Cathay Pacific v. Sps.
Vasquez
FACTS
Private respondents were passengers of petitioner booked
on its Flight CX-905 with the route of Manila to Hongkong and back.
They, along with their maid and two friends, went to HK for pleasure
and business. While the maids boarding pass was for the Economy
Class, the spouses and their two friends indicated that they were on
the Business Class.
However, while in Kai Tak Airport, after checking in their
luggage and presenting their boarding passes to the ground
stewardess, they were informed by Ms. Chiu, a ground attendant,
that there was a seat change from Business to First Class for the
spouses. It is to be noted that the Vasquezes are frequent flyers of
the airline and are Gold Card members of its Marco Polo Club.
The Marco Polo Club is part of the marketing strategy of
Cathay through which it accords its frequent flyers several privileges,
including priority for upgrading of booking without any extra charge
whenever an opportunity arises. Upon being informed of this change,
Dr. Vasquez refused the same, saying that it would not look nice for
them as hosts to travel in First Class and their guests, in Business
Class, not to mention that they also had to discuss business matters
during the flight. He asked Ms. Chiu to have other passengers
transferred instead.
Shocked by this unusual reaction to a seat upgrade, Ms.
Chiu, after consulting with her supervisor, informed them that if they
would not avail of the privilege, they would not be allowed to take the
flight. Eventually, after talking with his friends, Dr. Vasquez agreed.
He and his wife took the First Class Cabin. Back in Manila, after
apparent inaction on the part of Cathay, the Vasquezes filed a
damage suit, asking for temperate, moral and exemplary damages,
as well as attorney fees.
They attributed discourteous and humiliating behavior to Ms.
Chiu. Cathay answered that seat upgrading is a common practice
among airlines.
The TC ruled for the spouses, awarding them nominal (P100,000
each), moral (P2M each), exemplary (P5M each) and attorneys fees
(P1M each). The CA affirmed, but deleted the award of exemplary
damages and reduced the awards of moral and nominal damages
and attorney’s fees.
ISSUE/s
1. WON Cathay breached its contract of carriage with the Vs when
it upgraded their seat accommodation.
2. WON the upgrading was made in bad faith or with fraud.
3. WON the Vasquezes are entitled to damages.
RULING
1. YES. The Vazquezes never denied that they were members of
Cathays 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.
2. NO. 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 Cathays 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.
3. YES. 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.
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. 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.
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 attorneys fees.
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. 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.

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. 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. 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.
JAPAN AIRLINES vs. SIMANGAN
GR No. 170141 April 22, 2008
Third Division Reyes
FACTS:
Respondent needed to go to the US to donate his kidney to
his ailing cousin. Having obtained an emergency US Visa,
respondent purchased a round trip ticket from petitioner JAL. He was
scheduled to a flight bound for LA via Japan. On the date of his flight,
respondent passed through rigid immigration and security routines
before being allowed to board a JAL plane.
While inside the plane, respondent was asked to show his
travel documents. After which he was ordered by the crew to leave
the plane, imputing that respondent is carrying falsified travel
documents. Respondent pleaded but was ignored and under
constraint he gets off the plane. The plane took off and respondent
was left behind.
Respondent was refunded with the cost of his ticket minus
500 USD, when JAL found out eventually that his travel documents
were not falsified and in order. Respondent filed an action for
damages against JAL.
RTC RULING:
JAL is liable for beach of contract of carriage, and should
pay 1M as MD, 500K as ED, 250K as AF + cost of suit. JAL
appealed contending it is not guilty of breach of contract of carriage
and not liable for damages.
CA RULING:
Affirmed RTC decision with modification as to amount of
damages for being scandalously excessive. 500K MD, 250K ED and
NO AT.
ISSUE:
WON JAL is guilty of breach of contract of carriage.
WON Simangan is entitled to moral and exemplary
damages.
HELD:
JAL is guilty of breach of contract of carriage and is liable for
damages. Petition of JAL was denied. CA decision was affirmed with
modification. 500K ED, 100K ED, 200K AF.
RATIO:
Breach of contract of carriage
In an action for breach of contract of carriage, all that is
required of plaintiff is to prove the existence of such contract and its
non-performance by the carrier through the failure to carry the
passenger safely to his destination. Simangan complied with these
requisites. Damage was accrued by JAL when Simangan was
bumped off despite his protestations and valid travel documents and
notwithstanding his contract of carriage with JAL.
Award of moral damages in breach of contract of carriage.
As a general rule, moral damages are not recoverable in
actions for damages predicated on a breach of contract for it is not
enumerated under Art 2219 NCC. As an exception, such damages
are recoverable in:
1. Mishaps resulting to a death of a passenger (Art. 1764 NCC)
2. When carrier is guilty of fraud or bad faith (Art. 2220)
JAL breached its contract of carriage with respondent in bad
faith, when its crew ordered respondent to disembark while the latter
is already settled in his assigned seat under the guise of verifying the
genuineness of his travel documents. Inattention to and lack of care
for the interest of its passengers who are entitled ot its utmost
consideration, particularly as to their convenience, amount to bad
faith which entitles the passenger to award of moral damages.
Award of exemplary damages in breach of contract of carriage.
Exemplary damages maybe recovered in contractual
obligations as a way of example or correction for the public good.JAL
is liable for exemplary damages as its acts constitute wanton,
oppressive and malevolent acts against respondent. Passengers
have the right to be treated by the carrier’s employees with kindness,
respect, courtesy and due consideration and are entitled to be
protected against personal misconduct, injurious language,
indignities and abuses from such employees.
Cariaga vs LTB Co
J. Dizon
Facts
 Moncada was driving a bus of the Laguna Tayabas Bus
Company (LTB) and Cariaga was one of the passengers.
The bus is bound for Lilio, Laguna (coming from Manila).
 As the bus reached the poblacion of Bay, Laguna, where the
national highway crossed a railroad track, it (bus) bumped
against the engine of a train then passing by. The impact
was so strong that it caused the first six wheels of the train to
be derailed, while the engine and front part of the body of the
bus were wrecked.
 Moncada (bus driver) died while Cariaga suffered major
injuries.
o Cariaga was unconscious during the first 35 days
after the accident.
o A portion of his brain was removed. According to the
doctors, due to this operation, Cariaga’s mentality
has been so reduced (by 50%) that can no longer
finish his studies as a medical student
o Also, Cariaga ended up in a helpless ocndition,
virtually an invalid, both physically and mentally.
 LTB paid Cariaga’s hospital, medical and miscellaneous
expenses. Also, LTB gave him Php 10.00 daily allowance
from January until April 1953.
 Complaint was filed agains LTB and MRR Co. for recovery
of damages.
 LTB’s argument
o The accident was due to the negligence of MRR for
not providing a crossing bar at the point where the
national highway crossed the railway track
o That the driver of the train violated the law
 In sounding the whistle only when the
collision was about to take place instead of
at a distance of at least 300 meters from the
crossing
 And in not ringing the locomotive bell at all
 MRR’s argument
o It was the reckless negligence of the bus driver that
caused the accident
 RTC held that it was the negligence of the bus driver that
caused the accident. It ordered LTB to pay Cariaga
compensatory damages.
 Hence, this appeal where the Carriagas claim that the RTC
should have also awarded them moral and actual damages.
ISSUE + RATIO
 WON the bus driver was negligent - Yes
o Evidence shows that the train whistle had been
sounded several times before it reached the
crossing and the bus driver simply ignored the
warnings.
 Instead of slowing down, Moncada (bus
driver) 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.
 In fact, there was a bus which arrived at the
crossing ahead of the one driven by
Moncada. Said bus stopped before the
crossing, hence nothing happened to it.
o WON the amound awarded by the RTC as
compensatory damages shall be increased – Yes
 Liability of common carriers
 In contracts, the obligor in good faith
(common carrier) is liable only for
the natural and probable
consequences of the breach and
which the parties have foreseen or
could have reasonably foreseen at
the time the obligation was
constituted.
 If in bad faith, fraud, malice or
wanton attitude, the obligor in
breach is liable for all damages
reasonably attributed to the breach.
 In both instances, provided that the
damages have been proven
  In the case at bar, LTB is liable not only for
the actual damages suffered for medical and
hospital expenses but also for the income
which the passenger would have earned
had he finished medical school. These are
likewise considered as actual damages
because they could have been reasonably
foreseen by the parties at the time the
passenger boarded the bus.
 No moral damages could be awarded
(passenger did not die), because it was not
shown that the breach of contract, for which
the action is based, was not tainted with
fraud or bad faith.
 The claim made by spouses Cariaga for
actual and compensatory damages cannot
be awarded due to the fact that 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
LTB because they were not the ones injured
in the accident.
DISPOSITION: RTC afformed with modification.
PHILTRANCO SERVICE ENTERPRISES, INC. vs FELIX PARAS
AND INLAND TRAILWAYS, INC., AND HON. COURT OF
APPEALS
G.R. No. 161909, April 25, 2012
Facts:
Felix Paras is engaged in the buy and sell of fish products.
Sometime on his way home to Manila from Bicol Region, he boarded a bus
owned and operated by Inland Trailways, Inc. and driven by its driver
Calvin Coner.
While the said bus was travelling, it was bumped at the rear by
another bus owned and operated by Philtranco Service Enterprises, Inc. 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. 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.
 
Paras was not spared from the effects of the accident. He was
taken for an emergency treatment in the nearby hospital and thereafter taken
to the National Orthopedic Hospital in which underwent several operations.
 
In view of financial constraints, Paras filed a complaint for
damages based on breach of contract of carriage against Inland to which it
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 it, Inland invoked the Police
Investigation Report which established the fact that the Philtranco bus
driver, 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.
 
The RTC ruled in favor of Paras and held that Philtranco and
Apolinar Miralles jointly and severally liable for actual and moral damages
including attorney’s fees.
On appeal to the CA, it affirmed the RTC’s ruling 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.
Issue:
1. Whether or not moral damages is availing in view of the fact that the
complaint had been anchored on a breach of contract of carriage
2. Whether or not the award of temperate damages is proper
Held:

1. The SC held that Paras can recover moral damages based on a quasi-
delict. As a general rule, 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 Code 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 in relation to Article 2206, (3) of the Civil
Code; and (b) where the common carrier has been guilty of fraud or bad
faith, as provided in Article 2220 of the Civil Code.

2. 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.
Article 2224 of the Civil Code expressly authorizes the courts to award
temperate damages despite the lack of certain proof of actual 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.