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G.R. No.

L-28512 February 28, 1973 December 19, 1960, a letter of condolence from the defendant's
president Andres Soriano, informing them that their son had died
PEDRO R. DAVILA and PRECIOSA C. TIRO, plaintiffs- in the crash. And it was only on December 29 that his body was
appellants, recovered an taken back to Iloilo.
PHILIPPINE AIR LINES, defendant-appellant. The issues before the trial court, and now before Us in this appeal,
are whether or not the defendant is liable for violation of its
contract of carriage and if so, for how much. The provisions of the
Civil Code on this substantive question of liability are clear and
explicit. Article 1733 binds common carriers, "from the nature of
MAKALINTAL, J.: their business and by reasons of public policy, ... to observe
extraordinary diligence in the vigilance ... for the safety of the
In Civil Case No. 5728 of the Court of First Instance of Iloilo (Pedro passengers transported by them according to all the
R. Davila and Preciosa C. Tirol, plaintiffs, vs. Philippine Air Lines, circumstances of each case." Article 1755 establishes the standard
Inc., defendant) judgment was rendered ordering the defendant to of care required of a common carrier, which is, "to carry the
pay the plaintiffs various sums of money, as follows: passengers safely as far as human care and foresight can provide,
using the utmost diligence of very cautious persons, with due
(1) For the death of Pedro T. Davila, Jr. the regard for all the circumstances." Article 1756 fixes the burden of
amount of P6,000.00; proof by providing that "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
(2) For the loss of the earning capacity of the extraordinary diligence as prescribed in Articles 1733 and 1755."
deceased at the rate of P12,000.00 per annum Lastly, Article 1757 states that "the responsibility of a common
for five (5) years in the amount of Sixty carrier for the safety of passengers ... cannot be dispensed with or
Thousand Pesos. (P60,000.00); lessened by stipulation, by the posting of notices, by statements on
tickets, or otherwise."
(3) For moral damages in favor of the plaintiffs
Ten Thousand Pesos (P10,000.00); The route prescribed by the Civil Aeronautics Administration for
the flight of plane PI-C113 in the afternoon of November 23, 1960
(4) For exemplary damages in the amount of was Iloilo-Romblon-Manila, the latter stage, denominated as
Ten Thousand Pesos (P10,000.00); airway "Amber I," being a straight lane from Romblon to Manila.
The prescribed elevation of the flight was 6,000 ft. The plane
reported its position after take-off and again when it was abeam
(5) For actual damages the amount of Five
the Roxas homer. However, it did not intercept airway "Amber I"
Thousand Pesos (P5,000.00) broken down to as
over Romblon as it was supposed to do, and the pilot did not give
follows: A rolex watch valued at P600.00; a
his position then although Romblon was a compulsory checking
pistol worth P300.00; burial expenses P600.00;
point. The fact was that the plane had deviated from the prescribed
for the lot and the mausoleum P3,500.00;
route by 32 miles to the west when it crashed at Mt. Baco. The
reading of the altimeter of the plane when its wreckage was found
(6) For Attorney's fees the amount of Ten was 6,800 ft.
Thousand Pesos (P10,000.00) or a total amount
of One Hundred and One Thousand Pesos
There is a suggestion that in the course of the flight between
Romblon and Mindoro the aircraft was drifted westward by the
cross-winds then blowing in the region. The defendant, however,
To pay the costs of this proceedings. has not given a definite explanation as to why, if such was the
case, the pilot failed to make the necessary correction in his flight
Both parties appealed directly to this Court in view of the to compensate for the drift. According to the defendant's witness,
aggregate of the amounts awarded, the judgment having been Maj. Mijares, Chief of the Aviation Safety Division of the Civil
rendered before the effectivity of Rep. Act No. 5440. In this appeal Aeronautics Administration and Chairman of the CAA Investigating
the plaintiffs seek an increase in said amounts, and the defendant, Committee, there was a navigational error, to which several factors
complete exoneration from, or at least mitigation of, liability. contributed: "the weather observation at that time from the
Weather Bureau was not so good between Mt. Baco and Romblon
and the wind aloft was quite strong, which would be also one of the
The case arose from the tragic crash of a passenger plane of the
causes for the drifting of the aircraft; and the other strong
defendant which took the lives of all its crew and passengers. The
probability, I would say, would be the malfunction of the aircraft's
plane, identified as PI-C133, was a DC-3 type of aircraft,
navigational instrument." He further explained that "a cross-wind
manufactured in 1942 and acquired by the defendant in 1948. It
can drift the plane if the pilot will not make the necessary
had flown almost 18,000 hours at the time of its ill-fated flight.
correction, if his navigational instrument is malfunctioning and the
Despite its age, however, it had been certified as airworthy by the
visual reference outside the aircraft could not make the necessary
Civil Aeronautics Administration. On November 23, 1960, at 5:30
in the afternoon, it took off from the Manduriao Airport, Iloilo, on its
way to Manila, with 33 people on board, including the plane's
complement. It did not reach its destination, but crashed at Mt. There is nothing in the testimony of Maj. Mijares to show just how
Baco, Mindoro, one hour and fifteen minutes after take-off. A strong the cross-winds were in the region at the time, although in
massive search was undertaken by the defendant and by other the investigation of the accident by the Senate Committee on
parties as soon as it was realized that the plane's arrival in Manila transportation there was testimony that the cross-winds had a
was overdue. The plaintiffs, parents of Pedro T. Davila, Jr., who velocity of either 20 to 25 knots or 25 to 35 knots an hour.
was one of the passengers, had no definite news of what had Considering the relatively short distance from Romblon to Mt. Baco
happened to their son, getting what information they could only and the brief span of time it would take to fly that distance, cross-
from conflicting newspaper reports, until they received, on
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winds with the velocity stated could not have possibly deviated the Court in the case of Villa Rey Transit, Inc. vs. Court of Appeals3 on
plane by as much as 32 miles. the basis of the American Expectancy Table of Mortality or the
Actuarial of Combined Experience Table of Mortality. However,
The defendant points out that the navigational instrument on board although the deceased was in relatively good health, his medical
the plane consisted of two (2) sets of automatic direction finders history shows that he had complained of and been treated for such
(ADF) which, when found after the crash, showed a reading that ailments as backaches, chest pains and occasional feelings of
the aircraft was heading north, which was the proper flight tiredness. It is reasonable to make an allowance for these
direction. This point, however, is of no vital significance in this case circumstances and consider, for purposes of this case, a reduction
since it does not explain why the aircraft was 32 miles off its of his life expectancy to 25 years.
prescribed route in the first place. It is suggested that the pilot did
not notice the drift of his plane because of poor visibility due to In the same case of Villa Revenue Transit this Court stated:
thick clouds, which prevented him from making the corresponding
correction on the basis of visual references to the terrain outside. "... earning capacity, as an element of damages to one's estate for
But according to Maj. Mijares himself the report from the Weather his death by wrongful act is necessarily his net earning capacity or
Bureau at the time showed that visibility was 15 miles between his capacity to acquire money, less the necessary expense for his
Romblon and Mt. Baco and that the clouds from 2,700 to 7,000 ft. own living. Stated otherwise, the amount recoverable is not loss of
elevation were "scattered." And the profile of the probable weather the entire earnings, but rather the loss of that portion of the
cross-section along airway "Amber I" during the flight (Exh. 33-A) earnings which the beneficiary would have received. In other
shows that at 6,000 ft. the airlane was clear and free of clouds. words, only net earnings, not gross earnings, are to be considered,
The suggestion therefore that the pilot was practically flying blind that is, the total of the earnings less expenses necessary in the
and consequently failed to notice the drift of the aircraft is not creation of such earnings or income and less living and other
justified by the evidence. Indeed even the investigating team of the incidental expenses."
defendant under the chairmanship of Capt. Jaime Manzano
concluded in its report that "based on the limited evidences
available, the board is of the opinion that the probable cause was Considering the fact that the deceased was getting his income
the inability of the pilot to intersect airway "Amber I" over Romblon from three (3) different sources, namely from managing a radio
and to maintain track within its designated airway lane for reasons station, from law practice and from farming, the expenses
unknown." incidental to the generation of such income were necessarily more
than if he had only one source. Together with his living expenses,
a deduction of P600.00 a month, or P7,200.00 a year, seems to Us
What is undisputed therefore is that the pilot did not follow the reasonable, leaving a net yearly income of P7,800.00. This
route prescribed for his flight, at least between Romblon and amount, multiplied by 25 years, or P195,000.00 is the amount
Manila. Since up to that point over Romblon, where he was which should be awarded to the plaintiffs in this particular respect.
supposed to intersect airway "Amber I" the weather was clear, the
most reasonable conclusion is that his failure to do so was
intentional, and that he probably wanted to fly on a straight line to Actual losses sustained consist of the following, as found by the
Manila. It was a violation of air-craft traffic rules to which, under the trial court: "Rolex Watch — P600.00; pistol — P300.00; Burial
circumstances, the accident may be directly attributable. Expenses — P600.00; and cost of cemetery lot and mausoleum -
In any case, absent a satisfactory explanation on the part of the
defendant as to how and why the accident occurred, the Under Article 2206, in relation to Article 1764, of the Civil Code,
presumption is that it was at fault, under Article 1756 of the Civil the parents of the deceased are entitled to moral damages for their
Code. mental anguish. The trial court awarded P10,000.00 in this
concept, and We find no justification to change the award,
considering the long period of uncertainty and suffering the
The next question relates to the amount of damages that should plaintiffs underwent from November 23, when the plane crash
be awarded to the plaintiffs, parents of the deceased. The trial occurred, to December 19, when they received a letter from the
court fixed the indemnity for his death in the amount of P6,000.00. defendant's president confirming the death of their son, and again
Pursuant to current jurisprudence on the point it should be to the following December 29, when his body was finally recovered
increased to P12,000.00.1 and taken back to them.

The deceased was employed as manager of a radio station 2, from With respect to the award of P10,000.00 as exemplary damages, it
which he was earning P8,400.00 a year, consisting of a monthly is Our opinion that the same should be eliminated. According to
salary of P600.00 and allowance of P100.00. As a lawyer and Article 2232 of the Civil Code, in contracts and quasi-contracts the
junior partner of his father in the law office, he had an annual court may award exemplary damages if the defendant acted in a
income of P3,600.00. From farming he was getting an average of wanton, fraudulent, reckless, oppressive or malevolent manner.
P3,000.00. All in all therefore the deceased had gross earnings of The failure of the defendant here to exercise extraordinary
P15,000.00 a year. diligence, as required by law, does not amount to anyone of the
circumstances contemplated in the said provision.
According to Article 2206, paragraph (1), of the Civil Code, "the
defendant shall be liable for the loss of the earning capacity of the The trial court has awarded attorney's fees of P10,000.00. We do
deceased and indemnity shall be paid to the heirs of the latter." not find this award groundless or the amount thereof
This Article, while referring to "damages for death caused by crime unreasonable.
or quasi-delict," is expressly made applicable by Article 1764 "to
the death of a passenger caused by the breach of contract by a
common carrier." The total of the different items above enumerated is P232,000.00.
The judgment of the court a quo is therefore modified accordingly
and the defendant is ordered to pay the said amount to the
The deceased, Pedro Davila, Jr., was single and 30 years of age plaintiffs, with legal interest thereon from the finality of this
when he died. At that age one's normal life expectancy is 33-1/3 judgment. With costs against the defendant.
years, according to the formula (2/3 x [80-30]) adopted by this
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aside with the aid of a policeman and who shouted at them,
"Conos! Ignorantes Filipinos!"

Mrs. Mendoza later called up the manager of Aer Lingus and

requested that they provide her and her husband means to get to
G.R. No. L-31150 July 22, 1975
Lourdes, but the request was denied. A stranger, however,
advised them to take a train, which the two did; despite the third
KONINKLIJKE LUCHTVAART MAATSHAPPIJ N.V., otherwise class accommodations and lack of food service, they reached
known as KLM ROYAL DUTCH AIRLINES, petitioner, Lourdes the following morning. During the train trip the
vs. respondents had to suffer draft winds as they wore only minimum
THE HONORABLE COURT OF APPEALS, CONSUELO T. clothing, their luggage having gone ahead with the Aer Lingus
MENDOZA and RUFINO T. MENDOZA, respondents. plane. They spent $50 for that train trip; their plane passage was
worth $43.35.
On March 17, 1966 the respondents, referring to KLM as the
In this appeal by way of certiorari the Koninklijke Luchtvaart principal of Aer Lingus, filed a complaint for damages with the
Maatschappij N.V., otherwise known as the KLM Royal Dutch Court of First Instance of Manila arising from breach of contract of
Airlines (hereinafter referred to as the KLM) assails the award of carriage and for the humiliating treatment received by them at the
damages made by the Court of Appeals in CA-G.R. 40620 in favor hands of the Aer Lingus manager in Barcelona. After due hearing,
of the spouses Rufino T. Mendoza and Consuelo T. Mendoza the trial court awarded damages to the respondents as follows:
(hereinafter referred to as the respondents).1äwphï1.ñët $43.35 or its peso equivalent as actual damages, P10,000 as
moral damages, P5,000 as exemplary damages, and P5,000 as
attorney's fees, and expenses of litigation.
Sometime in March 1965 the respondents approached Tirso
Reyes, manager of a branch of the Philippine Travel Bureau, a
travel agency, for consultations about a world tour which they were Both parties appealed to the Court of Appeals. The KLM sought
intending to make with their daughter and a niece. Reyes complete exoneration; the respondents prayed for an increase in
submitted to them, after preliminary discussions, a tentative the award of damages. In its decision of August 14, 1969 the Court
itinerary which prescribed a trip of thirty-five legs; the respondents of Appeals decreed as follows: "Appellant KLM is condemned to
would fly on different airlines. Three segments of the trip, the pay unto the plaintiffs the sum of $43.35 as actual damages;
longest, would be via KLM. The respondents expressed a desire to P50,000 as moral damages; and P6,000 as attorney's fees and
visit Lourdes, France, and discussed with Reyes two alternate costs."
routes, namely, Paris to Lourdes and Barcelona to Lourdes. The
respondents decided on the Barcelona-Lourdes route with Hence, the present recourse by the KLM.
knowledge that only one airline, Aer Lingus, serviced it.
The KLM prays for exculpation from damages on the strength of
The Philippine Travel Bureau to which Reyes was accredited was the following particulars which were advanced to but rejected by
an agent for international air carriers which are members of the the Court of Appeals:
International Air Transport Association, popularly known as the
"IATA," of which both the KLM and the Aer Lingus are members.
(a) The air tickets issued to the respondents stipulate that carriage
thereunder is subject to the "Convention for the Unification of
After about two weeks, the respondents approved the itinerary Certain Rules Relating to International Transportation by Air,"
prepared for them, and asked Reyes to make the necessary plane otherwise known as the "Warsaw Convention," to which the
reservations. Reyes went to the KLM, for which the respondents Philippine Government is a party by adherence, and which
had expressed preference. The KLM thereafter secured seat pertinently provides.1
reservations for the respondents and their two companions from
the carriers which would ferry them throughout their trip, with the
ART. 30. (1) In the case of transportation to be
exception of Aer Lingus. When the respondents left the Philippines
performed by various successive carriers and
(without their young wards who had enplaned much earlier), they
failing within the definition set out in the third
were issued KLM tickets for their entire trip. However, their coupon
paragraph of Article I, each carrier who accepts
for the Aer Lingus portion (Flight 861 for June 22, 1965) was
passengers, baggage, or goods shall be subject
marked "RQ" which meant "on request".
to the rules set out in the convention, and shall
be deemed to be one of the contracting parties
After sightseeing in American and European cities (they were in to the contract of transportation insofar as the
the meantime joined by their two young companions), the contract deals with that part of transportation
respondents arrived in Frankfurt, Germany. They went to a KLM which is performed under his supervision.2
office there and obtained a confirmation from Aer Lingus of seat
reservations on flight 861. After meandering in London, Paris and
(2) In the case of transportation of this nature,
Lisbon, the foursome finally took wing to Barcelona for their trip to
the passenger or his representative can take
Lourdes, France.
action only against the carrier who performed
the transportation during which the accident or
In the afternoon of June 22, 1965 the respondents with their wards the delay occured, save in the case where, by
went to the Barcelona airport to take their plane which arrived at express agreement, the first carrier has
4:00 o'clock. At the airport, the manager of Aer Lingus directed the assumed liability for the whole journey.
respondents to check in. They did so as instructed and were (emphasis supplied)
accepted for passage. However, although their daughter and niece
were allowed to take the plane, the respondents were off-loaded
(b) On the inside front cover of each ticket the following appears
on orders of the Aer Lingus manager who brusquely shoved them
under the heading "Conditions of Contract":

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1 ... (a) Liability of carrier for damages shall be manifest, instead, is that the Aer Lingus, through its manager
limited to occurrences on its own line, except in there, refused to transport the respondents to their planned and
the case of checked baggage as to which the contracted destination.
passenger also has a right of action against the
first or last carrier. A carrier issuing a ticket or 2. The argument that the KLM should not be held accountable for
checking baggage for carriage over the lines of the tortious conduct of Aer Lingus because of the provision printed
others does so only as agent.. on the respondents' tickets expressly limiting the KLM's liability for
damages only to occurrences on its own lines is unacceptable. As
(c) All that the KLM did after the respondents completed their noted by the Court of Appeals that condition was printed in letters
arrangements with the travel agency was to request for seat so small that one would have to use a magnifying glass to read the
reservations among the airlines called for by the itinerary words. Under the circumstances, it would be unfair and inequitable
submitted to the KLM and to issue tickets for the entire flight as a to charge the respondents with automatic knowledge or notice of
ticket-issuing agent. the said condition so as to preclude any doubt that it was fairly and
freely agreed upon by the respondents when they accepted the
The respondents rebut the foregoing arguments, thus: passage tickets issued to them by the KLM. As the airline which
issued those tickets with the knowledge that the respondents
would be flown on the various legs of their journey by different air
(a) Article 30 of the Warsaw Convention has no application in the carriers, the KLM was chargeable with the duty and responsibility
case at bar which involves, not an accident or delay, but a willful of specifically informing the respondents of conditions prescribed
misconduct on the part of the KLM's agent, the Aer Lingus. Under in their tickets or, in the very least, to ascertain that the
article 25 of the same Convention the following is prescribed: respondents read them before they accepted their passage tickets.
A thorough search of the record, however, inexplicably fails to
ART. 25. (1) The carrier shall not be entitled to show that any effort was exerted by the KLM officials or employees
avail himself of the provisions of this convention to discharge in a proper manner this responsibility to the
which exclude or limit his liability, if the damage respondents. Consequently, we hold that the respondents cannot
is caused by his willful misconduct or by such be bound by the provision in question by which KLM unilaterally
default on his part as, in accordance with the law assumed the role of a mere ticket-issuing agent for other airlines
of the court to which the case is submitted, is and limited its liability only to untoward occurrences on its own
considered to be equivalent to willful lines.
3. Moreover, as maintained by the respondents and the Court of
(2) Similarly, the carrier shall not be entitled to Appeals, the passage tickets of the respondents provide that the
avail himself of the said provisions, if the carriage to be performed thereunder by several successive
damage is caused under the same carriers "is to be regarded as a single operation," which is
circumstances by any agent of the carrier acting diametrically incompatible with the theory of the KLM that the
within the scope of his employment. (emphasis respondents entered into a series of independent contracts with
by respondents) the carriers which took them on the various segments of their trip.
This position of KLM we reject. The respondents dealt exclusively
(b) The condition in their tickets which purportedly excuse the KLM with the KLM which issued them tickets for their entire trip and
from liability appears in very small print, to read which, as found by which in effect guaranteed to them that they would have sure
the Court of Appeals, one has practically to use a magnifying space in Aer Lingus flight 861. The respondents, under that
glass. assurance of the internationally prestigious KLM, naturally had the
right to expect that their tickets would be honored by Aer Lingus to
which, in the legal sense, the KLM had indorsed and in effect
(c) The first paragraph of the "Conditions of Contract" appearing guaranteed the performance of its principal engagement to carry
identically on the KLM tickets issued to them idubitably shows that out the respondents' scheduled itinerary previously and mutually
their contract was one of continuous air transportation around the agreed upon between the parties.
4. The breach of that guarantee was aggravated by the
1 ... "carriage" includes the air carrier issuing this discourteous and highly arbitrary conduct of an official of the Aer
ticket and all carriers that carry or undertake to Lingus which the KLM had engaged to transport the respondents
carry the passenger or his baggage hereunder on the Barcelona-Lourdes segment of their itinerary. It is but just
or perform any other service incidental to such and in full accord with the policy expressly embodied in our civil
air carriage... Carriage to be performed law which enjoins courts to be more vigilant for the protection of a
hereunder by several successive carrier is contracting party who occupies an inferior position with respect to
regarded as a single operation. the other contracting party, that the KLM should be held
responsible for the abuse, injury and embarrassment suffered by
(d) The contract of air transportation was exclusively between the the respondents at the hands of a supercilious boor of the Aer
respondents and the KLM, the latter merely endorsing its Lingus.
performance to other carriers, like Aer Lingus, as its
subcontractors or agents, as evidenced by the passage tickets ACCORDINGLY, the judgment of the Court of Appeals dated
themselves which on their face disclose that they are KLM tickets. August 14, 1969 is affirmed, at KLM's cost.
Moreover, the respondents dealt only with KLM through the travel

1. The applicability insisted upon by the KLM of article 30 of the

Warsaw Convention cannot be sustained. That article
presupposes the occurrence of either an accident or a delay,
neither of which took place at the Barcelona airport; what is here
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UNITED AIRLINES, INC., petitioner, vs. COURT OF APPEALS, always ask for American aid. After which she remarked Dont worry about
ANICETO FONTANILLA, in his personal capacity and in your baggage. Anyway there is nothing in there. What are you doing here
behalf of his minor son MYCHAL ANDREW anyway? I will report you to immigration. You Filipinos should go
FONTANILLA respondents. home.[10] Such rude statements were made in front of other people in the
airport causing the Fontanillas to suffer shame, humiliation and
DECISION embarrassment. The chastening situation even caused the younger
Fontanilla to break into tears.[11]
After some time, Linda, without any explanation, offered the
Fontanillas $50.00 each. She simply said Take it or leave it. This, the
On March 1, 1989, private respondent Aniceto Fontanilla purchased Fontanillas declined.[12]
from petitioner United Airlines, through the Philippine Travel Bureau in
Manila, three (3) Visit the U.S.A. tickets for himself, his wife and his minor The Fontanillas then proceeded to the United Airlines customer
son Mychal for the following routes: service counter to plead their case. The male employee at the counter
reacted by shouting that he was ready for it and left without saying
(a) San Francisco to Washington (15 April 1989); anything.[13]
The Fontanillas were not booked on the next flight, which departed
(b) Washington to Chicago (25 April 1989); for San Francisco at 11:00 a.m. It was only at 12:00 noon that they were
able to leave Los Angeles on United Airlines Flight No. 803.
(c) Chicago to Los Angeles (29 April 1989); Petitioner United Airlines has a different version of what occurred at
the Los Angeles Airport on May 5, 1989.
(d) Los Angeles to San Francisco (01 May 1989 for petitioners wife and
05 May 1989 for petitioner and his son).[1] According to United Airlines, the Fontanillas did not initially go to
the check-in counter to get their seat assignments for UA Flight 1108. They
instead proceeded to join the queue boarding the aircraft without first
All flights had been confirmed previously by United Airlines.[2] securing their seat assignments as required in their ticket and boarding
passes. Having no seat assignments, the stewardess at the door of the plane
The Fontanillas proceeded to the United States as planned, where instructed them to go to the check-in counter. When the Fontanillas
they used the first coupon from San Francisco to Washington. On April 24, proceeded to the check-in counter, Linda Allen, the United Airlines
1989, Aniceto Fontanilla bought two (2) additional coupons each for Customer Representative at the counter informed them that the flight was
himself, his wife and his son from petitioner at its office in Washington overbooked. She booked them on the next available flight and offered them
Dulles Airport. After paying the penalty for rewriting their tickets, the denied boarding compensation. Allen vehemently denies uttering the
Fontanillas were issued tickets with corresponding boarding passes with derogatory and racist words attributed to her by the Fontanillas.[14]
the words CHECK-IN REQUIRED, for United Airlines Flight No. 1108,
set to leave from Los Angeles to San Francisco at 10:30 a.m. on May 5, The incident prompted the Fontanillas to file Civil Case No. 89-4268
1989.[3] for damages before the Regional Trial Court of Makati. After trial on the
merits, the trial court rendered a decision, the dispositive portion of which
The cause of the non-boarding of the Fontanillas on United Airlines reads as follows:
Flight No. 1108 makes up the bone of contention of this controversy.
WHEREFORE, judgment is rendered dismissing the complaint. The
Private respondents' version is as follows:
counterclaim is likewise dismissed as it appears that plaintiffs were not
Aniceto Fontanilla and his son Mychal claim that on May 5, 1989, actuated by legal malice when they filed the instant complaint.[15]
upon their arrival at the Los Angeles Airport for their flight, they proceeded
to United Airlines counter where they were attended by an employee On appeal, the Court of Appeals ruled in favor of the Fontanillas. The
wearing a nameplate bearing the name LINDA. Linda examined their appellate court found that there was an admission on the part of United
tickets, punched something into her computer and then told them that Airlines that the Fontanillas did in fact observe the check-in requirement. It
boarding would be in fifteen minutes.[4] ruled further that even assuming there was a failure to observe the check-
in requirement, United Airlines failed to comply with the procedure laid
When the flight was called, the Fontanillas proceeded to the
down in cases where a passenger is denied boarding. The appellate court
plane. To their surprise, the stewardess at the gate did not allow them to
likewise gave credence to the claim of Aniceto Fontanilla that the
board the plane, as they had no assigned seat numbers. They were then
employees of United Airlines were discourteous and arbitrary and, worse,
directed to go back to the check-in counter where Linda subsequently
discriminatory. In light of such treatment, the Fontanillas were entitled to
informed them that the flight had been overbooked and asked them to
moral damages. The dispositive portion of the decision of the respondent
Court of Appeals dated 29 September 1995, states as follows:
The Fontanillas tried to explain to Linda the special circumstances of
their visit. However, Linda told them in arrogant manner, So what, I can WHEREFORE, in view of the foregoing, judgment appealed herefrom is
not do anything about it.[6] hereby REVERSED and SET ASIDE, and a new judgment is entered
ordering defendant-appellee to pay plaintiff-appellant the following:
Subsequently, three other passengers with Caucasian features were
graciously allowed to board, after the Fontanillas were told that the flight
had been overbooked.[7] a) P200,000.00 as moral damages;

The plane then took off with the Fontanillas baggage in tow, leaving
b) P200,000.00 as exemplary damages;
them behind.[8]
The Fontanillas then complained to Linda, who in turn gave them an c) P50, 000.00 as attorneys fees.
ugly stare and rudely uttered, Its not my fault. Its the fault of the
company. Just sit down and wait.[9] When Mr. Fontanilla reminded Linda
No pronouncement as to costs.
of the inconvenience being caused to them, she bluntly retorted, Who do
you think you are? You lousy Flips are good for nothing beggars.You

Transpoeh 5
SO ORDERED.[16] The rule authorizing an answer that the defendant has no knowledge
or information sufficient to form a belief as to the truth of an averment and
Petitioner United Airlines now comes to this Court raising the giving such answer the effect of a denial, does not apply where the fact as
following assignment of errors: to which want of knowledge is asserted is so plainly and necessarily within
the defendant's knowledge that his averment of ignorance must be palpably
I untrue.[22] Whether or not private respondents checked in at petitioner's
designated counter at the airport at 9:45 a.m. on May 5, 1989 must
RESPONDENT COURT OF APPEALS GRAVELY ERRED IN necessarily be within petitioner's knowledge.
RULING THAT THE TRIAL COURT WAS WRONG IN While there was no specific denial as to the fact of compliance with
FAILING TO CONSIDER THE ALLEGED ADMISSION THAT the check-in requirement by private respondents, petitioner presented
PRIVATE RESPONDENT OBSERVED THE CHECK-IN evidence to support its contention that there indeed was no compliance.
Private respondents then are said to have waived the rule on
II admission. It not only presented evidence to support its contention that
there was compliance with the check-in requirement, it even allowed
petitioner to present rebuttal evidence. In the case of Yu Chuck vs. "Kong
DENIED BOARDING RULES WERE NOT COMPLIED WITH. The object of the rule is to relieve a party of the trouble and expense in
proving in the first instance an alleged fact, the existence or non-existence
of which is necessarily within the knowledge of the adverse party, and of
III the necessity (to his opponents case) of establishing which such adverse
party is notified by his opponents pleadings.
RULING THAT PRIVATE RESPONDENT IS ENTITLED TO The plaintiff may, of course, waive the rule and that is what must be
MORAL DAMAGES OF P200, 000. considered to have done (sic) by introducing evidence as to the execution
of the document and failing to object to the defendants evidence in
IV refutation; all this evidence is now competent and the case must be
decided thereupon.[23]
RULING THAT PRIVATE RESPONDENT IS ENTITLED TO The determination of the other issues raised is dependent on whether
EXEMPLARY DAMAGES OF P200,000. or not there was a breach of contract in bad faith on the part of the petitioner
in not allowing the Fontanillas to board United Airlines Flight 1108.
V It must be remembered that the general rule in civil cases is that the
party having the burden of proof of an essential fact must produce a
RESPONDENT COURT OF APPEALS GRAVELY ERRED IN preponderance of evidence thereon.[24] Although the evidence adduced by
RULING THAT PRIVATE RESPONDENT IS ENTITLED TO the plaintiff is stronger than that presented by the defendant, a judgment
ATTORNEYS FEES OF P50, 000.[17] cannot be entered in favor of the former, if his evidence is not sufficient to
sustain his cause of action. The plaintiff must rely on the strength of his
own evidence and not upon the weakness of the defendants.[25] Proceeding
On the first issue raised by the petitioner, the respondent Court of
Appeals ruled that when Rule 9, Section 1 of the Rules of Court, [18] there from this, and considering the contradictory findings of facts by the
was an implied admission in petitioner's answer in the allegations in the Regional Trial Court and the Court of Appeals, the question before this
complaint that private respondent and his son observed the check-in Court is whether or not private respondents were able to prove with
adequate evidence his allegations of breach of contract in bad faith.
requirement at the Los Angeles Airport. Thus:
A perusal of the above pleadings filed before the trial court disclosed We rule in the negative.
that there exists a blatant admission on the part of the defendant-appellee Time and again, the Court has pronounced that appellate courts
that the plaintiffs-appellants indeed observed the check-in requirement at should not, unless for strong and cogent reasons, reverse the findings of
the Los Angeles Airport on May 5, 1989. In view of defendant-appellees facts of trial courts. This is so because trial judges are in a better position
admission of plaintiffs-appellants material averment in the complaint, We to examine real evidence and at a vantage point to observe the actuation
find no reason why the trial court should rule against such admission. [19] and the demeanor of the witnesses.[26] While not the sole indicator of the
We disagree with the above conclusion reached by respondent Court credibility of a witness, it is of such weight that it has been said to be the
of Appeals. Paragraph 7 of private respondents' complaint states: touchstone of credibility.[27]
Aniceto Fontanillas assertion that upon arrival at the airport at 9:45
7. On May 5, 1989 at 9:45 a.m., plaintiff and his son checked in at a.m., he immediately proceeded to the check-in counter, and that Linda
defendants designated counter at the airport in Los Angeles for their Allen punched in something into the computer is specious and not
scheduled flight to San Francisco on defendants Flight No. 1108. [20] supported by the evidence on record. In support of their allegations, private
respondents submitted a copy of the boarding pass. Explicitly printed on
the boarding pass are the words Check-In Required. Curiously, the said
Responding to the above allegations, petitioner averred in paragraph
pass did not indicate any seat number. If indeed the Fontanillas checked in
4 of its answer, thus:
at the designated time as they claimed, why then were they not assigned
seat numbers? Absent any showing that Linda was so motivated, we do not
4. Admits the allegation set forth in paragraph 7 of the complaint except buy into private respondents' claim that Linda intentionally deceived him,
to deny that plaintiff and his son checked in at 9:45 a.m., for lack of and made him the laughing stock among the passengers.[28] Hence, as
knowledge or information at this point in time as to the truth thereof.[21] correctly observed by the trial court:

Transpoeh 6
Plaintiffs fail to realize that their failure to check in, as expressly required As to the award of moral and exemplary damages, we find error in
in their boarding passes, is the very reason why they were not given their the award of such by the Court of Appeals. For the plaintiff to be entitled
respective seat numbers, which resulted in their being denied boarding. [29] to an award of moral damages arising from a breach of contract of carriage,
the carrier must have acted with fraud or bad faith. The appellate court
Neither do we agree with the conclusion reached by the appellate predicated its award on our pronouncement in the case of Zalamea vs.
court that private respondents' failure to comply with the check-in Court of Appeals, supra, where we stated:
requirement will not defeat his claim as the denied boarding rules were not
complied with. Notably, the appellate court relied on the Code of Federal Existing jurisprudence explicitly states that overbooking amounts to bad
Regulation Part on Oversales, which states: faith, entitling passengers concerned to an award of moral
damages. In Alitalia Airways v. Court of Appeals, where passengers with
250.6 Exceptions to eligibility for denied boarding compensation. confirmed booking were refused carriage on the last minute, this Court
held that when an airline issues a ticket to a passenger confirmed on a
particular flight, on a certain date, a contract of carriage arises, and the
A passenger denied board involuntarily from an oversold flight shall not passenger has every right to expect that he would fly on that flight and on
be eligible for denied board compensation if: that date. If he does not, then the carrier opens itself to a suit for breach of
contract of carriage. Where an airline had deliberately overbooked, it
(a) The passenger does not comply with the carriers contract of carriage took the risk of having to deprive some passengers of their seats in case
or tariff provisions regarding ticketing, reconfirmation, check-in, and all of them would show up for check in. For the indignity and
acceptability for transformation. inconvenience of being refused a confirmed seat on the last minute, said
passenger is entitled to moral damages. (Emphasis supplied.)
The appellate court, however, erred in applying the laws of the
United States as, in the case at bar, Philippine law is the applicable However, the Courts ruling in said case should be read in consonance
law. Although, the contract of carriage was to be performed in the United with existing laws, particularly, Economic Regulations No. 7, as amended,
States, the tickets were purchased through petitioners agent in Manila. It is of the Civil Aeronautics Board:
true that the tickets were rewritten in Washington, D.C. However, such fact
did not change the nature of the original contract of carriage entered into Sec 3. Scope. This regulation shall apply to every Philippine and foreign
by the parties in Manila. air carrier with respect to its operation of flights or portions of flights
In the case of Zalamea vs. Court of Appeals,[30] this Court applied the originating from or terminating at, or serving a point within the territory
doctrine of lex loci contractus. According to the doctrine, as a general rule, of the Republic of the Philippines insofar as it denies boarding to a
the law of the place where a contract is made or entered into governs with passenger on a flight, or portion of a flight inside or outside the
respect to its nature and validity, obligation and interpretation. This has Philippines, for which he holds confirmed reserved space. Furthermore,
been said to be the rule even though the place where the contract was made this Regulation is designed to cover only honest mistakes on the part of
is different from the place where it is to be performed, and particularly so, the carriers and excludes deliberate and willful acts of non-
if the place of the making and the place of performance are the accommodation. Provided, however, that overbooking not exceeding
same. Hence, the court should apply the law of the place where the airline 10% of the seating capacity of the aircraft shall not be considered as
ticket was issued, when the passengers are residents and nationals of the a deliberate and willful act of non-accommodation.
forum and the ticket is issued in such State by the defendant airline.
What this Court considers as bad faith is the willful and deliberate
The law of the forum on the subject matter is Economic Regulations overbooking on the part of the airline carrier. The above-mentioned law
No. 7 as amended by Boarding Priority and Denied Boarding clearly states that when the overbooking does not exceed ten percent
Compensation of the Civil Aeronautics Board, which provides that the (10%), it is not considered as deliberate and therefore does not amount to
check-in requirement be complied with before a passenger may claim bad faith. While there may have been overbooking in this case, private
against a carrier for being denied boarding: respondents were not able to prove that the overbooking on United Airlines
Flight 1108 exceeded ten percent.
SEC. 5. Amount of Denied Boarding Compensation Subject to the
exceptions provided hereinafter under Section 6, carriers shall pay to As earlier stated, the Court is of the opinion that the private
passengers holding confirmed reserved space and who have presented respondents were not able to prove that they were subjected to coarse and
themselves at the proper place and time and fully complied with the harsh treatment by the ground crew of United Airlines. Neither were they
carriers check-in and reconfirmation procedures and who are able to show that there was bad faith on part of the carrier airline. Hence,
acceptable for carriage under the Carriers tariffs but who have been the award of moral and exemplary damages by the Court of Appeals is
denied boarding for lack of space, a compensation at the rate of: xx improper. Corollarily, the award of attorney's fees is, likewise, denied for
lack of any legal and factual basis.

Private respondents' narration that they were subjected to harsh and WHEREFORE, the petition is GRANTED. The decision of the
derogatory remarks seems incredulous. However, this Court will not Court of Appeals in CA-G.R. CV No. 37044 is hereby REVERSED and
attempt to surmise what really happened. Suffice to say, private respondent SET ASIDE. The decision of the Regional Trial Court of Makati City in
was not able to prove his cause of action, for as the trial court correctly Civil Case No. 89-4268 dated April 8, 1991 is hereby REINSTATED.
xxx plaintiffs claim to have been discriminated against and insulted in the
presence of several people. Unfortunately, plaintiffs limited their
evidence to the testimony [of] Aniceto Fontanilla, without any
corroboration by the people who saw or heard the discriminatory remarks
and insults; while such limited testimony could possibly be true, it does
not enable the Court to reach the conclusion that plaintiffs have, by a
preponderance of evidence, proven that they are entitled to P1,650,000.00
damages from defendant.[31]

Transpoeh 7
Republic of the Philippines when he discovered the he was holding his daughter's full-fare
Even in the next TWA flight to Los Angeles Mrs. Zalamea and her
SECOND DIVISION daughter, could not be accommodated because it was also fully
booked. Thus, they were constrained to book in another flight and
purchased two tickets from American Airlines at a cost of Nine
Hundred Eighteen ($918.00) Dollars.
G.R. No. 104235 November 18, 1993
Upon their arrival in the Philippines, petitioners filed an action for
damages based on breach of contract of air carriage before the
SPOUSES CESAR & SUTHIRA ZALAMEA and LIANA Regional Trial Court of Makati, Metro Manila, Branch 145. As
ZALAMEA, petitioners, aforesaid, the lower court ruled in favor of petitioners in its
vs. decision 1 dated January 9, 1989 the dispositive portion of which
AIRLINES, INC., respondents.
WHEREFORE, judgment is hereby rendered
Sycip, Salazar, Hernandez, Gatmaitan for petitioners. ordering the defendant to pay plaintiffs the
following amounts:
Quisumbing, Torres & Evangelista for private-respondent.
(1) US $918.00, or its peso equivalent at the
time of payment representing the price of the
tickets bought by Suthira and Liana Zalamea
NOCON, J.: from American Airlines, to enable them to fly to
Los Angeles from New York City;

Disgruntled over TransWorld Airlines, Inc.'s refusal to

accommodate them in TWA Flight 007 departing from New York to (2) US $159.49, or its peso equivalent at the
Los Angeles on June 6, 1984 despite possession of confirmed time of payment, representing the price of
tickets, petitioners filed an action for damages before the Regional Suthira Zalamea's ticket for TWA Flight 007;
Trial Court of Makati, Metro Manila, Branch 145. Advocating
petitioner's position, the trial court categorically ruled that (3) Eight Thousand Nine Hundred Thirty-Four
respondent TransWorld Airlines (TWA) breached its contract of Pesos and Fifty Centavos (P8,934.50, Philippine
carriage with petitioners and that said breach was "characterized Currency, representing the price of Liana
by bad faith." On appeal, however, the appellate court found that Zalamea's ticket for TWA Flight 007,
while there was a breach of contract on respondent TWA's part,
there was neither fraud nor bad faith because under the Code of (4) Two Hundred Fifty Thousand Pesos
Federal Regulations by the Civil Aeronautics Board of the United (P250,000.00), Philippine Currency, as moral
States of America it is allowed to overbook flights. damages for all the plaintiffs'

The factual backdrop of the case is as follows: (5) One Hundred Thousand Pesos
(P100,000.00), Philippine Currency, as and for
Petitioners-spouses Cesar C. Zalamea and Suthira Zalamea, and attorney's fees; and
their daughter, Liana Zalamea, purchased three (3) airline tickets
from the Manila agent of respondent TransWorld Airlines, Inc. for a (6) The costs of suit.
flight to New York to Los Angeles on June 6, 1984. The tickets of
petitioners-spouses were purchased at a discount of 75% while
that of their daughter was a full fare ticket. All three tickets SO ORDERED. 2
represented confirmed reservations.
On appeal, the respondent Court of Appeals held that moral
While in New York, on June 4, 1984, petitioners received notice of damages are recoverable in a damage suit predicated upon a
the reconfirmation of their reservations for said flight. On the breach of contract of carriage only where there is fraud or bad
appointed date, however, petitioners checked in at 10:00 a.m., an faith. Since it is a matter of record that overbooking of flights is a
hour earlier than the scheduled flight at 11:00 a.m. but were placed common and accepted practice of airlines in the United States and
on the wait-list because the number of passengers who had is specifically allowed under the Code of Federal Regulations by
checked in before them had already taken all the seats available the Civil Aeronautics Board, no fraud nor bad faith could be
on the flight. Liana Zalamea appeared as the No. 13 on the wait- imputed on respondent TransWorld Airlines.
list while the two other Zalameas were listed as "No. 34, showing a
party of two." Out of the 42 names on the wait list, the first 22 Moreover, while respondent TWA was remiss in not informing
names were eventually allowed to board the flight to Los Angeles, petitioners that the flight was overbooked and that even a person
including petitioner Cesar Zalamea. The two others, on the other with a confirmed reservation may be denied accommodation on an
hand, at No. 34, being ranked lower than 22, were not able to fly. overbooked flight, nevertheless it ruled that such omission or
As it were, those holding full-fare tickets were given first priority negligence cannot under the circumstances be considered to be
among the wait-listed passengers. Mr. Zalamea, who was holding so gross as to amount to bad faith.
the full-fare ticket of his daughter, was allowed to board the plane;
while his wife and daughter, who presented the discounted tickets Finally, it also held that there was no bad faith in placing
were denied boarding. According to Mr. Zalamea, it was only later petitioners in the wait-list along with forty-eight (48) other

Transpoeh 8
passengers where full-fare first class tickets were given priority Respondent TWA relied solely on the statement of Ms. Gwendolyn
over discounted tickets. Lather, its customer service agent, in her deposition dated January
27, 1986 that the Code of Federal Regulations of the Civil
The dispositive portion of the decision of respondent Court of Aeronautics Board allows overbooking. Aside from said statement,
Appeals3 dated October 25, 1991 states as follows: no official publication of said code was presented as evidence.
Thus, respondent court's finding that overbooking is specifically
allowed by the US Code of Federal Regulations has no basis in
WHEREFORE, in view of all the foregoing, the fact.
decision under review is hereby MODIFIED in
that the award of moral and exemplary damages
to the plaintiffs is eliminated, and the defendant- Even if the claimed U.S. Code of Federal Regulations does exist,
appellant is hereby ordered to pay the plaintiff the same is not applicable to the case at bar in accordance with
the following amounts: the principle of lex loci contractus which require that the law of the
place where the airline ticket was issued should be applied by the
court where the passengers are residents and nationals of the
(1) US$159.49, or its peso equivalent at the time forum and the ticket is issued in such State by the defendant
of the payment, representing the price of Suthira airline.8 Since the tickets were sold and issued in the Philippines,
Zalamea's ticket for TWA Flight 007; the applicable law in this case would be Philippine law.

(2) US$159.49, or its peso equivalent at the time Existing jurisprudence explicitly states that overbooking amounts
of the payment, representing the price of Cesar to bad faith, entitling the passengers concerned to an award of
Zalamea's ticket for TWA Flight 007; moral damages. In Alitalia Airways v. Court of Appeals,9 where
passengers with confirmed bookings were refused carriage on the
(3) P50,000.00 as and for attorney's fees. last minute, this Court held that when an airline issues a ticket to a
passenger confirmed on a particular flight, on a certain date, a
(4) The costs of suit. contract of carriage arises, and the passenger has every right to
expect that he would fly on that flight and on that date. If he does
not, then the carrier opens itself to a suit for breach of contract of
SO ORDERED.4 carriage. Where an airline had deliberately overbooked, it took the
risk of having to deprive some passengers of their seats in case all
Not satisfied with the decision, petitioners raised the case on of them would show up for the check in. For the indignity and
petition for review on certiorari and alleged the following errors inconvenience of being refused a confirmed seat on the last
committed by the respondent Court of Appeals, to wit: minute, said passenger is entitled to an award of moral damages.

I. Similarly, in Korean Airlines Co., Ltd. v. Court of Appeals, 10 where

private respondent was not allowed to board the plane because
her seat had already been given to another passenger even before
the allowable period for passengers to check in had lapsed despite
the fact that she had a confirmed ticket and she had arrived on
time, this Court held that petitioner airline acted in bad faith in
violating private respondent's rights under their contract of carriage
and is therefore liable for the injuries she has sustained as a result.
In fact, existing jurisprudence abounds with rulings where the
. . . IN ELIMINATING THE AWARD OF breach of contract of carriage amounts to bad faith. In Pan
EXEMPLARY DAMAGES. American World Airways, Inc. v. Intermediate Appellate
Court, 11 where a would-be passenger had the necessary ticket,
III. baggage claim and clearance from immigration all clearly and
unmistakably showing that she was, in fact, included in the
passenger manifest of said flight, and yet was denied
accommodation in said flight, this Court did not hesitate to affirm
the lower court's finding awarding her damages.
A contract to transport passengers is quite different in kind and
degree from any other contractual relation. So ruled this Court
That there was fraud or bad faith on the part of respondent airline
in Zulueta v. Pan American World Airways, Inc. 12 This is so, for a
when it did not allow petitioners to board their flight for Los
contract of carriage generates a relation attended with public duty
Angeles in spite of confirmed tickets cannot be disputed. The U.S.
— a duty to provide public service and convenience to its
law or regulation allegedly authorizing overbooking has never been
passengers which must be paramount to self-interest or
proved. Foreign laws do not prove themselves nor can the courts
enrichment. Thus, it was also held that the switch of planes from
take judicial notice of them. Like any other fact, they must be
Lockheed 1011 to a smaller Boeing 707 because there were only
alleged and proved.6 Written law may be evidenced by an official
138 confirmed economy class passengers who could very well be
publication thereof or by a copy attested by the officer having the
accommodated in the smaller planes, thereby sacrificing the
legal custody of the record, or by his deputy, and accompanied
comfort of its first class passengers for the sake of economy,
with a certificate that such officer has custody. The certificate may
amounts to bad faith. Such inattention and lack of care for the
be made by a secretary of an embassy or legation, consul general,
interest of its passengers who are entitled to its utmost
consul, vice-consul, or consular agent or by any officer in the
consideration entitles the passenger to an award of moral
foreign service of the Philippines stationed in the foreign country in
damages. 13
which the record is kept, and authenticated by the seal of his

Transpoeh 9
Even on the assumption that overbooking is allowed, respondent petitioners. In accordance with Article 2201, New Civil Code,
TWA is still guilty of bad faith in not informing its passengers respondent TWA should, therefore, be responsible for all damages
beforehand that it could breach the contract of carriage even if which may be reasonably attributed to the non-performance of its
they have confirmed tickets if there was overbooking. Respondent obligation. In the previously cited case of Alitalia Airways v. Court
TWA should have incorporated stipulations on overbooking on the of Appeals, 15 this Court explicitly held that a passenger is entitled
tickets issued or to properly inform its passengers about these to be reimbursed for the cost of the tickets he had to buy for a flight
policies so that the latter would be prepared for such eventuality or to another airline. Thus, instead of simply being refunded for the
would have the choice to ride with another airline. cost of the unused TWA tickets, petitioners should be awarded the
actual cost of their flight from New York to Los Angeles. On this
Respondent TWA contends that Exhibit I, the detached flight score, we differ from the trial court's ruling which ordered not only
coupon upon which were written the name of the passenger and the reimbursement of the American Airlines tickets but also the
the points of origin and destination, contained such a notice. An refund of the unused TWA tickets. To require both prestations
examination of Exhibit I does not bear this out. At any rate, said would have enabled petitioners to fly from New York to Los
exhibit was not offered for the purpose of showing the existence of Angeles without any fare being paid.
a notice of overbooking but to show that Exhibit I was used for
flight 007 in first class of June 11, 1984 from New York to Los The award to petitioners of attorney's fees is also justified under
Angeles. Article 2208(2) of the Civil Code which allows recovery when the
defendant's act or omission has compelled plaintiff to litigate or to
Moreover, respondent TWA was also guilty of not informing its incur expenses to protect his interest. However, the award for
passengers of its alleged policy of giving less priority to discounted moral damages and exemplary damages by the trial court is
tickets. While the petitioners had checked in at the same time, and excessive in the light of the fact that only Suthira and Liana
held confirmed tickets, yet, only one of them was allowed to board Zalamea were actually "bumped off." An award of P50,000.00
the plane ten minutes before departure time because the full-fare moral damages and another P50,000.00 exemplary damages
ticket he was holding was given priority over discounted tickets. would suffice under the circumstances obtaining in the instant
The other two petitioners were left behind. case.

It is respondent TWA's position that the practice of overbooking WHEREFORE, the petition is hereby GRANTED and the decision
and the airline system of boarding priorities are reasonable of the respondent Court of Appeals is hereby MODIFIED to the
policies, which when implemented do not amount to bad faith. But extent of adjudging respondent TransWorld Airlines to pay
the issue raised in this case is not the reasonableness of said damages to petitioners in the following amounts, to wit:
policies but whether or not said policies were incorporated or
deemed written on petitioners' contracts of carriage. Respondent (1) US$918.00 or its peso equivalent at the time of payment
TWA failed to show that there are provisions to that effect. Neither representing the price of the tickets bought by Suthira and Liana
did it present any argument of substance to show that petitioners Zalamea from American Airlines, to enable them to fly to Los
were duly apprised of the overbooked condition of the flight or that Angeles from New York City;
there is a hierarchy of boarding priorities in booking passengers. It
is evident that petitioners had the right to rely upon the assurance (2) P50,000.00 as moral damages;
of respondent TWA, thru its agent in Manila, then in New York, that
their tickets represented confirmed seats without any qualification.
The failure of respondent TWA to so inform them when it could (3) P50,000.00 as exemplary damages;
easily have done so thereby enabling respondent to hold on to
them as passengers up to the last minute amounts to bad faith. (4) P50,000.00 as attorney's fees; and
Evidently, respondent TWA placed its self-interest over the rights
of petitioners under their contracts of carriage. Such conscious (5) Costs of suit.
disregard of petitioners' rights makes respondent TWA liable for
moral damages. To deter breach of contracts by respondent TWA
in similar fashion in the future, we adjudge respondent TWA liable SO ORDERED.
for exemplary damages, as well.

Petitioners also assail the respondent court's decision not to

require the refund of Liana Zalamea's ticket because the ticket was
used by her father. On this score, we uphold the respondent court.
Petitioners had not shown with certainty that the act of respondent
TWA in allowing Mr. Zalamea to use the ticket of her daughter was
due to inadvertence or deliberate act. Petitioners had also failed to
establish that they did not accede to said agreement. The logical
conclusion, therefore, is that both petitioners and respondent TWA
agreed, albeit impliedly, to the course of action taken.

The respondent court erred, however, in not ordering the refund of

the American Airlines tickets purchased and used by petitioners
Suthira and Liana. The evidence shows that petitioners Suthira
and Liana were constrained to take the American Airlines flight to
Los Angeles not because they "opted not to use their TWA tickets
on another TWA flight" but because respondent TWA could not
accommodate them either on the next TWA flight which was also
fully booked. 14 The purchase of the American Airlines tickets by
petitioners Suthira and Liana was the consequence of respondent
TWA's unjustifiable breach of its contracts of carriage with
Transpoeh 10
Republic of the Philippines Kenneth Sitton, defendants airport manager,
SUPREME COURT according to plaintiffs; Wayne Pendleton,
Manila defendant's airport customer service supervisor,
according to defendant — stopped them at the
EN BANC gate. This is what the report of Wayne Pendleton
the airport customer service supervisor, says:

...I made no comment to the passenger but

turned and led the group toward the ramp. Just
G.R. No. L-28589 February 29, 1972 as we reached the boarding gate, Mr. Zulueta
spoke to me for the first time saying, `You
RAFAEL ZULUETA, ET AL., plaintiffs-appellees, people almost made me miss your flight. You
vs. have a defective announcing system and I was
PAN AMERICAN WORLD AIRWAYS, INC., defendant-appellant. not paged."

Jose W. Diokno for plaintiffs-appellees. I was about to make some reply when I noticed
the captain of the flight standing on the ramp,
Ross, Salcedo, Del Rosario, Bito and Misa for defendant- midway between the gate and the aircraft, and
appellant. talking with the senior maintenance supervisor
and several other persons. The captain
motioned for me to join him which I
did, indicating to the Zulueta family that they
should wait for a moment at the gate.
-- Exh. 5 .
Appeal, taken by defendant Pan American World Airways, Inc.,
from a decision of the Court of First Instance of Rizal, sentencing (2) Thereafter, one of defendant's employees —
said defendant to pay herein plaintiffs — Rafael Zulueta, Telly Mr. Sitton, according to plaintiffs; Mr. Pendleton
Albert Zulueta and Carolinda Zulueta — "the sum of P5,502.85, as according to defendants — asked plaintiffs to
actual damages; plus the further sum of P1,000,000.00 as moral turn over their baggage claim checks. Plaintiffs
damages; the further sum of P400,000.00 as exemplary damages; did so, handing him four (4) claim checks.
and attorney's fees in the sum of P100,000.00" with the costs
against said defendant, hereinafter referred to as PANAM for the
sake of brevity. (3) However, only three (3) bags were located
and segregated from the rest of the passenger's
luggage. The items hand-carried by plaintiffs,
It is not disputed that, on October 23, 1964, the spouse Rafael except for plaintiff's overcoat, were also brought
Zulueta and Telly Albert Zulueta — hereinafter referred to as down. These hand-carried items, however, were
plaintiff and Mrs. Zulueta, respectively — as well as their daughter, not opened or inspected; later, plaintiffs Mrs.
Carolinda Zulueta — hereinafter referred to as Miss Zulueta — Zulueta and Miss Zulueta were permitted to
were passengers aboard a PANAM plane, on Flight No. 841-23, reboard the plane with their hand-carried
from Honolulu to Manila, the first leg of which was Wake Island. As luggage; and when the plane took off, about two
the plane landed on said Island, the passengers were advised that and a half hours later, it carried plaintiff's fourth
they could disembark for a stopover of about 30 minutes. Shortly bag, his overcoat and the hand-carried luggage.
before reaching that place, the flight was, according to the
plaintiffs, "very rough." Testifying for PANAM its purser, Miss
Schmitz, asserted, however, that it was "very calm"; but her notes, (4) Once three bags had been identified, and
Exhibit 7 — prepared upon the request of Captain Zentner, on while the search was going on for the fourth bag,
account of the incident involved in this case — state that there was Mr. Sitton, defendant's airport manager,
"unusually small amount of roughness," which His Honor, the Trial demanded that plaintiffs open the bags (actually,
Judge, considered properly as "an admission that there was they were closed, but not locked) and allow
roughness, only the degree thereof is in dispute." In any event, defendant's employees to inspect them. Plaintiff
plaintiff testified that, having found the need to relieve himself, he Rafael Zulueta refused and warned that
went to the men's comfort room at the terminal building, but found defendant could open the bags only by force and
it full of soldiers, in view of which he walked down the beach some at its peril of a law suit.
100 yards away.
(5) Mr. Sitton, defendant's manager, then told
Meanwhile, the flight was called and when the passengers had plaintiff that he would not be allowed to proceed
boarded the plane, plaintiff's absence was noticed. The take-off to Manila on board the plane and handed
was, accordingly, delayed and a search for him was conducted by Zulueta the following letters:
Mrs. Zulueta, Miss Zulueta and other persons. Minutes later,
plaintiff was seen walking back from the beach towards the
terminal. Heading towards the ramp of the plane, plaintiff
remarked, "You people almost made me miss your flight. You have
a defective announcing system and I was not paged." At this point,
the decision appealed from has the following to say:

(1) Plaintiffs were on their way to the plane in

order to board it, but defendant's employees —

Transpoeh 11
(9) On Octobere 27, 1964, plaintiff Zulueta finally
arrived at Manila,
r after spending two nights at
Wake, going back
1 to Honolulu, and from
Honolulu flying9thru Tokyo to Manila.
(10) On December 21, 1964, plaintiffs
demanded that defendant reimburse them in the
sum of P1,505,502.85 for damages but
defendants refused to do so; hence this action.
In its brief, PANAM maintains that I the trial court erred: (1) "in not
granting defendant additional hearing
s dates (not a postponement)
for the presentation of its other witnesses";
l (2) "in assuming it to be
true that the reason plaintiff Rafael
a Zulueta did not come aboard
when the passengers were reboarded n was that he had gone to the
beach to relieve himself"; (3) "in not
d holding that the real reason
why plaintiff Rafael Zulueta did not reboard the plane, when the
announcement to do so was made, was that he had a quarrel with
"Mr. Zulueta: his wife and after he was found at the beach and his intention to be
Passenger aboard flight 84123 left behind at Wake was temporarily thwarted he did everything
Honolulu/Manila . calculated to compel Pan American personnel to leave him
behind"; (4) "in accepting as true plaintiff Rafael Zulueta's claim of
Sir: what occurred when; he arrived at the terminal after he was found
at the beach"; (5) "in not holding that the captain was entitled to an
We are forced to off-load you explanation for Zulueta's failure to reboard and not having received
from flight 84123 due to the a reasonable explanation and because of Zulueta's irrational
fact that you have refused to behavior and refusal to have his bags examined, the captain had
open your checked baggage the right and duty to leave Zulueta behind"; (6) "in condemning the
for Inspection as requested. defendant to pay plaintiffs P5,502.85 as actual damages plus the
further sum of P1,000,000.00 as moral damages, and the further
sum of P400,000.00 as exemplary damages, and attorneys' fees in
During your stay on Wake the sum of P100,000.00"; and (7) "in not granting defendant's
Island, which will be for a counterclaim of attorney's fees and expenses of litigation." .
minimum of one week, you will
be charged $13.30 per day for
each member of your party. PANAM's first assignment of error refers to the denial of its motion,
dated October 20, 1966, that it "be granted other hearing dates
about two months from today so as to be able to present
K. Sitton defendant's other witnesses or their depositions."
Airport Manager, Wake Island
Pan American World Airways, Inc."
It appears that the complaint in this case was filed on September
30, 1965. It was amended on December 1, 1965, and again on
— Exh. D April 14, 1966. PANAM answered the second amended complaint
on May 6, 1966. After a pre-trial conference, held on May 28,
(6) All this happened in plain view and within 1966, the case was set for hearing on June 1, 2 and 3, 1966. By
earshot of the other passengers on the plane, subsequent agreement of the parties, the hearing was, on June 3,
many of whom were Filipinos who knew 1966, reset for August 1, 2 and 3, 1966. Plaintiffs rested their case
plaintiffs; on August 2, 1966, whereupon it was agreed that PANAM's
witnesses would be presented "at a later date," months later,
The departure of the plane was delayed for because they would "come from far-flung places like Wake Island,
about two hours San Francisco, Seattle and it will take time to arrange for their
coming here." Accordingly the case was reset for October 17, 18
and 19, 1966, at 8:30 a.m. On motion of the plaintiffs, the trial
(7) Though originally all three plaintiffs had been scheduled for October 17 was cancelled, without any objection on
off loaded, plaintiff requested that his wife and the part of PANAM but, to offset said action, additional hearings
daughter be permitted to continue with the flight. were set for October 18 and 19, in the afternoon, apart from those
This was allowed but they were required to leave originally set in the morning of these dates. Before the
the three bags behind. Nevertheless, the plane presentation of PANAM's evidence, in the morning of October 18,
did fly with the Plaintiff's fourth bag; it was found 1966, plaintiffs' counsel asked for the names of the former's
among all other passengers' luggage flown to witnesses, so that those not on the witness stand could be
Manila upon the plane's arrival here. excluded from the courtroom. PANAM's counsel announced that
his witnesses were Marshall Stanley Ho, Kenneth Sitton, Michael
(8) Upon arrival at Manila, Mrs. Zulueta Thomas, Wayne S. Pendleton, Capt. Robert Zentner and Miss
demanded of defendant's Manila office that it re- Carol Schmitz.
route plaintiff Rafael Zulueta to Manila at the
earliest possible time, by the fastest route, and The defense then proceeded to introduce the testimony of said
at its expense; defendant refused; so plaintiffs witnesses, and consumed therefor the morning and afternoon of
were forced to pay for his ticket and to send him October 18 and the morning of October 19. Upon the conclusion,
money as he was without funds. that morning, of the testimony of the last witness for the defense,
its counsel asked that it "be given an opportunity to present our
Transpoeh 12
other witnesses who are not present today, at the convenience of between the same and a motion for postponement owing to the
the Court." The motion was denied, but, said counsel sought a "absence of evidence."
reconsideration and the court gave PANAM a last chance to
present its "other witnesses" the next day, October 20. Instead of The second, third and fourth assignments of error are interrelated.
doing so, PANAM filed a written motion reiterating its prayer for They refer to the question whether the reason why plaintiff went to
"other hearing dates about two months from today so as to be able the beach was to relieve himself, as testified to by him, or to
to present defendant's other witnesses or their depositions." Upon remain in Wake Island because he had quarreled with his wife, as
denial of this motion, PANAM made an offer of the testimony it contended by PANAM's counsel.
expected from one Edgardo Gavino, an unnamed meteorologist,
either Sue Welby and/or Helga Schley, and John C. Craig, Ida V.
Pomeroy, Herman Jaffe, Gerry Cowles and Col. Nilo de Guia. The latter contention however, is utterly devoid of merit. To begin
with, plaintiff's testimony about what he did upon reaching the
beach is uncontradicted. Secondly, other portions of his testimony
His Honor, the Trial Judge, did not commit a reversible error in — such as, for instance, that the flight was somewhat rough,
denying said motion of October 20, 1966. PANAM knew, as early shortly before reaching Wake Island; that there were quite a
as August 2, 1966, that its turn to present evidence would take number of soldiers in the plane and, later, in the terminal building;
place, as agreed upon, about two (2) months and a half later, or on that he did not voluntarily remain in Wake Island, but was "off-
October 17, 18 and 19, 1966. PANAM has not offered any valid loaded" by PANAM's agent therein — are borne out by the very
excuse for its failure to bring to court the witnesses mentioned in evidence for the defense. Thirdly, PANAM's efforts to show that
said motion, despite the assurance given by its counsel, on August plaintiff had decided to remain in the Island because he had
2, 1966, that the defense would "spare no effort to bring them quarreled with Mrs. Zulueta — which is ridiculous — merely
here," or, if they could not be brought due to circumstances underscores the artificious nature of PANAM's contention.
beyond PANAM's control, to "submit their deposition." The records
do not show that any such effort to bring the aforementioned
witnesses had been exerted. The defense has not even tried to Fourthly, there is absolutely no direct evidence about said alleged
explain why the deposition of said witnesses was not taken. What quarrel. Nobody testified about it. Counsel for the defense has, in
is worse, the proffered explanation — that the six (6) persons who effect, merely concluded that there must have been such quarrel
testified for the defense1 were believed, by defense counsel, to be because, when the searching party located plaintiff, he —
enough for the three (3) days of October set for the reception of his according to Stanley Ho — was "shouting in a loud tone of voice"
evidence2 — indicates that no effort whatsoever had been made — not at his wife, but — "towards his wife and daughter," who
either to bring the "other witnesses"3 or to take and submit their headed said party and to which the words spoken were addressed,
depositions. according to plaintiff. Capt. Zentner said that plaintiff was "angry
with them" — Mrs. Zulueta and Miss Zulueta — who Michael
Thomas affirmed — were saying "I am sorry, I am sorry"; whereas,
Besides, the testimony allegedly expected of said other witnesses Wayne S. Pendleton declared that Gavino told him that this
for the defense — namely: (1) that there was, according to official "seems to stem from a domestic issue" between Mr. and Mrs.
records, no turbulence in the flight from San Francisco to Honolulu, Zulueta. Surely, this alleged surmise, not even by Pendleton but by
on which the testimony of Carol Schmitz had touched; (2) that Ida Gavino — who was not placed on the witness stand — cannot be
V. Pomeroy and John C. Craig would say that the passengers taken as competent evidence that plaintiff had quarreled with his
were advised not to go beyond the terminal and that the stopover wife, apart from the circumstance that such quarrel — if it took
would be for about 30 minutes only, on which duration of the place and there is absolutely no evidence or offer to prove that
stopover Miss Schmitz had, also testified, as she could have anything had transpired between husband and wife before
similarly testified on said advice, had it been given; (3) that either reaching Wake Island which may suggest a misunderstanding
Helga Schley or Sue Welby would narrate the sympathy with which between them — does not warrant jumping at the conclusion that
Mrs. Zulueta was allegedly treated during the flight from Wake plaintiff had decided to remain in the Island, for he would gain
Island to Manila, which is not particularly relevant or material in the nothing thereby.
case at bar; (4) that Herman Jaffe, Gerry Cowles and Nilo de Guia
were, also, expected to corroborate the testimony of Capt.
Zentner; and (5) that Edgardo Gavino was expected to corroborate Needless to say, if plaintiff's purpose in going to the beach was to
Michael Thomas regarding the remarks made by the plaintiff to hide from Mrs. and Miss Zulueta and PANAM's personnel, so that
Mrs. Zulueta and Miss Zulueta when they and other members of he may be left in the Island, he, surely, would not have walked
the searching party found him in the early morning of October 23, back from the beach to the terminal, before the plane had resumed
1964 -- were merely cumulative in nature its flight to Manila, thereby exposing his presence to the full view of
those who were looking for him.
Then, again, PANAM did not comply with section 4 of Rule 22 of
the Rules of Court, reading: Then, again, the words uttered by him as he saw the search party
and approached the plane — "You people almost made me miss
your flight. You have a defective announcing system and I was not
SEC. 4. Requisites of motion to postpone trial for paged" — and the "belligerent" manner — according to Captain
absence of evidence. — A motion to postpone a Zentner — in which he said it revealed his feeling of distress at the
trial on the ground of absence can be granted thought that the plane could have left without him.4
only upon affidavit showing the materiality of
evidence expected to be obtained, and that due
diligence has been used to procure it. But if the The second, third and fourth assignments of error are thus clearly
adverse party admits the facts to be given in untenable.
evidence, even if he objects or reserves the right
to object to their admissibility, the trial must not In connection with the fifth assignment of error, PANAM's witness,
be postponed." . Captain Zentner, testified that, while he was outside the plane,
waiting for the result of the search, a "man" approached him and
Although this provision refers to motions "to postpone trial," it expressed concern over the situation; that the "man" said he was
applies with equal force to motions like the one under with the State Department; that he, his wife and their children, who
consideration, there being no plausible reason to distinguish were on board the aircraft, would not want to continue the flight
Transpoeh 13
unless the missing person was found; that the "man" expressed do with his being belligerent and unfriendly in his
fear of a "bomb," a word he used reluctantly, because he knew it is attitude towards me and the rest of the members
violative of a Federal law when said at the wrong time; that when of the crew." The written report of Capt. Zentner
plaintiff came, Zentner asked him: "why did you not want to get on made in transit from Wake to Manila "intimated
the airplane?"; that plaintiff then became "very angry" and spoke to he might possibly continue;" but "due to drinking,
him "in a way I have not been spoken to in my whole adult life"; belligerent attitude, he was off-loaded along with
that the witness explained: "I am Captain of the aircraft and it is my his locked bags." (Exh. 10). In a later report,
duty to see to the flight's safety"; that he (Zentner) then told Wayne Zentner admitted, "The decision to leave Mr.
Pendleton — PANAM's Customer Service Supervisor — to get Zulueta and his locked luggage in Wake was
plaintiff's "bags off the plane to verify ... about the bomb"; that mine and alone." (Exh. 9). Defendant's airport
PANAM's airport manager (K. Sitton) "got three bags of Mr. customer service supervisor, W.S. Pendleton,
Zulueta"; that his fourth bag could not be located despite a reported that:
thorough search; that believing that it must have been left behind,
in Honolulu, "we took off"; and that he (Zentner) would not have "After the search for Mr. Zulueta had continued
done so had he thought it was still aboard. almost 20 minutes and it was apparent that he
was not be found in the terminal building or
The lower court did not err in giving no credence to this testimony. immediate vicinity, I proceeded to the parking lot
and picked up my jeep continue the search in
Indeed, Captain Zentner did not explain why he seemingly more remote areas. Just as I was getting
assumed that the alleged apprehension of his informant was underway, a small group of persons approach
justified. He did not ask the latter whether he knew anything in from the direction of the beach and a voice
particular about plaintiff herein, although some members of the called out the passenger had been found.
crew would appear to have a notion that plaintiff is an impresario. Having parked the jeep again, I walked toward
Plaintiff himself intimated to them that he was well known to the the group and was met by PAA fleet-serviceman
U.S. State Department. Apparently, Captain Zentner did not even E. Gavino who was walking somewhere ahead
know the informant's name. Neither did the captain know whether of the others. Mr. Gavino remarked to me
the informant was really working for or in the State Department. In privately that the trouble seemed to have
other words, there was nothing — absolutely nothing — to justify stemmed from some domestic difference
the belief that the luggage of the missing person should be between the Passenger and his wife who was
searched, in order to ascertain whether there was a bomb in it; not at his side and returning with him to the gate.
that, otherwise, his presence in the aircraft would be inimical to its
safety; and that, consequently, he should be off-loaded. "On hearing Mr. Gavino's remark, I made no
comment to the passenger but turned and led
In fact, PANAM has not given the name of that "man" of the State the group toward the ramp. Just as we reached
Department. Neither has the defense tried to explain such the boarding gate, Mr. Zulueta spoke to me for
omission. Surely, PANAM's records would have disclosed the the first time saying, "You people almost made
identity of said "man," if he were not a mere figment of the me miss your flight. You have a defective
imagination. The list of passengers has been marked as Exh. A, announcing system and I was not paged."
and yet PANAM has not pointed out who among them is the
aforementioned "man". — Exh. 5

The trial court did not believe the testimony of Captain Zentner and Evidently, these could not have been the words
rejected the theory of the defense, for the following reasons: of a man who refused to board the plane.

(1) The defendant had contracted to transport (3) There was no legal or physical impossibility
plaintiff from Honolulu to Manila. It was its legal for defendant to transport plaintiff Zulueta from
obligation to do so, and it could be excused from Wake to Manila as it had contracted to do.
complying with the obligation only, if the Defendant claims that the safety of its craft and
passenger had refused to continue with the trip of the other passengers demanded that it
or it had become legally or physically impossible inspect Zulueta's luggage and when he refused
without the carrier's fault, to transport him. to allow inspection that it had no recourse but to
leave him behind. The truth that, knowing that of
(2) In this case, it is plain that Zulueta was plaintiff's four pieces of luggage, one could still
desirous of continuing with the trip. Although have been — as it was — aboard, defendant's
defendant's witnesses claim that Zulueta refused plane still flew on to Manila. Surely, if the
to board the plane, its own evidence belies this defendant's pilot and employees really believed
claim. The letter, Exh. "D", shows that it was that Zulueta had planted a bomb in one of the
defendant who off-loaded Zulueta; not Zulueta bags they would not have flown on until they had
who resisted from continuing the trip. In his made sure that the fourth bag had been left
testimony before the Court, Capt. Zentner, behind at Honolulu until enough time had lapsed
defendant's pilot, said that if a passenger for the bomb to have been exploded, since
voluntarily left the plane, the term used would be presumably it had to have been set to go off
`desistance' but the term "off-load" means that it before they reached Manila.
is the decision of the Captain not to allow the
passenger or luggage to continue the flight. "At any rate, it was quite evident that Zulueta
However, Capt. Zentner admitted on his had nothing to hide; for the report of defendant's
testimony that "his drunkenness... was of no witness, Mr. Stanley E. Ho, U.S. Marshall on
consequence in my report; (it) ... had nothing to Wake, has this to say: "

Transpoeh 14
"About twenty minutes later while an attempt three baggages and said,
was being made to locate another piece of Mr. open them up. I said, to begin
Zulueta's luggage his daughter, Carolinda with, there is one baggage
approached her father and wanted to get some missing and that missing bag
clothes from one of the suitcases. Mr. Zulueta is my bag. Then I said you
asked the undersigned if it was alright if he cannot make me open these
opened the suitcases and get the necessary baggages unless you are
clothes. To this I stated he was free to open his United States customs
luggage and obtain whatever he needed. Mr. authorities and when I arrive in
Zulueta opened a suitcase and took the dress the Philippines they can be
for her then boarded the aircraft." opened by the Philippine
Customs authorities. But an
— Exh. 2B . Airport Manager cannot make
me open my bags unless you
do exactly the same thing to
(4) What is evident to the Court is that defendant all the passengers. Open the
— acted in a manner deliberately calculated to bags of all the other
humiliate and shame plaintiffs. Although the passengers and I will open my
plane was held up to wait for plaintiff — for, as bag.
the Captain admitted in his testimony, he did so
because he knew that it would be a week before
another plane would come in for Manila (t.s.n., "Q. — What did he say: A. —
18 Oct. 1966, pp. 59-62) when plaintiff did come, He just kept on saying open
he was met and treated roughly by defendant's your bag, and I drew up my
manager Sitton. Here is what Zulueta testified to: hands and said, you want, you
open yourself or give me a
search warrant I shall open
"Q. — When you saw your this bag but give me a search
wife and daughter what warrant and then I asked, who
happened? A. — Then I is the Chief of Police, and he
started going towards the said, "I am Chief of Police,"
airplane. At the ramp, I do not then I said how can you be the
know what they call it, as soon Chief Police and Airport
as they arrived there, there Manager and then he started
was a man who subsequently to talk about double
identified himself as Kenneth compensation and by this time
Sitton. He identified himself as we were both quarreling and
the Airport Manager of Wake he was shouting and so with
Island. He did not ask me what me. Then there was a man
happened, was I sick, he who came around and said
looked at me and said, what in `open the bag' and I said,
the hell do you think you are? show the warrant of arrest and
Get on that plane. Then I said, do all the checking and the
what right have you to talk to discussion kept on going, and
me that way, I am a paying finally I said look, my fourth
passenger. Do not treat me bag is missing and he said, "I
this way. And this started the don't give damn." People at
altercation, and then he said, the time were surrounding us
do you know you held up the and staring at us and also the
plane? And I answered, this is passengers. My wife and
not my fault, I was sick. Did it daughter all along had been
not occur to you to ask me made to sit on a railing and
how I feel; then he said get on this man screaming and
that plane. looking at my wife and
daughter. Then he said, will
"Q. — What happened? A. — you pull these three monkeys
we started discussing kept out of here? then I said, will
saying, "You get on that plane" you send my wife and
and then I said, "I don't have daughter up the plane which
to get on that plane." After a he did. However, they have
prolonged discussion, he said, come down in their slippers
give me your baggage tags and when they were allowed
and I gave him four baggage to return to the plane none of
tickets or tags. I did not realize the defendant's personnel who
what he was up to until finally, had brought down the
I saw people coming down the overcoats, shoes and
airplane and police cars handcarried items of my wife
arrived and people were and daughter ever offered to
coming down the ramp. I gave bring back the items to the
him the four baggage tags and plane, until I demanded that
a few minutes late, he brought one of the defendants should

Transpoeh 15
help my wife and daughter (f) Defendant's manager himself took Zulueta
which he did. And then one and his off-loaded bags, in his own car, from the
man told me, because you terminal building to the hotel, which is also
refused to open your bag, "we inconsistent with a serious belief that the
shall hold you here in Wake luggages contained a bomb;
Island." then I asked, are we
under arrest? and the man (g) Defendant knew that while Zulueta's bags
answered, no. And further were on the ground, he had opened one of them
stated, your wife and daughter with the permission and in the presence of the
can continue their flight but U. S. Marshall in order to enable his daughter to
you will not go to this flight an get a dress from the bag; nothing suspicious
we will charge you $13.30 a was seen; still, defendant insisted on refusing to
day. Then I said, who are you allow Zulueta to continue unless he opened and
to tell all these things, and he allowed inspection of the bags by them; .
answered, I am the manager. I
said, put it in writing, then left
and in few minutes he came (h) Defendant completely changed his tone and
back and handed me this letter behavior towards the Zulueta's after the plane
(witness referring to Exhibit had arrived at Manila and the Captain learned
D)." . that its Manila manager, Mr. Oppenheimer, was
a friend of Zulueta;
— t.s.n., August 1, 1966, pp. 15-21
(i) Meantime, the attitude of Pan American
towards the Zulueta's caused other passengers
Anyone in Zulueta's position would have to resent Zulueta (See reports of Stewardesses
reached the same way if he had had a sense of and of Captain Zentner, Exhs. 7, 8, 9 and 10).
dignity. Evidently, angered by Zulueta's reaction, "Many passengers were angry towards the
irked by the delay he had caused them, `missing passenger," says Miss Schmitz's report.
defendant's employees decided to teach him a "A few inquisitive PA (passengers) — one
lesson by forcing him to open his bags when woman quite rudely stared once we were
there was no justifiable reason to do so: airborne and left Mr. Zulueta behind ... anyway I
told the woman to sit down — so did Helga — so
(a) Defendant did not make any attempt to did the man near her," say Miss Schmitz's
inquire from any passenger or even the crew personal notes. This confirms the testimony of
who knew Mr. Zulueta what his character and plain plaintiffs that, all the while the search and
reputation are, before demanding that he open discussions were going on, they were the
the bags; if it had done so, Miss Schmitz, the subject of stares, remarks and whisper
purser, and Col. Villamor would have vouched comments from the passengers and other
for plaintiffs; for Miss Schmitz believed she had persons around the plane.
flown before with the Zulueta's and they had
been very nice people. (j) Defendant did not allow plaintiff Zulueta to
board the plane at all, even though it was aware
(b) Worse, defendant's manager Sitton admits that some of his personal belongings, such as
that Zulueta had told him who he was and his his overcoat were on the plane. Plaintiffs so
social position in Manila; still he insisted that the testified; and though defendant's witness Mr.
bags be opened. Moreover, some passengers Sitton denied it, claiming that plaintiff was always
had informed the supervisor that Zulueta was free to board the plane, this denial is belied by
"the impresario"; but they persisted in their the report of defendant's own witness, U.S.
demands. Marshall Ho, who said that:

(c) Defendant never identified the alleged State "Ten minutes later, Mr. Zulueta asked if he could
Department men who reportedly approached the talk to his wife who was aboard the aircraft. I
Captain and expressed fear about a bomb, nor then accompanied him and as we got to the
did they confront him — if he existed with Mr. ramp, we met Mr. Sitton who stated he would
Zulueta despite Mr. Zulueta's request. summon Mrs. Zulueta from the aircraft. Mr.
Sitton summoned Mrs. Zulueta and she met her
(d) Defendant did not take any steps to put the husband at the foot of the ramp. Mr. Zulueta
luggage off-loaded far from its passengers and then asked his wife and himself to which I
plane, a strange procedure if it really believed replied I was not concerned what he had to say."
the luggage contained a bomb;
— Exh. 2-B
(e) Defendant continued with the flight knowing
one bag -- Zulueta's bag himself — had not been (k) Finally, to add further humiliation and heap
located and without verifying from Honolulu if the indignity on plaintiffs, when Mrs. Zulueta arrived
bag had been found there, nor even advising at Manila and appealed to defendant's Manila
Honolulu that a bag possibly containing a bomb manager, Mr. Oppenheimer, to see to it that her
had been left there, again an inexplicable husband got back as soon as possible and was
procedure if they sincerely believed that Zulueta made as comfortable as possible, at defendant's
had planted a bomb; expense, Mr. Oppenheimer refused to
Transpoeh 16
acknowledge any obligation to transport Mr. In case of fraud, bad faith, malice or wanton
Zulueta back to Manila and forcing Mrs. Zulueta attitude, the obligor shall be responsible for all
to send her husband $100.00 for pocket money damages which may be reasonably attributed to
and pay for his fare from Wake to Manila, thru the non-performance of the obligation.
Honolulu and Tokyo.
This responsibility applies to common carriers. Pursuant to Article
Upon a review of the record, We are satisfied that the foregoing 1759 of the same Code:
findings of His Honor, the Trial Judge, are supported by a
preponderance of the evidence. ART. 1759. Common carriers are liable for the
death or injuries to passengers through the
The last two (2) assignments of error are mere consequences of negligence or wilful acts of the former's
those already disposed of, and, hence, need no extended employees, although such employees may have
discussion. acted beyond the scope of their authority or in
violation of the orders of the common carriers.
It is urged, however, that plaintiff is, at most, entitled to actual
damages only, because he was the first to commit a breach of This liability of the common carriers does not
contract, for having gone over 200 yards away from the terminal, cease proof that they exercised all the diligence
where he could not expect to be paged. But, PANAM has not of a good father of a family in the selection and
pointed out what part of the contract has been violated thereby, supervision of their employees.
apart from the fact that the award for damages made in the
decision appealed from was due, not to PANAM's failure to so Referring now to the specific amounts to damages due to plaintiffs
page the plaintiff, but to the former's deliberate act of leaving him herein, We note that the sum of P5,502.85 awarded to them as
at Wake Island, and the embarrassment and humiliation caused to actual damages is not seriously disputed by PANAM.
him and his family in the presence of many other persons. Then,
also, considering the flat nature of the terrain in Wake Island, and
the absence of buildings and structures, other than the terminal As regards the moral and exemplary damages claimed by the
and a modest "hotel," as well as plaintiff's need of relieving himself, plaintiffs, our Civil Code provides:
he had to find a place beyond the view of the people and near
enough the sea to wash himself up before going back to the plane. ART. 21. Any person who wilfully causes loss or
injury to another in a manner that is contrary to
It is next argued that plaintiff was, also, guilty of contributory morals, good customs or public policy shall
negligence for failure to reboard the plane within the 30 minutes compensate the latter for the damage.
announced before the passengers debarked therefrom. This might
have justified a reduction of the damages, had plaintiff ART. 2217. Moral damages include physical
been unwittingly left by the plane, owing to the negligence of suffering, mental anguish, fright, serious anxiety,
PANAM personnel, or even, perhaps, wittingly, if he could not be besmirched reputation, wounded feelings, moral
found before the plane's departure. It does not, and cannot have shock, social humiliation, and similar injury.
such justification in the case at bar, plaintiff having shown up Though incapable of pecuniary computation,
before the plane had taken off, and he having been off- moral damages may be recovered if they are the
loaded intentionally and with malice aforethought, for his proximate result of defendant's wrongful act or
"belligerent" attitude, according to Captain Zentner; for having omission.
dared — despite his being one of "three monkeys," — the term
used by Captain Zentner to refer to the Zulueta family — to answer ART. 2229. Exemplary or corrective damages
him back — when he (Captain Zentner)5 said: "what in the hell do are imposed, by way of example or correction for
you think you are ?" — in a way he had "not been spoken to" in his the public good, in addition to the moral,
"whole adult life," in the presence of the passengers and other temperate liquidated or compensatory damages.
PANAM employees; for having responded to a command of either
Zentner or Sitton to open his (plaintiff's) bags, with a categorical
refusal and a challenge for Zentner or Sitton to open the bags ART. 2232. In contracts and quasi-contracts, the
without a search warrant therefor, thereby making manifest the court may award exemplary damages if the
lack of authority of the aforementioned representative of PANAM defendant acted in a wanton, fraudulent,
to issue said command and exposing him to ridicule before said reckless, oppressive, or malevolent manner.
passengers and employees. Besides, PANAM's own witness and
employee, Wayne Pendleton, testified the plane could not take off The records amply establish plaintiffs' right to recover both moral
at 4:30, as scheduled, because "we were still waiting for two (2) and exemplary damages. Indeed, the rude and rough reception
local passengers." plaintiff received at the hands of Sitton or Captain Zentner when
the latter met him at the ramp ("what in the hell do you think you
Article 2201 of our Civil Code reads: are? Get on that plane"); the menacing attitude of Zentner or Sitton
and the supercilious manner in which he had asked plaintiff to
open his bags ("open your bag," and when told that a fourth bag
In contracts and quasi-contracts, the damages was missing, "I don't give a damn"); the abusive language and
for which the obligor who acted in good faith is highly scornful reference to plaintiffs as monkeys by one of
liable shall be those that are the natural and PANAM's employees (who turning to Mrs. Zulueta and Miss
probable consequences of the breach of the Zulueta remarked, "will you pull these three monkeys out of
obligation, and which the parties have foreseen here?"); the unfriendly attitude, the ugly stares and unkind remarks
or could reasonably foreseen at the time the to which plaintiffs were subjected, and their being cordoned by
obligation was constituted. men in uniform as if they were criminals, while plaintiff was arguing
with Sitton; the airline officials' refusal to allow plaintiff to board the
plane on the pretext that he was hiding a bomb in his luggage and
Transpoeh 17
their arbitrary and high-handed decision to leave him in Wake; carrier's agents should have known about it and
Mrs. Zulueta's having suffered a nervous breakdown for which she prevented it. Some of the courts have mentioned
was hospitalized as a result of the embarrassment, insults and the implied duty of the carrier, arising out of the
humiliations to which plaintiffs were exposed by the conduct of contract of carriage, not to insult the passenger,
PANAM's employees; Miss Zulueta's having suffered shame, or permit him to be insulted, and even where no
humiliation and embarrassment for the treatment received by her mention is made of this basis for liability, it is
parents at the airport6 — all these justify an award for moral apparent that it is the ground upon which
damages resulting from mental anguish, serious anxiety, wounded recovery is allowed. 11
feelings, moral shock, and social humiliation thereby suffered by
plaintiffs. The question is whether the award of P1,000,000 as moral
damages was proper and justified by the circumstances. It has
The relation between carrier and passenger been held that the discretion in fixing moral damages lies in the
involves special and peculiar obligations and trial court. 12 Among the factors courts take into account in
duties, differing in kind and degree, from those assessing moral damages are the professional, social, political and
of almost every other legal or contractual financial standing of the offended parties on one hand, and the
relation. On account of the peculiar situation of business and financial position of the offender on the other. 13
the parties the law implies a promise and
imposes upon the carrier the corresponding duty In comparatively recent cases in this jurisdiction, also involving
of protection and courteous treatment. breach of contract of air carriage, this Court awarded the amount
Therefore, the carrier is under the absolute duty of P25,000, where plaintiff, a first-class passenger in an Air France
of protecting his passengers from assault or plane from Manila to Rome was, in Bangkok, forced by the
insult by himself or his servants. 7 manager of the airline company to leave his first class
accommodation after he was already seated because there was a
A contract to transport passengers is quite white man who, the manager alleged, had a "better right" to the
different in kind and degree from any other seat 14 ;the amount of P200,000, where plaintiffs, upon
contractual relation. And this, because of the confirmation of their reservation in defendant airline's flight from
relation which an air-carrier sustains with the Tokyo to San Francisco were issued first class tickets, but upon
public. Its business is mainly with the travelling arrival in Tokyo were informed that there was no accommodation
public. It invites people to avail of the comforts for them in the first class compartment and told they could not go
and advantages it offers. The contract of air unless they took the tourist class 15 — in both of which cases the
carriage, therefore, generates a relation tended Court found the airline companies to have acted in bad faith, or in
with a public duty. Neglect or malfeasance of the a wanton, reckless and oppressive manner, justifying likewise the
carrier's employees naturally could give ground award of exemplary damages.
for an action for damages.
None of the passengers involved in said cases was, however, off-
Passengers do not contract merely for loaded, much less in a place as barren and isolated as Wake
transportation. They have a right to be treated by Island, with the prospect of being stranded there for a week. The
the carrier's employees with kindness, respect, aforementioned passengers were merely constrained to take a
courtesy and due consideration. They are titled tourist or third class accommodation in lieu of the first class
to be protected against personal misconduct, passage they were entitled to. Then, also, in none of said cases
injurious language, indignities and abuses from had the agents of the carrier acted with the degree of malice or
such employees. So it is, that any rude or bad faith of those of PANAM in the case at bar, or caused to the
discourteous conduct on the part of employees offended passengers a mental suffering arising from injuries to
towards a passenger gives the latter an action feelings, fright and shock due to abusive, rude and insulting
for damages against the carrier. 8 language used by the carrier's employees in the presence and
within the hearing of others, comparable to that caused by
A carrier of passengers is as much bound to PANAM's employees to plaintiffs herein
protect them from humiliation and insult as from
physical injury .. It is held in nearly all To some extent, however, plaintiff had contributed to the gravity of
jurisdictions, if not universally, that a carrier is the situation because of the extreme belligerence with which he
liable to a passenger for humiliation and mental had reacted on the occasion. We do not over-look the fact that he
suffering caused by abusive or insulting justly believed he should uphold and defend his dignity and that of
language directed at such passenger by an the people of this country that the discomfort, the difficulties, and,
employee of the carrier. 9 perhaps, the ordeal through which he had gone to relieve himself
— which were unknown to PANAM's agents — were such as to
Where a conductor uses language to a put him in no mood to be understanding of the shortcoming of
passenger which is calculated to insult, others; and that said PANAM agents should have first inquired,
humiliate, or wound the feelings of a person of with an open mind, about the cause of his delay instead of
ordinary feelings and sensibilities, the carrier is assuming that he was at fault and of taking an arrogant and
liable, because the contract of carriage impliedly overbearing attitude, as if they were dealing with an inferior. Just
stipulates for decent, courteous, and respectful the same, there is every reason to believe that, in all probability,
treatment, at hands of the carrier's employees.10 things would not have turned out as bad as they became had he
not allowed himself, in a way, to be dragged to the level or plane
on which PANAM's personnel had placed themselves.
The general rule that a carrier owes to a
passenger highest degree of care has been held
to include the duty to protect the passenger from In view of this circumstance, We feel that the moral and exemplary
abusive language by the carrier's agents, or by damages collectible by the plaintiffs should be reduced to one-half
others if under such circumstances that the of the amounts awarded by the lower court, that is, to P500,000 for

Transpoeh 18
moral damages, and P200,000 for exemplary damages, aside from
the attorney's fees which should, likewise, be reduced to P75,000.

On April 22, 1971, Mrs. Zulueta filed a motion alleging that she
had, for more than two (2) years, been actually living separately
from her husband, plaintiff Rafael Zulueta, and that she had
decided to settle separately with PANAM and had reached a full
and complete settlement of all her differences with said defendant,
and praying accordingly, that this case be dismissed insofar as she
is concerned, Required to comment on said motion, PANAM
expressed no objection thereto.

Upon the other hand, plaintiff prayed that the motion be denied,
upon the ground that the case at bar is one for damages for
breach of a contract of carriage, owing to the off-loading of plaintiff
Rafael Zulueta, the husband and administrator of the conjugal
partnership, with the funds of which the PANAM had been paid
under said contract; that the action was filed by the plaintiffs as a
family and the lower court had awarded damages to them as such
family; that, although PANAM had questioned the award of
damages, it had not raised the question whether the lower court
should have specified what portion of the award should go to each
plaintiff; that although Mr. and Mrs. Zulueta had, for sometime,
been living separately, this has been without judicial approval; that
Mrs. Zulueta may not, therefore, bind the conjugal partnership or
settle this case separately; and that the sum given by PANAM to
Mrs. Zulueta is believed to be P50,000, which is less than 3-1/2%
of the award appealed from, thereby indicating the advisability of
denying her motion to dismiss, for her own protection.

Pursuant to a resolution, dated June 10, 1971, deferring action on

said motion to dismiss until the case is considered on the merits.
We now hold that the motion should be, as it is hereby denied.
Indeed, "(t)he wife cannot bind the conjugal partnership without the
husband's consent, except in cases provided by law," 16 and it has
not been shown that this is one of the cases so provided. Article
113 of our Civil Code, pursuant to which "(t)he husband must be
joined in all suits by or against the wife, except: ... (2) If they have
in fact been separated for at least one year ..." — relied upon by
PANAM — does not warrant the conclusion drawn therefrom by
the latter. Obviously the suit contemplated in subdivision (2) of said
Article 113 is one in which the wife is the real party — either
plaintiff or defendant — in interest, and, in which, without being so,
the hush must be joined as a party, by reason only of his relation
of affinity with her. Said provision cannot possibly apply to a case,
like the one at bar, in which the husband is the main party in
interest, both as the person principally grieved and as
administrator of the conjugal partnership. Moreover, he having
acted in this capacity in entering into the contract of carriage with
PANAM and paid the amount due to the latter, under the contract,
with funds of conjugal partnership, the damages recoverable for
breach of such contract belongs to said partnership.

Modified, as above stated, in the sense that plaintiffs shall recover

from defendant, Pan American World Airways, Inc., the sums of
P500,000 as moral damages, P200,000 as exemplary damages,
and P75,000 as attorney's fees, apart from P5,502.85 as actual
damages, and without prejudice to deducting the aforementioned
sum of P50,000 already paid Mrs. Zulueta, the decision appealed
from is hereby affirmed in all other respects, with the costs against
said defendant.

Transpoeh 19
Republic of the Philippines Suit for damages was thereafter filed by Senator Lopez and party
SUPREME COURT against PAN-AM on June 2, 1960 in the Court of First Instance of
Manila Rizal. Alleging breach of contracts in bad faith by defendant,
plaintiffs asked for P500,000 actual and moral damages, P100,000
EN BANC exemplary damages, P25,000 attorney's fees plus costs. PAN-AM
filed its answer on June 22, 1960, asserting that its failure to
provide first class accommodations to plaintiffs was due to honest
G.R. No. L-22415 March 30, 1966 error of its employees. It also interposed a counterclaim for
attorney's fees of P25,000.
FERNANDO LOPEZ, ET AL., plaintiffs-appellants,
vs. Subsequently, further pleadings were filed, thus: plaintiffs' answer
PAN AMERICAN WORLD AIRWAYS, defendant-appellant. to the counterclaim, on July 25, 1960; plaintiffs' reply attached to
motion for its admittance, on December 2, 1961; defendant's
Ross, Selph and Carrascoso for the defendant-appellant. supplemental answer, on March 8, 1962; plaintiffs' reply to
Vicente J. Francisco for the plaintiffs-appellants. supplemental answer, on March 10, 1962; and defendant's
amended supplemental answer, on July 10, 1962.
After trial — which took twenty-two (22) days ranging from
Plaintiffs and defendant appeal from a decision of the Court of First November 25, 1960 to January 5, 1963 — the Court of First
Instance of Rizal. Since the value in controversy exceeds Instance rendered its decision on November 13, 1963, the
P200,000 the appeals were taken directly to this Court upon all dispositive portion stating:
questions involved (Sec. 17, par. 3[5], Judiciary Act).
In view of the foregoing considerations, judgment is
Stated briefly the facts not in dispute are as follows: Reservations hereby rendered in favor of the plaintiffs and against the
for first class accommodations in Flight No. 2 of Pan American defendant, which is accordingly ordered to pay the
World Airways — hereinafter otherwise called PAN-AM — from plaintiffs the following: (a) P100,000.00 as moral
Tokyo to San Francisco on May 24, 1960 were made with damages; (b) P20,000.00 as exemplary damages; (c)
PAN-AM on March 29, 1960, by "Your Travel Guide" agency, P25,000.00 as attorney's fees, and the costs of this
specifically, by Delfin Faustino, for then Senator Fernando Lopez, action.
his wife Maria J. Lopez, his son-in-law Alfredo Montelibano, Jr.,
and his daughter, Mrs. Alfredo Montelibano, Jr., (Milagros Lopez So ordered.
Montelibano). PAN-AM's San Francisco head office confirmed the
reservations on March 31, 1960. Plaintiffs, however, on November 21, 1963, moved for
reconsideration of said judgment, asking that moral damages be
First class tickets for the abovementioned flight were subsequently increased to P400,000 and that six per cent (6%) interest per
issued by annum on the amount of the award be granted. And defendant
PAN-AM on May 21 and 23, 1960, in favor of Senator Lopez and opposed the same. Acting thereon the trial court issued an order
his party. The total fare of P9,444 for all of them was fully paid on December 14, 1963, reconsidering the dispositive part of its
before the tickets were issued. decision to read as follows:

As scheduled Senator Lopez and party left Manila by Northwest In view of the foregoing considerations, judgment is
Airlines on May 24, 1960, arriving in Tokyo at 5:30 P.M. of that hereby rendered in favor of the plaintiffs and against the
day. As soon as they arrived Senator Lopez requested Minister defendant, which is accordingly ordered to pay the
Busuego of the Philippine Embassy to contact PAN-AM's Tokyo plaintiffs the following: (a) P150,000.00 as moral
office regarding their first class accommodations for that evening's damages; (b) P25,000.00 as exemplary damages; with
flight. For the given reason that the first class seats therein were all legal interest on both from the date of the filing of the
booked up, however, PAN-AM's Tokyo office informed Minister complaint until paid; and (c) P25,000.00 as attorney's
Busuego that PAN-AM could not accommodate Senator Lopez fees; and the costs of this action.
and party in that trip as first class passengers. Senator Lopez
thereupon gave their first class tickets to Minister Busuego for him So ordered.
to show the same to PAN-AM's Tokyo office, but the latter firmly
reiterated that there was no accommodation for them in the first
class, stating that they could not go in that flight unless they took It is from said judgment, as thus reconsidered, that both parties
the tourist class therein. have appealed.

Due to pressing engagements awaiting Senator Lopez and his Defendant, as stated, has from the start admitted that it breached
wife, in the United States — he had to attend a business its contracts with plaintiffs to provide them with first class
conference in San Francisco the next day and she had to undergo accommodations in its Tokyo-San Francisco flight of May 24,
a medical check-up in Mayo Clinic, Rochester, Minnesota, on May 1960. In its appeal, however, it takes issue with the finding of the
28, 1960 and needed three days rest before that in San Francisco court a quo that it acted in bad faith in the branch of said contracts.
— Senator Lopez and party were constrained to take PAN-AM's Plaintiffs, on the other hand, raise questions on the amount of
flight from Tokyo to San Francisco as tourist passengers. Senator damages awarded in their favor, seeking that the same be
Lopez however made it clear, as indicated in his letter to PAN- increased to a total of P650,000.
AM's Tokyo office on that date (Exh. A), that they did so "under
protest" and without prejudice to further action against the Anent the issue of bad faith the records show the respective
airline.1äwphï1.ñët contentions of the parties as follows.

Transpoeh 20
According to plaintiffs, defendant acted in bad faith because it Subsequently, on April 27, 1960, Armando Davila, PAN-AM's
deliberately refused to comply with its contract to provide first class reservations employee working in the same Escolta office as
accommodations to plaintiffs, out of racial prejudice against Herranz, phoned PAN-AM's ticket sellers at its other office in the
Orientals. And in support of its contention that what was done to Manila Hotel, and confirmed the reservations of Senator Lopez
plaintiffs is an oftrepeated practice of defendant, evidence was and party.
adduced relating to two previous instances of alleged racial
discrimination by defendant against Filipinos in favor of "white" PAN-AM's reservations supervisor Alberto Jose, discovered
passengers. Said previous occasions are what allegedly happened Herranz's mistake after "Your Travel Guide" phone on May 18,
to (1) Benito Jalbuena and (2) Cenon S. Cervantes and his wife. 1960 to state that Senator Lopez and party were going to depart
as scheduled. Accordingly, Jose sent a telex wire on that date to
And from plaintiffs' evidence this is what allegedly happened; PAN-AM's head office at San Francisco to report the error and
Jalbuena bought a first class ticket from PAN-AM on April 13, asked said office to continue holding the reservations of Senator
1960; he confirmed it on April 15, 1960 as to the Tokyo-Hongkong Lopez and party (Annex B-Acker's to Exh. 6). Said message was
flight of April 20, 1960; PAN-AM similarly confirmed it on April 20, reiterated by Jose in his telex wire of May 19, 1960 (Annex C-
1960. At the airport he and another Oriental — Mr. Tung — were Acker's to Exh. 6). San Francisco head office replied on May 19,
asked to step aside while other passengers - including "white" 1960 that it regrets being unable to confirm Senator Lopez and
passengers — boarded PAN-AM's plane. Then PAN-AM officials party for the reason that the flight was solidly booked (Exh. 7).
told them that one of them had to stay behind. Since Mr. Tung was Jose sent a third telex wire on May 20, 1960 addressed to PAN-
going all the way to London, Jalbuena was chosen to be left AM's offices at San Francisco, New York (Idlewild Airport), Tokyo
behind. PAN-AM's officials could only explain by saying there was and Hongkong, asking all-out assistance towards restoring the
"some mistake". Jalbuena thereafter wrote PAN-AM to protest the cancelled spaces and for report of cancellations at their end
incident (Exh. B). (Annex D-Acker's to Exh. 6). San Francisco head office reiterated
on May 20, 1960 that it could not reinstate the spaces and referred
As to Cenon S. Cervantes it would appear that in Flight No. 6 of Jose to the Tokyo and Hongkong offices (Exh. 8). Also on May 20,
PAN-AM on September 29, 1958 from Bangkok to Hongkong, he the Tokyo office of PAN-AM wired Jose stating it will do everything
and his wife had to take tourist class, although they had first class possible (Exh. 9).
tickets, which they had previously confirmed, because their seats
in first class were given to "passengers from London." Expecting that some cancellations of bookings would be made
before the flight time, Jose decided to withhold from Senator Lopez
Against the foregoing, however, defendant's evidence would seek and party, or their agent, the information that their reservations had
to establish its theory of honest mistake, thus: been cancelled.

The first class reservations of Senator Lopez and party were made Armando Davila having previously confirmed Senator Lopez and
on March 29, 1960 together with those of four members of the party's first class reservations to PAN-AM's ticket sellers at its
Rufino family, for a total of eight (8) seats, as shown in their joint Manila Hotel office, the latter sold and issued in their favor the
reservation card (Exh. 1). Subsequently on March 30, 1960, two corresponding first class tickets on the 21st and 23rd of May,
other Rufinos secured reservations and were given a separate 1960.
reservation card (Exh. 2). A new reservation card consisting of two
pages (Exhs. 3 and 4) was then made for the original of eight From the foregoing evidence of defendant it is in effect admitted
passengers, namely, Senator Lopez and party and four members that defendant — through its agents — first cancelled plaintiffs,
of the Rufino family, the first page (Exh. 3) referring to 2 Lopezes, reservations by mistake and thereafter deliberately and
2 Montelibanos and 1 Rufino and the second page (Exh. 4) intentionally withheld from plaintiffs or their travel agent the fact of
referring to 3 Rufinos. On April 18, 1960 "Your Travel Guide" said cancellation, letting them go on believing that their first class
agency cancelled the reservations of the Rufinos. A telex message reservations stood valid and confirmed. In so misleading plaintiffs
was thereupon sent on that date to PAN-AM's head office at San into purchasing first class tickets in the conviction that they had
Francisco by Mariano Herranz, PAN-AM's reservations employee confirmed reservations for the same, when in fact they had none,
at its office in Escolta, Manila. (Annex A-Acker's to Exh. 6.) In said defendant wilfully and knowingly placed itself into the position of
message, however, Herranz mistakenly cancelled all the seats that having to breach its a foresaid contracts with plaintiffs should there
had been reserved, that is, including those of Senator Lopez and be no last-minute cancellation by other passengers before flight
party. time, as it turned out in this case. Such actuation of defendant may
indeed have been prompted by nothing more than the promotion of
The next day — April 1960 — Herranz discovered his mistake, its self-interest in holding on to Senator Lopez and party as
upon seeing the reservation card newly prepared by his co- passengers in its flight and foreclosing on their chances to seek
employee Pedro Asensi for Sen. Lopez and party to the exclusion the services of other airlines that may have been able to afford
of the Rufinos (Exh. 5). It was then that Herranz sent another telex them first class accommodations. All the time, in legal
wire to the San Francisco head office, stating his error and asking contemplation such conduct already amounts to action in bad faith.
for the reinstatement of the four (4) first class seats reserved for For bad faith means a breach of a known duty through some
Senator Lopez and party (Annex A-Velasco's to Exh. 6). San motive of interest or ill-will (Spiegel vs. Beacon Participations, 8
Francisco head office replied on April 22, 1960 that Senator Lopez NE 2d 895, 907). As stated in Kamm v. Flink, 113 N.J.L. 582, 175
and party are waitlisted and that said office is unable to reinstate A. 62, 99 A.L.R. 1, 7: "Self-enrichment or fraternal interest, and not
them (Annex B-Velasco's to Exh. 6). personal ill-will, may well have been the motive; but it is malice
Since the flight involved was still more than a month away and
confident that reinstatement would be made, Herranz forgot the As of May 18, 1960 defendant's reservations supervisor, Alberto
matter and told no one about it except his co-employee, either Jose knew that plaintiffs' reservations had been cancelled. As of
Armando Davila or Pedro Asensi or both of them (Tsn., 123-124, May 20 he knew that the San Francisco head office stated with
127, Nov. 17, 1961). finality that it could not reinstate plaintiffs' cancelled reservations.
And yet said reservations supervisor made the "decision" — to use

Transpoeh 21
his own, word — to withhold the information from the plaintiffs. Lopez and party (Tsn., pp. 108-109, Nov. 17, 1961). Secondly,
Said Alberto Jose in his testimony: after sending a wire to San Francisco head office on April 19, 1960
stating his error and asking for reinstatement, Herranz simply
Q Why did you not notify them? forgot about the matter. Notwithstanding the reply of San
Francisco head Office on April 22, 1960 that it cannot reinstate
Senator Lopez and party (Annex B-Velasco's to Exh. 6), it was
A Well, you see, sir, in my fifteen (15) years of service assumed and taken for granted that reinstatement would be made.
with the air lines business my experience is that even if Thirdly, Armando Davila confirmed plaintiff's reservations in a
the flights are solidly booked months in advance, usually phone call on April 27, 1960 to defendant's ticket sellers, when at
the flight departs with plenty of empty seats both on the the time it appeared in plaintiffs' reservation card (Exh. 5) that they
first class and tourist class. This is due to late cancellation were only waitlisted passengers. Fourthly, defendant's ticket
of passengers, or because passengers do not show up in sellers issued plaintiffs' tickets on May 21 and 23, 1960, without
the airport, and it was our hope others come in from first checking their reservations just before issuing said tickets.
another flight and, therefore, are delayed and, therefore, And, finally, no one among defendant's agents notified Senator
missed their connections. This experience of mine, Lopez and party that their reservations had been cancelled, a
coupled with that wire from Tokyo that they would do precaution that could have averted their entering with defendant
everything possible prompted me to withhold the into contracts that the latter had already placed beyond its power
information, but unfortunately, instead of the first class to perform.
seat that I was hoping for and which I anticipated only the
tourists class was open on which Senator and Mrs.
Lopez, Mr. and Mrs. Montelibano were accommodated. Accordingly, there being a clear admission in defendant's evidence
Well, I fully realize now the gravity of my decision in not of facts amounting to a bad faith on its part in regard to the breach
advising Senator and Mrs. Lopez, Mr. and Mrs. of its contracts with plaintiffs, it becomes unnecessary to further
Montelibano nor their agents about the erroneous discuss the evidence adduced by plaintiffs to establish defendant's
cancellation and for which I would like them to know that I bad faith. For what is admitted in the course of the trial does not
am very sorry. need to be proved (Sec. 2, Rule 129, Rules of Court).

xxx xxx xxx Addressing ourselves now to the question of damages, it is well to
state at the outset those rules and principles. First, moral damages
are recoverable in breach of contracts where the defendant acted
Q So it was not your duty to notify Sen. Lopez and parties fraudulently or in bad faith (Art. 2220, New Civil Code). Second, in
that their reservations had been cancelled since May 18, addition to moral damages, exemplary or corrective damages may
1960? be imposed by way of example or correction for the public good, in
breach of contract where the defendant acted in a wanton,
A As I said before it was my duty. It was my duty but as I fraudulent, reckless, oppressive or malevolent manner (Articles
said again with respect to that duty I have the power to 2229, 2232, New Civil Code). And, third, a written contract for an
make a decision or use my discretion and judgment attorney's services shall control the amount to be paid therefor
whether I should go ahead and tell the passenger about unless found by the court to be unconscionable or unreasonable
the cancellation. (Tsn., pp. 17-19, 28-29, March 15, (Sec. 24, Rule 138, Rules of Court).
First, then, as to moral damages. As a proximate result of
At the time plaintiffs bought their tickets, defendant, therefore, in defendant's breach in bad faith of its contracts with plaintiffs, the
breach of its known duty, made plaintiffs believe that their latter suffered social humiliation, wounded feelings, serious anxiety
reservation had not been cancelled. An additional indication of this and mental anguish. For plaintiffs were travelling with first class
is the fact that upon the face of the two tickets of record, namely, tickets issued by defendant and yet they were given only the
the ticket issued to Alfredo Montelibano, Jr. on May 21, 1960 (Exh. tourist class. At stop-overs, they were expected to be among the
22) and that issued to Mrs. Alfredo Montelibano, Jr., on May 23, first-class passengers by those awaiting to welcome them, only to
1960 (Exh. 23), the reservation status is stated as "OK". Such be found among the tourist passengers. It may not be humiliating
willful-non-disclosure of the cancellation or pretense that the to travel as tourist passengers; it is humiliating to be compelled to
reservations for plaintiffs stood — and not simply the erroneous travel as such, contrary to what is rightfully to be expected from the
cancellation itself — is the factor to which is attributable the breach contractual undertaking.
of the resulting contracts. And, as above-stated, in this respect
defendant clearly acted in bad faith. Senator Lopez was then Senate President Pro Tempore.
International carriers like defendant know the prestige of such an
As if to further emphasize its bad faith on the matter, defendant office. For the Senate is not only the Upper Chamber of the
subsequently promoted the employee who cancelled plaintiffs' Philippine Congress, but the nation's treaty-ratifying body. It may
reservations and told them nothing about it. The record shows that also be mentioned that in his aforesaid office Senator Lopez was
said employee — Mariano Herranz — was not subjected to in a position to preside in impeachment cases should the Senate
investigation and suspension by defendant but instead was given a sit as Impeachment Tribunal. And he was former Vice-President of
reward in the form of an increase of salary in June of the following the Philippines. Senator Lopez was going to the United States to
year (Tsn., 86-88, Nov. 20, 1961). attend a private business conference of the Binalbagan-Isabela
Sugar Company; but his aforesaid rank and position were by no
At any rate, granting all the mistakes advanced by the defendant, means left behind, and in fact he had a second engagement
there would at least be negligence so gross and reckless as to awaiting him in the United States: a banquet tendered by Filipino
amount to malice or bad faith (Fores vs. Miranda, L-12163, March friends in his honor as Senate President Pro Tempore (Tsn., pp.
4, 1959; Necesito v. Paras, L-10605-06, June 30, 1958). Firstly, 14-15, Nov. 25, 1960). For the moral damages sustained by him,
notwithstanding the entries in the reservation cards (Exhs. 1 & 3) therefore, an award of P100,000.00 is appropriate.
that the reservations cancelled are those of the Rufinos only,
Herranz made the mistake, after reading said entries, of sending a Mrs. Maria J. Lopez, as wife of Senator Lopez, shared his prestige
wire cancelling all the reservations, including those of Senator and therefore his humiliation. In addition she suffered physical
Transpoeh 22
discomfort during the 13-hour trip,(5 hours from Tokyo to Honolulu In view of its nature, it should be imposed in such an amount as to
and 8 hours from Honolulu to San Francisco). Although Senator sufficiently and effectively deter similar breach of contracts in the
Lopez stated that "she was quite well" (Tsn., p. 22, Nov. 25, 1960) future by defendant or other airlines. In this light, we find it just to
— he obviously meant relatively well, since the rest of his award P75,000.00 as exemplary or corrective damages.
statement is that two months before, she was attackedby severe
flu and lost 10 pounds of weight and that she was advised by Dr. Now, as to attorney's fees, the record shows a written contract of
Sison to go to the United States as soon as possible for medical services executed on June 1, 1960 (Exh. F) whereunder plaintiffs-
check-up and relaxation, (Ibid). In fact, Senator Lopez stated, as appellants engaged the services of their counsel — Atty. Vicente J.
shown a few pages after in the transcript of his testimony, that Mrs. Francisco — and agreedto pay the sum of P25,000.00 as
Lopez was sick when she left the Philippines: attorney's fees upon the termination of the case in the Court of
First Instance, and an additional sum of P25,000.00 in the event
A. Well, my wife really felt very bad during the entire trip the case is appealed to the Supreme Court. As said earlier, a
from Tokyo to San Francisco. In the first place, she was written contract for attorney's services shall control the amount to
sick when we left the Philippines, and then with that be paid therefor unless found by the court to be unconscionable or
discomfort which she [experienced] or suffered during unreasonable. A consideration of the subject matter of the present
that evening, it was her worst experience. I myself, who controversy, of the professional standing of the attorney for
was not sick, could not sleep because of the discomfort. plaintiffs-appellants, and of the extent of the service rendered by
(Tsn., pp. 27-28, Nov. 25, 1960). him, shows that said amount provided for in the written agreement
is reasonable. Said lawyer — whose prominence in the legal
It is not hard to see that in her condition then a physical discomfort profession is well known — studied the case, prepared and filed
sustained for thirteen hours may well be considered a physical the complaint, conferred with witnesses, analyzed documentary
suffering. And even without regard to the noise and trepidation evidence, personally appeared at the trial of the case in twenty-two
inside the plane — which defendant contends, upon the strengh of days, during a period of three years, prepared four sets of cross-
expert testimony, to be practically the same in first class and interrogatories for deposition taking, prepared several memoranda
tourist class — the fact that the seating spaces in the tourist class and the motion for reconsideration, filed a joint record on appeal
are quite narrower than in first class, there beingsix seats to a row with defendant, filed a brief for plaintiffs as appellants consisting of
in the former as against four to a row in the latter, and that in 45 printed pages and a brief for plaintiffs as appellees consisting of
tourist class there is very little space for reclining in view of the 265 printed pages. And we are further convinced of its
closer distance between rows (Tsn., p. 24, Nov. 25, 1960), will reasonableness because defendant's counsel likewise valued at
suffice to show that the aforesaid passenger indeed experienced P50,000.00 the proper compensation for his services rendered to
physical suffering during the trip. Added to this, of course, was the defendant in the trial court and on appeal.
painfull thought that she was deprived by defendant — after having
paid for and expected the same — of the most suitable, place for In concluding, let it be stressed that the amount of damages
her, the first class, where evidently the best of everything would awarded in this appeal has been determined by adequately
have been given her, the best seat, service, food and treatment. considering the official, political, social, and financial standing of
Such difference in comfort between first class and tourist class is the offended parties on one hand, and the business and financial
too obvious to be recounted, is in fact the reason for the former's position of the offender on the other (Domingding v. Ng, 55 O.G.
existence, and is recognized by the airline in charging a higher fare 10). And further considering the present rate of exchange and the
for it and by the passengers in paying said higher rate Accordingly, terms at which the amount of damages awarded would
considering the totality of her suffering and humiliation, an award approximately be in U.S. dollars, this Court is all the more of the
to Mrs. Maria J. Lopez of P50,000.00 for moral damages will be view that said award is proper and reasonable.
Wherefore, the judgment appealed from is hereby modified so as
Mr. and Mrs. Alfredo Montelibano, Jr., were travelling as to award in favor of plaintiffs and against defendant, the following:
immediate members of the family of Senator Lopez. They formed (1) P200,000.00 as moral damages, divided among plaintiffs, thus:
part of the Senator's party as shown also by the reservation cards P100,000.00 for Senate President Pro Tempore Fernando Lopez;
of PAN-AM. As such they likewise shared his prestige and P50,000.00 for his wife Maria J. Lopez; P25,000.00 for his son-in-
humiliation. Although defendant contends that a few weeks before law Alfredo Montelibano, Jr.; and P25,000.00 for his daughter Mrs.
the flight they had asked their reservations to be charged from first Alfredo Montelibano, Jr.; (2) P75,000.00 as exemplary or
class to tourist class — which did not materialize due to alleged full corrective damages; (3) interest at the legal rate of 6% per annum
booking in the tourist class — the same does not mean they on the moral and exemplary damages aforestated, from December
suffered no shared in having to take tourist class during the flight. 14, 1963, the date of the amended decision of the court a quo,
For by that time they had already been made to pay for first class until said damages are fully paid; (4) P50,000.00 as attorney's
seats and therefore to expect first class accommodations. As fees; and (5) the costs. Counterclaim dismissed.So ordered.
stated, it is one thing to take the tourist class by free choice; a far
different thing to be compelled to take it notwithstanding having
paid for first class seats. Plaintiffs-appellants now ask P37,500.00
each for the two but we note that in their motion for reconsideration
filed in the court a quo, they were satisfied with P25,000.00 each
for said persons. (Record on Appeal, p. 102). For their social
humiliation, therefore, the award to them of P25,000.00 each is

The rationale behind exemplary or corrective damages is, as the

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

Transpoeh 23
FIRST DIVISION 1. Actual Damages -------------------- P 122,000.00
2. Death Indemnity --------------------- 50,000.00
3. Exemplary and Moral Damages----- 400,000.00
4. Compensatory Damages ---------- 1,500,000.00
5. Attorneys Fees ------------ 10% of the total amount granted
[G.R. No. 159636. November 25, 2004]
6. Cost of the Suit.

APRIL ROSSAN P. GAMMAD, ROI ROZANO P. On appeal by petitioner, the Court of Appeals affirmed the
GAMMAD and DIANA FRANCES P. decision of the trial court with modification as follows:
GAMMAD, respondents.
[T]he Decision dated 06 November 1998 is hereby MODIFIED to reflect
DECISION that the following are hereby adjudged in favor of plaintiffs-appellees:

YNARES-SANTIAGO, J.: 1. Actual Damages in the amount of P88,270.00;

Assailed in this petition for review on certiorari is the April 11, 2. Compensatory Damages in the amount of P1,135,536,10;
2003 decision[1] of the Court of Appeals in CA-G.R. CV No. 63290
which affirmed with modification the November 6, 1998 decision [2] of
the Regional Trial Court of Tuguegarao, Cagayan, Branch 5 finding 3. Moral and Exemplary Damages in the amount of P400,000.00; and
petitioner Victory Liner, Inc. liable for breach of contract of carriage
in Civil Case No. 5023. 4. Attorneys fees equivalent to 10% of the sum of the actual,
compensatory, moral, and exemplary damages herein
The facts as testified by respondent Rosalito Gammad show adjudged.
that on March 14, 1996, his wife Marie Grace Pagulayan-
Gammad,[3] was on board an air-conditioned Victory Liner bus
bound for Tuguegarao, Cagayan from Manila. At about 3:00 a.m., The court a quos judgment of the cost of the suit against defendant-
the bus while running at a high speed fell on a ravine somewhere in appellant is hereby AFFIRMED.
Barangay Baliling, Sta. Fe, Nueva Vizcaya, which resulted in the
death of Marie Grace and physical injuries to other passengers.[4] SO ORDERED.[20]
On May 14, 1996, respondent heirs of the deceased filed a
complaint[5] for damages arising from culpa contractual against Represented by a new counsel, petitioner on May 21, 2003
petitioner. In its answer,[6] the petitioner claimed that the incident filed a motion for reconsideration praying that the case be remanded
was purely accidental and that it has always exercised extraordinary to the trial court for cross- examination of respondents witness and
diligence in its 50 years of operation. for the presentation of its evidence; or in the alternative, dismiss the
respondents complaint.[21] Invoking APEX Mining, Inc. v. Court of
After several re-settings,[7] pre-trial was set on April 10, Appeals,[22] petitioner argues, inter alia, that the decision of the trial
1997.[8] For failure to appear on the said date, petitioner was court should be set aside because the negligence of its former
declared as in default.[9] However, on petitioners motion[10] to lift the counsel, Atty. Antonio B. Paguirigan, in failing to appear at the
order of default, the same was granted by the trial court.[11] scheduled hearings and move for reconsideration of the orders
declaring petitioner to have waived the right to cross-examine
At the pre-trial on May 6, 1997, petitioner did not want to admit respondents witness and right to present evidence, deprived
the proposed stipulation that the deceased was a passenger of the petitioner of its day in court.
Victory Liner Bus which fell on the ravine and that she was issued
Passenger Ticket No. 977785. Respondents, for their part, did not On August 21, 2003, the Court of Appeals denied petitioners
accept petitioners proposal to pay P50,000.00.[12] motion for reconsideration.[23]
After respondent Rosalito Gammad completed his direct Hence, this petition for review principally based on the fact that
testimony, cross-examination was scheduled for November 17, the mistake or gross negligence of its counsel deprived petitioner of
1997[13] but moved to December 8, 1997,[14] because the parties due process of law. Petitioner also argues that the trial courts award
and the counsel failed to appear. On December 8, 1997, counsel of of damages were without basis and should be deleted.
petitioner was absent despite due notice and was deemed to have
waived right to cross-examine respondent Rosalito.[15] The issues for resolution are: (1) whether petitioners counsel
was guilty of gross negligence; (2) whether petitioner should be held
Petitioners motion to reset the presentation of its evidence to liable for breach of contract of carriage; and (3) whether the award
March 25, 1998[16] was granted. However, on March 24, 1998, the of damages was proper.
counsel of petitioner sent the court a telegram [17] requesting
postponement but the telegram was received by the trial court on It is settled that the negligence of counsel binds the client. This
March 25, 1998, after it had issued an order considering the case is based on the rule that any act performed by a counsel within the
submitted for decision for failure of petitioner and counsel to scope of his general or implied authority is regarded as an act of his
appear.[18] client. Consequently, the mistake or negligence of counsel may
result in the rendition of an unfavorable judgment against the client.
On November 6, 1998, the trial court rendered its decision in However, the application of the general rule to a given case should
favor of respondents, the dispositive portion of which reads: be looked into and adopted according to the surrounding
circumstances obtaining. Thus, exceptions to the foregoing have
WHEREFORE, premises considered and in the interest of justice, been recognized by the court in cases where reckless or gross
judgment is hereby rendered in favor of the plaintiffs and against the negligence of counsel deprives the client of due process of law, or
defendant Victory Liner, Incorporated, ordering the latter to pay the when its application will result in outright deprivation of the clients
following: liberty or property or where the interests of justice so require, and

Transpoeh 24
accord relief to the client who suffered by reason of the lawyers To cater to petitioners arguments and reinstate its petition for relief from
gross or palpable mistake or negligence.[24] judgment would put a premium on the negligence of its former counsel
and encourage the non-termination of this case by reason thereof. This is
The exceptions, however, are not present in this case. The one case where petitioner has to bear the adverse consequences of its
record shows that Atty. Paguirigan filed an Answer and Pre-trial counsels act, for a client is bound by the action of his counsel in the
Brief for petitioner. Although initially declared as in default, Atty. conduct of a case and he cannot thereafter be heard to complain that the
Paguirigan successfully moved for the setting aside of the order of result might have been different had his counsel proceeded differently.
default. In fact, petitioner was represented by Atty. Paguirigan at the The rationale for the rule is easily discernible. If the negligence of
pre-trial who proposed settlement for P50,000.00. Although Atty. counsel be admitted as a reason for opening cases, there would never be
Paguirigan failed to file motions for reconsideration of the orders an end to a suit so long as a new counsel could be hired every time it is
declaring petitioner to have waived the right to cross-examine shown that the prior counsel had not been sufficiently diligent,
respondents witness and to present evidence, he nevertheless, filed experienced or learned.[31]
a timely appeal with the Court of Appeals assailing the decision of
the trial court. Hence, petitioners claim that it was denied due
process lacks basis. Similarly, in Macalalag v. Ombudsman,[32] a Philippine Postal
Corporation employee charged with dishonesty was not able to file
Petitioner too is not entirely blameless. Prior to the issuance of an answer and position paper. He was found guilty solely on the
the order declaring it as in default for not appearing at the pre-trial, basis of complainants evidence and was dismissed with forfeiture of
three notices (dated October 23, 1996,[25] January 30, 1997,[26] and all benefits and disqualification from government service.
March 26, 1997,[27]) requiring attendance at the pre-trial were sent Challenging the decision of the Ombudsman, the employee
and duly received by petitioner. However, it was only on April 27, contended that the gross negligence of his counsel deprived him of
1997, after the issuance of the April 10, 1997 order of default for due process of law. In debunking his contention, the Court said
failure to appear at the pre-trial when petitioner, through its finance
and administrative manager, executed a special power of Neither can he claim that he is not bound by his lawyers actions; it is only
attorney[28] authorizing Atty. Paguirigan or any member of his law in case of gross or palpable negligence of counsel when the courts can
firm to represent petitioner at the pre-trial. Petitioner is guilty, at the step in and accord relief to a client who would have suffered thereby. If
least, of contributory negligence and fault cannot be imputed solely every perceived mistake, failure of diligence, lack of experience or
on previous counsel. insufficient legal knowledge of the lawyer would be admitted as a reason
The case of APEX Mining, Inc., invoked by petitioner is not on for the reopening of a case, there would be no end to controversy.
all fours with the case at bar. In APEX, the negligent counsel not Fundamental to our judicial system is the principle that every litigation
only allowed the adverse decision against his client to become final must come to an end. It would be a clear mockery if it were otherwise.
and executory, but deliberately misrepresented in the progress Access to the courts is guaranteed, but there must be a limit to it.
report that the case was still pending with the Court of Appeals when
the same was dismissed 16 months ago. [29] These circumstances Viewed vis--vis the foregoing jurisprudence, to sustain
are absent in this case because Atty. Paguirigan timely filed an petitioners argument that it was denied due process of law due to
appeal from the decision of the trial court with the Court of Appeals. negligence of its counsel would set a dangerous precedent. It would
enable every party to render inutile any adverse order or decision
In Gold Line Transit, Inc. v. Ramos,[30] the Court was similarly through the simple expedient of alleging gross negligence on the
confronted with the issue of whether or not the client should bear part of its counsel. The Court will not countenance such a farce
the adverse consequences of its counsels negligence. In that case, which contradicts long-settled doctrines of trial and procedure.[33]
Gold Line Transit, Inc. (Gold Line) and its lawyer failed to appear at
the pre-trial despite notice and was declared as in default. After the Anent the second issue, petitioner was correctly found liable
plaintiffs presentation of evidence ex parte, the trial court rendered for breach of contract of carriage. A common carrier is bound to
decision ordering Gold Line to pay damages to the heirs of its carry its passengers safely as far as human care and foresight can
deceased passenger. The decision became final and executory provide, using the utmost diligence of very cautious persons, with
because counsel of Gold Line did not file any appeal. Finding that due regard to all the circumstances. In a contract of carriage, it is
Goldline was not denied due process of law and is thus bound by presumed that the common carrier was at fault or was negligent
the negligence of its lawyer, the Court held as follows when a passenger dies or is injured. Unless the presumption is
rebutted, the court need not even make an express finding of
This leads us to the question of whether the negligence of counsel was so fault or negligence on the part of the common carrier. This
gross and reckless that petitioner was deprived of its right to due process statutory presumption may only be overcome by evidence that the
of law. We do not believe so. It cannot be denied that the requirements of carrier exercised extraordinary diligence.[34]
due process were observed in the instant case. Petitioner was never In the instant case, there is no evidence to rebut the statutory
deprived of its day in court, as in fact it was afforded every opportunity to presumption that the proximate cause of Marie Graces death was
be heard. Thus, it is of record that notices were sent to petitioner and that the negligence of petitioner. Hence, the courts below correctly ruled
its counsel was able to file a motion to dismiss the complaint, an answer that petitioner was guilty of breach of contract of carriage.
to the complaint, and even a pre-trial brief. What was irretrievably lost by
petitioner was its opportunity to participate in the trial of the case and to Nevertheless, the award of damages should be modified.
adduce evidence in its behalf because of negligence.
Article 1764[35] in relation to Article 2206[36] of the Civil Code,
holds the common carrier in breach of its contract of carriage that
In the application of the principle of due process, what is sought to be results in the death of a passenger liable to pay the following: (1)
safeguarded against is not the lack of previous notice but the denial of the indemnity for death, (2) indemnity for loss of earning capacity, and
opportunity to be heard. The question is not whether petitioner succeeded (3) moral damages.
in defending its rights and interests, but simply, whether it had the
opportunity to present its side of the controversy. Verily, as petitioner In the present case, respondent heirs of the deceased are
retained the services of counsel of its choice, it should, as far as this suit entitled to indemnity for the death of Marie Grace which under
is concerned, bear the consequences of its choice of a faulty option. Its current jurisprudence is fixed at P50,000.00.[37]
plea that it was deprived of due process echoes on hollow ground and
certainly cannot elicit approval nor sympathy. The award of compensatory damages for the loss of the
deceaseds earning capacity should be deleted for lack of basis. As

Transpoeh 25
a rule, documentary evidence should be presented to substantiate incident, might have pushed them through. On the day of the incident,
the claim for damages for loss of earning capacity. By way of Pleno was driving homeward with geologist Longley after an ocular
exception, damages for loss of earning capacity may be awarded inspection of the site of the Mayon Ceramics Corporation. His actual
despite the absence of documentary evidence when (1) the income however has not been sufficiently established so that this Court
deceased is self-employed earning less than the minimum wage cannot award actual damages, but, an award of temperate or moderate
under current labor laws, and judicial notice may be taken of the fact damages may still be made on loss or impairment of earning capacity.
that in the deceaseds line of work no documentary evidence is That Pleno sustained a permanent deformity due to a shortened left leg
available; or (2) the deceased is employed as a daily wage worker and that he also suffers from double vision in his left eye is also
earning less than the minimum wage under current labor laws. [38] established. Because of this, he suffers from some inferiority complex
and is no longer active in business as well as in social life. In similar
In People v. Oco,[39] the evidence presented by the cases as in Borromeo v. Manila Electric Railroad Co., 44 Phil 165;
prosecution to recover damages for loss of earning capacity was the Coriage, et al. v. LTB Co., et al., L-11037, Dec. 29, 1960, and in Araneta,
bare testimony of the deceaseds wife that her husband was earning et al. v. Arreglado, et al., L-11394, Sept. 9, 1958, the proper award of
P8,000.00 monthly as a legal researcher of a private corporation. damages were given.
Finding that the deceased was neither self-employed nor employed
as a daily-wage worker earning less than the minimum wage under
the labor laws existing at the time of his death, the Court held that We rule that the lower courts awards of damages are more consonant with
testimonial evidence alone is insufficient to justify an award for loss the factual circumstances of the instant case. The trial courts findings of
of earning capacity. facts are clear and well-developed. Each item of damages is adequately
supported by evidence on record.
Likewise, in People v. Caraig,[40] damages for loss of earning
capacity was not awarded because the circumstances of the 3 Article 2224 of the Civil Code was likewise applied in the recent
deceased did not fall within the recognized exceptions, and except cases of People v. Singh[43] and People v. Almedilla,[44] to justify the
for the testimony of their wives, no documentary proof about their award of temperate damages in lieu of damages for loss of earning
income was presented by the prosecution. Thus capacity which was not substantiated by the required documentary
The testimonial evidence shows that Placido Agustin, Roberto Raagas,
and Melencio Castro Jr. were not self-employed or employed as daily- Anent the award of moral damages, the same cannot be
wage workers earning less than the minimum wage under the labor laws lumped with exemplary damages because they are based on
existing at the time of their death. Placido Agustin was a Social different jural foundations.[45] These damages are different in nature
Security System employee who received a monthly salary of P5,000. and require separate determination.[46] In culpa contractual or
Roberto Raagas was the President of Sinclair Security and Allied breach of contract, moral damages may be recovered when the
Services, a family owned corporation, with a monthly compensation defendant acted in bad faith or was guilty of gross negligence
of P30,000. Melencio Castro Jr. was a taxi driver of New Rocalex (amounting to bad faith) or in wanton disregard of contractual
with an average daily earning of P500 or a monthly earning of obligations and, as in this case, when the act of breach of contract
P7,500. Clearly, these cases do not fall under the exceptions where itself constitutes the tort that results in physical injuries. By special
indemnity for loss of earning capacity can be given despite lack of rule in Article 1764 in relation to Article 2206 of the Civil Code, moral
documentary evidence. Therefore, for lack of documentary proof, no damages may also be awarded in case the death of a passenger
indemnity for loss of earning capacity can be given in these cases. results from a breach of carriage.[47] On the other hand, exemplary
(Emphasis supplied) 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
Here, the trial court and the Court of Appeals computed the malevolent manner.[48]
award of compensatory damages for loss of earning capacity only
on the basis of the testimony of respondent Rosalito that the Respondents in the instant case should be awarded moral
deceased was 39 years of age and a Section Chief of the Bureau of damages to compensate for the grief caused by the death of the
Internal Revenue, Tuguergarao District Office with a salary of deceased resulting from the petitioners breach of contract of
P83,088.00 per annum when she died.[41] No other evidence was carriage. Furthermore, the petitioner failed to prove that it exercised
presented. The award is clearly erroneous because the deceaseds the extraordinary diligence required for common carriers, it is
earnings does not fall within the exceptions. presumed to have acted recklessly.[49] Thus, the award of
exemplary damages is proper. Under the circumstances, we find it
However, the fact of loss having been established, temperate reasonable to award respondents the amount of P100,000.00 as
damages in the amount of P500,000.00 should be awarded to moral damages and P100,000.00 as exemplary damages. These
respondents. Under Article 2224 of the Civil Code, temperate or amounts are not excessive.[50]
moderate damages, which are more than nominal but less than
compensatory damages, may be recovered when the court finds The actual damages awarded by the trial court reduced by the
that some pecuniary loss has been suffered but its amount can not, Court of Appeals should be further reduced. In People v.
from the nature of the case, be proved with certainty. Duban,[51] it was held that only substantiated and proven expenses
or those that appear to have been genuinely incurred in connection
In Pleno v. Court of Appeals,[42] the Court sustained the trial with the death, wake or burial of the victim will be recognized. A list
courts award of P200,000.00 as temperate damages in lieu of actual of expenses (Exhibit J),[52] and the contract/receipt for the
damages for loss of earning capacity because the income of the construction of the tomb (Exhibit F)[53] in this case, cannot be
victim was not sufficiently proven, thus considered competent proof and cannot replace the official receipts
necessary to justify the award. Hence, actual damages should be
The trial court based the amounts of damages awarded to the petitioner on further reduced to P78,160.00,[54] which was the amount supported
the following circumstances: by official receipts.
Pursuant to Article 2208[55] of the Civil Code, attorneys fees
As to the loss or impairment of earning capacity, there is no doubt that may also be recovered in the case at bar where exemplary damages
Pleno is an ent[re]preneur and the founder of his own corporation, the are awarded. The Court finds the award of attorneys fees equivalent
Mayon Ceramics Corporation. It appears also that he is an industrious and to 10% of the total amount adjudged against petitioner reasonable.
resourceful person with several projects in line, and were it not for the

Transpoeh 26
Finally, in Eastern Shipping Lines, Inc. v. Court of
Appeals,[56] it was held that when an obligation, regardless of its
source, i.e., law, contracts, quasi-contracts, delicts or quasi-delicts
is breached, the contravenor can be held liable for payment of
interest in the concept of actual and compensatory damages,
subject to the following rules, to wit

1. When the obligation is breached, and it consists in the payment of a

sum of money, i.e., a loan or forbearance of money, the interest due
should be that which may have been stipulated in writing. Furthermore,
the interest due shall itself earn legal interest from the time it is judicially
demanded. In the absence of stipulation, the rate of interest shall be 12%
per annum to be computed from default, i.e., from judicial or extrajudicial
demand under and subject to the provisions of Article 1169 of the Civil

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

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.
(Emphasis supplied).

In the instant case, petitioner should 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, per paragraph 3 of the aforecited
WHEREFORE, in view of all the foregoing, the petition
is PARTIALLY GRANTED. The April 11, 2003 decision of the Court
of Appeals in CA-G.R. CV No. 63290, which modified the decision
of the Regional Trial Court of Tuguegarao, Cagayan in Civil Case
No. 5023, is AFFIRMED with MODIFICATION. As modified,
petitioner Victory Liner, Inc., is ordered to pay respondents the
following: (1) P50,000.00 as indemnity for the death of Marie Grace
Pagulayan-Gammad; (2) P100,000.00 as moral damages; (3)
P100,000.00 as exemplary damages; (4) P78,160.00 as actual
damages; (5) P500,000.00 as temperate damages; (6) 10% of the
total amount as attorneys fees; and the costs of suit.
Furthermore, the total amount adjudged against petitioner
shall earn interest at the rate of 12% per annum computed from the
finality of this decision until fully paid.

Transpoeh 27
Republic of the Philippines Tito tried to keep himself and his daughter afloat
SUPREME COURT but to no avail as the waves got stronger and he
Manila was subsequently separated from his daughter
despite his efforts.
He found himself on Almagro Island in Samar
the next day at round (sic) 11:00 A.M. and
immediately searched for his daughter among
the survivors in the island, but the search proved
G.R. No. 113578 July 14, 1995 fruitless.

SULPICIO LINES, INC., Petitioner, In the meantime, Angelina tried to seek the
vs. assistance of the Sulpicio Lines in Manila to no
The Honorable COURT OF APPEALS and TITO DURAN avail, the latter refusing to entertain her and
TABUQUILDE and ANGELINA DE PAZ hundreds of relatives of the other passengers
TABUQUILDE, respondents. who waited long hours outside the Manila Office.
Angelina spent sleepless nights worrying about
her husband Tito and daughter Jennifer Anne in
view of the refusal of Sulpicio Lines to release a
QUIASON, J.: verification of the sinking of the ship.

This is a petition for review on certiorari under Rule 45 of the On October 26, 1988, Tito and other survivors in
Revised Rules of Court of the decision of the Court of Appeals in the Almagro Island were fetched and were
CA-G.R. CV brought to Tacloban Medical Center for
No. 32864, which affirmed the decision of the Regional Trial Court, treatment.
Branch 85, Quezon City in Civil Case No. Q-89-3048.
On October 31, 1988, Tito reported the loss of
I his daughter, was informed that the corpse of a
child with his daughter's description had been
found. Subsequently, Tito wrote a letter to his
The Court of Appeals found: wife, reporting the sad fact that Jennifer Anne
was dead. Angelina suffered from shock and
On October 23, 1988, plaintiff Tito Duran severe grief upon receipt of the news.
Tabuquilde (hereinafter, "Tito") and his three-
year old daughter Jennifer Anne boarded the On November 3, 1988, the coffin bearing the
M/V Dona Marilyn at North Harbor, Manila, corpse of Jennifer Anne was buried in Tanauan,
bringing with them several pieces of luggage. Leyte.

In the morning of October 24, 1988, the M/V On November 24, 1988, a claim for damages
Dona Marilyn, while in transit, encountered was filed by Tito with the defendant Sulpicio
inclement weather which caused huge waves Lines in connection with the death of the plaintiff-
due to Typhoon Unsang. appellee's daughter and the loss of Tito's
belongings worth P27,580.00. (Appellees' Brief,
Notwithstanding the fact that Storm Signal No. 2 pp. 2-4) ( Rollo, pp. 52-54).
had been raised by the PAG-ASA authorities
over Leyte as early as 5:30 P.M. of October 23, On January 3, 1991, the trial court rendered a decision in Civil
1988 and which signal was raised to Signal No. Case No. Q-89-3048 in favor of the plaintiffs Tito Duran
3 by 10 P.M. of the same day, the ship captain Tabuquilde and Angelina de Paz Tabuquilde (private respondents
ordered the vessel to proceed to Tacloban when herein) and against defendant Sulpicio Lines, Inc. (petitioner
prudence dictated that he should have taken it to herein) ordering defendant to pay P27,580.00 as actual damages,
the nearest port for shelter, thus violating his P30,000.00 for the death of Jennifer Tabuquilde, P100,000.00 as
duty to exercise extraordinary diligence in the moral damages, P50,000.00 as exemplary damages, and
carrying of passengers safely to their P50,000.00 as attorney's fees, and costs.
Petitioner appealed to the Court of Appeals which affirmed the
At about the same time, plaintiff-appellee decision of the trial court. Petitioner then filed a motion for
Angelina Tabuquilde (hereinafter, "Angelina") reconsideration which was denied. Hence, this petition.
mother of Jennifer Anne, contacted the Sulpicio
Office to verify radio reports that the vessel M/V
Dona Marilyn was missing. Employees of said II
Sulpicio Lines assured her that the ship was
merely "hiding" thereby assuaging her anxiety. Generally, the findings of fact of the trial court are entitled to great
weight and not disturbed except for cogent reasons (Gatmaitan v.
At around 2:00 P.M. of October 24, 1988, said Court of Appeals, 200 SCRA 37 [1991]). One of the accepted
vessel capsized, throwing plaintiff-appellee Tito reasons is when the findings of fact are not supported by the
and Jennifer Anne, along with hundreds of evidence (Sandoval Shipyard, Inc. v. Clave, 94 SCRA 472 [1979]).
passengers, into the tumultuous sea. Corollary to this is the rule that actual or compensatory damages,
to be recovered, must be proved; otherwise, if the proof is flimsy,
Transpoeh 28
no damages will be awarded (Dichoso v. Court of Appeals, 192 continue to travel by sea. This Court is prepared
SCRA 169 [1990]). to use the instruments given to it by the law for
securing the ends of law and public policy. One
In the case at bench, the trial court merely mentioned the fact of of those instruments is the institution of
the loss and the value of the contents of the pieces of baggage exemplary damages; one of those ends, of
without stating the evidence on which it based its findings. There is special importance in an archipelagic state like
no showing that the value of the contents of the lost pieces of the Philippines, is the safe and reliable carriage
baggage was based on the bill of lading or was previously of people and goods by sea. . . . (at p. 100).
declared by respondent Tito D. Tabuquilde before he boarded the
ship. Hence, there can be no basis to award actual damages in the A common carrier is obliged to transport its passengers to their
amount of P27,850.00. destinations with the utmost diligence of a very cautious person
(Laguna Tayabas Bus Co. v. Tiongson, 16 SCRA 940 [1966]). The
The Court of Appeals was correct in confirming the award of trial court found that petitioner failed to exercise the extraordinary
damages for the death of the daughter of private respondents, a diligence required of a common carrier, which resulted in the
passenger on board the stricken vessel of petitioner. It is true that sinking of the M/V Dona Marilyn.
under Article 2206 of the Civil Code of the Philippines, only deaths
caused by a crime as quasi delict are entitled to actual and The trial court correctly concluded that the sinking of M/V Dona
compensatory damages without the need of proof of the said Marilyn was due to gross negligence, thus:
damages. Said Article provides:
. . . [i]t is undisputed that Typhoon Unsang
The amount of damages for death caused by a entered the Philippine Area of Responsibility on
crime or quasi delict shall be at least Three October 21, 1988. The rain in Metro Manila
Thousand Pesos, even though there may have started after lunch of October 23, 1988, and at
been mitigating circumstances. . . . about 5:00 p.m. Public Storm Signal No. 1 was
hoisted over Metro Manila, Signal No. 2 in Leyte
Deducing alone from said provision, one can conclude that and Signal No. 3 in Samar. But at 10:00 o'clock
damages arising from culpa contractual are not compensable (sic) in the morning of October 23, 1988, Public
without proof of special damages sustained by the heirs of the Storm Signal No. 1 was already hoisted over the
victim. province of Leyte, which is the destination of
M/V Dona Marilyn. This was raised to Signal No.
2 at 4:00 p.m. and Signal No. 3 at 10:00 p.m. on
However, the Civil Code, in Article 1764 thereof, expressly makes the same date. The following day, October 24,
Article 2206 applicable "to the death of a passenger caused by the 1988, at 4:00 a.m. and 10:00 a.m., Storm Signal
breach of contract by a common carrier." Accordingly, a common No. 3 remained hoisted in Leyte. At 4 p.m. on
carrier is liable for actual or compensatory damages under Article October 24, 1988, Storm Signal No. 3 remained
2206 in relation to Article 1764 of the Civil Code for deaths of its hoisted in Leyte but was reduced to Storm
passengers caused by the breach of the contract of transportation. Signal No. 2 (Exh. G). Signal No. 1 has
maximum winds at 60 kph within 36 hours;
The trial court awarded an indemnity of P30,000.00 for the death Signal No. 2 has maximum winds of from 60 kph
of the daughter of private respondents. The award of damages to 100 kph within a period of 24 hours; and
under Article 2206 has been increased to P50,000.00 (People v. Signal No. 3 has maximum winds of 100 kph
Flores, 237 SCRA 653 [1994]). and above within a period of 12 hours.

With respect to the award of moral damages, the general rule is Warnings of the storm signal are issued by PAG-
that said damages are not recoverable in culpa contractual except ASA thru DZZA, Office of Civil Defense,
when the presence of bad faith was proven (Trans World Air Lines Philippine Navy, Coast Guard, Radio Stations,
v. Court of Appeals, 165 SCRA 143 [1988]). However, in breach of and other offices, every six (6) hours as soon as
contract of carriage, moral damages may be recovered when it a cyclone enters the Philippine Area of
results in the death of a passenger (Philippine Rabbit Bus Lines, Responsibility.
Inc. v. Esguerra, 117 SCRA 741 [1982]; Vasquez v. Court of
Appeals, 138 SCRA 553 [1985]). At 10:30 a.m. on October 24, 1988, the vessel
was estimated to be between Mindoro and
With respect to the award of exemplary damages, Article 2232 of Masbate, and the center of the typhoon then
the Civil Code of the Philippines gives the Court the discretion to was around 130 degrees longitude with
grant said damages in breach of contract when the defendant maximum winds of 65 kph (Exh. G-3), with a
acted in a wanton, fraudulent and reckless manner (Air France v. "radius of rough to phenomenal sea at that time
Carrascoso, 18 SCRA 155 [1966]). of 450 kms. North and 350 kms. elsewhere; 350
kms. North center and all throughout the rest" (p.
Furthermore, in the case of Mecenas v. Court of Appeals, 180 12, TSN, Lumalda, Feb. 19, 1990).
SCRA 83 (1989), we ruled that:
xxx xxx xxx
. . . . The Court will take judicial notice of the
dreadful regularity with which grievous maritime In the same manner, (referring to the negligence
disasters occur in our waters with massive loss of the crew of the ship that sank in Vasquez v.
of life. The bulk of our population is too poor to Court of Appeals, 138 SCRA 553 [1985]) the
afford domestic air transportation. So it is that crew of the vessel M/V Dona Marilyn took a
notwithstanding the frequent sinking of calculated risk when it proceeded despite the
passenger in our waters, crowds of people typhoon brewing somewhere in the general
Transpoeh 29
direction to which the vessel was going. The
crew assumed a greater risk when, instead of
dropping anchor in or at the periphery of the Port
of Calapan, or returning to the port of Manila
which is nearer, proceeded on its voyage on the
assumption that it will be able to beat and race
with the typhoon and reach its destination before
it (Unsang) passes ( Rollo, pp. 45-47).

The award of attorney's fees by the trial court to respondents is

also assailed by petitioner, citing Mirasol v. De la Cruz, 84 SCRA
337 (1978). In this case, the petitioner filed before the Municipal
Court an action for forcible entry against the private respondent.
The said court dismissed the complaint. On appeal, the Court of
First Instance of Camarines Sur sustained the decision of the
lower court, dismissed the appeal and awarded attorney's fees in
the sum of not less than P500.00 in favor of private respondent.
Upon appeal to us, we deleted the award of attorney's fees
because the text of the appealed decision was bereft of any
findings of fact and law to justify such an award. Moreover, there
was no proof, other than the bare allegation of harassment that the
adverse party had acted in bad faith. The aforementioned decision
is inapposite to the instant case where the decision clearly
mentions the facts and the law upon which the award of attorney's
fees were based.

WHEREFORE, the decision of the Court of Appeals is AFFIRMED

with the MODIFICATION that the award of P27,580.00 as actual
damages for the loss of the contents of the pieces of baggage is
deleted and that the award of P30,000.00 under Article 2206 in
relation Article 1764 is increased to P50,000.00.


Transpoeh 30
SECOND DIVISION Valentino as he stabbed the latter.[3] Ernesto and Jerwin rushed towards the
two (2) - Gaudioso and Valentino - entreating Gaudioso to stop, but to no
avail. Gaudioso only stopped when Valentino was already dead. Gaudioso
then explained to his brothers that he stabbed Valentino because the latter
was going to shoot him. Afterwards they went home and did not report the
[G.R. No. 128820. December 23, 1999]
incident anymore to the barangay captain since it was already late.
Gaudioso claimed that when he handed his cigarette to Valentino
upon the latter's request he, instead of taking the cigarette, suddenly drew
PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. GAUDIOSO a .38 caliber gun and pointed it at him with the words: "I will shoot
MORE, ERNESTO, MORE and JERWIN MORE, accused- you.[4] Reacting immediately, Gaudioso, using both hands, frustrated
appellants. Valentino's attempt by grabbing the latter's right hand that was holding the
gun, twisted it, and then used his foot to outbalance Valentino sending the
latter to the ground. Thus Valentino was not able to fire his gun. Gaudioso
DECISION then straddled Valentino and pinned his left hand with his right knee while
BELLOSILLO, J.: his left hand held Valentino's right that was clutching the gun. In this
position, Gaudioso repeatedly stabbed Valentino until the latter died. [5]

GAUDIOSO, ERNESTO and JERWIN, all surnamed MORE, were On 9 May 1996 the trial court found all three (3) accused, Gaudioso,
found guilty of murder by the trial court for the killing of Valentino Ernesto and Jerwin More, guilty as principals by conspiracy for the murder
Pagumay on 22 February 1994 and sentenced to reclusion perpetua with of Valentino Pagumay, qualified by abuse of superior strength. The trial
all its accessory penalties and to pay P28,977.00 for funeral services and court sustained the version of the prosecution and rejected the theory of
other expenses, P133,333.00 for loss of income for five (5) self-defense primarily in view of the eighteen (18) stab wounds sustained
years, P100,000.00 for moral damages, and the costs.[1] They now come to by the victim and the fact that they were caused by at least two (2) different
us appealing their conviction. knives, one single-bladed and the other double-bladed, indicating that there
were at least two (2) assailants. The three (3) accused were accordingly
The factual backdrop: On 22 February 1994 at about six o'clock in sentenced to suffer the penalty of reclusion perpetua with all its accessory
the evening, Valentino Pagumay and Romeo Muralla were walking along penalties, and to pay damages in the total amount of P262,310.00 plus the
the river in Brgy. Igsoligue, Miag-ao, Iloilo, on their way to nearby Brgy. costs.
Igbogo to get some tuba when they chanced upon the More brothers
Gaudioso alias "Nono," Ernesto alias "Didoy" and Jerwin alias "Max" Accused-appellants contend in this appeal that the trial court
some three hundred (300) meters away. As they drew near, the accused erred: (a) in not appreciating in their favor the justifying circumstance of
who were armed with a gun and knives, inexplicably shouted why self-defense, insisting that all the elements thereof were successfully
Valentino and Romeo were pointing guns at them. Both Valentino and established, and, (b) in finding them guilty beyond reasonable doubt of
Romeo were unarmed. When Valentino nervously told Romeo, who had murder notwithstanding the inconsistencies in the testimonies of
no quarrel with the accused, that the More brothers were going to kill him, prosecution witnesses Romeo Muralla, Juanito Faromal and Sgt. Gersa.
the duo ran as fast as they could. But the accused chased them.
We find no merit in the appeal. When self-defense is invoked by an
About three hundred (300) meters from where the chase began, the accused charged with murder or homicide he necessarily owns up to the
accused led by Jerwin finally caught up with Valentino who was lagging killing but may escape criminal liability by proving that it was justified and
behind Romeo. Jerwin stabbed Valentino at the left side of his that he incurred no criminal liability therefor.[6] Hence, the three (3)
mouth. Ernesto followed by stabbing the victim in the chest. While Jerwin elements of self-defense, namely: (a) unlawful aggression on the part of
and Ernesto were stabbing Valentino Gaudioso held their captive by the the victim; (b) reasonable necessity of the means employed to prevent or
shoulders. Gaudioso then took his turn and stabbed Valentino on the chest repel the aggression; and, (c) lack of sufficient provocation on the part of
causing the latter to fall to the ground. The three (3) accused persisted in the person defending himself, which must be proved by clear and
their criminal design and pinned their victim down with their hands and convincing evidence.[7] However, without unlawful aggression there can
knees. They took turns in stabbing him again several times. be no self-defense, either complete or incomplete.[8]

As the stabbing progressed Romeo was having an unobstructed view In the instant case, accused-appellants sought to establish unlawful
of the occurrence some ten (10) meters away. After they were through with aggression on the part of Valentino Pagumay by testifying that the latter,
Valentino the accused turned to Romeo and warned him against telling after asking Gaudioso for a light for his cigarette, suddenly and for no
anybody about the incident and ordered him to go home. The three (3) reason at all, drew his gun and pointed it at Gaudioso with the threatening
More brothers then ran away. words, "I will shoot you." However, quite an enlightening and revealing
narrative follows thus:
When the More brothers were already farther down the river Romeo
noticed Juanito Faromal standing a few meters away from the crime Q: When Valentino Pagumay drew his gun from his waist what did you
scene. After seeing Valentino already lifeless Romeo left to inform the do?
victim's wife, but on the way he met Sgt. Romeo Gersa so he reported the
matter to him.[2] Sgt. Gersa pursued the accused but could not apprehend A: Both my hands caught his hand holding the firearm x x x x
them as he already got tired. When he fired a warning shot the three (3) Q: When you were able to grab the hand of Valentino Pagumay what
accused retaliated and fired three (3) shots instead. Juanito corroborated happened next?
the testimony of Romeo regarding the assault except that according to him
it was only Gaudioso who stabbed the victim while his brothers Jerwin and A: He fell to the ground.
Ernesto only assisted in restraining the victim.
Q: So you want to tell the Court that immediately after you grabbed or
The accused, on their part, invoked self defense. The version of took hold of his hand he immediately fell to the ground?
Ernesto and Jerwin was that at about six o'clock in the evening of 22
February 1994 they were walking along a road in Brgy. Igsoligue about ten A: Yes sir because he wrestled with me when I took hold both of his
(10) arms' length ahead of their brother Gaudioso when they heard hand (sic) and twisted his arm.
someone ask the latter for a light for his cigarette. Ernesto and Jerwin did Q: When Valentino Pagumay fell to the ground what did you do?
not recognize the voice. About two (2) minutes later they heard a gun
explode. They looked back and saw Gaudioso and Valentino already on
the ground wrestling with each other. Gaudioso was sitting astride
Transpoeh 31
A: After he fell to the ground I sat on his abdomen. My right knee was Third, accused-appellants did not inform the authorities about the
pinning down his left hand while my left hand was pinning on incident. If they were really innocent as they claimed to be, they should
the ground his right hand and then I delivered several successive have told the authorities about the accidental killing.[18] Their excuse that
stab blows on his breast x x x x it was already late is not only shallow but quite incredible considering three
(3) factors: (a) accused-appellants managed to get home at the relatively
Q: And how many times did you stab him? early hour of 6:30 in the evening;[19] (b) the house of the barangay captain
A: I was not able to count the number of times because I was stabbing to whom they could have reported the incident was a mere fifty (50) meters
him successively. away from their own house;[20] and, (c) Gaudioso was himself a barangay
official making it easier for him to approach the other barangay authorities
Q: And you cannot estimate the number of stab blows you delivered to who were but his colleagues.[21]
Fourth, accused-appellants do not deny that they did not surrender to
A: I was not able to count the number of blows because I was stabbing Sgt. Gersa when the latter saw them immediately after the killing. In fact,
and hitting him until his death (underscoring ours).[9] they ignored his warning shot and ran away. Worse, accused-appellants
even returned fire with three (3) gunshots of their own, continued their
Clearly, the unlawful aggression allegedly started by Valentino - flight until Sgt. Gersa gave up the chase through sheer exhaustion, and
assuming it to be true - had already ceased by the time Gaudioso repeatedly yielded only when they were already invited for questioning by the police
stabbed Valentino to death. Gaudioso himself testified that after Valentino after having been identified as the killers by eyewitnesses Romeo Muralla
threatened to shoot him, he was able to grab Valentino's right hand which and Juanito Faromal.
was holding the gun, outbalance him, and then pin both his hands while the
latter was lying prone on the ground. Having thus immobilized Valentino, On the alleged inconsistencies in the testimonies of the prosecution
there was obviously no more reason for Gaudioso to stab Valentino witnesses, suffice it to say that inconsistencies on minor and trivial matters
eighteen (18) times as he did because the alleged unlawful aggression from do not diminish but rather bolster a witness's credibility as they in fact
Valentino had stopped. In legitimate self-defense the aggression must still manifest spontaneity and lack of scheming.[22] In other words, they are
be existing or continuing when the person making the defense attacks or badges of truth rather than indicia of falsehood.[23] Thus the alleged
injures the aggressor.[10] Thus when the unlawful aggression ceases to contradictions on the relative positions of Romeo and Valentino while the
exist, the one making the defense has no more right to kill the former latter was being stabbed, whether it was Romeo or Juanito who informed
aggressor.[11] In such cases, less violent means would have sufficed; hence, the victim's wife about the incident, and whether Juanito was indeed taken
if not resorted to, the plea of self-defense must fail.[12] by Sgt. Gersa to Camp Monteclaro after the incident, are but trivial and
minor inconsistencies which neither detract from the essential integrity of
In the instant case Valentino was already effectively immobilized by the prosecution's evidence nor strengthen accused-appellants' flagging plea
Gaudioso, hence, the latter could have either simply boxed the former with of self-defense. Having already pleaded self-defense, accused-appellants
his free right hand, hit him on a non-vital part of his body,[13] or better yet, could not invoke the alleged weakness of the prosecution's evidence, for,
summoned his brothers Ernesto and Jerwin who were just standing a few even if the latter were weak (which is certainly not so in the instant case),
meters away to help him in ensuring no further aggression from it could not be disbelieved in view of their open admission of responsibility
Valentino. However, quite inconsistent with his plea of self-defense, for the killing.[24]
Gaudioso did none of these things. Instead, he even ignored his brothers'
entreaties for him to stop, rebuffed their efforts to the extent of even On the civil liabilities of accused-appellants a modification of the
accidentally hitting Jerwin as claimed by the latter,[14] and continued amounts awarded by the trial court is in order. By way of moral damages,
stabbing Valentino successively until the latter died.[15]Considering all the trial court awarded P100,000.00. Since the award is not meant to enrich
these, the plea of self-defense cannot but be received with incredulity and the heirs of the victim but only to compensate them for injuries sustained
disbelief. to their feelings we reduce the amount to P50,000.00 consistent with
prevailing jurisprudence.[25] A reduction of the actual damages awarded is
In addition to the foregoing, several other circumstances exist to likewise proper. The trial court awarded P28,977.00 for various expenses
further undermine the plea of self-defense and establish accused- incurred by the victim's widow as a result of the killing. However, since
appellants' collective guilt. only the costs of the tomb, coffin, embalming and funeral services in the
total amount of P8,977.00 were properly receipted[26] the estimated amount
First, the trial court correctly noted that the victim sustained a total
of P20,000.00 allegedly spent for food and drinks consumed during the
of eighteen (18) stab wounds, fourteen (14) of which were inflicted on the
wake must be disallowed for not having been competently proved. The
anterior chest alone, and four (4) of which were fatal. It is an oft-repeated
Court can only give credit to expenses which have been duly
rule that the presence of a large number of wounds on the part of the victim
negates self-defense because, rather than suggest an effort to defend
oneself, it instead strongly indicates a determined effort to kill the On the victim's loss of earning capacity, Victoria Pagumay testified
victim.[16] Second, the claim that Gaudioso alone killed Valentino in self- that her husband, a farmer, was 53 years old when he was killed, with an
defense and that Ernesto and Jerwin had nothing to do with the killing was average annual income of P40,000.00 to P50,000.00.[28] Using P40,000.00
disproved not only by Romeo and Juanito's positive identification of as the deceased's average annual income while still alive, the trial court
Ernesto and Jerwin as co-conspirators (at least) to the crime but, more awarded P133,333.00 for loss of earning capacity after multiplying two-
importantly, by the fact that the stab wounds themselves indicated that thirds (P26,666.67) of the victim's average annual income[29]by five (5)
there was actually more than one assailant. As testified to by Dr. Mary years. No reason was given, and no legal basis exists, why lost income was
Joyce M. Faeldan, the Acting Municipal Health Officer of Miag-ao who awarded for only five (5) years. On the contrary, the victim's lost earnings
autopsied the cadaver, the eighteen (18) stab wounds sustained by the are to be computed according to the formula adopted by the Court in
victim were not all caused by a single weapon but by two (2) kinds of several decided cases,[30] to wit: net earning capacity ("X") equals life
knives, i.e., one single-bladed, and the other, double-bladed. While three expectancy[31] multiplied by gross annual income[32] less living
(3) stab wounds had blunt and contussed extremities indicating that they expenses.[33] Thus, the victim's lost earning capacity amounted
were inflicted with the use of a blunt single-bladed knife, the remaining to P405,000.00 as may be shown hereunder -
fourteen (14) stab wounds had regular distinct clean-cut edges and sharp
extremities indicating a sharp double-bladed knife as the murder X = 2(80-53) x
weapon.[17] Since only Gaudioso's right hand was free to hold a weapon, [P45,000 - P22,500]
his left hand already gripping Valentino's right hand, then it is quite 3
obvious that his brothers likewise participated in the assault as claimed by X = 2 (27) x P22,500
the prosecution witnesses because Gaudioso, evidently, could not have 3
managed two (2) weapons at the same time with only his right hand free. X = 54 x P22,500
Transpoeh 32
X = 18 x P22, 500
X = P405,000.00
Finally, an award of another P50,000.00 is warranted as civil
indemnity for the death of the victim without need of evidence or proof of
WHEREFORE, the appealed Decision dated 9 May 1996 of the
Regional Trial Court of Iloilo City, Branch 25, finding accused-appellants
beyond reasonable doubt of Murder is AFFIRMED. Accused-appellants
are ordered to pay, jointly and severally, the heirs of Valentino Pagumay
the following amounts: (a) P50,000.00 as civil indemnity; (b) P50,000.00
as moral damages; (c) P8,977.00 as actual damages; and, (d) P405,000.00
for loss of earning capacity. Costs against accused-appellants.

Transpoeh 33
SECOND DIVISION expectancy of the late Henry Tugade would be 36 years, hence the
Court awards P216,000.00 for loss of earning capacity.

WHEREFORE, the Court hereby renders judgment:

[G.R. No. 120874. July 31, 2003]
1. Dismissing the complaint and cross-claim as
against Dagupan Bus in Civil Case No.
substituted by her heirs, namely, Napoleon Sr., 2. Dismissing the complaint in Civil Case No. A-
Napoleon Jr., and Zenaida, all surnamed 1384;
TUGADE, petitioners, vs. COURT OF APPEALS and
3. In Civil Case No. A-1368, ordering the
INC., respondents.
defendants Pangasinan Electric
Cooperative, Inc., and Honorato Areola
DECISION to pay, jointly and severally, to the
plaintiffs, the following:

P 99,131.00 as
While this Court is not a trier of facts, there are instances actual damages;
however when we are called upon to re-examine the factual findings 216,000.00 for loss
of the trial court and the Court of Appeals and weigh, after of earning capacity;
considering the records of the case, which of the conflicting findings 20,000.00 moral
is more in accord with law and justice.[1] Such is the case at bar. damages; and
The antecedent facts of this case are as follows: 10,000.00
On June 12, 1980 at around 12:00 noon, Engr. Henry Tugade damages; and
of the Pangasinan Electric Cooperative, Inc. (Panelco) rode in a 20,000.00 attorneys
company rover jeep together with four other employees bound from fees
the Panelco compound in Bani to Bolinao, Pangasinan. Somewhere
in Tiep, Pangasinan, a Dagupan bus that was also headed for With costs against said defendants.[3]
Bolinao, began to follow the rover jeep. While the bus was trying to
overtake the jeep, the latter turned turtle and caused four of its five
occupants to fall out of the jeep causing the death of Tugade and In arriving at its decision, the trial court explained that:
another passenger by the name of Consuelo Estolonio. [2]
xxx Rosie Castrence, a passenger of Bus No. 244 who saw the
Separate cases for damages, docketed as Civil Cases Nos. A- accident testified categorically that the rover jeep turned turtle in
1368 and A-1384 were filed by the heirs of the two deceased before front of the Dagupan Bus when the jeep was about 5 meters in front
the Regional Trial Court of Pangasinan against Panelco and of the Bus and the jeep turned turtle even without being bumped by
Dagupan Bus Co. and their respective drivers, Honorato Areola and the Dagupan Bus. The Court considers this witness as an unbiased
Renato Quiambao. It is Civil Case No. A-1368 filed by the heirs of witness as she appears not to be an interested party. She was also
Henry Tugade, which is now the subject of the present petition. in a good position to observe in detail what actually happened at the
The Regional Trial Court of Pangasinan (Branch 55) held scene of the accident as she was seated on the right front seat of
Panelco and its driver liable, thus: the bus. The Court believes this witness more than the other
witnesses who do not appear to be disinterested.

As a consequence and in view of the evidence on record, the Court

holds and so finds that the accident occurred due to the fault or Furthermore, it is not credible that if the rover jeep was hit on its left
negligence of Panelco and its driver Honorato Areola. The rear, it will turn turtle on its left side. The natural effect or tendency
negligence of Panelco consists in having allowed its rover jeep is for the jeep to be pushed or even thrown towards its right side. If
which is mechanically defective, unsafe and not roadworthy to be the jeep turned turtle towards the left, it must have been due to some
operated on a highway. On the other hand, the defendant-driver other cause than being hit by the bus on its left side.
Honorato Areola was likewise, negligent in driving a vehicle which
was not roadworthy, unsafe and with a mechanical defect. The physical facts which do not lie as well as testimonial evidence
support the stand of Dagupan Bus that the bus did not hit the left
The Court finds that the defendants Panelco and Honorato Areola rear of the rover jeep.
are liable to pay to the plaintiffs in Civil Case No. A-1368 damages,
as follows: actual damages, P99,131.00 (Exhibits H to H-3, I to I-4 If the bus did not hit the left rear of the jeep what then caused the
and K), attorneys fees, P20,000.00, moral damages, P20,000.00 latter to turn turtle. There is merit in the contention of defendant
and exemplary damages, P10,000.00 Dagupan Bus that the cause was due to some mechanical
defect. By Defendant Areolas own admission, the rover jeep was
As to loss of earning capacity, it has been held in Villa-Rey Transit being fixed by the Chief mechanic at the motor pool of Panelco,
vs. Court of Appeals, 31 SCRA 511, that this is based on net when he arrived at their compound, and that the jeep was Quite old.
earnings and not gross earnings. No evidence was introduced to
show the net earnings. However, under the Circumstances, the Likewise, Rosie Castrence also testified that when she first saw the
Court holds that a monthly net earning of P500.00 would be Panelco jeep at Tiep, Bani, Pangasinan, the jeep was already zig-
reasonable. Using the formula in the Villa-Rey case, the life zagging and wiggling, a sign that indeed the jeep had some
mechanical defect.

Transpoeh 34
Another mark of a mechanical defect in the jeep was the fact that of Dagupan, that is, that the wheels were detached due to
the right front wheel and rear wheel of the jeep were detached mechanical defects.
because their spindles were broken. This came from the mouth of
Panelcos witness Florencio Celeste. Second, her testimony that the jeep was wiggling and zigzagging is
contradicted by the testimonies of Florencio Celeste and Cipriano
The next issue to be resolved is what was the cause of death of Nacar, passengers of the jeep and witnesses for plaintiffs Tugade,
Henry Tugade? Plaintiffs theory is, of course, that Henry Tugade to the effect that their ride was smooth and normal. (TSN,
died because he was run over and pinned under the left front wheel September 29, 1983, pp. 10, 43 & 66; November 20, 1984, p. 7)
of Dagupan Bus No. 244 crushing his head and upper body. This is
the same theory of defendants Panelco and Areola.Defendants Third, her testimony regarding the sitting arrangement of
Dagupan Bus and Quiambao deny this claim and their theory is that passengers of the jeep is contradicted by the testimony of Cipriano
Henry Tugades death was caused by the violent impact of his head Nacar, passenger of the jeep and witness for plaintiffs
against the hard pavement of the road when he was thrown out of Tugade. According to Nacar, he and Estolonio were seated at the
the rover jeep. rear of the jeep; the driver Areola was behind the steering wheel,
with Celeste to his right and Tugade on the rightmost. In other
The plaintiffs theory is, however, contradicted by their own medico words, Celeste was between Areola and Tugade, and no one was
legal expert Dr. Wilfredo Nazareno who testified positively that the seated to the left of the driver. (TSN, September 29, 1983, pp. 9-10)
fatal injury which caused the death of Henry Tugade were the
fractures on his head which could have been due to the impact of Fourth, her testimony that Tugades head was about one foot from
the head against the asphalted road. the left front tire of the bus is likewise contradicted by the testimonies
of Cipriano Nacar and Honorato Areola that the tire of the bus was
Again plaintiffs theory is contradicted by Panelcos own witness partly resting on the head of Tugade. In fact, the bus driver Renato
Florencio Celeste, Chief Engineer, who was the only one who did Quiambao even had to back up the bus so that Tugades body may
not fall out of the jeep, when he testified that the left front wheel of be pulled out from below. (ibid., pp. 22-23)
the bus did not rest on the head of Henry Tugade and the wheel of
the bus did not run over the head of the victim. Fifth, her testimony that Tugades shirt was checkered is also
contradicted by Exhibit G, a photograph of the deceased as he lay
Rosie Castrence, a disinterested witness, also declared that the left on the ground. The photograph shows Tugade wearing a plain white
front tire of the bus did not run over the head of Henry Tugade. [4] shirt.

Petitioners went to the Court of Appeals questioning only the Finally, her testimony that she did not see Estolonio after the
award of damages and attorneys fees.[5] They claimed that the lower accident because the latter was inside the jeep is again contradicted
court erred in: finding that the monthly earnings of the late Henry by the finding of the court a quo that all the passengers of the rover
Tugade at the time of his death was only P500.00; disregarding the jeep were thrown out of the vehicle except Florencio Celeste and
evidence on record showing the monthly earnings of the late Henry the body of Henry Tugade landed on the left lane of the road and
Tugade; not considering the social, educational and economic was in front of the left front wheel of Bus No. 244. (underscoring
status of the plaintiffs in its assessment of the moral and exemplary ours, Decision, p. 2) In other words, Estolonio, just like Tugade, was
damages; and setting the sum of P20,000.00 as attorneys fees.[6] sprawled on the ground. (ibid., p. 22)
Respondent Panelco also appealed to the Court of Appeals
from the decision of the trial court and assailed its ruling that the Castrences testimony is also marred by improbabilities.
negligence of Panelco and its driver was the proximate cause of the
accident.[7] First, she claims to have noticed the color of Tugades pants who
was seated --- in the front of the jeep. It is quite improbable that
In its decision dated September 7, 1994,[8] the Court of Castrence, being seated inside the bus, could see the color of the
Appeals reversed the findings of the trial court, declared that pants of Tugade who was seated on the front seat of the
Dagupan Bus, as an employer, had exercised due diligence in the jeep. Second, while she noticed the passengers in the front of the
selection and supervision of its employees and disposed of the case jeep --- indeed she even noticed the color of the pants one of them
in this wise: was wearing --- she could not tell whether or not there were
passengers at the back. Third, it is also improbable that the driver
WHEREFORE, in view of all the foregoing, the decision of the court and the passengers of the jeep simply continued with their journey,
a quo is reversed, but only insofar as it holds defendant Pangasinan oblivious to the wiggling and zigzagging of their vehicle.
Electric Cooperative, Inc. liable, and defendant Renato Quiambao
is ordered to pay to defendant-appellant Pangasinan Electric Moreover, even disregarding the incredibility of Castrences
Cooperative, Inc., P7,500.00 as temperate damages, P10,000.00 testimony, still the version that the accident was due to a mechanical
as attorneys fees and costs of suit.[9] defect that allowed the wheels to be detached cannot be given
credence. If the cause of the accident was that both wheels on the
The appellate court explained, thus: right side were detached, then the jeep would not have turned turtle
to its left, but to its right. If there had been no wheels to support its
The testimony of Castrence, on which the court a quo heavily relied right side, the jeep should have turned turtle to its right, but it turned
in its finding of facts, is contradicted by the greater weight of to its left instead.
evidence on record.
The court a quo reasons that it is not credible that if the rover jeep
First, there is no evidence whatsoever --- for either one of the parties was hit on its left rear, it will turn turtle on its left side. The natural
--- of a blown-out tire. What the evidence on record indicates is that effect or tendency is for the jeep to be pushed or even thrown
the two right wheels of the jeep were detached. The testimony towards its right side. (Decision, p. 3) The court a quo, however,
regarding a blown-out tire is not even in consonance with the theory seems to have disregarded the testimony of Honorato Areola that
the jeep first swerved to the right, then to the left. (TSN, October 15,

Transpoeh 35
1984, p. 48) To be noted also is that a jeep is inherently IV
maneuverable, and may easily swerve from side to side when hit
from its left rear portion. Moreover, after the accident, both the jeep ERRED IN ARRIVING AT A CONCLUSION THAT PRIVATE
and the bus were at the left side of the highway. If the bus were not RESPONDENT WAS NOT NEGLIGENT AT THE TIME OF THE
attempting to overtake the jeep, why then was it at the left side of ACCIDENT AND IS NOT THEREFORE LIABLE FOR THE

As may be seen from the foregoing, the court a quo failed to take V
into account the discrepancies and inconsistencies of Castrences
testimony vis--vis established facts and other evidence on record.
Moreover, the court a quo misappreciated the testimony of Areola TRIAL COURT.[12]
that the jeep was being checked up at the Panelco motor pool, and
interpreted such testimony to mean that the jeep was being fixed or
repaired due to a mechanical defect. First, the mere fact that the Petitioners stress that they only questioned before the Court
jeep was at the motor pool does not mean that it was there due to a of Appeals the amount of damages, loss of earning capacity and
mechanical defect. As testified by Areola, it was being subjected to attorneys fees awarded by the trial court in its decision, but the
a check-up (TSN, October 9, 1984, pp. 41-42), which may have appellate court disregarded the factual findings and conclusions of
been simply routinary. Second, even assuming that the jeep had a the trial court and substituted its own findings of fact.Petitioners
mechanical defect, its presence at the motor pool may also mean claim that this violates the doctrine that the findings of the trial court
that such defect had been repaired and that the jeep was quite old on the credibility of witnesses are entitled to great weight on appeal
does not necessarily mean that it had a mechanical defect. That two as it is in a better position to decide the question on credibility having
wheels were detached from the jeep and that its spindle was broken seen and heard the witnesses themselves. Petitioners further claim
can be just as reasonably explained by the fact that the jeep turned that: the Court of Appeals erroneously disregarded the testimony of
turtle after being sideswiped by an overtaking bus. Rosie Castrence which the trial court found to be a disinterested
party, based on minor and trivial inconsistencies;[13] the appellate
court overlooked or failed to consider the breaking of the spindles
On the contrary, Celeste and Nacar, witnesses for the plaintiffs and the detachment of the front and rear wheels of the rover jeep
Tugade, consistently testified that their ride was normal and smooth. owned by and belonging to respondent Panelco which led the trial
court to conclude that the accident was due to the negligence of
In light of the foregoing, the conclusion must be that the accident private respondent as it allowed its rover jeep which is mechanically
was caused by the negligence of Quiambao in driving Bus No. 244, defective and not roadworthy to be operated on a highway and due
as testified to by Areola, Nacar and Celeste, for which he must be to the negligence of defendant Honorato Areola in driving a vehicle
held civilly liable.[10]xxx which was not roadworthy.[14]
In its Comment, respondent Panelco points out that the factual
Hence, petitioner filed the present petition for certiorari [11] of findings of the Court of Appeals is not reviewable by the Supreme
the decision of the Court of Appeals and the resolution dated June Court.[15]
27, 1995 denying petitioners motion for reconsideration.
Petitioners in their Reply, meanwhile, argue that where the
Petitioners contend that the Court of Appeals: findings of the Court of Appeals and the trial court are contrary to
I each other, such as in this case, the Supreme Court may scrutinize
the evidence on record.[16]
COMMITTED AN ERROR OF LAW AND VIOLATED THE RULES In its Rejoinder, respondent Panelco reiterates that: the
OF EVIDENCE BY REJECTING THE TESTIMONY OF A petitioners raised only factual issues which in effect will make this
DISINTERESTED WITNESS AND ADMITTED THE BIASED Court a trier of facts; the Court of Appeals, contrary to the contention
TESTIMONIES OF THE EMPLOYEES-WITNESSES FOR of petitioners, actually set the record straight by carefully scrutinizing
PRIVATE RESPONDENT PANELCO. the factual evidence; the appellate court pointed out in detail the
inconsistencies in the findings of the lower court unlike the
II haphazard way by which the lower court reached its conclusions.[17]
We find the petition to be impressed with merit.
FINDINGS OF FACTS TO THAT OF THE TRIAL COURT WHICH As mentioned earlier, it is settled that as a rule, our jurisdiction
WAS IN A BETTER POSITION TO EVALUATE AT FIRST HAND in cases brought to us from the Court of Appeals is limited to the
THE EVIDENCE ADDUCED BY THE PARTIES, PARTICULARLY review and revision of errors of law allegedly committed by the
THE SITUATION, DEMEANOR AND SINCERITY OF THE appellate court, as its findings of fact are deemed conclusive and
WITNESSES. we are not duty-bound to analyze and weigh all over again the
evidence already considered in the proceedings below.[18]
III However, we have consistently enunciated that we may review
the findings of fact of the Court of Appeals:
THE BREAKING OF THE SPINDLE AND THE DETACHMENTS OF (a) where there is grave abuse of discretion; (b) when the finding is
THE FRONT RIGHT AND REAR WHEELS OF THE ROVER JEEP grounded entirely on speculations, surmises or conjectures; (c)
OF PRIVATE RESPONDENT PANELCO WHICH ARE when the inference made is manifestly mistaken, absurd or
CONCLUSIVE PROOF OF THE ROAD UNWORTHINESS OF THE impossible; (d) when the judgment of the Court of Appeals was
ROVER JEEP THAT TURNED TURTLE CAUSING THE DEATH based on a misapprehension of facts; (e) when the factual findings
OF THE LATE HENRY TUGADE. are conflicting; (f) when the Court of Appeals, in making its findings,
went beyond the issues of the case and the same are contrary to
the admissions of both appellant and appellee; (g) when the Court
Transpoeh 36
of Appeals manifestly overlooked certain relevant facts not disputed The inconsistencies in the testimonies of [witnesses] do not render
by the parties and which, if properly considered, would justify a them incredible or their testimonies barren of probative weight. It
different conclusion; and, (h) where the findings of fact of the must be borne in mind that human memory is not as unerring as a
Court of Appeals are contrary to those of the trial court, or are photograph and a persons sense of observation is impaired by many
mere conclusions without citation of specific evidence, or where the factors A truth-telling witness is not always expected to give an
facts set forth by the petitioner are not disputed by the respondent, error-free testimony considering the lapse of time and the treachery
or where the findings of fact of the Court of Appeals are premised of human memory. What is primordial is that the mass of testimony
on the absence of evidence and are contradicted by the evidence jibes on material points, the slight clashing of statements dilute
on record.[19] [Emphasis ours] neither the witnesses credibility nor the veracity of his
testimonyInconsistencies on minor and trivial matters only serve to
In this case, the factual findings of the trial court and the Court strengthen rather than weaken the credibility of witnesses for they
of Appeals are conflicting. Thus, it behooves this Court to review the erase the suspicion of rehearsed testimony.[26]
findings of facts of the lower courts.
In her testimony, Rosie Castrence said that she saw the jeep
The trial court gave weight to the testimony of Rosie turn turtle in front of their bus.
Castrence, a passenger of Dagupan bus who testified that the
Panelco rover jeep turned turtle without being hit by the bus from Q Mrs. Witness, you testified that the PANELCO jeep
behind; while the Court of Appeals pointed out inconsistencies in her turned turtle infront of the Dagupan Bus, how
testimony and gave weight to the version of the employees of close was the Dagupan Bus to the PANELCO jeep
Panelco that the jeep turned turtle because it was hit by the bus from when you saw it turn turtle?
A About five (5) meters infront the Dagupan Bus when it
The trial court reasoned that Castrence, a fish vendor who turn (sic) turtle, sir.
happened to be a passenger at the time of the accident, was
credible and unbiased being a disinterested witness, unlike the other Q In other words, the jeep turned turtle even without
witnesses who are employees of Panelco. It also explained that she being bumped by the Dagupan Bus?
was in a good position to observe in detail what actually happened A Yes, sir.[27]
at the scene of the accident as she was seated at the right front seat
of the bus.[20] She also testified that before the jeep turned turtle she saw
that it was wiggling.
On the other hand, the Court of Appeals considered her
testimony not worthy of belief because of inconsistencies especially A When we were still at Barangay Tiep I have seen
vis-a-vis the testimonies of the employees of Panelco, already that jeep.
namely: Areola, Nacar and Celeste,[21] to which the appellate court
gave greater weight and on which basis it concluded that the xxx xxx xxx
accident was caused by the negligence of Quiambao in driving Bus
Q What did you observe if any about the jeep that you
No. 244 for which he must be held civilly liable. [22]
were following?
In ascertaining the facts of the case, it would have greatly
A The jeep was already wiggling and was zigzagging
aided the courts if photographs of the vehicles were presented
along the way.[28]
during the trial. However, none was presented. Hence, we are
constrained to rely mainly on the testimonies of the witnesses. We find this testimony not only credible but also consistent with
the physical evidence as well as the testimonies of Panelcos own
After reviewing the entire records of the case, we find
compelling reasons to reverse the findings of the Court of Appeals,
and affirm the appreciation of facts of the trial court. Engr. Florencio Celeste, who was seated beside Henry
Tugade, testified that after the jeep turned turtle he saw that the right
It is basic that findings of facts of trial courts are accorded by
wheels were detached and that the spindle was broken.
appellate courts with great, if not conclusive effect. This is because
of the unique advantage enjoyed by trial courts of observing at close Q If it turned turtle, did you observe the jeep suffered
range the demeanor, deportment and conduct of witnesses as they (sic) any mechanical defect or parts were broken?
give their testimonies.[23] Trial courts have the unique advantage of
being able to observe that elusive and incommunicable evidence of A After the jeep turned turtle, I noticed that the right
the witness deportment on the stand while testifying --- the brazen front wheel and rear wheel of the jeep were
face of the liar, the glibness of the schooled witness in reciting a detached, sir.
lesson, the itching over-eagerness of the swift witness, as well as
the honest face of the truthful one.[24] Indeed, assignment of values xxx xxx xxx
to declarations on the witness stand is best done by the trial judge Q Did you see how the wheels were detached?
who, unlike appellate magistrates, can weigh firsthand the testimony
of a witness.[25] A The spindle were (sic) broken, sir.[29]

While there may be inaccuracies in Castrences testimony as Engr. Agustin Erezo, the Officer In Charge of the Motorpool of
pointed out by the appellate court---the mention of a blown out tire, Panelco at the time of the accident, also admitted in his testimony
the seating arrangement of the passengers of the rover jeep, the that the rover jeep was merely assembled in their motorpool, thus:
color of the shirt of the deceased, and the location of all the
passengers of the jeep after it turned turtle---we deem such Q You mentioned that the rover jeep was assembled in
discrepancies negligible considering the totality of her February 1980, if it was assembled in February
testimony. Records show that she was called to the witness stand 1980, what was the condition before you
six years after the accident happened. It is therefore understandable assembled? (sic)
that she would miss recalling some details. As we held in the recent A We put all the spare parts new, we bought all the
case of People vs. Delim: spare parts new, all spare parts are new.

Transpoeh 37
Q So you want to make us understand that it was own employees that the jeep was merely assembled, had an old
almost a junk at the time you repair it? engine, and did not have any speedometer, manifest gross
negligence on the part of Panelco and its driver Honorato Areola for
A We bought the chassis, the engine and everything so which they should be held liable to pay damages. The trial court
all the spare parts are new. correctly held both Panelco and its driver liable for using an unsafe
Q At the time you repaired it in 1980 (interruption) vehicle in transporting Panelcos employees.

A I assembled it.[30] As provided for in the New Civil Code:

xxx xxx xxx Art. 2176. Whoever by act or omission causes damage to another,
Q Before you repaired it in February 1980, was it in there being fault or negligence, is obliged to pay for the damage
running condition?
A Before we repaired it, it was not in running condition, Art. 2180. The obligation imposed by Article 2176 is demandable
there was no jeep before the repair, they are all not only for ones own acts or omissions, but also for those of
spare parts and we assembled it.[31] persons for whom one is responsible.
The driver of the jeep and one of the defendants, Honorato
Areola, also admitted that the engine of the jeep at the time of the xxx xxx xxx
accident was already old.
Employers shall be liable for the damage caused by their employees
Q And what year Mr. Witness is the model of the rover
and household helpers acting within the scope of their assigned
jeep if you really know the model of the different
tasks, even though the former are not engaged in any business or
A I already forgot, sir. It is diesel model.
xxx xxx xxx
Q To make specific Mr. Witness, what year was this
model, was it the model 69, 65 or what?
The responsibility treated of in this article shall cease when the
A I cannot remember, sir. persons herein mentioned prove that they observed all the diligence
of a good father of a family to prevent damage.
Q But in your experience as driver, did this rover
jeepney, new or old, at the time you drove it on
June 12, 1980.
A Quite old already, sir. Areola, as driver of the vehicle, did not personally check the
condition of the vehicle before using it.
Q What about the body of the jeepney, also old like the
engine? Q And when you arrive at the Panelco compound this
jeep was already ready to be driven?
A The body is newly assembled, sir.[32]
A It was in the motor pool we were checking up.
Worth noting also is the admission of Engr. Celeste that the
jeep did not have a speedometer. Q But you yourself did not go to the motor pool to get
the jeep?
Q Now, you estimated the speed of the jeep at 45 to 50
kilometers per hour, because according to you you A I just see the jeep but I did not go under the jeep, sir.
are also a driver and you always look at the
Q You mean to say that the jeep was in an elevated flat
speedometer is that correct?
(sic) form at the time when you saw it at the
A Yes, sir. Panelco compound being checked up?

Q This rover jeep having been made, home made at the A Its not in the elevated place but it was in the Panelco
Panelco Motor pool, did not have speedometer, is compound, I am looking for the Chief Mechanic
that correct? checking up the jeep. I was looking at the jeep
being checked up by the Chief Mechanic, sir.
A It does not have speedometer, so the speedometer
does not function, sir. Q How many mechanics were attending this rover jeep
at the time you were looking at the jeep?
Q Aside from the speedometer there were many parts
of the jeep which were not functioning is that A They were many but who was looking after was the
correct? Chief Mechanic, sir.

A All of those parts in the Panel board except its xxx xxx xxx
speedometer cable.
Q And these mechanics of the Panelco were helping or
Q And so, when you said that the jeep was running attending the Chief Mechanic?
about 45 to 50 kilometers the truth is the speed
A I do not know, sir, because they were doing
could have been even less than 45 kilometers or
more than 50 kilometers.
Q So all these persons were working on the rover jeep,
A That is approximate, sir.[33]
is that correct?
In sum, we find that with the testimony of Castrence, the
A No, sir.[34] (sic)
broken spindle of the rover jeep and the admissions of Panelcos
Transpoeh 38
What was admitted was the fact that it was his first time to drive equitable.[45] We find no cogent reason to disturb the award
said vehicle[35] and that he did not know whether or not the vehicle of P20,000.00 as attorneys fees fixed by the trial court.
was registered at the time of the accident.
Moral damages should also be awarded for the mental
Q xxx You are aware that the rover jeep was not anguish and moral suffering suffered by the heirs of Henry Tugade
registered for that year 1980, the jeep you were brought about by his untimely demise. As held by this Court, the
driving, is that correct? award of moral damages is aimed at a restoration, within the limits
possible, of the spiritual status quo ante and therefore must be
A That is what I do not know, sir. proportionate to the suffering inflicted.[46]
xxx xxx xxx In this case, Napoleon Tugade, father of the deceased,
Q Is it a matter of your practice, that when you drive a testified as follows:
vehicle you do not determine and find out anymore Q How many children do you have?
whether the registration certificate is found in the
vehicle? A We have three (3), sir.
A I relied that the papers are complete, sir. xxx xxx xxx
Q But you yourself do not examine anymore whether Q about your second child, what is his profession or
the vehicle that you are driving, that you are going employment at present, will you name your
to drive has with the registration certificate. second child?
A No more, sir.[36] A He is the late Henry Tugade, an Agricultural
Panelco meanwhile is liable both as owner of the mechanically
defective vehicle under Art. 2176 and as employer of the negligent xxx xxx xxx
driver under Art. 2180.
Q At the time you learn the death of your son Henry,
Under Art. 2180, Panelco as employer of Areola is primarily how did you feel?
and solidarily liable for the quasi-delict committed by the latter. It is
presumed to be negligent in the selection and supervision of its A I was shocked and had a little mental torture because
employees by operation of law and may be relieved of responsibility its a shock that he is still young to die and
for the negligent acts of its driver, who at the time was acting within professional and he is the only one earning among
the scope of his assigned task, only if it can show that it observed my children, so there was mental torture also to
all the diligence of a good father of a family to prevent damage. [37] my wife and to my family.[47]

In this case, Panelco failed to show that it exercised the

diligence of a good father of a family to prevent the damage and that Rizalina Tugade, mother of the victim, also testified as follows:
it was diligent in the selection and supervision of its employees.
Q And Mrs. Witness, at the time your son died do you
Areola in his testimony admitted that he did not undergo know if he was a member of some civic
physical examination when he was hired as driver of the organizations or associations?
company[38] and that there were no records of his examination and
interview during his application for employment.[39] He also admitted A During his lifetime when he was studying, when he
that Panelco never gave them seminars regarding driving but only was student, at the Araneta Univeristy, he was the
received personal advice from the managers.[40] President of the Engineers Club Society.
The use of a vehicle with a defective speedometer has been Q And of course as a mother, having his son that
held by this Court as an indication of the owners laxity in the caliber, if said Henry your son, how did you feel on
operation of its business and in the supervision of its employees; those occasions, as he was a member of some
clearly, a conduct below the diligence required by law. [41] In this organizations.
case, the rover jeep of Panelco did not have a speedometer at all.
A I had a feeling of great pride, sir.
Finding both Panelco and its driver liable for the death of Henry
Tugade, we now consider the amount of damages that should be Q This pride enjoyed as a mother, did it continue to be
awarded to the heirs of the deceased. still in you as a pride enjoyed by a mother.

Following Art. 2206 of the Civil Code and recent jurisprudence, A Well, my pride is no more sir, he already died.
the heirs of the victim in this case are automatically entitled to
Q And when at the time you learned for the first time of
P50,000.00 as indemnity for the death of Henry Tugade. [42]
the death of your son Mrs. Witness, how did you
Actual damages to be recoverable, must actually be proved feel as mother.
and supported by receipts. In this case, the petitioners failed to
A I was miserably shocked, sir.
present any receipt to prove the expenses they
incurred. Nonetheless, temperate damages may still be given to the Q Aside from the shock, what else.
heirs of the victim under Art. 2224 of the Civil Code. [43] Based on
prevailing jurisprudence, the amount of P25,000.00 as temperate A Well, I lost my hope, my pride and happiness.[48]
damages is in order.[44]
Under Art. 2206 of the Civil Code, the ascendants of the
We also find that petitioners are entitled to the award of deceased may demand moral damages for mental anguish by
attorneys fees which is proper where the acts and omissions of a reason of the death of the deceased. Under the circumstances of
party have compelled another to litigate or incur expenses to protect the case at bar an award of P100,000.00 would be appropriate.[49]
his rights and when deemed by the court as just and
As to indemnity for loss of earning capacity, we take note of
Exh. L-1[50] showing Henry Tugades compensation to be Eight
Transpoeh 39
Hundred Three Pesos (P803.00) a month which amounts to an
annual income of P9,636.00. He was 26 years old at the time of his
death. Using the formula enunciated in People vs. Napalit,[51]we
compute his lost earning capacity thus:

Net earning capacity = 2/3 x (80-26) x [P9,636.00 (P9,636.00)]

= 2/3 x (54) x P4,818.00

= 36 x P4,818.00

= P 173,448.00

WHEREFORE, we REVERSE and SET ASIDE the decision of

the Court of Appeals; AFFIRM the decision of the Regional Trial
Court dated July 24, 1990 with the MODIFICATION that Pangasinan
Electric Cooperative, Inc. (PANELCO) and Honorato Areola are
ordered to pay jointly and severally the following amounts to the
heirs of Henry Tugade:

1. Death indemnity in the amount of Fifty Thousand

Pesos (P50,000.00);

2. Temperate damages in the amount of Twenty-Five

Thousand Pesos (P25,000.00);

3. Attorneys fees in the amount of Twenty Thousand

Pesos (P20,000.00);

4. Moral damages in the amount of One Hundred

Thousand Pesos (P100,000.00);

5. Loss of earning capacity in the amount of One

Hundred Seventy Three Thousand, Three
Hundred and Forty Eight Pesos (P173,448.00);

6. the costs of suit.


Transpoeh 40