Mecenas v.

CA

Facts:

On April 22, 1980, two vessels, Tacloban City and Don Juan collided at the Talbas Strait
within the vicinity of Mindoro. M/V Don Juan sank and hundreds of passengers died.
Among them were petitioners parents, whose bodies were never recovered. Petitioners
filed a complaint seeking damages against Negros Navigation. The trial court awarded
P400,000, but the Court of Appeals reduced the award to P100,000.

Issue:

Whether the reduction of the award was properly ruled upon by the Court of Appeals

Held:

In an action based upon a breach of the contract of carriage, the carrier under our civil law
is liable for the death of passengers arising from the negligence or wilful act of the carrier's
employees although such employees may have acted beyond the scope of their authority
or even in violation of the instructions of the carrier, which liability may include liability
for moral damages. It follows that petitioners would be entitled to moral damages so long
as the collision with the "Tacloban City" and the sinking of the "Don Juan" were caused or
attended by negligence on the part of private respondents.

Whether petitioners are entitled to exemplary damages as claimed must depend upon
whether or not private respondents acted recklessly, that is, with gross negligence. We
believe that the behaviour of the captain of the "Don Juan" in this instance playing
mahjong "before and up to the time of collision" constitutes behaviour that is simply
unacceptable on the part of the master of a vessel to whose hands the lives and welfare of
at least seven hundred fifty (750) passengers had been entrusted. There is also evidence
that the "Don Juan" was carrying more passengers than she had been certified as allowed
to carry. We conclude that Capt. Santisteban and Negros Navigation are properly held
liable for gross negligence. We find no necessity for passing upon the degree of negligence
or culpability properly attributable to PNOC and PNOC Shipping or the master of the
"Tacloban City," since they were never impleaded here.

Exemplary damages are designed by our civil law to permit the courts to reshape
behaviour that is socially deleterious in its consequence by creating negative incentives or
deterrents against such behaviour. In requiring compliance with the standard of
extraordinary diligence, a standard which is in fact that of the highest possible degree of
diligence, from common carriers and in creating a presumption of negligence against
them, the law seeks to compel them to control their employees, to tame their reckless
instincts and to force them to take adequate care of human beings and their property. Both
the demands of substantial justice and the imperious requirements of public policy compel
us to the conclusion that the trial court's implicit award of moral and exemplary damages
was erroneously deleted and must be restored and augmented and brought more nearly
to the level required by public policy and substantial justice.
Lopez v. Pan American World Airways 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.
Facts:

Reservation for first class accommodation in Pan American Airlines from Tokyo to San
Francisco was made by Delfin Faustino for then Senator Fernando Lopez and company.
First class tickets were issued and paid for. The party left Manila for Tokyo as scheduled.
Senator Lopez requested Minister Busuego to contact the airlines regarding their
accommodation. However, they were informed that there was no accommodation for
them. Because of some urgent matters to attend to in San Francisco, they were constrained
to take the tourist flight under protest.
Issues:
The rationale behind exemplary or corrective damages is, as the name implies, to provide
an example or correction for public good. Defendant having breached its contracts in bad
faith, the court, as stated earlier, may award exemplary damages in addition to moral
damages. In view of its nature, it should be imposed in such an amount as to sufficiently
and effectively deter similar breach of contracts in the future by defendant or other
airlines. In this light, we find it just to award P75,000.00 as exemplary or corrective
damages.

(1) Whether the defendant acted in bad faith for deliberate refusal to comply with its
contract to provide first-class accommodation to the plaintiff

(2) Whether moral and exemplary damages should be awarded

Held:

(1) From the evidence of defendant it is in effect admitted that defendant - through its
agents - first cancelled plaintiffs, reservations by mistake and thereafter deliberately and
intentionally withheld from plaintiffs or their travel agent the fact of said cancellation,
letting them go on believing that their first class reservations stood valid and confirmed.
In so misleading plaintiffs into purchasing first class tickets in the conviction that they had
confirmed reservations for the same, when in fact they had none, defendant wilfully and
knowingly placed itself into the position of having to breach its a foresaid contracts with
plaintiffs should there be no last-minute cancellation by other passengers before flight
time, as it turned out in this case. Such actuation of defendant may indeed have been
prompted by nothing more than the promotion of its self-interest in holding on to Senator
Lopez and party as passengers in its flight and foreclosing on their chances to seek the
services of other airlines that may have been able to afford them first class
accommodations. All the time, in legal contemplation such conduct already amounts to
action in bad faith. For bad faith means a breach of a known duty through some motive of
interest or ill-will.

At the time plaintiffs bought their tickets, defendant, therefore, in breach of its known
duty, made plaintiffs believe that their reservation had not been cancelled. Such willful-
non-disclosure of the cancellation or pretense that the reservations for plaintiffs stood -
and not simply the erroneous cancellation itself - is the factor to which is attributable the
breach of the resulting contracts. And, as above-stated, in this respect defendant clearly
acted in bad faith.

(2) First, then, as to moral damages. As a proximate result of defendant's breach in bad
faith of its contracts with plaintiffs, the latter suffered social humiliation, wounded
feelings, serious anxiety and mental anguish. For plaintiffs were travelling with first class
tickets issued by defendant and yet they were given only the tourist class. At stop-overs,
they were expected to be among the first-class passengers by those awaiting to welcome
them, only to be found among the tourist passengers. It may not be humiliating to travel
Alitalia v. IAC
Facts:
Dr. Felipa Pablo, an associate professor in the University of the Philippines and a research
grantee of the Philippine Atomic Energy Agency, was invited to take part at a meeting of
the Department of Research and Isotopes in Italy in view of her specialized knowledge in
foreign substances in food and the agriculture environment. She would be the second
speaker on the first day of the meeting. Dr. Pablo booked passage on petitioner Alitalia.
She arrived in Milan on the day before the meeting, but was told that her luggage was
delayed and was in a succeeding flight from Rome to Milan. The luggage included her
materials for the presentation. The succeeding flights did not carry her luggage. Desperate,
she went to Rome to try to locate the luggage herself, but to no avail. She returned to
Manila without attending the meeting. She demanded reparation for the damages. She
rejected Alitalias offer of free airline tickets and commenced an action for damages. As it
turned out, the luggage was actually forwarded to Ispra, but only a day after the scheduled
appearance. It was returned to her after 11 months. The trial court ruled in favor of Dr.
Pablo, and this was affirmed by the Court of Appeals.
Issues:
(1) Whether the Warsaw Convention should be applied to limit Alitalias liability
In the case at bar, no bad faith or otherwise improper conduct may be ascribed to the
employees of petitioner airline; and Dr. Pablo's luggage was eventually returned to her,
belatedly, it is true, but without appreciable damage. The fact is, nevertheless, that some
species of injury was caused to Dr. Pablo because petitioner ALITALIA misplaced her
baggage and failed to deliver it to her at the time appointed - a breach of its contract of
carriage. Certainly, the compensation for the injury suffered by Dr. Pablo cannot under the
circumstances be restricted to that prescribed by the Warsaw Convention for delay in the
transport of baggage.
(2) She is not, of course, entitled to be compensated for loss or damage to her luggage. She
is however entitled to nominal damages which, as the law says, is adjudicated in order that
a right of the plaintiff, which has been violated or invaded by the defendant, may be
vindicated and recognized, and not for the purpose of indemnifying the plaintiff that for
any loss suffered and this Court agrees that the respondent Court of Appeals correctly set
the amount thereof at PhP 40,000.00.
The Court also agrees that respondent Court of Appeals correctly awarded attorneys fees
to Dr. Pablo and the amount of PhP 5,000.00 set by it is reasonable in the premises. The
law authorizes recovery of attorneys fees inter alia where, as here, the defendants act or
omission has compelled the plaintiff to litigate with third persons or to incur expenses to
protect his interest or where the court deems it just and equitable.

(2) Whether Dr. Pablo is entitled to nominal damages

Held:

(1) Under the Warsaw Convention, an air carrier is made liable for damages for:

a. The death, wounding or other bodily injury of a passenger if the accident causing it took
place on board the aircraft or I the course of its operations of embarking or disembarking;

b. The destruction or loss of, or damage to, any registered luggage or goods, if the
occurrence causing it took place during the carriage by air; and

c. Delay in the transportation by air of passengers, luggage or goods.

The convention however denies to the carrier availment of the provisions which exclude
or limit his liability, if the damage is caused by his wilful misconduct, or by such default on
his part as is considered to be equivalent to wilful misconduct. The Convention does not
thus operate as an exclusive enumeration of the instances of an airline's liability, or as an
absolute limit of the extent of that liability. It should be deemed a limit of liability only in
those cases where the cause of the death or injury to person, or destruction, loss or damage
to property or delay in its transport is not attributable to or attended by any wilful
misconduct, bad faith, recklessness, or otherwise improper conduct on the part of any
official or employee for which the carrier is responsible, and there is otherwise no special
or extraordinary form of resulting injury.
Fores v. Miranda the carrier's driver does not per se constitute of justify an inference of malice or bad faith
on the part of the carrier; and in the case at bar there is no other evidence of such malice
Facts: to support the award of moral damages by the Court of Appeals.
Respondent was one of the passengers of a jeepney driven by Eugenio Luga. While the
vehicle was descending the Sta. Mesa bridge at an excessive speed, the driver lost control,
and the jeepney swerved to the bridge wall. Serious injuries were suffered by the
defendant. The driver was charged with serious physical injuries through reckless
imprudence, and upon interposing a plea of guilty was sentenced accordingly. Petitioner
denies liability for breach of contract of carriage, contending that a day before the accident,
the jeepney was sold to a certain Carmen Sackerman.

Issues:

(1) Is the approval of the Public Service Commission necessary for the sale of a public
service vehicle even without conveying therewith the authority to operate the same?

(2) To what damages is the respondent entitled?

Held:

(1) Assuming the dubious sale to be a fact, the court of Appeals answered the query in the
affirmative. The ruling should be upheld. The provisions of the statute are clear and
prohibit the sale, alienation, lease, or encumbrance of the property, franchise, certificate,
privileges or rights, or any part thereof of the owner or operator of the public service
Commission. The law was designed primarily for the protection of the public interest; and
until the approval of the public Service Commission is obtained the vehicle is, in
contemplation of law, still under the service of the owner or operator standing in the
records of the Commission which the public has a right to rely upon.

(2) The P10,000 actual damages awarded by the Court of First Instance of Manila were
reduced by the Court of Appeals to only P2,000, on the ground that a review of the records
failed to disclose a sufficient basis for the trial court's appraisal, since the only evidence
presented on this point consisted of respondent's bare statement that his expenses and
loss of income amounted to P20,000. On the other hand, "it cannot be denied," the lower
court said, "that appellee (respondent) did incur expenses"' It is well to note further that
respondent was a painter by profession and a professor of Fine Arts, so that the amount
of P2,000 awarded cannot be said to be excessive. The attorney's fees in the sum of P3,000
also awarded to the respondent are assailed on the ground that the Court of First Instance
did not provided for the same, and since no appeal was interposed by said respondent, it
was allegedly error for the Court of Appeals to award them motu proprio. Petitioner fails
to note that attorney's fees are included in the concept of actual damages under the Civil
Code and may be awarded whenever the court deems it is just and equitable. We see no
reason to alter these awards.

Anent the moral damages ordered to be paid to the respondent, the same must be
discarded. We have repeatedly ruled that moral damages are not recoverable in damage
actions predicted on a breach of the contract of transportation. Where the injured
passenger does not die, moral damages are not recoverable unless it is proved that the
carrier was guilty of malice or bad faith. We think it is clear that the mere carelessness of
Villa Rey Transit v. CA
Facts:
On March 17, 1960, Policronio Quintos, Jr. was riding the petitioners bus, when the said
bus frontally hit the rear side of a bullcart filled with hay. The protruding end of the
bamboo pole at the rear of the cart penetrated the windshield of the bus and landed at
Policronios face. He died of traumatic shock due to cerebral injuries. Private respondents
are sisters and surviving heirs of the deceased. They brought this action against Villa Rey
Transit for breach of contract of carriage. The trial court found that the death was caused
by the negligence of the bus driver, for whom petitioner was liable under the contract of
carriage with the deceased.
Issues:
(1) The number of years to be used as basis of computation
(2) The rate at which the losses sustained by respondents should be fixed
Held:
(1) The determination of the indemnity to be awarded to the heirs of a deceased person
has 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 "(t)here can be no exact or uniform
rule for measuring the value of a human life and the measure of damages cannot be arrived
at by precise mathematical calculation, but the amount recoverable depends on the
particular facts and circumstances of each case. The life expectancy of the deceased or of
the beneficiary, whichever is shorter, is an important factor.' Other factors that are usually
considered are: (1) pecuniary loss to plaintiff or beneficiary; (2) loss of support; (3) loss
of service; (4) loss of society; (5) mental suffering of beneficiaries; and (6) medical and
funeral expenses."
petitioner relies, the lower courts did not consider, in the present case, Policronio's
potentiality and capacity to increase his future income. Indeed, upon the conclusion of his
training period, he was supposed to have a better job and be promoted from time to time,
and, hence, to earn more, if not considering the growing importance of trade, commerce
and industry and the concomitant rise in the income level of officers and employees
therein much more.
Damages consist, not of the full amount of his earnings, but of the support, they received
or would have received from him had he not died in consequence of the negligence of
petitioner's agent. In fixing the amount of that support, We must reckon with the
"necessary expenses of his own living", which should be deducted from his earnings. Only
net earnings, not gross earning, are to be considered that is, the total of the earnings less
expenses necessary in the creation of such earnings or income and less living and other
incidental expenses.
All things considered, We are of the opinion that it is fair and reasonable to fix the
deductible living and other expenses of the deceased at the sum of P1,184.00 a year, or
about P100.00 a month, and that, consequently, the loss sustained by his sisters may be
roughly estimated at P1,000.00 a year or P33,333.33 for the 33-1/3 years of his life
expectancy. To this sum of P33,333.33, the following should be added: (a) P12,000.00,
pursuant to Arts. 104 and 107 of the Revised Penal Code, in relation to Article 2206 of our
Civil Code, as construed and applied by this Court; (b) P1,727.95, actually spent by private
respondents for medical and burial expenses; and (c) attorney's fee, which was fixed by
the trial court, at P500.00, but which, in view of the appeal taken by petitioner herein, first
to the Court of Appeals and later to this Supreme Court, should be increased to P2,500.00.
In other words, the amount adjudged in the decision appealed from should be reduced to
the aggregate sum of P49,561.28, with interest thereon, at the legal rate, from December
29, 1961, date of the promulgation of the decision of the trial court.

Thus, life expectancy is, not only relevant, but, also, an important element in fixing the
amount recoverable by private respondents herein. Although it is not the sole element
determinative of said amount, no cogent reason has been given to warrant its disregard
and the adoption, in the case at bar, of a purely arbitrary standard, such as a four-year rule.
In short, the Court of Appeals has not erred in basing the computation of petitioner's
liability upon the life expectancy of Policronio Quintos, Jr.

(2) With respect to the rate at which the damages shall be computed, petitioner impugns
the decision appealed from upon the ground that the damages awarded therein will have
to be paid now, whereas most of those sought to be indemnified will be suffered years
later. This argument is basically true, and this is, perhaps, one of the reasons why the
Alcantara case points out the absence of a "fixed basis" for the ascertainment of the
damages recoverable in litigations like the one at bar. Just the same, the force of the said
argument of petitioner herein is offset by the fact that, although payment of the award in
the case at bar will have to take place upon the finality of the decision therein, the liability
of petitioner herein had been fixed at the rate only of P2,184.00 a year, which is the annual
salary of Policronio Quintos, Jr. at the time of his death, as a young "training assistant" in
the Bacnotan Cement Industries, Inc. In other words, unlike the Alcantara case, on which
Cariaga v. LTB Co.
Facts:
At about 3:00 pm on June 18, 1952, a collision occurred between LTB bus and a train,
which resulted to the death of the bus driver, and severe injury to its passengers, including
plaintiff Edgardo Cariaga. Edgardo was a 4th year medical student at the University of
SantoTomas. LTB paid the sum of P16,964.45 for his hospital bills, and daily allowance of
P10 up to January 15, 1953, which totalled P775.30. On April 24, 1953, the present action
was filed to recover for Edgardo the sum of P312,000 as actual, moral and compensatory
damages from LTB and MRR Co. LTB disclaimed liability and filed a cross-claim against
MRR for the medical assistance extended to Edgardo. The trial court awarded P10, 490 to
Edgardo against LTB, and dismissed he cross-claim against MRR. The Cariagas and LTB
both appealed. The Cariagas claim that the trial court erred in merely awarding P10,490
as compensatory damages, while LTB contends that the collision was due to the fault of
the train engineer.
Issues:
(1) Whether it was the railroad company, and not LTB, who should be held liable
(2) Whether actual and moral damages should be awarded to Edgardo
a reputable university. While his scholastic may not be first rate, it is, nevertheless,
sufficient to justify the assumption that he could have passed the board test in due time.
As regards the income that he could possibly earn as a medical practitioner, it appears
that, according to Dr. Amado Doria, a witness for the LTB, the amount of P300.00 could
easily be expected as the minimum monthly income of Edgardo had he finished his studies.
Upon consideration of all the facts mentioned heretofore this Court is of the opinion, and
so holds, that the compensatory damages awarded to Edgardo Cariaga should be increased
to P25,000.00.
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.

(3) Whether Edgardos parents are entitled to damages In the case of Cangco, vs. Manila Railroad, 38 Phil. 768, We established the distinction
between obligation derived from negligence and obligation as a result of a breach of
Held:
contract. Thus, we said:
(1) The findings of the lower court are predicated mainly upon the testimony of Gregorio
It is important to note that the foundation of the legal liability of the defendant is the
Ilusondo, a witness for the Manila Railroad Company. Notwithstanding the efforts exerted
contract of carriage, and that the obligation to respond for the damage which plaintiff has
by the LTB to assail his credibility, we do not find in the record any fact or circumstance
suffered arises, if at all, from the breach of that contract by reason of the failure of
sufficient to discredit his testimony. We have, therefore, no other alternative but to accept
defendant to exercise due care in its performance. That is to say, its liability is direct and
the findings of the trial court to the effect, firstly, that the whistle of locomotive was
immediate, differing essentially in the legal viewpoint from the presumptive responsibility
sounded four times two long and two short "as the train was approximately 300 meters
for the negligence of its servants, imposed by Article 1903 of the Civil Code (Art. 2180 of
from the crossing"; secondly, that another LTB bus which arrived at the crossing ahead of
the new), which can be rebutted by proof of the exercise of due care in their selection of
the one where Edgardo Cariaga was a passenger, paid heed to the warning and stopped
supervision. Article 1903 is not applicable to obligations arising EX CONTRACTU, but only
before the "crossing", while as the LTB itself now admits, the driver of the bus in question
to extra-contractual obligation or to use the technical form of expression, that article
totally disregarded the warning.
relates only to CULPA AQUILIANA' and not to CULPA CONTRACTUAL.
(2) Appellant LTB admits that under Art. 2201 of the Civil Code the damages for which the
(3) The claim made by said spouses for actual and compensatory damages is likewise
obligor, guilty of a breach of contract but who acted in good faith, is liable shall be those
without merits. As held by the trial court, in so far as the LTB is concerned, the present
that are the natural and probable consequences of the breach and which the parties had
action is based upon a breach of contract of carriage to which said spouses were not a
forseen or could have reasonably forseen at the time the obligation was constituted,
party, and neither can they premise their claim upon the negligence or quasi-delict of the
provided such damages, according to Art. 2199 of the same Code, have been duly proved.
LTB for the simple reason that they were not themselves injured as a result of the collision
Upon this premise it claims that only the actual damages suffered by Edgardo Cariaga
between the LTB bus and train owned by the Manila Railroad Company.
consisting of medical, hospital and other expenses in the total sum of P17,719.75 are
within this category. We are of the opinion, however, that the income which Edgardo
Cariaga could earn if he should finish the medical course and pass the corresponding board
examinations must be deemed to be within the same category because they could have
reasonably been foreseen by the parties at the time he boarded the bus No. 133 owned
and operated by the LTB. At that time he was already a fourth-year student in medicine in