G.R. No.
119756 March 18, 1999 The private respondents brought this suit for breach of contract of carriage in the Regional Trial
FORTUNE EXPRESS, INC., petitioner,
vs.
COURT OF APPEALS, PAULIE U.CAORONG, and minor childrenYASSER KING CAORONG,
ROSE HEINNI and PRINCE ALEXANDER, all surnamed CAORONG, and represented by their
mother PAULIE U. CAORONG, respondents.
MENDOZA, J.:
This is an appeal by petition for review on certiorari of the decision, dated July 29, 1994, of the
Court of Appeals, which reversed the decision of the Regional Trial Court, Branch VI, Iligan City.
The aforesaid decision of the trial court dismissed the complaint of public respondents against
petitioner for damages for breach of contract of carriage filed on the ground that petitioner had not
exercised the required degree of diligence in the operation of one of its buses. Atty. Talib Caorong,
whose heirs are private respondents herein, was a passenger of the bus and was killed in the
ambush involving said bus.
The facts of the instant case are as follows:
Petitioner is a bus company in northern Mindanao. Private respondent Paulie Caorong is the widow
of Atty. Caorong, while private respondents Yasser King, Rose Heinni, and Prince Alexander are
their minor children.
On November 18, 1989, a bus of petitioner figured in an accident with a jeepney in Kauswagan,
Lanao del Norte, resulting in the death of several passengers of the jeepney, including two
Maranaos. Crisanto Generalao, a volunteer field agent of the Constabulary Regional Security Unit
No. X, conducted an investigation of the accident. He found that the owner of the jeepney was a
Maranao residing in Delabayan, Lanao del Norte and that certain Maranaos were planning to take
revenge on the petitioner by burning some of its buses. Generalao rendered a report on his findings
to Sgt. Reynaldo Bastasa of the Philippine Constabulary Regional Headquarters at Cagayan de Oro.
Upon the instruction of Sgt. Bastasa, he went to see Diosdado Bravo, operations manager of
petitioner, its main office in Cagayan de Oro City. Bravo assured him that the necessary precautions
to insure the safety of lives and property would be taken.1
At about 6:45 P.M. on November 22, 1989, three armed Maranaos who pretended to be
passengers, seized a bus of petitioner at Linamon, Lanao del Norte while on its way to Iligan City.
Among the passengers of the bus was Atty. Caorong. The leader of the Maranaos, identified as one
Bashier Mananggolo, ordered the driver, Godofredo Cabatuan, to stop the bus on the side of the
highway. Mananggolo then shot Cabatuan on the arm, which caused him to slump on the steering
wheel. The one of the companions of Mananggolo started pouring gasoline inside the bus, as the
other held the passenger at bay with a handgun. Mananggolo then ordered the passenger to get off
the bus. The passengers, including Atty. Caorong, stepped out of the bus and went behind the
bushes in a field some distance from the highway. 2
However, Atty. Caorong returned to the bus to retrieve something from the overhead rack. at that
time, one of the armed men was pouring gasoline on the head of the driver. Cabatuan, who had
meantime regained consciousness, heard Atty. Caorong pleading with the armed men to spare the
driver as he was innocent of any wrong doing and was only trying to make a living. The armed men
were, however, adamant as they repeated the warning that they were going to burn the bus along
with its driver. During this exchange between Atty. Caorong and the assailants, Cabatuan climbed
out of the left window of the bus and crawled to the canal on the opposite side of the highway. He
heard shots from inside the bus. Larry de la Cruz, one of the passengers, saw that Atty. Caorong
was hit. Then the bus was set on fire. Some of the passengers were able to pull Atty. Caorong out of
the burning bus and rush him to the Mercy Community Hospital in Iligan City, but he died while
undergoing operation.3
Court, Branch VI, Iligan City. In its decision, dated December 28, 1990, the trial court dismissed the
complaint, holding as follows:
The fact that defendant, through Operations Manager Diosdado Bravo, was informed of
the "rumors" that the Moslems intended to take revenge by burning five buses of defendant is
established since the latter also utilized Crisanto Generalao as a witness. Yet despite this
information, the plaintiffs charge, defendant did not take proper precautions. . . . Consequently,
plaintiffs now fault the defendant for ignoring the report. Their position is that the defendant should
have provided its buses with security guards. Does the law require common carriers to install
security guards in its buses for the protection and safety of its passengers? Is the failure to post
guards on omission of the duty to "exercise the diligence of a good father of the family" which could
have prevented the killing of Atty. Caorong? To our mind, the diligence demanded by law does not
include the posting of security guard in buses. It is an obligation that properly belongs to the State.
Besides, will the presence of one or two security guards suffice to deter a determined assault of the
lawless and thus prevent the injury complained of? Maybe so, but again, perhaps not. In other
words, the presence of a security guard is not a guarantee that the killing of Atty. Caorong would
have been definitely avoided.
xxx xxx xxx
Accordingly, the failure of defendant to accord faith and credit to the report of Mr.
Generalao and the fact that it did not provide security to its buses cannot, in the light of the
circumstances, be characterized as negligence.
Finally, the evidence clearly shows that the assalants did not have the least intention of
the harming any of the passengers. They ordered all the passengers to alight and set fire on the bus
only after all the passengers were out of danger. The death of Atty. Caorong was an unexpected
and unforseen occurrense over which defendant had no control. Atty. Caorong performed an act of
charity and heroism in coming to the succor of the driver even in the face of danger. He deserves
the undying gratitude of the driver whose life he saved. No one should blame him for an act of
extraordinary charity and altruism which cost his life. But neither should any blame be laid on the
doorstep of defendant. His death was solely due to the willfull acts of the lawless which defendant
could neither prevent nor to stop.
WHEREFORE, in view of the foregoing, the complaint is hereby dismissed. For lack of
merit, the counter-claim is likewise dismissed. No costs.4
On appeal, however, the Court of Appeals reversed. It held:
In the case at bench, how did defendant-appellee react to the tip or information that
certain Maranao hotheads were planning to burn five of its buses out of revenge for the deaths of
two Maranaos in an earlier collision involving appellee's bus? Except for the remarks of appellee's
operations manager that "we will have our action . . . . and I'll be the one to settle it personally,"
nothing concrete whatsoever was taken by appellee or its employees to prevent the execution of the
threat. Defendant-appellee never adopted even a single safety measure for the protection of its
paying passengers. Were there available safeguards? Of course, there were: one was frisking
passengers particularly those en route to the area where the threats were likely to be carried out
such as where the earlier accident occurred or the place of influence of the victims or their locality. If
frisking was resorted to, even temporarily, . . . . appellee might be legally excused from liabilty.
Frisking of passengers picked up along the route could have been implemented by the bus
conductor; for those boarding at the bus terminal, frisking could have been conducted by him and
perhaps by additional personnel of defendant-appellee. On hindsight, the handguns and especially
the gallon of gasoline used by the felons all of which were brought inside the bus would have been
discovered, thus preventing the burning of the bus and the fatal shooting of the victim.
1
 Appellee's argument that there is no law requiring it to provide guards on its buses and
that the safety of citizens is the duty of the g overnment, is not well taken. To be sure,
appellee is not expected to assign security guards on all its buses; if at all, it has the duty to post
guards only on its buses plying predominantly Maranaos areas. As discussed in the next preceding
paragraph, least appellee could have done in response to the report was to adopt a system of
verification such as the frisking of passengers boarding at its buses. Nothing, and no repeat, nothing
at all, was done by defendant-appellee to protect its innocent passengers from the danger arising
from the "Maranao threats." It must be observed that frisking is not a novelty as a safety measure in
our society. Sensitive places — in fact, nearly all important places — have applied this method of
security enhancement. Gadgets and devices are avilable in the market for this purpose. It would not
have weighed much against the budget of the bus company if such items were made available to its
personnel to cope up with situations such as the "Maranaos threats."
In view of the constitutional right to personal privacy, our pronouncement in this decision
should not be construed as an advocacy of mandatory frisking in all public conveyances. What we
are saying is that given the circumstances obtaining in the case at bench that: (a) two Maranaos
died because of a vehicular collision involving one of appellee's vehicles; (b) appellee received a
written report from a member of the Regional Security Unit, Constabulary Security Group, that the
tribal/ethnic group of the two deceased were planning to burn five buses of appellee out of revenge;
and (c) appelle did nothing — absolutely nothing — for the safety of its passengers travelling in the
area of influence of the victims, appellee has failed to exercise the degree of dilegence required of
common carriers. Hence, appellee must be adjudge liable.
xxx xxx xxx
WHEREFORE the decision appealed from is hereby REVERSED and another rendered ordering
defendant-appellee to pay plaintiffs-appellants the following:
1) P3,399,649.20 as death indemnity;
2) P50,000.00 and P500.00 per appearance as attorney's fee and
5 is inevitable. In Yobido v. Court of Appeals, 7 we held that to considered as force majeure, it is
Costs against defendant-appellee.
Hence, this appeal. Petitioner contends:
(A) THAT PUBLIC RESPONDENT ERRED IN REVERSING THE DECISION OF THE REGIONAL
TRIAL COURT DATED DECEMBER 28, 1990 DISMISSING THE COMPLAINT AS WELL AS THE
COUNTERCLAIM, AND FINDING FOR PRIVATE RESPONDENTS BY ORDERING PETITIONER
TO PAY THE GARGANTUAN SUM OF P3,449,649.20 PLUS P500.00 PER APPEARANCE AS
ATTORNEY'S FEES, AS WELL AS DENYING PETITIONERS MOTION FRO RECONSIDERATION
AND THE SUPPLEMENT TO SAID MOTION, WHILE HOLDING, AMONG OTHERS, THAT THE
PETITIONER BREACHED THE CONTRACT OF THE CARRIAGE BY ITS FAILURE TO
EXCERCISE THE REQUIRED DEGREE OF DILIGENCE;
(B) THAT THE ACTS OF THE MARANAO OUTLAWS WERE SO GRAVE, IRRESISTABLE,
VIOLENT, AND FORCEFULL, AS TO BE REGARDED AS CASO FORTUITO; AND
(C) THAT PUBLIC RESPONDENT COURT OF APPEALS SERIOUSLY ERRED IN HOLDING
THAT PETITIONER COULD HAVE PROVIDED ADEQUATE SECURITY IN PREDOMINANTLY
MUSLIM AREAS AS PART OF ITS DUTY TO OBSERVE EXTRA-ORDINARY DILIGENCE AS A
COMMON CARRIER.
The instant has no merit.
First. Petitioner's Breach of the Contract of Carriage.
Art. 1763 of the Civil Code provides that a common carrier is responsible for injuries suffered by a
passenger on account of wilfull acts of other passengers, if the employees of the common carrier
could have prevented the act through the exercise of the diligence of a good father of a family. In the
present case, it is clear that because of the negligence of petitioner's employees, the seizure of the
bus by Mananggolo and his men was made possible.
Despite warning by the Philippine Constabulary at Cagayan de Oro that the Maranaos were
planning to take revenge on the petitioner by burning some of its buses and the assurance of
petitioner's operation manager, Diosdado Bravo, that the necessary precautions would be taken,
petitioner did nothing to protect the safety of its passengers.
Had petitioner and its employees been vigilant they would not have failed to see that the malefactors
had a large quantity of gasoline with them. Under the circumstances, simple precautionary
measures to protect the safety of passengers, such as frisking passengers and inspecting their
baggages, preferably with non-intrusive gadgets such as metal detectors, before allowing them on
board could have been employed without violating the passenger's constitutional rights. As this
Court amended in Gacal v. Philippine Air Lines, Inc., 6 a common carrier can be held liable for failing
to prevent a hijacking by frisking passengers and inspecting their baggages.
From the foregoing, it is evident that petitioner's employees failed to prevent the attack on one of
petitioner's buses because they did not exercise the diligence of a good father of a family. Hence,
petitioner should be held liable for the death of Atty. Caorong.
Second. Seizure of Petitioner's Bus not a Case of Force Majeure
The petitioner contends that the seizure of its bus by the armed assailants was a fortuitous event for
which it could not be held liable.
Art. 1174 of the Civil Code defines a fortuitous event as an occurence which could not be foreseen,
necessary that (1) the cause of the breach of the obligation must be independent of the human will;
(2) the event must be either unforeseeable or unavoidable; (3) the occurence must be render it
impossible for the debtor to fulfill the obligation in a normal manner; and (4) the obligor must be free
of participation in, or aggravation of, the injury to the creditor. The absence of any of the requisites
mentioned above would prevent the obligor from being excused from liability.
Thus, in Vasquez v. Court of Appeals, 8 it was held that the common carrier was liable for its failure
to take the necessary precautions against an approaching typhoon, of which it was warned, resulting
in the loss of the lives of several passengers. The event was forseeable, and, thus, the second
requisite mentioned above was not fulfilled. This ruling applies by analogy to the present case.
Despite the report of PC agent Generalao that the Maranaos were going to attack its buses,
petitioner took no steps to safeguard the lives and properties of its passengers. The seizure of the
bus of the petitioner was foreseeable and, therefore, was not a fortuitous event which would exempt
petitioner from liabilty.
Petitioner invokes the ruling in Pilapil v. Court of Appeals, 9 and De Guzman v. Court of
Appeals, 10 in support of its contention that the seizure of its bus by the assailants constitutes force
majeure. In Pilapil v. Court of Appeals, 11 it was held that a common carrier is not liable for failing to
install window grills on its buses to protect the passengers from injuries cause by rocks hurled at the
bus by lawless elements. On the other hand, in De Guzman v. Court of Appeals, 12 it was ruled that
a common carriers is not responsible for goods lost as a result of a robbery which is attended by
grave or irresistable threat, violence, or force.
2
It is clear that the cases of Pilapil and De Guzman do not apply to the prensent case. Art. 1755 of necessary precautions would be take, the petitioner and its employees did nothing to protect the
the Civil Code provides that "a common carrier is bound to carry the passengers as far as human safety of passengers. Under the circumtances, we deem it reasonable to award private respondents
care and foresight can provide, using the utmost diligence of very cautious persons, with due regard exemplary damages in the amount of P100,000.00.17
for all the circumstances." Thus, we held in Pilapil and De Guzman that the respondents therein
were not negligent in failing to take special precautions against threats to the safety of passengers
Attorney's Fees. Pursuant to Art. 2208, attorney's fees may be recovered when, as in the instant
which could not be foreseen, such as tortious or criminal acts of third persons. In the present case,
case, exemplary damages are awarded. In the recent case of Sulpicio Lines, Inc. v. Court of
this factor of unforeseeability (the second requisite for an event to be considered force majeure) is
Appeals, 18 we held an award of P50,000.00 as attorney's fees to be reasonable. Hence, the private
lacking. As already stated, despite the report of PC agent Generalao that the Maranaos were
respondents are entitled to attorney's fees in that amount.
planning to burn some of petitioner's buses and the assurance of petitioner's operation manager
(Diosdado Bravo) that the necessary precautions would be taken, nothing was really done by
petitioner to protect the safety of passengers. Compensation for Loss of Earning Capacity. Art. 1764 of the Civil Code, in relation to Art. 2206
thereof, provides that in addition to the indemnity for death arising from the breach of contrtact of
carriage by a common carrier, the "defendant shall be liable for the loss of the earning capacity of
Third. Deceased not Guilty of Contributory Negligence
the deceased, and the indemnity shall be paid to the heirs of the latter." The formula established in
decided cases for computing net earning capacity is as follows:19
The petitioner contends that Atty. Caorong was guilty of contributory negligence in returning to the
bus to retrieve something. But Atty. Caorong did not act recklessly. It should be pointed out that the
Gross Necessary
intended targets of the violence were petitioners and its employees, not its passengers. The
Net Earning = Life x Annual — Living
assailant's motive was to retaliate for the loss of life of two Maranaos as a result of the collision
Capacity Expectancy Income Expenses
between petitioner's bus and the jeepney in which the two Maranaos were riding. Mananggolo, the
leader of the group which had hijacked the bus, ordered the passengers to get off the bus as they
intended to burn it and its driver. The armed men actually allowed Atty. Caorong to retrieve Life expectancy is equivalent to two thirds (2/3) multiplied by the difference of eighty (80) and the
something from the bus. What apparently angered them was his attempt to help the driver of the bus age of the deceased. 20 Since Atty. Caorong was 37 years old at that time of his death, 21 he had a
by pleading for his life. He was playing the role of the good Samaritan. Certainly, this act cannot life expectancy of 28 2/3 more years.22 His projected gross annual income, computed based on his
considered an act of negligence, let alone recklessness. monthly salary of P11,385.00. 23 as a lawyer in the Department of Agrarian Reform at the time of his
death, was P148,005.00. 24 Allowing for necessary living expenses of fifty percent (50%) 25 of his
projected gross annual income, his total earning capacity amounts to P2,121,404.90. 26 Hence, the
Fourth. Petitioner Liable to Private Respaondents for Damages
petitioner is liable to the private respondents in the said amount as a compensation for loss of
earning capacity.
We now consider the question of damages that the heirs of Atty. Caorong, private respondents
herein, are entitled to recover from the petitioner.
WHEREFORE, the decision, dated July 29, 1994, of the Court of Appeals is hereby AFFIRMED with
the MODIFICATION that petitioner Fortune Express, Inc. is ordered to pay the following amounts to
Indemnity for Death. Art. 1764 of the Civil Code, in relation to Art. 2206 thereof, provides for the private respondents Paulie, Yasser King, Rose Heinni, and Prince Alexander Caorong:
payment of indemnity for the death of passengers caused by the breach of contract of carriage by a
common carrier. Initially fixed in Art. 2206 at P3,000.00, the amount of the said indemnity for death
1. death indemnity in the amount of fifty thousand pesos (P50,000.00);
has through the years been gradually increased in view of the declining value of the peso. It is
presently fixed at P50,000.00. 13 Private respondents are entitled to this amount.
2. actual damages in the amount of thirty thousand pesos (P30,000.00);
Actual Damages. Art. 2199 provides that "except as provided by law or by stipulation, one is entitled
to an adequate compensation only for such pecuniary loss suffered by him as has duly proved." The 3. moral damages in the amount of one hundred thousand pesos (P100,000.00);
trial court found that the private respondents spent P30,000.00 for the wake and burial of Atty.
Caorong. 14 Since petitioner does not question this finding of the trial court, it is liable to private
4. exemplary damages in the amount of one hundred thousand pesos (P100,000.00);
respondent in the said amount as actual damages.

5. attorney's fees in the amount of fifty thousand pesos (P50,000.00);

Moral Damages. Under Art. 2206, the "spouse, legitimate and illegitimate descendants and
ascendants of the deceased may demand moral damages for mental anguish by reason of the
death of the deceased." The trial court found that private respondent Paulie Caorong suffered pain 6. compensation for loss of earning capacity in the amount of two million one hundred twenty-one
from the death of her husband and worry on how to provide support for their minor children, private thousand four hundred four pesos and ninety centavos (P2,121,404.90); and
respondents Yasser King, Rose Heinni, and Prince Alexander. 15 The petitioner likewise does not
question this finding of the trial court. Thus, in accordance with recent decisions of this Court, 16 we
hold that the petitioner is liable to the private respondents in the amount of P100,000.00 as moral 7. cost of suits.
damages for the death of Atty. Caorong.
SO ORDERED.
Exemplary Damages. Art. 2232 provides that "in contracts and quasi-contracts, the court may award
exemplary damages if the defendant acted in a wanton, fraudulent, reckless, oppressive, or
malevolent reckless manner." In the present case, the petitioner acted in a wanton and reckless
manner. Despite warning that the Maranaos were planning to take revenge against the petitioner by
burning some of its buses, and contary to the assurance made by its operations manager that the

3
G.R. No. L-16629             January 31, 1962
SOUTHERN LINES, INC., petitioner,
vs.
COURT OF APPEALS and CITY OF ILOILO, respondents.
DE LEON, J.:
This is a petition to review on certiorari the decision of the Court of Appeals in CA-G.R. No. 15579-R
affirming that of the Court of First Instance of Iloilo which sentenced petitioner Southern Lines, Inc.
to pay respondent City of Iloilo the amount of P4,931.41.
Sometime in 1948, the City of Iloilo requisitioned for rice from the National Rice and Corn
Corporation (hereafter referred to as NARIC) in Manila. On August 24 of the same year, NARIC,
pursuant to the order, shipped 1,726 sacks of rice consigned to the City of Iloilo on board the SS
"General Wright" belonging to the Southern Lines, Inc. Each sack of rice weighed 75 kilos and the
entire shipment as indicated in the bill of lading had a total weight of 129,450 kilos. According to the
bill of lading, the cost of the shipment was P63,115.50 itemized and computed as follows: .
Unit Price per bag P36.25 P62,567.50
Handling at P0.13 per bag 224.38
Trucking at P2.50 per bag 323.62
T o t a l . . . . . .. . . . . 63,115.50
On September 3, 1948, the City of Iloilo received the shipment and paid the amount of P63,115.50.
However, it was noted that the foot of the bill of lading that the City of Iloilo 'Received the above
mentioned merchandise apparently in same condition as when shipped, save as noted below:
actually received 1685 sacks with a gross weight of 116,131 kilos upon actual weighing. Total
shortage ascertained 13,319 kilos." The shortage was equivalent to 41 sacks of rice with a net
weight of 13,319 kilos, the proportionate value of which was P6,486.35.
On February 14, 1951 the City of Iloilo filed a complaint in the Court of First Instance of Iloilo against
NARIC and the Southern Lines, Inc. for the recovery of the amount of P6,486.35 representing the
value of the shortage of the shipment of rice. After trial, the lower court absolved NARIC from the
complaint, but sentenced the Southern Lines, Inc. to pay the amount of P4,931.41 which is the
difference between the sum of P6,486.35 and P1,554.94 representing the latter's counterclaim for
handling and freight.
The Southern Lines, Inc. appealed to the Court of Appeals which affirmed the judgment of the trial
court. Hence, this petition for review.
The only question to be determined in this petition is whether or not the defendant-carrier, the herein
petitioner, is liable for the loss or shortage of the rice shipped.
Article 361 of the Code of Commerce provides: .
ART. 361. — The merchandise shall be transported at the risk and venture of the shipper,
if the contrary has not been expressly stipulated.
As a consequence, all the losses and deteriorations which the goods may suffer during
the transportation by reason of fortuitous event, force majeure, or the inherent nature and
defect of the goods, shall be for the account and risk of the shipper.1äwphï1.ñët
Proof of these accidents is incumbent upon the carrier.
Article 362 of the same Code provides: .
ART. 362. — Nevertheless, the carrier shall be liable for the losses and damages resulting
from the causes mentioned in the preceding article if it is proved, as against him, that they
arose through his negligence or by reason of his having failed to take the precautions
which usage his establisbed among careful persons, unless the shipper has committed
fraud in the bill of lading, representing the goods to be of a kind or quality different from
what they really were.
If, notwithstanding the precautions referred to in this article, the goods transported run the
risk of being lost, on account of their nature or by reason of unavoidable accident, there
being no time for their owners to dispose of them, the carrier may proceed to sell them,
placing them for this purpose at the disposal of the judicial authority or of the officials
designated by special provisions.
Under the provisions of Article 361, the defendant-carrier in order to free itself from liability, was only
obliged to prove that the damages suffered by the goods were "by virtue of the nature or defect of
the articles." Under the provisions of Article 362, the plaintiff, in order to hold the defendant liable,
was obliged to prove that the damages to the goods by virtue of their nature, occurred on account of
its negligence or because the defendant did not take the precaution adopted by careful persons.
(Government v. Ynchausti & Co., 40 Phil. 219, 223).
Petitioner claims exemption from liability by contending that the shortage in the shipment of rice was
due to such factors as the shrinkage, leakage or spillage of the rice on account of the bad condition
of the sacks at the time it received the same and the negligence of the agents of respondent City of
Iloilo in receiving the shipment. The contention is untenable, for, if the fact of improper packing is
known to the carrier or his servants, or apparent upon ordinary observation, but it accepts the goods
notwithstanding such condition, it is not relieved of liability for loss or injury resulting thereform. (9
Am Jur. 869.) Furthermore, according to the Court of Appeals, "appellant (petitioner) itself frankly
admitted that the strings that tied the bags of rice were broken; some bags were with holes and
plenty of rice were spilled inside the hull of the boat, and that the personnel of the boat collected no
less than 26 sacks of rice which they had distributed among themselves." This finding, which is
binding upon this Court, shows that the shortage resulted from the negligence of petitioner.
Invoking the provisions of Article 366 of the Code of Commerce and those of the bill of lading,
petitioner further contends that respondent is precluded from filing an action for damages on
account of its failure to present a claim within 24 hours from receipt of the shipment. It also cites the
cases of Government v. Ynchausti & Co., 24 Phil. 315 and Triton Insurance Co. v. Jose, 33 Phil.
194, ruling to the effect that the requirement that the claim for damages must be made within 24
hours from delivery is a condition precedent to the accrual of the right of action to recover damages.
These two cases above-cited are not applicable to the case at bar. In the first cited case, the plaintiff
never presented any claim at all before filing the action. In the second case, there was payment of
the transportation charges which precludes the presentation of any claim against the carrier. (See
Article 366, Code of Commerce.) It is significant to note that in the American case of Hoye v.
Pennsylvania Railroad Co., 13 Ann. Case. 414, it has been said: .
... "It has been held that a stipulation in the contract of shipment requiring the owner of the
goods to present a notice of his claim to the carrier within a specified time after the goods
have arrived at their destination is in the nature of a condition precedent to the owner's
right to enforce a recovery, that he must show in the first instance that be has complied
4
 with the condition, or that the circumstances were such that to have complied with it would
have required him to do an unreasonable thing. The weight of authority, however, sustains
the view that such a stipulation is more in the nature of a limitation upon the owner's right
to recovery, and that the burden of proof is accordingly on the carrier to show that the
limitation was reasonable and in proper form or within the time stated." (Hutchinson on
Carrier, 3d ed., par. 44) Emphasis supplied.
In the case at bar, the record shows that petitioner failed to plead this defense in its answer to
respondent's complaint and, therefore, the same is deemed waived (Section 10, Rule 9, Rules of
Court), and cannot be raised for the first time at the trial or on appeal. (Maxilom v. Tabotabo, 9 Phil.
390.) Moreover, as the Court of Appeals has said: .
... the records reveal that the appellee (respondent) filed the present action, within a
reasonable time after the short delivery in the shipment of the rice was made. It should be
recalled that the present action is one for the refund of the amount paid in excess, and not
for damages or the recovery of the shortage; for admittedly the appellee (respondent) had
paid the entire value of the 1726 sacks of rice, subject to subsequent adjustment, as to
shortages or losses. The bill of lading does not at all limit the time for filing an action for
the refund of money paid in excess.
WHEREFORE, the decision of the Court of Appeals is hereby affirmed in all respects and the
petition for certiorari denied.
With costs against the petitioner.
G.R. No. L-23733            October 31, 1969
HERMINIO L. NOCUM, plaintiff-appellee,
vs.
LAGUNA TAYABAS BUS COMPANY, defendant-appellant.
BARREDO, J.:
Appeal of the Laguna Tayabas Bus Co., defendant in the Court below, from a judgment of the said
court (Court of First Instance of Batangas) in its Civil Case No. 834, wherein appellee Herminio L.
Nocum was plaintiff, sentencing appellant to pay appellee the sum of P1,351.00 for actual damages
and P500.00 as attorney's fees with legal interest from the filing of the complaint plus costs.
Appellee, who was a passenger in appellant's Bus No. 120 then making a trip within the barrio of
Dita, Municipality of Bay, Laguna, was injured as a consequence of the explosion of firecrackers,
contained in a box, loaded in said bus and declared to its conductor as containing clothes and
miscellaneous items by a co-passenger. The findings of fact of the trial court are not assailed. The
appeal is purely on legal questions.
Appellee has not filed any brief. All that We have before Us is appellant's brief with the following
assignment of errors:
I (12) kilos and because of company regulation, he charged him for it twenty-five centavos
BASED ON THE FACTS THE LOWER COURT FOUND AS ESTABLISHED, IT ERRED
AS A MATTER OF LAW IN NOT ABSOLVING APPELLANT FROM LIABILITY
RESULTING FROM THE EXPLOSION OF FIRECRACKERS CONTAINED IN A
PACKAGE, THE CONTENTS OF WHICH WERE MISREPRESENTED BY A
PASSENGER.
II
THE LOWER COURT ERRED, AS A MATTER OF LAW, IN AWARDING DAMAGES
WITH LEGAL INTEREST IN FAVOR OF THE APPELLEE.
III
THE LOWER COURT ERRED IN NOT DISMISSING THE COMPLAINT, WITH COSTS
AGAINST THE APPELLEE.
Upon consideration of the points raised and discussed by appellant, We find the appeal to be well
taken.
The main basis of the trial court's decision is that appellant did not observe the extraordinary or
utmost diligence of a very cautious person required by the following articles of the Civil Code:
ART. 1733. Common carriers, from the nature of their business and for reasons of public
policy, are bound to observe extraordinary diligence in the vigilance over the goods and
for the safety of the passengers transported by them, according to all the circumstances of
each case.
Such extraordinary diligence in the vigilance over the goods is further expressed in
articles 1734, 1735, and 1745, Nos. 5, 6, and 7, while the extraordinary diligence for the
safety of the passengers is further set forth in articles 1755 and 1756.
ART. 1755. A common carrier is bound to carry the passengers safely as far as human
care and foresight can provide, using the utmost diligence of very cautious persons, with a
due regard for all the circumstances.
ART 1756. In case of death of or injuries to passengers, common carriers are presumed
to have been at fault or to have acted negligently, unless they prove that they observed
extraordinary diligence as prescribed in articles 1733 and 1755.
Analyzing the evidence presented by the parties, His Honor found:
According to Severino Andaya, a witness for the plaintiff, a man with a box went up the
baggage compartment of the bus where he already was and said box was placed under
the seat. They left Azcarraga at about 11:30 in the morning and when the explosion
occurred, he was thrown out. PC investigation report states that thirty seven (37)
passengers were injured (Exhibits "O" and "2").
The bus conductor, Sancho Mendoza, testified that the box belonged to a passenger
whose name he does not know and who told him that it contained miscellaneous items
and clothes. He helped the owner in loading the baggage which weighed about twelve
(P0.25). From its appearance there was no indication at all that the contents were
explosives or firecrackers. Neither did he open the box because he just relied on the word
of the owner.
5
 Dispatcher Nicolas Cornista of defendant company corroborrated the testimony of
Mendoza and he said, among other things, that he was present when the box was loaded
in the truck and the owner agreed to pay its fare. He added that they were not authorized
to open the baggages of passengers because instruction from the management was to
call the police if there were packages containing articles which were against regulations.
xxx           xxx           xxx
There is no question that Bus No. 120 was road worthy when it left its Manila Terminal for
Lucena that morning of December 5, 1960. The injuries suffered by the plaintiff were not
due to mechanical defects but to the explosion of firecrackers inside the bus which was
loaded by a co-passenger.
... Turning to the present case, it is quite clear that extraordinary or utmost diligence of a
very cautious person was not observed by the defendant company. The service manual,
exhibits "3" and "3-A," prohibits the employees to allow explosives, such as dynamite and
firecrackers to be transported on its buses. To implement this particular rule for 'the safety
of passengers, it was therefore incumbent upon the employees of the company to make
the proper inspection of all the baggages which are carried by the passengers.
But then, can it not be said that the breach of the contract was due to fortuitous event?
The Supreme Court in the case of Lasam vs. Smith, 45 Phil. 657, quoted Escriche's
definition of caso fortuito as "an unexpected event or act of God which could neither be
foreseen nor resisted, such as floods, torrents, shipwrecks, conflagrations, lightning,
compulsions, insurrections, destructions of buildings by unforeseen accidents and other
occurrences of a similar nature." In other words, the cause of the unexpected event must
be independent of the will of man or something which cannot be avoided. This cannot be
said of the instant case. If proper and rigid inspection were observed by the defendant, the
contents of the box could have been discovered and the accident avoided. Refusal by the
passenger to have the package opened was no excuse because, as stated by Dispatcher
Cornista, employees should call the police if there were packages containing articles
against company regulations. Neither was failure by employees of defendant company to
detect the contents of the packages of passengers because like the rationale in the
Necesito vs. Paras case (supra), a passenger has neither choice nor control in the
exercise of their discretion in determining what are inside the package of co-passengers
which may eventually prove fatal.
We cannot agree. No doubt, the views of His Honor do seem to be in line with the reasons that the
Code Commission had for incorporating the above-quoted provisions in its draft of the Civil Code.
Indeed, in approving the said draft, Congress must have concurred with the Commission that by
requiring the highest degree of diligence from common carriers in the safe transport of their
passengers and by creating a presumption of negligence against them, the recklessness of their
drivers which is a common sight even in crowded areas and, particularly, on the highways
throughout the country may, somehow, if not in a large measure, be curbed. We are not convinced,
however, that the exacting criterion of said provisions has not been met by appellant in the
circumstances of this particular case.
It is undisputed that before the box containing the firecrackers were allowed to be loaded in the bus
by the conductor, inquiry was made with the passenger carrying the same as to what was in it, since
its "opening ... was folded and tied with abaca." (Decision p. 16, Record on Appeal.) According to
His Honor, "if proper and rigid inspection were observed by the defendant, the contents of the box
could have been discovered and the accident avoided. Refusal by the passenger to have the
package opened was no excuse because, as stated by Dispatcher Cornista, employees should call
the police if there were packages containing articles against company regulations." That may be
true, but it is Our considered opinion that the law does not require as much. Article 1733 is not as
unbending as His Honor has held, for it reasonably qualifies the extraordinary diligence required of
common carriers for the safety of the passengers transported by them to be "according to all the
circumstances of each case." In fact, Article 1755 repeats this same qualification: "A common carrier
is bound to carry the passengers safely as far as human care and foresight can provide, using the
utmost diligence of very cautious persons, with due regard for all the circumstances."
In this particular case before Us, it must be considered that while it is true the passengers of
appellant's bus should not be made to suffer for something over which they had no control, as
enunciated in the decision of this Court cited by His Honor,1 fairness demands that in measuring a
common carrier's duty towards its passengers, allowance must be given to the reliance that should
be reposed on the sense of responsibility of all the passengers in regard to their common safety. It is
to be presumed that a passenger will not take with him anything dangerous to the lives and limbs of
his co-passengers, not to speak of his own. Not to be lightly considered must be the right to privacy
to which each passenger is entitled. He cannot be subjected to any unusual search, when he
protests the innocuousness of his baggage and nothing appears to indicate the contrary, as in the
case at bar. In other words, inquiry may be verbally made as to the nature of a passenger's baggage
when such is not outwardly perceptible, but beyond this, constitutional boundaries are already in
danger of being transgressed. Calling a policeman to his aid, as suggested by the service manual
invoked by the trial judge, in compelling the passenger to submit to more rigid inspection, after the
passenger had already declared that the box contained mere clothes and other miscellaneous,
could not have justified invasion of a constitutionally protected domain. Police officers acting without
judicial authority secured in the manner provided by law are not beyond the pale of constitutional
inhibitions designed to protect individual human rights and liberties. Withal, what must be importantly
considered here is not so much the infringement of the fundamental sacred rights of the particular
passenger herein involved, but the constant threat any contrary ruling would pose on the right of
privacy of all passengers of all common carriers, considering how easily the duty to inspect can be
made an excuse for mischief and abuse. Of course, when there are sufficient indications that the
representations of the passenger regarding the nature of his baggage may not be true, in the
interest of the common safety of all, the assistance of the police authorities may be solicited, not
necessarily to force the passenger to open his baggage, but to conduct the needed investigation
consistent with the rules of propriety and, above all, the constitutional rights of the passenger. It is in
this sense that the mentioned service manual issued by appellant to its conductors must be
understood.
Decisions in other jurisdictions cited by appellant in its brief, evidently because of the paucity of local
precedents squarely in point, emphasize that there is need, as We hold here, for evidence of
circumstances indicating cause or causes for apprehension that the passenger's baggage is
dangerous and that it is failure of the common carrier's employee to act in the face of such evidence
that constitutes the cornerstone of the common carrier's liability in cases similar to the present one.
The principle that must control the servants of the carrier in a case like the one before us
is correctly stated in the opinion in the case of Clarke v. Louisville & N.R. Co. 20 Ky L.
Rep. 839, 49 S.W. 1120. In that case Clarke was a passenger on the defendant's train.
Another passenger took a quantity of gasoline into the same coach in which Clarke was
riding. It ignited and exploded, by reason of which he was severely injured. The trial court
peremptorily instructed the jury to find for the defendant. In the opinion, affirming the
judgment, it is said: "It may be stated briefly, in assuming the liability of a railroad to its
passengers for injury done by another passenger, only where the conduct of this
passenger had been such before the injury as to induce a reasonably prudent and vigilant
conductor to believe that there was reasonable ground to apprehend violence and danger
to the other passengers, and in that case asserting it to be the duty of the conductor of the
railroad train to use all reasonable means to prevent such injury, and if he neglects this
reasonable duty, and injury is done, that then the company is responsible; that otherwise
the railroad is not responsible."
The opinion quotes with approval from the case of Gulf, C. & S. F. R. Co. vs. Shields, 9
Tex. Civ. App. 652, 29 S. W. 652, in which case the plaintiff was injured by alcohol which
had been carried upon the train by another passenger. In the opinion in that case it is
said: "It was but a short period of time after the alcohol was spilt when it was set on fire
and the accident occurred, and it was not shown that appellant's employees knew that the
jug contained alcohol. In fact, it is not shown that the conductor or any other employee
knew that Harris had a jug with him until it fell out of the sack, though the conductor had
6
 collected ... (his) fare, and doubtless knew that he had the sack on the seat with him. ... It
cannot be successfully denied that Harris had the right as a passenger to carry baggage
on the train, and that he had a right to carry it in a sack if he chose to do so. We think it is
equally clear that, in the absence of some intimation or circumstance indicating that the
sack contained something dangerous to other passengers, it was not the duty of
appellant's conductor or any other employee to open the sack and examine its contents."
Quinn v. Louisville & N. R. Co. 98 Ky. 231, 32 S. W. 742; Wood v. Louisville & N. R. Co.
101 Ky. 703, 42 S. W. 349; Louisville & N. R. Co. v. Vincent, 29 Ky. L. Rep. 1049, 96 S.
W. 898; Louisville & N. R. Co. v. Renfro, 142 Ky. 590, 33 L. R. A. (N. S.) 133, 135 S. W.
266.2 (Emphasis supplied)
Explosive or Dangerous Contents. — A carrier is ordinarily not liable for injuries to
passengers from fires or explosions caused by articles brought into its conveyances by
other passengers, in the absence of any evidence that the carrier, through its employees,
was aware of the nature of the article or had any reason to anticipate danger therefrom.
(Bogard v. Illinois C. R Co. 144 Ky. 649, 139 S. W. 855, 36 L. R. A.[N. S.] 337; Clarke v.
Louisville & N. R. Co. 101 Ky. 34, 39 S. W. 840, 36 L. R. A. 123 [explosion of can of
gasoline]; East Indian R. Co. v. Mukerjee [1901] A. C. [Eng.] 396, 3 B. R. C. 420 — P. C.
[explosion of fireworks]; Annotation: 37 L. R. A. [N. S.] 725.) 3
Appellant further invokes Article 1174 of the Civil Code which relieves all obligors, including, of
course, common carriers like appellant, from the consequence of fortuitous events. The court a
quo held that "the breach of contract (in this case) was not due to fortuitous event and that,
therefore, the defendant is liable in damages." Since We hold that appellant has succeeded in
rebutting the presumption of negligence by showing that it has exercised extraordinary diligence for
the safety of its passengers, "according to the circumstances of the (each) case", We deem it
unnecessary to rule whether or not there was any fortuitous event in this case.
ACCORDINGLY, the appealed judgment of the trial court is reversed and the case is dismissed,
without costs.
G.R. No. 85691 July 31, 1990
BACHELOR EXPRESS, INCORPORATED, and CRESENCIO RIVERA, petitioners,
vs.
THE HONORABLE COURT OF APPEALS (Sixth Division), RICARDO BETER, SERGIA BETER,
TEOFILO RAUTRAUT and ZOETERA RAUTRAUT, respondents.
GUTIERREZ, JR., J.:
This is a petition for review of the decision of the Court of Appeals which reversed and set aside the
order of the Regional Trial Court, Branch I, Butuan City dismissing the private respondents'
complaint for collection of "a sum of money" and finding the petitioners solidarily liable for damages
in the total amount of One Hundred Twenty Thousand Pesos (P120,000.00). The petitioners also
question the appellate court's resolution denying a motion for reconsideration.
On August 1, 1980, Bus No. 800 owned by Bachelor Express, Inc. and driven by Cresencio Rivera
was the situs of a stampede which resulted in the death of passengers Ornominio Beter and Narcisa
Rautraut.
The evidence shows that the bus came from Davao City on its way to Cagayan de Oro City passing
Butuan City; that while at Tabon-Tabon, Butuan City, the bus picked up a passenger; that about
fifteen (15) minutes later, a passenger at the rear portion suddenly stabbed a PC soldier which
caused commotion and panic among the passengers; that when the bus stopped, passengers
Ornominio Beter and Narcisa Rautraut were found lying down the road, the former already dead as
a result of head injuries and the latter also suffering from severe injuries which caused her death
later. The passenger assailant alighted from the bus and ran toward the bushes but was killed by the
police. Thereafter, the heirs of Ornominio Beter and Narcisa Rautraut, private respondents herein
(Ricardo Beter and Sergia Beter are the parents of Ornominio while Teofilo Rautraut and Zoetera
[should be Zotera] Rautraut are the parents of Narcisa) filed a complaint for "sum of money" against
Bachelor Express, Inc. its alleged owner Samson Yasay and the driver Rivera.
In their answer, the petitioners denied liability for the death of Ornominio Beter and Narcisa
Rautraut. They alleged that ... the driver was able to transport his passengers safely to their
respective places of destination except Ornominio Beter and Narcisa Rautraut who jumped off the
bus without the knowledge and consent, much less, the fault of the driver and conductor and the
defendants in this case; the defendant corporation had exercised due diligence in the choice of its
employees to avoid as much as possible accidents; the incident on August 1, 1980 was not a traffic
accident or vehicular accident; it was an incident or event very much beyond the control of the
defendants; defendants were not parties to the incident complained of as it was an act of a third
party who is not in any way connected with the defendants and of which the latter have no control
and supervision; ..." (Rollo, pp. 112-113).i•t•c-aüsl
After due trial, the trial court issued an order dated August 8, 1985 dismissing the complaint.
Upon appeal however, the trial court's decision was reversed and set aside. The dispositive portion
of the decision of the Court of Appeals states:
WHEREFORE, the Decision appealed from is REVERSED and SET ASIDE and
a new one entered finding the appellees jointly and solidarily liable to pay the
plaintiffs-appellants the following amounts:
1) To the heirs of Ornominio Beter, the amount of Seventy Five Thousand
Pesos (P75,000.00) in loss of earnings and support, moral damages, straight
death indemnity and attorney's fees; and,
2) To the heirs of Narcisa Rautraut, the amount of Forty Five Thousand Pesos
(P45,000.00) for straight death indemnity, moral damages and attorney's fees.
Costs against appellees. (Rollo, pp. 71-72)
The petitioners now pose the following questions
What was the proximate cause of the whole incident? Why were the
passengers on board the bus panicked (sic) and why were they shoving one
another? Why did Narcisa Rautraut and Ornominio Beter jump off from the
running bus?
The petitioners opine that answers to these questions are material to arrive at "a fair, just and
equitable judgment." (Rollo, p. 5) They claim that the assailed decision is based on a
misapprehension of facts and its conclusion is grounded on speculation, surmises or conjectures.
As regards the proximate cause of the death of Ornominio Beter and Narcisa Rautraut, the
petitioners maintain that it was the act of the passenger who ran amuck and stabbed another
passenger of the bus. They contend that the stabbing incident triggered off the commotion and panic
among the passengers who pushed one another and that presumably out of fear and moved by that
human instinct of self-preservation Beter and Rautraut jumped off the bus while the bus was still
running resulting in their untimely death." (Rollo, p. 6) Under these circumstances, the petitioners
asseverate that they were not negligent in the performance of their duties and that the incident was
7
completely and absolutely attributable to a third person, the passenger who ran amuck, for without
his criminal act, Beter and Rautraut could not have been subjected to fear and shock which
compelled them to jump off the running bus. They argue that they should not be made liable for
damages arising from acts of third persons over whom they have no control or supervision.
Furthermore, the petitioners maintain that the driver of the bus, before, during and after the incident
was driving cautiously giving due regard to traffic rules, laws and regulations. The petitioners also
argue that they are not insurers of their passengers as ruled by the trial court.
The liability, if any, of the petitioners is anchored on culpa contractual or breach of contract of
carriage. The applicable provisions of law under the New Civil Code are as follows:
ART. 1732. Common carriers are persons, corporations, firms or associations
engaged in the business of carrying or transporting passengers or goods or
both by land, water, or air, for compensation, offering their services to the
public.
ART. 1733. Common carriers, from the nature of their business and for reasons
of public policy, are bound to observe extraordinary diligence in the vigilance
over the goods and for the safety of the passengers transported by them,
according to all the circumstances of each case.
xxx xxx xxx
ART. 1755. A common carrier is bound to carry the passengers safely as far as
human care and foresight can provide, using the utmost diligence of very
cautious persons, with a due regard for all the circumstances.
ART. 1756. In case of death of or injuries to passengers, common carriers are
presumed to have been at fault or to have acted negligently, unless they prove
that they observed extraordinary diligence as prescribed in Articles 1733 and
1755.
There is no question that Bachelor Express, Inc. is a common carrier. Hence, from the nature of its
business and for reasons of public policy Bachelor Express, Inc. is bound to carry its passengers
safely as far as human care and foresight can provide using the utmost diligence of very cautious
persons, with a due regard for all the circumstances.
In the case at bar, Ornominio Beter and Narcisa Rautraut were passengers of a bus belonging to
petitioner Bachelor Express, Inc. and, while passengers of the bus, suffered injuries which caused
their death. Consequently, pursuant to Article 1756 of the Civil Code, petitioner Bachelor Express,
Inc. is presumed to have acted negligently unless it can prove that it had observed extraordinary
diligence in accordance with Articles 1733 and 1755 of the New Civil Code.
Bachelor Express, Inc. denies liability for the death of Beter and Rautraut on its posture that the
death of the said passengers was caused by a third person who was beyond its control and
supervision. In effect, the petitioner, in order to overcome the presumption of fault or negligence
under the law, states that the vehicular incident resulting in the death of passengers Beter and
Rautraut was caused by force majeure or caso fortuito over which the common carrier did not have
any control.
Article 1174 of the present Civil Code states:
Except in cases expressly specified by law, or when it is otherwise declared by
stipulations, or when the nature of the obligation requires the assumption of risk,
no person shall be responsible for those events which could not be foreseen, or
which though foreseen, were inevitable.
The above-mentioned provision was substantially copied from Article 1105 of the old Civil Code
which states"
No one shall be liable for events which could not be foreseen or which, even if
foreseen, were inevitable, with the exception of the cases in which the law
expressly provides otherwise and those in which the obligation itself imposes
liability.
In the case of Lasam v. Smith (45 Phil. 657 [1924]), we defined "events" which cannot be foreseen
and which, having been foreseen, are inevitable in the following manner:
... The Spanish authorities regard the language employed as an effort to define
the term 'caso fortuito' and hold that the two expressions are synonymous.
(Manresa Comentarios al Codigo Civil Español, vol. 8, pp. 88 et seq.; Scaevola,
Codigo Civil, vol. 19, pp. 526 et seq.)
The antecedent to Article 1105 is found in Law II, Title 33, Partida 7, which
defines caso fortuito as 'occasion que acaese por aventura de que non se
puede ante ver. E son estos, derrivamientos de casas e fuego que enciende a
so ora, e quebrantamiento de navio, fuerca de ladrones' (An event that takes
place by incident and could not have been foreseen. Examples of this are
destruction of houses, unexpected fire, shipwreck, violence of robbers ...)
Escriche defines caso fortuito as an unexpected event or act of God which
could neither be foreseen nor resisted, such as floods, torrents, shipwrecks,
conflagrations, lightning, compulsion, insurrections, destruction of buildings by
unforeseen accidents and other occurrences of a similar nature.
In discussing and analyzing the term caso fortuito the Enciclopedia Juridica
Española says: 'In a legal sense and, consequently, also in relation to contracts,
a caso fortuito presents the following essential characteristics: (1) The cause of
the unforeseen and unexpected occurrence, or of the failure of the debtor to
comply with his obligation, must be independent of the human will. (2) It must
be impossible to foresee the event which constitutes the caso fortuito, or if it can
be foreseen, it must be impossible to avoid. (3) The occurrence must be such
as to render it impossible for the debtor to fulfill his obligation in a normal
manner. And (4) the obligor (debtor) must be free from any participation in the
aggravation of the injury resulting to the creditor. (5) Enciclopedia Juridica
Española, 309)
As will be seen, these authorities agree that some extraordinary circumstance
independent of the will of the obligor or of his employees, is an essential
element of a caso fortuito. ...
The running amuck of the passenger was the proximate cause of the incident as it triggered off a
commotion and panic among the passengers such that the passengers started running to the sole
exit shoving each other resulting in the falling off the bus by passengers Beter and Rautraut causing
them fatal injuries. The sudden act of the passenger who stabbed another passenger in the bus is
within the context of force majeure.
8
However, in order that a common carrier may be absolved from liability in case of force majeure, it is
not enough that the accident was caused by force majeure. The common carrier must still prove that
it was not negligent in causing the injuries resulting from such accident. Thus, as early as 1912, we
ruled:
From all the foregoing, it is concluded that the defendant is not liable for the loss
and damage of the goods shipped on the lorcha Pilar by the Chinaman, Ong
Bien Sip, inasmuch as such loss and damage were the result of a fortuitous
event or force majeure, and there was no negligence or lack of care and
diligence on the part of the defendant company or its agents. (Tan Chiong Sian
v. Inchausti & Co., 22 Phil. 152 [1912]; Emphasis supplied).
This principle was reiterated in a more recent case, Batangas Laguna Tayabas Co. v. Intermediate
Appellate Court (167 SCRA 379 [1988]), wherein we ruled:
... [F]or their defense of force majeure or act of God to prosper the accident
must be due to natural causes and exclusively without human intervention.
(Emphasis supplied)
A critical eye must be accorded the lower court's conclusions of fact in its tersely
written ratio decidendi. The lower court concluded that the door of the bus was closed;
secondly, the passengers, specifically the two deceased, jumped out of the window. The
lower court therefore concluded that the defendant common carrier is not liable for the death
of the said passengers which it implicitly attributed to the unforeseen acts of the unidentified
passenger who went amuck.
There is nothing in the record to support the conclusion that the solitary door of the bus was
locked as to prevent the passengers from passing through. Leonila Cullano, testifying for the
defense, clearly stated that the conductor opened the door when the passengers were
shouting that the bus stop while they were in a state of panic. Sergia Beter categorically
stated that she actually saw her son fall from the bus as the door was forced open by the
force of the onrushing passengers.
Pedro Collango, on the other hand, testified that he shut the door after the last passenger
had boarded the bus. But he had quite conveniently neglected to say that when the
passengers had panicked, he himself panicked and had gone to open the door. Portions of
the testimony of Leonila Cullano, quoted below, are illuminating:

xxx xxx xxx

Therefore, the next question to be determined is whether or not the petitioner's common carrier
observed extraordinary diligence to safeguard the lives of its passengers.
Q When you said the conductor opened the door, the door at the front or rear portion of the
bus?
In this regard the trial court and the appellate court arrived at conflicting factual findings.

A Front door.
The trial court found the following facts:

Q And these two persons whom you said alighted, where did they pass, the fron(t) door or
The parties presented conflicting evidence as to how the two deceased Narcisa Rautruat
rear door?
and Ornominio Beter met their deaths.

A Front door.
However, from the evidence adduced by the plaintiffs, the Court could not see why the two
deceased could have fallen off the bus when their own witnesses testified that when the
commotion ensued inside the bus, the passengers pushed and shoved each other xxx xxx xxx
towards the door apparently in order to get off from the bus through the door. But the
passengers also could not pass through the door because according to the evidence the
(Tsn., p. 4, Aug. 8, 1984)
door was locked.

xxx xxx xxx

On the other hand, the Court is inclined to give credence to the evidence adduced by the
defendants that when the commotion ensued inside the bus, the two deceased panicked
and, in state of shock and fear, they jumped off from the bus by passing through the Q What happened after there was a commotion at the rear portion of the bus?
window.
A When the commotion occurred, I stood up and I noticed that there was a passenger who
It is the prevailing rule and settled jurisprudence that transportation companies are not was sounded (sic). The conductor panicked because the passengers were shouting 'stop,
insurers of their passengers. The evidence on record does not show that defendants' stop'. The conductor opened the bus.'
personnel were negligent in their duties. The defendants' personnel have every right to
accept passengers absent any manifestation of violence or drunkenness. If and when
(Tsn. p. 3, August 8, 1984).
such passengers harm other passengers without the knowledge of the transportation
company's personnel, the latter should not be faulted. (Rollo, pp. 46-47)
Accordingly, there is no reason to believe that the deceased passengers jumped from the
window when it was entirely possible for them to have alighted through the door. The lower
A thorough examination of the records, however, show that there are material facts ignored by the
court's reliance on the testimony of Pedro Collango, as the conductor and employee of the
trial court which were discussed by the appellate court to arrive at a different conclusion. These
common carrier, is unjustified, in the light of the clear testimony of Leonila Cullano as the
circumstances show that the petitioner common carrier was negligent in the provision of safety
sole uninterested eyewitness of the entire episode. Instead we find Pedro Collango's
precautions so that its passengers may be transported safely to their destinations. The appellate
testimony to be infused by bias and fraught with inconsistencies, if not notably unreliable for
court states:
lack of veracity. On direct examination, he testified:

9
xxx xxx xxx In the light of the foregoing, the negligence of the common carrier, through its employees,
consisted of the lack of extraordinary diligence required of common carriers, in exercising
vigilance and utmost care of the safety of its passengers, exemplified by the driver's belated
Q So what happened to the passengers inside your bus?
stop and the reckless opening of the doors of the bus while the same was travelling at an
appreciably fast speed. At the same time, the common carrier itself acknowledged, through
A Some of the passengers jumped out of the window. its administrative officer, Benjamin Granada, that the bus was commissioned to travel and
take on passengers and the public at large, while equipped with only a solitary door for a
bus its size and loading capacity, in contravention of rules and regulations provided for
COURT:
under the Land Transportation and Traffic Code (RA 4136 as amended.) (Rollo, pp. 23-26)

Q While the bus was in motion? Considering the factual findings of the Court of Appeals-the bus driver did not immediately stop the
bus at the height of the commotion; the bus was speeding from a full stop; the victims fell from the
A Yes, your Honor, but the speed was slow because we have just picked up a passenger. bus door when it was opened or gave way while the bus was still running; the conductor panicked
and blew his whistle after people had already fallen off the bus; and the bus was not properly
equipped with doors in accordance with law-it is clear that the petitioners have failed to overcome
Atty. Gambe: the presumption of fault and negligence found in the law governing common carriers.

Q You said that at the time of the incident the bus was running slow because you have just
picked up a passenger. Can you estimate what was your speed at that time?
Atty. Calo:
No basis, your Honor, he is neither a driver nor a conductor.
COURT:
Let the witness answer. Estimate only, the conductor experienced.
Witness:
The petitioners' argument that the petitioners "are not insurers of their passengers" deserves no
merit in view of the failure of the petitioners to prove that the deaths of the two passengers were
exclusively due to force majeure and not to the failure of the petitioners to observe extraordinary
diligence in transporting safely the passengers to their destinations as warranted by law. (See
Batangas Laguna Tayabas Co. v. Intermediate Appellate Court, supra).
The petitioners also contend that the private respondents failed to show to the court that they are the
parents of Ornominio Beter and Narcisa Rautraut respectively and therefore have no legal
personality to sue the petitioners. This argument deserves scant consideration. We find this
argument a belated attempt on the part of the petitioners to avoid liability for the deaths of Beter and
Rautraut. The private respondents were Identified as the parents of the victims by witnesses during
the trial and the trial court recognized them as such. The trial court dismissed the complaint solely
on the ground that the petitioners were not negligent.

Finally, the amount of damages awarded to the heirs of Beter and Rautraut by the appellate court is
Not less than 30 to 40 miles. supported by the evidence. The appellate court stated:

COURT: Ornominio Beter was 32 years of age at the time of his death, single, in good health and
rendering support and service to his mother. As far as Narcisa Rautraut is concerned, the
Kilometers or miles? only evidence adduced is to the effect that at her death, she was 23 years of age, in good
health and without visible means of support.

A Miles.
In accordance with Art. 1764 in conjunction with Art. 2206 of the Civil Code, and established
jurisprudence, several factors may be considered in determining the award of damages,
Atty. Gambe: namely: 1) life expectancy (considering the state of health of the deceased and the mortality
tables are deemed conclusive) and loss of earning capacity; (2) pecuniary loss, loss of
Q That is only your estimate by your experience? support and service; and (3) moral and mental suffering (Alcantara, et al. v. Surro, et al., 93
Phil. 470).

A Yes, sir, estimate.

(Tsn., pp. 4-5, Oct. 17, 1983).
At such speed of not less than 30 to 40 miles ..., or about 48 to 65 kilometers per hour, the
speed of the bus could scarcely be considered slow considering that according to Collango
himself, the bus had just come from a full stop after picking a passenger (Tsn, p. 4, Id.) and
that the bus was still on its second or third gear (Tsn., p. 12, Id.).
In the case of People v. Daniel (No. L-66551, April 25, 1985, 136 SCRA 92, at page 104),
the High Tribunal, reiterating the rule in Villa Rey Transit, Inc. v. Court of Appeals (31 SCRA
511), stated that the amount of loss of earring capacity is based mainly on two factors,
namely, (1) the number of years on the basis of which the damages shall be computed; and
(2) the rate at which the losses sustained by the heirs should be fixed.
As the formula adopted in the case of Davila v. Philippine Air Lines, 49 SCRA 497, at the
age of 30 one's normal life expectancy is 33-1/3 years based on the American Expectancy
Table of Mortality (2/3 x 80-32).i•t•c-aüsl By taking into account the pace and nature of the
life of a carpenter, it is reasonable to make allowances for these circumstances and reduce

10
 the life expectancy of the deceased Ornominio Beter to 25 years (People v. Daniel, supra).
To fix the rate of losses it must be noted that Art. 2206 refers to gross earnings less
necessary living expenses of the deceased, in other words, only net earnings are to be
considered (People v. Daniel, supra; Villa Rey Transit, Inc. v. Court of Appeals, supra).
Applying the foregoing rules with respect to Ornominio Beter, it is both just and
reasonable, considering his social standing and position, to fix the deductible, living
and incidental expenses at the sum of Four Hundred Pesos (P400.00) a month, or
Four Thousand Eight Hundred Pesos (P4,800.00) annually. As to his income,
considering the irregular nature of the work of a daily wage carpenter which is
seasonal, it is safe to assume that he shall have work for twenty (20) days a month
at Twenty Five Pesos (P150,000.00) for twenty five years. Deducting therefrom his
necessary expenses, his heirs would be entitled to Thirty Thousand Pesos
(P30,000.00) representing loss of support and service (P150,000.00 less
P120,000.00). In addition, his heirs are entitled to Thirty Thousand Pesos
(P30,000.00) as straight death indemnity pursuant to Article 2206 (People v. Daniel,
supra). For damages for their moral and mental anguish, his heirs are entitled to the
reasonable sum of P10,000.00 as an exception to the general rule against moral
damages in case of breach of contract rule Art. 2200 (Necesito v. Paras, 104 Phil.
75). As attorney's fees, Beter's heirs are entitled to P5,000.00. All in all, the plaintiff-
appellants Ricardo and Sergia Beter as heirs of their son Ornominio are entitled to
an indemnity of Seventy Five Thousand Pesos (P75,000.00).
In the case of Narcisa Rautraut, her heirs are entitled to a straight death indemnity
of Thirty Thousand Pesos (P30,000.00), to moral damages in the amount of Ten
Thousand Pesos (P10,000.00) and Five Thousand Pesos (P5,000.00) as attorney's
fees, or a total of Forty Five Thousand Pesos (P45,000.00) as total indemnity for her
death in the absence of any evidence that she had visible means of support. (Rollo,
pp. 30-31)
WHEREFORE, the instant petition is DISMISSED. The questioned decision dated May 19, 1988 and
the resolution dated August 1, 1988 of the Court of Appeals are AFFIRMED.
SO ORDERED.
G.R. No. L-9671             August 23, 1957
CESAR L. ISAAC, plaintiff-appellant,
vs.
A. L. AMMEN TRANSPORTATION CO., INC., defendant-appellee.
BAUTISTA ANGELO, J.:
A. L. Ammen Transportation Co., Inc., hereinafter referred to as defendant, is a corporation engaged
in the business of transporting passengers by land for compensation in the Bicol provinces and one
of the lines it operates is the one connecting Legaspi City, Albay with Naga City, Camarines Sur.
One of the buses which defendant was operating is Bus No. 31. On May 31, 1951, plaintiff boarded
said bus as a passenger paying the required fare from Ligao, Albay bound for Pili, Camarines Sur,
but before reaching his destination, the bus collided with a motor vehicle of the pick-up type coming
from the opposite direction, as a result of which plaintiff's left arm was completely severed and the
severed portion fell inside the bus. Plaintiff was rushed to a hospital in Iriga, Camarines Sur where
he was given blood transfusion to save his life. After four days, he was transferred to another
hospital in Tabaco, Albay, where he under went treatment for three months. He was moved later to
the Orthopedic Hospital where he was operated on and stayed there for another two months. For
these services, he incurred expenses amounting to P623.40, excluding medical fees which were
paid by defendant.
As an aftermath, plaintiff brought this action against defendants for damages alleging that the
collision which resulted in the loss of his left arm was mainly due to the gross incompetence and
recklessness of the driver of the bus operated by defendant and that defendant incurred in culpa
contractual arising from its non-compliance with its obligation to transport plaintiff safely to his,
destination. Plaintiff prays for judgment against defendant as follows: (1) P5,000 as expenses for his
medical treatment, and P3,000 as the cost of an artificial arm, or a total of P8,000; (2) P6,000
representing loss of earning; (3) P75,000 for diminution of his earning capacity; (4) P50,000 as
moral damages; and (5) P10,000 as attorneys' fees and costs of suit.
Defendant set up as special defense that the injury suffered by plaintiff was due entirely to the fault
or negligence of the driver of the pick-up car which collided with the bus driven by its driver and to
the contributory negligence of plaintiff himself. Defendant further claims that the accident which
resulted in the injury of plaintiff is one which defendant could not foresee or, though foreseen, was
inevitable.
The after trial found that the collision occurred due to the negligence of the driver of the pick-up car
and not to that of the driver of the bus it appearing that the latter did everything he could to avoid the
same but that notwithstanding his efforts, he was not able to avoid it. As a consequence, the court
dismissed complaint, with costs against plaintiff. This is an appeal from said decision.
It appears that plaintiff boarded a bus of defendant as paying passenger from Ligao, Albay, bound
for Pili, Camarines Sur, but before reaching his destination, the bus collided with a pick-up car which
was coming from the opposite direction and, as a, result, his left arm was completely severed and
fell inside the back part of the bus. Having this background in view, and considering that plaintiff
chose to hold defendant liable on its contractual obligation to carry him safely to his place of
destination, it becomes important to determine the nature and extent of the liability of a common
carrier to a passenger in the light of the law applicable in this jurisdiction.
In this connection, appellant invokes the rule that, "when an action is based on a contract of
carriage, as in this case, all that is necessary to sustain recovery is proof of the existence of the
contract of the breach thereof by act or omission", and in support thereof, he cites several Philippine
cases.1 With the ruling in mind, appellant seems to imply that once the contract of carriage is
established and there is proof that the same was broken by failure of the carrier to transport the
passenger safely to his destination, the liability of the former attaches. On the other hand, appellee
claims that is a wrong presentation of the rule. It claims that the decisions of this Court in the cases
cited do not warrant the construction sought to be placed upon, them by appellant for a mere
perusal thereof would show that the liability of the carrier was predicated not upon mere breach of its
contract of carriage but upon the finding that its negligence was found to be the direct or proximate
cause of the injury complained of. Thus, appellee contends that "if there is no negligence on the part
of the common carrier but that the accident resulting in injuries is due to causes which are inevitable
and which could not have been avoided or anticipated notwithstanding the exercise of that high
degree of care and skill which the carrier is bound to exercise for the safety of his passengers",
neither the common carrier nor the driver is liable therefor.
We believe that the law concerning the liability of a common carrier has now suffered a substantial
modification in view of the innovations introduced by the new Civil Code. These innovations are the
ones embodied in Articles 1733, 1755 and 1756 in so far as the relation between a common carrier
and its passengers is concerned, which, for ready reference, we quote hereunder:
ART. 1733. Common carriers, from the nature of their business and for reasons of public
policy, are bound to observe extra ordinary diligence in the vigilance over the goods and
for the safety of the passengers transported by them according to all the circumstances of
each case.
11
 Such extraordinary diligence in the vigilance over the goods is further expressed in
articles 1734, 1735, and 1745, Nos. 5, 6, and 7, while the extraordinary diligence for the
safety of the passengers is further set forth in articles 1755 and 1756.
ART. 1755. A common carrier is bound to carry the passengers safely as far as human
care and foresight can provide, using the utmost diligence of very cautious persons, with a
due regard for all the circumstances.
ART. 1756. In case of death of or injuries to passengers, common carriers are presumed
to have been at fault or to have acted negligently, unless they prove that they observed
extraordinary diligence as prescribed in articles 1733 and 1755.
The Code Commission, in justifying this extraordinary diligence required of a common carrier, says
the following:
A common carrier is bound to carry the passengers safely as far as human care and
foresight can provide, using the utmost deligence of very cautions persons, with due
regard for all circumstances. This extraordinary diligence required of common carriers is
calculated to protect the passengers from the tragic mishaps that frequently occur in
connection with rapid modern transportation. This high standard of care is imperatively
demanded by the precariousness of human life and by the consideration that every
person must in every way be safeguarded against all injury. (Report of the Code
Commission, pp. 35-36)" (Padilla, Civil Code of the Philippines, Vol. IV, 1956 ed., p. 197).
From the above legal provisions, we can make the following restatement of the principles governing
the liability of a common carrier: (1) the liability of a carrier is contractual and arises upon breach of
its obligation. There is breach if it fails to exert extraordinary diligence according to all circumstances
of each case; (2) a carrier is obliged to carry its passenger with the utmost diligence of a very
cautious person, having due regard for all the circumstances; (3) a carrier is presumed to be at fault
or to have acted negligently in case of death of, or injury to, passengers, it being its duty to prove
that it exercised extraordinary diligence; and (4) the carrier is not an insurer against all risks of
travel.
The question that now arises is: Has defendant observed extraordinary diligence or the utmost
diligence of every cautious person, having due regard for all circumstances, in avoiding the collision
which resulted in the injury caused to the plaintiff?
After examining the evidence in connection with how the collision occurred, the lower court made
the following finding:
Hemos examinado muy detenidamente las pruebas presentadas en la vista,
principalmente, las declaraciones que hemos acotado arriba, y hernos Ilegado a la
conclusion de que el demandado ha hecho, todo cuanto estuviere de su parte para evitar
el accidente, pero sin embargo, no ha podido evitarlo.
EI hecho de que el demandado, antes del choque, tuvo que hacer pasar su truck encima
de los montones de grava que estaban depositados en la orilla del camino, sin que haya
ido mas alla, por el grave riesgo que corrian las vidas de sus pasajeros, es prueba
concluyente de lo que tenemos dicho, a saber: — que el cuanto esuba de su parte, para
evitar el accidente, sin que haya podidoevitardo, por estar fuera de su control.
The evidence would appear to support the above finding. Thus, it appears that Bus No. 31,
immediately prior to the collision, was running at a moderate speed because it had just stopped at
the school zone of Matacong, Polangui, Albay. The pick-up car was at full speed and was running
outside of its proper lane. The driver of the bus, upon seeing the manner in which the pick-up was
then running, swerved the bus to the very extreme right of the road until its front and rear wheels
have gone over the pile of stones or gravel situated on the rampart of the road. Said driver could not
move the bus farther right and run over a greater portion of the pile, the peak of which was about 3
feet high, without endangering the safety of his passengers. And notwithstanding all these efforts,
the rear left side of the bus was hit by the pick-up car.
Of course, this finding is disputed by appellant who cannot see eye to eye with the evidence for the
appellee and insists that the collision took place because the driver of the bus was going at a fast
speed. He contends that, having seen that a car was coming from the opposite direction at a
distance which allows the use of moderate care and prudence to avoid an accident, and knowing
that on the side of the road along which he was going there was a pile of gravel, the driver of the bus
should have stopped and waited for the vehicle from the opposite direction to pass, and should have
proceeded only after the other vehicle had passed. In other words, according to appellant, the act of
the driver of the bus in squeezing his way through of the bus in squeezing his way through between
the oncoming pick-up and the pile of gravel under the circumstances was considered negligent.
But this matter is one of credibility and evaluation of the evidence. This is evidence. This is the
function of the trial court. The trial court has already spoken on this matter as we have pointed out
above. This is also a matter of appreciation of the situation on the part of the driver. While the
position taken by appellant appeals more to the sense of caution that one should observe in a given
situation to avoid an accident or mishap, such however can not always be expected from one who is
placed suddenly in a predicament where he is not given enough time to take the course of action as
he should under ordinary circumstances. One who is placed in such a predicament cannot exercise
such coolness or accuracy of judgment as is required of him under ordinary circumstances and he
cannot therefore be expected to observe the same judgment, care and precaution as in the latter.
For this reason, authorities abound where failure to observe the same degree of care that as
ordinary prudent man would exercise under ordinary circumstances when confronted with a sadden
emergency was held to be warranted and a justification to exempt the carrier from liability. Thus, it
was held that "where a carrier's employee is confronted with a sudden emergency, the fact that he is
obliged to act quickly and without a chance for deliberation must be taken into account, and he is
held to the some degree of care that he would otherwise be required to exercise in the absence of
such emergency but must exercise only such care as any ordinary prudent person would exercise
under like circumstances and conditions, and the failure on his part to exercise the best judgement
the case renders possible does not establish lack of care and skill on his part which renders the
company, liable. . . . (13 C. J. S., 1412; 10 C. J.,970). Considering all the circumstances, we are
persuaded to conclude that the driver of the bus has done what a prudent man could have done to
avoid the collision and in our opinion this relieves appellee from legibility under our law.
A circumstances which miliates against the stand of appellant is the fact borne out by the evidence
that when he boarded the bus in question, he seated himself on the left side thereof resting his left
arm on the window sill but with his left elbow outside the window, this being his position in the bus
when the collision took place. It is for this reason that the collision resulted in the severance of said
left arm from the body of appellant thus doing him a great damage. It is therefore apparent that
appellant is guilty of contributory negligence. Had he not placed his left arm on the window sill with a
portion thereof protruding outside, perhaps the injury would have been avoided as is the case with
the other passenger. It is to be noted that appellant was the only victim of the collision.
It is true that such contributory negligence cannot relieve appellee of its liability but will only entitle it
to a reduction of the amount of damage caused (Article 1762, new Civil Code), but this is a
circumstance which further militates against the position taken by appellant in this case.
It is the prevailing rule that it is negligence per se for a passenger on a railroad voluntarily
or inadvertently to protrude his arm, hand, elbow, or any other part of his body through the
window of a moving car beyond the outer edge of the window or outer surface of the car,
so as to come in contact with objects or obstacles near the track, and that no recovery can
be had for an injury which but for such negligence would not have been sustained. (10 C.
J. 1139)
12
 Plaintiff, (passenger) while riding on an interurban car, to flick the ashes, from his cigar,
thrust his hand over the guard rail a sufficient distance beyond the side line of the car to
bring it in contact with the trunk of a tree standing beside the track; the force of the blow
breaking his wrist. Held, that he was guilty of contributory negligence as a matter of law.
(Malakia vs. Rhode Island Co., 89 A., 337.)
Wherefore, the decision appealed from is affirmed, with cost against appellant.
G.R. No. 122039 May 31, 2000
VICENTE CALALAS, petitioner,
vs.
COURT OF APPEALS, ELIZA JUJEURCHE SUNGA and FRANCISCO SALVA, respondents.
MENDOZA, J.:
This is a petition for review on certiorari of the decision1 of the Court of Appeals, dated March 31,
1991, reversing the contrary decision of the Regional Trial Court, Branch 36, Dumaguete City, and
awarding damages instead to private respondent Eliza Jujeurche Sunga as plaintiff in an action for
breach of contract of carriage.
The facts, as found by the Court of Appeals, are as follows:
At 10 o'clock in the morning of August 23, 1989, private respondent Eliza Jujeurche G. Sunga, then
a college freshman majoring in Physical Education at the Siliman University, took a passenger
jeepney owned and operated by petitioner Vicente Calalas. As the jeepney was filled to capacity of
about 24 passengers, Sunga was given by the conductor an "extension seat," a wooden stool at the
back of the door at the rear end of the vehicle.
On the way to Poblacion Sibulan, Negros Occidental, the jeepney stopped to let a passenger off. As
she was seated at the rear of the vehicle, Sunga gave way to the outgoing passenger. Just as she
was doing so, an Isuzu truck driven by Iglecerio Verena and owned by Francisco Salva bumped the
left rear portion of the jeepney. As a result, Sunga was injured. She sustained a fracture of the
"distal third of the left tibia-fibula with severe necrosis of the underlying skin." Closed reduction of the
fracture, long leg circular casting, and case wedging were done under sedation. Her confinement in
the hospital lasted from August 23 to September 7, 1989. Her attending physician, Dr. Danilo V.
Oligario, an orthopedic surgeon, certified she would remain on a cast for a period of three months
and would have to ambulate in crutches during said period.
On October 9, 1989, Sunga filed a complaint for damages against Calalas, alleging violation of the
contract of carriage by the former in failing to exercise the diligence required of him as a common
carrier. Calalas, on the other hand, filed a third-party complaint against Francisco Salva, the owner
of the Isuzu truck.
The lower court rendered judgment against Salva as third-party defendant and absolved Calalas of
liability, holding that it was the driver of the Isuzu truck who was responsible for the accident. It took
cognizance of another case (Civil Case No. 3490), filed by Calalas against Salva and Verena, for
quasi-delict, in which Branch 37 of the same court held Salva and his driver Verena jointly liable to
Calalas for the damage to his jeepney.
On appeal to the Court of Appeals, the ruling of the lower court was reversed on the ground that
Sunga's cause of action was based on a contract of carriage, not quasi-delict, and that the common
carrier failed to exercise the diligence required under the Civil Code. The appellate court dismissed
the third-party complaint against Salva and adjudged Calalas liable for damages to Sunga. The
dispositive portion of its decision reads:
WHEREFORE, the decision appealed from is hereby REVERSED and SET ASIDE, and
another one is entered ordering defendant-appellee Vicente Calalas to pay plaintiff-
appellant:
(1) P50,000.00 as actual and compensatory damages;
(2) P50,000.00 as moral damages;
(3) P10,000.00 as attorney's fees; and
(4) P1,000.00 as expenses of litigation; and
(5) to pay the costs.
SO ORDERED.
Hence, this petition. Petitioner contends that the ruling in Civil Case No. 3490 that the negligence of
Verena was the proximate cause of the accident negates his liability and that to rule otherwise would
be to make the common carrier an insurer of the safety of its passengers. He contends that the
bumping of the jeepney by the truck owned by Salva was a caso fortuito. Petitioner further assails
the award of moral damages to Sunga on the ground that it is not supported by evidence.
The petition has no merit.
The argument that Sunga is bound by the ruling in Civil Case No. 3490 finding the driver and the
owner of the truck liable for quasi-delict ignores the fact that she was never a party to that case and,
therefore, the principle of res judicata does not apply.
Nor are the issues in Civil Case No. 3490 and in the present case the same. The issue in Civil Case
No. 3490 was whether Salva and his driver Verena were liable for quasi-delict for the damage
caused to petitioner's jeepney. On the other hand, the issue in this case is whether petitioner is
liable on his contract of carriage. The first, quasi-delict, also known as culpa aquiliana or culpa extra
contractual, has as its source the negligence of the tortfeasor. The second, breach of contract
or culpa contractual, is premised upon the negligence in the performance of a contractual obligation.
Consequently, in quasi-delict, the negligence or fault should be clearly established because it is the
basis of the action, whereas in breach of contract, the action can be prosecuted merely by proving
the existence of the contract and the fact that the obligor, in this case the common carrier, failed to
transport his passenger safely to his destination. 2 In case of death or injuries to passengers, Art.
1756 of the Civil Code provides that common carriers are presumed to have been at fault or to have
acted negligently unless they prove that they observed extraordinary diligence as defined in Arts.
1733 and 1755 of the Code. This provision necessarily shifts to the common carrier the burden of
proof.
There is, thus, no basis for the contention that the ruling in Civil Case No. 3490, finding Salva and
his driver Verena liable for the damage to petitioner's jeepney, should be binding on Sunga. It is
immaterial that the proximate cause of the collision between the jeepney and the truck was the
negligence of the truck driver. The doctrine of proximate cause is applicable only in actions for
quasi-delict, not in actions involving breach of contract. The doctrine is a device for imputing liability
to a person where there is no relation between him and another party. In such a case, the obligation
13
is created by law itself. But, where there is a pre-existing contractual relation between the parties, it
is the parties themselves who create the obligation, and the function of the law is merely to regulate
the relation thus created. Insofar as contracts of carriage are concerned, some aspects regulated by
the Civil Code are those respecting the diligence required of common carriers with regard to the
safety of passengers as well as the presumption of negligence in cases of death or injury to
passengers. It provides:
Art. 1733. Common carriers, from the nature of their business and for reasons of public
policy, are bound to observe extraordinary diligence in the vigilance over the goods and for
the safety of the passengers transported by them, according to all the circumstances of
each case.
Such extraordinary diligence in the vigilance over the goods is further expressed in articles
1734, 1735, and 1746, Nos. 5, 6, and 7, while the extraordinary diligence for the safety of
the passengers is further set forth in articles 1755 and 1756.
Art. 1755. A common carrier is bound to carry the passengers safely as far as human care
and foresight can provide, using the utmost diligence of very cautious persons, with due
regard for all the circumstances.
Art. 1756. In case of death of or injuries to passengers, common carriers are presumed to
have been at fault or to have acted negligently, unless they prove that they observed
extraordinary diligence as prescribed by articles 1733 and 1755.
In the case at bar, upon the happening of the accident, the presumption of negligence at once
arose, and it became the duty of petitioner to prove that he had to observe extraordinary diligence in
the care of his passengers.
Now, did the driver of jeepney carry Sunga "safely as far as human care and foresight could provide,
using the utmost diligence of very cautious persons, with due regard for all the circumstances" as
required by Art. 1755? We do not think so. Several factors militate against petitioner's contention.
First, as found by the Court of Appeals, the jeepney was not properly parked, its rear portion being
exposed about two meters from the broad shoulders of the highway, and facing the middle of the
highway in a diagonal angle. This is a violation of the R.A. No. 4136, as amended, or the Land
Transportation and Traffic Code, which provides:
Sec. 54. Obstruction of Traffic. — No person shall drive his motor vehicle in such a manner
as to obstruct or impede the passage of any vehicle, nor, while discharging or taking on
passengers or loading or unloading freight, obstruct the free passage of other vehicles on
the highway.
Second, it is undisputed that petitioner's driver took in more passengers than the allowed seating
capacity of the jeepney, a violation of §32(a) of the same law. It provides:
Exceeding registered capacity. — No person operating any motor vehicle shall allow more
passengers or more freight or cargo in his vehicle than its registered capacity.
The fact that Sunga was seated in an "extension seat" placed her in a peril greater than that to
which the other passengers were exposed. Therefore, not only was petitioner unable to overcome
the presumption of negligence imposed on him for the injury sustained by Sunga, but also, the
evidence shows he was actually negligent in transporting passengers.
We find it hard to give serious thought to petitioner's contention that Sunga's taking an "extension
seat" amounted to an implied assumption of risk. It is akin to arguing that the injuries to the many
victims of the tragedies in our seas should not be compensated merely because those passengers
assumed a greater risk of drowning by boarding an overloaded ferry. This is also true of petitioner's
contention that the jeepney being bumped while it was improperly parked constitutes caso fortuito.
A caso fortuito is an event which could not be foreseen, or which, though foreseen, was
inevitable.3 This requires that the following requirements be present: (a) the cause of the breach is
independent of the debtor's will; (b) the event is unforeseeable or unavoidable; (c) the event is such
as to render it impossible for the debtor to fulfill his obligation in a normal manner, and (d) the debtor
did not take part in causing the injury to the
creditor.4 Petitioner should have foreseen the danger of parking his jeepney with its body protruding
two meters into the highway.
Finally, petitioner challenges the award of moral damages alleging that it is excessive and without
basis in law. We find this contention well taken.
In awarding moral damages, the Court of Appeals stated:
Plaintiff-appellant at the time of the accident was a first-year college student in
that school year 1989-1990 at the Silliman University, majoring in Physical
Education. Because of the injury, she was not able to enroll in the second
semester of that school year. She testified that she had no more intention of
continuing with her schooling, because she could not walk and decided not to
pursue her degree, major in Physical Education "because of my leg which has a
defect already."
Plaintiff-appellant likewise testified that even while she was under confinement,
she cried in pain because of her injured left foot. As a result of her injury, the
Orthopedic Surgeon also certified that she has "residual bowing of the fracture
side." She likewise decided not to further pursue Physical Education as her
major subject, because "my left leg . . . has a defect already."
Those are her physical pains and moral sufferings, the inevitable bedfellows of
the injuries that she suffered. Under Article 2219 of the Civil Code, she is
entitled to recover moral damages in the sum of P50,000.00, which is fair, just
and reasonable.
As a general rule, moral damages are not recoverable in actions for damages predicated on a
breach of contract for it is not one of the items enumerated under Art. 2219 of the Civil Code. 5 As an
exception, such damages are recoverable: (1) in cases in which the mishap results in the death of a
passenger, as provided in Art. 1764, in relation to Art. 2206(3) of the Civil Code; and (2) in the cases
in which the carrier is guilty of fraud or bad faith, as provided in Art. 2220. 6
In this case, there is no legal basis for awarding moral damages since there was no factual finding
by the appellate court that petitioner acted in bad faith in the performance of the contract of carriage.
Sunga's contention that petitioner's admission in open court that the driver of the jeepney failed to
assist her in going to a nearby hospital cannot be construed as an admission of bad faith. The fact
that it was the driver of the Isuzu truck who took her to the hospital does not imply that petitioner
was utterly indifferent to the plight of his injured passenger. If at all, it is merely implied recognition
by Verena that he was the one at fault for the accident.
WHEREFORE, the decision of the Court of Appeals, dated March 31, 1995, and its resolution, dated
September 11, 1995, are AFFIRMED, with the MODIFICATION that the award of moral damages is
DELETED.
SO ORDERED.
14
G.R. No. L-9605             September 30, 1957
GAUDIOSO EREZO, ET AL., plaintiff-appellee,
vs.
AGUEDO JEPTE, defendant-appellant.
LABRADOR, J.:
Appeal from a judgment of the Court of First Instance of Manila ordering defendant to pay plaintiff
Gaudioso Erezo P3,000 on the death of Ernesto Erezo, son of plaintiff Gaudioso Erezo.
Defendant-appellant is the registered owner of a six by six truck bearing plate No. TC-1253. On
August, 9, 1949, while the same was being driven by Rodolfo Espino y Garcia, it collided with a
taxicab at the intersection of San Andres and Dakota Streets, Manila. As the truck went off the
street, it hit Ernesto Erezo and another, and the former suffered injuries, as a result of which he
died. The driver was prosecuted for homicide through reckless negligence in criminal case No.
10663 of the Court of First Instance of Manila. The accused pleaded guilty and was sentenced to
suffer imprisonment and to pay the heirs of Ernesto Erezo the sum of P3,000. As the amount of the
judgment could not be enforced against him, plaintiff brought this action against the registered
owner of the truck, the defendant-appellant. The circumstances material to the case are stated by
the court in its decision.
The defendant does not deny at the time of the fatal accident the cargo truck driven by
Rodolfo Espino y Garcia was registered in his name. He, however, claims that the vehicle
belonged to the Port Brokerage, of which he was the broker at the time of the accident. He
explained, and his explanation was corroborated by Policarpio Franco, the manager of the
corporation, that the trucks of the corporation were registered in his name as a convenient
arrangement so as to enable the corporation to pay the registration fee with his backpay
as a pre-war government employee. Franco, however, admitted that the arrangement was
not known to the Motor Vehicle Office.
The trial court held that as the defendant-appellant represented himself to be the owner of the truck
and the Motor Vehicle Office, relying on his representation, registered the vehicles in his name, the
Government and all persons affected by the representation had the right to rely on his declaration of
ownership and registration. It, therefore, held that the defendant-appellant is liable because he
cannot be permitted to repudiate his own declaration. (Section 68 [a], Rule 123, and Art. 1431, New
Civil Code.).
Against the judgment, the defendant has prosecuted this appeal claiming that at the time of the
accident the relation of employer and employee between the driver and defendant-appellant was not
established, it having been proved at the trial that the owner of the truck was the Port Brokerage, of
which defendant-appellant was merely a broker. We find no merit or justice in the above contention.
In previous decisions, We already have held that the registered owner of a certificate of public
convenience is liable to the public for the injuries or damages suffered by passengers or third
persons caused by the operation of said vehicle, even though the same had been transferred to a
third person. (Montoya vs. Ignacio, 94 Phil., 182, 50 Off. Gaz., 108; Roque vs. Malibay Transit
Inc.,1 G. R. No. L- 8561, November 18,1955; Vda. de Medina vs. Cresencia, 99 Phil., 506, 52 Off.
Gaz., [10], 4606.)The principle upon which this doctrine is based is that in dealing with vehicles
registered under the Public Service Law, the public has the right to assume or presume that the
registered owner is the actual owner thereof, for it would be difficult for the public to enforce the
actions that they may have for injuries caused to them by the vehicles being negligently operated if
the public should be required to prove who the actual owner is. How would the public or third
persons know against whom to enforce their rights in case of subsequent transfers of the vehicles?
We do not imply by this doctrine, however, that the registered owner may not recover whatever
amount he had paid by virtue of his liability to third persons from the person to whom he had actually
sold, assigned or conveyed the vehicle.
Under the same principle the registered owner of any vehicle, even if not used for a public service,
should primarily be responsible to the public or to third persons for injuries caused the latter while
the vehicle is being driven on the highways or streets. The members of the Court are in agreement
that the defendant-appellant should be held liable to plaintiff-appellee for the injuries occasioned to
the latter because of the negligence of the driver even if the defendant-appellant was no longer the
owner of the vehicle at the time of the damage because he had previously sold it to another. What is
the legal basis for his (defendant-appellant's) liability?.
There is a presumption that the owner of the guilty vehicle is the defendant-appellant as he is the
registered owner in the Motor Vehicle Office. Should he not be allowed to prove the truth, that he
had sold it to another and thus shift the responsibility for the injury to the real and actual owner? The
defendant holds the affirmative of this proposition; the trial court held the negative.
The Revised Motor Vehicle Law (Act No. 3992, as amended) provides that no vehicle may be used
or operated upon any public highway unless the same is properly registered. It has been stated that
the system of licensing and the requirement that each machine must carry a registration number,
conspicuously displayed, is one of the precautions taken to reduce the danger of injury to
pedestrians and other travelers from the careless management of automobiles, and to furnish a
means of ascertaining the identity of persons violating the laws and ordinances, regulating the
speed and operation of machines upon the highways (2 R. C. L. 1176). Not only are vehicles to be
registered and that no motor vehicles are to be used or operated without being properly registered
for the current year, but that dealers in motor vehicles shall furnish the Motor Vehicles Office a
report showing the name and address of each purchaser of motor vehicle during the previous month
and the manufacturer's serial number and motor number. (Section 5 [c], Act. No. 3992, as
amended.).
Registration is required not to make said registration the operative act by which ownership in
vehicles is transferred, as in land registration cases, because the administrative proceeding of
registration does not bear any essential relation to the contract of sale between the parties
(Chinchilla vs. Rafael and Verdaguer, 39 Phil. 888), but to permit the use and operation of the
vehicle upon any public highway (section 5 [a], Act No. 3992, as amended).The main aim of motor
vehicle registration is to identify the owner so that if any accident happens, or that any damage or
injury is caused by the vehicles on the public highways, responsibility therefore can be fixed on a
definite individual, the registered owner. Instances are numerous where vehicles running on public
highways caused accidents or injuries to pedestrians or other vehicles without positive identification
of the owner or drivers, or with very scant means of identification. It is to forestall those
circumstances, so inconvenient or prejudicial to the public, that the motor vehicle registration is
primarily ordained, in the interest of the determination of persons responsible for damages or injuries
caused on public highways.
One of the principal purposes of motor vehicles legislation is identification of the vehicle
and of the operator, in case of accident; and another is that the knowledge that means of
detection are always available may act as a deterrent from lax observance of the law and
of the rules of conservative and safe operation. Whatever purpose there may be in these
statutes, it is subordinate at the last to the primary purpose of rendering it certain that the
violator of the law or of the rules of safety shall not escape because of lack of means to
discover him." The purpose of the statute is thwarted, and the displayed number becomes
a "snare and delusion," if courts will entertain such defenses as that put forward by
appellee in this case. No responsible person or corporation could be held liable for the
most outrageous acts of negligence, if they should be allowed to place a "middleman"
between them and the public, and escape liability by the manner in which they
recompense their servants. (King vs. Brenham Automobile Co., 145 S. W. 278,279.)
With the above policy in mind, the question that defendant-appellant poses is: should not be
registered owner be allowed at the trial to prove who the actual and real owner is, and in accordance
with such proof escape or evade responsibility and lay the same on the person actually owning the
vehicle? We hold with the trial court that the laws does not allow him to do so; the law, with its aim
and policy in mind, does not relieve him directly of the responsibility that the law fixes and places
15
upon him as an incident or consequence of registration. Were a registered owner allowed to evade
responsibility by proving who the supposed transferee or owner is, it would be easy for him, by
collusion with others or otherwise, to escape said responsibility and transfer the same to an
indefinite person, or to one who possesses no property with which to respond financially for the
damage or injury done. A victim of recklessness on the public highways is usually without means to
discover or identify the person actually causing the injury or damage. He has no means other than
by a recourse to the registration in the Motor Vehicles Office to determine who is the owner. The
protection that the law aims to extend to him would become illusory were the registered owner given
the opportunity to escape liability by disproving his ownership. If the policy of the law is to be
enforced and carried out, the registered owner should be allowed to prove the contrary to the
prejudice of the person injured that is, to prove that a third person or another has become the owner,
so that he may thereby be relieved of the responsibility to the injured person.1âwphïl.nêt
The above policy and application of the law may appear quite harsh and would seem to conflict with
truth and justice. We do not think it is so. A registered owner who has already sold or transferred a
vehicle has the recourse to a third-party complaint, in the same action brought against him to
recover for the damage or injury done, against the vendee or transferee of the vehicle. The
inconvenience of the suit is no justification for relieving him of liability; said inconvenience is the
price he pays for failure to comply with the registration that the law demands and requires.
In synthesis, we hold that the registered owner, the defendant-appellant herein, is primarily
responsible for the damage caused to the vehicle of the plaintiff-appellee, but he (defendant-
appellant) has a right to be indemnified by the real or actual owner of the amount that he may be
required to pay as damage for the injury caused to the plaintiff-appellant.1âwphïl.nêt
[G.R. No. 143360. September 5, 2002.]
EQUITABLE LEASING CORPORATION, Petitioner, v. LUCITA SUYOM, MARISSA ENANO,
MYRNA TAMAYO and FELIX OLEDAN, Respondents.
PANGANIBAN, J.:
In an action based on quasi delict, the registered owner of a motor vehicle is solidarily liable for the
injuries and damages caused by the negligence of the driver, in spite of the fact that the vehicle may
have already been the subject of an unregistered Deed of Sale in favor of another person. Unless
registered with the Land Transportation Office, the sale — while valid and binding between the
parties — does not affect third parties, especially the victims of accidents involving the said transport
equipment. Thus, in the present case, Petitioner, which is the registered owner, is liable for the acts
of the driver employed by its former lessee who has become the owner of that vehicle by virtue of an
unregistered Deed of Sale.
Statement of the Case
Before us is a Petition for Review under Rule 45 of the Rules of Court, assailing the May 12, 2000
Decision of the Court of Appeals 2 (CA) in CA-G.R. CV No. 55474. The decretal portion of the
Decision reads as follows:
"WHEREFORE, premises considered, the instant appeal is hereby DISMISSED for lack of merit.
The assailed decision, dated May 5, 1997, of the Regional Trial Court of Manila, Branch 14, in Civil
Case No. 95-73522, is hereby AFFIRMED with MODIFICATION that the award of attorney’s fees is
DELETED."
On the other hand, in Civil Case No. 95-73522, the Regional Trial Court (RTC) of Manila (Branch
14) had earlier disposed in this wise
"WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the defendant
Equitable Leasing Corporation ordering said defendant to pay to the plaintiffs the
following:chanrob1es virtual 1aw library
A. TO MYRNA TAMAYO
1. the sum of P50,000.00 for the death of Reniel Tamayo;
2. P50,000.00 as moral damages; and
3. P56,000.00 for the damage to the store and its contents, and funeral expenses.
B. TO FELIX OLEDAN
1. the sum of P50,000.00 for the death of Felmarie Oledan;
2. P50,000.00 as moral damages; and
3. P30,000.00 for medical expenses, and funeral expenses.
C. TO MARISSA ENANO
1. P7,000.00 as actual damages
D. TO LUCITA SUYOM
1. The sum of P5,000.00 for the medical treatment of her two sons.
The sum of P120,000.00 as and for attorney’s fees."
The Facts
On July 17, 1994, a Fuso Road Tractor driven by Raul Tutor rammed into the house cum store of
Myrna Tamayo located at Pier 18, Vitas, Tondo, Manila. A portion of the house was destroyed.
Pinned to death under the engine of the tractor were Respondent Myrna Tamayo’s son, Reniel
Tamayo, and Respondent Felix Oledan’s daughter, Felmarie Oledan. Injured were Respondent
Oledan himself, Respondent Marissa Enano, and two sons of Respondent Lucita
Suyom.chanrob1es virtua1 1aw 1ibrary
Tutor was charged with and later convicted of reckless imprudence resulting in multiple homicide
and multiple physical injuries in Criminal Case No. 296094-SA, Metropolitan Trial Court of Manila,
Branch 12.
Upon verification with the Land Transportation Office, respondents were furnished a copy of Official
Receipt No. 62204139 6 and Certificate of Registration No. 08262797, 7 showing that the registered
owner of the tractor was "Equitable Leasing Corporation/leased to Edwin Lim." On April 15, 1995,
respondents filed against Raul Tutor, Ecatine Corporation ("Ecatine") and Equitable Leasing
Corporation ("Equitable") a Complaint 8 for damages docketed as Civil Case No. 95-73522 in the
RTC of Manila, Branch 14.
The trial court, upon motion of plaintiffs’ counsel, issued an Order dropping Raul Tutor, Ecatine and
Edwin Lim from the Complaint, because they could not be located and served with summonses. 9
On the other hand, in its Answer with Counterclaim, petitioner alleged that the vehicle had already
been sold to Ecatine and that the former was no longer in possession and control thereof at the time
of the incident. It also claimed that Tutor was an employee, not of Equitable, but of Ecatine.
After trial on the merits, the RTC rendered its Decision ordering petitioner to pay actual and moral
damages and attorney’s fees to respondents. It held that since the Deed of Sale between petitioner
16
and Ecatine had not been registered with the Land Transportation Office, (LTO), the legal owner
was still Equitable. 11 Thus, petitioner was liable to respondents.
Ruling of the Court of Appeals
Sustaining the RTC, the CA held that petitioner was still to be legally deemed the owner/operator of
the tractor, even if that vehicle had been the subject of a Deed of Sale in favor of Ecatine on
December 9, 1992. The reason cited by the CA was that the Certificate of Registration on file with
the LTO still remained in petitioner’s name. In order that a transfer of ownership of a motor vehicle
can bind third persons, it must be duly recorded in the LTO.
The CA likewise upheld respondents’ claim for moral damages against petitioner because the
appellate court considered Tutor, the driver of the tractor, to be an agent of the registered
owner/operator.
Hence, this Petition.
Issues
In its Memorandum, petitioner raises the following issues for the Court’s consideration:chanrob1es
virtual 1aw library
I After a few months, Lim completed the payments to cover the full price of the tractor. Thus, on
"Whether or not the Court of Appeals and the trial court gravely erred when they decided and held
that petitioner [was] liable for damages suffered by private respondents in an action based on quasi
delict for the negligent acts of a driver who [was] not the employee of the petitioner.
II
"Whether or not the Court of Appeals and the trial court gravely erred when they awarded moral
damages to private respondents despite their failure to prove that the injuries they suffered were
brought by petitioner’s wrongful act."
This Court’s Ruling
The Petition has no merit.
First Issue:
Liability for Wrongful Acts
Petitioner contends that it should not be held liable for the damages sustained by respondents and
that arose from the negligence of the driver of the Fuso Road Tractor, which it had already sold to
Ecatine at the time of the accident. Not having employed Raul Tutor, the driver of the vehicle, it
could not have controlled or supervised him.
We are not persuaded. In negligence cases, the aggrieved party may sue the negligent party under
(1) Article 100 of the Revised Penal Code, for civil liability ex delicto; or (2) under Article 2176 of
the Civil Code, for civil liability ex quasi delicto.
Furthermore, under Article 103 of the Revised Penal Code, employers may be held subsidiarily
liable for felonies committed by their employees in the discharge of the latter’s duties. This liability
attaches when the employees who are convicted of crimes committed in the performance of their
work are found to be insolvent and are thus unable to satisfy the civil liability adjudged.
On the other hand, under Article 2176 in relation to Article 2180 of the Civil Code, an action
predicated on quasi delict may be instituted against the employer for an employee’s act or omission.
The liability for the negligent conduct of the subordinate is direct and primary, but is subject to the
defense of due diligence in the selection and supervision of the employee. The enforcement of the
judgment against the employer for an action based on Article 2176 does not require the employee to
be insolvent, since the liability of the former is solidary — the latter being statutorily considered a
joint tortfeasor. To sustain a claim based on quasi delict, the following requisites must be proven: (a)
damage suffered by the plaintiff, (b) fault or negligence of the defendant, and (c) connection of
cause and effect between the fault or negligence of the defendant and the damage incurred by the
plaintiff.
These two causes of action (ex delicto or ex quasi delicto) may be availed of, subject to the caveat
that the offended party cannot "recover damages twice for the same act or omission" or under both
causes. Since these two civil liabilities are distinct and independent of each other, the failure to
recover in one will not necessarily preclude recovery in the other.
In the instant case, respondents — having failed to recover anything in the criminal case — elected
to file a separate civil action for damages, based on quasi delict under Article 2176 of the Civil Code.
The evidence is clear that the deaths and the injuries suffered by respondents and their kins were
due to the fault of the driver of the Fuso tractor.
Dated June 4, 1991, the Lease Agreement between petitioner and Edwin Lim stipulated that "it is the
intention of the parties to enter into a FINANCE LEASE AGREEMENT." Under such scheme,
ownership of the subject tractor was to be registered in the name of petitioner, until the value of the
vehicle has been fully paid by Edwin Lim. Further, in the "Lease Schedule," the monthly rental for
the tractor was stipulated, and the term of the Lease was scheduled to expire on December 4, 1992.
December 9, 1992, a Deed of Sale over the tractor was executed by petitioner in favor of Ecatine
represented by Edwin Lim. However, the Deed was not registered with the LTO.
We hold petitioner liable for the deaths and the injuries complained of, because it was the registered
owner of the tractor at the time of the accident on July 17, 1994. The Court has consistently ruled
that, regardless of sales made of a motor vehicle, the registered owner is the lawful operator insofar
as the public and third persons are concerned; consequently, it is directly and primarily responsible
for the consequences of its operation In contemplation of law, the owner/operator of record is the
employer of the driver, the actual operator and employer being considered as merely its agent. The
same principle applies even if the registered owner of any vehicle does not use it for public service
Since Equitable remained the registered owner of the tractor, it could not escape primary liability for
the deaths and the injuries arising from the negligence of the driver.
The finance-lease agreement between Equitable on the one hand and Lim or Ecatine on the other
has already been superseded by the sale. In any event, it does not bind third persons. The rationale
for this rule has been aptly explained in Erezo v. Jepte, which we quote hereunder:
". . . .The main aim of motor vehicle registration is to identify the owner so that if any accident
happens, or that any damage or injury is caused by the vehicle on the public highways,
responsibility therefor can be fixed on a definite individual, the registered owner. Instances are
numerous where vehicles running on public highways caused accidents or injuries to pedestrians or
other vehicles without positive identification of the owner or drivers, or with very scant means of
identification. It is to forestall these circumstances, so inconvenient or prejudicial to the public, that
the motor vehicle registration is primarily ordained, in the interest of the determination of persons
responsible for damages or injuries caused on public highways."
Further, petitioner’s insistence on FGU Insurance Corp. v. Court of Appeals is misplaced. First, in
FGU Insurance, the registered vehicle owner, which was engaged in a rent-a-car business, rented
out the car. In this case, the registered owner of the truck, which is engaged in the business of
financing motor vehicle acquisitions, has actually sold the truck to Ecatine, which in turn employed
Tutor. Second, in FGU Insurance, the registered owner of the vehicle was not held responsible for
the negligent acts of the person who rented one of its cars, because Article 2180 of the Civil Code
was not applicable. We held that no vinculum juris as employer and employee existed between the
owner and the driver. 46 In this case, the registered owner of the tractor is considered under the law
to be the employer of the driver, while the actual operator is deemed to be its agent. Thus,
17
Equitable, the registered owner of the tractor, is — for purposes of the law on quasi delict — the
employer of Raul Tutor, the driver of the tractor. Ecatine, Tutor’s actual employer, is deemed as
merely an agent of Equitable.
True, the LTO Certificate of Registration, dated "5/31/91," qualifies the name of the registered owner
as "EQUITABLE LEASING CORPORATION/Leased to Edwin Lim." But the lease agreement
between Equitable and Lim has been overtaken by the Deed of Sale on December 9, 1992, between
petitioner and Ecatine. While this Deed does not affect respondents in this quasi delict suit, it
definitely binds petitioner because, unlike them, it is a party to it.chanrob1es virtua1 1aw 1ibrary
We must stress that the failure of Equitable and/or Ecatine to register the sale with the LTO should
not prejudice respondents, who have the legal right to rely on the legal principle that the registered
vehicle owner is liable for the damages caused by the negligence of the driver. Petitioner cannot
hide behind its allegation that Tutor was the employee of Ecatine. This will effectively prevent
respondents from recovering their losses on the basis of the inaction or fault of petitioner in failing to
register the sale. The non-registration is the fault of petitioner, which should thus face the legal
consequences thereof.
Second Issue:
Moral Damages
Petitioner further claims that it is not liable for moral damages, because respondents failed to
establish or show the causal connection or relation between the factual basis of their claim and their
wrongful act or omission, if any.
Moral damages are not punitive in nature, but are designed to compensate and alleviate in some
way the physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded
feelings, moral shock, social humiliation, and similar injury unjustly caused a person. Although
incapable of pecuniary computation, moral damages must nevertheless be somehow proportional to
and in approximation of the suffering inflicted. This is so because moral damages are in the category
of an award designed to compensate the claimant for actual injury suffered, not to impose a penalty
on the wrongdoer.
Viewed as an action for quasi delict, the present case falls squarely within the purview of Article
2219 (2), which provides for the payment of moral damages in cases of quasi delict. Having
established the liability of petitioner as the registered owner of the vehicle, respondents have
satisfactorily shown the existence of the factual basis for the award and its causal connection to the
acts of Raul Tutor, who is deemed as petitioner’s employee. Indeed, the damages and injuries
suffered by respondents were the proximate result of petitioner’s tortious act or omission.
Further, no proof of pecuniary loss is necessary in order that moral damages may be awarded, the
amount of indemnity being left to the discretion of the court. The evidence gives no ground for doubt
that such discretion was properly and judiciously exercised by the trial court. The award is in fact
consistent with the rule that moral damages are not intended to enrich the injured party, but to
alleviate the moral suffering undergone by that party by reason of the defendant’s culpable action.
WHEREFORE, the Petition is DENIED and the assailed Decision AFFIRMED. Costs against
petitioner.
SO ORDERED.
G.R. No. 98275 November 13, 1992
BA FINANCE CORPORATION, petitioner,
vs.
HON. COURT OF APPEALS, REGIONAL TRIAL COURT OF ANGELES CITY, BRANCH LVI,
CARLOS OCAMPO, INOCENCIO TURLA, SPOUSES MOISES AGAPITO and SOCORRO M.
AGAPITO and NICOLAS CRUZ, respondents.
MELO, J.:
The question of petitioner's responsibility for damages when on March 6, 1983, an accident occurred
involving petitioner's Isuzu ten-wheeler truck then driven by an employee of Lino Castro is the thrust
of the petition for review on certiorari now before Us considering that neither the driver nor Lino
Castro appears to be connected with petitioner.
On October 13, 1988, the disputed decision in the suit below was rendered by the court of origin in
this manner:
1. Ordering Rock B.A. and Rogelio Villar y Amare jointly and severally to pay the plaintiffs as
follows:
a) To the plaintiff Carlos Ocampo — P121,650.00;
b) To the plaintiff Moises Ocampo — P298,500.00
c) To the plaintiff Nicolas Cruz — P154,740.00
d) To the plaintiff Inocencio Turla, Sr. — 48,000.00
2. Dismissing the case against Lino Castro
3. Dismissing the third-party complaint against STRONGHOLD
4. Dismissing all the counterclaim of the defendants and third-party defendants.
5. Ordering ROCK to reimburse B.A. the total amount of P622,890.00 which the latter is
adjudged to pay to the plaintiffs. (p. 46, Rollo)
Respondent Court of Appeals affirmed the appealed disposition in toto through Justice Rasul, with
Justices De Pano, Jr. and Imperial concurring, on practically the same grounds arrived at by the
court a quo (p. 28, Rollo). Efforts exerted towards re-evaluation of the adverse were futile (p.
37, Rollo). Hence, the instant petition.
The lower court ascertained after due trial that Rogelio Villar y Amare, the driver of the Isuzu truck,
was at fault when the mishap occurred in as much as he was found guilty beyond reasonable doubt
of reckless imprudence resulting in triple homicide with multiple physical injuries with damage to
property in a decision rendered on February 16, 1984 by the Presiding Judge of Branch 6 of the
Regional Trial Court stationed at Malolos, Bulacan. Petitioner was adjudged liable for damages in as
much as the truck was registered in its name during the incident in question, following the doctrine
laid down by this Court in Perez vs. Gutierrez (53 SCRA 149 [1973]) and Erezo, et al. vs.
Jepte (102 Phil. 103 [1957]). In the same breadth, Rock Component Philippines, Inc. was ordered to
reimburse petitioner for any amount that the latter may be adjudged liable to pay herein private
respondents as expressly stipulated in the contract of lease between petitioner and Rock
18
Component Philippines, Inc. Moreover, the trial court applied Article 2194 of the new Civil Code on
solidary accountability of join tortfeasors insofar as the liability of the driver, herein petitioner and
Rock Component Philippines was concerned (pp. 6-7, Decision; pp. 44-45, Rollo).
To the question of whether petitioner can be held responsible to the victim albeit the truck was
leased to Rock Component Philippines when the incident occurred, the appellate court answered in
the affirmative on the basis of the jurisprudential dogmas which, as aforesaid, were relied upon by
the trial court although respondent court was quick to add the caveat embodied in the lease
covenant between petitioner and Rock Component Philippines relative to the latter's duty to
reimburse any amount which may be adjudged against petitioner (pp. 32-33, Rollo).
Petitioner asseverates that it should not have been haled to court and ordered to respond for the
damage in the manner arrived at by both the trial and appellate courts since paragraph 5 of the
complaint lodged by the plaintiffs below would indicate that petitioner was not the employer of the
negligent driver who was under the control an supervision of Lino Castro at the time of the accident,
apart from the fact that the Isuzu truck was in the physical possession of Rock Component
Philippines by virtue of the lease agreement.
Aside from casting clouds of doubt on the propriety of invoking the Perez and Erezo doctrines,
petitioner continue to persist with the idea that the pronouncements of this Court in Duavit vs. Court
of Appeals (173 SCRA 490 [1989]) and Duquillo vs. Bayot (67 Phil 131 [1939]) dovetail with the
factual and legal scenario of the case at hand. Furthermore, petitioner assumes, given the so-
called hiatus on the basis for the award of damages as decreed by the lower and appellate courts,
that Article 2180 of the new Civil Code on vicarious liability will divest petitioner of any responsibility
absent as there is any employer-employee relationship between petitioner and the driver.
Contrary to petitioner's expectations, the recourse instituted from the rebuffs it encountered may not
constitute a sufficient foundation for reversal of the impugned judgment of respondent court.
Petitioner is of the impression that the Perez and Erezo cases are inapplicable due to the variance
of the generative facts in said cases as against those obtaining in the controversy at bar.
A contrario, the lesson imparted by Justice Labrador in Erezo is still good law, thus:
. . . In previous decisions, We already have held that the registered owner of a certificate of
public convenience is liable to the public for the injuries or damages suffered by passengers
or third persons caused by the operation of said vehicle, even though the same had been
transferred to a third person. (Montoya vs. Ignacio, 94 Phil., 182 50 Off. Gaz., 108; Roque
vs. Malibay Transit, Inc., G.R. No. L-8561, November 18, 1955; Vda. de Medina vs.
Cresencia, 99 Phil., 506, 52 Off. Gaz., [10], 4606.) The principle upon which this doctrine is
based is that in dealing with vehicles registered under the Public Service Law, the public has
the right to assume or presumed that the registered owner is the actual owner thereof, for it
would be difficult with the public to enforce the actions that they may have for injuries
caused to them by the vehicles being negligently operated if the public should be required to
prove who actual the owner is. How would the public or third persons know against whom to
enforce their rights in case of subsequent transfer of the vehicles? We do not imply by this
doctrine, however, that the registered owner may not recover whatever amount he had paid
by virtue of his liability to third persons from the person to whom he had actually sold,
assigned or conveyed the vehicle.
Under the same principle the registered owner of any vehicle, even if not used for a public
service, should primarily responsible to the public or to the third persons for injuries caused
the latter while the vehicle is being driven on the highways or streets. The members of the
Court are in agreement that the defendant-appellant should be held liable to plaintiff-
appellee for the injuries occasioned to the latter because of the negligence of the driver,
even if the defendant-appellant was no longer an owner of the vehicle at the time of the
damage because he had previously sold it to another. What is the legal basis for his
(defendants-appellant's) liability?
There is a presumption that the owner of the guilty vehicle is the defendant-appellant as he
is the registered owner in the Motor Vehicle Office. Should he not be allowed to prove the
truth, that he had sold it to another and thus shift the responsibility for the injury to the real
and the actual owner? The defendants hold the affirmative of this proposition; the trial court
hold the negative.
The Revised Motor Vehicle Law (Act No. 3992, as amended) provides that the vehicle may
be used or operated upon any public highway unless the same is properly registered. It has
been stated that the system of licensing and the requirement that each machine must carry
a registration number, conspicuously displayed, is one of the precautions taken to reduce
the danger of injury of pedestrians and other travelers from the careless management of
automobiles, and to furnish a means of ascertaining the identity of persons violating the laws
and ordinances, regulating the speed and operation of machines upon the highways (2 R. C.
L. 1176). Not only are vehicles to be registered and that no motor vehicles are to be used or
operated without being properly registered from the current year, furnish the Motor Vehicle
Office a report showing the name and address of each purchaser of motor vehicle during the
previous month and the manufacturer's serial number and motor number. (Section 5[c], Act
No. 3992, as amended.)
Registration is required not to make said registration the operative act by which ownership in
vehicles is transferred, as in land registration cases, because the administrative proceeding
of registration does not bear any essential relation to the contract of sale between the
parties (Chinchilla vs. Rafael and Verdaguer, 39 Phil. 888), but to permit the use and
operation of the vehicle upon any public highway (section 5[a], Act No. 3992, as amended).
the main aim of motor vehicle registration is to identify the owner so that if any accident
happens, or that any damage or injury is caused by the vehicle on the public highways,
responsibility therefor can be fixed on a definite individual, the registered owner. Instances
are numerous where vehicles running on public highways caused accidents or injuries to
pedestrians or other vehicles without positive identification of the owner or drivers, or with
very scant means of identification. It is to forestall these circumstances, so inconvenient or
prejudicial to the public, that the motor vehicle registration is primarily obtained, in the
interest of the determinations of persons responsible for damages or injuries caused on
public highways.
One of the principle purposes of motor vehicles legislation is identification of the
vehicle and of the operator, in case of accident; and another is that the knowledge
that means of detection are always available my act as a deterrent from lax
observance of the law and of the rules of conservative and safe operation.
Whatever purpose there may be in these statutes, it is subordinate at the last to
the primary purpose of rendering it certain that the violator of the law or of the
rules of safety shall not escape because of lack of means to discover him. The
purpose of the statute is thwarted, and the displayed number becomes a "share
and delusion," if courts would entertain such defenses as that put forward by
appellee in this case. No responsible person or corporation could be held liable for
the most outrageous acts of negligence, if they should be allowed to pace a
"middleman" between them and the public, and escape liability by the manner in
which they recompense their servants. (King vs. Breham Automobile Co., Inc. 145
S. W. 278, 279.)
With the above policy in mind, the question that defendant-appellant poses is: should not the
registered owner be allowed at the trial to prove who the actual and real owner is, and in
accordance with such proof escape or evade responsibility and lay the same on the person
actually owning the vehicle? We hold with the trial court that the law does not allow him to
do so; the law, with its aim and policy in mind, does not relieve him directly of the
responsibility that the law fixes and places upon him as an incident or consequence of
registration. Were a registered owner allowed to evade responsibility by proving who the
supposed transferee or owner is, it would be easy for him, by collusion with others or
otherwise, to escape said responsibility and transfer the same to an indefinite person, or to
one who possesses no property with which to respond financially for the damage or injury
19
 done. A victim of recklessness on the public highways is usually without means to discover WHEREFORE, the petition is hereby DISMISSED and decision under review AFFIRMED without
or Identify the person actually causing the injury or damage. He has no means other then by special pronouncement as to costs. SO ORDERED.
a recourse to the registration in the Motor Vehicles Office to determine who is the owner.
The protection that the law aims to extend to him would become illusory were the registered
owner given the opportunity to escape liability by disproving his ownership. If the policy of
the law is to be enforced and carried out, the registered owner should not be allowed to
prove the contrary to the prejudice of the person injured, that is, to prove that a third person G.R. No. 82318 May 18, 1989
or another has become the owner, so that he may thereby be relieved of the responsibility to
the injured person.
GILBERTO M. DUAVIT, petitioner,
vs.
The above policy and application of the law may appear quite harsh and would seem to THE HON. COURT OF APPEALS, Acting through the Third Division, as Public Respondent,
conflict with truth and justice. We do not think it is so. A registered owner who has already and ANTONIO SARMIENTO, SR. & VIRGILIO CATUAR respondents.
sold or transferred a vehicle has the recourse to a third-party complaint, in the same action
brought against him to recover for the damage or injury done, against the vendee or
GUTIERREZ, JR., J.:
transferee of the vehicle. The inconvenience of the suit is no justification for relieving him of
liability; said inconvenience is the price he pays for failure to comply with the registration that
the law demands and requires. This petition raises the sole issue of whether or not the owner of a private vehicle which figured in an
accident can be held liable under Article 2180 of the Civil Code when the said vehicle was neither
driven by an employee of the owner nor taken with the consent of the latter.
In synthesis, we hold that the registered owner, the defendant-appellant herein, is primarily
responsible for the damage caused to the vehicle of the plaintiff-appellee, but he (defendant-
appellant) has a right to be indemnified by the real or actual owner of the amount that he The facts are summarized in the contested decision, as follows:
may be required to pay as damage for the injury caused to the plaintiff-appellant.
From the evidence adduced by the plaintiffs, consisting of the testimonies of witnesses
If the foregoing words of wisdom were applied in solving the circumstance whereof the vehicle had Virgilio Catuar, Antonio Sarmiento, Jr., Ruperto Catuar, Jr. and Norberto Bernarte it appears
been alienated or sold to another, there certainly can be no serious exception against utilizing the that on July 28, 1971 plaintiffs Antonio Sarmiento, Sr. and Virgilio Catuar were aboard a
same rationale to the antecedents of this case where the subject vehicle was merely leased by jeep with plate number 77-99-F-I Manila, 1971, owned by plaintiff, Ruperto Catuar was
petitioner to Rock Component Philippines, Inc., with petitioner retaining ownership over the vehicle. driving the said jeep on Ortigas Avenue, San Juan, Rizal; that plaintiff's jeep, at the time,
was running moderately at 20 to 35 kilometers per hour and while approaching Roosevelt
Avenue, Virgilio Catuar slowed down; that suddenly, another jeep with plate number 99-97-
Petitioner's reliance on the ruling of this Court in Duavit vs. Court of Appeals and in Duquillo vs.
F-J Manila 1971 driven by defendant Oscar Sabiniano hit and bumped plaintiff's jeep on the
Bayot (supra) is legally unpalatable for the purpose of the present discourse. The vehicles adverted
portion near the left rear wheel, and as a result of the impact plaintiff's jeep fell on its right
to in the two cases shared a common thread, so to speak, in that the jeep and the truck were driven
and skidded by about 30 yards; that as a result plaintiffs jeep was damaged, particularly the
in reckless fashion without the consent or knowledge of the respective owners. Cognizant of the
windshield, the differential, the part near the left rear wheel and the top cover of the jeep;
inculpatory testimony spewed by defendant Sabiniano when he admitted that he took the jeep from
that plaintiff Virgilio Catuar was thrown to the middle of the road; his wrist was broken and
the garage of defendant Dauvit without the consent or authority of the latter, Justice Gutierrez, Jr.
he sustained contusions on the head; that likewise plaintiff Antonio Sarmiento, Sr. was
in Duavit remarked;
trapped inside the fallen jeep, and one of his legs was fractured.

. . . Herein petitioner does not deny ownership of the vehicle involved in the mishap but
Evidence also shows that the plaintiff Virgilio Catuar spent a total of P2,464.00 for repairs of
completely denies having employed the driver Sabiniano or even having authorized the
the jeep, as shown by the receipts of payment of labor and spare parts (Exhs. H to H-7
latter to drive his jeep. The jeep was virtually stolen from the petitioner's garage. To hold,
Plaintiffs likewise tried to prove that plaintiff Virgilio Catuar, immediately after the accident
therefore, the petitioner liable for the accident caused by the negligence of Sabiniano who
was taken to Immaculate Concepcion Hospital, and then was transferred to the National
was neither his driver nor employee would be absurd as it would be like holding liable the
Orthopedic Hospital; that while plaintiff Catuar was not confined in the hospital, his wrist was
owner of a stolen vehicle for an accident caused by the person who stole such vehicle. In
in a plaster cast for a period of one month, and the contusions on his head were under
this regard, we cannot ignore the many cases of vehicles forcibly taken from their owners at
treatment for about two (2) weeks; that for hospitalization, medicine and allied expenses,
gunpoint or stolen from garages and parking areas and the instances of service station
plaintiff Catuar spent P5,000.00.
attendants or mechanics of auto repair shops using, without the owner's consent, vehicles
entrusted to them for servicing or repair.(at p. 496.)
Evidence also shows that as a result of the incident, plaintiff Antonio Sarmiento, Sr.
sustained injuries on his leg; that at first, he was taken to the National Orthopedic Hospital
In the Duquillo case, the defendant therein cannot, according to Justice Diaz, be held liable for
(Exh. K but later he was confined at the Makati Medical Center from July 29, to August 29,
anything because of circumstances which indicated that the truck was driven without the consent or
1971 and then from September 15 to 25, 1971; that his leg was in a plaster cast for a period
knowledge of the owner thereof.
of eight (8) months; and that for hospitalization and medical attendance, plaintiff Antonio
Sarmiento, Sr. spent no less than P13,785.25 as evidenced by receipts in his possession.
Consequently, there is no need for Us to discuss the matter of imputed negligence because (Exhs. N to N-1).
petitioner merely presumed, erroneously, however, that judgment was rendered against it on the
basis of such doctrine embodied under Article 2180 of the new Civil Code.
Proofs were adduced also to show that plaintiff Antonio sarmiento Sr. is employed as
Assistant Accountant of the Canlubang Sugar Estate with a salary of P1,200.00 a month;
that as sideline he also works as accountant of United Haulers Inc. with a salary of P500.00

20
 a month; and that as a result of this incident, plaintiff Sarmiento was unable to perform his
normal work for a period of at least 8 months. On the other hand, evidence shows that the
other plaintiff Virgilio Catuar is a Chief Clerk in Canlubang Sugar Estate with a salary of
P500.00 a month, and as a result of the incident, he was incapacitated to work for a period
of one (1) month.
The plaintiffs have filed this case both against Oscar Sabiniano as driver, and against
Gualberto Duavit as owner of the jeep.
Defendant Gualberto Duavit, while admitting ownership of the other jeep (Plate No. 99-07-F-
J Manila, 1971), denied that the other defendant (Oscar Sabiniano) was his employee.
Duavit claimed that he has not been an employer of defendant Oscar Sabiniano at any time
up to the present.
On the other hand documentary and testimonial evidence show that defendant Oscar
Sabiniano was an employee of the Board of Liquidators from November 14, 1966 up to
January 4, 1973 (Annex A of Answer).
Defendant Sabiniano, in his testimony, categorically admitted that he took the jeep from the
garage of defendant Duavit without the consent or authority of the latter (TSN, September 7,
1978, p. 8). He testified further, that Duavit even filed charges against him for theft of the
jeep, but which Duavit did not push through as his (Sabiniano's) parents apologized to
Duavit on his behalf.
Defendant Oscar Sabiniano, on the other hand in an attempt to exculpate himself from
liability, makes it appear that he was taking all necessary precaution while driving and the
accident occurred due to the negligence of Virgilio Catuar. Sabiniano claims that it was
plaintiffs vehicle which hit and bumped their jeep. (Reno, pp. 21-23)
The trial court found Oscar Sabiniano negligent in driving the vehicle but found no employer-
employee relationship between him and the petitioner because the latter was then a government
employee and he took the vehicle without the authority and consent of the owner. The petitioner
was, thus, absolved from liability under Article 2180 of the Civil Code.
The private respondents appealed the case.
On January 7, 1988, the Court of Appeals rendered the questioned decision holding the petitioner
jointly and severally liable with Sabiniano. The appellate court in part ruled:
We cannot go along with appellee's argument. It will be seen that in Vargas v. Langcay,
supra, it was held that it is immaterial whether or not the driver was actually employed by the
operator of record or registered owner, and it is even not necessary to prove who the actual
owner of the vehicle and who the employer of the driver is. When the Supreme Court ruled,
thus: 'We must hold and consider such owner-operator of record (registered owner) as the
employer in contemplation of law, of the driver,' it cannot be construed other than that the
registered owner is the employer of the driver in contemplation of law. It is a conclusive
presumption of fact and law, and is not subject to rebuttal of proof to the contrary.
Otherwise, as stated in the decision, we quote:
The purpose of the principles evolved by the decisions in these matters will be defeated and
thwarted if we entertain the argument of petitioner that she is not liable because the actual
owner and employer was established by the evidence. . . .
Along the same vein, the defendant-appellee Gualberto Duavit cannot be allowed to prove that the
driver Sabiniano was not his employee at the time of the vehicular accident.
The ruling laid down in Amar V. Soberano (1966), 63 O.G. 6850, by this Court to the effect
that the burden of proving the non-existence of an employer-employee relationship is upon
the defendant and this he must do by a satisfactory preponderance of evidence, has to defer
to the doctrines evolved by the Supreme Court in cases of damages arising from vehicular
mishaps involving registered motor vehicle. (See Tugade v. Court of Appeals, 85 SCRA
226, 230). (Rollo, pp. 26-27)
The appellate court also denied the petitioner's motion for reconsideration. Hence, this petition.
The petitioner contends that the respondent appellate court committed grave abuse of discretion in
holding him jointly and severally liable with Sabiniano in spite of the absence of an employer-
employee relationship between them and despite the fact that the petitioner's jeep was taken out of
his garage and was driven by Sabiniano without his consent.
As early as in 1939, we have ruled that an owner of a vehicle cannot be held liable for an accident
involving the said vehicle if the same was driven without his consent or knowledge and by a person
not employed by him. Thus, in Duquillo v. Bayot (67 Phil. 131-133-134) [1939] we said:
Under the facts established, the defendant cannot be held liable for anything. At the time of
the accident, James McGurk was driving the truck, and he was not an employee of the
defendant, nor did he have anything to do with the latter's business; neither the defendant
nor Father Ayson, who was in charge of her business, consented to have any of her trucks
driven on the day of the accident, as it was a holy day, and much less by a chauffeur who
was not in charge of driving it; the use of the defendant's truck in the circumstances
indicated was done without her consent or knowledge; it may, therefore, be said, that there
was not the remotest contractual relation between the deceased Pio Duquillo and the
defendant. It necessarily follows from all this that articles 1101 and following of the Civil
Code, cited by the appellant, have no application in this case, and, therefore, the errors
attributed to the inferior court are without basis.
The Court upholds the above ruling as still relevant and better applicable to present day
circumstances.
The respondent court's misplaced reliance on the cases of Erezo v. Jepte (102 Phil. 103 [1957]
and Vargas v. Langcay (6 SCRA 174 [1962]) cannot be sustained. In the Erezo case, Jepte, the
registered owner of the truck which collided with a taxicab, and which resulted in the killing of Erezo,
claimed that at the time of the accident, the truck belonged to the Port Brokerage in an arrangement
with the corporation but the same was not known to the Motor Vehicles Office. This Court sustained
the trial court's ruling that since Jepte represented himself to be the owner of the truck and the Motor
Vehicles Office, relying on his representation, registered the vehicle in his name, the Government
and all persons affected by the representation had the right to rely on his declaration of ownership
and registration. Thus, even if Jepte were not the owner of the truck at the time of the accident, he
was still held liable for the death of Erezo significantly, the driver of the truck was fully authorized to
drive it.
Likewise, in the Vargas case, just before the accident occurred Vargas had sold her jeepney to a
third person, so that at the time of the accident she was no longer the owner of the jeepney. This
court, nevertheless, affirmed Vargas' liability since she failed to surrender to the Motor Vehicles
Office the corresponding AC plates in violation of the Revised Motor Vehicle Law and
Commonwealth Act No. 146. We further ruled that the operator of record continues to be the
operator of the vehicle in contemplation of law, as regards the public and third persons, and as such
is responsible for the consequences incident to its operator. The vehicle involved was a public utility
jeepney for hire. In such cases, the law does not only require the surrender of the AC plates but
orders the vendor operator to stop the operation of the jeepney as a form of public transportation
until the matter is reported to the authorities.
21
As can be seen, the circumstances of the above cases are entirely different from those in the
present case. Herein petitioner does not deny ownership of the vehicle involved in tire mishap but
completely denies having employed the driver Sabiniano or even having authorized the latter to
drive his jeep. The jeep was virtually stolen from the petitioner's garage. To hold, therefore, the
petitioner liable for the accident caused by the negligence of Sabiniano who was neither his driver
nor employee would be absurd as it would be like holding liable the owner of a stolen vehicle for an
accident caused by the person who stole such vehicle. In this regard, we cannot ignore the many
cases of vehicles forcibly taken from their owners at gunpoint or stolen from garages and parking
areas and the instances of service station attendants or mechanics of auto repair shops using,
without the owner's consent, vehicles entrusted to them for servicing or repair.
We cannot blindly apply absolute rules based on precedents whose facts do not jibe four square
with pending cases. Every case must be determined on its own peculiar factual circumstances.
Where, as in this case, the records of the petition fail to indicate the slightest indicia of an employer-
employee relationship between the owner and the erring driver or any consent given by the owner
for the vehicle's use, we cannot hold the owner liable.
We, therefore, find that the respondent appellate court committed reversible error in holding the
petitioner jointly and severally liable with Sabiniano to the private respondent.
WHEREFORE, the petition is GRANTED and the decision and resolution appealed from are hereby
ANNULLED and SET ASIDE. The decision of the then Court of First Instance (now Regional Trial
Court) of Laguna, 8th Judicial District, Branch 6, dated July 30, 1981 is REINSTATED.
SO ORDERED.
G.R. No. 125817            January 16, 2002
ABELARDO LIM and ESMADITO GUNNABAN, petitioners,
vs.
COURT OF APPEALS and DONATO H. GONZALES, respondents.
BELLOSILLO, J.:
When a passenger jeepney covered by a certificate of public convenience is sold to another who
continues to operate it under the same certificate of public convenience under the so-
called kabit system, and in the course thereof the vehicle meets an accident through the fault of
another vehicle, may the new owner sue for damages against the erring vehicle? Otherwise stated,
does the new owner have any legal personality to bring the action, or is he the real party in interest
in the suit, despite the fact that he is not the registered owner under the certificate of public
convenience?
Sometime in 1982 private respondent Donato Gonzales purchased an Isuzu passenger jeepney
from Gomercino Vallarta, holder of a certificate of public convenience for the operation of public
utility vehicles plying the Monumento-Bulacan route. While private respondent Gonzales continued
offering the jeepney for public transport services he did not have the registration of the vehicle
transferred in his name nor did he secure for himself a certificate of public convenience for its
operation. Thus Vallarta remained on record as its registered owner and operator.1âwphi1.nêt
On 22 July 1990, while the jeepney was running northbound along the North Diversion Road
somewhere in Meycauayan, Bulacan, it collided with a ten-wheeler-truck owned by petitioner
Abelardo Lim and driven by his co-petitioner Esmadito Gunnaban. Gunnaban owned responsibility
for the accident, explaining that while he was traveling towards Manila the truck suddenly lost its
brakes. To avoid colliding with another vehicle, he swerved to the left until he reached the center
island. However, as the center island eventually came to an end, he veered farther to the left until he
smashed into a Ferroza automobile, and later, into private respondent's passenger jeepney driven
by one Virgilio Gonzales. The impact caused severe damage to both the Ferroza and the passenger
jeepney and left one (1) passenger dead and many others wounded.
Petitioner Lim shouldered the costs for hospitalization of the wounded, compensated the heirs of the
deceased passenger, and had the Ferroza restored to good condition. He also negotiated with
private respondent and offered to have the passenger jeepney repaired at his shop. Private
respondent however did not accept the offer so Lim offered him ₱20,000.00, the assessment of the
damage as estimated by his chief mechanic. Again, petitioner Lim's proposition was rejected;
instead, private respondent demanded a brand-new jeep or the amount of ₱236,000.00. Lim
increased his bid to ₱40,000.00 but private respondent was unyielding. Under the circumstances,
negotiations had to be abandoned; hence, the filing of the complaint for damages by private
respondent against petitioners.
In his answer Lim denied liability by contending that he exercised due diligence in the selection and
supervision of his employees. He further asserted that as the jeepney was registered in Vallarta’s
name, it was Vallarta and not private respondent who was the real party in interest. 1 For his part,
petitioner Gunnaban averred that the accident was a fortuitous event which was beyond his control. 2
Meanwhile, the damaged passenger jeepney was left by the roadside to corrode and decay. Private
respondent explained that although he wanted to take his jeepney home he had no capability,
financial or otherwise, to tow the damaged vehicle.3
The main point of contention between the parties related to the amount of damages due private
respondent. Private respondent Gonzales averred that per estimate made by an automobile repair
shop he would have to spend ₱236,000.00 to restore his jeepney to its original condition. 4 On the
other hand, petitioners insisted that they could have the vehicle repaired for ₱20,000.00. 5
On 1 October 1993 the trial court upheld private respondent's claim and awarded him ₱236,000.00
with legal interest from 22 July 1990 as compensatory damages and ₱30,000.00 as attorney's fees.
In support of its decision, the trial court ratiocinated that as vendee and current owner of the
passenger jeepney private respondent stood for all intents and purposes as the real party in interest.
Even Vallarta himself supported private respondent's assertion of interest over the jeepney for, when
he was called to testify, he dispossessed himself of any claim or pretension on the property.
Gunnaban was found by the trial court to have caused the accident since he panicked in the face of
an emergency which was rather palpable from his act of directing his vehicle to a perilous streak
down the fast lane of the superhighway then across the island and ultimately to the opposite lane
where it collided with the jeepney.
On the other hand, petitioner Lim's liability for Gunnaban's negligence was premised on his want of
diligence in supervising his employees. It was admitted during trial that Gunnaban doubled as
mechanic of the ill-fated truck despite the fact that he was neither tutored nor trained to handle such
task.6
Forthwith, petitioners appealed to the Court of Appeals which, on 17 July 1996, affirmed the decision
of the trial court. In upholding the decision of the court a quo the appeals court concluded that while
an operator under the kabit system could not sue without joining the registered owner of the vehicle
as his principal, equity demanded that the present case be made an exception.7 Hence this petition.
It is petitioners' contention that the Court of Appeals erred in sustaining the decision of the trial court
despite their opposition to the well-established doctrine that an operator of a vehicle continues to be
its operator as long as he remains the operator of record. According to petitioners, to recognize an
operator under the kabit system as the real party in interest and to countenance his claim for
damages is utterly subversive of public policy. Petitioners further contend that inasmuch as the
22
passenger jeepney was purchased by private respondent for only ₱30,000.00, an award of
₱236,000.00 is inconceivably large and would amount to unjust enrichment. 8
Petitioners' attempt to illustrate that an affirmance of the appealed decision could be supportive of
the pernicious kabit system does not persuade. Their labored efforts to demonstrate how the
questioned rulings of the courts a quo are diametrically opposed to the policy of the law requiring
operators of public utility vehicles to secure a certificate of public convenience for their operation is
quite unavailing.
The kabit system is an arrangement whereby a person who has been granted a certificate of public
convenience allows other persons who own motor vehicles to operate them under his license,
sometimes for a fee or percentage of the earnings.9 Although the parties to such an agreement are
not outrightly penalized by law, the kabit system is invariably recognized as being contrary to public
policy and therefore void and inexistent under Art. 1409 of the Civil Code.
In the early case of Dizon v. Octavio10 the Court explained that one of the primary factors considered
in the granting of a certificate of public convenience for the business of public transportation is the
financial capacity of the holder of the license, so that liabilities arising from accidents may be duly
compensated. The kabit system renders illusory such purpose and, worse, may still be availed of by
the grantee to escape civil liability caused by a negligent use of a vehicle owned by another and
operated under his license. If a registered owner is allowed to escape liability by proving who the
supposed owner of the vehicle is, it would be easy for him to transfer the subject vehicle to another
who possesses no property with which to respond financially for the damage done. Thus, for the
safety of passengers and the public who may have been wronged and deceived through the
baneful kabit system, the registered owner of the vehicle is not allowed to prove that another person
has become the owner so that he may be thereby relieved of responsibility. Subsequent cases
affirm such basic doctrine.11
It would seem then that the thrust of the law in enjoining the kabit system is not so much as to
penalize the parties but to identify the person upon whom responsibility may be fixed in case of an
accident with the end view of protecting the riding public. The policy therefore loses its force if the
public at large is not deceived, much less involved.
In the present case it is at once apparent that the evil sought to be prevented in enjoining
the kabit system does not exist. First, neither of the parties to the pernicious kabit system is being
held liable for damages. Second, the case arose from the negligence of another vehicle in using the
public road to whom no representation, or misrepresentation, as regards the ownership and
operation of the passenger jeepney was made and to whom no such representation, or
misrepresentation, was necessary. Thus it cannot be said that private respondent Gonzales and the
registered owner of the jeepney were in estoppel for leading the public to believe that the jeepney
belonged to the registered owner. Third, the riding public was not bothered nor inconvenienced at
the very least by the illegal arrangement. On the contrary, it was private respondent himself who had
been wronged and was seeking compensation for the damage done to him. Certainly, it would be
the height of inequity to deny him his right.
In light of the foregoing, it is evident that private respondent has the right to proceed against
petitioners for the damage caused on his passenger jeepney as well as on his business. Any effort
then to frustrate his claim of damages by the ingenuity with which petitioners framed the issue
should be discouraged, if not repelled.
In awarding damages for tortuous injury, it becomes the sole design of the courts to provide for
adequate compensation by putting the plaintiff in the same financial position he was in prior to the
tort. It is a fundamental principle in the law on damages that a defendant cannot be held liable in
damages for more than the actual loss which he has inflicted and that a plaintiff is entitled to no
more than the just and adequate compensation for the injury suffered. His recovery is, in the
absence of circumstances giving rise to an allowance of punitive damages, limited to a fair
compensation for the harm done. The law will not put him in a position better than where he should
be in had not the wrong happened.12
In the present case, petitioners insist that as the passenger jeepney was purchased in 1982 for only
₱30,000.00 to award damages considerably greater than this amount would be improper and
unjustified. Petitioners are at best reminded that indemnification for damages comprehends not only
the value of the loss suffered but also that of the profits which the obligee failed to obtain. In other
words, indemnification for damages is not limited to damnum emergens or actual loss but extends
to lucrum cessans or the amount of profit lost.13
Had private respondent's jeepney not met an accident it could reasonably be expected that it would
have continued earning from the business in which it was engaged. Private respondent avers that
he derives an average income of ₱300.00 per day from his passenger jeepney and this earning was
included in the award of damages made by the trial court and upheld by the appeals court. The
award therefore of ₱236,000.00 as compensatory damages is not beyond reason nor speculative as
it is based on a reasonable estimate of the total damage suffered by private respondent, i.e. damage
wrought upon his jeepney and the income lost from his transportation business. Petitioners for their
part did not offer any substantive evidence to refute the estimate made by the courts a quo.
However, we are constrained to depart from the conclusion of the lower courts that upon the award
of compensatory damages legal interest should be imposed beginning 22 July 1990, i.e. the date of
the accident. Upon the provisions of Art. 2213 of the Civil Code, interest "cannot be recovered upon
unliquidated claims or damages, except when the demand can be established with reasonable
certainty." It is axiomatic that if the suit were for damages, unliquidated and not known until definitely
ascertained, assessed and determined by the courts after proof, interest at the rate of six percent
(6%) per annum should be from the date the judgment of the court is made (at which time the
quantification of damages may be deemed to be reasonably ascertained).14
In this case, the matter was not a liquidated obligation as the assessment of the damage on the
vehicle was heavily debated upon by the parties with private respondent's demand for ₱236,000.00
being refuted by petitioners who argue that they could have the vehicle repaired easily for
₱20,000.00. In fine, the amount due private respondent was not a liquidated account that was
already demandable and payable.
One last word. We have observed that private respondent left his passenger jeepney by the
roadside at the mercy of the elements. Article 2203 of the Civil Code exhorts parties suffering from
loss or injury to exercise the diligence of a good father of a family to minimize the damages resulting
from the act or omission in question. One who is injured then by the wrongful or negligent act of
another should exercise reasonable care and diligence to minimize the resulting damage. Anyway,
he can recover from the wrongdoer money lost in reasonable efforts to preserve the property injured
and for injuries incurred in attempting to prevent damage to it.15
However we sadly note that in the present case petitioners failed to offer in evidence the estimated
amount of the damage caused by private respondent's unconcern towards the damaged vehicle. It
is the burden of petitioners to show satisfactorily not only that the injured party could have mitigated
his damages but also the amount thereof; failing in this regard, the amount of damages awarded
cannot be proportionately reduced.
WHEREFORE, the questioned Decision awarding private respondent Donato Gonzales
₱236,000.00 with legal interest from 22 July 1990 as compensatory damages and ₱30,000.00 as
attorney's fees is MODIFIED. Interest at the rate of six percent (6%) per annum shall be computed
from the time the judgment of the lower court is made until the finality of this Decision. If the
adjudged principal and interest remain unpaid thereafter, the interest shall be twelve percent (12%)
per annum computed from the time judgment becomes final and executory until it is fully
satisfied.1âwphi1.nêt
23
Costs against petitioners. PREMISES CONSIDERED, this Commission finds and so holds that there existed no
employer-employee relationship between the petitioner and respondent as would warrant
further remittance of SSS contributions for and in behalf of petitioner Roman Martinez.
SO ORDERED.

Consequently, this petition is hereby dismissed for lack of merit, SO ORDERED.

On appeal ,the Court of Appeals finding that the late Pascual Tuazon operated his buses under the
G.R. No. L-57493 January 7, 1987
"Kabit" System reversed and set aside the foregoing resolution as follows:

BALIWAG TRANSIT, INC., petitioner,

WHEREFORE, the resolution (decision) of the Social Security Commission in SSC Case
vs.
No. 3272 is hereby set aside and another one entered ordering respondent Baliwag Transit,
THE HON. COURT OF APPEALS AND ROMAN MARTINEZ, respondents.
Inc. to remit to the Social Security Commission the premium contributions for the petitioner
for the years 1958 to May 1963 and from 1967 to March 1971, inclusive, plus penalties
PARAS, J.: thereon at the rate of 3% per month of delinquency. SO ORDERED.

This is a petition for review on certiorari, seeking the reversal of the decision of the Court of Appeals Herein petitioner filed a Motion for Reconsideration with respondent Court of Appeals, which Motion
dated June 4, 1981, the dispositive portion of which reads: was later denied.

WHEREFORE, the resolution (decision) of the Social Security Commission in SSC Case Hence, this petition.
No. 3272 is hereby set aside and another one entered: ordering respondent Baliwag Transit,
Inc. to remit to the Social Security Commission the premium contributions for the petitioner
In the resolution of August 26, 1981 of the Second Division of this Court, respondents were required
for the years 1958 to May 1963 and from 1967 to March 1971, inclusive, plus penalties
to comment (Rollo, p. 64) which was complied with on September 21, 1981 (Rollo, pp. 65-71). On
thereon at the rate of 3% per month of delinquency.
October 5, 198 1, petitioner filed its Reply (Rollo, pp. 73-75) in compliance with the resolution of
September 30, 1981 (Rollo, p. 71). In the resolution of December 7, 1981, the petition was given
Two passenger bus lines with similar buses and similar routes were being operated by firm names due course (Rollo, p. 81). The brief for petitioner-appellant was filed on March 27, 1982 (Rollo, p.
"Baliwag Transit' and "Baliwag Transit, Inc." (BTI) the herein petitioner. The former was owned by 89) while private respondent filed a manifestation and motion to be excused for not filing private
the late Pascual Tuazon who continued to operate it until his death on January 26, 1972, while the respondent's brief and to be allowed to adopt as his arguments the comments he filed on
latter was owned by petitioner corporation, incorporated in the year 1968 and existing until the September 19, 1981 and his brief with the Court of Appeals (Rollo, p. 92). Said manifestation and
present time. Both bus lines operate under different grants of franchises by the Public Service motion was noted in the resolution of June 23, 1982 (Rollo, p. 93) and this case was submitted for
Commission (Brief for Petitioner, p.11), but were issued only one ID Number 03-22151 by the Social deliberation in the resolution of February 3, 1984 (Rllo, p. 94).
Security System (Rollo, p. 66).
Petitioners raised the following assignment of errors:
Private respondent claiming to be an employee of both bus lines with one ID Number, filed a petition
with the Social Security Commision on August 14, 1975 which was docketed as SSC Case No. 3272
I. THAT THE FINDINGS OF THE RESPONDENT HONORABLE COURT OF APPEALS TO THE
to compel BTI to remit to the Social Security private respondent's SSS Premium contributions for the
EFFECT THAT THE VEHICLES OF THE LATE PASCUAL TUAZON WERE "ATTACHED" OR
years 1958 to March, 1963 and from 1967 to March 1971. He alleged that he was employed by
"KABIT" WITH PETITIONER, BALIWAG TRANSIT, INC. MAY NOT HAVE BEEN SUPPORTED BY
petitioner from 1947 to 1971 as conductor and later as inspector with corresponding salary
SUBSTANTIAL EVIDENCE.
increases and that petitioner deducted from his salaries, premium contributions, but what was
remitted to the SSS was only for a period covering June, 1963 to 1966, at a much lesser amount.
II. GRANTING THAT THE VEHICLES OF THE LATE PASCUAL TUAZON WERE INDEED
"ATTACHED" OR "KABIT" WITH PETITIONER BALIWAG TRANSIT, INC. EMPLOYER-
In its answer, BTI denied having employed private respondent Ramon Martinez, the truth being that
EMPLOYEE RELATIONS MAY NOT EXTENT TC COVER OR INCLUDE THE EMPLOYEES OF
he was employed by Pascual Tuazon who since 1948 owned and operated buses under the trade
THE ACTUAL OWNER OF THE VEHICLES AS EMPLOYEES ALSO OF THE HOLDER OF THE
name Baliwag Transit which were separate and distinct from the buses operated by petitioner
CERTIFICATE OF PUBLIC CONVENIENCE WHICH IS IN THIS CASE, PETITIONER BALIWAG
company owned by Mrs. Victoria Vda. de Tengco. Both bus lines had different offices, different
TRANSIT, INC.
maintenance and repair shops, garages, books of account, and managers. The employment of
private respondent lasted until 1971 when his employer Pascual Tuazon became bankrupt. It was
the latter which deducted from private respondent the amount corresponding to his SSS However, the main issue in this case is whether or not the issuance by the Social Security System of
contributions for the years in question but allegedly did not remit the same. Finally, herein petitioner one SSS-ID-Number to two bus lines necessarily indicates that one of them, operates his buses
BTI claims that private respondent allowed 17 years to elapse and at a time when Pascual Tuazon under the "Kabit System."
was already dead before filing the subject petition with the Social Security Commission. (Rollo, p.
18).lwphl@itç
The answer is in the negative.

After trial on the merits, the Social Security Commission on September 12, 1979, entered a
The "Kabit System" has been defined by the Supreme Court as an arrangement "whereby a person
resolution in SSC Case No. 3272, the dispositive portion of which reads:
who has been granted a certificate of convenience allows another person who owns motor vehicles

24
to operate under such franchise for a fee." (Lita Enterprises, Inc. v. Second Civil Cases Division,
IAC, et al., G.R. No. 64693, April 27, 1984).lwphl@itç
The determining factor, therefore, is the possession of a franchise to operate which negates the
existence of the "Kabit System" and not the issuance of one SSS ID Number for both bus lines from
which the existence of said system was inferred.
In the instant case, the findings of the Court of Appeals are as follows:
... It is very obvious from the foregoing narration of facts that the late Pascual Tuazon,
during the time material to this case, operated his buses under the "kabit" Syetem; that is,
while actually he was the owner and operator of public utility buses, maintaining his own
drivers, conductors, inspectors and other employees, his buses were not registered with the
Public Service Commission (now the Bureau of Land Transportation) in his own name.
Instead, his buses were absorbed and registered as owned and operated by the "Baliwag
Transit," which was the firm name owned and used by his niece, Victoria Vda. de Tengco.
It is well settled that the findings of facts of the Court of Appeals ... are conclusive on the
parties and on this Court, unless ... (2) the inference made is manifestly mistaken; ... (4) the
judgment is based on misapprehension of facts; ... (6) the Court of Appeals went beyond the
issues of the case and its findings are contrary to the admissions of both appellant appellant
and appellees; (7) the findings of facts of the Court of Appeals are contrary to those of the
trial court; ... (Sacay v. Sandiganbayan, G.R. No. 66497-98, July 10, 1986).
In the case at bar, it is undisputed that as testified to, lot only by seven (7) witnesses presented by
the petitioner but also by the Social Security System witness Mangowan Macalaba, Clerk I ,of the R
& A Division of the Board of Transportation, who had access to the records of said office with
respect to applications and grant of franchises of public utility vehicles, that Victoria Vda. de Tengco
and Pascual Tuazon were granted separate franchises to operate public utility buses, under Cases
Nos. 15904, 114913, 11564, 103366, 64157 and 65894 for the former and Case No. 69-4592 and
Case No. 697775 for the latter, both operating between Manila and Baliuag routes. However, the
franchises of Pascual Tuazon were cancelled on December 16, 1971 and may 14, 1972 respectively
(Rollo, p. 22), when the latter terminated his operation.
It is thus evident that both bus lines operated under their own franchises but opted to retain the firm
name "Baliwag Transit" with slight modification, by the inclusion of the word "Inc." in the case of
herein petitioner, obviously to take advantage of the goodwill such firm name enjoys with the riding
public. Conversely, the conclusion of the Court of Appeals that the late Pascual Tuazon, during the
time material to this case operated his buses under the "Kabit System" on the ground that while he
was actually the owner and operator, his buses were not registered with the Public Service
Commission (now the Bureau of Land Transportation) in his own name, is not supported by the
records. Much less can it be said that there is an analogy between the case at bar and the cited
case of Doligosa, et al. v. Decolongon, et al. (3 CA Nos. 1135, 1142-43) to the extent that Baliwag
Transit, Inc. being the ostensible operator of the buses actually owned by Pascual Tuazon, should
be held liable for the contributions collected or ought to be collected from private respondent (Rollo,
pp. 53-54), presumably to discourage the proliferating "Kabit System" in public utility vehicles.
While it is admitted that petitioner was the one who remitted the SSS premiums of private
respondent, it has also been established by testimonies of witnesses that such arrangement was
done purposely to accommodate the request of the late Pascual Tuazon, the uncle of Victoria Vda.
de Tengco and the money came from him. On the other hand, there is no reason why such
testimonies should not be given credence as the records fail to show that said witnesses have any
motive or reason to falsify or perjure their testimonies (Rollo, pp. 23-24).
Moreover, the Social Security Commission after several hearings had been conducted, arrived at
the following conclusion:
It was established during the hearings that petitioner Roman Martinez was employed by,
worked for and took orders from Pascual Tuazon and was authorized to get "vales" from the
conductors of the trucks of Mr. Tuazon. This was admitted got "vales" from the buses of
Pascual Tuazon (TSN. pp. 24-25, May 7, 1976 and Exhibits "3" to "49").
On the other hand, there is no evidence introducted to show that petitioner ever received
salaries from respondent or from Mrs. Victoria Vda. de Tengco and neither had he been
under the orders of the latter. The only basis upon which petitioner anchors his claim despite
his actual employment by Pascual Tuazon was the use by the latter of the trade name,
Baliwag Transit, in the operation of his (Mr. Tuazon's) own buses which the latter had every
reason to do since he laboriously helped and organized said firm until it gained cognizance
by the public.
It is, therefore, clear that even long before the incorporation of the Baliwag Transit in 1968
petitioner was already an employee of the late Pascual Tuazon who despite having separate
office, employees and buses which were operated under the line of the Baliwag Transit did
not report him for coverage to the SSS. Sadly enough petitioner who claims to be an
employee of the respondent did not refute, by way of submitting rebuttal evidence, the
testimonies given by respondent's witnesses that he was an employee of the late Pascual
Tuazon and not of said respondent or of Mrs. Victoria Tuazon and not of said respondent or
of Mr. Victoria Vda. de Tengco. Indeed, there is a reasonable basis to believe that he would
not attempt to do so if only to be consistent with his stand when he filed a case before the
National Labor Relations Commission, a claim against both the late Pascual Tuazon and the
respondent, He is now concentrating his action against the respondent in view of the death
of Pascual Tuazon who during his lifetime sold his trucks and became bankrupt Exhibit "2")
— Resolution, September 14, 1979, pp. 29-31). (Rollo, pp. 28-30)
It has been uniformly held by this Court that it is sufficient that administrative findings of fact are
supported by evidence on the record, or stated negatively, it is sufficient that findings of fact are not
shown to be unsupported by evidence.
The Court has also held further that "in reviewing administrative decisions, the reviewin/g court
cannot re-examine the sufficiency of the evidence as if originally instituted therein, and receive
additional evidence that was not submitted to the administrative agency concerned. The findings of
fact must be respected, so long as they are supported by substantial evidence, even if not
overwhelming or preponderant." (Police Commission v. Lood, 127 SCRA 758 [1984]).lwphl@itç
Thus, the employer-employee relationship between the late Pascual Tuazon and herein private
respondent, having been established, the remittance of SSS contributions of the latter, is the
responsibility of his employer Tuazon, regardless of the existence or non-existence of the "Kabit
System."
Moreover, private respondent having allowed seventeen (17) years to elapse before filing his
petition with the Social Security System, has undoubtedly slept on his rights and his cause of action
has already prescribed under Article 1144(2) of the Civil Code (Central Azucarrera del Davao v.
Court of Appeals, 137 SCRA 296 [1985]; applied by analogy).
PREMISES CONCERNED, the decision of respondent Court of Appeals dated June 4, 1981 is
hereby REVERSED and SET ASIDE, and the Resolution of the Social Security Commission dated
September 12, 1979 is hereby REINSTATED.
SO ORDERED.
G.R. No. 120553 June 17, 1997
25
PHILTRANCO SERVICE ENTERPRISES, INC. and ROGACIONES MANILHIG, petitioner, Yabao was only about 20 meters away when he saw the bus of defendant Philtranco
vs. bumped [sic] and [sic] ran over the victim. From the place where the victim was actually
COURT OF APPEALS and HEIRS OF THE LATE RAMON ACUESTA, respondents. bumped by the bus, the said vehicle still had run to a distance of about 15 meters away. 4

DAVIDE, JR., J.: For their part, the petitioners filed an Answer 5 wherein they alleged that petitioner Philtranco
exercised the diligence of a good father of a family in the selection and supervision of its employees,
including petitioner Manilhig who had excellent record as a driver and had undergone months of
The petitioners interposed this appeal by way of a petition for review under Rule 45 of the Rules of
rigid training before he was hired. Petitioner Manilhig had always been a prudent professional driver,
Court from the 31 January 1995 Decision of the Court of Appeals in CA-G.R. CV No.
religiously observing traffic rules and regulations. In driving Philtranco's buses, he exercised the
41140 1 affirming the 22 January 1993 2 Decision of Branch 31 of the Regional Trial Court, Calbayog
diligence of a very cautious person.
City, in Civil Case No. 373, which ordered the petitioners to pay the private respondents damages
as a result of a vehicular accident.
As might be expected, the petitioners had a different version of the incident. They alleged that in the
morning of 24 March 1990, Manilhig, in preparation for his trip back to Pasay City, warmed up the
Civil Case No. 373 was an action against herein petitioners for damages instituted by the heirs of
engine of the bus and made a few rounds within the city proper of Calbayog. While the bus was
Ramon A. Acuesta, namely, Gregorio O. Acuesta; Julio O. Acuesta; Ramon O. Acuesta, Jr.;
slowly and moderately cruising along Gomez Street, the victim, who was biking towards the same
Baltazar O. Acuesta; Rufino O. Acuesta; Maximo O. Acuesta; Neri O. Acuesta; Iluminada O.
direction as the bus, suddenly overtook two tricycles and swerved left to the center of the road. The
Acuesta; Rosario Acuesta-Sanz; and Pamfilo O. Acuesta. Atty. Julio O. Acuesta also appeared as
swerving was abrupt and so sudden that even as Manilhig applied the brakes and blew the bus
counsel for the plaintiffs (herein private respondents). 3 The private respondents alleged that the
horn, the victim was bumped from behind and run over by the bus. It was neither willful nor
petitioners were guilty of gross negligence, recklessness, violation of traffic rules and regulations,
deliberate on Manilhig's part to proceed with the trip after his bus bumped the victim, the truth being
abandonment of victim, and attempt to escape from a crime.
that when he looked at his rear-view window, he saw people crowding around the victim, with others
running after his bus. Fearing that he might be mobbed, he moved away from the scene of the
To support their allegations, the private respondents presented eight witnesses. On 10 February accident and intended to report the incident to the police. After a man boarded his bus and
1992, after the cross-examination of the last witness, the private respondents' counsel made a introduced himself as a policeman, Manilhig gave himself up to the custody of the police and
reservation to present a ninth witness. The case was then set for continuation of the trial on 30 and reported the accident in question.
31 March 1992. Because of the non-appearance of the petitioners' counsel, the 30 March 1992
hearing was cancelled. The next day, private respondents' counsel manifested that he would no
The petitioners further claimed that it was the negligence of the victim in overtaking two tricycles,
longer present the ninth witness. He thereafter made an oral offer of evidence and rested the case.
without taking precautions such as seeing first that the road was clear, which caused the death of
The trial court summarized private respondents' evidence in this wise:
the victim. The latter did not even give any signal of his intention to overtake. The petitioners then
counterclaimed for P50,000 as and for attorney's fees; P1 million as moral damages; and P50,000
[I]n the early morning of March 24, 1990, about 6:00 o'clock, the victim Ramon A. Acuesta for litigation expenses.
was riding in his easy rider bicycle (Exhibit "O"), along the Gomez Street of Calbayog City.
The Gomez Street is along the side of Nijaga Park. On the Magsaysay Blvd., also in
However, the petitioners were not able to present their evidence, as they were deemed to have
Calbayog City, defendant Philtranco Service Enterprises, Inc. (Philtranco for brevity) Bus
waived that right by the failure of their counsel to appear at the scheduled hearings on 30 and 31
No. 4025 with plate No. EVA-725 driven by defendant Rogasiones Manilhig y Dolira was
March 1992. The trial court then issued an Order 6 declaring the case submitted for decision.
being pushed by some persons in order to start its engine. The Magsaysay Blvd. runs
Motions for the reconsideration of the said Order were both denied.
perpendicular to Gomez St. and the said Philtranco bus 4025 was heading in the general
direction of the said Gomez Street. Some of the persons who were pushing the bus were on
its back, while the others were on the sides. As the bus was pushed, its engine started On 22 January 1992, the trial court handed down a decision ordering the petitioners to jointly and
thereby the bus continued on its running motion and it occurred at the time when Ramon A. severally pay the private respondents the following amounts:
Acuesta who was still riding on his bicycle was directly in front of the said bus. As the engine
of the Philtranco bus started abruptly and suddenly, its running motion was also enhanced
1) P55, 615.72 as actual damages;
by the said functioning engine, thereby the subject bus bumped on the victim Ramon A.
Acuesta who, as a result thereof fell and, thereafter, was run over by the said bus. The bus
did not stop although it had already bumped and ran [sic] over the victim; instead, it 2) P200,000 as death indemnity for the death of the victim Ramon A. Acuesta;
proceeded running towards the direction of the Rosales Bridge which is located at one side
of the Nijaga Park and towards one end of the Gomez St., to which direction the victim was
3) P1 million as moral damages;
then heading when he was riding on his bicycle. P/Sgt. Yabao who was then jogging thru
the Gomez Street and was heading and meeting the victim Ramon A. Acuesta as the latter
was riding on his bicycle, saw when the Philtranco bus was being pushed by some 4) P500,000 by way of exemplary damages;
passengers, when its engine abruptly started and when the said bus bumped and ran over
the victim. He approached the bus driver defendant Manilhig herein and signalled to him to
stop, but the latter did not listen. So the police officer jumped into the bus and introducing 5) P50,000 as attorney's fees; and
himself to the driver defendant as policeman, ordered the latter to stop. The said defendant
driver stopped the Philtranco bus near the Nijaga Park and Sgt. Yabao thereafter, told the 6) the costs of suit. 7
driver to proceed to the Police Headquarter which was only 100 meters away from Nijaga
Park because he was apprehensive that the said driver might be harmed by the relatives of
the victim who might come to the scene of the accident. Then Sgt. Yabao cordoned the Unsatisfied with the judgment, the petitioners appealed to the Court of Appeals imputing upon the
scene where the vehicular accident occurred and had P/Cpl. Bartolome Bagot, the Traffic trial court the following errors:
Investigator, conduct an investigation and make a sketch of the crime scene. Sgt. Yambao

26
(1) in preventing or barring them from presenting their evidence;
(2) in finding that petitioner Manilhig was at fault;
(3) in not finding that Ramon was the one at fault and his own fault caused, or at least contributed to,
his unfortunate accident;
(4) in awarding damages to the private respondents; and
(5) in finding that petitioner Philtranco was solidarily liable with Manilhig for damages. 8
In its decision of 31 January 1995, the Court of Appeals affirmed the decision of the trial court. It
held that the petitioners were not denied due process, as they were given an opportunity to present
their defense. The records show that they were notified of the assignment of the case for 30 and 31
March 1992. Yet, their counsel did not appear on the said dates. Neither did he file a motion for
postponement of the hearings, nor did he appeal from the denial of the motions for reconsideration
of the 31 March 1992 Order of the trial court. The petitioners have thereby waived their right to
present evidence. Their expectation that they would have to object yet to a formal offer of evidence
by the private respondents was "misplaced," for it was within the sound discretion of the court to
allow oral offer of evidence.
As to the second and third assigned errors, the respondent court disposed as follows:
. . . We cannot help but accord with the lower court's finding on appellant Manilhig's fault.
First, it is not disputed that the bus driven by appellant Manilhig was being pushed at the
time of the unfortunate happening. It is of common knowledge and experience that when a
vehicle is pushed to a jump-start, its initial movement is far from slow. Rather, its movement
is abrupt and jerky and it takes a while before the vehicle attains normal speed. The lower
court had thus enough basis to conclude, as it did, that the bumping of the victim was due to
appellant Manilhig's actionable negligence and inattention. Prudence should have dictated
against jump-starting the bus in a busy section of the city. Militating further against
appellants' posture was the fact that the precarious pushing of subject bus to a jumpstart
was done where the bus had to take a left turn, thereby making the move too risky to take.
The possibility that pedestrians on Gomez Street, where the bus turned left and the victim
was biking, would be unaware of a vehicle being pushed to a jumpstart, was too obvious to
be overlooked. Verily, contrary to their bare arguments, there was gross negligence on the
part of appellants.
The doctrine of last clear chance theorized upon by appellants, is inapplicable under the
premises because the victim, who was bumped from behind, obviously, did not of course
anticipate a Philtranco bus being pushed from a perpendicular street.
The respondent court sustained the awards of moral and exemplary damages and of attorney's
fees, for they are warranted under Articles 2206, 2231, and 2208(1), respectively, of the Civil Code.
Anent the solidary liability of petitioner Philtranco, the same finds support in Articles 2180 and 2194
of the said Code. The defense that Philtranco exercised the diligence of a good father of a family in
the selection and supervision of its employees crumbles in the face of the gross negligence of its
driver, which caused the untimely death of the victim.
Their motion for reconsideration having been denied, the petitioners came to us claiming that the
Court of Appeals gravely erred
I
. . . IN HOLDING THAT PETITIONERS WAIVED THEIR RIGHT TO PRESENT THEIR
EVIDENCE, AND THAT PETITIONERS WERE NOT DENIED DUE PROCESS.
II
. . . IN APPLYING ART. 2194, INSTEAD OF ART. 2180, OF THE CIVIL CODE, AND IN
HOLDING THAT PETITIONER PHILTRANCO CAN NOT INVOKE THE DEFENSE OF
DILIGENCE OF A GOOD FATHER OF A FAMILY.
III
. . . IN AWARDING DAMAGES TO RESPONDENTS AND/OR IN NOT FINDING THE TRIAL
COURT'S AWARD OF DAMAGES EXCESSIVE.
We resolved to give due course to the petition and required the parties to submit their respective
memoranda after due consideration of the allegations, issues, and arguments adduced in the
petition, the comment thereon by the private respondents, and the reply to the comment filed by the
petitioners. The petitioners filed their memorandum in due time; while the private respondents filed
theirs only on 3 January 1997, after their counsel was fined in the amount of P1,000 for failure to
submit the required memorandum.
The first imputed error is without merit. The petitioners and their counsel, Atty. Jose Buban, were
duly notified in open court of the order of the trial court of 10 February 1992 setting the case for
hearing on 30 and 31 March 1992. 9 On both dates neither the petitioners nor their counsel
appeared. In his motion for reconsideration, 10 Atty. Buban gave the following reasons for his failure
to appear on the said hearings:
1. That when this case was called on March 27, 1992, counsel was very much indisposed
due to the rigors of a very hectic campaign as he is a candidate for City Councilor of
Tacloban; he wanted to leave for Calbayog City, but he was seized with slight fever on the
morning of said date; but then, during the last hearing, counsel was made to understand that
plaintiffs would formally offer their exhibits in writing, for which reason, counsel for
defendants waited for a copy of said formal offer, but counsel did not receive any copy as
counsel for plaintiffs opted to formally offer their exhibits orally in open court;
2. That counsel for defendants, in good faith believed that he would be given reasonable
time within which to comment on the formal offer in writing, only to know that counsel for
plaintiffs orally offered their exhibits in open court and that the same were admitted by the
Honorable Court; and that when this case was called on March 30 and 31, 1992, the
undersigned counsel honestly believed that said schedule would be cancelled, pending on
the submission of the comments made by the defendants on the formal offer; but it was not
so, as the exhibits were admitted in open court. 11
In its order of 26 May 1992, the trial court denied the motion, finding it to be "devoid of meritorious
basis," as Atty. Buban could have filed a motion for postponement. 12 Atty. Buban then filed a motion
to reconsider 13 the order of denial, which was likewise denied by the trial court in its order of 12
August 1992. 14 Nothing more was done by the petitioners after receipt of the order of 12 August
1992. A perusal of the first and second motions for reconsideration discloses absence of any claim
that the petitioners have meritorious defenses. Clearly, therefore, the trial court committed no error
in declaring the case submitted for decision on the basis of private respondent's evidence.
The second imputed error is without merit either.
27
Civil Case No. 373 is an action for damages based on quasi-delict 15 under Article 2176 and 2180 of
the Civil Code against petitioner Manilhig and his employer, petitioner Philtranco, respectively.
These articles pertinently provide:
Art. 2176. Whoever by act or omission causes damage to another, there being fault or
negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no
pre-existing contractual relation between the parties, is called a quasi-delict and is governed
by the provisions of this Chapter.
Art. 2180. The obligation imposed by Article 2176 is demandable not only for one's own acts
or omissions, but also for those of persons for whom one is responsible.
xxx xxx xxx
The owners and managers of an establishment or enterprise are likewise responsible for
damages caused by their employees in the service of the branches in which the latter are
employed or on the occasion of their functions.
Employers shall be liable for the damages caused by their employees and household
helpers acting within the scope of their assigned tasks even though the former are not
engaged in any business or industry.
xxx xxx xxx
The responsibility treated of in this article shall cease when the persons herein mentioned
prove that they observed all the diligence of a good father of a family to prevent damage.
We have consistently held that the liability of the registered owner of a public service vehicle, like
petitioner Philtranco, 16 for damages arising from the tortious acts of the driver is primary, direct, and
joint and several or solidary with the driver. 17 As to solidarity, Article 2194 expressly provides:
Art. 2194. The responsibility of two or more persons who are liable for a quasi-
delict is solidary.
Since the employer's liability is primary, direct and solidary, its only recourse if the
judgment for damages is satisfied by it is to recover what it has paid from its employee
who committed the fault or negligence which gave rise to the action based on quasi-delict.
Article 2181 of the Civil Code provides:
Art. 2181. Whoever pays for the damage caused by his dependents or employees
may recover from the latter what he has paid or delivered in satisfaction of the claim.
There is, however, merit in the third imputed error.
The trial court erroneously fixed the "death indemnity" at P200,000. The private respondents
defended the award in their Opposition to the Motion for Reconsideration by saying that "[i]n the
case of Philippine Airlines, Inc. vs. Court of Appeals, 185 SCRA 110, our Supreme Court held that
the award of damages for death is computed on the basis of the life expectancy of the deceased." In
that case, the "death indemnity" was computed by multiplying the victim's gross annual income by
his life expectancy, less his yearly living expenses. Clearly then, the "death indemnity" referred to
was the additional indemnity for the loss of earning capacity mentioned in Article 2206(1) of the Civil
Code, and not the basic indemnity for death mentioned in the first paragraph thereof. This article
provides as follows:
Art. 2206. The amount of damages for death caused by a crime or quasi-delict shall be at
least three thousand pesos, even though there may have been mitigating circumstances.
In addition:
(1) The defendant shall be liable for the loss of the earning capacity of the deceased, and
the indemnity shall be paid to the heirs of the latter; such indemnity shall in every case be
assessed and awarded by the court, unless the deceased on account of permanent
physical disability not caused by the defendant, had no earning capacity at the time of his
death;
(2) If the deceased was obliged to give support according to the provisions of article 291,
the recipient who is not an heir called to the decedent's inheritance by the law of testate or
intestate succession, may demand support from the person causing the death, for a
period of not exceeding five years, the exact duration to be fixed by the court;
(3) The spouse, legitimate and illegitimate descendants and ascendants of the deceased
may demand moral damages for mental anguish by reason of the death of the deceased.
We concur with petitioners' view that the trial court intended the award of "P200,000.00 as death
indemnity" not as compensation for loss of earning capacity. Even if the trial court intended the
award as indemnity for loss of earning capacity, the same must be struck out for lack of basis. There
is no evidence on the victim's earning capacity and life expectancy.
Only indemnity for death under the opening paragraph of Article 2206 is due, the amount of which
has been fixed by current jurisprudence at P50,000. 18
The award of P1 million for moral damages to the heirs of Ramon Acuesta has no sufficient basis
and is excessive and unreasonable. This was based solely on the testimony of one of the heirs, Atty.
Julio Acuesta, contained in his "Direct Testimony . . . As Plaintiff, conducted by Himself," 19 to wit:
Q. What was your feeling or reaction as a result of the death of your father Ramon A.
Acuesta?
A. We, the family members, have suffered much from wounded feelings, moral shock,
mental anguish, sleepless nights, to which we are entitled to moral damages at the
reasonable amount of ONE MILLION (P1,000,000.00) PESOS or at the sound discretion
of this Hon. Court.
Since the other heirs of the deceased did not take the witness stand, the trial court had no basis for
its award of moral damages to those who did not testify thereon.
Moral damages are emphatically not intended to enrich a plaintiff at the expense of the defendant.
They are awarded only to allow the former to obtain means, diversion, or amusements that will serve
to alleviate the moral suffering he has undergone due to the defendant's culpable action and must,
perforce, be proportional to the suffering inflicted. 20 In light of the circumstances in this case, an
award of P50,000 for moral damages is in order.
The award of P500,000 for exemplary damages is also excessive. In quasi-delicts, exemplary
damages may be awarded if the party at fault acted with gross negligence. 21 The Court of Appeals
found that there was gross negligence on the part of petitioner Manilhig. 22 Under Article 2229 of the
Civil Code, exemplary damages are imposed by way of example or correction for the public good, in
addition to the moral, temperate, liquidated, or compensatory damages. Considering its purpose, it
must be fair and reasonable in every case and should not be awarded to unjustly enrich a prevailing
party. In the instant case, an award of P50,000 for the purpose would be adequate, fair, and
reasonable.
28
Finally, the award of P50,000 for attorney's fees must be reduced. The general rule is that attorney's G.R. Nos. L-12634 and L-12720             May 29, 1959
fees cannot be recovered as part of damages because of the policy that no premium should be
placed on the right to
JOSE G. TAMAYO, petitioner,
litigate. 23 Stated otherwise, the grant of attorney's fees as part of damages is the exception rather
vs.
than the rule, as counsel's fees are not awarded every time a party prevails in a suit. 24 Such
INOCENCIO AQUINO, ET AL., and SILVESTRE RAYOS, respondents.
attorney's fees can be awarded in the cases enumerated in Article 2208 of the Civil Code, and in all
cases it must be reasonable. In the instant case, the counsel for the plaintiffs is himself a co-plaintiff;
it is then unlikely that he demanded from his brothers and sisters P100,000 as attorney's fees as SILVESTRE RAYOS, petitioner,
alleged in the complaint and testified to by vs.
him. 25 He did not present any written contract for his fees. He is, however, entitled to a reasonable JOSE G. TAMAYO and INOCENCIO AQUINO ET AL., respondents.
amount for attorney's fees, considering that exemplary damages are awarded. Among the instances
mentioned in Article 2208 of the Civil Code when attorney's fees may be recovered is "(1) when
LABRADOR, J.:
exemplary damages are awarded." Under the circumstances in this case, an award of P25,000 for
attorney's fees is reasonable.
Inocencio Aquino and his children brought this action against Jose G. Tamayo, holder of a certificate
of public convenience to operate two trucks for damages for the death of Inocencio's wife, Epifania
The petitioners did not contest the award for actual damages fixed by the trial court. Hence, such
Gonzales, while riding aboard Tamayo's trucks. It is alleged that while his (Inocencio Aquino) wife
award shall stand.
was making a trip aboard truck with Plate No. TPU-735, it bumped against a culvert on the side of
the road in Bugallon, Pangasinan; that as a consequence of this accident Epifania Gonzales was
IN VIEW OF THE FOREGOING, the petition is hereby partly granted and the challenged decision of thrown away from the vehicle and two pieces of wood embedded in her skull, as a result of which
CA-G.R. CV No. 41140 is AFFIRMED, subject to modifications as to the damages awarded, which she died; that the impact of the truck against the culvert was so violent that the roof of the vehicle
are reduced as follows: was ripped off from its body, one fender was smashed and the engine damaged beyond repair.
Complaint was filed for the recovery of P10,000 as actual damages, P10,000 as moral damages,
and costs.
(a) Death indemnity, from P200,000 to P50,000;

Upon being summoned, defendant Tamayo answered alleging a that the truck is owned by Silvestre
(b) Moral damages, from P1 million to P50,000;
Rayos, so he filed a third-party complaint against the latter, alleging that he no longer had any
interest whatsoever in the said truck, as he had sold the same before the accident to the third-party
(c) Exemplary damages, from P500,000 to P50,000; and defendant Silvestre Rayos. Answering the third-party complaint, Rayos alleged that if any indemnity
is due, it should come from Jose G. Tamayo, because he did not have any transaction with him
regarding such sale.
(d) Attorney's fees, from P50,000 to P25,000.

The Court of First Instance found that the truck with plate No. TPU-735 was one of the trucks of
No pronouncements as to costs in this instance.
Tamayo under a certificate of public convenience issued to him; that he had sold it to Rayos in
March, 1953, but did not inform the Public Service Commission of the sale until June 30, 1953, one
SO ORDERED. month after the accident. On the basis of the above facts, the Court of First Instance ordered the
defendant Tamayo and the third-party defendant Rayos to pay plaintiffs jointly and severally the sum
of P6,000 as compensatory damages, and another sum of P5,000 as moral damages, with interest,
and authorized the defendant or third-party defendant, whoever should pay the entire amount, to
recover from the other any sum in excess of one-half of the amount ordered to be paid, with interest.
The Court also dismissed the third-party complaint.

Appeals against the above decision was made to the Court of Appeals. This court affirmed the
judgment of the Court of First Instance in all respects, and against this judgment certiorari was
issued by us on separate petitions of Tamayo and Rayos.

Tamayo claims exemption from liability, arguing that the owner and operator of the truck at the time
the accident was not he but Rayos. In answer we state that we have already held in the cases
of Medina vs. Cresencia, 99 Phil., 506; 52 Off. Gaz., (11) 4606; Timbol vs. Osias, 98 Phil., 432; 52
Off. Gaz. (3) 1392; Montoya vs. Ignacio, 94 Phil., 182; 50 Off. Gaz., 108, and Roque vs. Malibay, L-
8561, Nov. 18, 1955, that the registered owner of a public service vehicle is responsible for
damages that may be caused to any of the passengers therein, even if the said vehicle had already
been sold, leased or transferred to another person who was, at the time of the accident, actually
operating the vehicle. This principle was also reaffirmed in the case of Erezo vs. Jepte, 102 Phil.,
103. The reason given by us for the above liability imposed upon the registered owner of the vehicle
under a certificate of public convenience is as follows:

29
 . . . we hold with the trial court that the law does not allow him to do so; the law with its
aim and policy in mind, does not relieve him directly of the responsibility that the law fixes
and places upon him as an incident or consequence of registration. Were a registered
owner alleged to evade responsibility by proving who the supposed transferee or owner is,
it would be easy for him by collusion with others or otherwise, to escape said responsibility
and transfer the same to an indefinite person, or to one who possesses no property with
which to respond financially for the damage or injury done. A victim of recklessness on the
public highways is usually without means to discover or identify the person actually
causing the injury or damage. He has no means other than by a recourse to the
registration in the Motor Vehicles Office to determine who is the owner. The protection
that the law aims to extend to him would become illusory were the registered owner given
the opportunity to escape liability by disproving his ownership. If the policy of the law is to
be enforced and carried out, the registered owner should not be allowed to prove the
contrary to the prejudice of the person injured, that is, to prove that a third person or
another has become the owner, so that he may thereby be relieved of the responsibility to
the injured. (Erezo vs. Jepte, supra).
The decision of the Court of Appeals is also attacked insofar as it holds that inasmuch as the third-
party defendant had used the truck on a route not covered by the registered owner's franchise, both
the registered owner and the actual owner and operator should be considered as joint tortfeasors
and should be made liable in accordance with Article 2194 of the Civil Code. This Article is as
follows:
Art. 2194. The responsibility of two or more persons who are liable for a quasi-delict is
solidary.
But the action instituted in the case at bar is one for breach of contract, for failure of the defendant to
carry safety the deceased for her destination. The liability for which he is made responsible, i.e., for
the death of the passenger, may not be considered as arising from a quasi-delict. As the registered
owner Tamayo and his transferee Rayos may not be held guilty of tort or a quasi-delict; their
responsibility is not solidary as held by the Court of Appeals.
The question that poses, therefore, is how should the holder of the certificate of public convenience
Tamayo participate with his transferee, operator Rayos, in the damages recoverable by the heirs of
the deceased passenger, if their liability is not that of Joint tortfeasors in accordance with Article
2194 of the Civil Code. The following considerations must be borne in mind in determining this
question. As Tamayo is the registered owner of the truck, his responsibility to the public or to any
passenger riding in the vehicle or truck must be direct, for the reasons given in our decision in the
case of Erezo vs. Jepte, supra, as quoted above. But as the transferee, who operated the vehicle
when the passenger died, is the one directly responsible for the accident and death he should in turn
be made responsible to the registered owner for what the latter may have been adjudged to pay. In
operating the truck without transfer thereof having been approved by the Public Service
Commission, the transferee acted merely as agent of the registered owner and should be
responsible to him (the registered owner), for any damages that he may cause the latter by his
negligence.
In the case at bar, the court found, furthermore, that inspite of the fact that the agreement between
Tamayo and Rayos was for Rayos to use the truck in carrying of gasoline, the latter used the same
in transporting passengers outside the route covered by the franchise of Tamayo. For this additional
reason, the agent or Rayos must be held responsible to the registered owner, to the extent that the
latter may suffer damage by reason of the death caused during the accident. The responsibility of
the transferee was already adverted to by us in the case of Erezo vs. Jepte, supra, when we held
expressly:
In synthesis, we hold that the registered owner, the defendant-appellant herein, is
primarily responsible for the damage caused to the vehicle of the plaintiff-appellee, but he
(defendant-appellant) has a right to be indemnified by the real or actual owner of the
amount that he may be required to pay as damage for the injury caused to the plaintiff-
appellant. (Erezo vs. Jepte, supra.)
We hereby affirm that the responsibility of the transferee of the public vehicle be as above denied.
The procedural means by which the liability of the transferee to the holder of the certificate should
be enforced is that indicated by us in the above-quoted portion of the case of Erezo vs. Jepte. This
procedure was adopted by Tamayo, the defendant herein, when he presented a third party
complaint against Rayos. The courts below should not have dismissed this third-party complaint,
and should have adjudged the responsibility to make indemnity in accordance therewith. The
transferee is liable to indemnify the registered owner for the damages that the latter may be required
to pay for the accident, hence the remedy is by third-party complaint (See Rule 12, Rules of the
Court).
We now come to the question of the damages that the Court of Appeals and the Court of First
Instance awarded to the plaintiffs. The actual or compensatory damage of P6,000 is not seriously
questioned by any of the defendants, but the award of P5,000 as moral damages is questioned by
them in this appeal. We agree with the appellants that as the responsibility of Tamayo and his agent
Rayos is culpa-contractual, no award of moral damages can be given. The law on this matter is
expressed in Article 2220 of the Civil Code, which provides:
Willful injury to property may be a legal ground for awarding moral damages if the court
should find that, under the circumstances, such damages are justly due. The same rule
applies to breaches of contract where the defendant acted fraudulently or in bad faith.
Both the Court of First Instance and the Court of Appeals considered the violation of the rules of the
Public Service Commission prohibiting transfer of public vehicles without approval by the
Commission as justifying the award of moral damages. We believe that both courts erred. The law
expressly provides that award of moral damages can be made in a suit for breach of contact only
when the defendants acted fraudulently or in bad faith. We do not believe that the holder of the
certificate, defendant Tamayo, was guilty of fraud or bad faith. There appears to be no fraud at all in
the transfer. Transfers are prohibited only if made without approval by the Public Service
Commission. There may have been a violation of the regulations because Tamayo did not secure a
previous authority to transfer from said Commission, but he actually applied for and obtained said
permission or approval about a month after the accident. Besides, the truck was transferred to
Rayos with the understanding that the same was not to be used as a public convenience, so that
insofar as Tamayo is concerned, there could have been no shade or tint of bad faith at all.
Consequently, the ground upon which moral damages may be demanded from him by the plaintiffs
does not exist.
Neither can we find that there was fraud or bad faith committed on the part of the transferee or
agent. There may have been a breach of the agreement between Tamayo and Rayos, but this was
not the immediate cause of the accident. It was the negligence of the driver. What the law would
seem to consider as bad faith which may furnish a ground for the award of moral damages in the
case at bar would be bad faith in the securing and in the execution of the contract and in the
enforcement of its terms (Article 1338, Civil Code), or any other kind of deceit which may have been
used by both defendants. None can be said to have been present in the case at bar. There was no
bad faith on the part of the agent Rayos; there was negligence of the driver employed by him, but
this certainly not bad faith defendants' part contemplated by law.
For the foregoing considerations, the judgment appealed from is hereby modified, in that the
defendant-appellant Tamayo is hereby ordered to pay to the plaintiff-appellees the sum of P6,000 as
compensatory damages for the death of the deceased, but that he (Tamayo) has the right to be
indemnified by third-party defendant-appellant Rayos of the amount he is hereby ordered to pay.
With costs against appellants.
30
G.R. No. 168433               February 10, 2009
UCPB GENERAL INSURANCE CO., INC., Petitioner,
vs.
ABOITIZ SHIPPING CORP. EAGLE EXPRESS LINES, DAMCO INTERMODAL SERVICES, INC.,
and PIMENTEL CUSTOMS BROKERAGE CO., Respondents.
DECISION
TINGA, J.:
UCPB General Insurance Co., Inc. (UCPB) assails the Decision1 of the Court of Appeals dated
October 29, 2004, which reversed the Decision2 dated November 29, 1999 of the Regional Trial
Court of Makati City, Branch 146, and its Resolution3 dated June 14, 2005, which denied UCPB’s
motion for reconsideration.
The undisputed facts, culled from the assailed Decision, are as follows:
On June 18, 1991, three (3) units of waste water treatment plant with accessories were purchased
by San Miguel Corporation (SMC for brevity) from Super Max Engineering Enterprises, Co., Ltd. of
Taipei, Taiwan. The goods came from Charleston, U.S.A. and arrived at the port of Manila on board
MV "SCANDUTCH STAR". The same were then transported to Cebu on board MV "ABOITIZ
SUPERCON II". After its arrival at the port of Cebu and clearance from the Bureau of Customs, the
goods were delivered to and received by SMC at its plant site on August 2, 1991. It was then
discovered that one electrical motor of DBS Drive Unit Model DE-30-7 was damaged.
Pursuant to an insurance agreement, plaintiff-appellee paid SMC the amount of ₱1,703,381.40
representing the value of the damaged unit. In turn, SMC executed a Subrogation Form dated
March 31, 1992 in favor of plaintiff-appellee.
Consequently, plaintiff-appellee filed a Complaint on July 21, 1992 as subrogee of SMC seeking to
recover from defendants the amount it had paid SMC.
On September 20, 1994, plaintiff-appellee moved to admit its Amended Complaint whereby it
impleaded East Asiatic Co. Ltd. (EAST for brevity) as among the defendants for being the "general
agent" of DAMCO. In its Order dated September 23, 1994, the lower court admitted the said
amended complaint.
Upon plaintiff-appellee’s motion, defendant DAMCO was declared in default by the lower court in its
Order dated January 6, 1995.
In the meantime, on January 25, 1995, defendant EAST filed a Motion for Preliminary Hearing on its
affirmative defenses seeking the dismissal of the complaint against it on the ground of prescription,
which motion was however denied by the court a quo in its Order dated September 1, 1995. Such
denial was elevated by defendant EAST to this Court through a Petition for Certiorari on October 30,
1995 in CA G.R. SP No. 38840. Eventually, this Court issued its Decision dated February 14, 1996
setting aside the lower court’s assailed order of denial and further ordering the dismissal of the
complaint against defendant EAST. Plaintiff-appellee moved for reconsideration thereof but the
same was denied by this Court in its Resolution dated November 8, 1996. As per Entry of Judgment,
this Court’s decision ordering the dismissal of the complaint against defendant EAST became final
and executory on December 5, 1996.
Accordingly, the court a quo noted the dismissal of the complaint against defendant EAST in its
Order dated December 5, 1997. Thus, trial ensued with respect to the remaining defendants.
On November 29, 1999, the lower court rendered its assailed Decision, the dispositive portion of
which reads:
WHEREFORE, all the foregoing premises considered, judgment is hereby rendered declaring
DAMCO Intermodal Systems, Inc., Eagle Express Lines, Inc. and defendant Aboitiz Shipping
solidarily liable to plaintiff-subrogee for the damaged shipment and orders them to pay plaintiff jointly
and severally the sum of ₱1,703,381.40.
No costs.
SO ORDERED.
Not convinced, defendants-appellants EAGLE and ABOITIZ now come to this Court through their
respective appeals x x x4
The appellate court, as previously mentioned, reversed the decision of the trial court and ruled that
UCPB’s right of action against respondents did not accrue because UCPB failed to file a formal
notice of claim within 24 hours from (SMC’s) receipt of the damaged merchandise as required under
Art. 366 of the Code of Commerce. According to the Court of Appeals, the filing of a claim within the
time limitation in Art. 366 is a condition precedent to the accrual of a right of action against the
carrier for the damages caused to the merchandise.
In its Memorandum5 dated February 8, 2007, UCPB asserts that the claim requirement under Art.
366 of the Code of Commerce does not apply to this case because the damage to the merchandise
had already been known to the carrier. Interestingly, UCPB makes this revelation: "x x x damage to
the cargo was found upon discharge from the foreign carrier onto the International Container
Terminal Services, Inc. (ICTSI) in the presence of the carrier’s representative who signed the
Request for Bad Order Survey6 and the Turn Over of Bad Order Cargoes. 7 On transshipment, the
cargo was already damaged when loaded on board the inter-island carrier."8 This knowledge, UCPB
argues, dispenses with the need to give the carrier a formal notice of claim. Incidentally, the carrier’s
representative mentioned by UCPB as present at the time the merchandise was unloaded was in
fact a representative of respondent Eagle Express Lines (Eagle Express).
UCPB claims that under the Carriage of Goods by Sea Act (COGSA), notice of loss need not be
given if the condition of the cargo has been the subject of joint inspection such as, in this case, the
inspection in the presence of the Eagle Express representative at the time the cargo was opened at
the ICTSI.
UCPB further claims that the issue of the applicability of Art. 366 of the Code of Commerce was
never raised before the trial court and should, therefore, not have been considered by the Court of
Appeals.
Eagle Express, in its Memorandum9 dated February 7, 2007, asserts that it cannot be held liable for
the damage to the merchandise as it acted merely as a freight forwarder’s agent in the transaction. It
allegedly facilitated the transshipment of the cargo from Manila to Cebu but represented the interest
of the cargo owner, and not the carrier’s. The only reason why the name of the Eagle Express
representative appeared on the Permit to Deliver Imported Goods was that the form did not have a
space for the freight forwarder’s agent, but only for the agent of the shipping line. Moreover, UCPB
had previously judicially admitted that upon verification from the Bureau of Customs, it was East
Asiatic Co., Ltd. (East Asiatic), regarding whom the original complaint was dismissed on the ground
of prescription, which was the real agent of DAMCO Intermodal Services, Inc. (DAMCO), the ship
owner.
Eagle Express argues that the applicability of Art. 366 of the Code of Commerce was properly raised
as an issue before the trial court as it mentioned this issue as a defense in its Answer to UCPB’s
31
Amended Complaint. Hence, UCPB’s contention that the question was raised for the first time on
appeal is incorrect.
Aboitiz Shipping Corporation (Aboitiz), on the other hand, points out, in its Memorandum 10 dated
March 29, 2007, that it obviously cannot be held liable for the damage to the cargo which, by
UCPB’s admission, was incurred not during transshipment to Cebu on
board one of Aboitiz’s vessels, but was already existent at the time of unloading in Manila. Aboitiz
also argues that Art. 366 of the Code of Commerce is applicable and serves as a condition
precedent to the accrual of UCPB’s cause of action against it.lawphil.net
The Memorandum11 dated June 3, 2008, filed by Pimentel Customs Brokerage Co. (Pimentel
Customs), is also a reiteration of the applicability of Art. 366 of the Code of Commerce.
It should be stated at the outset that the issue of whether a claim should have been made by SMC,
or UCPB as SMC’s subrogee, within the 24-hour period prescribed by Art. 366 of the Code of
Commerce was squarely raised before the trial court.
In its Answer to Amended Complaint12 dated May 10, 1993, Eagle Express averred, thus:
The amended complaint states no cause of action under the provisions of the Code of Commerce
and the terms of the bill of lading; consignee made no claim against herein defendant within twenty
four (24) hours following the receipt of the alleged cargo regarding the condition in which said cargo
was delivered; however, assuming arguendo that the damage or loss, if any, could not be
ascertained from the outside part of the shipment, consignee never made any claim against herein
defendant at the time of receipt of said cargo; herein defendant learned of the alleged claim only
upon receipt of the complaint.13
Likewise, in its Answer14 dated September 21, 1992, Aboitiz raised the defense that UCPB did not
file a claim with it and that the complaint states no cause of action.
UCPB obviously made a gross misrepresentation to the Court when it claimed that the issue
regarding the applicability of the Code of Commerce, particularly the 24-hour formal claim rule, was
not raised as an issue before the trial court. The appellate court, therefore, correctly looked into the
validity of the arguments raised by Eagle Express, Aboitiz and Pimentel Customs on this point after
the trial court had so ill-advisedly centered its decision merely on the matter of extraordinary
diligence.
Interestingly enough, UCPB itself has revealed that when the shipment was discharged and opened
at the ICTSI in Manila in the presence of an Eagle Express representative, the cargo had already
been found damaged. In fact, a request for bad order survey was then made and a turnover survey
of bad order cargoes was issued, pursuant to the procedure in the discharge of bad order cargo.
The shipment was then repacked and transshipped from Manila to Cebu on board MV Aboitiz
Supercon II. When the cargo was finally received by SMC at its Mandaue City warehouse, it was
found in bad order, thereby confirming the damage already uncovered in Manila. 15
In charging Aboitiz with liability for the damaged cargo, the trial court condoned UCPB’s wrongful
suit against Aboitiz to whom the damage could not have been attributable since there was no
evidence presented that the cargo was further damaged during its transshipment to Cebu. Even by
the exercise of extraordinary diligence, Aboitiz could not have undone the damage to the cargo that
had already been there when the same was shipped on board its vessel.
That said, it is nonetheless necessary to ascertain whether any of the remaining parties may still be
held liable by UCPB. The provisions of the Code of Commerce, which apply to overland, river and
maritime transportation, come into play.
Art. 366 of the Code of Commerce states:
Art. 366. Within twenty-four hours following the receipt of the merchandise, the claim against the
carrier for damage or average which may be found therein upon opening the packages, may be
made, provided that the indications of the damage or average which gives rise to the claim cannot
be ascertained from the outside part of such packages, in which case the claim shall be admitted
only at the time of receipt.
After the periods mentioned have elapsed, or the transportation charges have been paid, no claim
shall be admitted against the carrier with regard to the condition in which the goods transported
were delivered.1avvphi1
The law clearly requires that the claim for damage or average must be made within 24 hours from
receipt of the merchandise if, as in this case, damage cannot be ascertained merely from the
outside packaging of the cargo.
In Philippine Charter Insurance Corporation v. Chemoil Lighterage Corporation, 16 petitioner, as
subrogee of Plastic Group Phil., Inc. (PGP), filed suit against respondent therein for the damage
found on a shipment of chemicals loaded on board respondent’s barge. Respondent claimed that no
timely notice in accordance with Art. 366 of the Code of Commerce was made by petitioner because
an employee of PGP merely made a phone call to respondent’s Vice President, informing the latter
of the contamination of the cargo. The Court ruled that the notice of claim was not timely made or
relayed to respondent in accordance with Art. 366 of the Code of Commerce.
The requirement to give notice of loss or damage to the goods is not an empty formalism. The
fundamental reason or purpose of such a stipulation is not to relieve the carrier from just liability, but
reasonably to inform it that the shipment has been damaged and that it is charged with liability
therefor, and to give it an opportunity to examine the nature and extent of the injury. This protects
the carrier by affording it an opportunity to make an investigation of a claim while the matter is still
fresh and easily investigated so as to safeguard itself from false and fraudulent claims.17
We have construed the 24-hour claim requirement as a condition precedent to the accrual of a right
of action against a carrier for loss of, or damage to, the goods. The shipper or consignee must
allege and prove the fulfillment of the condition. Otherwise, no right of action against the carrier can
accrue in favor of the former.18
The shipment in this case was received by SMC on August 2, 1991. However, as found by the Court
of Appeals, the claims were dated October 30, 1991, more than three (3) months from receipt of the
shipment and, at that, even after the extent of the loss had already been determined by SMC’s
surveyor. The claim was, therefore, clearly filed beyond the 24-hour time frame prescribed by Art.
366 of the Code of Commerce.
But what of the damage already discovered in the presence of Eagle Express’s representative at the
time the shipment was discharged in Manila? The Request for Bad Order Survey and Turn Over
Survey of Bad Order Cargoes, respectively dated June 17, 1999 and June 28, 1991, evince the fact
that the damage to the cargo was already made known to Eagle Express and, possibly, SMC, as of
those dates.
Sec. 3(6) of the COGSA provides a similar claim mechanism as the Code of Commerce but
prescribes a period of three (3) days within which notice of claim must be given if the loss or
damage is not apparent. It states:
Sec. 3(6). Unless notice of loss or damage and the general nature of such loss or damage be given
in writing to the carrier or his agent at the port of discharge or at the time of the removal of the goods
into the custody of the person entitled to delivery thereof under the contract of carriage, such
32
removal shall be prima facie evidence of the delivery by the carrier of the goods as descibed in the
bill of lading. If the loss or damage is not apparent, the notice must be given within three days of the
delivery.
Said notice of loss or damage may be endorsed upon the receipt of the goods given by the person
taking delivery thereof.
The notice in writing need not be given if the state of the goods has at the time of their receipt been
the subject of joint survey or inspection.
UCPB seizes upon the last paragraph which dispenses with the written notice if the state of the
goods has been the subject of a joint survey which, in this case, was the opening of the shipment in
the presence of an Eagle Express representative. It should be noted at this point that the
applicability of the above-quoted provision of the COGSA was not raised as an issue by UCPB
before the trial court and was only cited by UCPB in its Memorandum in this case.
UCPB, however, is ambivalent as to which party Eagle Express represented in the transaction. By
its own manifestation, East Asiatic, and not Eagle Express, acted as the agent through which
summons
and court notices may be served on DAMCO. It would be unjust to hold that Eagle Express’s
knowledge of the damage to the cargo is such that it served to preclude or dispense with the 24-
hour notice to the carrier required by Art. 366 of the Code of Commerce. Neither did the inspection
of the cargo in which Eagle Express’s representative had participated lead to the waiver of the
written notice under the Sec. 3(6) of the COGSA. Eagle Express, after all, had acted as the agent of
the freight consolidator, not that of the carrier to whom the notice should have been made.
At any rate, the notion that the request for bad order survey and turn over survey of bad cargoes
signed by Eagle Express’s representative is construable as compliant with the notice requirement
under Art. 366 of the Code of Commerce was foreclosed by the dismissal of the complaint against
DAMCO’s representative, East Asiatic.
As regards respondent Pimentel Customs, it is sufficient to acknowledge that it had no participation
in the physical handling, loading and delivery of the damaged cargo and should, therefore, be
absolved of liability.
Finally, UCPB’s misrepresentation that the applicability of the Code of Commerce was not raised as
an issue before the trial court warrants the assessment of double costs of suit against it.
WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R. CV No.
68168, dated October 29, 2004 and its Resolution dated June 14, 2005 are AFFIRMED. Double
costs against petitioner.
SO ORDERED.
G.R. No. L-49496 May 31, 1979
MD TRANSIT, INC., petitioner,
vs.
THE HONORABLE COURT OF APPEALS * and SERGIO MARIANO (for himself and in
representation of his minors SERGIO, JR. and MICHAEL all surnamed
MARIANO), respondents.
TEEHANKEE, J.:
The Court modifies the award to respondent of compensatory damages for lost earnings of his
deceased wife Carmen G. Mariano (who was recklessly hit, while crossing the street on a pedestrian
lane on Ayala Avenue in Makati, by petitioner's bus, thrown six meters away and instantly killed)
from P309,920.00 to P200,000.00. The award is based on the two main factors of fife expectancy
and lost net earning capacity of the deceased as set forth in the controlling case of Villa Rey Transit
Inc. vs. Court of appeals.
Respondent Court of Appeals, in its decision of August 31, 1978, affirmed in toto the judgment of
December 15, 1976 of the Court of First Instance of Bataan in favor of respondent Sergio Mariano
(for himself and in representation of two minor children) as plaintiffs-appellees against herein
petitioner MD Transit, Inc. as defendant-appellant, as follows:
WHEREFORE, PREMISES ABOVE CONSIDERED, finding the defendant MD Transit, Inc.
civilly liable for having failed to exercise the diligence of a good father of a family in the
supervision of its employee, Renato Dote who drove in a reckless manner defendant's MD
Bus bumping and killing Carmen G. Mariano, the court hereby awards the following
damages, to be paid by said defendant to herein plaintiffs, to wit:
a) P50,000.00 as moral damages;
b) P309,920.00 as compensatory damages for lost earnings;
c) P20,160.00 as actual damages;
d) P10,000.00 as attorney's fees; and
e) Costs of suit.
Petitioner filed on January 8, 1979 with this Court the present petition for review on certiorari of
respondent appellate court's judgment. Upon receipt of respondents' comment as required in its
Resolution of January 17, 1979, the Court in its March 5, 1979 Resolution resolved "to GIVE
LIMITED DUE COURSE to the petition, only as to Item (b) of the judgment of the lower court as
affirmed by the Court of Appeals, referring to the allegedly excessive compensatory damages
awarded in the amount of P309,920.00 ..., " and required the parties to submit their respective
memoranda on this filed issue which were filed in due course.
Respondent court found as 11 reasonable" the amount of P309,920.00 awarded as compensatory
damages by the trial court, which had estimated the same in this wise:
When the life of Carmen Mariano was untimely snapped she was only 39 years of age, in
good health (Exhibit "E" — "E-2") and gainfully employed with the General Telephone
Directory Co. receiving a monthly salary of P1,160.00 (Exhibit "F" Without taking into
consideration anymore the regular annual increase of salary of the deceased (Exhibit "F-2"),
had not her untimely death supervened, in her next 26 more years until her 65th year, she
33
 would have earned P309,920.00 deducting already some P2,000.00 as taxes (Exhibit 'K')
and miscellaneous from her annual income of P13,920.00 126 years x P11,920.00 =
[ P309,920.00]. 1
Respondent court had further rejected petitioner's objection to the Court's estimate of the
deceased's life expectancy at 26 years more, affirming the trial court's findings on the basis of the
evidence that the deceased was in good physical health, thus:
before computed by us), the amount due private respondent, as compensatory damages, will then
be only P86,400.00. 5
Respondents, on the other hand, contend that in the absence of a clear showing that the
determination of the amount of compensatory damages based on life expectancy and the net
earning capacity of the deceased is manifestly arbitrary or excessive, such award should be
sustained.

As regards the compensatory damages awarded, while appellant does not dispute the
findings of the court a quo that Carmen G. Mariano's earnings per month was P1,160.00
with the General Telephone Directory and she was only 39 years old when she met the
untimely death, it however assails the ruling that the victim would still have for 26 years
since her death on April 5, 1975, on the ground that while the victim was still living she did
not deliver a baby normally but by Caesarian operation. A cursory reading of the Medical
History and Physical Examination record (Exh. E, E-2) of the victim submitted by Mr.
Mariano reveals that indeed the victim was in good physical health otherwise the phrase 'fit
to continue present occupation could not have been placed in the 'remarks' portion of the
record by the examining doctor.
In the controlling case of Villa Rey Transit Inc. vs. Court of Appeals 2 (where P33,333.33 for loss of
net earnings of P1,000.00 per year x 33-1/3 years of fife expectancy were awarded) as reaffirmed
in Davila vs. Philippine Air Lines 3 (where P195,000.00- damages were awarded based on net
earnings of P7,200.00 per year x 25 years of life expectancy), the Court stressed two factors in the
award of such compensatory damages, to wit, (1) "life expectancy is not only relevant but also an
important element in fixing the amount recoverable" and (2) "earning capacity, as an element of
damages to one's estate for his death by wrongful act is necessarily his net earning capacity or his
capacity to acquire money, 'less the necessary expense for his own living.' Stated otherwise, the
amount recoverable is not loss of the entire earning, but rather the loss of that portion of the
earnings which the beneficiary would have received. In other words, only net earnings, not gross
earning, are to be considered, that is, the total of the earnings less expenses necessary in the
creation of such earnings or income and less living and other incidental expenses."
Petitioner, citing the Villa Rey doctrine, contends in its petition that the maximum damages
that should be awarded would amount to only P103,680.00 based on its contention that the
victim's life expectancy should be 24 years (not 26 years) and net earnings only at
P4,320.00 a year, thus:
All factors considered, the Court believes that it is fair and reasonable to fix the deductible living and
other expenses of the deceased at the sum of P4,800.00 a year or P400.00 a month (one half of the
amount of P9,600.00 a year or P800.00 a month urged by petitioner), since the deceased's husband
had also his own earnings and this sum would be her fair share of the family's expenses. Petitioner
has expressly conceded the deceased's life expectancy to be at 20 to 24 years, supra. All in all, the
Court believes that an award of P200,000.00 as compensatory damages by way of the deceased's
lost earnings is completely justified, under the facts of the case at bar. Ts would be roughly based
on an annual net earning of P9,120.00 [P13,920.00 gross earnings less P4,800.00 annual
expenses] x 22 years of life expectancy P200,640.00). Such award of P200,000.00 for
compensatory damages incidentally coincides with the exact amount prayed for as compensatory
damages for loss of earning capacity in respondent's complaint. 6
This award of P200,000.00 as compensatory damages shall pertain in three equal one-third shares
to respondent and the two minor children born of respondent's marriage with the deceased, namely
Sergio Mariano, Jr. and Michael Mariano.
ACCORDINGLY, judgment is hereby rendered reducing the lower court's award of compensatory
damages, as affirmed by respondent court, to respondent and his two minor children, Sergio, Jr. and
Michael, both surnamed Mariano to the sum of P200,000.00 in three equal one-third shares among
them. Since the other items of damages awarded to respondent (P50,000.00-moral damages,
P20,160.00-actual damages, P10,000.00-attorney's fees and costs of suit) in the trial court's
judgment as affirmed by respondent court have long become final and executory with the Court's
denial of the petition to review these items per its Resolution of March 5, 1979, this judgment shall
be immediately executory.

The deceased Carmen G. Mariano, at the time of her death, was 39 years old. On the basis
of the above formula (2/3 x 80-30) the deceased's normal life expectancy would be 24 years
and not 27 years [sic]) at that age of 39 years old, ..., in the case at bar, the amount of at
least P800.00 should be considered as reasonable monthly deduction from the income of
the deceased or the sum of P9,600.00 a year.

The deceased's yearly income was P13,920.00. s the above amount of P9,600.00, the
deceased's net earning capacity would, therefore, be only P4,320.00 a year. Multiply this
amount by 24 years (the deceased's normal life expectancy at age 39 years old, as above
computed), the amount due private respondent, as compensatory damages, will then be
P103,680.00 ... 4

In its memorandum, petitioner would further reduce the life expectancy of the deceased Carmen G.
Mariano to 20 years instead of 24 years, arguing that "while it may be said that at the time of her
death, Carmen G. Mariano was in relatively good health, yet undergoing a major surgery such as
caesarian operation is a circumstance that would have affected her normal life expectancy and this
fact should be considered as further allowance and hence, for purposes of this e her life expectancy
may be reduced further to 20 years," and on this basis "(T)he deceased's yearly income was
P13,920.00. Less the amount of P9,600.00, the deceased's net earning capacity would, therefore,
be only P4,320.00 a year. Multiply this amount by 20 years (her normal life expectancy as herein

34
G.R. No. 104685 March 14, 1996
SABENA BELGIAN WORLD AIRLINES, petitioner,
vs.
HON. COURT OF APPEALS and MA. PAULA SAN AGUSTIN, respondents.
VITUG, J.:p
The appeal before the Court involves the issue of an airline's liability for lost luggage. The petition for
review assails the decision of the Court of Appeals,1 dated 27 February 1992, affirming an award of
damages made by the trial court in a complaint filed by private respondent against petitioner.
The factual background of the case, narrated by the trial court and reproduced at length by the
appellate court, is hereunder quoted:
On August 21, 1987, plaintiff was a passenger on board Flight SN 284 of defendant airline
originating from Casablanca to Brussels, Belgium on her way back to Manila. Plaintiff
checked in her luggage which contained her valuables, namely: jewelries valued at
$2,350.00; clothes $1,500.00 shoes/bag $150; accessories $75; luggage itself $10.00; or a
total of $4,265.00, for which she was issued Tag No. 71423. She stayed overnight in
Brussels and her luggage was left on board Flight SN 284.
Plaintiff arrived at Manila International Airport on September 2, 1987 and immediately
submitted her Tag No. 71423 to facilitate the release of her luggage but the luggage was
missing. She was advised to accomplish and submit a property Irregularity Report which she
submitted and filed on the same day.
She followed up her claim on September 14, 1987 but the luggage remained to be missing.
On September 15, 1987, she filed her formal complaint with the office of Ferge Massed,
defendant's Local Manager, demanding immediate attention (Exh. "A").
On September 30, 1987, on the occasion of plaintiffs following up of her luggage claim, she
was furnished copies of defendant's telexes with an information that the Burssel's Office of
defendant found the luggage and that they have broken the locks for identification (Exhibit
"B"). Plaintiff was assured by the defendant that it has notified its Manila Office that the
luggage will be shipped to Manila on October 27, 1987. But unfortunately plaintiff was
informed that the luggage was lost for the second time (Exhibits "C" and "C-1").
At the time of the filing of the complaint, the luggage with its content has not been found.
Plaintiff demanded from the defendant the money value of the luggage and its contents
amounting to $4,265.00 or its exchange value, but defendant refused to settle the claim.
Defendant asserts in its Answer and its evidence tend to show that while it admits that the
plaintiff was a passenger on board Flight No. SN 284 with a piece of checked in luggage
bearing Tag No. 71423, the loss of the luggage was due to plaintiff's sole if not contributory
negligence; that she did not declare the valuable items in her checked in luggage at the
flight counter when she checked in for her flight from Casablanca to Brussels so that either
the representative of the defendant at the counter would have advised her to secure an
insurance on the alleged valuable items and required her to pay additional charges, or
would have refused acceptance of her baggage as required by the generally accepted
practices of international carriers; that Section 9(a), Article IX of General Conditions of
carriage requiring passengers to collect their checked baggage at the place of stop over,
plaintiff neglected to claim her baggage at the Brussels Airport; that plaintiff should have
retrieved her undeclared valuables from her baggage at the Brussels Airport since her flight
from Brussels to Manila will still have to visit for confirmation inasmuch as only her flight
from Casablanca to Brussels was confirmed; that defendant incorporated in all Sabena
Plane Tickets, including Sabena Ticket No. 082422-72502241 issued to plaintiff in Manila on
August 21, 1987, a warning that "Items of value should be carried on your person" and that
some carriers assume no liability for fragile, valuable or perishable articles and that further
information may be obtained from the carrier for guidance;' that granting without conceding
that defendant is liable, its liability is limited only to US $20.00 per kilo due to plaintiffs failure
to declare a higher value on the contents of her checked in luggage and pay additional
charges thereon.2
The trial court rendered judgment ordering petitioner Sabena Belgian World Airlines to pay private
respondent Ma. Paula San Agustin —
(a) . . . US $4,265.00 or its legal exchange in Philippine pesos;
(b) . . . P30,000.00 as moral damages;
(c) . . . P10,000.00 as exemplary damages;
(d) . . . P10,000.00 as attorney's fees; and
(e) (t)he costs of the suit.3
Sabena appealed the decision of the Regional Trial Court to the Court of Appeals. The appellate
court, in its decision of 27 February 1992, affirmed in toto the trial court's judgment.
Petitioner airline company, in contending that the alleged negligence of private respondent should
be considered the primary cause for the loss of her luggage, avers that, despite her awareness that
the flight ticket had been confirmed only for Casablanca and Brussels, and that her flight from
Brussels to Manila had yet to be confirmed, she did not retrieve the luggage upon arrival in Brussels.
Petitioner insists that private respondent, being a seasoned international traveler, must have
likewise been familiar with the standard provisions contained in her flight ticket that items of value
are required to be hand-carried by the passenger and that the liability of the airline for loss, delay or
damage to baggage would be limited, in any event, to only US $20.00 per kilo unless a higher value
is declared in advance and corresponding additional charges are paid thereon. At the Casablanca
International Airport, private respondent, in checking in her luggage, evidently did not declare its
contents or value. Petitioner cites Section 5(c), Article IX, of the General Conditions of Carriage,
signed at Warsaw, Poland, on 02 October 1929, as amended by the Hague Protocol of 1955,
generally observed by International carriers, stating, among other things, that:
Passengers shall not include in his checked baggage, and the carrier may refuse to carry as
checked baggage, fragile or perishable articles, money, jewelry, precious metals, negotiable
papers, securities or other valuable.4
Fault or negligence consists in the omission of that diligence which is demanded by the nature of an
obligation and corresponds with the circumstances of the person, of the time, and of the place.
When the source of an obligation is derived from a contract, the mere breach or non-fulfillment of the
prestation gives rise to the presumption of fault on the part of the obligor. This rule is no different in
the case of common carriers in the carriage of goods which, indeed, are bound to observe not just
the due diligence of a good father of a family but that of "extraordinary" care in the vigilance over the
goods. The appellate court has aptly observed:
35
 . . . Art. 1733 of the [Civil] Code provides that from the very nature of their business and by
reasons of public policy, common carriers are bound to observe extraordinary diligence in
the vigilance over the goods transported by them. This extraordinary responsibility,
according to Art. 1736, lasts from the time the goods are unconditionally placed in the
possession of and received by the carrier until they are delivered actually or constructively to
the consignee or person who has the right to receive them. Art. 1737 states that the
common carrier's duty to observe extraordinary diligence in the vigilance over the goods
transported by them remains in full force and effect even when they are temporarily
unloaded or stored in transit. And Art. 1735 establishes the presumption that if the goods
are lost, destroyed or deteriorated, common carriers are presumed to have been at fault or
to have acted negligently, unless they prove that they had observed extraordinary diligence
as required in Article 1733.
The only exceptions to the foregoing extraordinary responsibility of the common carrier is
when the loss, destruction, or deterioration of the goods is due to any of the following
causes:
(1) Flood, storm, earthquake, lightning, or other natural disaster or calamity;
(2) Act of the public enemy in war, whether international or civil;
(3) Act or omission of the shipper or owner of the goods;
(4) The character of the goods or defects in the packing or in the containers;
(5) Order or act of competent public authority.
Not one of the above excepted causes obtains in this case. 5
The above rules remain basically unchanged even when the contract is breached by tort6 although
noncontradictory principles on quasi-delict may then be assimilated as also forming part of the
governing law. Petitioner is not thus entirely off track when it has likewise raised in its defense the
tort doctrine of proximate cause. Unfortunately for petitioner, however, the doctrine cannot, in this
particular instance, support its case. Proximate cause is that which, in natural and continuous
sequence, unbroken by any efficient intervening cause, produces injury and without which the result
would not have occurred. The exemplification by the Court in one case7 is simple and explicit; viz:
(T)he proximate legal cause is that acting first and producing the injury, either immediately
or by setting other events in motion, all constituting a natural and continuous chain of
events, each having a close causal connection with its immediate predecessor, the final
event in the chain immediately affecting the injury as a natural and probable result of the
cause which first acted, under such circumstances that the person responsible for the first
event should, as an ordinarily prudent and intelligent person, have reasonable ground to
expect at the moment of his act or default that an injury to some person might probably
result therefrom.
It remained undisputed that private respondent's luggage was lost while it was in the custody of
petitioner. It was supposed to arrive on the same flight that private respondent took in returning to
Manila on 02 September 1987. When she discovered that the luggage was missing, she promptly
accomplished and filed a Property Irregularity Report. She followed up her claim on 14 September
1987, and filed, on the following day, a formal letter-complaint with petitioner. She felt relieved when,
on 23 October 1987, she was advised that her luggage had finally been found, with its contents
intact when examined, and that she could expect it to arrive on 27 October 1987. She then waited
anxiously only to be told later that her luggage had been lost for the second time. Thus, the
appellate court, given all the facts before it, sustained the trial court in finding petitioner ultimately
guilty of "gross negligence" in the handling of private respondent's luggage. The "loss of said
baggage not only once but twice, said the appellate court, "underscores the wanton negligence and
lack of care" on the part of the carrier.
The above findings, which certainly cannot be said to be without basis, foreclose whatever rights
petitioner might have had to the possible limitation of liabilities enjoyed by international air carriers
under the Warsaw Convention (Convention for the Unification of Certain Rules Relating to
International Carriage by Air, as amended by the Hague Protocol of 1955, the Montreal Agreement
of 1966, the Guatemala Protocol of 1971 and the Montreal Protocols of 1975). In Alitalia vs.
Intermediate Appellate Court,8 now Chief Justice Andres R. Narvasa, speaking for the Court, has
explained it well; he said:
The Warsaw Convention however denies to the carrier availment of the provisions which
exclude or limit his liability, if the damage is caused by his wilful misconduct or by such
default on his part as, in accordance with the law of the court seized of the case, is
considered to be equivalent to wilful misconduct, or if the damage is (similarly) caused . . .
by any agent of the carrier acting within the scope of his employment. The Hague Protocol
amended the Warsaw Convention by removing the provision that if the airline took all
necessary steps to avoid the damage, it could exculpate itself completely, and declaring the
stated limits of liability not applicable if it is proved that the damage resulted from an act or
omission of the carrier, its servants or agents, done with intent to cause damage or
recklessly and with knowledge that damage would probably result. The same deletion was
effected by the Montreal Agreement of 1966, with the result that a passenger could recover
unlimited damages upon proof of wilful misconduct.
The Convention does not thus operate as an exclusive enumeration of the instances of an
airline's liability, or as an absolute limit of the extent of that liability. Such a proposition is not
borne out by the language of the Convention, as this Court has now, and at an earlier time,
pointed out. Moreover, slight reflection readily leads to the conclusion that it should be
deemed a limit of liability only in those cases where the cause of the death or injury to
person, or destruction, loss or damage to property or delay in its transport is not attributable
to or attended by any wilful misconduct, bad faith, recklessness, or otherwise improper
conduct on the part of any official or employee for which the carrier is responsible, and there
is otherwise no special or extraordinary form of resulting injury. The Convention's provisions,
in short, do not regulate or exclude liability for other breaches of contract by the carrier or
misconduct of its officers and employees, or for some particular or exceptional type of
damage. Otherwise, an air carrier would be exempt from any liability for damages in the
event of its absolute refusal, in bad faith, to comply with a contract of carriage, which is
absurd. Nor may it for a moment be supposed that if a member of the aircraft complement
should inflict some physical injury on a passenger, or maliciously destroy or damage the
latter's property, the Convention might successfully be pleaded as the sole gauge to
determine the carrier's liability to the passenger. Neither may the Convention be invoked to
justify the disregard of some extraordinary sort of damage resulting to a passenger and
preclude recovery therefor beyond the limits set by said Convention. It is in this sense that
the Convention has been applied, or ignored, depending on the peculiar facts presented by
each case.
The Court thus sees no error in the preponderant application to the instant case by the appellate
court, as well as by the trial court, of the usual rules on the extent of recoverable damages beyond
the Warsaw limitations. Under domestic law and jurisprudence (the Philippines being the country of
destination), the attendance of gross negligence (given the equivalent of fraud or bad faith) holds the
common carrier liable for all damages which can be reasonably attributed, although unforeseen, to
the non-performance of the obligation, 9 including moral and exemplary damages. 10
WHEREFORE, the decision appealed from is AFFIRMED. Costs against petitioner.
SO ORDERED.
36
G.R. No. L-22415             March 30, 1966
FERNANDO LOPEZ, ET AL., plaintiffs-appellants,
vs.
PAN AMERICAN WORLD AIRWAYS, defendant-appellant.
BENGZON, J.P., J.:
Plaintiffs and defendant appeal from a decision of the Court of First Instance of Rizal. Since the
value in controversy exceeds P200,000 the appeals were taken directly to this Court upon all
questions involved (Sec. 17, par. 3[5], Judiciary Act).
Stated briefly the facts not in dispute are as follows: Reservations for first class accommodations in
Flight No. 2 of Pan American World Airways — hereinafter otherwise called PAN-AM — from Tokyo
to San Francisco on May 24, 1960 were made with
PAN-AM on March 29, 1960, by "Your Travel Guide" agency, specifically, by Delfin Faustino, for
then Senator Fernando Lopez, his wife Maria J. Lopez, his son-in-law Alfredo Montelibano, Jr., and
his daughter, Mrs. Alfredo Montelibano, Jr., (Milagros Lopez Montelibano). PAN-AM's San Francisco
head office confirmed the reservations on March 31, 1960.
First class tickets for the abovementioned flight were subsequently issued by
PAN-AM on May 21 and 23, 1960, in favor of Senator Lopez and his party. The total fare of P9,444
for all of them was fully paid before the tickets were issued.
As scheduled Senator Lopez and party left Manila by Northwest Airlines on May 24, 1960, arriving in
Tokyo at 5:30 P.M. of that day. As soon as they arrived Senator Lopez requested Minister Busuego
of the Philippine Embassy to contact PAN-AM's Tokyo office regarding their first class
accommodations for that evening's flight. For the given reason that the first class seats therein were
all booked up, however, PAN-AM's Tokyo office informed Minister Busuego that PAN-AM could not
accommodate Senator Lopez and party in that trip as first class passengers. Senator Lopez
thereupon gave their first class tickets to Minister Busuego for him 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 the tourist class therein.
Due to pressing engagements awaiting Senator Lopez and his wife, in the United States — he had
to attend a business conference in San Francisco the next day and she had to undergo a medical
check-up in Mayo Clinic, Rochester, Minnesota, on May 28, 1960 and needed three days rest before
that in San Francisco — Senator Lopez and party were constrained to take PAN-AM's flight from
Tokyo to San Francisco as tourist passengers. Senator Lopez however made it clear, as indicated in
his letter to PAN-AM's Tokyo office on that date (Exh. A), that they did so "under protest" and
without prejudice to further action against the airline.1äwphï1.ñët
Suit for damages was thereafter filed by Senator Lopez and party against PAN-AM on June 2, 1960
in the Court of First Instance of Rizal. Alleging breach of contracts in bad faith by defendant,
plaintiffs asked for P500,000 actual and moral damages, P100,000 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 error of its employees. It also
interposed a counterclaim for attorney's fees of P25,000.
Subsequently, further pleadings were filed, thus: plaintiffs' answer to the counterclaim, on July 25,
1960; plaintiffs' reply attached to motion for its admittance, on December 2, 1961; defendant's
supplemental answer, on March 8, 1962; plaintiffs' reply to 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 November 25, 1960 to January 5, 1963
— the Court of First Instance rendered its decision on November 13, 1963, the dispositive portion
stating:
In view of the foregoing considerations, judgment is hereby rendered in favor of the
plaintiffs and against the defendant, which is accordingly ordered to pay the plaintiffs the
following: (a) P100,000.00 as moral damages; (b) P20,000.00 as exemplary damages; (c)
P25,000.00 as attorney's fees, and the costs of this action.
So ordered.
Plaintiffs, however, on November 21, 1963, moved for reconsideration of said judgment, asking that
moral damages be increased to P400,000 and that six per cent (6%) interest per annum on the
amount of the award be granted. And defendant opposed the same. Acting thereon the trial court
issued an order on December 14, 1963, reconsidering the dispositive part of its decision to read as
follows:
In view of the foregoing considerations, judgment is hereby rendered in favor of the
plaintiffs and against the defendant, which is accordingly ordered to pay the plaintiffs the
following: (a) P150,000.00 as moral damages; (b) P25,000.00 as exemplary damages;
with legal interest on both from the date of the filing of the complaint until paid; and (c)
P25,000.00 as attorney's fees; and the costs of this action.
So ordered.
It is from said judgment, as thus reconsidered, that both parties have appealed.
Defendant, as stated, has from the start admitted that it breached its contracts with plaintiffs to
provide them with first class accommodations in its Tokyo-San Francisco flight of May 24, 1960. In
its appeal, however, it takes issue with the finding of the court a quo that it acted in bad faith in the
branch of said contracts. Plaintiffs, on the other hand, raise questions on the amount of damages
awarded in their favor, seeking that the same be increased to a total of P650,000.
Anent the issue of bad faith the records show the respective contentions of the parties as follows.
According to plaintiffs, defendant acted in bad faith because it deliberately refused to comply with its
contract to provide first class accommodations to plaintiffs, out of racial prejudice against Orientals.
And in support of its contention that what was done to plaintiffs is an oftrepeated practice of
defendant, evidence was adduced relating to two previous instances of alleged racial discrimination
by defendant against Filipinos in favor of "white" passengers. Said previous occasions are what
allegedly happened to (1) Benito Jalbuena and (2) Cenon S. Cervantes and his wife.
And from plaintiffs' evidence this is what allegedly happened; Jalbuena bought a first class ticket
from PAN-AM on April 13, 1960; he confirmed it on April 15, 1960 as to the Tokyo-Hongkong flight
of April 20, 1960; PAN-AM similarly confirmed it on April 20, 1960. At the airport he and another
Oriental — Mr. Tung — were asked to step aside while other passengers - including "white"
passengers — boarded PAN-AM's plane. Then PAN-AM officials told them that one of them had to
stay behind. Since Mr. Tung was going all the way to London, Jalbuena was chosen to be left
behind. PAN-AM's officials could only explain by saying there was "some mistake". Jalbuena
thereafter wrote PAN-AM to protest the incident (Exh. B).
As to Cenon S. Cervantes it would appear that in Flight No. 6 of PAN-AM on September 29, 1958
from Bangkok to Hongkong, he and his wife had to take tourist class, although they had first class
tickets, which they had previously confirmed, because their seats in first class were given to
"passengers from London."
37
Against the foregoing, however, defendant's evidence would seek to establish its theory of honest intentionally withheld from plaintiffs or their travel agent the fact of said cancellation, letting them go
mistake, thus: on believing that their first class reservations stood valid and confirmed. In so misleading plaintiffs
into purchasing first class tickets in the conviction that they had confirmed reservations for the same,
when in fact they had none, defendant wilfully and knowingly placed itself into the position of having
The first class reservations of Senator Lopez and party were made on March 29, 1960 together with
to breach its a foresaid contracts with plaintiffs should there be no last-minute cancellation by other
those of four members of the Rufino family, for a total of eight (8) seats, as shown in their joint
passengers before flight time, as it turned out in this case. Such actuation of defendant may indeed
reservation card (Exh. 1). Subsequently on March 30, 1960, two other Rufinos secured reservations
have been prompted by nothing more than the promotion of its self-interest in holding on to Senator
and were given a separate reservation card (Exh. 2). A new reservation card consisting of two
Lopez and party as passengers in its flight and foreclosing on their chances to seek the services of
pages (Exhs. 3 and 4) was then made for the original of eight passengers, namely, Senator Lopez
other airlines that may have been able to afford them first class accommodations. All the time, in
and party and four members of the Rufino family, the first page (Exh. 3) referring to 2 Lopezes, 2
legal contemplation such conduct already amounts to action in bad faith. For bad faith means a
Montelibanos and 1 Rufino and the second page (Exh. 4) referring to 3 Rufinos. On April 18, 1960
breach of a known duty through some motive of interest or ill-will (Spiegel vs. Beacon Participations,
"Your Travel Guide" agency cancelled the reservations of the Rufinos. A telex message was
8 NE 2d 895, 907). As stated in Kamm v. Flink, 113 N.J.L. 582, 175 A. 62, 99 A.L.R. 1, 7: "Self-
thereupon sent on that date to PAN-AM's head office at San Francisco by Mariano Herranz, PAN-
enrichment or fraternal interest, and not personal ill-will, may well have been the motive; but it is
AM's reservations employee at its office in Escolta, Manila. (Annex A-Acker's to Exh. 6.) In said
malice nevertheless."
message, however, Herranz mistakenly cancelled all the seats that had been reserved, that is,
including those of Senator Lopez and party.
As of May 18, 1960 defendant's reservations supervisor, Alberto Jose knew that plaintiffs'
reservations had been cancelled. As of May 20 he knew that the San Francisco head office stated
The next day — April 1960 — Herranz discovered his mistake, upon seeing the reservation card
with finality that it could not reinstate plaintiffs' cancelled reservations. And yet said reservations
newly prepared by his co-employee Pedro Asensi for Sen. Lopez and party to the exclusion of the
supervisor made the "decision" — to use his own, word — to withhold the information from the
Rufinos (Exh. 5). It was then that Herranz sent another telex wire to the San Francisco head office,
plaintiffs. Said Alberto Jose in his testimony:
stating his error and asking for the reinstatement of the four (4) first class seats reserved for Senator
Lopez and party (Annex A-Velasco's to Exh. 6). San Francisco head office replied on April 22, 1960
that Senator Lopez and party are waitlisted and that said office is unable to reinstate them (Annex B- Q Why did you not notify them?
Velasco's to Exh. 6).
A Well, you see, sir, in my fifteen (15) years of service with the air lines business my
Since the flight involved was still more than a month away and confident that reinstatement would be experience is that even if the flights are solidly booked months in advance, usually the flight
made, Herranz forgot the matter and told no one about it except his co-employee, either Armando departs with plenty of empty seats both on the first class and tourist class. This is due to late
Davila or Pedro Asensi or both of them (Tsn., 123-124, 127, Nov. 17, 1961). cancellation of passengers, or because passengers do not show up in the airport, and it was
our hope others come in from another flight and, therefore, are delayed and, therefore,
missed their connections. This experience of mine, coupled with that wire from Tokyo that
Subsequently, on April 27, 1960, Armando Davila, PAN-AM's reservations employee working in the
they would do everything possible prompted me to withhold the information, but
same Escolta office as Herranz, phoned PAN-AM's ticket sellers at its other office in the Manila
unfortunately, instead of the first class seat that I was hoping for and which I anticipated only
Hotel, and confirmed the reservations of Senator Lopez and party.
the tourists class was open on which Senator and Mrs. Lopez, Mr. and Mrs. Montelibano
were accommodated. Well, I fully realize now the gravity of my decision in not advising
PAN-AM's reservations supervisor Alberto Jose, discovered Herranz's mistake after "Your Travel Senator and Mrs. Lopez, Mr. and Mrs. Montelibano nor their agents about the erroneous
Guide" phone on May 18, 1960 to state that Senator Lopez and party were going to depart as cancellation and for which I would like them to know that I am very sorry.
scheduled. Accordingly, Jose sent a telex wire on that date to PAN-AM's head office at San
Francisco to report the error and asked said office to continue holding the reservations of Senator
xxx     xxx     xxx
Lopez and party (Annex B-Acker's to Exh. 6). Said message was reiterated by Jose in his telex wire
of May 19, 1960 (Annex C-Acker's to Exh. 6). San Francisco head office replied on May 19, 1960
that it regrets being unable to confirm Senator Lopez and party for the reason that the flight was Q So it was not your duty to notify Sen. Lopez and parties that their reservations had been
solidly booked (Exh. 7). Jose sent a third telex wire on May 20, 1960 addressed to PAN-AM's offices cancelled since May 18, 1960?
at San Francisco, New York (Idlewild Airport), Tokyo and Hongkong, asking all-out assistance
towards restoring the cancelled spaces and for report of cancellations at their end (Annex D-Acker's
A As I said before it was my duty. It was my duty but as I said again with respect to that duty
to Exh. 6). San Francisco head office reiterated on May 20, 1960 that it could not reinstate the
I have the power to make a decision or use my discretion and judgment whether I should go
spaces and referred Jose to the Tokyo and Hongkong offices (Exh. 8). Also on May 20, the Tokyo
ahead and tell the passenger about the cancellation. (Tsn., pp. 17-19, 28-29, March 15,
office of PAN-AM wired Jose stating it will do everything possible (Exh. 9).
1962.)

Expecting that some cancellations of bookings would be made before the flight time, Jose decided
to withhold from Senator Lopez and party, or their agent, the information that their reservations had
been cancelled.
Armando Davila having previously confirmed Senator Lopez and party's first class reservations to
PAN-AM's ticket sellers at its Manila Hotel office, the latter sold and issued in their favor the
corresponding first class tickets on the 21st and 23rd of May, 1960.
From the foregoing evidence of defendant it is in effect admitted that defendant — through its agents
— first cancelled plaintiffs, reservations by mistake and thereafter deliberately and
At the time plaintiffs bought their tickets, defendant, therefore, in breach of its known duty, made
plaintiffs believe that their reservation had not been cancelled. An additional indication of this is the
fact that upon the face of the two tickets of record, namely, the ticket issued to Alfredo Montelibano,
Jr. on May 21, 1960 (Exh. 22) and that issued to Mrs. Alfredo Montelibano, Jr., on May 23, 1960
(Exh. 23), the reservation status is stated as "OK". Such willful-non-disclosure of the cancellation or
pretense that the reservations for plaintiffs stood — and not simply the erroneous cancellation itself
— is the factor to which is attributable the breach of the resulting contracts. And, as above-stated, in
this respect defendant clearly acted in bad faith.

38
As if to further emphasize its bad faith on the matter, defendant subsequently promoted the
employee who cancelled plaintiffs' reservations and told them nothing about it. The record shows
that said employee — Mariano Herranz — was not subjected to investigation and suspension by
defendant but instead was given a reward in the form of an increase of salary in June of the
following year (Tsn., 86-88, Nov. 20, 1961).
At any rate, granting all the mistakes advanced by the defendant, there would at least be negligence
so gross and reckless as to amount to malice or bad faith (Fores vs. Miranda, L-12163, March 4,
1959; Necesito v. Paras, L-10605-06, June 30, 1958). Firstly, notwithstanding the entries in the
reservation cards (Exhs. 1 & 3) that the reservations cancelled are those of the Rufinos only,
Herranz made the mistake, after reading said entries, of sending a wire cancelling all the
reservations, including those of Senator Lopez and party (Tsn., pp. 108-109, Nov. 17, 1961).
Secondly, after sending a wire to San Francisco head office on April 19, 1960 stating his error and
asking for reinstatement, Herranz simply 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 assumed and taken for granted that reinstatement would be made.
Thirdly, Armando Davila confirmed plaintiff's reservations in a phone call on April 27, 1960 to
defendant's ticket sellers, when at the time it appeared in plaintiffs' reservation card (Exh. 5) that
they were only waitlisted passengers. Fourthly, defendant's ticket sellers issued plaintiffs' tickets on
May 21 and 23, 1960, without first checking their reservations just before issuing said tickets. And,
finally, no one among defendant's agents notified Senator Lopez and party that their reservations
had been cancelled, a precaution that could have averted their entering with defendant into
contracts that the latter had already placed beyond its power to perform.
Accordingly, there being a clear admission in defendant's evidence of facts amounting to a bad faith
on its part in regard to the breach of its contracts with plaintiffs, it becomes unnecessary to further
discuss the evidence adduced by plaintiffs to establish defendant's bad faith. For what is admitted in
the course of the trial does not need to be proved (Sec. 2, Rule 129, Rules of Court).
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 fraudulently or in bad faith (Art. 2220, New Civil Code). Second, in addition to moral damages,
exemplary or corrective damages may be imposed by way of example or correction for the public
good, in breach of contract where the defendant acted in a wanton, fraudulent, reckless, oppressive
or malevolent manner (Articles 2229, 2232, New Civil Code). And, third, a written contract for an
attorney's services shall control the amount to be paid therefor unless found by the court to be
unconscionable or unreasonable (Sec. 24, Rule 138, Rules of Court).
First, then, as to moral damages. As a proximate result of defendant's breach in bad faith of its
contracts with plaintiffs, the latter suffered social humiliation, wounded feelings, serious anxiety and
mental anguish. For plaintiffs were travelling with first class tickets issued by defendant and yet they
were given only the tourist class. At stop-overs, they were expected to be among the first-class
passengers by those awaiting to welcome them, only to be found among the tourist passengers. It
may not be humiliating to travel as tourist passengers; it is humiliating to be compelled to travel as
such, contrary to what is rightfully to be expected from the contractual undertaking.
Senator Lopez was then Senate President Pro Tempore. International carriers like defendant know
the prestige of such an office. For the Senate is not only the Upper Chamber of the Philippine
Congress, but the nation's treaty-ratifying body. It may also be mentioned that in his aforesaid office
Senator Lopez was in a position to preside in impeachment cases should the Senate sit as
Impeachment Tribunal. And he was former Vice-President of the Philippines. Senator Lopez was
going to the United States to attend a private business conference of the Binalbagan-Isabela Sugar
Company; but his aforesaid rank and position were by no means left behind, and in fact he had a
second engagement awaiting him in the United States: a banquet tendered by Filipino friends in his
honor as Senate President Pro Tempore (Tsn., pp. 14-15, Nov. 25, 1960). For the moral damages
sustained by him, therefore, an award of P100,000.00 is appropriate.
Mrs. Maria J. Lopez, as wife of Senator Lopez, shared his prestige and therefore his humiliation. In
addition she suffered physical discomfort during the 13-hour trip,(5 hours from Tokyo to Honolulu
and 8 hours from Honolulu to San Francisco). Although Senator Lopez stated that "she was quite
well" (Tsn., p. 22, Nov. 25, 1960) — he obviously meant relatively well, since the rest of his
statement is that two months before, she was attackedby severe flu and lost 10 pounds of weight
and that she was advised by Dr. Sison to go to the United States as soon as possible for medical
check-up and relaxation, (Ibid). In fact, Senator Lopez stated, as shown a few pages after in the
transcript of his testimony, that Mrs. Lopez was sick when she left the Philippines:
A. Well, my wife really felt very bad during the entire trip from Tokyo to San Francisco. In
the first place, she was sick when we left the Philippines, and then with that discomfort
which she [experienced] or suffered during that evening, it was her worst experience. I
myself, who was not sick, could not sleep because of the discomfort. (Tsn., pp. 27-28,
Nov. 25, 1960).
It is not hard to see that in her condition then a physical discomfort sustained for thirteen hours may
well be considered a physical suffering. And even without regard to the noise and trepidation inside
the plane — which defendant contends, upon the strengh of expert testimony, to be practically the
same in first class and tourist class — the fact that the seating spaces in the tourist class are quite
narrower than in first class, there beingsix seats to a row in the former as against four to a row in the
latter, and that in tourist class there is very little space for reclining in view of the closer distance
between rows (Tsn., p. 24, Nov. 25, 1960), will suffice to show that the aforesaid passenger indeed
experienced physical suffering during the trip. Added to this, of course, was the painfull thought that
she was deprived by defendant — after having paid for and expected the same — of the most
suitable, place for her, the first class, where evidently the best of everything would have been given
her, the best seat, service, food and treatment. Such difference in comfort between first class and
tourist class is too obvious to be recounted, is in fact the reason for the former's existence, and is
recognized by the airline in charging a higher fare for it and by the passengers in paying said higher
rate Accordingly, considering the totality of her suffering and humiliation, an award to Mrs. Maria J.
Lopez of P50,000.00 for moral damages will be reasonable.
Mr. and Mrs. Alfredo Montelibano, Jr., were travelling as immediate members of the family of
Senator Lopez. They formed part of the Senator's party as shown also by the reservation cards of
PAN-AM. As such they likewise shared his prestige and humiliation. Although defendant contends
that a few weeks before the flight they had asked their reservations to be charged from first class to
tourist class — which did not materialize due to alleged full booking in the tourist class — the same
does not mean they suffered no shared in having to take tourist class during the flight. For by that
time they had already been made to pay for first class seats and therefore to expect first class
accommodations. As 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 reasonable.
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).
In view of its nature, it should be imposed in such an amount as to sufficiently and effectively deter
similar breach of contracts in the future by defendant or other airlines. In this light, we find it just to
award P75,000.00 as exemplary or corrective damages.
Now, as to attorney's fees, the record shows a written contract of services executed on June 1, 1960
(Exh. F) whereunder plaintiffs-appellants engaged the services of their counsel — Atty. Vicente J.
Francisco — and agreedto pay the sum of P25,000.00 as 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 the case is
appealed to the Supreme Court. As said earlier, a written contract for attorney's services shall
39
control the amount to be paid therefor unless found by the court to be unconscionable or
unreasonable. A consideration of the subject matter of the present controversy, of the professional
standing of the attorney for plaintiffs-appellants, and of the extent of the service rendered by him,
shows that said amount provided for in the written agreement is reasonable. Said lawyer — whose
prominence in the legal profession is well known — studied the case, prepared and filed the
complaint, conferred with witnesses, analyzed documentary evidence, personally appeared at the
trial of the case in twenty-two days, during a period of three years, prepared four sets of cross-
interrogatories for deposition taking, prepared several memoranda and the motion for
reconsideration, filed a joint record on appeal with defendant, filed a brief for plaintiffs as appellants
consisting of 45 printed pages and a brief for plaintiffs as appellees consisting of 265 printed pages.
And we are further convinced of its reasonableness because defendant's counsel likewise valued at
P50,000.00 the proper compensation for his services rendered to defendant in the trial court and on
appeal.
In concluding, let it be stressed that the amount of damages awarded in this appeal has been
determined by adequately considering the official, political, social, and financial standing of the
offended parties on one hand, and the business and financial position of the offender on the other
(Domingding v. Ng, 55 O.G. 10). And further considering the present rate of exchange and the terms
at which the amount of damages awarded would approximately be in U.S. dollars, this Court is all
the more of the view that said award is proper and reasonable.
Wherefore, the judgment appealed from is hereby modified so as to award in favor of plaintiffs and
against defendant, the following: (1) P200,000.00 as moral damages, divided among plaintiffs, thus:
P100,000.00 for Senate President Pro Tempore Fernando Lopez; P50,000.00 for his wife Maria J.
Lopez; P25,000.00 for his son-in-law Alfredo Montelibano, Jr.; and P25,000.00 for his daughter Mrs.
Alfredo Montelibano, Jr.; (2) P75,000.00 as exemplary or corrective damages; (3) interest at the
legal rate of 6% per annum on the moral and exemplary damages aforestated, from December 14,
1963, the date of the amended decision of the court a quo, until said damages are fully paid; (4)
P50,000.00 as attorney's fees; and (5) the costs. Counterclaim dismissed.So ordered.
G.R. No. L-28589 February 29, 1972
RAFAEL ZULUETA, ET AL., plaintiffs-appellees,
vs.
PAN AMERICAN WORLD AIRWAYS, INC., defendant-appellant.
CONCEPCION, C.J.:p
Appeal, taken by defendant Pan American World Airways, Inc., from a decision of the Court of First
Instance of Rizal, sentencing said defendant to pay herein plaintiffs — Rafael Zulueta, Telly Albert
Zulueta and Carolinda Zulueta — "the sum of P5,502.85, as actual damages; plus the further sum of
P1,000,000.00 as moral damages; the further sum of P400,000.00 as exemplary damages; 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.
It is not disputed that, on October 23, 1964, the spouse Rafael Zulueta and Telly Albert Zulueta —
hereinafter referred to as plaintiff and Mrs. Zulueta, respectively — as well as their daughter,
Carolinda Zulueta — hereinafter referred to as Miss Zulueta — were passengers aboard a PANAM
plane, on Flight No. 841-23, from Honolulu to Manila, the first leg of which was Wake Island. As the
plane landed on said Island, the passengers were advised that they could disembark for a stopover
of about 30 minutes. Shortly 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, Exhibit 7 — prepared upon the request of Captain Zentner, on account of the
incident involved in this case — state that there was "unusually small amount of roughness," which
His Honor, the Trial Judge, considered properly as "an admission that there was roughness, only the
degree thereof is in dispute." In any event, plaintiff testified that, having found the need to relieve
himself, he went to the men's comfort room at the terminal building, but found it full of soldiers, in
view of which he walked down the beach some 100 yards away.
Meanwhile, the flight was called and when the passengers had boarded the plane, plaintiff's
absence was noticed. The take-off was, accordingly, delayed and a search for him was conducted
by 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
— Kenneth Sitton, defendants airport manager, according to plaintiffs; Wayne Pendleton,
defendant's airport customer service supervisor, according to defendant — stopped them at
the 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
as we reached the boarding gate, Mr. Zulueta spoke to me for the first time saying, `You
people almost made me miss your flight. You have a defective announcing system and I
was not paged."
I was about to make some reply when I noticed the captain of the flight standing on the
ramp, midway between the gate and the aircraft, and 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 .
(2) Thereafter, one of defendant's employees — Mr. Sitton, according to plaintiffs; Mr.
Pendleton according to defendants — asked plaintiffs to turn over their baggage claim
checks. Plaintiffs did so, handing him four (4) claim checks.
(3) However, only three (3) bags were located and segregated from the rest of the
passenger's luggage. The items hand-carried by plaintiffs, except for plaintiff's overcoat,
were also brought down. These hand-carried items, however, were not opened or inspected;
later, plaintiffs Mrs. Zulueta and Miss Zulueta were permitted to reboard the plane with their
hand-carried luggage; and when the plane took off, about two and a half hours later, it
carried plaintiff's fourth bag, his overcoat and the hand-carried luggage.
(4) Once three bags had been identified, and while the search was going on for the fourth
bag, Mr. Sitton, defendant's airport manager, demanded that plaintiffs open the bags
(actually, they were closed, but not locked) and allow defendant's employees to inspect
them. Plaintiff Rafael Zulueta refused and warned that defendant could open the bags only
by force and at its peril of a law suit.
(5) Mr. Sitton, defendant's manager, then told plaintiff that he would not be allowed to
proceed to Manila on board the plane and handed Zulueta the following letters:
"'24 October 1964
40
 Wake Island
"Mr. Zulueta:
Passenger aboard flight 84123
Honolulu/Manila
Sir:
We are forced to off-load you from flight 84123 due to the fact that you have refused to open your
checked baggage for Inspection as requested.
During your stay on Wake Island, which will be for a minimum of one week, you will be charged
$13.30 per day for each member of your party.
K. Sitton
Airport Manager, Wake Island
Pan American World Airways, Inc."
— Exh. D
(6) All this happened in plain view and within earshot of the other passengers on the plane,
many of whom were Filipinos who knew plaintiffs;
The departure of the plane was delayed for about two hours
(7) Though originally all three plaintiffs had been off loaded, plaintiff requested that his wife
and daughter be permitted to continue with the flight. This was allowed but they were
required to leave the three bags behind. Nevertheless, the plane did fly with the Plaintiff's
fourth bag; it was found among all other passengers' luggage flown to Manila upon the
plane's arrival here.
(8) Upon arrival at Manila, Mrs. Zulueta demanded of defendant's Manila office that it re-
route plaintiff Rafael Zulueta to Manila at the earliest possible time, by the fastest route, and
at its expense; defendant refused; so plaintiffs were forced to pay for his ticket and to send
him money as he was without funds.
(9) On October 27, 1964, plaintiff Zulueta finally arrived at Manila, after spending two nights
at Wake, going back to Honolulu, and from Honolulu flying thru 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 the trial court erred: (1) "in not granting defendant additional
hearing dates (not a postponement) for the presentation of its other witnesses"; (2) "in assuming it to
be true that the reason plaintiff Rafael Zulueta did not come aboard when the passengers were
reboarded was that he had gone to the beach to relieve himself"; (3) "in not 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 his wife and after he was found at the beach and his intention
to be left behind at Wake was temporarily thwarted he did everything calculated to compel Pan
American personnel to leave him behind"; (4) "in accepting as true plaintiff Rafael Zulueta's claim of
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 explanation for Zulueta's failure to reboard and not having
received a reasonable explanation and because of Zulueta's irrational behavior and refusal to have
his bags examined, the captain had the right and duty to leave Zulueta behind"; (6) "in condemning
the 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 the sum of P100,000.00"; and (7) "in not granting defendant's counterclaim of attorney's fees and
expenses of litigation." .
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
defendant's other witnesses or their depositions."
It appears that the complaint in this case was filed on September 30, 1965. It was amended on
December 1, 1965, and again on April 14, 1966. PANAM answered the second amended complaint
on May 6, 1966. After a pre-trial conference, held on May 28, 1966, the case was set for hearing on
June 1, 2 and 3, 1966. By subsequent agreement of the parties, the hearing was, on June 3, 1966,
reset for August 1, 2 and 3, 1966. Plaintiffs rested their case on August 2, 1966, whereupon it was
agreed that PANAM's witnesses would be presented "at a later date," months later, because they
would "come from far-flung places like Wake Island, 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 scheduled for October 17 was cancelled, without any
objection on the part of PANAM but, to offset said action, additional hearings were set for October
18 and 19, in the afternoon, apart from those originally set in the morning of these dates. Before the
presentation of PANAM's evidence, in the morning of October 18, 1966, plaintiffs' counsel asked for
the names of the former's witnesses, so that those not on the witness stand could be excluded from
the courtroom. PANAM's counsel announced that his witnesses were Marshall Stanley Ho, Kenneth
Sitton, Michael Thomas, Wayne S. Pendleton, Capt. Robert Zentner and Miss Carol Schmitz.
The defense then proceeded to introduce the testimony of said witnesses, and consumed therefor
the morning and afternoon of October 18 and the morning of October 19. Upon the conclusion, that
morning, of the testimony of the last witness for the defense, its counsel asked that it "be given an
opportunity to present our other witnesses who are not present today, at the convenience of the
Court." The motion was denied, but, said counsel sought a reconsideration and the court gave
PANAM a last chance to present its "other witnesses" the next day, October 20. Instead of doing so,
PANAM filed a written motion reiterating its prayer for "other hearing dates about two months from
today so as to be able to present defendant's other witnesses or their depositions." Upon denial of
this motion, PANAM made an offer of the testimony it 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.
His Honor, the Trial Judge, did not commit a reversible error in denying said motion of October 20,
1966. PANAM knew, as early as August 2, 1966, that its turn to present evidence would take place,
as agreed upon, about two (2) months and a half later, or on October 17, 18 and 19, 1966. PANAM
has not offered any valid excuse for its failure to bring to court the witnesses mentioned in said
motion, despite the assurance given by its counsel, on August 2, 1966, that the defense would
"spare no effort to bring them here," or, if they could not be brought due to circumstances 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 explain why the
deposition of said witnesses was not taken. What is worse, the proffered explanation — that the six
(6) persons who testified for the defense1 were believed, by defense counsel, to be enough for the
three (3) days of October set for the reception of his evidence 2 — indicates that no effort whatsoever
had been made either to bring the "other witnesses" 3 or to take and submit their depositions.
Besides, the testimony allegedly expected of said other witnesses for the defense — namely: (1)
that there was, according to official records, no turbulence in the flight from San Francisco to
Honolulu, on which the testimony of Carol Schmitz had touched; (2) that Ida V. Pomeroy and John
C. Craig would say that the passengers were advised not to go beyond the terminal and that the
stopover would be for about 30 minutes only, on which duration of the stopover Miss Schmitz had,
also testified, as she could have similarly testified on said advice, had it been given; (3) that either
Helga Schley or Sue Welby would narrate the sympathy with which Mrs. Zulueta was allegedly
treated during the flight from Wake Island to Manila, which is not particularly relevant or material in
the 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
41
corroborate Michael Thomas regarding the remarks made by the plaintiff to Mrs. Zulueta and Miss
Zulueta when they and other members of the searching party found him in the early morning of
October 23, 1964 -- were merely cumulative in nature
Then, again, PANAM did not comply with section 4 of Rule 22 of the Rules of Court, reading:
SEC. 4. Requisites of motion to postpone trial for absence of evidence. — A
motion to postpone a trial on the ground of absence can be granted only upon
affidavit showing the materiality of evidence expected to be obtained, and that
due diligence has been used to procure it. But if the adverse party admits the
facts to be given in evidence, even if he objects or reserves the right to object to
their admissibility, the trial must not be postponed." .
Although this provision refers to motions "to postpone trial," it applies with equal force to motions like
the one under consideration, there being no plausible reason to distinguish between the same and a
motion for postponement owing to the "absence of evidence."
The second, third and fourth assignments of error are interrelated. They refer to the question
whether the reason why plaintiff went to the beach was to relieve himself, as testified to by him, or to
remain in Wake Island because he had quarreled with his wife, as contended by PANAM's counsel.
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 —
such as, for instance, that the flight was somewhat rough, shortly before reaching Wake Island; that
there were quite a number of soldiers in the plane and, later, in the terminal building; that he did not
voluntarily remain in Wake Island, but was "off-loaded" by PANAM's agent therein — are borne out
by the very evidence for the defense. Thirdly, PANAM's efforts to show that plaintiff had decided to
remain in the Island because he had quarreled with Mrs. Zulueta — which is ridiculous — merely
underscores the artificious nature of PANAM's contention.
Fourthly, there is absolutely no direct evidence about said alleged quarrel. Nobody testified about
it. Counsel for the defense has, in effect, merely concluded that there must have been such quarrel
because, when the searching party located plaintiff, he — according to Stanley Ho — was "shouting
in a loud tone of voice" — not at his wife, but — "towards his wife and daughter," who headed said
party and to which the words spoken were addressed, 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, Wayne S. Pendleton declared that Gavino told him
that this "seems to stem from a domestic issue" between Mr. and Mrs. Zulueta. Surely, this alleged
surmise, not even by Pendleton but by Gavino — who was not placed on the witness stand —
cannot be taken as competent evidence that plaintiff had quarreled with his wife, apart from the
circumstance that such quarrel — if it took place and there is absolutely no evidence or offer to
prove that anything had transpired between husband and wife before reaching Wake Island which
may suggest a misunderstanding between them — does not warrant jumping at the conclusion that
plaintiff had decided to remain in the Island, for he would gain nothing thereby.
Needless to say, if plaintiff's purpose in going to the beach was to hide from Mrs. and Miss Zulueta
and PANAM's personnel, so that he may be left in the Island, he, surely, would not have walked
back from the beach to the terminal, before the plane had resumed its flight to Manila, thereby
exposing his presence to the full view of those who were looking for him.
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 paged" — and the "belligerent" manner — according to Captain Zentner — in which he said it
revealed his feeling of distress at the thought that the plane could have left without him.4
The second, third and fourth assignments of error are thus clearly untenable.
In connection with the fifth assignment of error, PANAM's witness, Captain Zentner, testified that,
while he was outside the plane, waiting for the result of the search, a "man" approached him and
expressed concern over the situation; that the "man" said he was with the State Department; that
he, his wife and their children, who were on board the aircraft, would not want to continue the flight
unless the missing person was found; that the "man" expressed fear of a "bomb," a word he used
reluctantly, because he knew it is violative of a Federal law when said at the wrong time; that when
plaintiff came, Zentner asked him: "why did you not want to get on the airplane?"; that plaintiff then
became "very angry" and spoke to him "in a way I have not been spoken to in my whole adult life";
that the witness explained: "I am Captain of the aircraft and it is my duty to see to the flight's safety";
that he (Zentner) then told Wayne Pendleton — PANAM's Customer Service Supervisor — to get
plaintiff's "bags off the plane to verify ... about the bomb"; that PANAM's airport manager (K. Sitton)
"got three bags of Mr. Zulueta"; that his fourth bag could not be located despite a thorough search;
that believing that it must have been left behind, in Honolulu, "we took off"; and that he (Zentner)
would not have done so had he thought it was still aboard.
The lower court did not err in giving no credence to this testimony.
Indeed, Captain Zentner did not explain why he seemingly assumed that the alleged apprehension
of his informant was justified. He did not ask the latter whether he knew anything in particular about
plaintiff herein, although some members of the crew would appear to have a notion that plaintiff is an
impresario. Plaintiff himself intimated to them that he was well known to the U.S. State Department.
Apparently, Captain Zentner did not even know the informant's name. Neither did the captain know
whether the informant was really working for or in the State Department. In other words, there was
nothing — absolutely nothing — to justify the belief that the luggage of the missing person should be
searched, in order to ascertain whether there was a bomb in it; that, otherwise, his presence in the
aircraft would be inimical to its safety; and that, consequently, he should be off-loaded.
In fact, PANAM has not given the name of that "man" of the State Department. Neither has the
defense tried to explain such omission. Surely, PANAM's records would have disclosed the identity
of said "man," if he were not a mere figment of the imagination. The list of passengers has been
marked as Exh. A, and yet PANAM has not pointed out who among them is the aforementioned
"man".
The trial court did not believe the testimony of Captain Zentner and rejected the theory of the
defense, for the following reasons:
(1) The defendant had contracted to transport plaintiff from Honolulu to Manila. It was its
legal obligation to do so, and it could be excused from complying with the obligation only, if
the passenger had refused to continue with the trip or it had become legally or physically
impossible without the carrier's fault, to transport him.
(2) In this case, it is plain that Zulueta was desirous of continuing with the trip. Although
defendant's witnesses claim that Zulueta refused to board the plane, its own evidence belies
this claim. The letter, Exh. "D", shows that it was defendant who off-loaded Zulueta; not
Zulueta who resisted from continuing the trip. In his testimony before the Court, Capt.
Zentner, defendant's pilot, said that if a passenger voluntarily left the plane, the term used
would be `desistance' but the term "off-load" means that it is the decision of the Captain not
to allow the passenger or luggage to continue the flight. However, Capt. Zentner admitted
on his testimony that "his drunkenness... was of no consequence in my report; (it) ... had
nothing to do with his being belligerent and unfriendly in his attitude towards me and the rest
of the members of the crew." The written report of Capt. Zentner made in transit from Wake
to Manila "intimated he might possibly continue;" but "due to drinking, belligerent attitude, he
was off-loaded along with his locked bags." (Exh. 10). In a later report, Zentner admitted,
"The decision to leave Mr. Zulueta and his locked luggage in Wake was mine and alone."
(Exh. 9). Defendant's airport customer service supervisor, W.S. Pendleton, reported that:
42
"After the search for Mr. Zulueta had continued almost 20 minutes and it was apparent that
he was not be found in the terminal building or immediate vicinity, I proceeded to the parking
lot and picked up my jeep continue the search in more remote areas. Just as I was getting
underway, a small group of persons approach from the direction of the beach and a voice
called out the passenger had been found. Having parked the jeep again, I walked toward the
group and was met by PAA fleet-serviceman E. Gavino who was walking somewhere ahead
of the others. Mr. Gavino remarked to me privately that the trouble seemed to have
stemmed from some domestic difference between the Passenger and his wife who was not
at his side and returning with him to the gate.
"On hearing Mr. Gavino's remark, I made no comment to the passenger but turned and led
the group toward the ramp. Just as we reached the boarding gate, Mr. Zulueta spoke to me
for the first time saying, "You people almost made me miss your flight. You have a defective
announcing system and I was not paged."
— Exh. 5
Evidently, these could not have been the words of a man who refused to board the plane.
(3) There was no legal or physical impossibility for defendant to transport plaintiff Zulueta
from Wake to Manila as it had contracted to do. Defendant claims that the safety of its craft
and of the other passengers demanded that it inspect Zulueta's luggage and when he
refused to allow inspection that it had no recourse but to leave him behind. The truth that,
knowing that of plaintiff's four pieces of luggage, one could still have been — as it was —
aboard, defendant's plane still flew on to Manila. Surely, if the defendant's pilot and
employees really believed that Zulueta had planted a bomb in one of the bags they would
not have flown on until they had made sure that the fourth bag had been left behind at
Honolulu until enough time had lapsed for the bomb to have been exploded, since
presumably it had to have been set to go off before they reached Manila.
"At any rate, it was quite evident that Zulueta had nothing to hide; for the report of
defendant's witness, Mr. Stanley E. Ho, U.S. Marshall on Wake, has this to say: "
"About twenty minutes later while an attempt was being made to locate another piece of Mr.
Zulueta's luggage his daughter, Carolinda approached her father and wanted to get some
clothes from one of the suitcases. Mr. Zulueta asked the undersigned if it was alright if he
opened the suitcases and get the necessary clothes. To this I stated he was free to open his
luggage and obtain whatever he needed. Mr. Zulueta opened a suitcase and took the dress
for her then boarded the aircraft."
— Exh. 2B .
(4) What is evident to the Court is that defendant — acted in a manner deliberately
calculated to humiliate and shame plaintiffs. Although the plane was held up to wait for
plaintiff — for, as 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., 18 Oct. 1966, pp.
59-62) when plaintiff did come, he was met and treated roughly by defendant's manager
Sitton. Here is what Zulueta testified to:
"Q. — When you saw your wife and daughter what happened? A. — Then I started going
towards the airplane. At the ramp, I do not know what they call it, as soon as they arrived
there, there was a man who subsequently identified himself as Kenneth Sitton. He identified
himself as the Airport Manager of Wake Island. He did not ask me what happened, was I
sick, he looked at me and said, what in the hell do you think you are? Get on that plane.
Then I said, what right have you to talk to me that way, I am a paying passenger. Do not
treat me this way. And this started the altercation, and then he said, do you know you held
up the plane? And I answered, this is not my fault, I was sick. Did it not occur to you to ask
me how I feel; then he said get on that plane.
"Q. — What happened? A. — we started discussing kept saying, "You get on that plane"
and then I said, "I don't have to get on that plane." After a prolonged discussion, he said,
give me your baggage tags and I gave him four baggage tickets or tags. I did not realize
what he was up to until finally, I saw people coming down the airplane and police cars
arrived and people were coming down the ramp. I gave him the four baggage tags and a
few minutes late, he brought three baggages and said, open them up. I said, to begin with,
there is one baggage missing and that missing bag is my bag. Then I said you cannot make
me open these baggages unless you are United States customs authorities and when I
arrive in the Philippines they can be opened by the Philippine Customs authorities. But an
Airport Manager cannot make me open my bags unless you do exactly the same thing to all
the passengers. Open the bags of all the other passengers and I will open my bag.
"Q. — What did he say: A. — He just kept on saying open your bag, and I drew up my
hands and said, you want, you open yourself or give me a search warrant I shall open this
bag but give me a search warrant and then I asked, who is the Chief of Police, and he said,
"I am Chief of Police," then I said how can you be the Chief Police and Airport Manager and
then he started to talk about double compensation and by this time we were both quarreling
and he was shouting and so with me. Then there was a man who came around and said
`open the bag' and I said, show the warrant of arrest and do all the checking and the
discussion kept on going, and finally I said look, my fourth bag is missing and he said, "I
don't give damn." People at the time were surrounding us and staring at us and also the
passengers. My wife and daughter all along had been made to sit on a railing and this man
screaming and looking at my wife and daughter. Then he said, will you pull these three
monkeys out of here? then I said, will you send my wife and daughter up the plane which he
did. However, they have come down in their slippers and when they were allowed to return
to the plane none of the defendant's personnel who had brought down the overcoats, shoes
and handcarried items of my wife and daughter ever offered to bring back the items to the
plane, until I demanded that one of the defendants should help my wife and daughter which
he did. And then one man told me, because you refused to open your bag, "we shall hold
you here in Wake Island." then I asked, are we under arrest? and the man answered, no.
And further stated, your wife and daughter can continue their flight but you will not go to this
flight an we will charge you $13.30 a day. Then I said, who are you to tell all these things,
and he answered, I am the manager. I said, put it in writing, then left and in few minutes he
came back and handed me this letter (witness referring to Exhibit D)." .
— t.s.n., August 1, 1966, pp. 15-21
Anyone in Zulueta's position would have reached the same way if he had had a sense of
dignity. Evidently, angered by Zulueta's reaction, irked by the delay he had caused them,
defendant's employees decided to teach him a lesson by forcing him to open his bags when
there was no justifiable reason to do so:
(a) Defendant did not make any attempt to inquire from any passenger or even the crew
who knew Mr. Zulueta what his character and reputation are, before demanding that he
open the bags; if it had done so, Miss Schmitz, the purser, and Col. Villamor would have
vouched for plaintiffs; for Miss Schmitz believed she had flown before with the Zulueta's and
they had been very nice people.
(b) Worse, defendant's manager Sitton admits that Zulueta had told him who he was and his
social position in Manila; still he insisted that the bags be opened. Moreover, some
passengers had informed the supervisor that Zulueta was "the impresario"; but they
persisted in their demands.
43
(c) Defendant never identified the alleged State Department men who reportedly
approached the Captain and expressed fear about a bomb, nor did they confront him — if
he existed with Mr. Zulueta despite Mr. Zulueta's request.
(d) Defendant did not take any steps to put the luggage off-loaded far from its passengers
and plane, a strange procedure if it really believed the luggage contained a bomb;
(e) Defendant continued with the flight knowing one bag -- Zulueta's bag himself — had not
been located and without verifying from Honolulu if the bag had been found there, nor even
advising Honolulu that a bag possibly containing a bomb had been left there, again an
inexplicable procedure if they sincerely believed that Zulueta had planted a bomb;
(f) Defendant's manager himself took Zulueta and his off-loaded bags, in his own car, from
the terminal building to the hotel, which is also inconsistent with a serious belief that the
luggages contained a bomb;
(g) Defendant knew that while Zulueta's bags were on the ground, he had opened one of
them with the permission and in the presence of the U. S. Marshall in order to enable his
daughter to get a dress from the bag; nothing suspicious was seen; still, defendant insisted
on refusing to allow Zulueta to continue unless he opened and allowed inspection of the
bags by them; .
(h) Defendant completely changed his tone and behavior towards the Zulueta's after the
plane had arrived at Manila and the Captain learned that its Manila manager, Mr.
Oppenheimer, was a friend of Zulueta;
(i) Meantime, the attitude of Pan American towards the Zulueta's caused other passengers
to resent Zulueta (See reports of Stewardesses and of Captain Zentner, Exhs. 7, 8, 9 and
10). "Many passengers were angry towards the `missing passenger," says Miss Schmitz's
report. "A few inquisitive PA (passengers) — one woman quite rudely stared once we were
airborne and left Mr. Zulueta behind ... anyway I told the woman to sit down — so did Helga
— so did the man near her," say Miss Schmitz's personal notes. This confirms the testimony
of plain plaintiffs that, all the while the search and discussions were going on, they were the
subject of stares, remarks and whisper comments from the passengers and other persons
around the plane.
(j) Defendant did not allow plaintiff Zulueta to board the plane at all, even though it was
aware that some of his personal belongings, such as his overcoat were on the plane.
Plaintiffs so testified; and though defendant's witness Mr. Sitton denied it, claiming that
plaintiff was always free to board the plane, this denial is belied by the report of defendant's
own witness, U.S. Marshall Ho, who said that:
"Ten minutes later, Mr. Zulueta asked if he could talk to his wife who was aboard the aircraft.
I then accompanied him and as we got to the ramp, we met Mr. Sitton who stated he would
summon Mrs. Zulueta from the aircraft. Mr. Sitton summoned Mrs. Zulueta and she met her
husband at the foot of the ramp. Mr. Zulueta then asked his wife and himself to which I
replied I was not concerned what he had to say."
— Exh. 2-B
(k) Finally, to add further humiliation and heap indignity on plaintiffs, when Mrs. Zulueta
arrived at Manila and appealed to defendant's Manila manager, Mr. Oppenheimer, to see to
it that her husband got back as soon as possible and was made as comfortable as possible,
at defendant's expense, Mr. Oppenheimer refused to acknowledge any obligation to
transport Mr. Zulueta back to Manila and forcing Mrs. Zulueta to send her husband $100.00
for pocket money and pay for his fare from Wake to Manila, thru Honolulu and Tokyo.
Upon a review of the record, We are satisfied that the foregoing findings of His Honor, the Trial
Judge, are supported by a preponderance of the evidence.
The last two (2) assignments of error are mere consequences of those already disposed of, and,
hence, need no extended discussion.
It is urged, however, that plaintiff is, at most, entitled to actual damages only, because he was the
first to commit a breach of contract, for having gone over 200 yards away from the terminal, where
he could not expect to be paged. But, PANAM has not pointed out what part of the contract has
been violated thereby, apart from the fact that the award for damages made in the decision
appealed from was due, not to PANAM's failure to so page the plaintiff, but to the former's deliberate
act of leaving him at Wake Island, and the embarrassment and humiliation caused to 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 and a modest
"hotel," as well as plaintiff's need of relieving himself, 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.
It is next argued that plaintiff was, also, guilty of contributory negligence for failure to reboard the
plane within the 30 minutes announced before the passengers debarked therefrom. This might have
justified a reduction of the damages, had plaintiff been unwittingly left by the plane, owing to the
negligence of PANAM personnel, or even, perhaps, wittingly, if he could not be found before the
plane's departure. It does not, and cannot have such justification in the case at bar, plaintiff having
shown up before the plane had taken off, and he having been off-loaded intentionally and with
malice aforethought, for his "belligerent" attitude, according to Captain Zentner; for having dared —
despite his being one of "three monkeys," — the term used by Captain Zentner to refer to the
Zulueta family — to answer him back — when he (Captain Zentner)5 said: "what in the hell do you
think you are ?" — in a way he had "not been spoken to" in his "whole adult life," in the presence of
the passengers and other 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 without a search warrant therefor, thereby making manifest the lack of
authority of the aforementioned representative of PANAM to issue said command and exposing him
to ridicule before said passengers and employees. Besides, PANAM's own witness and employee,
Wayne Pendleton, testified the plane could not take off at 4:30, as scheduled, because "we were still
waiting for two (2) local passengers."
Article 2201 of our Civil Code reads:
In contracts and quasi-contracts, the damages for which the obligor who acted in good faith
is liable shall be those that are the natural and probable consequences of the breach of the
obligation, and which the parties have foreseen or could reasonably foreseen at the time the
obligation was constituted.
In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible for all
damages which may be reasonably attributed to the non-performance of the obligation.
This responsibility applies to common carriers. Pursuant to Article 1759 of the same Code:
ART. 1759. Common carriers are liable for the death or injuries to passengers through the
negligence or wilful acts of the former's employees, although such employees may have
acted beyond the scope of their authority or in violation of the orders of the common
carriers.
44
 This liability of the common carriers does not cease proof that they exercised all the
diligence of a good father of a family in the selection and supervision of their employees.
Referring now to the specific amounts to damages due to plaintiffs herein, We note that the sum of
P5,502.85 awarded to them as actual damages is not seriously disputed by PANAM.
As regards the moral and exemplary damages claimed by the plaintiffs, our Civil Code provides:
ART. 21. Any person who wilfully causes loss or injury to another in a manner that is
contrary to morals, good customs or public policy shall compensate the latter for the
damage.
ART. 2217. Moral damages include physical suffering, mental anguish, fright, serious
anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and
similar injury. Though incapable of pecuniary computation, moral damages may be
recovered if they are the proximate result of defendant's wrongful act or omission.
ART. 2229. Exemplary or corrective damages are imposed, by way of example or correction
for the public good, in addition to the moral, temperate liquidated or compensatory
damages.
ART. 2232. In contracts and quasi-contracts, the court may award exemplary damages if the
defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner.
The records amply establish plaintiffs' right to recover both moral and exemplary damages. Indeed,
the rude and rough reception 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 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 was missing, "I don't give a damn"); the
abusive language and highly scornful reference to plaintiffs as monkeys by one of PANAM's
employees (who turning to Mrs. Zulueta and Miss Zulueta remarked, "will you pull these three
monkeys out of here?"); the unfriendly attitude, the ugly stares and unkind remarks to which plaintiffs
were subjected, and their being cordoned by 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 their arbitrary and high-handed decision to leave him
in Wake; Mrs. Zulueta's having suffered a nervous breakdown for which she was hospitalized as a
result of the embarrassment, insults and humiliations to which plaintiffs were exposed by the
conduct of PANAM's employees; Miss Zulueta's having suffered shame, humiliation and
embarrassment for the treatment received by her parents at the airport6 — all these justify an award
for moral damages resulting from mental anguish, serious anxiety, wounded feelings, moral shock,
and social humiliation thereby suffered by plaintiffs.
The relation between carrier and passenger involves special and peculiar obligations and
duties, differing in kind and degree, from those of almost every other legal or contractual
relation. On account of the peculiar situation of the parties the law implies a promise and
imposes upon the carrier the corresponding duty of protection and courteous treatment.
Therefore, the carrier is under the absolute duty of protecting his passengers from assault or
insult by himself or his servants. 7
A contract to transport passengers is quite different in kind and degree from any other
contractual relation. And this, because of the relation which an air-carrier sustains with the
public. Its business is mainly with the travelling public. It invites people to avail of the
comforts and advantages it offers. The contract of air carriage, therefore, generates a
relation tended with a public duty. Neglect or malfeasance of the carrier's employees
naturally could give ground for an action for damages.
Passengers do not contract merely for transportation. They have a right to be treated by the
carrier's employees with kindness, respect, courtesy and due consideration. They are titled
to be protected against personal misconduct, injurious language, indignities and abuses
from such employees. So it is, that any rude or discourteous conduct on the part of
employees towards a passenger gives the latter an action for damages against the carrier. 8
A carrier of passengers is as much bound to protect them from humiliation and insult as
from physical injury .. It is held in nearly all jurisdictions, if not universally, that a carrier is
liable to a passenger for humiliation and mental suffering caused by abusive or insulting
language directed at such passenger by an employee of the carrier. 9
Where a conductor uses language to a passenger which is calculated to insult, humiliate, or
wound the feelings of a person of ordinary feelings and sensibilities, the carrier is liable,
because the contract of carriage impliedly stipulates for decent, courteous, and respectful
treatment, at hands of the carrier's employees. 10
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 abusive language by the carrier's agents, or
by others if under such circumstances that the carrier's agents should have known about it
and prevented it. Some of the courts have mentioned the implied duty of the carrier, arising
out of the contract of carriage, not to insult the passenger, or permit him to be insulted, and
even where no mention is made of this basis for liability, it is apparent that it is the ground
upon which recovery is allowed. 11
The question is whether the award of P1,000,000 as moral damages was proper and justified by the
circumstances. It has been held that the discretion in fixing moral damages lies in the trial
court. 12 Among the factors courts take into account in assessing moral damages are the
professional, social, political and financial standing of the offended parties on one hand, and the
business and financial position of the offender on the other. 13
In comparatively recent cases in this jurisdiction, also involving breach of contract of air carriage,
this Court awarded the amount of P25,000, where plaintiff, a first-class passenger in an Air France
plane from Manila to Rome was, in Bangkok, forced by the manager of the airline company to leave
his first class accommodation after he was already seated because there was a white man who, the
manager alleged, had a "better right" to the seat 14 ;the amount of P200,000, where plaintiffs, upon
confirmation of their reservation in defendant airline's flight from Tokyo to San Francisco were
issued first class tickets, but upon arrival in Tokyo were informed that there was no accommodation
for them in the first class compartment and told they could not go unless they took the tourist
class 15 — in both of which cases the Court found the airline companies to have acted in bad faith, or
in a wanton, reckless and oppressive manner, justifying likewise the award of exemplary damages.
None of the passengers involved in said cases was, however, off-loaded, much less in a place as
barren and isolated as Wake Island, with the prospect of being stranded there for a week. The
aforementioned passengers were merely constrained to take a tourist or third class accommodation
in lieu of the first class passage they were entitled to. Then, also, in none of said cases had the
agents of the carrier acted with the degree of malice or bad faith of those of PANAM in the case at
bar, or caused to the offended passengers a mental suffering arising from injuries to feelings, fright
and shock due to abusive, rude and insulting language used by the carrier's employees in the
presence and within the hearing of others, comparable to that caused by PANAM's employees to
plaintiffs herein
To some extent, however, plaintiff had contributed to the gravity of the situation because of the
extreme belligerence with which he had reacted on the occasion. We do not over-look the fact that
he justly believed he should uphold and defend his dignity and that of the people of this country that
the discomfort, the difficulties, and, perhaps, the ordeal through which he had gone to relieve himself
— which were unknown to PANAM's agents — were such as to put him in no mood to be
understanding of the shortcoming of others; and that said PANAM agents should have first inquired,
45
with an open mind, about the cause of his delay instead of assuming that he was at fault and of G.R. No. 106664 March 8, 1995
taking an arrogant and overbearing attitude, as if they were dealing with an inferior. Just the same,
there is every reason to believe that, in all probability, things would not have turned out as bad as
PHILIPPINE AIR LINES, petitioner,
they became had he not allowed himself, in a way, to be dragged to the level or plane on which
vs.
PANAM's personnel had placed themselves.
FLORANTE A. MIANO, respondent.

In view of this circumstance, We feel that the moral and exemplary damages collectible by the
PUNO, J.:
plaintiffs should be reduced to one-half of the amounts awarded by the lower court, that is, to
P500,000 for moral damages, and P200,000 for exemplary damages, aside from the attorney's fees
which should, likewise, be reduced to P75,000. The petitioner questions the Decision of the Regional Trial Court of Makati, Branch 148, dated July
29, 1992,1 awarding private respondent moral and exemplary damages and attorney's fees for want
of legal justification. We grant the petition.
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 The facts are uncontroverted.
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.
On August 31, 1988, private respondent took petitioner's flight PR 722, Mabuhay Class, bound for
Frankfurt, Germany. He had an immediate onward connecting flight via Lufthansa flight LH 1452 to
Upon the other hand, plaintiff prayed that the motion be denied, upon the ground that the case at bar Vienna, Austria. At the Ninoy Aquino International Airport, he checked-in one brown suitcase
is one for damages for breach of a contract of carriage, owing to the off-loading of plaintiff Rafael weighing twenty (20) kilograms2 but did not declare a higher valuation. He claimed that his suitcase
Zulueta, the husband and administrator of the conjugal partnership, with the funds of which the contained money, documents, one Nikkon camera with zoom lens, suits, sweaters, shirts, pants,
PANAM had been paid under said contract; that the action was filed by the plaintiffs as a family and shoes, and other accessories.3
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
Upon private respondent's arrival at Vienna via Lufthansa flight LH 1452, his checked-in baggage
have specified what portion of the award should go to each plaintiff; that although Mr. and Mrs.
was missing. He reported the matter to the Lufthansa authorities. After three (3) hours of waiting in
Zulueta had, for sometime, been living separately, this has been without judicial approval; that Mrs.
vain, he proceeded to Piestany, Czechoslovakia. Eleven (11) days after or on September 11, 1988,
Zulueta may not, therefore, bind the conjugal partnership or settle this case separately; and that the
his suitcase was delivered to him in his hotel in Piestany, Czechoslovakia. He claimed that because
sum given by PANAM to Mrs. Zulueta is believed to be P50,000, which is less than 3-1/2% of the
of the delay in the delivery of his suitcase, he was forced to borrow money to buy some clothes, to
award appealed from, thereby indicating the advisability of denying her motion to dismiss, for her
pay $200.00 for the transportation of his baggage from Vienna to Piestany, and lost his Nikkon
own protection.
camera.4

Pursuant to a resolution, dated June 10, 1971, deferring action on said motion to dismiss until the
In November 1988, private respondent wrote to petitioner a letter demanding: (1) P10,000.00 cost of
case is considered on the merits. We now hold that the motion should be, as it is hereby denied.
allegedly lost Nikkon camera; (2) $200.00 for alleged cost of transporting luggage from Vienna to
Indeed, "(t)he wife cannot bind the conjugal partnership without the husband's consent, except in
Piestany; and (3) P100,000.00 as damages. In its reply, petitioner informed private respondent that
cases provided by law," 16 and it has not been shown that this is one of the cases so provided.
his letter was forwarded to its legal department for investigation.
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 Private respondent felt his demand letter was left unheeded. He instituted an action for Damages
suit contemplated in subdivision (2) of said Article 113 is one in which the wife is the real party — docketed as Civil Case No. 89-3496 before the Regional Trial Court of Makati.
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 Petitioner contested the complaint. It disclaimed any liability on the ground that there was neither a
principally grieved and as administrator of the conjugal partnership. Moreover, he having acted in report of mishandled baggage on flight PR 722 nor a tracer telex received from its Vienna Station. It,
this capacity in entering into the contract of carriage with PANAM and paid the amount due to the however, contended that if at all liable its obligation is limited by the Warsaw Convention rate.
latter, under the contract, with funds of conjugal partnership, the damages recoverable for breach of
such contract belongs to said partnership. Petitioner filed a Third-Party Complaint against Lufthansa German Airlines imputing the mishandling
of private respondent's baggage, but was dismissed for its failure to prosecute.
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, In its decision, the trial court observed that petitioner's actuation was not attended by bad faith.
and P75,000 as attorney's fees, apart from P5,502.85 as actual damages, and without prejudice to Nevertheless, it awarded private respondent damages and attorney's fees, the dispositive portion of
deducting the aforementioned sum of P50,000 already paid Mrs. Zulueta, the decision appealed which reads:
from is hereby affirmed in all other respects, with the costs against said defendant.
WHEREFORE, judgment is hereby rendered in favor of the plaintiff (private respondent) and
against the defendant (petitioner), thereby ordering the latter to pay the following:

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

46
 (b) P40,000.00 as moral damages; Under the circumstances obtaining, considering that defendant's (petitioner's) actuation was
not attendant with bad faith, the award of moral damages in the amount of P40,000.00 is but
just and fair. 12
(c) P20,000.00 as exemplary damages; and

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

(d) P15,000.00 as attorney's fees.
Appeals,13 we ruled:

SO ORDERED. 5
Hence, this petition for review.
In breach of contract of carriage by air, moral damages are awarded only if the defendant acted
fraudulently or in bad faith.6 Bad faith means a breach of a known duty through same motive of
interest or ill will.7
The trial court erred in awarding moral damages to private respondent. The established facts evince
that petitioner's late delivery of the baggage for eleven (11) days was not motivated by ill will or bad
faith. In fact, it immediately coordinated with its Central Baggage Services to trace private
respondent's suitcase and succeeded in finding it. At the hearing, petitioner's Manager for
Administration of Airport Services Department Miguel Ebio testified that their records disclosed that
Manila, the originating station, did not receive any tracer telex.8 A tracer telex, an airline lingo, is an
action of any station that the airlines operate from whom a passenger may complain or have not
received his baggage upon his arrival.9 It was reasonable to presume that the handling of the
baggage was normal and regular. Upon inquiry from their Frankfurt Station, it was however
discovered that the interline tag of private respondent's baggage was accidentally taken off.
According to Mr. Ebio, it was customary for destination stations to hold a tagless baggage until
properly identified. The tracer telex, which contained information on the baggage, is matched with
the tagless luggage for identification. Without the tracer telex, the color and the type of baggage are
used as basis for the matching. Thus, the delay.
Bad faith under the law cannot be presumed; it must be established by clear and convincing
evidence. Again, the unbroken jurisprudence is that in breach of contract cases where the
defendant is not shown to have acted fraudulently or in bad faith, liability for damages is
limited to the natural and probable consequences of the breach of the obligation which the
parties had foreseen or could reasonably have foreseen. The damages, however, will not
include liability far moral damages. (Citations omitted)
We can neither sustain the award of exemplary damages. The prerequisite for the award of
exemplary damages in cases of contract or quasi-contract 14 is that the defendant acted in wanton,
fraudulent, reckless, oppressive, or malevolent manner. 15 The undisputed facts do not so warrant
the characterization of the action of petitioner.
The award of attorney's fees must also be disallowed for lack of legal leg to stand on. The fact that
private respondent was compelled to litigate and incur expenses to protect and enforce his claim did
not justify the award of attorney's fees. The general rule is that attorney's fees cannot be recovered
as part of damages because of the policy that no premium should be placed on the right to
litigate.16 Petitioner is willing to pay the just claim of $200.00 as a result of the delay in the
transportation of the luggage in accord with the Warsaw Convention. Needless to say, the award of
attorney's fees must be deleted where the award of moral and exemplary damages are eliminated.
IN VIEW WHEREOF, the assailed Decision of July 29, 1992 is MODIFIED deleting the award of
moral and exemplary damages and attorney's fees. No costs.

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

xxx xxx xxx

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

xxx xxx xxx

The mere fact that defendant (petitioner) exerted effort to assist plaintiff (private respondent)
in his predicament as shown in defendant's (petitioner's) letter to plaintiff (private
respondent) (Exh. "E") and likewise the letter from Mr. Miguel Ebio, Manager-Airport
Services Administration of defendant (petitioner) PAL to its Senior Counsel-Litigation, Atty.
Marceliano Calica (Exh. "3") which reveals the fact that an investigation was conducted as to
mishandled baggage, coupled with the fact that said information were then relayed to
plaintiff (private respondent) as evidenced by a letter of defendant (petitioner) to plaintiff
(private respondent) (Exh. "4") does not warrant a showing of malice on the part of
defendant
( petitioner). 11

xxx xxx xxx

47
G.R. No. 113578 July 14, 1995
SULPICIO LINES, INC., Petitioner,
vs.
The Honorable COURT OF APPEALS and TITO DURAN TABUQUILDE and ANGELINA DE PAZ
TABUQUILDE, respondents.
QUIASON, J.:
This is a petition for review on certiorari under Rule 45 of the Revised Rules of Court of the decision
of the Court of Appeals in CA-G.R. CV
No. 32864, which affirmed the decision of the Regional Trial Court, Branch 85, Quezon City in Civil
Case No. Q-89-3048.
I
The Court of Appeals found:
On October 23, 1988, plaintiff Tito Duran Tabuquilde (hereinafter, "Tito") and his three-year
old daughter Jennifer Anne boarded the M/V Dona Marilyn at North Harbor, Manila, bringing
with them several pieces of luggage.
In the morning of October 24, 1988, the M/V Dona Marilyn, while in transit, encountered
inclement weather which caused huge waves due to Typhoon Unsang.
Notwithstanding the fact that Storm Signal No. 2 had been raised by the PAG-ASA
authorities over Leyte as early as 5:30 P.M. of October 23, 1988 and which signal was
raised to Signal No. 3 by 10 P.M. of the same day, the ship captain ordered the vessel to
proceed to Tacloban when prudence dictated that he should have taken it to the nearest
port for shelter, thus violating his duty to exercise extraordinary diligence in the carrying of
passengers safely to their destination.
At about the same time, plaintiff-appellee Angelina Tabuquilde (hereinafter, "Angelina")
mother of Jennifer Anne, contacted the Sulpicio Office to verify radio reports that the vessel
M/V Dona Marilyn was missing. Employees of said Sulpicio Lines assured her that the ship
was merely "hiding" thereby assuaging her anxiety.
At around 2:00 P.M. of October 24, 1988, said vessel capsized, throwing plaintiff-appellee
Tito and Jennifer Anne, along with hundreds of passengers, into the tumultuous sea.
Tito tried to keep himself and his daughter afloat but to no avail as the waves got stronger
and he 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 fruitless.
In the meantime, Angelina tried to seek the assistance of the Sulpicio Lines in Manila to no
avail, the latter refusing to entertain her and hundreds of relatives of the other passengers
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 verification of the sinking of the ship.
On October 26, 1988, Tito and other survivors in the Almagro Island were fetched and were
brought to Tacloban Medical Center for treatment.
On October 31, 1988, Tito reported the loss of 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 wife, reporting the sad fact that Jennifer Anne was dead. Angelina suffered from shock
and severe grief upon receipt of the news.
On November 3, 1988, the coffin bearing the corpse of Jennifer Anne was buried in
Tanauan, Leyte.
On November 24, 1988, a claim for damages was filed by Tito with the defendant Sulpicio
Lines in connection with the death of the plaintiff-appellee's daughter and the loss of Tito's
belongings worth P27,580.00. (Appellees' Brief, pp. 2-4) ( Rollo, pp. 52-54).
On January 3, 1991, the trial court rendered a decision in Civil Case No. Q-89-3048 in favor of the
plaintiffs Tito Duran Tabuquilde and Angelina de Paz Tabuquilde (private respondents herein) and
against defendant Sulpicio Lines, Inc. (petitioner herein) ordering defendant to pay P27,580.00 as
actual damages, P30,000.00 for the death of Jennifer Tabuquilde, P100,000.00 as moral damages,
P50,000.00 as exemplary damages, and P50,000.00 as attorney's fees, and costs.
Petitioner appealed to the Court of Appeals which affirmed the decision of the trial court. Petitioner
then filed a motion for reconsideration which was denied. Hence, this petition.
II
Generally, the findings of fact of the trial court are entitled to great weight and not disturbed except
for cogent reasons (Gatmaitan v. Court of Appeals, 200 SCRA 37 [1991]). One of the accepted
reasons is when the findings of fact are not supported by the evidence (Sandoval Shipyard, Inc. v.
Clave, 94 SCRA 472 [1979]). Corollary to this is the rule that actual or compensatory damages, to
be recovered, must be proved; otherwise, if the proof is flimsy, no damages will be awarded
(Dichoso v. Court of Appeals, 192 SCRA 169 [1990]).
In the case at bench, the trial court merely mentioned the fact of the loss and the value of the
contents of the pieces of baggage without stating the evidence on which it based its findings. There
is no showing that the value of the contents of the lost pieces of baggage was based on the bill of
lading or was previously declared by respondent Tito D. Tabuquilde before he boarded the ship.
Hence, there can be no basis to award actual damages in the amount of P27,850.00.
The Court of Appeals was correct in confirming the award of damages for the death of the daughter
of private respondents, a passenger on board the stricken vessel of petitioner. It is true that under
Article 2206 of the Civil Code of the Philippines, only deaths caused by a crime as quasi delict are
entitled to actual and compensatory damages without the need of proof of the said damages. Said
Article provides:
The amount of damages for death caused by a crime or quasi delict shall be at least Three
Thousand Pesos, even though there may have been mitigating circumstances. . . .
Deducing alone from said provision, one can conclude that damages arising
from culpa contractual are not compensable without proof of special damages sustained by the
heirs of the victim.
However, the Civil Code, in Article 1764 thereof, expressly makes Article 2206 applicable "to the
death of a passenger caused by the breach of contract by a common carrier." Accordingly, a
48
common carrier is liable for actual or compensatory damages under Article 2206 in relation to Article
1764 of the Civil Code for deaths of its passengers caused by the breach of the contract of
transportation.
The trial court awarded an indemnity of P30,000.00 for the death of the daughter of private
respondents. The award of damages under Article 2206 has been increased to P50,000.00 (People
v. Flores, 237 SCRA 653 [1994]).
At 10:30 a.m. on October 24, 1988, the vessel was estimated to be between Mindoro and
Masbate, and the center of the typhoon then was around 130 degrees longitude with
maximum winds of 65 kph (Exh. G-3), with a "radius of rough to phenomenal sea at that
time of 450 kms. North and 350 kms. elsewhere; 350 kms. North center and all throughout
the rest" (p. 12, TSN, Lumalda, Feb. 19, 1990).
xxx xxx xxx

With respect to the award of moral damages, the general rule is that said damages are not
recoverable in culpa contractual except when the presence of bad faith was proven (Trans World Air
Lines v. Court of Appeals, 165 SCRA 143 [1988]). However, in breach of contract of carriage, moral
damages may be recovered when it results in the death of a passenger (Philippine Rabbit Bus
Lines, Inc. v. Esguerra, 117 SCRA 741 [1982]; Vasquez v. Court of Appeals, 138 SCRA 553 [1985]).
With respect to the award of exemplary damages, Article 2232 of the Civil Code of the Philippines
gives the Court the discretion to grant said damages in breach of contract when the defendant acted
in a wanton, fraudulent and reckless manner (Air France v. Carrascoso, 18 SCRA 155 [1966]).
Furthermore, in the case of Mecenas v. Court of Appeals, 180 SCRA 83 (1989), we ruled that:
. . . . The Court will take judicial notice of the dreadful regularity with which grievous
maritime disasters occur in our waters with massive loss of life. The bulk of our population is
too poor to afford domestic air transportation. So it is that notwithstanding the frequent
sinking of passenger in our waters, crowds of people continue to travel by sea. This Court is
prepared to use the instruments given to it by the law for securing the ends of law and public
policy. One of those instruments is the institution of exemplary damages; one of those ends,
of special importance in an archipelagic state like the Philippines, is the safe and reliable
carriage of people and goods by sea. . . . (at p. 100).
A common carrier is obliged to transport its passengers to their destinations with the utmost
diligence of a very cautious person (Laguna Tayabas Bus Co. v. Tiongson, 16 SCRA 940 [1966]).
The trial court found that petitioner failed to exercise the extraordinary diligence required of a
common carrier, which resulted in the sinking of the M/V Dona Marilyn.
In the same manner, (referring to the negligence of the crew of the ship that sank in
Vasquez v. Court of Appeals, 138 SCRA 553 [1985]) the crew of the vessel M/V Dona
Marilyn took a calculated risk when it proceeded despite the typhoon brewing somewhere in
the general 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.
SO ORDERED.

The trial court correctly concluded that the sinking of M/V Dona Marilyn was due to gross
negligence, thus:

. . . [i]t is undisputed that Typhoon Unsang entered the Philippine Area of Responsibility on
October 21, 1988. The rain in Metro Manila started after lunch of October 23, 1988, and at
about 5:00 p.m. Public Storm Signal No. 1 was hoisted over Metro Manila, Signal No. 2 in
Leyte and Signal No. 3 in Samar. But at 10:00 o'clock (sic) in the morning of October 23,
1988, Public Storm Signal No. 1 was already hoisted over the 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 the same date. The following day, October 24, 1988, at 4:00 a.m.
and 10:00 a.m., Storm Signal No. 3 remained hoisted in Leyte. At 4 p.m. on October 24,
1988, Storm Signal No. 3 remained hoisted in Leyte but was reduced to Storm Signal No. 2
(Exh. G). Signal No. 1 has maximum winds at 60 kph within 36 hours; Signal No. 2 has
maximum winds of from 60 kph to 100 kph within a period of 24 hours; and Signal No. 3 has
maximum winds of 100 kph and above within a period of 12 hours.

Warnings of the storm signal are issued by PAG-ASA thru DZZA, Office of Civil Defense,
Philippine Navy, Coast Guard, Radio Stations, and other offices, every six (6) hours as soon
as a cyclone enters the Philippine Area of Responsibility.

49
G.R. No. 78656 August 30, 1988
TRANS WORLD AIRLINES, petitioner,
vs.
COURT OF APPEALS and ROGELIO A. VINLUAN, respondents.
GANCAYCO, J.:
Rogelio A. Vinluan is a practicing lawyer who had to travel in April, 1979 to several cities in Europe
and the U.S. to attend to some matters involving several clients. He entered into a contract for air
carriage for valuable consideration with Japan Airlines first class from Manila to Tokyo, Moscow,
Paris, Hamburg, Zurich, New York, Los Angeles, Honolulu and back to Manila thru the same airline
and other airlines it represents for which he was issued the corresponding first class tickets for the
entire trip.
On April 18, 1979, while in Paris, he went to the office of Trans World Airlines (TWA) at the De
Gaulle Airport and secured therefrom confirmed reservation for first class accommodation on board
its Flight No. 41 from New York to San Francisco which was scheduled to depart on April 20, 1979.
A validated stub was attached to the New York-Los Angeles portion of his ticket evidencing his
confirmed reservation for said flight with the mark "OK " 1 On April 20, 1979, at about 8:00 o'clock
A.M., Vinluan reconfirrred his reservation for first class accommodation on board TWA Flight No. 41
with its New York office. He was advised that his reservation was confirmed. He was even
requested to indicate his seat preference on said flight on said scheduled date of departure of TWA
Flight No. 41. Vinluan presented his ticket for check-in at the counter of TWA at JFK International
Airport at about 9:45 o'clock A.M., the scheduled time of the departure being 11:00 o'clock A.M. He
was informed that there was no first class seat available for him on the flight. He asked for an
explanation but TWA employees on duty declined to give any reason. When he began to protest,
one of the TWA employees, a certain Mr. Braam, rudely threatened him with the words "Don't argue
with me, I have a very bad temper."
To be able to keep his schedule, Vinluan was compelled to take the economy seat offered to him
and he was issued a refund application" as he was downgraded from first class to economy class.
While waiting for the departure of Flight No. 41. Vinluan noticed that other passengers who were
white Caucasians and who had checked-in later than him were given preference in some first class
seats which became available due to "no show" passengers.
On February 15, 1980, Vinluan filed an action for damages against the TWA in the Court of First
Instance of Rizal alleging breach of contract and bad faith. After trial on the merits, a decision was
rendered the dispositive part of which reads as follows:
WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the
defendant holding the latter liable to the for-mer for the amount representing the difference
in fare between first class and economy class accommodations on board Flight No. 6041
from New York to San Francisco, the amount of P500,000.00 as moral damages, the
amount of P300,000.00 as exemplary damages, and the amount of P100,000.00 as and for
attorney's fees, all such amounts to earn interest at the rate of twelve (12%) percent per
annum from February 15, 1980 when the complainant was filed until fully paid.
Correspondingly, defendant's counterclaim is dismissed. Costs against the defendant.
SO ORDERED.
Not satisfied therewith, the TWA appealed to the Court of Appeals wherein in due course a decision
was rendered on May 27, 1987, 2 the dispositive part of which reads as follows:
WHEREFORE, the decision dated March 8, 1984 is hereby modified by (1) fixing the
interest which appellant must pay on the awards of moral and exemplary damages at six per
cent (6%) per annum from the date of the decision a quo, March 8, 1984 until date of full
payment and (2) reducing the attorne's fees to P50,000.00 without interest, the rest of the
decision is affirmed. Cost against appellant.
SO ORDERED.
Hence, the herein petition for review.
The theory of the petitioner is that because of maintenance problems of the aircraft on the day of the
flight, TWA Flight No. 41 was cancelled and a special Flight No. 6041 was organized to operate in
lieu of Flight No. 41. 3 Flight No. 41 was to have utilized a Lockheed 1011 with 34 first class seats,
but instead, a smaller Boeing 707 with only 16 first class seats was substituted for use in Flight No.
6041. Hence, passengers who had first class reservations on Flight No. 41 had to be
accommodated on Flight No. 6041 on a first-come, first-served basis. An announcement was
allegedly made to all passengers in the entire terminal of the airport advising them to get boarding
cards for Flight No. 6041 to San Francisco and that the first ones getting them would get first
preference as to seats in the aircraft. It denied declining to give any explanation for the downgrading
of private respondent as well as the discourteous attitude of Mr. Braam.
On the other hand, private respondent asserts that he did not hear such announcement at the
terminal and that he was among the early passengers to present his ticket for check-in only to be
informed that there was no first class seat available for him and that he had to be downgraded.
The petitioner contends that the respondent Court of Appeals committed a grave abuse of discretion
in finding that petitioner acted maliciously and discriminatorily, and in granting excessive moral and
exemplary damages and attorney's fees.
The contention is devoid of merit. Private respondent had a first class ticket for Flight No. 41 of
petitioner from New York to San Francisco on April 20, 1979. It was twice confirmed and yet
respondent unceremoniously told him that there was no first class seat available for him and that he
had to be downgraded to the economy class. As he protested, he was arrogantly threatened by one
Mr. Braam. Worst still, while he was waiting for the flight, he saw that several Caucasians who
arrived much later were accommodated in first class seats when the other passengers did not show
up.
The discrimination is obvious and the humiliation to which private respondent was subjected is
undeniable. Consequently, the award of moral and exemplary damages by the respondent court is
in order. 4
Indeed, private respondent had shown that the alleged switch of planes from a Lockheed 1011 to a
smaller Boeing 707 was because there were only 138 confirmed economy class passengers who
could very well be accommodated in the smaller plane and not because of maintenance problems.
Petitioner sacrificed the comfort of its first class passengers including private respondent Vinluan for
the sake of econonmy. Such inattention and lack of care for the interest of its passengers who are
entitled to its utmost consideration, particularly as to their convenience, amount to bad faith which
entitles the passenger to the award of moral damages. 5 More so in this case where instead of
courteously informing private respondent of his being downgraded under the circumstances, he was
angrily rebuffed by an employee of petitioner.
At the time of this unfortunate incident, the private respondent was a practicing lawyer, a senior
partner of a big law firm in Manila. He was a director of several companies and was active in civic
and social organizations in the Philippines. Considering the circumstances of this case and the
50
social standing of private respondent in the community, he is entitled to the award of moral and
exemplary damages. However, the moral damages should be reduced to P300,000.00, and the
exemplary damages should be reduced to P200,000.00. This award should be reasonably sufficient
to indemnify private respondent for the humiliation and embarrassment that he suffered and to serve
as an example to discourage the repetition of similar oppressive and discriminatory acts.
WHEREFORE, with the above modification reducing the moral and exemplary damages as above-
stated, the decision subject of the petition for review is AFFIRMED in all other respects, without
pronouncement as to costs in this instance.
SO ORDERED.
G.R. No. L-31420 October 23, 1982
PHILIPPINE RABBIT BUS LINES, INC. and NICASIO DE LOS REYES, petitioners,
vs.
PATROCINIO ESGUERRA, TRANSPORT CONTRACTORS, INC. and MODESTO
JOAQUIN, respondents.
RELOVA, J.:
In this petition for certiorari, petitioners pray that the portion of the decision of the Court of Appeals
sentencing the Philippine Rabbit Bus Lines, Inc. to pay solidarily the sum of P 5,000.00 as moral
damages and sentencing both petitioners to pay respondent Patrocinio Esguerra the sum of P
2,000.00 as attorney's fees, be revoked.
Records show that the Court of First Instance of Manila rendered a decision in Civil Case No.
53698, entitled: Patrocinio Esguerra versus Philippine Rabbit Bus Lines, Inc., Nicasio de los Reyes,
Transport Contractors, Inc. and Modesto Joaquin, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered dismissing the complaint against defendants
Transport Contractors, Inc. and Modesto Joaquin but sentencing defendants Nicasio de los
Reyes and Philippine Rabbit Bus Lines, Inc., jointly and severally, to pay the plaintiff the
sum of P25,085.40 as compensatory damages, P5,000.00 as moral damages, P2,000.00 as
attorney's fees and the costs of suit. The cross-claim of defendants Philippine Rabbit Bus
Lines, Inc. and Transport Contractors, Inc. against each other are hereby dismissed.
The Court of Appeals modified the decision of the lower court as follows:
From the foregoing it would appear that all the defendants are solidarily liable; but plaintiffs
not having appealed the judgment, no affirmative relief therefrom which absolved
defendants Transport Contractors, Inc. and Modesto Joaquin from the complaint as to make
them co-responsible with appellants Rabbit Bus and Nicasio de los Reyes. Hence, except
the obviously erroneous addition of the items for compensatory damages which would be
P20,085.40, not P25,085.40 as stated in the dispositive part of the appealed decision, the
judgment appealed from is in accordance with law and the evidence.
WHEREFORE, modified as indicated above, the judgment appealed from is affirmed in all
other respects, with costs against all the defendants.
However, in a resolution, dated December 8, 1969, the Court of Appeals modified the dispositive
portion of its decision promulgated on July 10, 1969 in the sense that:
. . . the defendants-appellees Transport Contractors, Inc. and Modesto Joaquin are ordered
to pay solidarily with the defendants-appellants Philippine Rabbit Bus Lines, Inc. and Nicasio
de los Reyes sums awarded in the judgment, with costs in this instance against all the
defendants.
Patrocinio Esguerra was a paying passenger of Bus No. 223 of Philippine Rabbit Bus Lines, Inc. He
boarded the said bus at the Manila terminal about four o'clock in the afternoon of November 6, 1961,
bound for San Fernando, Pampanga. He sat at the left-end of the fourth row behind the driver, close
to the window. As the bus approached barrio San Marcos, Calumpit, Bulacan, a freight truck owned
and operated by the Transport Contractors, Inc. was coming from the opposite direction. The
vehicles sideswiped each other. The window glass near the driver's seat of the Rabbit Bus was
detached and the left side of its body was damaged. The left forearm of Patrocinio Esguerra was hit
by a hard blunt object, breaking the bones into small fragments while the soft tissues of the muscles
and the skin were mascerated. He was immediately brought to the Bulacan Provincial Hospital in
Malolos, Bulacan for treatment. The left arm was amputated.
Plaintiff filed a case against the Philippine Rabbit Bus Lines, Inc. and the Transport Contractors,
Inc., together with their respective drivers, praying that judgment be rendered in favor of the plaintiff
and against the defendants requiring them to pay, jointly and severally damages, actual and
compensatory, moral and exemplary, litigation expenses and costs.
The Court of Appeals found that the two drivers of the two vehicles were reckless in driving. The two
vehicles sideswiped each other at the middle of the road.
By and large, it is not denied that plaintiff's arm was so seriously injured as to need
amputation as a result of the collision. It is neither denied that the Transcon truck hit the arm
when it came in contact with the Rabbit Bus. It is immaterial which part of the truck hit it. The
defendant carrier failed to exonerate itself from its presumed fault.
In this petition, Philippine Rabbit Bus Lines, Inc. and Nicasio de los Reyes contend that the award of
P 5,000.00 moral damages is contrary to law and violates the prevailing jurisprudence; that the
award of P 2,000.00 attorney's fees is bereft of legal and factual basis; that moral damages are not
allowable against the carrier, if ex-contracto, except when the mishap results in death and where it is
proved that the carrier was guilty of fraud or bad faith even if death did not result; that as passenger
Esguerra did not die and no fraud or bad faith had been imputed, much less proved, against the
carrier, they cannot be adjudged to pay moral damages. Further, petitioners claim that there is no
evidence adduced by passenger Esguerra showing actual proof of expenses for attorney's fees.
The contention of petitioners with respect to the award of moral damages is meritorious. This Court
has repeatedly held (Cachero v. Manila Yellow Taxicab, Inc., G. R. No. L-8721, promulgated May
23, 1957; Necesito v. Paras, et al., G. R. No. L-10605-10606, promulgated June 30, 1958; Fores v.
Miranda, G. R. No. L-12163, promulgated March 4, 1959; Tamayo v. Aquino, et al., G. R. No. L-
12634, promulgated May 29, 1959) that moral damages are not recoverable in actions for damages
predicated on a breach of the contract of transportation, as in the instant case, in view of the
provisions of Articles 2219 and 2220 of the New Civil Code. The exceptions are (1) where the
mishap results in the death of a passenger, and (2) where it is proved that the carrier was guilty of
fraud or bad faith, even if death does not result. (Rex Taxicab Co., Inc. vs. Jose Bautista, et al., G.
R. No. L-15392, Sept. 30,1960).<äre||anº•1àw>
The Court of Appeals found that the two vehicles sideswiped each other at the middle of the road. In
other words. both vehicles were in their respective lanes and that they did not invade the lane of the
other. It cannot be said therefore that there was fraud or bad faith on the part of the carrier's driver.
This being the case, no moral damages are recoverable.
However, with respect to attorney's fee of P2,000.00, the same need not be proved as herein
petitioners contended. The same is allowed in the discretion of the court after considering several
51
factors which are discernible from the facts brought out during the trial. In this case, plaintiff was
compelled to litigate and incur expenses in order to protect his interest.
ACCORDINGLY, this petition is granted with respect to that portion of the decision of the Court of
Appeals sentencing herein petitioners to pay the sum of P5,000.00, as moral damages, which is
hereby set aside. However, that portion of the decision sentencing petitioners to pay respondent
Patrocinio Esguerra the sum of P2,000.00, as attorney's fees, stays.
SO ORDERED.
G.R. No. 128820 December 23, 1999
PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
GAUDIOSO MORE, ERNESTO MORE and JERWIN MORE, accused-appellants.
BELLOSILLO, J.:
GAUDIOSO, ERNESTO and JERWIN, all surnamed MORE, were found guilty of murder by the trial
court for the killing of Valentino Pagumay on 22 February 1994 and sentenced to reclusion
perpetua with all its accessory penalties and to pay P28,977.00 for funeral services and other
expenses, P133,333.00 for loss of income for five (5) years, P100,000.00 for moral damages, and
the costs. 1 They now come to us appealing their conviction.
The factual backdrop: On 22 February 1994 at about six o'clock in the evening, Valentino Pagumay
and Romeo Muralla were walking along the river in Brgy. Igsoligue, Miag-ao, Iloilo, on their way to
nearby Brgy. Igbogo to get some tuba when they chanced upon the More brothers
Gaudioso alias "Nono," Ernesto alias "Didoy" and Jerwin alias "Max" some three hundred (300)
meters away. As they drew near, the accused who were armed with a gun and knives, inexplicably
shouted why Valentino and Romeo were pointing guns at them. Both Valentino and Romeo were
unarmed. When Valentino nervously told Romeo, who had no quarrel with the accused, that the
More brothers were going to kill him, the due ran as fast as they could. But the accused chased
them.
About three hundred (300) meters from where the chase began, the accused led by Jerwin finally
caught up with Valentino who was lagging behind Romeo. Jerwin stabbed Valentino at the left side
of his mouth. Ernesto followed by stabbing the victim in the chest. While Jerwin and Ernesto were
stabbing Valentino Gaudioso held their captive by the shoulders. Gaudioso then took his turn and
stabbed Valentino on the chest causing the latter to fall to the ground. The three (3) accused
persisted in their criminal design and pinned their victim down with their hands and knees. They took
turns in stabbing him again several times.
As the stabbing progressed Romeo was having an unobstructed view of the occurrence some ten
(10) meters away. After they were through with Valentino the accused turned to Romeo and warned
him against telling anybody about the incident and ordered him to go home. The three (3) More
brothers then ran away.
When the More brothers were already farther down the river Romeo noticed Juanito Faromal
standing a few meters away from the crime scene. After seeing Valentino already lifeless Romeo left
to inform the 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 them as he already got tired. When
he fired a warning shot the three (3) accused retaliated and fired three (3) shots instead. Juanito
corroborated 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 Ernesto only assisted in restraining
the victim.
The accused, on their part, invoked self defense. The version of 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 (10) arms' length ahead of their brother Gaudioso when they heard someone
ask the latter for a light for his cigarette. Ernesto and Jerwin did 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 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 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 a .38 caliber gun and pointed it at him with the words:
"I will shoot you." 4 Reacting immediately, Gaudioso, using both hands, frustrated 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 then straddled Valentino and pinned his left hand with his right knee while his left hand
held Valentino's right that was clutching the gun. In this position, Gaudioso repeatedly stabbed
Valentino until the latter died. 5
On 9 May 1996 the trial court found all three (3) accused, Gaudioso, Ernesto and Jerwin More, guilty
as principals by conspiracy for the murder of Valentino Pagumay, qualified by abuse of superior
strength. The trial court sustained the version of the prosecution and rejected the theory of self-
defense primarily in view of the eighteen (18) stab wounds sustained by the victim and the fact that
they were caused by at least two (2) different knives, one single-bladed and the other double-
bladed, indicating that there were at least two (2) assailants. The three (3) accused were accordingly
sentenced to suffer the penalty of reclusion perpetua with all its accessory penalties, and to pay
damages in the total amount of P262,310.00 plus the costs.
Accused-appellants contend in this appeal that the trial court erred: (a) in not appreciating in their
favor the justifying circumstance of self-defense, insisting that all the elements thereof were
successfully established, and, (b) in finding them guilty beyond reasonable doubt of murder
notwithstanding the inconsistencies in the testimonies of prosecution witnesses Romeo Muralla,
Juanito Faromal and Sgt. Gersa.
We find no merit in the appeal. When self-defense is invoked by an accused charged with murder or
homicide he necessarily owns up to the killing but may escape criminal liability by proving that it was
justified and that he incurred no criminal liability therefor. 6 Hence, the three (3) elements of self-
defense, namely: (a) unlawful aggression on the part of the victim; (b) reasonable necessity of the
means employed to prevent or repel the aggression; and, (c) lack of sufficient provocation on the
part of the person defending himself, which must be proved by clear and convincing
evidence. 7 However, without unlawful aggression there can be no self-defense, either complete or
incomplete. 8
In the instant case, accused-appellants sought to establish unlawful aggression on the part of
Valentino Pagumay by testifying that the latter, after asking Gaudioso for a light for his cigarette,
suddenly and for no reason at all, drew his gun and pointed it at Gaudioso with the threatening
words, "I will shoot you." However, quite an enlightening and revealing narrative follows thus:
Q: When Valentino Pagumay drew his gun from his waist what did you do?
A: Both my hands caught his hand holding the firearm . . . .
52
 Q: When you were able to grab the hand of Valentino Pagumay what happened next?
A: He fell to the ground.
Q: So you want to tell the Court that immediately after you grabbed or took hold of his hand
he immediately fell to the ground?
A: Yes sir because he wrestled with me when I took hold both of his hand (sic) and twisted
his arm.
Q: When Valentino Pagumay fell to the ground what did you do?
A: After he fell to the ground I sat on his abdomen. My right knee was pinning down his left
hand while my left hand was pinning on the ground his right hand and then I delivered
several successive stab blows on his breast . . . .
Q: And how many times did you stab him?
A: I was not able to count the number of times because I was stabbing him successively.
Q: And you cannot estimate the number of stab blows you delivered to him?
A: I was not able to count the number of blows because I was stabbing and hitting him until
his death. (emphasis ours.) 9
Clearly, the unlawful aggression allegedly started by Valentino — assuming it to be true — had
already ceased by the time Gaudioso repeatedly stabbed Valentino to death. Gaudioso himself
testified that after Valentino threatened to shoot him, he was able to grab Valentino's right hand
which 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, there was obviously no more reason for
Gaudioso to stab Valentino eighteen (18) times as he did because the alleged unlawful aggression
from Valentino had stopped. In legitimate self-defense the aggression must still
be existing or continuing when the person making the defense attacks or injures the
aggressor. 10 Thus when the unlawful aggression ceases to exist, the one making the defense has
no more right to kill the former aggressor. 11 In such cases, less violent means would have sufficed;
hence, if not resorted to, the plea of self-defense must fail. 12
In the instant case Valentino was already effectively immobilized by Gaudioso, hence, the latter
could have either simply boxed the former with his free right hand, hit him on a non-vital part of his
body, 13 or better yet, summoned his brothers Ernesto and Jerwin who were just standing a few
meters away to help him in ensuring no further aggression from Valentino. However, quite
inconsistent with his plea of self-defense, 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
accidentally hitting Jerwin as claimed by the latter, 14 and continued stabbing Valentino successively
until the latter died. 15 Considering all these, the plea of self-defense cannot but be received with
incredulity and disbelief.
In addition to the foregoing, several other circumstances exist to further undermine the plea of self-
defense and establish accused-appellants' collective guilt.
First, the trial court correctly noted that the victim sustained a total of eighteen (18) stab wounds,
fourteen (14) of which were inflicted on the anterior chest alone, and four (4) of which were fatal. It is
an oft-repeated 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 victim. 16
Second, the claim that Gaudioso alone killed Valentino in self-defense and that Ernesto and Jerwin
had nothing to do with the killing was disproved not only by Romeo and Juanito's positive
identification of Ernesto and Jerwin as co-conspirators (at least) to the crime but, more importantly,
by the fact that the stab wounds themselves indicated that there was actually more than one
assailant. As testified to by Dr. Mary Joyce M. Faeldan, the Acting Municipal Health Officer of Miag-
ao who autopsied the cadaver, the eighteen (18) stab wounds sustained by the by the victim were
not all caused by a single weapon but by two (2) kinds of knives, i.e., one single-bladed, and the
other, double-bladed. While three (3) stab wounds had blunt and contussed extremities indicating
that they were inflicted with the use of a blunt single-bladed knife, the remaining fourteen (14) stab
wounds had regular distinct clean-cut edges and sharp extremities indicating a sharp double-bladed
knife as the murder
weapon. 17 Since only Gaudioso's right hand was free to hold a weapon, his left hand already
gripping Valentino's right hand, then it is quite obvious that his brothers likewise participated in the
assault as claimed by the prosecution witnesses because Gaudioso, evidently, could not have
managed two (2) weapons at the same time with only his right hand free.
Third, accused-appellants did not inform the authorities about the incident. If they were really
innocent as they claimed to be, they should have told the authorities about the accidental
killing. 18 Their excuse that 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 early hour of 6:30 in
the evening; 19 (b) the house of the barangay captain to whom they could have reported the incident
was a mere fifty (50) meters 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 who were but
his
colleagues. 21
Fourth, accused-appellants do not deny that they did not surrender to Sgt. Gersa when the latter
saw them immediately after the killing. In fact, they ignored his warning shot and ran away. Worse,
accused-appellants even returned fire with three (3) gunshots of their own, continued their flight until
Sgt. Gersa gave up the chase through sheer exhaustion, and yielded only when they were already
invited for questioning by the police after having been identified as the killers by eyewitnesses
Romeo Muralla and Juanito Faromal.
On the alleged inconsistencies in the testimonies of the prosecution witnesses, suffice it to say that
inconsistencies on minor and trivial matters do not diminish but rather bolster a witness's credibility
as they in fact manifest spontaneity and lack of scheming. 22 In other words, they are badges of truth
rather than indicia of falsehood. 23 Thus the alleged contradictions on the relative positions of
Romeo and Valentino while the latter was being stabbed, whether it was Romeo or Juanito who
informed the victim's wife about the incident, and whether Juanito was indeed taken by Sgt. Gersa to
Camp Monteclaro after the incident, are but trivial and minor inconsistencies which neither detract
from the essential integrity of the prosecution's evidence nor strengthen accused-appellants'
flagging plea of self-defense. Having already pleaded self-defense, accused-appellants could not
invoke the alleged weakness of the prosecution's evidence, for, even if the latter were weak (which
is certainly not so in the instant case), it could not be disbelieved in view of their open admission of
responsibility for the killing. 24
On the civil liabilities of accused-appellants a modification of the amounts awarded by the trial court
is in order. By way of moral damages, the trial court awarded P100,000.00. Since the award is not
meant to enrich the heirs of the victim but only to compensate them for injuries sustained to their
feelings we reduce the amount to P50,000.00 consistent with prevailing jurisprudence. 25 A reduction
of the actual damages awarded is likewise proper. The trial court awarded P28,977.00 for various
expenses incurred by the victim's widow as a result of the killing. However, since 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 of P20,000.00 allegedly spent for food and drinks consumed
53
during the wake must be disallowed for not having been competently proved. The Court can only
give credit to expenses which have been duly substantiated. 27
On the victim's loss of earning capacity, Victoria Pagumay testified that her husband, a farmer, was
53 years old when he was killed, with an average annual income of P40,000.000 to
P50,000.00. 28 Using P40,000.00 as the deceased's average annual income while still alive, the trial
court awarded P133,333.00 for loss of earning capacity after multiplying two-thirds (P26,666.67) of
the victim's average annual income 29 by five (5) years. No reason was given, and no legal basis
exists, why lost income was awarded for only five (5) years. On the contrary, the victim's lost
earnings are to be computed according to the formula adopted by the Court in several decided
cases, 30 to wit: net earning capacity ("X") equals life expectancy 31 multiplied by gross annual
income 32 less living expenses. 33 Thus, the victim's lost earning capacity amounted to P405,000.00
as may be shown hereunder —
X = 2(80-53) x [P45,000 - P22,500]
————
3 c. Chicago to Los Angeles (29 April 1989);
X = 2(27) x P22,500
———
3
X = 54 x P22,500
— corresponding boarding passes with the words "CHECK-IN REQUIRED," for United Airlines Flight
3
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 damages. 34
WHEREFORE, the appealed Decision dated 9 May 1996 of the Regional Trial Court of Iloilo City,
Branch 25, finding accused-appellants GAUDIOSO MORE, ERNESTO MORE and JERWIN MORE
guilty 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. SO ORDERED.
G.R. No. 124110       April 20, 2001
UNITED AIRLINES, INC., Petitioner
vs.
COURT OF APPEALS, ANICETO FONTANILLA, in his personal capacity and in behalf of his minor
son MYCHAL ANDREW FONTANILLA, Respondents.
KAPUNAN, J.:
On March 1, 1989, private respondent Aniceto Fontanilla purchased 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 son Mychal for the following routes:
a. San Francisco to Washinton (15 April 1989);
b. Washington to Chicago (25 April 1989);
d. Los Angeles to San Francisco (01 may 1989 for petitioner’s wife and 05 May 1989 for
petitioner and his son). 1
All flights had been confirmed previously by United Airlines.  2
The Fontanillas proceeded to the United States as planned, where they used the first coupon from
San Francisco to Washington. On April 24, 1989, Aniceto Fontanilla bought two (2) additional
coupons each for himself, his wife and his son from petitioner at its office in Washington Dulles
Airport. After paying the penalty for rewriting their tickets, the Fontanillas were issued tickets with
No. 1108, set to leave from Los Angeles to San Francisco at 10:30 a.m. on May 5, 1989. 3
The cause of the non-boarding of the Fontanillas on United Airlines Flight No. 1108 makes up the
bone of contention of this controversy.1âwphi1.nêt
Private respondents’ version is as follows:
Aniceto Fontanilla and his son Mychal claim that on May 5, 1989, upon their arrival at the los
Angeles Airport for their flight, they proceeded to united Airlines counter where they were attended
by an employee wearing a nameplate bearing the name "LINDA." Linda examined their tickets,
punched something into her computer and then told them that boarding would be in fifteen minutes. 4
When the flight was called, the Fontanillas proceeded to the plane. To their surprise, the stewardess
at the gate did not allow them to board the plane, as they had no assigned seat numbers. They were
then directed to go back to the "check-in" counter where Linda subsequently informed them that the
flight had been overbooked and asked them to wait.5
The Fontanillas tried to explain to Linda the special circumstances of their visit. However, Linda told
them in arrogant manner, "So what, I can not do anything about it."6
Subsequently, three other passengers with Caucasian features were graciously allowed to baord,
after the Fontanillas were told that the flight had been overbooked.7
54
The plane then took off with the Fontanillas’ baggage in tow, leaving them behind. 8 a. P200,000.00 as moral damages;
b. P200,000.00 as exemplary damages;
c. P50,000.00 as attorney’s fees;
The Fontanillas then complained to Linda, who in turn gave them an ugly stare and rudely uttered,
"it’s not my fault. It’s the fault of the company. Just sit down and wait."9 When Mr. Fontanilla
reminded Linda of the inconvenience being caused to them, she bluntly retorted, "Who do you think No pronouncement as to costs.
you are? You lousy Flips are good for nothing beggars. You always ask for American aid." After
which she remarked "Don’t worry about your baggage. Anyway there is nothing in there. What are
SO ORDERED.16
you doing here anyway? I will report you to immigration. You Filipinos should go home."10 Such rude
statements were made in front of other people in the airport causing the Fontanillas to suffer shame,
humiliation and embarrassment. The chastening situation even caused the younger Fontanilla to Petitioner United Airlines now comes to this Court raising the following assignments of errors;
break into tears.11
I
After some time, Linda, without any explanation, offered the Fontanillas $50.00 each. She simply
said "Take it or leave it." This, the Fontanillas declined.12
RESPONDENT COURT OF APPEALS GRVAELY ERRED IN RULING THAT THE TRIAL
COURT WAS WRONG IN FAILING TO CONSIDER THE ALLEGED ADMISSION THAT
The Fontanillas then proceeded to the United Airlines customer service counter to plead their case. PRIVATE RESPONDENT OBSERVED THE CHECK-IN REQUIREMENT.
The male employee at the counter reacted by shouting that he was ready for it and left without
saying anything.13
II

The Fontanillas were not booked on the next flight, which departed for San Francisco at 11:00 a.m.
RESPONDENT COURT OF APPEALS GRAVELY ERRED IN RULING THAT PRIVATE
It was only at 12:00 noon that they were able to leave Los Angeles on United Airlines Flight No. 803.
RESPONDENT’S FAILURE TO CHECK-IN WILL NOT DEFEAT HIS CLAIMS BECAUSE
THE DENIED BOARDING RULES WERE NOT COMPLIED WITH. 
Petitioner United Airlines has a different version of what occurred at the Los Angeles Airport on May
5, 1989.
III

According to United Airlines, the Fontanillas did not initially go to the check-in counter to get their
RESPONDENT COURT OF APPEALS GRAVELY ERRED IN RULING THAT PRIVATE
seat assignments for UA Flight 1108. They instead proceeded to join the queue boarding the aircraft
RESPONDENT IS ENTITLED TO MORAL DAMAGES OF P200,000.
without first securing their seat assignments as required in their ticket and boarding passes. Having
no seat assignments, the stewardess at the door of the plane instructed them to go to the check-in
counter. When the Fontanillas proceeded to the check-in counter, Linda Allen, the United Airlines IV
Customer Representative at the counter informed them that the flight was overbooked. She booked
them on the next available flight and offered them denied boarding compensation. Allen vehemently
denies uttering the derogatory and racist words attributed to her by the Fontanillas. 14 RESPONDENT COURT OF APPEALS GRAVELY ERRED IN RULING THAT PRIVATE
RESPONDENT IS ENTITLED TO EXEMPLARY DAMAGES OF P200,000.

The incident prompted the Fontanillas to file Civil Case No. 89-4268 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 reads as follows:
WHEREFORE, judgment is rendered dismissing the complaint. The counterclaim is likewise
dismissed as it appears that plaintiffs were not actuated by legal malice when they filed the
instant complaint.15
On appeal, the Court of Appeals ruled in favor of the Fontanillas. The appellate court found that
there was an admission on the part of United Airlines that the Fontanillas did in fact observe the
check-in requirement. It ruled further that even assuming there was a failure to observe the check-in
requirement, United Airlines failed to comply with the procedure laid down in cases where a
passenger is denied boarding. The appellate court likewise gave credence to the claim of Aniceto
Fontanilla that the employees of United Airlines were discourteous and arbitrary and, worse,
discriminatory. In light of such treatment, the Fontanillas were entitled to moral damages. The
dispositive portion of the decision of the respondent Court of Appeals dated 29 September 1995,
states as follows:
WHEREFORE, in view of the foregoing, judgment appealed herefrom is hereby REVERSED
and SET ASIDE, and a new judgment is entered ordering defendant-appellee to pay
plaintiff-appellant the following:  We disagree with the above conclusion reached by respondent Court of Appeals. Paragraph 7 of
V
RESPONDENT COURT OF APPEALS GRAVELY ERRED IN RULING THAT PRIVATE
RESPONDENT IS ENTITLED TO ATTORNEY’S FEES OF P50,000. 17 
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 was an implied admission in petitioner’s answer in the
allegations in the complaint that private respondent and his son observed the "check-in requirement
at the Los Angeles Airport." Thus:
A perusal of the above pleadings filed before the trial court disclosed that there exist a
blatant admission on the part of the defendant-appellee that the plaintiffs-appellants indeed
observed the "check-in" requirement at the Los Angeles Airport on May 5, 1989. In view of
defendant-appellee’s admission of plaintiffs-appellants’ material averment in the complaint.
We find no reason why the trial court should rule against such admission.19
private respondents’ complaint states:
55
 7. On May 5, 1989 at 9:45 a.m., plaintiff and his son checked in at defendant’s designated
counter at the airport in Los Angeles for their scheduled flight to San Francisco on
defendant’s Flight No. 1108. 20
Responding to the above allegations, petitioner averred in paragraph 4 of its answer, thus:
4. Admits the allegation set forth in paragraph 7 of the complaint except to deny that plaintiff
and his son checked in at 9:45 a.m., for lack of knowledge or information at this point in time
as to the truth thereof.21
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 giving such answer is asserted is so plainly and necessarily
within the defendant’s knowledge that his averment of ignorance must be palpably 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 necessarily be within petitioner’s knowledge.
demeanor of the witnesses.26 While not the sole indicator of the credibility of a witness, it is of such
weight that it has been said to be the touchstone of credibility.27
Aniceto Fontanilla’s assertion that upon arrival at the airport at 9:45 a.m., he immediately proceeded
to the check-in counter, and that Linda Allen punched in something into the computer is specious
and not 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 pass did not indicate any seat number. If indeed the
Fontanillas checked in 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 buy into private
respondents’ claim that Linda intentionally deceived him, and made him the laughing stock among
the passengers.28 Hence, as correctly observed by the trial court:
Plaintiffs fail to realize that their failure to check in, as expressly required in their boarding
passes, is they very reason why they were not given their respective seat numbers, which
resulted in their being denied boarding.29

While there was no specific denial as to the fact of compliance with the "check-in" requirement by
Neither do we agree with the conclusion reached by the appellate court that private respondents’
private respondents, petitioner presented evidence to support its contention that there indeed was
failure to comply with the check-in requirement will not defeat his claim as the denied boarding rules
no compliance.
were not complied with. Notably, the appellate court relied on the Code of Federal Regulation Part
on Oversales which states:
Private respondents then are said to have waived the rule on admission. It not only presented
evidence to support its contention that there was compliance with the check-in requirement, it even
250.6 Exceptions to eligibility for denied boarding compensation.
allowed petitioner to present rebutal evidence. In the case of Yu Chuck vs. "Kong Li Po," we ruled
that:
A passenger denied board involuntarily from an oversold flight shall not be eligible for
denied board compensation if:
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 the necessity (to his opponent’s case) of a. The passenger does not comply with the carrier’s contract of carriage or tariff
establishing which such adverse party is notified by his opponent’s pleadings. provisions regarding ticketing, reconfirmation, check-in, and acceptability for
transformation.
The plaintiff may, of course, waive the rule and that is what must be considered to have
done (sic) by introducing evidence as to the execution of the document and failing to object The appellate court, however, erred in applying the laws of the United States as, in the case at bar,
to the defendant’s evidence in refutation; all this evidence is now competent and the case Philippine law is the applicable law. Although, the contract of carriage was to be performed in the
must be decided thereupon.23 United States, the tickets were purchased through petitioner’s agent in Manila. It is 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 by the parties in Manila.
The determination of the other issues raised is dependent on whether 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. In the case of Zalanea vs. Court of Appeals,30 this Court applied the doctrine of lex loci contractus.
According to the doctrine, as a general rule, the law of the place where a contract is made or
entered into governs with respect to its nature and validity, obligation and interpretation. This has
It must be remembered that the general rule in civil cases is that the party having the burden of
been said to be the rule even though the place where the contract was made is different from the
proof of an essential fact must produce a preponderance of evidence thereon.24 Although the
place where it is to be performed, and particularly so, if the place of the making and the place of
evidence adduced by the plaintiff is stronger than that presented by the defendant, a judgment
performance are the same. Hence, the court should apply the law of the place where the airline
cannot be entered in favor of the former, if his evidence is not sufficient to sustain his cause of
ticket was issued, when the passengers are residents and nationals of the forum and the ticket is
action. The plaintiff must rely on the strength of his own evidence and not upon the weakness of the
issued in such State by the defendant airline.
defendant’s.25 Proceeding from this, and considering the contradictory findings of facts by the
Regional Trial Court and the Court of Appeals, the question before this Court is whether or not
private respondents were able to prove with adequate evidence his allegations of breach of contract The law of the forum on the subject matter is Economic Regulations No. 7 as amended by Boarding
in bad faith. Priority and Denied Board Compensation of the Civil Aeronautics Board which provides that the
check-in requirement be complied with before a passenger may claim against a carrier for being
denied boarding:
We rule in the negative.

Sec. 5. Amount of Denied Boarding Compensation Subject to the exceptions provided

Time and again, the Court has pronounced that appellate courts should not, unless for strong and
hereinafter under Section 6, carriers shall pay to passengers holding confirmed reserved
cogent reasons, reverse the findings of facts of trial courts. This is so because trial judges are in
space and who have presented themselves at the proper place and time and fully complied
better position to examine real evidence and at a vantage point to observe the actuation and the
with the carrier’s check-in and reconfirmation procedures and who are acceptable for

56
 carriage under the Carrier’s tariff but who have been denied boarding for lack of space, a moral and exemplary damages by the Court of Appeals is improper. Corollarily, the award of
compensation at the rate of: xxx attorney’s fees is, likewise, denied for lack of any legal and factual basis.

Private respondents’ narration that they were subjected to harsh and derogatory remarks seems WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals in CA-G.R. CV No.
incredulous. However, this Court will not attempt to surmise what really happened, suffice to say, 37044 is hereby REVERSED and SET ASIDE. The decision of the Regional Trial Court of Makati
private respondent was not able to prove his cause of action, for as the trial court correctly City in Civil Case No. 89-4268 dated April 8, 1991 is hereby REINSTATED.
observed:
SO ORDERED.
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, G.R. No. 104235 November 18, 1993
proven that they are entitled to P1,650,000.00 damages from defendant. 31
SPOUSES CESAR & SUTHIRA ZALAMEA and LIANA ZALAMEA, petitioners,
As to the award of moral and exemplary damages, we find error in the award of such by the Court of vs.
Appeals. For the plaintiff to be entitled to an award of moral damages arising from a breach of HONORABLE COURT OF APPEALS and TRANSWORLD AIRLINES, INC., respondents.
contract of carriage, the carrier must have acted with fraud or bad faith. The appellate court
predicated its award on our pronouncement in the case of Zalanea vs. Court of Appeals,
NOCON, J.:
supra, where we stated:

Disgruntled over TransWorld Airlines, Inc.'s refusal to accommodate them in TWA Flight 007
Existing jurisprudence explicitly states that overbooking amounts to bad faith, entitling
departing from New York to Los Angeles on June 6, 1984 despite possession of confirmed tickets,
passengers concerned to an award of moral damages. In Alitalia Airways vs. Court of
petitioners filed an action for damages before the Regional Trial Court of Makati, Metro Manila,
Appeals, where passengers with confirmed booking were refused carriage on the last
Branch 145. Advocating petitioner's position, the trial court categorically ruled that respondent
minute, this Court held that when an airline issues a ticket to a passenger confirmed on a
TransWorld Airlines (TWA) breached its contract of carriage with petitioners and that said breach
particular flight, on a certain date, a contract of carriage arises, and the passenger has every
was "characterized by bad faith." On appeal, however, the appellate court found that while there was
right to except that he would fly on that flight and on that date. If he does not, then the
a breach of contract on respondent TWA's part, there was neither fraud nor bad faith because under
carrier opens itself to a suit for breach of contract of carriage. Where an airline had
the Code of Federal Regulations by the Civil Aeronautics Board of the United States of America it is
deliberately overbooked, it took the risk of having to deprive some passengers of their seats
allowed to overbook flights.
in case all of them would show up for check in. For the indignity and inconvenience of being
refused a confirmed seat on the last minute, said passenger is entitled to moral damages.
(Emphasis supplied). The factual backdrop of the case is as follows:

However, the Court’s ruling in said case should be read in consonance with existing laws,
particularly, Economic Regulations No. 7, as amended, of the Civil Aeronautics Board:
Sec. 3. Scope. – This regulation shall apply to every Philippine and foreign air carrier with
respect to its operation of flights or portions of flights originating from or terminating at, or
serving a point within the territory of the Republic of the Philippines insofar as it denies
boarding to a passenger on a flight, or portion of a flight inside or outside the Philippines, for
which he holds confirmed reserved space. Furthermore, this Regulation is designed to cover
only honest mistakes on the part of the carriers and excludes deliberate and willful acts of
non-accommodation. Provided, however, that overbooking not exceeding 10% of the
seating capacity of the aircraft shall not be considered as a deliberate and willful act of non-
accommodation.
What this Court considers as bad faith is the willful and deliberate overbooking on the part of the
airline carrier. The above-mentioned law clearly states that when the overbooking does not exceed
ten percent (10%), it is not considered as deliberate and therefore does not amount to bad faith.
While there may have been overbooking in this case, private respondents were not able to prove
that the overbooking on United Airlines Flight 1108 exceeded ten percent.
Petitioners-spouses Cesar C. Zalamea and Suthira Zalamea, and their daughter, Liana Zalamea,
purchased three (3) airline tickets from the Manila agent of respondent TransWorld Airlines, Inc. for
a 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
represented confirmed reservations.
While in New York, on June 4, 1984, petitioners received notice of the reconfirmation of their
reservations for said flight. On the appointed date, however, petitioners checked in at 10:00 a.m., an
hour earlier than the scheduled flight at 11:00 a.m. but were placed on the wait-list because the
number of passengers who had checked in before them had already taken all the seats available on
the flight. Liana Zalamea appeared as the No. 13 on the wait-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 names
were eventually allowed to board the flight to Los Angeles, including petitioner Cesar Zalamea. The
two others, on the other hand, at No. 34, being ranked lower than 22, were not able to fly. As it were,
those holding full-fare tickets were given first priority among the wait-listed passengers. Mr.
Zalamea, who was holding the full-fare ticket of his daughter, was allowed to board the plane; while
his wife and daughter, who presented the discounted tickets were denied boarding. According to Mr.
Zalamea, it was only later when he discovered the he was holding his daughter's full-fare ticket.

Even in the next TWA flight to Los Angeles Mrs. Zalamea and her daughter, could not be
As earlier stated, the Court is of the opinion that the private respondents were not able to prove that
accommodated because it was also fully booked. Thus, they were constrained to book in another
they were subjected to coarse and harsh treatment by the ground crew of united Airlines. Neither
flight and purchased two tickets from American Airlines at a cost of Nine Hundred Eighteen
were they able to show that there was bad faith on part of the carrier airline. Hence, the award of
($918.00) Dollars.

57
Upon their arrival in the Philippines, petitioners filed an action for damages based on breach of
contract of air carriage before the Regional Trial Court of Makati, Metro Manila, Branch 145. As
aforesaid, the lower court ruled in favor of petitioners in its decision 1 dated January 9, 1989 the
dispositive portion of which states as follows:
WHEREFORE, judgment is hereby rendered ordering the defendant to pay plaintiffs the
following amounts:
(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 from American Airlines, to enable them to fly to
Los Angeles from New York City;
(2) US $159.49, or its peso equivalent at the time of payment, representing the price of
Suthira Zalamea's ticket for TWA Flight 007;
(3) Eight Thousand Nine Hundred Thirty-Four Pesos and Fifty Centavos (P8,934.50,
Philippine Currency, representing the price of Liana Zalamea's ticket for TWA Flight 007,
(4) Two Hundred Fifty Thousand Pesos (P250,000.00), Philippine Currency, as moral
damages for all the plaintiffs'
(5) One Hundred Thousand Pesos (P100,000.00), Philippine Currency, as and for attorney's
fees; and
(6) The costs of suit.
SO ORDERED. 2
On appeal, the respondent Court of Appeals held that moral damages are recoverable in a damage
suit predicated upon a breach of contract of carriage only where there is fraud or bad faith. Since it
is a matter of record that overbooking of flights is a common and accepted practice of airlines in the
United States and is specifically allowed under the Code of Federal Regulations by the Civil
Aeronautics Board, no fraud nor bad faith could be imputed on respondent TransWorld Airlines.
Moreover, while respondent TWA was remiss in not informing petitioners that the flight was
overbooked and that even a person with a confirmed reservation may be denied accommodation on
an overbooked flight, nevertheless it ruled that such omission or negligence cannot under the
circumstances be considered to be so gross as to amount to bad faith.
Finally, it also held that there was no bad faith in placing petitioners in the wait-list along with forty-
eight (48) other passengers where full-fare first class tickets were given priority over discounted
tickets.
The dispositive portion of the decision of respondent Court of Appeals 3 dated October 25, 1991
states as follows:
WHEREFORE, in view of all the foregoing, the decision under review is hereby MODIFIED
in that the award of moral and exemplary damages to the plaintiffs is eliminated, and the
defendant-appellant is hereby ordered to pay the plaintiff the following amounts:
(1) US$159.49, or its peso equivalent at the time of the payment, representing the
price of Suthira Zalamea's ticket for TWA Flight 007;
(2) US$159.49, or its peso equivalent at the time of the payment, representing the
price of Cesar Zalamea's ticket for TWA Flight 007;
(3) P50,000.00 as and for attorney's fees.
(4) The costs of suit.
SO ORDERED.4
Not satisfied with the decision, petitioners raised the case on petition for review on certiorari and
alleged the following errors committed by the respondent Court of Appeals, to wit:
I.
. . . IN HOLDING THAT THERE WAS NO FRAUD OR BAD FAITH ON THE PART OF
RESPONDENT TWA BECAUSE IT HAS A RIGHT TO OVERBOOK FLIGHTS.
II.
. . . IN ELIMINATING THE AWARD OF EXEMPLARY DAMAGES.
III.
. . . IN NOT ORDERING THE REFUND OF LIANA ZALAMEA'S TWA TICKET AND
PAYMENT FOR THE AMERICAN AIRLINES
TICKETS.5
That there was fraud or bad faith on the part of respondent airline when it did not allow petitioners to
board their flight for Los Angeles in spite of confirmed tickets cannot be disputed. The U.S. law or
regulation allegedly authorizing overbooking has never been proved. Foreign laws do not prove
themselves nor can the courts take judicial notice of them. Like any other fact, they must be alleged
and proved.6 Written law may be evidenced by an official publication thereof or by a copy attested by
the officer having the legal custody of the record, or by his deputy, and accompanied with a
certificate that such officer has custody. The certificate may be made by a secretary of an embassy
or legation, consul general, consul, vice-consul, or consular agent or by any officer in the foreign
service of the Philippines stationed in the foreign country in which the record is kept, and
authenticated by the seal of his office.7
Respondent TWA relied solely on the statement of Ms. Gwendolyn Lather, its customer service
agent, in her deposition dated January 27, 1986 that the Code of Federal Regulations of the Civil
Aeronautics Board allows overbooking. Aside from said statement, 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 fact.
Even if the claimed U.S. Code of Federal Regulations does exist, the same is not applicable to the
case at bar in accordance with 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 forum and the ticket is issued in such State by the defendant
airline.8 Since the tickets were sold and issued in the Philippines, the applicable law in this case
would be Philippine law.
Existing jurisprudence explicitly states that overbooking amounts to bad faith, entitling the
passengers concerned to an award of moral damages. In Alitalia Airways v. Court of
58
Appeals,9 where passengers with confirmed bookings 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 passenger has every right to expect that he would
fly on that flight and on that date. If he does not, then the carrier opens itself to a suit for breach of
contract of carriage. Where an airline had deliberately overbooked, it took the risk of having to
deprive some passengers of their seats in case all of them would show up for the check in. For the
indignity and inconvenience of being refused a confirmed seat on the last minute, said passenger is
entitled to an award of moral damages.
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 breach of contract of carriage amounts
to bad faith. In Pan American World Airways, Inc. v. Intermediate Appellate Court, 11 where a would-
be passenger had the necessary ticket, 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 in Zulueta v. Pan American World Airways, Inc.  12 This is so, for a
contract of carriage generates a relation attended with public duty — a duty to provide public service
and convenience to its passengers which must be paramount to self-interest or enrichment. Thus, it
was also held that the switch of planes from Lockheed 1011 to a smaller Boeing 707 because there
were only 138 confirmed economy class passengers who could very well be accommodated in the
smaller planes, thereby sacrificing the comfort of its first class passengers for the sake of economy,
amounts to bad faith. Such inattention and lack of care for the interest of its passengers who are
entitled to its utmost consideration entitles the passenger to an award of moral damages. 13
Even on the assumption that overbooking is allowed, respondent TWA is still guilty of bad faith in not
informing its passengers beforehand that it could breach the contract of carriage even if they have
confirmed tickets if there was overbooking. Respondent TWA should have incorporated stipulations
on overbooking on the tickets issued or to properly inform its passengers about these policies so
that the latter would be prepared for such eventuality or would have the choice to ride with another
airline.
Respondent TWA contends that Exhibit I, the detached flight coupon upon which were written the
name of the passenger and the points of origin and destination, contained such a notice. An
examination of Exhibit I does not bear this out. At any rate, said exhibit was not offered for the
purpose of showing the existence of 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 Angeles.
Moreover, respondent TWA was also guilty of not informing its passengers of its alleged policy of
giving less priority to discounted tickets. While the petitioners had checked in at the same time, and
held confirmed tickets, yet, only one of them was allowed to board the plane ten minutes before
departure time because the full-fare ticket he was holding was given priority over discounted tickets.
The other two petitioners were left behind.
It is respondent TWA's position that the practice of overbooking and the airline system of boarding
priorities are reasonable policies, which when implemented do not amount to bad faith. But the issue
raised in this case is not the reasonableness of said policies but whether or not said policies were
incorporated or deemed written on petitioners' contracts of carriage. Respondent TWA failed to
show that there are provisions to that effect. Neither did it present any argument of substance to
show that petitioners were duly apprised of the overbooked condition of the flight or that there is a
hierarchy of boarding priorities in booking passengers. It is evident that petitioners had the right to
rely upon the assurance 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 easily have done so thereby enabling respondent to hold on to them as
passengers up to the last minute amounts to bad faith. Evidently, respondent TWA placed its self-
interest over the rights of petitioners under their contracts of carriage. Such conscious 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 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 petitioners. In accordance with Article
2201, New Civil Code, respondent TWA should, therefore, be responsible for all damages which
may be reasonably attributed to the non-performance of its obligation. In the previously cited case
of Alitalia Airways v. Court of Appeals, 15 this Court explicitly held that a passenger is entitled to be
reimbursed for the cost of the tickets he had to buy for a flight to another airline. Thus, instead of
simply being refunded for the cost of the unused TWA tickets, petitioners should be awarded the
actual cost of their flight from New York to Los Angeles. On this score, we differ from the trial court's
ruling which ordered not only the reimbursement of the American Airlines tickets but also the refund
of the unused TWA tickets. To require both prestations would have enabled petitioners to fly from
New York to Los Angeles without any fare being paid.
The award to petitioners of attorney's fees is also justified under Article 2208(2) of the Civil Code
which allows recovery when the defendant's act or omission has compelled plaintiff to litigate or to
incur expenses to protect his interest. However, the award for moral damages and exemplary
damages by the trial court is excessive in the light of the fact that only Suthira and Liana Zalamea
were actually "bumped off." An award of P50,000.00 moral damages and another P50,000.00
exemplary damages would suffice under the circumstances obtaining in the instant case.
WHEREFORE, the petition is hereby GRANTED and the decision of the respondent Court of
Appeals is hereby MODIFIED to the extent of adjudging respondent TransWorld Airlines to pay
damages to petitioners in the following amounts, to wit:
(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 from American Airlines, to enable them to fly to Los Angeles
from New York City;
(2) P50,000.00 as moral damages;
(3) P50,000.00 as exemplary damages;
(4) P50,000.00 as attorney's fees; and
(5) Costs of suit.
SO ORDERED.
59