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.
Ozaeta, Lichauco and Picazo for defendant and appellant.
E.A. Fernandez and L.H. Fernandez for plaintiffs and appellants.
Gov't. Corp. Counsel A. Padilla and Atty. F.A. Umali for appellee.
DIZON, J.:
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.

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.
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. L-25499 February 18, 1970 Pampanga, reached the scene of the mishap and it was
stopped by Patrolman Felino Bacani of the municipal police
VILLA REY TRANSIT, INC., petitioner, force of Minalin who, in the meantime, had gone to the
vs. scene to investigate. Patrolman Bacani placed Policronio
THE COURT OF APPEALS, TRINIDAD A. QUINTOS, PRIMA A. QUINTOS, AND Quintos, Jr. and three other injured men who rode on the
JULITA A. QUINTOS, respondents. bullcart aboard the La Mallorca bus and brought them to the
provincial hospital of Pampanga at San Fernando for medical
Laurea and Pison for petitioner. assistance. Notwithstanding such assistance, Policronio
Quintos, Jr. died at 3:15 p.m. on the same day, March 17,
Bonifacio M. Abad, Jr. for respondents. 1960, due to traumatic shock due to cerebral injuries.

The private respondents, Trinidad, Prima and Julita, all surnamed Quintos, are
the sisters and only surviving heirs of Policronio Quintos Jr., who died single,
CONCEPCION, C.J.: leaving no descendants nor ascendants. Said respondents herein brought
this action against herein petitioner, Villa Rey Transit, Inc., as owner and
operator of said passenger bus, bearing Plate No. TPU-14871-Bulacan, for
Petitioner, Villa Rey Transit, Inc., seeks the review by certiorari of a decision
breach of the contract of carriage between said petitioner and the deceased
of the Court of Appeals affirming that of the Court of First Instance of
Policronio Quintos, Jr., to recover the aggregate sum of P63,750.00 as
Pangasinan. The basic facts are set forth in said decision of the Court of
damages, including attorney's fees. Said petitioner — defendant in the court
Appeals, from which We quote:
of first instance — contended that the mishap was due to a fortuitous event,
but this pretense was rejected by the trial court and the Court of Appeals,
At about 1:30 in the morning of March 17, 1960, an Izuzu First
both of which found that the accident and the death of Policronio had been
Class passenger bus owned and operated by the defendant,
due to the negligence of the bus driver, for whom petitioner was liable under
bearing Plate No. TPU-14871-Bulacan and driven by Laureano
its contract of carriage with the deceased. In the language of His Honor, the
Casim, left Lingayen, Pangasinan, for Manila. Among its
trial Judge:
paying passengers was the deceased, Policronio Quintos, Jr.
who sat on the first seat, second row, right side of the bus.
The mishap was not the result of any unforeseeable
At about 4:55 o'clock a.m. when the vehicle was nearing the
fortuitous event or emergency but was the direct result of
northern approach of the Sadsaran Bridge on the national
the negligence of the driver of the defendant. The defendant
highway in barrio Sto. Domingo, municipality of Minalin,
must, therefore, respond for damages resulting from its
Pampanga, it frontally hit the rear side of a bullcart filled with
breach of contract for carriage. As the complaint alleged a
hay. As a result the end of a bamboo pole placed on top of
total damage of only P63,750.00 although as elsewhere
the hayload and tied to the cart to hold it in place, hit the
shown in this decision the damages for wake and burial
right side of the windshield of the bus. The protruding end of
expenses, loss of income, death of the victim, and attorneys
the bamboo pole, about 8 feet long from the rear of the
fee reach the aggregate of P79,615.95, this Court finds it just
bullcart, penetrated through the glass windshield and landed
that said damages be assessed at total of only P63,750.00 as
on the face of Policronio Quintos, Jr. who, because of the
prayed for in plaintiffs' amended complaint.
impact, fell from his seat and was sprawled on the floor. The
pole landed on his left eye and the bone of the left side of his
face was fractured. He suffered other multiple wounds and The despositive part of the decision of the trial Court reads:
was rendered unconscious due, among other causes to
severe cerebral concussion. A La Mallorca passenger bus WHEREFORE, judgment is hereby rendered ordering the
going in the opposite direction towards San Fernando, defendant to pay to the plaintiffs the amount of P63,750.00
 as damages for breach of contract of carriage resulting from
the death of Policronio Quintos, Jr.
which, as above indicated, was affirmed by the Court of Appeals. Hence, the
present petition for review on certiorari, filed by Villa Rey Transit, Inc.
The only issue raised in this appeal is the amount of damages recoverable by
private respondents herein. The determination of such amount depends,
mainly upon two (2) factors, namely: (1) the number of years on the basis of
which the damages shall be computed and (2) the rate at which the losses
sustained by said respondents should be fixed.
The first factor was based by the trial court — the view of which was
concurred in by the Court of Appeals — upon the life expectancy of
Policronio Quintos, Jr., which was placed at 33-1/3 years — he being over 29
years of age (or around 30 years for purposes of computation) at the time of
his demise — by applying the formula (2/3 x [80-301 = life expectancy)
adopted in the American Expectancy Table of Mortality or the actuarial of
Combined Experience Table of Mortality. Upon the other hand, petitioner
maintains that the lower courts had erred in adopting said formula and in not
acting in accordance with Alcantara v. Surro1 in which the damages were
computed on a four (4) year basis, despite the fact that the victim therein
was 39 years old, at the time of his death, and had a life expectancy of 28.90
years.
The case cited is not, however, controlling in the one at bar. In the Alcantara
case, none of the parties had questioned the propriety of the four-year basis
adopted by the trial court in making its award of damages. Both parties
appealed, but only as regards the amount thereof. The plaintiffs assailed the
non-inclusion, in its computation, of the bonus that the corporation, which
was the victim's employer, had awarded to deserving officers and
employees, based upon the profits earned less than two (2) months before
the accident that resulted in his death. The defendants, in turn, objected to
the sum awarded for the fourth year, which was treble that of the previous
years, based upon the increases given, in that fourth year,
to other employees of the same corporation. Neither this objection nor said
claim for inclusion of the bonus was sustained by this Court. Accordingly, the
same had not thereby laid down any rule on the length of time to be used in
the computation of damages. On the contrary, it declared:
The determination of the indemnity to be awarded to the
heirs of a deceased person has thereforeno fixed basis. Much
is left to the discretion of the court considering the moral and
material damages involved, and so it has been said
that "(t)here can be no exact or uniform rule for measuring the
value of a human life and the measure of damages cannot be
arrived at by precise mathematical calculation, but the amount
recoverable depends on the particular facts and circumstances
of each case. The life expectancy of the deceased or of the
beneficiary, whichever is shorter, is an important factor.' (25
C.J.S. 1241.) Other factors that are usually considered are: (1)
pecuniary loss to plaintiff or beneficiary (25 C.J.S. 1243-1250) ;
(2) loss of support (25 C.J.S., 1250-1251); (3) loss of service (25
C.J.S. 1251-1254); (4) loss of society (25 C.J.S. 1254-1255); (5)
mental suffering of beneficiaries (25 C.J.S., 1258-1259) ; and
(6) medical and funeral expenses (26 C.J.S., 1254-1260)."2
Thus, life expectancy is, not only relevant, but, also, an important element in
fixing the amount recoverable by private respondents herein. Although it is
not the sole element determinative of said amount, no cogent reason has
been given to warrant its disregard and the adoption, in the case at bar, of a
purely arbitrary standard, such as a four-year rule. In short, the Court of
Appeals has not erred in basing the computation of petitioner's liability upon
the life expectancy of Policronio Quintos, Jr.
With respect to the rate at which the damages shall be computed, petitioner
impugns the decision appealed from upon the ground that the damages
awarded therein will have to be paid now, whereas most of those sought to
be indemnified will be suffered years later. This argument is basically true,
and this is, perhaps, one of the reasons why the Alcantara case points out the
absence of a "fixed basis" for the ascertainment of the damages recoverable
in litigations like the one at bar. Just the same, the force of the said argument
of petitioner herein is offset by the fact that, although payment of the award
in the case at bar will have to take place upon the finality of the decision
therein, the liability of petitioner herein had been fixed at the rate only of
P2,184.00 a year, which is the annual salary of Policronio Quintos, Jr. at the
time of his death, as a young "training assistant" in the Bacnotan Cement
Industries, Inc. In other words, unlike the Alcantara case, on which petitioner
relies, the lower courts did not consider, in the present case, Policronio's
potentiality and capacity to increase his future income. Indeed, upon the
conclusion of his training period, he was supposed to have a better job and
be promoted from time to time, and, hence, to earn more, if not —
considering the growing importance of trade, commerce and industry and
the concomitant rise in the income level of officers and employees
therein — much more.
At this juncture, it should be noted, also, that We are mainly concerned with
the determination of the losses or damages sustained by the private
respondents, as dependents and intestate heirs of the deceased, and that
said damages consist, not of the full amount of his earnings, but of the
support, they received or would have received from him had he not died in
consequence of the negligence of petitioner's agent. In fixing the amount of
that support, We must reckon with the "necessary expenses of his own
living", which should be deducted from his earnings. Thus, it has been
consistently held that earning capacity, as an element of damages to one's
estate for his death by wrongful act is necessarily his net earning capacity or
his capacity to acquire money, "less the necessary expense for his own
living.3 Stated otherwise, the amount recoverable is not loss of the entire
earning, but rather the loss of that portion of the earnings which the
beneficiary would have received.4 In other words, only net earnings, not
gross earning, are to be considered5 that is, the total of the
earnings less expenses necessary in the creation of such earnings or
income6 and less living and other incidental expenses.7

All things considered, We are of the opinion that it is fair and reasonable to
fix the deductible living and other expenses of the deceased at the sum of
P1,184.00 a year, or about P100.00 a month, and that, consequently, the loss
sustained by his sisters may be roughly estimated at P1,000.00 a year or
P33,333.33 for the 33-1/3 years of his life expectancy. To this sum of
P33,333.33, the following should be added: (a) P12,000.00, pursuant to Arts.
104 and 107 of the Revised Penal Code, in relation to Article 2206 of our Civil
Code, as construed and applied by this Court;8 (b) P1,727.95, actually spent by
private respondents for medical and burial expenses; and (c) attorney's fee,
which was fixed by the trial court, at P500.00, but which, in view of the
appeal taken by petitioner herein, first to the Court of Appeals and later to
this Supreme Court, should be increased to P2,500.00. In other words, the
amount adjudged in the decision appealed from should be reduced to the
aggregate sum of P49,561.28, with interest thereon, at the legal rate, from
December 29, 1961, date of the promulgation of the decision of the trial
court.

Thus modified, said decision and that of the Court of Appeals are hereby
affirmed, in all other respects, with costs against petitioner, Villa Rey Transit,
Inc. It is so ordered.
G.R. No. 114061 August 3, 1994
KOREAN AIRLINES CO., LTD., petitioner,
vs.
COURT OF APPEALS and JUANITO C. LAPUZ, respondents.
G.R. No. 113842 August 3, 1994
JUANITO C. LAPUZ, petitioner,
vs.
COURT OF APPEALS and KOREAN AIRLINES CO., LTD., respondents.
M.A. Aguinaldo and Associates for Korean Airlines Co., Ltd.
Camacho and Associates for Juanito Lapuz.
CRUZ, J.:
Sometime in 1980, Juanito C. Lapuz, an automotive electrician, was
contracted for employment in Jeddah, Saudi Arabia, for a period of one year
through Pan Pacific Overseas Recruiting Services, Inc. Lapuz was supposed to
leave on November 8, 1980, via Korean Airlines. Initially, he was "wait-listed,"
which meant that he could only be accommodated if any of the confirmed
passengers failed to show up at the airport before departure. When two of
such passengers did not appear, Lapuz and another person by the name of
Perico were given the two unclaimed seats.
According to Lapuz, he was allowed to check in with one suitcase and one
shoulder bag at the check-in counter of KAL. He passed through the customs
and immigration sections for routine check-up and was cleared for departure
as Passenger No. 157 of KAL Flight No. KE 903. Together with the other
passengers, he rode in the shuttle bus and proceeded to the ramp of the KAL
aircraft for boarding. However, when he was at the third or fourth rung of
the stairs, a KAL officer pointed to him and shouted "Down! Down!" He was
thus barred from taking the flight. When he later asked for another booking,
his ticket was canceled by KAL. Consequently, he was unable to report for his
work in Saudi Arabia within the stipulated 2-week period and so lost his
employment.
KAL, on the other hand, alleged that on November 8, 1980, Pan Pacific
Recruiting Services Inc. coordinated with KAL for the departure of 30
contract workers, of whom only 21 were confirmed and 9 were wait-listed
passengers. The agent of Pan Pacific, Jimmie Joseph, after being informed
that there was a possibility of having one or two seats becoming available,
gave priority to Perico, who was one of the supervisors of the hiring company
in Saudi Arabia. The other seat was won through lottery by Lapuz. However,
only one seat became available and so, pursuant to the earlier agreement
that Perico was to be given priority, he alone was allowed to board.
After trial, the Regional Trial Court of Manila, Branch 30, 1 adjudged KAL liable
for damages, disposing as follows:
WHEREFORE, in view of the foregoing consideration,
judgment is hereby rendered sentencing the defendant
Korean Air Lines to pay plaintiff Juanito C. Lapuz the
following:
1. The amount of TWO HUNDRED SEVENTY-TWO THOUSAND
ONE HUNDRED SIXTY (P272,160.00) PESOS as
actual/compensatory damages, with legal interest thereon
from the date of the filing of the complaint until fully paid.
2. The sum of TWENTY-FIVE THOUSAND (P25,000.00) PESOS
as and for attorney's fees; and
3. The costs of suit.
The case is hereby dismissed with respect to defendant Pan
Pacific Overseas Recruiting Services, Inc.
The counterclaims and cross-claim of defendant Korean Air
Lines Co., Ltd. are likewise dismissed.
On appeal, this decision was modified by the Court of Appeals 2 as follows:
WHEREFORE, in view of all the foregoing, the
appealed judgment is hereby AFFIRMED with the
following modifications: the amount of actual
damages and compensatory damages is reduced to
P60,000.00 and defendant-appellant is hereby
ordered to pay plaintiff-appellant the sum of One
 Hundred Thousand Pesos (P100,000.00) by way of
moral and exemplary damages, at 6% interest per
annum from the date of the filing of the Complaint
until fully paid.
KAL and Lapuz filed their respective motions for reconsideration, which were
both denied for lack of merit. Hence, the present petitions for review which
have been consolidated because of the identity of the parties and the
similarity of the issues.
In G. R. No. 114061, KAL assails the decision of the appellate court on the
following grounds:
1. That the Court of Appeals erred in concluding that
petitioner committed a breach of contract of
carriage notwithstanding lack of proper, competent
and sufficient evidence of the existence of such
contract.
2. That the Court of Appeals erred in not according
the proper evidentiary weight to some evidence
presented and the fact that private respondent did
not have any boarding pass to prove that he was
allowed to board and to prove that his airline ticket
was confirmed.
3. That the Court of Appeals erred in concluding that
the standby passenger status of private respondent
Lapuz was changed to a confirmed status when his
name was entered into the passenger manifest.
4. That the Court of Appeals abused its discretion in
awarding moral and exemplary damages in the
amount of P100,000.00 in favor of private
respondent notwithstanding its lack of basis and
private respondent did not state such amount in his
complaint nor had private respondent proven the
said damages.
5. That the Court of Appeals erred in dismissing the
counterclaims.
6. That the Court of Appeals erred in dismissing the
counterclaim of petitioner against Pan Pacific.
7. That the Court of Appeals erred in ruling that the
6% per annum legal interest on the judgment shall be
computed from the filing of the complaint.
In G. R. No. 113842, Lapuz seeks: (a) the setting aside of the decision of the
Court of Appeals insofar as it modifies the award of damages; b) actual and
compensatory damages in the sum equivalent to 5 years' loss of earnings
based on the petitioner's monthly salary of 1,600 Saudi rials at the current
conversion rate plus the cost of baggage and personal belongings worth
P2,000 and the service fee of P3,000 paid to the recruiting agency, all with
legal interest from the filing of the complaint until fully paid; c) moral
damages of not less than P1 million and exemplary damages of not less than
P500,000.00, both with interest at 6% per annum from the filing of the
complaint; and d) attorney's fees in the sum equivalent to 30% of the award
of damages.
It is evident that the issues raised in these petitions relate mainly to the
correctness of the factual findings of the Court of Appeals and the award of
damages. The Court has consistently affirmed that the findings of fact of the
Court of Appeals and the other lower courts are as a rule binding upon it,
subject to certain exceptions. As nothing in the record indicates any of such
exceptions, the factual conclusions of the appellate court must be affirmed.
The status of Lapuz as standby passenger was changed to that of a
confirmed passenger when his name was entered in the passenger manifest
of KAL for its Flight No. KE 903. His clearance through immigration and
customs clearly shows that he had indeed been confirmed as a passenger of
KAL in that flight. KAL thus committed a breach of the contract of carriage
between them when it failed to bring Lapuz to his destination.
This Court has held that a contract to transport passengers is different in kind
and degree from any other contractual relation. 3 The business of the carrier
is mainly with the traveling public. It invites people to avail themselves of the
comforts and advantages it offers. The contract of air carriage generates a
relation attended with a public duty. Passengers have the right to be treated
by the carrier's employees with kindness, respect, courtesy and due
consideration. They are entitled to be protected against personal
misconduct, injurious language, indignities and abuses from such
employees. 4 So it is that any discourteous conduct on the part of these
employees toward a passenger gives the latter an action for damages against
the carrier.
The breach of contract was aggravated in this case when, instead of
courteously informing Lapuz of his being a "wait-listed" passenger, a KAL
officer rudely shouted "Down! Down!" while pointing at him, thus causing
him embarrassment and public humiliation.
KAL argues that "the evidence of confirmation of a chance passenger status
is not through the entry of the name of a chance passenger in the passenger
manifest nor the clearance from the Commission on Immigration and
Deportation, because they are merely means of facilitating the boarding of a
chance passenger in case his status is confirmed." We are not persuaded.
The evidence presented by Lapuz shows that he had indeed checked in at the
departure counter, passed through customs and immigration, boarded the
shuttle bus and proceeded to the ramp of KAL's aircraft. In fact, his baggage
had already been loaded in KAL's aircraft, to be flown with him to Jeddah.
The contract of carriage between him and KAL had already been perfected
when he was summarily and insolently prevented from boarding the aircraft.
KAL's allegation that the respondent court abused its discretion in awarding
moral and exemplary damages is also not tenable.
The Court of Appeals granted moral and exemplary damages because:
The findings of the court a quo that the defendant-
appellant has committed breach of contract of
carriage in bad faith and in wanton, disregard of
plaintiff-appellant's rights as passenger laid the basis
and justification of an award for moral damages.
xxxx
In the instant case, we find that defendant-appellant
Korean Air Lines acted in a wanton, fraudulent,
reckless, oppressive or malevolent manner when it
"bumped off" plaintiff-appellant on November 8,
1980, and in addition treated him rudely and
arrogantly as a "patay gutom na contract worker
fighting Korean Air Lines," which clearly shows
malice and bad faith, thus entitling plaintiff-appellant
to moral damages.
xxxx
Considering that the plaintiff-appellant's entitlement
to moral damages has been fully established by oral
and documentary evidence, exemplary damages
may be awarded. In fact, exemplary damages may be
awarded, even though not so expressly pleaded in
the complaint (Kapoe vs. Masa, 134 SCRA 231). By the
same token, to provide an example for the public
good, an award of exemplary damages is also proper
(Armovit vs. Court of Appeals, supra).
On the other hand, Lapuz's claim that the award of P100,000.00 as moral and
exemplary damages is inadequate is not acceptable either. His prayer for
moral damages of not less than P1 million and exemplary damages of not less
than P500,000.00 is overblown.
The well-entrenched principle is that moral damages depend upon the
discretion of the court based on the circumstances of each case. 5 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. 6 Damages are not
intended to enrich the complainant at the expense of the defendant. They
are awarded only to alleviate the moral suffering that the injured party had
undergone by reason of the defendant's culpable action. 7 There is no hard-
and-fast rule in the determination of what would be a fair amount of moral
damages since each case must be governed by its own peculiar facts.
A review of the record of this case shows that the injury suffered by Lapuz is
not so serious or extensive as to warrant an award of P1.5 million. The
assessment of P100,000 as moral and exemplary damages in his favor is, in
our view, reasonable and realistic.
Lapuz likewise claims that the respondent court could not rule upon the
propriety of the award of actual damages because it had not been assigned
as an error by KAL. Not so. The rule is that only errors specifically assigned
and properly argued in the brief will be considered except errors affecting
jurisdiction over the subject matter and plain as well as clerical errors. 8 But
this is not without qualification for, as the Court held in Vda. de Javellana vs.
Court of Appeals: 9
. . . [T]he Court is clothed with ample authority to
review matters, even if they are not assigned as
errors in their appeal, if it finds that their
consideration is necessary in arriving at a just
decision of the case.
A similar pronouncement was made in Baquiran vs. Court of Appeals 10 in this
wise:
Issues, though not specifically raised in the pleading
in the appellate court, may, in the interest of justice,
be properly considered by said court in deciding a
case, if they are questions raised in the trial court
and are matters of record having some bearing on
the issue submitted which the parties failed to raise
or the lower court ignored.
The Court of Appeals was therefore justified in decreasing the award of
actual damages even if the issue was not assigned as an error by KAL.
Consideration of this question was necessary for the just and complete
resolution of the present case. Furthermore, there was enough evidence to
warrant the reduction of the original award, as the challenged decision
correctly observed:
A perusal of the plaintiff-appellant's contract of
employment shows that the effectivity of the
contract is for only one year, renewable every year
for five years. Although plaintiff-appellant intends to
renew his contract, such renewal will still be subject
to his foreign employer. Plaintiff-appellant had not
yet started working with his foreign employer,
hence, there can be no basis as to whether his
contract will be renewed by his foreign employer or
not. Thus, the damages representing the loss of
earnings of plaintiff-appellant in the renewal of the
contract of employment is at most speculative.
Damages may not be awarded on the basis of
speculation or conjecture (Gachalian vs. Delim, 203
SCRA 126). Hence, defendant-appellant's liability is
limited to the one year contract only. Plaintiff-
appellant is, therefore, entitled only to his lost
earnings for one year, i.e., P60,000.00, which is 1/5 of
P300,000.00, the total amount of actual damages,
representing lost earnings for five years prayed for in
the Complaint.
Plaintiff-appellant's contention that in computing his
lost earnings, the current rate of the Saudi Rial to the
Philippine Peso at the time of payment should be
used, is untenable, considering that in his Complaint,
plaintiff-appellant has quantified in Philippine Peso
his lost earnings for five years.
We disagree with the respondent court, however, on the date when the legal
interest should commence to run. The rule is that the legal interest of six
percent (6%) on the amounts adjudged in favor of Lapuz should resume from
the time of the rendition of the trial court's decision instead of November 28,
1980, the date of the filing of the complaint.
On this matter, the Court has held:
If suit were for payment of a definite sum of money,
the contention might be tenable. However, if it is for
damages, unliquidated and not known until
definitely ascertained, assessed and determined by
the courts after proof, interest should be from the
date of the decision. 11
xxxx
The obligation to pay interest on a sum filed in a
judgment exists from the date of the sentence,
when so declared; for until the net amount of the
debtor's liability has been determined, he cannot he
considered delinquent in the fulfillment of his
obligation to pay the debt with interest thereon. 12
Finally, we find that the respondent court did not err in sustaining the trial
court's dismissal of KAL's counterclaim against Pan Pacific Overseas
Recruiting Services Inc., whose responsibility ended with the confirmation by
KAL of Lapuz as its passenger in its Flight No. 903.
This is still another case of the maltreatment of our overseas contract
workers, this time by the airline supposed to bring the passenger to his
foreign assignment. Our OCW's sacrifice much in seeking employment
abroad, where they are deprived of the company of their loved ones, the
direct protection of our laws, and the comfort of our own native culture and
way of life. This Court shall exert every effort to vindicate their rights when
they are abused and shall accord them the commensurate reparation of their
injuries consistent with their dignity and worth as members of the working
class.

WHEREFORE, the appealed judgment is AFFIRMED, but with the modification

that the legal interest on the damages awarded to private respondent should
commence from the date of the decision of the trial court on November 14,
1990. The parties shall bear their own costs.

SO ORDERED.
G.R. No. L-20089 December 26, 1964
BEATRIZ P. WASSMER, plaintiff-appellee,
vs.
FRANCISCO X. VELEZ, defendant-appellant.
Jalandoni & Jamir for defendant-appellant.
Samson S. Alcantara for plaintiff-appellee.
BENGZON, J.P., J.:
The facts that culminated in this case started with dreams and hopes,
followed by appropriate planning and serious endeavors, but terminated in
frustration and, what is worse, complete public humiliation.
Francisco X. Velez and Beatriz P. Wassmer, following their mutual promise of
love, decided to get married and set September 4, 1954 as the big day. On
September 2, 1954 Velez left this note for his bride-to-be:
Dear Bet —
Will have to postpone wedding — My mother opposes it. Am
leaving on the Convair today.
Please do not ask too many people about the reason why —
That would only create a scandal.
Paquing
But the next day, September 3, he sent her the following telegram:
NOTHING CHANGED REST ASSURED RETURNING VERY
SOON APOLOGIZE MAMA PAPA LOVE .
PAKING
Thereafter Velez did not appear nor was he heard from again.
Sued by Beatriz for damages, Velez filed no answer and was declared in
default. Plaintiff adduced evidence before the clerk of court as commissioner,
and on April 29, 1955, judgment was rendered ordering defendant to pay
plaintiff P2,000.00 as actual damages; P25,000.00 as moral and exemplary
damages; P2,500.00 as attorney's fees; and the costs.
On June 21, 1955 defendant filed a "petition for relief from orders, judgment
and proceedings and motion for new trial and reconsideration." Plaintiff
moved to strike it cut. But the court, on August 2, 1955, ordered the parties
and their attorneys to appear before it on August 23, 1955 "to explore at this
stage of the proceedings the possibility of arriving at an amicable
settlement." It added that should any of them fail to appear "the petition for
relief and the opposition thereto will be deemed submitted for resolution."
On August 23, 1955 defendant failed to appear before court. Instead, on the
following day his counsel filed a motion to defer for two weeks the resolution
on defendants petition for relief. The counsel stated that he would confer
with defendant in Cagayan de Oro City — the latter's residence — on the
possibility of an amicable element. The court granted two weeks counted
from August 25, 1955.
Plaintiff manifested on June 15, 1956 that the two weeks given by the court
had expired on September 8, 1955 but that defendant and his counsel had
failed to appear.
Another chance for amicable settlement was given by the court in its order of
July 6, 1956 calling the parties and their attorneys to appear on July 13, 1956.
This time. however, defendant's counsel informed the court that chances of
settling the case amicably were nil.
On July 20, 1956 the court issued an order denying defendant's aforesaid
petition. Defendant has appealed to this Court. In his petition of June 21, 1955
in the court a quo defendant alleged excusable negligence as ground to set
aside the judgment by default. Specifically, it was stated that defendant filed
no answer in the belief that an amicable settlement was being negotiated.
A petition for relief from judgment on grounds of fraud, accident, mistake or
excusable negligence, must be duly supported by an affidavit of merits
stating facts constituting a valid defense. (Sec. 3, Rule 38, Rules of Court.)
Defendant's affidavit of merits attached to his petition of June 21, 1955
stated: "That he has a good and valid defense against plaintiff's cause of
action, his failure to marry the plaintiff as scheduled having been due to
fortuitous event and/or circumstances beyond his control." An affidavit of
merits like this stating mere conclusions or opinions instead of facts is not
valid. (Cortes vs. Co Bun Kim, L-3926, Oct. 10, 1951; Vaswani vs. P. Tarrachand
Bros., L-15800, December 29, 1960.)
Defendant, however, would contend that the affidavit of merits was in fact
unnecessary, or a mere surplusage, because the judgment sought to be set
aside was null and void, it having been based on evidence adduced before
the clerk of court. In Province of Pangasinan vs. Palisoc, L-16519, October 30,
1962, this Court pointed out that the procedure of designating the clerk of
court as commissioner to receive evidence is sanctioned by Rule 34 (now
Rule 33) of the Rules of Court. Now as to defendant's consent to said
procedure, the same did not have to be obtained for he was declared in
default and thus had no standing in court (Velez vs. Ramas, 40 Phil. 787;
Alano vs. Court of First Instance, L-14557, October 30, 1959).
In support of his "motion for new trial and reconsideration," defendant
asserts that the judgment is contrary to law. The reason given is that "there is
no provision of the Civil Code authorizing" an action for breach of promise to
marry. Indeed, our ruling in Hermosisima vs. Court of Appeals (L-14628, Sept.
30, 1960), as reiterated in Estopa vs. Biansay (L-14733, Sept. 30, 1960), is that
"mere breach of a promise to marry" is not an actionable wrong. We pointed
out that Congress deliberately eliminated from the draft of the new Civil
Code the provisions that would have it so.
It must not be overlooked, however, that the extent to which acts not
contrary to law may be perpetrated with impunity, is not limitless for Article
21 of said Code provides that "any person who wilfully causes loss or injury to
another in a manner that is contrary to morals, good customs or public policy
shall compensate the latter for the damage."
The record reveals that on August 23, 1954 plaintiff and defendant applied for
a license to contract marriage, which was subsequently issued (Exhs. A, A-1).
Their wedding was set for September 4, 1954. Invitations were printed and
distributed to relatives, friends and acquaintances (Tsn., 5; Exh. C). The bride-
to-be's trousseau, party drsrses and other apparel for the important occasion
were purchased (Tsn., 7-8). Dresses for the maid of honor and the flower girl
were prepared. A matrimonial bed, with accessories, was bought. Bridal
showers were given and gifts received (Tsn., 6; Exh. E). And then, with but
two days before the wedding, defendant, who was then 28 years old,: simply
left a note for plaintiff stating: "Will have to postpone wedding — My mother
opposes it ... " He enplaned to his home city in Mindanao, and the next day,
the day before the wedding, he wired plaintiff: "Nothing changed rest
assured returning soon." But he never returned and was never heard from
again.
Surely this is not a case of mere breach of promise to marry. As stated, mere
breach of promise to marry is not an actionable wrong. But to formally set a
wedding and go through all the above-described preparation and publicity,
only to walk out of it when the matrimony is about to be solemnized, is quite
different. This is palpably and unjustifiably contrary to good customs for
which defendant must be held answerable in damages in accordance with
Article 21 aforesaid.
Defendant urges in his afore-stated petition that the damages awarded were
excessive. No question is raised as to the award of actual damages. What
defendant would really assert hereunder is that the award of moral and
exemplary damages, in the amount of P25,000.00, should be totally
eliminated.
Per express provision of Article 2219 (10) of the New Civil Code, moral
damages are recoverable in the cases mentioned in Article 21 of said Code. As
to exemplary damages, defendant contends that the same could not be
adjudged against him because under Article 2232 of the New Civil Code the
condition precedent is that "the defendant acted in a wanton, fraudulent,
reckless, oppressive, or malevolent manner." The argument is devoid of merit
as under the above-narrated circumstances of this case defendant clearly
acted in a "wanton ... , reckless [and] oppressive manner." This Court's
opinion, however, is that considering the particular circumstances of this
case, P15,000.00 as moral and exemplary damages is deemed to be a
reasonable award.
PREMISES CONSIDERED, with the above-indicated modification, the lower
court's judgment is hereby affirmed, with costs.
G.R. No. L-8721 May 23, 1957 Meralco post on said street, resulting in the smashing of the said
taxicab, and as a result thereof I was gravely injured and suffered and
TRANQUILINO CACHERO, plaintiff-appellant, is still suffering physical, mental and moral damages and not being
vs. able to resume my daily calling.
MANILA YELLOW TAXICAB CO., INC., defendant-appellant.
For the said damages, I hereby make a demand for the payment of
Bernardino Guerrero and J. G. Madarang for plaintiff-appellant. the sum of P79,245.65, covering expenses for transportation to the
Castaño and Ampil for the defendant-appellant. hospital for medical treatment, medicines, doctors bills, actual
monetary loss, moral, compensatory and exemplary damages, etc.,
FELIX, J.: within 5 days from date of receipt hereof.

There is no dispute as to the following facts: on December 13, 1952, Atty. I trust to hear from you on the matter within the period of 5 days
Tranquilino F. Cachero boarded a Yellow Taxicab, with plate No. 2159-52 above specified.
driven by Gregorio Mira Abinion and owned by the Manila Yellow Taxicab Co.,
Inc. On passing Oroquieta between Doroteo Jose and Lope de Vega streets,
Truly yours,
Gregorio Mira Abinion bumped said taxicab against a Meralco post, No. 1-
4/387, with the result that the cab was badly smashed and the plaintiff fell
(Sgd.) TRANQUILINO F. CACHERO
out of the vehicle to the ground, suffering thereby physical injuries, slight in
2256 Int. B, Misericordia St.,
nature.
Sta. Cruz, Manila
The chauffeur was subsequently prosecuted by the City Fiscal and on
February 26, 1963, upon his plea of guilty the Municipal Court of Manila (Exhibit K)
sentenced him to suffer 1 month and 1 day of arresto mayor, and to pay the
costs. On December 17, 1952, Tranquilino F. Cachero addressed a letter to the The Taxicab Co. to avoid expenses and time of litigation offered to settle the
Manila Yellow Taxicab Co., Inc., which was followed by another of January 6, case amicably with plaintiff but the latter only agreed to reduce his demand
1953, which reads as follows: to the sum of P72,050.20 as his only basis for settlement which, of course,
was not accepted by said company. So plaintiff instituted this action on
February 2, 1953, in the Court of First Instance of Manila, praying in the
MANILA, January 6, 1953
complaint that the defendant be condemned to pay him:

(a) The sum of P72,050.20, the total sum of the itemized losses
The MANILA YELLOW TAXICAB CO., INC. and/or damages under paragraph 7 of the complaint, with legal
1338 Arlegui, Manila interest thereon from the date of the filing of the complaint;

Dear Sirs: (b) The sum of P5,000 as attorney's fee; and the costs of the suit;
and
As you have been already advised by the letter dated December 17,
1952, on December 13, 1952, while I was a passenger of your taxicab Plaintiff further respectfully prays for such other and further reliefs
bearing plate No. 2159 and driven by your chauffeur Gregorio Mira as the facts and the law pertaining to the case may warrant.
and through his negligence and the bad condition of the said car, he
bumped the same against the pavement on the street (Oroquieta —
The defendant answered the complaint setting forth affirmative defenses
between Doroteo Jose and Lope de Vega streets, Manila) and hit the
and a counterclaim for P930 as damages and praying for the dismissal of
plaintiff's action. After hearing the Court rendered decision only July 20, 1954,
the dispositive part of which is as follows:
IN VIEW OF THE FOREGOING, the Court hereby renders judgment in
favor of the plaintiff and against the defendant, sentencing the latter
to pay the former the following: (1) For medicine, doctor's fees for
services rendered and transportation, P700; (2) professional fee as
attorney for the defendant in Criminal Case No. 364, "People vs.
Manolo Maddela et al." of the Court of First Instance of Nueva
Vizcaya, P3,000; (3) professional fees as attorney for the defendant
in Civil Case No. 23891 of the Municipal Court of Manila, "Virginia
Tangulan vs. Leonel da Silva," and for the taking of the deposition of
Gabina Angrepan in a case against the Philippine National Bank,
P200; and(4) moral damages in the amount of P2,000.
Defendant's counterclaim is hereby dismissed.
Defendant shall also pay the costs."
From this decision both parties appealed to Us, plaintiff limiting his appeal to
the part of the decision which refers to the moral damages awarded to him
which he considered inadequate, and to the failure of said judgment to grant
the attorney's fees asked for in the prayer of his complaint. Defendant in turn
alleges that the trial Court erred in awarding to the plaintiff the following:
(1) P700 — for medicine, doctor's fees and transportation expenses;
(2) P3,000 — as supposedly unearned full professional fees as
attorney for the defendant in Criminal Case No. 364, "People vs.
Manolo Maddela et al.";
(3) P200 — as supposedly unearned professional fees as attorney for
the defendant in Civil Case No. 23891 of the Manila Municipal Court,
"Virginia Tangulan vs. Leonel de Silva", and for failure to take the
deposition of a certain Gabina Angrepan in an unnamed case; and
(4) P2,000 — as moral damages, amounting to the grand total of
P5,900, these amounts being very much greater than what plaintiff
deserves.
In connection with his appeal, plaintiff calls attention to the testimonies of
Dr. Modesto S. Purisima and of Dr. Francisco Aguilar, a member of the staff of
the National Orthopedic Hospital, which he considers necessary as a basis for
ascertaining not only the physical sufferings undergone by him, but also for
determining the adequate compensation for moral damages that he should
be awarded by reason of said accident.
The exact nature of plaintiff's injuries, their degree of seriousness and the
period of his involuntary disability can be determined by the medical
certificate (Exhibit D) issued by the National Orthopedic Hospital on
December 16, 1952, and the testimonies of Dr. Francisco Aguilar, physician in
said hospital, and of Dr. Modesto Purisima, a private practitioner. The medical
certificate (Exhibit D) lists: (a) a subluxation of the right shoulder joint; (b)
a contusion on the right chest; and (c) a "suspicious fracture" of the upper
end of the right humerus. Dr. Aguilar who issued the medical certificate
admitted, however, with regard to the "suspicious fracture", that in his
opinion with (the aid of) the x-ray there was no fracture. According to this
doctor plaintiff went to the National 0rthopedic Hospital at least six times
during the period from December 16, 1952, to April 7, 1953; that he strapped
plaintiffs body (see Exhibit E), which strap was not removed until after a
period of six weeks had elapsed Dr. Modesto Purisima, a private practitioner,
testified that he advised and treated plaintiff from, December 14, 1952, to the
end of March (1953). Plaintiff was never hospitalized for treatment of the
injuries he received in said accident.
Counsel for the defendant delves quite extensively on these injuries. He says
in his brief the following:
Just what is a subluxation? Luxation is another term for dislocation
(Dorland, W.A.N., The American Illustrated Medical Dictionary (13th
ed.), p. 652), and hence, a sublaxation is an incomplete or
partial dislocation (Ibid., p. 1115). While a dislocation is the
displacement of a bone or bones from its or their normal setting
(and, therefore, applicable and occurs only to joints and not to rigid
or non-movable parts of the skeletal system) (Ibid., p. 358;
Christopher, F., A Textbook of Surgery (5th ed.), p. 342), it should be
distinguished from a fracture which is a break or rupture in a bone or
cartilage, usually due to external violence (Christopher, F., A
Textbook of Surgery (5th Ed.) p. 194; Dorland, W.A.N., The American
Illustrated Medical Dictionary (13th ed.), P.459). Because,
unlike fracture which may be partial (a crack in the bone) or total (a
complete break in the bone), there can be no half-way situations
with regard to dislocations of the shoulder joint (the head or ball of
the humerus — the humerus is the bone from the elbow to the
shoulder) must be either inside the socket of the scapula or shoulder
blade (in which case there is no dislocation) or out of the latter (in
which event there is a dislocation), to denote a condition where due
to external violence, the muscles and ligaments connecting the
humerus to the scapula have subjected to strain intense enough to
produce temporary distention or lessening of their tautness and
consequently resulting in the loosening or wrenching of the ball of
the humerus from its snug fit in the socket of the scapula, by using
the terms subluxation or partial dislocation(as used in the medical
certificate), is to fall into a misnomer — a term often used by
"chiropractors" and by those who would want to sound impressive,
but generally unfavored by the medical profession. To describe the
above condition more aptly, the medical profession usually employs
the expression luxatio imperfecta, or, in simple language,
a sprain (Dorland, W.A.N., The American Illustrated Medical
Dictionary (13th ed.), p. 652). The condition we have described is a
paraphrase of the definition of a sprain. Plaintiff suffered this very
injury (a sprained or wrenched shoulder joint) and a cursory scrutiny
of his x-ray plates (Exhibits A and B) by a qualified orthopedic
surgeon or by a layman with a picture or x-ray plate of a normal
shoulder joint (found in any standard textbook on human anatomy;
the one we used was Schemer, J.P., Morris' Human Anatomy (10 ed.,
p. 194) for comparison will bear out our claim.
Treatment for a sprain is by the use of adhesive or elastic bandage,
elevation of the joint, heat, effleurage and later massage
(Christopher, F., A Textbook of Surgery (5th ed., p. 116). The
treatment given to the plaintiff was just exactly that Dr. Aguilar
bandaged (strapped) plaintiff's right shoulder and chest (t.s.n., p. 31)
in an elevated position (with the forearm horizontal to the chest (see
photograph, Exhibit E), and certain vitamins were prescribed for him
(t.s.n., p. 131). He also underwent massage for some time by Drs.
Aguilar and Purisima. The medicines and appurtenances to treatment
purchased by plaintiff from the Orthopedic Hospital, Botica Boie and
Metro Drug Store were, by his own admission, adhesive plaster,
bandage, gauze, oil and "tintura arnica" (t.s.n., p. 3 — continuation
of transcript ), and Dr. Purisima also prescribed "Numotizin", a beat
generating ointment (t.s.n., p. 23), all of which are indicated for a
sprain, and by their nature, can cure nothing more serious than a
sprain anyway. Fractures and true dislocations cannot be cured by
the kind of treatment and medicines which plaintiff received. A true
dislocation, for instance, is treated by means of reduction through
traction of the arm until the humeral head returns to the proper
position in the scapular socket (pulling the arm at a 60 degree angle
and guiding the ball of the humerus into proper position, in its
socket) while the patient is under deep anaesthesia, and then,
completely immobilizing the part until the injured capsule has healed
(Christopher, F., A Textbook of Surgery, pp. 343 and 344). No
evidence was submitted that plaintiff ever received the latter kind of
treatment. Dr. Purisima even declared that after the plaintiff's first
visit to the Orthopedic Hospital the latter informed him that there
was no fracture or dislocation (t.s.n., p. 26). Dr. Purisima's statement
is the truth of the matter as we have already explained — joints of
the shoulder being only subject to total dislocation (due to their
anatomical design), not to partial ones, and any injury approximating
dislocation but not completely, it being classified as mere sprains,
slight or bad.
The second and last injury plaintiff sustained was a contusion. What is
a contusion? It is just a high flown expression for a bruise or the act
of bruising (Dorland, W.A.N., The American Illustrated Medical
Dictionary (13th ed. p. 290). No further discussion need be made on
this particular injury since the nature of a bruise is of common
knowledge (it's a bit uncomfortable but not disabling unless it occurs
on movable parts like the fingers or elbow which is not the case,
herein having occurred in the right chest) and the kind of medical
treatment or help it is also well known. (pp. 10-14, defendant-
appellant's brief).
The trial Judge undoubtedly did not give much value to the testimonies of
the doctors when in the statement of facts made in his decision he referred
to the physical injuries received by the plaintiff as slight in nature and the
latter is estopped from discussing the same in order to make them appear as
serious, because in the statement of facts made in his brief as appellant, he
says the following:
The facts of the case as found by the lower court in its decision, with
the permission of this Honorable Court, we respectfully quote them
hereunder as our STATEMENT OF FACTS for the purpose of this
appeal.
Before entering into a discussion of the merits of plaintiff's appeal, We will
say a few words as to the nature of the action on which his demand for
damages is predicated.
 The nature of an action as in contract or in tort is determined from
the essential elements of the complaint, taken as a whole, in the case
of doubt a construction to sustain the action being given to it.
While the prayer for relief or measure of damages sought does not
necessarily determine the character of the action, it may be material
in the determination of the question and therefore entitled to
consideration and in case of doubt will open determine character of
the action and indeed there are actions whose character is
necessarily determined thereby. (1 C.J.S. 1100)
A mere perusal of plaintiff complaint will show that his action against the
defendant is predicated on an alleged breach of contract of carriage, i.e., the
failure of the defendant 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 been 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 the cases 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. Although (a) owners
and managers of an establishment or 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 2180 of the Civil Code);
and (c) employers and corporations engaged in any kind of industry are
subsidiarily 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
treatises 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-delicts" was chosen, which more
nearly corresponds to the Roman Law classification of 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 acts, such as assault and battery, false imprisonment and
deceit. In the general plan of the Philippine legal system, intentional
and malicious 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 a 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 view
point from that 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 or supervision. Article 1903 is not applicable to
obligation 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.
The decisions in the cases of Castro vs. Acro Taxicab (82 Phil., 359, 46 Off.
Gaz., Na. 5, p. 2023); Lilius et al. vs. Manila Railroad, (59 Phil. 758) and others,
wherein moral damages, are awarded to the plaintiffs, are not applicable to
the case at bar because said decisions 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 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.
As to plaintiff's demand for P5,000 as attorney's fees, the Civil Code provides
the following:
ART, 2208. In the absence of stipulation, attorney's fees and
expenses of litigation, other than judicial costs, cannot be
recovered, except:
(1) When exemplary damages are awarded;
(2) When the defendant's act or omission has compelled the plaintiff
to litigate with third persons or to incur expenses to protect his
interest;
(3) In criminal cases of malicious prosecution against the plaintiff;
(4) In case of a clearly unfounded civil action or proceeding against
the plaintiff;
(5) Where the defendant acted in gross and evident had faith in
refusing to satisfy the plaintiff's plainly valid, just and demandable
claim;
(6) In actions for legal support;
(7) In actions for the recovery of wages of household helpers,
laborers and skilled workers;
(8) in actions for indemnity under workmen's compensation and
employers liability laws;
(9) In a separate civil action to recover civil liability arising from a
crime;
(10) When at least double judicial costs are awarded;
(11) In any other case where the court deems it just and equitable
that attorney's fees and expenses of litigation should be recovered.
In all cases, the attorney's fees and expenses of litigation must be
reasonable.
The present case does not come under any of exceptions enumerated in the
preceding article, specially of paragraph 2 thereof, because defendant's
failure to meet its responsibility was not the plaintiff to litigate or to incur
expenses to protect his interests. The present action was instituted because
plaintiff an exorbitant amount for damages (P60,000) and naturally the
defendant did not and could not yield to such demand. This is neither a case
that comes under paragraph 11 of Article 2208 because the Lower Court did
not deem it just and equitable to award any amount for attorney's fees. As
We agree with the trial Judge on this point, We cannot declare that he erred
for not awarding to plaintiff any such fees in this case.
Coming now to the appeal of the defendant, the Court, after due
consideration of the evidence appearing on record:
(1) Approves the award of P700 for medicine, doctors' fees and
transportation expenses;
(2) Reduces the award of P3,000 as attorney's fees to the sum of P2,000, as
Manolo Maddela, defendant in Criminal Case No. 364 of the Court of First
Instance of Nueva Vizcaya testified that he has already paid to plaintiff part of
the latter's fees of P3,000, the amount of which was not disclosed, though it
was incumbent upon the plaintiff to establish how much he had been paid of
said fees;
(3) Approves the award of P200 as unearned professional fees as attorney
for the defendant in Civil Case No. 238191 of the Municipal Court of Manila
whom plaintiff was unable to represent, and for the latter's failure to take
the deposition of one Agripina Angrepan due to the automobile accident
referred to in this case.
Before closing this decision We deem it convenient to quote the following
passage of defendant's brief as appellant:
Realizing its obligation under its contract of carriage with the
plaintiff, and because the facts of the case, as have been shown,
mark it as more proper for the Municipal Court only, the defendant,
to avoid the expense and time of litigation, offered to settle the case
amicably with plaintiff, but the latter refused and insisted on his
demand for P72,050.20 (Exhibit K) as the only basis for settlement,
thus adding a clearly petty case to the already overflowing desk of
the Honorable Members of this Court.
We admire and respect at all times a man for standing up and
fighting for his rights, and when said right consists in injuries
sustained due to a breach of a contract of carriage with us, sympathy
and understanding are added thereto. But when a person starts
demanding P72,050.20 for a solitary bruise and sprain, injuries for
which the trial court, even at its generous although erroneous best,
could only grant P5,900, then respect and sympathy give way to
something else. It is time to fight, for, in our humble opinion, there is
nothing more loathsome nor truly worthy of condemnation than one
who uses his injuries for other purposes than just rectification. If
plaintiff's claim is granted, it would be a blessing, not a misfortune,
to be injured. (p. 34-35)
This case was instituted by a lawyer who, as an officer of the courts, should
be the first in helping Us in the administration of justice, and after going over
the record of this case, we do not hesitate to say that the demand of
P72,050.20 for a subluxation of the right humerus bone and an insignificant
contusion in the chest, has not even the semblance of reasonableness. As a
matter of fact, Dr. Aguilar himself said that the x-ray plates (Exhibits A, Band
C) " did not show anything significant except that it shows a slight subluxation
of the right shoulder, and that there is a suspicious fracture", which
ultimately he admitted not to exist. The plaintiff himself must have felt
embarrassed by his own attitude when after receiving defendant's brief as
appellant, he makes in his brief as appellee the categorical statement that he
DOES NOT NOW INSIST NOR PRETEND IN THE LEAST to Collect from the
defendant all the damages he had claimed in his complaint, but instead he is
submitting his case to the sound discretion of the Honorable Court for the
award of a reasonable and equitable damages allowable by law, to
compensate the plaintiff of the suffering and losses he had undergone and
incurred of the accident oftentimes mentioned in this brief in which plaintiff
was injured" (p. 17-18).This acknowledgment comes too late, for plaintiff has
already deprived the Court of Appeals of the occasion to exercise its
appellate jurisdiction over this case which he recklessly dumped to this Court.
We certainly cannot look with at favor at his attitude of plaintiff.
WHEREFORE, the decision appealed from is hereby modified by reducing the
amount awarded as professional fees from P3,000 to P2,000 and by
eliminating the moral damages of P2,000 awarded by the Lower Court to the
plaintiff. Said decision is in all other respects affirmed, without
pronouncement as to costs. It is so ordered.
G.R. No. L-12163 March 4, 1959
PAZ FORES, petitioner,
vs.
IRENEO MIRANDA, respondent.
Alberto O. Villaraza for petitioner.
Almazan and Ereneta for respondent.
REYES, J.B.L., J.:
Defendant-petitioner Paz Fores brings this petition for review of the decision
of the Court of Appeals (C.A. Case No. 1437-R) awarding to the plaintiff-
respondent Ireneo Miranda the sums of P5,000 by way of actual damages
and counsel fees, and P10,000 as moral damages, with costs.
Respondent was one of the passengers on a jeepney driven by Eugenio Luga.
While the vehicle was descending the Sta. Mesa bridge at an excessive rate of
speed, the driver lost control thereof, causing it to swerve and to his the
bridge wall. The accident occurred on the morning of March 22, 1953. Five of
the passengers were injured, including the respondent who suffered a
fracture of the upper right humerus. He was taken to the National
Orthopedic Hospital for treatment, and later was subjected to a series of
operations; the first on May 23, 1953, when wire loops were wound around
the broken bones and screwed into place; a second, effected to insert a
metal splint, and a third one to remove such splint. At the time of the trial, it
appears that respondent had not yet recovered the use of his right arm.
The driver was charged with serious physical injuries through reckless
imprudence, and upon interposing a plea of guilty was sentenced
accordingly.
The contention that the evidence did not sufficiently establish the identity of
the vehicle as the belonging to the petitioner was rejected by the appellate
court which found, among other things, that is carried plate No. TPU-1163,
SERIES OF 1952, Quezon City, registered in the name of Paz Fores, (appellant
herein) and that the vehicle even had the name of "Doña Paz" painted below
its wind shield. No evidence to the contrary was introduced by the petitioner,
who relied on an attack upon the credibility of the two policemen who went
to the scene of the incident.
A point to be further remarked is petitioner's contention that on March 21,
1953, or one day before the accident happened, she allegedly sold the
passenger jeep that was involved therein to a certain Carmen Sackerman.
The initial problem raised by the petitioner in this appeal may be formulated
thus — "Is the approval of the Public Service Commission necessary for the
sale of a public service vehicle even without conveying therewith the
authority to operate the same?" Assuming the dubious sale to be a fact, the
court of Appeals answered the query in the affirmative. The ruling should be
upheld.
Section 20 of the Public Service Act (Commonwealth Act No. 146) provides:
Sec. 20. Subject to established limitations and exceptions and saving
provisions to the contrary, it shall be unlawful for any public service
or for the owner, lessee or operator thereof, without the previous
approval and authority of the Commission previously had —
xxx xxx xxx
(g) To sell, alienate, mortgage, encumber or lease its property,
franchises, certificates, privileges, or rights, or any part thereof; or
merge or consolidate its property, franchises, privileges or rights, or
any part thereof, with those of any other public service. The approval
herein required shall be given, after notice to the public and after
hearing the persons interested at a public hearing, if it be shown that
there are just and reasonable grounds for making the mortgage or
encumbrance, for liabilities of more than one year maturity, or the
sale, alienation, lease, merger, or consolidation to be approved and
that the same are not detrimental to the public interest, and in case
of a sale, the date on which the same is to be consummated shall be
fixed in the order of approval: Provided, however, That nothing
herein contained shall be construed to prevent the transaction from
being negotiated or completed before its approval or to prevent the
sale, alienation, or lease by any public service of any of its property in
the ordinary course of its business.
Interpreting the effects of this particular provision of law, we have held in the
recent cases of Montoya vs. Ignacio, * 50 Off. Gaz. No. 1, p. 108; Timbol vs.
Osias, et al., G. R. No. L-7547, April 30, 1955, and Medina vs. Cresencia, 99 Phil.,
506; 52 Off. Gaz. No. 10, p. 4606, that a transfer contemplated by the law, if
made without the requisite approval of the Public Service Commission, is not
effective and binding in so far as the responsibility of the grantee under the
franchise in relation to the public is concerned. Petitioner assails, however,
the applicability of these rulings to the instant case, contending that in those
cases, the operator did not convey, by lease or by sale, the vehicle
independently of his rights under the franchise. This line of reasoning does
not find support in the law. The provisions of the statute are clear and
prohibit the sale, alienation, lease, or encumbrance of the property,
franchise, certificate, privileges or rights, or any part thereof of the owner or
operator of the public service Commission. The law was designed primarily
for the protection of the public interest; and until the approval of the public
Service Commission is obtained the vehicle is, in contemplation of law, still
under the service of the owner or operator standing in the records of the
Commission which the public has a right to rely upon.
The proviso contained in the aforequoted law, to the effect that nothing
therein shall be construed "to prevent the transaction from being negotiated
or complete before its approval", means only that the sale without the
required approval is still valid and binding between the parties (Montoya vs.
Ignacio, supra). The phrase "in the ordinary course of its business" found in
the other proviso" or to prevent the sale, alienation, or lease by any public
service of any of its property". As correctly observed by the lower court,
could not have been intended to include the sale of the vehicle itself, but at
most may refer only to such property that may be conceivably disposed or by
the carrier in the ordinary course of its business, like junked equipment or
spare parts.
The case of Indalecio de Torres vs. Vicente Ona (63 Phil., 594, 597) is
enlightening; and there, it was held:
Under the law, the Public Service Commission has not only general
supervision and regulation of, but also full jurisdiction and control
over all public utilities including the property, equipment and
facilities used, and the property rights and franchise enjoyed by every
individual and company engaged i the performance of a public
service in the sense this phrase is used in the Public Service Act or Act
No. 3108). By virtue of the provisions of said Act, motor vehicles used
in the performance of a service, as the transportation of freight from
one point to another, have to this date been considered — and they
cannot but be so considered-public service property; and, by reason
of its own nature, a TH truck, which means that the operator thereof
places it at the disposal of anybody who is willing to pay a rental of
its use, when he desires to transfer or carry his effects, merchandise
or any other cargo from one place to another, is necessarily a public
service property. (Emphasis supplied)
Of course, this court has held in the case of Bachrach Motor co. vs. Zamboanga
Transportation Co., 52 Phil., 244, that there may be a nunc pro
tunc authorization which has the effect of having the approval retroact to the
date of the transfer; but such outcome cannot prejudice rights intervening in
the meantime. It appears that no such approval was given by the Commission
before the accident occurred.
The P10,000 actual damages awarded by the Court of First Instance of Manila
were reduced by the Court of Appeals to only P2,000, on the ground that a
review of the records failed to disclose a sufficient basis for the trial court's
appraisal, since the only evidence presented on this point consisted of
respondent's bare statement that his expenses and loss of income amounted
to P20,000. On the other hand, "it cannot be denied," the lower court said,
"that appellee (respondent) did incur expenses"' It is well to note further
that respondent was a painter by profession and a professor of Fine Arts, so
that the amount of P2,000 awarded cannot be said to be excessive (see Arts.
2224 and 2225, Civil Code of the Philippines). The attorney's fees in the sum of
P3,000 also awarded to the respondent are assailed on the ground that the
Court of First Instance did not provided for the same, and since no appeal
was interposed by said respondent, it was allegedly error for the Court of
Appeals to award them motu proprio. Petitioner fails to note that attorney's
fees are included in the concept of actual damages under the Civil Code and
may be awarded whenever the court deems it is just and equitable (Art. 2208,
Civil Code of the Philippines). We see no reason to alter these awards.
Anent the moral damages ordered to be paid to the respondent, the same
must be discarded. We have repeatedly ruled (Cachero vs. Manila Yellow
Taxicab Co. Inc., 101 Phil., 523; 54 Off. Gaz., [26], 6599; Necesito, et al vs.
Paras, 104 Phil., 75; 56 Off. Gaz., [23] 4023, that moral damages are not
recoverable in damage actions predicted on a breach of the contract of
transportation, in view of Articles 2219 and 2220 of the new Civil Code, which
provide as follows:
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;
 xxx xxx xxx
Art. 2220. Willful injury to property may be a legal ground for
awarding moral damages if the court should find that, under
circumstances, such damages are justify due. The same rule applies
to breaches of contract where the defendant acted fraudulently or in
bad faith.
By contrasting the provisions of these two article it immediately becomes
apparent that:
(a) In case of breach of contract (including one of transportation) proof of
bad faith or fraud (dolus), i.e., wanton or deliberately injurious conduct, is
essential to justify an award of moral damages; and
(b) That a breach of contract can not be considered included in the
descriptive term "analogous cases" used in Art. 2219; not only because Art.
2220 specifically provides for the damages that are caused by contractual
breach, but because the definition of quasi-delict in Art. 2176 of the Code
expressly excludes the cases where there is a "preexisting contractual
relation between the parties."
Art. 2176. Whoever by act or omission causes damage to another,
there being fault or negligence, is obliged to pay for the damage
dome. 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.
The exception to the basic rule of damages now under consideration is a
mishap resulting in the death of a passenger, in which case Article 1764
makes the common carrier expressly subject to the rule of Art. 2206, that
entitles the deceased passenger to "demand moral damages for mental
anguish by reason of the death of the deceased" (Necesito vs. Paras, 104
Phil., 84, Resolution on motion to reconsider, September 11, 1958). But the
exceptional rule of Art. 1764 makes it all the more evident that where the
injured passenger does not die, moral damages are not recoverable unless it
is proved that the carrier was guilty of malice or bad faith. We think it is clear
that the mere carelessness of the carrier's driver does not per se constitute of
justify an inference of malice or bad faith on the part of the carrier; and in the
case at bar there is no other evidence of such malice to support the award of
moral damages by the Court of Appeals. To award moral damages for breach
of contract, therefore, without proof of bad faith or malice on the part of the
defendant, as required by Art. 220, would be to violate the clear provisions of
the law, and constitute unwarranted judicial legislation.
The Court of Appeals has invoked our rulings in Castro vs. Acro Taxicab Co.,
G.R. No. 49155, December 14, 1948 and Layda vs. Court of Appeals, 90 Phil.,
724; but these doctrines were predicated upon our former law of damages,
before judicial discretion in fixing them became limited by the express
provisions of the new Civil Code (previously quoted). Hence, the aforesaid
rulings are now inapplicable.
Upon the other hand, the advantageous position of a party suing a carrier for
breach of the contract of transportations explains, to some extent, the
limitations imposed by the new Code on the amount of the recovery. The
action for breach of contract imposes on the defendant carrier a
presumption of liability upon mere proof of injury to the passenger; that
latter is relieved from the duty to established the fault of the carrier, or of his
employees, and the burden is placed on the carrier to prove that it was due
to an unforseen event or to force majeure (Cangco vs. Manila Railroad Co., 38
Phil., 768, 777). Moreover, the carrier, unlike in suits for quasi-delict, may not
escape liability by proving that it has exercised due diligence in the selection
and supervision of its employees (Art. 1759, new civil code; Cangco vs. Manila
Railroad Co., supra; Prado vs. Manila Electric Co., 51 Phil., 900).
The difference in conditions, defenses and proof, as well as the codal concept
of quasi-delict as essentially extra contractual negligence, compel us to
differentiate between action ex contractu, and actions quasi ex delicto, and
prevent us from viewing the action for breach of contract as simultaneously
embodying an action on tort. Neither can this action be taken as one to
enforce on employee's liability under Art. 103 of the Revised Penal Code,
since the responsibility is not alleged to be subsidiary, nor is there on record
any averment or proof that the driver of appellant was insolvent. In fact, he is
not even made a party to the suit.
It is also suggested that a carrier's violation of its engagement to safety
transport the passenger involves a breach of the passenger's confidence, and
therefore should be regarded as a breach of contract in bad faith, justifying
recovery of moral damages under Art. 2220. This theory is untenable, for
under it the carrier would always be deemed in bad faith, in every case its
obligation to the passenger is infringed, and it would be never accountable
for simple negligence; while under the law (Art. 1756). the presumption is
that common carriers acted negligently (and not maliciously), and Art. 1762
speaks of negligence of the common carrier.
 ART. 1756. In case of death of or injuries to passengers, common
carriers are presumed to have been at fault or to have acted
negligently, unless they prove that they observed extraordinary
diligence as prescribed in article 1733 and 1755.

ART. 1762. The contributory negligence of the passenger does not

bar recovery of damages for his death or injuries, if the proximate
cause thereof is the negligence of the common carrier, but the
amount of damages shall be equitably reduced.

The distinction between fraud, bad faith or malice in the sense of deliberate
or wanton wrong doing and negligence (as mere carelessness) is too
fundamental in our law to be ignored (Arts. 1170-1172); their consequences
being clearly differentiated by the Code.

ART. 2201. In contracts and quasi-contracts, the damages for which

the obligor who acted in good faith is liable shall be those that are
the natural and probable consequences of the breach of the
obligation, and which the parties have foreseen or could have
reasonably foreseen at the time the obligation was constituted.

In case of fraud, bad faith, malice or wanton attitude, the obligor

shall be responsible for all damages which may be reasonably
attributed to the non-performance of the obligation.

It is to be presumed, in the absence of statutory provision to the contrary,

that this difference was in the mind of the lawmakers when in Art. 2220 they
limited recovery of moral damages to breaches of contract in bad faith. It is
true that negligence may be occasionally so gross as to amount to malice; but
that fact must be shown in evidence, and a carrier's bad faith is not to be
lightly inferred from a mere finding that the contract was breached through
negligence of the carrier's employees.

In view of the foregoing considerations, the decision of the Court of Appeals

is modified by eliminating the award of P5,000.00 by way of moral damages.
(Court of Appeals Resolution of May 5, 1957). In all other respects, the
judgment is affirmed. No costs in this instance. So ordered.
G.R. No. 135802 March 3, 2000
PRISCILLA L. TAN, petitioner,
vs.
NORTHWEST AIRLINES, INC., respondent.
PARDO, J.:
Petitioner Priscilla L. Tan appeals via certiorari from the decision of the Court
of Appeals 1 affirming with modification 2 the decision of the trial
court, 3 ordering respondent to pay petitioner the following amounts: (1)
P15,000.00, as actual damages; (2) P100,000.00, as moral damages; (3)
P50,000.00, as exemplary damages; (4) P30,000.00, as and for attorney's
fees; and (6) costs.
The case before the Court traces its roots from an action for damages for
breach of contract of air carriage for failure to deliver petitioner's baggages
on the date of her arrival filed on June 29, 1994 with the Regional Trial Court,
Makati, Branch 150 against respondent Northwest Airlines, Inc., a foreign
corporation engaged in the business of air transportation.
The antecedent facts are as follows:
On May 31, 1994, Priscilla L. Tan and Connie Tan boarded Northwest Airlines
Flight 29 in Chicago, U. S. A. bound for the Philippines, with a stop-over at
Detroit, U. S. A. They arrived at the Ninoy Aquino International Airport (NAIA)
on June 1, 1994 at about 10:40 in the evening.
Upon their arrival, petitioner and her companion Connie Tan found that their
baggages were missing. They returned to the airport in the evening of the
following day and they were informed that their baggages might still be in
another plane in Tokyo, Japan.
On June 3, 1994, they recovered their baggages and discovered that some of
its contents were destroyed and soiled.
Claiming that they "suffered mental anguish, sleepless nights and great
damage" because of Northwest's failure to inform them in advance that their
baggages would not be loaded on the same flight they boarded and because
of their delayed arrival, they demanded from Northwest Airlines
compensation for the damages they suffered. On June 15, 1994 and June 22,
1994, petitioner sent demand letters to Northwest Airlines, but the latter did
not respond. Hence, the filing of the case with the regional trial court.
In its answer to the complaint, respondent Northwest Airlines did not deny
that the baggages of petitioners were not loaded on Northwest Flight 29.
Petitioner's baggages could not be carried on the same flight because of
"weight and balance restrictions." However, the baggages were loaded in
another Northwest Airlines flight, which arrived in the evening of June 2,
1994.
When petitioner received her baggages in damaged condition, Northwest
offered to either (1) reimburse the cost or repair of the bags; or (2) reimburse
the cost for the purchase of new bags, upon submission of receipts.
After due trial, on June 10, 1996, the trial court rendered decision finding
respondent Northwest Airlines, Inc. liable for damages, as follows:
WHEREFORE judgment is rendered ordering the defendant to pay
the plaintiff the following amounts:
1. P15,000.00, as actual damages;
2. P100,000.00, as moral damages;
3. P50,000.00, as exemplary damages;
4. P30,000.00, as and for attorney's fees and
5. Costs.
SO ORDERED.
Given this 10th day of June, 1996 at Makati City.
ERNA FALLORAN ALIPOSA
Judge4
Respondent Northwest Airlines, Inc. appealed from the trial court's decision
to the Court of Appeals contending that the court a quo erred in finding it
guilty of breach of contract of carriage and of willful misconduct and
awarded damages which had no basis in fact or were otherwise excessive.
On September 30, 1998, the Court of Appeals promulgated its decision
partially granting the appeal by deleting the award of moral and exemplary
damages and reducing the attorney's fees, specifically providing that:
WHEREFORE, PREMISES CONSIDERED, the appeal is hereby
GRANTED partially. The Decision of the lower court dated June 10,
1996 is AFFIRMED with the modification that the award of moral and
exemplary damages is deleted and the amount of attorney's fees is
reduced to ten thousand pesos (P10,000.00).
No pronouncement as to costs.
SO ORDERED. 5
Hence, this appeal. 6
The issue is whether respondent is liable for moral and exemplary damages
for willful misconduct and breach of the contract of air carriage.
It is admitted that respondent failed to deliver petitioner's luggages on time.
However, there was no showing of malice in such failure. By its concern for
safety, respondent had to ship the baggages in another flight with the same
date of arrival.
Hence, the Court of Appeals correctly held that respondent did not act in bad
faith. 9
"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 known duty through some motive or interest or ill-will that
partakes of the nature of fraud." 10
"Where in breaching the contract of carriage the defendant 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 obligation
which the parties had foreseen or could have reasonably foreseen. In that
case, such liability does not include moral and exemplary damages." 11

The petition is without merit. Consequently, we have no reason to reverse the decision of the Court of
Appeals.
We agree with the Court of Appeals that respondent was not guilty of willful
misconduct. "For willful misconduct to exist there must be a showing that WHEREFORE, the Court DENIES the petition for lack of merit. The Court
the acts complained of were impelled by an intention to violate the law, or AFFIRMS the decision of the Court of Appeals deleting, however, the award
were in persistent disregard of one's rights. It must be evidenced by a of attorney's fees.1âwphi1.nêt
flagrantly or shamefully wrong or improper conduct." 7
No costs.
Contrary to petitioner's contention, there was nothing in the conduct of
respondent which showed that they were motivated by malice or bad faith in SO ORDERED.
loading her baggages on another plane. Due to weight and balance
restrictions, as a safety measure, respondent airline had to transport the
baggages on a different flight, but with the same expected date and time of
arrival in the Philippines. As aptly explained by respondent:

To ensure the safety of each flight, Northwest's personnel determine

every flight's compliance with "weight and balance restrictions."
They check the factors like weight of the aircraft used for the flight
gas input, passenger and crew load, baggage weight, all in relation to
the wind factor anticipated on the flight. If there is an overload, i.e., a
perceived safety risk, the aircraft's load will be reduced by off-loading
cargo, which will then be placed on the next available flight. 8
 ALITALIA, Petitioner, vs. INTERMEDIATE APPELLATE COURT and FELIPA E.
PABLO, Respondents.
DECISION
NARVASA, J.:
Dr. Felipa Pablo — an associate professor in the University of the Philippines,
1 and a research grantee of the Philippine Atomic Energy Agency — was
invited to take part at a meeting of the Department of Research and Isotopes
of the Joint FAO-IAEA Division of Atomic Energy in Food and Agriculture of
the United Nations in Ispra, Italy. 2 She was invited in view of her specialized
knowledge in "foreign substances in food and the agriculture environment."
She accepted the invitation, and was then scheduled by the organizers, to
read a paper on "The Fate of Radioactive Fusion Products Contaminating
Vegetable Crops." 3 The program announced that she would be the second
speaker on the first day of the meeting. 4 To fulfill this engagement, Dr.
Pablo booked passage on petitioner airline, ALITALIA.
She arrived in Milan on the day before the meeting in accordance with the
itinerary and time table set for her by ALITALIA. She was however told by the
ALITALIA personnel there at Milan that her luggage was "delayed inasmuch
as the same . . . (was) in one of the succeeding flights from Rome to Milan." 5
Her luggage consisted of two (2) suitcases: one contained her clothing and
other personal items; the other, her scientific papers, slides and other
research material. But the other flights arriving from Rome did not have her
baggage on board.
By then feeling desperate, she went to Rome to try to locate her bags
herself. There, she inquired about her suitcases in the domestic and
international airports, and filled out the forms prescribed by ALITALIA for
people in her predicament. However, her baggage could not be found.
Completely distraught and discouraged, she returned to Manila without
attending the meeting in Ispra, Italy. : nad
Once back in Manila she demanded that ALITALIA make reparation for the
damages thus suffered by her. ALITALIA offered her "free airline tickets to
compensate her for any alleged damages. . . ." She rejected the offer, and
forthwith commenced the action 6 which has given rise to the present
appellate proceedings.
As it turned out, Prof. Pablo's suitcases were in fact located and forwarded to
Ispra, 7 Italy, but only on the day after her scheduled appearance and
participation at the U.N. meeting there. 8 Of course Dr. Pablo was no longer
there to accept delivery; she was already on her way home to Manila. And for
some reason or other, the suitcases were not actually restored to Prof. Pablo
by ALITALIA until eleven (11) months later, and four (4) months after
institution of her action. 9
After appropriate proceedings and trial, the Court of First Instance rendered
judgment in Dr. Pablo's favor: 10
"(1) Ordering the defendant (ALITALIA) to pay . . . (her) the sum of
TWENTY THOUSAND PESOS (P20,000.00), Philippine Currency, by
way of nominal damages;
(2) Ordering the defendant to pay . . . (her) the sum of FIVE
THOUSAND PESOS (P5,000.00), Philippine Currency, as and for
attorney's fees; (and)
(3) Ordering the defendant to pay the costs of the suit."
ALITALIA appealed to the Intermediate Appellate Court but failed to obtain a
reversal of the judgment. 11 Indeed, the Appellate Court not only affirmed the
Trial Court's decision but also increased the award of nominal damages
payable by ALITALIA to P40,000.00. 12 That increase it justified as follows: 13
"Considering the circumstances, as found by the Trial Court and the
negligence committed by defendant, the amount of P20,000.00
under present inflationary conditions as awarded . . . to the plaintiff
as nominal damages, is too little to make up for the plaintiff's
frustration and disappointment in not being able to appear at said
conference; and for the embarrassment and humiliation she suffered
from the academic community for failure to carry out an official
mission for which she was singled out by the faculty to represent her
institution and the country. After weighing carefully all the
considerations, the amount awarded to the plaintiff for nominal
damages and attorney's fees should be increased to the cost of her
round trip air fare or at the present rate of peso to the dollar at
P40,000,00."
ALITALIA has appealed to this Court on Certiorari. Here, it seeks to make
basically the same points it tried to make before the Trial Court and the
Intermediate Appellate Court, i.e.:
1) that the Warsaw Convention should have been applied to limit
ALITALIA'S liability; and
 2) that there is no warrant in fact or in law for the award to Dr. Pablo
of nominal damages and attorney's fees. 14
In addition, ALITALIA postulates that it was error for the Intermediate
Appellate Court to have refused to pass on all the assigned errors and in not
stating the facts and the law on which its decision is based. 15
Under the Warsaw Convention, 16 an air carrier is made liable for damages
for:
1) the death, wounding or other bodily injury of a passenger if the
accident causing it took place on board the aircraft or in the course
of its operations of embarking or disembarking; 17
2) the destruction or loss of, or damage to, any registered luggage or
goods, if the occurrence causing it took place during the carriage by
air;" 18 and
3) delay in the transportation by air of passengers, luggage or goods.
19
In these cases, it is provided in the Convention that the "action for damages,
however, founded, can only be brought subject to conditions and limits set
out" therein. 20
The Convention also purports to limit the liability of the carriers in the
following manner: 21
1. In the carriage of passengers the liability of the carrier for each
passenger is limited to the sum of 250,000 francs . . . Nevertheless,
by special contract, the carrier and the passenger may agree to a
higher limit of liability.: nad
2. a) In the carriage of registered baggage and of cargo, the liability
of the carrier is limited to a sum of 250 francs per kilogramme, unless
the passenger or consignor has made, at the time when the package
was handed over to the carrier, a special declaration of interest in
delivery at destination and has paid a supplementary sum if the case
so requires. In that case the carrier will be liable to pay a sum not
exceeding the declared sum, unless he proves that sum is greater
than the actual value to the consignor at delivery.
b) In the case of loss, damage or delay of part of registered baggage
or cargo, or of any object contained therein, the weight to be taken
into consideration in determining the amount to which the carrier's
liability is limited shall be only the total weight of the package or
packages concerned. Nevertheless, when the loss, damage or delay
of a part of the registered baggage or cargo, or of an object
contained therein, affects the value of other packages covered by
the same baggage check or the same air way bill, the total weight of
such package or packages shall also be taken into consideration in
determining the limit of liability.
3. As regards objects of which the passenger takes charge himself
the liability of the carrier is limited to 5000 francs per passenger.
4. The limits prescribed . . shall not prevent the court from awarding,
in accordance with its own law, in addition, the whole or part of the
court costs and of the other expenses of litigation incurred by the
plaintiff. The foregoing provision shall not apply if the amount of the
damages awarded, excluding court costs and other expenses of the
litigation, does not exceed the sum which the carrier has offered in
writing to the plaintiff within a period of six months from the date of
the occurrence causing the damage, or before the commencement
of the action, if that is later.
The Warsaw Convention however denies to the carrier availment "of the
provisions which exclude or limit his liability, if the damage is caused by his
wilful misconduct or by such default on his part as, in accordance with the
law of the court seized of the case, is considered to be equivalent to wilful
misconduct," or "if the damage is (similarly) caused . . by any agent of the
carrier acting within the scope of his employment." 22 The Hague Protocol
amended the Warsaw Convention by removing the provision that if the
airline took all necessary steps to avoid the damage, it could exculpate itself
completely, 23 and declaring the stated limits of liability not applicable "if it is
proved that the damage resulted from an act or omission of the carrier, its
servants or agents, done with intent to cause damage or recklessly and with
knowledge that damage would probably result." The same deletion was
effected by the Montreal Agreement of 1966, with the result that a
passenger could recover unlimited damages upon proof of wilful
misconduct. 24
The Convention does not thus operate as an exclusive enumeration of the
instances of an airline's liability, or as an absolute limit of the extent of that
liability. Such a proposition is not borne out by the language of the
Convention, as this Court has now, and at an earlier time, pointed out. 25
Moreover, slight reflection readily leads to the conclusion that it should be
deemed a limit of liability only in those cases where the cause of the death or
injury to person, or destruction, loss or damage to property or delay in its
transport is not attributable to or attended by any wilful misconduct, bad
faith, recklessness, or otherwise improper conduct on the part of any official
or employee for which the carrier is responsible, and there is otherwise no
special or extraordinary form of resulting injury. The Convention's provisions,
in short, do not "regulate or exclude liability for other breaches of contract
by the carrier" 26 or misconduct of its officers and employees, or for some
particular or exceptional type of damage. Otherwise, "an air carrier would be
exempt from any liability for damages in the event of its absolute refusal, in
bad faith, to comply with a contract of carriage, which is absurd." 27 Nor may
it for a moment be supposed that if a member of the aircraft complement
should inflict some physical injury on a passenger, or maliciously destroy or
damage the latter's property, the Convention might successfully be pleaded
as the sole gauge to determine the carrier's liability to the passenger. Neither
may the Convention be invoked to justify the disregard of some
extraordinary sort of damage resulting to a passenger and preclude recovery
therefor beyond the limits set by said Convention. It is in this sense that the
Convention has been applied, or ignored, depending on the peculiar facts
presented by each case.:-cralaw
In Pan American World Airways, Inc. v. I.A.C., 28 for example, the Warsaw
Convention was applied as regards the limitation on the carrier's liability,
there being a simple loss of baggage without any otherwise improper
conduct on the part of the officials or employees of the airline or other
special injury sustained by the passenger.
On the other hand, the Warsaw Convention has invariably been held
inapplicable, or as not restrictive of the carrier's liability, where there was
satisfactory evidence of malice or bad faith attributable to its officers and
employees. 29 Thus, an air carrier was sentenced to pay not only
compensatory but also moral and exemplary damages, and attorney's fees,
for instance, where its employees rudely put a passenger holding a first-class
ticket in the tourist or economy section, 30 or ousted a brown Asiatic from
the plane to give his seat to a white man, 31 or gave the seat of a passenger
with a confirmed reservation to another, 32 or subjected a passenger to
extremely rude, even barbaric treatment, as by calling him a "monkey." 33
In the case at bar, no bad faith or otherwise improper conduct may be
ascribed to the employees of petitioner airline; and Dr. Pablo's luggage was
eventually returned to her, belatedly, it is true, but without appreciable
damage. The fact is, nevertheless, that some special species of injury was
caused to Dr. Pablo because petitioner ALITALIA misplaced her baggage and
failed to deliver it to her at the time appointed — a breach of its contract of
carriage, to be sure — with the result that she was unable to read the paper
and make the scientific presentation (consisting of slides, autoradiograms or
films, tables and tabulations) that she had painstakingly labored over, at the
prestigious international conference, to attend which she had traveled
hundreds of miles, to her chagrin and embarrassment and the
disappointment and annoyance of the organizers. She felt, not unreasonably,
that the invitation for her to participate at the conference, extended by the
Joint FAO/IAEA Division of Atomic Energy in Food and Agriculture of the
United Nations, was a singular honor not only to herself, but to the University
of the Philippines and the country as well, an opportunity to make some sort
of impression among her colleagues in that field of scientific activity. The
opportunity to claim this honor or distinction was irretrievably lost to her
because of Alitalia's breach of its contract.
Apart from this, there can be no doubt that Dr. Pablo underwent profound
distress and anxiety, which gradually turned to panic and finally despair, from
the time she learned that her suitcases were missing up to the time when,
having gone to Rome, she finally realized that she would no longer be able to
take part in the conference. As she herself put it, she "was really shocked and
distraught and confused."
Certainly, the compensation for the injury suffered by Dr. Pablo cannot under
the circumstances be restricted to that prescribed by the Warsaw Convention
for delay in the transport of baggage.
She is not, of course, entitled to be compensated for loss or damage to her
luggage. As already mentioned, her baggage was ultimately delivered to her
in Manila, tardily but safely. She is however entitled to nominal damages —
which, as the law says, is adjudicated in order that a right of the plaintiff,
which has been violated or invaded by the defendant, may be vindicated and
recognized, and not for the purpose of indemnifying the plaintiff for any loss
suffered — and this Court agrees that the respondent Court of Appeals
correctly set the amount thereof at P40,000.00. As to the purely technical
argument that the award to her of such nominal damages is precluded by her
omission to include a specific claim therefor in her complaint, it suffices to
draw attention to her general prayer, following her plea for moral and
exemplary damages and attorney's fees, "for such other and further just and
equitable relief in the premises," which certainly is broad enough to
comprehend an application as well for nominal damages. Besides, petitioner
should have realized that the explicit assertion, and proof, that Dr. Pablo's
right had been violated or invaded by it — absent any claim for actual or
compensatory damages, the prayer thereof having been voluntarily deleted
by Dr. Pablo upon the return to her of her baggage — necessarily raised the
issue of nominal damages.: rd
This Court also agrees that respondent Court of Appeals correctly awarded
attorney's fees to Dr. Pablo, and the amount of P5,000.00 set by it is
reasonable in the premises. The law authorizes recovery of attorney's fees
inter alia where, as here, "the defendant's act or omission has compelled the
plaintiff to litigate with third persons or to incur expenses to protect his
interest," 34 or "where the court deems it just and equitable." 35
WHEREFORE, no error being perceived in the challenged decision of the
Court of Appeals, it appearing on the contrary to be entirely in accord with
the facts and the law, said decision is hereby AFFIRMED, with costs against
the petitioner.
SO ORDERED.
G.R. No. L-33836 March 16, 1987
DRA. SOFIA L. PRUDENCIADO, petitioner,
vs.
ALLIANCE TRANSPORT SYSTEM, INC. and JOSE LEYSON, et al., respondents.
PARAS, J.:
This is a petition for review on certiorari of the decision 1 of the Court of
Appeals dated May 4,1971 in CA-G.R. No. 34832R entitled Dra. Sofia L.
Prudenciado v. Alliance Transport System, Inc. and Jose Leyson, which
modified the decision 2 of the Court of First Instance of Rizal, Quezon City, in
Civil Case No. Q-5235 reducing the amount of moral damages from P25,000 to
P2,000 and eliminating the award of exemplary damages and attorney's fees
but granting actual damages of P2,451.27.
The decretal portion of said decision reads:
WHEREFORE, the decision appealed from is hereby modified,
ordering appellants jointly and severally to pay plaintiff the
sum of P2,451.27 for actual damages representing the cost of
the repair of the car of Plaintiff; (2) the sum of P2,000.00 as
moral damages. No pronouncement as to costs.
The antecedent facts of this case as found by the trial court and by the Court
of Appeals are as follows:
At about 2:05 p.m. of May 11, 1960, Dra. Sofia L. Prudenciado was driving her
own Chevrolet Bel Air car along Arroceros Street with the intention of
crossing Taft Avenue in order to turn left, to go to the Philippine Normal
College Compound where she would hold classes. She claimed that she was
driving her car at the rate of 10 kmph; that before crossing Taft Ave. she
stopped her car and looked to the right and to the left and not noticing any
on-coming vehicle on either side she slowly proceeded on first gear to cross
the same, but when she was almost at the center, near the island thereof,
Jose Leyson who was driving People's Taxicab owned and operated by
Alliance Transport System, Inc., suddenly bumped and struck Dra.
Prudenciado's car, thereby causing physical injuries in different parts of her
body, suffering more particularly brain concussion which subjected her to
several physical examinations and to an encephalograph test while her car
was damaged to the extent of P2,451.27. The damage to the taxicab
amounted to P190.00 (Decision in Civil Case No. Q-5235, CFI, Rizal; Record on
Appeal, pp. 63-64; Decision, CA-G.R. No. 34832-R, Rollo, pp. 37-38).
Dra. Prudenciado filed a complaint for damages at the Court of First Instance
of Rizal, Quezon City against the Alliance Transport System and Jose Leyson
docketed as aforestated, Civil Case No. Q-5232 (Record on Appeal, pp. 2-11).
After due hearing, the Court of First Instance of Rizal, Quezon City, found
Jose Leyson guilty of negligence in the performance of his duties as taxicab
driver which is the proximate cause of the accident in question. On the other
hand, defendant Alliance Transport System, Inc. failed to prove to the
satisfaction of the court that it had exercised the required diligence of a good
father of the family in the selection, supervision and control of its employees
including defendant Leyson. Consequently, both defendants were held jointly
and severally liable for the physical injuries suffered by the plaintiff Dra. Sofia
L. Prudenciado as well as for the damage to her car, in addition to the other
consequential damages prayed for. The dispositive portion of said decision
reads:
IN VIEW OF THE FOREGOING CONSIDERATIONS judgment is
rendered, one in favor of plaintiff and against the
defendants, by ordering the said defendants, jointly and
severally, to pay the plaintiff the sum of P2,451.27 for actual
damages representing the cost for the repair of the car of
plaintiff; P25,000.00 as moral damages; P5,000.00 as
exemplary damages; and the further sum of P3,000.00 as
attorney's fees, with costs against the defendants. (Record
on Appeal, pp. 71-73).
On appeal, the Court of Appeals rendered the assailed decision on May 14,
1971 and denied petitioner's motion for reconsideration in its resolution
dated July 20, 1971.
Hence, this petition.
The petition was given due course in the resolution of this Court dated
September 6, 1971 and petitioner filed her brief on November 10, 1971 (Rollo,
p. 69) while respondents filed their brief on January 24, 1972 (Rollo, p. 86).
Petitioner filed her Reply Brief on March 1, 1972 (Rollo, p. 96); after which the
case was considered submitted for decision on the same date (Rollo, p. 99).
In her brief, petitioner raised the following assignment of errors:
I SAID COSTS ARE LEGAL AND PROPER;
THE RESPONDENT COURT OF APPEALS ERRED IN REDUCING THE AWARD OF
MORAL DAMAGES TO THE PETITIONER FROM P25,000.00 AWARDED BY THE
COURT OF FIRST INSTANCE OF RIZAL, BRANCH V, QUEZON CITY, TO
P2,000.00 NOTWITHSTANDING THE FACT THAT THERE WAS NO FINDING
THAT THE AWARD WAS PALPABLY AND SCANDALOUSLY EXCESSIVE AS TO
INDICATE THAT IT WAS THE RESULT OF PASSION OR CORRUPTION ON THE
PART OF THE TRIAL COURT;
II
THE RESPONDENT COURT OF APPEALS ERRED IN ELIMINATING THE AWARD
OF EXEMPLARY DAMAGES OF P5,000.00 NOTWITHSTANDING THE FACT
THAT THE FINDING OF THE SAID COURT ON THE EVIDENCE AND THE LAW
APPLICABLE JUSTIFIED THE AWARD OF EXEMPLARY DAMAGES AS HELD BY
THE SAID TRIAL COURT;
III
THE COURT OF APPEALS ERRED IN FINDING THAT HER DEMOTION IN RANK
AS A PROFESSOR IN THE UNITED STATES WAS NOT SUBSTANTIATED AND IN
MAKING THIS FINDING A BASIS FOR THE REDUCTION OF THE AWARD OF
MORAL DAMAGES, NOTWITHSTANDING THAT IT IS ALREADY TOO FAR
FETCHED AND IT MERELY CONFIRMS THE TRUTH OF THE FACT THAT THE
ACCUSED SUFFERED LOSS OF HER USUAL LIVELINESS; VIVACITY ACTIVITY
SELF-CONFIDENCE AND THAT SHE FEELS UNCERTAIN AND INSECURE AND
THAT SHE WAS SUBJECTED TO EXTREME FRIGHT AND SERIOUS ANXIETY,
SERIOUS APPREHENSION OF LOSING HER LIFE OR HER SENSES OR REASON
AND OF HER PHYSICAL MOBILITY ANYTIME AND THAT SHE SUFFERED
GREAT SHOCK AND SEVERE PAINS ON HER BACK NEAR THE LEFT SIDE OF
HER SPINAL COLUMN OF THE LUMBAR REGION;
IV
THE RESPONDENT COURT OF APPEALS ALSO ERRED IN ELIMINATING THE
AWARD OF ATTORNEY'S FEES TO THE PETITIONERS NOTWITHSTANDING
THE FACT THAT SAID AWARD IS LEGAL AND PROPER;
V L-40071, January 29, 1986).
THE RESPONDENT COURT OF APPEALS ERRED IN ELIMINATING THE COSTS
TAXED AGAINST THE RESPONDENTS NOTWITHSTANDING THE FACT THAT
VI
THE RESPONDENT COURT OF APPEALS ERRED IN FINDING THAT THE CLAIM
OF DR. SOFIA L. PRUDENCIADO OF HER LOSS OF HER USUAL LIVELINESS,
VIVACITY ACTIVITY AND HER USUAL SELF CONFIDENCE, SUCH THAT SHE
NOW FEELS UNCERTAIN AND INSECURE... EXTREME FRIGHT AND SERIOUS
ANXIETY, SERIOUS APPREHENSION OF LOSING HER LIFE OR HER SENSES OR
REASON; OF HER PHYSICAL MOBILITY ANYTIME ... GREAT SHOCK AND
SEVERE PAINS ON HER BACK NEAR THE LEFT SIDE OF HER SPINAL COLUMN
IN THE LUMBAR REGION IS UNCORROBORATED NOTWITHSTANDING THE
FACT OF THE CERTIFICATE, EXHIBIT "G" OF DR. DOMINADOR VERGARA, OF
THE VETERANS MEMORIAL HOSPITAL AND DR. CONRADO ARAMIL, BRAIN
SPECIALIST AND THE CORROBORATING TESTIMONY OF THE LATTER AFTER
EXAMINATION AND TREATMENT OF PETITIONER;
VII
THE RESPONDENT COURT OF APPEALS ERRED IN SO MODIFYING THE
DECISION OF THE TRIAL COURT NOTWITHSTANDING THE FACT THAT IT HAD
NO POWER TO DO SO UNDER THE FACTS AND CIRCUMSTANCES OF THIS
CASE AS FOUND BY THE COURT OF APPEALS;
VIII
THE RESPONDENT COURT OF APPEALS ERRED IN MODIFYING THE DECISION
OF THE TRIAL COURT NOTWITHSTANDING THE FACT THAT THE DECISION OF
SAID TRIAL COURT IS IN ACCORDANCE WITH LAW.
The Court of Appeals and the trial court are in accord in the finding that the
accident was caused by the negligence of the taxi driver. The bone of
contention is however in the award of damages, which crystalizes the errors
assigned into one issue, which is whether or not the Court of Appeals is
justified in modifying or changing the grant of damages by the trial court.
It is well settled that factual findings of the Court of Appeals are binding on
the Supreme Court, but said findings are subject to scrutiny if such are
diametrically opposed to those of the trial court (Samson v. CA, et al. G.R. No.
The Court of Appeals concedes that a concussion of the brain was suffered
by Dra. Prudenciado but as to how serious was the concussion or how it had
later become, and the disastrous extent of the injuries which she alleges to
have sustained as a result of the accident, are seriously doubted by said
Appellate Court.
Specifically, said Court finds that Dra. Prudenciado's claim (which was
sustained b the trial court) that because of aforesaid concussion, she
eventually lost her usual liveliness, vivacity activity and her usual self-
confidence, to the extent that now she feels uncertain and insecure, not to
mention a sense of extreme fright and serious anxiety, serious apprehension
of losing her life, or her senses or reason or her physical mobility
momentarily, plus experiences of great shock and severe pains on her back
near the left side of her spinal column in the lumbar region, was not
supported by the deposition of Dr. Conrado Aramil the list who attended to
the plaintiff from May 14 to May 26, 1960 (TSN, July 13, 1960, pp. 72-73). From
said deposition, it was gathered that Dra. Prudenciado suffered a mild
abnormality, compatible with mold concussion of the brain (TSN, July 13,
1960, pp. 47-48); that the symptoms of any brain concussion usually are
headache, dizziness, voting and lack of pep or alertness; and that the
possible after effects that may be produced are persistent or irregular
headaches, fluctuating dizziness. Accordingly, Dra. Prudenciado was advised
"Just to watch herself if she would develop any alarming symptoms such as
headache, dizziness or vomitings, to have her re-checked after several
months for her to be sure." (Ibid, pp. 51-52). It might also produce intellectual
deterioration or lessening of intelligence, and even insanity.
Dra. Prudenciado sought to establish that she had precisely suffered are
those after effects except insanity; but the Court of Appeals ruled that her
proof consisted merely in her own uncorroborated testimony. In support of
her allegation she could not show any medical certificate tending to prove
that she was indeed medically treated abroad for her brain ailment nor was
there any showing in the documents presented that she was demoted to the
rank of technical assistant because the San Francisco State College does not
believe in her mental capacity any more.
Finally, her statements that she is almost completely losing her voice, that
she has a terrible headache when her head is pressed, that she has lost her
sense of taste, that she is nervous and temperamental and that she has
lapses of memory, are belied by the deposition of Dr. Aramil that the
patient's EEG was already normal on May 26, 1960; and on cross-examination
he declared that she was clinically symtomless when she was discharged
from the hospital (TSN, July 13, 1960, pp. 75-76; 78-79).
There is no argument that moral damages include physical suffering, mental
anguish, fright, serious anxiety, besmirched reputation, wounded feelings,
moral shock, social humiliation, and similar injury. Though incapable of
pecuniary computation, moral damages may be recovered if they are the
proximate result of defendant's wrongful act or omission (People v. Baylon,
129 SCRA 62 [1984]).
In the same manner, it is undisputed that the trial courts are given discretion
to determine the amount of moral damages Alcantara v. Surro, 93 Phil. 472)
and that the Court of Appeals can only modify or change the amount
awarded when they are palpably and scandalously excessive "so as to
indicate that it was the result of passion, prejudice or corruption on the part
of the trial court (Gellada v. Warner Barnes & Co., Inc., 57 O.G. (4) 7347, 7358;
Sadie v. Bachrach Motors Co., Inc., 57 O.G. (4) 636 and Adone v. Bachrach
Motor Co., Inc., 57 O.G. 656). But in more recent cases where the awards of
moral and exemplary damages are far too excessive compared to the, actual
losses sustained by the aggrieved party, this Court ruled that they should be
reduced to more reasonable amounts.
Thus, in the case of San Andres v. Court of Appeals (116 SCRA 85 [1982]) the
Supreme Court ruled that while the amount of moral damages is a matter left
largely to the sound discretion of a court, the same when found excessive
should be reduced to more reasonable amounts, considering the attendant
facts and circumstances. Moral damages, though incapable of pecuniary
estimation, are in the category of an award designed to compensate the
claimant for actual injury suffered and not to impose a penalty on the
wrongdoer.
In a much later case (Siguenza v. Court of Appeals, 137 SCRA 578-579 [1985]),
the Supreme court, reiterating the above ruling, reduced the awards of moral
and exemplary damages which were far too excessive compared to the
actual losses sustained by the aggrieved parties and where the records show
that the injury suffered was not serious or gross and, therefore, out of
proportion to the amount of damages generously awarded by the trial court.
In any case the Court held that "moral damages are emphatically not
intended to enrich a complainant at the expense of a 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 defendants' culpable action." The award of
moral damages must be proportionate to the suffering inflicted & B Surety &
Insurance Co., Inc. v. Intermediate Appellate Court, 129 SCRA 745 [1984]
citing Grand Union Supermarket, Inc. v. Espino, Jr., 94 SCRA 966).
Coming back to the case at bar, a careful review of the records makes it
readily apparent that the injuries sustained by Dra. Prudenciado are not as
serious or extensive as they were claimed to be, to warrant the damages
awarded by the trial court. In fact, a closer scrutiny of the exhibits showing a
moderate damage to the car can by no stretch of the imagination produce a
logical conclusion that such disastrous effects of the accident sought to be
established, actually took place, not to mention the fact that such were not
supported by the medical findings presented. Unquestionably, therefore, the
damages imposed' by the lower court should be reduced to more reasonable
levels.
On the other hand, it will be observed that the reduction of the damages
made by the Court of Appeals is both too drastic and unrealistic, to pass the
test of reasonableness, which appears to be the underlying basis to justify
such reduction.
While the damages sought to be recovered were not satisfactorily
established to the extent desired by the petitioner, it was nonetheless not
disputed that an accident occurred due to the fault and negligence of the
respondents; that Dra. Prudenciado suffered a brain concussion which
although mild can admittedly produce the effects complained of by her and
that these symptoms can develop after several years and can lead to some,
serious handicaps or predispose the patient to other sickness (TSN, July 13,
1960, pp. 52-54). Being a doctor by profession, her fears can be more real and
intense than an ordinary person. Otherwise stated, she is undeniably a proper
recipient of moral damages which are proportionate to her suffering.
that respondent driver was running at high speed after turning to the right
along Taft Ave. coming from Ayala Boulevard, considering that the traffic was
clear. Failing to notice petitioner's car, he failed to apply his brakes and did
not even swerve to the right to avoid the collision (Record on Appeal, pp. 69-
70).
The Court of Appeals conforms with aforesaid findings of the trial court but is
not prepared to accept that there was gross negligence on the part of the
driver to justify the imposition of exemplary damages.
However, a driver running at full speed on a rainy day, on a slippery road in
complete disregard of the hazards to life and limb of other people cannot be
said to be acting in anything less than gross negligence. The frequent
incidence of accidents of this nature caused by taxi drivers indeed demands
corrective measures.
PREMISES CONSIDERED, the assailed decision of the Court of Appeals is
hereby MODIFIED insofar as the award of damages is concerned; and
respondents are ordered to jointly and severally pay the petitioner; (1) the
sum of P2,451.27 for actual damages representing the cost of the repair of
her car; (2) the sum of P15,000.00 as moral damages; (3) the sum of
P5,000.00 as exemplary damages; and (4) the sum of P3,000.00 as attorney's
fees. No pronouncement as to costs.
SO ORDERED.

As to exemplary damages, Article 2231 of the Civil Code provides:

In quasi-delicts, exemplary damages may be granted if the

defendant acted with grave negligence.

The rationale behind exemplary or corrective damages is, as the name

implies, to provide an example or correction for the public good (Lopez, et al.
v. Pan American World Airways, 16 SCRA 431).

The findings of the trial court in the case at bar which became the basis of the
award of exemplary damages are to the effect that it is more apparent from
the facts, conditions and circumstances obtaining in the record of the case
G.R. No. L-22415 March 30, 1966
FERNANDO LOPEZ, ET AL., plaintiffs-appellants,
vs.
PAN AMERICAN WORLD AIRWAYS, defendant-appellant.
Ross, Selph and Carrascoso for the defendant-appellant.
Vicente J. Francisco for the plaintiffs-appellants.
BENGZON, J.P., J.:
Plaintiffs and defendant appeal from a decision of the Court of First Instance
of Rizal. Since the value in controversy exceeds P200,000 the appeals were
taken directly to this Court upon all questions involved (Sec. 17, par. 3[5],
Judiciary Act).
Stated briefly the facts not in dispute are as follows: Reservations for first
class accommodations in Flight No. 2 of Pan American World Airways —
hereinafter otherwise called PAN-AM — from Tokyo to San Francisco on May
24, 1960 were made with
PAN-AM on March 29, 1960, by "Your Travel Guide" agency, specifically, by
Delfin Faustino, for then Senator Fernando Lopez, his wife Maria J. Lopez, his
son-in-law Alfredo Montelibano, Jr., and his daughter, Mrs. Alfredo
Montelibano, Jr., (Milagros Lopez Montelibano). PAN-AM's San Francisco
head office confirmed the reservations on March 31, 1960.
First class tickets for the abovementioned flight were subsequently issued by
PAN-AM on May 21 and 23, 1960, in favor of Senator Lopez and his party. The
total fare of P9,444 for all of them was fully paid before the tickets were
issued.
As scheduled Senator Lopez and party left Manila by Northwest Airlines on
May 24, 1960, arriving in Tokyo at 5:30 P.M. of that day. As soon as they
arrived Senator Lopez requested Minister Busuego of the Philippine Embassy
to contact PAN-AM's Tokyo office regarding their first class accommodations
for that evening's flight. For the given reason that the first class seats therein
were all booked up, however, PAN-AM's Tokyo office informed Minister
Busuego that PAN-AM could not accommodate Senator Lopez and party in
that trip as first class passengers. Senator Lopez thereupon gave their first
class tickets to Minister Busuego for him to show the same to PAN-AM's
Tokyo office, but the latter firmly reiterated that there was no
accommodation for them in the first class, stating that they could not go in
that flight unless they took the tourist class therein.
Due to pressing engagements awaiting Senator Lopez and his wife, in the
United States — he had to attend a business conference in San Francisco the
next day and she had to undergo a medical check-up in Mayo Clinic,
Rochester, Minnesota, on May 28, 1960 and needed three days rest before
that in San Francisco — Senator Lopez and party were constrained to take
PAN-AM's flight from Tokyo to San Francisco as tourist passengers. Senator
Lopez however made it clear, as indicated in his letter to PAN-AM's Tokyo
office on that date (Exh. A), that they did so "under protest" and without
prejudice to further action against the airline.1äwphï1.ñët
Suit for damages was thereafter filed by Senator Lopez and party against
PAN-AM on June 2, 1960 in the Court of First Instance of Rizal. Alleging
breach of contracts in bad faith by defendant, plaintiffs asked for P500,000
actual and moral damages, P100,000 exemplary damages, P25,000 attorney's
fees plus costs. PAN-AM filed its answer on June 22, 1960, asserting that its
failure to provide first class accommodations to plaintiffs was due to honest
error of its employees. It also interposed a counterclaim for attorney's fees of
P25,000.
Subsequently, further pleadings were filed, thus: plaintiffs' answer to the
counterclaim, on July 25, 1960; plaintiffs' reply attached to motion for its
admittance, on December 2, 1961; defendant's supplemental answer, on
March 8, 1962; plaintiffs' reply to supplemental answer, on March 10, 1962;
and defendant's amended supplemental answer, on July 10, 1962.
After trial — which took twenty-two (22) days ranging from November 25,
1960 to January 5, 1963 — the Court of First Instance rendered its decision on
November 13, 1963, the dispositive portion stating:
In view of the foregoing considerations, judgment is hereby rendered
in favor of the plaintiffs and against the defendant, which is
accordingly ordered to pay the plaintiffs the following: (a)
P100,000.00 as moral damages; (b) P20,000.00 as exemplary
damages; (c) P25,000.00 as attorney's fees, and the costs of this
action.
So ordered.
Plaintiffs, however, on November 21, 1963, moved for reconsideration of said
judgment, asking that moral damages be increased to P400,000 and that six
per cent (6%) interest per annum on the amount of the award be granted.
And defendant opposed the same. Acting thereon the trial court issued an
order on December 14, 1963, reconsidering the dispositive part of its decision
to read as follows:
In view of the foregoing considerations, judgment is hereby rendered
in favor of the plaintiffs and against the defendant, which is
accordingly ordered to pay the plaintiffs the following: (a)
P150,000.00 as moral damages; (b) P25,000.00 as exemplary
damages; with legal interest on both from the date of the filing of
the complaint until paid; and (c) P25,000.00 as attorney's fees; and
the costs of this action.
So ordered.
It is from said judgment, as thus reconsidered, that both parties have
appealed.
Defendant, as stated, has from the start admitted that it breached its
contracts with plaintiffs to provide them with first class accommodations in
its Tokyo-San Francisco flight of May 24, 1960. In its appeal, however, it takes
issue with the finding of the court a quo that it acted in bad faith in the
branch of said contracts. Plaintiffs, on the other hand, raise questions on
the amount of damages awarded in their favor, seeking that the same be
increased to a total of P650,000.
Anent the issue of bad faith the records show the respective contentions of
the parties as follows.
According to plaintiffs, defendant acted in bad faith because it deliberately
refused to comply with its contract to provide first class accommodations to
plaintiffs, out of racial prejudice against Orientals. And in support of its
contention that what was done to plaintiffs is an oftrepeated practice of
defendant, evidence was adduced relating to two previous instances of
alleged racial discrimination by defendant against Filipinos in favor of "white"
passengers. Said previous occasions are what allegedly happened to (1)
Benito Jalbuena and (2) Cenon S. Cervantes and his wife.
And from plaintiffs' evidence this is what allegedly happened; Jalbuena
bought a first class ticket from PAN-AM on April 13, 1960; he confirmed it on
April 15, 1960 as to the Tokyo-Hongkong flight of April 20, 1960; PAN-AM
similarly confirmed it on April 20, 1960. At the airport he and another Oriental
— Mr. Tung — were asked to step aside while other passengers - including
"white" passengers — boarded PAN-AM's plane. Then PAN-AM officials told
them that one of them had to stay behind. Since Mr. Tung was going all the
way to London, Jalbuena was chosen to be left behind. PAN-AM's officials
could only explain by saying there was "some mistake". Jalbuena thereafter
wrote PAN-AM to protest the incident (Exh. B).
As to Cenon S. Cervantes it would appear that in Flight No. 6 of PAN-AM on
September 29, 1958 from Bangkok to Hongkong, he and his wife had to take
tourist class, although they had first class tickets, which they had previously
confirmed, because their seats in first class were given to "passengers from
London."
Against the foregoing, however, defendant's evidence would seek to
establish its theory of honest mistake, thus:
The first class reservations of Senator Lopez and party were made on March
29, 1960 together with those of four members of the Rufino family, for a total
of eight (8) seats, as shown in their joint reservation card (Exh. 1).
Subsequently on March 30, 1960, two other Rufinos secured reservations and
were given a separate reservation card (Exh. 2). A new reservation card
consisting of two pages (Exhs. 3 and 4) was then made for the original of
eight passengers, namely, Senator Lopez and party and four members of the
Rufino family, the first page (Exh. 3) referring to 2 Lopezes, 2 Montelibanos
and 1 Rufino and the second page (Exh. 4) referring to 3 Rufinos. On April 18,
1960 "Your Travel Guide" agency cancelled the reservations of the Rufinos. A
telex message was thereupon sent on that date to PAN-AM's head office at
San Francisco by Mariano Herranz, PAN-AM's reservations employee at its
office in Escolta, Manila. (Annex A-Acker's to Exh. 6.) In said message,
however, Herranz mistakenly cancelled all the seats that had been reserved,
that is, including those of Senator Lopez and party.
The next day — April 1960 — Herranz discovered his mistake, upon seeing
the reservation card newly prepared by his co-employee Pedro Asensi for
Sen. Lopez and party to the exclusion of the Rufinos (Exh. 5). It was then that
Herranz sent another telex wire to the San Francisco head office, stating his
error and asking for the reinstatement of the four (4) first class seats
reserved for Senator Lopez and party (Annex A-Velasco's to Exh. 6). San
Francisco head office replied on April 22, 1960 that Senator Lopez and party
are waitlisted and that said office is unable to reinstate them (Annex B-
Velasco's to Exh. 6).
Since the flight involved was still more than a month away and confident that
reinstatement would be made, Herranz forgot the matter and told no one
about it except his co-employee, either Armando Davila or Pedro Asensi or
both of them (Tsn., 123-124, 127, Nov. 17, 1961).
Subsequently, on April 27, 1960, Armando Davila, PAN-AM's reservations
employee working in the same Escolta office as Herranz, phoned PAN-AM's
ticket sellers at its other office in the Manila Hotel, and confirmed the
reservations of Senator Lopez and party.
PAN-AM's reservations supervisor Alberto Jose, discovered Herranz's
mistake after "Your Travel Guide" phone on May 18, 1960 to state that
Senator Lopez and party were going to depart as scheduled. Accordingly,
Jose sent a telex wire on that date to PAN-AM's head office at San Francisco
to report the error and asked said office to continue holding the reservations
of Senator Lopez and party (Annex B-Acker's to Exh. 6). Said message was
reiterated by Jose in his telex wire of May 19, 1960 (Annex C-Acker's to Exh.
6). San Francisco head office replied on May 19, 1960 that it regrets being
unable to confirm Senator Lopez and party for the reason that the flight was
solidly booked (Exh. 7). Jose sent a third telex wire on May 20, 1960
addressed to PAN-AM's offices at San Francisco, New York (Idlewild Airport),
Tokyo and Hongkong, asking all-out assistance towards restoring the
cancelled spaces and for report of cancellations at their end (Annex D-Acker's
to Exh. 6). San Francisco head office reiterated on May 20, 1960 that it could
not reinstate the spaces and referred Jose to the Tokyo and Hongkong
offices (Exh. 8). Also on May 20, the Tokyo office of PAN-AM wired Jose
stating it will do everything possible (Exh. 9).
Expecting that some cancellations of bookings would be made before the
flight time, Jose decided to withhold from Senator Lopez and party, or their
agent, the information that their reservations had been cancelled.
Armando Davila having previously confirmed Senator Lopez and party's first
class reservations to PAN-AM's ticket sellers at its Manila Hotel office, the
latter sold and issued in their favor the corresponding first class tickets on
the 21st and 23rd of May, 1960.
From the foregoing evidence of defendant it is in effect admitted that
defendant — through its agents — first cancelled plaintiffs, reservations by
mistake and thereafter deliberately and intentionally withheld from plaintiffs
or their travel agent the fact of said cancellation, letting them go on believing
that their first class reservations stood valid and confirmed. In so misleading
plaintiffs into purchasing first class tickets in the conviction that they had
confirmed reservations for the same, when in fact they had none, defendant
wilfully and knowingly placed itself into the position of having to breach its a
foresaid contracts with plaintiffs should there be no last-minute cancellation
by other passengers before flight time, as it turned out in this case. Such
actuation of defendant may indeed have been prompted by nothing more
than the promotion of its self-interest in holding on to Senator Lopez and
party as passengers in its flight and foreclosing on their chances to seek the
services of other airlines that may have been able to afford them first class
accommodations. All the time, in legal contemplation such conduct already
amounts to action in bad faith. For bad faith means a breach of a known duty
through some motive of interest or ill-will (Spiegel vs. Beacon Participations,
8 NE 2d 895, 907). As stated in Kamm v. Flink, 113 N.J.L. 582, 175 A. 62, 99
A.L.R. 1, 7: "Self-enrichment or fraternal interest, and not personal ill-will, may
well have been the motive; but it is malice nevertheless."
As of May 18, 1960 defendant's reservations supervisor, Alberto Jose knew
that plaintiffs' reservations had been cancelled. As of May 20 he knew that
the San Francisco head office stated with finality that it could not reinstate
plaintiffs' cancelled reservations. And yet said reservations supervisor made
the "decision" — to use his own, word — to withhold the information from
the plaintiffs. Said Alberto Jose in his testimony:
Q Why did you not notify them?
A Well, you see, sir, in my fifteen (15) years of service with the air
lines business my experience is that even if the flights are solidly
booked months in advance, usually the flight departs with plenty of
empty seats both on the first class and tourist class. This is due to
late cancellation of passengers, or because passengers do not show
up in the airport, and it was our hope others come in from another
flight and, therefore, are delayed and, therefore, missed their
connections. This experience of mine, coupled with that wire from
Tokyo that they would do everything possible prompted me to
withhold the information, but unfortunately, instead of the first class
seat that I was hoping for and which I anticipated only the tourists
class was open on which Senator and Mrs. Lopez, Mr. and Mrs.
Montelibano were accommodated. Well, I fully realize now the
gravity of my decision in not advising Senator and Mrs. Lopez, Mr.
and Mrs. Montelibano nor their agents about the erroneous
 cancellation and for which I would like them to know that I am very
sorry.
xxx xxx xxx
Q So it was not your duty to notify Sen. Lopez and parties that their
reservations had been cancelled since May 18, 1960?
A As I said before it was my duty. It was my duty but as I said again
with respect to that duty I have the power to make a decision or use
my discretion and judgment whether I should go ahead and tell the
passenger about the cancellation. (Tsn., pp. 17-19, 28-29, March 15,
1962.)
At the time plaintiffs bought their tickets, defendant, therefore, in breach of
its known duty, made plaintiffs believe that their reservation had not been
cancelled. An additional indication of this is the fact that upon the face of the
two tickets of record, namely, the ticket issued to Alfredo Montelibano, Jr.
on May 21, 1960 (Exh. 22) and that issued to Mrs. Alfredo Montelibano, Jr., on
May 23, 1960 (Exh. 23), the reservation status is stated as "OK". Such willful-
non-disclosure of the cancellation or pretense that the reservations for
plaintiffs stood — and not simply the erroneous cancellation itself — is the
factor to which is attributable the breach of the resulting contracts. And, as
above-stated, in this respect defendant clearly acted in bad faith.
As if to further emphasize its bad faith on the matter, defendant
subsequently promoted the employee who cancelled plaintiffs' reservations
and told them nothing about it. The record shows that said employee —
Mariano Herranz — was not subjected to investigation and suspension by
defendant but instead was given a reward in the form of an increase of salary
in June of the following year (Tsn., 86-88, Nov. 20, 1961).
At any rate, granting all the mistakes advanced by the defendant, there
would at least be negligence so gross and reckless as to amount to malice or
bad faith (Fores vs. Miranda, L-12163, March 4, 1959; Necesito v. Paras, L-
10605-06, June 30, 1958). Firstly, notwithstanding the entries in the
reservation cards (Exhs. 1 & 3) that the reservations cancelled are those of
the Rufinos only, Herranz made the mistake, after reading said entries, of
sending a wire cancelling all the reservations, including those of Senator
Lopez and party (Tsn., pp. 108-109, Nov. 17, 1961). Secondly, after sending a
wire to San Francisco head office on April 19, 1960 stating his error and asking
for reinstatement, Herranz simply forgot about the matter. Notwithstanding
the reply of San Francisco head Office on April 22, 1960 that it cannot
reinstate Senator Lopez and party (Annex B-Velasco's to Exh. 6), it was
assumed and taken for granted that reinstatement would be made. Thirdly,
Armando Davila confirmed plaintiff's reservations in a phone call on April 27,
1960 to defendant's ticket sellers, when at the time it appeared in plaintiffs'
reservation card (Exh. 5) that they were only waitlisted passengers. Fourthly,
defendant's ticket sellers issued plaintiffs' tickets on May 21 and 23, 1960,
without first checking their reservations just before issuing said tickets. And,
finally, no one among defendant's agents notified Senator Lopez and party
that their reservations had been cancelled, a precaution that could have
averted their entering with defendant into contracts that the latter had
already placed beyond its power to perform.
Accordingly, there being a clear admission in defendant's evidence of facts
amounting to a bad faith on its part in regard to the breach of its contracts
with plaintiffs, it becomes unnecessary to further discuss the evidence
adduced by plaintiffs to establish defendant's bad faith. For what is admitted
in the course of the trial does not need to be proved (Sec. 2, Rule 129, Rules
of Court).
Addressing ourselves now to the question of damages, it is well to state at
the outset those rules and principles. First, moral damages are recoverable in
breach of contracts where the defendant acted fraudulently or in bad faith
(Art. 2220, New Civil Code). Second, in addition to moral damages, exemplary
or corrective damages may be imposed by way of example or correction for
the public good, in breach of contract where the defendant acted in a
wanton, fraudulent, reckless, oppressive or malevolent manner (Articles
2229, 2232, New Civil Code). And, third, a written contract for an attorney's
services shall control the amount to be paid therefor unless found by the
court to be unconscionable or unreasonable (Sec. 24, Rule 138, Rules of
Court).
First, then, as to moral damages. As a proximate result of defendant's breach
in bad faith of its contracts with plaintiffs, the latter suffered social
humiliation, wounded feelings, serious anxiety and mental anguish. For
plaintiffs were travelling with first class tickets issued by defendant and yet
they were given only the tourist class. At stop-overs, they were expected to
be among the first-class passengers by those awaiting to welcome them, only
to be found among the tourist passengers. It may not be humiliating to travel
as tourist passengers; it is humiliating to be compelled to travel as such,
contrary to what is rightfully to be expected from the contractual
undertaking.
Senator Lopez was then Senate President Pro Tempore. International carriers
like defendant know the prestige of such an office. For the Senate is not only
the Upper Chamber of the Philippine Congress, but the nation's treaty-
ratifying body. It may also be mentioned that in his aforesaid office Senator
Lopez was in a position to preside in impeachment cases should the Senate
sit as Impeachment Tribunal. And he was former Vice-President of the
Philippines. Senator Lopez was going to the United States to attend a private
business conference of the Binalbagan-Isabela Sugar Company; but his
aforesaid rank and position were by no means left behind, and in fact he had
a second engagement awaiting him in the United States: a banquet tendered
by Filipino friends in his honor as Senate President Pro Tempore (Tsn., pp. 14-
15, Nov. 25, 1960). For the moral damages sustained by him, therefore, an
award of P100,000.00 is appropriate.
Mrs. Maria J. Lopez, as wife of Senator Lopez, shared his prestige and
therefore his humiliation. In addition she suffered physical discomfort during
the 13-hour trip,(5 hours from Tokyo to Honolulu and 8 hours from Honolulu
to San Francisco). Although Senator Lopez stated that "she was quite well"
(Tsn., p. 22, Nov. 25, 1960) — he obviously meant relatively well, since the
rest of his statement is that two months before, she was attackedby severe
flu and lost 10 pounds of weight and that she was advised by Dr. Sison to go
to the United States as soon as possible for medical check-up and relaxation,
(Ibid). In fact, Senator Lopez stated, as shown a few pages after in the
transcript of his testimony, that Mrs. Lopez was sick when she left the
Philippines:
A. Well, my wife really felt very bad during the entire trip from Tokyo
to San Francisco. In the first place, she was sick when we left the
Philippines, and then with that discomfort which she [experienced]
or suffered during that evening, it was her worst experience. I
myself, who was not sick, could not sleep because of the discomfort.
(Tsn., pp. 27-28, Nov. 25, 1960).
It is not hard to see that in her condition then a physical discomfort sustained
for thirteen hours may well be considered a physical suffering. And even
without regard to the noise and trepidation inside the plane — which
defendant contends, upon the strengh of expert testimony, to be practically
the same in first class and tourist class — the fact that the seating spaces in
the tourist class are quite narrower than in first class, there beingsix seats to
a row in the former as against four to a row in the latter, and that in tourist
class there is very little space for reclining in view of the closer distance
between rows (Tsn., p. 24, Nov. 25, 1960), will suffice to show that the
aforesaid passenger indeed experienced physical suffering during the trip.
Added to this, of course, was the painfull thought that she was deprived by
defendant — after having paid for and expected the same — of the most
suitable, place for her, the first class, where evidently the best of everything
would have been given her, the best seat, service, food and treatment. Such
difference in comfort between first class and tourist class is too obvious to be
recounted, is in fact the reason for the former's existence, and is recognized
by the airline in charging a higher fare for it and by the passengers in paying
said higher rate Accordingly, considering the totality of her suffering and
humiliation, an award to Mrs. Maria J. Lopez of P50,000.00 for moral
damages will be reasonable.
Mr. and Mrs. Alfredo Montelibano, Jr., were travelling as immediate
members of the family of Senator Lopez. They formed part of the Senator's
party as shown also by the reservation cards of PAN-AM. As such they
likewise shared his prestige and humiliation. Although defendant contends
that a few weeks before the flight they had asked their reservations to be
charged from first class to tourist class — which did not materialize due to
alleged full booking in the tourist class — the same does not mean they
suffered no shared in having to take tourist class during the flight. For by that
time they had already been made to pay for first class seats and therefore to
expect first class accommodations. As stated, it is one thing to take the
tourist class by free choice; a far different thing to be compelled to take it
notwithstanding having paid for first class seats. Plaintiffs-appellants now ask
P37,500.00 each for the two but we note that in their motion for
reconsideration filed in the court a quo, they were satisfied with P25,000.00
each for said persons. (Record on Appeal, p. 102). For their social humiliation,
therefore, the award to them of P25,000.00 each is reasonable.
The rationale behind exemplary or corrective damages is, as the name
implies, to provide an example or correction for public good. Defendant
having breached its contracts in bad faith, the court, as stated earlier, may
award exemplary damages in addition to moral damages (Articles 2229, 2232,
New Civil Code).
In view of its nature, it should be imposed in such an amount as to sufficiently
and effectively deter similar breach of contracts in the future by defendant or
other airlines. In this light, we find it just to award P75,000.00 as exemplary
or corrective damages.
Now, as to attorney's fees, the record shows a written contract of services
executed on June 1, 1960 (Exh. F) whereunder plaintiffs-appellants engaged
the services of their counsel — Atty. Vicente J. Francisco — and agreedto pay
the sum of P25,000.00 as attorney's fees upon the termination of the case in
the Court of First Instance, and an additional sum of P25,000.00 in the event
the case is appealed to the Supreme Court. As said earlier, a written contract
for attorney's services shall control the amount to be paid therefor unless
found by the court to be unconscionable or unreasonable. A consideration of
the subject matter of the present controversy, of the professional standing
of the attorney for plaintiffs-appellants, and of the extent of the service
rendered by him, shows that said amount provided for in the written
agreement is reasonable. Said lawyer — whose prominence in the legal
profession is well known — studied the case, prepared and filed the
complaint, conferred with witnesses, analyzed documentary evidence,
personally appeared at the trial of the case in twenty-two days, during a
period of three years, prepared four sets of cross-interrogatories for
deposition taking, prepared several memoranda and the motion for
reconsideration, filed a joint record on appeal with defendant, filed a brief for
plaintiffs as appellants consisting of 45 printed pages and a brief for plaintiffs
as appellees consisting of 265 printed pages. And we are further convinced of
its reasonableness because defendant's counsel likewise valued at
P50,000.00 the proper compensation for his services rendered to defendant
in the trial court and on appeal.

In concluding, let it be stressed that the amount of damages awarded in this

appeal has been determined by adequately considering the official, political,
social, and financial standing of the offended parties on one hand, and the
business and financial position of the offender on the other (Domingding v.
Ng, 55 O.G. 10). And further considering the present rate of exchange and the
terms at which the amount of damages awarded would approximately be in
U.S. dollars, this Court is all the more of the view that said award is proper
and reasonable.

Wherefore, the judgment appealed from is hereby modified so as to award in

favor of plaintiffs and against defendant, the following: (1) P200,000.00 as
moral damages, divided among plaintiffs, thus: P100,000.00 for Senate
President Pro Tempore Fernando Lopez; P50,000.00 for his wife Maria J.
Lopez; P25,000.00 for his son-in-law Alfredo Montelibano, Jr.; and
P25,000.00 for his daughter Mrs. Alfredo Montelibano, Jr.; (2) P75,000.00 as
exemplary or corrective damages; (3) interest at the legal rate of 6% per
annum on the moral and exemplary damages aforestated, from December
14, 1963, the date of the amended decision of the court a quo, until said
damages are fully paid; (4) P50,000.00 as attorney's fees; and (5) the costs.
Counterclaim dismissed.So ordered.