G.R. No.

L-22272 June 26, 1967

ANTONIA MARANAN, plaintiff-appellant,

vs.
PASCUAL PEREZ, ET AL., defendants.
PASCUAL PEREZ, defendant appellant.

Pedro Panganiban for plaintiff-appellant.

Magno T. Bueser for defendant-appellant.

BENGZON, J.P., J.:

Rogelio Corachea, on October 18, 1960, was a passenger in a taxicab owned and operated by Pascual Perez
when he was stabbed and killed by the driver, Simeon Valenzuela.

Valenzuela was prosecuted for homicide in the Court of First Instance of Batangas. Found guilty, he was
sentenced to suffer imprisonment and to indemnify the heirs of the deceased in the sum of P6,000. Appeal
from said conviction was taken to the Court of Appeals.1wph1.t

On December 6 1961, while appeal was pending in the Court of Appeals, Antonia Maranan, Rogelio's mother,
filed an action in the Court of First Instance of Batangas to recover damages from Perez and Valenzuela for
the death of her son. Defendants asserted that the deceased was killed in self-defense, since he first assaulted
the driver by stabbing him from behind. Defendant Perez further claimed that the death was a caso fortuito for
which the carrier was not liable.

The court a quo, after trial, found for the plaintiff and awarded her P3,000 as damages against defendant
Perez. The claim against defendant Valenzuela was dismissed. From this ruling, both plaintiff and defendant
Perez appealed to this Court, the former asking for more damages and the latter insisting on non-liability.
Subsequently, the Court of Appeals affirmed the judgment of conviction earlier mentioned, during the pendency
of the herein appeal, and on May 19, 1964, final judgment was entered therein. (Rollo, p. 33).

Defendant-appellant relies solely on the ruling enunciated in Gillaco v. Manila Railroad Co., 97 Phil. 884, that
the carrier is under no absolute liability for assaults of its employees upon the passengers. The attendant facts
and controlling law of that case and the one at bar are very different however. In the Gillaco case, the
passenger was killed outside the scope and the course of duty of the guilty employee. As this Court there
found:

x x x when the crime took place, the guard Devesa had no duties to discharge in connection with the
transportation of the deceased from Calamba to Manila. The stipulation of facts is clear that when
Devesa shot and killed Gillaco, Devesa was assigned to guard the Manila-San Fernando (La Union)
trains, and he was at Paco Station awaiting transportation to Tutuban, the starting point of the train that
he was engaged to guard. In fact, his tour of duty was to start at 9:00 two hours after the commission of
the crime. Devesa was therefore under no obligation to safeguard the passengers of the Calamba-
Manila train, where the deceased was riding; and the killing of Gillaco was not done in line of duty. The
position of Devesa at the time was that of another would be passenger, a stranger also awaiting
transportation, and not that of an employee assigned to discharge any of the duties that the Railroad
had assumed by its contract with the deceased. As a result, Devesa's assault can not be deemed in law
a breach of Gillaco's contract of transportation by a servant or employee of the carrier. . . . (Emphasis
supplied)

Now here, the killing was perpetrated by the driver of the very cab transporting the passenger, in whose hands
the carrier had entrusted the duty of executing the contract of carriage. In other words, unlike the Gillaco case,
the killing of the passenger here took place in the course of duty of the guilty employee and when the
employee was acting within the scope of his duties.
Moreover, the Gillaco case was decided under the provisions of the Civil Code of 1889 which, unlike the
present Civil Code, did not impose upon common carriers absolute liability for the safety of passengers against
wilful assaults or negligent acts committed by their employees. The death of the passenger in the Gillaco case
was truly a fortuitous event which exempted the carrier from liability. It is true that Art. 1105 of the old Civil
Code on fortuitous events has been substantially reproduced in Art. 1174 of the Civil Code of the Philippines
but both articles clearly remove from their exempting effect the case where the law expressly provides for
liability in spite of the occurrence of force majeure. And herein significantly lies the statutory difference between
the old and present Civil Codes, in the backdrop of the factual situation before Us, which further accounts for a
different result in the Gillaco case. Unlike the old Civil Code, the new Civil Code of the Philippines expressly
makes the common carrier liable for intentional assaults committed by its employees upon its passengers, by
the wording of Art. 1759 which categorically states that

Common carriers are liable for the death of or injuries to passengers through the negligence or willful
acts of the former's employees, although such employees may have acted beyond the scope of their
authority or in violation of the orders of the common carriers.

The Civil Code provisions on the subject of Common Carriers1 are new and were taken from Anglo-American
Law.2 There, the basis of the carrier's liability for assaults on passengers committed by its drivers rests either
on (1) the doctrine of respondeat superior or (2) the principle that it is the carrier's implied duty to transport the
passenger safely.3

Under the first, which is the minority view, the carrier is liable only when the act of the employee is within the
scope of his authority and duty. It is not sufficient that the act be within the course of employment only.4

Under the second view, upheld by the majority and also by the later cases, it is enough that the assault
happens within the course of the employee's duty. It is no defense for the carrier that the act was done in
excess of authority or in disobedience of the carrier's orders.5 The carrier's liability here is absolute in the
sense that it practically secures the passengers from assaults committed by its own employees.6

As can be gleaned from Art. 1759, the Civil Code of the Philippines evidently follows the rule based on the
second view. At least three very cogent reasons underlie this rule. As explained in Texas Midland R.R. v.
Monroe, 110 Tex. 97, 216 S.W. 388, 389-390, and Haver v. Central Railroad Co., 43 LRA 84, 85: (1) the special
undertaking of the carrier requires that it furnish its passenger that full measure of protection afforded by the
exercise of the high degree of care prescribed by the law, inter alia from violence and insults at the hands of
strangers and other passengers, but above all, from the acts of the carrier's own servants charged with the
passenger's safety; (2) said liability of the carrier for the servant's violation of duty to passengers, is the result
of the formers confiding in the servant's hands the performance of his contract to safely transport the
passenger, delegating therewith the duty of protecting the passenger with the utmost care prescribed by law;
and (3) as between the carrier and the passenger, the former must bear the risk of wrongful acts or negligence
of the carrier's employees against passengers, since it, and not the passengers, has power to select and
remove them.

Accordingly, it is the carrier's strict obligation to select its drivers and similar employees with due regard not
only to their technical competence and physical ability, but also, no less important, to their total personality,
including their patterns of behavior, moral fibers, and social attitude.

Applying this stringent norm to the facts in this case, therefore, the lower court rightly adjudged the defendant
carrier liable pursuant to Art. 1759 of the Civil Code. The dismissal of the claim against the defendant driver
was also correct. Plaintiff's action was predicated on breach of contract of carriage7 and the cab driver was not
a party thereto. His civil liability is covered in the criminal case wherein he was convicted by final judgment.

In connection with the award of damages, the court a quo granted only P3,000 to plaintiff-appellant. This is the
minimum compensatory damages amount recoverable under Art. 1764 in connection with Art. 2206 of the Civil
Code when a breach of contract results in the passenger's death. As has been the policy followed by this
Court, this minimal award should be increased to P6,000. As to other alleged actual damages, the lower court's
finding that plaintiff's evidence thereon was not convincing,8 should not be disturbed. Still, Arts. 2206 and 1764
award moral damages in addition to compensatory damages, to the parents of the passenger killed to
compensate for the mental anguish they suffered. A claim therefor, having been properly made, it becomes the
court's duty to award moral damages.9 Plaintiff demands P5,000 as moral damages; however, in the
circumstances, We consider P3,000 moral damages, in addition to the P6,000 damages afore-stated, as
sufficient. Interest upon such damages are also due to plaintiff-appellant. 10

Wherefore, with the modification increasing the award of actual damages in plaintiff's favor to P6,000, plus
P3,000.00 moral damages, with legal interest on both from the filing of the complaint on December 6, 1961
until the whole amount is paid, the judgment appealed from is affirmed in all other respects. No costs. So
ordered.

G.R. No. 85691 July 31, 1990

BACHELOR EXPRESS, INCORPORATED, and CRESENCIO RIVERA, petitioners,

vs.
THE HONORABLE COURT OF APPEALS (Sixth Division), RICARDO BETER, SERGIA BETER, TEOFILO
RAUTRAUT and ZOETERA RAUTRAUT, respondents.

Aquino W. Gambe for petitioners.

Tranquilino O. Calo, Jr. for private respondents.

GUTIERREZ, JR., J.:

This is a petition for review of the decision of the Court of Appeals which reversed and set aside the order of
the Regional Trial Court, Branch I, Butuan City dismissing the private respondents' complaint for collection of
"a sum of money" and finding the petitioners solidarily liable for damages in the total amount of One Hundred
Twenty Thousand Pesos (P120,000.00). The petitioners also question the appellate court's resolution denying
a motion for reconsideration.

On August 1, 1980, Bus No. 800 owned by Bachelor Express, Inc. and driven by Cresencio Rivera was the
situs of a stampede which resulted in the death of passengers Ornominio Beter and Narcisa Rautraut.

The evidence shows that the bus came from Davao City on its way to Cagayan de Oro City passing Butuan
City; that while at Tabon-Tabon, Butuan City, the bus picked up a passenger; that about fifteen (15) minutes
later, a passenger at the rear portion suddenly stabbed a PC soldier which caused commotion and panic
among the passengers; that when the bus stopped, passengers Ornominio Beter and Narcisa Rautraut were
found lying down the road, the former already dead as a result of head injuries and the latter also suffering
from severe injuries which caused her death later. The passenger assailant alighted from the bus and ran
toward the bushes but was killed by the police. Thereafter, the heirs of Ornominio Beter and Narcisa Rautraut,
private respondents herein (Ricardo Beter and Sergia Beter are the parents of Ornominio while Teofilo
Rautraut and Zoetera [should be Zotera] Rautraut are the parents of Narcisa) filed a complaint for "sum of
money" against Bachelor Express, Inc. its alleged owner Samson Yasay and the driver Rivera.

In their answer, the petitioners denied liability for the death of Ornominio Beter and Narcisa Rautraut. They
alleged that ... the driver was able to transport his passengers safely to their respective places of destination
except Ornominio Beter and Narcisa Rautraut who jumped off the bus without the knowledge and consent,
much less, the fault of the driver and conductor and the defendants in this case; the defendant corporation had
exercised due diligence in the choice of its employees to avoid as much as possible accidents; the incident on
August 1, 1980 was not a traffic accident or vehicular accident; it was an incident or event very much beyond
the control of the defendants; defendants were not parties to the incident complained of as it was an act of a
third party who is not in any way connected with the defendants and of which the latter have no control and
supervision; ..." (Rollo, pp. 112-113).itc-asl
After due trial, the trial court issued an order dated August 8, 1985 dismissing the complaint.

Upon appeal however, the trial court's decision was reversed and set aside. The dispositive portion of the
decision of the Court of Appeals states:

WHEREFORE, the Decision appealed from is REVERSED and SET ASIDE and a new one
entered finding the appellees jointly and solidarily liable to pay the plaintiffs-appellants the
following amounts:

1) To the heirs of Ornominio Beter, the amount of Seventy Five Thousand Pesos (P75,000.00) in
loss of earnings and support, moral damages, straight death indemnity and attorney's fees; and,

2) To the heirs of Narcisa Rautraut, the amount of Forty Five Thousand Pesos (P45,000.00) for
straight death indemnity, moral damages and attorney's fees. Costs against appellees. (Rollo,
pp. 71-72)

The petitioners now pose the following questions

What was the proximate cause of the whole incident? Why were the passengers on board the
bus panicked (sic) and why were they shoving one another? Why did Narcisa Rautraut and
Ornominio Beter jump off from the running bus?

The petitioners opine that answers to these questions are material to arrive at "a fair, just and equitable
judgment." (Rollo, p. 5) They claim that the assailed decision is based on a misapprehension of facts and its
conclusion is grounded on speculation, surmises or conjectures.

As regards the proximate cause of the death of Ornominio Beter and Narcisa Rautraut, the petitioners maintain
that it was the act of the passenger who ran amuck and stabbed another passenger of the bus. They contend
that the stabbing incident triggered off the commotion and panic among the passengers who pushed one
another and that presumably out of fear and moved by that human instinct of self-preservation Beter and
Rautraut jumped off the bus while the bus was still running resulting in their untimely death." (Rollo, p. 6) Under
these circumstances, the petitioners asseverate that they were not negligent in the performance of their duties
and that the incident was completely and absolutely attributable to a third person, the passenger who ran
amuck, for without his criminal act, Beter and Rautraut could not have been subjected to fear and shock which
compelled them to jump off the running bus. They argue that they should not be made liable for damages
arising from acts of third persons over whom they have no control or supervision.

Furthermore, the petitioners maintain that the driver of the bus, before, during and after the incident was driving
cautiously giving due regard to traffic rules, laws and regulations. The petitioners also argue that they are not
insurers of their passengers as ruled by the trial court.

The liability, if any, of the petitioners is anchored on culpa contractual or breach of contract of carriage. The
applicable provisions of law under the New Civil Code are as follows:

ART. 1732. Common carriers are persons, corporations, firms or associations engaged in the
business of carrying or transporting passengers or goods or both by land, water, or air, for
compensation, offering their services to the public.

ART. 1733. Common carriers, from the nature of their business and for reasons of public policy,
are bound to observe extraordinary diligence in the vigilance over the goods and for the safety
of the passengers transported by them, according to all the circumstances of each case.

xxx xxx xxx

 ART. 1755. A common carrier is bound to carry the passengers safely as far as human care and
foresight can provide, using the utmost diligence of very cautious persons, with a due regard for
all the circumstances.

ART. 1756. In case of death of or injuries to passengers, common carriers are presumed to
have been at fault or to have acted negligently, unless they prove that they observed
extraordinary diligence as prescribed in Articles 1733 and 1755.

There is no question that Bachelor Express, Inc. is a common carrier. Hence, from the nature of its business
and for reasons of public policy Bachelor Express, Inc. is bound to carry its passengers safely as far as human
care and foresight can provide using the utmost diligence of very cautious persons, with a due regard for all the
circumstances.

In the case at bar, Ornominio Beter and Narcisa Rautraut were passengers of a bus belonging to petitioner
Bachelor Express, Inc. and, while passengers of the bus, suffered injuries which caused their death.
Consequently, pursuant to Article 1756 of the Civil Code, petitioner Bachelor Express, Inc. is presumed to have
acted negligently unless it can prove that it had observed extraordinary diligence in accordance with Articles
1733 and 1755 of the New Civil Code.

Bachelor Express, Inc. denies liability for the death of Beter and Rautraut on its posture that the death of the
said passengers was caused by a third person who was beyond its control and supervision. In effect, the
petitioner, in order to overcome the presumption of fault or negligence under the law, states that the vehicular
incident resulting in the death of passengers Beter and Rautraut was caused by force majeure or caso
fortuito over which the common carrier did not have any control.

Article 1174 of the present Civil Code states:

Except in cases expressly specified by law, or when it is otherwise declared by stipulations, or

when the nature of the obligation requires the assumption of risk, no person shall be responsible
for those events which could not be foreseen, or which though foreseen, were inevitable.

The above-mentioned provision was substantially copied from Article 1105 of the old Civil Code which states"

No one shall be liable for events which could not be foreseen or which, even if foreseen, were
inevitable, with the exception of the cases in which the law expressly provides otherwise and
those in which the obligation itself imposes liability.

In the case of Lasam v. Smith (45 Phil. 657 [1924]), we defined "events" which cannot be foreseen and which,
having been foreseen, are inevitable in the following manner:

... The Spanish authorities regard the language employed as an effort to define the term 'caso
fortuito' and hold that the two expressions are synonymous. (Manresa Comentarios al Codigo
Civil Espaol, vol. 8, pp. 88 et seq.; Scaevola, Codigo Civil, vol. 19, pp. 526 et seq.)

The antecedent to Article 1105 is found in Law II, Title 33, Partida 7, which defines caso fortuito
as 'occasion que acaese por aventura de que non se puede ante ver. E son estos,
derrivamientos de casas e fuego que enciende a so ora, e quebrantamiento de navio, fuerca de
ladrones' (An event that takes place by incident and could not have been foreseen. Examples of
this are destruction of houses, unexpected fire, shipwreck, violence of robbers ...)

Escriche defines caso fortuito as an unexpected event or act of God which could neither be
foreseen nor resisted, such as floods, torrents, shipwrecks, conflagrations, lightning,
compulsion, insurrections, destruction of buildings by unforeseen accidents and other
occurrences of a similar nature.
 In discussing and analyzing the term caso fortuito the Enciclopedia Juridica Espaola says: 'In a
legal sense and, consequently, also in relation to contracts, a caso fortuito presents the
following essential characteristics: (1) The cause of the unforeseen and unexpected occurrence,
or of the failure of the debtor to comply with his obligation, must be independent of the human
will. (2) It must be impossible to foresee the event which constitutes the caso fortuito, or if it can
be foreseen, it must be impossible to avoid. (3) The occurrence must be such as to render it
impossible for the debtor to fulfill his obligation in a normal manner. And (4) the obligor (debtor)
must be free from any participation in the aggravation of the injury resulting to the creditor. (5)
Enciclopedia Juridica Espaola, 309)

As will be seen, these authorities agree that some extraordinary circumstance independent of
the will of the obligor or of his employees, is an essential element of a caso fortuito. ...

The running amuck of the passenger was the proximate cause of the incident as it triggered off a commotion
and panic among the passengers such that the passengers started running to the sole exit shoving each other
resulting in the falling off the bus by passengers Beter and Rautraut causing them fatal injuries. The sudden
act of the passenger who stabbed another passenger in the bus is within the context of force majeure.

However, in order that a common carrier may be absolved from liability in case of force majeure, it is not
enough that the accident was caused by force majeure. The common carrier must still prove that it was not
negligent in causing the injuries resulting from such accident. Thus, as early as 1912, we ruled:

From all the foregoing, it is concluded that the defendant is not liable for the loss and damage of
the goods shipped on the lorcha Pilar by the Chinaman, Ong Bien Sip, inasmuch as such loss
and damage were the result of a fortuitous event or force majeure, and there was no negligence
or lack of care and diligence on the part of the defendant company or its agents. (Tan Chiong
Sian v. Inchausti & Co., 22 Phil. 152 [1912]; Emphasis supplied).

This principle was reiterated in a more recent case, Batangas Laguna Tayabas Co. v. Intermediate Appellate
Court (167 SCRA 379 [1988]), wherein we ruled:

... [F]or their defense of force majeure or act of God to prosper the accident must be due to
natural causes and exclusively without human intervention. (Emphasis supplied)

Therefore, the next question to be determined is whether or not the petitioner's common carrier observed
extraordinary diligence to safeguard the lives of its passengers.

In this regard the trial court and the appellate court arrived at conflicting factual findings.

The trial court found the following facts:

The parties presented conflicting evidence as to how the two deceased Narcisa Rautruat and
Ornominio Beter met their deaths.

However, from the evidence adduced by the plaintiffs, the Court could not see why the two
deceased could have fallen off the bus when their own witnesses testified that when the
commotion ensued inside the bus, the passengers pushed and shoved each other towards the
door apparently in order to get off from the bus through the door. But the passengers also could
not pass through the door because according to the evidence the door was locked.

On the other hand, the Court is inclined to give credence to the evidence adduced by the
defendants that when the commotion ensued inside the bus, the two deceased panicked and, in
state of shock and fear, they jumped off from the bus by passing through the window.
 It is the prevailing rule and settled jurisprudence that transportation companies are not insurers
of their passengers. The evidence on record does not show that defendants' personnel were
negligent in their duties. The defendants' personnel have every right to accept passengers
absent any manifestation of violence or drunkenness. If and when such passengers harm other
passengers without the knowledge of the transportation company's personnel, the latter should
not be faulted. (Rollo, pp. 46-47)

A thorough examination of the records, however, show that there are material facts ignored by the trial court
which were discussed by the appellate court to arrive at a different conclusion. These circumstances show that
the petitioner common carrier was negligent in the provision of safety precautions so that its passengers may
be transported safely to their destinations. The appellate court states:

A critical eye must be accorded the lower court's conclusions of fact in its tersely written ratio
decidendi. The lower court concluded that the door of the bus was closed; secondly, the
passengers, specifically the two deceased, jumped out of the window. The lower court therefore
concluded that the defendant common carrier is not liable for the death of the said passengers
which it implicitly attributed to the unforeseen acts of the unidentified passenger who went
amuck.

There is nothing in the record to support the conclusion that the solitary door of the bus was
locked as to prevent the passengers from passing through. Leonila Cullano, testifying for the
defense, clearly stated that the conductor opened the door when the passengers were shouting
that the bus stop while they were in a state of panic. Sergia Beter categorically stated that she
actually saw her son fall from the bus as the door was forced open by the force of the onrushing
passengers.

Pedro Collango, on the other hand, testified that he shut the door after the last passenger had
boarded the bus. But he had quite conveniently neglected to say that when the passengers had
panicked, he himself panicked and had gone to open the door. Portions of the testimony of
Leonila Cullano, quoted below, are illuminating:

xxx xxx xxx

Q When you said the conductor opened the door, the door at the front or rear portion of the
bus?

A Front door.

Q And these two persons whom you said alighted, where did they pass, the fron(t) door or rear
door?

A Front door.

xxx xxx xxx

(Tsn., p. 4, Aug. 8, 1984)

xxx xxx xxx

Q What happened after there was a commotion at the rear portion of the bus?

A When the commotion occurred, I stood up and I noticed that there was a passenger who was
sounded (sic). The conductor panicked because the passengers were shouting 'stop, stop'. The
conductor opened the bus.'
(Tsn. p. 3, August 8, 1984).

Accordingly, there is no reason to believe that the deceased passengers jumped from the
window when it was entirely possible for them to have alighted through the door. The lower
court's reliance on the testimony of Pedro Collango, as the conductor and employee of the
common carrier, is unjustified, in the light of the clear testimony of Leonila Cullano as the sole
uninterested eyewitness of the entire episode. Instead we find Pedro Collango's testimony to be
infused by bias and fraught with inconsistencies, if not notably unreliable for lack of veracity. On
direct examination, he testified:

xxx xxx xxx

Q So what happened to the passengers inside your bus?

A Some of the passengers jumped out of the window.

COURT:

Q While the bus was in motion?

A Yes, your Honor, but the speed was slow because we have just picked up a passenger.

Atty. Gambe:

Q You said that at the time of the incident the bus was running slow because you have just
picked up a passenger. Can you estimate what was your speed at that time?

Atty. Calo:

No basis, your Honor, he is neither a driver nor a conductor.

COURT:

Let the witness answer. Estimate only, the conductor experienced.

Witness:

Not less than 30 to 40 miles.

COURT:

Kilometers or miles?

A Miles.

Atty. Gambe:

Q That is only your estimate by your experience?

A Yes, sir, estimate.

(Tsn., pp. 4-5, Oct. 17, 1983).

 At such speed of not less than 30 to 40 miles ..., or about 48 to 65 kilometers per hour, the
speed of the bus could scarcely be considered slow considering that according to Collango
himself, the bus had just come from a full stop after picking a passenger (Tsn, p. 4, Id.) and that
the bus was still on its second or third gear (Tsn., p. 12, Id.).

In the light of the foregoing, the negligence of the common carrier, through its employees,
consisted of the lack of extraordinary diligence required of common carriers, in exercising
vigilance and utmost care of the safety of its passengers, exemplified by the driver's belated
stop and the reckless opening of the doors of the bus while the same was travelling at an
appreciably fast speed. At the same time, the common carrier itself acknowledged, through its
administrative officer, Benjamin Granada, that the bus was commissioned to travel and take on
passengers and the public at large, while equipped with only a solitary door for a bus its size
and loading capacity, in contravention of rules and regulations provided for under the Land
Transportation and Traffic Code (RA 4136 as amended.) (Rollo, pp. 23-26)

Considering the factual findings of the Court of Appeals-the bus driver did not immediately stop the bus at the
height of the commotion; the bus was speeding from a full stop; the victims fell from the bus door when it was
opened or gave way while the bus was still running; the conductor panicked and blew his whistle after people
had already fallen off the bus; and the bus was not properly equipped with doors in accordance with law-it is
clear that the petitioners have failed to overcome the presumption of fault and negligence found in the law
governing common carriers.

The petitioners' argument that the petitioners "are not insurers of their passengers" deserves no merit in view
of the failure of the petitioners to prove that the deaths of the two passengers were exclusively due to force
majeure and not to the failure of the petitioners to observe extraordinary diligence in transporting safely the
passengers to their destinations as warranted by law. (See Batangas Laguna Tayabas Co. v. Intermediate
Appellate Court, supra).

The petitioners also contend that the private respondents failed to show to the court that they are the parents
of Ornominio Beter and Narcisa Rautraut respectively and therefore have no legal personality to sue the
petitioners. This argument deserves scant consideration. We find this argument a belated attempt on the part
of the petitioners to avoid liability for the deaths of Beter and Rautraut. The private respondents were Identified
as the parents of the victims by witnesses during the trial and the trial court recognized them as such. The trial
court dismissed the complaint solely on the ground that the petitioners were not negligent.

Finally, the amount of damages awarded to the heirs of Beter and Rautraut by the appellate court is supported
by the evidence. The appellate court stated:

Ornominio Beter was 32 years of age at the time of his death, single, in good health and
rendering support and service to his mother. As far as Narcisa Rautraut is concerned, the only
evidence adduced is to the effect that at her death, she was 23 years of age, in good health and
without visible means of support.

In accordance with Art. 1764 in conjunction with Art. 2206 of the Civil Code, and established
jurisprudence, several factors may be considered in determining the award of damages,
namely: 1) life expectancy (considering the state of health of the deceased and the mortality
tables are deemed conclusive) and loss of earning capacity; (2) pecuniary loss, loss of support
and service; and (3) moral and mental suffering (Alcantara, et al. v. Surro, et al., 93 Phil. 470).

In the case of People v. Daniel (No. L-66551, April 25, 1985, 136 SCRA 92, at page 104), the
High Tribunal, reiterating the rule in Villa Rey Transit, Inc. v. Court of Appeals (31 SCRA 511),
stated that the amount of loss of earring capacity is based mainly on two factors, namely, (1) the
number of years on the basis of which the damages shall be computed; and (2) the rate at
which the losses sustained by the heirs should be fixed.
 As the formula adopted in the case of Davila v. Philippine Air Lines, 49 SCRA 497, at the age of
30 one's normal life expectancy is 33-1/3 years based on the American Expectancy Table of
Mortality (2/3 x 80-32).itc-asl By taking into account the pace and nature of the life of a
carpenter, it is reasonable to make allowances for these circumstances and reduce the life
expectancy of the deceased Ornominio Beter to 25 years (People v. Daniel, supra). To fix the
rate of losses it must be noted that Art. 2206 refers to gross earnings less necessary living
expenses of the deceased, in other words, only net earnings are to be considered (People v.
Daniel, supra; Villa Rey Transit, Inc. v. Court of Appeals, supra).

Applying the foregoing rules with respect to Ornominio Beter, it is both just and reasonable,
considering his social standing and position, to fix the deductible, living and incidental expenses
at the sum of Four Hundred Pesos (P400.00) a month, or Four Thousand Eight Hundred Pesos
(P4,800.00) annually. As to his income, considering the irregular nature of the work of a daily
wage carpenter which is seasonal, it is safe to assume that he shall have work for twenty (20)
days a month at Twenty Five Pesos (P150,000.00) for twenty five years. Deducting therefrom
his necessary expenses, his heirs would be entitled to Thirty Thousand Pesos (P30,000.00)
representing loss of support and service (P150,000.00 less P120,000.00). In addition, his heirs
are entitled to Thirty Thousand Pesos (P30,000.00) as straight death indemnity pursuant to
Article 2206 (People v. Daniel, supra). For damages for their moral and mental anguish, his
heirs are entitled to the reasonable sum of P10,000.00 as an exception to the general rule
against moral damages in case of breach of contract rule Art. 2200 (Necesito v. Paras, 104 Phil.
75). As attorney's fees, Beter's heirs are entitled to P5,000.00. All in all, the plaintiff-appellants
Ricardo and Sergia Beter as heirs of their son Ornominio are entitled to an indemnity of Seventy
Five Thousand Pesos (P75,000.00).

In the case of Narcisa Rautraut, her heirs are entitled to a straight death indemnity of Thirty
Thousand Pesos (P30,000.00), to moral damages in the amount of Ten Thousand Pesos
(P10,000.00) and Five Thousand Pesos (P5,000.00) as attorney's fees, or a total of Forty Five
Thousand Pesos (P45,000.00) as total indemnity for her death in the absence of any evidence
that she had visible means of support. (Rollo, pp. 30-31)

WHEREFORE, the instant petition is DISMISSED. The questioned decision dated May 19, 1988 and the
resolution dated August 1, 1988 of the Court of Appeals are AFFIRMED.

G.R. No. L-8034 November 18, 1955

CORNELIA A. DE GILLACO, ET AL., plaintiffs-appellees,

vs.
MANILA RAILROAD COMPANY, defendant-appellant.

First Assistant Corporate Counsel Federico C. Alikpala and Attorney Higino R. Francisco for appellant.
Restituto Luna for appellees.

REYES, J.B.L., J.:

The Manila Railroad Company has appealed from a judgment of the Court of First Instance of Laguna
sentencing it to pay P4,000 damages to the appellees herein, the widow and children of the late Tomas Gillaco,
shot by an employee of the Company in April, 1946.

The judgment was rendered upon the following stipulation of facts:

That at about 7:30 a.m., on the morning of April 1, 1946, Lieut. Tomas Gillaco, husband of the plaintiff,
was a passenger in the early morning train of the Manila Railroad Company from Calamba, Laguna to
Manila;
 That when the train reached the Paco Railroad station, Emilio Devesa, a train guard of the Manila
Railroad Company assigned in the Manila-San Fernando, La Union Line, happened to be in said station
waiting for the same train which would take him to Tutuban Station, where he was going to report for
duty;

That Emilio Devesa had a long standing personal grudge against Tomas Gillaco, same dating back
during the Japanese occupation;

That because of this personal grudge, Devesa shot Gillaco with the carbine furnished to him by the
Manila Railroad Company for his use as such train guard, upon seeing him inside the train coach;

That Tomas Gillaco died as a result of the would which he sustained from the shot fired by Devesa.

It is also undisputed that Devesa was convicted with homicide by final judgment of the Court of Appeals.

Appellant's contention is that, on the foregoing facts, no liability attaches to it as employer of the killer, Emilio
Devesa; that it is not responsible subsidiary ex delicto, under Art. 103 of the Revised Penal Code, because the
crime was not committed while the slayer was in the actual performance of his ordinary duties and service; nor
is it responsible ex contractu, since the complaint did not aver sufficient facts to establish such liability, and no
negligence on appellant's party was shown. The Court below held the Railroad company responsible on the
ground that a contract of transportation implies protection of the passengers against acts of personal violence
by the agents or employees of the carrier.

There can be no quarrel with the principle that a passenger is entitled to protection from personal violence by
the carrier or its agents or employees, since the contract of transportation obligates the carrier to transport a
passenger safely to his destination. But under the law of the case, this responsibility extends only to those that
the carrier could foresee or avoid through the exercise of the degree of car and diligence required of it.

Discussing the basis of a carrier's liability under the old Civil Code of 1889 (which was in force in 1946, when
Gillaco was shot) this Court said in Lasam vs. Smith (45 Phil., 657):

In our opinion, the conclusions of the court below are entirely correct. That upon the facts stated the
defendant's liability, if any, is contractual, is well settled by previous decisions of the court, beginning
with the case of Rakes vs. Atlantic, Gulf & Pacific Co. (7 Phil., 359), and the distinction between extra-
contractual liability and contractual liability has been so ably and exhaustively discussed in various
other cases that nothing further need here be said upon that subject. (See Cangco vs. Manila Railroad
Co., 38 Phil., 768; Manila Railroad vs. Compaia Transatlantica and Atlantic, Gulf & Pacific Co., 38
Phil., 875; De Guia vs. Manila Electric Railroad & Light Co., 40 Phil., 706). It is sufficient to reiterate that
the source of the defendant's legal liability is the contract of carriage; that by entering into that contract
he bound himself to carry the plaintiff safely and securely to their destination; and that having failed to
do so he is liable in damages unless he shows that the failure to fulfill his obligation was due to causes
mentioned in article 1105 of the Civil Code, which reads as follows:

"No one shall be liable for events which could not be foreseen or which, even if foreseen, were
inevitable, with the exception of the cases in which the law expressly provides otherwise and those in
which the obligation itself imposes such liability."

The act of guard Devesa in shooting passenger Gillaco (because of a personal grudge nurtured against the
latter since the Japanese occupation) was entirely unforeseeable by the Manila Railroad Co. The latter had no
means to ascertain or anticipate that the two would meet, nor could it reasonably foresee every personal
rancor that might exist between each one of its many employees and any one of the thousands of eventual
passengers riding in its trains. The shooting in question was therefore "caso fortuito" within the definition of
article 105 of the old Civil Code, being both unforeseeable and inevitable under the given circumstances; and
pursuant to established doctrine, the resulting breach of appellant's contract of safe carriage with the late
Tomas Gillaco was excused thereby.
No doubt that a common carrier is held to a very high degree of care and diligence in the protection of its
passengers; but, considering the vast and complex activities of modern rail transportation, to require of
appellant that it should guard against all possible misunderstanding between each and every one of its
employees and every passenger that might chance to ride in its conveyances at any time, strikes us as
demanding diligence beyond what human care and foresight can provide.

The lower Court and the appellees both relied on the American authorities that particularly hold carriers to be
insurers of the safety of their passengers against willful assault and intentional ill treatment on the part of their
servants, it being immaterial that the act should be one of private retribution on the part of the servant, impelled
by personal malice toward the passenger (10 Am. Jur. 108; Ed. Note to Gassenheimer vs. Wester R. Co. 40
LRA (NS), p. 999, et seq.) But as can be inferred from the previous jurisprudence of this Court , the Civil Code
of 1889 did not impose such absolute liability (Lasam vs. Smith, supra). The liability of a carrier as an insurer
was not recognized in this jurisdiction (Government vs. Inchausti & Co., 40 Phil., 219; Oriental Comm.
Co. vs. Naviera Filipina, 38 Off. Gaz., 1020).

Another very important consideration that must be borne in mind is that, when the crime took place, the guard
Devesa had no duties to discharge in connection with the transportation of the deceased from Calamba to
Manila. The stipulation of facts is clear that when Devesa shot and killed Gillaco, Devesa was assigned to
guard the Manila-San Fernando (La Union) trains, and he was at Paco Station awaiting transportation to
Tutuban, the starting point of the train that he was engaged to guard. In fact, his tour of duty was to start at
9:00 a.m., two hours after the commission of the crime. Devesa was therefore under no obligation to safeguard
the passenger of the Calamba-Manila train, where the deceased was riding; and the killing of Gillaco was not
done in line of duty. The position of Devesa at the time was that of another would be passenger, a stranger
also awaiting transportation, and not that of an employee assigned to discharge any of the duties that the
Railroad had assumed by its contract with the deceased. As a result, Devesa's assault cannot be deemed in
law a breach of Gillaco's contract of transportation by a servant or employee of the carrier. We agree with the
position taken by the Supreme Court of Texas in a similar case, where it held:

The only good reason for making the carrier responsible for the misconduct of the servant perpetrated
in his own interest, and not in that of his employer, or otherwise within the scope of his employment, is
that the servant is clothed with the delegated authority, and charge with the duty by the carrier, to
execute his undertaking with the passenger. And it cannot be said, we think, that there is any such
delegation to the employees at a station with reference to passenger embarking at another or traveling
on the train. Of course, we are speaking only of the principle which holds a carrier responsible for
wrong done to passenger by servants acting in their own interest, and not in that of the employer. That
principle is not the ordinary rule, respondent superior, by which the employer is held responsible only
for act or omissions of the employee in the scope of his employment; but the only reason in our opinion
for a broader liability arises from the fact that the servant, in mistreating the passenger wholly for some
private purpose of his own, in the very act, violates the contractual obligation of the employer for the
performance of which he has put the employee in his place. The reason does not exist where the
employee who committed the assault was never in a position in which it became his duty to his
employer to represent him in discharging any duty of the latter toward the passenger. The proposition
that the carrier clothes every employee engaged in the transportation business with the comprehensive
duty of protecting every passenger with whom he may in any way come in contact, and hereby makes
himself liable for every assault commited by such servant, without regard to the inquiry whether or not
the passenger has come within the sphere of duty of that servant as indicated by the employment, is
regarded as not only not sustained by the authorities, but as being unsound and oppressive both to the
employer and the employee. (Houston & T. C. R. Co. vs. Bush, 32 LRA (NS), p. 1205.)

Wherefore, the judgment appealed from is reversed and the complaint ordered dismissed, without cost. So
ordered.

G.R. No. 60501. March 5, 1993.

CATHAY PACIFIC AIRWAYS, LTD, petitioner, vs. COURT OF APPEALS and TOMAS L. ALCANTARA,
respondents.
Siguion-Reyna, Montecillo & Ongsiako and Tomacruz, Manguiat & Associates for petitioner.

Tanjuatco, Oreta, Tanjuatco, Berenger & Corpus for private respondent.

SYLLABUS

1. CIVIL LAW; CONTRACT OF CARRIAGE; BREACH THEREOF; PETITIONER BREACHED ITS CONTRACT
OF CARRIAGE WITH PRIVATE RESPONDENT WHEN IT FAILED TO DELIVER HIS LUGGAGE AT THE
DESIGNATED PLACE AND TIME. Petitioner breached its contract of carriage with private respondent when
it failed to deliver his luggage at the designated place and time, it being the obligation of a common carrier to
carry its passengers and their luggage safely to their destination, which includes the duty not to delay their
transportation, and the evidence shows that petitioner acted fraudulently or in bad faith.

2. DAMAGES; MORAL AND EXEMPLARY DAMAGES PREDICATED UPON A BREACH OF CONTRACT OF

CARRIAGE; RECOVERABLE ONLY IN INSTANCES WHERE THE MISHAP RESULTS IN DEATH OF A
PASSENGER, OR WHERE THE CARRIER IS GUILTY OF FRAUD OR BAD FAITH; THE CONDUCT OF
PETITIONER'S REPRESENTATIVE TOWARDS RESPONDENT JUSTIFIES THE GRANT OF MORAL AND
EXEMPLARY DAMAGES IN CASE AT BAR. Moral damages predicated upon a breach of contract of
carriage may only be recoverable in instances where the mishap results in death of a passenger, or where the
carrier is guilty of fraud or bad faith. The language and conduct of petitioner's representative towards
respondent Alcantara was discourteous or arbitrary to justify the grant of moral damages. The CATHAY
representative was not only indifferent and impatient; he was also rude and insulting. He simply advised
Alcantara to buy anything he wanted. But even that was not sincere because the representative knew that the
passenger was limited only to $20.00 which, certainly, was not enough to purchase comfortable clothings
appropriate for an executive conference. Considering that Alcantara was not only a revenue passenger but
even paid for a first class airline accommodation and accompanied at the time by the Commercial Attache of
the Philippine Embassy who was assisting him in his problem, petitioner or its agents should have been more
courteous and accommodating to private respondent, instead of giving him a curt reply, "What can we do, the
baggage is missing. I cannot do anything . . . Anyhow, you can buy anything you need, charged to Cathay
Pacific." Where in breaching the contract of carriage the defendant airline is not shown to have acted
fraudulently or in bad faith, liability for damages is limited to the natural and probable consequences of the
breach of obligation which the parties had foreseen or could have reasonably foreseen. In that case, such
liability does not include moral and exemplary damages. Conversely, if the defendant airline is shown to have
acted fraudulently or in bad faith, the award of moral and exemplary damages is proper.

3. TEMPERATE DAMAGES; RECOVERABLE ONLY UPON PROOF THAT THE CLAIMANT SUSTAINED
SOME PECUNIARY LOSS. However, respondent Alcantara is not entitled to temperate damages, contrary
to the ruling of the court a quo, in the absence of any showing that he sustained some pecuniary loss. It cannot
be gainsaid that respondent's luggage was ultimately delivered to him without serious or appreciable damage.

4. WARSAW CONVENTION; DOES NOT OPERATE AS AN EXCLUSIVE ENUMERATION OF THE

INSTANCES FOR DECLARING A CARRIER LIABLE FOR BREACH OF CONTRACT OF CARRIAGE OR AS
AN ABSOLUTE LIMIT OF THE EXTENT OF THAT LIABILITY; DOES NOT PRECLUDE THE OPERATION OF
THE CIVIL CODE AND OTHER PERTINENT LAWS. As We have repeatedly held, although the Warsaw
Convention has the force and effect of law in this country, being a treaty commitment assumed by the
Philippine government, said convention does not operate as an exclusive enumeration of the instances for
declaring a carrier liable for breach of contract of carriage or as an absolute limit of the extent of that liability.
The Warsaw Convention declares the carrier liable for damages in the enumerated cases and under certain
limitations. However, it must not be construed to preclude the operation of the Civil Code and other pertinent
laws. It does not regulate, much less exempt, the carrier from liability for damages for violating the rights of its
passengers under the contract of carriage, especially if wilfull misconduct on the part of the carrier's employees
is found or established, which is clearly the case before Us.

DECISION

BELLOSILLO, J p:
This is a petition for review on certiorari of the decision of the Court of Appeals which affirmed with modification
that of the trial court by increasing the award of damages in favor of private respondent Tomas L. Alcantara.

The facts are undisputed: On 19 October 1975, respondent Tomas L. Alcantara was a first class passenger of
petitioner Cathay Pacific Airways, Ltd. (CATHAY for brevity) on its Flight No. CX-900 from Manila to Hongkong
and onward from Hongkong to Jakarta on Flight No. CX-711. The purpose of his trip was to attend the
following day, 20 October 1975, a conference with the Director General of Trade of Indonesia, Alcantara being
the Executive Vice-President and General Manager of Iligan Cement Corporation, Chairman of the Export
Committee of the Philippine Cement Corporation, and representative of the Cement Industry Authority and the
Philippine Cement Corporation. He checked in his luggage which contained not only his clothing and articles
for personal use but also papers and documents he needed for the conference.

Upon his arrival in Jakarta, respondent discovered that his luggage was missing. When he inquired about his
luggage from CATHAY's representative in Jakarta, private respondent was told that his luggage was left behind
in Hongkong. For this, respondent Alcantara was offered $20.00 as "inconvenience money" to buy his
immediate personal needs until the luggage could be delivered to him.

His luggage finally reached Jakarta more than twenty four (24) hours after his arrival. However, it was not
delivered to him at his hotel but was required by petitioner to be picked up by an official of the Philippine
Embassy.

On 1 March 1976, respondent filed his complaint against petitioner with the Court of First Instance (now
Regional Trial Court) of Lanao del Norte praying for temperate, moral and exemplary damages, plus attorney's
fees.

On 18 April 1976, the trial court rendered its decision ordering CATHAY to pay Plaintiff P20,000.00 for moral
damages, P5,000.00 for temperate damages, P10,000.00 for exemplary damages, and P25,000.00 for
attorney's fees, and the costs. 1

Both parties appealed to the Court of Appeals. CATHAY assailed the conclusion of the trial court that it was
accountable for breach of contract and questioned the non-application by the court of the Warsaw Convention
as well as the excessive damages awarded on the basis of its finding that respondent Alcantara was rudely
treated by petitioner's employees during the time that his luggage could not be found. For his part, respondent
Alcantara assigned as error the failure of the trial court to grant the full amount of damages sought in his
complaint.

On 11 November 1981, respondent Court of Appeals rendered its decision affirming the findings of fact of the
trial court but modifying its award by increasing the moral damages to P80,000.00, exemplary damages to
P20,000.00 and temperate or moderate damages to P10,000.00. The award of P25,000.00 for attorney's fees
was maintained.

The same grounds raised by petitioner in the Court of Appeals are reiterated before Us. CATHAY contends
that: (1) the Court of Appeals erred in holding petitioner liable to respondent Alcantara for moral, exemplary
and temperate damages as well as attorney's fees; and, (2) the Court of Appeals erred in failing to apply the
Warsaw Convention on the liability of a carrier to its passengers.

On its first assigned error, CATHAY argues that although it failed to transport respondent Alcantara's luggage
on time, the one-day delay was not made in bad faith so as to justify moral, exemplary and temperate
damages. It submits that the conclusion of respondent appellate court that private respondent was treated
rudely and arrogantly when he sought assistance from CATHAY's employees has no factual basis, hence, the
award of moral damages has no leg to stand on.

Petitioner's first assigned error involves findings of fact which are not reviewable by this Court. 2 At any rate, it
is not impressed with merit. Petitioner breached its contract of carriage with private respondent when it failed to
deliver his luggage at the designated place and time, it being the obligation of a common carrier to carry its
passengers and their luggage safely to their destination, which includes the duty not to delay their
transportation, 3 and the evidence shows that petitioner acted fraudulently or in bad faith.

Moral damages predicated upon a breach of contract of carriage may only be recoverable in instances where
the mishap results in death of a passenger, 4 or where the carrier is guilty of fraud or bad faith. 5

In the case at bar, both the trial court and the appellate court found that CATHAY was grossly negligent and
reckless when it failed to deliver the luggage of petitioner at the appointed place and time. We agree. CATHAY
alleges that as a result of mechanical trouble, all pieces of luggage on board the first aircraft bound for Jakarta
were unloaded and transferred to the second aircraft which departed an hour and a half later. Yet, as the Court
of Appeals noted, petitioner was not even aware that it left behind private respondent's luggage until its
attention was called by the Hongkong Customs authorities. More, bad faith or otherwise improper conduct may
be attributed to the employees of petitioner. While the mere failure of CATHAY to deliver respondent's luggage
at the agreed place and time did not ipso facto amount to willful misconduct since the luggage was eventually
delivered to private respondent, albeit belatedly, 6 We are persuaded that the employees of CATHAY acted in
bad faith. We refer to the deposition of Romulo Palma, Commercial Attache of the Philippine Embassy at
Jakarta, who was with respondent Alcantara when the latter sought assistance from the employees of
CATHAY. This deposition was the basis of the findings of the lower courts when both awarded moral damages
to private respondent. Hereunder is part of Palma's testimony

"Q: What did Mr. Alcantara say, if any?

A. Mr. Alcantara was of course . . . . I could understand his position. He was furious for the experience because
probably he was thinking he was going to meet the Director-General the following day and, well, he was with
no change of proper clothes and so, I would say, he was not happy about the situation.

Q: What did Mr. Alcantara say?

A: He was trying to press the fellow to make the report and if possible make the delivery of his baggage as
soon as possible.

Q: And what did the agent or duty officer say, if any?

A: The duty officer, of course, answered back saying 'What can we do, the baggage is missing. I cannot do
anything.' something like it. 'Anyhow you can buy anything you need, charged to Cathay Pacific.'

Q: What was the demeanor or comportment of the duty officer of Cathay Pacific when he said to Mr. Alcantara
'You can buy anything chargeable to Cathay Pacific'?

A: If I had to look at it objectively, the duty officer would like to dismiss the affair as soon as possible by saying
indifferently 'Don't worry. It can be found.'" 7

Indeed, the aforequoted testimony shows that the language and conduct of petitioner's representative towards
respondent Alcantara was discourteous or arbitrary to justify the grant of moral damages. The CATHAY
representative was not only indifferent and impatient; he was also rude and insulting. He simply advised
Alcantara to buy anything he wanted. But even that was not sincere because the representative knew that the
passenger was limited only to $20.00 which, certainly, was not enough to purchase comfortable clothings
appropriate for an executive conference. Considering that Alcantara was not only a revenue passenger but
even paid for a first class airline accommodation and accompanied at the time by the Commercial Attache of
the Philippine Embassy who was assisting him in his problem, petitioner or its agents should have been more
courteous and accommodating to private respondent, instead of giving him a curt reply, "What can we do, the
baggage is missing. I cannot do anything . . . Anyhow, you can buy anything you need, charged to Cathay
Pacific." CATHAY's employees should have been more solicitous to a passenger in distress and assuaged his
anxieties and apprehensions. To compound matters, CATHAY refused to have the luggage of Alcantara
delivered to him at his hotel; instead, he was required to pick it up himself and an official of the Philippine
Embassy. Under the circumstances, it is evident that petitioner was remiss in its duty to provide proper and
adequate assistance to a paying passenger, more so one with first class accommodation.

Where in breaching the contract of carriage the defendant airline is not shown to have acted fraudulently or in
bad faith, liability for damages is limited to the natural and probable consequences of the breach of obligation
which the parties had foreseen or could have reasonably foreseen. In that case, such liability does not include
moral and exemplary damages. 8 Conversely, if the defendant airline is shown to have acted fraudulently or in
bad faith, the award of moral and exemplary damages is proper.

However, respondent Alcantara is not entitled to temperate damages, contrary to the ruling of the court a quo,
in the absence of any showing that he sustained some pecuniary loss. 9 It cannot be gainsaid that
respondent's luggage was ultimately delivered to him without serious or appreciable damage.

As regards its second assigned error, petitioner airline contends that the extent of its liability for breach of
contract should be limited absolutely to that set forth in the Warsaw Convention. We do not agree. As We have
repeatedly held, although the Warsaw Convention has the force and effect of law in this country, being a treaty
commitment assumed by the Philippine government, said convention does not operate as an exclusive
enumeration of the instances for declaring a carrier liable for breach of contract of carriage or as an absolute
limit of the extent of that liability. 10 The Warsaw Convention declares the carrier liable for damages in the
enumerated cases and under certain limitations. 11 However, it must not be construed to preclude the
operation of the Civil Code and other pertinent laws. It does not regulate, much less exempt, the carrier from
liability for damages for violating the rights of its passengers under the contract of carriage, 12 especially if
wilfull misconduct on the part of the carrier's employees is found or established, which is clearly the case
before Us. For, the Warsaw Convention itself provides in Art. 25 that

"(1) The carrier shall not be entitled to avail himself of the provisions of this convention which exclude or limit
his liability, if the damage is caused by his wilfull misconduct or by such default on his part as, in accordance
with the law of the court to which the case is submitted, is considered to be equivalent to wilfull misconduct."

(2) Similarly the carrier shall not be entitled to avail himself of the said provisions, if the damage is caused
under the same circumstances by any agent of the carrier acting within the scope of his employment."

When petitioner airline misplaced respondent's luggage and failed to deliver it to its passenger at the appointed
place and time, some special species of injury must have been caused to him. For sure, the latter underwent
profound distress and anxiety, and the fear of losing the opportunity to fulfill the purpose of his trip. In fact, for
want of appropriate clothings for the occasion brought about by the delay of the arrival of his luggage, to his
embarrassment and consternation respondent Alcantara had to seek postponement of his pre-arranged
conference with the Director General of Trade of the host country.

In one case, 13 this Court observed that a traveller would naturally suffer mental anguish, anxiety and shock
when he finds that his luggage did not travel with him and he finds himself in a foreign land without any article
of clothing other than what he has on.

Thus, respondent is entitled to moral and exemplary damages. We however find the award by the Court of
Appeals of P80,000.00 for moral damages excessive, hence, We reduce the amount to P30,000.00. The
exemplary damages of P20,000.00 being reasonable is maintained, as well as the attorney's fees of
P25,000.00 considering that petitioner's act or omission has compelled Alcantara to litigate with third persons
or to incur expenses to protect his interest. 14

WHEREFORE, the assailed decision of respondent Court of Appeals is AFFIRMED with the exception of the
award of temperate damages of P10,000.00 which is deleted, while the award of moral damages of
P80,000.00 is reduced to P30,000.00. The award of P20,000.00 for exemplary damages is maintained as
reasonable together with the attorney's fees of P25,000.00. The moral and exemplary damages shall earn
interest at the legal rate from 1 March 1976 when the complaint was filed until full payment.
PURITA S. MAPA, CARMINA S. MAPA and CORNELIO P. MAPA, petitioners, vs. COURT OF APPEALS
and TRANS-WORLD AIRLINES INC., respondents.

DECISION

DAVIDE, JR., J.:

The main issue in this petition for review under Rule 45 of the Rules of Court is the applicability of Article
28(1) of the Warsaw Convention,[1] which provides as follows:

ARTICLE 28. (1) An action for damages must be brought, at the option of the plaintiff, in the territory of one of the High
Contracting Parties, either before the court of the domicile of the carrier or of his principal place of business, or where he
has a place of business through which the contract has been made, or before the court at the place of destination.

We are urged by the petitioners to reverse the 31 May 1995 Decision of the Court of Appeals in CA-G.R.
CV No. 39896[2] affirming the 24 July 1992 Order of the Regional Trial Court of Quezon City, Branch 102, which
dismissed Civil Case No. Q-91-9620[3] on the ground of lack of jurisdiction in view of the aforementioned Article
28(1) of the Warsaw Convention.

The antecedent facts, as summarized by the Court of Appeals, are as follows:

Plaintiffs Cornelio P. Mapa and Purita S. Mapa are respectable members of the society. Mr. Mapa is an established
businessman and currently the Regional General Manager of Akerlund and Rausing, a multinational packaging material
manufacturer based in Manila. He was previously the Senior Vice President of Phimco Industries, an affiliate company of
Swedish Match Company. Mrs. Mapa is a successful businesswoman engaged in the commercial transactions of high
value antique and oriental arts decor items originating from Asian countries. Carmina S. Mapa is the daughter of plaintiffs
Purita and Cornelio and is a graduate of the International School in Bangkok, Thailand, now presently enrolled at the
Boston University where she is majoring in communication.

Plaintiffs Mapa entered into contract of air transportation with defendant TWA as evidenced by TWA ticket Nos.
015:9475:153:304 and 015:9475:153:305, purchased in Bangkok, Thailand. Said TWA tickets are for Los Angeles-New
York-Boston-St. Louis-Chicago ....

Domicile of carrier TWA is Kansas City, Missouri, USA. Its principal place of business is Kansas City, Missouri,
USA. TWAs place of business through which the contracts were made is Bangkok, Thailand.The place of destination is
Chicago, USA.

On August 10, 1990, plaintiffs Carmina and Purita left Manila on board PAL flight No. 104 for Los Angeles. Carmina was
to commence schooling and thus was accompanied by Purita to assist her in settling down at the University.

They arrived in Los Angeles on the same date and stayed there until August 14, 1990 when they left for New York City.

On August 14, 1990, plaintiffs Purita and Carmina S. Mapa arrived at the John F. Kennedy (JFK) Airport, New York, on
TWA Flight No. 904.

On August 27, 1990, plaintiffs Purita and Carmina S. Mapa departed for Boston, taking a connecting flight on TWAs
carrier, TW 0901, from JFK Airport, New York, to Bostons Logan Airport, checking in seven (7) pieces of luggage at the
TWA counter in the JFK Airport. The seven baggages were received by a porter who issued seven TWA baggage receipts
numbered 17-8270, 71, 72, 73, 74, 75, and 76therefor.

From the entrance gate of the terminal building, plaintiffs Purita and Carmina proceeded to TWAs ticket counter and
presented their confirmed TWA tickets numbered 015:9475:153:304 and 015:9475:153:305 with a 3:00 p.m. departure
time. They were issued their boarding passes and were instructed to proceed to gate 35 for boarding. At about 2:40 p.m.,
plaintiffs noticed that there was still no instruction to board the aircraft so they made inquiries. The TWA ground
stewardess informed plaintiffs that they were at the wrong gate because their flight was boarding at gate 1. Upon hearing
this, plaintiffs rushed to gate 1 which was in another building terminal. At gate 1, they were told by a TWA ground
stewardess that flight 901 had just departed. However, they were consoled that another TWA flight was leaving for Boston
after 30 minutes and plaintiffs could use the same boarding pass for the next flight. At around 3:15 p.m., plaintiffs Purita
and Carmina were able to board the next flight.However, the plane was not immediately cleared for take off on account of
a thunderstorm. The passengers were instructed to stay inside the aircraft until 6:00 p.m. when the plane finally left for
Boston.

Upon arriving in Boston, plaintiffs Purita and Carmina proceeded to the carousel to claim their baggages and found only
three out of the seven they checked in, to wit: one Samsonite on the carousel, another Samsonite lying on the floor near
the carousel and a third baggage, an American Tourister, inside the unclaimed baggage office. Plaintiffs immediately
reported the loss of their four baggages to the TWA Baggage Office at Logan Airport. TWAs representative confidently
assured them that their baggages would be located within 24 hours and not more than 48 hours.

On September 2, 1990, plaintiffs received a letter from TWA, signed by Mr. J.A. Butler, Customer Relations-Baggage
Service, apologizing for TWAs failure to locate the missing luggage and requesting plaintiffs to accomplish a passenger
property questionnaire to facilitate a further intensive and computerized search for the lost luggage. Plaintiffs duly
accomplished the passenger property questionnaire, taking pains to write down in detail the contents of each missing
baggage. The total value of the lost items amounted to $11, 283.79.

On September 20, 1990, plaintiffs counsel wrote TWA thru its General Sales Manager in the Philippines, Daniel Tuason,
with office address at Ground Floor, Saville Building, Sen. Gil J. Puyat Avenue corner Paseo de Roxas, Makati, Metro
Manila demanding indemnification for the grave damage and injury suffered by the plaintiffs.

TWA again assured plaintiffs that intensive search was being conducted.

On October 8, 1990, TWA offered to amicably settle the case by giving plaintiffs-appellants two options: (a) transportation
credit for future TWA travel or (b) cash settlement. Five months lapsed without any result on TWAs intensive search.

On January 3, 1991, plaintiffs-appellants opted for transportation credit for future TWA travel.

On January 11, 1991, TWA disregarded plaintiffs option and unilaterally declared the payment of $2,560.00 as
constituting full satisfaction of the plaintiffs claim.

On July 19, 1991, plaintiffs accepted the check for $2,560.00, as partial payment for the actual cost of their lost baggages
and their contents.

Despite demands by plaintiffs, TWA failed and refused without just cause to indemnify and redress plaintiffs for the grave
injury and damages they have suffered.[4]

Purita S. Mapa, Carmina S. Mapa, and Cornelio P. Mapa (herein petitioners) then filed with the trial court
on 1 August 1991 a complaint[5] for damages,[6] which was docketed as Civil Case No. Q-91-9620. Before a
responsive pleading was filed, the petitioners filed an Amended Complaint. [7] They prayed that after due trial
private respondent Trans-World Airlines, Inc. (hereafter, TWA), be ordered to pay them the following amounts:
(1) US$8,723.79, or its equivalent in Philippine currency, representing the cost of the lost luggage and its
contents; (2) US$2,949.50, or its equivalent in Philippine currency, representing the cost of hotel, board and
lodging, and communication expenses; (3) P1 million, by way of moral damages; (4) P1 million, by way of
exemplary damages, with legal interest on said amounts from the date of extrajudicial demand thereof; and
(5) P500,000.00 as attorney's fees, costs of the suit, and other expenses of litigation.[8]

On 26 February 1992, TWA filed its Answer to the Amended Complaint raising, as special and affirmative
defense, lack of jurisdiction of Philippine courts over the action for damages in that pursuant to Article 28(1) of
the Warsaw Convention, the action could only be brought either in Bangkok where the contract was entered
into, or in Boston which was the place of destination, or in Kansas City which is the carrier's domicile and
principal place of business.
 TWA further alleged that pursuant to the Warsaw Convention and the Notice of Baggage Limitations at the
back of the tickets, its liability to the petitioners is limited to US$9.07 per pound, or US$20.00 per kilo, which is
in lieu of actual and compensatory damages. Even assuming that petitioners bag weighed the maximum
acceptable weight of 70 pounds, TWAs maximum liability is $640.00 per bag or $2,560.00 for the four pieces of
baggage, which the petitioners have been offered and have accepted. TWA also submitted that it could not be
liable for moral and exemplary damages and attorneys fees because it did not act in a wanton, fraudulent,
reckless, oppressive, or malevolent manner.[9]

On 7 February 1992, the petitioners filed their second Amended Complaint [10] to include a claim of
US$2,500, or its equivalent in Philippine Currency, representing the additional replacement cost of the items
and personal effects contained in their lost luggage; and US$4,500 representing the travel expenses, hotel,
lodging, food and other expenses of petitioner Cornelio Mapa, who was constrained to join his family in Boston
to extend the necessary assistance in connection with the lost luggage.

After the filing of TWAs Answer to the second Amended Complaint, [11] and petitioners Reply thereto, the
trial court gave TWA ten days within which to submit a memorandum in support of its affirmative defenses;
after which the incident would be deemed submitted for resolution. [12] However, after TWA filed its
Memorandum,[13] the trial court gave the petitioners five days within which to file a reply memorandum; and
TWA, two days from receipt of the latter to file its comment thereon. [14] The petitioners then filed their
Opposition (by way of Reply Memorandum)[15] to which TWA filed a Reply.[16] Thereafter, the petitioners
submitted a Rejoinder[17]; TWA, a Surrejoinder.[18]

On 24 July 1992, the trial court issued an Order [19] dismissing the case for lack of jurisdiction in light of
Article 28(1) of the Warsaw Convention. Thus:

It is plaintiffs' theory that the Warsaw Convention does not apply to the instant case because plaintiffs' contract of
transportation does not constitute "international transportation" as defined in said convention.This however is belied by
the Passenger Property Questionnaire which is Annex C of plaintiffs' amended complaint. Page two of said questionnaire
accomplished by plaintiffs under the heading "Your Complete Itinerary" shows that the TWA tickets issued to the
plaintiffs form part of the contract of transportation to be performed from Manila to the United States. Since the
Philippines and the United States are parties to the convention, plaintiffs' contracts of transportation come within the
meaning of International Transportation.

...

On the basis of the foregoing, the Court holds that the Warsaw Convention is applicable to the case at bar, even if the basis
of plaintiffs' present action is breach of contract of carriage under the New Civil Code.

The next question to be resolved is whether or not the Court has jurisdiction to try the present case in the light of the
provision of Art. 28(1) above-quoted.

Under Art. 28(1) supra, a complaint for damages against an air carrier can be instituted only in any of the following
places/courts:

(1) The court of the domicile of the carrier;

(2) The court of its principal place of business;

(3) The court where it has a place of business through which the contract had been made;

(4) The court of the place of destination.

In interpreting the provision of Art. 28(1) of the Warsaw Convention, the Supreme Court in the same case of Augusto
Benedicto Santos vs. Northwest Airlines held:
"Whether Article 28(1) refers to jurisdiction or only to venue is a question over which authorities are sharply
divided. While the petitioner cites several cases holding that Article 28(1) refers to venue rather that jurisdiction, there are
later cases cited by the private respondent supporting the conclusion that the provision is jurisdictional.

Venue and jurisdiction are entirely distinct matters. Jurisdiction may not be conferred by consent or waiver upon a court
which otherwise would have no jurisdiction over the subject-matter of an action; but the venue of an action as fixed by
statute may be changed by the consent of the parties and an objection that the plaintiff brought his suit in the wrong
country may be waived by the failure of the defendant to make a timely objection. In either case, the court may render a
valid judgment. Rules as to jurisdiction can never be left to the consent or agreement of the parties, whether or not a
prohibition exists against their alteration.

A number of reasons tends to support the characterization of Article 28(1) as a jurisdiction and not a venue
provision. First, the wording of Article 32, which indicates the places where the action for damages "must" be brought,
underscores the mandatory nature of Article 28(1). Second, this characterization is consistent with one of the objectives of
the Convention, which is to "regulate in a uniform manner the conditions of international transportation by air." Third, the
Convention does not contain any provision prescribing rules of jurisdiction other than Article 28(1), which means that the
phrase "rules as to jurisdiction" used in Article 32 must refer only to Article 28(1). In fact, the last sentence of Article 32
specifically deals with the exclusive enumeration in Article 28(1) as "jurisdictions," which, as such, cannot be left to the
will of the parties regardless of the time when the damage occurred.

...

It has been shown by the defendant that the domicile of the defendant Trans World Airlines, Inc. is Kansas City, Missouri,
its principal place of business is also in Kansas City, Missouri, the carrier's place of business through which the contracts
were made is Bangkok (Annexes A and A-1, Amended Complaint), and the place of destination was Boston.

The Philippines not being one of the places specified in Art. 28(1) above-quoted where the complaint may be instituted,
this Court therefore, does not have jurisdiction over the present case.

Evidently discontented with the trial court's order, the petitioners appealed to the Court of Appeals,
contending that the lower court erred in not holding that (1) it has jurisdiction over the instant case and (2) the
Warsaw Convention is inapplicable in the instant case because the subject matter of the case is not included
within the coverage of the said convention.[20] They claimed that their cause of action could be based on breach
of contract of air carriage founded on Articles 1733, 1734, 1735, 1755, and 1756 of the New Civil Code
governing common carriers or Article 2176 of the same Code governing tort or quasi-delict.

The appellate court disagreed with the petitioners and affirmed the order of the trial court. It held that the
Warsaw Convention is the law which governs the dispute between the petitioners and TWA because what is
involved is international transportation defined by said Convention in Article I(2). This holding is founded on its
determination that the two TWA tickets for Los Angeles-New York-Boston-St. Louis-Chicago purchased in
Bangkok, Thailand, were issued in conjunction with, and therefore formed part of, the contract of transportation
performed from Manila, Philippines, to the United States.

The respondent court further held that the cause of action of the petitioners arose from the loss of the four
checked pieces of baggage, which then falls under Article 18(1), Chapter III (Liability of the Carrier) of the
Warsaw Convention.[21] Pursuant to Article 24(1) of the Convention, all actions for damages, whether based on
tort, code law or common law, arising from loss of baggage under Article 18 of the Warsaw Convention, can
only be brought subject to the conditions and limits set forth in the Warsaw Convention. Article 28(1) thereof
sets forth conditions and limits in that the action for damages may be instituted only in the territory of one of the
High Contracting Parties, before the court of (1) the domicile of the carrier, (2) the carriers principal place of
business, (3) the place of business through which the contract has been made, or (4) the place of
destination. Since the Philippines is not one of these places, a Philippine Court, like the RTC, has no
jurisdiction over the complaint for damages.
 Respondent Court of Appeals likewise held that the petitioners could not claim application of Articles 1733,
1734, 1735, 1755, and 1756 of the New Civil Code on common carriers without taking into consideration Article
1753 of the same Code, which provides that the law of the country to which the goods are to be transported
shall govern the liability of the common carrier for their loss, destruction, or deterioration. Since the country of
ultimate destination is Chicago, the law of Chicago shall govern the liability of TWA for the loss of the four
pieces of baggage. Neither is Article 2176 of the New Civil Code on torts or quasi-delicts applicable in view of
the private international law principle of lex loci delicti commissi.[22] In addition, comformably with Santos III v.
Northwest Orient Airlines,[23] mere allegation of willful misconduct resulting in a tort is insufficient to exclude the
case from the comprehension of the Warsaw Convention.

Failing in their bid to reconsider the decision, the petitioners filed this petition. They aver that respondent
Court of Appeals gravely erred (1) in holding that the Warsaw Convention is applicable to this case and (2) in
applying Article 1753 of the Civil Code and the principle of lex loci delicti commissi.[24]

We resolved to give due course to the petition after the filing by TWA of its Comment on the petition and
noted without action for the reasons stated in the resolution of 25 September 1996 petitioners Reply and
Rejoinder. We then required the parties to submit their respective memoranda. They did in due time.

The petitioners insist that the Warsaw Convention is not applicable to their case because the contracts
they had with TWA did not involve an international transportation. Whether the contracts were of international
transportation is to be solely determined from the TWA tickets issued to them in Bangkok, Thailand, which
showed that their itinerary was Los Angeles-New York-Boston-St. Louis-Chicago. Accordingly, since the place
of departure (Los Angeles) and the place of destination (Chicago) are both within the territory of one High
Contracting Party, with no agreed stopping place in a territory subject to the sovereignty, mandate, suzerainty
or authority of another Power, the contracts did not constitute international transportation as defined by the
convention. They also claim to be without legal basis the contention of TWA that their transportation contracts
were of international character because of the handwritten notations in the tickets re INTL TKT #079-
4402956821-2 and INTL TKT #079-4402956819. Notwithstanding such notations, the TWA tickets, viz., (a) No.
015.9475:153:304 and (b) No. 015:9475:153:305 did not cease to be for the itinerary therein
designated. Besides, it is a fact that petitioners Purita and Carmina Mapa traveled from Manila to Los Angeles
via Philippine Airlines (PAL) by virtue of PAL tickets issued independently of the TWA tickets.

The pith issue to be resolved under the petitioners first assigned error is whether the contracts of
transportation between Purita and Carmina Mapa, on the one hand, and TWA, on the other, were contracts of
international transportation under the Warsaw Convention. If they were, then we should sustain the trial court
and the Court of Appeals in light of our ruling in Santos v. Northwest Orient Airlines.[25] It appears clear to us
that TWA itself, the trial court, and the Court of Appeals impliedly admit that if the sole basis were the two TWA
tickets for Los Angeles-New York-Boston-St. Louis-Chicago, the contracts cannot be brought within the term
international transportation, as defined in Article I(2) of the Warsaw Convention. As provided therein, a contract
is one of international transportation only if

according to the contract made by the parties, the place of departure and the place of destination, whether or not there be a
break in the transportation or a transshipment, are situated either within the territories of two High Contracting Parties, or
within the territory of a single High Contracting Party, if there is an agreed stopping place within a territory subject to the
sovereignty, mandate or authority of another power, even though that power is not a party to this convention.

There are then two categories of international transportation, viz., (1) that where the place of departure
and the place of destination are situated within the territories of two High Contracting Parties regardless of
whether or not there be a break in the transportation or a transshipment; and (2) that where the place of
departure and the place of destination are within the territory of a single High Contracting Party if there is an
agreed stopping place within a territory subject to the sovereignty, mandate, or authority of another power,
even though the power is not a party to the Convention.

The High Contracting Parties referred to in the Convention are the signatories thereto and those which
subsequently adhered to it. In the case of the Philippines, the Convention was concurred in by the Senate,
through Resolution No. 19, on 16 May 1950. The Philippine instrument of accession was signed by President
Elpidio Quirino on 13 October 1950 and was deposited with the Polish Government on 9 November 1950. The
Convention became applicable to the Philippines on 9 February 1951. Then, on 23 September 1955, President
Ramon Magsaysay issued Proclamation No. 201, declaring the Philippines formal adherence thereto, to the
end that the same and every article and clause thereof may be observed and fulfilled in good faith by the
Republic of the Philippines and the citizens thereof.[26]

The contracts of transportation in this case are evidenced by the two TWA tickets, No. 015:9475:153:304
and No. 015:9475:153:305, both purchased and issued in Bangkok, Thailand.On the basis alone of the
provisions therein, it is obvious that the place of departure and the place of destination are all in the territory of
the United States, or of a single High Contracting Party. The contracts, therefore, cannot come within the
purview of the first category of international transportation. Neither can it be under the second category since
there was NO agreed stopping place within a territory subject to the sovereignty, mandate, or authority of
another power.

The only way to bring the contracts between Purita and Carmina Mapa, on the one hand, and TWA, on the
other, within the first category of international transportation is to link them with, or to make them an integral
part of, the Manila-Los Angeles travel of Purita and Carmina through PAL aircraft. The linkages which have
been pointed out by the TWA, the trial court, and the Court of Appeals are (1) the handwritten notations, viz.,
INTL TKT # 079-4402956821-2 and INTL TKT # 079-4402956819, on the two TWA tickets; and (2) the entries
made by petitioners Purita and Carmina Mapa in column YOUR COMPLETE ITINERARY in TWAs Passenger
Property Questionnaire, wherein they mentioned their travel from Manila to Los Angeles in flight PR 102.

The alleged international tickets mentioned in the notations in conjunction with which the two TWA tickets
were issued were not presented. Clearly then, there is at all no factual basis of the finding that the TWA tickets
were issued in conjunction with the international tickets, which are even, at least as of now, non-existent.

As regards the petitioners entry in YOUR COMPLETE ITINERARY column of the Passenger Property
Questionnaire wherein they included the Manila-Los Angeles travel, it must be pointed out that this was made
on 4 September 1990[27] by petitioners Purita and Carmina Mapa, and only in connection with their claim for
their lost pieces of baggage. The loss occurred much earlier, or on 27 August 1990. The entry can by no
means be considered as a part of, or supplement to, their contracts of transportation evidenced by the TWA
tickets which covered transportation within the United States only.

It must be underscored that the first category of international transportation under the Warsaw Convention
is based on the contract made by the parties. TWA does not claim that the Manila-Los Angeles contracts of
transportation which brought Purita and Carmina to Los Angeles were also its contracts. It does not deny the
assertion of the petitioners that those contracts were independent of the TWA tickets issued in Bangkok,
Thailand. No evidence was offered that TWA and PAL had an agreement concerning transportation of
passengers from points of departures not served with aircrafts of one or the other. There could have been no
difficulty for such agreement, since TWA admitted without qualification in paragraph 1 of its Answer [28] to the
second Amended Complaint the allegation in paragraph 1.1 of the latter [29] that TWA is a foreign corporation
licensed to do business in the Philippines with office address at Ground Floor, Saville Building, Sen. Gil. J.
Puyat Avenue, corner Paseo de Roxas, Makati, Metro Manila.

TWA relies on Article I(3) of the Convention, which provides as follows:

3. A carriage to be performed by several successive air carriers is deemed, for the purposes of this
Convention, to be one undivided carriage, if it has been regarded by the parties as a single
operation, whether it had been agreed upon under the form of a single contract or of a series of
contracts, and it shall not lose its international character merely because one contract or a series of
contracts is to be performed entirely within a territory subject to the sovereignty, suzerainty,
mandate, or authority of the same High Contracting Party.

It also points to Article 15 of the IATA Recommend Practice 1724, which provides: Carriage to be performed by
several successive carriers under one ticket, or under a ticket and any conjunction ticket issued in connection
therewith, is regarded as a single operation.[30]
 The flaw of respondents position is the presumption that the parties have regarded as an undivided
carriage or as a single operation the carriage from Manila to Los Angeles through PAL then to New York-
Boston- St. Louis-Chicago through TWA. The dismissal then of the second Amended Complaint by the trial
court and the Court of Appeals affirmance of the dismissal were not based on indubitable facts or grounds, but
on inferences without established factual basis.

TWA should have offered evidence for its affirmative defenses at the preliminary hearing therefor. Section
5 of Rule 16 of the Rules of Court expressly provides:

SEC. 5. Pleading grounds as affirmative defenses. -- Any of the grounds for dismissal provided for in this rule, except
improper venue, may be pleaded as an affirmative defense, and a preliminary hearing may be had thereon as if a motion to
dismiss had been filed.

Without any further evidence as earlier discussed, the trial court should have denied the affirmative
defense of lack of jurisdiction because it did not appear to be indubitable. Section 3 of Rule 16 of the Rules of
Court provides:

SEC. 3. Hearing and order. -- After hearing the court may deny or grant the motion or allow amendment of pleading, or
may defer the hearing and determination of the motion until the trial if the ground alleged therein does not appear to be
indubitable.

WHEREFORE, the instant petition is GRANTED and the challenged decision of 31 May 1995 of
respondent Court of Appeals in CA-G.R. CV No. 39896, as well as the Order of 24 July 1992 of the Regional
Trial Court of Quezon City, Branch 102, in Civil Case No. Q-91-9620, is REVERSED and SET ASIDE.

The Regional Trial Court of Quezon City, Branch 102, is hereby DIRECTED to proceed with the pre-trial, if
it has not been terminated, and with the trial on the merits of the case and then to render judgment thereon,
taking into account the foregoing observations on the issue of jurisdiction.