Art. 1744.

A stipulation between the common carrier and the shipper or owner limiting the liability of the former for the loss, destruction, or deterioration of the goods to a degree less than extraordinary diligence shall be valid, provided it be: (1) In writing, signed by the shipper or owner; (2) Supported by a valuable consideration other than the service rendered by the common carrier; (3) Reasonable, just and not contrary to public policy. Art. 1745. Any of the following or similar stipulations shall be considered unreasonable, unjust and contrary to public policy: (1) That the goods are transported at the risk of the owner or shipper; (2) That the common carrier will not be liable for any loss, destruction, or deterioration of the goods; (3) That the common carrier need not observe any diligence in the custody of the goods; (4) That the common carrier shall exercise a degree of diligence less than that of a good father of a family, or of a man of ordinary prudence in the vigilance over the movables transported; (5) That the common carrier shall not be responsible for the acts or omission of his or its employees; (6) That the common carrier's liability for acts committed by thieves, or of robbers who do not act with grave or irresistible threat, violence or force, is dispensed with or diminished; (7) That the common carrier is not responsible for the loss, destruction, or deterioration of goods on account of the defective condition of the car, vehicle, ship, airplane or other equipment used in the contract of carriage. c.3.1.2 As to amount of liability Art. 1749. A stipulation that the common carrier's liability is limited to the value of the goods appearing in the bill of lading, unless the shipper or owner declares a greater value, is binding. Art. 1750. A contract fixing the sum that may be recovered by the owner or shipper for the loss, destruction, or deterioration of the goods is valid, if it is reasonable and just under the circumstances, and has been fairly and freely agreed upon. c.3.1.3 Factors affecting agreement Art. 1746. An agreement limiting the common carrier's liability may be annulled by the shipper or owner if the common carrier refused to carry the goods unless the former agreed to such stipulation. Art. 1747. If the common carrier, without just cause, delays the transportation of the goods or changes the stipulated or usual route, the contract limiting the common carrier's liability cannot be availed of in case of the loss, destruction, or deterioration of the goods. Art. 1748. An agreement limiting the common carrier's liability for delay on account of strikes or riots is valid. Art. 1751. The fact that the common carrier has no competitor along the line or route, or a part thereof, to which the contract refers shall be taken into consideration on the question of whether or not a stipulation limiting the common carrier's liability is reasonable, just and in consonance with public policy. Art. 1752. Even when there is an agreement limiting the liability of the common carrier in the vigilance over the goods, the common carrier is disputably presumed to have been negligent in case of their loss, destruction or deterioration.

c.3.2 Bill of Lading as a Contract of Adhesion c.3.3 Passengers c.3.3.1 As to diligence required Art. 1757. The responsibility of a common carrier for the safety of passengers as required in articles 1733 and 1755 cannot be dispensed with or lessened by stipulation, by the posting of notices, by statements on tickets, or otherwise. Art. 1758. When a passenger is carried gratuitously, a stipulation limiting the common carrier's liability for negligence is valid, but not for willful acts or gross negligence. The reduction of fare does not justify any limitation of the common carrier's liability. c.3.3.2 As to amount of liability Art. 1306. The contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy. (1255a) Art. 2199. Except as provided by law or by stipulation, one is entitled to an adequate compensation only for such pecuniary loss suffered by him as he has duly proved. Such compensation is referred to as actual or compensatory damages. d. Action for Damages Art. 1764. Damages in cases comprised in this Section shall be awarded in accordance with Title XVIII of this Book, concerning Damages. Article 2206 shall also apply to the death of a passenger caused by the breach of contract by a common carrier. Art. 2197. Damages may be: (1) Actual or compensatory; (2) Moral; (3) Nominal; (4) Temperate or moderate; (5) Liquidated; or (6) Exemplary or corrective. d.1 Concurrent Causes of Action Art. 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual relation between the parties, is called a quasidelict and is governed by the provisions of this Chapter. (1902a) Art. 100 of the Revised Penal Code. Civil liability of a person guilty of felony Every person criminally liable for a felony is also civilly liable. Cangco v. Manila Railroad Company1
1 In culpa contractual, where negligent acts or omissions amount to the breach of a contract, there is no defense of due diligence in the selection & supervision of its employees, such being applicable only to culpa aquiliana. Extra-contractual obligation has its source in the breach or omission of those mutual duties w/c civilized society imposes upon its members, or which arise from these relations, other than contractual, of certain

38 Phil 768 Facts: The plaintiff, Jose Cangco, comes to work daily by the train of defendant. One night, when plaintiff rode the train, he met an accident while stepping off it. His feet stepped on watermelons stacked on the side of the platform which made his body fall under the moving car. His right arm was badly crushed and lacerated. It appears that after the plaintiff alighted from the train, the car moved forward possibly 6m before it came to a full stop. The accident occurred between 7-8pm on a dark night, with the railroad station being dimly lighted by a single light. This made it difficult for the passengers to discern if there are any objects to be avoided on the platform when they alight from the train. Plaintiff instituted this action to recover damages from the defendant company, founding his action upon the negligence of the employees of the defendant in placing stacks of melons upon the platform and in leaving them so placed as to be a menace to the security of passengers alighting from the companys trains. CFI precluded plaintiff from recovering on the ground that the latter had failed to use due caution in alighting from the train (there was contributory negligence on his part). This was because of the finding that the plaintiff alighted from the train while it was moving. Issue: Whether or not the defendant company is liable to plaintiff? Ruling: Yes, the foundation of its legal liability is the contract of carriage. Its liability under such contract is direct and immediate, differing essentially, in the legal viewpoint from that presumptive responsibility (under the CC) for the negligence of its servants which can be rebutted by proof of the exercise of due care in their selection and supervision. In this situation, the plaintiff was ignorant of the fact that the obstruction which was caused by the sacks of melons piled on the platform existed; and as the defendant was bound by reason of its duty as a public carrier to afford to its passengers facilities for safe egress from its trains, the plaintiff had a right to assume, in the absence of some circumstance to warn him to the contrary, that the platform was clear. Moreover, the place was dark, or dimly lit. Hence, if it were by any possibility conceded that there was a right to pile the sacks in the path of alighting passengers, the placing of them in the position it was placed gave rise to the duty to light the premises adequately so that their presence would be revealed. The plaintiff could not be held to have been guilty of contributory negligence. d.2 Solidary Liability Gutierrez v. Gutierrez 56 Phil 177
members of society to others, generally embraced in the concept of status. In cases of non-contractual obligation, it is the wrongful or negligent act or omission itself w/c creates the vinculum juris, whereas in contractual relations the vinculum exists independently of the breach of the voluntary duty assumed by the parties when entering into the contractual relation. When the source of the obligation of the defendant is culpa aquiliana, the burden of proof rests upon plaintiff to prove the negligence. On the other hand, if the source is culpa contractual, what the plaintiff has to show is only the existence of a contractual undertaking by the defendant for the benefit of such plaintiff, and the failure or refusal of the defendant to perform the contract. In the latter case, it is not necessary to show that the breach was due to willful fault or negligence on the part of the defendant, or of his servants or agents. Doctrine of comparative negligence if the accident was cause by plaintiffs own negligence, no liability is imposed upon defendant. On the other hand, if the accident was caused by defendants negligence and plaintiffs negligence merely contributed to his injury, the damages should be apportioned.

Facts: On February 2, 1930, a passenger truck and an automobile of private ownership collided while attempting to pass each other on the Talon bridge on the Manila South Road in the municipality of Las Pinas, Province of Rizal. The truck was driven by the chauffeur Abelardo Velasco, and was owned by Saturnino Cortez. The automobile was being operated by Bonifacio Gutierrez, a lad 18 years of age, and was owned by Bonifacio's father and mother, Mr. and Mrs. Manuel Gutierrez. At the time of the collision, the father was not in the car, but the mother, together with several other members of the Gutierrez family, seven in all, were accommodated therein. A passenger in the autobus, by the name of Narciso Gutierrez, was en route from San Pablo, Laguna, to Manila. The collision between the bus and the automobile resulted in Narciso Gutierrez suffering a fractured right leg which required medical attendance for a considerable period of time, and which even at the date of the trial appears not to have healed properly. Ruling: It is conceded that the collision was caused by negligence pure and simple. The difference between the parties is that, while the plaintiff blames both sets of defendants, the owner of the passsenger truck blames the automobile, and the owner of the automobile, in turn, blames the truck. In amplification of so much of the above pronouncement as concerns the Gutierrez family, it may be explained that the youth Bonifacio was an incompetent chauffeur, that he was driving at an excessive rate of speed, and that, on approaching the bridge and the truck, he lost his head and so contributed by his negligence to the accident. The guaranty given by the father at the time the son was granted a license to operate motor vehicles made the father responsible for the acts of his son. Based on these facts, pursuant to the provisions of article 1903 of the Civil Code, the father alone and not the minor or the mother, would be liable for the damages caused by the minor. Here, the case deals with the civil law liability of parties for obligations which arise from fault or negligence. At the same time, believe that, as has been done in other cases, the Court can take cognizance of the common law rule on the same subject. In the United States, it is uniformly held that the head of a house, the owner of an automobile, who maintains it for the general use of his family is liable for its negligent operation by one of his children, whom he designates or permits to run it, where the car is occupied and being used at the time of the injury for the pleasure of other members of the owner's family than the child driving it. The theory of the law is that the running of the machine by a child to carry other members of the family is within the scope of the owner's business, so that he is liable for the negligence of the child because of the relationship of master and servant. The liability of Saturnino Cortez, the owner of the truck, and of his chauffeur Abelardo Velasco rests on a different basis, namely, that of contract which, has been sufficiently demonstrated by the allegations of the complaint, not controverted, and the evidence. The reason for this conclusion reaches to the findings of the trial court concerning the position of the truck on the bridge, the speed in operating the machine, and the lack of care employed by the chauffeur. While these facts are not as clearly evidenced as are those which convict the other defendant, the Court nevertheless hesitate to disregard the points emphasized by the trial judge. In its broader aspects, the case is one of two drivers approaching a narrow bridge from opposite directions, with neither being willing to slow up and give the right of way to the other, with the inevitable result of a collision and an accident. The defendants Velasco and Cortez further contend that there existed contributory negligence on the part of the plaintiff, consisting principally of his keeping his foot outside the truck, which occasioned his injury. In this connection, it is sufficient to state that, aside from the fact that the defense of contributory negligence was not pleaded, the evidence bearing out this theory of the case is contradictory in the extreme and leads far afield into speculative matters.

In consonance with the foregoing rulings, the judgment appealed from is modified, and the plaintiff will have judgment in his favor against the defendants Manuel Gutierrez, Abelardo Velasco, and Saturnino Cortez, jointly and severally, for the sum of P5,000, and the costs of both instances. Fabre v. Court of Appeals 259 SCRA 426

Facts: Petitioners Engracio Fabre, Jr. and his wife were owners of a 1982 model Mazda minibus. They used the bus principally in connection with a bus service for school children w/c they operated in Manila. Porfirio Cabil was their driver. Private respondent Word for the World Christian Fellowship, Inc. (WWCF) arranged w/ petitioners for the transportation of 33 members of its Young Adults Ministry from Manila to La Union and back in consideration of w/c respondents paid petitioners. The group left late on the date of the trip due to latecomers. The usual route to Caba, La Union was thru Carmen, Pangasinan. However, the bridge at Carmen was under repair, so Cabil, who was unfamiliar with the area (it being his 1 st trip to La Union), was forced to take a detour thru Baay, Lingayen, Pangasinan. Cabil came upon a sharp curve on the highway. The road was slippery because it was raining, causing the bus, w/c was running at 50kph, to skid to the left road shoulder. The bus turned over and landed on its left side. Several passengers were injured. Cabil claimed he did not see the curve until it was too late. He said he was not familiar with the area and he could not have seen the curve despite the care he took in driving the bus, because it was dark and there was no sign on the road. The trial court rendered judgment against herein petitioner spouses and Cabil pursuant to Arts. 2176 & 2180 CC. CA affirmed. Issues: 1) Whether or not the civil code provisions on common carriers apply to petitioner spouses? 2) Whether or not the Fabres are liable to the injured passengers? 3) Whether or not petitioner-owners (Fabres) may be made solidarily liable with Cabil (driver)? Ruling: 1) YES. Petitioners, the Fabres, did not have to be engaged in the business of public transportation for the CC provisions on common carriers to apply to them. Art. 1732 CC makes no distinction between one whose principal business activity is the carrying of persons or goods or both, and one who does such carrying only as an ancillary activity (in local idiom, as "a sideline"). It also carefully avoids making any distinction between a person or enterprise offering transportation service on a regular or scheduled basis and one offering such service on an occasional, episodic or unscheduled basis. Neither does it distinguish between a carrier offering its services to the "general public," i.e., the general community or population, and one who offers services or solicits business only from a narrow segment of the general population. We think that Article 1732 deliberately refrained from making such distinctions. 2) YES. Pursuant to Arts. 2176 & 2180 CC, the negligence of the driver gave rise to the presumption that his employers were themselves negligent in the selection & supervision of their employee. The fact that it was the WWCF that sought out the use of petitioners vehicle, it does not absolve the latter from liability for the negligence of its driver. Due diligence in selection of employees is not satisfied by finding that the applicant possessed a professional driver's license. The employer should also examine the applicant for his qualifications, experience and record of service. Due diligence in supervision, on the other hand, requires the formulation of rules and regulations for the guidance of employees and issuance of proper instructions as well as actual implementation and monitoring of consistent compliance with the rules. A person who hires a public automobile and gives the driver directions as to the place to

which he wishes to be conveyed, but exercises no other control over the conduct of the driver, is not responsible for acts of negligence of the latter or prevented from recovering for injuries suffered from a collision between the automobile and a train, caused by the negligence or the automobile driver. 3) YES. The respondents in this case did not stake out their claim against the carrier and driver exclusively on one theory, much less on that of breach of contract alone. After all, it was permitted for them to allege alternative causes of action and join as many parties as may be liable on such causes of action so long as there is no double recovery. This case is different from the case of Philippine Rabbit Bus Lines, Inc. v. Court of Appeals (189 SCRA 158), where the SC exonerated the jeepney driver from liability to the injured passengers and their families while holding the owners of the jeepney jointly and severally liable, because that case was expressly tried and decided exclusively on the theory of culpa contractual. It was there held that the driver cannot be held jointly and severally liable w/ the carrier in case of breach of the contract of carriage.

d.3 Criminal Liability Art. 103 of the Revised Penal Code. Subsidiary civil liability of other persons. The subsidiary liability established in the next preceding article shall also apply to employers, teachers, persons, and corporations engaged in any kind of industry for felonies committed by their servants, pupils, workmen, apprentices, or employees in the discharge of their duties. Vda. de Paman et al v. Seneris GR L-37632 July 30, 1982 Facts: Accused-respondent Teodoro de los Santos, driver of a cargo truck with plate No. T15341, owned and operated by the Western Mindanao Lumber Co., and without due precaution, considering the width, grades, curvature, visibility and other conditions of the road, did then and there willfully, unlawfully and feloniously, thru his recklessness and lack of foresight while driving said cargo truck cause one Victoriano Paman to fall therefrom who was riding the said truck and as a consequence, the latter sustained injuries on his person which caused his death. He was then charged by the City Attorney of Zamboanga City with Homicide Thru Reckless Imprudence. Upon arraignment, accused-respondent Teodoro de los Santos entered a plea of guilty. In view of said plea, the respondent Judge, Alberto Seeris, rendered a Decision sentencing said respondent to suffer an imprisonment of two (2) months and one (1) day of arresto mayor and to indemnify the heirs of the late Victoriano Paman, namely, the petitioner Gregoria Vda. de Paman and her three children, in the amount of P12,000.00. On the same day, accused-respondent Teodoro de los Santos commenced his service of sentence. Petitioner Gregoria Vda. de Paman, widow of the victim, filed the first motion for execution of the judgment to enforce the civil liability of the P12,000.00 of the accused-respondent. This was followed by the filing of petitioner of an ex parte motion for execution of judgment against the accused. In both instances, Western Mindanao Lumber Company was duly notified. Respondent Judge issued an order granting the said motion for execution. However, the Sheriff's Return of Service showed that the accused-respondent Teodoro de los Santos had no property registered in his name. Upon discovery that accused-respondent is insolvent, petitioner filed a "Motion for Execution on Subsidiary Liability of Employer Western Mindanao Lumber Company under Article 103 of the Revised Penal Code." Petitioner contended therein that the subsidiary liability of the employer Western Mindanao Lumber Company in the event the accused is insolvent, is executory in nature and there is no need for a separate action or a further civil case to be filed in the enforcement of the division aforementioned. Petitioner filed a "Supplemental Motion for

Execution for Subsidiary Liability of Employer under Art. 103 of the Penal Code." Petitioner, thru counsel, cited therein the case of Fernando vs. Franco, 37 SCRA 311, where the Court held that: "It may be stated further that since it was not only in the latter part of October, 1962 that the decision against the driver attained finality and became executory, had plaintiffs relied on suing out a writ of execution against the employer, it could have had until October 1967 at the latest to take such step." Petitioner concluded that the tenor of the aforesaid decision implies that the subsidiary liability of the employer may be enforced in the same proceeding. The respondent Judge issued an order denying the motion for issuance of writ of execution against the employer of Teodoro de los Santos. He opined that the alleged employer not having been notified that its driver was facing a criminal charge, a separate civil action must be filed. Hence, this petition for mandamus.

Issue: Whether or not the subsidiary liability established in Article 103 of the Revised Penal Code may be enforced in the same criminal case where the award was made, or in a separate civil action? Ruling: Besides, even if the employer-employee relationship is not disputed, still, in order that an employer may be subsidiarily liable for the employee's civil liability in the criminal action, it should be shown (1) that the employer, etc. is engaged in any kind of industry, (2) that the employee committed the offense in the discharge of his duties, and (2) that he is insolvent. Against the foregoing considerations, Section 1, Rule 111 of the Rules of Court provides, however, that "when a criminal action is instituted, the civil action for recovery of civil liability arising from the offense charged is impliedly instituted with the criminal action, unless the offended party expressly waives the civil action or reserves his right to institute it separately." That means as if two actions are joined in one as twins, each one complete with the same completeness as any of the two normal persons composing the twins. It means that the civil action may be tried and prosecuted, with all the ancillary processes provided by law. Said provision will be rendered meaningless if the subsidiary civil liability is not allowed to be enforced in the same proceeding. To remedy the situation and thereby afford due process to the alleged employer, the Court directed the court a quo in Pajarito vs. Seeris to hear and decide in the same proceeding the subsidiary liability of the alleged owner and operator of the passenger bus. It was explained therein that the proceeding for the enforcement of the subsidiary liability may be considered as part of the proceeding for the execution of the judgment. A case in which an execution has been issued is regarded as still pending so that all proceedings on the execution are proceedings in the suit. There is no question that the court which rendered the judgment has a general supervisory control over its process of execution, and this power carries with it the right to determine very question of fact and law which may be involved in the execution. Moreover, it has been invariably held that a judgment of conviction sentencing a defendant employer to pay an indemnity in the absence of any collusion between the defendant and the offended party, is conclusive upon the employer in an action for the enforcement of the latter's subsidiary liability not only with regard to the civil liability, but also with regard to its amount. This being the case, the Court stated in Rotea vs. Halili, 109 Phil. 495 that the court has no other function than to render decision based upon the indemnity awarded in the criminal case and has no power to amend or modify it even if in its opinion an error has been committed in the decision. A separate and independent action is, therefore, unnecessary and would only unduly prolong the agony of the heirs of the victim. Thus, the order of respondent Judge is is set aside. The Court a quo is hereby directed to conduct further proceedings in the same case on whether the requisite facts to impose subsidiary civil liability on the alleged employer of Teodoro de los Santos are present.

e. Kinds and Nature of Damages e.1 Actual or compensatory Art. 2199. Except as provided by law or by stipulation, one is entitled to an adequate compensation only for such pecuniary loss suffered by him as he has duly proved. Such compensation is referred to as actual or compensatory damages. Art. 2201. In contracts and quasi-contracts, the damages for which the obligor who acted in good faith is liable shall be those that are the natural and probable consequences of the breach of the obligation, and which the parties have foreseen or could have reasonably foreseen at the time the obligation was constituted. In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible for all damages which may be reasonably attributed to the nonperformance of the obligation. (1107a) Art. 2203. The party suffering loss or injury must exercise the diligence of a good father of a family to minimize the damages resulting from the act or omission in question. Villa Rey Transit v. Court of Appeals 31 SCRA 511 Facts: An Isuzu passenger bus owned and operated by the petitioner Villa Rey Transit left Lingayen, Pangasinan, for Manila. Among its paying passengers was the deceased, Policronio Quintos, Jr. who sat on the 1st seat, 2nd row, right side of the bus. When the vehicle was nearing the northern approach of the Sadsaran Bridge on the national highway in barrio Sto. Domingo, Mun. of Minalin, Pampanga, it frontally hit the rear side of a bullcart filled w/ hay. As a result, the end of a bamboo pole placed on top of the hayload and tied to the cart to hold it in place, hit the right side of the windshield of the bus. The protruding end of the bamboo pole, about 8 ft long from the rear of the bullcart, penetrated through the glass windshield and landed on the face of Policronio who, because of the impact, fell from his seat and was sprawled on the floor. The pole landed on his left eye and the bone of the left side of his face was fractured. He died due to the traumatic shock due to cerebral injuries. The private respondents are the sisters and only surviving heirs of Policronio. Said respondents brought this action against petitioner as owner and operator of the passenger bus for breach of the contract of carriage between said petitioner and the deceased Policronio. TC and CA both found that the accident and death had been due to the negligence of the bus driver, for whom petitioner was liable under its contract of carriage w/ the deceased. The only issue raised in this appeal is the amount of damages recoverable by private respondents herein. Issues: 1) The method to be used. 2) The rate at w/c the damages shall be computed. Ruling: 1) The determination of the indemnity to be awarded to the heirs of a deceased person has therefore no fixed basis. Much is left to the discretion of the court considering the moral and material damages involved, and so it has been said that there can be no exact or uniform rule for measuring the value of a human life and the measure of damages cannot be arrived at by precise mathematical calculation, but the amount recoverable depends on the particular facts and circumstances of each case. Life expectancy is not only relevant, but, also, an important element in fixing the amount recoverable. Although it is not the sole element determinative of said amount,

no cogent reason has been given to warrant its disregard and the adoption, in the case at bar, of a purely arbitrary standard (the 4-yr rule being asserted by respondents). 2) The main concern w/ the determination of the losses or damages sustained by the respondents, as dependents and intestate heirs of the deceased, and that said damages consist, not of the full amount of his earnings, but of the support they received or would have received from him had he not died in consequence of the negligence of petitioners agent. Earning capacity, as an element of damages to ones estate for his death by wrongful act is necessarily his net earning capacity or his capacity to acquire money, less the necessary expense for his own living. Stated otherwise, the amount recoverable is not loss of the entire earning, but rather the loss of that portion of the earnings w/c the beneficiary would have received. Net earnings is the total of the earnings less expenses necessary in the creation of such earnings or income and less living and other incidental expenses. Korea Airlines v. Court of Appeals 234 SCRA 717

Issue: Lapuz likewise claims that the respondent court could not rule upon the propriety of the award of actual damages because it had not been assigned as an error by KAL. Not so. The rule is that only errors specifically assigned and properly argued in the brief will be considered except errors affecting jurisdiction over the subject matter and plain as well as clerical errors. 8 But this is not without qualification for, as the Court held in Vda. de Javellana vs. Court of Appeals: . . . [T]he Court is clothed with ample authority to review matters, even if they are not assigned as errors in their appeal, if it finds that their consideration is necessary in arriving at a just decision of the case. Ruling: The Court of Appeals was therefore justified in decreasing the award of actual damages even if the issue was not assigned as an error by KAL Consideration of this question was necessary for the just and complete resolution of the present case. Furthermore, there was enough evidence to warrant the reduction of the original award, as the challenged decision correctly observed: A perusal of the plaintiff-appellant's contract of employment shows that the effectivity of the contract is for only one year, renewable every year for five years. Although plaintiff-appellant intends to renew his contract, such renewal will still be subject to his foreign employer. Plaintiff-appellant had not yet started working with his foreign employer, hence, there can be no basis as to whether his contract will be renewed by his foreign employer or not. Thus, the damages representing the loss of earnings of plaintiff-appellant in the renewal of the contract of employment is at most speculative. Damages may not be awarded on the basis of speculation or conjecture (Gachalian vs. Delim, 203 SCRA 126). Hence, defendant-appellant's liability is limited to the one year contract only. Plaintiff-appellant is, therefore, entitled only to his lost earnings for one year, i.e., P60,000.00, which is 1/5 of P300,000.00, the total amount of actual damages, representing lost earnings for five years prayed for in the Complaint. Plaintiff-appellant's contention that in computing his lost earnings, the current rate of Saudi Rial to the Philippine Peso at the time of payment should be used, is untenable, considering that in his Complaint, plaintiff-appellant has quantified in Philippine Pesos his lost earnings for five years. PAL v. Court of Appeals 185 SCRA 110 Facts: Starlight Flight No. 26 of the PAL took off from the Manduriao Airport in Iloilo, on its way to Manila, w/ 33 persons on board, including the planes complement. The plane did not reach its destination but crashed on Mt. Baco, Mindoro. Among the fatalities was

Nicanor Padilla who was a passenger on the star crossed flight. He was 29 yrs old, single. His mother, private respondent Natividad Padilla, was his only legal heir. Issue: Whether the indemnity for the death of respondents son should be computed on the basis of the deceaseds life expectancy, as the TC & CA ruled, rather than the life expectancy of respondent, as PAL contends? Ruling: Under Article 1764 and Article 2206 (1) of the Civil Code, the award of damages for death is computed on the basis of the life expectancy of the deceased, not of his beneficiary. e.2 Moral Art. 2206. The amount of damages for death caused by a crime or quasi-delict shall be at least three thousand pesos, even though there may have been mitigating circumstances. In addition: (1) The defendant shall be liable for the loss of the earning capacity of the deceased, and the indemnity shall be paid to the heirs of the latter; such indemnity shall in every case be assessed and awarded by the court, unless the deceased on account of permanent physical disability not caused by the defendant, had no earning capacity at the time of his death; (2) If the deceased was obliged to give support according to the provisions of article 291, the recipient who is not an heir called to the decedent's inheritance by the law of testate or intestate succession, may demand support from the person causing the death, for a period not exceeding five years, the exact duration to be fixed by the court; (3) The spouse, legitimate and illegitimate descendants and ascendants of the deceased may demand moral damages for mental anguish by reason of the death of the deceased. 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 damages, except liquidated ones, is left to the discretion of the court, according to the circumstances of each case. Art. 2217. Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury. Though incapable of pecuniary computation, moral damages may be recovered if they are the proximate result of the defendant's wrongful act for omission. Art. 2219. Moral damages may be recovered in the following and analogous cases: (1) A criminal offense resulting in physical injuries; (2) Quasi-delicts causing physical injuries; (3) Seduction, abduction, rape, or other lascivious acts; (4) Adultery or concubinage; (5) Illegal or arbitrary detention or arrest; (6) Illegal search; (7) Libel, slander or any other form of defamation; (8) Malicious prosecution; (9) Acts mentioned in article 309; (10) Acts and actions referred to in articles 21, 26, 27, 28, 29, 30, 32, 34, and 35. The parents of the female seduced, abducted, raped, or abused, referred to in No. 3 of this article, may also recover moral damages.

The spouse, descendants, ascendants, and brothers and sisters may bring the action mentioned in No. 9 of this article, in the order named. Art. 2220. Willful injury to property may be a legal ground for awarding moral damages if the court should find that, under the circumstances, such damages are justly due. The same rule applies to breaches of contract where the defendant acted fraudulently or in bad faith. Lopez v. Pan American 16 SCRA 431 Facts: Plaintiffs Senator Fernando Lopez, his wife, his son in law and his daughter, made the first class reservations with the defendant in its Tokyo-San Francisco flight. The reservations having been confirmed, first class tickets were subsequently issued in favor of plaintiffs. Through mistake, however, defendants agents cancelled the said reservations. Expecting that some cancellations of bookings would be made before the flight time, the reservation supervisor decided to withhold from plaintiffs the information that their reservations had been cancelled. Upon arrival in Tokyo, defendant informed the plaintiffs that there was no accommodation for them in the first class stating that they could not go unless they take the tourist class. Due to pressing engagements in the US, the plaintiffs were constrained to take the flight as tourist passengers, but they did so under protest. Ruling: In so misleading plaintiffs into purchasing first class tickets in the conviction that they had confirmed reservations for the same, when in fact they had none, defendant wilfully and knowingly placed itself into the position of having to breach its aforesaid contracts with plaintiffs should there be no last-minute cancellation by other passengers before flight time, as it turned out in this case. Such actuation of defendant may indeed have been prompted by nothing more than the promotion of its self- interest in holding on to Senator Lopez and party as passengers in its flight and foreclosing on their chances to seek the services of other airlines that may have been able to afford them first class accommodations. All the same, in legal contemplation such conduct already amounts to action in bad faith. For bad faith means a breach of a known duty through some motive of interest or ill will. Self-enrichment or fraternal interest, and not personal ill will, may well have been the motive, but it is malice nevertheless. First, moral damages are recoverable in breach of contracts where the defendant acted fraudulently or in bad faith (Art. 2220, New Civil Code). Second, in addition to moral damages, exemplary or corrective damages may be imposed by way of example or correction for the public good, in breach of contract where the defendant acted in a wanton, fraudulent, reckless, oppressive or malevolent manner (Articles 2229, 2232, New Civil Code). And, third, a written contract for an attorney's services shall control the amount to be paid therefore unless found by the court to be unconscionable or unreasonable (Sec. 24, Rule 138, Rules of Court). First, then, as to moral damages. As a proximate result of defendant's breach in bad faith of its contracts with plaintiff's the latter suffered social humiliation, wounded feelings, serious anxiety and mental anguish. For plaintiffs were travelling with first class tickets issued-by defendant and yet they were given only the tourist class. At stopovers, they were expected to be among the first-class passengers by those awaiting to welcome them, only to be found among the tourist passengers. It may not be humiliating to travel as tourist passengers; it is humiliating to be compelled to travel as such, contrary to what is rightfully to be expected from the contractual undertaking. Senator Lopez was then Senate President Pro Tempore. International carriers like defendant know the prestige of such an office. He was awarded P100,000 moral damages. His wife was given P50,000 for her suffering and humiliation. His daughter and son in

law were awarded P25,000 for their social humiliation. In this case, the damages have been determines by adequately considering the official, political, social and financial standing of the offended parties, on one hand, and the business and financial position of the offended party on the other. Air France v. Carrascoso 18 SCRA 155

Facts: Respondent Rafael Carrascoso left Manila for Lourdes via Air France, petitioner. He bought a first class round trip ticket. From Manila to Bangkok, he traveled in first class, but at Bangkok, the Manager of petitioner airline forced respondent to vacate the first class seat that he was already occupying because, in the words of the witness Ernesto Cuento, there was a white man, who, the Manager alleged, had a better right to the seat. The respondent refused to give his seat at first, causing a commotion in the plane. The other passengers pacified respondent and the latter reluctantly gave his first class seat. Petitioner asserts that respondent was not entitled to the first class seat that he was claiming as the plane ticket did not represent the true & complete intent & agreement of the parties; that respondent knew that he did not have confirmed reservations for first class on any specific flight; that, accordingly, the issuance of a first class ticket was no guarantee that he would have a first class ride, but that such would depend upon the availability of first class seats. CFI sentenced petitioner to pay moral damages, exemplary damages & a refund of the ticket, among others, to respondent. CA reduced the amount of refund but affirmed all others. Issues: 1) Whether or not petitioner is liable for a quasi-delict? 2) Whether or not petitioner is liable for moral damages although no bad faith was alleged in the complaint against it? Ruling: 1) YES. Petitioners assertion that respondent was not entitled to the first class seat even though he had a ticket is preposterous. If that was the case, then an air passenger is placed in the hollow hands of an airline. It will always be an easy matter for an airline aided by its employees, to strike out the very stipulations in the ticket, and say that there was a verbal agreement to the contrary. Moreover, as a rule, a written document speaks a uniform language; and that, spoken word could be notoriously unreliable. A contract to transport passengers is quite different in kind and degree from any other contractual relation. The K of air carriage generates a relation attended w/ a public duty. Neglect or malfeasance of the carriers employees, naturally, could give ground for an action for damages. Although the relation of passenger and carrier is contractual both in origin and nature nevertheless the act that breaks the contract may be also a tort. Passengers do not contract merely for transportation. They have a right to be treated by the carriers employees w/ kindness, respect, courtesy and due consideration. They are entitled to be protected against personal misconduct, injurious language, indignities and abuses from such employees. So it is, that any rule or discourteous conduct on the part of employees towards a passenger gives the latter an action for damages against the carrier. Petitioners contract w/ respondent is one attended w/ public duty. The stress of respondents action is placed upon his wrongful expulsion. This is a violation of public duty by the petitioner a case of quasi-delict. Damages are proper. 2) YES. The manager not only prevented respondent from enjoying his right to a first class seat; worse, he imposed his arbitrary will, he forcibly ejected him from his seat, made him suffer the humiliation of having to go to the tourist class compartment just to give way to another passenger whose right thereto has not been established. Certainly, bad faith can be inferred from this, and no written allegation is necessary for

one to infer that from here. Northwest Airlines v. Cuenca 14 SCRA 1063 Facts: Respondent boarded petitioners plane in Manila with a first class ticket to Tokyo. Upon arrival at Okinawa, an agent of petitioner rudely compelled him, in the presence of other passengers, to move to tourist class. Respondent protested, revealing that he was traveling in his official capacity as a delegate of the Philippines to a conference in Tokyo. In order to reach the conference in time, the respondent obeyed. Ruling: Having been given first class accommodation as he took petitioners plane in Manila, respondent was entitled to believe that he would keep the same until he reach his destination, Tokyo. Since the offense had been committed with full knowledge of the fact that the respondent was a delegate of the Philippines, the sum of P20,000 was awarded to him as damages. Zulueta v. PANAM 49 SCRA 1 Facts: Plaintiff Zulueta, his wife and daughter were passengers aboard defendants plane from Honolulu to Manila. Upon reaching Wake Island the passengers were advised that they could disembark for a stopover for about 30 minutes. Plaintiff went to the toilet at the terminal building but finding it full walked 200 yards away. Upon returning he told an employee of the defendant that they almost made him miss the flight because of a defective announcing system. He had a discussion with either the plane captain or the terminal manager. He was told that they would open his bags which he refused and he warned them of the consequences. Just the same they opened his bags and found nothing prohibited. They forced him to go out of the plane and left him at Wake Island. His wife had to send him money and hw was able to leave Wake Island and return to Manila thru Homolulu and Tokyo after two days. Ruling: The records amply establish plaintiffs right to recover both moral and exemplary damages. Indeed, the rude and rough reception plaintiff received at the hands of Sitton or Capatin Zentner when the latter met him at the ramp (What in the hell do you think you are?); the menacing attitude of Zentner or Sitton and the supercilious manner in which he had asked plaintiff to open his bags; the abusive language and highly scornful reference to plaintiffs as monkeys by one of PANAMs employees; the unfriendly attitude, the ugly stares and unkind remarks; the airline officials refusal to allow plaintiff to board the plane on the protest that he was hiding a bomb in his luggage and their arbitrary and high handed decision to leave him in Wake Island; his wifes nervous breakdown caused by the incident as these justify an award for moral damages resulting from mental anguish, serious anxiety, wounded feelings, moral shock, and social humiliation suffered by the plaintiffs. Ortigas, Jr. v. Lufthansa 64 SCRA 610 Facts: Plaintiff Ortigas was the holder of a first class airplane ticket from Manila to Hongkong,

the US, Europe, Asia, the Far East and back to Manila issued by Lufthansa German Airlines. While in Rome, he booked a flight to Hongkong first class. Plaintiffs flight was confirmed and validated by the representative of the defendant. On the date of the flight, h went to the airport and his luggage was weighed and accepted by the defendant. He handed his ticket at the airport and was told that everything was alright. Later defendants employees asked for his passport where his Filipino nationality appeared. Later he was told that there was no space for him in the first class because his seat was given to a Belgian. Ortigas persuaded to take the economy class seat on the promise by the defendants employees that he would be given first class accommodations at Cairo. At Cairo he asked for a first class seat but was promised that he will be given one at Dharham. At Dharham, he again demanded a first class seat and was promised to be given again in Calcutta. In Calcutta, he was not given the promised seat. It was only in Bangkok where he was offered a first class seat but he refused because it was already near Hongkong and he did not want to accept the seat as a sign of protest having already been humiliated and embarrassed.

Ruling: The acts of the defendant amounted to fraud and bad faith and entitled the plaintiff to moral damages under Article 2220 of the Civil Code. The breach by the defendant was graver nature because preference was given to a Belgian in wanton disregard of plaintiffs dignity as a human being and as a Filipino who may not be discriminated against with impunity. Ortigas was a prominent lawyer, a businessman and social leader. He awarded P150,000 as moral damages. Sweet Lines v. Court of Appeals 121 SCRA 769 Facts: Private respondents purchased first-class tickets from petitioner at the latter's office in Cebu City. They were to board petitioner's vessel, M/V Sweet Grace, bound for Catbalogan, Western Samar. Instead of departing at the scheduled hour of about midnight on July 8, 1972, the vessel set sail at 3:00 A.M. of July 9, 1972 only to be towed back to Cebu due to engine trouble, arriving there at about 4:00 P.M. on the same day. Repairs having been accomplished, the vessel lifted anchor again on July 10, 1972 at around 8:00 A.M. Instead of docking at Catbalogan, which was the first port of call, the vessel proceeded direct to Tacloban at around 9:00 P.M. of July 10, 1972. Private respondents had no recourse but to disembark and board a ferryboat to Catbalogan. Hence, this suit for damages for breach of contract of carriage which the Trial Court, affirmed by respondent Appellate Court. Ruling: The voyage to Catbalogan was "interrupted" by the captain upon instruction of management. The "interruption" was not due to fortuitous event or for majeure nor to disability of the vessel. Having been caused by the captain upon instruction of management, the passengers' right to indemnity is evident. The owner of a vessel and the ship agent shall be civilly liable for the acts of the captain. Under Article 2220 of the Civil Code, moral damages are justly due in breaches of contract where the defendant acted fraudulently or in bad faith. Both the Trial Court and the Appellate Court found that there was bad faith on the part of petitioner in that: (1) Defendants-appellants did not give notice to plaintiffs-appellees as to the change of schedule of the vessel;

(2) Knowing fully well that it would take no less than fifteen hours to effect the repairs of the damaged engine, defendants-appellants instead made announcement of assurance that the vessel would leave within a short period of time, and when plaintiffs-appellees wanted to leave the port and gave up the trip, defendants-appellants' employees would come and say, `we are leaving, already.' (3) Defendants-appellants did not offer to refund plaintiffs-appellees' tickets nor provide them with transportation from Tacloban City to Catbalogan. That finding of bad faith is binding, since it is not the function of the Court to analyze and review evidence on this point all over again aside from the fact that we find it faithful to the meaning of bad faith enunciated thus: "Bad faith means a breach of a known duty through some motive or interest or illwill. Self-enrichment or fraternal interest, and not personal ill will, may have been the motive, but it is malice nevertheless." Under the circumstances, however, the Court find the award for moral damages excessive and accordingly reduce them to P3,000.00, respectively, for each of the private respondents. Pan American World Airways, Inc. v. IAC 153 SCRA 521

Facts: On February 5, 1975, private respondent herein, Teofista P. Tinitigan, filed a complaint against petitioner herein, Pan American World Airways, Inc. (Pan Am for brevity) for damages arising from defendant's alleged refusal to accommodate her on Pan Am Flight No. 431 from Sto. Domingo, Republica Dominica to San Juan, Puerto Rico on April 29, 1973 notwithstanding the fact that she possessed a confirmed plane ticket purchased from Pan Am's Office at Sto. Domingo and thus causing her to suffer mental anguish, serious anxiety, besmirched reputation, wounded feelings and social humiliation. She prayed that she be awarded moral damages of P500,000.00, exemplary damages of P200,000.00, attorney's fees of P100,000.00 and actual damages sustained by her in the amount of US$1,546.15. In its Answer, defendant denied that plaintiff was a confirmed passenger since the ticket for Flight No. 431 issued to her was on an open space basis which meant that she could only be accommodated if any of the confirmed passengers failed to show up at the airport before departure. Plaintiff was advised by defendant of this fact when plaintiff changed her ticket for a new route with San Juan as additional part of her itinerary. After due trial, the lower court rendered judgment in favor of plaintiff and awarded the amount of damages as prayed for. Ruling: By refusing to accommodate plaintiff in said flight, defendant had willfully and knowingly violated the contract of carriage and failed to bring the plaintiff to her place of destination under its contract with plaintiff. Bad faith means a breach of a known duty through some motive or interest or ill will. Self enrichment or fraternal interest and not personal illwill, may have been the motive of defendant, but it is malice nevertheless. The fact that plaintiff was ordered out under some pretext in order to accommodate a white man in an airline owned by an American firm with a reputation for bumping off non-caucasian to accommodate whites is very regrettable. When defendant's employee ordered plaintiff to step out of line because her ticket was not confirmed despite plaintiff's pleas that she should be in San Juan that day, this caused plaintiff embarrassment because so many people heard the same and plaintiff was prevented from boarding the plane at all while her seat (3-A) was given to another passenger (a white man). For being subjected to such indignities, plaintiff suffered social humiliation, wounded feelings, serious anxiety, and mental anguish. Defendant should be held liable to plaintiff for moral damages. A contract to transport passengers is quite different in kind and degree from any other contractual relation. And this, because of the relation which an air-carrier sustains with

the public. Its business is mainly with the travelling public. It invites people to avail of the comforts and advantages it offers. The contract of carriage, therefore, generates a relation attended with a public duty. Neglect or malfeasance of the carrier's employees, naturally, could give ground for an action for damages. By not allowing plaintiff to board Flight 431 on April 29, 1973, plaintiff was not able to sign a contract with Mrs. Lilibeth Warner who had earlier placed an order for a sizeable number of "capiz" shells in which transaction plaintiff expected to derive a profit of US $1,000.00. Plaintiff had to return to the Hotel El Embajador drom the aircraft costing her US$20.00. She had to pay for additional accommodations in said hotel for US$26.15 and the damage to her personal property amounted to US$500.00. Defendant should be held liable to the plaintiff in the amount of US$1,546.15 or its equivalent in Philippine Currency at the present rate of exchange as actual or compensatory damages. Defendant having breached its contract with plaintiff in bad faith, it is not error for the trial court to have awarded exemplary damages. The rational behind exemplary or corrective damages is, as the name implies, to provide an example or correction for public good. 6 In view of it nature, it should be imposed in such amount as to sufficiently and effectively deter similar breach of contract in the future by defendant and other airlines. Korean Airlines v. Court of Appeals 154 SCRA 211

Facts: Petitioner Korean Airlines (herein after called KAL) issued to Azucena Tomas a plane ticket to Los Angeles, California, U.S.A., on Flight No. KE 612 departing from the Manila International Airport on July 29, 1977, at 2:20 p.m. She paid the fare of P2,587.88. She and her husband arrived at the KAL check-in counter at 1:50 p.m. of that date 4 and presented her ticket to Augusto Torres, Jr., who was in charge. Torres refused to check her in, saying that the Immigration Office was already closed. Januario Tomas, her husband, rushed to the said office, which was still open, and was told by the immigration officer on duty that his wife could still be cleared for departure. Januario rushed back to Torres to convey this information and asked that his wife be checked in. Torres said this was no longer possible because her seat had already been given to another passenger. His reason was that Azucena had arrived late and had not checked in within forty minutes before departure time. Ruling: There is no evidence in the record of any rule requiring passengers to check in at least forty minutes before departure time, as invoked by Torres. KAL admits that it has not been able to cite any statutory or administrative requirement to this effect. 7 In fact, the alleged rule is not even a condition of the plane ticket purchased by Azucena. At the same time, KAL invokes the memorandum-circular of February 24, 1975, issued by the Commission on Immigration and Deportation which says that "all passengers authorized to leave for abroad shall be required to check in with the Immigration Departure Control Officer at least thirty minutes before the scheduled departure." The record shows that Azucena was ready to comply. If, as Torres said, he gave Azucena's seat to a chance passenger thirty-eight minutes before departure time 8 instead of waiting for Azucena, then he was intentionally violating the said circular. Significantly, it was proved he was not telling the truth when he said the Immigration Office was already closed although it was in fact still open at the time the private respondents arrived. Moreover, the immigration officer on duty expressed his willingness to clear Azucena Tomas for departure, thus indicating that she was well within the provisions of the memorandum-circular. Torres' refusal to check her in was clearly unjustified. As it appeared later, the real reason why she could not be checked in was not her supposed tardiness but the circumstance that Torres had prematurely given her seat to a chance passenger. That person certainly had less right to prior accommodation than the private respondent herself.

It is clear that the petitioner acted in bad faith in violating the private respondent's rights under their contract of carriage and is therefore liable for the injuries she has sustained as a result. We agree with the Court of Appeals, however, that the award should be reduced to P50,000.00 for actual and compensatory damages, P30,000.00 for moral damages, and P20,000.00 for attorney's fees, the exemplary damages to be eliminated altogether. Trans World Airlines v. Court of Appeals 165 SCRA 143

Facts: Rogelio A. Vinluan is a practicing lawyer who had to travel in April, 1979 to several cities in Europe and the U.S. to attend to some matters involving several clients. He entered into a contract for air carriage for valuable consideration with Japan Airlines first class from Manila to Tokyo, Moscow, Paris, Hamburg, Zurich, New York, Los Angeles, Honolulu and back to Manila thru the same airline and other airlines it represents for which he was issued the corresponding first class tickets for the entire trip. On April 18, 1979, while in Paris, he went to the office of Trans World Airlines (TWA) at the De Gaulle Airport and secured therefrom confirmed reservation for first class accommodation on board its Flight No. 41 from New York to San Francisco which was scheduled to depart on April 20, 1979. A validated stub was attached to the New YorkLos Angeles portion of his ticket evidencing his confirmed reservation for said flight with the mark "OK. On April 20, 1979, at about 8:00 o'clock A.M., Vinluan reconfirmed his reservation for first class accommodation on board TWA Flight No. 41 with its New York office. He was advised that his reservation was confirmed. He was even requested to indicate his seat preference on said flight on said scheduled date of departure of TWA Flight No. 41. Vinluan presented his ticket for check-in at the counter of TWA at JFK International Airport at about 9:45 o'clock A.M., the scheduled time of the departure being 11:00 o'clock A.M. He was informed that there was no first class seat available for him on the flight. He asked for an explanation but TWA employees on duty declined to give any reason. When he began to protest, one of the TWA employees, a certain Mr. Braam, rudely threatened him with the words "Don't argue with me, I have a very bad temper." To be able to keep his schedule, Vinluan was compelled to take the economy seat offered to him and he was issued a "refund application" as he was downgraded from first class to economy class. While waiting for the departure of Flight No. 41. Vinluan noticed that other passengers who were white Caucasians and who had checked-in later than him were given preference in some first class seats which became available due to "no show" passengers. Vinluan filed an action for damages against the TWA in the Court of First Instance of Rizal alleging breach of contract and bad faith. The petitioner contends that the respondent Court of Appeals committed a grave abuse of discretion in finding that petitioner acted maliciously and discriminatorily, and in granting excessive moral and exemplary damages and attorney's fees. Ruling: The contention is devoid of merit. Private respondent had a first class ticket for Flight No. 41 of petitioner from New York to San Francisco on April 20, 1979. It was twice confirmed and yet respondent unceremoniously told him that there was no first class seat available for him and that he had to be downgraded to the economy class. As he protested, he was arrogantly threatened by one Mr. Braam. Worst still, while he was waiting for the flight, he saw that several Caucasians who arrived much later were accommodated in first class seats when the other passengers did not show up. The discrimination is obvious and the humiliation to which private respondent was subjected is undeniable. Consequently, the award of moral and exemplary damages by the respondent court is in order.

Indeed, private respondent had shown that the alleged switch of planes from a Lockheed 1011 to a smaller Boeing 707 was because there were only 138 confirmed economy class passengers who could very well be accommodated in the smaller plane and not because of maintenance problems. Petitioner sacrificed the comfort of its first class passengers including private respondent Vinluan for the sake of economy. Such inattention and lack of care for the interest of its passengers who are entitled to its utmost consideration, particularly as to their convenience, amount to bad faith which entitles the passenger to the award of moral damages. More so in this case where instead of courteously informing private respondent of his being downgraded under the circumstances, he was angrily rebuffed by an employee of petitioner. At the time of this unfortunate incident, the private respondent was a practicing lawyer, a senior partner of a big law firm in Manila. He was a director of several companies and was active in civic and social organizations in the Philippines. Considering the circumstances of this case and the social standing of private respondent in the community, he is entitled to the award of moral and exemplary damages. However, the moral damages should be reduced to P300,000.00, and the exemplary damages should be reduced to P200,000.00. This award should be reasonably sufficient to indemnify private respondent for the humiliation and embarrassment that he suffered and to serve as an example to discourage the repetition of similar oppressive and discriminatory acts. Alitalia v. Court of Appeals 187 SCRA 763

Facts: On September 3, 1981, the private respondents Spouses Jose and Victoria Juliano (hereinafter referred to as the Julianos), arrived at the Fumicino Airport in Rome, Italy in order to board Flight AZ 1774 of Alitalia Airways scheduled to depart at 10:30 a.m. for Hongkong. However, Flight AZ 1774 left Rome without the Julianos. When private respondent Jose O. Juliano arrived in Manila, he returned to his employer Bristol-Myers, Inc., of which he was Vice-President for Operations, the unused Rome-Hongkong leg of the Alitalia ticket. However, the cost of the Thai Airways tickets they had to purchase in lieu of Alitalia was not refunded by his office. On December 15, 1981, the Julianos filed a complaint with the Regional Trial Court of Quezon City against the petitioner for damages from the alleged breach of its contractual obligations when the petitioner failed to transport the private respondent to Hongkong on the Alitalia Flight AZ 1774 2 . Ruling: When an airline issues a ticket to a passenger confirmed on a particular flight, on a certain date, a contract of carriage arises, and the passenger has every right to expect that he would fly on that flight and on that date. If he does not, then the carrier opens itself to a suit for breach of contract of carriage. When a passenger contracts for a specific flight, he has a purpose in making that choice which must be respected. This choice, once exercised, must not be impaired by a breach on the part of the airline without the latter incurring any liability. Besides, why should the Julianos be compelled to wait for another Alitalia flight to risk a similar rebuff and suffer the consequent further delay? It was already too much of a coincidence that, at Fumicino Airport, the Julianos would find another Filipino, in the person of Ms. Estanislao, in the same predicament that they were in. That Alitalia had no intention to accommodate all who had confirmed their flight reservations could be seen in the absence of any measure to contract and possible passengers for each flight who might be within the airport premises. As a result, some passengers would really be left behind in the long and disorderly queue at the check-in counter.

Common carriers, like commercial airlines, are in the business of rendering service, which is the primary reason for their recognition in our law. They can not be allowed to disregard our laws as if they are doing the passengers any favor by accommodating them. Because the passengers in a contract of carriage do not contract merely for transportation, they have a right to be treated by the carrier's employees with kindness, respect, courtesy, and consideration. Hence the justification why passengers must be spared from the indignity and inconvenience of being refused a confirmed seat on the last minute. As held in Trans World Airlines v. Court of Appeals, such inattention to and lack of care [by the petitioner airline] for the interest of its passengers who are entitled to its utmost consideration, particularly as to their convenience, amount to bad faith which entitles the passenger to the award of moral damages. Ergo, we affirm the respondent court's award of moral damages at P200.000.00. This award should be sufficient to indemnify the Julianos for the delay, inconvenience, humiliation, and embarrassment they suffered. Korean Airlines v. Court of Appeals 234 SCRA 717

Facts: Sometime in 1980, Juanito C. Lapuz, an automotive electrician, was contracted for employment is Jeddah, Saudi Arabia, for a period of one year through Pan Pacific Overseas Recruiting Services, Inc. Lapuz was supposed to leave on November 8, 1980, via Korean Airlines. Initially, he was "waitlisted," which meant that he could only be accommodated if any of the confirmed passengers failed to show up at the airport before departure. When two of such passengers did not appear, Lapuz and another person by the name of Perico were given the two unclaimed seats. According to Lapuz, he was allowed to check in with one suitcase and one shoulder bag at the check-in counter of KAL. He passed through the customs and immigration sections for routine check-up and was cleared for departure as Passenger No. 157 of KAL Flight No. KE 903. Together with the other passengers, he rode in the shuttle bus and proceeded to the ramp of the KAL aircraft for boarding. However, when he was at the third or fourth rung of the stairs, a KAL officer pointed to him and shouted "Down! Down!" He was thus barred from taking the flight. When he later asked for another booking, his ticket was canceled by KAL. Consequently, he was unable to report for his work in Saudi Arabia within the stipulated 2-week period and so lost his employment. KAL, on the other hand, alleged that on November 8, 1980, Pan Pacific Recruiting Services Inc. coordinated with KAL for the departure of 30 contract workers, of whom only 21 were confirmed and 9 were wait-listed passengers. The agent of Pan Pacific, Jimmie Joseph, after being informed that there was a possibility of having one or two seats becoming available, gave priority to Perico, who was one of the supervisors of the hiring company in Saudi Arabia. The other seat was won through lottery by Lapuz. However, only one seat became available and so, pursuant to the earlier agreement that Perico was to be given priority, he alone was allowed to board. Ruling: The Court held that the status of Lapuz as standby passenger was changed to that of a confirmed passenger when his name was entered in the passenger manifest of KAL for its Flight No. KE 903. His clearance through immigration and customs clearly shows that he had indeed been confirmed as a passenger of KAL in that flight. KAL thus committed a breach of the contract of carriage between them when it failed to bring Lapuz to his destination. A contract to transport passengers is different in kind and degree from any other contractual relation. The business of the carrier is mainly with the traveling public. It invites people to avail themselves of the comforts and advantages it offers. The contract of air carriage generates a relation attended with a public duty. Passengers have the right to be treated by the carrier's employees with kindness, respect, courtesy and due

consideration. They are entitled to be protected against personal misconduct, injurious language, indignities and abuses from such employees. So it is that any discourteous conduct on the part of these employees toward a passenger gives the latter an action for damages against the carrier. The breach of contract was aggravated in this case when, instead of courteously informing Lapuz of his being a "wait-listed" passenger, a KAL officer rudely shouted "Down! Down!" while pointing at him, thus causing him embarrassment and public humiliation. The evidence presented by Lapuz shows that he had indeed checked in at the departure counter, passed through customs and immigration, boarded the shuttle bus and proceeded to the ramp of KAL's aircraft. In fact, his baggage had already been loaded in KAL's aircraft, to be flown with him to Jeddah. The contract to carriage between him and KAL had already been perfected when he was summarily and insolently prevented from boarding the aircraft. The defendant-appellant Korean Air Lines acted in a wanton, fraudulent, reckless, oppressive or malevolent manner when it "bumped off" plaintiff-appellant on November 8, 1980, and in addition treated him rudely and arrogantly as a "patay gutom na contract worker fighting Korean Air Lines," which clearly malice and bad faith, thus entitling plaintiff-appellant to moral damages. A review of the record of this case shows that the injury suffered by Lapuz is not so serious or extensive as to warrant an award of P1.5 million. The assessment of P100,000 as moral and exemplary damages in his favor is reasonable and realistic.

PAL v. Court of Appeals 275 SCRA 621 Facts: Private respondent Pantejo, then City Fiscal of Surigao City, boarded a PAL plane in Manila and disembarked in Cebu City where he was supposed to take his connecting flight to Surigao City However, due to typhoon Osang, the connecting flight to Surigao City was cancelled. To accommodate the needs of its stranded passengers, PAL initially gave out cash assistance of P100.00 and, the next day, P200.00, for their expected stay of two days in Cebu. Respondent Pantejo requested instead that he be billeted in a hotel at PAL's expense because he did not have cash with him at that time, but PAL refused. Thus, respondent Pantejo was forced to seek and accept the generosity of a co-passenger, an engineer named Andoni Dumlao, and he shared a room with the latter at Sky View Hotel with the promise to pay his share of the expenses upon reaching Surigao. When the flight for Surigao was resumed, respondent Pantejo came to know that the hotel expenses of his co-passengers, one Superintendent Ernesto Gonzales and a certain Mrs. Gloria Rocha, an auditor of the Philippine National Bank, were reimbursed by PAL. At this point, respondent Pantejo informed Oscar Jereza, PAL's Manager for Departure Services at Mactan Airport and who was in charge of cancelled flights, that he was going to sue the airline for discriminating against him. It was only then that Jereza offered to pay respondent Pantejo P300.00 which, due to the ordeal and anguish he had undergone, the latter decline. The Regional Trial Court of Surigao City, Branch 30, rendered judgment in the action for damages filed by respondent Pantejo against herein petitioner, Philippine Airlines, Inc., ordering the latter to pay Pantejo P300.00 for actual damages, P150,000.00 as moral damages, P100,000.00 as exemplary damages, P15,000.00 as attorney's fees, and 6% interest from the time of the filing of the complaint until said amounts shall have been fully paid, plus costs of suit. 2 On appeal, respondent court affirmed the decision of the court a quo, but with the exclusion of the award of attorney's fees and litigation expenses. Issue: Whether petitioner airlines acted in bad faith when it failed and refused to provide hotel

accommodations for respondent Pantejo or to reimburse him for hotel expenses incurred by reason of the cancellation of its connecting flight to Surigao City due to force majeure? Ruling: Respondent Court of Appeals thus correctly concluded that the refund of hotel expenses was surreptitiously and discriminatorily made by herein petitioner since the same was not made known to everyone, except through word of mouth to a handful of passengers. This is a sad commentary on the quality of service and professionalism of an airline company, which is the country's flag carrier at that. On the bases of all the foregoing, the inescapable conclusion is that petitioner acted in bad faith in disregarding its duties as a common carrier to its passengers and in discriminating against herein respondent Pantejo. It was even oblivious to the fact that this respondent was exposed to humiliation and embarrassment especially because of his government position and social prominence, which altogether necessarily subjected him to ridicule, shame and anguish. It remains uncontroverted that at the time of the incident, herein respondent was then the City Prosecutor of Surigao City, and that he is a member of the Philippine Jaycee Senate, past Lt. Governor of the Kiwanis Club of Surigao, a past Master of the Mount Diwata Lodge of Free Masons of the Philippines, member of the Philippine National Red Cross, Surigao Chapter,and past Chairman of the Boy Scouts of the Philippines, Surigao del Norte Chapter. His refusal to accept the P300.00 proffered as an afterthought when he threatened suit was justified by his resentment when he belatedly found out that his co-passengers were reimbursed for hotel expenses and he was not. Worse, he would not even have known about it were it not for a co-passenger who verbally told him that she was reimbursed by the airline for hotel and meal expenses. It may even be said that the amounts, the time and the circumstances under which those amounts were offered could not salve the moral wounds inflicted by PAL on private respondent but even approximated insult added to injury. The discriminatory act of petitioner against respondent ineludibly makes the former liable for moral damages under Article 21 in relation to Article 2219 (10) of the Civil Code. 9 As held in Alitalia Airways vs. CA, et al., 10 such inattention to and lack of care by petitioner airline for the interest of its passengers who are entitled to its utmost consideration, particularly as to their convenience, amount to bad faith which entitles the passenger to the award of moral damages. Moral damages are emphatically not intended to enrich a plaintiff at the expense of the defendant. They are awarded only to allow the former to obtain means, diversion, or amusements that will serve to alleviate the moral suffering he has undergone due to the defendant's culpable action and must, perforce, be proportional to the suffering inflicted. However, substantial damages do not translate into excessive damages. Except for attorney's fees and costs of suit, it will be noted that the Court of Appeals affirmed point by point the factual findings of the lower court upon which the award of damages had been based. Under the peculiar circumstances of this case, the Court is convinced that the awards for actual, moral and exemplary damages granted in the judgment of respondent court, for the reasons meticulously analyzed and thoroughly explained in its decision, are just and equitable. It is high time that the travelling public is afforded protection and that the duties of common carriers, long detailed in our previous laws and jurisprudence and thereafter collated and specifically catalogued in our Civil Code in 1950, be enforced through appropriate sanctions. Singson v. Court of Appeals 282 SCRA 149 Facts: On 24 May 1988 CARLOS SINGSON and his cousin Crescentino Tiongson bought from Cathay Pacific Airways, Ltd. (CATHAY), at its Metro Manila ticket outlet two (2) opendated, identically routed, round trip plane tickets for the purpose of spending their vacation in the United States. Each ticket consisted of six (6) flight coupons corresponding to this itinerary: flight

coupon no. 1 Manila to Hongkong; flight coupon no. 2 Hongkong to San Francisco; flight coupon no. 3 San Francisco to Los Angeles; flight coupon no. 4 Los Angeles back to San Francisco; flight coupon no. 5 San Francisco to Hongkong; and, finally, flight coupon no. 6 Hongkong to Manila. The procedure was that at the start of each leg of the trip a flight coupon corresponding to the particular sector of the travel would be removed from the ticket booklet so that at the end of the trip no more coupon would be left in the ticket booklet. On 6 June 1988 CARLOS SINGSON and Crescentino Tiongson left Manila on board CATHAY's Flight No. 902. They arrived safely in Los Angeles and after staying there for about three (3) weeks they decided to return to the Philippines. On 30 June 1988 they arranged for their return flight at CATHAY's Los Angeles Office and chose 1 July 1988, a Friday for their departure. While Tiongson easily got a booking for the flight, SINGSON was not as lucky. It was discovered that his ticket booklet did not have flight coupon no. 5 corresponding to the San Francisco-Hongkong leg of the trip. Instead, what was in his ticket was flight coupon no. 3 San Francisco to Los Angeles which was supposed to have been used and removed from the ticket booklet. It was not until 6 July 1988 that CATHAY was finally able to arrange for his return flight to Manila. On 26 August 1988 SINGSON commenced an action for damages against CATHAY before the Regional Trial Court of Vigan, Ilocos Sur. He claimed that he insisted on CATHAY's confirmation of his return flight reservation because of very important and urgent business engagements in the Philippines. But CATHAY allegedly shrugged off his protestations and arrogantly directed him to go to San Francisco himself and do some investigations on the matter or purchase a new ticket subject to refund if it turned out that the missing coupon was still unused or subsisting. He remonstrated that it was the airline's agent/representative who must have committed the mistake of tearing off the wrong flight coupon; that he did not have enough money to buy new tickets; and, CATHAY could conclude the investigation in a matter of minutes because of its facilities. CATHAY, allegedly in scornful insolence, simply dismissed him like an impertinent "brown pest." Thus he and his cousin Tiongson, who deferred his own flight to accompany him, were forced to leave for San Francisco on the night of 1 July 1988 to verify the missing ticket.

Issue: Whether the carrier was liable not only for actual damages but also for moral and exemplary damages, and attorney's fees for failing to book petitioner on his return flight to the Philippines? Ruling: The appellate court seriously erred in disallowing moral and exemplary damages. Although the rule is that moral damages predicated upon a breach of contract of carriage may only be recoverable in instances where the mishap results in the death of a passenger, or where the carrier is guilty of fraud or bad faith, there are situations where the negligence of the carrier is so gross and reckless as to virtually amount to bad faith, in which case, the passenger likewise becomes entitled to recover moral damages just like the case at bar. To be stranded for five (5) days in a foreign land because of an air carrier's negligence is too exasperating an experience for a plane passenger. For sure, petitioner underwent profound distress and anxiety, not to mention the worries brought about by the thought that he did not have enough money to sustain himself, and the embarrassment of having been forced to seek the generosity of relatives and friends. Anent the accusation that private respondent's personnel were rude and arrogant, petitioner failed to adduce sufficient evidence to substantiate his claim. Nonetheless, such fact will not in any manner affect the disposition of this case. Private respondent's mistake in removing the wrong coupon was compounded by several other independent acts of negligence above-enumerated. Taken together, they indubitably signify more than ordinary inadvertence or inattention and thus constitute a radical departure from the extraordinary standard of care required of common carriers. Put differently, these circumstances reflect the carrier's utter lack of care and sensitivity to the needs of its passengers, clearly constitutive of gross negligence, recklessness and wanton disregard

of the rights of the latter, acts evidently indistinguishable or no different from fraud, malice and bad faith. As the rule now stands, where in breaching the contract of carriage the defendant airline is shown to have acted fraudulently, with malice or in bad faith, the award of moral and exemplary damages, in addition to actual damages, is proper. However, the P500,000.00 moral damages and P400,000.00 exemplary damages awarded by the trial court have to be reduced. The well-entrenched principle is that the grant of moral damages depends upon the discretion of the court based on the circumstances of each case. This discretion is limited by the principle that the "amount awarded should not be palpably and scandalously excessive" as to indicate that it was the result of prejudice or corruption on the part of the trial court. Damages are not intended to enrich the complainant at the expense of the defendant. They are awarded only to alleviate the moral suffering that the injured party had undergone by reason of the defendant's culpable action. There is no hard-and-fast rule in the determination of what would be a fair amount of moral damages since each case must be governed by its own peculiar facts. In the instant case, the injury suffered by petitioner is not so serious or extensive as to warrant an award amounting to P900,000.00. The assessment of P200,000.00 as moral damages and P50,000.00 as exemplary damages in his favor is reasonable and realistic. Cervantes v. Court of Appeals 304 SCRA 25

Facts: On March 27, 1989, the private respondent, Philippines Air Lines, Inc. (PAL), issued to the herein petitioner, Nicholas Cervantes (Cervantes), a round trip plane ticket for Manila-Honolulu-Los Angeles-Honolulu-Manila, which ticket expressly provided an expiry of date of one year from issuance, i.e., until March 27, 1990. The issuance of the said plane ticket was in compliance with a Compromise Agreement entered into between the contending parties in two previous suits, docketed as Civil Case Nos. 3392 and 3451 before the Regional Trial Court in Surigao City. On March 23, 1990, four days before the expiry date of subject ticket, the petitioner used it. Upon his arrival in Los Angeles on the same day, he immediately booked his Los Angeles-Manila return ticket with the PAL office, and it was confirmed for the April 2, 1990 flight. Upon learning that the same PAL plane would make a stop-over in San Francisco, and considering that he would be there on April 2, 1990, petitioner made arrangements with PAL for him to board the flight In San Francisco instead of boarding in Los Angeles. On April 2, 1990, when the petitioner checked in at the PAL counter in San Francisco, he was not allowed to board. The PAL personnel concerned marked the following notation on his ticket: "TICKET NOT ACCEPTED DUE EXPIRATION OF VALIDITY." Aggrieved, petitioner Cervantes filed a Complaint for Damages, for breach of contract of carriage. But the said complaint was dismissed for lack of merit.

Issue: Whether or not the denial of the damages was proper? Ruling: An award of damages is improper because petitioner failed to show that PAL acted in bad faith in refusing to allow him to board its plane in San Francisco. In awarding moral damages for breach of contract of carriage, the breach must be wanton and deliberately injurious or the one responsible acted fraudulently or with malice or bad faith. Petitioner knew there was a strong possibility that he could not use the subject ticket, so much so that he bought a back-up ticket to ensure his departure. Should there be a finding of bad faith, we are of the opinion that it should be on the petitioner. What the employees of PAL did was one of simple negligence. No injury resulted on the part of petitioner because he had a back-up ticket should PAL refuse to

accommodate him with the use of subject ticket. Neither can the claim for exemplary damages be upheld. Such kind of damages is imposed by way of example or correction for the public good, and the existence of bad faith is established. The wrongful act must be accompanied by bad faith, and an award of damages would be allowed only if the guilty party acted in a wanton, fraudulent, reckless or malevolent manner. Here, there is no showing that PAL acted in such a manner. An award for attorneys fees is also improper. Tan v. Northwest Airlines 327 SCRA 263

Facts: On May 31, 1994, Priscilla L. Tan and Connie Tan boarded Northwest Airlines Flight 29 in Chicago, U. S. A. bound for the Philippines, with a stop-over at Detroit, U. S. A. They arrived at the Ninoy Aquino International Airport (NAIA) on June 1, 1994 at about 10:40 in the evening. Upon their arrival, petitioner and her companion Connie Tan found that their baggages were missing. They returned to the airport in the evening of the following day and they were informed that their baggages might still be in another plane in Tokyo, Japan. On June 3, 1994, they recovered their baggages and discovered that some of its contents were destroyed and soiled. Claiming that they "suffered mental anguish, sleepless nights and great damage" because of Northwest's failure to inform them in advance that their baggages would not be loaded on the same flight they boarded and because of their delayed arrival, they demanded from Northwest Airlines compensation for the damages they suffered. On June 15, 1994 and June 22, 1994, petitioner sent demand letter to Northwest Airlines, but the latter did not respond. Hence, the filing of the case with the regional trial court. Issue: Whether respondent is liable for moral and exemplary damages for willful misconduct and breach of the contract of air carriage? Ruling: The petition is without merit. The Court agreed with the Court of Appeals that respondent was not guilty of willful misconduct. "For willful misconduct to exist there must be a showing that the acts complained of were impelled by an intention to violate the law, or were in persistent disregard of one's rights. It must be evidenced by a flagrantly or shamefully wrong or improper conduct." Contrary to petitioner's contention, there was nothing in the conduct of respondent which showed that they were motivated by malice or bad faith in loading her baggages on another plane. Due to weight and balance restrictions, as a safety measure, respondent airline had to transport the baggages on a different flight, but with the same expected date and time of arrival in the Philippines. As aptly explained by respondent: "To ensure the safety of each flight, Northwest's personnel determine every flight's compliance with "weight and balance restrictions." They check the factors like weight of the aircraft used for the flight gas input, passenger and crew load, baggage weight, all in relation to the wind factor anticipated on the flight. If there is an overload, i.e., a perceived safety risk, the aircraft's load will be reduced by off-loading cargo, which will then be placed on the next available flight." It is admitted that respondent failed to deliver petitioner's luggages on time. However, there was no showing of malice in such failure. By its concern for safety, respondent had to ship the baggages in another flight with same date of arrival. Hence, the Court of Appeals correctly held that respondent did not act in bad faith. "Bad faith does not simply connnote bad judgment or negligence, it imports a dishonest purpose or some moral obliquity and conscious doing of a wrong, a breach of known duty through some motive or interest or ill-will that partakes of the nature of fraud." "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."