Professional Documents
Culture Documents
COMMON CARRIERS
The petition before the Court seeks a review of the decision of the Court of
Appeals in C.A. G.R. CV No. 56470, promulgated on 25 June 2001, which has
affirmed in toto the judgment of the Regional Trial Court (RTC), Branch 65, of
Makati, dismissing the complaint for damages filed by petitioner insurance
corporation against respondent shipping company.
The appellate court ruled, gathered from the testimonies and sworn
marine protests of the respective vessel masters of Limar I and MT Iron
Eagle, that there was no way by which the barges or the tugboats crew could
have prevented the sinking of Limar I. The vessel was suddenly tossed by
waves of extraordinary height of six (6) to eight (8) feet and buffeted by
strong winds of 1.5 knots resulting in the entry of water into the barges
hatches. The official Certificate of Inspection of the barge issued by the
Philippine Coastguard and the Coastwise Load Line Certificate would attest to
the seaworthiness of Limar I and should strengthen the factual findings of
the appellate court.
Findings of fact of the Court of Appeals generally conclude this Court;
none of the recognized exceptions from the rule - (1) when the factual
findings of the Court of Appeals and the trial court are contradictory;
(2) when the conclusion is a finding grounded entirely on speculation,
surmises, or conjectures; (3) when the inference made by the Court of
Appeals from its findings of fact is manifestly mistaken, absurd, or
impossible; (4) when there is a grave abuse of discretion in the appreciation
of facts; (5) when the appellate court, in making its findings, went beyond
the issues of the case and such findings are contrary to the admissions of
both appellant and appellee; (6) when the judgment of the Court of Appeals
is premised on a misapprehension of facts; (7) when the Court of Appeals
failed to notice certain relevant facts which, if properly considered, would
justify a different conclusion; (8) when the findings of fact are themselves
conflicting; (9) when the findings of fact are conclusions without citation of
the specific evidence on which they are based; and (10) when the findings of
fact of the Court of Appeals are premised on the absence of evidence but
such findings are contradicted by the evidence on record would appear to be
clearly extant in this instance.
All given then, the appellate court did not err in its judgment absolving
PKS Shipping from liability for the loss of the DUMC cargo.
WHEREFORE, the petition is DENIED. No costs.
This is a petition for review on certiorari assailing the Decision[1] of the Court
of Appeals which affirmed in toto the decision[2] of
the Regional Trial Court of Pasig City, Branch 164 in Civil Case No. 60985 filed
by the respondent for damages.
The respondent then requested the lady employee to use their phone to
make a call to Manila. Over the employees reluctance, the respondent
telephoned her mother to inform the latter that she missed the connecting
flight. The respondent was able to contact a family friend who picked her up
from the airport for her overnight stay in Singapore.[9]
The next day, after being brought back to the airport, the respondent
proceeded to petitioners counter which says: Immediate Attention To
Passengers with Immediate Booking. There were four or five passengers in
line. The respondent approached petitioners male employee at the counter
to make arrangements for immediate booking only to be told: Cant you see I
am doing something. She explained her predicament but the male employee
uncaringly retorted: Its your problem, not ours.[10]
The respondent never made it to Manila and was forced to take a direct
flight from Singapore to Malaysia on January 29, 1991, through the efforts of
her mother and travel agency in Manila. Her mother also had to travel
to Malaysia bringing with her respondents wardrobe and personal things
needed for the performance that caused them to incur an expense of about
P50,000.[11]
As a result of this incident, the respondents performance before the Royal
Family of Malaysia was below par. Because of the rude and unkind treatment
she received from the petitioners personnel in Singapore, the respondent
was engulfed with fear, anxiety, humiliation and embarrassment causing her
to suffer mental fatigue and skin rashes. She was thereby compelled to seek
immediate medical attention upon her return to Manila for acute urticaria.[12]
On June 15, 1993, the RTC rendered a decision with the following
dispositive portion:
SO ORDERED.[13]
II
III
.... Undisputably, PALs diversion of its flight due to inclement weather was a
fortuitous event. Nonetheless, such occurrence did not terminate PALs
contract with its passengers. Being in the business of air carriage and the
sole one to operate in the country, PAL is deemed to be equipped to deal
with situations as in the case at bar. What we said in one case once again
must be stressed, i.e., the relation of carrier and passenger continues until
the latter has been landed at the port of destination and has left the carriers
premises. Hence, PAL necessarily would still have to exercise extraordinary
diligence in safeguarding the comfort, convenience and safety of its stranded
passengers until they have reached their final destination...
...
It maybe that delay in the take off and arrival of commercial aircraft could
not be avoided and may be caused by diverse factors such as those testified
to by defendants pilot. However, knowing fully well that even before the
plaintiff boarded defendants Jumbo aircraft in Frankfurt bound for Singapore,
it has already incurred a delay of two hours. Nevertheless, defendant did not
take the trouble of informing plaintiff, among its other passengers of such a
delay and that in such a case, the usual practice of defendant airline will be
that they have to stay overnight at their connecting airport; and much less
did it inquire from the plaintiff and the other 25 passengers bound for Manila
whether they are amenable to stay overnight in Singapore and to take the
connecting flight to Manila the next day. Such information should have been
given and inquiries made in Frankfurt because even the defendant airlines
manual provides that in case of urgency to reach his or her destination on
the same date, the head office of defendant in Singapore must be informed
by telephone or telefax so as the latter may make certain arrangements with
other airlines in Frankfurt to bring such a passenger with urgent business to
Singapore in such a manner that the latter can catch up with her connecting
flight such as S-27/28 without spending the night in Singapore[23]
The respondent was not remiss in conveying her apprehension about the
delay of the flight when she was still in Frankfurt. Upon the assurance of
petitioners personnel in Frankfurt that she will be transported to Manila on
the same date, she had every right to expect that obligation fulfilled. She
testified, to wit:
Q: Now, since you were late, when the plane that arrived
from Frankfurt was late, did you not make arrangements so that
your flight from Singapore to Manila would be adjusted?
A: I asked the lady at the ticket counter, the one who gave the
boarding pass in Frankfurt and I asked her, Since my flight going
to Singapore would be late, what would happen to my Singapore-
Manila flight? and then she said, Dont worry, Singapore Airlines
would be responsible to bring you to Manila on the same
date. And then they have informed the name of the officer, or
whatever, that our flight is going to be late.[24]
When a passenger contracts for a specific flight, he has a purpose in
making that choice which must be respected. This choice, once exercised,
must not be impaired by a breach on the part of the airline without the latter
incurring any liability.[25] For petitioners failure to bring the respondent to her
destination, as scheduled, we find the petitioner clearly liable for the breach
of its contract of carriage with the respondent.
We are convinced that the petitioner acted in bad faith. Bad faith means
a breach of known duty through some motive of interest or ill will. Self-
enrichment or fraternal interest, and not personal ill will, may well have been
the motive; but it is malice nevertheless.[26] Bad faith was imputed by the
trial court when it found that the petitioners employees at
the Singapore airport did not accord the respondent the attention and
treatment allegedly warranted under the circumstances. The lady employee
at the counter was unkind and of no help to her. The respondent further
alleged that without her threats of suing the company, she was not allowed
to use the companys phone to make long distance calls to her mother
in Manila. The male employee at the counter where it says: Immediate
Attention to Passengers with Immediate Booking was rude to her when he
curtly retorted that he was busy attending to other passengers in line. The
trial court concluded that this inattentiveness and rudeness of petitioners
personnel to respondents plight was gross enough amounting to bad
faith. This is a finding that is generally binding upon the Court which we find
no reason to disturb.
Article 2232 of the Civil Code provides that in a contractual or quasi-
contractual relationship, exemplary damages may be awarded only if the
defendant had acted in a wanton, fraudulent, reckless, oppressive or
malevolent manner. In this case, petitioners employees acted in a wanton,
oppressive or malevolent manner. The award of exemplary damages is,
therefore, warranted in this case.
WHEREFORE, the Petition is DENIED. The Decision of the Court of
Appeals is AFFIRMED.
SO ORDERED.
FIRST DIVISION
DECISION
YNARES-SANTIAGO, J.:
SO ORDERED.[5]
The trial court held that respondent was negligent in erroneously advising
petitioner of her departure date through its employee, Menor, who was not
presented as witness to rebut petitioners testimony. However, petitioner
should have verified the exact date and time of departure by looking at her
ticket and should have simply not relied on Menors verbal representation.
The trial court thus declared that petitioner was guilty of contributory
negligence and accordingly, deducted 10% from the amount being claimed
as refund.
Respondent appealed to the Court of Appeals, which likewise found both
parties to be at fault. However, the appellate court held that petitioner is
more negligent than respondent because as a lawyer and well-traveled
person, she should have known better than to simply rely on what was told
to her. This being so, she is not entitled to any form of damages. Petitioner
also forfeited her right to the Jewels of Europe tour and must therefore pay
respondent the balance of the price for the British Pageant tour. The
dispositive portion of the judgment appealed from reads as follows:
WHEREFORE, premises considered, the decision of the Regional Trial Court
dated October 26, 1995 is hereby REVERSED and SET ASIDE. A new
judgment is hereby ENTERED requiring the plaintiff-appellee to pay to the
defendant-appellant the amount of P12,901.00, representing the balance of
the price of the British Pageant Package Tour, the same to earn legal interest
at the rate of SIX PERCENT (6%) per annum, to be computed from the time
the counterclaim was filed until the finality of this decision. After this decision
becomes final and executory, the rate of TWELVE PERCENT (12%) interest
per annum shall be additionally imposed on the total obligation until
payment thereof is satisfied. The award of attorneys fees is DELETED. Costs
against the plaintiff-appellee.
SO ORDERED.[6]
Upon denial of her motion for reconsideration, [7] petitioner filed the
instant petition under Rule 45 on the following grounds:
I
II
The Honorable Court of Appeals also erred in not ruling that the Jewels of
Europe tour was not indivisible and the amount paid therefor refundable;
III
The Honorable Court erred in not granting to the petitioner the consequential
damages due her as a result of breach of contract of carriage.[8]
Petitioner contends that respondent did not observe the standard of care
required of a common carrier when it informed her wrongly of the flight
schedule. She could not be deemed more negligent than respondent since
the latter is required by law to exercise extraordinary diligence in the
fulfillment of its obligation. If she were negligent at all, the same is merely
contributory and not the proximate cause of the damage she suffered. Her
loss could only be attributed to respondent as it was the direct consequence
of its employees gross negligence.
Petitioners contention has no merit.
By definition, a contract of carriage or transportation is one whereby a
certain person or association of persons obligate themselves to transport
persons, things, or news from one place to another for a fixed price. [9] Such
person or association of persons are regarded as carriers and are classified
as private or special carriers and common or public carriers. [10] A common
carrier is defined under Article 1732 of the Civil Code as persons,
corporations, firms or associations engaged in the business of carrying or
transporting passengers or goods or both, by land, water or air, for
compensation, offering their services to the public.
It is obvious from the above definition that respondent is not an entity
engaged in the business of transporting either passengers or goods and is
therefore, neither a private nor a common carrier. Respondent did not
undertake to transport petitioner from one place to another since its
covenant with its customers is simply to make travel arrangements in their
behalf. Respondents services as a travel agency include procuring tickets and
facilitating travel permits or visas as well as booking customers for tours.
While petitioner concededly bought her plane ticket through the efforts of
respondent company, this does not mean that the latter ipso facto is a
common carrier. At most, respondent acted merely as an agent of the airline,
with whom petitioner ultimately contracted for her carriage to Europe.
Respondents obligation to petitioner in this regard was simply to see to it
that petitioner was properly booked with the airline for the appointed date
and time. Her transport to the place of destination, meanwhile, pertained
directly to the airline.
The object of petitioners contractual relation with respondent is the
latters service of arranging and facilitating petitioners booking, ticketing
and accommodation in the package tour. In contrast, the object of a contract
of carriage is the transportation of passengers or goods. It is in this sense
that the contract between the parties in this case was an ordinary one for
services and not one of carriage. Petitioners submission is premised on a
wrong assumption.
The nature of the contractual relation between petitioner and respondent
is determinative of the degree of care required in the performance of the
latters obligation under the contract. For reasons of public policy, a common
carrier in a contract of carriage is bound by law to carry passengers as far as
human care and foresight can provide using the utmost diligence of very
cautious persons and with due regard for all the circumstances. [11] As earlier
stated, however, respondent is not a common carrier but a travel agency. It
is thus not bound under the law to observe extraordinary diligence in the
performance of its obligation, as petitioner claims.
Since the contract between the parties is an ordinary one for services,
the standard of care required of respondent is that of a good father of a
family under Article 1173 of the Civil Code. [12] This connotes reasonable care
consistent with that which an ordinarily prudent person would have observed
when confronted with a similar situation. The test to determine whether
negligence attended the performance of an obligation is: did the defendant
in doing the alleged negligent act use that reasonable care and caution
which an ordinarily prudent person would have used in the same situation? If
not, then he is guilty of negligence.[13]
In the case at bar, the lower court found Menor negligent when she
allegedly informed petitioner of the wrong day of departure. Petitioners
testimony was accepted as indubitable evidence of Menors alleged negligent
act since respondent did not call Menor to the witness stand to refute the
allegation. The lower court applied the presumption under Rule 131, Section
3 (e)[14] of the Rules of Court that evidence willfully suppressed would be
adverse if produced and thus considered petitioners uncontradicted
testimony to be sufficient proof of her claim.
On the other hand, respondent has consistently denied that Menor was
negligent and maintains that petitioners assertion is belied by the evidence
on record. The date and time of departure was legibly written on the plane
ticket and the travel papers were delivered two days in advance precisely so
that petitioner could prepare for the trip. It performed all its obligations to
enable petitioner to join the tour and exercised due diligence in its dealings
with the latter.
We agree with respondent.
Respondents failure to present Menor as witness to rebut petitioners
testimony could not give rise to an inference unfavorable to the former.
Menor was already working in France at the time of the filing of the
complaint,[15] thereby making it physically impossible for respondent to
present her as a witness. Then too, even if it were possible for respondent to
secure Menors testimony, the presumption under Rule 131, Section 3(e)
would still not apply. The opportunity and possibility for obtaining Menors
testimony belonged to both parties, considering that Menor was not just
respondents employee, but also petitioners niece. It was thus error for the
lower court to invoke the presumption that respondent willfully suppressed
evidence under Rule 131, Section 3(e). Said presumption would logically be
inoperative if the evidence is not intentionally omitted but is simply
unavailable, or when the same could have been obtained by both parties.[16]
In sum, we do not agree with the finding of the lower court that Menors
negligence concurred with the negligence of petitioner and resultantly
caused damage to the latter. Menors negligence was not sufficiently proved,
considering that the only evidence presented on this score was petitioners
uncorroborated narration of the events. It is well-settled that the party
alleging a fact has the burden of proving it and a mere allegation cannot take
the place of evidence.[17] If the plaintiff, upon whom rests the burden of
proving his cause of action, fails to show in a satisfactory manner facts upon
which he bases his claim, the defendant is under no obligation to prove his
exception or defense.[18]
Contrary to petitioners claim, the evidence on record shows that
respondent exercised due diligence in performing its obligations under the
contract and followed standard procedure in rendering its services to
petitioner. As correctly observed by the lower court, the plane ticket [19] issued
to petitioner clearly reflected the departure date and time, contrary to
petitioners contention. The travel documents, consisting of the tour itinerary,
vouchers and instructions, were likewise delivered to petitioner two days
prior to the trip. Respondent also properly booked petitioner for the tour,
prepared the necessary documents and procured the plane tickets. It
arranged petitioners hotel accommodation as well as food, land transfers and
sightseeing excursions, in accordance with its avowed undertaking.
Therefore, it is clear that respondent performed its prestation under the
contract as well as everything else that was essential to book petitioner for
the tour. Had petitioner exercised due diligence in the conduct of her affairs,
there would have been no reason for her to miss the flight. Needless to say,
after the travel papers were delivered to petitioner, it became incumbent
upon her to take ordinary care of her concerns. This undoubtedly would
require that she at least read the documents in order to assure herself of the
important details regarding the trip.
The negligence of the obligor in the performance of the obligation
renders him liable for damages for the resulting loss suffered by the obligee.
Fault or negligence of the obligor consists in his failure to exercise due care
and prudence in the performance of the obligation as the nature of the
obligation so demands.[20] There is no fixed standard of diligence applicable
to each and every contractual obligation and each case must be determined
upon its particular facts. The degree of diligence required depends on the
circumstances of the specific obligation and whether one has been negligent
is a question of fact that is to be determined after taking into account the
particulars of each case.[21]
The lower court declared that respondents employee was negligent. This
factual finding, however, is not supported by the evidence on record. While
factual findings below are generally conclusive upon this court, the rule is
subject to certain exceptions, as when the trial court overlooked,
misunderstood, or misapplied some facts or circumstances of weight and
substance which will affect the result of the case.[22]
In the case at bar, the evidence on record shows that respondent
company performed its duty diligently and did not commit any contractual
breach. Hence, petitioner cannot recover and must bear her own damage.
WHEREFORE, the instant petition is DENIED for lack of merit. The
decision of the Court of Appeals in CA-G.R. CV No. 51932 is
AFFIRMED. Accordingly, petitioner is ordered to pay respondent the amount
of P12,901.00 representing the balance of the price of the British Pageant
Package Tour, with legal interest thereon at the rate of 6% per annum, to be
computed from the time the counterclaim was filed until the finality of this
Decision. After this Decision becomes final and executory, the rate of 12%
per annum shall be imposed until the obligation is fully settled, this interim
period being deemed to be by then an equivalent to a forbearance of credit.
[23]
SO ORDERED.
EN BANC
The court a quo, after trial, found for the plaintiff and awarded her P3,000 as
damages against defendant Perez. The claim against defendant Valenzuela
was dismissed. From this ruling, both plaintiff and defendant Perez appealed
to this Court, the former asking for more damages and the latter insisting on
non-liability. Subsequently, the Court of Appeals affirmed the judgment of
conviction earlier mentioned, during the pendency of the herein appeal, and
on May 19, 1964, final judgment was entered therein. (Rollo, p. 33).
x x x when the crime took place, the guard Devesa had no duties to
discharge in connection with the transportation of the deceased from
Calamba to Manila. The stipulation of facts is clear that when Devesa
shot and killed Gillaco, Devesa was assigned to guard the Manila-San
Fernando (La Union) trains, and he was at Paco Station awaiting
transportation to Tutuban, the starting point of the train that he was
engaged to guard. In fact, his tour of duty was to start at 9:00 two
hours after the commission of the crime. Devesa was therefore under
no obligation to safeguard the passengers of the Calamba-Manila train,
where the deceased was riding; and the killing of Gillaco was not done
in line of duty. The position of Devesa at the time was that of another
would be passenger, a stranger also awaiting transportation, and not
that of an employee assigned to discharge any of the duties that the
Railroad had assumed by its contract with the deceased. As a result,
Devesa's assault can not be deemed in law a breach of Gillaco's
contract of transportation by a servant or employee of the carrier. . . .
(Emphasis supplied)
Now here, the killing was perpetrated by the driver of the very cab
transporting the passenger, in whose hands the carrier had entrusted the
duty of executing the contract of carriage. In other words, unlike
the Gillaco case, the killing of the passenger here took place in the course of
duty of the guilty employee and when the employee was acting within the
scope of his duties.
Moreover, the Gillaco case was decided under the provisions of the Civil
Code of 1889 which, unlike the present Civil Code, did not impose upon
common carriers absolute liability for the safety of passengers against wilful
assaults or negligent acts committed by their employees. The death of the
passenger in the Gillaco case was truly a fortuitous event which exempted
the carrier from liability. It is true that Art. 1105 of the old Civil Code on
fortuitous events has been substantially reproduced in Art. 1174 of the Civil
Code of the Philippines but both articles clearly remove from their exempting
effect the case where the law expressly provides for liability in spite of the
occurrence of force majeure. And herein significantly lies the statutory
difference between the old and present Civil Codes, in the backdrop of the
factual situation before Us, which further accounts for a different result in
the Gillaco case. Unlike the old Civil Code, the new Civil Code of the
Philippines expressly makes the common carrier liable for intentional
assaults committed by its employees upon its passengers, by the wording of
Art. 1759 which categorically states that
The Civil Code provisions on the subject of Common Carriers 1 are new and
were taken from Anglo-American Law. 2 There, the basis of the carrier's
liability for assaults on passengers committed by its drivers rests either on
(1) the doctrine of respondeat superior or (2) the principle that it is the
carrier's implied duty to transport the passenger safely.3
Under the first, which is the minority view, the carrier is liable only when the
act of the employee is within the scope of his authority and duty. It is not
sufficient that the act be within the course of employment only.4
Under the second view, upheld by the majority and also by the later cases, it
is enough that the assault happens within the course of the employee's duty.
It is no defense for the carrier that the act was done in excess of authority or
in disobedience of the carrier's orders. 5 The carrier's liability here is absolute
in the sense that it practically secures the passengers from assaults
committed by its own employees.6
As can be gleaned from Art. 1759, the Civil Code of the Philippines evidently
follows the rule based on the second view. At least three very cogent reasons
underlie this rule. As explained in Texas Midland R.R. v. Monroe, 110 Tex. 97,
216 S.W. 388, 389-390, and Haver v. Central Railroad Co., 43 LRA 84, 85: (1)
the special undertaking of the carrier requires that it furnish its passenger
that full measure of protection afforded by the exercise of the high degree of
care prescribed by the law, inter alia from violence and insults at the hands
of strangers and other passengers, but above all, from the acts of the
carrier's own servants charged with the passenger's safety; (2) said liability
of the carrier for the servant's violation of duty to passengers, is the result of
the formers confiding in the servant's hands the performance of his contract
to safely transport the passenger, delegating therewith the duty of
protecting the passenger with the utmost care prescribed by law; and (3) as
between the carrier and the passenger, the former must bear the risk of
wrongful acts or negligence of the carrier's employees against passengers,
since it, and not the passengers, has power to select and remove them.
Accordingly, it is the carrier's strict obligation to select its drivers and similar
employees with due regard not only to their technical competence and
physical ability, but also, no less important, to their total personality,
including their patterns of behavior, moral fibers, and social attitude.
Applying this stringent norm to the facts in this case, therefore, the lower
court rightly adjudged the defendant carrier liable pursuant to Art. 1759 of
the Civil Code. The dismissal of the claim against the defendant driver was
also correct. Plaintiff's action was predicated on breach of contract of
carriage7 and the cab driver was not a party thereto. His civil liability is
covered in the criminal case wherein he was convicted by final judgment.
In connection with the award of damages, the court a quo granted only
P3,000 to plaintiff-appellant. This is the minimum compensatory damages
amount recoverable under Art. 1764 in connection with Art. 2206 of the Civil
Code when a breach of contract results in the passenger's death. As has
been the policy followed by this Court, this minimal award should be
increased to P6,000. As to other alleged actual damages, the lower court's
finding that plaintiff's evidence thereon was not convincing, 8 should not be
disturbed. Still, Arts. 2206 and 1764 award moral damages in addition to
compensatory damages, to the parents of the passenger killed to
compensate for the mental anguish they suffered. A claim therefor, having
been properly made, it becomes the court's duty to award moral
damages.9 Plaintiff demands P5,000 as moral damages; however, in the
circumstances, We consider P3,000 moral damages, in addition to the P6,000
damages afore-stated, as sufficient. Interest upon such damages are also
due to plaintiff-appellant. 10
FIRST DIVISION
DECISION
DAVIDE, JR., C.J.:
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 Cathays
revenues. Cathays 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 attorneys 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 formers
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 Appeals[3] where we recognized that, in accordance
with the Civil Aeronautics Boards 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 attorneys 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 attorneys
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 passengers 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 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.
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 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; 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.
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 Cathays 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:
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 courts 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 attorneys 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
Courts admonition in Singson vs. CA (282 SCRA 149 [1997]), where it said:
and in Alitalia Airways vs. CA (187 SCRA 763 [1990], where it was held: