\ZULUETA vs.

PAN AM
Rafael Zulueta et al vs. Pan American World Airways, Inc.
January 8, 1973
Concepcion, C.J.
Motions for reconsideration of a decision of the Supreme Court

FACTS

Rafael Zulueta was in Wake Island with his wife and children. They were supposed to leave via a Pan American
World Airways plane. Shortly before the flight, Rafael informed the airport manager that he will look for a place to
relieve himself (apparently he went to the beach which was 400 yards from the terminal). He returned only after
an hour and thus caused delay for everyone. As he was reached the ramp leading to the plane, Capt. Zentner
barked at him ―What do you think you are?‖ in an intemperate and arrogant tone and attitude, impelling Rafale to
answer in the same vein.

An altercation between the two ensued. Capt. Zentner then ordered that all the Zuluetas be off-loaded, including
their luggage. Rafael requested that the ladies be allowed to continue the trip Thus, only Rafael was off-loaded.
However, only 3 of his 4 pieces of luggage were returned to him. The fourth one remained in the plane.

After he was left behind, the airport manager sent him a note stating that he will stay there for a minimum of 1
week and the charge would be $13.30/day. However, Rafael was able to secure a flight from Wake to Hawaii,
where he boarded a plane to Japan and was eventually able to return to the Philippines.

THE COURT, IN THIS CASE, ANSWERED THE ARGUMENTS RAISED BY PAN AM IN ITS MOTION FOR
RECONSIDERATION. (I’LL JUST FOLLOW THE ORDER SO WE WON’T GET LOST IN THE STORY)

1. Pan Am argues that Zulueta’s story that he went to the beach to relieve himself is incredible. Pan Am
asserts that he could just have gone to the toilets in the plane or in the terminal or if he indeed went to the
beach, it wouldn’t have taken him one hour. Thus Pan Am says that the reason Zulueta was off-loaded was
a bomb scare which arose when Zulueta was late for the flight and refused to have his bags inspected.

Court’s answer: Pan Am was not able to adduce evidence to support its bomb-scare claim. If indeed there was a
bomb scare, Pan Am’s agents would have had the passengers and their luggage frisked and searched. Also, as Mrs.
Zulueta and Miss Zulueta were in the plane, Rafael couldn’t have brought a bomb. Taking into consideration the
possibilities that the terminal toilets were occupied and the distance of the beach from the terminal and Zulueta’s
ill condition at the time, the Court finally said that it was not prepared to hold that it could not have taken Rafael
an hour to relieve himself.

2. Pan Am argues that the amount of damages awarded was excessive (P700,00), citing the damages
awarded in previous cases to passengers of airlines. (Northwest Airlines, Inc. vs. Cuenca et al, Lopez et al
vs. Pan American World Airways, Air France vs. Carrascoso) + no right to recover exemplary damages +
no right to recover attorney’s fees

Court’s Answer: None of the cases cited were in point. Said cases referred to passengers who were merely
constrained to take a tourist class accommodation despite their first class tickets. In this case, Rafael was ―off-
loaded‖ for having dared to retort to Pan Am’s agent in a tone and manner matching, if not befitting, his
intemperate language and arrogant attitude.

Zentner even referred to the Zuluetas as ―monkeys‖ in the presence of the other passengers and crew – a racial
insult not made openly and publicly in the cited cases. Rafael was off-loaded, not to protect the safety of the
aircraft and its passengers, but to retaliate and punish him for the embarrassment and loss of face suffered by Pan
Am’s agent (Zentner).

Neither may criminal cases, nor the cases for libel and slander cited in the defendant's motion for reconsideration,
be equated with the present case. Indeed, in ordinary criminal cases, the award for damages is, in actual practice,
of purely academic value, for the convicts generally belong to the poorest class of society. There is, moreover, a
fundamental difference between said cases and the one at bar.

The Zuluetas had a contract of carriage with the defendant, as a common carrier, pursuant to which the latter was
bound, for a substantial monetary consideration paid by the former, not merely to transport them to Manila, but,
also, to do so with "extraordinary diligence" or "utmost diligence.‖ (Articles 1733 and 1755, CC) The responsibility
of the common carrier, under said contract, as regards the passenger's safety, is of such a nature, affecting as it
does public interest, that it "cannot be dispensed with" or even "lessened by stipulation, by the posting of notices,
by statements on tickets, or otherwise.‖ (Article 1757)

In the present case, the defendant did not only fail to comply with its obligation to transport Mr. Zulueta to
Manila, but, also, acted in a manner calculated to humiliate him, to chastise him, to make him suffer, to cause to
him the greatest possible inconvenience, by leaving him in a desolate island, in the expectation that he would be
stranded there for a "minimum of one week" and, in addition thereto, charged therefor $13.30 a day.

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

Article 2208 of our Civil Code expressly authorizes the award of attorney's fees "when exemplary damages are
awarded," — as they are in this case —as well as "in any other case where the court deems it just and equitable that
attorney's fees ... be recovered," and We so deem it just and equitable in the present case, considering the
"exceptional" circumstances obtaining therein.

3. Pan Am assails the Court’s non-enforcement of the compromise agreement between Pan Am and Mrs.
Zulueta wherein Mrs. Zulueta agreed to withdraw the case for P50,000.

Mrs. Zulueta filed a motion for the dismissal of the case, as far as she was concerned, having received
P50,000, ―without prejudice to this sum being deducted from the award made in the previous decision.‖

Court’s Answer: The payment made to Mrs. Zulueta is effective, insofar as the amount of P50,000 was
deductible from the award. However, the compromise agreement is ineffective, insofar as the conjugal partnership
is concerned.

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

Pan Am asserts that the damages in this case are not among those forming part of the conjugal partnership
pursuant to Article 153 of the Old Civil Code (NOW ARTICLE 117, which is in the syllabus).

Art. 117. The following are conjugal partnership properties:

(1) Those acquired by onerous title during the marriage at the expense of the common fund, whether the
acquisition be for the partnership, or for only one of the spouses;

(2) Those obtained from the labor, industry, work or profession of either or both of the spouses;

(3) The fruits, natural, industrial, or civil, due or received during the marriage from the common property, as well
as the net fruits from the exclusive property of each spouse;

(4) The share of either spouse in the hidden treasure which the law awards to the finder or owner of the property
where the treasure is found; ***(This is the only reference to hidden treasure I could find. This is not even in the
case because Article 153 of the Old Civil Code mentions only the first 3 numbers here. But this case is under right
to hidden treasure in our syllabus. I don’t know why )

(5) Those acquired through occupation such as fishing or hunting;

(6) Livestock existing upon the dissolution of the partnership in excess of the number of each kind brought to the
marriage by either spouse; and
(7) Those which are acquired by chance, such as winnings from gambling or betting. However, losses therefrom
shall be borne exclusively by the loser-spouse. (153a, 154a, 155, 159)

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

ART. 148 (now Article 109). The following shall be the exclusive property of each spouse:
(1) That which is brought to the marriage as his or her own;
(2) That which each acquires, during the marriage, by lucrative title;
(3) That which is acquired by right of redemption or by exchange with other property belonging to
only one of the spouses;
(4) That which is purchased with exclusive money of the wife or of the husband.

The damages involved in the case at bar do not come under any of these provisions. What is more, if "(t)hat which
is acquired by right of redemption or by exchange with other property belonging to only one of the spouses," and
"(t)hat which is purchased with exclusive money of the wife or of the husband," belong exclusively to such wife or
husband, it follows necessarily that that which is acquired with money of the conjugal partnership belongs thereto
or forms part thereof.

There is no proof as to the purpose of the Zuluetas’ trip, neither is there any evidence that the money used to pay
for the plane tickets came from the conjugal funds. Absence such proof, the presumption is that the purpose of the
trip was for the common benefit of the Zuluetas and the money had come from the conjugal funds, unless there is
proof to the contrary (Manresa, Codigo Civil Espanol). Also, there is a presumption that all property acquired
during the marriage belongs to the conjugal property of the spouses (Article 116, NCC, then Art. 160).
In the present case, the contract of carriage was concededly entered into, and the damages claimed by the
plaintiffs were incurred, during marriage. Hence, the rights accruing from said contract, including those resulting
from breach thereof by the defendant, are presumed to belong to the conjugal partnership of Mr. and Mrs. Zulueta.

DISPOSITIVE: First Supreme Court decision is affirmed.