Module 6 Transpo Law 405

MODULE 6 When confronted with Keihin-Everett's findings, Orient
Freight wrote back on May 15, 2002 to admit that its

ACTIONS AND DAMAGES previous report was erroneous and that pilferage was
apparently proven.
Culpa Aquiliana V Culpa Contractual
In its June 6, 2002 letter, Matsushita terminated its In-
Orient Freight International, Inc. v. Keihin-Everett House Brokerage Service Agreement with Keihin-Everett,
Forwarding Company, Inc., G.R. GR No. 191937 | effective July 1, 2002. Matsushita cited loss of confidence
August 9, 2017 for terminating the contract, stating that Keihin-Everett's
way of handling the April 17, 2002 incident and its
Facts: nondisclosure of this incident's relevant facts "amounted
On October 16, 2001, Keihin-Everett entered into a to fraud and signified an utter disregard of the rule of law."
Trucking Service Agreement with Matsushita. Under the
Trucking Service Agreement, Keihin-Everett would provide Keihin-Everett, by counsel, sent a letter dated September
services for Matsushita's trucking requirements. These 16, 2002 to Orient Freight, demanding P2,500,000.00 as
services were subcontracted by Keihin-Everett to Orient indemnity for lost income. When Orient Freight refused to
Freight, through their own Trucking Service Agreement pay, Keihin-Everett filed a complaint dated October 24,
executed on the same day. 2002 for damages with Branch 10, Regional Trial Court,
Manila.
In April 2002, Matsushita called Keihin-Everett's Sales
Manager, Salud Rizada, about a column in the April 19, Petitioner’s Argument/s:
2002 issue of the tabloid newspaper Tempo. This news Petitioner denies that it was obliged to disclose the facts
narrated the April 17, 2002 interception by Caloocan City regarding the hijacking incident since this was not among
police of a stolen truck filled with shipment of video the provisions of its Trucking Service Agreement with
monitors and CCTV systems owned by Matsushita. respondent. There being no contractual obligation,
respondent had no cause of action against petitioner.
When contacted by Keihin-Everett about this news, Orient
Freight stated that the tabloid report had blown the Respondent’s Arguments:
Keihin argued that Orient Freight's mishandling of the
incident out of proportion. They claimed that the incident
simply involved the breakdown and towing of the truck, situation caused the termination of Keihin-Everett's
contract with Matsushita.
which was driven by Ricky Cudas (Cudas), with truck
helper, Rubelito Aquino (Aquino). The truck was promptly
released and did not miss the closing time of the vessel Ruling of the lower court:
The Regional Trial Court rendered its February 27, 2008
intended for the shipment.
Decision, in favor of Keihin-Everett. It found that Orient
Freight was "negligent in failing to investigate properly the
Keihin-Everett directed Orient Freight to investigate the
incident and make a factual report to Keihin[-Everett] and
matter. During its April 20, 2002 meeting with Keihin-
Everett and Matsushita, as well as in its April 22, 2002 Matsushita," despite having enough time to properly
investigate the incident.
letter addressed to Matsushita, Orient Freight reiterated
that the truck merely broke down and had to be towed. Orient Freight appealed the Regional Trial Court Decision
to the Court of Appeals.
However, when the shipment arrived in Yokohama, Japan
On January 21, 2010, the Court of Appeals issued its
on May 8, 2002, it was discovered that 10 pallets of the
Decision affirming the trial court's decision. It ruled that
shipment's 218 cartons, worth US$34,226.14, were
Orient Freight "not only had knowledge of the foiled
missing.
hijacking of the truck carrying the . . . shipment but, more
importantly, withheld [this] information from [Keihin-
Keihin-Everett independently investigated the incident.
During its investigation, it obtained a police report from Everett]."
the Caloocan City Police Station. The report stated, among
Issue:
others, that at around 2:00 p.m. on April 17, 2002,
somewhere in Plaza Dilao, Paco Street, Manila, Cudas told Whether or not the Court of Appeals, considering the
existing contracts in this case, erred in applying Article
Aquino to report engine trouble to Orient Freight. After
Aquino made the phone call, he informed Orient Freight 2176 of the Civil Code... whether Orient Freight, Inc. was
negligent for failing to disclose the facts surrounding the
that the truck had gone missing. When the truck was
hijacking incident on April 17, 2002, which led to the
intercepted by the police along C3 Road near the corner of
Dagat-Dagatan Avenue in Caloocan City, Cudas escaped termination of the Trucking Service Agreement between
Keihin-Everett Forwarding Co., Inc. and Matsushita
and became the subject of a manhunt.
Communication Industrial Corporation of the Philippines
TRANSPORTATION LAWS | ATTY. CAPANAS | MODULE 6 CASE DIGEST COMPILATION | EH405 2020-2021 | PAGE | 1
Rule: The doctrine "the act that breaks the contract may also be
Article 1170 of the Civil Code states: “Those who in the a tort," on which the lower courts relied, is inapplicable
performance of their obligations are guilty of fraud, here. Petitioner's negligence, arising as it does from its
negligence, or delay and those who in any manner performance of its obligation to respondent, is dependent
contravene the tenor thereof are liable for damages.” on this obligation. Neither do the facts show that Article 21
of the Civil Code applies, there being no finding that
Application: petitioner's act was a conscious one to cause harm, or be
Negligence in culpa contractual, on the other hand, is "the of such a degree as to approximate fraud or bad faith
fault or negligence incident in the performance of an
obligation which already-existed, and which increases the Consequently, Articles 1170, 1172, and 1173 of the Civil
liability from such already existing obligation." This is Code on negligence in the performance of an obligation
governed by Articles 1170 to 1174 of the Civil Code should apply.
Actions based on contractual negligence and actions based Under Article 1170 of the Civil Code, liability for damages
on quasi-delicts differ in terms of conditions, defenses, and arises when those in the performance of their obligations
proof. They generally cannot co-exist. Once a breach of are guilty of negligence, among others. Negligence here
contract is proved, the defendant is presumed negligent has been defined as "the failure to observe that degree of
and must prove not being at fault. In a quasi-delict, care, precaution and vigilance that the circumstances just
however, the complaining party has the burden of proving demand, whereby that other person suffers injury."If the
the other party's negligence. law or contract does not provide for the degree of diligence
to be exercised, then the required diligence is that of a
However, there are instances when Article 2176 may apply good father of a family.The test to determine a party's
even when there is a pre-existing contractual relation. A negligence is if the party used "the reasonable care and
party may still commit a tort or quasi-delict against caution which an ordinarily prudent person would have
another, despite the existence of a contract between them. used in the same situation" when it performed the
negligent act. If the party did not exercise reasonable care
If a contracting party's act that breaches the contract
and caution, then it is guilty of negligence.
would have given rise to an extra-contractual liability had
there been no contract, the contract would be deemed In this case, both the Regional Trial Court and the Court of
breached by a tort,and the party may be held liable under Appeals found that petitioner was negligent in failing to
Article 2176 and its related provisions adequately report the April 17, 2002 hijacking incident to
respondent and not conducting a thorough investigation
However, if the act complained of would not give rise to a
despite being directed to do so. The trial court's factual
cause of action for a quasi-delict independent of the
findings, when affirmed by the Court of Appeals, are
contract, then the provisions on quasi-delict or tort would
binding on this Court and are generally conclusive.
be inapplicable.
Despite the circumstances which would have cautioned
In situations where the contractual relation is
petitioner to act with care while investigating and reporting
indispensable to hold a party liable, there must be a finding
the hijacking incident, petitioner failed to do so. Petitioner
that the act or omission complained of was done in bad
is responsible for the damages that respondent incurred
faith and in violation of Article 21 of the Civil Code to give
due to the former's negligent performance of its obligation.
rise to an action based on tort.
Here, petitioner denies that it was obliged to disclose the

Basis of Cause of action
facts regarding the hijacking incident since this was not
among the provisions of its Trucking Service Agreement
Sanico, et al. v. Colipano
with respondent. There being no contractual obligation,
G.R. No.209969 | Date Sept. 27, 2017
respondent had no cause of action against petitioner
The obligation to report what happened during the Facts:

hijacking incident, admittedly, does not appear on the Colipano filed a complaint for breach of contract of carriage
plain text of the Trucking Service Agreement. Petitioner and damages against Sanico and Castro. In her complaint,
argues that it is nowhere in the agreement. Respondent Colipano claimed that on December 25, 1993, Christmas
does not dispute this claim. Neither the Regional Trial Day, she and her daughter were paying passengers in the
Court nor the Court of Appeals relied on the provisions of jeepney operated by Sanico, which was driven by
the Trucking Service Agreement to arrive at their Castro.Colipano claimed she was made to sit on an empty
respective conclusions. Breach of the Trucking Service beer case at the edge of the rear entrance/exit of the
Agreement was neither alleged nor proved. jeepney with her sleeping child on her lap. And, at an uphill
incline in the road to Natimao-an, Carmen, Cebu, the
jeepney slid backwards because it did not have the power
to reach the top. Colipano pushed both her feet against contravened the tenor of his obligation to safely transport
the step board to prevent herself and her child from being Colipano from the place of departure to the place of
thrown out of the exit, but because the step board was destination as far as human care and foresight can
wet, her left foot slipped and got crushed between the step provide, using the utmost diligence of very cautious
board and a coconut tree which the jeepney bumped, persons, and with due regard for all the circumstances.
causing the jeepney to stop its backward movement.
Colipano's leg was badly injured and was eventually Sanico's attempt to evade liability by arguing that he
amputated. exercised extraordinary diligence when he hired Castro,
who was allegedly an experienced and time-tested driver,
Petitioner’s Argument/s: (LOST) whom he had even accompanied on a test-drive and in
Sanico and Castro admitted that Colipano's leg was whom he was personally convinced of the driving skills,
crushed and amputated but claimed that it! was Colipano's are not enough to exonerate him from liability — because
fault that her leg was crushed. They admitted that the the liability of common carriers does not cease upon proof
jeepney slid backwards because the jeepney lost power. that they exercised all the diligence of a good father of a
The conductor then instructed everyone not to panic but family in the selection and supervision of their employees.
Colipano tried to disembark and her foot got caught in
Lastly, The Supreme Court used the following formula in
between the step board and the coconut tree. Sanico
computing the loss of earning capacity of Werherlina. Net
claimed that he paid for all the hospital and medical
earning capacity = Life expectancy x [Gross Annual
expenses of Colipano, and that Colipano eventually freely
Income - Living Expenses (50% of gross annual income)],
and voluntarily executed an Affidavit of Desistance and
where life expectancy = 2/3 (80-the age of the deceased).
Release of Claim.
By virtue of their negligence, defendants-appellants are
Respondent’s Arguments: (WON) liable to pay Werherlina, as her legs were crushed by the
Colipano posited that there was a breach of contract of incident, compensatory damages for loss of earning
carriage against Sanico and Castro. capacity, aside from actual damages and interest.
Ruling of the lower court: Civil Action Based on Law or Contract

Both the trial court and the appellate court ruled in favor
of Colipano. People v. Go
G.R. No. 210816 | Date: Dec 10, 2018
Issue:
Facts
Whether Sanico is liable for damages for breach of contract On June 20, 2008, M/V Princess of the Stars (MV Stars), a
of carriage - YES passenger cargo owned and operated by Sulpicio Lines,
Inc. (SLI), was expected to depart at 8:00 p.m. from the
Rule: Port of Manila for Cebu City.
ART. 1170. Those who in the performance of their
obligations are guilty of fraud, negligence, or delay, and PAGASA issued Storm Warning Signal No. 1 over Romblon,
those who in any manner contravene the tenor thereof, Marinduque, Southern Quezon, Cebu, Bohol, Panay Island,
are liable for damages. and Surigao del Norte.
With this, Captain Eugenio, SLI Manila Port Captain, met
Application:
with Captain Marimon, Master of the vessel, at SLI's
Common carriers may also be liable for damages when
Engineering Office for a pre-departure conference to
they contravene the tenor of their obligations, see Art.
discuss about the storm warning.
1170 above. In Magat v. Medialdea, the Court ruled: "The
phrase 'in any manner contravene the tenor' of the
Prior to MV Star’s departure, PH Coast Guard (PCG)
obligation includes any illicit act or omission which impairs
boarded the vessel to inspect its documents and conduct
the strict and faithful fulfilment of the obligation and every
verification, the soundness and sufficiency of the cargo
kind of defective performance." There is no question here
hold, the life saving devices, and all the navigational lights.
that making Colipano sit on the empty beer case was a
clear showing of how Sanico contravened the tenor of his
Captain Marimon showed the PCG officer a new voyage
obligation to safely transport Colipano from the place of
plan and explained that he would navigate the route west
departure to the place of destination as far as human care
of Tablas below Panay Island which would not be affected
and foresight can provide, using the utmost diligence of
by the storm – this was approved by the PCG.
very cautious persons, and with due regard for all the
circumstances.
After obtaining clearance, MV Stars departed, and it had a
total of 849 persons on board.
There is no question here that making Colipano sit on the
empty beer case was a clear showing of how Sanico
As MV Stars sailed and went on, the vessel was within the movement of Stars on June 20, 2008 was a matter that
vicinity of Aklan Point where it was caught in the certain of could be better appreciated by the trial court. He declared
Typhoon Frank. that when the DOJ Panel recommended the filing of
information against respondent for reckless imprudence, it
After hours of going through strong wind and big waves, merely found probable cause that a crime had been
Captain Marimon had given the order to abandon ship. committed and that respondent was probably guilty
thereof, which finding was not tantamount to a declaration
Continuously pounded by heavy waves and buffeted by of guilt.
strong winds, Stars eventually capsized and sank.
CA: CA found erroneous the finding of the DOJ Panel that
Of the 849 persons on board, only 32 survived, 227 died respondent was criminally liable for not instructing the
and 592 were reported missing. vessel to seek shelter or drop anchor in the face of the
storm because there was not a shred of evidence from
Petitioner’s Argument – WON which such power to decide matters pertaining to the
It was established that respondent (VP for Admin of vessel's navigation could be inferred. It observed that the
Sulpicio Lines) was remiss in his responsibilities as an DOJ Panel did not cite any law or regulation that grants an
officer of SLI; that respondent failed to exercise administrative officer of a company operating a vessel the
extraordinary care and precaution in securing the safety of power to direct the vessel at sea and requires him to so
the passengers, among others, when he admittedly act in times of emergency. Thus, the CA concluded that
allowed Captain Marimon, Captain Eugenio and Engineer the charge for reckless imprudence against respondent
Ernelson Morales to decide among themselves on whether must be dismissed as the latter's constitutional right to due
to permit the vessel to depart or not, notwithstanding the process and the higher interest of substantial justice must
severe weather condition at that time. prevail over adherence to the policy of non-interference on
the executive prerogatives of the DOJ. = basically CA said
Respondent did not even dictate upon Captain Marimon to you cannot make the respondent-shipowner criminally
cancel or discourage the voyage of the vessel or to take liable; but of course CA is wrong here.
shelter or drop anchor in order not to come face to face
with the eye of the typhoon; and that the determination Issue:
and appreciation of respondent's culpability for the crime Whether the respondent-shipowner can be held civilly AND
charged are better left to the trial court's assessment. criminally liable? YES, both civil and criminal case may be
filed against respondent.
Respondent’s Argument – LOST
Respondent counters that in a reckless imprudence case Rule:
involving a common carrier, it is the captain who should Shipowner's liability based on the contract of carriage is
be subjected to criminal culpability as he is in the best separate and distinct from the criminal liability of those
position to determine the best measures to be taken for who may be found negligent.
the protection of the passengers, crew, vessel and its
cargo, a land-based person far removed from the Under Article 1755 of the Civil Code, a common carrier is
situation, is unaware of the circumstances confronting the bound to carry the passengers safely as far as human care
voyage. and foresight can provide using the utmost diligence of
very cautious persons with due regard for all the
The liability of the common carrier or shipowner is merely circumstances. Moreover, under Article 1756 of the Civil
civil in nature even if the accident results in the death or Code, in case of death or injuries to passengers, a common
injury of passengers, and even when the negligence of the carrier is presumed to have been at fault or to have acted
shipowner concurs with the negligence of the captain. The negligently, unless it proves that it observed extraordinary
ship captain is the one in control, being the one actually in diligence.
the open sea with direct first-hand knowledge of the
running condition of his vessel and the actual wind and sea In addition, pursuant to Article 1759 of the same Code, it
conditions prevailing at any given time affecting the is liable for the death of, or injuries to passengers through
voyage. the negligence or willful acts of the former's employees.
These provisions evidently refer to a civil action based not
Basically, respondent is saying that the shipowner is may on the act or omission charged as a felony in a criminal
only be civilly liable, but not criminally liable. case, but to one based on an obligation arising from other
sources, such as law or contract. Thus, the obligation of
Ruling of the Lower Court: the common carrier to indemnify its passenger or his heirs
DOJ: The DOJ Secretary ruled that there was sufficient for injury or death arises from the contract of carriage
evidence to warrant respondent's indictment and that the entered into by the common carrier and the passenger.
issue on whether or not respondent was responsible in the
On the other hand, "the essence of the quasi offense of They bought Business Class tickets for Manila to Sydney
criminal negligence under Art. 365 of the RPC lies in the via Hong Kong and back. They changed their minds,
execution of an imprudent or negligent act that, if however, and decided to upgrade to First Class.
intentionally done, would be punishable as a felony. The
law penalizes the negligent or careless act, not the result Petitioner admits that First Class tickets were issued to
thereof. The gravity of the consequence is only taken into respondents, but clari3es that the tickets were open-dated
account to determine the penalty; it does not qualify the (waitlisted). 20 There was no showing whether the First
substance of the offense." Class tickets issued to Sps. Lopez and Sps. Fugoso were
open-dated or otherwise, but it appears that they were
Consequently, in criminal cases for reckless imprudence, able to Ey First Class on all the segments of the trip, while
the negligence or fault should be established beyond respondents were not.
reasonable doubt because it is the basis of the action,
whereas in breach of contract, the action can be On 25 October 1993, respondents queued in front of the
prosecuted merely by proving the existence of the contract First Class counter in the airport. They were issued
and the fact that the common carrier failed to transport his boarding passes for Business Class seats on board CX 902
passenger safely to his destination. bound for Hong Kong from Manila and Economy Class
seats on board CX 101 bound for Sydney from Hong Kong.
The first (criminal case) punishes the negligent act, with They only discovered that they had not been given First
civil liability being a mere consequence of a finding of guilt, Class seats when they were denied entry into the First
whereas the second (breach of contract) seeks Class lounge. Respondent Fuentebella went back to the
indemnification for damages. Moreover, the first is check-in counter to demand that they be given First Class
governed by the provisions of the RPC, and not by those seats or at the very least, access to the First Class Lounge.
of the Civil Code. Thus, it is beyond dispute that a civil He recalled that he was treated by the ground staff in a
action based on the contractual liability of a common discourteous, arrogant and rude manner. He was allegedly
carrier is distinct from an action based on criminal told that the plane would leave with or without them. Both
negligence. the trial court and the CA gave credence to the testimony
of respondent Fuentebella.
Application
In this case, the criminal action instituted against the During trial, petitioner offered the transcript of the
respondent involved exclusively the criminal and civil deposition of its senior reservation supervisor, Nenita
liability of the latter arising from his criminal negligence as Montillana. She said that based on the record locator,
responsible officer of SLI. It must be emphasized that respondents had confirmed reservations for Business Class
there is a separate civil action instituted against SLI based seats for the Manila-Hong Kong, Sydney-Hong Kong, and
on culpa contractual incurred by it due to its failure to carry Hong Kong-Manila Eights; but the booking for Business
safely the passengers of MV Star to their place of Class seats for the Hong Kong-Sydney leg was "under
destination. request;" and due to the flight being full, petitioner was
not able to approve the request.
The civil action against a shipowner for breach of contract Petitioner’s Argument/s:
of carriage does not preclude criminal prosecution While respondents expressed their desire to travel First
against its employees whose negligence resulted in the Class, they could not be accommodated because they had
death of or injuries to passengers. failed to confirm and the sections were full on the date and
time of their scheduled and booked Eights. Petitioner also
Interests of the injured party denied that its personnel exhibited arrogance in dealing
with respondents; on the contrary, it was allegedly
Cathay Pacific Airways, Ltd. v. Sps. Fuentebella respondent Fuentebella who was hostile in dealing with the
G.R. No. 188283 | July 20, 2016 ground staff.
Facts: Galvez-Leonio testified that it was company policy not to

In 1993, the Speaker of the House authorized engage passengers in debates or drawn-out discussions,
Congressmen Arnulfo Fuentebella (respondent but to address their concerns in the best and proper way.
Fuentebella), Alberto Lopez (Cong. Lopez) and Leonardo She admitted, however, that she had no personal
Fugoso (Cong. Fugoso) to travel on of3cial business to knowledge of compliance in airports other than NAIA.
Sydney, Australia, to confer with their counterparts in the LOST
Australian Parliament from 25 October to 6 November
1993 Respondent’s Arguments:
During transit through the Hong Kong airport on 25
October 1993, they were treated with far less respect and
courtesy by the ground staff. In fact, the first employee
they approached completely ignored them and turned her familiar with the concept of open-dated tickets. Petitioner
back on them. The second one did not even give them any attempts to draw a parallel with Sarreal, Jr. v. JAL, in which
opportunity to explain why they should be given First Class this Court ruled that the airline could not be faulted for the
seats, but instead brushed aside their complaints and told negligence of the passenger, because the latter was aware
them to just fall in line in Economy Class. The third of the restrictions carried by his ticket and the usual
employee they approached shoved them to the line for procedure for travel. In that case, though, records showed
Economy Class passengers in front of many people. that the plaintiff was a well-travelled person who averaged
two trips to Europe and two trips to Bangkok every month
They narrated that their trip from Hong Kong to Sydney, for 34 years. In the present case, no evidence was
they were squeezed into very narrow seats for eight and a presented to show that respondents were indeed familiar
half hours and, as a result, they felt groggy and miserable with the concept of open-dated tickets. In fact, the tickets
upon landing. They were able to travel First Class for their do not even contain the term "opendated."
trip from Sydney to Hong Kong on 30 October 1993. 2) As found by the trial and the appellate courts, the
However, on the last segment of the itinerary from Hong petitioner had acted in bad faith. SC found no reason to
Kong to Manila on 2 November 1993, they were issued disturb the finding of the trial court that the inattentiveness
boarding passes for Business Class. WON and rudeness of the ground staff were gross enough to
amount to bad faith. The bad faith in the present case is
Ruling of the lower court: even more pronounced because petitioner's ground staff
It identified the ticket as a contract of adhesion as it found physically manhandled the passengers by shoving them to
that respondents had entered into the contract because of the line, after another staff had insulted them by turning
the assurance that they would be given First Class seats. her back on them. However, the award of P5 million as
It ordered the petitioner to pay P5 million as moral moral damages is excessive, considering that the highest
damages, P1 million as exemplary damages, and P500,000 amount ever awarded by this Court for moral damages in
as attorney's fees. cases involving airlines is P500,000. The amount of
The CA affirmed the RTC Decision with the modi3cation P500,000 as moral damages is reasonable to obviate the
that the attorney's fees be reduced to P100,000. The CA moral suffering that respondents have undergone. With
affirmed the RTC Decision with the modi3cation that the regard to exemplary damages, jurisprudence shows that
attorney's fees be reduced to P100,000. P50,000 is sufficient to deter similar acts of bad faith
attributable to airline representatives.
Issue:
1) WON there was a breach of contract. YES Application of rule on Substitution
2) WON there is basis for the award of moral and
exemplary damages. YES Sulpicio Lines, Inc. v. Sesante, et al.,
G.R. No. 172682 | July 27, 2016
Rule:
In Air France v. Gillego, SC ruled that in an action based Facts:
on a breach of contract of carriage, the aggrieved party
does not have to prove that the common carrier was at The M/V Princess of the Orient, a passenger vessel owned
fault or was negligent; all that he has to prove is the and operated by the Sulpicio, sank near Fortune Island in
existence of the contract and the fact of its Batangas. Of the 388 recorded passengers, 150 were lost.
nonperformance by the carrier. Napoleon Sesante was one of the passengers who survived
the sinking. He sued the petitioner for breach of contract
Damages may be awarded only when the breach is wanton and damages.
and deliberately injurious, or the one responsible had
acted fraudulently or with malice or bad faith. Bad faith is Respondent’s Arguments: (WON)
a question of fact that must be proven by clear and
convincing evidence. Sesante alleged that the M/V Princess of the Orient had
committed bad faith in allowing the vessel to sail despite
Application: the storm signal. He reiterated how he had managed to
1) SC accorded respect to the factual findings of the trial stay afloat after the vessel had sunk, and had been carried
and appellate courts-- that respondents were entitled to by the waves to the coastline of Cavite and Batangas until
First Class accommodations under the contract of carriage he had been rescued; that he had suffered tremendous
and that petitioner failed to perform its obligation. hunger, thirst, pain, fear, shock, serious anxiety and
mental anguish; that he had sustained injuries (recovery
Petitioner tries to downplay the factual finding that no of damages for an injury to person) and had lost money,
explanation was given to respondents with regard to the jewelry, important documents, police uniforms and the .45
types of ticket that were issued to them. It ventured that
respondents were seasoned travelers and therefore
caliber pistol issued to him by the PNP (recovery of The application of the rule on substitution depends on
personal property.) whether or not the action survives the death of the litigant.
Section 1, Rule 87 of the Rules of Court enumerates the
Petitioner’s Argument/s: (LOST) following actions that survive the death of a party,
namely:
Sulpicio insisted on the seaworthiness of the M/V Princess (1) recovery of real or personal property, or an interest
of the Orient due to its having been cleared to sail from from the estate;
the Port of Manila by the proper authorities; that the (2) enforcement of liens on the estate; and
sinking had been due to force majeure; that it had not (3) recovery of damages for an injury to person or
been negligent; and that its officers and crew had also not property.
been negligent because they had made preparations to
abandon the vessel because they had launched life rafts On the one hand, Section 5, Rule 86 of the Rules of Court
and had provided the passengers assistance in that regard. lists the actions abated by death as including:
(1) claims for funeral expenses and those for the last
Ruling of the lower court: sickness of the decedent;
(2) judgments for money; and
RTC rendered its judgment in favor of the Sesante and (3) all claims for money against the deceased, arising from
observed that the Sulpicio being negligent, was liable to contract, express or implied.
Sesante pursuant to Articles 1739 and 1759 of the Civil
Code; that the petitioner had not established its due A contract of carriage generates a relation attended with
diligence in the selection and supervision of the vessel public duty, neglect or malfeasance of the carrier's
crew; that the ship officers had failed to inspect the employees and gives ground for an action for damages.
stowage of cargoes despite being aware of the storm
signal; that the officers and crew of the vessel had not Application:
immediately sent a distress signal to the Philippine Coast Sesante's claim against the petitioner involved his
Guard; that the ship captain had not called for then personal injury caused by the breach of the contract of
"abandon ship" protocol; and that based on the report of carriage. Pursuant to the aforecited rules, the complaint
the Board of Marine Inquiry (BMI), the erroneous survived his death, and could be continued by his heirs
maneuvering of the vessel by the captain during the following the rule on substitution.
extreme weather condition had been the immediate and
proximate cause of the sinking. Class suit/Joinder of parties
The CA promulgated its assailed decision as it lowered the Re: Request of the Plaintiffs, Heirs of the
temperate damages at approximated the cost of Sesante's Passengers of the Doña Paz to Set Aside Order
lost personal belongings and held that despite the dated Jan. 4, 1988 of Judge B.D. Chingcuangco
seaworthiness of the vessel, the petitioner remained civilly A.M. No. 88-1-646-0 | Date: March 3, 1988
liable because its officers and crew had been negligent in
performing their duties. Facts:
On 4 January 1988, a complaint for damages amounting
While the case was pending (not specified when), Sesante to more than one a half billion pesos was filed in the name
died and was substituted by his heirs. and behalf of the relatives/heirs of the victims of “the
worst sea disaster in history.”
Issue:
WON complaint for breach of contract and damages a The complaint was characterized the action thereby
personal action survive the death of the plaintiff. instituted as a “class suit,” prosecuted by the twentyseven
(27) named plaintiffs on their behalf and in presentation
Rule: of the approximately 4,000 persons who are all close
Yes. An action for breach of contract of carriage survives relatives and legal heirs of the passengers of Dona Paz.
the death of the plaintiff
Petitioner’s Argument/s (LOST):
In Sarsaba v. Vda. de Te, Substitution by the heirs is ● Petitioners (close relatives/legal heirs of the
not a matter of jurisdiction, but a requirement of due passengers of Dona Paz) contended that such
process. It protects the right of due process belonging to complaint is a class suit because "the subject
any party, that in the event of death the deceased litigant matter is of general or common interest to 4,000
continues to be protected and properly represented in the persons, more or less, all of whom are residing
suit through the duly appointed legal representative of his variously in Samar, Leyte and Metro Manila and
estate. its institution is proper because the Identified
plaintiffs are sufficiently numerous and to litigate as pauper litigants, and consider the
representative to fully protect the interests of all.” case as a class suit."
● [Additional Facts, not related to the topic but Sir
might ask] The plaintiffs also filed a Motion for Issue:
Leave to File Case as Pauper Litigant. 1. W/N the complaint may be characterized as
○ They alleged that "a big majority ... (of a class suit. (NO)
them) are poor and have no sufficient 2. W/N the plaintiffs may be allowed to litigate as
means to finance the filing of this case pauper litigants. (NO)
especially because, considering the
gargantuan amount of damages Rule: In such a class suit, there is one, single right of
involved, the amount of filing fee alone actio pertaining to numerous stockholders, not multiple
will run to several thousands of pesos," rights belonging separately to several, distinct persons. On
that in view thereof and the fact that the the other hand, it is a joinder of parties if there are many
case was one of "national concern as persons who have distinct, separate rights against the
shown by the public outcry and same party or group of parties, but those rights arise from
sustained publicity that it has evoked, the same transaction or series of transactions and there
the Court may be justified in allowing are common questions of fact or law resulting therefrom.
them to file the instant suit as pauper
litigants or, in the alternative, (ruling) Application:
that the legal fees incident to the filing SC ruled that it is not the rule governing class suits under
of this case may constitute a lien on Section 12, Rule 3 of the Rules of Court that in truth is
whatever judgment may be recovered involved in the proceedings at bar, but that concerning
by the plaintiffs therein. permissive joinder of parties in Section 6 of the same Rule
3.
Respondent’s Arguments:
● The respondents (Sulpicio Lines, Inc., et al.) point What is contemplated in a Class Suit is that: (a) the
out that there were only 1,493 passengers on subject matter in controversy is of common or general
board the Doña Paz at the time of the tragedy, interest to many persons; and (b) those persons are so
and not 4,000. numerous as to make it impracticable to bring them all
● It is doubtful whether 27 plaintiffs are sufficiently before the court. Illustrative of the rule is a so-called
numerous and representative to fully protect the derivative suit brought on behalf of numerous stockholders
interests of all the suit preempts the other of a corporation to perpetually enjoin or nullify what is
claimants' cause of action as to the amount of claimed to be a breach of trust or an ultra vires act of the
recovery and as to the venue of the suit. company's board of directors. In such a suit, there is
● There are in truth only seven plaintiffs qualified one, single right of action pertaining to numerous
to sue as pauper litigants; and the claimants not stockholders, not multiple rights belonging
authorized to sue as paupers may continue with separately to several, distinct persons.
the action.
On the other hand, it has been held that employees
Ruling of the lower court: dismissed by their employer on the same occasion for
● Judge Chingcuangco of RTC-QC did not rule on substantially the same reasons, allegedly without cause or
the propriety of the class suit. In his order, he justification, may join as plaintiff in a single action to
said that he had opted to leave "to the sound obtain relief from their employer. In such a case, the
judgment of the branch to which this case may plaintiff each has a material interest only in the damages
be raffled," properly due to him, not in those that may be payable to
● As to the issue on pauper litigants, the judge the others, although their rights thereto arise from the
posited that he "would have freely allowed all same transaction. Thus, there are as many rights of
plaintiffs to litigate as pauper litigants and close action as there are plaintiffs joined in the action.
... (his) eyes to the fact that one of them is the
present Clerk of this Court and another regional It is true that in both juridical situations, similar essential
trial court judge;"and that he had 'suggested to factors exist i.e., the same transaction or series of
the plaintiffs' counsel to seek the assistance of transactions is involved; and common questions of fact or
the highest tribunal of the land with the fond hope law are at issue. What makes the situation a proper case
that it may once again exercise its highly- for a class suit is the circumstance that there is only one
regarded judicial activism by allowing that which right or cause of action pertaining or belonging in common
this Executive Judge cannot do, that is, allow, in to many persons, not separately or severally to distinct
the highest interest of public service, all plaintiffs individuals.
The other factor that serves to distinguish the rule on class • CDCP argues that BLTB and its driver should be held
suits from that of permissive joinder of parties is, of SOLELY liable for the damages sustained by Estrella and
course, the numerousness of parties involved in the her granddaughter
former. The rule is that for a class suit to be allowed, it is
needful inter alia that the parties be so numerous that it • CDCP claims that the liability for actual damages and
would be impracticable to bring them all before the court. attorney's fees is based on culpa contractual, thus, only
BLTB should be held liable.
The case at bar not being a proper one for a class suit, it
follows that the action may not be maintained by a Respondent’s Arguments:
representative few on behalf of all the others. Be all this • CDCP is also at fault.
as it may, as regards the computation of the amount
involved in the action for purposes of determining the • There may be an action arising out of one incident where
original jurisdiction over it, and the correlative matter of questions of fact are common to all. Action based on culpa
the amount of filing fees to be paid, it is immaterial aquiliana in the civil suit is valid.
whether the rule applied be that on class suits or
permissive joinder of parties. For in either case, it is the Ruling of the lower court:
totality of the amounts claimed by or against the parties As to BLTB: BLTB was bound to observe extraordinary
that determines jurisdiction, exclusive only of interest and diligence over the safety of its passengers. It must carry
costs. the passengers safely as far as human care and foresight
provide, using the utmost diligence of very cautious
[Pauper Litigants] persons, with a due regard for all the circumstances. Thus,
SC held that every would be litigant who seeks exemption where a passenger dies or is injured, the carrier is
from the payment of the fees prescribed for maintaining presumed to have been at fault or has acted negligently.
an action must establish, not simply allege, his lack of BLTB's inability to carry respondents to their destination
means Where there is a multiplicity of such parties, each gave rise to an action for breach of contract of carriage
must show such lack, in propria persona as it were. And while its failure to rebut the presumption of negligence
that the particular circumstances or possible consequences made it liable to respondents for the breach.
of an actual or contemplated suit are such as to transcend
the narrow personal interests of the immediate parties As to CDCP: The tractor-truck it owned bumped the BLTB
thereto and to so impinge upon the wider interests of the bus from behind. Evidence showed that CDCP's driver was
people at large as to assume an aspect of "national reckless and driving very fast at the time of the incident.
importance," does not under any existing law or rule justify The gross negligence of its driver raised the presumption
excusing such parties from paying the requisite judicial that CDCP was negligent either in the selection or in the
fees or costs. supervision of its employees, which it failed to rebut thus
making it and its driver liable to respondents.
Solidary Liability
Issue:
Construction Development Corp. of the Phil. v. Can CDCP be held liable for the negligence of its driver in
Estrella, et al., ramming the BLTB bus? - YES, it is liable as employer
G.R. No. 147791 | Date September 8, 2006 of the tractor-truck driver that rammed the bus.
Facts: Rule:
• Rebecca Estrella and her granddaughter Rachel Fletcher The case filed by respondents against petitioner is an
boarded a BLTB bus bound for Pasay, which never reached action for culpa aquiliana or quasi-delict under Article
destination, because it was rammed from behind by a 2176 of the Civil Code. In this regard, Article 2180
tractor-truck owned by Construction Development Corp of provides that the obligation imposed by Article 2176 is
the Philippines (CDCP). The impact caused them to be demandable for the acts or omissions of those persons for
pinned to the seats in front of them and sustain injuries. whom one is responsible. Consequently, an action based
on quasi-delict may be instituted against the employer for
• They fined a complaint against CDCP, BLTB and the an employee's act or omission. The liability for the
drivers of the bus and tractor. They allege that the drivers negligent conduct of the subordinate is direct and primary,
did not obey the traffic laws, that both companies did not but is subject to the defense of due diligence in the
exercise the diligence of a good father of a family in the selection and supervision of the employee.
selection and supervision of employees, and that BLTB
allowed its bus to operate despite proper maintenance. In a "joint" obligation, each obligor answers only for a part
of the whole liability; in a "solidary" or "joint and several"
Petitioner’s Argument/s: obligation, the relationship between the active and the
passive subjects is so close that each of them must comply arrived on the same date.
with or demand the fulfillment of the whole obligation.
Columbia engaged the services of Glodel for the release
Application: and withdrawal of the cargoes from the pier and the
· CDCP failed to prove that it exercised the subsequent delivery to its warehouses/plants. Glodel, in
diligence of a good father of a family in the turn, engaged the services of Loadmasters for the use of
selection and supervision of its driver. its delivery trucks to transport the cargoes to Columbia's
warehouses/plants in Bulacan and Valenzuela City.
· The owner of the other vehicle, which collided
with a common carrier, is solidarily liable to the One (1) truck, loaded with 11 bundles or 232 pieces of
injured passenger of the same. copper cathodes, failed to deliver its cargo. Later on, the
said truck, an Isuzu with Plate No. NSD-117, was
· Nor should it make any difference that the liability recovered but without the copper cathodes. Because of
of petitioner [bus owner] springs from contract this incident, Columbia filed with R&B Insurance a claim
while that of respondents [owner and driver of for insurance indemnity in the amount of P1,903,335.39.
other vehicle] arises from quasi-delict. After the requisite investigation and adjustment, R&B
Insurance paid Columbia the amount of P1,896,789.62 as
· In case of injury to a passenger due to the insurance indemnity.
negligence of the driver of the bus on which he
was riding and of the driver of another vehicle, R&B insurance filed complaint for damages from Glodel
the drivers as well as the owners of the two and Loadmasters seeking reimbursement of the amount
vehicles are jointly and severally liable for paid to Columbia for the loss of the subject cargo. It
damages claimed that it had been subrogated "to the right of the
consignee to recover from the party/parties who may be
· It was permitted for them to allege alternative held legally liable for the loss."
causes of action and join as many parties as may
be liable on such causes of action so long as they Petitioner’s Contention (LOST):
do not recover twice for the same injury. To totally exculpate itself from responsibility for the lost
goods, Loadmasters argues that it cannot be considered
· Joint tortfeasors are jointly and severally liable an agent of Glodel because it never represented the latter
for the tort which they commit. The persons in its dealings with the consignee.
injured may sue all of them or any number less
than all. Each is liable for the whole damages Loadmasters also argues that it was never privy to the
caused by all, and all together are jointly liable contract entered into by Glodel with the consignee
for the whole damage. It is no defense for one Columbia or R&B Insurance as subrogee.
sued alone, that the others who participated in
the wrongful act are not joined with him as Respondent’s Contention (LOST – Glodel ; WON –
defendants; nor is it any excuse for him that his R&B Insurance):
participation in the tort was insignificant as Glodel counters that Loadmasters is liable to it under its
compared to that of the others. . . . cross-claim because the latter was grossly negligent in the
transportation of the subject cargo.
· Joint tort feasors are not liable pro rata. The
damages cannot be apportioned among them, Ruling of the lower court: Appellee Loadmasters is
except among themselves. They cannot insist likewise held liable to appellant Glodel in the amount of
upon an apportionment, for the purpose of each P1,896,789.62 representing the insurance indemnity
paying an aliquot part. They are jointly and appellant Glodel has been held liable to appellant R&B
severally liable for the whole amount. . . . Insurance Corporation.
Loadmasters Customs Services, Inc. v. Glodel Issue: Is Loadmasters jointly and severally liable with
Brokerage Corp., et al., Glodel to reimburse R&B Insurance? (YES)
G.R. No. 179446 | January 10, 2011
Rule:
Facts: ● Under Article 2194 of the New Civil Code, "the
R&B Insurance issued Marine Policy No. MN-00105/2001 responsibility of two or more persons who are
in favor of Columbia to insure the shipment of 132 bundles liable for a quasi-delict is solidary.”
of electric copper cathodes against All Risks. The cargoes ● Subrogation is the substitution of one person in
were shipped on board the vessel "Richard Rey" from the place of another with reference to a lawful
Isabela, Leyte, to Pier 10, North Harbor, Manila. They claim or right, so that he who is substituted
succeeds to the rights of the other in relation to TMBI — who did not own any delivery trucks —
a debt or claim, including its remedies or subcontracted the services of Benjamin Manalastas'
securities. company, BMT Trucking Services (BMT), to transport the
● ART. 2176. Whoever by act or omission causes shipment from the port to the Biñan warehouse.
damage to another, there being fault or Incidentally, TMBI notified Sony who had no objections to
negligence, is obliged to pay for the damage the arrangement
done. Such fault or negligence, if there is no pre-
existing contractual relation between the parties, Four BMT trucks picked up the shipment from the port at
is called a quasi-delict and is governed by the about 11:00 a.m. of October 7, 2000. However, BMT could
provisions of this Chapter. not immediately undertake the delivery because of the
● ART. 2180. The obligation imposed by Article truck ban and because the following day was a Sunday.
2176 is demandable not only for one's own acts Thus, BMT scheduled the delivery on October 9, 2000.
or omissions, but also for those of persons for
whom one is responsible. In the early morning of October 9, 2000, the four trucks
left BMT's garage for Laguna. However, only three trucks
Application: arrived at Sony's Biñan warehouse.
Premises considered, the Court is of the view that both At around 12:00 noon, the truck driven by Rufo Reynaldo
Loadmasters and Glodel are jointly and severally liable to Lapesura (NSF-391) was found abandoned along the
R & B Insurance for the loss of the subject cargo. Diversion Road in Filinvest, Alabang, Muntinlupa City. Both
the driver and the shipment were missing.
It is not disputed that the subject cargo was lost while in
the custody of Loadmasters whose employees (truck driver Later that evening, BMT's Operations Manager Melchor
and helper) were instrumental in the hijacking or robbery Manalastas informed Victor Torres, TMBI's General
of the shipment. As employer, Loadmasters should be Manager, of the development. They went to Muntinlupa
made answerable for the damages caused by its together to inspect the truck and to report the matter to
employees who acted within the scope of their assigned the police.
task of delivering the goods safely to the warehouse.
TMBI notified Sony of the loss through a letter dated
Glodel is also liable because of its failure to exercise October 10, 2000. 11 It also sent BMT a letter dated March
extraordinary diligence. It failed to ensure that 29, 2001, demanding payment for the lost shipment. BMT
Loadmasters would fully comply with the undertaking to refused to pay, insisting that the goods were "hijacked."
safely transport the subject cargo to the designated
destination. It should have been more prudent in In the meantime, Sony was able to claim for insurance on
entrusting the goods to Loadmasters by taking the value of the goods from Mitsui.
precautionary measures, such as providing escorts to After being subrogated to Sony's rights, Mitsui sent TMBI
accompany the trucks in delivering the cargoes. Glodel a demand letter dated August 30, 2001 for payment of the
should, therefore, be held liable with Loadmasters. lost goods. TMBI refused to pay Mitsui's claim. Thus it filed
a complaint against TMBI.
Each wrongdoer is liable for the total damage suffered by TMBI on the other hand, impleaded BMT as a third-party
R&B Insurance. Where there are several causes for the defendant.
resulting damages, a party is not relieved from liability,
even partially. It is sufficient that the negligence of a party At the trial, it was revealed that BMT and TMBI have been
is an efficient cause without which the damage would not doing business with each other since the early 80's. It also
have resulted. came out that there had been a previous hijacking incident
involving Sony's cargo in 1997, but neither Sony nor its
Torres-Madrid Brokerage, Inc. v. FEB Mitsui Marine insurer filed a complaint against BMT or TMBI
Insurance Co., Inc., et al
G.R. No. 194121 | Date July 11, 2016 The RTC found TMBI and BMT jointly and solidarily liable
to pay Mitsui, holding that TMBI and MBT were common
Facts: carriers and acted negligently.
On October 7, 2000, a shipment of various electronic
goods from Thailand and Malaysia arrived at the Port of Petitioner’s Argument/s: (LOST)
Manila for Sony Philippines, Inc. (Sony). Previous to the TMBI denies being a common carrier because it does not
arrival, Sony had engaged the services of TMBI to own a single truck to transport its shipment and it does
facilitate, process, withdraw, and deliver the shipment not offer transport services to the public for compensation.
from the port to its warehouse in Biñan, Laguna. It emphasizes that Sony knew TMBI did not have its own
vehicles and would subcontract the delivery to a third-
party.
Further, TMBI now insists that the service it offered was That TMBI does not own trucks and has to subcontract the
limited to the processing of paperwork attendant to the delivery of its clients' goods, is immaterial. As long as an
entry of Sony's goods. It denies that delivery of the entity holds itself to the public for the transport of goods
shipment was a part of its obligation. as a business, it is considered a common carrier regardless
TMBI solely blames BMT as it had full control and custody of whether it owns the vehicle used or has to actually hire
of the cargo when it was lost. BMT, as a common carrier, one.
is presumed negligent and should be responsible for the
loss. The Court disagree with the lower courts' ruling that TMBI
and BMT are solidarily liable to Mitsui for the loss as joint
TMBI also insists that the hijacking of the truck was a tortfeasors. The ruling was based on Article 2194 of the
fortuitous event. Civil Code: The responsibility of two or more persons who
are liable for quasi-delict is solidary.
BMT insists that it observed the required standard of care. Notably, TMBI's liability to Mitsui does not stem from a
Like the petitioner, BMT maintains that the hijacking was quasi-delict (culpa aquiliana) but from its breach of
a fortuitous event — a force majeure — that exonerates it contract (culpa contractual).
from liability. It points out that Lapesura has never been
seen again and his fate remains a mystery. BMT likewise The tie that binds TMBI with Mitsui is contractual, albeit
argues that the loss of the cargo necessarily showed that one that passed on to Mitsui as a result of TMBI's contract
the taking was with the use of force or intimidation. of carriage with Sony to which Mitsui had been subrogated
as an insurer who had paid Sony's insurance claim. The
Respondent’s Arguments: (WON) legal reality that results from this contractual tie precludes
Mitsui counters that neither TMBI nor BMT alleged or the application of quasi-delict based Article 2194.
proved during the trial that the taking of the cargo was
accompanied with grave or irresistible threat, violence, or The Court likewise disagree with the finding that BMT is
force. Hence, the incident cannot be considered "force directly liable to Sony/Mitsui for the loss of the cargo.
majeure" and TMBI remains liable for breach of contract. While it is undisputed that the cargo was lost under the
actual custody of BMT (whose employee is the primary
Mitsui also reasoned that TMBI is a common carrier. suspect in the hijacking or robbery of the shipment), no
direct contractual relationship existed between
Mitsui affirms that TMBI breached the contract of carriage Sony/Mitsui and BMT. If at all, Sony/Mitsui's cause of
through its negligent handling of the cargo, resulting in its action against BMT could only arise from quasidelict, as a
loss. third party suffering damage from the action of another
due to the latter's fault or negligence, pursuant to Article
Ruling of the lower court: 2176 of the Civil Code.
The CA held: (1) that "hijacking" is not necessarily a
fortuitous event because the term refers to the general We have repeatedly distinguished between an action for
stealing of cargo during transit; (2) that TMBI is a common breach of contract (culpa contractual) and an action for
carrier engaged in the business of transporting goods for quasi-delict (culpa aquiliana).
the general public for a fee; (3) even if the "hijacking"
were a fortuitous event, TMBI's failure to observe In culpa contractual, the plaintiff only needs to establish
extraordinary diligence in overseeing the cargo and the existence of the contract and the obligor's failure to
adopting security measures rendered it liable for the loss; perform his obligation. It is not necessary for the plaintiff
and (4) even if TMBI had not been negligent in the to prove or even allege that the obligor's non-compliance
handling, transport and the delivery of the shipment, TMBI was due to fault or negligence because Article 1735
still breached its contractual obligation to Sony when it already presumes that the common carrier is negligent.
failed to deliver the shipment The common carrier can only free itself from liability by
proving that it observed extraordinary diligence. It cannot
Issue: WON TMBI is a common carrier and WON TMBI or discharge this liability by shifting the blame on its agents
BMT is liable for the loss of the cargo. or servants.
On the other hand, the plaintiff in culpa aquiliana must
Rule/Application: clearly establish the defendant's fault or negligence
Despite TMBI's present denials, we find that the delivery because this is the very basis of the action.
of the goods is an integral, albeit ancillary, part of its
brokerage services. TMBI admitted that it was contracted Moreover, if the injury to the plaintiff resulted from the act
to facilitate, process, and clear the shipments from the or omission of the defendant's employee or servant, the
customs authorities, withdraw them from the pier, then defendant may absolve himself by proving that he
transport and deliver them to Sony's warehouse in Laguna.
observed the diligence of a good father of a family to The shipment arrived in Manila on November 3, 2005 and
prevent the damage. was, accordingly, offloaded from the ocean liner and
temporarily stored at the CY Area of the Manila
In the present case, Mitsui's action is solely premised on International Port pending release by the Customs
TMBI's breach of contract. Mitsui did not even sue BMT, Authority. On November 8, 2005, the shipment was
much less prove any negligence on its part. If BMT has caused to be released from the pier by petitioner Keihin-
entered the picture at all, it is because TMBI sued it for Everett and turned over to respondent Sunfreight
reimbursement for the liability that TMBI might incur from Forwarders for delivery to Honda Trading. En route to the
its contract of carriage with Sony/Mitsui. Accordingly, latter's warehouse, the truck carrying the containers was
there is no basis to directly hold BMT liable to Mitsui for hijacked and the container van with Serial No. TEXU
quasi-delict. 389360-5 was reportedly taken away. Although said
container van was subsequently found in the vicinity of the
By subcontracting the cargo delivery to BMT, TMBI entered Manila North Cemetery and later towed to the compound
into its own contract of carriage with a fellow common of the Metro Manila Development Authority (MMDA), it
carrier. appears that the contents thereof were no longer
retrieved. Only the container van with Serial No. GATU
The cargo was lost after its transfer to BMT's custody 040516-3 reached the warehouse. As a consequence,
based on its contract of carriage with TMBI. Following Honda Trading suffered losses in the total amount of
Article 1735, BMT is presumed to be at fault. Since BMT P2,121,917.04, representing the value of the lost 40
failed to prove that it observed extraordinary diligence in bundles of Aluminum Alloy Ingots.
the performance of its obligation to TMBI, it is liable to
TMBI for breach of their contract of carriage. Petitioner’s Argument/s: (LOST)
In these lights, TMBI is liable to Sony (subrogated by Served with summons, petitioner Keihin-Everett denied
Mitsui) for breaching the contract of carriage. In turn, liability for the lost shipment on the ground that the loss
TMBI is entitled to reimbursement from BMT due to the thereof occurred while the same was in the possession of
latter's own breach of its contract of carriage with TMBI. respondent Sunfreight Forwarders. Hence, petitioner
The proverbial buck stops with BMT who may either: (a) Keihin-Everett filed a third-party complaint against the
absorb the loss, or (b) proceed after its missing driver, the latter, who, in turn, denied liability on the ground that it
suspected culprit, pursuant to Article 2181 was not privy to the contract between Keihin-Everett and
Honda Trading. If at all, respondent Sunfreight Forwarders
Keihin-Everett Forwarding Co., Inc. v. Tokio Marine claimed that its liability cannot exceed the P500,000.00
Malayan Insurance Co., Inc. fixed in its Accreditation Agreement with petitioner Keihin-
G.R. No. 212107 | Jan. 28, 2019 Everett.
Facts: Respondent’s Arguments: (WON)
In 2005, Honda Trading Phils. Ecozone Corporation (Honda Claiming to have paid Honda Trading's insurance claim for
Trading) ordered 80 bundles of Aluminum Alloy Ingots the loss it suffered, respondent Tokio Marine commenced
from PT Molten Aluminum Producer Indonesia (PT Molten). the instant suit on October 10, 2006 with the filing of its
PT Molten loaded the goods in two container vans with complaint for damages against petitioner Keihin-Everett.
Serial Nos. TEXU 389360-5 and GATU 040516-3 which Respondent Tokio Marine maintained that it had been
were, in turn, received in Jakarta, Indonesia by Nippon subrogated to all the rights and causes of action pertaining
Express Co., Ltd. for shipment to Manila. to Honda Trading.
Aside from insuring the entire shipment with Tokio Marine Ruling of the lower court:
& Nichido Fire Insurance Co., Inc. (TMNFIC) under Policy
No. 83-00143689, Honda Trading also engaged the RTC rendered a Decision finding petitioner Keihin-Everett
services of petitioner Keihin-Everett to clear and withdraw and respondent Sunfreight Forwarders jointly and
the cargo from the pier and to transport and deliver the severally liable to pay respondent Tokio Marine's claim.
same to its warehouse at the Laguna Technopark in Biñan,
Laguna. Meanwhile, petitioner Keihin-Everett had an The CA modified the ruling of the RTC insofar as the
Accreditation Agreement with respondent Sunfreight solidary liability of Keihin-Everett and Sunfreight
Forwarders whereby the latter undertook to render Forwarders is concerned. The CA went to rule that
common carrier services for the former and to transport solidarity is never presumed. There is solidary liability
inland goods within the Philippines. when the obligation so states, or when the law or the
nature of the obligation requires the same. Thus, because
of the lack of privity between Honda Trading and
Sunfreight Forwarders, the latter cannot simply be held There is solidary liability only when the obligation
jointly and severally liable with Keihin-Everett for Tokio expressly so states, when the law so provides, or when the
Marine's claim as subrogee. In view of the Accreditation nature of the obligation so requires.
Agreement between Keihin-Everett and Sunfreight
Forwarders, the former possesses a right of Damages
reimbursement against the latter for so much of what
Keihin-Everett has paid to Tokio Marine. Cariaga, et al. v. Laguna Tayabas Bus Co., et al.
G.R. No.127768 | December 29, 1960
Issue:
Facts:
Whether or not Keihin-Everett and Sunfreight Forwarders At about 1:00 p.m. on June 18, 1952, Bus No. 133 of the
are solidarily liable. NO. Laguna Tayabas Bus Companyhereinafter referred to as
the LTBdriven by Alfredo Moncada, left its station at
Rule: Azcarraga St., Manila, for Lilio, Laguna, with Edgardo
Cariaga, a fourth-year medical student of the University of
The liability of Keihin-Everett and Sunfreight Forwarders Santos Tomas, as one of its passengers. At about 3:00
are not solidary. There is solidary liability only when the p.m., as the bus reached that part of the poblacion of Bay,
obligation expressly so states, when the law so provides, Laguna, where the national highway crossed a railroad
or when the nature of the obligation so requires. Thus, track, it bumped against the engine of a train then passing
under Article 2194 of the Civil Code, liability of two or more by with such terrific force that the first six wheels of the
persons is solidary in quasi-delicts. But in this case, Keihin- latter were derailed, the engine and front part of the body
Everett's liability to Honda Trading (to which Tokio Marine of the bus were wrecked, the driver of the bus died
had been subrogated as an insurer) stemmed not from instantly, while many of its passengers, Edgardo among
quasi-delict, but from its breach of contract of carriage. them, were severely injured.
Sunfreight Forwarders was only impleaded in the case
when Keihin-Everett filed a third-party complaint against Edgardo was confined to different hospitals (San Pablo City
it. As mentioned earlier, there was no direct contractual Hospital, then to De los Santos Clinic, Question City, then
relationship between Sunfreight Forwarders and Honda to University of Santo Tomas Hospital and back to De los
Trading. Accordingly, there was no basis to directly hold Santos Clinic).
Sunfreight Forwarders liable to Honda Trading for breach
of contract. If at all, Honda Trading can hold Sunfreight The LTB paid the sum of P16.964.45 for all the hospital,
Forwarders for quasi-delict, which is not the action filed in medical and miscellaneous expenses incurred from June
the instant case. 18, 1952 to April 1953. From January 15, 1953 up to April
of the same year Edgardo stayed in a private house in
It is not expected however that Keihin-Everett must Quezon City, the LTB having agreed to give him a
shoulder the entire loss. Keihin-Everett has a right to be subsistence allowance of P10.00 daily during his
reimbursed based on its Accreditation Agreement with convalescence, having spent in this connection the total
Sunfreight Forwarders. By accrediting Sunfreight sum of P775.30 in addition to the amount already referred
Forwarders to render common carrier services to it, to.
Keihin-Everett in effect entered into a contract of carriage
with a fellow common carrier, Sunfreight Forwarders. The present action was then filed to recover for Edgardo
Cariaga, from the LTB and the MER Co., the total sum of
It is undisputed that the cargoes were lost when they were P312,000.00 as actual, compensatory, moral and
in the custody of Sunfreight Forwarders. Hence, under exemplary damages, and for his parents, the sum of
Article 1735 of the Civil Code, the presumption of fault on P18,000.00 in the same concepts.
the part of Sunfreight Forwarders (as common carrier)
arose. Since Sunfreight Forwarders failed to prove that it Petitioner’s Argument/s: LOST
observed extraordinary diligence in the performance of its The Cariagas claim that both LTB and MER Co. should be
obligation to Keihin-Everett, it is liable to the latter for held liable with damages.
breach of contract. Consequently, Keihin-Everett is
entitled to be reimbursed by Sunfreight Forwarders due to After denial with Lower Court, petitioner contends that the
the latter's own breach occasioned by the loss and damage trial court erred: in awarding only P10.490.00 as
to the cargoes under its care and custody. compensatory damages to Edgardo; in not awarding them
actual and moral damages, and in not sentencing appellant
Application: LTB to pay attorney's fees.
Respondent’s Arguments: WON
LTB: The LTB disclaimed liability claiming that the accident defendant herein has not committed in connection with
was due to the negligence of its co-defendant, the Manila this case any 'criminal offense resulting in physical
Railroad Company, for not providing a crossing bar at the injuries'. The one that committed the offense against the
point where the national highway crossed the railway plaintiff is Gregorio Mira, and that is why he has been
track, and for this reason filed the corresponding cross- already prosecuted and punished therefor. Altho (a)
claim against the latter company to recover the total sum owners and Managers of an establishment or enterprise
of P18,194.75 representing the expenses paid to Edgardo are responsible for damages caused by their employees in
Cariaga. the service of the branches which the latter are employed
or on the occasion of their functions; (b) employers are
MER Co.: The Manila Railroad Company, in turn, denied likewise liable for damages caused by their employees and
liability upon the complaint and cross-claim, alleging that household helpers acting within the scope of their assigned
it was the reckless negligence of the bus driver that caused task (Article 218 of the Civil Code); and (c) employers and
the accident. corporations engaged in any kind of industry are
subsidiary civilly liable for felonies committed by their
Ruling of the lower court: employees in the discharge of their duties (Art. 103,
The lower court held that it was the negligence of the bus Revised Penal Code), plaintiff herein does not maintain this
driver that caused the accident and, as a result, rendered action under the provisions of any of the articles of the
judgment sentencing the LTB to pay Edgardo Cariaga the codes just mentioned and against all the persons who
sum of P1O,490.00 as compensatory damages, with might be liable for the damages caused, but as a result of
interest at the legal rate from the filing of the complaint, an admitted breach of contract of carriage and against the
and dismissing the cross-claim against the Manila Railroad defendant employer alone. We, therefore, hold that the
Company. case at bar does not come within the exception of
paragraph 1, Article 2219 of the Civil Code.”
Issue: Whether or not the trial court erred in denying
Edgardo Cariaga's claim for moral damages and attorney's The present complaint is not based either on a 'quasi-delict
fees? NO. causing physical injuries'.
Rule: Victory Liner, Inc. v. Rosalito Gammad, et al.,

Article 2219. Moral damages may be recovered in the G.R. No. 159 636| November 25, 2004
following and analogous cases:
1. A criminal offense resulting in physical
injuries; Facts:
2. Quasi-delicts causing physical injuries; ● Rosalito Gammad show that his wife Marie Grace
3. Seduction, abduction, rape, or other Gammad was on board an air-conditioned Victory
lascivious acts; Liner bus bound for Tuguegarao, Cagayan from
4. Adultery or concubinage; Manila. The bus while running at a high speed fell
5. Illegal or arbitrary detention or arrest; on a ravine somewhere in Barangay Baliling,
6. Illegal search; Nueva, Vizcaya which resulted in the death of
7. Libel, slander or any other form of Marie Grace and physical injuries to other
defamation; passengers.
8. Malicious prosecution; ● Respondents filed a complaint for damages
9. Acts mentioned in Article 309; arising from culpa contractual against the
10. Acts and actions referred to in Articles 21, petitioner. In its answer, petitioner claimed that
26, 27, 28, 29, 30, 32, 34 and 35. the incident was purely accidental and that it had
always exercised extraordinary diligence in its 50
years of operation.
Application: ● After respondent Rosalito Gammad completed his
Upon consideration of all the facts mentioned heretofore, direct testimony, counsel of the petitioner was
this Court is of the opinion, and so holds, that the absent despite due notice and was deemed to
compensatory damages awarded to Edgardo Cariaga have waived right to cross-examine. Also, they
should be increased to P25,000.00. were not able to present its own evidence.
However, we agree with the Trial Court in denying Petitioner’s Argument/s:

Cariaga’s claim for moral damages and attorney’s fees. ● The trial court's award of damages were without
basis and should be deleted
"Of the cases enumerated in the just quoted Article 2219
only the first two may have any bearing on the case at bar. Respondent’s Arguments:
We find, however, with regard to the first that the
● Case did not discuss about respondent’s capacity may be awarded despite the absence of
arguments. Petition mainly revolves around the documentary evidence when (1) the deceased is self-
gross negligence of petitioner’s counsel depriving employed earning less than the minimum wage under
petitioners of due process. current labor laws, and judicial notice may be taken of the
fact that in the deceased's line of work no documentary
Ruling of the lower court: evidence is available; or (2) the deceased is employed as
● Trial court decided in favor of Gammad and a daily wage worker earning less than the minimum wage
ordered Victory Liner to pay damages under current labor laws
● CA affirmed the decision but modified the
damages awarded 3. In culpa contractual or breach of contract, moral
1. 1. Actual Damages in the amount of P88,270.00; damages may be recovered when the defendant acted in
2. 2.Compensatory Damages in the amount of bad faith or was guilty of gross negligence (amounting to
P1,135,536,10; bad faith) or in wanton disregard of contractual obligations
3. 3. Moral and Exemplary Damages in the amount and, as in this case, when the act of breach of contract
of P400,000.00; and itself constitutes the tort that results in physical injuries.
4. 4. Attorney's fees equivalent to 10% of the sum By special rule in Article 1764 in relation to Article 2206
of the actual, compensatory, moral, and of the Civil Code, moral damages may also be awarded in
exemplary damages herein adjudged case the death of a passenger results from a breach of
carriage.
Issue:
1. WON petitioner should be held liable for 4. Exemplary damages, which are awarded by way of
breach of contract of carriage (YES) example or correction for the public good may be
2. WON the award of damages was proper (NO, recovered in contractual obligations if the defendant acted
should be modified) in wanton, fraudulent, reckless, oppressive, or malevolent
manner.
Rule:
Application:
● A common carrier is bound to carry its passengers 1. Yes. Petitioner was correctly found liable for breach of
safely as far as human care and foresight can contract of carriage. There is no evidence to rebut the
provide, using the utmost diligence of very statutory presumption that the proximate cause of Marie
cautious persons, with due regard to all the Grace's death was the negligence of petitioner. Hence, the
circumstances. In a contract of carriage, it is courts below correctly ruled that petitioner was guilty of
presumed that the common carrier was at fault or breach of contract of carriage.
was negligent when a passenger dies or is
injured. Unless the presumption is rebutted, the 2. No. Award of damages should be modified.
court need not even make an express finding of
fault or negligence on the part of the common ● The award of compensatory damages for the loss
carrier. This statutory presumption may only be of the deceased's earning capacity should be
overcome by evidence that the carrier exercised deleted for lack of basis. CA computed the award
extraordinary diligence. of compensatory damages for loss of earning
● Article 1764 in relation to Article 2206 of the Civil capacity only on the basis of the testimony of
Code, holds the common carrier in breach of its respondent Rosalito that the deceased was 39
contract of carriage that results in the death of a years of age and a Section Chief of the Bureau of
passenger liable to pay the following: (1) Internal Revenue, Tuguegarao District Office with
indemnity for death, (2) indemnity for loss of a salary of P83,088.00 per annum when she died.
earning capacity, and (3) moral damages. No other evidence was presented. The award is
clearly erroneous because the deceased's earnings
1. Under Article 2224 of the Civil Code, temperate or does not fall within the exceptions
moderate damages, which are more than nominal but less ● The fact of loss having been established,
than compensatory damages, may be recovered when the temperate damages in the amount of P500,000.00
court finds that some pecuniary loss has been suffered but should be awarded to respondents.
its amount cannot, from the nature of the case, be proved ● Respondents in the instant case should be awarded
with certainty. moral damages to compensate for the grief caused
by the death of the deceased resulting from the
2. As a rule, documentary evidence should be presented petitioner's breach of contract of carriage.
to substantiate the claim for damages for loss of earning Furthermore, the petitioner failed to prove that it
capacity. By way of exception, damages for loss of earning exercised the extraordinary diligence required for
common carriers, it is presumed to have acted ● Counsel for petitioner questioned the reduction in
recklessly. Thus, the award of exemplary damages the award of attorney's fees alleging that he had
is proper. Under the circumstances we find it to use his own money for transportation,
reasonable to award respondents the amount of stenographic transcriptions and other court
P100,000.00 as moral damages and P100,000.00 expenses, and for such reason, avers that the
as exemplary damages. These amounts are not award of 25 percent attorney's fees made by the
excessive. trial court was proper.
Sps. Ong v. Court of Appeals, Respondent’s Arguments: CA, INLAND TRAILWAYS,

G.R. No. 117103 | January 21, 1999 PHILTRANCO (PARTIALLY WON FOR PHILTRANCO,
INLAND LOST)
Facts: ● Philtranco and Inland filed cross-claims against
● This is a petition for review on certiorari on CA’s each other.
decision modifying the decision of the trial court ● Philtranco denied liability claiming that its
in an action for damages filed by the Spouses Ong agreement with Inland from their lease
against Private Respondents Inland Trailways and agreement states that it would be Inland which
Philtranco. would be solely liable for all claims and liabilities
● Spouses Ong boarded inland bus no. 101 which arising from the operation of the said bus and that
was owned and operated by Inland Trailways the proximate cause of the accident was the
under a Lease Agreement with Philtranco. It was negligence of either the cargo truck or the inland
driven by Calvin Coronel. bus which collided with said cargo truck.
● Around 3:50 in the morning, the bus was bumped ● Inland answered that based on the Police Report,
from the rear by another bus owned and operated it was Apolinar, the driver of Philtranco who was
by Philtranco driven by Apolinar Miralles. Francia at fault as shown by his flight from the situs of
sustained wounds and fractures in both of her the accident. It also argued that it exercised
legs and her right arm, while Renato suffered extraordinary diligence as testified by its
injuries on his left chest, right knee, right arm and passengers.
left eye. They were brought to a hospital for Ruling of the lower court:
treatment and were confined for nine days. ● RTC ruled that the proximate cause of the
● They filed an action for damages against accident was the bumping from behind by the
Philtranco and Inland. Philtranco bus based on the Police Report and the
affidavits of the passengers. It absolved Inland
Petitioner’s Argument/s: SPS. RENATO & FRANCIA Trailways from any liability and held Philtranco
ONG (PARTIALLY LOST - See Detailed discussion in liable for culpa aquilana and was ordered to pay
Application) for the actual damages, compensatory damages,
● They alleged that they suffered injuries, unrealized profits or income, moral damages, and
preventing Francia from operating a sari-sari attorney’s fees.
store where she derived her daily income of P200 ● CA however resolved that Philtranco’s liability
and Renato from continuing his work as an cannot be predicated on a Police Report which
overseas contract worker (pipe welder) with a was not formally offered in evidence as it was
monthly salary of USD 690. They also incurred merely annexed to the answer of Inland and
P10,000 as medical and miscellaneous expenses. hence has no probative value thereby absolving
They further claimed as supported by Philtranco from liability.
documentary evidence (bus tickets, medical ● CA held Inland liable based on culpa contractual
certificate, financial statements, payroll for failure to observe and exercise extraordinary
summary): diligence under Article 1735 and 1750 of the Civil
○ P500,000 moral damages Code. It further ruled that finding of fault or
○ P500,000 exemplary and corrective negligence was not necessary to hold it liable for
damages damages and that Inland failed to overcome such
○ P500,000 compensatory damages presumption of negligence. It however reduced
○ 35% thereof as attorney’s fees the medical and miscellaneous expenses as well
● The spouses also questioned the reduction in the as moral damages while the award for unearned
award for actual damages for the medical and income was disallowed.
miscellaneous expenses as well as moral
damages and why the award for unearned income Issue:
was disallowed. ● WON the reduction of the award for damages was
proper. YES.
● WON the Police Report not formally offered could ● Under the Civil Code, an award of attorney's fees
be used to establish a claim against Philtranco is an indemnity for damages ordered by a court
based on culpa contractual. NO to be paid by the losing party to the prevailing
party, based on any of the cases authorized by
Rule: law.
On award for damages ● It is payable not to the lawyer but to the client,
● The fundamental principle of the law on damages unless the two have agreed that the award shall
is that one injured by a breach of contract (in this pertain to the lawyer as additional compensation
case, the contract of transportation) or by a or as part thereof.
wrongful or negligent act or omission shall have ● The Court has established a set of standards in
a fair and just compensation, commensurate with fixing the amount of attorney's fees: "(1) The
the loss sustained as a consequence of the amount and character of the services rendered;
defendant's acts. Hence, actual pecuniary (2) labor, time and trouble involved; (3) the
compensation is the general rule, except where nature and importance of the litigation or
the circumstances warrant the allowance of other business in which the services were rendered; (4)
kinds of damages. the responsibility imposed; (5) the amount of
● Damages, after all, are not intended to enrich the money or the value of the property affected by
complainant at the expense of the defendant. the controversy or involved in the employment;
(6) the skill and experience called for in the
Actual damages: nature and basis of award performance of the services; (7) the professional
● They are such compensation or damages for an character and social standing of the attorney; (8)
injury that will put the injured party in the the results secured, it being a recognized rule
position in which he had been before he was that an attorney may properly charge a much
injured. They pertain to such injuries or losses larger fee when it is contingent than when it is
that are actually sustained and susceptible of not."
measurement.
● Except as provided by law or by stipulation, a Application:
party is entitled to adequate compensation only On award of Actual Damages: GRANTED
for such pecuniary loss as he has duly proven. ● The records will show that from the documentary
● To be recoverable, actual damages must be evidence, Spouses Ong have jointly spent the
pleaded and proven in Court. In no instance may sum of P3,977.00. Philtranco has not presented
the trial judge award more than those so pleaded any evidence that it has advanced any amount for
and proven. Damages cannot be presumed. The medicine, hospitalization and doctor's fees, but
award thereof must be based on the evidence on the contrary, Spouses have testified that they
presented, not on the personal knowledge of the paid for their expenses except at the initial stage
court; and certainly not on flimsy, remote, wherein a representative of Philtranco went to the
speculative and non-substantial proof. hospital to get the receipts of medicines only and
● Article 2199 of the Civil Code expressly mandates paid.
that "except as provided by law or by stipulation, ● Considering the claim of the Spouses, as alleged
one is entitled to an adequate compensation only in their complaint they spent P10,000.00
for such pecuniary loss suffered by him as he has representing medical and miscellaneous
duly proved." expenses considering that they have gone for
consultation to at least two (2) different doctors,
Moral damages: nature and basis of award SC took judicial notice of the fact that
● A person is entitled to the physical integrity of his miscellaneous expenses are bound to be incurred
or her body, and if that integrity is violated, to cover transportation and food, and therefore,
damages are due and assessable. The usual found the amount of P10,000.00 as actual
practice is to award moral damages for physical damages to be reasonable.
injuries sustained.
On award for Moral Damages: INCREASED
Unrealized income: nature and basis of award ● It was sufficiently shown during the trial that
● The Court awards the cost of medical procedures Francia's right arm could not function in a normal
to restore the injured person to his or her former manner and that, as a result, she suffered mental
condition. However, this award necessitates anguish and anxiety. Thus, an increase in the
expert testimony on the cost of possible amount of moral damages awarded, from
restorative medical procedure. P30,000 to P50,000, appears to be reasonable
and justified. Renato also suffered mental anxiety
Attorney’s Fees: nature and basis of award and anguish from the accident. Thus, he should
be separately awarded P30,000 as moral requirements proceeded to the check-in counter of
damages. Northwest. Upon reaching the counter, he was informed
by Northwest staff that his name did not appear in the
On Deletion of Unrealized Income: DENIED confirmed departing passengers list. He was directed to
● The bare and unsubstantiated assertion of speak to a man in barong standing outside the counters,
Francia that she usually earned P200 a day from allegedly he could obtain a boarding pass from him. He
her market stall is not the best evidence to prove approached the man and was asked to pay 100 US dollars
her claim of unrealized income for the eight- for a boarding pass. Chiong went to Calvo and asked for
month period that her arm was in plaster cast. help. Calvo insisted there was no need to pay since his
Her testimony that it was their lessor who led plane ticket was confirmed. In the end, Chiong was not
their income tax returns and obtained business able to board the plane and was not able to report for
licenses for them does not justify her failure to work.
present more credible evidence of her income.
● Furthermore, after her ten-day confinement at Petitioner’s Argument (Northwest - LOST): Asserted
the San Pablo Hospital, she could have returned that Chiong was a “no-show” passenger hence was not
to her work at the public market despite the able to board the flight. (They presented the passenger
plaster cast on her right arm, since she claimed manifest for that flight and Chiong was not on the list.) NW
to have two nieces as helpers. Clearly, the filed a criminal case for false testimony against Chiong
appellate court was correct in deleting the award because he allegedly was able to leave the country on April
for unrealized income, because of petitioner's 17, 1989 and was able to work.
utter failure to substantiate her claim.
Respondent’s Arguments (Chiong - WON): Chiong was
On Increase of Attorney’s Fees: DENIED deliberately prevented from checking-in and his boarding
● Counsel's performance, however, does not justify pass unjustifiably withheld to accommodate an American
the award of 25 percent attorney's fees. It is well- passenger by the name of W. Costine. (the Flight manifest
settled that such award is addressed to sound showed that Chiong’s name was “crossed-out” and another
judicial discretion and subject to judicial control. name was written above it.)
On admissibility of evidence not formally offered Ruling of the lower court: RTC ruled in favor of Chiong
● A formal offer is necessary, since judges are and awarded Compensatory/Actual, Moral, exemplary
required to base their findings of fact and their damages and Attorney’s fees.
judgment solely and strictly upon the evidence
offered by the parties at the trial. Issue: WON there was a breach in the contract of carriage
● To allow parties to attach any document to their and as a result NW was liable for damages. (YES)
pleadings and then expect the court to consider it
as evidence, even without formal offer and Rule:
admission, may draw unwarranted 1. Air transport is primarily intended to serve the
consequences. traveling public and thus, imbued with public interest. The
● Opposing parties will be deprived of their chance law governing common carriers consequently imposes an
to examine the document and to object to its exacting standard of conduct. As the aggrieved party, only
admissibility. On the other hand, the appellate had to prove the existence of the contract and the fact of
court will have difficulty reviewing documents not its non-performance the carrier, in order to be awarded
previously scrutinized by the court below. compensatory and actual damages.
Northwest Airlines, Inc. v. Steven P. Chiong 2. Under Article 2220 of the NCC, an award of moral
G.R. No. 155550 | Jan. 31, 2008 damages, in breaches of contract, is in order upon a
showing that the defendant acted fraudulently or in bad
Facts: Respondent (Chiong) was given a plane ticket faith.
(issued by Petitioner - Northwest Airlines) bought by
Philmare (Philippine agent of Transocean) which was 3. Attorney's fees may be awarded when a party
bound for California to work as an engineer with is compelled to litigate or incur expenses to protect his
Transocean’s vessel. (April 1, 1989) On the day of interest, 35 or where the defendant acted in gross and
departure, he brought his whole family (they travelled evident bad faith in refusing to satisfy the plaintiff's plainly
from Samar) to the Manila Intl Airport to send him off. valid, just and demandable claim.
Chiong was assisted by Calvo (Philmare agent). They went
to the departure gate, proceeded to the Phil. Coast guard Application:
to present his service record for clearance, his passport
duly stamped and after complying with other govt
1. In its desperate attempt to evade liability for the breach, Having obtained an emergency US visa, respondent
Northwest claims that Chiong worked at M/V Elbiawhen he purchased a round trip plane ticket from petitioner JAL and
left the Philippines on April 17, 1989. Even if Chiong left was issued the corresponding boarding pass. He was
the Philippines on April 17, 1989, it would not necessarily scheduled to a particular flight bound for Los Angeles,
prove that Chiong was a "no-show" on April 1, 1989. California, U.S.A. via Narita, Japan.
Neither does it negate the already established fact that
Chiong had a confirmed ticket for April 1, 1989, and On the date of his flight, respondent went to NAIA.11 He
passed through the PCG counter without delay, then was allowed to check-in at JAL's counter. His plane ticket,
reached and was at the Northwest check- in counters on boarding pass, travel authority and personal articles were
time for the scheduled flight. Northwest failed to prove its subjected to rigid immigration and security routines. After
claim that Chiong worked on M/V Elbia from April 17 to passing through said immigration and security procedures,
October 5, 1989 under the original crew agreement. respondent was allowed by JAL to enter its airplane.
Affirmed lower court's finding on Chiong's entitlement to
actual and compensatory damages. ($8K as While inside the airplane, JAL's airline crew suspected
Compensatory damages due to loss of income for 1 YR. respondent of carrying a falsified travel document and
Php15k as Actual damages as a consequence of failure to imputed that he would only use the trip to the US as a
board the flight.) pretext to stay and work in Japan. He was asked to show
his travel documents. Shortly after, the stewardess along
2. As to the conduct and outward acts of Northwest with a Japanese and a Filipino haughtily ordered him to
indicative of its inward motive, it is borne out by the stand up and leave the plane. Respondent protested,
records that Chiong was given the run-around at the explaining that he was issued a US visa. Just to allow him
Northwest check-in counter, instructed to deal with a "man to board the plane, he pleaded with JAL to closely monitor
in barong" to obtain a boarding pass, and eventually his movements when the aircraft stops over in Narita. His
barred from boarding Northwest Flight No. 24 to pleas were ignored. He was then constrained to go out of
accommodate an American, W. Costine, whose name was the plane. In a nutshell, respondent was bumped off the
merely inserted in the Flight Manifest, and did not even flight.
personally check-in at the counter. (Php200k moral
damages and Php200k for exemplary damages as result of Respondent went to JAL's ground office and waited there
breach of contract with malice and fraud). for three hours. Meanwhile, the plane took off and he was
left behind. Afterwards, he was informed that his travel
3. Northwest deliberately breached its contract of carriage documents were, indeed, in order, and was refunded the
with Chiong and then repeatedly refused to satisfy cost of his plane ticket less the sum of US$500.00 which
Chiong's valid, just and demandable claim. This unjusti ed was deducted by JAL. Subsequently, respondent's U.S.
refusal constrained Chiong to not only lose income under visa was cancelled.
the crew agreement, but to further incur expenses and
exert effort for almost two (2) decades in order to protect Displeased by the turn of events, respondent filed an
his interests and vindicate his right. (Php200k as Atty’s action for damages against JAL with the RTC in Valenzuela
fees). City. He claimed he was not able to donate his kidney to
Loreto; and that he suffered terrible embarrassment and
Japan Airlines v. Jesus Simangan, mental anguish. He prayed that he be awarded P3 million
G.R. No. 170141| April 22, 2008 as moral damages, P1.5 million as exemplary damages
and P500,000.00 as attorney's fees.
Facts:
Petitioner’s Argument/s: (LOST)
Simangan decided to donate a kidney to his ailing cousin,
Loreto Simangan, in UCLA School of Medicine in Los JAL denied the material allegations of the complaint. It
Angeles, California, U.S.A. Upon request of UCLA, argued, among others, that its failure to allow respondent
respondent undertook a series of laboratory tests at the to fly on his scheduled departure was due to "a need for
National Kidney Institute in Quezon City to verify whether his travel documents to be authenticated by the United
his blood and tissue type are compatible with Loreto's, States Embassy" because no one from JAL's airport staff
which fortunately were compatible. had encountered a parole visa before. It posited that the
authentication required additional time; that respondent
Respondent needed to go to the US to complete his was advised to take the flight the following day.
preliminary work-up and donation surgery. Hence, to
facilitate respondent's travel to the US, UCLA wrote a letter JAL also lodged a counterclaim anchored on respondent's
to the American Consulate in Manila to arrange for his visa. alleged wrongful institution of the complaint. It prayed for
In due time, respondent was issued an emergency US visa.
litigation expenses, exemplary damages and attorney's Since JAL definitely declared that the flight could not wait
fees. for respondent, it gave respondent no choice but to be left
behind. The latter was unceremoniously bumped off
Ruling of the lower court: despite his protestations and valid travel documents and
notwithstanding his contract of carriage with JAL. Damage
RTC rendered its decision in favor of respondent had already been done when respondent was offered to fly
Simangan, declaring JAL guilty of violating the contract of the next day on July 30, 1992. Said offer did not cure JAL's
carriage, and awarding Simangan moral and exemplary, default.
as well as award of attorney’s fees.
Considering that respondent was forced to get out of the
CA affirmed the decision of the RTC with modification in plane and left behind against his will, he could not have
that it lowered the amount of moral and exemplary freely consented to be rebooked the next day. In short, he
damages and deleted the award of attorney's fees. did not agree to the alleged novation. Since novation
implies a waiver of the right the creditor had before the
Issue: novation, such waiver must be express. It cannot be
supposed, without clear proof, that respondent had
1. WON JAL is guilty of breach of contract of carriage; willingly done away with his right to fly on July 29, 1992.
2. WON respondent is entitled to moral and exemplary Moreover, the reason behind the bumping off incident, as
damages; found by the RTC and CA, was that JAL personnel imputed
that respondent would only use the trip to the US as a
pretext to stay and work in Japan.
3. WON JAL is entitled to its counterclaim for damages.
Apart from the fact that respondent's plane ticket,

Rule:
boarding pass, travel authority and personal articles
already passed the rigid immigration and security routines,
Article 1755 of the New Civil Code: "A common carrier is
JAL, as a common carrier, ought to know the kind of valid
bound to carry the passengers safely as far as human care
travel documents respondent carried. As provided in
Article 1755 of the New Civil Code: "A common carrier is
very cautious persons, with a due regard for all the
bound to carry the passengers safely as far as human care
circumstances."
very cautious persons, with a due regard for all the
Application:
circumstances." Thus, JAL's defense of "verification of
respondent's documents" in its breach of contract of
1. JAL is guilty of breach of contract of carriage.
carriage IS UNTENABLE. The power to admit or not an
alien into the country is a sovereign act which cannot be
In an action for breach of contract of carriage, all that is interfered with even by JAL.
required of plaintiff is to prove the existence of such
contract and its non-performance by the carrier through
2. WON respondent is entitled to moral and
the latter's failure to carry the passenger safely to his
exemplary damages.
destination. Respondent has complied with these twin
requisites.
Respondent is entitled to moral and exemplary damages
and attorney's fees plus legal interest.
That respondent purchased a round trip plane ticket from
JAL and was issued the corresponding boarding pass is
With reference to moral damages- JAL alleged that they
uncontroverted. His plane ticket, boarding pass, travel
are not recoverable in actions ex contractu except only
authority and personal articles were subjected to rigid
when the breach is attended by fraud or bad faith. It is
immigration and security procedure. After passing through
contended that it did not act fraudulently or in bad faith
said immigration and security procedure, he was allowed
towards respondent, hence, it may not be held liable for
by JAL to enter its airplane to fly to Los Angeles, California,
moral damages.
U.S.A. via Narita, Japan. Concisely, there was a
contract of carriage between JAL and respondent.
As a general rule, moral damages are not recoverable in
actions for damages predicated on a breach of contract for
Nevertheless, JAL made respondent get off the plane on
it is not one of the items enumerated under Article 2219
his scheduled departure AND was not allowed by JAL to
of the Civil Code. As an exception, such damages are
fly. JAL thus failed to comply with its obligation under the
recoverable: (a) in cases in which the mishap results in the
contract of carriage.
death of a passenger, as provided in Article 1764, in
relation to Article 2206(3) of the Civil Code; and (b) in the There are two commonly accepted concepts of attorney's
cases in which the carrier is guilty of fraud or bad faith, as fees, the so-called ordinary and extraordinary. In its
provided in Article 2220. ordinary concept, an attorney's fee is the reasonable
compensation paid to a lawyer by his client for the legal
The acts committed by JAL against respondent services he has rendered to the latter. The basis of this
amounts to bad faith. JAL’s personnel summarily and compensation is the fact of his employment by and his
insolently ordered respondent to disembark while the agreement with the client.
latter was already settled in his assigned seat. He was
ordered out of the plane under the alleged reason that the In its extraordinary concept, an attorney's fee is an
genuineness of his travel documents should be verified. indemnity for damages ordered by the court to be paid by
the losing party in a litigation. The basis of this is any of
Moral damages are recoverable in suits predicated on the cases provided by law where such award can be made,
breach of a contract of carriage where it is proved that the such as those authorized in Article 2208, Civil Code, and is
carrier was guilty of fraud or bad faith, as in this case. payable not to the lawyer but to the client, unless they
Inattention to and lack of care for the interests of its have agreed that the award shall pertain to the lawyer as
passengers who are entitled to its utmost consideration, additional compensation or as part thereof (CDCP v.
particularly as to their convenience, amount to bad faith Estrella).
which entitles the passenger to an award of moral
damages. What the law considers as bad faith which may The above liabilities of JAL earn legal interest pursuant to
furnish the ground for an award of moral damages would the Court's ruling in CDCP v. Estrella, citing Eastern
be bad faith in securing the contract and in the execution Shipping Lines, Inc. v. CA. The legal interest is 6% and it
thereof, as well as in the enforcement of its terms, or any shall be reckoned from September 21, 2000 when the RTC
other kind of deceit. rendered its judgment. From the time this Decision
becomes final and executory, the interest rate shall be
JAL is also liable for exemplary damages -above- 12% until its satisfaction.
mentioned acts constitute wanton, oppressive and
malevolent acts against respondent. Exemplary damages, 3. WON JAL is entitled to its counterclaim for
which are awarded by way of example or correction for the damages.
public good, may be recovered in contractual obligations,
as in this case, if defendant acted in wanton, fraudulent, JAL is not entitled to its counterclaim for damages.
reckless, oppressive, or malevolent manner.
The counterclaim of JAL in its Answer is a compulsory
Exemplary damages are designed by our civil law to permit counterclaim for damages and attorney's fees arising from
the courts to reshape behaviour that is socially deleterious the filing of the complaint. There is no mention of any other
in its consequence by creating negative incentives or counter claims.
deterrents against such behaviour. In requiring
compliance with the standard of extraordinary diligence, a This compulsory counterclaim of JAL arising from the filing
standard which is, in fact, that of the highest possible of the complaint may not be granted inasmuch as the
degree of diligence, from common carriers and in creating complaint against it is obviously not malicious or
a presumption of negligence against them, the law seeks unfounded. It was filed by respondent precisely to claim
to compel them to control their employees, to tame their his right to damages against JAL.
reckless instincts and to force them to take adequate care
of human beings and their property. If damages result from a party's exercise of a right, it is
damnum absque injuria. Lawful acts give rise to no injury.
Neglect or malfeasance of the carrier's employees could Walang perhuwisyong maaring idulot ang paggamit sa
give ground for an action for damages. Passengers have a sariling karapatan.
right to be treated by the carrier's employees with
kindness, respect, courtesy and due consideration and are JAL is a common carrier. JAL's business is mainly with the
entitled to be protected against personal misconduct, traveling public. It invites people to avail themselves of the
injurious language, indignities and abuses from such comforts and advantages it offers. Since JAL deals with the
employees. public, its bumping off of respondent without a valid
reason naturally drew public attention and generated a
With respect to attorney's fees, they may be awarded public issue.
when defendant's act or omission has compelled plaintiff
to litigate with third persons or to incur expenses to protect The publications involved matters about which the public
his interest. has the right to be informed because they relate to a public
issue. This public issue or concern is a legitimate topic of Francisco, it would again transport the two on that same
a public comment that may be validly published. day through a connecting flight from San Francisco to Los
Angeles, USA via another airline.
Assuming that respondent, indeed, caused the publication
of his complaint, he may not be held liable for damages for The two children will then be met by their grandmother,
it. The constitutional guarantee of freedom of the speech Mrs. Regalado, at Los Angeles on their scheduled arrival.
and of the press includes fair commentaries on matters of
public interest. The staff of United Airways 996 however refused to take
aboard the two children for their connecting flight because
Fair commentaries on matters of public interest are the petitioner's personnel in San Francisco could not
privileged and constitute a valid defense in an action for produce the indemnity bond. The said bond was lost during
libel or slander. The doctrine of fair comment means that the previous stop-over in Honolulu Hawai.
while in general every discreditable imputation publicly
made is deemed false, because every man is presumed The minors were then left stranded at the San Francisco
innocent until his guilt is judicially proved, and every false Airport. Mr. Strigl, then the Lead Traffic Agent of the
imputation is deemed malicious, nevertheless, when the petitioner, took the minors to his residence where they
discreditable imputation is directed against a public person stayed overnight.
in his public capacity, it is not necessarily actionable. In
order that such discreditable imputation to a public official Petitioner’s Argument/s: The loss of indemnity bond
may be actionable, it must either be a false allegation of was caused by gross negligence and malevolent conduct
fact or a comment based on a false supposition. If the of its personnel. It averred that it always exercised the
comment is an expression of opinion, based on established diligence of a good father of the family in the selection,
facts, then it is immaterial that the opinion happens to be supervision, and control of its employees.In addition, the
mistaken, as long as it might reasonably be inferred from two minors were escorted by Strigl, and made their
the facts (Borjal v. Court of Appeals). connecting flights to LA possible.
Even though JAL is not a public official, the rule on Respondent’s Arguments (WON): The two minor
privileged commentaries on matters of public interest children were not able to take their connecting flight to LA
applies to it. The privilege applies not only to public as scheduled because the required indemnity bond was
officials but extends to a great variety of subjects, and lost on account of gross negligence and malevolent
includes matters of public concern, public men, and conduct of petitioner's personnel. This dilemma caused the
candidates for office. two minors, Mrs Regalado and private respondents to
suffer serious anxiety, mental angusih, wounded feelings,
Hence, pursuant to the Borjal case, there must be an and sleepness night.
actual malice in order that a discreditable imputation to a
public person in his public capacity or to a public official Ruling of the lower court: The RTC awarded moral,
may be actionable. To be considered malicious, the exemplary damages, and Attorney's fees. It was sustained
libelous statements must be shown to have been written by the CA.
or published with the knowledge that they are false or in
reckless disregard of whether they are false or not.
Issue: 1 WON CA erred in sustaining the RTC's award of
Moral Damages. (NO)
Considering that the published articles involve matters of
2. WON CA erred in sustaining the RTC's award of
public interest and that its expressed opinion is not
Exemplary Damages (NO)
malicious but based on established facts, the imputations
3. WON CA erred in sustaining the RTC's award of
against JAL are not actionable. Therefore, JAL may not
Attorney's fees and order for payment of costs (Yes)
claim damages for them.
Rule:
Phil. Airlines, Inc. v. CA, et al.
1. In breach of contract of air carriage, moral damages
G.R. No. 123238 | Sept. 22, 2008
may be recovered where the negligence of the carrier is so
gross and reckless as to virtually amount to bad faith.
Facts: Sps. Buncio purchased two plane tickets for their
Gross negligence implies a want or absence of or failure to
two minor children. Since the two children will travel as
exercise even slight care or diligence, or the entire
unaccompanied minors, Philippine Airlines required them
absence of care. It evinces a thoughtless disregard of
to accomplish and submit an indemnity bond. This was
consequences without exerting any effort to avoid them.
compiled by the Sps. For the purchase of the ticket, the
The foregoing facts reflect petitioner's lack of care for and
petitioners agreed to transport the two children from
inattention to the welfare of the two children as
Manila to San Francisco, USA and upon arrival in San
unaccompanied minor passengers. Petitioner's failure to
exercise even slight care and diligence in handling the Petitioner admitted that the respondent contracted him to
indemnity bond showed that their negligence was so gross haul and deliver but denied that it did not reach its
and reckless that it amounted to bad faith. destination. He averred that it was delivered to Pepsi Cola.
Furthermore, he stated that the loss was either caused by
It is worth emphasizing that petitioner, as a common the negligence of the respondent or due to a fortuitous
carrier, is bound by law to exercise extraordinary diligence event.
and utmost care in ensuring for the safety and welfare of Respondent’s Arguments:— ——
its passengers with due regard for all the circumstances.
Ruling of the lower court:
2. Article 2232 of the Civil Code provides that exemplary The lower court rendered a decision in favor of the
damages may be awarded in a breach of contract if the respondent. Hence, this petition.
defendant acted in a wanton, fraudulent, reckless,
oppressive or malevolent manner. In addition, Article 2234 Issue:
thereof states that the plaintiff must show that he is WON the petitioner is liable
entitled to moral damages before he can be awarded
exemplary damages. It was already ascertained that the Rule:
private respondents are entitled to moral damages Elements of a caso fortuito: (1) the cause of the
because they have sufficiently established the petitioner's unforeseen and unexpected occurrence was independent
gross negligence which amounted to bad faith. This being of the human will; (2) it was impossible to foresee the
the case, the award of exemplary damages is warranted. event which constituted the caso fortuito or, if it could be
foreseen, it was impossible to avoid; (3) the occurrence
3. Jurisprudence provides that in awarding attorney's fees, must be such as to render it impossible to perform an
the trial court must state the factual, legal, or equitable obligation in a normal manner; and (4) the person tasked
justification for awarding the same, bearing in mind that to perform the obligation must not have participated in any
the award of attorney's fees is the exception, not the course of conduct that aggravated the accident.
general rule, and it is not sound public policy to place a
penalty on the right to litigate; nor should attorney's fees Application:
be awarded every time a party wins a lawsuit. in awarding
attorney's fees, the trial court must state the factual, legal, Yes, the petitioner is liable. Petitioner has admitted his
or equitable justification for awarding the same, bearing in contract with the respondent. Admission made in the
mind that the award of attorney's fees is the exception, course of trial, either by verbal or written manifestations,
not the general rule, and it is not sound public policy to or stipulations cannot be controverted by the party making
place a penalty on the right to litigate; nor should such admission. They become conclusive upon him and all
attorney's fees be awarded every time a party wins a proofs submitted by him contrary thereto should be
lawsuit. ignored. It being such, the petitoner can no longer say
otherwise.
Canada, doing business under the name and style
of Hi-Ball Freight Services v. All Commodities Petitioner tried to exculpate himself from liabilty
Marketing Corporation, saying that the incident was a caso fortuito to which the
G.R. No. 146141, October 17, 2008 court disagrees.
Facts: There are only 4 instances wherein the exempting

circumstances of caso fortuito can be availed of: (1)the
Petitioner is engaged in the business of providing trucking cause of the unforeseen and unexpected occurrence was
and hauling services under the highball freight services. independent of the human will; (2) it was impossible to
Respondent contracted petitioner’s services to haul and foresee the event which constituted the caso fortuito or, if
deliver 1000 sacks of sugar to Pepsi Cola Plant in it could be foreseen, it was impossible to avoid; (3) the
Muntinlupa, Metro Manila. The transaction was covered by occurrence must be such as to render it impossible to
a delivery receipt. The petitioner loaded the sacks of sugar perform an obligation in a normal manner; and (4) the
however, the same were never delivered to the Pepsi Cola person tasked to perform the obligation must not have
Plant. participated in any course of conduct that aggravated the
accident.
Respondents demanded payment of the value of the sacks
of sugar, but the demand was not heeded. This prompted None of these elements are present in the case at
the respondent to file a petition to recover the value of the bar. No evidence was offered to substantiate their claim.
lost sugar. However, the negligence of the petitioner was sufficiently
proven and supported by the evidence adduced by the
Petitioner’s Argument/s: lower court.
No actual damage should be awarded to the moral damages from the vessel owner as common carrier.
respondent as the amount lost was not ascertained. (No)
However, they may still be awarded with temperate
damages and exemplary damages. When the court :nds Rule:
that some pecuniary loss has been suffered but the Moral damages may be recovered in an action upon breach
amount cannot, from the nature of the case, be proven of contract of carriage only when: (a) death of a passenger
with certainty, temperate damages may be recovered. results, or (b) it is proved that the carrier was guilty of
fraud and bad faith, even if death does not result.
Sulpicio Lines, Inc. v. Curso, et al.,
G.R. No. 157009 | March 17, 2010 Moral damages may be awarded in case of breach of
contract of carriage that results in the death of a passenger
Facts: in accordance with Article 2206 (3) of the Civil Code, which
● Dr. Curso boarded at the port of Manila the MV Dona provides:
Marily bound for Tacloban City, which unfortunately
sank while at sea due to the inclement sae and Article 2206. The amount of damages for death caused by
weather conditions brought about by Typhoon a crime or quasi-delict shall be at least three thousand
Unsang. Dr. Curso’s body was not recovered. pesos, even though there may have been mitigating
● The respondents, allegedly the surviving brothers and circumstances. In addition:
sisters of the deceased, sued petitioner to claim xxx
damages based on breach of contract of carriage by (3) The spouse, legitimate and illegitimate
sea. descendants and ascendants of the deceased may
demand moral damages for mental anguish by reason of
Petitioner’s Argument/s: (WON) the death of the deceased.
Petitioner denied liability, insisting that the sinking of the
vessel was due to force majeure (Typhoon Unsang), which Application:
exempted a common carrier from liability. It averred that To be entitled to moral damages, the respondents must
the MV Doña Marilyn was seaworthy in all respects, and have a right based upon law. While it is true that the
was in fact cleared by the Philippine Coast Guard for the siblings succeeded to the entire estate of the late Dr.
voyage; and that after the accident it conducted intensive Curso, (in the absence of the latter's descendants,
search and rescue operations and extended assistance and ascendants, illegitimate children, and surviving spouse)
aid to the victims and their families. they were not included among the persons entitled to
recover moral damages.
Respondent’s Arguments: (LOST)
Respondents averring that the petitioner had acted Thus, the CA erred in awarding moral damages to the
negligently in transporting Dr. Curso and the other respondents as the omission from Article 2206 (3) of the
passengers, and that they must be compensated for moral brothers and sisters of the deceased passenger reveals the
damages as they took great pains to recover, in vain, the legislative intent to exclude them from the recovery of
body of their brother, at their own cost, while suffering moral damages for mental anguish by reason of the death
great grief due to the loss of a loved one. of the deceased. Inclusio unius est exclusio alterius.
Ruling of the lower court: Sps. Cruz v. Sun Holidays, Inc.,

● RTC dismissed the complaint on the ground that force G.R. No.186312 | June 29, 2010
majeure caused the sinking and that the officers of
the ship acted with diligence required of a common Facts:
carrier. Spouses Cruz (petitioners) lodged a complaint against Sun
● CA awarded moral damages (P100K), death indemnity Holidays Inc. (respondent) for damages arising from the
(P50K) and loss of earning capacity (P500K+) to the death of their son Ruelito who perished with his wife on
surviving brothers and sisters on the finding that the September 11, 2000 on board the boat M/B Coco Beach
officers of the ship had not apprised of the weather III that capsized en route to Batangas from Puerto Galera,
reports on the approach of typhoon “Unsang” which Oriental Mindoro where the couple had stayed at Coco
had the power of a signal no. 3 cyclone, and that the Beach Island Resort (resort) owned and operated by Sun
fitness of the ship was doubtful as the ship’s hydraulic Holidays. Shortly after the boat sailed on that day, it
system failed and had to be repaired mid-voyage. started to rain and as it moved farther away from Puerto
Galera and into the open seas, the rain and wind got
Issue: stronger. After getting hit by two big waves, M/B Coco
Whether the surviving brothers and sisters of a passenger Beach III capsized putting all passengers underwater and
of a vessel that sinks during a voyage entitled to recover resulted to the death of 8 passengers, including
petitioners’ son Ruelito and his wife.
The stay of Ruelito and his wife was by virtue of a tour heir called to the decedent's inheritance by the law of
package-contract with respondent that included testate or intestate succession, may demand support from
transportation to and from the resort and the point of the person causing the death, for a period not exceeding
departure in Batangas. five years, the exact duration to be fixed by the court;
Petitioners declined respondent’s offer, as an act of
commiseration, in the amount of P10,000. (3) The spouse, legitimate and illegitimate descendants
and ascendants of the deceased may demand moral
Petitioner’s Argument/s: (WON) damages for mental anguish by reason of the death of the
Petitioners alleged that respondent, as a common carrier, deceased.
was guilty of negligence in allowing M/B Coco Beach to sail
notwithstanding storm warning bulletins issued by the Application:
PAG-ASA. Article 1732 of the Civil Code makes no distinction between
one whose principal business activity is the carrying of
Respondent’s Arguments: (LOST) persons or goods or both, and one who does such carrying
Respondent denied any responsibility for the incident only as an ancillary activity (in local idiom, as “a sideline”).
which it considered to be a fortuitous event and further Article 1732 also carefully avoids making any distinction
denied being a common carrier, alleging that its boats are between a person or enterprise offering transportation
not available to the general public as they only ferry resort service on a regular or scheduled basis and one offering
guests and crew members. such service on an occasional, episodic or unscheduled
basis. Neither does Article 1732 distinguish between a
Ruling of the lower court: carrier offering its services to the "general public," i.e., the
RTC dismissed petitioners' Complaint and respondent's general community or population, and one who offers
Counterclaim. The appellate court denied petitioners' services or solicits business only from a narrow segment
appeal, holding, among other things, that the trial court of the general population. We think that Article 1733
correctly ruled that respondent is a private carrier which is deliberately refrained from making such distinctions. So
only required to observe ordinary diligence; that understood, the concept of "common carrier" under Article
respondent in fact observed extraordinary diligence in 1732 may be seen to coincide neatly with the notion of
transporting its guests on board M/B Coco Beach III; and "public service," under the Public Service Act
that the proximate cause of the incident was a squall, a (Commonwealth Act No. 1416, as amended) which at least
fortuitous event. partially supplements the law on common carriers set forth
in the Civil Code.
Issue:
Whether or not Sun Holidays Inc. is a common carrier and Respondent is a common carrier- “The operator of a beach
thus should be liable for damages (YES) resort that accepts clients by virtue of tour package-
contracts that included transportation to and from the
Rule: Resort and the point of departure is considered a common
Art. 1764. Damages in cases comprised in this Section carrier. Its ferry service is so intertwined with its main
shall be awarded in accordance with Title XVIII of this Book business as to be properly considered ancillary thereto.”
concerning Damages. Article 2206 shall also apply to the
death of a passenger caused by the breach of contract by The constancy of respondent's ferry services in its resort
a common carrier. operations is underscored by its having its own Coco Beach
boats. And the tour packages it offers, which include the
Art. 2206. The amount of damages for death caused by a ferry services, may be availed of by anyone who can afford
crime or quasi-delict shall be at least three thousand to pay the same. These services are thus available to the
pesos, even though there may have been mitigating public. That respondent does not charge a separate fee or
circumstances. In addition: fare for its ferry services is of no moment. It would be
imprudent to suppose that it provides said services at a
(1) The defendant shall be liable for the loss of the earning loss. The Court is aware of the practice of beach resort
capacity of the deceased, and the indemnity shall be paid operators offering tour packages to factor the
to the heirs of the latter; such indemnity shall in every transportation fee in arriving at the tour package price.
case be assessed and awarded by the court, unless the
deceased on account of permanent physical disability not To fully free a common carrier from any liability, the
caused by the defendant, had no earning capacity at the fortuitous event must have been the proximate and only
time of his death; cause of the loss. And it should have exercised due
diligence to prevent or minimize the loss before, during
(2) If the deceased was obliged to give support according and after the occurrence of the fortuitous event.
to the provisions of article 291, the recipient who is not an
Article 1764 27 vis-à-vis Article 2206 of the Civil Code exercise this extraordinary diligence because its employee
holds the common carrier in breach of its contract of failed to transport Jose Marcial to his destination safely.
carriage that results in the death of a passenger liable to They averred that G & S is liable to them for having
pay the following: (1) indemnity for death, (2) indemnity breached the contract of common carriage. As an
for loss of earning capacity and (3) moral damages. alternative cause of action, they asserted that G & S is
Petitioners are entitled to indemnity for the death of likewise liable for damages based on quasi-delict pursuant
Ruelito which is fixed at P50,000. to Article 21806 in relation to Article 21767 of the Civil
Code. The heirs thus prayed for G & S to pay them actual
Respecting the award of moral damages, since respondent damages, moral damages, exemplary damages, and
common carrier's breach of contract of carriage resulted in attorney’s fees and expenses of litigation.
the death of petitioners' son, following Article 1764 vis-à-
vis Article 2206 of the Civil Code, petitioners are entitled Respondent’s Arguments: (LOST)
to moral damages. Since respondent failed to prove that it
exercised the extraordinary diligence required of common G&S claimed that the accident was caused by an incoming
carriers, it is presumed to have acted recklessly, thus van, which rammed the taxi on its right side, causing the
warranting the award too of exemplary damages, which taxi to swerve and smash the railing. This contention
are granted in contractual obligations if the defendant however was uncorroborated by evidence. G&S also raised
acted in a wanton, fraudulent, reckless, oppressive or the defense of fortuitous event as well as diligence of a
malevolent manner. good father of the family in the selection of its drivers.
Under the circumstances, it is reasonable to award Ruling of the lower court:

petitioners the amount of P100,000 as moral damages and
P100,000 as exemplary damages. Pursuant to Article 2208 Both the trial court awarded damages to the heirs,
of the Civil Code, attorney's fees may also be awarded excluding funeral expenses which were not evidenced by
where exemplary damages are awarded. The Court finds receipts and the like. The CA however removed the actual
that 10% of the total amount adjudged against respondent damages for loss of income because it averred that the
is reasonable for the purpose. statement of income from the employer of Jose Marcial,
the United States Agency for International Development
Heirs of Jose Marcial K. Ochoa v. G & S Transport (USAID), was self-serving.
Corporation
G.R. No. 170071 | March 9, 2011 Issue: WON G&S should be liable to the heirs for
damages. YES.
Facts: Sometime in the eve of March 10, 1995, Jose
Marcial rode on one of the taxis of G&S. This taxi was Rule: G&S are liable to the heirs for damages.
driven by Bibiano Padilla. Jose Marcial rode the taxi at
Manila Domestic Airport and his destination was G&S’s defense that they were diligent as a good father of
Teacher’s Village, Diliman, Quezon City. the family in the selection of their drivers was not enough
to overcome the presumption of negligence. On the
During this ride, as they were passing a fly-over above contrary, it is not merely diligence of a good father of the
EDSA, Padilla, driving at a high speed, overtook another family that a common carrier must exercise but
taxi driven by Clave, and further attempted to overtake a extraordinary diligence.
10-wheeler truck. However, the opening in the road beside
the truck was not large enough to pass, and due to the The testimony of the driver of the other taxi, Clave, in the
high speed of travel, Padilla could not avoid collision by criminal proceeding against driver Padilla was sufficient
stepping on the brakes. Instead he swerved to the left and evidence to prove that Padilla was driving at high speeds
smashed through the railing of the fly-over. The taxi and recklessly attempted to overtake a 10-wheeler truck,
dropped top first on the pavement in the middle of EDSA leading to the death of Jose Marcial. The common carrier
Street, the force splitting it in half. Both passenger and must be held liable for the negligence or recklessness of
driver were rushed to the hospital but sadly Jose Marcial their employees.
was not so lucky and was declared dead on arrival.
Application: A common carrier who breaches the contract
Petitioner’s Argument/s: (WON) of carriage, leading to the death of the passenger, is liable
to the heirs for exemplary, moral, actual, and
The heirs alleged that G & S, as a common carrier, is under compensatory damages unless it can prove that the
legal obligation to observe and exercise extraordinary liability should be placed elsewhere. There is a
diligence in transporting its passengers to their destination presumption of negligence of the common carrier if any
safely and securely. However, G & S failed to observe and harm is put on the passenger during the course of the
contract of carriage.
Philtranco Service Enterprises, Inc. v. Paras, The RTC declared Philtranco and Apolinar liable for moral
G.R. No. 161909 | April 25, 2012 and actual damages. CA affirmed RTC’s decision but
decreased the actual damages, added temperate damages
and maintained the amount of moral damages and costs
Facts: awarded.
Felix Paras is engaged in the buy and sell of fish products.
On his way home to Manila, he boarded a bus owned and Issue:
operated by Inland Trailways, Inc. and driven by its driver 1. WON Paras can recover moral damages in this
Calvin Coner. suit based on quasi-delict. (YES)
2. WON the award for temperate damages was in
While the said bus was travelling, it was bumped at the order despite the fact it was not raised on appeal.
rear by another bus owned and operated by Philtranco (YES)
Service Enterprises, Inc. As a result of the strong and
Rule:
violent impact, the Inland bus was pushed forward and
1. Section 16, Rule 6 of the Revised Rules of Court
smashed into a cargo truck parked along the outer right
defines a third party complaint as a "claim that a
portion of the highway and the shoulder. Consequently,
defending party may, with leave of court, file
the said accident brought considerable damage to the
against a person not a party to the action, called
vehicles involved and caused physical injuries to the
the third party defendant, for contribution,
passengers and crew of the two buses, including the death
indemnification, subrogation, or any other relief,
of Coner.
in respect of his opponent’s claim."
Paras was taken for an emergency treatment in the nearby

Under this Rule, a person not a party to an action
hospital and thereafter taken to the National Orthopedic
may be impleaded by the defendant either (a) on
Hospital where he was found and diagnosed to be affected
an allegation of liability to the latter; (b) on the
with the following injuries: a) contusion/hematoma: b)
ground of direct liability to the plaintiff-; or, (c)
dislocation of hip upon fracture of the fibula on the right
both (a) and (b). The situation in (a) is covered
leg; c) fractured small bone on the right leg: and d) close
by the phrase "for contribution, indemnity or
fracture on the tibial plateau of the left leg.
subrogation;" while (b) and (c) are subsumed
under the catch all "or any other relief, in respect
Paras filed a complaint for damages based on breach of
of his opponent’s claim."
contract of carriage against Inland. Inland hired a third-
party complaint against Philtranco and Apolinar Miralles, it
2. Article 2224. Temperate or moderate damages,
sought for exoneration of its liabilities to Paras, asserting
which are more than nominal but less than
that the latter's cause of action should be directed against
compensatory damages, may be recovered when
Philtranco considering that the accident was caused by
the court finds that some pecuniary loss has been
Miralles' lack of care, negligence and reckless imprudence.
suffered but its amount cannot, from the nature
of the case, be proved with certainty.
Petitioner’s Argument/s: (LOST)
Paras could not recover moral damages because his suit
Application:
was based on breach of contract of carriage, pursuant to
1. The case at bar is one in which the third party
which moral damages could be recovered only if he had
defendants are brought into the action as directly
died, or if the common carrier had been guilty of fraud or
liable to the plaintiffs upon the allegation that
bad faith. Paras had suffered only physical injuries; that "the primary and immediate cause as shown by
he had not adduced evidence of fraud or bad faith on the the police investigation of said vehicular collision
part of the common carrier; and that, consequently, Paras between the above-mentioned three vehicles was
could not recover moral damages directly from it the recklessness and negligence and lack of
(Philtranco), considering that it was only being subrogated imprudence of the third-party defendant Virgilio
for Inland. Esguerra y Ledesma then driver of the passenger
bus."
Respondent’s Arguments: (WON)
Paras filed a complaint for damages based on breach of The effects are that "plaintiff and third party are
contract of carriage against Inland. at issue as to their rights respecting the claim"
and "the third party is bound by the adjudication
Ruling of the lower court: as between him and plaintiff." It is not
indispensable in the premises that the defendant Facts:
be first adjudged liable to plaintiff before the ● Reputable Forwarder Services Inc. (RFS) had an
third-party defendant may be held liable to the annual contract of carriage with Wyeth Phils.
plaintiff, as precisely, the theory of defendant is ● Wyeth insured its goods with Phil. First Insurance
that it is the third party defendant, and not he, (PFI), while RFS because of the stipulations in
who is directly liable to plaintiff. The situation there contract with Wyeth stipulated that it shall
contemplated by appellants would properly be liable for any loss and damage of the goods,
pertain to situation (a) above wherein the third RFS a Special Risk Insurance with Malayan
party defendant is being sued for contribution, Insurance Company (MIC)
indemnity or subrogation, or simply stated, for a ● As common practice between Wyeth and RFS,
defendant's "remedy over". they executed the annual contract of carriage.
Only RFS was able to sign the contract and Wyeth
It is worth adding that allowing the recovery of was not to sign the contract. RFS still continued
damages by Paras based on quasi-delict, despite to follow the terms of the contract.
his complaint being upon contractual breach, ● In October 1996, the truck of RFS carrying the
served the judicial policy of avoiding multiplicity goods of Wyeth (Cartons of Milk) was hijacked by
of suits and circuity of actions by disposing of the 10 robbers.
entire subject matter in a single litigation. ● PFI as the insurer of Wyeth paid Wyeth 2,133,257
as indemnity for the lost goods.
2. In awarding temperate damages in lieu of actual ● PFI was then subrogated with the rights of Wyeth.
damages, the CA did not err, because Paras and PFI then demanded payment from RFS.
Inland were definitely shown to have sustained ● RFS then impleaded Malayan into the case to
substantial pecuniary losses. It would really be a collect the amount covered by its Special Risk
travesty of justice were the CA now to be held Insurance
bereft of the discretion to calculate moderate or

Petitioner’s Argument/s: (Malayan) (Lost)
temperate damages, and thereby leave Paras and
● According to Special Risk Insurance policy,
Inland without redress from the wrongful act of
Malayan will not be liable to pay for loss or
Philtranco and its driver. We are satisfied that the damages because the loss or damage goods if it
CA exerted effort and practiced great care to is covered by any other insurance policy
ensure that the causal link between the physical
injuries of Paras and the material loss of Inland, Respondent’s Arguments:(PFI) (Won)
on the one hand, and the negligence of Philtranco ● PFI contends that the provision in the policy
and its driver, on the other hand, existed in fact. applies only to situations of over or double
insurance
The Code Commission, in explaining the concept ● PFI contends that there is no double insurance as
the PFI insured Wyeth and Malayan insured RFS
of temperate damages under Article 2224, makes
the following comment:
● RTC ruled in favor of Phil. First Insurance.
In some States of the American Union, temperate ● It ordered RFS to pay 2,133, 257 PFI
damages are allowed. There are cases where ● RTC ordered Malayan to indemnify RFS 1M as
from the nature of the case, definite proof of proceeds of the SPecial Risk Insurance
pecuniary loss cannot be offered, although the Issue:
court is convinced that there has been such loss.
For instance, injury to one’s commercial credit or ● Whether Malayan Insurance should be held liable
to the goodwill of a business firm is often hard to to pay RFS for the proceeds of the Special Risk
show with certainty in terms of money. Should Insurance when it claims that there is double
insurance of the goods lost or damaged. (Yes)
damages be denied for that reason? The judge
● Whether RFS is solidarily liable with Malayan (No)
should be empowered to calculate moderate
damages in such cases, rather than that the
Rule:
plaintiff should suffer, without redress from the 1. Double insurance only occurs if:
defendant’s wrongful act. a. The person insured is the same;
b. Two or more insurers insuring
Malayan Insurance Co., Inc. v. Philippines First separately
Insurance Co., Inc., et al., c. There is identity of subject matter;
G.R. No. | Date d. There is identity of interest insured; and
e. There is identity of the risk or peril persons manning the crossing. At about the time the van
insured against. was to traverse the railroad crossing, PNR Commuter No.
302 (TRAIN), operated by Jhonny Alano (Alano), was in
2. There is solidary liability only when the vicinity of the Magallanes Interchange travelling
the obligation expressly so states, when northbound. As the train neared the railroad crossing,
the law so provides or when the nature Alfaro drove the van eastward across the railroad tracks,
of the obligation so requires. closely tailing a large passenger bus. His view of the
oncoming train was blocked because he overtook the
The liability of the insured carrier or
passenger bus on its left side. The train blew its horn to
vehicle owner is based on tort, in
warn motorists of its approach. When the train was about
accordance with the provisions of the
50 meters away from the passenger bus and the van,
Civil Code; while that of the insurer
Alano applied the ordinary brakes of the train. He applied
arises from contract, particularly, the
the emergency brakes only when he saw that a collision
insurance policy.
was imminent.
Application:
1. SC said that Malayan is liable to indemnify RFS as The passenger bus successfully crossed the railroad
there was no double insurance in this case. There tracks, but the van driven by Alfaro did not. The train hit
is no identity in the person insured. PFI insured the rear end of the van, and the impact threw nine of the
Wyeth in its interest over its own goods, while 12 students in the rear, including Aaron, out of the van.
Malayan insured RFS in its interest over the safety Aaron landed in the path of the train, which dragged his
of the goods it was carrying. Hence, no double body and severed his head, instantaneously killing him.
insurance in this case. Alano fled the scene on board the train, and did not wait
2. RFS is not solidarily liable. RFS and Malayan have for the police investigator to arrive.
different obligations. RFS’ obligation arose from Devastated by the early and unexpected death of Aaron,
the damages incurred by Wyeth, while Malayan’s the Zarates commenced this action for damages against
obligation arose from the contract of insurance Alfaro, the Pereñas, PNR and Alano.
with RFS.
Petitioner’s Argument/s:
Sps. Pereña v. Sps. Zarate, et al., PERENA’S: the Pereñas adduced evidence to show that
G.R. No.157917 | August 29, 2012 they had exercised the diligence of a good father of the
family in the selection and supervision of Alfaro, by making
Facts:The Pereñas were engaged in the business of sure that Alfaro had been issued a driver’s license and had
transporting students from their respective residences in not been involved in any vehicular accident prior to the
Parañaque City to Don Bosco in Pasong Tamo, Makati City collision
and back. They employed Clemente Alfaro as driver of the
van. PNR (TRAIN): PNR tended to show that the proximate
cause of the collision had been the reckless crossing of the
The Zarates contracted the Pereñas to transport Aaron to van whose driver had not first stopped, looked and
and from Don Bosco. On August 22, 1996, as on previous listened; and that the narrow path traversed by the van
school days, the van picked Aaron up around 6:00 a.m. had not been intended to be a railroad crossing for
from the Zarates’ residence. Aaron took his place on the motorists.
left side of the van near the rear door. The van, with its
air-conditioning unit turned on and the stereo playing Respondent’s Arguments:
loudly, ultimately carried all the 14 student riders on their Zarates’ claim against the Pereñas was upon breach of the
way to Don Bosco. Considering that the students were due contract of carriage for the safe transport of Aaron; but
at Don Bosco by 7:15 a.m., and that they were already that against PNR was based on quasi delict under Article
running late because of the heavy vehicular traffic on the 2176, Civil Code.
South Superhighway, Alfaro(Driver) took the van to an
alternate route at about 6:45 a.m. by traversing the Ruling of the lower court:
narrow path underneath the Magallanes Interchange that RTC: Ruled in favor of the Zarates and ordered the
was then commonly used by Makati-bound vehicles as a defendants to pay damages
shortcut into Makati.
CA: Both Pereña and PNR appealed to the CA.
At the time, the narrow path was marked by piles of CA promulgated its decision, affirming the findings of the
construction materials and parked passenger jeepneys, RTC, but limited the moral damages to ₱ 2,500,000.00
and the railroad crossing in the narrow path had no (previously 4M); and deleted the attorney’s fees because
railroad warning signs, or watchmen, or other responsible the RTC did not state the factual and legal bases.
Issues: (b) undertaking to carry passengers over established
1. Whether or not the driver of the van is, in the roads by the method by which the business was
performance of his functions, liable for negligence conducted; and
constituting the death of Aaron (c) transporting students for a fee. Despite catering to a
2. Were the Pereñas and PNR jointly and severally limited clientèle, the Pereñas operated as a common
liable for damages carrier because they held themselves out as a ready
3. Whether or not defendant Philippine National transportation indiscriminately to the students of a
Railways being the operator of the railroad particular
system is liable for negligence in failing to provide school living within or near where they operated the
adequate safety warning signs and railings in the service and for a fee.
area
The Pereñas, acting as a common carrier, were already
Rule: presumed to be negligent at the time of the accident
Art. 2176. Whoever by act or omission causes damage to because death had occurred to their passenger.
another, there being fault or negligence, is obliged to pay
for the damage done. Such fault or negligence, if there is PNR is also liable
no pre-existing contractual relation between the parties, is At any rate, the lower courts correctly held both the
called a quasi-delict and is governed by the provisions of Pereñas and the PNR "jointly and severally" liable for
this Chapter damages arising from the death of Aaron. Although the
basis of the right to relief of the Zarates (i.e., breach of
Application: contract of carriage) against the Pereñas was distinct from
The omissions of care on the part of the van driver the basis of the Zarates’ right to relief against the PNR
constituted negligence. (i.e., quasi-delict under Article 2176, Civil Code), they
nonetheless could be held jointly and severally liable by
Pursuant to the Picart v. Smith test of negligence, the virtue of their respective negligence combining to cause
Pereñas’ driver was entirely negligent when he traversed the death of Aaron.
the railroad tracks at a point not allowed for a motorist’s
crossing despite being fully aware of the grave harm to be Philippine Airlines, Inc. v. Lim,
thereby caused to his passengers; and when he G.R. No. 168987 | Date October 10,2012
disregarded the foresight of harm to his passengers by
overtaking the bus on the left side as to leave himself blind Facts:
to the approach of the oncoming train that he knew was ● Respondents herein decided to venture into
on the opposite side of the bus. The omissions of care on business transactions involving the purchase of
the part of the van driver constituted negligence, which, weighing scales from Mrs. Ng Yuen Ming of
according to Layugan v. Intermediate Appellate Court,is Hongkong and printing press equipment from
"the omission to do something which a reasonable man, Mrs. Irsch of Germany.
guided by those considerations which ordinarily regulate ● On Feb 11, 1991, respondent herein, Mr. Lim
the conduct of human affairs, would do, or the doing of went to the office Rainbow Tours and purchased
something which a prudent and reasonable man would not 3 confirmed PAL roundtrip tickets.
do. ● On Feb 23, 1991, Mr. Lim returned to the office
of Rainbow Tours to inquire about the availability
The Pereñas were liable for the death of Aaron. of seats for the PAL Manila-Hongkong flight on
Feb 26, 1991.
They operated as a common carrier. Thus, the standard of ● Ms. Dingal, Rainbow Tours travel agent, called up
care required was extraordinary diligence and not just PAL Reservations. Upon being informed of the
ordinary diligence. unavailability of PAL seats, Mr. Lim left Rainbow
Tours without making any cancellations of their
Although the operator of the school bus service is usually confirmed bookings that were stated in their
regarded as a private carrier, primarily because of it caters respective tickets.
only to specific or privileged individuals and his operations ● On feb 26, 1991, at the check-in counter at the
is neither open to the indefinite public nor for public use, NAIA, the respondents herein were informed that
such is not the case here. their books had been cancelled.
The Pereñas as the operators of the school bus service Petitioner’s Argument/s:LOSS
were: ● PAL impleaded Rainbow Tours as third party
(a) engaged in transporting passengers generally as a defendant.
business, not just as a casual occupation;
● PAL contended that the cancellation of of the contract and the fact of its non-
respondents’ confirmed books was upon the performance by the carrier.
requiest of Ms. Dingal of Rainbow Tours.
● PAL witness Mariano Aldee III who was assigned ● The award of moral damages must be anchored
at the Check In counter disputed respondents’ on a clear showing that the complainant actually
herein claims that they were rudely treated by experienced mental anguish, besmirched
PAL employees arguing that : reputation, sleepless nights, wounded feelings or
○ PAL employees underwent 5 week similar injury.
trainings on proper handling and
courteous treatment ● Article 2224 provides temperate or moderate
○ Airline employees’ uniform practice of damages, which are more than nominal but less
treating passengers politely; than compensatory damages, may be recovered
○ PAL’s corporate policy is “Total when court finds that some pecuniary loss has
Passenger Care” been suffered but its amount cannot, from the
○ PAL subject employees to administrative nature of the case, be proved, with certainty.
sanctions when employees are impolite
and discourteous, Application:
○ Their superiors would make them ● YES. The respondents herein was able to prove
explain if employees exhibit any before the lower court that indeed holding
rudeness or discourtesy to passengers. confirmed tickets for PR300 on Feb 26, 1991, as
they did not have their bookings cancelled.
Respondent’s Arguments: WIN Having proven the existence of a contract of
● PAL personnel at the check in clerk at NAIA carriage between respondents Lao Lim and Go
arrogantly shouted at them and humiliated them and the fact of non-performance by petitioner of
in front of the other passengers by labeling their its obligation as a common carrier, it is clear that
tickets “cheap tickets” thus entitling them moral petitioner breached its contract of carriage with
damages. the respondents.
● Because of their failure to reach Hongkong in time
for the scheduled business conferences, their ● The award of moral damages in favor of the heirs
contacts did not anymore wait for them of deceased respondent Go is improper. Indeed,
● The transaction on the purchase of several in this case, since respondent Go was not able to
German printing press equipments on testify, there is then no evidence on record to
consignment was not consummated because prove that he suffered mental anguish,
their German contact insisted on meeting all besmirched reputation, sleepless nights,
three respondents considering that the proposed wounded feelings or similar injury by reason of
transaction involved a huge amount. petitioner’s conduct.
● However, there was no error committed by the
Ruling of the lower court: lower courts with regard to the award of
RTC: ordered PAL and Rainbow Tours to jointly and temperate or moderate damages to respondents
severally pay the respondents herein the sum of 75,000, Lim and Go. it is clear from the factual findings of
as a temperate or moderate damages. the lower court that respondents indeed suffered
pecuniary loss due to their failure to meet with
CA: holds that PAL clearly breached its contract of carriage their business associates.
with the respondents herein. ● On the other hand, Respondent Manuel Limtong
is not entitled to any award for damages because,
Issue: as said respondent, petitioner faithfully complied
Whether or not PAL breached its contract of carriage with their contract of carriage.
with the respondents. (YES)
Cathay Pacific Airways v. Reyes,
Whether or not the imposition of damages was G.R. No. 185891 | Jun. 26, 2013
properly done.
Facts: Respondent Wilfredo Reyes made a travel
Rule: reservation with Sampaguita Travel for his family's trip to
Australia scheduled from 12 April 1997 to 4 May 1997.
● In an action based on a breach of contract of Upon booking and confirmation of their flight schedule,
carriage, the aggrieved party does not have to Wilfredo paid for the airfare and was issued four (4) Cathay
prove that the common carrier was at fault or was Pacific round-trip tickets for Manila - HongKong - Adelaide
negligent. All that he has to prove is the existence - HongKong - Manila.
On the day of their scheduled departure from Adelaide, Rule: For one to be entitled to actual damages, it is
Wilfredo and his family arrived at the airport on time. necessary to prove the actual amount of loss with a
When the airport check-in counter opened, Wilfredo was reasonable degree of certainty, premised upon competent
informed by a staff member from Cathay Pacific that the proof and the best evidence obtainable by the injured
Reyeses did not have confirmed reservations, and only party. To justify an award of actual damages, there must
Sixta's (Wilfredo’s mother in law) flight booking was be competent proof of the actual amount of loss. Credence
confirmed. Nevertheless, they were allowed to board the can be given only to claims which are duly supported by
flight to Hong Kong due to adamant pleas from Wilfredo. receipts
Whenthey arrived in Hong Kong, they were again informed
of the same problem. Unfortunately this time, the Reyeses Application: The determination of whether or not the
were not allowed to board because the flight to Manila was award of damages is correct depends on the nature of the
fully booked. Only Sixta was allowed to proceed to Manila respondents' contractual relations with Cathay Pacific and
from HongKong. On the following day, the Reyeses were Sampaguita Travel. It is beyond dispute that respondents
finally allowed to board the next flight bound for Manila. were holders of Cathay Pacic airline tickets and they made
the booking through Sampaguita Travel.
Petitioner’s Argument/s (LOST): Cathay Pacific
alleged that based on its computerized booking system, Respondents failed to show proof of actual damages.
several and confusing bookings were purportedly made Wilfredo initially testified that he personally incurred losses
under the names of respondents through two (2) travel amounting to P300,000.00 which represents the amount
agencies, namely: Sampaguita Travel and Rajah Travel of the contract that he was supposedly scheduled to sign
Corporation. Cathay Pacific asserted that in the case of had his return trip not been cancelled. During the cross-
Wilfredo no valid ticket number was inputted within a examination however, it appears that the supposed
prescribed period which means that no ticket was sold. contract-signing was a mere formality and that an
Thus, Cathay Pacific had the right to cancel the booking. agreement had already been hatched beforehand. Hence,
Cathay Pacific found that Sampaguita Travel initially we cannot fathom how said contract did not materialize
inputted a ticket number for Wilfredo and had it cancelled because of Wilfredo's absence, and how Wilfredo incurred
the following day, while the records for Juanita and Michael such losses when he himself admitted that he entered into
do not exist. Cathay Pacific blames Sampaguita Travel for said contract on behalf of Parsons Engineering Consulting
negligence in not ensuring that respondents had confirmed Firm, where he worked as construction manager. Thus, if
bookings for their return trips. indeed there were losses, these were losses suffered by
the company and not by Wilfredo. Moreover, he did not
Respondent’s Arguments (WON): Respondents as present any documentary evidence, such as the actual
passengers sent a letter to Cathay Pacific advising the contract or affidavits from any of the parties to said
latter of the incident and demanding payment of contract, to substantiate his claim of losses.
damages.After a series of exchanges and with no
resolution in sight, respondents filed a Complaint for Under Article 2220 of the Civil Code of the Philippines, an
damages against Cathay Pacific and Sampaguita Travel award of moral damages, in breaches of contract, is in
and prayed for the following relief: a) ₱1,000,000.00 as order upon a showing that the defendant acted
moral damages; b) ₱300,000.00 as actual damages; c) fraudulently or in bad faith. What may be attributed to
₱100,000.00 as exemplary damages; and d) ₱100,000.00 Cathay Pacific is negligence concerning the lapses in their
as attorney’s fees. process of confirming passenger bookings and
reservations, done through travel agencies. But this
Ruling of the lower court: The trial court found that negligence is not so gross so as to amount to bad faith."
respondents were in possession of valid tickets but did not
have confirmed reservations for their return trip to Manila. Likewise, Sampaguita Travel cannot be held liable for
Additionally, the trial court observed that the several PNRs moral damages. True, Sampaguita Travel was negligent in
opened by Sampaguita Travel created confusion in the the conduct of its booking and ticketing which resulted in
bookings. The trial court however did not find any basis to the cancellation of flights. But its actions were not proven
establish liability on the part of either Cathay Pacific or to have been tainted with malice or bad faith. Under these
Sampaguita Travel considering that the cancellation was circumstances, respondents are not entitled to moral and
not without any justified reason. Finally, the trial court exemplary damages. With respect to attorney's fees, we
denied the claims for damages for being unsubstantiated. uphold the appellate court's finding on lack of factual and
legal justification to award attorney's fees.
Issue: WON petitioner is liable for nominal damages for
its alleged initial breach of contract with the passengers We however sustain the award of nominal damages in the
even though cathay pacific airways was able to prove amount of P25,000.00 to only three of the four
beyond reasonable doubt that it was not at fault for the respondents who were aggrieved by the last-minute
predicament of the respondent passengers. cancellation of their flights. Nominal damages are
recoverable where a legal right is technically violated and the decision of the Labor Arbiter was rendered on October
must be vindicated against an invasion that has produced 15, 1998. Further, petitioner posits that he is also entitled
no actual present loss of any kind or where there has been to the payment of interest from the finality of the decision
a breach of contract and no substantial injury or actual until full payment by the respondents.
damages whatsoever have been or can be shown.
Considering that the three respondents were denied Respondent’s Arguments: (LOST)
boarding their return flight from HongKong to Manila and
that they had to wait in the airport overnight for their Respondent prayed for the quashal of motion for
return flight, they are deemed to have technically suffered recomputation on the ground that the judgment made by
injury. the Supreme Court is already final and the amount should
not be further altered.
Dario Nacar v. Gallery Frames and/or Felipe Ruling of the lower court:
Bordey, Jr.
G.R. No. 189871 | August 13, 2013 Labor Arbiter rendered a Decision in favor of petitioner and
found that he was dismissed from employment without a
Facts: valid or just cause. Respondents appealed to the NLRC,
but it was dismissed for lack of merit. Accordingly, the
On January 24, 1997, Dario Nacar got dismissed by his NLRC sustained the decision of the Labor Arbiter.
employer, Gallery Frames. He filed a complaint; the Labor Respondents filed a motion for reconsideration, but it was
Arbiter ruled that the petitioner was dismissed without just denied. Dissatisfied, respondents filed a Petition for
cause. A computation for the separation pay and Review on Certiorari before the CA but it was likewise
backwages were made and amounted to PHP 158,919.92. denied. Respondents then sought relief before the
The respondent sought appeals to the NLRC, CA, and Supreme Court. Finding no reversible error on the part of
Supreme Court, but they were all dismissed, thus the the CA, this Court denied the petition in the Resolution
judgment became final on April 17, 2002. dated April 17, 2002.
During the execution of the final judgment, the petitioner Issue: (YES)
filed a motion for the recomputation of the damages. The
amount previously computed includes the separation pay Whether or not a re-computation in the course of
and backwages up to the time of his dismissal. The execution of the labor arbiter's original computation of the
petitioner argued that the damages should cover the awards made is legally proper.
period until the date of final judgment. A recomputation
was made and the damages was increased to PHP Rule:
471,320.31.
Principle of Immutability of Judgements
Petitioner appealed to the CA but was denied, stating that The doctrine of immutability of judgments bars courts from
since petitioner no longer appealed the October 15, 1998 modifying decisions that have already attained finality,
Decision of the Labor Arbiter, which already became final even if the purpose of the modification is to correct errors
and executory, a belated correction thereof is no longer of fact or law.
allowed. The CA stated that there is nothing left to be done
except to enforce the said judgment. Consequently, it can Application:
no longer be modified in any respect, except to correct
clerical errors or mistakes. Thus, the petitioner filed this The Supreme Court ruled that a correction in the
petition for review on certiorari. computation of the damages does not violate the rule on
immutability of judgments. The final decision made by the
Petitioner’s Argument/s: (WON) SC to award the petitioner with damages with regard to
the dismissal without justifiable cause can be divided into
Petitioner argues that notwithstanding the fact that there two important parts. One is the finding that an illegal
was a computation of backwages in the Labor Arbiter’s dismissal was indeed made. And the other is the
decision, the same is not final until reinstatement is made computation of damages. According to a previous case of
or until finality of the decision, in case of an award of Session Delights Ice Cream and Fast Foods v. CA, the SC
separation pay. Petitioner maintains that considering that held that the second part of the decision - being merely a
the October 15, 1998 decision of the Labor Arbiter did not computation of what the first part of the decision
become final and executory until the April 17, 2002 established and declared - can, by its nature, be
Resolution of the Supreme Court in G.R. No. 151332 was recomputed. The recomputation of the consequences of
entered in the Book of Entries on May 27, 2002, the illegal dismissal upon execution of the decision does not
reckoning point for the computation of the backwages and constitute an alteration or amendment of the final decision
separation pay should be on May 27, 2002 and not when being implemented. The illegal dismissal ruling stands;
only the computation of monetary consequences of this 4. The 6% per annum rate of legal interest shall be applied
dismissal is affected, and this is not a violation of the prospectively:– Final and executory judgments awarding
principle of immutability of judgments. damages prior to July 1, 2013 shall apply the 12% rate;–
Final and executory judgments awarding damages on or
On the mentioning of ESLI v. CA because of BSP-MB after July 1, 2013 shall apply the 12% rate for unpaid
Reso. No. 796 obligations until June 30, 2013; unpaid obligations with
Anent the issue of award of interest in the form of actual respect to said judgments on or after July 1, 2013 shall
or compensatory damages, the Supreme Court ruled that still incur the 6% rate.
the old case of Eastern Shipping Lines vs CA is already
modified by the promulgation of the Bangko Sentral ng Mendoza, et al. v. Gomez, et al.,
Pilipinas Monetary Board Resolution No. 796 which lowered G.R. No. 160110 | June 18, 2014
the legal rate of interest from 12% to 6%. Specifically, the
rules on interest are now as follows:
Facts:
The Isuzu elf truck owned by Spouses Gomez was hit by
1. Monetary Obligations ex. Loans: Mayamy Bus registered under the name of Lim and driven
by Mendoza. The Isuzu truck was in its rightful lane, and
a. If stipulated in writing: was even at a stop. The mishap occured when the Mayamy
bus, traveling at a fast speed and going in the opposite
direction as that of the Isuzu truck, encroached on the lane
a.1. shall run from date of judicial demand (filing of the
rightfully occupied by the Isuzu truck, and caused the
case)
latter to spin, resulting in injury to the helpers of the Isuzu
truck and extensive damage on the truck.
a.2. rate of interest shall be that amount stipulated
b. If not stipulated in writing Lim, who is the registered owner, contends that he is not
liable for damages as the truck’s actual owner is Cirilo
Enriquez, who had the bus attached with Mayamy
b.1. shall run from date of default (either failure to pay
Transport under the so-called “kabit system.”
upon extra-judicial demand or upon judicial demand
whichever is appropriate and subject to the provisions of
Article 1169 of the Civil Code)
They anchor their claim for damages on Mendoza’s
negligence and on Lim’s vicarious liability.
b.2. rate of interest shall be 6% per annum
2. Non-Monetary Obligations (such as the case at bar) Both the RTC and the CA found Mendoza liable for direct
personal negligence and Lim vicariously liable.
Issue:
a. If already liquidated, rate of interest shall be 6% per (1) WON Mendoza is liable for damages
annum, demandable from date of judicial or extra-judicial
demand (Art. 1169, Civil Code)
(2) WON Lim is the employer of Mendoza, and if so, WON
he is liable for damages
b. If unliquidated, no interest
Rule:
Except: When later on established with certainty. Interest
shall still be 6% per annum demandable from the date of Article 2185 of the Civil Code
judgment because on such date, it is already deemed that
the amount of damages is already ascertained. Unless there is proof to the contrary, it is presumed that a
person driving a motor vehicle has been negligent if at the
time of the mishap, he was violating any traffic regulation.
3. Compounded Interest – This is applicable to both
monetary and non-monetary obligations– 6% per annum
computed against the award of damages (interest) Filcar Transport Services vs. Espinas
granted by the court. To be computed from the date when
the court’s decision becomes final and executory until the The registered owner is deemed the employer of the
award is fully satisfied by the losing party. negligent driver, and is thus vicariously liable under Art.
2176, in relation to Art. 2180 of the Civil Code.
Equitable Leasing Corporation vs. Soyum
As far as third persons are concerned, the registered The weather that day was windy with a wind force of 10 to
owner of the motor vehicle is the employer of the negligent 20 knots, and the sea condition was rough, with waves 6
driver, and the actual employer is considered merely as an to 8 feet high. However, before the accident, the vessel
agent of such owner. was anchored at the causeway of the port, where it was
safe from inclement weather.
Application:
When it left the causeway to dock, the mooring rope got
(1) Yes. Mendoza is liable. It is undisputed that entangled in the vessel's propeller, thereby choking
Mendoza acted negligently in driving the bus for and disabling it, and preventing the further use of its main
intruding on the lane occupied by the Isuzu truck. engine for maneuvering.
Applying the rule in Article 2185, Mendoza’s
violation of traffic laws was the proximate cause Due to the wind and current, the dead weight of the vessel
of the harm. His negligence having caused the caused it to swing from side to side. The uncontrollable
damage, Mendoza is certainly liable to repair said vessel drifted and dragged its anchor until it hit several
damage. structures at the Pier, including the coal conveyor facility
(2) In determining who between Lim and Enriquez is owned by DMC.
the employer of Mendoza, we apply the rulings in
Filcar Transport Services vs. Espinas and Petitioner’s Argument/s:
Equitable Leasing Corporation vs Suyom, where Petitioner argues that nominal damages are only awarded
the court has consistently ruled that the to vindicate or recognize a right that has been violated,
registered owner is the employer of the negligent and not to indemnify a party for any loss suffered by the
driver. Hence, as the registered owner, Lim is latter. They are not awarded as a simple replacement for
therefore the employer of Mendoza. actual damages that were not duly proven during trial.
Consequently, Lim may also be held liable under
the doctrine of vicarious liability or imputed Considering that DMC allegedly failed to substantiate its
negligence. In our jurisdiction, vicarious liability actual loss, it was therefore improper for the CA to award
or imputed negligence is embodied in Article 2180 nominal damages based on respondent's "highly
of the Civil Code and the basis for damages in the speculative claims." - LOST
action under said article, is the direct and primary
negligence of the employer in the selection or Respondent’s Arguments:
supervision, or both, of his employees. The DMC alleges that nominal damages were rightly assessed,
general rule is that if the employer shows that he since there was a categorical finding that its "property
exercised the care and diligence of a good father right was ... violated ... due to petitioner's negligence."
of a family in the selection and supervision of his Nominal damages are recoverable where some injury has
employees, the presumption is overcome. been done, but the evidence fails to show the
However, with the enactment of the Motor Vehicle corresponding amount. - ALSO LOST
Registration Law, the defenses available under
Article 2180 of the Civil Code -- that the employee (SC decided that nominal damages is not the proper
acts beyond the scope of his assigned task or that compensation)
it exercised the due diligence of a good father of
a family to prevent the damage -- are no longer Ruling of the lower court:
available to the registered owner of the motor The RTC declared that there was no force majeure and that
vehicle, because the Motor Vehicle Registration petitioner was negligent. DMC was awarded actual
Law, to a certain extent, modified Article 2180. damages plus legal interest of 6%.
Lim, however, has a right to be indemnified by
Enriquez, him being the actual owner, under the CA modified the decision of the RTC and awarded only
principle of unjust enrichment. nominal damages.
Seven Brothers Shipping Corp. v. DMC-Construction Issue:

Resources, Inc. W/N the CA erred in awarding nominal damages after
G.R. No. 193914 | November 26, 2014 having ruled that the actual damages awarded by the RTC
was unfounded. - Computation of the amount is proper,
Facts: but it should be awarded as temperate damages not
M/V "Diamond Rabbit" (the Vessel) owned and operated nominal damages
by Seven Brothers Shipping Corporation, was at the PICOP
Pier in Surigao del Sur to dock there. Rule:
Art. 2216. No proof of pecuniary loss is necessary in order
that moral, nominal, temperate, liquidated or exemplary
damages, may be adjudicated. The assessment of such refused to board the airplane. The staff conceded and the
damages, except liquidated ones, is left to the discretion petitioner was allowed to enter the plane. Once inside the
of the court, according to the circumstances of each case. plane, petitione proceeded to his seat as reflected in the
Dummy boarding pass, however said boarding pass
Art. 2221. Nominal damages are adjudicated in order that reflected another name “Eddie Tanno” and such person
a right of the plaintiff, which has been violated or invaded was already seated. When petitioner asked Eddie to move,
by the defendant, may be vindicated or recognized, and Eddie read petitioner’s “dummy boarding pass” and it says
not for the purpose of indemnifying the plaintiff for any there his name. Eddie insulted petitioner by asking him,
loss suffered by him. “can’t you read?”
Art. 2224. Temperate or moderate damages, which are Respondent version of the facts (adopted by the CA
more than nominal but less than compensatory damages, and SC): Ohashi found out that two original passengers of
may be recovered when the court finds that some Flight no. 22 arrived hence, petitioner, being the last one
pecuniary loss has been suffered but its amount cannot, to check in for his previous flight, came last as a “wait-
from the nature of the case, be proved with certainty. listed” passenger, hence he had to give up his seat for
flight no. 22. He proceeded to go out of the plane but
Application: Ohashi assured him that he would find someone in flight
Nominal damages are 'recoverable where a legal right is no. 22, who would volunteer to give up their seat for him.
technically violated and must be vindicated against an Ohashi found a volunteer and petitioner was allowed to
invasion that has produced no actual present loss of any board the plane.
kind or where there has been a breach of contract and no
substantial injury or actual damages whatsoever have (Take note that flight no. 22 was never able to take-off
been or can be shown. because of airport curfew. The petitioner and other
delegates were accommodated by the staff to sleep in the
Temperate or moderate damages may be recovered when airport because the next available flight would be for the
the court finds that some pecuniary loss has been suffered next day. (Hotels were all fully booked since almost 1,500
but its amount cannot, from the nature of the case, be passengers were stranded due to the typhoon. Both
provided with certainty. petitioner and friends boarded the next available flight to
Hawaii.)
Since DMC truly suffered a loss caused by Seven Brothers;
and that DMC failed to sufficiently establish the amount Petitioner filed a complaint for moral and exemplary
due to him, as no actual receipt was presented. damages against NWA for breach of contract of carriage.
Ruling of the lower court: RTC Decided in favor of
Temperate damages, and not nominal damages, must be petitioner but the CA reversed it. The CA found the
awarded. respondent’s story more credible. The CA held that: (1)
moral damages cannot be awarded in breaches of
Bernales v. Northwest Airlines contracts of carriage except in cases of the death of a
G.R. No. 182395 |Oct. 5, 2015 passenger or when the common carrier acted in bad faith;
(2) the typhoon was the real and proximate cause of the
Facts: Petitioner (Bernales) a lawyer and board member cancellation of flights and NWA's failure to bring the
of Camarines Sur was, with other prominent personalities petitioner to Honolulu in time; (3) the petitioner's
from Bicol, on his way to Hawaii as a delegate of trade and accusation that Mr. Ohashi verbally abused him is not
tourism mission. They got tickets from respondent believable and contrary to ordinary human experience; (4)
(Northwest Airlines/NWA) for a flight from MNL-Japan- the airline cannot be responsible for the remarks of Eddie
Hawaii. Once they arrived in Japan, their connecting flight Tanno, a fellow passenger; and (5) 1,500 other
to Hawaii was cancelled because of a typhoon happening passengers similarly experienced the discomfort of
in Japan. They were to be accommodated as “Wait-listed” spending the night at the airport, and NWA did not
passengers for the next flight if there will be available maliciously single him out.
seats. Respondent offered them “dummy boarding passes”
for the next flight to Hawaii (Flight No. 22). Passengers for Issue: WON NWA is liable for moral and exemplary
flight no. 22 were boarded in a shuttle bus that would take damages? (NO)
them to the plane.
Rule: Moral damages predicated upon a breach of a
Petitioner’s version of the facts (Adopted by the RTC): carriage contract is only recoverable in instances where
Before the bus could leave, Ohashi (NWA staff) entered the mishap results in the death of a passenger or where
the bus and shouted at the petitioner to get off the bus. the carrier is guilty of fraud or bad faith. Bad faith is not
He was grabbed by the arm, and ejected out of the bus. simple negligence or bad judgment; it involves ill
Upon reaching the tarmac, petitioner’s companions
intentions and a conscious design to do a wrongful act for have business commitments waiting for them in Manila,
a dishonest purpose. petitioners were constrained to rent a car that took them
to Chuan Chio Station where they boarded the train to
Application: The primary cause of NWA's delay in the Hongkong where they purchased new plane tickets from
fulfilment of its obligation was the unusually strong Philippine Airlines (PAL) that flew them back to Manila.
typhoon that struck Japan that evening. We cannot
attribute bad faith or ill motives on NWA for cancelling the Upon arrival in Manila, petitioners went to Active Travel to
flight. Pushing through would have recklessly endangered inform them of their unfortunate fate with China Southern
the lives of the passengers and the crew. We do not believe Airlines. In their effort to avoid lawsuit, Active Travel
the petitioner's accusations that Ohashi barged into shuttle offered to refund the price of the plane tickets but
bus, verbally abused him, and forced him off the bus. petitioners refused to accept the offer, then went to China
Ohashi has a good track record in customer service and Southern Airlines to demand for the reimbursement of
was the recipient of several commendation letters that their airfare and travel expenses in the amount of
were presented in court. On the insulting remark from P87,375.00. The airline refused to accede to their demand,
Eddie Tanno, we cannot hold NWA responsible for the so petitioners initiated an action for damages before the
actions of the other passengers. The RTC blames the RTC of Manila against China Southern Airlines and Active
mistake of NWA's agents in the issuance of the dummy Travel.
boarding pass for putting the petitioner in that situation.
Moral damages cannot be awarded for simple mistakes in Respondent’s Arguments (Lost):
the absence of bad faith. We also cannot impute bad faith
on NWA's failure to house the passengers in any nearby China Southern Airlines denied liability by alleging that
hotels. All rooms would have been booked because almost petitioners were not confirmed passengers of the airlines
1,500 passengers were stranded. The arrival of Typhoon but were merely chance passengers. It was specifically
Higos was an extraordinary and unavoidable event. Its provided in the issued tickets that petitioners are required
occurrence made it impossible for NWA to bring the to re-confirm all their bookings at least 72 hours before
petitioner to Honolulu in time for his commitments. We their scheduled time of departures but they failed to do so
cannot hold the respondent liable for a breach of contract which resulted in the automatic cancellation of their
resulting from a fortuitous event. NWA did not act in bad bookings.
faith or in a wanton, fraudulent, reckless, or oppressive
manner. On the contrary, it exerted its best efforts to Ruling of the lower court:
accommodate the petitioner on Flight No. 22 and to lessen RTC ruled in favor of the petitioners. On appeal, CA
the petitioner's discomfort when he and the other modified the RTC Decision by deleting the award for moral
passengers were left to pass the night at the terminal. and exemplary damages for petitioners failed to prove that
China Southern Airlines' breach of contractual obligation
Ramos, et al. v. China Southern Airlines Co. Ltd., was attended with bad faith.
G.R. No.213418 | September 21, 2016
Issue:
Facts: Whether the bumping off of the petitioners was attended

Petitioners purchased five China Southern Airlines by bad faith and malice, and if so, whether they are
roundtrip plane tickets (Manila-Xiamen-Manila) from entitled to the awards of moral and exemplary damages -
Active Travel Agency for $985.00. On their way back to YES
the Manila, however, petitioners were prevented from
taking their designated flight despite the fact that earlier Rule:
that day an agent from Active Tours informed them that A common carrier is bound to carry passengers safely as
their bookings for China Southern Airlines 1920H flight are far as human care and foresight can provide, using the
confirmed. The refusal came after petitioners already utmost diligence of very cautious persons, with due regard
checked in all their baggages and were given the for all the circumstances
corresponding claim stubs and after they had paid the Willful injury to property may be a legal ground for
terminal fees. awarding moral damages if the court should find that,
under the circumstances, such damages are justly due.
According to the airlines' agent, petitioners were merely The same rule applies to breaches of contract where the
chance passengers but they may be allowed to join the defendant acted fraudulently or in bad faith.
flight if they are willing to pay an additional 500 Renminbi Bad faith does not simply connote bad judgment or
(RMB) per person. When petitioners refused to defray the negligence. It imports dishonest purpose or some moral
additional cost, their baggages were offloaded from the obliquity and conscious doing of a wrong. It means breach
plane and China Southern Airlines 1920H flight then left of a known duty through some motive, interest or ill will
Xiamen International Airport without them. Because they
that partakes the nature of fraud. Bad faith is in essence a passengers without confirmed reservations. Quite
question of intention tellingly, all the foregoing circumstances lead us to the
inevitable conclusion that petitioners indeed were bumped
Application: off from the flight. This gives rise to the claim for damages.
The airline company acted in bad faith in insolently
bumping petitioners off the flight after they have Sps. Fernando v. Northwest Airlines,
completed all the pre-departure routine. Bad faith is G.R. No. | Date
evident when the ground personnel of the airline company
unjustly and unreasonably refused to board petitioners to Facts:
the plane which compelled them to rent a car and take the
train to the nearest airport where they bought new sets of The spouses Jesus and Elizabeth S. Fernando (Fernandos)
plane tickets from another airline that could fly them are frequent flyers of Northwest Airlines, Inc. and are
home. Petitioners have every reason to expect that they holders of Elite Platinum World Perks Card, the highest
would be transported to their intended destination after category given to frequent flyers of the carrier. They are
they had checked in their luggage and had gone through known in the musical instruments and sports equipments
all the security checks. Instead, China Southern Airlines industry in the Philippines being the owners of JB Music
offered to allow them to join the flight if they are willing to and JB Sports with outlets all over the country.
pay additional cost; this amount is on top of the purchase
price of the plane tickets. The requirement to pay an The first incident — Sometime on December 20, 2001,
additional fare was insult upon injury. It is an aggravation Jesus Fernando arrived at the LA Airport via Northwest
of the breach of contract. Undoubtedly, petitioners are Airlines Flight No. NW02 to join his family who flew earlier
entitled to the award of moral damages and exemplary to the said place for a reunion for the Christmas holidays.
damages.
When Jesus Fernando presented his documents at the
Petitioners are entitled to damages, actual, moral and immigration counter, he was asked by the Immigration
exemplary.. When an airline issues a ticket to a passenger Officer to have his return ticket verified and validated since
confirmed on a particular flight, on a certain date, a the date reflected thereon is August 2001. He approached
contract of carriage arises, and the passenger has every a Northwest personnel who simply brushed it off and did
right to expect that he would fly on that flight and on that not offer any for, of assistance. This resulted to his being
date. If that does not happen, then the carrier opens itself interrogated by Immigration. He was granted only a 12
to a suit for breach of contract of carriage. In an action month stay, contrary to the usual 6 month tourist stay.
based on a breach of contract of carriage, the aggrieved
party does not have to prove that the common carrier was Since Jesus Fernando was granted only a twelve (12)-day
at fault or was negligent. All he has to prove is the stay in the US, his scheduled plans with his family as well
existence of the contract and the fact of its non- as his business commitments were disrupted.
performance by the carrier, through the latter's failure to
carry the passenger to its destination. The second incident — on their trip bak to Manila,
Northwest supervisor Linda Tang stopped them and
Petitioners had an existing contract of air carriage with demanded for the presentation of their paper tickets
China Southern Airlines as evidenced by the airline tickets (coupon type). They failed to present the same since,
issued by Active Travel. When they showed up at the according to them, Northwest issued electronic tickets
airport and after they went through the routine security (attached to the boarding passes) which they showed to
check including the checking in of their luggage and the the supervisor. In the presence of the other passengers,
payment of the corresponding terminal fees, petitioners Linda Tang rudely pulled them out of the queue. Elizabeth
were not allowed by China Southern Airlines to board on Fernando explained to Linda Tang that the matter could be
the plane. The airlines' claim that petitioners do not have sorted out by simply verifying their electronic tickets in her
confirmed reservations cannot be given credence by the computer and all she had to do was click and punch in their
Court. The petitioners were issued two-way tickets with Elite Platinum World Perks Card number. But Linda Tang
itineraries indicating the date and time of their return flight arrogantly told them that if they wanted to board the
to Manila. These are binding contracts of carriage. plane, they should produce their credit cards and pay for
their new tickets, otherwise Northwest would order their
China Southern Airlines allowed petitioners to check in luggage off-loaded from the plane.
their luggage and issued the necessary claim stubs
showing that they were part of the flight. It was only after The couple clarified the matter with Northwest upon proper
petitioners went through all the required check-in verification, they were indeed passengers on the said
procedures that they were informed by the airlines that January 29 flight to Manila. They were issued new tickets,
they were merely chance passengers. Airlines companies but as soon as they got to the boarding gate, they had
do not, as a practice, accept pieces of luggage from already missed their flight back.
Due to all the inconvenience cause and the failure to take When Northwest confirmed the reservations of the
their return flight, a complaint for damages was instituted Fernandos, it bound itself to transport the Fernandos on
by the Fernandos against Northwest before the RTC. their flight on 29 January 2002.
Petitioner’s Argument/s: (WON) In an action based on a breach of contract of carriage, the

aggrieved party does not have to prove that the common
In their petition, the Fernandos contended that it was the carrier was at fault or was negligent. All that he has to
personal misconduct, gross negligence and the rude and prove is the existence of the contract and the fact of its
abusive attitude of Northwest employees Linda non-performance by the carrier. As the aggrieved party,
Puntawongdaycha and Linda Tang which subjected them the Fernandos only had to prove the existence of the
to indignities, humiliation and embarrassment. The contract and the fact of its non-performance by Northwest,
attitude of the aforesaid employees was wanton and as carrier, in order to be awarded compensatory and actual
malevolent allegedly amounting to fraud and bad faith. damages.
Respondent’s Arguments: Therefore, having proven the existence of a contract of

carriage between Northwest and the Fernandos, and the
On the part of Northwest Airline, there was no bad faith fact of non-performance by Northwest of its obligation as
since the staff assisted to the best of their ability and that a common carrier, it is clear that Northwest breached its
they were merely implementing protocol. contract of carriage with the Fernandos. Thus, Northwest
opened itself to claims for compensatory, actual, moral
Ruling of the lower court: and exemplary damages, attorney's fees and costs of suit.
RTC & CA awarded damages to the Spouses Fernando. Moreover, Article 1733 of the New Civil Code provides that
common carriers, from the nature of their business and for
Issue: reasons of public policy, are bound to observe
extraordinary diligence in the vigilance over the goods and
Was there a breach of contract of carriage and was the for the safety of the passengers transported by them,
airline liable for damages? Yes. according to all the circumstances of each case. Also,
Article 1755 of the same Code states that a common
Rule: carrier is bound to carry the passengers safely as far as
human care and foresight can provide, using the utmost
In an action based on a breach of contract of carriage, the diligence of very cautious persons, with due regard for all
aggrieved party does not have to prove that the common the circumstances.
carrier was at fault or was negligent. All that he has to
prove is the existence of the contract and the fact of its The SC sustained the findings of the CA and the RTC that
non-performance by the carrier. As the aggrieved party, Northwest committed a breach of contract "in failing to
the Fernandos only had to prove the existence of the provide the spouses with the proper assistance to avoid
contract and the fact of its non-performance by Northwest, any inconvenience" and that the actuations of Northwest
as carrier, in order to be awarded compensatory and actual in both subject incidents "fall short of the utmost diligence
damages. of a very cautious person expected of it". Both ruled that
considering that the Fernandos are not just ordinary
Application: passengers but, in fact, frequent flyers of Northwest, the
latter should have been more courteous and
A contract of carriage is defined as one whereby a certain accommodating to their needs so that the delay and
person or association of persons obligate themselves to inconveniences they suffered could have been avoided.
transport persons, things, or goods from one place to Northwest was remiss in its duty to provide the proper and
another for a fixed price. Under Article 1732 of the Civil adequate assistance to them.
Code, this "persons, corporations, firms, or associations
engaged in the business of carrying or transporting Loadstar Shipping Co., Inc., et al. v. Malayan
passengers or goods or both, by land, water, or air, for Insurance Co.,
compensation, offering their services to the public" is [G.R. No. 185565. November 26, 2014.]
called a common carrier. Undoubtedly, a contract of
carriage existed between Northwest and the Fernandos. FACTS:
They voluntarily and freely gave their consent to an • Loadstar Shipping and Philippine Associated
agreement whose object was the transportation of the Smelting and Refining Corporation (PASAR)
Fernandos from LA to Manila, and whose cause or entered into a Contract of Affreightment for
consideration was the fare paid by the Fernandos to domestic bulk transport of the latter's copper
concentrates for a period of one year.
Northwest.
• A 5,065.47 wet metric tons (WMT) of copper been expressly stipulated. As a consequence, all the losses
concentrates were loaded in Cargo Hold. Nos. 1 and deteriorations which the goods may suffer during the
and 2 of MV "Bobcat", a marine vessel owned by transportation by reason of fortuitous event, force
petitioner and operated by Loadstar Shipping
majeure, or the inherent nature and defect of the goods,
under a charter party agreement.
shall be for the account and risk of the shipper. Proof of
• The shipper and consignee under the Bill of
Lading are Philex Mining Corporation (Philex) and these accidents is incumbent upon the carrier.
PASAR, respectively. The cargo was insured with
Malayan Insurance Company, Inc. Article 362. Nevertheless, the carrier shall be liable for
• MV "Bobcat" sailed from Poro Point, San the losses and damages resulting from the causes
Fernando, La Union bound for Isabel, Leyte. mentioned in the preceding article if it is proved, as against
• On September 12, 2000, while in the vicinity of
him, that they arose through his negligence or by reason
Cresta de Gallo, the vessel's chief officer on
routine inspection found a crack on starboard side of his having failed to take the precautions which usage
of the main deck which caused seawater to enter has established among careful persons, unless the shipper
and wet the cargo inside Cargo Hold No. 2 has committed fraud in the bill of lading, representing the
forward/aft. goods to be of a kind or quality different from what they
• Immediately after the vessel arrived at Isabel, really were. If, notwithstanding the precautions referred to
Leyte anchorage area, PASAR and Philex's in this article, the goods transported run the risk of being
representatives boarded and inspected the vessel
lost, on account of their nature or by reason of unavoidable
and undertook sampling of the copper
concentrates, it confirmed that samples of copper accident, there being no time for their owners to dispose
concentrates from Cargo Hold No. 2 were of them, the carrier may proceed to sell them, placing
contaminated by seawater. them for this purpose at the disposal of the judicial
• Consequently, PASAR rejected 750 MT of the authority or of the officials designated by special
2,300 MT cargo discharged from Cargo Hold No. provisions.
2.
xxx xxx xxx
Petitioner’s Argument:
Article 364. If the effect of the damage referred to in
The petitioners argued that the copper concentrates,
Article 361 is merely a diminution in the value of the
despite being dampened with seawater, is neither subject
goods, the obligation of the carrier shall be reduced to the
to penalty nor rejection. Under the Philex-PASAR Purchase
payment of the amount which, in the judgment of experts,
Contract Agreement, there is no rejection clause. Instead,
constitutes such difference in value.
there is a pre-agreed formula for the imposition of penalty
in case other elements exceeding the provided minimum
Article 365. If, in consequence of the damage, the goods
level would be found on the concentrates. Since the
are rendered useless for sale and consumption for the
chlorine content on the copper concentrates is still below
purposes for which they are properly destined, the
the minimum level provided under the Philex- PASAR
consignee shall not be bound to receive them, and he may
purchase contract, no penalty may be imposed against the
have
petitioners.
them in the hands of the carrier, demanding of the latter
their value at the current price on that day.
Malayan opposed the petitioners' invocation of the Philex-
If among the damaged goods there should be some pieces
PASAR purchase agreement, stating that the contract
in good condition and without any defect, the foregoing
involved in this case is a contract of affreightment between
provision shall be applicable with respect to those
the petitioners and PASAR, not the agreement between
damaged and the consignee shall receive those which are
Philex and PASAR, which was a contract for the sale of
sound, this segregation to be made by distinct and
copper concentrates
separate pieces and without dividing a single object,
unless the consignee proves the impossibility of
ISSUES:
conveniently making use of them in this form.
WON THERE IS ACTUAL LOSS OR DAMAGE TO THE CARGO
OF COPPER CONCENTRATES WHICH WOULD MAKE
APPLICATION:
LOADSTAR AS THE SHIPOWNER LIABLE. (NO)
The Court agrees with Malayan that contrary to the trial

RULING:
court's disquisition, the petitioners cannot validly invoke
The following provisions of the Code of Commerce state
the penalty clause under the Philex-PASAR purchase
how damages on goods delivered by the carrier should be
agreement, where penalties are to be imposed by the
appraised:
buyer PASAR against the seller Philex if some elements
exceeding the agreed limitations are found on the copper
Article 361. The merchandise shall be transported at the
concentrates upon delivery. The petitioners are not privy
risk and venture of the shipper, if the contrary has not
to the contract of sale of the copper concentrates. The
contract between PASAR and the petitioners is a contract concentrates to have these validly disposed of. If the
of carriage of goods and not a contract of sale. Therefore, goods were rejected, it only means there was no
the petitioners and PASAR are bound by the laws on acceptance on the part of PASAR from the carrier.
transportation of goods and their contract of Furthermore, PASAR and Malayan simply agreed on the
affreightment. purchase price of US$90,000.00 without any allegation or
proof that the said price was the depreciated value based
Since the Contract of Affreightment between the on the appraisal of experts as provided under Article 364
petitioners and PASAR is silent as regards the computation of the Code of Commerce.
of damages, whereas the bill of lading presented before
the trial court is undecipherable, the New Civil Code and Sps. Estrada v. Philippine Rabbit Bus Lines, Inc.,
the Code of Commerce shall govern the contract between G.R. No. | Date
the parties.
Facts:
From the above-cited provisions, if the goods are delivered • A collision between passenger bus driven by respondent
but arrived at the destination in damaged condition, the Saylan and owned by Philippine Rabbit Bus (PRB) and an
remedies to be pursued by the consignee depend on the Isuzu truck driven by Urez and registered to Cuyton Jr.
extent of damage on the goods. occurred which injured petitioner Estrada’s arm and was
later amputated.
If the goods are rendered useless for sale, consumption or • Petitioner filed a complaint for damages that pursuant to
for the intended purpose, the consignee may reject the the contract of carriage between him and PRB.
goods and demand the payment of such goods at their • Petitioner claims are as follows: P500k for moral
market price on that day pursuant to Article 365. In case damages, P60k for actual damages, and P25k for
the damaged portion of the goods can be segregated from attorney’s fees.
those delivered in good condition, the consignee may • RTC rules in favor of petitioner concluding PRB driver was
reject those in damaged condition and accept merely those negligent in driving the PRB bus as he was tailgating, did
which are in good condition. But if the consignee is able to not apply the breaks when necessary and instead swerved,
prove that it is impossible to use those goods which were and operated the bus at a speed greater than what was
delivered in good condition without the others, then the reasonably necessary for a full stop. Also established by
entire shipment may be rejected. Art. 2185 of the NCC “It is presumed that a person driving
a motor vehicle has been negligent if at the time of the
To reiterate, under Article 365, the nature of damage must mishap he was violating any traffic regulation, unless there
be such that the goods are rendered useless for sale, is proof to the contrary.” Which the driver failed to rebut.
consumption or intended purpose for the consignee to be Last clear chance is inapplicable in this case as the suit is
able to validly reject them. If the effect of damage on the between passenger and common carrier. RTC awarded the
goods consisted merely of diminution in value, the carrier moral damages, actual damages, and attorney’s fees.
is bound to pay only the difference between its price on • The CA partially granted the appeal and agreed with
that day and its depreciated value as provided under PRB’s contention that moral damages are not recoverable
Article 364. in actions for damages predicated on a breach of contract,
unless death or a passenger results, or it is proven that
Malayan, as the insurer of PASAR, neither stated nor the carrier was guilty of fraud or bad faith, even if death
proved that the goods are rendered useless or unfit does not result.
for the purpose intended by PASAR due to • The CA ruled that the RTC erred in ruling PRB bus
contamination with seawater. company and respondent driver are jointly and severally
liable because a driver may not be held liable under the
Hence, there is no basis for the goods' rejection under contract of carriage, not being a party of the same. The
Article 365 of the Code of Commerce. Clearly, it is carrier thus is exclusively responsible to the passenger,
erroneous for Malayan to reimburse PASAR as though the even if such breach be due to the negligence of his driver.
latter suffered from total loss of goods in the absence of • The basis of a cause of action of a passenger against the
proof that PASAR sustained such kind of loss. Otherwise, driver is either culpa criminal or culpa aquiliana. A
there will be no difference in the indemnification of goods passenger may file a criminal case based on culpa criminal
which were not delivered at all; or delivered but rendered punishable by RPC or a civil case based on culpa aquiliana
useless, compared against those which were delivered under the Civil Code, both have separate and distinct
albeit, there is diminution in value. causes of action.
Malayan also failed to establish the legal basis of its Petitioner’s Argument/s: (LOST)
decision to sell back the rejected copper concentrates to Petitioners dispute the findings of lack of fraud or bad faith
PASAR. It cannot be ascertained how and when Malayan on the part of Philippine Rabbit as to make it liable for
deemed itself as the owner of the rejected copper moral damages. According to them, the assertions of
Philippine Rabbit in its Answer, i.e., that it carried Dionisio 1. Five Hundred Thousand Pesos (₱500,000.00) as moral
safely; that it was not an insurer of all risks; that the damages;
accident was caused by a fortuitous event; that in any 2. Fifty Seven Thousand Seven Hundred Sixty Six Pesos
event, it was the negligent manner by which the Isuzu and Twenty Five Centavos (₱57,766.25), as actual
truck was operated which was the proximate cause of the damages; and
accident; and that Dionisio has no cause of action against
Philippine Rabbit, were made with the intention to evade 3. Twenty Five Thousand Pesos (₱25,000.00), as
liability. Petitioners claim that the said assertions are a attorney's fees; and the costs of suit.
clear indication of fraud or bad faith.
SO ORDERED.
They argue that while in a strict sense, Dionisio incurred
actual damages through the amputation of his right arm, CA:
such loss may rightly be considered as falling under moral There was no evidence on record indicative of fraud or bad
damages. This is because a right arm is beyond the faith on [Philippine Rabbit's] part. Bad faith should be
commerce of man and loss thereof necessarily brings established by clear and convincing evidence. The settled
physical suffering, mental anguish, besmirched reputation, rule is that the law always presumes good faith such that
social humiliation and similar injury to a person. At any any person who seeks to be awarded damages due to the
rate, should this Court award the amount of ₱500,000.00 acts of another has the burden of proving that the latter
as actual damages due to the loss of Dionisio's right arm, acted in bad faith or with ill motive. The award for
petitioners also find the same proper and appropriate attorney's fees must likewise be deleted considering that
under the circumstances. moral damages cannot be granted and none of the
instances enumerated in Article 2208 of the Civil Code is
Respondent’s Arguments: (WON) present in the instant case. However, the actual damages
The respondents, on the other hand, reiterate the rule that awarded by the trial court are adequately substantiated by
moral damages are not recoverable in an action for official receipts. Therefore, the same shall be sustained.
damages predicated on a breach of contract, as in this
case, since breach of contract is not one of the items The driver on the other hand, may not be held liable under
enumerated in Article 2219 of the Civil Code. Only as an the contract of carriage, not being a party to the same.
exception, moral damages may be recovered in an action The basis of a cause of action of a passenger against the
for breach of contract of carriage when the mishap results driver is either culpa criminal or culpa aquiliana. A
in death or if the carrier acted fraudulently or in bad faith. passenger may file a criminal case based on culpa criminal
Since Dionisio did not die in the mishap nor was Philippine punishable under the Revised Penal Code or a civil case
Rabbit found guilty of fraud or bad faith, respondents based on culpa aquiliana under Articles 2176 and 2177 of
argue that an award for moral damages is improper for the Civil Code.
having no basis in fact and in law.
A cause of action based on culpa contractual is also
separate and distinct from a cause of action based on culpa
Ruling of the lower court: aquiliana.
RTC: The trial court therefore erred in ruling that [Philippine

The RTC then proceeded to determine whether Philippine Rabbit] bus company and [respondent] driver are jointly
Rabbit, as it claimed, exercised the diligence of a good and severally liable. The driver cannot be held jointly and
father of a family in the selection and supervision of its severally liable with the carrier in case of breach of the
drivers as to negate any liability for damages. The said contract of carriage. The contract of carriage is between
court, however, was unconvinced after it found that (1) the carrier and the passenger, and in the event of
Philippine Rabbit failed to show that it had taken all the contractual liability, the carrier is exclusively responsible
necessary and actual steps to thoroughly examine the [therefor] to the passenger, even if such breach be due to
qualifications of Eduardo as a driver worthy of the negligence of his driver. The carrier can neither shift
employment; and (2) no proof relative to the existence of his liability on the contract to his driver nor share it with
company rules and regulations, instructions, and policies him for his driver's negligence is his.The trial court
affecting its drivers, as well as to their actual therefore erred in ruling that [Philippine Rabbit] bus
implementation and observance, were presented. company and [respondent] driver are jointly and severally
liable. The driver cannot be held jointly and severally liable
WHEREFORE, judgment is hereby rendered ordering x x x with the carrier in case of breach of the contract of
Philippine Rabbit Bus Lines, Inc. and Eduardo Saylan to carriage. The contract of carriage is between the carrier
pay jointly and severally x xx Dionisio Estrada the and the passenger, and in the event of contractual liability,
following amounts: the carrier is exclusively responsible [therefore] to the
passenger, even if such breach be due to the negligence
of his driver. The carrier can neither shift his liability on boarded the bus owned by Philippine Rabbit. Likewise, it
the contract to his driver nor share it with him for his was not shown that Philippine Rabbit's breach of its known
driver's negligence is his. duty, which was to transport Dionisio from Urdaneta to La
Union,43 was attended by some motive, interest, or ill will.
Issue: From these, no fraud or bad faith can be attributed to
W/N the CA erred in declaring that there was no evidence Philippine Rabbit.
to indicate bad faith or fraud on PRB bus company to make
it liable for moral damages. (NO) Darines, et al. v. Quiñones, et al.,
G.R. No. 206468 | August 2, 2017
Rule:
Facts: Judith and her daughter, Joyce (petitioners) alleged
Article 2185. Unless there is proof to the contrary, it is in their Complaint that they boarded the Amianan Bus Line
presumed that a person driving a motor vehicle has been as paying passengers enroute from Carmen, Rosales,
negligent if at the time of the mishap, he was violating any Pangasinan to Baguio City. Respondent Quitan was driving
traffic regulation. the bus at that time. While travelling on Camp 3, Tuba,
Article 2176. Whoever by act or omission causes damage Benguet along Kennon Road, the bus crashed into a truck
to another, there being fault or negligence, is obliged to which was parked on the shoulder of Kennon Road. As a
pay for the damage done. Such fault or negligence, if there result, both vehicles were damaged; two passengers of the
is no pre-existing contractual relation between the parties, bus died; and the other passengers, including petitioners,
is called a quasi-delict and is governed by the provisions were injured. In particular, Joyce suffered cerebral
of this Chapter. concussion while Judith had an eye wound which required
an operation.
Article 2177. Responsibility for fault or negligence under
the preceding article is entirely separate and distinct from Petitioner’s Argument: Petitioners argued that Quitan
the civil liability arising from negligence under the Penal and respondent Quinones, the operator of Amianan Bus
Code. But the plaintiff cannot recover damages twice for Line, breached their contract of carriage as they failed to
the same act or omission of the defendant. bring them safely to their destination. They also contended
that Quitan's reckless and negligent driving caused the
Application: collision.
Moral damages include physical suffering, mental anguish,
fright, serious anxiety, besmirched reputation, wounded Respondent’s Arguments: For their part, Quinones and
feelings, moral shock, social humiliation, and similar Quitan countered in their Answer that Quitan was driving
injury. Though incapable of pecuniary computation, moral in a careful, prudent, and dutiful manner at the normal
damages may be recovered if they are the proximate speed of 40 kilometers per hour.
result of the defendant's wrongful act or omission.
Requisites for the award of moral damages: (1) there must According to them, the proximate cause of the incident
be an injury clearly sustained by the claimant, whether was the negligence of the truck driver, Ronald C.
physical, mental or psychological; (2) there must be a Fernandez, who parked the truck at the roadside right
culpable act or omission factually established; (3) the after the curve without having installed any early warning
wrongful act or omission of the defendant is the proximate device.
cause of the injury sustained by the claimant; and (4) the
award for damages is predicated on any of the cases stated They also claimed that Quinones observed due diligence in
in Article 2219 of the Civil Code the selection and supervision of his employees as he
conducted seminars on road safety measures; and Quitan
It has been held, however, that "allegations of bad faith attended such seminars including those required by the
and fraud must be proved by clear and convincing government on traffic safety.
evidence."In this case, the fraud or bad faith that must be
convincingly proved by petitioners should be one which They likewise averred that Quitan was a licensed
was committed by Philippine Rabbit in breaching its professional driver who, in his 12 years as a public utility
contract of carriage with Dionisio. Unfortunately for driver, had not figured in any incident like the one at hand.
petitioners, the Court finds no persuasive proof of such
fraud or bad faith. Ruling of the lower court: CA ruling that in an action for
breach of contract, moral damages may be recovered only
There is no showing here that Philippine Rabbit induced when a) death of a passenger results; or b) the carrier was
Dionisio to enter into a contract of carriage with the former guilty of fraud and bad faith even if death does not result;
through insidious machination. Neither is there any and that neither of these circumstances were present
indication or even an allegation of deceit or concealment in the case at bar.
or omission of material facts by reason of which Dionisio
Issue: WoN petitioners are entitled to damages. (NO) Petitioner contests the CA's award of temperate damages
in lieu of actual damages, which was purportedly testified
Rule: To stress, this case is one for breach of contract of to and duly proven by the respondents.
carriage (culpa contractual) where it is necessary to show
the existence of the contract between the parties, and the Citing Article 2232, Petitioner also objects to the CA's
failure of the common carrier to transport its passenger award of exemplary damages, claiming that the Court did
safely to his or her destination. not find any specific acts of negligent or "wanton,
fraudulent, reckless, oppressive or malevolent conduct."
Application: The CA correctly held that, since no moral
damages was awarded then, there is no basis to Respondent’s Arguments (WON):
grant exemplary damages and attorney's fees to
petitioners. Respondents gave lengthy account of the incident and the
fact that they suffered loss of personal things during the
An action for breach of contract differs from quasi-delicts sinking of the vessel. Respondents also pointed out that
(also referred as culpa aquiliana or culpa extra contractual) there were no crew assisting them when they were
as the latter emanate from the negligence of the tort vacating their cabin.
feasor including such instance where a person is injured in
a vehicular accident by a party other than the carrier Ruling of the lower court:
where he is a passenger.
RTC granted moral, exemplary, actual and nominal
Clearly, unless it is fully established (and not just
damages in favor of the respondents. CA however
lightly inferred) that negligence in an action for
modified the RTC’s decision removing nominal damages,
breach of contract is so gross as to amount to
and granting temperate damages (instead of actual).
malice, then the claim of moral damages is without
merit. Petitioners propounded on the negligence of
Issue:
respondents, but did not discuss or impute fraud or bad
faith, or such gross negligence which would amount to bad
1. WON temperate damages should be
faith, against respondents. There being neither allegation
awarded?(YES)
nor proof that respondents acted in fraud or in bad faith in
performing their duties arising from their contract of
2. WON exemplary damages should be
carriage, they are then not liable for moral damages.
awarded?(YES)
Since petitioners are not entitled to either moral,
temperate, liquidated, or compensatory damages,
then their claim for exemplary damages is bereft of Rule:
merit.
On the issue on the award of temperate damages:
Sulpicio Lines, Inc. v. Karaan, et al.,
G.R. No. 208590 | October 3, 2018 The law sanctions the award of temperate damages
in case of insufficiency of evidence of actual loss
Facts: suffered.
Respondents were passengers of the M/V Princess of the Article 2224. Temperate or moderate damages, which are
Orient, owned by petitioner, when it sank on September more than nominal but less than compensatory damages,
18, 1998. may be recovered when the court finds that some
pecuniary loss has been suffered but its amount cannot,
They filed a complaint based on breach of contract of from the nature of the case, be provided with certainty
carriage against petitioner praying for various amount of
damages as passengers/survivors of the aforementioned On the award of exemplary damages:
vessel.
Article 2229. Exemplary or corrective damages are
They specifically sought for actual, moral, exemplary and imposed, by way of example or correction for the
nominal damages, as well as attorney’s fees of 5% of the public good, in addition to the moral, temperate,
total awards of damages. liquidated or compensatory damages.
Petitioner’s Argument/s (LOST): Article 2232. In contracts and quasi-contracts, the

court may award exemplary damages if the
defendant acted in a wanton, fraudulent, reckless, Petitioner and respondent executed a credit agreement
oppressive, or malevolent manner. allowing respondent to purchase airline tickets on credit
and at a fixed price from petitioner.
Conduct is reckless when it is an extreme departure from
ordinary care, in a situation in which a high degree of Respondent purchased several airline tickets from
danger is apparent. petitioner under this agreement. Despite the payment
terms respondent had an outstanding balance of
Application: P1,738,180.00, prompting petitioner to send a demand
letter to respondent. Petitioner, through its counsel, wrote
The Court found no gross error on the part of the CA in respondent informing him that he will be refused carriage
imposing temperate damages because while it has been on any of petitioner's network or flights until respondent
established in the records of the case that the respondents settles his outstanding balance.
suffered loss during the unfortunate sinking of MV Princess
of the Orient, there is no independent proof presented, Meanwhile, respondent purchased and booked flights. For
other than respondent’s bare claims, to determine the his July 16, 2000 flight, respondent was refused boarding.
numerical value of the loss. Petitioner's manager executed a written document which
detailed that the refusal is linked to Article 7, of the general
The CA also found no error in the award of exemplary terms and condition of transportation — passengers and
damages considering the lower court’s consistent finding luggage — stating that airline carrier may refuse the
that respondents are entitled to moral and temperate boarding of a passenger or the loading of a luggage, if he
damages for the sinking of M/V Princess of the Orient. has previously informed the passenger in writing that he
does not want to carry him/her anymore or if any of the
Since petitioner failed to prove that it had exercised the following cases has happened:
degree of extraordinary diligence required of common
carriers, it should be presumed to have acted in a reckless ● applicable air-fare or all due expenses or taxes
manner, and the courts have the judicial discretion to have not been paid or,
grant or deny exemplary damages in contracts and quasi- ● credit arrangements have not been made
contracts against a defendant who acted in wanton, between the air-carrier and the passenger
fraudulent, reckless, oppressive, or malevolent manner.
In this case, BMI found that the "erroneous maneuvers"
during the ill-fated voyage by the captain of the Petitioner argues that the CA's award of moral and
petitioner's vessel had caused the sinking. After the vessel exemplary damages, as well as attorney's fees, in favor of
had cleared Limbones Point while navigating towards the respondent is contrary to law and applicable
direction of Fortune Island, the captain already noticed the jurisprudence. Its refusal to transport respondent is
listing of the vessel by three degrees to the portside of the pursuant to a right arising from the binding terms of the
vessel, but, according to the BMI, he did not exercise contract of carriage as the tickets issued to respondent are
prudence as required by the situation in which his vessel subject to certain conditions. These conditions are
was suffering the battering on the starboard side by big embodied in petitioner's General Conditions of Carriage,
waves of seven to eight meters high and strong Passenger, and Baggage, Article VII of cited above and
southwesterly winds of 25 knots. The BMI pointed out that that the respondent's tickets are subject to the conditions
he should have considerably reduced the speed of the set by the International Air Transport Association providing
vessel based on his experience about the vessel, but he that carrier reserves the right to refuse carriage to any
did this when the vessel was already tilting to her portside person who has acquired a ticket in violation of applicable
(the side that faced the port, allowing cargo to be loaded law or carrier's tariffs, rules or regulations.
or discharged) between 15 to 20 degrees, which was
almost the maximum angle of the vessel's loll.
SC also emphasized that the records of the case support Given respondent's unpaid ticket purchases amounting to
the conclusion that petitioner was extremely remiss before P1,738,180.00, there was a violation of the terms of the
and during the time of the vessel's sinking. credit agreement and petitioner's rules and regulations,
which justifies the latter's exercise of its right to refuse
Air France v. Zani, G.R. No. carriage to respondent. Further, assuming that the award
G.R. No. 199767 | March 13, 2019 is proper, petitioner contends that the amounts are
unconscionable, exorbitant, and plainly inconsistent with
Facts jurisprudence.
Respondent’s Arguments: with respondent. While petitioner may have been negligent
in interpreting and applying the conditions of the contract
Respondent anchors his claim for damages against of carriage and in not informing respondent earlier that he
petitioner on the latter's alleged breach of their contract of will not be allowed to board the flight, We cannot conclude
carriage when petitioner refused to allow him to board the that petitioner's negligence is so gross and reckless that it
aircraft on July 16, 2000. already amounts to bad faith.
Ruling of the lower court: Exemplary Damages
RTC ruled in respondent's favor holding that petitioner and Article 2232 of the Civil Code provides that in a contractual
respondent had a perfected contract when the former or quasi-contractual relationship, exemplary damages
confirmed the latter's tickets twice, and that petitioner's may be awarded only if the defendant had acted in a
refusal to let respondent board was a breach of their wanton, fraudulent, reckless, oppressive, or malevolent
contract, notwithstanding respondent's pending obligation manner. Article 2234 further requires that to be entitled to
to it. The RTC dismissed respondent's claim against SAL exemplary damages, the claimant must show that he is
on the ground that there was no showing that SAL is entitled to moral, temperate, or compensatory damages.
petitioner's principal. Since respondent is not entitled to any of these damages,
the award of exemplary damages must be deleted.
CA affirmed the Decision of RTC awarding moral and
exemplary damages, and attorney's fees in favor of Attorney's fees and litigation costs.
respondent Charles Auguste Raymond M. Zani due to
petitioner Air France's breach of the contract of carriage While Article 2208 of the Civil Code allows attorney's fees
between them. to be awarded if the claimant is compelled to litigate with
third persons or to incur expenses to protect his interest
Issue: by reason of an unjustified act or omission of the party
from whom it is sought, there must be a showing that the
Whether the award of actual and damages were proper losing party acted willfully or in bad faith and practically
given the issue because of breach of contract despite the compelled the claimant to litigate and incur litigation
respondent’s debt. expenses. Thus, the matter of attorney's fees cannot be
touched upon only in the dispositive portion of the
Rule: decision. The text itself must state the reasons why
attorney's fees are being awarded.
Under Article 2220 of the Civil Code, moral damages may
be awarded in breaches of contract when the defendant While the dispositive portion of the RTC Decision provided
acted fraudulently or in bad faith. In Cathay Pacific for the award of attorney's fees and costs of suit, neither
Airways, Ltd. v. Vazquez, it was explained that: the RTC Decision nor the CA Decision provided the factual
or legal justification for the awards. Thus, for lack of
Moral damages predicated upon a breach of contract of sufficient basis in fact, law, or equity, together with the
carriage may only be recoverable in instances where the absence of bad faith, the award of attorney's fees and
carrier is guilty of fraud or bad faith or where the mishap costs must be deleted.
resulted in the death of a passenger. Where in breaching
the contract of carriage the airline is not shown to have Nominal Damages
acted fraudulently or in bad faith, liability for damages is
limited to the natural and probable consequences of the Art. 2221. Nominal damages are adjudicated in order that
breach of the obligation which the parties had foreseen or a right of the plaintiff, which has been violated or invaded
could have reasonably foreseen. by the defendant, may be vindicated or recognized, and
not for the purpose of indemnifying the plaintiff for any
Where the negligence of the carrier is so gross and reckless loss suffered by him.
as to virtually amount to bad faith, moral damages may
also be awarded to the passenger. Gross negligence Nominal damages are recoverable if no actual, substantial,
implies a want or absence of or failure to exercise slight or specific damages were shown to have resulted from the
care or diligence, or the entire absence of care. It evinces breach. The amount of such damages is addressed to the
a thoughtless disregard of consequences without exerting sound discretion of the court, taking into account the
any effort to avoid them relevant circumstances. Taking into consideration the
circumstances that respondent was forced to rebook his
Here, there is no showing that petitioner committed an act flight, rearrange his schedule and business meetings, and
indicating its utter lack of care and diligence in its dealing suffer confusion and frustration because of his missed
flight, the award of P50,000.00 as nominal damages is
proper.
Application:
There was a breach of contract when Air France barred

the respondent from his flight despite the perfection of
contract of carriage. However, absent malicious intent,
gross negligence and bad faith only nominal damages
may be awarded.

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MODULE 6 When confronted with Keihin-Everett's findings, Orient

Freight wrote back on May 15, 2002 to admit that its

Here, petitioner denies that it was obliged to disclose the

The obligation to report what happened during the Facts:

Ruling of the lower court: Civil Action Based on Law or Contract

Facts: Galvez-Leonio testified that it was company policy not to

Facts: Respondent’s Arguments: (WON)

Respondent’s Arguments: WON

Rule: Victory Liner, Inc. v. Rosalito Gammad, et al.,

However, we agree with the Trial Court in denying Petitioner’s Argument/s:

Sps. Ong v. Court of Appeals, Respondent’s Arguments: CA, INLAND TRAILWAYS,

Apart from the fact that respondent's plane ticket,

Facts: There are only 4 instances wherein the exempting

Ruling of the lower court: Sps. Cruz v. Sun Holidays, Inc.,

Under the circumstances, it is reasonable to award Ruling of the lower court:

Paras was taken for an emergency treatment in the nearby

bereft of the discretion to calculate moderate or

Equitable Leasing Corporation vs. Soyum

Seven Brothers Shipping Corp. v. DMC-Construction Issue:

Facts: Whether the bumping off of the petitioners was attended

Petitioner’s Argument/s: (WON) In an action based on a breach of contract of carriage, the

Respondent’s Arguments: Therefore, having proven the existence of a contract of

The Court agrees with Malayan that contrary to the trial

RTC: The trial court therefore erred in ruling that [Philippine

Petitioner’s Argument/s (LOST): Article 2232. In contracts and quasi-contracts, the

Ruling of the lower court: Exemplary Damages

There was a breach of contract when Air France barred

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