G.R. No. 170141 April 22, 2008 was allowed to check-in at JAL's counter.
ed to check-in at JAL's counter. His plane ticket, boarding pass,
JAPAN AIRLINES, petitioner, vs. JESUS SIMANGAN, respondent.
DECISION
REYES R.T., J.:
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.
The power to admit or not an alien into the country is a sovereign act which
cannot be interfered with even by Japan Airlines (JAL).
In this petition for review on certiorari, petitioner JAL appeals the: (1)
Decision dated May 31, 2005 of the Court of Appeals (CA) ordering it to pay
respondent Jesus Simangan moral and exemplary damages; and (2)
Resolution of the same court dated September 28, 2005 denying JAL's
motion for reconsideration.
The Facts
In 1991, respondent Jesus Simangan decided to donate a kidney to his ailing
cousin, Loreto Simangan, in UCLA School of Medicine in Los Angeles,
California, U.S.A. Upon request of UCLA, respondent undertook a series of
laboratory tests at the National Kidney Institute in Quezon City to verify
whether his blood and tissue type are compatible with Loreto's.6 Fortunately,
said tests proved that respondent's blood and tissue type were well-matched
with Loreto's.7
Respondent needed to go to the United States to complete his preliminary
work-up and donation surgery. Hence, to facilitate respondent's travel to the
United States, UCLA wrote a letter to the American Consulate in Manila to
arrange for his visa. In due time, respondent was issued an emergency U.S.
visa by the American Embassy in Manila.8
Having obtained an emergency U.S. visa, respondent purchased a round trip
plane ticket from petitioner JAL for US$1,485.00 and was issued the
corresponding boarding pass.9 He was scheduled to a particular flight bound
for Los Angeles, California, U.S.A. via Narita, Japan.10
On July 29, 1992, the date of his flight, respondent went to Ninoy Aquino
International Airport in the company of several relatives and friends.11 He
travel authority and personal articles were subjected to rigid immigration and
security routines. After passing through said immigration and security
procedures, respondent was allowed by JAL to enter its airplane.
While inside the airplane, JAL's airline crew suspected respondent of
carrying a falsified travel document and imputed that he would only use the
trip to the United States as a pretext to stay and work in Japan. The
stewardess asked respondent to show his travel documents. Shortly after,
the stewardess along with a Japanese and a Filipino haughtily ordered him to
stand up and leave the plane. Respondent protested, explaining that he was
issued a U.S. visa. Just to allow him to board the plane, he pleaded with JAL
to closely monitor his movements when the aircraft stops over in Narita. His
pleas were ignored. He was then constrained to go out of the plane. In a
nutshell, respondent was bumped off the flight.
Respondent went to JAL's ground office and waited there for three hours.
Meanwhile, the plane took off and he was left behind.19 Afterwards, he was
informed that his travel documents were, indeed, in order.20 Respondent
was refunded the cost of his plane ticket less the sum of US$500.00 which
was deducted by JAL.21 Subsequently, respondent's U.S. visa was
cancelled.
Displeased by the turn of events, respondent filed an action for damages
against JAL with the Regional Trial Court (RTC) in Valenzuela City, docketed
as Civil Case No. 4195-V-93. He claimed he was not able to donate his
kidney to Loreto; and that he suffered terrible embarrassment and mental
anguish.23 He prayed that he be awarded P3 million as moral damages,
P1.5 million as exemplary damages and P500,000.00 as attorney's fees.24
JAL denied the material allegations of the complaint. It argued, among
others, that its failure to allow respondent to fly on his scheduled departure
was due to "a need for his travel documents to be authenticated by the
United States Embassy"25 because no one from JAL's airport staff had
encountered a parole visa before.26 It posited that the authentication
required additional time; that respondent was advised to take the flight the
following day, July 30, 1992. JAL alleged that respondent agreed to be
rebooked on July 30, 1992.27
JAL also lodged a counterclaim anchored on respondent's alleged wrongful
institution of the complaint. It prayed for litigation expenses, exemplary
damages and attorney's fees.28
On September 21, 2000, the RTC presided by Judge Floro P. Alejo rendered
its decision in favor of respondent (plaintiff), disposing as follows:
WHEREFORE, judgment is hereby rendered ordering the defendant to pay
the plaintiff the amount of P1,000,000.00 as moral damages, the amount of
P500,000.00 as exemplary damages and the amount of P250,000.00 as
attorney's fees, plus the cost of suit.
The RTC explained:
In summarily and insolently ordering the plaintiff to disembark while the latter
was already settled in his assigned seat, the defendant violated the contract
of carriage; that when the plaintiff was ordered out of the plane under the
pretext that the genuineness of his travel documents would be verified it had
caused him embarrassment and besmirched reputation; and that when the
plaintiff was finally not allowed to take the flight, he suffered more wounded
feelings and social humiliation for which the plaintiff was asking to be
awarded moral and exemplary damages as well as attorney's fees.
The reason given by the defendant that what prompted them to investigate
the genuineness of the travel documents of the plaintiff was that the plaintiff
was not then carrying a regular visa but just a letter does not appear
satisfactory. The defendant is engaged in transporting passengers by plane
from country to country and is therefore conversant with the travel
documents. The defendant should not be allowed to pretend, to the prejudice
of the plaintiff not to know that the travel documents of the plaintiff are valid
documents to allow him entry in the United States.
The foregoing act of the defendant in ordering the plaintiff to deplane while
already settled in his assigned seat clearly demonstrated that the defendant
breached its contract of carriage with the plaintiff as passenger in bad faith
and as such the plaintiff is entitled to moral and exemplary damages as well
as to an award of attorney's fees.
Disagreeing with the RTC judgment, JAL appealed to the CA contending that
it is not guilty of breach of contract of carriage, hence, not liable for
damages.31 It posited that it is the one entitled to recover on its
counterclaim.32
CA Ruling
In a Decision33 dated May 31, 2005, the CA affirmed the decision of the
RTC with modification in that it lowered the amount of moral and exemplary
damages and deleted the award of attorney's fees. The fallo of the CA
decision reads:
WHEREFORE, the appealed Decision is AFFIRMED with MODIFICATION.
Appellant JAPAN AIR LINES is ordered to pay appellee JESUS SIMANGAN
the reduced sums, as follows: Five Hundred Thousand Pesos (P500,000.00)
as moral damages, and Two Hundred Fifty Thousand Pesos (P250,000.00)
as exemplary damages. The award of attorney's fees is hereby DELETED.
The CA elucidated that since JAL issued to respondent a round trip plane
ticket for a lawful consideration, "there arose a perfected contract between
them." It found that respondent was "haughtily ejected"36 by JAL and that
"he was certainly embarrassed and humiliated" when, in the presence of
other passengers, JAL's airline staff "shouted at him to stand up and
arrogantly asked him to produce his travel papers, without the least courtesy
every human being is entitled to"; and that "he was compelled to deplane on
the grounds that his papers were fake."
The CA ratiocinated:
While the protection of passengers must take precedence over convenience,
the implementation of security measures must be attended by basic
courtesies.
In fact, breach of the contract of carriage creates against the carrier a
presumption of liability, by a simple proof of injury, relieving the injured
passenger of the duty to establish the fault of the carrier or of his employees;
and placing on the carrier the burden to prove that it was due to an
unforeseen event or to force majeure.
That appellee possessed bogus travel documents and that he might stay
illegally in Japan are allegations without substantiation. Also, appellant's
attempt to rebook appellee the following day was too late and did not relieve
it from liability. The damage had been done. Besides, its belated theory of
novation, i.e., that appellant's original obligation to carry appellee to Narita
and Los Angeles on July 29, 1992 was extinguished by novation when
appellant and appellant agreed that appellee will instead take appellant's
flight to Narita on the following day, July 30, 1992, deserves little attention. It
is inappropriate at bar. Questions not taken up during the trial cannot be
raised for the first time on appeal.40 (Underscoring ours and citations were
omitted)
Citing Ortigas, Jr. v. Lufthansa German Airlines,41 the CA declared that "(i)n
contracts of common carriage, inattention and lack of care on the part of the
carrier resulting in the failure of the passenger to be accommodated in the
class contracted for amounts to bad faith or fraud which entitles the
passengers to the award of moral damages in accordance with Article 2220
of the Civil Code."42
Nevertheless, the CA modified the damages awarded by the RTC. It
explained:
Fundamental in the law on damages is that one injured by a breach of a
contract, or by a wrongful or negligent act or omission shall have a fair and
just compensation commensurate to the loss sustained as consequence of
the defendant's act. Being discretionary on the court, the amount, however,
should not be palpably and scandalously excessive.
Here, the trial court's award of P1,000,000.00 as moral damages appears to
be overblown. No other proof of appellee's social standing, profession,
financial capabilities was presented except that he was single and a
businessman. To Us, the sum of 500,000.00 is just and fair. For, moral
damages are emphatically not intended to enrich a complainant at the
expense of the defendant. They are awarded only to enable the injured party
to obtain means, diversion or amusements that will serve to alleviate the
moral suffering he has undergone, by reason of the defendant's culpable
action.
Moreover, the grant of P500,000.00 as exemplary damages needs to be
reduced to a reasonable level. The award of exemplary damages is designed
to permit the courts to mould behavior that has socially deleterious
consequences and its imposition is required by public policy to suppress the
wanton acts of the offender. Hence, the sum of P250,000.00 is adequate
under the circumstances.
The award of P250,000.00 as attorney's fees lacks factual basis. Appellee
was definitely compelled to litigate in protecting his rights and in seeking
relief from appellant's misdeeds. Yet, the record is devoid of evidence to
show the cost of the services of his counsel and/or the actual expenses
incurred in prosecuting his action.43 (Citations were omitted)
When JAL's motion for reconsideration was denied, it resorted to the petition
at bar.
Issues
JAL poses the following issues -
I.
WHETHER OR NOT THE COURT OF APPEALS ERRED IN RULING THAT
RESPONDENT WAS ENTITLED TO MORAL DAMAGES, CONSIDERING
THAT:
A. JAL WAS NOT GUILTY OF BREACH OF CONTRACT.
B. MORAL DAMAGES MAY BE AWARDED IN BREACH OF CONTRACT
CASES ONLY WHEN THE BREACH IS ATTENDED BY FRAUD OR BAD
FAITH. ASSUMING ARGUENDO THAT JAL WAS GUILTY OF BREACH,
JAL DID NOT ACT FRAUDULENTLY OR IN BAD FAITH AS TO ENTITLE
RESPONDENT TO MORAL DAMAGES.
C. THE LAW DISTINGUISHES A CONTRACTUAL BREACH EFFECTED IN
GOOD FAITH FROM ONE ATTENDED BY BAD FAITH.
II.
WHETHER OR NOT THE COURT OF APPEALS ERRED IN RULING THAT
RESPONDENT WAS ENTITLED TO EXEMPLARY DAMAGES
CONSIDERING THAT:
A. EXEMPLARY DAMAGES ARE NOT RECOVERABLE IN BREACH OF
CONTRACT OF CARRIAGE UNLESS THE CARRIER IS GUILTY OF
WANTON, FRAUDULENT, RECKLESS, OPPRESSIVE OR MALEVOLENT
CONDUCT.
B. ASSUMING ARGUENDO THAT JAL WAS GUILTY OF BREACH, JAL
DID NOT ACT IN A WANTON FRAUDULENT, RECKLESS, OPPRESSIVE
OR MALEVOLENT MANNER AS TO ENTITLE RESPONDENT TO
EXEMPLARY DAMAGES.
III.
ASSUMING ARGUENDO THAT RESPONDENT WAS ENTITLED TO AN
AWARD OF DAMAGES, WHETHER OR NOT THE COURT OF APPEALS
AWARD OF P750,000 IN DAMAGES WAS EXCESSIVE AND
UNPRECEDENTED.
IV.
WHETHER OR NOT THE COURT OF APPEALS ERRED IN NOT FINDING
FOR JAL ON ITS COUNTERCLAIM.44 (Underscoring Ours)
Basically, there are three (3) issues to resolve here: (1) whether or not JAL is
guilty of contract of carriage; (2) whether or not respondent is entitled to
moral and exemplary damages; and (3) whether or not JAL is entitled to its
counterclaim for damages.
Our Ruling
This Court is not a trier of facts.
Chiefly, the issues are factual. The RTC findings of facts were affirmed by
the CA. The CA also gave its nod to the reasoning of the RTC except as to
the awards of damages, which were reduced, and that of attorney's fees,
which was deleted.
We are not a trier of facts. We generally rely upon, and are bound by, the
conclusions on this matter of the lower courts, which are better equipped and
have better opportunity to assess the evidence first-hand, including the
testimony of the witnesses.
We have repeatedly held that the findings of fact of the CA are final and
conclusive and cannot be reviewed on appeal to the Supreme Court provided
they are based on substantial evidence.46 We have no jurisdiction, as a rule,
to reverse their findings.47 Among the exceptions to this rule are: (a) when
the conclusion is a finding grounded entirely on speculations, surmises or
conjectures; (b) when the inference made is manifestly mistaken, absurd or
impossible; (c) where there is grave abuse of discretion; (d) when the
judgment is based on a misapprehension of facts; (e) when the findings of
facts are conflicting; (f) when the CA, in making its findings, went beyond the
issues of the case and the same is contrary to the admissions of both
appellant and appellee.
The said exceptions, which are being invoked by JAL, are not found here.
There is no indication that the findings of the CA are contrary to the evidence
on record or that vital testimonies of JAL's witnesses were disregarded.
Neither did the CA commit misapprehension of facts nor did it fail to consider
relevant facts. Likewise, there was no grave abuse of discretion in the
appreciation of facts or mistaken and absurd inferences.
We thus sustain the coherent facts as established by the courts below, there
being no sufficient showing that the said courts committed reversible error in
reaching their conclusions.
JAL is guilty of breach of contract of carriage.
That respondent purchased a round trip plane ticket from JAL and was
issued the corresponding boarding pass is uncontroverted. His plane ticket,
boarding pass, travel authority and personal articles were subjected to rigid
immigration and security procedure. After passing through said immigration
and security procedure, he was allowed by JAL to enter its airplane to fly to
Los Angeles, California, U.S.A. via Narita, Japan. Concisely, there was a
contract of carriage between JAL and respondent.
Nevertheless, JAL made respondent get off the plane on his scheduled
departure on July 29, 1992. He was not allowed by JAL to fly. JAL thus failed
to comply with its obligation under the contract of carriage.
JAL justifies its action by arguing that there was "a need to verify the
authenticity of respondent's travel document."52 It alleged that no one from
its airport staff had encountered a parole visa before.53 It further contended
that respondent agreed to fly the next day so that it could first verify his travel
document, hence, there was novation.54 It maintained that it was not guilty of
breach of contract of carriage as respondent was not able to travel to the
United States due to his own voluntary desistance.55
We cannot agree. JAL did not allow respondent to fly. It informed respondent
that there was a need to first check the authenticity of his travel documents
with the U.S. Embassy.56 As admitted by JAL, "the flight could not wait for
Mr. Simangan because it was ready to depart."
Since JAL definitely declared that the flight could not wait for respondent, it
gave respondent no choice but to be left behind. The latter was
unceremoniously bumped off despite his protestations and valid travel
documents and notwithstanding his contract of carriage with JAL. Damage
had already been done when respondent was offered to fly the next day on
July 30, 1992. Said offer did not cure JAL's default.
Considering that respondent was forced to get out of the plane and left
behind against his will, he could not have freely consented to be rebooked
the next day. In short, he did not agree to the alleged novation. Since
novation implies a waiver of the right the creditor had before the novation,
such waiver must be express.58 It cannot be supposed, without clear proof,
that respondent had willingly done away with his right to fly on July 29, 1992.
Moreover, the reason behind the bumping off incident, as found by the RTC
and CA, was that JAL personnel imputed that respondent would only use the
trip to the United States as a pretext to stay and work in Japan.59
Apart from the fact that respondent's plane ticket, boarding pass, travel
authority and personal articles already passed the rigid immigration and
security routines,60 JAL, as a common carrier, ought to know the kind of
valid travel documents respondent carried. As provided in Article 1755 of the
New Civil Code: "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."61 Thus,
We find untenable JAL's defense of "verification of respondent's documents"
in its breach of contract of carriage.
It bears repeating that the power to admit or not an alien into the country is a
sovereign act which cannot be interfered with even by JAL.62
In an action for breach of contract of carriage, all that is required of plaintiff is
to prove the existence of such contract and its non-performance by the
carrier through the latter's failure to carry the passenger safely to his
destination.63 Respondent has complied with these twin requisites.
Respondent is entitled to moral and exemplary damages and attorney's fees
plus legal interest.
With reference to moral damages, JAL alleged that they are not recoverable
in actions ex contractu except only when the breach is attended by fraud or
bad faith. It is contended that it did not act fraudulently or in bad faith towards
respondent, hence, it may not be held liable for moral damages.
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 Article 2219 of the Civil Code.64 As an exception, such
damages are recoverable: (1) in cases in which the mishap results in the
death of a passenger, as provided in Article 1764, in relation to Article
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 Article 2220.65
The acts committed by JAL against respondent amounts to bad faith. As
found by the RTC, JAL breached its contract of carriage with respondent in
bad faith. JAL personnel summarily and insolently ordered respondent to
disembark while the latter was already settled in his assigned seat. He was
ordered out of the plane under the alleged reason that the genuineness of his
travel documents should be verified.
These findings of facts were upheld by the CA, to wit:
x x x he was haughtily ejected by appellant. He was certainly embarrassed
and humiliated when, in the presence of other passengers, the appellant's
airline staff shouted at him to stand up and arrogantly asked him to produce
his travel papers, without the least courtesy every human being is entitled to.
Then, he was compelled to deplane on the grounds that his papers were
fake. His protestation of having been issued a U.S. visa coupled with his plea
to appellant to closely monitor his movements when the aircraft stops over in
Narita, were ignored. Worse, he was made to wait for many hours at the
office of appellant only to be told later that he has valid travel documents.66
(Underscoring ours)
Clearly, JAL is liable for moral damages. It is firmly settled that moral
damages are recoverable in suits predicated on breach of a contract of
carriage where it is proved that the carrier was guilty of fraud or bad faith, as
in this case. Inattention to and lack of care for the interests of its passengers
who are entitled to its utmost consideration, particularly as to their
convenience, amount to bad faith which entitles the passenger to an award
of moral damages. What the law considers as bad faith which may furnish
the ground for an award of moral damages would be bad faith in securing the
contract and in the execution thereof, as well as in the enforcement of its
terms, or any other kind of deceit.67
JAL is also liable for exemplary damages as its above-mentioned acts
constitute wanton, oppressive and malevolent acts against respondent.
Exemplary damages, which are awarded by way of example or correction for
the public good, may be recovered in contractual obligations, as in this case,
if defendant acted in wanton, fraudulent, reckless, oppressive, or malevolent
manner.68
Exemplary damages are designed by our civil law to permit the courts to
reshape behaviour that is socially deleterious in its consequence by creating
negative incentives or deterrents against such behaviour. In requiring
compliance with the standard of extraordinary diligence, a standard which is,
in fact, that of the highest possible degree of diligence, from common carriers
and in creating a presumption of negligence against them, the law seeks to
compel them to control their employees, to tame their reckless instincts and
to force them to take adequate care of human beings and their property.69
Neglect or malfeasance of the carrier's employees could give ground for an
action for damages. Passengers have a right to be treated by the carrier's
employees with kindness, respect, courtesy and due consideration and are
entitled to be protected against personal misconduct, injurious language,
indignities and abuses from such employees.70
The assessment of P500,000.00 as moral damages and P100,000.00 as
exemplary damages in respondent's favor is, in Our view, reasonable and
realistic. This award is reasonably sufficient to indemnify him for the
humiliation and embarrassment he suffered. This also serves as an example
to discourage the repetition of similar oppressive acts.
With respect to attorney's fees, they may be awarded when defendant's act
or omission has compelled plaintiff to litigate with third persons or to incur
expenses to protect his interest.71 The Court, in Construction Development
Corporation of the Philippines v. Estrella,72 citing Traders Royal Bank
Employees Union-Independent v. National Labor Relations Commission,73
elucidated thus:
There are two commonly accepted concepts of attorney's fees, the so-called
ordinary and extraordinary. In its ordinary concept, an attorney's fee is the
reasonable compensation paid to a lawyer by his client for the legal services
he has rendered to the latter. The basis of this compensation is the fact of his
employment by and his agreement with the client.
In its extraordinary concept, an attorney's fee is an indemnity for damages
ordered by the court to be paid by the losing party in a litigation. The basis of
this is any of the cases provided by law where such award can be made,
such as those authorized in Article 2208, Civil Code, and is payable not to
the lawyer but to the client, unless they have agreed that the award shall
pertain to the lawyer as additional compensation or as part thereof.74
It was therefore erroneous for the CA to delete the award of attorney's fees
on the ground that the record is devoid of evidence to show the cost of the
services of respondent's counsel. The amount is actually discretionary upon
the Court so long as it passes the test of reasonableness. They may be
recovered as actual or compensatory damages when exemplary damages
are awarded and whenever the court deems it just and equitable,75 as in this
case.
Considering the factual backdrop of this case, attorney's fees in the amount
of P200,000.00 is reasonably modest.
The above liabilities of JAL in the total amount of P800,000.00 earn legal
interest pursuant to the Court's ruling in Construction Development
Corporation of the Philippines v. Estrella,76 citing Eastern Shipping Lines,
Inc. v. Court of Appeals,77 to wit:
Regarding the imposition of legal interest at the rate of 6% from the time of
the filing of the complaint, we held in Eastern Shipping Lines, Inc. v. Court of
Appeals, that when an obligation, regardless of its source, i.e., law, contracts,
quasi-contracts, delicts or quasi-delicts is breached, the contravenor can be
held liable for payment of interest in the concept of actual and compensatory
damages, subject to the following rules, to wit -
1. When the obligation is breached, and it consists in the payment of a sum
of money, i.e., a loan or forbearance of money, the interest due should be
that which may have been stipulated in writing. Furthermore, the interest due
shall itself earn legal interest from the time it is judicially demanded. In the
absence of stipulation, the rate of interest shall be 12% per annum to be
computed from default, i.e., from judicial or extrajudicial demand under and
subject to the provisions of Article 1169 of the Civil Code.
2. When an obligation, not constituting a loan or forbearance of money, is
breached, an interest on the amount of damages awarded may be imposed
at the discretion of the court at the rate of 6% per annum. No interest,
however, shall be adjudged on unliquidated claims or damages except when
or until the demand can be established with reasonable certainty.
Accordingly, where the demand is established with reasonable certainty, the
interest shall begin to run from the time the claim is made judicially or
extrajudicially (Art. 1169, Civil Code) but when such certainty cannot be so
reasonably established at the time the demand is made, the interest shall
begin to run only from the date the judgment of the court is made (at which
time the quantification of damages may be deemed to have been reasonably
ascertained). The actual base for the computation of legal interest shall, in
any case, be on the amount finally adjudged.
3. When the judgment of the court awarding a sum of money becomes final
and executory, the rate of legal interest, whether the case falls under
paragraph 1 or paragraph 2, above, shall be 12% per annum from such
finality until its satisfaction, this interim period being deemed to be by then an
equivalent to a forbearance of credit.78 (Emphasis supplied and citations
omitted)
Accordingly, in addition to the said total amount of P800,000.00, JAL is liable
to pay respondent legal interest. Pursuant to the above ruling of the Court,
the legal interest is 6% and it shall be reckoned from September 21, 2000
when the RTC rendered its judgment. From the time this Decision becomes
final and executory, the interest rate shall be 12% until its satisfaction.
JAL is not entitled to its counterclaim for damages.
The counterclaim of JAL in its Answer79 is a compulsory counterclaim for
damages and attorney's fees arising from the filing of the complaint. There is
no mention of any other counter claims.
This compulsory counterclaim of JAL arising from the filing of the complaint
may not be granted inasmuch as the complaint against it is obviously not
malicious or unfounded. It was filed by respondent precisely to claim his right
to damages against JAL. Well-settled is the rule that the commencement of
an action does not per se make the action wrongful and subject the action to
damages, for the law could not have meant to impose a penalty on the right
to litigate.80
We reiterate case law that if damages result from a party's exercise of a right,
it is damnum absque injuria.81 Lawful acts give rise to no injury. Walang
perhuwisyong maaring idulot ang paggamit sa sariling karapatan.
During the trial, however, JAL presented a witness who testified that JAL
suffered further damages. Allegedly, respondent caused the publications of
his subject complaint against JAL in the newspaper for which JAL suffered
damages.82
Although these additional damages allegedly suffered by JAL were not
incorporated in its Answer as they arose subsequent to its filing, JAL's
witness was able to testify on the same before the RTC.83 Hence, although
these issues were not raised by the pleadings, they shall be treated in all
respects as if they had been raised in the pleadings.
As provided in Section 5, Rule 10 of the Rules of Court, "(w)hen issues not
raised by the pleadings are tried with the express or implied consent of the
parties, they shall be treated in all respects as if they had been raised in the
pleadings."
Nevertheless, JAL's counterclaim cannot be granted.
JAL is a common carrier. JAL's business is mainly with the traveling public. It
invites people to avail themselves of the comforts and advantages it offers.84
Since JAL deals with the public, its bumping off of respondent without a valid
reason naturally drew public attention and generated a public issue.
The publications involved matters about which the public has the right to be
informed because they relate to a public issue. This public issue or concern
is a legitimate topic of a public comment that may be validly published.
Assuming that respondent, indeed, caused the publication of his complaint,
he may not be held liable for damages for it. The constitutional guarantee of
freedom of the speech and of the press includes fair commentaries on
matters of public interest. This is explained by the Court in Borjal v. Court of
Appeals,85 to wit:
To reiterate, fair commentaries on matters of public interest are privileged
and constitute a valid defense in an action for libel or slander. The doctrine of
fair comment means that while in general every discreditable imputation
publicly made is deemed false, because every man is presumed innocent
until his guilt is judicially proved, and every false imputation is deemed
malicious, nevertheless, when the discreditable imputation is directed against
a public person in his public capacity, it is not necessarily actionable. In order
that such discreditable imputation to a public official may be actionable, it
must either be a false allegation of fact or a comment based on a false
supposition. If the comment is an expression of opinion, based on
established facts, then it is immaterial that the opinion happens to be
mistaken, as long as it might reasonably be inferred from the facts.86
(Citations omitted and underscoring ours)
Even though JAL is not a public official, the rule on privileged commentaries
on matters of public interest applies to it. The privilege applies not only to
public officials but extends to a great variety of subjects, and includes
matters of public concern, public men, and candidates for office.87
Hence, pursuant to the Borjal case, there must be an actual malice in order
that a discreditable imputation to a public person in his public capacity or to a
public official may be actionable. To be considered malicious, the libelous
statements must be shown to have been written or published with the
knowledge that they are false or in reckless disregard of whether they are
false or not.88
Considering that the published articles involve matters of public interest and
that its expressed opinion is not malicious but based on established facts, the
imputations against JAL are not actionable. Therefore, JAL may not claim
damages for them.
WHEREFORE, the petition is DENIED. The appealed Decision of the Court
of Appeals is AFFIRMED WITH MODIFICATION. As modified, petitioner
Japan Airlines is ordered to pay respondent Jesus Simangan the following:
(1) P500,000.00 as moral damages; (2) P100,000.00 as exemplary
damages; and (3) P200,000.00 as attorney's fees.
The total amount adjudged shall earn legal interest at the rate of 6% per
annum from the date of judgment of the Regional Trial Court on September
21, 2000 until the finality of this Decision. From the time this Decision
becomes final and executory, the unpaid amount, if any, shall earn legal
interest at the rate of 12% per annum until its satisfaction.
SO ORDERED.
G.R. No. 150843 March 14, 2003
CATHAY PACIFIC AIRWAYS, LTD., petitioner, vs. SPOUSES DANIEL
VAZQUEZ and MARIA LUISA MADRIGAL VAZQUEZ, respondents.
DAVIDE, JR., C.J.:
Is an involuntary upgrading of an airline passenger’s accommodation from
one class to a more superior class at no extra cost a breach of contract of
carriage that would entitle the passenger to an award of damages? This is a
novel question that has to be resolved in this case.
The facts in this case, as found by the Court of Appeals and adopted by
petitioner Cathay Pacific Airways, Ltd., (hereinafter Cathay) are as follows:
Cathay is a common carrier engaged in the business of transporting
passengers and goods by air. Among the many routes it services is the
Manila-Hongkong-Manila course. As part of its marketing strategy, Cathay
accords its frequent flyers membership in its Marco Polo Club. The members
enjoy several privileges, such as priority for upgrading of booking without any
extra charge whenever an opportunity arises. Thus, a frequent flyer booked
in the Business Class has priority for upgrading to First Class if the Business
Class Section is fully booked.
Respondents-spouses Dr. Daniel Earnshaw Vazquez and Maria Luisa
Madrigal Vazquez are frequent flyers of Cathay and are Gold Card members
of its Marco Polo Club. On 24 September 1996, the Vazquezes, together with
their maid and two friends Pacita Cruz and Josefina Vergel de Dios, went to
Hongkong for pleasure and business.
For their return flight to Manila on 28 September 1996, they were booked on
Cathay’s Flight CX-905, with departure time at 9:20 p.m. Two hours before
their time of departure, the Vazquezes and their companions checked in their
luggage at Cathay’s check-in counter at Kai Tak Airport and were given their
respective boarding passes, to wit, Business Class boarding passes for the
Vazquezes and their two friends, and Economy Class for their maid. They
then proceeded to the Business Class passenger lounge.
When boarding time was announced, the Vazquezes and their two friends
went to Departure Gate No. 28, which was designated for Business Class
passengers. Dr. Vazquez presented his boarding pass to the ground
stewardess, who in turn inserted it into an electronic machine reader or
computer at the gate. The ground stewardess was assisted by a ground
attendant by the name of Clara Lai Han Chiu. When Ms. Chiu glanced at the
computer monitor, she saw a message that there was a "seat change" from
Business Class to First Class for the Vazquezes.
Ms. Chiu approached Dr. Vazquez and told him that the Vazquezes’
accommodations were upgraded to First Class. Dr. Vazquez refused the
upgrade, reasoning that it would not look nice for them as hosts to travel in
First Class and their guests, in the Business Class; and moreover, they were
going to discuss business matters during the flight. He also told Ms. Chiu that
she could have other passengers instead transferred to the First Class
Section. Taken aback by the refusal for upgrading, Ms. Chiu consulted her
supervisor, who told her to handle the situation and convince the Vazquezes
to accept the upgrading. Ms. Chiu informed the latter that the Business Class
was fully booked, and that since they were Marco Polo Club members they
had the priority to be upgraded to the First Class. Dr. Vazquez continued to
refuse, so Ms. Chiu told them that if they would not avail themselves of the
privilege, they would not be allowed to take the flight. Eventually, after talking
to his two friends, Dr. Vazquez gave in. He and Mrs. Vazquez then
proceeded to the First Class Cabin.
Upon their return to Manila, the Vazquezes, in a letter of 2 October 1996
addressed to Cathay’s Country Manager, demanded that they be indemnified
in the amount of P1million for the "humiliation and embarrassment" caused
by its employees. They also demanded "a written apology from the
management of Cathay, preferably a responsible person with a rank of no
less than the Country Manager, as well as the apology from Ms. Chiu" within
fifteen days from receipt of the letter.
In his reply of 14 October 1996, Mr. Larry Yuen, the assistant to Cathay’s
Country Manager Argus Guy Robson, informed the Vazquezes that Cathay
would investigate the incident and get back to them within a week’s time.
On 8 November 1996, after Cathay’s failure to give them any feedback within
its self-imposed deadline, the Vazquezes instituted before the Regional Trial
Court of Makati City an action for damages against Cathay, praying for the
payment to each of them the amounts of P250,000 as temperate damages;
P500,000 as moral damages; P500,000 as exemplary or corrective
damages; and P250,000 as attorney’s fees.
In their complaint, the Vazquezes alleged that when they informed Ms. Chiu
that they preferred to stay in Business Class, Ms. Chiu "obstinately,
uncompromisingly and in a loud, discourteous and harsh voice threatened"
that they could not board and leave with the flight unless they go to First
Class, since the Business Class was overbooked. Ms. Chiu’s loud and
stringent shouting annoyed, embarrassed, and humiliated them because the
incident was witnessed by all the other passengers waiting for boarding.
They also claimed that they were unjustifiably delayed to board the plane,
and when they were finally permitted to get into the aircraft, the forward
storage compartment was already full. A flight stewardess instructed Dr.
Vazquez to put his roll-on luggage in the overhead storage compartment.
Because he was not assisted by any of the crew in putting up his luggage,
his bilateral carpal tunnel syndrome was aggravated, causing him extreme
pain on his arm and wrist. The Vazquezes also averred that they "belong to
the uppermost and absolutely top elite of both Philippine Society and the
Philippine financial community, [and that] they were among the wealthiest
persons in the Philippine[s]."
In its answer, Cathay alleged that it is a practice among commercial airlines
to upgrade passengers to the next better class of accommodation, whenever
an opportunity arises, such as when a certain section is fully booked. Priority
in upgrading is given to its frequent flyers, who are considered favored
passengers like the Vazquezes. Thus, when the Business Class Section of
Flight CX-905 was fully booked, Cathay’s computer sorted out the names of
favored passengers for involuntary upgrading to First Class. When Ms. Chiu
informed the Vazquezes that they were upgraded to First Class, Dr. Vazquez
refused. He then stood at the entrance of the boarding apron, blocking the
queue of passengers from boarding the plane, which inconvenienced other
passengers. He shouted that it was impossible for him and his wife to be
upgraded without his two friends who were traveling with them. Because of
Dr. Vazquez’s outburst, Ms. Chiu thought of upgrading the traveling
companions of the Vazquezes. But when she checked the computer, she
learned that the Vazquezes’ companions did not have priority for upgrading.
She then tried to book the Vazquezes again to their original seats. However,
since the Business Class Section was already fully booked, she politely
informed Dr. Vazquez of such fact and explained that the upgrading was in
recognition of their status as Cathay’s valued passengers. Finally, after
talking to their guests, the Vazquezes eventually decided to take the First
Class accommodation.
Cathay also asserted that its employees at the Hong Kong airport acted in
good faith in dealing with the Vazquezes; none of them shouted, humiliated,
embarrassed, or committed any act of disrespect against them (the
Vazquezes). Assuming that there was indeed a breach of contractual
obligation, Cathay acted in good faith, which negates any basis for their claim
for temperate, moral, and exemplary damages and attorney’s fees. Hence, it
prayed for the dismissal of the complaint and for payment of P100,000 for
exemplary damages and P300,000 as attorney’s fees and litigation
expenses.
During the trial, Dr. Vazquez testified to support the allegations in the
complaint. His testimony was corroborated by his two friends who were with
him at the time of the incident, namely, Pacita G. Cruz and Josefina Vergel
de Dios.
For its part, Cathay presented documentary evidence and the testimonies of
Mr. Yuen; Ms. Chiu; Norma Barrientos, Comptroller of its retained counsel;
and Mr. Robson. Yuen and Robson testified on Cathay’s policy of upgrading
the seat accommodation of its Marco Polo Club members when an
opportunity arises. The upgrading of the Vazquezes to First Class was done
in good faith; in fact, the First Class Section is definitely much better than the
Business Class in terms of comfort, quality of food, and service from the
cabin crew. They also testified that overbooking is a widely accepted practice
in the airline industry and is in accordance with the International Air Transport
Association (IATA) regulations. Airlines overbook because a lot of
passengers do not show up for their flight. With respect to Flight CX-905,
there was no overall overbooking to a degree that a passenger was bumped
off or downgraded. Yuen and Robson also stated that the demand letter of
the Vazquezes was immediately acted upon. Reports were gathered from
their office in Hong Kong and immediately forwarded to their counsel Atty.
Remollo for legal advice. However, Atty. Remollo begged off because his
services were likewise retained by the Vazquezes; nonetheless, he
undertook to solve the problem in behalf of Cathay. But nothing happened
until Cathay received a copy of the complaint in this case. For her part, Ms.
Chiu denied that she shouted or used foul or impolite language against the
Vazquezes. Ms. Barrientos testified on the amount of attorney’s fees and
other litigation expenses, such as those for the taking of the depositions of
Yuen and Chiu.
In its decision1 of 19 October 1998, the trial court found for the Vazquezes
and decreed as follows:
WHEREFORE, finding preponderance of evidence to sustain the instant
complaint, judgment is hereby rendered in favor of plaintiffs Vazquez
spouses and against defendant Cathay Pacific Airways, Ltd., ordering the
latter to pay each plaintiff the following:
a) Nominal damages in the amount of P100,000.00 for each plaintiff;
b) Moral damages in the amount of P2,000,000.00 for each plaintiff;
c) Exemplary damages in the amount of P5,000,000.00 for each plaintiff;
d) Attorney’s fees and expenses of litigation in the amount of P1,000,000.00
for each plaintiff; and
e) Costs of suit.
SO ORDERED.
According to the trial court, Cathay offers various classes of seats from which
passengers are allowed to choose regardless of their reasons or motives,
whether it be due to budgetary constraints or whim. The choice imposes a
clear obligation on Cathay to transport the passengers in the class chosen by
them. The carrier cannot, without exposing itself to liability, force a passenger
to involuntarily change his choice. The upgrading of the Vazquezes’
accommodation over and above their vehement objections was due to the
overbooking of the Business Class. It was a pretext to pack as many
passengers as possible into the plane to maximize Cathay’s revenues.
Cathay’s actuations in this case displayed deceit, gross negligence, and bad
faith, which entitled the Vazquezes to awards for damages.
On appeal by the petitioners, the Court of Appeals, in its decision of 24 July
2001,2 deleted the award for exemplary damages; and it reduced the awards
for moral and nominal damages for each of the Vazquezes to P250,000 and
P50,000, respectively, and the attorney’s fees and litigation expenses to
P50,000 for both of them.
The Court of Appeals ratiocinated that by upgrading the Vazquezes to First
Class, Cathay novated the contract of carriage without the former’s consent.
There was a breach of contract not because Cathay overbooked the
Business Class Section of Flight CX-905 but because the latter pushed
through with the upgrading despite the objections of the Vazquezes.
However, the Court of Appeals was not convinced that Ms. Chiu shouted at,
or meant to be discourteous to, Dr. Vazquez, although it might seemed that
way to the latter, who was a member of the elite in Philippine society and
was not therefore used to being harangued by anybody. Ms. Chiu was a
Hong Kong Chinese whose fractured Chinese was difficult to understand and
whose manner of speaking might sound harsh or shrill to Filipinos because of
cultural differences. But the Court of Appeals did not find her to have acted
with deliberate malice, deceit, gross negligence, or bad faith. If at all, she
was negligent in not offering the First Class accommodations to other
passengers. Neither can the flight stewardess in the First Class Cabin be
said to have been in bad faith when she failed to assist Dr. Vazquez in lifting
his baggage into the overhead storage bin. There is no proof that he asked
for help and was refused even after saying that he was suffering from
"bilateral carpal tunnel syndrome." Anent the delay of Yuen in responding to
the demand letter of the Vazquezes, the Court of Appeals found it to have
been sufficiently explained.
The Vazquezes and Cathay separately filed motions for a reconsideration of
the decision, both of which were denied by the Court of Appeals.
Cathay seasonably filed with us this petition in this case. Cathay maintains
that the award for moral damages has no basis, since the Court of Appeals
found that there was no "wanton, fraudulent, reckless and oppressive"
display of manners on the part of its personnel; and that the breach of
contract was not attended by fraud, malice, or bad faith. If any damage had
been suffered by the Vazquezes, it was damnum absque injuria, which is
damage without injury, damage or injury inflicted without injustice, loss or
damage without violation of a legal right, or a wrong done to a man for which
the law provides no remedy. Cathay also invokes our decision in United
Airlines, Inc. v. Court of Appeals3 where we recognized that, in accordance
with the Civil Aeronautics Board’s Economic Regulation No. 7, as amended,
an overbooking that does not exceed ten percent cannot be considered
deliberate and done in bad faith. We thus deleted in that case the awards for
moral and exemplary damages, as well as attorney’s fees, for lack of proof of
overbooking exceeding ten percent or of bad faith on the part of the airline
carrier.
On the other hand, the Vazquezes assert that the Court of Appeals was
correct in granting awards for moral and nominal damages and attorney’s
fees in view of the breach of contract committed by Cathay for transferring
them from the Business Class to First Class Section without prior notice or
consent and over their vigorous objection. They likewise argue that the
issuance of passenger tickets more than the seating capacity of each section
of the plane is in itself fraudulent, malicious and tainted with bad faith.
The key issues for our consideration are whether (1) by upgrading the seat
accommodation of the Vazquezes from Business Class to First Class Cathay
breached its contract of carriage with the Vazquezes; (2) the upgrading was
tainted with fraud or bad faith; and (3) the Vazquezes are entitled to
damages.
We resolve the first issue in the affirmative.
A contract is a meeting of minds between two persons whereby one agrees
to give something or render some service to another for a consideration.
There is no contract unless the following requisites concur: (1) consent of the
contracting parties; (2) an object certain which is the subject of the contract;
and (3) the cause of the obligation which is established.4 Undoubtedly, a
contract of carriage existed between Cathay and the Vazquezes. They
voluntarily and freely gave their consent to an agreement whose object was
the transportation of the Vazquezes from Manila to Hong Kong and back to
Manila, with seats in the Business Class Section of the aircraft, and whose
cause or consideration was the fare paid by the Vazquezes to Cathay.
The only problem is the legal effect of the upgrading of the seat
accommodation of the Vazquezes. Did it constitute a breach of contract?
Breach of contract is defined as the "failure without legal reason to comply
with the terms of a contract."5 It is also defined as the "[f]ailure, without legal
excuse, to perform any promise which forms the whole or part of the
contract."6
In previous cases, the breach of contract of carriage consisted in either the
bumping off of a passenger with confirmed reservation or the downgrading of
a passenger’s seat accommodation from one class to a lower class. In this
case, what happened was the reverse. The contract between the parties was
for Cathay to transport the Vazquezes to Manila on a Business Class
accommodation in Flight CX-905. After checking-in their luggage at the Kai
Tak Airport in Hong Kong, the Vazquezes were given boarding cards
indicating their seat assignments in the Business Class Section. However,
during the boarding time, when the Vazquezes presented their boarding
passes, they were informed that they had a seat change from Business
Class to First Class. It turned out that the Business Class was overbooked in
that there were more passengers than the number of seats. Thus, the seat
assignments of the Vazquezes were given to waitlisted passengers, and the
Vazquezes, being members of the Marco Polo Club, were upgraded from
Business Class to First Class.
We note that in all their pleadings, the Vazquezes never denied that they
were members of Cathay’s Marco Polo Club. They knew that as members of
the Club, they had priority for upgrading of their seat accommodation at no
extra cost when an opportunity arises. But, just like other privileges, such
priority could be waived. The Vazquezes should have been consulted first
whether they wanted to avail themselves of the privilege or would consent to
a change of seat accommodation before their seat assignments were given
to other passengers. Normally, one would appreciate and accept an
upgrading, for it would mean a better accommodation. But, whatever their
reason was and however odd it might be, the Vazquezes had every right to
decline the upgrade and insist on the Business Class accommodation they
had booked for and which was designated in their boarding passes. They
clearly waived their priority or preference when they asked that other
passengers be given the upgrade. It should not have been imposed on them
over their vehement objection. By insisting on the upgrade, Cathay breached
its contract of carriage with the Vazquezes.
We are not, however, convinced that the upgrading or the breach of contract
was attended by fraud or bad faith. Thus, we resolve the second issue in the
negative.
Bad faith and fraud are allegations of fact that demand clear and convincing
proof. They are serious accusations that can be so conveniently and casually
invoked, and that is why they are never presumed. They amount to mere
slogans or mudslinging unless convincingly substantiated by whoever is
alleging them.
Fraud has been defined to include an inducement through insidious
machination. Insidious machination refers to a deceitful scheme or plot with
an evil or devious purpose. Deceit exists where the party, with intent to
deceive, conceals or omits to state material facts and, by reason of such
omission or concealment, the other party was induced to give consent that
would not otherwise have been given.7
Bad faith does not simply connote bad judgment or negligence; it imports a
dishonest purpose or some moral obliquity and conscious doing of a wrong,
a breach of a known duty through some motive or interest or ill will that
partakes of the nature of fraud.8
We find no persuasive proof of fraud or bad faith in this case. The Vazquezes
were not induced to agree to the upgrading through insidious words or
deceitful machination or through willful concealment of material facts. Upon
boarding, Ms. Chiu told the Vazquezes that their accommodations were
upgraded to First Class in view of their being Gold Card members of
Cathay’s Marco Polo Club. She was honest in telling them that their seats
were already given to other passengers and the Business Class Section was
fully booked. Ms. Chiu might have failed to consider the remedy of offering
the First Class seats to other passengers. But, we find no bad faith in her
failure to do so, even if that amounted to an exercise of poor judgment.
Neither was the transfer of the Vazquezes effected for some evil or devious
purpose. As testified to by Mr. Robson, the First Class Section is better than
the Business Class Section in terms of comfort, quality of food, and service
from the cabin crew; thus, the difference in fare between the First Class and
Business Class at that time was $250.9 Needless to state, an upgrading is
for the better condition and, definitely, for the benefit of the passenger.
We are not persuaded by the Vazquezes’ argument that the overbooking of
the Business Class Section constituted bad faith on the part of Cathay.
Section 3 of the Economic Regulation No. 7 of the Civil Aeronautics Board,
as amended, provides:
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.
It is clear from this section that an overbooking that does not exceed ten
percent is not considered deliberate and therefore does not amount to bad
faith.10 Here, while there was admittedly an overbooking of the Business
Class, there was no evidence of overbooking of the plane beyond ten
percent, and no passenger was ever bumped off or was refused to board the
aircraft.
Now we come to the third issue on damages.
The Court of Appeals awarded each of the Vazquezes moral damages in the
amount of P250,000. Article 2220 of the Civil Code provides:
Article 2220. Willful injury to property may be a legal ground for awarding
moral damages if the court should find that, under the circumstances, such
damages are justly due. The same rule applies to breaches of contract where
the defendant acted fraudulently or in bad faith.
Moral damages include physical suffering, mental anguish, fright, serious
anxiety, besmirched reputation, wounded feelings, moral shock, social
humiliation, and similar injury. Although incapable of pecuniary computation,
moral damages may be recovered if they are the proximate result of the
defendant’s wrongful act or omission.11 Thus, case law establishes the
following requisites for the award of moral damages: (1) there must be an
injury clearly sustained by the claimant, whether physical, mental or
psychological; (2) there must be a culpable act or omission factually
established; (3) the wrongful act or omission of the defendant is the
proximate cause of the injury sustained by the claimant; and (4) the award for
damages is predicated on any of the cases stated in Article 2219 of the Civil
Code.12
Moral damages predicated upon a breach of contract of carriage may only be
recoverable in instances where the carrier is guilty of fraud or bad faith or
where the mishap resulted in the death of a passenger.13 Where in
breaching the contract of carriage the airline is not shown to have acted
fraudulently or in bad faith, liability for damages is limited to the natural and
probable consequences of the breach of the obligation which the parties had
foreseen or could have reasonably foreseen. In such a case the liability does
not include moral and exemplary damages.14
In this case, we have ruled that the breach of contract of carriage, which
consisted in the involuntary upgrading of the Vazquezes’ seat
accommodation, was not attended by fraud or bad faith. The Court of
Appeals’ award of moral damages has, therefore, no leg to stand on.
The deletion of the award for exemplary damages by the Court of Appeals is
correct. It is a requisite in the grant of exemplary damages that the act of the
offender must be accompanied by bad faith or done in wanton, fraudulent or
malevolent manner.15 Such requisite is absent in this case. Moreover, to be
entitled thereto the claimant must first establish his right to moral, temperate,
or compensatory damages.16 Since the Vazquezes are not entitled to any of
these damages, the award for exemplary damages has no legal basis. And
where the awards for moral and exemplary damages are eliminated, so must
the award for attorney’s fees.17
The most that can be adjudged in favor of the Vazquezes for Cathay’s
breach of contract is an award for nominal damages under Article 2221 of the
Civil Code, which reads as follows:
Article 2221 of the Civil Code provides:
Article 2221. Nominal damages are adjudicated in order that a right of the
plaintiff, which has been violated or invaded by the defendant, may be
vindicated or recognized, and not for the purpose of indemnifying the plaintiff
for any loss suffered by him.
Worth noting is the fact that in Cathay’s Memorandum filed with this Court, it
prayed only for the deletion of the award for moral damages. It deferred to
the Court of Appeals’ discretion in awarding nominal damages; thus:
As far as the award of nominal damages is concerned, petitioner respectfully
defers to the Honorable Court of Appeals’ discretion. Aware as it is that
somehow, due to the resistance of respondents-spouses to the normally-
appreciated gesture of petitioner to upgrade their accommodations, petitioner
may have disturbed the respondents-spouses’ wish to be with their
companions (who traveled to Hong Kong with them) at the Business Class
on their flight to Manila. Petitioner regrets that in its desire to provide the
respondents-spouses with additional amenities for the one and one-half (1
1/2) hour flight to Manila, unintended tension ensued.18
Nonetheless, considering that the breach was intended to give more benefit
and advantage to the Vazquezes by upgrading their Business Class
accommodation to First Class because of their valued status as Marco Polo
members, we reduce the award for nominal damages to P5,000.
Before writing finis to this decision, we find it well-worth to quote the apt
observation of the Court of Appeals regarding the awards adjudged by the
trial court:
We are not amused but alarmed at the lower court’s unbelievable alacrity,
bordering on the scandalous, to award excessive amounts as damages. In
their complaint, appellees asked for P1 million as moral damages but the
lower court awarded P4 million; they asked for P500,000.00 as exemplary
damages but the lower court cavalierly awarded a whooping P10 million; they
asked for P250,000.00 as attorney’s fees but were awarded P2 million; they
did not ask for nominal damages but were awarded P200,000.00. It is as if
the lower court went on a rampage, and why it acted that way is beyond all
tests of reason. In fact the excessiveness of the total award invites the
suspicion that it was the result of "prejudice or corruption on the part of the
trial court."

The presiding judge of the lower court is enjoined to hearken to the Supreme
Court’s admonition in Singson vs. CA (282 SCRA 149 [1997]), where it said:

The well-entrenched principle is that the grant of moral damages depends

upon the discretion of the court based on the circumstances of each case.
This discretion is limited by the principle that the amount awarded should not
be palpably and scandalously excessive as to indicate that it was the result
of prejudice or corruption on the part of the trial court….

and in Alitalia Airways vs. CA (187 SCRA 763 [1990], where it was held:

Nonetheless, we agree with the injunction expressed by the Court of Appeals

that passengers must not prey on international airlines for damage awards,
like "trophies in a safari." After all neither the social standing nor prestige of
the passenger should determine the extent to which he would suffer because
of a wrong done, since the dignity affronted in the individual is a quality
inherent in him and not conferred by these social indicators. 19

We adopt as our own this observation of the Court of Appeals.

WHEREFORE, the instant petition is hereby partly GRANTED. The Decision

of the Court of Appeals of 24 July 2001 in CA-G.R. CV No. 63339 is hereby
MODIFIED, and as modified, the awards for moral damages and attorney’s
fees are set aside and deleted, and the award for nominal damages is
reduced to P5,000.

No pronouncement on costs.

SO ORDERED.
G.R. No. L-11037 December 29, 1960
EDGARDO CARIAGA, ET AL., plaintiffs-appellants, vs. LAGUNA
TAYABAS BUS COMPANY, defendant-appellant. MANILA RAILROAD
COMPANY, defendant-appellee.
DIZON, J.:
At about 1:00 p.m. on June 18, 1952, Bus No. 133 of the Laguna Tayabas
Bus Co. — hereinafter referred to as the LTB — driven by Alfredo Moncada,
left its station at Azcarraga St., Manila, for Lilio, Laguna, with Edgardo
Cariaga, a fourth-year medical student of the University of Santo Tomas, as
one of its passengers. At about 3:00 p.m., as the bus reached that part of the
poblacion of Bay, Laguna, where the national highway crossed a railroad
track, it bumped against the engine of a train then passing by with such
terrific force that the first six wheels of the latter were derailed, the engine
and the front part of the body of the bus was wrecked, the driver of the bus
died instantly, while many of its passengers, Edgardo among them, were
severely injured. Edgardo was first confined at the San Pablo City Hospital
from 5:00 p.m., June 18, 1952, to 8:25 a.m., June 20 of the same year when
he was taken to the De los Santos Clinic, Quezon City. He left that clinic on
October 14 to be transferred to the University of Santo Tomas Hospital
where he stayed up to November 15. On this last date he was taken back to
the De los Santos Clinic where he stayed until January 15, 1953. He was
unconscious during the first 35 days after the accident; at the De los Santos
Clinic Dr. Gustilo removed the fractured bones which lacerated the right
frontal lobe of his brain and at the University of Santo Tomas Hospital Dr.
Gustilo performed another operation to cover a big hole on the right frontal
part of the head with a tantalum plate.
The LTB paid the sum of P16,964.45 for all the hospital, medical and
miscellaneous expenses incurred from June 18, 1952 to April, 1953. From
January 15, 1953 up to April of the same year Edgardo stayed in a private
house in Quezon, City, the LTB having agreed to give him a subsistence
allowance of P10.00 daily during his convalescence, having spent in this
connection the total sum of P775.30 in addition to the amount already
referred to.
On April 24, 1953 the present action was filed to recover for Edgardo
Cariaga, from the LTB and the MRR Co., and total sum of P312,000.00 as
actual, compensatory, moral and exemplary damages, and for his parents,
the sum of P18,00.00 in the same concepts. The LTB disclaimed liability
claiming that the accident was due to the negligence of its co-defendant, the
Manila Railroad Company, for not providing a crossing bar at the point where
the national highway crossed the railway track, and for this reason filed the
corresponding cross-claim against the latter company to recover the total
sum of P18,194.75 representing the expenses paid to Edgardo Cariaga. The
Manila Railroad Company, in turn, denied liability upon the complaint and
cross-claim alleging that it was the reckless negligence of the bus driver that
caused the accident.
The lower court held that it was the negligence of the bus driver that caused
the accident and, as a result, rendered judgment sentencing the LTB to pay
Edgardo Cariaga the sum of P10,490.00 as compensatory damages, with
interest at the legal rate from the filing of the complaint, and dismissing the
cross-claim against the Manila Railroad Company. From this decision the
Cariagas and the LTB appealed.
The Cariagas claim that the trial court erred: in awarding only P10,490.00 as
compensatory damages to Edgardo; in not awarding them actual and moral
damages, and in not sentencing appellant LTB to pay attorney's fees.
On the other hand, the LTB's principal contention in this appeal is that the
trial court should have held that the collision was due to the fault of both the
locomotive driver and the bus driver and erred, as a consequence, in not
holding the Manila Railroad Company liable upon the cross-claim filed
against it.
We shall first dispose of the appeal of the bus company. Its first contention is
that the driver of the train locomotive, like the bus driver, violated the law,
first, in sounding the whistle only when the collision was about to take place
instead of at a distance at least 300 meters from the crossing, and second, in
not ringing the locomotive bell at all. Both contentions are without merits.
After considering the evidence presented by both parties the lower court
expressly found:
. . . While the train was approximately 300 meters from the crossing, the
engineer sounded two long and two short whistles and upon reaching a point
about 100 meters from the highway, he sounded a long whistle which lasted
up to the time the train was about to cross it. The bus proceeded on its way
without slackening its speed and it bumped against the train engine, causing
the first six wheels of the latter to be derailed.
xxx xxx xxx
. . . that the train whistle had been sounded several times before it reached
the crossing. All witnesses for the plaintiffs and the defendants are uniform in
stating that they heard the train whistle sometime before the impact and
considering that some of them were in the bus at the time, the driver thereof
must have heard it because he was seated on the left front part of the bus
and it was his duty and concern to observe such fact in connection with the
safe operation of the vehicle. The other L.T.B. bus which arrived ahead at the
crossing, heeded the warning by stopping and allowing the train to pass and
so nothing happened to said vehicle. On the other hand, the driver of the bus
No. 133 totally ignored the whistle and noise produced by the approaching
train and instead he tried to make the bus pass the crossing before the train
by not stopping a few meters from the railway track and in proceeding ahead.
The above findings of the lower court are predicated mainly upon the
testimony of Gregorio Ilusondo, a witness for the Manila Railroad Company.
Notwithstanding the efforts exerted by the LTB to assail his credibility, we do
not find in the record any fact or circumstance sufficient to discredit his
testimony. We have, therefore, no other alternative but to accept the findings
of the trial court to the effect, firstly, that the whistle of locomotive was
sounded four times — two long and two short — "as the train was
approximately 300 meters from the crossing"; secondly, that another LTB
bus which arrived at the crossing ahead of the one where Edgardo Cariaga
was a passenger, paid heed to the warning and stopped before the
"crossing", while — as the LTB itself now admits (Brief p. 5) — the driver of
the bus in question totally disregarded the warning.
But to charge the MRR Co. with contributory negligence, the LTB claims that
the engineer of the locomotive failed to ring the bell altogether, in violation of
the section 91 of Article 1459, incorporated in the charter of the said MRR
Co. This contention — as is obvious — is the very foundation of the cross-
claim interposed by the LTB against its co-defendant. The former, therefore,
had the burden of proving it affirmatively because a violation of law is never
presumed. The record discloses that this burden has not been satisfactorily
discharged.
The Cariagas, as appellants, claim that the award of P10,000.00
compensatory damages to Eduardo is inadequate considering the nature and
the after effects of the physical injuries suffered by him. After a careful
consideration of the evidence on this point we find their contentions to be
well-founded.
From the deposition of Dr. Romeo Gustilo, a neurosurgeon, it appears that,
as a result of the injuries suffered by Edgardo, his right forehead was
fractured necessitating the removal of practically all of the right frontal lobe of
his brain. From the testimony of Dr. Jose A. Fernandez, a psychiatrist, it may
be gathered that, because of the physical injuries suffered by Edgardo, his
mentality has been so reduced that he can no longer finish his studies as a
medical student; that he has become completely misfit for any kind of work;
that he can hardly walk around without someone helping him, and has to use
a brace on his left leg and feet.
Upon the whole evidence on the matter, the lower court found that the
removal of the right frontal lobe of the brain of Edgardo reduced his
intelligence by about 50%; that due to the replacement of the right frontal
bone of his head with a tantalum plate Edgardo has to lead a quite and
retired life because "if the tantalum plate is pressed in or dented it would
cause his death."
The impression one gathers from this evidence is that, as a result of the
physical injuries suffered by Edgardo Cariaga, he is now in a helpless
condition, virtually an invalid, both physically and mentally.
Appellant LTB admits that under Art. 2201 of the Civil Code the damages for
which the obligor, guilty of a breach of contract but who acted in good faith, is
liable shall be those that are the natural and probable consequences of the
breach and which the parties had forseen or could have reasonably forseen
at the time the obligation was constituted, provided such damages, according
to Art. 2199 of the same Code, have been duly proved. Upon this premise it
claims that only the actual damages suffered by Edgardo Cariaga consisting
of medical, hospital and other expenses in the total sum of P17,719.75 are
within this category. We are of the opinion, however, that the income which
Edgardo Cariaga could earn if he should finish the medical course and pass
the corresponding board examinations must be deemed to be within the
same category because they could have reasonably been foreseen by the
parties at the time he boarded the bus No. 133 owned and operated by the
LTB. At that time he was already a fourth-year student in medicine in a
reputable university. While his scholastic may not be first rate (Exhibits 4, 4-A
to 4-C), it is, nevertheless, sufficient to justify the assumption that he could
have passed the board test in due time. As regards the income that he could
possibly earn as a medical practitioner, it appears that, according to Dr.
Amado Doria, a witness for the LTB, the amount of P300.00 could easily be
expected as the minimum monthly income of Edgardo had he finished his
studies.
Upon consideration of all the facts mentioned heretofore this Court is of the
opinion, and so holds, that the compensatory damages awarded to Edgardo
Cariaga should be increased to P25,000.00.
Edgardo Cariaga's claim for moral damages and attorney's fees was denied
by the trial court, the pertinent portion of its decision reading as follows:
Plaintiffs' claim for moral damages cannot also be granted. Article 2219 of
the Civil Code enumerates the instances when moral damages may be
covered and the case under consideration does not fall under any one of
them. The present action cannot come under paragraph 2 of said article
because it is not one of the quasi-delict and cannot be considered as such
because of the pre-existing contractual relation between the Laguna Tayabas
Bus Company and Edgardo Cariaga. Neither could defendant Laguna
Tayabas Bus Company be held liable to pay moral damages to Edgardo
Cariaga under Article 2220 of the Civil Code on account of breach of its
contract of carriage because said defendant did not act fraudulently or in bad
faith in connection therewith. Defendant Laguna Tayabas Bus Company had
exercised due diligence in the selection and supervision of its employees like
the drivers of its buses in connection with the discharge of their duties and so
it must be considered an obligor in good faith.
The plaintiff Edgardo Cariaga is also not entitled to recover for attorney's
fees, because this case does not fall under any of the instances enumerated
in Article 2208 of the Civil Code.
We agree with the trial court and, to the reason given above, we add those
given by this Court in Cachero vs. Manila Yellow Taxicab Co., Inc.(101 Phil.,
523, 530, 533):
A mere perusal of plaintiff's complaint will show that this action against the
defendant is predicated on an alleged breach of contract of carriage, i.e., the
failure of the defendants to bring him "safely and without mishaps" to his
destination, and it is to be noted that the chauffeur of defendant's taxicab that
plaintiff used when he received the injuries involved herein, Gregorio Mira,
has not even made a party defendant to this case.
Considering, therefore, the nature of plaintiff's action in this case, is he
entitled to compensation for moral damages? Article 2219 of the Civil Code
says the following:
Art. 2219. Moral damages may be recovered in the following and analogous
cases:
(1) A criminal offense resulting in physical injuries;
(2) Quasi-delicts causing physical injuries;
(3) Seduction, abduction, rape, or other lascivious acts;
(4) Adultery or concubinage;
(5) Illegal or arbitrary detention or arrest;
(6) Illegal search;
(7) Libel, slander or any other form of defamation;
(8) Malicious prosecution;
(9) Acts mentioned in Article 309;
(10) Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34, and
35.
xxx xxx xxx
Of course enumerated in the just quoted Article 2219 only the first two may
have any bearing on the case at bar. We find, however, with regard to the
first that the defendant herein has not committed in connection with this case
any "criminal offense resulting in physical injuries". The one that committed
the offense against the plaintiff is Gregorio Mira, and that is why he has been
already prosecuted and punished therefor. Altho (a) owners and managers of
an establishment and enterprise are 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; (b) employers are likewise
liable for damages caused by their employees and household helpers acting
within the scope of their assigned task (Article 218 of the Civil Code); and (c)
employers and corporations engaged in any kind of industry are subsidiary
civilly liable for felonies committed by their employees in the discharge of
their duties (Art. 103, Revised Penal Code), plaintiff herein does not maintain
this action under the provisions of any of the articles of the codes just
mentioned and against all the persons who might be liable for the damages
caused, but as a result of an admitted breach of contract of carriage and
against the defendant employer alone. We, therefore, hold that the case at
bar does not come within the exception of paragraph 1, Article 2219 of the
Civil Code.
The present complaint is not based either on a "quasi-delict causing physical
injuries" (Art. 2219, par. 2 of the Civil Code). From the report of the Code
Commission on the new Civil Code. We copy the following:
A question of nomenclature confronted the Commission. After a careful
deliberation, it was agreed to use the term "quasi-delict" for those obligations
which do not arise from law, contracts, quasi-contracts, or criminal offenses.
They are known in Spanish legal treaties as "culpa aquiliana", "culpa-extra-
contractual" or "cuasi-delitos". The phrase "culpa-extra-contractual" or its
translation "extra-contractual-fault" was eliminated because it did not exclude
quasi-contractual or penal obligations. "Aquilian fault" might have been
selected, but it was thought inadvisable to refer to so ancient a law as the
"Lex Aquilia". So "quasi-delict" was chosen, which more nearly corresponds
to the Roman Law classification of the obligations and is in harmony with the
nature of this kind of liability.
The Commission also thought of the possibility of adopting the word "tort"
from Anglo-American law. But "tort" under that system is much broader than
the Spanish-Philippine concept of obligations arising from non-contractual
negligence. "Tort" in Anglo-American jurisprudence includes not only
negligence, but also intentional criminal act, such as assault and battery,
false imprisonment and deceit. In the general plan of the Philippine legal
system, intentional and malicious acts are governed by the Penal Code,
although certain exceptions are made in the Project. (Report of the Code
Commission, pp. 161-162).

In the case of Cangco, vs. Manila Railroad, 38 Phil. 768, We established the
distinction between obligation derived from negligence and obligation as a
result of a breach of contract. Thus, we said:

It is important to note that the foundation of the legal liability of the defendant
is the contract of carriage, and that the obligation to respond for the damage
which plaintiff has suffered arises, if at all, from the breach of that contract by
reason of the failure of defendant to exercise due care in its performance.
That is to say, its liability is direct and immediate, differing essentially in the
legal viewpoint from the presumptive responsibility for the negligence of its
servants, imposed by Article 1903 of the Civil Code (Art. 2180 of the new),
which can be rebutted by proof of the exercise of due care in their selection
of supervision. Article 1903 is not applicable to obligations arising EX
CONTRACTU, but only to extra-contractual obligations — or to use the
technical form of expression, that article relates only to CULPA AQUILIANA'
and not to CULPA CONTRACTUAL.lawphil.net

The decisions in the cases of Castro vs. Acro Taxicab Co., (82 Phil., 359; 46
Off. Gaz., No. 5, p. 2023); Lilius, et al. vs. Manila Railroad, 59 Phil., 758) and
others, wherein moral damages were awarded to the plaintiffs, are not
applicable to the case at bar because said decision were rendered before the
effectivity of the new Civil Code (August 30, 1950) and for the further reason
that the complaints filed therein were based on different causes of action.

In view of the foregoing the sum of P2,000 was awarded as moral damages
by the trial court has to be eliminated, for under the law it is not a
compensation awardable in a case like the one at bar.

What has been said heretofore relative to the moral damages claimed by
Edgardo Cariaga obviously applies with greater force to a similar claim (4th
assignment of error) made by his parents.

The claim made by said spouses for actual and compensatory damages is
likewise without merits. As held by the trial court, in so far as the LTB is
concerned, the present action is based upon a breach of contract of carriage
to which said spouses were not a party, and neither can they premise their
claim upon the negligence or quasi-delict of the LTB for the simple reason
that they were not themselves injured as a result of the collision between the
LTB bus and train owned by the Manila Railroad Company.

Wherefore, modified as above indicated, the appealed judgement is hereby

affirmed in all other respects, with costs against appellant LTB.
G.R. No. 179117 February 3, 2010
NORTHWEST AIRLINES, INC., Petitioner, vs. SPOUSES EDWARD J.
HESHAN AND NELIA L. HESHAN AND DARA GANESSA L. HESHAN,
REPRESENTED BY HER PARENTS EDWARD AND NELIA HESHAN,
Respondents.
DECISION
CARPIO MORALES, J.:
In July 1998, Edward Heshan (Edward) purchased three (3) roundtrip tickets
from Northwest Airlines, Inc. (petitioner) for him, his wife Nelia Heshan
(Nelia) and daughter Dara Ganessa Heshan (Dara) for their trip from Manila
to St. Louis, Missouri, USA and back to attend an ice skating competition
where then seven yearold Dara was to participate.
When Dara’s participation in the ice skating event ended on August 7, 1998,
the Heshans proceeded to the airport to take the connecting flight from St.
Louis to Memphis on their way to Los Angeles. At the airport, the Heshans
first checked-in their luggage at the airport’s "curbside check-in" near the
entrance.2 Since they arrived three hours early for their 6:05 p.m. flight
(Flight No. 972M), the Heshans whiled away the time at a nearby coffee
shop. At 5:15 p.m. when the check-in counter opened, Edward took to the
line where he was second in the queue. When his turn came and presented
the tickets to petitioner’s customer service agent Ken Carns (Carns) to get
the boarding passes, he was asked to step aside and wait to be called
again.3
After all the other departing passengers were given their boarding passes,
the Heshans were told to board the plane without any boarding pass given to
them and to just occupy open seats therein. Inside the plane, the Heshans
noticed that only one vacant passenger seat was available, which was
offered to Dara, while Edward and Nelia were directed to occupy two "folding
seats" located at the rear portion of the plane. To respondents, the two
folding seats were crew seats intended for the stewardesses.4
Upset that there were not enough passenger seats for them, the Heshans
complained to the cabin crew about the matter but were told that if they did
not like to occupy the seats, they were free to disembark from the plane. And
disembark they did, complaining thereafter to Carns about their situation.
Petitioner’s plane then departed for Memphis without respondents onboard.5
The Heshans were later endorsed to and carried by Trans World Airways to
Los Angeles. Respondents arrived in Los Angeles at 10:30 p.m. of the same
day but had to wait for three hours at the airport to retrieve their luggage from
petitioner’s Flight No. 972M.6 Respondents stayed for five days more in the
U.S. before going back home to Manila.7
On September 24, 1998, respondents sent a letter to petitioner to demand
indemnification for the breach of contract of carriage.8 Via letter of December
4, 1998, petitioner replied that respondents were prohibited to board Flight
No. 972M for "verbally abus[ing] [the] flight crew."9
As their demand remained unheeded, respondents filed a complaint for
breach of contract with damages at the Regional Trial Court (RTC) of
Quezon City.10
From the depositions of petitioner’s employees Carns, Mylan Brown (Brown)
and Melissa Seipel (Seipel), the following version is gathered:
The Heshans did not have reservations for particular seats on the flight.
When they requested that they be seated together, Carns denied the request
and explained that other passengers had pre-selected seats and that the
computerized seating system did not reflect that the request could be
accommodated at the time. Carns nonetheless assured the Heshans that
they would be able to board the plane and be seated accordingly, as he in
fact instructed them ten minutes before the plane’s departure, to board the
plane even without boarding passes and to occupy "open seats" therein.11
By Seipel’s claim, as the Heshans were upset upon learning that they were
not seated together on the plane, she told them that she would request other
passengers to switch places to accommodate their demand; that she never
had a chance to try to carry out their demand, however, as she first had to
find space for their bags in the overhead compartment; and that the Heshans
cursed her which compelled her to seek assistance from Brown in dealing
with them.
Brown averred that she went to the back portion of the plane to help out but
she was brushed aside by Nelia who was cursing them as she stormed out of
the plane followed by Edward and Dara.13
Petitioner denied that the Heshans (hereafter respondents) were told to
occupy "folding seats" or crew seats since "[Federal Aviation Authority]
regulations say no passengers are to sit there."14 As for respondents not
having been given boarding passes, petitioner asserted that that does not in
itself mean that the flight was overbooked, for
[t]his is done on last minute boarding when flights are full and in order to get
passengers on their way and to get the plane out on time. This is acceptable
procedure.15
Branch 96 of the RTC, by Decision16 of August 20, 2002, rendered judgment
in favor of respondents, disposing as follows:
WHEREFORE, judgment is rendered ordering [petitioner] Northwest Airlines,
Inc. to pay [respondents] Edward J. Heshan, Nelia L. Heshan and Dara
Ganessa L. Heshan the following:
1. P3,000,000.00, as moral damages;
2. P500,000.00, as exemplary damages;
3. A sum equivalent of 20% of the foregoing amounts, as attorney’s fees;
and,
4. Costs of suit.
SO ORDERED.
In finding for respondents, the trial court noted:
[T]hat the [respondents] held confirmed reservations for the St Louis-
Memphis leg of their return trip to the Philippines is not disputed. As such,
they were entitled as of right under their contract to be accommodated in the
flight, regardless of whether they had selected their seats in advance or not.
They had arrived at the airport early to make sure of their seating together,
and, in fact, Edward was second in the queue for boarding passes. Yet,
Edward was unceremoniously sidelined and curtly told to wait without any
explanations why. His concerned seeking for explanations was repeatedly
rebuffed by the airline employees. When, at last, they were told to board the
aircraft although they had not yet been issued boarding passes, which they
thought to be highly unusual, they soon discovered, to their dismay, that the
plane was fully booked, with only one seat left for the 3 of them. Edward and
Nelia rejected the offer [to take] the crew seats. [Respondents] were thus
forced to disembark. (italics in the original; emphasis and underscoring
supplied)
On appeal, the Court of Appeals, by Decision18 of June 22, 2007, sustained
the trial court’s findings but reduced the award of moral and exemplary
damages to ₱2 million and ₱300,000, respectively.19 In affirming the findings
of the trial court, the appellate court held:
… [I]t is clear that the only instances [sic] when the [petitioner] and its agents
allow its passengers to board the plane without any boarding pass is when
the flights are full and the plane is running late. Taking into account the fact
that the [respondents] arrived at the airport early, checked-in their baggage
before hand and were in fact at the gates of the boarding area on time, thus,
it could not be said that they can fall under the exceptional circumstance
[sic]. It bears stressing at this juncture that it becomes a highly irregular
situation that despite the fact that the [respondents] showed up on time at the
boarding area[,] they were made to go in last and sans any boarding passes.
Thus, We hold that it can be logically inferred that the reason why no
boarding passes were immediately issued to the [respondents] is because
Flight 972 from St. Louis to Memphis is full and the [respondents] were
"bumped off" from their flight. (emphasis, italics and underscoring supplied)
Reconsideration having been denied by the appellate court,20 petitioner filed
the present petition for review upon the issues of whether the appellate court
I
. . . ERRED IN RULING THAT RESPONDENTS WERE ENTITLED TO
MORAL DAMAGES…
II
. . . ERRED IN RULING THAT RESPONDENTS WERE ENTITLED TO
EXEMPLARY DAMAGES…
III
. . . ERRED IN RULING THAT RESPONDENTS WERE ENTITLED TO
ATTORNEY’S FEES…
IV
. . .ASSUMING ARGUENDO THAT RESPONDENTS WERE ENTITLED TO
AN AWARD OF DAMAGES, [ERRED IN AWARDING EXCESSIVE
DAMAGES TO RESPONDENTS] .
V
. . . ERRED IN NOT FINDING FOR [IT] ON ITS COUNTERCLAIM.21
To petitioner, the present petition offers compelling reasons to again review
the congruent factual findings of the lower courts which, to it, are contrary to
the evidence on record; that the lower courts disregarded vital testimonies of
its witnesses; that the appellate court premised its decision on a
misapprehension of facts and failed to consider certain relevant facts which,
if properly taken into account, will justify a different conclusion; that the
appellate court made several inferences which were manifestly mistaken and
absurd; and that the appellate court exercised grave abuse of discretion in
the appreciation of facts.
Petitioner maintains that it did not violate the contract of carriage since
respondents were eventually transported from Memphis to Los Angeles,
albeit via another airline, and that respondents made no claim of having
sustained injury during the carriage.
Petitioner goes on to posit that if indeed crew seats were offered to
respondents, its crew would have had nowhere to sit and the plane would not
have been able to depart, and that in reality, respondents voluntarily
disembarked from the aircraft because they were not willing to wait to be
seated together.
At all events, petitioner finds the amount of damages imposed by the
appellate court "excessive and unprecedented" and needing substantial
reduction.
In their Comment, respondents counter that since the petition is predicated
on questions of facts and the appellate court affirmed the trial court’s factual
findings, these are entitled to great weight and respect.
Respondents thus maintain that petitioner was guilty of breach of contract.
They cite Singapore Airlines v. Fernandez, which ruled:
[W]hen an airline issues a ticket to a passenger, confirmed for a particular
flight on a certain date, a contract of carriage arises. The passenger then has
every right to expect that he be transported on that flight and on that date. If
he does not, then the carrier opens itself to a suit for a breach of contract of
carriage.
The petition fails.
As has repeatedly been underscored, in petitions for review on certiorari, the
general rule is that only questions of law may be raised by the parties and
passed upon by the Court.29 Factual findings of the appellate court are
generally binding on the Court, especially when in complete accord with the
findings of the trial court, as in the present case, save for some recognized
exceptions.30
The issues raised by petitioner are predicated on the appreciation of factual
issues. In weighing the evidence of the parties, the trial court found
respondents’ more credible.
An examination of the evidence presented by petitioner shows that it
consisted only of depositions of its witnesses. It had in its possession and
disposition pertinent documents such as the flight manifest and the plane’s
actual seating capacity and layout which could have clearly refuted
respondents’ claims that there were not enough passenger seats available
for them. It inexplicably failed to offer even a single piece of documentary
evidence. The Court thus believes that if at least the cited documentary
evidence had been produced, it would have been adverse to petitioner’s
case.31
More. Petitioner failed to satisfactorily explain why it did not issue boarding
passes to respondents who were confirmed passengers, even after they had
checked-in their luggage three hours earlier. That respondents did not
reserve seats prior to checking-in did not excuse the non-issuance of
boarding passes.
From Carns’ following testimony, viz:
Q. Now you mentioned open seats, Mr. Carns, can you tell us what the
phrase or term open seats mean?
A. Well, about 10 minutes before boarding time when we cancel those who
do not take reserve seats, we know how many passengers are on the plane
and we just tell the other passengers to take whatever seat is available at
that time,32 it is gathered that respondents were made to wait for last-minute
cancellations before they were accommodated onto the plane. This, coupled
with petitioner’s failure to issue respondents their boarding passes and the
eleventh-hour directive for them to embark, reinforces the impression that the
flight was overbooked.
Petitioner’s assertion that respondents disembarked from the plane when
their request to be seated together was ignored does not impress. The
observation of the appellate court, viz:
x x x x [T]he fact that the Appellees still boarded the plane ten (10) minutes
prior to the departure time, despite knowing that they would be seated apart,
is a clear manifestation of the Appellees’ willingness to abandon their request
and just board the plane in order to catch their flight. But as it turns out, there
were not enough seats for the three of them as aptly found by the Court a
quo, to which We subscribed [sic]. x x x x,33 merits the Court’s concurrence.
Nonetheless, the petition is in part meritorious. There is a need to
substantially reduce the moral damages awarded by the appellate court.
While courts are given discretion to determine the amount of damages to be
awarded, it is limited by the principle that the amount awarded should not be
palpably and scandalously excessive.34
Moral damages are neither intended to impose a penalty to the wrongdoer,
nor to enrich the claimant. Taking into consideration the facts and
circumstances attendant to the case, an award to respondents of ₱500,000,
instead of ₱2,000,000, as moral damages is to the Court reasonable.35
WHEREFORE, the assailed Decision and Resolution of the Court of Appeals
are AFFIRMED with MODIFICATION. The award of moral damages is
reduced to ₱500,000. In all other respects, the Decision is AFFIRMED.
Costs against petitioner.
SO ORDERED.
G.R. No. 157009 March 17, 2010
SULPICIO LINES, INC., Petitioner, vs. DOMINGO E. CURSO, LUCIA E.
CURSO, MELECIO E. CURSO, SEGUNDO E. CURSO, VIRGILIO E.
CURSO, DIOSDADA E. CURSO, and CECILIA E. CURSO, Respondents.
DECISION
BERSAMIN, J.:
Are the surviving brothers and sisters of a passenger of a vessel that sinks
during a voyage entitled to recover moral damages from the vessel owner as
common carrier?
This is the question presented in the appeal taken by the common carrier
from the reversal by the Court of Appeals (CA) of the decision of the
Regional Trial Court (RTC) dismissing the complaint for various damages
filed by the surviving brothers and sisters of the late Dr. Cenon E. Curso
upon a finding that force majeure had caused the sinking. The CA awarded
moral and other damages to the surviving brothers and sisters.
Antecedents
On October 23, 1988, Dr. Curso boarded at the port of Manila the MV Doña
Marilyn, an inter-island vessel owned and operated by petitioner Sulpicio
Lines, Inc., bound for Tacloban City. Unfortunately, the MV Doña Marilyn
sank in the afternoon of October 24, 1988 while at sea due to the inclement
sea and weather conditions brought about by Typhoon Unsang. The body of
Dr. Curso was not recovered, along with hundreds of other passengers of the
ill-fated vessel. At the time of his death, Dr. Curso was 48 years old, and
employed as a resident physician at the Naval District Hospital in Naval,
Biliran. He had a basic monthly salary of ₱3,940.00, and would have retired
from government service by December 20, 2004 at the age of 65.
On January 21, 1993, the respondents, allegedly the surviving brothers and
sisters of Dr. Curso, sued the petitioner in the RTC in Naval, Biliran to claim
damages based on breach of contract of carriage by sea, averring that the
petitioner had acted negligently in transporting Dr. Curso and the other
passengers. They stated, among others, that their parents had predeceased
Dr. Curso, who died single and without issue; and that, as such, they were
Dr. Curso’s surviving heirs and successors in interest entitled to recover
moral and other damages.1 They prayed for judgment, as follows: (a)
compensatory damages of ₱1,924,809.00; (b) moral damages of
₱100,000.00; (c) exemplary or corrective damages in the amount deemed
proper and just; (d) expenses of litigation of at least ₱50,000.00; (e)
attorney’s fees of ₱50,000.00; and (f) costs of suit.
The petitioner denied liability, insisting that the sinking of the vessel was due
to force majeure (i.e., Typhoon Unsang), which exempted a common carrier
from liability. It averred that the MV Doña Marilyn was seaworthy in all
respects, and was in fact cleared by the Philippine Coast Guard for the
voyage; and that after the accident it conducted intensive search and rescue
operations and extended assistance and aid to the victims and their families.
Ruling of the RTC
On July 28, 1995, the RTC dismissed the complaint upon its finding that the
sinking of the vessel was due to force majeure. The RTC concluded that the
officers of the MV Doña Marilyn had acted with the diligence required of a
common carrier; that the sinking of the vessel and the death of its
passengers, including Dr. Curso, could not have been avoided; that there
was no basis to consider the MV Doña Marilyn not seaworthy at the time of
the voyage; that the findings of the Special Board of Marine Inquiry (SBMI)
constituted to investigate the disaster absolved the petitioner, its officers, and
crew of any negligence and administrative liability; and that the respondents
failed to prove their claim for damages.
Ruling of the CA
The respondents appealed to the CA, contending that the RTC erred: (a) in
considering itself barred from entertaining the case by the findings of fact of
the SBMI in SBMI-ADM Case No. 08-88; (b) in not holding that the petitioner
was negligent and did not exercise the required diligence and care in
conducting Dr. Curso to his destination; (c) in not finding that the MV Doña
Marilyn was unseaworthy at the time of its sinking; and (d) in not awarding
damages to them.2
In its decision dated September 16, 2002,3 the CA held and disposed:
Based on the events described by the appellee’s witness, the Court found
inadequate proof to show that Sulpicio Lines, Inc., or its officers and crew,
had exercised the required degree of diligence to acquit the appellee of
liability.
In the first place, the court finds inadequate explanation why the officers of
the M.V. Doña Marilyn had not apprised themselves of the weather reports
on the approach of typhoon "Unsang" which had the power of a signal no. 3
cyclone, bearing upon the general direction of the path of the M.V. Doña
Marilyn. If the officers and crew of the Doña Marilyn had indeed been
adequately monitoring the strength and direction of the typhoon, and had
acted promptly and competently to avoid the same, then such a mishap
would not have occurred.
Furthermore, there was no account of the acts and decision of the crew of
the ill-fated ship from 8:00 PM on October 23, 1988 when the Chief Mate left
his post until 4:00 AM the next day when he resumed duty. It does not
appear what occurred during that time, or what weather reports were
received and acted upon by the ship captain. What happened during such
time is important in determining what information about the typhoon was
gathered and how the ship officers reached their decision to just change
course, and not take shelter while a strong typhoon was approaching.
Furthermore, the Court doubts the fitness of the ship for the voyage, since at
the first sign of bad weather, the ship’s hydraulic system failed and had to be
repaired mid-voyage, making the vessel a virtual derelict amidst a raging
storm at sea. It is part of the appellee’s extraordinary diligence as a common
carrier to make sure that its ships can withstand the forces that bear upon
them during a voyage, whether they be the ordinary stress of the sea during
a calm voyage or the rage of a storm. The fact that the stud bolts in the ships
hydraulic system gave way while the ship was at sea discredits the theory
that the appellee exercised due diligence in maintaining the seaworthy
condition of the M.V. Doña Marilyn. xxx.4
xxx
Aside from these, the defendant must compensate the plaintiffs for moral
damages that they suffered as a result of the negligence attending the loss of
the M.V. Doña Marilyn. Plaintiffs, have established that they took great pains
to recover, in vain, the body of their brother, at their own cost, while suffering
great grief due to the loss of a loved one. Furthermore, Plaintiffs were unable
to recover the body of their brother. Moral damages worth ₱100,000.00 is
proper.
WHEREFORE, premises considered, the appealed decision of the RTC of
Naval, Biliran, Branch 16, rendered in Civil Case No. B-0851, is hereby SET
ASIDE. In lieu thereof, judgment is hereby rendered, finding the defendant-
appellee Sulpicio Lines, Inc, to have been negligent in transporting the
deceased Cenon E. Curso who was on board the ill-fated M.V. Doña Marilyn,
resulting in his untimely death. Defendant-appellee is hereby ordered to pay
the plaintiffs heirs of Cenon E. Curso the following:
(1) Death indemnity in the amount of ₱50,000.00;
(2) Loss of Earning Capacity in the amount of ₱504,241.20;
(3) Moral Damages in the amount of ₱100,000.00.
(4) Costs of the suit.
Hence, this appeal, in which the petitioner insists that the CA committed
grievous errors in holding that the respondents were entitled to moral
damages as the brothers and sisters of the late Dr. Curso; that the CA
thereby disregarded Article 1764 and Article 2206 of the Civil Code, and the
ruling in Receiver for North Negros Sugar Co., Inc. v. Ybañez,6 whereby the
Supreme Court disallowed the award of moral damages in favor of the
brothers and sisters of a deceased passenger in an action upon breach of a
contract of carriage.
Issues
The petitioner raises the following issues:
ARE THE BROTHERS AND SISTERS OF A DECEASED PASSENGER IN
A CASE OF BREACH OF CONTRACT OF CARRIAGE ENTITLED TO AN
AWARD OF MORAL DAMAGES AGAINST THE CARRIER?
ASSUMING (THAT) THEY ARE ENTITLED TO CLAIM MORAL DAMAGES,
SHOULD THE AWARD BE GRANTED OR GIVEN TO THE BROTHER OR
SISTER NOTWITHSTANDING (THE) LACK OF EVIDENCE AS REGARDS
HIS OR HER PERSONAL SUFFERING?
Ruling
The petition is meritorious.
As a general rule, moral damages are not recoverable in actions for
damages predicated on a breach of contract, unless there is fraud or bad
faith.8 As an exception, moral damages may be awarded in case of breach
of contract of carriage that results in the death of a passenger,9 in
accordance with Article 1764, in relation to Article 2206 (3), of the Civil Code,
which provide:
Article 1764. Damages in cases comprised in this Section shall be awarded
in accordance with Title XVIII of this Book, concerning Damages. Article
2206 shall also apply to the death of a passenger caused by the breach of
contract by a common carrier.
Article 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 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.
The foregoing legal provisions set forth the persons entitled to moral
damages. The omission from Article 2206 (3) of the brothers and sisters of
the deceased passenger reveals the legislative intent to exclude them from
the recovery of moral damages for mental anguish by reason of the death of
the deceased. Inclusio unius est exclusio alterius.10 The solemn power and
duty of the courts to interpret and apply the law do not include the power to
correct the law by reading into it what is not written therein.11 Thus, the CA
erred in awarding moral damages to the respondents.
The petitioner has correctly relied on the holding in Receiver for North
Negros Sugar Company, Inc. v. Ybañez,12 to the effect that in case of death
caused by quasi-delict, the brother of the deceased was not entitled to the
award of moral damages based on Article 2206 of the Civil Code.
Essentially, the purpose of moral damages is indemnity or reparation, that is,
to enable the injured party to obtain the means, diversions, or amusements
that will serve to alleviate the moral suffering he has undergone by reason of
the tragic event. According to Villanueva v. Salvador,13 the conditions for
awarding moral damages are: (a) there must be an injury, whether physical,
mental, or psychological, clearly substantiated by the claimant; (b) there must
be a culpable act or omission factually established; (c) the wrongful act or
omission of the defendant must be the proximate cause of the injury
sustained by the claimant; and (d) the award of damages is predicated on
any of the cases stated in Article 2219 of the Civil Code.
To be entitled to moral damages, the respondents must have a right based
upon law. It is true that under Article 100314 of the Civil Code they
succeeded to the entire estate of the late Dr. Curso in the absence of the
latter’s descendants, ascendants, illegitimate children, and surviving spouse.
However, they were not included among the persons entitled to recover
moral damages, as enumerated in Article 2219 of the Civil Code, viz:
Article 2219. Moral damages may be recovered in the following and
analogous cases:
(1) A criminal offense resulting in physical injuries;
(2) Quasi-delicts causing physical injuries;
(3) Seduction, abduction, rape or other lascivious acts;
(4) Adultery or concubinage;
(5) Illegal or arbitrary detention or arrest;
(6) Illegal search;
(7) Libel, slander or any other form of defamation;
(8) Malicious prosecution;
(9) Acts mentioned in article 309;
(10) Acts and actions referred to in articles 21, 26, 27, 28, 29, 30, 32, 34 and
35.
The parents of the female seduced, abducted, raped or abused referred to in
No. 3 of this article, may also recover moral damages.
The spouse, descendants, ascendants and brothers and sisters may bring
the action mentioned in No. 9 of this article, in the order named.1avvphi1
Article 2219 circumscribes the instances in which moral damages may be
awarded. The provision does not include succession in the collateral line as a
source of the right to recover moral damages. The usage of the phrase
analogous cases in the provision means simply that the situation must be
held similar to those expressly enumerated in the law in question15 following
the ejusdem generis rule. Hence, Article 1003 of the Civil Code is not
concerned with recovery of moral damages.
In fine, moral damages may be recovered in an action upon breach of
contract of carriage only when: (a) where death of a passenger results, or (b)
it is proved that the carrier was guilty of fraud and bad faith, even if death
does not result.16 Article 2206 of the Civil Code entitles the descendants,
ascendants, illegitimate children, and surviving spouse of the deceased
passenger to demand moral damages for mental anguish by reason of the
death of the deceased.17
WHEREFORE, the petition for review on certiorari is granted, and the award
made to the respondents in the decision dated September 16, 2002 of the
Court of Appeals of moral damages amounting to ₱100,000.00 is deleted
and set aside.
SO ORDERED.
G.R. No. 161909 April 25, 2012
PHILTRANCO SERVICE ENTERPRISES, INC., Petitioner, vs. FELIX
PARAS AND INLAND TRAILWAYS, INC., AND HON. COURT OF
APPEALS, Respondents.
DECISION
BERSAMIN, J.:
In an action for breach of contract of carriage commenced by a passenger
against his common carrier, the plaintiff can recover damages from a third-
party defendant brought into the suit by the common carrier upon a claim
based on tort or quasi-delict. The liability of the third-party defendant is
independent from the liability of the common carrier to the passenger.
Philtranco Service Enterprises, Inc. (Philtranco) appeals the affirmance with
modifications by the Court of Appeals (CA) of the decision of the Regional
Trial Court (RTC) awarding moral, actual and temperate damages, as well as
attorney’s fees and costs of suit, to respondent Felix Paras (Paras), and
temperate damages to respondent Inland Trailways, Inc. (Inland),
respectively the plaintiff and the defendant/third-party plaintiff in this action
for breach of contract of carriage, upon a finding that the negligence of the
petitioner and its driver had caused the serious physical injuries Paras
sustained and the material damage Inland’s bus suffered in a vehicular
accident.
Antecedents
The antecedent facts, as summarized by the CA, are as follows:
Plaintiff-appellant [respondent] Felix Paras (Paras for brevity), who hails from
Cainta, Rizal is engaged in the buy and sell of fish products. Sometime on 08
February 1987, on his way home to Manila from Bicol Region, he boarded a
bus with Body No. 101 and Plate No. EVE 508, owned and operated by
Inland Trailways, Inc. (Inland for brevity) and driven by its driver Calvin Coner
(Coner for brevity).
At approximately 3:50 o’clock in the morning of 09 February 1987, while the
said bus was travelling along Maharlika Highway, Tiaong, Quezon, it was
bumped at the rear by another bus with Plate No. EVB 259, owned and
operated by Philtranco Service Enterprises, Inc. (Philtranco for brevity). As a
result of the strong and violent impact, the Inland bus was pushed forward
and smashed into a cargo truck parked along the outer right portion of the
highway and the shoulder thereof. Consequently, the said accident bought
considerable damage to the vehicles involved and caused physical injuries to
the passengers and crew of the two buses, including the death of Coner who
was the driver of the Inland Bus at the time of the incident.
Paras was not spared from the pernicious effects of the accident. After an
emergency treatment at the San Pablo Medical Center, San Pablo City,
Laguna, Paras was taken to the National Orthopedic Hospital. At the latter
hospital, he was found and diagnosed by Dr. Antonio Tanchuling, Jr. to be
affected with the following injuries: a) contusion/hematoma; b) dislocation of
hip upon fracture of the fibula on the right leg; c) fractured small bone on the
right leg; and d) close fracture on the tibial plateau of the left leg. (Exh. "A", p.
157, record)
On 04 March 1987 and 15 April 1987, Paras underwent two (2) operations
affecting the fractured portions of his body. (Exhs. "A-2" and "A-3", pp. 159
and 160 respectively, record)
Unable to obtain sufficient financial assistance from Inland for the costs of his
operations, hospitalization, doctors’ fees and other miscellaneous expenses,
on 31 July 1989, Paras filed a complaint for damages based on breach of
contract of carriage against Inland.
In its answer, defendant Inland denied responsibility, by alleging, among
others, that its driver Coner had observed an utmost and extraordinary care
and diligence to ensure the safety of its passengers. In support of its
disclaimer of responsibility, Inland invoked the Police Investigation Report
which established the fact that the Philtranco bus driver of [sic] Apolinar
Miralles was the one which violently bumped the rear portion of the Inland
bus, and therefore, the direct and proximate cause of Paras’ injuries.
On 02 March 1990, upon leave of court, Inland filed a third-party complaint
against Philtranco and Apolinar Miralles (Third Party defendants). In this
third-party complaint, Inland, sought for exoneration of its liabilities to Paras,
asserting that the latter’s cause of action should be directed against
Philtranco considering that the accident was caused by Miralles’ lack of care,
negligence and reckless imprudence. (pp. 50 to 56, records).
After trial, the RTC (Branch 71) in Antipolo, Rizal rendered its judgment on
July 18, 1997,1 viz:
WHEREFORE, third-party defendant Philtranco and Apolinar Miralles are
hereby ordered to pay plaintiff jointly and severally, the following amounts:
1.₱54,000.00 as actual damages;
2.₱50,000.00 as moral damages;
3.₱20,000.00 as attorney’s fees and costs.
SO ORDERED.
All the parties appealed to the CA on different grounds.
On his part, Paras ascribed the following errors to the RTC, to wit:
I. THE TRIAL COURT ERRED IN HOLDING THAT ONLY THIRD-PARTY
DEFENDANT-APPELLANT PHILTRANCO IS LIABLE FOR THE DAMAGES
SUFFERED BY APPELLANT PARAS.
II. THE TRIAL COURT ERRED IN NOT HOLDING APPELLANT INLAND
TRAILWAYS INC. TO BE JOINTLY AND SEVERALLY LIABLE FOR THE
DAMAGES SUFFERED BY PARAS.
III. THE TRIAL COURT ERRED IN NOT AWARDING UNEARNED INCOME
AS ADDITIONAL ACTUAL DAMAGES SUFFERED BY APPELLANT PARAS
AS HIS PHYSICAL DISABILITY IS PERMANENT IN NATURE.
IV. THE TRIAL COURT ERRED IN NOT AWARDING EXEMPLARY
DAMAGES IN FAVOR OF APPELLANT PARAS.
On the other hand, Inland assigned the following errors to the RTC, namely:
THE TRIAL COURT ERRED WHEN IT FAILED TO AWARD DAMAGES
UNTO THE THIRD PARTY PLAINTIFF NOTWITHSTANDING CLEAR
FINDING THAT:
‘It is clear from the evidence that the plaintiff sustained injuries because of
the reckless, negligence, and lack of precaution of third party defendant
Apolinar Miralles, an employee of Philtranco.’
AND, COMPLETELY DISREGARDED THE UNCONTROVERTED ORAL
AND DOCUMENTARY EVIDENCES ESTABLISHING THE EXTENT AND
DEGREE OF DAMAGES SUSTAINED BY THE THIRD PARTY PLAINTIFF.
Lastly, Philtranco stated that the RTC erred thuswise:
I SO ORDERED.
THE COURT A QUO MISERABLY ERRED IN AWARDING ACTUAL
DAMAGES GREATER THAN WHAT WAS ALLEGED IN THE COMPLAINT
ITSELF, AND EVEN MUCH MORE GREATER THAN WHAT WERE
PROVED DURING THE TRIAL, HENCE, PERPETUATING UNJUST
ENRICHMENT.
II
THE COURT A QUO SERIOUSLY ERRED IN AWARDING MORAL
DAMAGES TO A CAUSE OF ACTION OF CULPA-CONTRACTUAL EVEN
WITHOUT ANY EVIDENCE OF GROSS BAD FAITH; HENCE, CONTRARY
TO THE ESTABLISHED DOCTRINE IN THE CASES OF PHIL. RABBIT
BUS LINES VS. ESGUERRA; SOBERANO VS. BENGUET AUTO LINE AND
FLORES VS. MIRANDA.
III
THE COURT A QUO MISERABLY ERRED IN HOLDING THAT MIRALLES
WAS THE ONE AT FAULT MERELY ON THE STRENGHT OF THE
TESTIMONY OF THE POLICE INVESTIGATOR WHICH IS IN TURN
BASED ON THE STATEMENTS OF ALLEGED WITNESSES WHO WERE
NEVER PRESENTED ON THE WITNESS STAND.
IV
THE COURT A QUO COMMITTED A GRIEVOUS ERROR IN
DISREGARDING THE TESTIMONY OF APPELLANTS’ WITNESSES WHO
TESTIFIED AS TO THE DEFENSE OF EXERCISE OF DUE DILIGENCE IN
THE SELECTION AND SUPERVISION OF EMPLOYEES PURSUANT TO
ART. 2180, LAST PARAGRAPH, NEW CIVIL CODE.
On September 25, 2002, the CA promulgated its decision,2 disposing:
WHEREFORE, in consideration of the foregoing premises, the assailed
decision dated 18 July 19(9)7 is perforce affirmed with the following
modifications:
1. Third party defendants-appellants Philtranco and Apolinar Miralles are
ordered to pay plaintiff-appellant Felix Paras jointly and severally the
following amounts:
a) ₱1,397.95 as actual damages;
b) ₱50,000.00 as temperate damages;
c) ₱50,000.00 as moral damages; and
d) ₱20,000.00 as attorney’s fees and costs of suit.
2. On the third party plaintiff-appellant Inland’s claims, the third party
defendant-appellants Philtranco and Apolinar Miralles are hereby ordered to
pay the former (Inland) jointly and severally the amount of ₱250,000.00 as
and by way of temperate damages.
The CA agreed with the RTC’s finding that no trace of negligence at the time
of the accident was attributable to Inland’s driver, rendering Inland not guilty
of breach of contract of carriage; that faulty brakes had caused Philtranco’s
bus to forcefully bump Inland’s bus from behind, making it hit the rear portion
of a parked cargo truck; that the impact had resulted in considerable material
damage to the three vehicles; and that Paras and others had sustained
various physical injuries.
Accordingly, the CA:– (a) sustained the award of moral damages of
₱50,000.00 in favor of Paras pursuant to Article 2219 of the Civil Code based
on quasi-delict committed by Philtranco and its driver; (b) reduced the actual
damages to be paid by Philtranco to Paras from ₱54,000.00 to ₱1,397.95
because only the latter amount had been duly supported by receipts; (c)
granted temperate damages of ₱50,000.00 (in lieu of actual damages in view
of the absence of competent proof of actual damages for his hospitalization
and therapy) to be paid by Philtranco to Paras; and (d) awarded temperate
damages of ₱250,000.00 under the same premise to be paid by Philtranco to
Inland for the material damage caused to Inland’s bus.
Philtranco moved for reconsideration,3 but the CA denied its motion for
reconsideration on January 21, 2004.4
Issues
Hence, this appeal, in which the petitioner submits that the CA committed
grave abuse of discretion amounting to lack of jurisdiction in awarding moral
damages to Paras despite the fact that the complaint had been anchored on
breach of contract of carriage; and that the CA committed a reversible error
in substituting its own judgment by motu proprio awarding temperate
damages of ₱250,000.00 to Inland and ₱50,000.00 to Paras despite the
clear fact that temperate damages were not raised on appeal by Paras and
Inland.
Ruling
The appeal lacks merit.
The Court does not disturb the unanimous findings by the CA and the RTC
on the negligence of Philtranco and its driver being the direct cause of the
physical injuries of Paras and the material damage of Inland.
Nonetheless, we feel bound to pass upon the disparate results the CA and
the RTC reached on the liabilities of Philtranco and its driver.
1. Paras can recover moral damages in this suit based on quasi-delict
Philtranco contends that Paras could not recover moral damages because
his suit was based on breach of contract of carriage, pursuant to which moral
damages could be recovered only if he had died, or if the common carrier
had been guilty of fraud or bad faith. It argues that Paras had suffered only
physical injuries; that he had not adduced evidence of fraud or bad faith on
the part of the common carrier; and that, consequently, Paras could not
recover moral damages directly from it (Philtranco), considering that it was
only being subrogated for Inland.
The Court cannot uphold the petitioner’s contention.
As a general rule, indeed, moral damages are not recoverable in an action
predicated on a breach of contract. This is because such action is not
included in Article 2219 of the Civil Code5 as one of the actions in which
moral damages may be recovered. By way of exception, moral damages are
recoverable in an action predicated on a breach of contract: (a) where the
mishap results in the death of a passenger, as provided in Article 1764,6 in
relation to Article 2206, (3),7 of the Civil Code; and (b) where the common
carrier has been guilty of fraud or bad faith,8 as provided in Article 22209 of
the Civil Code.
Although this action does not fall under either of the exceptions, the award of
moral damages to Paras was nonetheless proper and valid. There is no
question that Inland filed its third-party complaint against Philtranco and its
driver in order to establish in this action that they, instead of Inland, should
be directly liable to Paras for the physical injuries he had sustained because
of their negligence. To be precise, Philtranco and its driver were brought into
the action on the theory of liability that the proximate cause of the collision
between Inland’s bus and Philtranco’s bus had been "the negligent, reckless
and imprudent manner defendant Apolinar Miralles drove and operated his
driven unit, the Philtranco Bus with Plate No. 259, owned and operated by
third-party defendant Philtranco Service Enterprises, Inc."10 The apparent
objective of Inland was not to merely subrogate the third-party defendants for
itself, as Philtranco appears to suggest,11 but, rather, to obtain a different
relief whereby the third-party defendants would be held directly, fully and
solely liable to Paras and Inland for whatever damages each had suffered
from the negligence committed by Philtranco and its driver. In other words,
Philtranco and its driver were charged here as joint tortfeasors who would be
jointly and severally be liable to Paras and Inland.
Impleading Philtranco and its driver through the third-party complaint filed on
March 2, 1990 was correct. The device of the third-party action, also known
as impleader, was in accord with Section 12, Rule 6 of the Revised Rules of
Court, the rule then applicable, viz:
Section 12. Third-party complaint. – A third-party complaint is a claim that a
defending party may, with leave of court, file against a person not a party to
the action, called the third-party defendant, for contribution, indemnity,
subrogation or any other relief, in respect of his opponent’s claim.12
Explaining the application of Section 12, Rule 6, supra, the Court said in
Balbastro v. Court of Appeals,13 to wit:
Section 12 of Rule 6 of the Revised Rules of Court authorizes a defendant to
bring into a lawsuit any person "not a party to the action . . . for contribution,
indemnity, subrogation or any other relief in respect of his opponent's claim."
From its explicit language it does not compel the defendant to bring the third-
parties into the litigation, rather it simply permits the inclusion of anyone who
meets the standard set forth in the rule. The secondary or derivative liability
of the third-party is central — whether the basis is indemnity, subrogation,
contribution, express or implied warranty or some other theory. The
impleader of new parties under this rule is proper only when a right to relief
exists under the applicable substantive law. This rule is merely a procedural
mechanism, and cannot be utilized unless there is some substantive basis
under applicable law.
Apart from the requirement that the third-party complainant should assert a
derivative or secondary claim for relief from the third-party defendant there
are other limitations on said party’s ability to implead. The rule requires that
the third-party defendant is "not a party to the action" for otherwise the proper
procedure for asserting a claim against one who is already a party to the suit
is by means of counterclaim or cross-claim under sections 6 and 7 of Rule 6.
In addition to the aforecited requirement, the claim against the third-party
defendant must be based upon plaintiff's claim against the original defendant
(third-party claimant). The crucial characteristic of a claim under section 12 of
Rule 6, is that the original "defendant is attempting to transfer to the third-
party defendant the liability asserted against him by the original plaintiff."
Accordingly, the requisites for a third-party action are, firstly, that the party to
be impleaded must not yet be a party to the action; secondly, that the claim
against the third-party defendant must belong to the original defendant;
thirdly, the claim of the original defendant against the third-party defendant
must be based upon the plaintiff’s claim against the original defendant; and,
fourthly, the defendant is attempting to transfer to the third-party defendant
the liability asserted against him by the original plaintiff.14
As the foregoing indicates, the claim that the third-party complaint asserts
against the third-party defendant must be predicated on substantive law.
Here, the substantive law on which the right of Inland to seek such other
relief through its third-party complaint rested were Article 2176 and Article
2180 of the Civil Code, which read:
Article 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. (1902a)
Article 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
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
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. (1903a)
Paras’ cause of action against Inland (breach of contract of carriage) did not
need to be the same as the cause of action of Inland against Philtranco and
its driver (tort or quasi-delict) in the impleader. It is settled that a defendant in
a contract action may join as third-party defendants those who may be liable
to him in tort for the plaintiff’s claim against him, or even directly to the
plaintiff.15 Indeed, Prof. Wright, et al., commenting on the provision of the
Federal Rules of Procedure of the United States from which Section 12,
supra, was derived, observed so, to wit:16
The third-party claim need not be based on the same theory as the main
claim. For example, there are cases in which the third-party claim is based
on an express indemnity contract and the original complaint is framed in
terms of negligence. Similarly, there need not be any legal relationship
between the third-party defendant and any of the other parties to the action.
Impleader also is proper even though the third party’s liability is contingent,
and technically does not come into existence until the original defendant’s
liability has been established. In addition, the words ‘is or may be liable’ in
Rule 14(a) make it clear that impleader is proper even though the third-party
defendant’s liability is not automatically established once the third-party
plaintiff’s liability to the original plaintiff has been determined.
Nor was it a pre-requisite for attachment of the liability to Philtranco and its
driver that Inland be first declared and found liable to Paras for the breach of
its contract of carriage with him.17 As the Court has cogently discoursed in
Samala v. Judge Victor:
Appellants argue that since plaintiffs filed a complaint for damages against
the defendants on a breach of contract of carriage, they cannot recover from
the third-party defendants on a cause of action based on quasi-delict. The
third party defendants, they allege, are never parties liable with respect to
plaintiff s claim although they are with respect to the defendants for
indemnification, subrogation, contribution or other reliefs. Consequently, they
are not directly liable to the plaintiffs. Their liability commences only when the
defendants are adjudged liable and not when they are absolved from liability
as in the case at bar.
Quite apparent from these arguments is the misconception entertained by
appellants with respect to the nature and office of a third party complaint.
Section 16, Rule 6 of the Revised Rules of Court defines a third party
complaint as a "claim that a defending party may, with leave of court, file
against a person not a party to the action, called the third-party defendant, for
contribution, indemnification, subrogation, or any other relief, in respect of his
opponent’s claim." In the case of Viluan vs. Court of Appeals, et al., 16 SCRA
742 [1966], this Court had occasion to elucidate on the subjects covered by
this Rule, thus:
... As explained in the Atlantic Coast Line R. Co. vs. U.S. Fidelity & Guaranty
Co., 52 F. Supp. 177 (1943:)
‘From the sources of Rule 14 and the decisions herein cited, it is clear that
this rule, like the admiralty rule, ‘covers two distinct subjects, the addition of
parties defendant to the main cause of action, and the bringing in of a third
party for a defendant’s remedy over’. xxx
‘If the third party complaint alleges facts showing a third party’s direct liability
to plaintiff on the claim set out in plaintiff’s petition, then third party ‘shall’
make his defenses as provided in Rule 12 and his counterclaims against
plaintiff as provided in Rule 13. In the case of alleged direct liability, no
amendment (to the complaint) is necessary or required. The subject-matter
of the claim is contained in plaintiff's complaint, the ground of third party’s
liability on that claim is alleged in third party complaint, and third party’s
defense to set up in his answer to plaintiff's complaint. At that point and
without amendment, the plaintiff and third party are at issue as to their rights
respecting the claim.
The provision in the rule that, ‘The third-party defendant may assert any
defense which the third-party plaintiff may assert to the plaintiffs claim,’
applies to the other subject, namely, the alleged liability of third party
defendant. The next sentence in the rule, ‘The third-party defendant is bound
by the adjudication of the third party plaintiffs liability to the plaintiff, as well
as of his own to the plaintiff or to the third-party plaintiff applies to both
subjects. If third party is brought in as liable only to defendant and judgment
is rendered adjudicating plaintiff's right to recover against defendant and
defendant’s rights to recover against third party, he is bound by both
adjudications.That part of the sentence refers to the second subject. If third
party is brought in as liable to plaintiff, then third party is bound by the
adjudication as between him and plaintiff. That refers to the first subject. If
third party is brought in as liable to plaintiff and also over to defendant, then
third party is bound by both adjudications. xxx
Under this Rule, a person not a party to an action may be impleaded by the
defendant either (a) on an allegation of liability to the latter; (b) on the ground
of direct liability to the plaintiff-; or, (c) both (a) and (b). The situation in (a) is
covered by the phrase "for contribution, indemnity or subrogation;" while (b)
and (c) are subsumed under the catch all "or any other relief, in respect of his
opponent’s claim."
The case at bar is one in which the third party defendants are brought into
the action as directly liable to the plaintiffs upon the allegation that "the
primary and immediate cause as shown by the police investigation of said
vehicular collision between (sic) the above-mentioned three vehicles was the
recklessness and negligence and lack of imprudence (sic) of the third-party
defendant Virgilio (should be Leonardo) Esguerra y Ledesma then driver of
the passenger bus." The effects are that "plaintiff and third party are at issue
as to their rights respecting the claim" and "the third party is bound by the
adjudication as between him and plaintiff." It is not indispensable in the
premises that the defendant be first adjudged liable to plaintiff before the
third-party defendant may be held liable to the plaintiff, as precisely, the
theory of defendant is that it is the third party defendant, and not he, who is
directly liable to plaintiff. The situation contemplated by appellants would
properly pertain to situation (a) above wherein the third party defendant is
being sued for contribution, indemnity or subrogation, or simply stated, for a
defendant's "remedy over".19
It is worth adding that allowing the recovery of damages by Paras based on
quasi-delict, despite his complaint being upon contractual breach, served the
judicial policy of avoiding multiplicity of suits and circuity of actions by
disposing of the entire subject matter in a single litigation.20
2. Award of temperate damages was in order
Philtranco assails the award of temperate damages by the CA considering
that, firstly, Paras and Inland had not raised the matter in the trial court and in
their respective appeals; secondly, the CA could not substitute the temperate
damages granted to Paras if Paras could not properly establish his actual
damages despite evidence of his actual expenses being easily available to
him; and, thirdly, the CA gravely abused its discretion in granting motu
proprio the temperate damages of ₱250,000.00 to Inland although Inland had
not claimed temperate damages in its pleading or during trial and even on
appeal.
The Court cannot side with Philtranco.
Actual damages, to be recoverable, must not only be capable of proof, but
must actually be proved with a reasonable degree of certainty. The reason is
that the court "cannot simply rely on speculation, conjecture or guesswork in
determining the fact and amount of damages," but "there must be competent
proof of the actual amount of loss, credence can be given only to claims
which are duly supported by receipts."21
The receipts formally submitted and offered by Paras were limited to the
costs of medicines purchased on various times in the period from February
1987 to July 1989 (Exhibits E to E-35, inclusive) totaling only ₱1,397.95.22
The receipts by no means included hospital and medical expenses, or the
costs of at least two surgeries as well as rehabilitative therapy.
Consequently, the CA fixed actual damages only at that small sum of
₱1,397.95. On its part, Inland offered no definite proof on the repairs done on
its vehicle, or the extent of the material damage except the testimony of its
witness, Emerlinda Maravilla, to the effect that the bus had been damaged
beyond economic repair.23 The CA rejected Inland’s showing of unrealized
income worth ₱3,945,858.50 for 30 months (based on alleged average
weekly income of ₱239,143.02 multiplied by its guaranteed revenue
amounting to 55% thereof, then spread over a period of 30 months, the
equivalent to the remaining 40% of the vehicle’s un-depreciated or net book
value), finding such showing arbitrary, uncertain and speculative.24 As a
result, the CA allowed no compensation to Inland for unrealized income.
Nonetheless, the CA was convinced that Paras should not suffer from the
lack of definite proof of his actual expenses for the surgeries and
rehabilitative therapy; and that Inland should not be deprived of recourse to
recover its loss of the economic value of its damaged vehicle. As the records
indicated, Paras was first rushed for emergency treatment to the San Pablo
Medical Center in San Pablo City, Laguna, and was later brought to the
National Orthopedic Hospital in Quezon City where he was diagnosed to
have suffered a dislocated hip, fracture of the fibula on the right leg, fracture
of the small bone of the right leg, and closed fracture on the tibial plateau of
the left leg. He underwent surgeries on March 4, 1987 and April 15, 1987 to
repair the fractures.25 Thus, the CA awarded to him temperate damages of
₱50,000.00 in the absence of definite proof of his actual expenses towards
that end. As to Inland, Maravilla’s testimony of the bus having been damaged
beyond economic repair showed a definitely substantial pecuniary loss, for
which the CA fixed temperate damages of ₱250,000.00. We cannot disturb
the CA’s determination, for we are in no position today to judge its
reasonableness on account of the lapse of a long time from when the
accident occurred.26
In awarding temperate damages in lieu of actual damages, the CA did not
err, because Paras and Inland were definitely shown to have sustained
substantial pecuniary losses. It would really be a travesty of justice were the
CA now to be held bereft of the discretion to calculate moderate or temperate
damages, and thereby leave Paras and Inland without redress from the
wrongful act of Philtranco and its driver.27 We are satisfied that the CA
exerted effort and practiced great care to ensure that the causal link between
the physical injuries of Paras and the material loss of Inland, on the one
hand, and the negligence of Philtranco and its driver, on the other hand,
existed in fact. It also rejected arbitrary or speculative proof of loss. Clearly,
the costs of Paras’ surgeries and consequential rehabilitation, as well as the
fact that repairing Inland’s vehicle would no longer be economical justly
warranted the CA to calculate temperate damages of ₱50,000.00 and
₱250,000.00 respectively for Paras and Inland.
There is no question that Article 2224 of the Civil Code expressly authorizes
the courts to award temperate damages despite the lack of certain proof of
actual damages, to wit:
Article 2224. Temperate or moderate damages, which are more than nominal
but less than compensatory damages, may be recovered when the court
finds that some pecuniary loss has been suffered but its amount cannot, from
the nature of the case, be proved with certainty.
The rationale for Article 2224 has been stated in Premiere Development
Bank v. Court of Appeals28 in the following manner:
Even if not recoverable as compensatory damages, Panacor may still be
awarded damages in the concept of temperate or moderate damages. When
the court finds that some pecuniary loss has been suffered but the amount
cannot, from the nature of the case, be proved with certainty, temperate
damages may be recovered. Temperate damages may be allowed in cases
where from the nature of the case, definite proof of pecuniary loss cannot be
adduced, although the court is convinced that the aggrieved party suffered
some pecuniary loss.
The Code Commission, in explaining the concept of temperate damages
under Article 2224, makes the following comment:
In some States of the American Union, temperate damages are allowed.
There are cases where from the nature of the case, definite proof of
pecuniary loss cannot be offered, although the court is convinced that there
has been such loss. For instance, injury to one’s commercial credit or to the
goodwill of a business firm is often hard to show with certainty in terms of
money. Should damages be denied for that reason? The judge should be
empowered to calculate moderate damages in such cases, rather than that
the plaintiff should suffer, without redress from the defendant’s wrongful act.
3. Paras’ loss of earning capacity must be compensated
In the body of its decision, the CA concluded that considering that Paras had
a minimum monthly income of ₱8,000.00 as a trader he was entitled to
recover compensation for unearned income during the 3-month period of his
hospital confinement and the 6-month period of his recovery and
rehabilitation; and aggregated his unearned income for those periods to
₱72,000.00.29 Yet, the CA omitted the unearned income from the dispositive
portion.
The omission should be rectified, for there was credible proof of Paras’ loss
of income during his disability. According to Article 2205, (1), of the Civil
Code, damages may be recovered for loss or impairment of earning capacity
in cases of temporary or permanent personal injury. Indeed, indemnification
for damages comprehends not only the loss suffered (actual damages or
damnum emergens) but also the claimant’s lost profits (compensatory
damages or lucrum cessans).30 Even so, the formula that has gained
acceptance over time has limited recovery to net earning capacity; hence,
the entire amount of ₱72,000.00 is not allowable. The premise is obviously
that net earning capacity is the person’s capacity to acquire money, less the
necessary expense for his own living.31 To simplify the determination,
therefore, the net earning capacity of Paras during the 9-month period of his
confinement, surgeries and consequential therapy is pegged at only half of
his unearned monthly gross income of ₱8,000.00 as a trader, or a total of
₱36,000.00 for the 9-month period, the other half being treated as the
necessary expense for his own living in that period.
It is relevant to clarify that awarding the temperate damages (for the
substantial pecuniary losses corresponding to Paras’s surgeries and
rehabilitation and for the irreparability of Inland’s damaged bus) and the
actual damages to compensate lost earnings and costs of medicines give
rise to no incompatibility. These damages cover distinct pecuniary losses
suffered by Paras and Inland,32 and do not infringe the statutory prohibition
against recovering damages twice for the same act or omission.33
4. Increase in award of attorney’s fees
Although it is a sound policy not to set a premium on the right to litigate,34
we consider the grant to Paras and Inland of reasonable attorney’s fees
warranted. Their entitlement to attorney’s fees was by virtue of their having
been compelled to litigate or to incur expenses to protect their interests,35 as
well as by virtue of the Court now further deeming attorney’s fees to be just
and equitable.36
In view of the lapse of a long time in the prosecution of the claim,37 the Court
considers it reasonable and proper to grant attorney’s fees to each of Paras
and Inland equivalent to 10% of the total amounts hereby awarded to them,
in lieu of only ₱20,000.00 for that purpose granted to Paras.
5. Legal interest on the amounts awarded
Pursuant to Eastern Shipping Lines, Inc. v. Court of Appeals,38 legal interest
at the rate of 6% per annum accrues on the amounts adjudged reckoned
from July 18, 1997, the date when the RTC rendered its judgment; and legal
interest at the rate of 12% per annum shall be imposed from the finality of the
judgment until its full satisfaction, the interim period being regarded as the
equivalent of a forbearance of credit.
WHEREFORE, the Court AFFIRMS WITH MODIFICATION the decision of
the Court of Appeals promulgated on September 25, 2002, by ordering
PHILTRANCO SERVICE ENTERPRISES, INC. and APOLINAR MIRALLES
to pay, jointly and severally, as follows:
1. To Felix Paras:
(a) ₱1,397.95, as reimbursement for the costs of medicines purchased
between February 1987 and July 1989;
(b) ₱50,000.00 as temperate damages;
(c) ₱50,000.00 as moral damages;
(d) ₱36,000.00 for lost earnings;
(e) 10% of the total of items (a) to (d) hereof as attorney’s fees; and
(f) Interest of 6% per annum from July 18, 1997 on the total of items (a) to (d)
hereof until finality of this decision, and 12% per annum thereafter until full
payment.
2. To Inland Trailways, Inc.:
(a) ₱250,000.00 as temperate damages;
(b) 10% of item (a) hereof; and
(c) Interest of 6% per annum on item (a) hereof from July 18, 1997 until
finality of this decision, and 12% per annum thereafter until full payment.
3. The petitioner shall pay the costs of suit.
SO ORDERED.