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TRANQUILINO CACHERO, plaintiff and appellant, vs. MANILA YELLOW TAXICAB CO., INC., defendant-appellant.

Bernardino Guerrero and J. G. Madarang for plaintiff and appellant. Castao & Ampil for the defendant and appellant.
SYLLABUS 1.CONTRACT OF CARRIAGE; BREACH OF; DAMAGES; AGAINST WHOM THE ACTION MUST BE MAINTAINED TO RECOVER MORAL DAMAGES. While under the law, employers are made responsible for the damages caused by their employees acting within the scope of their assigned task, plaintiff, in the present case, does not maintain his action against all the persons who might be liable for the damages caused but on an alleged breach of contract of carriage and against the defendant employer alone. However, the defendant taxicab company has not committed any criminal offense resulting in physical injuries against the plaintiff. The one that committed the offense against plaintiff is the driver of defendant's taxicab but he was not made party defendant to the case. Therefore, plaintiff is not entitled to compensation for moral damages as his case does not come within the exception of paragraph 1 of Article 2219 of the Civil Code. 2.ID.; ATTORNEY'S FEES; WHEN MAY BE RECOVERED; CASE AT BAR. The present case does not come under any of the exceptions enumerated in Article 2208 of the Civil Code, specially of paragraph 2 thereof, because defendant's failure to meet its responsibility was not the cause that compelled the plaintiff to litigate or to incur expenses to protect his interests. The present action was instituted because plaintiff demanded an exorbitant amount for moral damages and naturally the defendant did not and could not yield to such demand. This is neither a case that comes under paragraph 11 of said Article because the Lower Court did not deem it just and equitable to award any amount for attorney's fees, on which point this Court agrees. DECISION FELIX, J :
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There is no dispute as to the following facts: on December 13, 1952, Atty. Tranquilino F. Cachero boarded a Yellow Taxicab, with plate No. 2159-52 driven by Gregorio Mira Abinion and owned by the Manila Yellow Taxicab Co., Inc. On passing Oroquieta between Doroteo Jose and Lope de Vega streets, Gregorio Mira Abinion bumped said taxicab against a Meralco post, No. 1-4/387, with the result that the cab was badly smashed and the plaintiff fell out of the vehicle to the ground, suffering thereby physical injuries, slight in nature.

The chauffeur was subsequently prosecuted by the City Fiscal and on February 26, 1953, upon his plea of guilty the Municipal Court of Manila sentenced him to suffer 1 month and 1 day of arresto mayor, and to pay the costs. On December 17, 1952, Tranquilino F. Cachero addressed a letter to the Manila Yellow Taxicab Co., Inc., which was followed by another of January 6, 1953, which reads as follows:
"MANILA, January 6, 1953 The MANILA YELLOW TAXICAB Co., INC. 1338 Arlegui, Manila Dear Sirs: As you have been already advised by the letter dated December 17, 1952, on December 13, 1952, while I was a passenger of your taxicab bearing plate No. 2159 and driven by your chauffeur Gregorio Mira and through his negligence and the bad condition of the said car, he bumped the same against the pavement on the street (Oroquieta between Doroteo Jose and Lope de Vega streets, Manila) and hit the Meralco post on said street, resulting in the smashing of the said taxicab, and as a result thereof I was gravely injured and suffered and is still suffering physical, mental and moral damages and not being able to resume my daily calling. For the said damages, I hereby make a demand for the payment of the sum of P79,245.65, covering expenses for transportation to the hospital for medical treatment, medicines, doctors bills, actual monetary loss, moral, compensatory and exemplary damages, etc., within 5 days from date of receipt hereof. I trust to hear from you on the matter within the period of 5 days above specified. Truly yours, (Sgd.) Tranquilino F. Cachero 2256 Int. B, Misericordia St., Sta. Cruz, Manila" (Exhibit K)

The Taxicab Co. to avoid expenses and time of litigation offered to settle the case amicably with plaintiff but the latter only agreed to reduce his demand to the sum of P72,050.20 as his only basis for settlement which, of course, was not accepted by said company. So plaintiff instituted this action on February 2, 1953, in the Court of First Instance of Manila, praying in the complaint that the defendant be condemned to pay him:
"(a)The sum of P72,050.20, the total sum of the itemized losses and/or damages under paragraph 7 of the complaint, with legal interest thereon from the date of the filing of the complaint; (b)The sum of 5,000 as attorney's fee; and the costs of the suit; and. Plaintiff further respectfully prays for such other and further reliefs as the facts and the law pertaining to the case may warrant."

The defendant answered the complaint setting forth affirmative defenses and a counterclaim for P930 as damages and praying for the dismissal of plaintiff's action. After

hearing the Court rendered decision only July 20, 1954, the dispositive part of which is as follows:
"IN VIEW OF THE FOREGOING, the Court hereby renders judgment in favor of the plaintiff and against the defendant, sentencing the latter to pay the former the following: (1) For medicine, doctor's fees for services rendered and transportation, P700; (2) professional fee as attorney for the defendant in Criminal Case No. 364, 'People vs. Manolo Maddela et al.' of the Court of First Instance of Nueva Vizcaya, P3,000; (3) professional fees as attorney for the defendant in Civil Case No. 23891 of the Municipal Court of Manila, 'Virginia Tangulan vs. Leonel da Silva,' and for the taking of the deposition of Gabina Angrepan in a case against the Philippine National Bank, P200; and (4) moral damages in the amount of P2,000.

Defendant's counterclaim is hereby dismissed. Defendant shall also pay the costs." From this decision both parties appealed to Us, plaintiff limiting his appeal to the part of the decision which refers to the moral damages awarded to him which he considered inadequate, and to the failure of said judgment to grant the attorney's fees asked for in the prayer of his complaint. Defendant in turn alleges that the trial Court erred in awarding to the plaintiff the following:
"(1)P700 for medicine, doctor's fees and transportation expenses; (2)P3,000 as supposedly unearned full professional fees as attorney for the defendant in Criminal Case No. 364, 'People vs. Manolo Maddela et al.'; (3)P200 as supposedly unearned professional fees as attorney for the defendant in Civil Case No. 23891 of the Manila Municipal Court, 'Virginia Tangulan vs. Leonel de Silva', and for failure to take the deposition of a certain Gabina Angrepan in an unnamed case; and (4)P2,000 as moral damages, amounting to the grand total of P5,900, these amounts being very much greater than what plaintiff deserves."

In connection with his appeal, plaintiff calls attention to the testimonies of Dr. Modesto S. Purisima and of Dr. Francisco Aguilar, a member of the staff of the National Orthopedic Hospital, which he considers necessary as a basis for ascertaining not only the physical sufferings undergone by him, but also for determining the adequate compensation for moral damages that he should be awarded by reason of said accident. The exact nature of plaintiff's injuries, their degree of seriousness and the period of his involuntary disability can be determined by the medical certificate (Exhibit D) issued by the National Orthopedic Hospital on December 16, 1952, and the testimonies of Dr. Francisco Aguilar, physician in said hospital, and of Dr. Modesto Purisima, a private practitioner. The medical certificate (Exhibit D) lists: (a) a subluxation of the right shoulder joint; (b) a contusion on the right chest; and (c) a "suspicious fracture" of the upper end of the right humerus. Dr. Aguilar who issued the medical certificate admitted, however, with regard to the "suspicious fracture", that in his opinion with (the aid of) the x-ray there was no fracture. According to this doctor plaintiff went to the National Orthopedic Hospital at least six times during the period from December 16, 1952, to April 7, 1953; that he strapped plaintiff's body (see exhibit E), which strap was not removed until after a period of six weeks had elapsed. Dr. Modesto Purisima, a private practitioner, testified that

he advised and treated plaintiff from December 14, 1952, to the end of March (1953). Plaintiff was never hospitalized for treatment of the injuries he received in said accident. Counsel for the defendant delves quite extensively on these injuries. He says in his brief the following:
"Just what is a subluxation? Luxation is another term for dislocation (Dorland, W.A.N., The American Illustrated Medical Dictionary (13th ed.), p. 652), and hence, a subluxation is an incomplete or partial dislocation (Ibid., p. 1115). While a dislocation is the displacement of a bone or bones from its or their normal setting (and, therefore, applicable and occurs only to joints and not to rigid or non-movable parts of the skeletal system) (Ibid., p. 358; Christopher, F., A Textbook of Surgery (5th ed.), p. 342), it should be distinguished from a fracture which is a break ar rupture in a bone or cartilage, usually due to external violence (Christopher, F., A Textbook of Surgery (5th ed.), p. 194; Dorland, W.A.N., The American Illustrated Medical Dictionary (13th ed.), p. 459). Because, unlike fractures which may be partial (a crack in the bone) or total (a complete break in the bone), there can be no halfway situations with regard to dislocations of the shoulder joint (the head or ball of the humerus the humerus is the bone from the elbow to the shoulder) must be either inside the socket of the scapula or shoulder blade (in which case there is no dislocation) or out of the latter (in which event there is a dislocation), to denote a condition where due to external violence, the muscles and ligaments connecting the humerus to the scapula have subjected to strain intense enough to produce temporary distension or lessening of their tautness and consequently resulting in the loosening or wrenching of the ball of the humerus from its snug fit in the socket of the scapula, by using the terms subluxation or partial dislocation (as used in the medical certificate), is to fall into a misnomer a term often used by 'chiropractors' and by those who would want to sound impressive, but generally unfavored by the medical profession. To describe the above condition more aptly, the medical profession usually employs the expression luxatio imperfecta, or, in simple language, a sprain (Dorland, W.A.N., The American Illustrated Medical Dictionary (13th ed.), p. 652). The condition we have described is a paraphrase of the definition of a sprain. Plaintiff suffered this very injury (a sprained or wrenched shoulder joint) and a cursory scrutiny of his x- ray plates (Exhibits A and B) by a qualified orthopedic surgeon or by a layman with a picture or x-ray plate of a normal shoulder joint (found in any standard textbook on human anatomy; the one we used was Scheffer, J.P., Morris' Human Anatomy (10 ed., p. 194) for comparison will bear out our claim. Treatment for a sprain is by the use of adhesive or elastic bandage, elevation of the joint, heat, effleurage and later massage (Christopher, F., A Textbook of Surgery (5th ed., p. 116). The treatment given to the plaintiff was just exactly that Dr. Aguilar bandaged (strapped) plaintiff's right shoulder and chest (t.s.n., p. 31) in an elevated position (with the forearm horizontal to the chest (see photograph, Exhibit E), and certain vitamins wane prescribed for him (t.s.n., p. 131). He also underwent massage for some time by Drs. Aguilar and Purisima. The medicines and appurtenances to treatment purchased by plaintiff from the Orthopedic Hospital, Botica Boie and Metro Drug Store were, by his own admission, adhesive plaster, bandage, gauze, oil and 'tintura arnica' (t.s.n., p. 3 continuation of transcript), and Dr. Purisima also prescribed 'Numotizin', a heat generating ointment (t.s.n., p. 23), all

of which are indicated for a sprain, and by their nature, can cure nothing more serious than a sprain anyway. Fractures and true dislocations cannot be cured by the kind of treatment and medicines which plaintiff received. A true dislocation, for instance, is treated by means of reduction through traction of the arm until the humeral head returns to the proper position in the scapular socket (pulling the arm at a 60 degree angle and guiding the ball of the humerus into proper position, in its socket) while the patient is under deep anesthesia, and then, completely immobilizing the part until the injured capsule has healed (Christopher, F., A Textbook of Surgery, pp. 343 and 344). No evidence was submitted that plaintiff ever received the latter kind of treatment. Dr. Purisima even declared that after the plaintiff's first visit to the Orthopedic Hospital the latter informed him that there was no fracture or dislocation (t.s.n., p. 26). Dr. Purisima's statement is the truth of the matter as we have already explained joints of the shoulder being only subject to total dislocation (due to their anatomical design), not to partial ones, and any injury approximating dislocation but not completely, it being classified as mere sprains, slight or bad. The second and last injury plaintiff sustained was a contusion. What is a contusion? It is just a high flown expression for a bruise or the act of bruising (Dorland, W.A.N., The American Illustrated Medical Dictionary (13th ed., p. 290). No further discussion need be made on this particular injury since the nature of a bruise is of common knowledge (it's a bit uncomfortable but not disabling unless it occurs on movable parts like the fingers or elbow, which is not the case herein having occurred in the right chest) and the kind of medical treatment or help it deserves is also well known." (pp. 10-14, defendant-appellant's brief).

The trial Judge undoubtedly did not give much value to the testimonies of the doctors when in the statement of facts made in his decision he referred to the physical injuries received by the plaintiff as slight in nature and the latter is estopped from discussing the same in order to make them appear as serious, because in the statement of facts made in his brief as appellant, he says the following:
"The facts of the case as found by the lower court in its decision, with the permission of this Honorable Court, we respectfully quote them hereunder as our STATEMENT OF FACTS for the purpose of this appeal."

Before entering into a discussion of the merits of plaintiff's appeal, We Will say a few words as to the nature of the action on which his demand for damages is predicated.
"The nature of an action as in contract or in tort is determined from the essential elements of the complaint, taken as a whole, in the case of doubt a construction to sustain the action being given to it. While the prayer for relief or measure of damages sought does not necessarily determine the character of the action, it may be material in the determination of the question and therefore entitled to consideration and in cases of doubt will often determine the character of the action and indeed there are actions whose character is necessarily determined thereby." (1 C.J.S. 1100)

A mere perusal of plaintiff's complaint will show that his action against the defendant is predicated on an alleged breach of contract of carriage, i.e., the failure of the defendant to bring him "safely and without mishaps" to his destination, and it is to be noted that the chauffeur of defendant's taxicab that plaintiff used when he received the

injuries involved herein, Gregorio Mira, has not even been made a party defendant to this case. Considering, therefore, the nature of plaintiff's action in this case, is he entitled to compensation for moral damages? Article 2219 of the Civil Code says the following:
"ART. 2219.Moral damages may be recovered in the following and analogous cases: (1)A criminal offense resulting in physical injuries; (2)Quasi-delicts causing physical injuries; (3)Seduction, abduction, rape, or other lascivious acts; (4)Adultery or concubinage; (5)Illegal or arbitrary detention or arrest; (6)Illegal search; (7)Libel, slander or any other form of defamation; (8)Malicious prosecution; (9)Acts mentioned in Article 309; 35. (10)Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34 and xxx xxx xxx."

Of the cases enumerated in the just quoted Article 2219 only the first two may have any bearing on the case at bar. We find, however, with regard to the first that the defendant herein has not committed in connection with this case any "criminal offense resulting in physical injuries". The one that committed the offense against the plaintiff is Gregorio Mira, and that is why he has been already prosecuted and punished therefor. Although (a) owners and managers of an establishment or enterprise are responsible for damages caused by their employees in the service of the branches in which the latter are employed or on the occasion of their functions; (b) employers are likewise liable for damages caused by their employees and household helpers acting within the scope of their assigned task (Article 2180 of the Civil Code); and (c) employers and corporations engaged in any kind of industry are subsidiarily civilly liable for felonies committed by their employees in the discharge of their duties (Art. 103, Revised Penal Code), plaintiff herein does not maintain this action under the provisions of any of the articles of the codes just mentioned and against all the persons who might be liable for the damages caused, but as a result of an admitted breach of contract of carriage and against the defendant employer alone. We, therefore, hold that the case at bar does not come within the exception of paragraph 1, Article 2219 of the Civil Code. The present complaint is not based either on a "quasi delict causing physical injuries" (Art. 2219, par. 2, of the Civil Code). From the report of the Code Commission on the new Civil Code We copy the following:
"A question of nomenclature confronted the Commission. After a careful deliberation, it was agreed to use the term 'quasi delict' for those obligationwhich agreed to not arise from law, contracts, quasi- contracts, or criminal offenses.They are known in Spanish legal treatises as 'culpa aquiliana','culpa-extra-contractual' or

'cuasi- delitos'. The phrase 'culpa-extra-contractual' or its translation 'extra-contractual or penal obligation. 'Aquilian fault' might have been selected, but it was thought inadvisable to refer to so ancient a law as the 'Lex Aquilia'. So 'quasi-delicts' was chosen, which more nearly corresponds to the Roman Law classification of obligations, and is in harmony with the nature of this kind of liability." "The Commission also thought of the possibility of adopting the word 'tort' from Anglo-American law. But 'tort' under that system is much broader than the SpanishPhilippine concept of obligations arising from non-contractual negligence. 'Tort' in Anglo-American jurisprudence includes not only negligence, but also intentional criminal act, such as assault and battery, false imprisonment and deceit. In the general plan of the Philippine legal system, intentional and malicious acts are governed by the Penal Code, although certain exceptions are made in the Project." (Report of the Code Commission, pp. 161-162).

In the case of Cangco vs. Manila Railroad, 38 Phil. 768, We established the distinction between obligation derived from negligence and obligation as a result of a breach of a contract. Thus, We said:
"It is important to note that the foundation of the legal liability of the defendant is the contract of carriage, and that the obligation to respond for the damage which plaintiff has suffered arises, if at all, from the breach of that contact by reason of the failure of defendant to exercise due care in its performance. That is to say, its liability is direct and immediate, differing essentially in the legal viewpoint

from that presumptive responsibility for the negligence of its servants, imposed by Article 1903 of the Civil Code (Art. 2180 of the new), which can be rebutted by proof of the exercise of due care in their selection or supervision. Article 1903 is not applicable to obligations arising EX CONTRACTU, but only to extra- contractual obligations or to use the technical form of expression, that article relates only to CULPA AQUILIANA and not to CULPA CONTRACTUAL."

The decisions in the cases of Castro vs. Acro Taxicab (82 Phil., 359, 46 Off. Gaz., No. 5, p. 2023); Lilius et al. vs. Manila Railroad, (59 Phil. 758) and others, wherein moral damages were awarded to the plaintiffs, are not applicable to the case at bar because said decisions were rendered before the effectivity of the new Civil Code (August 30, 1950) and for the further reason that the complaints filed therein were based on different causes of action. In view of the foregoing the sum of P2,000 awarded as moral damages by the trial Court has to be eliminated, for under the law it is not a compensation awardable in a case like the one at bar. As to plaintiff's demand for P5,000 as attorney's fees, the Civil Code provides the following:
"ART. 2208.In the absence of stipulation, attorney's fees and expenses of litigation, other than judicial costs, cannot be recovered, except: (1)When exemplary damages are awarded; (2)When the defendant's act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest;

(3)In criminal cases of malicious prosecution against the plaintiff; (4)In case of a clearly unfounded civil action or proceeding against the plaintiff; (5)Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff's plainly valid, just and demandable claim; (6)In actions for legal support; (7)In actions for the recovery of wages of household helpers, laborers and skilled workers; (8)In actions for indemnity under workmen's compensation and employer's liability laws; (9)In a separate civil action to recover civil liability arising from a crime; (10)When at least double judicial costs are awarded; (11)In any other case where the court deems it just and equitable that attorney's fees and expenses of litigation should be recovered.

In all cases, the attorney's fees and expenses of litigation must be reasonable." The present case does not come under any of the exceptions enumerated in the preceding article, specially of paragraph 2 thereof, because defendant's failure to meet its responsibility was not the cause that compelled the plaintiff to litigate or to incur expenses to protect his interests. The present action was instituted because plaintiff demanded an exorbitant a mount for moral damages (P60,000) and naturally the defendant did not and could not yield to such demand. This is neither a case that comes under paragraph 11 of Article 2208 because the Lower Court did not deem it just and equitable to award any amount for attorney's fees. As We agree with the trial Judge on this point, We cannot declare that he erred for not a warding to plaintiff any such fees in this case. Coming now to the appeal of the defendant, the Court, after due consideration of the evidence appearing on record: (1)Approves the award of P700 for medicine, doctors' fees and transportation expenses; (2)Reduces the award of P3,000 as attorney's fees to the sum of P2,000, as Manolo Maddela, defendant in Criminal Case No. 364 of the Court of First Instance of Nueva Vizcaya testified that he has already paid to plaintiff part of the latter's fees of P3,000, the amount of which was not disclosed, though it was incumbent upon the plaintiff to establish how much he had been paid of said fees; (3)Approves the award of P200 as unearned professional fees as attorney for the defendant in Civil Case No. 238191 of the Municipal Court of Manilawhom plaintiff was unable to represent, and for the latter's failure to take the deposition of one Agripina Angrepan due to the automobile accident referred to in this case. Before closing this decision We deem it convenient to quote the following passage of defendant's brief as appellant:
"Realizing its obligation under its contract of carriage with the plaintiff, and because the facts of the case, as have been shown, mark it as more proper for the Municipal Court only, the defendant, to avoid the expense and time of litigation, offered to settle the case amicably with plaintiff, but the latter refused and insisted on

his demand for P72,050.20 (Exhibit K) as the only basis for settlement, thus adding a clearly petty case to the already overflowing desk of the Honorable Members of this Court. We admire and respect at all times a man for standing up and fighting for his rights, and when said right consists in injuries sustained due to a breach of a contract of carriage with us, sympathy and understanding are added thereto. But when a person starts demanding P2,050.20 for a solitary bruise and sprain, injuries for which the trial court, even at its generous although erroneous best, could only grant P5,900, then respect and sympathy give way to something else. It is time to fight, for, in our humble opinion, there is nothing more loathsome nor truly worthy of condemnation than one who uses his injuries for other purposes than just rectification. If plaintiff's claim is granted, it would be a blessing, not a misfortune, to be injured." (p. 34-35)

This case was instituted by a lawyer who, as an officer of the courts, should be the first in helping Us in the administration of justice, and after going over the record of this case, we do not hesitate to say that the demand of P72,050.20 for a subluxation of the right humerus bone and an insignificant contusion in the chest, has not even the semblance of reasonableness. As a matter of fact, Dr. Aguilar himself said that the x-ray plates (Exhibits A, B and C) "did not show anything significant except that it shows a slight subluxation of the right shoulder, and that there is a suspicious fracture", which ultimately he admitted not to exist. The plaintiff himself music have felt embarrassed by his own attitude when after receiving defendant's brief as appellant, he makes in his brief as appelleethe categorical statement that he "DOES NOT NOW INSIST NOR PRETEND IN THE LEAST to collect from the defendant all the damages he had claimed in his complaint, but instead he is submitting his case to the sound discretion of the Honorable Court for the award of a reasonable and equitable damages allowable by law, to compensate the plaintiff of the suffering and looses he had undergone and incurred because of the accident oftentimes mentioned in this brief in which plaintiff was injured" (p. 17-18). This acknowledgment comes too late, for plaintiff has already deprived the Court of Appeals of the occasion to exercise its appellate jurisdiction over this case which he recklessly dumped to this Court. We certainly cannot look with favor at this attitude of plaintiff. Wherefore, the decision appealed from is hereby modified by reducing the amount awarded as unearned professional fees from P3,000 to P2,000 and by eliminating the moral damages of P2,000 awarded by the Lower Court to the plaintiff. Said decision is in all other respects affirmed, without pronouncement as to costs. It is so ordered.

PAZ FORES, petitioner, vs. IRENEO MIRANDA, respondent.

Alberto O. Villaraza for petitioner. Almazan & Ereneta for respondent.


SYLLABUS

1.PUBLIC UTILITIES; SALE OF PUBLIC SERVICE VEHICLE; APPROVAL OF PUBLIC SERVICE COMMISSION; REASON. Transfer of a Public Service Commission, is not effective and binding in so far as the responsibility of the grantee under the franchise in relation to the public is concerned. The provisions of Section 20 of the Public Service Act are clear and prohibit the sale, alienation, lease, of an operator's property, franchise , certificates, privileges or rights, or any part thereof without approval or authorization 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 operation standing in the records of the Commission to which the public has a right to rely upon. 2.STATUTORY CONSTRUCTION; PROVISION OF SECTION 20 (Z) PUBLIC SERVICE ACT INTERPRETED.--The proviso contained in Section 20 (Z) of the Public Service Act, to the effect that nothing therein shall be construed "to prevent the transaction from being negotiated or completed before its approval", means only that the sale without the required approval is still valid and binding between the parties. (Montoya vs. Ignacio 50 Off. Gaz., No. 1, p. 108). the phrase "in ordinary course of its business" found in the other proviso "or to prevent the sale, alienation, or lease by any public service of any of its property," could not have been intended to include the sale of the vehicle itself but at most may refer only to such property that can be conceivably disposed of by the carrier in the ordinary course of its business, like junked equipment or spare parts. 3.DAMAGES; ACTUAL DAMAGES; ATTORNEY'S FEES INCLUDED IN THE CONCEPT; AWARD BY COURT OF APPEALS MOTU PROPRIO. Although the Court of First Instance did not provide for attorney's fees in the sum of P3,000 and no appeal to the Court of Appeals was interposed on the point, it was not an error for the Court of Appeals to award them motu propio because attorney's fees are included in the concept of actual damages under the Civil Code and may be awarded whenever the court deems it just and equitable. 4.ID.; MORAL DAMAGES NOT RECOVERABLE IN ACTION ON BREACH OF CONTRACT OF TRANSPROTATION. Moral damages are generally not recoverable in damage actions predicated on a breach of contract of transportation in view or the provisions of Articles 2218 and 2220 of the new Civil Code. 5.ID.; ID.; EXCEPTION IN CASE OF DEATH OF PASSENGER. The exception to the basic rule of damages is a mishap resulting in the death of a passenger, in which case Article 1764 makes the common carrier expressly subject to the rule of Art. 2206, of the Civil Code that entitles the spouse, descendants and ascendants of the deceased passenger to "demand moral damages for mental anguish by reason of the death of the deceased." (Necesito vs. Paras G. R. No. L-10605, Resolution on motion to reconsider, Sept. 11, 1958). 6.ID.; ID.; NO DEATH; PROOF OF MALICE OR BAD FAITH REQUIRED. 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. The mere carelessness of the carrier's driver does not per se constitute or justify an inference of malice or bad faith on the part of the carrier.

7.ID.; ID.; NEGLIGENCE; NOT CARRIER'S BAD FAITH. While it is true that negligence may be occasionally so gross as to amount to malice, that fact must be shown in evidence. A carrier's bad faith is not to be lightly inferred from a mere finding that the contract was breached through negligence of the carrier's employees. 8.ID.; ID.; FAILURE TO TRANSPORT PASSENGERS SAFELY. The theory that carrier's violation of its engagement to safely transport the passenger involves a breach of the passenger's confidence, and therefore should be regarded as a breach of contract in bad faith, justifying recovery of moral damages, under Article 2220 of the New Code is untenable, for under it the carrier would always be deemed in bad faith in every case its obligation to the passenger is infringed and it would never be accountable for simple negligence while under Article 1756 of the Civil Code the presumption is that common carriers actednegligently and not maliciously, and Article 1762 speaks of negligence of the common carrier. 9.ID.; CARRIERS; ACTIONS FOR BREACH OF CONTRACT; WHEN PRESUMPTION OR CARRIER'S LIABILITY ARISES. An action for breach of contract imposes on the carrier a presumption of liability upon mere proof of injury of the passenger; the latter does not have to establish the fault of the carrier, or of his employees, and the burden is placed on the carrier to prove that it was due to an unforeseen event or to force majeure (Congco vs. Manila Railroad Co. 38 Phil., 768, 777.) Morever, the carrier, unlike in suits for quasidelict may not escape liability by proving that it has exercised due diligence in the selection and supervision of its employees. (Art. 1759 New Civil Code, Cangco vs. Manila Railroad Co. Supra; Prado vs. Manila Electric Co., 51 Phil., 900) DECISION REYES, J.B.L., J :
p

Defendant-petitioner Paz Fores brings this petition for review of the decision of the Court of Appeals (C. A. Case No. 1437-R) awarding to the plaintiff-respondent Ireneo Miranda the sums of P5,000 by way of actual damages and counsel fees, and P10,000 as moral damages, with costs. Respondent was one of the passengers on a jeepney driven by Eugenio Luga. While the vehicle was descending the Sta. Mesa bridge at an excessive rate of speed, the driver lost control thereof, causing it to swerve and to hit the bridge wall. The accident occurred on the morning of March 22, 1953. Five of the passengers were injured, including the respondent who suffered a fracture of the upper right humerus. He was taken to the National Orthopedic Hospital for treatment, and later was subjected to a series of operations; the first on May 23, 1953, when wire loops were wound around the broken bones and screwed into place; a second, effected to insert a metal splint, and a third one to remove such splint. At the time of the trial, it appears that respondent had not yet recovered the use of his right arm.

The driver was charged with serious physical injuries through reckless imprudence, and upon interposing a plea of guilty was sentenced accordingly. The contention that the evidence did not sufficiently establish the identity of the vehicle as that belonging to the petitioner was rejected by the appellate court which found, among other things, that it carried plate No. TPU-1163, series of 1952, Quezon City, registered in the name of Paz Fores, (appellant herein) and that the vehicle even had the name of "Dona Paz" painted below its windshield. No evidence to the contrary was introduced by the petitioner, who relied on an attack upon the credibility of the two policemen who went to the scene of the incident. A point to be further remarked is petitioner's contention that on March 21, 1953, or one day before the accident happened, she allegedly sold the passenger jeep that was involved therein to a certain Carmen Sackerman. The initial problem raised by the petitioner in this appeal may be formulated thus "Is the approval of the Public Service Commission necessary for the sale of a public service vehicle even without conveying therewith the authority to operate the same?" Assuming the dubious sale to be a fact, the Court of Appeals answered the query in the affirmative. The ruling should be upheld. Section 20 of the Public Service Act (Commonwealth Act No. 146) provides:
"SEC. 20.Subject to established limitations and saving provisions to the contrary, it shall be unlawful for any public service or for the owner, lessee or operation thereof, without the previous approval and authority of the Commission previously had (g)To sell, alienate, mortgage, encumber or lease its property, franchises, certificates, privileges, or rights, or any part thereof; or merge or consolidate its property, franchises, privileges or rights, or any part thereof, with those of any other public service. The approval herein required shall be given, after notice to the public and after hearing the persons interested at a public hearing, if it be shown that there are just and reasonable grounds for making the mortgage or encumbrance, for liabilities of more than one year maturity, or the sale, alienation, lease, merger, or consolidation to be approved and the same are not detrimental to the public interest, and in case of a sale, the date on which the same is to be consummated shall be fixed in the order or approval: Provided, however, That nothing herein contained shall be construed to prevent the transaction from being negotiated or completed before its approval or to prevent the sale, alienation, or lease by any public service of any of its property in the ordinary course of its business."

Interpreting the effects of this particular provision of law, we have held in the recent cases of Montoya vs. Ignacio, * 50 Off. Gaz. No. 1, p. 108; Timbol vs. Osias, et al., G. R. No. L-7547, April 30, 1955, and Medina vs. Cresencia, 99 Phil, 506; 52 Off. Gaz. No. 10, p. 4606, that a transfer contemplated by the law, if made without the requisite approval of the Public Service Commission, is not effective and binding in so far as the responsibility of the grantee under the franchise in relation to the public is concerned. Petitioner assails case, contending that in those cases, the operator, the operator did not convey, by lease or by sale, the vehicle independently of his rights under the franchise. This line of reasoning does not find support in the law. The provisions of the statute are clear and

property, franchise, certificate, privileges or rights, or any part thereof of the owner or operator of the public service without approval or authorization of the Public Service Commission. The law was designed primarily for the protection of the public interest; and until the approval of the Public Service Commission is obtained the vehicle is, in contemplation of law, still under the service of the owner or operator standing in the records of the Commission which the public has a right to rely upon. The proviso contained in the aforequoted law, to the effect that nothing therein shall be construed "to prevent the transaction from being negotiated or completed before its approval", means only that the sale without the required approval is still valid and binding between the parties (Montoya vs. Ignacio, supra). The phrase "in the ordinary course of its business" found in the other proviso "or to prevent the sale, alienation, or lease by any public service of any of its property". as correctly observed by the lower court, could not have been intended to include the sale of the vehicle itself, but at most may refer only to such property that may be conceivably disposed or by the carrier in the ordinary course of its business, like junked equipment or spare parts. The case of Indalecio de Torres vs. Visente Ona (63 Phil., 594,597) is enlightening; and there, it was held:
"Under the law, the Public Service Commission has not only general supervision and regulation of, but also full jurisdiction and control over all public utilities including the property, equipment and facilities used, and the property rights and franchises enjoyed by every individual and company engaged in the performance of a public service in the sense this phrase is used in the Public Service Act or Act No. 3108). By virtue of the provisions of said Act, motor vehicles used in the performance of a service, as the transportation of freight from one point to another, have to this date been considered and they cannot but be so considered public service property; and, by reason of its own nature, a TH truck, which means that the operator thereof places it at the disposal of anybody who is willing to pay a rental for its use, when he desires to transfer or carry his effects, merchandise or any other cargo from one place to another, is necessarily a public service property." (Emphasis supplied)

Of course, this Court has held in the case of Bachrach Motor Co. vs. Zamboanga Transportation Co., 52 Phil., 244, that there may be a nunc pro tunc authorization which had the effect of having the approval retroact to the date of the transfer; but such outcome cannot prejudice rights intervening in the meantime. It appears that no such approval was given by the Commission before the accident occurred. The P10,000 actual damages awarded by the Court of First Instance of Manila were reduced by the Court of Appeals to only P2,000, on the ground that a review of the records failed to disclose a sufficient basis for the trial court's appraisal, since the only evidence presented on this point consisted of respondent's bare statement that his expenses and loss of income amounted to P20,000. On the other hand, "it cannot be denied," the lower court said, "that appellee (respondent ) did incur expenses." It is well to note further that respondent was a painter by profession and a professor of Fine Arts, so that the amount of P2,000 awarded cannot be said to be excessive (see Arts. 2224 and 2225, Civil Code of the Philippines). The attorney's fees in the sum of P3,000 also awarded

to the respondent are assailed on the ground that the Court of First Instance did not provide 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 damaged under the Civil Code and may be awarded whenever the court deems it just and equitable (Art. 2208, Civil Code of the Philippines). We see no reason to alter these awards. Anent the moral damages ordered to be paid to the respondent, the same must be discarded. We have repeatedly ruled (Cachero vs. Manila Yellow Taxicab Co. Inc. 101 Phil., 523; 54 Off. Gaz., [26], 6599; Necesito, et al vs. Paras, 104 Phil., 75; 56 Off. Gaz., [23] 4023, that moral damages are not recoverable in damage actions predicated on a breach of the contract of transportation, in view of Articles 2219 and 2220 of the new Civil Code, which provide as follows:
"ART. 2219.Moral damages may be recovered in the following and analogous cases: (1)A criminal offense resulting in physical injuries; (2)Quasi-delicts causing physical injuries; xxx xxx xxx ART. 2220.Willful injury to property may be a legal ground for awarding moral damages if the court should find that, under the circumstance, such damages are justly due. The same rule applies to breaches of contract where the defendant acted fraudulently or in bad faith."

By contrasting the provisions of these two articles it immediately becomes apparent that: (a)In case of breach of contract (including one of transportation) proof of bad faith or fraud (dolus), i.e., wanton or deliberately injurious conduct, is essential to justify an award of moral damages; and (b)That a breach of contract can not be considered included in the description term "analogous cases" used in Art. 2219; not only because Art. 2220 specifically provides for the damages that are caused by contractual breach, but because the definition of quasidelict in Act. 2176 of the Code expressly excludesthe cases where there is a "preexisting contractual relation between the parties."
"ART. 2176.Whoever by act or omission caused damage to another, there being fault or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no pro-existing contractual relation between the parties, is called a quasi-delict and is governed by the provision of this Chapter."

The exception to the basic rule of damages now under consideration is a mishap resulting in the death of a passenger, in which case Article 1764 makes the common carrier expressly subject to the rule of Art. 2206, that entitles the spouse, descendants and ascendants of the deceased passenger to "demand moral damages for mental anguish by reason of the death of the deceased" (Necesito vs. Paras, 104 Phil., 84, Resolution on motion to reconsider, September 11, 1958). But the exceptional rule of Art. 1764 makes it all the more evident that where the injured passenger does not die, moral damages are not recoverable unless it is proved that the carrier was guilty of malice or bad faith. We

think it is clear that the mere carelessness of the carrier's driver does not per se constitute or justify an inference of malice or bad faith on the part of the carrier; and in the case at bar there is no other evidence of such malice to support the award of moral damages for breach of contract, therefore, without proof of bad faith or malice on the part of the defendant, as required by Art. 2220, would be to violate the clear provisions of the law, and constitute unwarranted judicial legislation. The Court of Appeals has invoked our ruling in Castro vs. Acro Taxicab Co., R. G. No. 49155, December 14, 1948 and Layda vs. Court of Appeals, 90 Phil., 724; but these doctrines were predicated upon our former law of damages, before judicial discretion in fixing them became limited by the express provisions of the new Civil Code (previously quoted). Hence, the aforesaid rulings are now inapplicable. Upon the other hand, the advantageous position of a party suing a carrier for breach of the contract of transportation explains, to some extent, the limitation imposed by the new Code on the amount of the recovery. The action for breach of contract imposes on the defendant carrier a presumption of liability upon mere proof of injury to the passenger; that latter is relieved from the duty to establish the fault of the carrier, or of his employees, and the burden is placed on the carrier to prove the it was due to an unforeseen event or to force majeure (Cangco vs. Manila Railroad Co., 38 Phil., 768 777). Moreover, the carrier, unlike in suits for quasi-delict, may not escape liability by proving that it has exercised due diligence in the selection and supervision of its employees (Art. 1759, new Civil Code; Cangco vs. Manila Railroad Co., supra; Prado vs. Manila Electric Co., 51 Phil., 900). The difference in conditions, defenses and proof, as well as the codal concept of quasi-delict as essentially extra contractual negligence, compel us to differentiate between action ex contractu, and actions quasi ex delicto, and prevent us from viewing the action for breach of contract as simultaneously embodying an action on tort. Neither liability under Art. 103 of the Revised Penal Code, since the responsibility is not alleged to be subsidiary, nor is there on record any averment or proof that the driver of appellant was insolvent. In fact, he is not even made a party to the suit. It is also suggested that a carrier's violation of its engagement to safety transport the passenger involves a breach of the passenger's confidence, and therefore should be regarded as a breach of contract in bad faith, justifying recovery of moral damages under Art. 2220. This theory is untenable, for under it the carrier would always be deemed in bad faith, in every case its obligation to the passenger is infringed, and it would be never accountable for simple negligence; while under the law (Art. 1756) the presumption is that common carriers acted negligently (and not maliciously), and Art. 1762 speaks of negligence of the common carrier.
"ART. 1756.In case of death of or injuries to passengers, common carriers are presumed to have been at fault or to have acted negligently, unless the prove that they observed extraordinary diligence as prescribed in article 1733 and 1755." "ART. 1762.The contributory negligence of the passenger does not bar recovery of damages for his death or injuries, it the proximate cause thereof is the negligence of the common carrier, but the amount of damages shall be equitably reduced."

The distinction between fraud, bad faith or malice in the sense of deliberate or wanton wrong doing and negligence (as mere carelessness) is too fundamental in our law to be ignored (Arts. 1170-1172); their consequences being clearly differentiated by the Code.
"ART. 2201.In contracts and quasi-contracts, the damages for which the obligor who acted in good faith is liable shall be those that are the natural and probable consequence of the breach of the obligation, and which the parties have foreseen or could have reasonable 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."

It is to be presumed, in the absence of statutory provision to the contrary, that this difference was in the mind of the lawmakers when in Art. 2220 they limited recovery of moral damages to breaches of contract in bad faith. It is true that negligence may be occasionally so gross as to amount to malice; but that fact must be shown in evidence, from a mere finding that the contract was breached through negligence of the carrier's employees. In view of the foregoing considerations, the decision of the Court of Appeals is modified by eliminating the award of P5.000.00 by way of moral damages (Court of Appeals Resolution of May 5, 1957). In all other respects, the judgment is affirmed. No costs in this instance. So ordered. LAGUNA TAYABAS BUS COMPANY, petitioner, vs. JULIETA CORNISTA, thru her parents, GIL CORNISTA and MANUELA BELSONTACORNISTA, respondents.

Ozaeta, Gibbs & Ozaeta for petitioner. Lastrilla & Alimagahan for respondents.
SYLLABUS 1.DAMAGES; BREACH OF CONTRACT OF CARRIAGE; EFFECT OF CONTRIBUTORY NEGLIGENCE ON AWARD OF MORAL DAMAGES. While contributory negligence on the part of the injured party justifies the reduction of moral damages in a breach of contract of carriage, it does not justify the exemption from liability of the carrier. 2.ID.; ID.; MORAL DAMAGES; NEGLIGENCE OF CARRIER. The carrier's negligence consisting in its failure to cover the right side of the bus in question with a bar or some other contrivance to safeguard and protect passengers falls within the category of the misconduct mentioned in Article 2220 of the New Civil Code.

RESOLUTION DIZON, J :
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Julieta Cornista, through her parents, sued petitioner in the Court of First Instance of Leyte (Civil Case No. 2298) for damages arising from breach of contract of carriage, her claim being that, while a passenger of one of petitioner's buses, she sustained physical injuries through the negligence of petitioner and its driver. Petitioner's principal defense was that Julieta's own negligence was the proximate cause of her injuries. After trial, the Court rendered judgment for the plaintiff awarding her the amount of P6,000 as moral damages, plus the amount of P300 for medical attendance, and P1,000 as attorney's fees, with costs. On appeal the Court of Appeals reduced the moral damages to P3,000, and affirmed the appealed decision in all other respects. Petitioner now seeks a review of the last mentioned decision for the purpose of having it set aside, or to have the award of moral damages eliminated. The principal facts, as found by the trial Court, are as follows:
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"The court, in considering the evidence presented in support of the main issue, is satisfied that the proximate cause of the injuries suffered by plaintiff JulietaCornista, as shown by Exhibit 'A' was the negligence of both the defendant and its driver of bus No. 284 who, at the time of the incident at bar, unmindful of the warning given him by his passengers, recklessly operated and drove said bus at high speed even on sharp curves of the road. A look at Exhs. '7' and '7-A' will readily show that bus No. 284, wherein on November 9, 1957, plaintiff Julieta Cornista was a passenger and from where she fell when said bus was running at a high speed on a curve, the right side of said bus is not covered nor protected by any bar to safeguard passengers sitting at the extreme ends of the seats on the right side from falling therefrom."

Upon the above facts which must be deemed final petitioner's liability for damages cannot be doubted. The decision in Lara vs. Valencia, 55 Off. Gaz., 4438, does not apply to the present for the reason that, as found by the trial Court, Julieta Cornista was not guilty of negligence. While the Court of Appeals found her chargeable with contributory negligence because, instead of holding the hand of her friend Myrna Cruz, who was seated beside her, she should have held tenaciously on to the bus itself, We believe with said Court that while such circumstances justifies the reduction of the moral damages awarded by the Court of origin, it does not justify the exemption from liability of petitioner herein. Regarding petitioner's contention that no award of moral damages should have been made in favor of the injured passenger, it must be borne in mind that the Court of origin not only found petitioner's driver guilty of reckless driving, but also found petitioner itself guilty of negligence because "the right side of said bus is not covered nor protected by any bar to safeguard passengers sitting at the extreme ends of the seats on the right side from falling therefrom."

Under the provisions of Art. 2220 of the New Civil Code, in cases of breach of contract (including one of transportation of carriage), either fraud or bad faith, that is, wanton and deliberately injurious conduct on the part of the carrier is necessary to justify an award of moral damages. Petitioner's negligence consisting in its failure to cover the right side of the bus in question with a bar or some other contrivance to safeguard or protect passengers falls within this category of misconduct. WHEREFORE, petition under consideration is dismissed for lack of merit. JOSE G. TAMAYO, petitioner, vs. INOCENCIO AQUINO, ET AL., and SILVESTRE RAYOS, respondents. SILVESTRE RAYOS, petitioner, vs.JOSE G. TAMAYO and INOCENCIO AQUINO ET AL., respondents.

Briones & Pascual for petitioner. Emiliano R. Navarro for respondent Inocencio Aquino et al. Jose C. Laureta and Naty-Belen N. Millan for respondent Silvestre Rayos.
SYLLABUS 1.DAMAGES; REGISTERED OWNER OF PUBLIC UTILITIES LIABLE FOR DAMAGES DESPITE TRANSFER OF VEHICLE. The registered owner of a public service vehicle is responsible for damages that may be caused to any of the passengers therein, even if the said vehicle had already been sold, leased or transferred to another person who was, at the time of the accident, actually operating the vehicle. 2.ID.; LIABILITY OF REGISTERED OWNER DIRECT; REMEDY OF THE LATTER AGAINST TRANSFEREE. The responsibility of a registered owner of a public vehicle to the public or to any passenger riding in the vehicle is direct. However, the transferee, who operated the vehicle when the accident took place, and who is directly responsible thereof, should in turn be made responsible to the registered owner for what the latter may have been adjudged to pay. The remedy of the registered owner is by third-party complaint. 3.ID.; MORAL DAMAGES; NO MORAL DAMAGES IN BREACH OF CONTRACT IN THE ABSENCE OF FRAUD OR BAD FAITH; MEANING OF TERM "BAD FAITH". Article 2220 of the Civil Code expressly provides that award of moral damages can be made in a suit for breach of contract only when the defendant acted fraudulently or in bad faith. What the law would consider as bad faith which may furnish a ground for the award of moral damages would be bad faith in the securing and in the execution of the contract and in the enforcement of its terms, or any kind of deceit which may have been used by both defendants. DECISION

LABRADOR, J :
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Inocencio Aquino and his children brought this action against Jose G. Tamayo, holder of a certificate of public convenience to operate two truck s for damages for the death of Inocencio's wife, Epifania Gonzales, while riding aboard Tamayo's truck. It is alleged that while his (Inocencio Aquino) wife was making a trip aboard truck with Plate No. TPU-735, it bumped against a culvert on the side of the road in Bugallon, Pangasinan; that as a consequence of this accident Epifania Gonzales was thrown away from the vehicle and two pieces of wood embeded in her skull as a result of which she died; that the impact of the truck against the culvert was so violent that the roof of the vehicle was ripped off from its body, one fender was smashed and the engine damaged beyond repair. Complaint was filed for the recovery of P10,000 as actual damages, P10,000 as moral damages, and costs. Upon being summoned, defendant Tamayo answered alleging that the truck is owned by Silvestre Rayos, so he filed a third-party complaint against the latter, alleging that he no longer had any interest whatsoever in the said truck, as he had sold the same before the accident to the third-party defendant Silvestre Rayos. Answering the third-party complaint, Rayos alleged that if any indemnity is due, it should come from Jose G. Tamayo, because he did not have any transaction with him regarding such sale. The Court of First Instance found that the truck with plate No. TPU-735 was one of the trucks of Tamayo under a certificate of public convenience issued to him; that he had sold it to Rayos in March, 1953, but did not inform the Public Service Commission of the sale until June 30, 1953, one month after the accident. On the basis of the above facts, the Court of First Instance ordered the defendant Tamayo and the third-party defendant Rayos to pay plaintiffs jointly and severally the sum of P6,000 as compensatory damages, and another sum of P5,000 as moral damages, with interest, and authorized the defendant or third-party defendant, whoever should pay the entire amount, to recover from the other any sum in excess of one-half of the amount ordered to be paid, with interest. The court also dismissed the third-party complaint. Appeal against the above decision was made to the Court of Appeals. This court affirmed the judgment of the Court of First Instance in all respects, and against this judgment certiorari was issued by us on separate petitions of Tamayo and Rayos. Tamayo claims exemptionn from liability, arguing that the owner and operator of the truck at the time the accident was not he but Rayos. In answer we state that we have already held in the cases of Medina vs. Cresencia, 99 Phil., 506; 52 Off. Gaz., (11) 4606; Timbol vs. Osias, 98 Phil., 432; 52 Off. Gaz. (3) 1392; Montoya vs. Ignacio, 94 Phil., 182; 50 Off. Gaz., 108, and Roque vs. Malibay, L-8561, Nov. 18, 1955, that the registered owner of a public service vehicle is responsible for damages that may be caused to any of the passengers therein, even if the said vehicle had already been sold, leased or transferred to another person who was, at the time of the accident, actually operating the vehicle. This principle was also reafirmed in the case of Erezo vs. Jepte, 102 Phil., 103. The reason given by us for the above liability imposed upon the registered owner of the vehicle under a certificate of public convenience is as follows:

". . . we hold with the trial court that the law does not allow him to do so; the law, with its aim and policy in mind, does not relieve him directly of the responsibility that the law fixes and places upon him as an incident or consequence of registration. Were a registered owner allowed to evade responsibility by proving who the supposed transferre or owner is, it would be easy for him by collusion with others or otherwise, to escape said responsibility and transfer the same to an indefinite person, or to one who possesses no property with which to respond financially for the damage or injury done. A victim of recklessness on the public highways is usually without means to discover or identify the person actually causing the injury or damage. He has no means other than by a recourse to the registration in the Motor Vehicles Office to determine who is the owner. The protection that the law aims to extend to him would become illusory were the registered owner given the opportunity to escape liability by disproving his ownership. If the policy of the law is to be enforced and carried out, the registered owner should not be allowed to prove the contrary to the prejudice of the person injured, that is, to prove that a third person or another has become the owner, so that he may thereby be relieved of the responsibility to the injured." (Erezo vs. Jepte, supra).

The decision of the Court of Appeals is alsoo attacked insofar as it holdds that inasmuch as the third-party defendant had used the truck on a route not covered by the registered owner's franchise, both the registered owner and the actual owner and operator should be considered as joint tortfeasors and should be made liable in accordance with Article 2194 of the Civil Code. This Article is as follows:
"Art. 2194.The responsibility of two or more persons who are liable for a quasidelict is solidary."

But the action instituted in the case at bar is one for breach of contract, for failure of the defendant to carry safety the deceased to her destination. The liability for which he is made responsible, i. e., for the death of the passenger, may not be considered as arising from a quasi-delict. As the registered ownerTamayo and his tranferee Rayos may not be held guilty of tort or a quasi-delict; their responsibility is not solidary as held by the Court of Appeals. The question that poses, therefore, is how should the holder of the certificate of public convenience Tamayo participate with his transferee, operator Rayos, in the damages recoverable by the heirs of the deceased passenger, if their liability is not that of joint tortfeasors in accordance with Article 2194 of the Civil Code. The following considerations must be borne in mind in determining this question. As Tamayo is the registered owner of the truck, his responsibility to the public or to any passenger riding in the vehicle or truck must be direct, for the reasons given in our decision in the case of Erezo vs. Jepte, supra, as quoted above. But as the transferee, who operated the vehicle when the passenger died, is the one directly responsible for the accident and death he should in turn be made responsible to the registered owner for what the latter may have been adjudged to pay. In operating the truck without transfer thereof having been approved by the Public Service Commission, the transferee acted merely as agent of the registered owner and should be responsible to him (the registered owner), for any damages that he may cause the latter by his negligence.

In the case at bar, the court found, furthermore, that inspite of the fact that the agreement between Tamayo and Rayos was for Rayos to use the truck in carrying of gasoline, the latter used the same in transporting passengers outside the route covered by the franchise of Tamayo. For this additional reason, the agent or Rayos must be held responsible to the registered owner, to the extent that the latter may suffer damage by reason of the death caused during the accident. The responsibility of the transferee was already adverted to by us in the case of Erezo vs. Jepte, supra, when we held expressly.
"In synthesis, we hold that the registered owner, the defendant appellant herein, is primarily responsible for the damage caused to the vehicle of the plaintiffappellee, but he (defendant-appellant) has a right to be indemnified by the real or actual owner of the amount that he may be required to pay as damage for the injury caused to the plaintiff-appellant." (Erezo vs. Jepte, supra.)

We hereby affirm that the responsibility of the transferee of the public vehicle be as above denied. The procedural means by which the liability of the transferee to the holder of the certificate should be enforced is that indicated by us in the above-quoted portion of the case of Erezo vs. Jepte. This procedure was adopted by Tamayo, the defendant herein, when he presented third-party complaint against Rayos. The courts below should not have dismissed this third-party complaint, and should have adjudged the responsibility to make indemnity in accordance therewith. The transferee is liable to indemnify the registered owner for the damages that the latter may be required to pay for the accident, hence the remedy is by third-party complaint (See Rule 12, Rules of Court). We now come to the question of the damages that the Court of Appeals and the Court of First Instance awarded to the plaintiffs. The actual or compensatory damage of P6,000 is not seriously questioned by any of the defendants, but the award of P5,000 as moral damages is questioned by them in this appeal. We agree with the appellants that as the responsibility of Tamayo and his agent Rayos is culpa-contractual, no award of moral damages can be given. The law on this matter is expressed in Article 2220 of the Civil Code, which provides:
"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."

Both the Court of First Intance and the Court of Appeals considered the violation of the rules of the Public Service Commission prohibiting transfer of public vehicles without approval by the Commission as justifying the award of moral damages. We believe that both courts erred. The law expressly provides that award of moral damages can be made in a suit for breach of contract only when the defendants acted fraudulently or in bad faith. We do not believe that the holder of the certificate, defendant Tamayo, was guilty of fraud or bad faith. There appears to be no fraud at all in the transfer. Transfers are prohibited only if made without approval by the Public Service Commission. There may have been a violation of the regulations because Tamayo did not secure a previous authority to transfer from said Commission, but he actually applied for and obtained said

permission or approval about a month after the accident. Besides, the truck was transferred to Rayos with the understanding that the same was not to be used as a public convenience, so that insofar as Tamayo is concerned, there could have been no shade or tint of bad faith at all. Consequently, the ground upon which moral damages may be demanded from him by the plaintiffs does not exist. Neither can wee find that there was fraud or bad faith committed on the part of the transferee or agent. There may have been a breach of the agreement between Tamayo and Rayos, but this was not the immediate cause of the accident. It was the negligence of the driver. What the law would seem to consider as bad faith which may furnish a ground for the award of moral damages in the case at bar would be bad faith in the securing and in the execution of the contract and in the enforcement of its terms (Article 1338, Civil Code), or any other kind of deceit which may have been used by both defendants. None can be said to have been present in the case at bar. There was no bad faith on the part of the agent Rayos, there was negligence of the driver employed by him, but this is certainly not bad faith on defendants' part contemplated by law. For the foregoing considerations, the judgment appealed from is hereby modified, in that the defendant-appellant Tamayo is hereby ordered to pay to the plaintiff-appellees the sum of P6,000 as compensatory damages for the death of the deceased, but that he (Tamayo) has the right to be indemnified by third-party defendant-appellant Rayos of the amount he is hereby ordered to pay. With costs against appellants. AIR FRANCE, petitioner, vs. RAFAEL CARRASCOSO and THE HONORABLE COURT OF APPEALS, respondents.

Lichauco, Picazo & Agcaoili for petitioner. Bengzon, Villegas & Zarraga for respondent R. Carrascoso.
SYLLABUS 1.JUDGMENT; FINDINGS OF FACT; REQUIREMENT OF LAW. Courts of justice are not burdened with the obligation to specify in the sentence every bit and piece of evidence presented by the parties upon the issues raised. The law solely insists that a decision state the "essential ultimate facts" upon which the court's conclusion is drawn. 2.ID.; ID.; ID.; APPEAL AND ERROR; FAILURE TO MAKE FINDINGS ON EVIDENCE AND CONTENTIONS OF ONE PARTY, EFFECT OF; DECISION NOT TO BE CLOGGED WITH DETAILS. The mere failure to make specific findings of fact on the evidence presented for the defense or to specify in the decision the contentions of the appellant and the reasons for refusing to believe them is not sufficient to hold the same contrary to the requirement of the law and the Constitution. There is no law that so requires. A decision is not to be clogged with details such that prolixity, if not confusion, may result.

3.ID.; ID.; ID.; FINDINGS OF FACT BY COURTS DEFINED. Findings of fact may be defined as the written statement of the ultimate facts as found by the court and essential to support the decision and judgment rendered thereon; they consist of the court's "conclusions with respect to the determinative facts on issue." 4.ID.; ID.; ID.; QUESTION OF LAW EXPLAINED. A question of law is "one which does not call for an examination of the probative value of the evidence presented by the parties." 5.PLEADING AND PRACTICE; APPEAL; WHAT MAY BE RAISED ON APPEAL FROM COURT OF APPEALS. It is not appropriately the business of the Supreme Court to alter the facts or to review the questions of fact because, by statute, only questions of law may be raised in an appeal by certiorari from a judgment of the Court of Appeals, which judgment is conclusive as to the facts. 6.ID.; ID.; EFFECT OF AFFIRMANCE BY COURT OF APPEALS OF TRIAL COURT'S DECISION. When the Court of Appeals affirms a judgment of the trial court, and the findings of fact of said appellate court are not in any way at war with those of the trial court, nor is said affirmance upon a ground or grounds different from those which were made the basis of the trial court's conclusions, such judgment of affirmance is (1) a determination by the Court of Appeals that the proceeding in the lower court was free from prejudicial error; (7) that all questions raised by the assignments of error and all questions that might have been so raised have been finally adjudicated as free from all error. 7.ID.; COMPLAINT; SPECIFIC MENTION OF THE TERM "BAD FAITH" IN THE COMPLAINT NOT REQUIRED. Although there is no specific mention of the term bad faith in the complaint, the inference of bad faith may be drawn from the facts and circumstances set forth therein. 8. EVIDENCE; FINDING OF COURT OF APPEALS THAT RESPONDENT WAS ENTITLED TO A FIRST CLASS SEAT. The Court of Appeals properly found that a first classticket holder is entitled to first class seat, given the fact that seat availability in specific flights is therein confirmed; otherwise, an air passenger will be placed in the hollow of the hands of an airline, because it will always be easy for an airline to strike out the very stipulations in the ticket and say that there was verbal agreement to the contrary. If only to achieve stability in the relations between passenger and air carrier, adherence to the ticket so issued is desirable. 9.ID.; LACK OF SPECIFIC AVERMENT OF BAD FAITH CURED BY NOTICE TO DEFENDANT OF WHAT PLAINTIFF INTENDS TO PROVE AND BY EVIDENCE PRESENTED WITHOUT OBJECTION; AMENDMENT OF COMPLAINT TO CONFORM TO EVIDENCE UNNECESSARY. If there was lack of specific averment of bad faith in the complaint, such deficiency was cured by notice, right at the start of the trial, by plaintiff's counsel to defendant as to what plaintiff intended to prove: while in the plane in Bangkok, plaintiff was ousted by defendant's manager who gave his seat to a white man; and by evidence of bad faith in the fulfillment of the contract presented without objection on the part of the defendant. An amendment of the complaint to conform to the evidence is not even required.

10.ID.; ADMISSIBILITY OF TESTIMONY ON AN ENTRY IN A NOTEBOOK; TESTIMONY NOT COVERED BY BEST EVIDENCE RULE. The testimony of a witness that the purser made an entry in his notebook reading "First Class passenger was forced to go to the tourist class against his will and that the captain refused to intervene," is competent and admissible because the subject of the inquiry is not the entry but the ouster incident. It does not come within the prescription of the best evidence rule. 11.CONTRACT OF CARRIAGE; QUASI-DELICT; LIABILITY OF COMMON CARRIERS; CASE AT BAR. Neglect or malfeasance of the carrier's employees could give ground for an action for damages. Damages here are proper because the stress of respondent's action is placed upon his wrongful expulsion, which is a violation of a public duty by petitioner- aircarrier a case of quasi-delict. 12.ID.; ID.; ID.; AWARD OF MORAL DAMAGES FOR BREACH OF CONTRACT. Award of moral damages is proper, despite petitioner's argument that respondent's action is planted upon breach of contract, where the stress of the action is put on wrongful expulsion, the contract having been averred only to establish the relation between the parties. 13.ID.; ID.; ID.; EMPLOYER IS RESPONSIBLE FOR TORTIOUS ACTS OF HIS EMPLOYEE; CASE AT BAR. The responsibility of an employer for the tortious act of his employees is well settled in law. (Art. 2130, Civil Code). Petitioner-aircarrier must answer for the willful, malevolent act of its manager. 14.ID.; ID.; ID.; LIABILITY FOR EXEMPLARY DAMAGES; POWER OF COURTS TO GRANT; CASE AT BAR. The Civil Code gives the court ample power to grant exemplary damages, the only condition being that defendant should have "acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner." As the manner of ejectment of plaintiff from his first class seat fits into this legal precept, exemplary damages are well awarded, in addition to moral damages. 15.ID.; ID.; LIABILITY FOR ATTORNEY'S FEES; COURT DISCRETION WELL EXERCISED SHOULD NOT BE DISTURBED. The grant of exemplary damages justifies a similar judgment for attorney's fees. The court below felt that it is but just and equitable that attorney's fees be given and the Supreme Court does not intend to break faith with the tradition that discretion well-exercised as it is here should not be disturbed. 16.ID.; RIGHTS OF PASSENGERS. Passengers do not contract merely for transportation. They have a 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, any rude or discourteous conduct on the part of employees towards a passenger gives the latter an action for damages against the carrier. (4 R. C. L-1174-1175). 17.ID.; BREACH OF CONTRACT MAY BE A TORT. Although the relation of passenger and carrier is contractual both in origin and nature, nevertheless, the act that breaks the contract may also be a tort.

18.WORDS AND PHRASES; BAD FAITH DEFINED. "Bad faith", as understood in law, contemplates a state of mind affirmatively operating with furtive design or with some motive of self-interest or ill will or for ulterior purpose DECISION SANCHEZ, J :
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The Court of First Instance of Manila 1 sentenced petitioner to pay respondent Rafael Carrascoso P25,000.00 by way of moral damages; P10,000.00 as exemplary damages; P393.20 representing the difference in fare between first class and tourist class for the portion of the trip Bangkok-Rome, these various amounts with interest at the legal rate, from the date of the filing of the complaint until paid; plus P3,000.00 for attorneys' fees; and the costs of suit. On appeal, 2 the Court of Appeals slightly reduced the amount of refund on Carrascoso's plane ticket from P393.20 to P383.10, and voted to affirm the appealed decision "in all other respects", with costs against petitioner. The case is now before us for review on certiorari. The facts declared by the Court of Appeals as "fully supported by the evidence of record", are:
"Plaintiff, a civil engineer, was a member of a group of 48 Filipino pilgrims that left Manila for Lourdes on March 30, 1958. On March 28, 1958, the defendant, Air France, through its authorized agent, Philippine Air Lines, Inc., issued to plaintiff a 'first class' round trip airplane ticket from Manila to Rome. From Manila to Bangkok, plaintiff traveled in 'first class', but at Bangkok, the Manager of the defendant airline forced plaintiff to vacate the 'first class' seat that he was occupying because, in the words of the witness Ernesto G. Cuento, there was a 'white man', who, the Manager alleged, had a 'better right to the seat. When asked to vacate his 'first class' seat, the plaintiff, as was to be expected, refused, and told defendant's Manager that his seat would be taken over his dead body; a commotion ensued, and, according to said Ernesto G. Cuento, many of the Filipino passengers got nervous in the tourist class; when they found out that Mr. Carrascoso was having a hot discussion with the white man [manager], they came all across to Mr. Carrascoso and pacified Mr. Carrascoso to give his seat to the 'white man' (Transcript, p. 12, Hearing of May 26, 1959); and plaintiff reluctantly gave his 'first class' seat in the plane." 3

1.The thrust of the relief petitioner now seeks is that we review "all the findings" 4 of respondent Court of Appeals. Petitioner charges that respondent court failed to make

complete findings of fact on all the issues properly laid before it. We are asked to consider facts favorable to petitioner, and then, to overturn the appellate court's decision.

Coming into focus is the constitutional mandate that "No decision shall be rendered by any court of record without expressing therein clearly and distinctly the facts and the law on which it is based". 5 This is echoed in the statutory demand that a judgment determining the merits of the case shall state "clearly and distinctly the facts and the law on which it is based", 6 and that "Every decision of the Court of Appeals shall contain complete findings of fact on all issues properly raised before it." 7 A decision with absolutely nothing to support it is a nullity. It is open to direct attack. 8 The law, however, solely insists that a decision state the "essential ultimate facts" upon which the court's conclusion is drawn. 9 A court of justice is not hidebound to write in its decision every bit and piece of evidence 10 presented by one party and the other upon the issues raised. Neither is it to be burdened with the obligation "to specify in the sentence the facts" which a party "considered as proved". 11 This is but a part of the mental process from which the Court draws the essential ultimate facts. A decision is not to be so clogged with details such that prolixity, if not confusion, may result. So long as the decision of the Court of Appeals contains the necessary facts to warrant its conclusions, it is no error for said court to withhold therefrom "any specific finding of facts with respect to the evidence for the defense". Because, as this Court well observed, "There is no law that so requires". 12 Indeed, "the mere failure to specify (in the decision) the contentions of the appellant and the reasons for refusing to believe them is not sufficient to hold the same contrary to the requirements of the provisions of law and the Constitution". It is in this setting that in Manigque, it was held that the mere fact that the findings "were based entirely on the evidence for the prosecution without taking into consideration or even mentioning the appellant's side in the controversy as shown by his own testimony", would not vitiate the judgment. 13 If the court did not recite in the decision the testimony of each witness for, or each item of evidence presented by, the defeated party, it does not mean that the court has overlooked such testimony or such item of evidence. 14 At any rate, the legal presumptions are that official duty has been regularly performed, and that all the matters within an issue in a case were laid before the court and passed upon by it.15 Findings of fact, which the Court of Appeals is required to make, may be defined as "the written statement of the ultimate facts as found by the court . . . and essential to support the decision and judgment rendered thereon". 16 They consist of the court's "conclusions with respect to the determinative facts in issue" 17 A question of law, upon the other hand, has been declared as "one which does not call for an examination of the probative value of the evidence presented by the parties." 18 2.By statute, "only questions of law may be raised" in an appeal by certiorari from a judgment of the Court of Appeals 19 That judgment is conclusive as to the facts. It is not appropriately the business of this Court to alter the facts or to review the questions of fact. 20

With these guideposts, we now face the problem of whether the findings of fact of the Court of Appeals support its judgment. 3.Was Carrascoso entitled to the first class seat he claims? It is conceded in all quarters that on March 28, 1958 he paid to and received from petitioner a first class ticket. But petitioner asserts that said ticket did not represent the true and complete intent and agreement of the parties; that said respondent knew that he did not have confirmed reservations for first class on any specific flight, although he had tourist class protection; 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. These are matters which petitioner has thoroughly presented and discussed in its brief before the Court of Appeals under its third assignment of error, which reads: "The trial court erred in finding that plaintiff had confirmed reservations for, and a right to, first class seats on the 'definite' segments of his journey, particularly that from Saigon to Beirut." 21 And, the Court of Appeals disposed of this contention thus:
"Defendant seems to capitalize on the argument that the issuance of a first-class ticket was no guarantee that the passenger to whom the same had been issued, would be accommodated in the first-class compartment, for as in the case of plaintiff he had yet to make arrangements upon arrival at every station for the necessary first class reservation. We are not impressed by such a reasoning. We cannot understand how a reputable firm like defendant airplane company could have the indiscretion to give out ticket it never meant to honor at all. It received the corresponding amount in payment of first-class tickets end yet it allowed the passenger to be at the mercy of its employees. It is more in keeping with the ordinary course of business that the company should know whether or not the tickets it issues are to be honored or not." 22

Not that the Court of Appeals is alone. The trial court similarly disposed of petitioner's contention, thus:
"On the fact that plaintiff paid for, and was issued a 'First class ticket, there can be no question. Apart from his testimony, see plaintiffs Exhibits 'A', 'A-1' 'B', 'B-1', 'B-2', 'C' and 'C-1', and defendant's own witness, Rafael Altonaga, confirmed plaintiff's testimony and testified as follows: Q.In these tickets there are marks 'O.K.' From what you know, what does this O.K. mean? A.That the space is confirmed. Q.Confirmed for first class? A.Yes, 'first class'. (Transcript, p. 169)

xxx xxx xxx "Defendant tried to prove by the testimony of its witnesses Luis Zaldariaga and Rafael Altonaga that although plaintiff paid for, and was issued a 'first class' airplane ticket, the ticket was subject to confirmation in Hongkong. The court cannot give credit to the testimony of said witnesses. Oral evidence cannot prevail over written evidence, and plaintiff's Exhibits 'A', 'A1', 'B', 'B-1', 'C' and 'C- 1' belie the testimony of said witnesses, and clearly show that the plaintiff was issued, and paid for, a first class ticket without any reservation whatever. Furthermore, as hereinabove shown, defendant's own witness Rafael Altonaga testified that the reservation for a 'first class' accommodation for the plaintiff was confirmed. The court cannot believe that after such confirmation ,defendant had a verbal understanding with plaintiff that the 'first class' ticket issued to him by defendant would be subject to confirmation in Hongkong." 23

We have heretofore adverted to the fact that except for a slight difference of a few pesos in the amount refunded on Carrascoso's ticket, the decision of the Court of First Instance was affirmed by the Court of Appeals in all other respects. We hold the view that such a judgment of affirmance has merged the judgment of the lower court. 24 Implicit in that affirmance is a determination by the Court of Appeals that the proceeding in the Court of First Instance was free from prejudicial error and that 'all questions raised by the assignments of error and all questions that might have been so raised are to be regarded as finally adjudicated against the appellant". So also, the judgment affirmed "must be regarded as free from all error" 25 We reached this policy construction because nothing in the decision of the Court of Appeals on this point would suggest that its findings of fact are in any way at war with those of the trial court. Nor was said affirmance by the Court of Appeals upon a ground or grounds different from those which were made the basis of the conclusions of the trial court. 26 If, as petitioner underscores, a first-class-ticket holder is not entitled to a first class seat, notwithstanding the fact that seat availability in specific flights is therein confirmed, then an air passenger is placed in the hollow of the hands of an airline. What security then can a passenger have? 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. What if the passenger had a schedule to fulfill? We have long learned that, as a rule, a written document speaks a uniform language; that spoken word could be notoriously unreliable. If only to achieve stability in the relations between passenger and air carrier, adherence to the ticket so issued is desirable. Such is the case here. The lower courts refused to believe the oral evidence intended to defeat the covenants in the ticket. The foregoing are the considerations which point to the conclusion that there are facts upon which the Court of Appeals predicated the finding that respondentCarrascoso had a first class ticket and was entitled to a first class seat at Bangkok, which is a stopover in the Saigon to Beirut leg of the flight, 27 We perceive no "welter of distortions by the Court of Appeals of petitioner's statement of its position", as charged by petitioner. 28 Nor do we subscribe to petitioners accusation that respondent Carrascoso "surreptitiously took a first class seat to provoke an issue". 29 And this because, as petitioner states, Carrascoso went to see the

Manager at his office in Bangkok "to confirm my seat and because from Saigon I was told again to see the Manager. 30 Why, then, was he allowed to take a first class seat in the plane at Bangkok, if he had no seat? Or, if another had a better right to the seat? 4.Petitioner assails respondent court's award of moral damages. Petitioner's trenchant claim is that Carrascoso's action is planted upon breach of contract; that to authorize an award for moral damages there must be an averment of fraud or bad faith; 31 and that the decision of the Court of Appeals fails to make a finding of bad faith. The pivotal allegations in the complaint bearing on this issue are:

"3.That . . . plaintiff entered into a contract of air carriage with the Philippine Air Lines for a valuable consideration, the latter acting as general agents for and in behalf of the defendant, under which aid contract, plaintiff was entitled to, as defendant agreed to furnish plaintiff, First Class passage on defendant's plane during the entire duration of plaintiff's tour of Europe with Hongkong as starting point up to and until plaintiff's return trip to Manila, . . . 4.That during the first two legs of the trip from Hongkong to Saigon and from Saigon to Bangkok, defendant furnished to the plaintiff First Class accommodation but only after protestations, arguments and/or insistence were made by the plaintiff with defendant's employees. 5.That finally, defendant failed to provide First Class passage, but instead furnished plaintiff only Tourist Class accommodations from Bangkok to Teheran and/or Casablanca, . . . the plaintiff has been compelled by defendant's employees to leave the First Class accommodation berths at Bangkok after he was already seated. 6.That consequently, the plaintiff, desiring no repetition of the inconvenience and embarrassments brought by defendant's breach of contract was forced to take a Pan American World Airways plane on his return trip from Madrid to Manila. 32 xxx xxx xxx 2.That likewise, as a result of defendant's failure to furnish First Class accommodations aforesaid, plaintiff suffered inconveniences, embarrassments, and humiliations, thereby causing plaintiff mental anguish, serious anxiety, wounded feelings, social humiliation, and the like injury, resulting in moral damages in the amount of P30,000.00." 33 xxx xxx xxx

The foregoing, in our opinion, substantially aver: First, That there was a contract to furnish plaintiff a first class passage covering, amongst others, the Bangkok-Teheran leg; Second, That said contract was breached when petitioner failed to furnish first class transportation at Bangkok; and Third, That there was bad faith when petitioner's employee compelled Carrascoso to leave his first class accommodation berth "after he was already

seated" and to take a seat in the tourist class, by reason of which he suffered inconvenience,
embarrassments and humiliations, thereby causing him mental anguish, serious anxiety, wounded feelings and social humiliation, resulting in moral damages. It is true that there is no specific mention of the term bad faith in the complaint. But, the inference of bad faith is there; it may be drawn from the facts and circumstances set forth therein. 34 The contract was averred to establish the relation between the parties. But the stress of the action is put on wrongful expulsion.

Quite apart from the foregoing is that (a) right at the start of the trial, respondent's counsel placed petitioner on guard on what Carrascoso intended to prove: That while sitting in the plane in Bangkok, Carrascoso was ousted by petitioner's manager who gave his seat to a white man; 35 and (b) evidence of bad faith in the fulfillment of the contract was presented without objection on the part of the petitioner. It is, therefore, unnecessary to inquire as to whether or not there is sufficient averment in the complaint to justify an award for moral damages. Deficiency in the complaint, if any, was cured by the evidence. An amendment thereof to conform to the evidence is not even required. 36 On the question of bad faith, the Court of Appeals declared:
"That the plaintiff was forced out of his seat in the first class compartment of the plane belonging to the defendant Air France while at Bangkok, and was transferred to the tourist class not only without his consent but against his will, has been sufficiently established by plaintiff in his testimony before the court, corroborated by the corresponding entry made by the purser of the plane in his notebook which notation reads as follows: 'First-class passenger was forced to go to the tourist class against his will and that the captain refused to intervene', and by the testimony of an eye-witness Ernesto G. Cuento, who was a copassenger. The captain of the plane who was asked by the manager of defendant company at Bangkok to intervene even refused to do so. It is noteworthy that no one on behalf of defendant ever contradicted or denied this evidence for the plaintiff. It could have been easy for defendant to present its manager at Bangkok to testify at the trial of the case, or yet to secure his deposition; but defendant did neither. 37

The Court of Appeals further stated


"Neither is there evidence as to whether or ,not a prior reservation was made by the white man. Hence, if the employees of the defendant at Bangkok sold a first-class ticket to him when all the seats had already been taken, surely the plaintiff should not have been picked out as the one to suffer the consequences and to be subjected to the humiliation and indignity of being ejected from his seat in the presence of others. Instead of explaining to the white man the improvidence committed by defendant's employees, the manager adopted the more drastic step of ousting the plaintiff who was then safely ensconced in his rightful seat. We are strengthened in our belief that this probably was what happened there, by the testimony of defendant's witness Rafael Altonaga who, when asked to explain the meaning of the letters 'O.K., appearing on the tickets of plaintiff, said that 'the space is confirmed' for first class.

Likewise, Zenaida Faustino, another witness for defendant, who was the chief of the Reservation Office of defendant, testified as follows: 'Q.How does the person in the ticket-issuing office know what reservation the passenger has arranged with you? A.They call us up by phone and ask for the confirmation.' (t.s.n., p. 247, June 19, 1959)

In this connection, we quote with approval what the trial Judge has said on this point:
'Why did the, using the words of witness Ernesto G. Cuento, 'white man' have a 'better right' to the seat occupied by Mr. Carrascoso? The record is silent. The defendant airline did not prove 'any better', nay, any right on the part of the 'white man' to the 'First class' seat that the plaintiff was occupying and for which he paid and was issued a corresponding 'first class' ticket. 'If there was a justified reason for the action of the defendant's Manager in Bangkok, the defendant could have easily proven it by having taken the testimony of the said Manager by deposition, but defendant did not do so; the presumption is that evidence willfully suppressed would be adverse if produced [Sec. 69, par. (e) Rules of Court]; and, under the circumstances, the Court is constrained to find, as it does find, that the Manager of the defendant airline in Bangkok not merely asked but threatened the plaintiff to throw him out of the plane if he did not give up his 'first class' seat because the said Manager wanted to accommodate using the words of the witness Ernesto G. Cuento, the 'white man'." 38

It is really correct to say that the Court of Appeals in the quoted portion first transcribed did not use the term "bad faith". But can it be doubted that the recital of facts therein points to bad faith? The manager not only prevented Carrascoso 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, this is bad faith. Unless, of course, bad faith has assumed a meaning different from what is understood in law. For, "bad faith" contemplates a "state of mind affirmatively operating with furtive design or with some motive of self-interest or ill will or for ulterior purposes." 39 And if the foregoing were not yet sufficient, there is the express finding of bad faith in the judgment of the Court of First Instance, thus:
"The evidence shows that defendant violated its contract of transportation with plaintiff in bad faith, with the aggravating circumstances that defendant's Manager in Bangkok went to the extent of threatening the plaintiff in the presence of many passengers to have him thrown out of the airplane to give the 'first class' seat that he was occupying to, again using the words of witness Ernesto G. Cuento, a 'white man' whom he (defendant's Manager) wished to accommodate, and the defendant has not proven that this 'white man' had any 'better right' to occupy the 'first class' seat that

the plaintiff was occupying, duly paid for, and for which the corresponding 'first class' ticket was issued by the defendant to him." 40

5.The responsibility of an employer for the tortuous act of its employees-need not be essayed. It is well settled in law. 41 For the willful malevolent act of petitioner's manager, petitioner's his employer, must answer. Article 21 of the Civil Code says:
"Art. 21.Any person who willfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the damage."

In parallel circumstances, we applied the foregoing legal precept; and, we held that upon the provisions of Article 2219 (10), Civil Code, moral damages are recoverable. 42 6.A contract to transport passengers is quite different in kind and degree from any other contractual relation. 43 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 aircarriage, 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. Passengers do not contract merely for transportation. They have a light 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 rude or discourteous conduct on the part of employees towards a passenger gives the latter an action for damages against the carrier. 44

Thus, "Where a steamship company 45 had accepted a passenger's check, it was a breach of contract and a tort, giving a right of action for its agent in the presence of third persons to falsely notify her that the check was worthless and demand payment under threat of ejection, though the language used was not insulting and she was not ejected. 46 And this, because, altho 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". 47 And in another case, "Where a passenger on a railroad train, when the conductor came to collect his fare, tendered him the cash fare to a point where the train was scheduled not to stop, and told him that as soon as the train reached such point he would pay the cash fare from that point to destination, there was nothing in the conduct of the passenger which justified the conductor in using insulting language to him, as by calling him a lunatic," 48 and the Supreme Court of South Carolina there held the carrier liable for the mental suffering of said passenger. Petitioner's contract with Carrascoso is one attended with public duty. The stress of Carrascoso's action as we have said, is placed upon his wrongful expulsion. This is a violation of public duty by the petitioner-air carrier a case of quasi-delict. Damages are proper.

7.Petitioner draws our attention to respondent Carrascoso's testimony, thus


"Q.You mentioned about an attendant. Who is that attendant and purser? A.When we left already that was already in the trip I could not help it. So one of the flight attendants approached me and requested from me my ticket and I said, What for? and she said, 'We will note that you were transferred to the tourist class'. I said, 'Nothing of that kind. That is tantamount to accepting my transfer.' And I also said, You are not going to note anything there because I am protesting to this transfer. Q.Was she able to note it? A.No, because I did not give my ticket. Q.About that purser? A.Well, the seats there are so close that you feel uncomfortable and you don't have enough leg room, I stood up and I went to the pantry that was next to me and the purser was there. He told me, 'I have recorded the incident in my notebook.' He read it and translated it to me because it was recorded in French 'First class passenger was forced to go to the tourist class against his will, and that the captain refused to intervene.' MR. VALTE I move to strike out the last part of the testimony of the witness because the best evidence would be the notes. Your Honor. COURT I will allow that as part of his testimony." 49

Petitioner charges that the finding of the Court of Appeals that the purser made an entry in his notebooks reading "First class passenger was forced to go to the tourist class against his will, and that the captain refused to intervene" is predicated upon evidence [Carrascoso's testimony above] which is incompetent. We do not think so. The subject of inquiry is not the entry, but the ouster incident. Testimony of the entry does not come within the proscription of the best evidence rule. Such testimony is admissible. 49 Besides, from a reading of the transcript just quoted, when the dialogue happened, the impact of the startling occurrence was still fresh and continued to be felt. The excitement had not as yet died down. Statements then, in this environment, are admissible as part of the res gestae. 50 For, they grow "out of the nervous excitement and mental and physical condition of the declarant". 51 The utterance of the purser regarding his entry in the notebook was spontaneous, and related to the circumstances of the ouster incident. Its trustworthiness has

been guaranteed. 52 It thus escapes the operation of the hearsay rule. It forms part of the res gestae. At all events, the entry was made outside the Philippines. And, by an employee of petitioner. It would have been an easy matter for petitioner to have contradictedCarrascoso's testimony. If it were really true that no such entry was made, the deposition of the purser could have cleared up the matter. We, therefore, hold that the transcribed testimony of Carrascoso is admissible in evidence. 8.Exemplary damages are well awarded. The Civil Code gives the Court ample power to grant exemplary damages in contracts and quasi-contracts. The only condition is that defendant should have "acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner". 53 The manner of ejectment of respondentCarrascoso from his first class seat fits into this legal precept. And this, in addition to moral damages. 54 9.The right to attorneys' fees is fully established. The grant of exemplary damages justifies a similar judgment for attorneys' fees. The least that can be said is that the courts below felt that it is but just and equitable that attorneys' fees be given. 55 We do not intend to break faith with the tradition that discretion well exercised as it was here should not be disturbed. 10.Questioned as excessive are the amounts decreed by both the trial court and the Court of Appeals, thus: P25,000.00 as moral damages; P10,000.00, by way of exemplary damages, and P3,000.00 as attorney's fees. The task of fixing these amounts is primarily with the trialcourt. 56 The Court of Appeals did not interfere with the same. The dictates of good sense suggest that we give our imprimatur thereto. Because, the facts and circumstances point to the reasonableness thereof.57 On balance, we say that the judgment of the Court of Appeals does not suffer from reversible error. We accordingly vote to affirm the same. Costs against petitioner. So ordered. NORTHWEST AIRLINES, INC., petitioner, vs. NICOLAS L. CUENCA and COURT OF APPEALS (SPECIAL SIXTH DIVISION), respondents.

Ross, Selph & Carrascoso for petitioner. Bengzon, Villegas & Zarraga for respondents.
SYLLABUS 1.AIR CARRIERS; LIABILITY UNDER THE WARSAW CONVENTION OF 1929 AND FOR OTHER BREACHES OF CONTRACT. Articles 17, 18 and 19 of the Warsaw Convention of 1929 merely declare the airlines liable for damage in the cases enumerated therein, if the

conditions specified are present. Neither the provisions of said articles nor others regulate or exclude liability for other breaches of contract by the air carriers. 2.ID.; ID.; ID.; LIABILITY FOR NOMINAL AND EXEMPLARY DAMAGES; CASE AT BAR. Respondent boarded petitioner's 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 the tourist class. Respondent protested, revealing that he was traveling in his official capacity as delegate of the Republic of the Philippines to a conference in Tokyo. In order to reach the conference on time, respondent obeyed. Held: Having been given first class accommodation as he took petitioner's plane in Manila, respondent was entitled to believe that this was a confirmation of his first class reservation and that he would keep the same until his ultimate destination, Tokyo. Since the offense had been committed with full knowledge of the fact that respondent was an official representative of the Republic of the Philippines, the sum of P20,000.00 awarded as damages may well be considered as merely nominal. At any rate, considering that petitioners agent had acted in a wanton, reckless and oppressive manner, said award may, also, be considered as one for exemplary damages. DECISION CONCEPCION, J :
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This is an action for damages for alleged breach of contract. After appropriate proceedings the Court of First Instance of Manila, in which the case was originally filed, rendered judgment sentencing defendant Northwest Airlines, Inc., hereinafter referred to as petitioner to pay to plaintiff Cuenca hereinafter referred to as respondent "the sum of P20,000 as moral damages, together with the sum of P5,000 as exemplary damages, with legal interest thereon from the date of the filing of the complaint" December 12, 1959 "until fully paid, plus the further sum of P2,000 as attorney's fees and expenses of litigation". On appeal taken by petitioner, said decision was affirmed by the Court of Appeals, except as to the P50,000.00 exemplary damages, which was eliminated, and the P20,000.00 award for moral damages, which was converted into nominal damages. The case is now before us on petition for review by certiorari filed by petitioner, upon the ground that the lower court has erred: (1) in holding that the Warsaw Convention of October 12, 1929, relative to transportation by air is not in force in the Philippines; (2) in not holding that respondent has no cause of action; and (3) in awarding P20,000 as nominal damages. We deem it unnecessary to pass upon the first assignment of error because the same is the basis of the second assignment of error, and the latter is devoid of merit, even if we assumed the former to be well taken. Indeed, the second assignment of error is predicated upon Articles 17, 18 and 19 of said Convention, reading:
"ART. 17.The carrier shall be liable for damage sustained in the event of the death or wounding of a passenger or any other bodily injury suffered by a passenger if the

accident which caused the damage so sustained took place on board the aircraft or in the course of any of the operations of embarking or disembarking. "ART. 18.(1)The carrier shall be liable for damage sustained in the event of the destruction or loss of, or of damage to, any checked baggage, or any goods, if the occurrence which caused the damage so sustained took place during the transportation by air. "(2)The transportation by air within the meaning of the preceding paragraph shall comprise the period during which the baggage or goods are in charge of the carrier, whether in an airport or on board an aircraft, or, in the case of a landing outside an airport, in any place whatsoever. "(3)The period of the transportation by air shall not extend to any transportation by land, by sea, or by river performed outside an airport. If, however, such transportation takes place in the performance of a contract for transportation by air, for the purpose of loading, delivery, or transshipment, any damage is presumed, subject to proof to the contrary, to have been the result of an event which took place during the transportation by air. "ART. 19.The carrier shall be liable for damage occasioned by delay in the transportation by air of passengers, baggage, or goods."

Petitioner argues that pursuant to these provisions, an air "carrier is liable only" in the event of death of a passenger or injury suffered by him, or of destruction or loss of, or damage to any checked baggage or any goods, or of delay in the transportation by air of passengers, baggage or goods. This pretense is not borne out by the language of said Articles. The same merely declare the carrier liable for damages in the enumerated cases, if the conditions therein specified are present. Neither said provisions nor others in the aforementioned Convention regulate or exclude liability for other breaches of contract by carrier. Under petitioner's theory, an air carrier would be exempt from any liability for damages in the event of its absolute refusal, in bad faith, to comply with a contract of carriage, which is absurd. The third assignment of error is based upon Medina vs. Cresencia (52 Off. Gaz. 4606), and Quijano vs. Philippine Air Lines (CA-G.R. No. 21804). Neither case is, however, in point, aside from the fact that the latter is not controlling upon us. In the first case, this Court eliminated a P10,000 award for nominal damages, because the aggrieved party had already been awarded P6,000 as compensatory damages, P30,000 as moral damages and P10,000 as exemplary damages, and "nominal damages cannot co-exist with compensatory damages". In the case at bar, the Court of Appeals has adjudicated no such compensatory, moral and exemplary damages to respondent herein. Moreover, there are special reasons why the P20,000.00 award in favor of respondent herein is justified, even if said award were characterized as nominal damages. When his contract of carriage was violated by the petitioner, respondent held the office of Commissioner of Public Highways of the Republic of the Philippines. Having boarded petitioner's plane in Manila with a first class ticket to Tokyo, he was, upon arrival at Okinawa, transferred to the tourist class compartment. Although he revealed that he was traveling in his official capacity as official

delegate of the Republic to a conference in Tokyo, an agent of petitioner rudely compelled him, in the presence of other passengers, to move, over his objection, to the tourist class, under threat of otherwise leaving him in Okinawa. In order to reach the conference on time, respondent had no choice but to obey. It is true that said ticket was marked "W/L", but respondent's attention was not called thereto. Much less was he advised that "W/L" meant "wait listed". Upon the other hand, having paid the first class fare in full and having been given first class accommodation as he took petitioner's plane in Manila, respondent was entitled to believe that this was a confirmation of his first class reservation and that he would keep the same until his ultimate destination, Tokyo. Then, too, petitioner has not tried to explain or even alleged that the person to whom respondent's first class seat was given had a better right thereto. In other words, since the offense had been committed with full knowledge of the fact that respondent was an official representative of the Republic of the Philippines, the sum of P20,000 awarded as damages may well be considered as merely nominal. At any rate, considering that petitioner's agent had acted in a wanton, reckless and oppressive manner, said award may, also, be considered as one for exemplary damages. WHEREFORE, the decision appealed from is hereby affirmed, with costs against the petitioner. It is so ordered. RAFAEL ZULUETA, ET AL., plaintiffs-appellee, vs. PAN AMERICAN WORLD AIRWAYS INC., defendant-appellant.

Jose W. Diokno & Associates for plaintiffs-appellees. Ross, Salcedo, Del Rosario, Bito & Misa for defendants appellants.
SYLLABUS 1.REMEDIAL LAW; COURTS OF FIRST INSTANCE; JURISDICTION; ACTIONS SUBJECT OF WHICH IS NOT CAPABLE OF PECUNIARY ESTIMATION IS WITHIN THE JURISDICTION OF COURTS OF FIRST INSTANCE. Where the complaint for damages, among others, includes a claim for moral damages, the court of first instance has jurisdiction over the complaint. A claim for moral damages is one not susceptible of pecuniary estimation. 2.ID., ID.; ID.; ACTION WHERE COUNTERCLAIM IS P12,000. Where defendants had set up a counterclaim in the aggregate sum of P12,000, the action is within the original jurisdiction of the court of first instance, thereby curing the alleged lack of jurisdiction over the complaint itself. 3.ID.; ID.; ID.; DEFENDANT ESTOPPED FROM IMPUGNING JURISDICTION OF COURT IN INSTANT CASE. Having not only failed to question the jurisdiction of the trial court either in that court or in this Court, before the rendition of the latter's decision, and even subsequently thereto, by filing the present motion for reconsideration and seeking the reliefs

therein prayed for but, also, urged both courts to exercise jurisdiction over the merits of the case, defendant is now estopped from impugning said jurisdiction. 4.CIVIL LAW; DAMAGES; EXEMPLARY DAMAGES, AWARD THEREOF IN QUASI-DELICTS JUSTIFIED WHERE ACT WAS PERFORMED DELIBERATELY AND IN BAD FAITH. It is urged by the defendant that exemplary damages are not recoverable in quasi-delicts, pursuant to Art. 2231 of our Civil Code, except when the defendant has acted with "gross negligence," and that there is no specific finding that it had so acted. It is obvious, however, that in offloading plaintiff at Wake Island, for having dared to retort to defendant's agent in a tone and manner matching, if not befitting his intemperate language and arrogant attitude, defendant's agents had acted with malice aforethought and evident bad faith, If "gross negligence" warrants the award of exemplary damages, with more reason is its imposition justified when the act performed is deliberate, malicious and tainted with bad faith. 5.ID.; ID.; ID.; SUBSIDIARY LIABILITY THEREFOR OF PRINCIPAL FOR ACTS OF AGENTS; CASES OF ROTEA v. HALILI and PALISOC v. BRILLANTES, NOT IN POINT. Defendant cites Rotea vs. Halili, (109 Phil. 495) in support of the proposition that a principal is not liable for exemplary damages owing to acts of his agent unless the former has participated in said acts or ratified the same. Said case involved, however, the subsidiary civil liability of an employer arising from criminal acts of his employee, and "exemplary damages . . . may be imposed when the crime was committed with one or more aggravating circumstances." The Rotea case is not in point, for the case at bar involves a breach of contract, as well as a quasi-delict. Neither may the case of Palisoc vs. Brillantes (L-29025, Oct., 4, 1971), invoked by the defendant, be equated with the case at bar. There, in an action for damages, the school officials were held jointly and severally liable with the student who caused the death of another for failure of the school to provide "adequate supervision over the activities of the students in the school premises," to protect them "from harm, whether at the hands of fellow students or other parties." Obviously, the amount of damages awarded in the Palisoc case is not and cannot serve as the measure of the damages recoverable in the present case, the latter having been caused directly and intentionally by an employee or agent of the defendant, where as the student who killed the young Palisoc was in no wise an agent of the school. 6.ID; ID; AWARD OF ATTORNEY'S FEES AND OF EXEMPLARY DAMAGES, EQUITABLE IN INSTANT CASE. Article 2208 of our Civil Code expressly authorizes the award of attorney's fees "when exemplary damages are awarded," as they are in this case as well as "in any other case where the court deems it just and equitable that attorney's fees . . . be recovered," and We so deem it just and equitable in the present case, considering the "exceptional" circumstances obtaining therein, particularly the bad faith with which defendant's agent had acted, the place where and the conditions under which the plaintiffappellee was left at Wake Island, the absolute refusal of defendant's manager in Manila to take any step whatsoever to alleviate Mr. Zulueta's predicament at Wake and have him brought to Manila which, under their contract of carriage, was defendant's obligation to discharge with "extraordinary" or "utmost" diligence and, the "racial" factor that had, likewise, tainted the decision of defendant's agent, Capt. Zentner, to off-load him at Wake Island.

7.ID.; ID.; AWARD THEREOF IN INSTANT CASE, PART OF CONJUGAL PARTNERSHIP PROPERTY. Where the damages in question have arisen from, inter alia, a breach of plaintiffs' (husband's and wife's) contract of carriage with the defendant, for which plaintiffs paid their fare with funds presumably belonging to the conjugal partnership, said damages form part of the conjugal partnership property under paragraph (l) of Art. 153, the right thereto having been "acquired by onerous title during the marriage . . . ." 8.ID.; ID.; ID.; EFFECT OF COMPROMISE AGREEMENT ENTERED BY WIFE WITH DEFENDANT ON CONJUGAL PARTNERSHIP. The payment to Mrs. Zuluetaby defendant PANAM after her having settled her differences with the latter is effective, insofar as it is deductible from the award, and because it is due (or part of the amount due) from the defendant, with or without its compromise agreement with Mrs. Zulueta. What is ineffective is the compromise agreement, insofar as the conjugal partnership is concerned. Art. 113 of the Civil Code relied upon by the defense, refers to suits in which the wife is the principal or real party in interest, not to the case at bar, "in which the husband is the main party-in-interest, both as the person principally aggrieved and as administrator of the conjugal partnership . . . having acted in this capacity in entering into the contract of carriage with PANAM and paid the amount due to the latter, under the contract, with funds of the conjugal partnership," to which the amounts recoverable for breach of said contract, accordingly, belong. BARREDO, J.; concurring and dissenting opinion. 1.REMEDIAL LAW; COURTS; JURISDICTION; COURT OF FIRST INSTANCE HAS JURISDICTION OVER PRESENT CASE. In the present case, it is indisputable that the damages claimed by appellees are susceptible of pecuniary estimation within the contemplation of Sec. 44(a) of the Judiciary Act, and since they amount to more than P10,000.00, the trial court had jurisdiction over the same. 2.ID.; ID.; ID.; RULE WHERE THERE IS COMPULSORY COUNTER-CLAIM. It is the nature or amount of the subject of the plaintiff's action that is decisive as to which court is to exercise jurisdiction over his case, and if the defendant has any counterclaim, the latter, to be available within the same action, must be within the jurisdiction of the court in which plaintiff has properly filed his case, unless such counterclaim is compulsory, in which case, the same being essentially auxiliary or ancillary to the main controversy, considering that it arises out of or is necessarily connected with the transaction or occurrence that is the subject matter of the complaint, it is considered as absorbed, for jurisdictional purposes, by the latter, albeit this exception does not obtain in inferior courts in view of the express provision of Section 5 of Rule 5 to the effect that "a counterclaim beyond the court's jurisdiction may only be pleaded by way of defense." 3.ID.; ID.; ID.; RULE WHERE THERE IS PERMISSIVE COUNTERCLAIM. As to permissive counterclaims, which are considered as separate actions in themselves, it is obvious that they must necessarily fall within the jurisdiction of the court in which the complaint has been filed under the express provision of Section 8 of Rule 6 of the Rules of Court.

4.ID.; ID.; ID.; LACHES OR ESTOPPEL NOT APPLICABLE TO JURISDICTION OVER THE SUBJECT MATTER. Laches or estoppel is not juridically possible or proper in regard to the jurisdiction over the subject matter, notwithstanding the long list of cases cited by the majority upholding the erroneously various shades of alleged estoppel and laches that supposedly had the effect of validating, very often for reasons of convenience and practicality, actuations and actions of courts which otherwise, by clear mandate of the statute which this Court has held to be informed in public policy, do not come within the jurisdiction conferred upon them thereby. 5.CIVIL LAW; CONTRACT OF CARRIAGE; BREACH OF SUCH CONTRACT; AWARD OF DAMAGES THEREFOR; AWARD IN INSTANT CASE DID NOT PROCEED FROM BAD FAITH OR MALICE. If it were true that the PANAM agents were motivated by pure vindictiveness rather than by the desire to comply with the demands of the public interest involved in the safety of the plane and of all on board thereof, they would not have offered to-allow him to reboard under any circumstance. The fact that they implied they would consider the incident about the "bomb scare" terminated if Mr. Zulueta would only permit examination of his bags, just so there would be no reason for anyone to say that the captain was so imprudent as to desist from taking safety measure only because Mr. Zulueta was tenaciously standing his ground, simply goes to show that the PANAM agents had no malice or any retaliatory intent in their minds. Accordingly I hold that appellant has to answer for the damages for breach of its contract of carriage with Mr. Zulueta, albeit I cannot condemn the captain's decision as proceeding from bad faith, vindictiveness, malice aforethought and deliberate ill-will, contrary to the finds of the majority.

6.ID.; ID.; ID.; ID.; ID.; REQUEST TO OPEN BAGS WAS NOT UNJUSTIFIED OR IN BAD FAITH It is the inherent duty of the captain of an airplane to screen every piece of baggage or cargo with a view to avoiding the carrying of any which might endanger the safety of the plane and its passengers. Correspondingly, it must follow that it is clearly within the ambit of his unquestionable lawful authority to refuse to load any baggage or cargo not proven to his satisfaction to be harmless. The net result of the foregoing consideration is that the whole heated altercation about the opening of the bags and the mutually unyielding attitude of both parties resulted from nothing more than their precipitate misconception of each other's motivation. Verily, I cannot see any bad faith that can be attributed to any of those involved in such an unfortunate turn of events. 7.ID.; ID.; ID.; ID.; ID.; ID.; NO CONSTITUTIONAL RIGHT WAS VIOLATED. I am not prepared to hold that the requirement to open his bags could be resisted by an invocation of constitutional rights, because I am more disposed to consider that it is a matter of public policy, more paramount than an individual's right to privacy, that the safety of air travel is maintained free from concessions and compromises in consideration of the variant personal status of the persons concerned. My considered view is that reliance should rather be exclusively on the sound judgment of the captain who after all is the one most responsible for such safety.

8.ID.; ID.; ID.; ID.; INSTANT CASE. For the error of judgment of Captain Zentner resulting in the off-loading of Mr. Zulueta, appellant is liable to him for breach of the contract of carriage, it being indisputable that it failed in its obligation to take him to his destination stipulated in said contract. 9.ID., ID.; ID.; ID.; AWARD THEREFOR SHOULD BE LIMITED TO ACTUAL DAMAGES. There being no clear showing that appellant's agents acted in bad faith in off-loading Mr. Zulueta, the damages for which appellant should answer must be limited to actual ones, and cannot include moral damages. 10.ID.; ID.; ID.; ID.; LIABILITY FOR INSULTING LANGUAGE PREDICATED ON QUASIDELICT. Although it has been established that appellant's agents employed insulting language in dealing with the appellees, the liability therefor cannot be predicated on contractual breach but on quasi-delict under Article 2176, read together with Articles 2180 and 2219(7) of the Civil Code of the Philippines. 11.ID.; ID.; ID.; ID.; TORT RESULTING FROM VERBAL OFFENSE IN INSTANT CASE IS SEPARATE FROM BREACH OF CARRIAGE CONTRACT. In the case at bar, the off-loading of Mr. Zulueta is in every sense separable from the abusive or insulting language attributed to appellant's employees while they were demanding that Mr. Zulueta open his bags, and consequently, the tort resulting from such verbal offense is juridically independent of the contractual breach of not taking him to his destination and it may, therefore, be considered as a distinct cause of action and ground for relief from the ones for contractual breach. 12.ID.; ID.; ID.; ID.; ID.; EXPRESSIONS UTTERED BY PANAM AGENTS AGAINST PLAINTIFFS ARE NOT ACTIONABLE. The choice of expressions by appellant' s agents was not excellent, but viewed objectively in the context of the environmental circumstances prevailing, I refuse to believe they are actionable. "What in (the) hell do you think you are?" is not an uncommon expression of molestation and annoyance. It is hardly, if ever, meant or considered as an offensive remark. As movant pointedly posits, it was once held by this Court that the utterance of the words "Agustin, putang ina mo" ("Your mother is a whore"), considered in the light of the circumstances under which it was made, is not defamatory. And to make capital of them for the purpose of recovering supposed damages to feeling and reputation is, in my considered view, to expand the concept of damages in law beyond the natural bounds of human nature and experience, which I cannot conceive could ever be juridically assumed. 13.ID.; ID.; ID.; ID.; AWARD IS NOT CONJUGAL IN INSTANT CASE. I also disagree with the majority's pose that all the damages due appellees are conjugal property of the Zulueta spouses for two basic juristic reasons: (a) said damages are merely reparative and cannot in any sense be gains, hence inapposite to the essentially characteristic concept of the conjugal partnership of gains, and (b) the legal effects of the tort in this case are purely personal to each of appellees and consequently belong to their respective patrimonies, exclusive of the patrimony of the conjugal partnership; and also (c) because, in effect, the majority's position disregards the separate and individual interest of Miss Zulueta involved herein, which cannot in any sense be deemed absorbed in or merged with the interest of her

parents. While the three appellees do belong to a single family, it is undeniable that the honor and prestige of each of them do not belong to all of them in common. Besides, it is only consistent with fundamental principles that the damages to be awarded to each of the appellees should be individualized in accordance not only with their respective personal circumstances but also with the varying factors that affect the measure of the damages to which each of them is entitled. 14.ID.; ID.; ID.; ID.; AWARD FOR DAMAGES ARE NOT EARNINGS OF THE CONJUGAL PARTNERSHIP. Since the actual and moral damages which may be awarded to the plaintiffs merely replace whatever material or sentimental losses or injuries they have suffered, the same cannot be wholly considered as either the earnings or profits which are categorized in the law on conjugal partnership as gains or "ganancias." The only portions of the said damages which may be deemed as pertaining to the category of earnings or profits of the spouses are those that correspond to their unearned income and hospital expenses (Civil Code of the Philippines by Senator Tolentino, Vol. I, pp. 361-362, Bismorte vs. Aldecoa, 17 Phil. 480; Lilius vs. Manila Railroad, 62 Phil 56). 15.ID.; ID.; ID.; ID.; AWARD FOR DAMAGES TO BODY AND HONOR OF THE SPOUSE IS SEPARATE PROPERTY. In this jurisdiction, it is settled that the body of each spouse is his or her own patrimony, and necessarily, compensation for any injury suffered by it in private properly of the injured spouse; their honor cannot be treated differently. From another point of view, since under Article 163, "the fines and pecuniary indemnities imposed upon" the spouses "shall not be charged to the conjugal partnership," it stands to reason that conversely and upon the principle that these matters are purely personal, the indemnities to them for personal injury do not accrue to the partnership. 16.ID.; ID.; ID.; ID.; ARTICLE 153(1) OF THE CIVIL CODE IS NOT APPLICABLE IN INSTANT CASE. Neither the letter of Article 153(1) nor the spirit behind it can be properly invoked in this case. The theory of the majority seems to be that inasmuch ac conjugal fund was used in purchasing his ticket, all rights accruing from the ensuing contract of carriage are necessarily conjugal. I do not see it that way. It must be considered that even under the position taken by the majority to the effect that the liability of appellant arises from both contract and tort at the same time, the inescapable implication is that there is a tort aspect therein, On the other hand, the effects of that tort are purely personal to each of the appellees. 17.ID.; ID.; ID.; ID.; SAID AWARD SHOULD NOT BE FOR FAMILY. The view being sustained is that appellant is liable for damages to the three Zuluetas collectively, that is, as a family and not to each of them individually. As far as I know, nowhere in the Civil Code is a family, to which it devotes special attention as an institution, ever treated as a unit having rights or obligations as such. 18.ID.; ID.; ID.; ID.; COMPROMISE AGREEMENT ENTERED INTO BY WIFE WITH APPELLANT MUST BE GIVEN EFFECT. The majority would base their refusal to give effect to Mrs. Zulueta's compromise agreement with appellant precisely on the predicate that the damage being awarded to appellees constitute part of the properties of the conjugal partnership of the Zulueta spouses. Frankly, and with due respect to the lengthy exposition of

such theory in the majority opinion, I believe this is its weakest point. And the first obvious obstacle to this conceptualization is the fact that by their very terms, the judgments herein, both of this Court and of the trial court, are not in favor of the so-called conjugal partnership, represented by its manager, the husband, but of all "the (three) plaintiffs" namely, Mr. Zulueta, Mrs. Zulueta and Miss Zulueta. In the second place, I am convinced after mature deliberation that the damages herein involved cannot be juridically treated as conjugal property, having in mind the true concept and the basic elements of the conjugal partnership of gains as it is known and contemplated in our Civil Code. 19.ID.; CONJUGAL PARTNERSHIP; RELEVANT NEW AND OLD CIVIL CODE PROVISIONS EXPLAINED . Substantially, Article 142 of the Civil Code of the Philippines is the same as Article 1392 of the Civil Code of Spain which was in force here before the present Code, but it will be noted that the change in phraseology served to accentuate not only the nature of the component elements of the so-called conjugal partnership of properties but also how they come into being. Whereas the old provision refers broadly or vaguely to "ganancias o beneficio" or "earnings or profits," for which reason the system itself is aptly dominated as "sociedad de gananciales," the new one makes it abundantly clear that what are contemplated are ''fruits of their separate property and the income from their work or industry." There is thus a discernible emphasis on the thought that the effort or labor on the part of any or both of the spouses, whether this be actual or presumed, must be the creative factor of the "earnings or profit" in order for any of these to form part of the conjugal partnership properties. This is even made clearer by the enumeration in Article 153 of what are "conjugal partnership properly." Even the new provision regarding "things acquired by occupation, such as fishing and hunting" conveys the same underlying idea. While the new provision, Article 154, which provides that "the share of the hidden treasure which the law awards to the finder or proprietor belongs to the conjugal partnership" seems to refer to something acquired without labor on the part of the spouses, the truth is that such hidden treasure is viewed by the Code as fruit of the property of the spouse in which it is found, under Article 153(3). In contrast under Article 148, what either of the spouses "acquires during the marriage by lucrative title" is exclusive property of the spouse making the acquisition. And the obvious reason for all these distinctions and clarifications is the human and realistic consideration that any earning or profit of the spouses, not derived from their respective private properties and without any effort on their part is the product of their common and never ceasing effort to help each other directly or indirectly in the promotion of their common interest and welfare. Such is the concern of the law for their common industry that even in the absence of a marriage, properties acquired by a man and a woman living together as husband and wife through their work and industry are made governable by the rules on co-ownership (Art. 144).

20.ID.; ID.; SEPARATE PROPERTY OF SPOUSE CANNOT BY AGREEMENT BE MADE CONJUGAL. It is a cardinal principle that the spouses cannot modify their respective patrimonies vis-a-vis each other's and that of the conjugal partnership. In other words, separate property of one spouse cannot by agreement be made conjugal nor vice-versa.

21.ID.; ID.; PRIMARY OBJECTIVE OF PARTNERSHIP'S FORMATION. The primary objective of the formation of the conjugal partnership of gains is to have a common fund to answer for the obligations of the spouses contracted in the common interest of the family, thereby solving the problems of who of the two spouses should primarily answer for them and from whose resources they should be satisfied. But there are also obligations for which the spouses are individually liable, and for these, they answer with their own patrimonies. RESOLUTION CONCEPCION, J :
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Both parties in this case have moved for the reconsideration of the decision of this Court promulgated on February 29, 1972. Plaintiffs maintain that the decision appealed from should be affirmed in toto. The defendant, in turn, prays that the decision of this Court be "set aside . . . with or without a new trial, . . . and that the complaint be dismissed, with costs; or, in the alternative, that the amount of the award embodied therein be considerably reduced." Subsequently to the filing of its motion for reconsideration, the defendant filed a "petition to annul proceedings and/or to order the dismissal of plaintiffs-appellees' complaint," upon the ground that "appellees' complaint actually seeks the recovery of only P5,502.85 as actual damages, because, for the purpose of determining the jurisdiction of the lower court, the unspecified sums representing items of alleged damages, may not be considered, under the settled doctrines of this Honorable Court," and "the jurisdiction of courts of first instance when the complaint in the present case was filed on Sept. 30, 1965" was limited to cases "in which the demand, exclusive of interest, or the value of the property in controversy amounts to more than ten thousand pesos" and "the mere fact that the complaint also prays for unspecified moral damages and attorney's fees, does not bring the action within the jurisdiction of the lower court." We find no merit in this contention. To begin with, it is not true that "the unspecified sums representing items or other alleged damages, may not be considered" for the purpose of determining the jurisdiction of the court "under the settled doctrines of this Honorable Court." In fact, not a single case has been cited in support of this allegation. Secondly, it has been held that a claim for moral damages is one not susceptible of pecuniary estimation. 1 In fact, Article 2217 of the Civil Code of the Philippines explicitly provides that "(t)hough incapable of pecuniary computation, moral damages may be recovered if they are the proximate result of the defendant's wrongful act or omission." Hence, "(n)o proof pecuniary loss necessary" pursuant to Article 2216 of the same Code "in order that moral . . . damages may be adjudicated." And "(t)he assessment of such damages . . . is left to the discretion of the court" said article adds "according to the circumstances of each case." Appellees' complaint is, therefore, within the original jurisdiction of courts of first instance, which includes "all civil actions in which the subject of the litigation is not capable of pecuniary estimation." 2

Thirdly, in its answer to plaintiffs' original and amended complaints, defendant had set up a counterclaim in the aggregate sum of P12,000, which is, also, within the original Jurisdiction of said courts, thereby curing the alleged defect if any, in plaintiffs' complaint. 3
"We need not consider the jurisdictional controversy as to the amount the appellant sues to recover because the counterclaim interposed establishes the jurisdiction of the District Court. Merchants' Heat & Light Co. v. James B. Clow & Sons, 204 U.S. 286, 27 S. Ct. 285, 51 L. Ed. 488; O. J. Lewis Mercantile Co. v. Klepner, 176 F. 343 (C.C.A. 2), certiorari denied 216 U.S. 620, 30 S Ct. 575, 54 L. Ed. 641 . . ." 4 ". . . courts have said that 'when the jurisdictional amount is in question, the tendering of a counterclaim in an amount which in itself, or added to the amount claimed in the petition, makes up a sum equal to the amount necessary to the jurisdiction of this court, jurisdiction is established, whatever may be the state of the plaintiff's complaint.' American Sheet & Tin Plate Co. v. Winzeler (D.C.) 227 F. 321, 324." 5

Thus, in Ago v. Buslon,

We held:

". . . Then, too, petitioner's counterclaim for P37,000.00 was, also, within the exclusive original jurisdiction of the latter courts, and there are ample precedents to

the effect that 'although the original claim involves less than the jurisdictional amount, . . . jurisdiction can be sustained if the counterclaim (of the compulsory type)' such as the one set up by petitioner herein, based upon the damages allegedly suffered by him in consequence of the filing of said complaint 'exceeds the jurisdictional amount,' (Moore Federal Practice, 2nd ed. [1948], Vol. 3, p. 41; Ginsburg vs. Pacific

Mutual Life Ins. Co. of California, 69 Fed. [2d] 97; Home Life Ins. Co. vs. Sipp., 11 Fed. [2d] 474; American Sheet & Tin Plate Co. vs. Winzeler [D.C.], 227 Fed. 321, 324; Brix vs. People's Mutual Life Ins. Co., 41 P. 2d. 537, 2 Cal. 2d. 446; Emery vs. Pacific Employees Ins. Co., 67 P. 2d. 1046, 8 Cal. 2d. 663)."

Needless to say, having not only failed to question the jurisdiction of the trial court either in that court or in this Court, before the rendition of the latter's decision, and even subsequently thereto, by filing the aforementioned motion for reconsideration and seeking the reliefs therein prayed for but, also, urged both courts to exercise jurisdiction over the merits of the case, defendant is now estopped from impugning said jurisdiction. 7 Before taking up the specific questions raised in defendant's motion for reconsideration, it should be noted that the same is mainly predicated upon the premise that plaintiffs' version is inherently incredible, and that this Court should accept the theory of the defense to the effect that petitioner was off-loaded because of a bomb-scare allegedly arising from his delay in boarding the aircraft and subsequent refusal to open his bags for inspection. We need not repeat here the reasons given in Our decision for rejecting defendant's contention and not disturbing the findings of fact of His Honor, the Trial Judge, who had the decided advantage denied to Us of observing the behaviour of the witnesses in the course of the trial and found those of the plaintiffs worthy of credence, not the evidence for the defense.

It may not be amiss, however, to stress the fact that, in his written report, made in transit from Wake to Manila or immediately after the occurrence and before the legal implications or consequences thereof could have been the object of mature deliberation, so that it could, in a way, be considered as part of the res gestae Capt. Zentner stated that Zulueta had been off-loaded "due to drinking" and "belligerent attitude," thereby belying the story of the defense about said alleged bomb-scare, and confirming the view that said agent of the defendant had acted out of resentment because his ego had been hurt by Mr. Zulueta's adamant refusal to be bullied by him. Indeed, had there been an iota of truth in said story of the defense, Capt. Zentner would have caused every one of the passengers to be frisked or searched and the luggage of all of them examined as it is done now before resuming the flight from Wake Island. His failure to do so merely makes the artificious nature of defendant's version more manifest. Indeed, the fact that Mrs. Zulueta and Miss Zulueta were on board the plane shows beyond doubt that Mr.Zulueta could not possibly have intended to blow it up. The defense tries to explain its failure to introduce any evidence to contradict the testimony of Mr. Zulueta as to why he had gone to the beach and what he did there, alleging that, in the very nature of things, nobody else could have witnessed it. Moreover, the defense insists, inter alia, that the testimony of Mr. Zulueta is inherently incredible because he had no idea as to how many toilets the plane had; it could not have taken him an hour to relieve himself in the beach; there were eight (8) commodes at the terminal toilet for men; if he felt the need of relieving himself, he would have seen to it that the soldiers did not beat him to the terminal toilets; he did not tell anybody about the reason for going to the beach, until after the plane had taken off from Wake. We find this pretense devoid of merit. Although Mr. Zulueta had to look for a secluded place in the beach to relieve himself, beyond the view of others, defendant's airport manager, whom Mr. Zulueta informed about it, soon after the departure of the plane, could have forthwith checked the veracity of Mr. Zulueta's statement by asking him to indicate the specific place where he had been in the beach and then proceeding thereto for purposes of verification. Then, again, the passenger of a plane seldom knows how many toilets it has. As a general rule, his knowledge is limited to the toilets for the class first class or tourist class in which he is. Then, too, it takes several minutes for the passengers of big aircrafts, like those flying from the U.S. to the Philippines, to deplane. Besides, the speed with which a given passenger may do so depends, largely, upon the location of his seat in relation to the exit door. He cannot go over the heads of those nearer than he thereby. Again, Mr. Zulueta may have stayed in the toilet terminal for some time, expecting one of the commodes therein to be vacated soon enough, before deciding to go elsewhere to look for a place suitable to his purpose. But he had to walk, first, from the plane to the terminal building and, then, after vainly waiting therein for a while, cover a distance of about 400 yards therefrom to the beach, and seek there a place not visible by the people in the plane and in the terminal, inasmuch as the terrain at Wake Island is flat. What is more, he must have had to take off part, at least, of his clothing, because, without the facilities of a toilet, he had to wash himself and, then, dry himself up before he could be properly attired and walk back the 400 yards

that separated him from the terminal building and/or the plane. Considering, in addition to the foregoing, the fact that he was not feeling well, at that time, We are not prepared to hold that it could not have taken him around an hour to perform the acts narrated by him.

But, why asks the defendant did he not reveal the same before the plane took off? The record shows that, even before Mr. Zulueta had reached the ramp leading to the plane, Capt. Zentner was already remonstrating at him in an intemperate and arrogant tone and attitude ("What do you think you are?), thereby impelling Mr. Zulueta to answer back in the same vein. As a consequence, there immediately ensued an altercation in the course of which each apparently tried to show that he could not be cowed by the other. Then came the order of Capt. Zentner to off-load all of the Zuluetas, including Mrs. Zulueta and the minor MissZulueta, as well as their luggage, their overcoats and other effects handcarried by them; but, Mr. Zulueta requested that the ladies be allowed to continue the trip. Meanwhile, it had taken time to locate his four (4) pieces of luggage. As a matter of fact, only three (3) of them were found, and the fourth eventually remained in the plane. In short, the issue between Capt. Zentner and Mr. Zulueta had been limited to determining whether the latter would allow himself to be browbeaten by the former. In the heat of the altercation, nobody had inquired about the cause of Mr. Zulueta's delay in returning to the plane, apart from the fact that it was rather embarrassing for him to explain, in the presence and within the hearing of the passengers and the crew, then assembled around them, why he had gone to the beach and why it had taken him some time to answer there a call of nature, instead of doing so in the terminal building. Defendant's motion for reconsideration assails: (1) the amount of damages awarded as excessive; (2) the propriety of accepting as credible plaintiffs' theory; (3) plaintiffs' right to recover either moral or exemplary damages; (4) plaintiffs' right to recover attorney's fees; and (5) the non-enforcement of the compromise agreement between the defendant and plaintiff's wife, Mrs. Zulueta. Upon the other hand, plaintiffs' motion for reconsideration contests the decision of this Court reducing the amount of damages awarded by the trial court to approximately one-half thereof, upon the ground, not only that, contrary to the findings of this Court, in said decision, plaintiff had not contributed to the aggravation of his altercation or incident with Capt. Zentner by reacting to his provocation with extreme belligerency, thereby allowing himself to be dragged down to the level on which said agent of the defendant had placed himself, but, also, because the purchasing power of our local currency is now much lower than when the trial court rendered its appealed decision, over five (5) years ago, on July 5, 1967, which is an undeniable and undisputed fact. Precisely, for this reason, defendant's characterization as exorbitant of the aggregate award of over P700,000 by way of damages, apart from attorney's fees in the sum of P75,000, is untenable. Indeed, said award is now barely equivalent to around 100,000 U. S. dollars. In further support of its contention, defendant cites the damages awarded in previous cases to passengers of airlines, 8 as well as in several criminal cases, and some cases for libel and slander. None of these cases is, however, in point. Said cases against airlines referred to passengers who were merely constrained to take atourist class accommodation, despite the

fact that they had first class tickets, and that although, in one of such cases, there was proof that the airline involved had acted as it did to give preference to a "white" passenger, this motive was not disclosed until the trial in court, In the case at bar, plaintiff Rafael Zulueta was "off-loaded" at Wake Island, for having dared to retort to defendant's agent in a tone and manner matching, if not befitting his intemperate language and arrogant attitude. As a consequence, Capt. Zentner's attempt to humiliate Rafael Zulueta had boomeranged against him (Zentner), in the presence of the other passengers and the crew. It was, also, in their presence that defendant's agent had referred to the plaintiffs as "monkeys," a racial insult not made openly and publicly in the abovementioned previous cases against airlines. In other words, Mr. Zulueta was off-loaded, not to protect the safety of the aircraft and its passengers, but to retaliate and punish him for the embarrassment and loss of face thus suffered by defendant's agent. This vindictive motive is made more manifest by the note delivered to Mr. Zulueta by defendant's airport manager at Wake Island, Mr. Sitton, stating that the former's stay therein would be "for a minimum of one week," during which he would be charged $13.30 per day. This reference to a "minimum of one week" revealed the intention to keep him there stranded that long, for no other plane, headed for Manila, was expected within said period of time, although Mr. Zulueta managed to board, days later, a plane that brought him to Hawaii, whence he flew back to the Philippines, via Japan. Neither may criminal cases, nor the cases for libel and slander cited in the defendant's motion for reconsideration, be equated with the present case. Indeed, in ordinary criminal cases, the award for damages is, in actual practice, of purely academic value, for the convicts generally belong to the poorest class of society. There is, moreover, a fundamental difference between said cases and the one at bar. The Zuluetas had a contract of carriage with the defendant, as a common carrier, pursuant to which the latter was bound, for a substantial monetary consideration paid by the former, not merely to transport them to Manila, but, also, to do so with "extraordinary diligence" or "utmost diligence." 9 The responsibility of the common carrier, under said contract, as regards the passenger's safety, is of such a nature, affecting as it does public interest, that it "cannot be dispensed with" or even "lessened by stipulation, by the posting of notices, by statements on tickets, or otherwise." 10 In the present case, the defendant did not only fail to comply with its obligation to transport Mr. Zulueta to Manila, but, also, acted in a mannercalculated to humiliate him, to chastise him, to make him suffer, to cause to him the greatest possible inconvenience, by leaving him in a desolate island, in the expectation that he would be stranded there for a "minimum of one week" and, in addition thereto, charged therefor $13.30 a day. It is urged by the defendant that exemplary damages are not recoverable in quasi-delicts, pursuant to Article 2231 of our Civil Code, except when the defendant has acted with "gross negligence," and that there is no specific finding that it had so acted. It is obvious, however, that in off-loading plaintiff at Wake Island, under the circumstances heretofore adverted to, defendant's agents had acted with malice aforethought and evident bad faith. If "gross negligence" warrants the award of exemplary damages, with more reason is its imposition justified when the act performed is deliberate, malicious and tainted with bad faith. Thus, in Lopez v. PANAM,11 We held:

"The rationale behind exemplary or corrective damages is, as the name implies, to provide an example or correction for public good. Defendant having breached its contracts in bad faith, the court, as stated earlier, may award exemplary damages in addition to moral damages (Articles 2229, 2232, New Civil Code.)"

Similarly, in NWA v. Cuenca 12 this Court declared that an award for exemplary damages was justified by the fact that the airline's "agent had acted in a wanton, reckless and oppressive manner" in compelling Cuenca, upon arrival at Okinawa, to transfer, over his objection, from the first class, where he was accommodated from Manila to Okinawa, to the tourist class, in his trip to Japan, "under threat of otherwise leaving him in Okinawa," despite the fact that he had paid in full the first class fare and was issued in Manila a first class ticket. Defendant cites Rotea v. Halili, 13 in support of the proposition that a principal is not liable for exemplary damages owing to acts of his agent unless the former has participated in said acts or ratified the same. Said case involved, however, the subsidiary civil liability of an employer arising from criminal acts of his employee, and "exemplary damages . . . may be imposed when the crime was committed with one or more aggravating circumstances." 14 Accordingly, the Rotea case is not in point, for the case at bar involves a breach of contract, as well as a quasi-delict. Neither may the case of Palisoc v. Brillantes, 15 invoked by the defendant, be equated with the case at bar. The Palisoc case dealt with the liability of school officials for damages arising from the death of a student (Palisoc) due to fist blows given by another student (Daffon), in the course of a quarrel between them, while in a laboratory room of the Manila Technical Institute. In an action for damages, the head thereof and the teacher in charge of said laboratory were held jointly and severally liable with the student who caused said death, for failure of the school to provide "adequate supervision over the activities of the students in the school premises," to protect them "from harm, whether at the hands of fellow students or other parties." Such liability was predicated upon Article 2180 of our Civil Code, the pertinent part of which reads:
"ART. 2180.The obligation imposed by article 2176 is demandable not only for one's own acts or omissions, but also for those of persons for whom one is responsible. "xxx xxx xxx "Lastly, teachers or heads of establishments of arts and trades shall be liable for damages caused by their pupils and students or apprentices, so long as they remain in their custody. "xxx xxx xxx"

Obviously, the amount of damages awarded in the Palisoc case is not and cannot serve as the measure of the damages recoverable in the present case, the latter having been caused directly and intentionally by an employee or agent of the defendant, whereas the student who killed the young Palisoc was in no wise an agent of the school. Moreover, upon her arrival in the Philippines, Mrs. Zulueta reported her husband's predicament to defendant's

local manager and asked him to forthwith have him (Mr. Zulueta) brought to Manila, which defendant's aforementioned manager refused to do, thereby impliedly ratifying the offloading of Mr. Zulueta at Wake Island.

It is next urged that, under the contract of carriage with the defendant, Mr. Zulueta was bound to be present at the time scheduled for the departure of defendant's plane and that he had, consequently, violated said contract when he did not show up at such time. This argument might have had some weight had defendant's plane taken off before Mr. Zulueta had shown up. But the fact is that he was ready, willing and able to board the plane about two hours before it actually took off, and that he was deliberately and maliciously off-loaded on account of his altercation with Capt. Zentner. It should, also, be noted that, although Mr. Zulueta was delayed some 20 to 30 minutes, the arrival or departure of planes is often delayed for much longer periods of time. Followed to its logical conclusion, the argument adduced by the defense suggests that airlines should be held liable for damages due to the inconvenience and anxiety, aside from actual damages, suffered by many passengers either in their haste to arrive at the airport on scheduled time just to find that their plane will not take off until later, or by reason of the late arrival of the aircraft at its destination. PANAM impugns the award of attorney's fees upon the ground that no penalty should be imposed upon the right to litigate; that, by law, it may be awarded only in exceptional cases; that the claim for attorney's fees has not been proven; and that said defendant was justified in resisting plaintiff's claim "because it was patently exorbitant." Nothing, however, can be farther from the truth. Indeed, apart from plaintiff's claim for actual damages, the amount of which is not contested, plaintiffs did not ask any specific sum by way of exemplary and moral damages, as we]l as attorney's fees, and left the amount thereof to the "sound discretion" of the lower court. This, precisely, is the reason why PANAM, now, alleges without justification that the lower court had no jurisdiction over the subject matter of the present case. Moreover, Article 2208 of our Civil Code expressly authorizes the award of attorney's fees "when exemplary damages are awarded," as they are in this case as well as "in any other case where the court deems it just and equitable that attorney's fees . . . be recovered," and We so deem it just and equitable in the present case, considering the "exceptional" circumstances obtaining therein, particularly the bad faith with which defendant's agent had acted, the place where and the conditions under which Rafael Zulueta was left at Wake Island, the absolute refusal of defendant's manager in Manila to take any step whatsoever to alleviate Mr.Zulueta's predicament at Wake and have him brought to Manila which, under their contract of carriage, was defendant's obligation to discharge with "extraordinary" or "utmost" diligence and, the "racial" factor that had, likewise, tainted the decision of defendant's agent, Capt. Zentner, to off-load him at Wake Island.

As regards the evidence necessary to justify the sum of P75,000 awarded as attorney's fees in this case, suffice it to say that the quantity and quality of the services rendered by plaintiffs' counsel appearing on record, apart from the nature of the case and the amount involved therein as well as his prestige as one of the most distinguished members of the legal profession in the Philippines, of which judicial cognizance may be taken, amply justify said award, which is a little over 10% of the damages (P700,000) collectible by plaintiffs herein. Indeed, the attorney's fees in this case is proportionally much less than that adjudged in Lopez v. PANAM 16 in which the judgment rendered for attorney's fees (P50,000) was almost 20% of the damages (P275,000) recovered by the plaintiffs therein. The defense assails the last part of the decision sought to be reconsidered, in which relying upon Article 172 of our Civil Code, which provides that "(t)he wife cannot bind the conjugal partnership without the husband's consent, except in cases provided by law," and it is not claimed that this is one of such cases We denied a motion, filed by Mrs. Zulueta, for the dismissal of this case, insofar as she is concerned she having settled all her differences with the defendant, which appears to have paid her the sum of P50,000 therefor "without prejudice to this sum being deducted from the award made in said decision." Defendant now alleges that this is tantamount to holding that said compromise agreement is both effective and ineffective. This, of course, is not true. The payment is effective, insofar as it is deductible from the award, and, because it is due (or part of the amount due) from the defendant, with or without its compromise agreement with Mrs. Zulueta. What is ineffective is the compromise agreement, insofar as the conjugal partnership is concerned. Mrs. Zulueta's motion was for the dismissal of the case insofar as she was concerned, and the defense cited in support thereof Article 113 of said Code, pursuant to which "(t)he husband must be joined in all suits by or against the wife except: . . . (2) If they have in fact been separated for at least one year." This provision, We held, however, refers to suits in which the wife is the principal or real party in interest, not to the case at bar, "in which the husband is the main party in interest, both as the person principally aggrieved and as administrator of the conjugal partnership . . . he having acted in this capacity in entering into the contract of carriage with PANAM and paid the amount due to the latter, under the contract, with funds of the conjugal partnership," to which the amounts recoverable for breach of said contract, accordingly, belong. The damages suffered by Mrs. Zulueta were mainly an incident of the humiliation to which her husband had been subjected. The Court ordered that said sum of P50,000 paid by PANAM to Mrs. Zulueta be deducted from the aggregate award in favor of the plaintiffs herein for the simple reason that upon liquidation of the conjugal partnership, as provided by law, said amount would have to be reckoned with, either as part of her share in the partnership, or as part of the support which might have been or may be due to her as wife of Rafael Zulueta. It would surely be inane to sentence the defendant to pay the P700,000 due to the plaintiffs and to direct Mrs. Zulueta to return said P50,000 to the defendant. In this connection, it is noteworthy that, for obvious reasons of public policy, she is not allowed by law to waive her share in the conjugal partnership, before the dissolution thereof. 17 She cannot even acquire any property by gratuitous title, without the husband's

consent, except from her ascendants, descendants, parents-in-law, and collateral relatives within the fourth degree. 18 It is true that the law favors and encourages the settlement of litigations by compromise agreement between the contending parties, but, it certainly does not favor a settlement with one of the spouses, both of whom are plaintiffs or defendants in a common cause, such as the defense of the rights of the conjugal partnership, when the effect, even if indirect, of the compromise is to jeopardize "the solidarity of the family" which the law 19 seeks to protect by creating an additional cause for the misunderstanding that had arisen between such spouses during the litigation, and thus rendering more difficult a reconciliation between them. It is urged that there is no proof as to the purpose of the trip of the plaintiffs, that neither is there any evidence that the money used to pay the plane tickets came from the conjugal funds and that the award to Mrs. Zulueta was for her personal suffering or injuries. There was, however, no individual or specific award in favor of Mrs. Zulueta or any of the plaintiffs. The award was made in their favor collectively. Again, in the absence of said proof, the presumption is that the purpose of the trip was for the common benefit of the plaintiffs and that the money had come from the conjugal funds, for, unless there is proof to the contrary, it is presumed "(t)hat things have happened according to the ordinary course of nature and the ordinary habits of life." 20 In fact Manresa maintains 21 that they are deemed conjugal, when the source of the money used therefor is not established, even if the purchase had been made by the wife. 22 And this is the rule obtaining in the Philippines. Even property registered, under the Torrens system, in the name of one of the spouses, or in that of the wife only, if acquired during the marriage, is presumed to belong to the conjugal partnership, unless there is competent proof to the contrary. 23 PANAM maintains that the damages involved in the case at bar are not among those forming part of the conjugal partnership pursuant to Article 153 of the Civil Code, reading:
"ART. 153.The following are conjugal partnership property: "(1)That which is acquired by onerous title during the marriage at the expense of the common fund, whether the acquisition be for the partnership, or for only one of the spouses; "(2)That which is obtained by the industry, or work, or as salary of the spouses, or of either of them; "(3)The fruits, rents or interests received or due during the marriage, coming from the common property or from the exclusive property of each spouse."

Considering that the damages in question have arisen from, inter alia, a breach of plaintiffs' contract of carriage with the defendant, for which plaintiffs paid their fare with funds presumably belonging to the conjugal partnership, We hold that said damages fall under paragraph (1) of said Article 153, the right thereto having been "acquired by onerous title

during the marriage . . ." This conclusion is bolstered up by Article 148 of our Civil Code, according to which:
"ART. 148.The following shall be the exclusive property of each spouse:

"(1)That which is brought to the marriage as his or her own; "(2)That which each acquires, during the marriage, by lucrative title; "(3)That which is acquired by right of redemption or by exchange with other property belonging to only one of the spouses; "(4)That which is purchased with exclusive money of the wife or of the husband."

The damages involved in the case at bar do not come under any of these provisions or of the other provisions forming part of Chapter 3, Title VI, of Book I of the Civil Code, which chapter is entitled "Paraphernal Property." What is more, if "(t)hat which is acquired by right of redemption or by exchange with other property belonging to only one of the spouses," and "(t)hat which is purchased with exclusive money of the wife or of the husband," 24 belong exclusively to such wife or husband, it follows necessarily that that which is acquired with money of the conjugal partnership belongs thereto or forms part thereof. The rulings in Maramba v. Lozano 25 and Perez v. Lantin, 26 cited in defendant's motion for reconsideration, are, in effect, adverse thereto. In both cases, it was merely held that the presumption under Article 160 of our Civil Code to the effect that all property of the marriage belong to the conjugal partnership does not apply unless it is shown that it was acquired during marriage. In the present case, the contract of carriage was concededly entered into, and the damages claimed by the plaintiffs were incurred, during marriage. Hence, the rights accruing from said contract, including those resulting from breach thereof by the defendant, are presumed to belong to the conjugal partnership of Mr. and Mrs. Zulueta. The fact that such breach of contract was coupled, also, with a quasi-delict constitutes an aggravating circumstances and can not possibly have the effect of depriving the conjugal partnership of such property rights. Defendant insists that the use of conjugal funds to redeem property does not make the property redeemed conjugal if the right of redemption pertained to the wife. In the absence, however, of proof that such right of redemption pertains to the wife and there is no proof that the contract of carriage with PANAM or the money paid therefor belongs to Mrs. Zulueta the property involved, or the rights arising therefrom, must be presumed, therefore, to form part of the conjugal partnership. It is true that in Lilius v. Manila Railroad Co., 27 it was held that the "patrimonial and moral damages" awarded to a young and beautiful woman by reason of a scar in consequence of an injury resulting from an automobile accident which disfigured her face and fractured her left leg, as well as caused a permanent deformity, are her paraphernal property. Defendant cites, also, in support of its contention the following passage from Colin y Capitant:

"No esta resuelta expresamente en la legislacion espaola la cuestin de si las indemnizaciones debidas por accidentes del trabajo tienen la consideracion de gananciales o son bienes particulares de los conyuges. "Inclinan a la solucion de que estas indemnizaciones deben ser consideradas como gananciales, el hecho de que la sociedad pierde la capacidad de trabajo con el accidente, que a ella le pertenece, puesto que de la sociedad son los frutos de ese trabajo; en cambio, la consideracion de que de igual manera que los bienes que sustituyen a los que cada conyuge lleva al matrimonio como propios tienen el caracter de propios, hace pensar que las indemnizaciones que vengan a suplir la capacidad de trabajo aportada por cada conyuge a la sociedad, deben ser juridicamente reputadas como bienes propios del conyuge que haya sufrido el accidente. As! se llega a la misma solicion aportada por la jurisprudencia francesca." 28

This opinion is, however, undecisive, to say the least. It should be noted that Colin y Capitant were commenting on the French Civil Code; that their comment referred to indemnities due in consequence of "accidentes del trabajo" resulting in physical injuries sustained by one the spouses (which Mrs. Zulueta has notsuffered); and that said commentators admit that the question whether or not said damages are paraphernal property or belong to the conjugal partnership is notsettled under the Spanish law. 29 Besides, the French law and jurisprudence to which the comments of Planiol and Ripert, likewise, refer are inapposite to the question under consideration, because they differ basically from the Spanish law in the treatment of the property relations between husband and wife. Indeed, our Civil Code, lie the Spanish Civil Code, favors the system of conjugal partnership of gains. Accordingly, the former provides that "(i)n the absence of marriage settlements, or when the same are void, the system of relative community or conjugal partnership of gains . . . shall govern the property relations between" the spouses. 30 Hence, "(a)ll property of the marriage is presumed to belong to the conjugal partnership, unless it be proved that it pertains exclusively to the husband or to the wife." 31 No similar rules are found in the French Civil Code. What is more, under the provisions thereof, the conjugal partnership exists only when so stipulated in the "capitulaciones matrimoniales" or by way of exception. In the language of Manresa
"Prescindimos de los preceptos de los Codigos de Francia, Italia, Holanda, Portugal, Alemania y Suiza, porsue solo excepcionalmente, o cuando asi se pactaen las capitulaciones, admiten el sistema de gananciales." 32

Again, Colin y Capitant, as well as the Lilius case, refer to damages recovered for physical injuries suffered by the wife. In the case at bar, the party mainly injured, although not physically, is the husband. Accordingly, the other Philippine cases 33 and those from Louisiana whose civil law is based upon the French Civil Code cited by the defendant, which similarly refer to moral damages due to physical injuries suffered by the wife, are, likewise, inapplicable to the case at bar.

We find, therefore, no plausible reason to disturb the views expressed in Our decision promulgated on February 29, 1972. WHEREFORE, the motions for reconsideration above-referred to should be, as they are hereby denied. FRANCISCO ORTIGAS, JR., plaintiff-appellantappellee, vs. LUFTHANSA GERMAN AIRLINES, defendant-appellantappellee.

Baizas, Alberto & Associates for appellant Lufthansa German Airlines. Pelaez, Jalandoni & Jamir for appellant Francisco Ortigas, Jr.
SYNOPSIS Plaintiff sued defendant for damages as a result of his being refused by defendant's employees and agents to travel first-class despite his confirmed and validated airline tickets indicating his right to such accommodations. The trial of the case covered a long period of time, delayed by innumerable postponements sought by both parties. Having allowed a permissible number of continuances the trial court repeatedly warned against further postponements, since the case had been pending for three years. When defendant again sought postponement of the hearing set for September 28, 1966, the court, in the exercise of its sound judicial discretion, denied the same, no valid reason having been given why the witness could not appear. Corollary to this denial order, the court directed the striking off from the records the unfinished testimony of the defendant's witness Ivo Lazzari and considered the case submitted for decision on the evidence presented by the plaintiff. A motion for reconsideration was likewise denied and subsequently, a decision was rendered "condemning defendant to pay the plaintiff the amount of P100,000.00 as moral damages, P30,00.00 as exemplary or corrective damages with interest on both sums at the legal rate from the commencement of the suit until fully paid, P20,000.00 as attorney's fees and the costs" for the failure to "comply with its obligation to give first-class accommodation to the plaintiff, a Filipino passenger, holding a first class ticket, aggravated by the giving of the space instead to a Belgian and the improper conduct of its agent in dealing with plaintiff during the occasion of such discriminatory violation of the contract of carriage." Both parties appealed directly to this Court, plaintiff-appellant contending that the amount of damages awarded him was insufficient and defendant-appellant contending, on the other hand, that the lower court acted with grave abuse of discretion in denying its urgent motion for postponement of the hearing set for September 28, 1966, for striking out the testimony of its witness and for ordering it to pay plaintiff damages. The Supreme Court, considering precedents and the circumstances of the case, raised the award of moral and exemplary damages to plaintiff-appellant to P150,000.00 and P100,000.00 respectively.

Judgment modified. SYLLABUS 1.CIVIL PROCEDURE; APPEALS MATTERS NOT ASSIGNED AS ERRORS, WHEN REVIEWABLE. The Supreme Court is clothed with ample authority to review matters even if they are not assigned as errors in the appeal, if it finds that their consideration is necessary in arriving at a just decision of the case. An unassigned error closely related to an error properly assigned, or upon which the determination of the question raised by the error properly assigned is dependent, will be considered by the appellate court notwithstanding the failure to assign it as error. 2.ID.; TRIAL; POSTPONEMENTS THEREOF; CIRCUMSTANCES WHICH CALL FOR DENIAL OF DEFENDANT'S MOTION. Where a case had been pending for about three years and had actually suffered during the said period even more than the usually permissible number of continuances to suit the convenience of defendant's counsel, and where notice of next scheduled hearing had been served on said counsel a month earlier, it must be assumed that due preparations and arrangements had been made after the receipt of notice to insure the presence of the witnesses on the date set. The excuse that the witnesses cannot leave their respective stations and places of work to attend the trial is unacceptable, especially where the movant is an airline company engage in international transportation and presumably having all the facilities to have any of its employees available practically anywhere in the world at a moment's notice. A party must not rely on the assumption that courts could be made to wait until the volume and conditions of business of a party would permit it to comply with the schedule of the court. 3.ID.; ID.; ID.; ABSENCE OF EVIDENCE; RULE. Trials may be postponed because of the absence of evidence only when such absence is justified. Mere absence is not a justification in itself. It must be shown to the court that due diligence had been exercised in either securing the presence of the evidence or preventing the absence thereof, accompanied by an affidavit showing the materiality of the evidence expected to be obtained, pursuant to Rule 22, Section 4. 4.ID.; ID.; PRESENTATION OF EVIDENCE; INCOMPLETE ORAL TESTIMONY MAY BE STRICKEN OUT. Oral testimony may be taken into account only when it is complete, that is, if the witness has been wholly cross-examined by the adverse party or the right to crossexamine is lost wholly or in part thru the fault of such adverse party. But when crossexamination is not and cannot be done or completed due to causes attributable to the party offering the witness, the uncompleted testimony is thereby rendered incompetent. 5.ID.; ID.; ID.; CROSS-EXAMINATION OF WITNESSES, AN INDISPENSABLE PART OF DUE PROCESS. The right of a party to cross-examine the witnesses of his adversary is invaluable as it is inviolable in civil cases, no less than the right of the accused in criminal cases. The express recognition of such right of the accused in the Constitution does not render the right thereto of parties in civil cases less continually based, for it is an

indispensable part of the due process guaranteed by the fundamental law. Subject to appropriate supervision by the judge in order to avoid unnecessary delays on account of its being unduly protracted and to needed injunctions protective of the right of the witness against self-incrimination and oppressive and unwarranted harassment and embarrassment, a party is absolutely entitled to a full cross-examination as prescribed in Section 8, Rule 132 of the Rules of Court. 6.CONTRACTS; CONTRACT OF CARRIAGE; CARRIER'S LIABILITY FOR DAMAGES; PREFERENCE GIVEN TO ANOTHER PASSENGER IN DISREGARD OF PLAINTIFF'S RIGHTS AND DIGNITY AMOUNTS TO BAD FAITH AND FRAUD ENTITLING AGGRIEVED PASSENGER TO AWARD OF DAMAGES. When it comes to contracts of common carriage, inattention and lack of care on the part of the carrier resulting in the failure of the passenger to be accommodated in the class contracted for, amounts to bad faith or fraud which entitles the passenger to the award of moral damages in accordance with Article 2220 of the Civil Code. In the instant case, the preference given to a Belgian passenger over plaintiff was done willfully and in wanton disregard of plaintiff's rights and dignity as a human being and as a Filipino, who may not be discriminated against with impunity. The breach is of a grave nature. The treatment given to plaintiff was completely wrong and absolutely unjustifiable. The carrier is liable for moral damages. 7.ID.; ID.; ID.; WILLFUL AND WANTON BREACH OF CONTRACT OF CARRIAGE; JURISPRUDENCE. The right of a passenger to moral damages has been upheld in cases wherein after having contract and paid for first class accommodation duly confirmed and validated; he is transferred over his objection to economy class, which he has to take in order to be able to arrive at his destination on his scheduled time. (Northwest Airlines, Inc. vs. Cuenca, 14 SCRA 1063 Fernando Lopez et al. vs Pan American World Airways. 16 SCRA 431: Air France vs Carrascoso, 18 SCRA 155). 8.ID.; ID.; ID.; ID.; CONSIDERATIONS WHICH JUSTIFY AN INCREASE IN THE AWARD OF MORAL DAMAGES; CASE AT BAR. Where an air carrier's employee falsely noted on the ticket of a Filipino passenger that the latter was travelling economy class in order to give way to a Belgian passenger on account of his nationality, and considering that said passenger was suffering from a weak heart and was advised by his doctor to travel first class only, and taking into account his personal and social status, being a prominent lawyer, businessman, civil and religious leader, member of the numerous government boards and organizations as well as of local and international bodies, carrying a special Philippine government passport, and taking into account the present peso rate at exchange vis-a-vis the dollars, the Supreme Court held that the increase of moral damages awarded by the trial court from P100,000 to P150,000 was justified. 9.ID.; ID.; ID.; ID.; PAYMENT OF EXEMPLARY DAMAGES. "Exemplary damages are required by public policy, for wanton acts must be repressed. They are an antidote so that the poison of wickedness may not through the body politic."(Report of the Code Commission, pp. 75-76). An airline company should be made to pay an amount that can really serve as a deterent against a seeming pattern of indifference and unconcern, and of discrimination for racial reasons, discernible in the treatment of air passengers.

10.ID.; ID.; ID.; ID.; ID.; RATIONALE. "The rationale behind exemplary or corrective damages, is, as the name implies, to provide an example or correction for public good. In view of its nature, it should be imposed in such an amount as to sufficiently and effectively deter similar breach of contracts by defendant or other airlines." (Lopez vs. Pan American World Airways, 16 SCRA 431). 11.ID.; ID.; ID.; ID.; ID.; AMOUNT INCREASED IN INSTANT CASE. The amount of P30,000.00, fixed by the lower court as exemplary damages is increased to P100,000.00 to serve the ends for which the liability has been conceived. This is not the first case, and unless the proper sanction are applied, it does not appear it is going to be the last yet, of instances wherein Filipino passengers having validated and confirmed tickets for first class would be shoved to the economy class over their valid objections and without any regard at all to their feelings and convenience, only to favor other passengers presumed by the airlines to be of superior race, hence deserving preference. It is high time everyone concerned were made to realize that the laws of the Philippines do not permit any act of discrimination against its citizens, especially when this accompanies a clear breach of contractual obligations of common carriers whose business is affected with public interest and must be directed to serve the convenience and comfort of the passengers. When any disregard of such laws is committed, the Supreme Court, as the interpreter of such laws, must exact the commensurate liability which they contemplate.

DECISION BARREDO, J :
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Direct appeals of both parties plaintiff, Francisco Ortigas, and defendant Lufthansa German Airlines, from the decision of the Court of First Instance of Manila, Branch X, "condemning the defendant to pay plaintiff the amount of P100,000 as moral damages, P30,000 as exemplary or corrective damages, with interest on both sums at the legal rate from the commencement of this suit until fully paid, P20,000 as attorney's fees and the costs" for the former's failure to "comply with its obligation to give first class accommodation to (the latter) a (Filipino) passenger holding a first class ticket," aggravated by the giving of the space instead to a Belgian and the improper conduct of its agents in dealing with him during the occasion of such discriminatory violation of its contract of carriage. Defendant buttresses its appeal on the following:
"ASSIGNMENT OF ERRORS I THE LOWER COURT ACTED WITH GRAVE ABUSE OF DISCRETION IN DENYING THE DEFENDANTS URGENT-MOTION FOR POSTPONEMENT DATED SEPTEMBER 24, 1966.

II THE LOWER COURT CONSEQUENTLY ERRED IN ORDERING THE STRIKING FROM THE RECORDS THE TESTIMONY OF WITNESS IVO LAZZARI AND IN DEEMING THE CASE SUBMITTED FOR DECISION ON THE EVIDENCE OF THE PLAINTIFF ALONE. III THE LOWER COURT ERRED IN CONDEMNING DEFENDANT TO PAY THE PLAINTIFF THE AMOUNT OF P100,000.00 AS MORAL DAMAGES, P30,000.00 AS EXEMPLARY OR CORRECTIVE DAMAGES, WITH INTEREST ON BOTH SUMS AT THE LEGAL RATE FROM THE COMMENCEMENT OF THIS SUIT UNTIL FULLY PAID, P20,000.00 AS ATTORNEY'S FEES, AND COSTS." (Pp. 12-13, p. 118, Record.)

On the other hand, plaintiff's sole ground for his appeal is that "the trial court erred in ordering Lufthansa to pay Ortigas only P100,000 as moral damages, P20,000 as exemplary or corrective damages, and P20,000 as attorney's fees." (Plaintiff-Appellant's Brief, p. a.) Thus, apart from the contention of defendant that it has been denied its full day in court, the only issue raised by both appellants relate to the amount of the damages awarded by the trial court, plaintiff claiming it is less than he is entitled to and the defendant insisting on the opposite. Lufthansa maintains it has not had its full day in court because the trial court abruptly ended the trial by denying its last motion for postponement notwithstanding it was well founded and forthwith ordering the striking out of the testimony of its absent witness whose crossexamination had not been finished and then declaring the case submitted for decision. In this connection, the record reveals the following facts: Plaintiff's complaint was filed with the court below on December 24, 1963 and after issues were joined, a pre-trial was held, the parties submitted a partial stipulation of facts and thereafter went to trial, the last day of which was on September 28, 1966. As to what happened in between, a detailed account is made in the brief of Ortigas as plaintiff-appellee as follows:
". . . Thereafter the case was set for hearing twenty four (24) times, or on April 27, 1964, July 9, 1964, August 20, 1964, October 1, 1964, November 11, 1964, December 22, 1964, February 3, 1965, March 18, 1965, May 5, 1965, June 11, 1965, July 22, 1965, August 26, 1965 and September 8, 1965, September 22, 1965, November 3, 1965, November 24, 1965, December 17, 1965, December 29, 1965, January 14, 1966, February 2, 1966, April 19, 1966, April 20, 1966, July 5, 6 and 7, 1966, August 25, 1966 and September 28, 1966. One (1) hearing, or that of August 25, 1966, was cancelled because the trial judge, Hon. Jose L. Moya, was then sick. Other postponements were as follows:

Postponements at instance of plaintiff

Three (3) settings were cancelled upon motion of plaintiff on grounds that defendant's counsel (Atty. Crispin Baizas) himself must have found sufficient, for he gave his conformity thereto. These were the hearings set for: July 9, 1964 postponed upon plaintiffs motion, dated June 27, 1964, or 12 days before the hearing, on the ground that he had to attend an important business matter in Mindanao, which was so urgent that 'for plaintiff to even make a flying trip to Manila for the scheduled hearing might jeopardize and render to naught a project to which plaintiff has already expended considerable time, money and effort' (RA pp. 28-29. Note: All reference herein will be to plaintiff's Record on Appeal) August 26, 1965 postpone upon plaintiff's motion, dated August 23, 1965, for the reason that he was in London for business reasons and could not return to the Philippines on time for the hearing. This motion is not reproduced in any Record on Appeal but is admitted. July 5-7, 1966 18 days before the dates set for the hearing, counsel for plaintiff filed a motion, dated June 17, 1966, for postponement on the ground that Atty. Rodegelio M. Jalandoni, who had been personally handling this case was then in Washington, D.C. on business and would not be back until the middle part of August, 1966. Considering that the trial of the case was far advanced, it would be difficult for another lawyer to substitute for Atty. Jalandoni. Defendant's counsel agreed to the motion (RA pp. 50-51).

Postponements at instance of both parties


Four (4) settings, or those of August 20, 1964, October 1, 1964 November 11, 1964 and December 22, 1964, were cancelled upon the joint motion of the parties on the ground that negotiations for the possible settlement of this case were pending (RA pp. 31-34). While both attorneys for plaintiff and defendant signed the joint motions for postponement, the initiative to have the hearings cancelled actually came from defendant's counsel who claimed that he needed time to consult with his client. Plaintiff welcomed the possibility of compromise and acceded to join the requests for postponement but became impatient at and suspicious of the attempt to delay so that in the motion to postpone the December 22, 1964 hearing, plaintiff insisted on the insertion of the phrase 'be postponed for the last time' (RA p. 34). These took place after the pre-trial but before plaintiff had started presenting his evidence.

Postponement at instance of defendant


Of the remaining 16 settings, at least TEN (10) were postponed or could not proceed except for a few minutes because either Atty. Crispin Baizas, counsel for defendant, was not available or needed time to prepare or had to attend a meeting somewhere else, or, as in the ease of September 28, 1966, defendant's witnesses wanted to avoid the inconvenience of coming to the Philippines. The situation became such that on two (2) occasions the court a quo warned the defendant and/or its counsel that it was postponing the trial 'for the last time' and 'definitely for the last time.' Thus:

February 3, 1965 On this date, although plaintiff was ready to present his evidence and the Court to hear the parties, Atty. Baizas asked for postponement for the reason that he had to be somewhere else. The undersigned graciously obliged by not objecting, albeit the motion was made without warning and in open court. March 18, 1965 Once again the hearing scheduled for this date was postponed on motion of Atty. Baizas in open court. The undersigned did not object because, as far as he can now recall, the excuse given was that opposite counsel had another appointment. June 11, 1965 The Court was free the whole morning of this day and plaintiff actually took the witness stand. After plaintiff was through with his direct testimony, Atty. Zaida R. Alberto, who appeared for the defendant, asked that the crossexamination be postponed for the next hearing, on the ground that Atty. Baizas knew more of the defense. The following appears on record: 'ATTY. ALBERTO: If Your Honor please, may I request to allow the cross examination at the next hearing. COURT: You can handle the cross examination now. ATTY. ALBERTO: The defense are more in the knowledge of Atty. Baizas. COURT: If you postpone the cross examination we will forget the testimony and will be spending much time referring to this testimony, so you better cross-examine him while his testimony is still fresh. ATTY. ALBERTO: May I ask for a reconsideration, Your Honor, anyway it is past 11:00 o'clock I do not think there will be enough time. We still have one hour. ATTY. ALBERTO: I ask for a reconsideration, Your Honor. COURT:

On motion of the defendant's counsel, the continuation of the trial is postponed to July 22, 1965, at 8:30 a.m. The parties were notified in open court of this new assignment.' (t.s.n. pp. 43-44, June 11, 1965) Notwithstanding there was an hour left, which was precious considering the crowded calendar of the Court, and Judge Moya wanted to hear the crossexamination because plaintiff's testimony was fresh, the Court pleased counsel for the defendant and postponed the hearing to July 22, 1965. September 22, 1965 At this hearing the undersigned requested that Dr. Isidro Pertiera be permitted to take the witness stand. He is a heart specialist and it was difficult to bring him to court because of his many patients. His direct testimony did not take long, after which Atty. Baizas asked for postponement, for the reason that he did not expect Dr. Pertiera to testify and, since the subject of the testimony was important and technical, he needed time to be able to cross-examine. The undersigned, understanding the predicament of Atty. Baizas, did not offer any objection. November 3, 1965 This scheduled hearing was postponed upon motion dated October 7, 1965, of Atty. Baizas on the ground that he was leaving on business trip abroad. The undersigned again did not object. November 24, 1965 It will be recalled that the hearing of September 22, 1965, supra, was postponed to enable Atty. Baizas to prepare for his crossexamination of Dr. Pertiera. On this date November 24, 1965, Atty. Baizas crossexamined briefly the doctor, but announced: 'ATTY. BAIZAS: May I announce, your Honor, that after I cross-examine the Doctor I will ask for a postponement of my cross examination of Atty. Ortigasbecause I will have to attend a meeting of the PAL Board of Directors this morning. My cross examination will not be very long.' (t.s.n., pp. 3-4, November 24, 1965)

The PAL Board of Directors' meeting was certainly not more important than the occupation of the Court, and it was still early, bur counsel was insistent. The Court was beginning to be perturbed by the dilatory motions; yet it granted counsel's requested postponement but 'for the last time.' Thus: 'ATTY. BAIZAS: That is all. May I make that request, Your Honor, that it is simply that I have to be present at the meeting. I wish to finish my cross examination on Atty. Ortigas but it is merely that the meeting is held for today at 10:00 o'clock and I would like to ask for a postponement to continue the cross examination. COURT:

I will grant this for the last time. On motion of Atty. Baizas, the continuation of the hearing is postponed for the last time to December 17, 1965, at 8:30 a.m., by agreement between him and Atty. Jalandoni.' (t.s.n., p. 17, November 24, 1965) December 17, 1965 Although at the hearing of November 24, 1965 trial was postponed for the last time to December 17, 1965, the Court's warning did not seem to register because on December 7, 1965 defendant's counsel filed another motion for postponement alleging that he had received a telegram to the effect that the meeting of the Legal Committee of IATA that he was attending, originally scheduled for December 10-15, had been deferred and would begin on December 13 and as it was for 5 days, it would not be possible for him to return for the December 17 hearing; hence, he requested that said hearing be reset for December 27 and 29. In his undated motion filed on December 7, 1965 counsel averred that: 'There is no intention whatever to delay the case but because of the circumstances above-stated, undersigned counsel is constrained to ask, for the last time, for the cancellation of the hearing on December 17 and for its resetting on such dates as may be convenient to this Honorable Court, preferably December 27 and 29.' (RA - p. 41) The undersigned opposed said motion and alleged: 'That this case has been pending since December 24, 1963, or almost two years now, and trial thereof has been repeatedly suspended and/or postponed; That at the hearing of November 24, 1965, this Honorable Court precisely postponed continuation of the trial thereof for the last time to December 17, a date which was fixed by agreement of the parties; That when counsel for defendant left, as alleged, on December 6, 1965 he did so with full knowledge of the intransferable character of the trial set for December 17; That defendant can well be represented by Atty. Baizas' associate, Atty. Alberto, who, as a matter of fact, handled this case when trial started on June 11, 1965 and has been actively collaborating with Atty. Baizas since then; That when plaintiff testified on direct examination on June 11, 1965 said Atty. Alberto appeared for defendant and that plaintiff is now merely due for further cross-examination.' (RA p. 43) In spite of said opposition, the Trial Court once more granted defendant's request but was more categorical this time with its admonition against further postponements and used the word 'definitely' in its order which read: 'O R D E R

For the reasons stated in the defendant's motion for postponement and in view of the fact that it seeks a deferment of the hearing for only a few days, the continuation of the trial is postponed definitely for the last time to December 29, 1965, at 8:30 a.m. 'SO ORDERED 'Manila, Philippines, December 11, 1965. JOSE L. MOYA Judge' (RA p. 46) March 10, 1966 The hearing on this date lasted for only a few minutes, with the undersigned offering the documentary evidence for the plaintiff. Thereupon, defendant's counsel again asked for postponement so he could go over said evidence. Since he had no witnesses to present, the Court once more postponed the trial to April 19, 1966 without any objection on the part of the undersigned. April 19, 1966 The hearing for this day was cancelled upon motion of defendant's counsel (RA p. 49) on his representation that defendant's witness Ivo Lazzari had arrived from Italy at midnight of April 18, 1966 and was not in a condition to take the witness stand. The Court again accommodatingly transferred the hearing to the following day, April 20, 1966, although it had other cases scheduled for that date and the case at bar was not among them, just so Lazzari's trip would not be useless. The undersigned likewise did not oppose the transfer of hearing." (Pp. 2-13 Brief, p. 132 Record.)

Defendant does not seriously deny these facts. Seemingly, the controversy between the parties revolves around defendant's motion for postponement of the hearing set for September 28, 1966 which was denied by the trial court. It is this denial that is the subject of the first above-quoted alleged errors assigned byLufthansa in its brief as defendantappellant. At the time this incident of postponement arose, plaintiff had already closed his evidence, and so it was the turn of the defendant to prove its defenses. The starting date for this was April 19, 1966, but, upon motion of defendant's counsel, it was deferred to the next day, April 20, 1966, on which date defendant's first witness, Ivo Lazzari, took the witness stand. His testimony, however, was not finished in the morning and afternoon of that day nor during the whole day of April 22, 1966. Atty. Rodegelio M. Jalandoni was still cross-examining him when the hearing was continued "to the first available date in the calendar". Eventually, the next continuation of the trial was set at first for July 5, 6 and 7, 1966, but upon motion of plaintiff's counsel, it was reset for August 25, 1966, on which date, in spite of the presence of Lazzari who came from Rome purposely for the trial together with another expected witness, Severino Caselli, and still another witness, C.H. Dehio, who came from Hongkong, no trial could be held because of the absence of the judge. Hence, another date, September 28, 1966 was fixed with notice to the parties received by them respectively the month previous.

On September 24, 1966, defendant's counsel filed a motion for postponement thus:
"COMES NOW the defendant by undersigned counsel and to this Honorable Court respectfully states: 1 The above-entitled case is set for hearing on September 28, 1966 at 8:30 o'clock in the morning. 2 The witnesses who are scheduled to testify for the defendant at said hearing are to come from Rome, Italy; 3 Word has been received from the defendant that said witnesses will not be able to come for the hearing aforementioned. WHEREFORE, it is respectfully prayed that the hearing of this case scheduled for September 28 be postponed to some other date most convenient to this Honorable Court, preferably on any of the following dates: October 21, 17 November 3, 8, 9 or 11, 1966. . . ." (Page 53, Record on Appeal, p. 29, Rec.)

On September 27, 1966, plaintiff's counsel filed the following opposition to the above motion:
"COMES NOW plaintiff, through undersigned counsel and, in opposition to defendant's urgent motion for postponement, dated September 24, 1966, to this Honorable Court respectfully states: That this case has been pending since December, 1963; That defendant's aforesaid motion does not give any valid reason for postponing the hearing, since it does not state why defendant's witnesses cannot come to Manila on the scheduled dates of continuation of trial; That the convenience and motive of defendant and its witnesses in not exerting every effort to testify are not the concern of the plaintiff, and more so of this Honorable Court, and that the speedy and proper administration of justice dictates that the hearing proceed irrespective of defendant's obvious disregard of the need thereof; That defendant's attitude is aggravated by the fact that, being an airline company, it has all facilities to have its employees available as witnesses at any time it desires. WHEREFORE, it is respectfully prayed that defendant's aforesaid motion for postponement be denied.

. . ." (Pp. 55-56, id.)

In view of this opposition, on the same day, His Honor issued an order of denial:
"No reason whatsoever having been alleged or shown why the defendant's witnesses will not be able to come from Rome to Manila on the day of the hearing, and this case having been pending since December, 1963, the motion for postponement is denied." (Pp. 56-57, id.)

On the day set for the hearing, September 28, 1966, Atty. Zaida Ruby S. Alberto appeared for defendant and verbally moved for reconsideration of the foregoing order of denial. She argued that:
"Actually, it is not intended to delay the termination of this case. As a matter of fact, on August 15, 1966, the date set for the hearing of this case, we were ready with the presentation of our evidence as our two witnesses from Rome were here. But unfortunately, Your Honor was indisposed, so the hearing was postponed to this date. I really do not know why our witnesses failed to come. However, I intend to make an inquiry about the matter so that I could file the corresponding explanation for their failure to appear in Court today. May I, therefore, reiterate my motion for reconsideration, with the reservation that I be allowed to file my explanation for the failure of these two witnesses coming from Rome to appear for today's hearing." (Page 2, t.s.n., Sept. 28/66.)

But as counsel could not give the exact reason why defendant's witness scheduled to testify were absent, the trial court denied the motion; ruling that "no ground has been alleged in support thereof". (p. 6, t.s.n., September 28, 1966.) This order was immediately followed by a motion of plaintiff's counsel for the striking out of the entire testimony of the witness, Ivo Lazzari, upon the ground that counsel had not yet finished his cross-examination of him and his absence was unexplained. No objection appears to have been made to such motion, albeit counsel for defendant tried to point out that Atty. Jalandoni had already finished his cross-examination of the witness. After verifying from the records that such was not the case, His Honor issued the following order:

"The witness Ivo Lazzari not having appeared at the hearing set for today, for which reason his cross-examination cannot be continued, on motion of the plaintiff's counsel, his testimony is striken from the record, and this case is deemed submitted for decision on the evidence already presented." (Pp. 57-58, Rec. on Ap., id.)

Thus the trial ended and parties were allowed to submit their respective memoranda. On October 19, 1966, however, defendant's counsel filed the following motion for reconsideration:
"MOTION FOR RECONSIDERATION

COMES NOW defendant by undersigned counsel this Honorable Court moving for a reconsideration of the orders dated September 27 and September 28, 1966, respectively, respectfully states: 1 On September 26, 1966 a motion for postponement of the hearing on September 28, 1966 was filed by undersigned counsel for the reason that word had just been received from the defendant that the witnesses who were scheduled to testify at the said hearing and who were to come from Rome, Italy, would not be able to come to the Philippines for said hearing. This motion was denied in the order of September 27, 1966; 2 No reason could be stated in the aforesaid motion for postponement because at the time it was prepared, counsel for defendant did not really know the specific reasons for the inability of said witnesses to come. A simple telex message had been sent by the Far East Manager of the defendant company to defendant's representatives in Manila advising the latter that the witnesses in question could not come. Copy of said telex message is attached to and made part of this motion for reconsideration as Annex "1"; 3 For this reason on September 28, 1966, when the case was called, counsel for the defendant reiterated the motion for postponement and requested this Honorable Court for time to submit an explanation on the failure of defendant's witnesses to come as a letter elaborating on the matter would surely follow the telex message. This request was however denied by the Honorable Court and upon motion of plaintiff's counsel, another order was issued striking out from the record the testimony of defendant's only witness so far, Ivo Lazzari, whose cross-examination was to be continued that date, for the latter's failure to appear at the hearing, and deeming the case submitted for decision; 4 It is alleged by opposing counsel that the witnesses did not come for the hearing of September 28, 1966 because it was inconvenient for them and for defendant. This accusation is absolutely without basis and malicious; 5 If inconvenience were the only reason for the witnesses' failure to come, then they would not also have come previously because it was just as inconvenient for them then. It will be recalled that Ivo Lazzari had been here in April 1966 when he was presented on direct examination and partly on cross-examination. On August 25, 1966, the case was also scheduled for hearing. All of defendant's witnesses came here from Rome, Italy for said hearing. Even Mr. C.H. Dehio was also here to testify. Unfortunately, the Presiding (Judge) of this Honorable Court was indisposed on that particular morning and so the hearing on said date was cancelled. We mention this

only to show that the failure of the witnesses to come for the hearing on September 28 was not caused by mere inconvenience; 6 Defendant had and had no intention to delay the proceedings whatsoever. The witnesses in question could not come because of certain circumstances that rendered their coming over virtually impossible. Both witnesses, Ivo Lazzari and Saverino Casilli are employees of defendant company at the Rome office. The air traffic in Rome has been particularly heavy this season. Some of the personnel of the Lufthansa Rome office were on leave and these two employees had to assume some of the duties of those employees who were on leave, aside from performing their own regular duties. If they were to leave their posts to come for the hearing on September 28, there would be grave disruption to the public service and for this reason they were not able to come. These facts are contained in a letter dated September 29, 1966 written to undersigned counsel by C. H. Dehio, IATA Agency Manager, Far East and Australasia, LufthansaGerman Air Lines, copy of which is attached to and made part of this motion for reconsideration as Annex '2'. The envelope in which said letter contained is likewise attached to and made part of this motion as Annex '2-A'; 7 Witness Ivo Lazzari had finished his testimony on direct examination and on September 28, 1966, opposing counsel was to continue cross-examination of said witness. The other witness Saverino Casilli was to be presented after Ivo Lazzari would have finished testifying. Both witnesses are material for the defense and no other person could testify on the facts that are the subject of their testimony. The inability of said witnesses to come for the hearing on September 28 was not due to any fault or neglect on the part of defendant who in fact had exerted every effort to have them come, but because of the supervening circumstances above-described, their coming over could not have been possible without seriously disrupting public service; 8 There is no question that the granting or denial of a motion for postponement rests upon the sound discretion of the court. We submit however that under the circumstances, the ends of justice would have been better served by granting the motion on question. The reason for defendant's motion for postponement is valid and meritorious, and the grant of a postponement based on such ground would not have adversely affected the substantial rights of plaintiffs. 'Continuances and postponements of trial are part and parcel of our judicial system of justice, and where no substantial rights are affected and the intention to delay is not manifest, it is sound judicial discretion to allow them. (Rexwell vs. Canlas, No. L-16746, Dec. 30, 1961)

'There is even authority for the view that the right to a speedy trial is not violated by granting a continuance on the ground of absence of material witnesses. (People vs. Romero, G.R. No. L-4517-20, May 25, 1953) 'The lower court erred in denying a motion for postponement filed by defense to await arrival of a material witness." (People vs. Narsolis, et al. G.R. No. L-2764, March 24, 1950) 'A miscarriage of justice may result from the accidental or excusable absence of a material witness, where presence can be secured by the grant of a reasonable continuance.' (Luna vs. Arcenas, 34 Phil. 80, 98-99) 8 Defendant has a valid and meritorious defense, and if given opportunity to present its side of the case, it would certainly diminish, if not altogether disprove plaintiff's claim. '. . . court litigations are primarily for the search of truth. . . . A trial by which both parties are given the chance to adduce truth is the best way to find out such truth. A denial of this chance would be too technical. The dispensation of justice and the vindication of grievances should not be barred by technicalities.' (Ronquillo vs. Marasigan, L-11621, May 21, 1962; Santiago vs. Joaquin, L-15237, May 31, 1963, italics ours.) 'Judicial experience dictates that it is better that cases are tried on the merits even with a little delay than that substantial rights of a party litigant be sacrificed on the altar of technicality.' (Uy vs. Demetillo, CA-G.R. No. 32665-R, Jan. 14, 1964.) 9 An affidavit of merit by Clarita C. de la Riva, Manager, Rocha & Cua., Inc., General Sales Agents, Lufthansa German Airlines is likewise attached to and made an integral part of this motion for reconsideration as Annex "3"; 10 The order dated September 27, denying defendant's motion for postponement and the order of September 28, 1966 striking off from the records the testimony on direct examination of the witness Ivo Lazzari and holding the case submitted for decision on the evidence presented would unduly prejudice defendant's stand, and would amount to a denial of due process to defendant. 'The paramount interests of justice demand such reasonable allowances as would prevent, without doing an injustice to the opposing party, the loss by a litigant of his chance to duly present his side of the case before the court. With a view of avoiding a possible miscarriage of justice, the exercise of the court's discretion ought to lean, in a reasonable degree toward bringing about a presentation of evidence on both sides. . . .' (Gerona vs. Calada, CA-G.R. No.

23955-R March 30, 1963, Tormes vs. Balzado, CA-G.R. No. 32019-R, April 17, 1964.) WHEREFORE, it is respectfully prayed that the orders of the Honorable Court dated September 27, and September 28, 1966, respectively, be reconsidered and set aside; that the testimony of defendant's witness Ivo Lazzari be allowed to remain on record and that a date be set for the continuation of defendant's evidence. Manila, Philippines, October 19, 1966. CRISPIN D. BAIZAS & ASSOCIATES By: s/t/ Crispin D. Baizas Counsel for the defendant Suite 305 Shurdut Building Intramuros, Manila. VERIFICATION I, CRISPIN D. BAIZAS, after having been sworn according to law, depose and say: I am the counsel for the defendant in the above-entitled case; I have prepared the foregoing motion for reconsideration and all the allegations contained therein are true and correct of my own knowledge and to the best of my information and belief. s/t/ CRISPIN D. BAIZAS SUBSCRIBED AND SWORN TO BEFORE ME this 19th day of October, 1966 in the City of Manila, affiant exhibiting to me his Res. Cert. No. A-5892423 issued on January 28, 1966 at Makati, Rizal. s/(Illigible) NOTARY PUBLIC Until December 31, 1967 Doc. No. 1377 Page No. 77 Book No. III Series of 1966." (Pages 58-67, Record on Appeal, id.)

to which, plaintiff's counsel filed the following opposition:


"COMES NOW plaintiff, through undersigned-counsel, and, in opposition to defendant's motion for reconsideration, dated October 19, 1966, to this Honorable Court respectfully states that:

1.This is in effect the second motion for reconsideration that defendant has filed against the order of September 27, 1966 denying its motion for postponement of the hearing of September 28. The first motion for reconsideration was made in open court by Atty. Zaida S. Alberto and denied on the same date. 2.Defendant now claims that it did not intend to delay the trial of this case and seeks to justify the failure of its witnesses, Ivo Lazzari and Saverino Casilli, to appear on September 28 on the ground that: '. . . The air traffic in Rome has been particularly heavy this season. Some of the personnel of the Lufthansa Rome office were on leave and these two employees had to assume some of the duties of these employees who were on leave, aside from performing their own regular duties. If they were to leave their posts to come for the hearing on September 28, there would be grave disruption to the public service and for this reason they were not able to come. . . .' (p. 3, Defendant's Motion for Reconsideration.) 3.Note that the above alleged facts are contained in a mere letter that was written by a certain Mr. C.H. Dehio, an employee of defendant in Hongkong, to its counsel on September 29, 1966, or one day after the hearing of September 28, when presumably defendant's aforesaid employee had already been informed that this Honorable Court had denied the postponement and considered this case as submitted for decision. Defendant is an airline company and has all the telex facilities to communicate in a matter of minutes with its various agencies. The ground for failure to appear, to wit, supposed pressure of work of said employees, is as easier to conceive and gratuitously state as to flick one's fingers. We wish to call attention to the significant fact that the statement of Mr. Dehio in his letter is not under oath. Incorporating said statement in the body of the motion for reconsideration that is sworn to by counsel merely 'to the best of his information and belief', or in an affidavit of Mrs. Clarita C. de la Riva (Annex 3) who was only referring to hearsay information derived from Mr. Dehio's aforesaid letter, is insufficient verification of the motion for reconsideration under Section 6, Rule 7 of the Rules of Court. Even Mr. Dehio had he executed the affidavit himself, would have been disqualified to swear to the facts because he is stationed in Hongkong. So that, when defendant's counsel and Mrs. de la Riva verified the motion on 'information and belief' derived from Mr. Dehio's letter, their statements were hearsay thrice removed. 4.But assuming said facts to be true, did this justify the failure of defendant's witnesses to appear at the scheduled hearing or constitute a valid excuse for defendant's inability to present evidence" We respectfully submit that they do not. The September 28 hearing was set as early as August 25, 1966, or more than one (1) month previous, to suit the schedules not only of this Honorable Court but of the parties as well. Surely, it was incumbent on defendant, if it has deference to this Honorable Court and our administration of justice, to see to it that its witnesses, particularly Ivo Lazzari who was on the witness stand and due for cross-examination, would be available, rather than granting leave to its other employees and burdening the two needed witnesses with additional work. Defendant is not a neophyte in the airline business. Assuming arguendo that it is true that the volume of air traffic in Europe was high in 'September and early October', it should have foreseen the

situation and taken appropriate measures to assure compliance with its obligation to this Honorable Court. The witnesses are defendant's employees and subject to its exclusive control. Instead, defendant allegedly rendered itself short handed by granting leave to its other employees, and now comes to court with a lame excuse requesting that it be extricated from a predicament that it has deliberatedly brought upon itself. For, the excuse that with the workload for Mr. Lazzari and Mr. Casilli becoming heavier than usual 'it would seriously disrupt our service to the travelling public if, during this time, they were to leave their jobs for several days' (Please see Mr. Dehio's letter, Annex '2'), is lame, by any standard. The local newspapers are constantly carrying news articles of how large and expanded is the Lufthansa as an airline outfit. Surely, of its hundred (if not thousands) of available employees, two like Lazzari and Casilli could have been dispensed from their work temporarily to defend the company against the just grievance asserted by an injured passenger before a court of justice. At the most, defendant was after the promotion of its own interest in holding the two employees to their jobs, and is not avoiding 'grave disruption to the public service' as counsel exaggerates Mr. Dehio's expression 'seriously disrupt our service to the travelling public' two distinct ideas, the latter signifying self-interest as distinguished from public necessity. This Honorable Court can take judicial notice that there are many other airlines operating in the same areas as does Lufthansa and competing with it. 5.As we explained at the September 28 hearing, the truth of the matter is that, contrary to the unverified representations of defendant, the reason for the nonattendance of defendant's witnesses was to avoid the inconvenience of coming to the Philippines to testify. In other words, after Ivo Lazzari and Saverino Casilli were unable to testify last August 25, 1966, defendant thought of avoiding having said witnesses come again to Manila. We say this because sometime on September 20, 1966, Atty. Leonardo P. Valmonte (an assistant attorney of plaintiff who is helping in this case) had a telephone conversation with defendant's counsel, Atty. Zaida S. Alberto in connection with the former's request for a copy of a certain exhibit, and in the course of their conversation Atty. Alberto informed Atty. Valmonte that the trial scheduled for September 28, 1966 would not proceed because they were intending 'to secure the permission of the court to take the testimonies of their witnesses by way of deposition'. In short, even before the receipt of the alleged telex (Annex "1" of Motion) by defendant's counsel on September 22, 1966, said counsel announcing that the trial could not proceed because they were going to resort to depositions of their witnesses in Rome, rather than have said witnesses come to Manila. The decision to take depositions having been made on or before September 20, it was an easy matter to have Lufthansa's Hongkong office send the telex of September 22 stating that they would be unable to provide witnesses on September 28. No reason was given why witnesses could not be provided 6 or 7 days thence. If in truth there was unexpected increase in air traffic, surely 6 or 7 days were more than sufficient to make the necessary arrangements so that the work of Lazzari and Casilli could be taken over temporarily just so these witnesses could appear before this Honorable Court at the appointed date. Attached hereto as Annex "A" is the affidavit of Atty. Leonardo P. Valmonte on his aforesaid conversation with Atty. Alberto. 6.At the hearing on September 28, when we made reference to the above-referred to conversation between Attys. Valmonte and Alberto, the latter did not deny that she

had in truth spoken to Atty. Valmonte in the tenor above related. As a matter of fact, she admitted that defendant was intending to take the depositions of its witnesses in Rome. 7.When this Honorable Court denied the motion for postponement on September 28, 1966, it did so in the exercise of its sound judicial discretion, for no valid reason was given why the witnesses could not appear, whereas this case had been pending for about three (3) years and had been postponed several times with repeated warnings on defendant that said postponements were for the last time. And now, in its motion for reconsideration, defendant has failed to effectively allege the ground for the failure of said witnesses to come, and even if said ground be admitted as true for argument's sake, it merely showed 'inofficiousness, lack of resourcefulness and diligence, if not total indifference' on the part of defendant to protect in court its interests and to prevent needless delays in the discharge of judicial business.

'Postponement not based on valid reasons. Where a party seeks postponement of

the hearing of this case for reasons caused by his own inofficiousness, lack of resourcefulness and diligence if not total indifference to his own interests or to the interests of those he represents, thereby resulting in his failure to present his own evidence, the court would not extend to him its mantle of protection. If it was he who created the situation that brought about the resulting adverse consequences, he cannot plead for his day in court nor claim that he was so denied of it.' (De Leon vs. People's Homesite and Housing Corporation, CA-G.R. No. 31169-R, Aug. 31, 1963.) 8.In the case of Hap Hong Hardware Co. vs. Philippine Company, G.R. No. L-16773 (May 23, 1961), the Supreme Court, in sustaining the trial court's denial of a motion for postponement and on the ground that the defendant's witnesses, officers of the company, had not come because it was the beginning of the milling season in the municipality of San Jose, Mindoro Occidental and their presence in the Central was very necessary, held that the trial court was perfectly justified in denying said motion for postponement because the reason adduced was 'not unavoidable and one that could not have been foreseen.' Said the Supreme Court: 'The reason adduced in support of the motion for postponement is not unavoidable and one that could not have been foreseen. Defendant ought to have known long before the date of trial that the milling season would start when the trial of the case would be held. The motion should have been presented long in advance of the hearing, so that the court could have taken steps to postpone the trial without inconvenience to the adverse party. As it is, however, the motion was presented on the day of the trial. Knowing as it should have known that postponements lie in the court's discretion and there being no apparent reason why the defendant could not have presented the motion earlier, thus avoiding inconvenience to the adverse party, the appellant cannot claim that the trial court erred in denying postponement. Under all the circumstances we hold that the court was perfectly justified in denying the motion for postponement.'

In the case at bar, the same unjustified excuse is adduced that the witnesses, who are employees (not even officers) of defendant, had work to do, albeit date of trial was set one month previous. 9.The cases cited by defendant are not in point, the facts involved therein being very different from those attending the case at bar. For example, in the cited case of Lino Luna vs. Arcenas, 34 Phil. 93, the trial judge declined to grant a continuance of a few hours to give counsel an opportunity to secure the presence of the defendant. The Supreme Court held that considering that it did not appear that defendant was indulging in dilatory tactics, the denial of the motion for short postponement was improper. Again, in the case of People vs. Romero, G.R. No. L-4517, May 25, 1953, the prosecution witnesses, although subpoenaed, failed to appear; whereupon the fiscal asked that they be ordered arrested and that in the meantime the trial be postponed. The Supreme Court likewise held that the denial of the postponement was improper. These fact situations, however, as can immediately be seen are completely different from that of Lufthansa whose non-presentation of its employees-witnesses was motivated by the desire to avoid inconvenience to them, hence its frustrated plan to have their depositions taken in Rome. 10.Complaints regarding delays in the disposition of court cases are prevalent and have recently found expression not only in executive pronouncements but in judicial admonitions. The unclogging of court dockets remains a pressing problem to the despair of litigants. As the Court of Appeals put it: 'The records reveals that the trial of the case was postponed five times at the instance of appellants themselves, and for this reason the trial was delayed for more than one year and three months. In granting these several postponements, the trial judge was over liberal already, and to have allowed another postponement would have been to jeopardize plaintiff's interest. Obviously courts cannot unduly protect the interests of one party to the detriment of the other. Already, there are complaints regarding delays in the disposition of court cases. The unclogging of our court dockets still remains a pressing problem in the despair of many a litigant. However to eliminate, at least minimize, these delays is as much our concern and any act of trial courts conducive towards this purposeful end will be encouraged by appellate court's.' (Rosario vs. De Leon, CA-G.R. No. 6495-R, April 25, 1941; 40 O.G. 752.) 11.Prejudice will be occasioned plaintiff if defendant's belated motion for reconsideration is granted. Notwithstanding defendant's counsel's receipt of Mr. Dehio's letter, dated September 25, 1966, a few days after said date, defendant delayed the filing of its motion for reconsideration until after about three (3) weeks later. In the meantime, it knew as of September 28 that this Honorable Court had striken out the testimony of Ivo Lazzari, considered the case submitted for decision on the evidence on record, and given plaintiff's counsel 7 days to present his memorandum. Plaintiff and his counsel exerted all efforts and worked overtime just so to be able to submit his memorandum within the short period allowed. Said memorandum was finished on time, and has been served on defendant's counsel and submitted to Court. In other words, defendant purposely waited until the submission of plaintiff's memorandum before presenting its motion for reconsideration based on

alleged information received three (3) weeks previous. To grant defendant's instant motion for reconsideration would place plaintiff at a great disadvantage, because defendant is now fully aware of every facet of plaintiff's cause and can simply tailor its defenses and evidence in refutation thereof. 12.Defendant claims that plaintiff is taking undue advantage of a technicality and it should not be deprived of its day in court on this ground. Suffice it to state that it is never technical to invoke one's rights, and that while the Rules of Court should be liberally construed, their strict observance has been considered indispensable to the prevention of needless delays and the orderly and speedy discharge of judicial business. Thus: 'Although the Rules of Court should he liberally construed, however their strict observance which have been considered indispensable to the prevention of needless delays and to the orderly and speedy discharge of judicial business, is as imperative necessity. Thus, the rules prescribing the time within which certain act must be done, or certain proceedings taken, are considered absolutely indispensable to the prevention of needless delays and to the orderly and speedy discharge of judicial business, is as imperative necessity. Thus, the rules prescribing the time within which certain act must be done, or certain proceedings taken, are considered absolutely indispensable to the prevention of needless delays and to the orderly and speedy discharge of judicial business and therefore must be strictly complied with.' (Alvero vs. De la Rosa, 76 Phil. 428, cited in Francisco on Civil Procedure, Vol. 1, p. 89) 'Rules of Courts, promulgated by authority of law, have the force and effect of law; and rules of court prescribing the time within which certain acts must be done, or certain proceedings taken are considered absolutely indispensable to the prevention of needless delays and to the orderly and speedy discharge of judicial business.' Conlu vs. Court of Appeals, et al., G.R. No. L-14027, January 29, 1960, citing Shioji vs. Harvey, 43 Phil. 333; Alvero vs. De la Rosa, et al., 42 Off. Gaz., p. 316, (Supra.) WHEREFORE, it is respectfully prayed that defendant's motion for reconsideration, dated October 19, 1966, be denied. Manila, October 31, 1966." (Pages 74-88, Record on Appeal, id.)

By way of reply to the above opposition, defendant's counsel alleged:


"Defendant could have from the beginning taken depositions in Rome, but so as to avoid any inconvenience to plaintiff and that the court may see and hear the witnesses testify to better determine the credibility of their testimony defendant had been bringing the witnesses here. As a matter of fact, defendant even without leave of court may take the depositions of its witnesses by merely giving the Court notice of its intention to do so. 'After answer has been filed no leave of court is required as a prerequisite to taking depositions . . . (Marzo vs. Moore McCormick Line, Inc. 8

Feb. Rules of Service, p. 560; cited in Moran Comments on Rules of Court Vol. II, p. 18) 'After issue is joined, depositions may be taken without leave of court. (Lyons vs. Bronx Towing Line, Inc., 1 Fed. Service p. 341) 'After answer is served, depositions may be taken as of course and application should not be made to the court for leave. (Schultz vs. State Mutual Life Assurance Company, 1 Fed. Rules of Service, p. 340, US Dist. Ct. Dist. of Oregon, Oct. 14, 1938) The statements made by Atty. Valmonte are false and malicious. An affidavit executed by Atty. Zaida Ruby Alberto is attached to and made part of this Reply as Annex '1'." (Pages 92-93, Record on Appeal, id.)

On October 24, 1966, the trial court resolved the incident in a brief order holding that "(f)or the reasons stated in the plaintiff's opposition to the motion for reconsideration, it is denied." In its appeal, defendant reiterates insistently its position that the denial of its motion for postponement as well as the order striking out the testimony of Ivo Lazzari were issued in grave abuse of discretion and should be set aside. Before going any further, however, it may be mentioned that since defendant has not assigned as error, although it discusses in its brief, the denial of its last motion for reconsideration, plaintiff contends that such failure constitutes a bar to any further consideration of the merits of the arguments of defendant relative to the main denial-of-postponement and striking-out orders. To be sure, there is technical plausibility in such pose of plaintiff, but considering the importance of the other matters involved in this case, it would serve the interests of justice more if We passed on the merits of the substantial issues in this controversy. After all, "this Court is clothed with ample authority to review matters, even if they are not assigned as errors in the appeal, if it finds that their consideration is necessary in arriving at a just decision of the case." (Saura Import & Export Co., Inc. vs. Philippine International Surety Co., Inc., L-15184, May 31, 1963, 8 SCRA 143.) And considering the inter-relation between the omitted assignment of error and those actually assigned and discussed by defendant's counsel, We can apply here the ruling in Hernandez vs. Andal, 78 Phil. 196, to the effect that "an unassigned error closely related to an error properly assigned or upon which the determination of the question raised by the error properly assigned is dependent, will be considered by the appellate court notwithstanding the failure to assign it as an error." (at pp. 209-210.) Now, with respect to defendant's first assignment of error, We feel that the rather extended recital We have made above of the incidents and proceedings related to the trial court's order denying defendant's motion for postponement of the hearing set for September 28, 1966 is self-revealing. It argues against the charge that His Honor's order of denial was improper and unjustified. The case had been pending for about three years and had actually suffered during that period even more than the usually permissible number of continuances, quite often to suit the convenience of defendant's counsel. Notice of the September 28, 1966 schedule had

been served on counsel the month previous. It must be assumed that due preparations and arrangements were to be made since the receipt of that notice to insure the presence in Manila for the expected witnesses on the date set. Under the circumstances, the excuse given by defendant that the witnesses could not leave their respective stations and places of work to attend the trial is plainly unacceptable. There was enough time and opportunity for defendant to have made the corresponding adjustments in the assignments of its personnel so as to enable its witnesses to be in court. The trouble is that defendant relied on the assumption that the court could be made to wait until the volume and other conditions of its business would permit it to comply with the schedule of the court. For an airline company engaged in international transportation and presumably having all the facilities to have any of its employees available practically anywhere in the world at a moment's notice, if it only took due care to do this, defendant's attitude cannot be countenanced.

What is more, the motion of September 24, 1966 gave no reason at all why defendant's witnesses supposed to come from Rome would be unable to be at the trial. Even as late as the day of the hearing, September 28, 1966, the court could not be told the reason for such inability. All that counsel could say was that she "intend(ed) to inquire and file the explanation" later. This was not as it should have been, for the telex advising the Manila office that the witnesses would not be available was received on September 22nd yet, and certainly there was enough time to investigate and find out the reason for such unavailability. And as no justifiable reason could be advanced in support of the verbal motion for reconsideration. We cannot say that His Honor acted improperly when he denied the same. We reiterate, the case had been pending for more than three years, with so many postponements, and the least that defendant should have done to merit favorable action on the part of the trial judge was to be ready with an explanation of its inability to proceed with the trial, giving the detailed and good reasons therefor. As it is, there was actually no basis at all for the exercise of discretion on the part of the trial judge in a manner favorable to it. Trials may be postponed because of the absence of evidence only when such absence is justified. Mere absence is not a justification in itself. Section 4 of Rule 22 is sufficiently clear on this point. It provides that "A motion to postpone a trial on the ground of absence of evidence can be granted only upon affidavit showing the materiality of evidence expected to be obtained, and that due diligence has been used to procure it." This means that it must be shown to the court that due diligence had been exercised in either securing the presence of the evidence (witnesses) or preventing the absence thereof. There is, of course, defendant's motion for reconsideration of October 19, 1966 praying for the setting aside of the court's order of denial as well as the other order striking out the testimony of witness Lazzari. But, as already noted, the only excuse given in said motion is that:
". . . The witnesses in question could not come because of certain circumstances that rendered their coming over virtually impossible. Both witnesses, Ivo Lazzari and Saverino Casilli are employees of defendant company at the Rome office. The air

traffic in Rome has been particularly heavy this season. Some of the personnel of the Lufthansa Rome office were on leave and these two employees had to assume some of the duties of those employees who were on leave, aside from performing their own regular duties. If they were to leave their posts to come for the hearing on September 28, there would be grave disruption to the public service and for this reason they were not able to come. . . ." (Page 47, Rec. on Ap., p. 32, Record.)

Indeed, even if such reason were given earlier on September 24, 1966 the court would have been as well justified in denying the requested postponement. We cannot see any reason why, despite its having knowledge of the date of the hearing about a month before, defendant did not see to it that its expected witnesses were not assigned to do duty on the day they were supposed to appear in court. We cannot believe Lufthansa could be so undermanned that such a simple adjustment of its personnel had to be "impossible." Moreover, the Rome based witnesses were not the only possible witnesses of defendant. To begin with, Mr. C.H. Dehio, the IATA Agency Manager, Far East and Australasia, Lufthansa German Air Lines, who, according to the record, had already attended previous hearings as a prospective witness could have been made to go to court. There is nothing in the record to show that he was also rendered incapable of doing so. Then there could still be local witnesses. it is no excuse that presenting other witnesses would have disrupted the presentation of defendant's case, for parties may be allowed to maintain their own way of presenting their evidence only where this can be done without injury to the expeditious disposition of the case and the best interests of the administration of justice. Coming now to the second assigned error regarding the striking out of the unfinished testimony of Lazarri, the Court is also of the opinion and so holds that the trial court's action cannot be categorized as arbitrary or oppressive or as amounting to a grave abuse of discretion. To be sure, this second order was but a logical consequence of the previous order denying defendant's motion for postponement. With such denial, the next thing in order was to declare the presentation of evidence of the defendant terminated. Accordingly, it was necessary to determine what evidence could be considered to be for the defendant. And so when counsel for plaintiff asked the court to strike out the testimony so far given by Lazarri, there was practically no alternative for the court but to grant the same. Indeed, defendant's counsel could not and did not offer any objection thereto. Oral testimony may be taken into account only when it is complete, that is, if the witness has been wholly cross-examined by the adverse party or the right to cross-examine is lost wholly or in part thru the fault of such adverse party. But when cross-examination is not and cannot be done or completed due to causes attributable to the party offering the witness, the uncompleted testimony is thereby rendered incompetent. The right of a party to cross-examine the witnesses of his adversary is invaluable as it is inviolable in civil cases, no less than the right of the accused in criminal cases. The express recognition of such right of the accused in the Constitution does not render the right thereto of parties in civil cases less constitutionally based, for it is an indispensable part of the due

process guaranteed by the fundamental law. Subject to appropriate supervision by the judge in order to avoid unnecessary delays on account of its being unduly protracted and to needed injunctions protective of the right of the witness against self-incrimination and oppressive and unwarranted harassment and embarrassment, a party is absolutely entitled to a full crossexamination as prescribed in Section 8 of Rule 132 thus: "Upon the termination of the direct examination, the witness may be cross-examined by the adverse party as to any matters stated in the direct examination, or connected therewith, with sufficient fullness and freedom to test his accuracy and truthfulness and freedom from interest or bias, or the reverse, and to elicit all important facts bearing upon the issue." Until such cross-examination has been finished, the testimony of the witness cannot be considered as complete and may not, therefore, be allowed to form part of the evidence to be considered by the court in deciding the case. In the case at bar, however, We have opted not to rely exclusively on the foregoing considerations. In order to satisfy Ourselves as to whether or not defendant stands to be irreparably prejudiced by the impugned action of the trial court relative to the testimony of Lazzari, We have just the same gone over the transcript thereof. After considering the same, however, We are of the impression that even his direct testimony, without taking into account anymore his answers to the cross-examination questions of counsel for plaintiff, cannot be of much weight in establishing the defenses in defendant's answer. But it would seem more appropriate to elaborate on this point when We come to the discussion of the mutual accusation of the parties that the trial court erred in the portion of its discretion awarding damages to plaintiff. The last issue submitted for Our resolution relates to the award of damages made by the trial court in favor of Ortigas against Lufthansa in the amounts aforestated, as to which, as already noted at the outset, both parties have appealed taking opposite positions. In this respect, the appealed decision made the following findings and discussion of the material facts:
"In October, 1963, the Sharp Travel Service, the travel department of C. F. Sharp, Inc., the majority interest in which is held by Rocha y Cia., Inc., General Agents of the defendant, Lufthansa German Airlines, issued to the plaintiff First Class Pan American Ticket No. 026492 147076 to 81 which would take him from Manila, the place of departure, to Hongkong, various cities in the United States, Europe, Asia, the Far East, and then back to Manila, the place of destination. Ortigas' ticket for all these different legs of his journey was first class. He left Manila October 12, 1963, as scheduled. In New York, he decided to leave out some cities, included in his original itinerary, to be in Hongkong on the 19th day of November, 1963, for several appointments he had there. He went to the Trans World Airlines and had his Pan American ticket changed with First Class TWA Ticket No. 115460-451-878 to 881. His TWA ticket was also first class for the entire trip from New York to several European cities, including Rome, and thence to the Far East, with Manila also as the place of destination.

Ortigas arrived in due course in Rome. To be sure be could fly first class to Hongkong on November 18, 1963, for his appointments there the next day,Ortigas repaired to the office of the Alitalia on Saturday, November 16, 1963, to book passage. The man at the counter of the Alitalia office told him it had no flight on Monday but the Lufthansa had. The man thereupon called up the office of the Lufthansa and, after talking to an employee thereof, told Ortigas that the Lufthansa had no first class, but only economy, seats available on its Monday flight. Ortigas answered that he was not willing to take an economy seat and requested the employee to call up other airlines. Then the phone rang. The employee answered and afterwards informed Ortigas that the Lufthansa had a first class seat available for its Monday flight. Ortigas immediately asked him to get the seat and to see to it that his ticket be confirmed and validated for the flight and a first class seat. The man thereafter asked for Ortigas' passport and other travel papers and attached a validating sticker (Exhibit 'D-1') on flight coupon No. 4 (Exhibit 'B') which corresponded to the Rome-Hongkong leg of his TWA Ticket No. 115-460-451-878. The sticker recites:

FlightRes. CarrierNo.DateTimeStatus LH64618 Nov.12:35 P.M.O.K. Wishing to be doubly sure, Ortigas again requested the Alitalia employee to call back the Lufthansa office to recheck whether his ticket was really confirmed and validated. The man did so, after which he told Ortigas that his ticket had been checked, validated, and confirmed as shown by the word 'O.K.' on the sticker. The same employee later wrote on the cover of the plaintiff's ticket '10.15 Terminal-36, via Gioliti' (Exhibits 'C' and 'C-1') and told him to be in the air terminal on Monday, November 18, at 10:00 A.M. The following Monday, Ortigas checked out of his hotel and took a taxi to the terminal, arriving there about 9:30 A.M. He unloaded his baggage and proceeded to the counter in charge of the Lufthansa passengers. The lady at the counter told him the Lufthansa had no space for him that day. Ortigasrequested her to check with her main office, which she did by calling it up. After calling, she apologized and said the plaintiff's ticket was in order and would be confirmed and validated. On her request, Ortigas had his luggage weighed and was given the free luggage allowance of a first class passenger. He was furthermore asked to pay 800 liras for bus fare and 700 liras as embarkation tax. Then Ortigas, along with other passengers, one of whom was Amado Castro of the Development Bank of the Philippines, boarded a bus for the airport. At the airport, the plaintiff handed over his ticket to the man behind the Lufthansa counter, who told him everything was all right. At that juncture, the plaintiff heard his name called. He inquired if he was being called from an employee of the Lufthansa and, on receiving an affirmative answer, said he wasOrtigas. The employee asked for his passport and other papers and, after examining his passport,

where his Filipino nationality appears, said he could not board the plane that day because his seat would be given to a Belgian. Ortigas asked the man why he was doing that to him when his ticket was confirmed and validated first class. The Lufthansa employee replied he was sorry but Ortigas could not leave. Fearing he would have a recurrence of his heart ailment, Ortigas took a nitroglycerin pill which his doctor advised him to take on occasions of stress. The plaintiff then told the Lufthansa man to bring the Belgian over so that his papers may be examined to determine whether he had a preferred right to Ortigas'seat but the Lufthansa employee turned down the request, raised his voice, and said if the plaintiff desired, he could take an economy seat and he would be allowed a refund. Ortigas retorted he was not interested in a refund and what he wanted was to travel first class in accordance with his ticket. This argument occurred in the presence of the other passengers, one of whom was Amado Castro, and the plaintiff felt embarrassed and humiliated because the Lufthansa employee was shouting at him and treating him the way he did. Ortigas made another request, namely, that the employee call other airlines to inquire if they had flights to Hongkong that day but he once more turned down the plea and insisted that Ortigas travel economy, with the promise that he will be transferred to first class in Cairo and onward to Hongkong. After promising to, the man went inside a room and, after a while, came out and assured the plaintiff he would travel first class from Cairo to Hongkong because he sent a communication that it should he done. He then jotted down some letters on Ortigas' ticket. The plaintiff replied he was not satisfied with the arrangement but was constrained to agree to it because he had to be in Hongkong the next day, his luggage was in all probability already inside the plane, he was not certain he could still secure a hotel reservation, the manager of the hotel where he shyed having told him it would be hard for him to get another reservation once he checks out, and he was assured he would be given first class passage from Cairo onward. Upon arrival in Cairo, the plaintiff requested the Lufthansa agent to transfer him to first class but the agent said he could not and that he did not receive any communication from Rome to that effect. Ortigas also requested the man to find out if there were other airlines having planes leaving that day but his request was likewise denied. The man, however, promised that at Dharham, Ortigas will be transferred to first class. Ortigas had no alternative but to continue traveling as before but he did so again under protest. At Dharham, the plaintiff once more requested a transfer to first class but was also told by the Lufthansa agent that he had not received any communication about the change and the request could not be granted. The plaintiff had to travel perforce economy from Dharham. In Calcutta, Ortigas once again requested a transfer or that he be assisted in booking passage on other planes but was also refused. It was only in Bangkok when the chief steward asked him if he wanted to move over to first class but having been already embarrassed and humiliated and the trip to Hongkong being only three hours, he said he would not as a sign of protest.

In Hongkong, Ortigas protested against the treatment given him but was told by the Lufthansa office he had to file his protest in Manila, it being the point of destination. He did so by means of a letter, dated November 25, 1963 (Exhibit "F"), followed by another letter, dated December 20, 1963 (Exhibit "C"), and not having received any definite answer, he brought this suit. Although Ortigas' ticket for the flight from Rome to Hongkong was validated and confirmed by the Alitalia, its act bound and obligated the Lufthansa. The Alitalia and Lufthansa are members of the International Air Transport Association (IATA). It is admitted that as such member, the Alitalia can issue tickets for other members of the association like the Lufthansa, Pan American World Airways, and others. Par. 10, Order of April 29, 1964, and Exhibit "H", certification of the manager of the Alitalia. Aside from being members of the IATA, the Alitalia and Lufthansa are pool partners and conduct a joint service with interchangeable flights for the European-Far East-and Australia sectors. Par. 11, Order of April 29, 1964. Under the pool agreement (Exhibit "DD") they undertake to adhere to the appropriate IATA regulations and to take measures to provide district sales offices with every possibility for close cooperation in the promotion of the pool services covered by the agreement, including "reservation and booking". They furthermore, in effect confirm in the agreement that tickets of one, other than free and reduced tickets, may be validated by the other. Finally, Manuel Otayza, general manager of Filital, Inc., which is the general agent of the Alitalia in the Philippines, testified that space reservation through telephone calls between airlines is permitted by IATA's, 'Manual of Traffic Conference Resolutions' and that telephone calls for reservation by one airline to another is in fact accepted procedure in accordance with the official airline guide of the Air Traffic Conference and International Air Transport Association (Exhibit "W") The placing by the Alitalia of a sticker on the plaintiff's ticket obligated the Lufthansa to give him a first class seat on its flight from Rome to Hongkong on November 18, 1963. The same witness, Manuel Otayza, testified that the placing of a validating sticker on a ticket is standard airline procedure; that a sticker changes are status of a reservation; that consequently while Ortigas' ticket was "open", that is, it had no reservation for a particular flight between Rome and Hongkong, the moment a validating sticker was placed thereon, stating the flight number of the airline, the day and hour of departure, with the letters "O.K", his ticket was changed from an "open" to a "confirmed" or "validated" ticket; and that the sticker on Ortigas' ticket meant that first class space was confirmed for him on Lufthansa flight 646 to Hongkong on November 18, 1963, at 12:35 P.M. Aside from Otayza's testimony, it is admitted that in the stipulation of facts that "the letters 'O.K.' (Exhibit D-2) appearing on the 'Res. Status' box of the sticker (Exhibit D1) attached to Flight Coupon No. 4 of TWA Ticket No. 015-410: 451-880 (Exhibit "D") means space confirmed', per IATA Resolution 275, page 4, Issue 2, a photostatic copy of which is attached hereto as Exhibit 'O'; that validate' means to stamp or write on the passenger ticket an indication that the passenger ticket has been officially issued by the carrier; that "the placing of a sticker on a flight coupon is a revalidation thereof for the flight mentioned in said sticker and is an alteration effected on said coupon, in accordance with the procedure laid down in IATA Resolution 275d, Page 1, Issue 1, a

photostatic copy of which is attached thereto as Exhibit 'S'"; and that "prior endorsement was not necessary for Alitalia to revalidate TWA Ticket No. 115-410-880 Exhibit "D") because Alitalia is the carrier originally designated in the 'Via carrier' box of said ticket, in accordance with IATA Resolution No. 279, photostatic copy of which is attached hereto as Exhibit 'T' ". There was, therefore, a valid and binding contract between Lufthansa and the plaintiff to transport him as a first class passenger from Rome to Hongkong on November 18, 1963, and this agreement the defendant violated by compelling the plaintiff to travel as an economy passenger. It cannot be said the breach was the result of an honest mistake or excusable negligence. There is evidence the defendant acted with bad faith and in wilful disregard of the plaintiff's rights. Ortigas' ticket was confirmed on the early morning of November 16, 1963, more than 43 hours before his departure on the afternoon of November 18. There was, therefore, ample time to send a telex message from Rome to the defendant's main office in Frankfurt, which is only about 2-1/2 flying hours away, to reserve a first class seat for the plaintiff.

At the terminal on Via Gioliti, he was again told that he had a first class seat, his luggage was checked in divesting him of control thereof, and transported to the airport some 37 kilometers distant. He was in this manner deprived of the opportunity of availing himself of the facilities of other airlines and compelled to take the Lufthansa flight even against his will. In the airport, although he was found entitled to fly first class, he was told after his Filipino passport was seen, that his seat would be given to a Belgian, without any reason or explanation whatsoever. His simple request that the Belgian's ticket be produced and examined to see who had a better right to a first class seat was turned down. So was his equally simple request that other airlines be called to find out if any of them could accept him as a first class passenger to Hongkong that day. He was deceived into boarding the Lufthansa plane at Rome by falsely assuring him he will be transferred to first class at Cairo, the next stop in the flight. The same false and deceptive promise was given him at Dharham and Calcutta. Indubitable proof of the defendant's bad faith is found in the fact that while its employee was assuring the plaintiff be would be transferred to first class in Cairo, he was at the same time writing on his ticket the following notation: 'TRVLDY/c ROME HEG ROME ST', which means 'Travelled economy class Rome to Hongkong St', thereby barring Ortigas from asserting any right to demand first class accommodation. The defendant's employee, therefore, knew all along the plaintiff would not travel first class, and yet he deliberately made him believe he would be transferred to first class from Cairo to Hongkong. From the circumstances, it is clear that the defendant not only breached its duty to the plaintiff but also did not want to release him as a passenger and wished to hold

on to him even if it would cause him inconvenience and embarrassment." (Pages 97109, Record on Appeal.)

Disputing the foregoing conclusions, Lufthansa claims firstly that the Alitalia employee who validated and confirmed Ortigas' reservation must have made a mistake because actually, he was informed by the Lufthansa Rome office that Ortigas could only be waitlisted. Assuming, however, there was such an error, it has been indisputably proven that under the so-called pool arrangement among different airline companies pursuant to the International Air Transport Association (IATA) agreement of which Alitalia and Lufthansa are signatories, both companies are constituted thereby as agents of each other in the issuing of tickets and other matters pertaining to their relations with those who would need their services, and since there can be no question that on its face, the annotations made by Alitalia on the ticket here in dispute cannot have any other meaning than that the reservation of Ortigas for the Rome Hongkong flight was validated and confirmed, Lufthansa'sdisclaimer is unavailing. Besides, it appears that when Ortigas checked in at the airport, the Lufthansa lady employee thereat told him, after making the proper verification, that the reservation was correct. What is more, in the unconcluded testimony of Ivo Lazzari, the striking out of which is questioned by Lufthansa, he admitted that it was a fact that the said reservation of plaintiff for first class was confirmed, albeit he qualified that this was done already in the morning of November 18th, the day of the flight, almost at the last hour. What seems to have happened was that somehow the first class accommodations for that flight were overboard and Lufthansa tried to solve the problem by downgrading Ortigas to the economy class in favor of a Belgian, as Ortigas was told by the Lufthansaemployee who paged him over the public address system for the purpose just as he was about to go to the departure area, with his luggage already checked and his overweight fees duly paid, so much so that they were already loaded in the plane. Verily, such treatment given to plaintiff was completely wrong and absolutely unjustifiable. Nobody, much less a common carrier who is under constant special obligation to give utmost consideration to the convenience of its customers, may be permitted to relieve itself from any difficulty situation created by its own lack of diligence in the conduct of its affairs in a manner prejudicial to such customers. It is Our considered view that when it comes to contracts of common carriage, inattention and lack of care on the part of the carrier resulting in the failure of the passenger to be accommodated in the class contracted for amounts to bad faith or fraud which entitles the passenger to the award of moral damages in accordance with Article 2220 of the Civil Code. But in the instant case, the breach appears to be of graver nature, since the preference given to the Belgian passenger over plaintiff was done willfully and in wanton disregard of plaintiff's rights and his dignity as a human being and as a Filipino, who may not be discriminated against with impunity. Lufthansa contends, however, that there could not have been any possible discrimination by reason of race against Ortigas because from his appearance, said plaintiff can easily be taken for a European or white more than his own witness Amado Castro and besides, there were other orientals in the same flight on that occasion. It is argued that any such policy would be self-defeating, since it would certainly be damaging to its own business. Again, this ratiocination cannot carry the day for Lufthansa, for what appears from the evidence in this case is not really a case of a general policy of discriminating against orientals or non-whites, but a specific act of Lufthansa's employee at the airport of giving preference to a Belgian

after examining Ortigas' passport wherein his Filipino nationality is noted. Indeed, the fact that despite plaintiff's protestations and demand that he be shown how it could happen that somebody else, particularly that Belgian, should be given his place when his reservation was validated and confirmed and actually, he had already checked in and his luggage was already in the plane, nothing was done to satisfy him, merely infused bad faith into the breach of contract already committed of depriving plaintiff of his reserved accommodation. In other words, from the legal standpoint, such preference given to a European surely aggravated the damage or injury suffered by plaintiff, but the very act alone of deliberately downgrading him despite his confirmed reservation for first class accommodation is sufficient ground for relief. And considering that there are already recorded cases in this Court wherein Filipinos have been similarly discriminated against by foreign airline company employees in the treatment of passengers, this new instance can easily be believed and correspondingly dealt with in fixing and assessing the liability of herein defendant. As found by the court below what worsened the situation of Ortigas was that Lufthansa succeeded in keeping him as its passenger by assuring him that he would be given first class accommodation at Cairo, the next station, the proper arrangements therefor having been made already, when in truth such was not the case. Thus, instead of complying with the request of Ortigas that other airlines be contacted to find out if they had first class space for him, the Lufthansa employee who had indifferently told him about his downgrading paid very little attention if ever to said request. And to keep him from giving the business to another company, he was made to believe that he would be given first class accommodation at Cairo. Although molested and embarrassed to the point that he had to take nitroglycerine pills to ward off a possible heart attack, Ortigas hardly had any choice, since his luggage was already in the plane. To his disappointment, when the plane reached Cairo, he was told by the Lufthansa office there that no word at all had been received from Rome and they had no space for him in first class. Worse, similar false representations were made to him at Dharham and Calcutta. It was only at Bangkok where for the first time, Ortigas was at last informed that he could have a first class seat in that leg of the flight, from Bangkok to Hongkong. This Ortigas rejected, if only to make patent his displeasure and indignation at being so inconsiderately treated in the earlier part of his journey. Lufthansa insists in its brief that it could have proven that there was no such "entrapment of a captive passenger" had it been allowed the postponement it sought of the September 28, 1966 hearing. It is argued that there could have been no way by which its Rome office could have assured Ortigas about what he would be given in Cairo, the flight being fully booked as it was without any assurance of any first class seat being vacated by then. We are not impressed. In view of the insistence of plaintiff that he be given the first class accommodation he had contracted and paid for, the least that the Rome office should have done was to communicate with Cairo and strongly urge that all possible effort be made to comply with his well grounded request. As it happened, however, the Cairo office informed Ortigas when he arrived there that they had not received any word at all from Rome. On the contrary, as pointed out by the trial court, contrary to the verbal assurance givenOrtigas, the Lufthansa employee made annotations on his ticket that he was travelling economy class from Rome to Hongkong. If, as contended by Lufthansa,Ortigas was duly advised to make arrangements for transfer to first class as soon as he arrived at each station

on the way, why was such notation made that he was travelling up to Hongkong in economy class? All these only go to show that any evidence of defendant tending to disprove the testimony of Ortigas would in any event have been inconclusive or unreliable.

Likewise, Lufthansa maintains that it could have proven that Ortigas did not take offense at being downgraded, as in fact, according to Lufthansa, he was in jovial mood throughout the trip enjoying his conversation and exchange of amenities with his seatmate, who by strange coincidence happened to be the Manager ofLufthansa German Airlines for the district of Australia and New Zealand holding said position since 1962. 1 Moreover, it is argued, the economy class accommodations are not much different from first class and Ortigas was not delayed in his trip. We cannot see the point. A passenger contracts for first class accommodations for many reasons peculiar to himself and pays a higher price therefor, and it is certainly not for the airplane to say later, after it deprives him of his space in order to favor another passenger, that economy class is anyway just as good as first class. That Ortigas was rightfully indignant is not difficult to imagine. No person in his normal senses and possessed of human dignity would have been unperturbed and unruffled by the treatment he had received. More, he was under express admonition of his doctor taking care of his ailing coronary condition to travel only in first class. Indeed, that he complained and made himself emphatically clear while still in Rome is sufficiently substantiated in the record, as it was more or less admitted by defendant's witness Lazzari when he testified that he heard about plaintiff's complaint that same day, November 18, 1963. In the light of all the foregoing, there can be no doubt as to the right of Ortigas to damages, both moral and exemplary. Precedents We have consistently adhered to so dictate. Beginning with Cuenca, 2 wherein the Court rejected the theory that an air carrier is liable only in the event of death or injury suffered by a passenger, because, according to the Court, to so hold would be tantamount to declaring the carrier "exempt from any liability for damages in the event of its absolute refusal, in bad faith, to comply with a contract of carriage, which is absurd", We have uniformly upheld the right of a passenger to damages in all cases wherein, after having contracted and paid for first class accommodations duly confirmed and validated, he is transferred over his objection to economy class, which he has to take in order to be able to arrive at his destination on his scheduled time. In the case of Nicolas L. Cuenca, then Commissioner of Public Highways of the Philippines, he boarded a Northwest plane in Manila with a first class ticket to Tokyo, but upon arrival at Okinawa, an agent of the company rudely compelled him, over his protest, to move over to the tourist class, which he had to do, so he could reach the international conference he was attending on time. Under these facts, the Court held that the P20,000 awarded by the lower court to Cuenca "may well be considered as nominal and also as exemplary, the Court of Appeals having modified the trial court's designation thereof as moral, saying it should have been nominal. In Lopez 3 , Honorable Fernando Lopez, then an incumbent senator and former Vice President of the Philippines, together with his wife and his daughter and son-in-law, made first class

reservations with the Pan American World Airways in its Tokyo-San Francisco flight. The reservation having been confirmed, first class tickets were subsequently issued in their favor. Mistakenly, however, defendant's agent cancelled said reservation, but expecting some cancellations before the flight scheduled about a month later, the reservations supervisor decided to withhold the information from them, with the result that upon arrival in Tokyo, the Lopezes discovered they had no first class accommodations and were thus compelled to take the tourist class, just so the senator could be on time for his pressing engagements in the United States. In the light of these facts, the Court held there was a breach of the contract of carriage and viewed as the element of bad faith entitling the plaintiffs to moral damages for such contractual breach, the failure of the agents of the defendant to inform the plaintiffs on time that their reservation for first class had long before been cancelled by mistake. According to the Court, such omission placed plaintiffs in a predicament that enabled the company to keep the plaintiffs as their passengers in the tourist class, thereby retaining the business and promoting the company's self-interest at the expense of, embarrassment, discomfort and humiliation on the part of the plaintiffs. In Air France vs. Carrascoso, 4 plaintiff Mr. Rafael Carrascoso, a civil engineer who was going to Lourdes, France, as a member of a religious group of pilgrims was issued by the Philippine Air Lines, as agent of the defendant Air France, a ticket for first class round trip from Manila to Rome. From Manila, Carrascoso travelled first class, as per said ticket, but at Bangkok, the Manager of the defendant airline forced him to vacate the first class seat because there was a white man who allegedly had a better right thereto, without, however, showing him the basis for such preference. Upon these factual premises, the Court held:
"It is really correct to say that the Court of Appeals in the quoted portion first transcribed did not use the term 'bad faith'. But can it be doubted that the recital of facts therein points to bad faith? The manager not only prevented Carrascoso 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, this is bad faith. Unless, of course, bad faith has assumed a meaning different from what is understood in law. For, 'bad faith' contemplates a 'state of mind affirmatively operating with furtive design or with some motive of self-interest or ill will or for ulterior purpose.' (Words & Phrases, Perm. Ed., Vol. 5, p. 13, citing Warfield Natural Gas Co. vs. Allen, 59 S.W. (2d) 534, 538.) And if the foregoing were not yet sufficient, there is the express finding of bad faith in the judgment of the Court of First Instance, thus: 'The evidence shows that defendant violated its contract of transportation with plaintiff in bad faith, with the aggravating circumstances that defendant's Manager in Bangkok went to the extent of threatening the plaintiff in the presence of many passengers to have him thrown out of the airplane to give the 'first class' seat that he was occupying to, again using the words of the witness Ernesto G. Cuento, a 'white man' whom he (defendant's Manager) wished to accommodate, and the defendant has not proven that this 'white man' had any 'better right' to occupy the 'first class' seat that the plaintiff was occupying, duly paid for, and for which the

corresponding 'first class' ticket was issued by the defendant to him.' (R.A., p. 74; emphasis supplied.) (at pp. 166-167.)

These precedents, as may be seen, apply four-square to herein plaintiff's case. Defendant's liability for willful and wanton breach of its contract of carriage with plaintiff is, therefore, indubitable. Coming now to the amount that should be awarded by way of damages to the plaintiff, it is also the teaching of the cases aforecited that defendant is liable not only for moral but also for exemplary damages. As earlier stated, the court below fixed the compensation for moral damages at P100,000 and the exemplary at P30,000. The Court believes that these amounts are not enough. According to the lower court:
"Although the plaintiff has not held any elective public office, he has however, a distinguished record as a private citizen, a lawyer, businessman, a civic and religious leader, a member of numerous government boards and organizations as well as of local and international bodies, and is the recipient of awards and citations for outstanding services and achievements. He was, and still is, moreover suffering from a heart ailment and has been advised by his physician to travel first class because it is more relaxing and comfortable. His position as chairman of the boards of directors of the corporation he represented also required that he travel in that manner. He was, furthermore, carrying a special passport issued by the Philippine Government to represent it and business corporations abroad. His sickness and the need for him to travel in the most comfortable manner possible were made known to the defendant's employee, but he paid no heed to them. Instead, he engaged Ortigas in a heated discussion, summarily brushed off his protests and pleas, humiliated him, and tricked him into boarding his employer's plane, endangering thereby his health and obliging him to take medicine to forestall an attack. There is, finally, evidence that he was discriminated against because of his nationality, for he was told to yield his first class seat to a Belgian only after his passport was examined and his Filipino citizenship must have been noted. "Under the circumstances and measured by the criterion jurisprudence has followed, the compensation the plaintiff should be entitled to receive must be fixed at P100,000.00 as moral damages, P30,000.00 as exemplary damages or corrective damages, and P20,000.00 as attorney's fees." (Pp. 111-113, Record on Appeal.)

We have reviewed the evidence and We are convinced there is more than ample basis for these findings. But under the circumstances revealed in the record, it is Our considered opinion that the award of moral damages should be increased to P150,000.

We cannot go along with defendant's pose that in Cuenca the amount awarded was only P20,000, for the very obvious reason that in that case what was involved was only one leg of the flight contracted for, namely, that from Okinawa to Tokyo, whereas in the case not at bar, the offense was repeated four times, at Rome, Cairo, Dharham and Calcutta, with apparent cold indifference of defendant's agents to plaintiff's plight. Besides, it appears that Cuenca did not appeal from the trial court's decision fixing said amount, hence there was no occasion for the Supreme Court to award more. This was also what happened in the Carrascoso case, where the plaintiff did not complain against the award of only P25,000moral-and-P10,000-exemplary damages made by the trial court. It was Air France who claimed that these were even excessive. Verily, however, such discriminatory acts of the defendants in those cases which were not only violative of their contractual obligations but also offensive to human dignity and national or racial pride constitute about the most justifiable ground for the award of moral damages, for the resulting injury therefrom cannot but cause immense mental anguish, besmirched reputation, wounded feelings, moral shock and social humiliation. (See Article 2217 of the Civil Code.) We reiterate, they are to be considered as infecting with bad faith the breach of contract committed, under Article 2220 of the same Code. (Lopez vs. Pan Am., supra.)

Lufthansa suggests that compared to the P100,000 awarded to Vice President Lopez in the case aforementioned, the P100,000 given by the trial court to Ortigas are "grossly excessive". It does not appear to Us to be so. As pointed out by His Honor, "although plaintiff has not held any elective public office, he has, however, a distinguished record as a private citizen, a lawyer, businessman, a civic and religious leader, a member of numerous boards and organizations as well as local and international bodies, and is the recipient of awards and citations for outstanding services and achievements." Indeed, under the proven facts in the record, We cannot regard plaintiff to be in any inferior position vis-a-vis Vice President Lopez in the highest circles of Philippine society and in the business and religious world, not to speak of his standing in government officialdom. Besides, there is again the disparity between the Lopez case and this one that here the offense, which, as in Cuenca, is aggravated by the Lufthansa employee at Rome having falsely noted on the ticket that Ortigas was travelling in economy from Rome to Hongkong, 5 was repeated four times in the same trip, namely, in Rome, Cairo, Dharham and Calcutta. More importantly, unlike in the case of Lopez, Ortigas was suffering from a weak heart and was under doctor's advice to travel only in first class, hence, his being compelled to stay in economy or tourist class during the major part of his trip, must have given him added apprehensive feelings about his safety. And, moreover, it is to be noted that in the Lopez case, which was decided in 1966, aside from taking into account the personal circumstances of the plaintiff, the Court considered "the present rate of exchange and the terms at which the amount of damages awarded would approximately be in U.S. dollars", hence, We may not justifiably do differently here. Furthermore, it may not be amiss to mention here that in Zulueta vs. Pan American World Airways, Inc., 43 SCRA 397, the Court awarded the plaintiffs: Zulueta, the husband, his wife

and a minor daughter, a total of P775,000 as damages, consisting of P500,000 as moral, P200,000 as exemplary and P75,000 as attorney's fees, apart from actual damages. In that case, the Zulueta's were coming home to Manila from Honolulu in a Pan-American plane. At Wake, however, where the plane arrived at 4:00 o'clock in the morning, Zulueta could not be found at flight time because, without letting anyone know, not even his wife or daughter, he had relieved himself, according to him, at the beach behind the terminal. When at last, he was found, the Pan-Am employee who first met him while walking back from the beach remonstrated him thus: "What in the hell do you think you are? Get on that plane." This angered Zulueta who engaged the said employee in an exchange of angry words. In the meanwhile, the pilot who had been tipped by a "man from the State Department", also a passenger in that flight, that there might be a bomb in the plane and expressed apprehension for the safety of the flight unless Zulueta could be found, ordered the unloading of the bags of the Zuluetas, and when three of the four of them had already been unloaded, he ordered Zulueta to open them, but the latter refused. Another exchange of angry words followed, in the course of which, according to Zulueta's evidence, the pilot went to the extent of referring to him and his family as "those monkeys" Ultimately, the plane left without Zulueta, albeit his wife and daughter were on board, because the captain refused to allow Zulueta to board until after his bags were opened and inspected, which Zulueta refused entirely to do. Although, said decision is not yet final, because of the pendency of a second motion for reconsideration the Court has not yet resolved, the Court has already allowed the partial execution of the judgment, thus enabling Zuluetas to collect already one-half of the amount or over P335,000, which amount, according to the concurring and dissenting opinion there of the writer of the instant decision could be the least that should anyway be allowed. Of course, the Court did not itemize the award but granted the same to the family as a whole, but it is evident that in the final distribution, Zulueta would get for himself from at least P150,000 to not more than P200,000. 6 We hold that the foregoing considerations justify the increase of the award of moral damages from P100.000 to P150,000. Finally, We have the dispute regarding the amount of exemplary damages awarded. In this respect, it is Our considered opinion that defendant should pay P100,000 instead of the P30,000 awarded by the trial court. The record of this case taken together with what are revealed in the other similar cases decided by this Court, those aforediscussed, convinces Us that defendant, as an airline, should be made to pay an amount that can really serve as a deterrent against a seeming pattern of indifference and unconcern, and what is worse, of discrimination for racial reasons, discernible in the treatment of air passengers. This is not the first case, and unless the proper sanctions are applied, it does not appear it is going to be the last yet, of instances wherein Filipino passengers having validated and confirmed tickets for first class would be shoved to the economy class, over their valid objections and without any regard at all to their feelings and convenience, only to favor other passengers presumed by the airlines to be of superior race, hence, deserving preference. It is high time everyone concerned were made to realize that the laws of the Philippines do not permit any act of discrimination against its citizens, specially when this accompanies a clear breach of contractual obligations of common carriers whose business is affected with public interest and must be directed to serve the convenience and comfort of the passengers. When any

disregard of such laws is committed, the Supreme Court, as the interpreter of such laws, must exact the commensurate liability which they contemplate. "Exemplary damages are required by public policy, for wanton acts must be repressed. They are an antidote so that the poison of wickedness may not run through the body politic." (Report of Code Commission, pp. 75-76) by authority of the decided cases aforediscussed, 7 acts of similar nature as those herein involved fall within the category of those justifying the imposition of exemplary damages pursuant to the codal concept just stated. "The rationale behind exemplary or corrective damages is, as the name implies, to provide an example or correction for public good. . . . In view of its nature, it should be imposed in such an amount as to sufficiently and effectively deter similar breach of contracts by defendant or other airlines." (Lopez v. Pan-American World Airways, supra; see also Rotea vs. Halili, 109 Phil. 495; People vs. Medroso, Jr., G.R. No. L-37633, Jan. 31, 1975, 62 SCRA 245; Cotabato Timberland Co. Inc. vs. Plaridel Lumber Co., Inc., 13 SCRA 235) Thus, all relevant matters considered, P100,000 of exemplary damages, which practically amounts only to not more than $15,000 U.S. under the present rate of exchange, would serve the ends for which the liability has been conceived. WHEREFORE, the judgment appealed from is modified by raising the award of moral and exemplary damages to plaintiff Ortigas to P150,000.00 and P100,000.00, respectively. In all other respects, including as to the payment of interests on the said amounts, the same is affirmed. PHILIPPINE RABBIT BUS LINES, INC. and NICASIO DE LOS REYES, petitioners, vs. PATROCINIO ESGUERRA, TRANSPORT CONTRACTORS, INC. and MODESTO JOAQUIN, respondents.

Angel A. Sison for petitioners. Sycip, Salazar, Luna, Manalo & Feliciano for respondent Patrocinio Esguerra. M.G. Palileo & F.T. Chua for respondents Transport Contractors Inc.
SYPNOSIS Respondent Patrocinio Esguerra, a paying passenger in a bus of Philippine Rabbit Bus Lines, Inc., was seriously injured when said vehicles and a freight truck of Transport Constractors, Inc. sideswiped each other in the midle of the road. Esguerra filed an action for damages against the owners of said vehicles and their respective drivers. The trial court dismissed the complaint against Transport Constractors, Inc. and Modesto Joaquin but ordered Philippine Rabbit Bus Lines, Inc. and Nicasio de los Reyes to pay solidarily the plaintiff P25,085.40 as compensatory damages, P5,000.00 as moral damages, P 2,000.00 as attorney's fees and the costs of the suit. On appeal, the Court of Appeals modified the

compensatory damages to. P20,085.40 and ordered all four defendants to pay solidarily said amounts to the plaintiff. On certiorari, petitioners Philippine Rabbit Bus Lines, Inc. and Nicasio de los Reyes contend that the award of P 5,000.00 moral damages is contrary to law and jurisprudence; and that the award of P2,000.00 attorney's fees is without factual and legal basis. On review, the Supreme Court held that the instant case falls under the jurisprudential rule that moral damages are not recoverable in actions for damages predicated on a breach of contract of transportation in view of the provisions of Articles 2219 and 2220 of the New Civil Code; but that with respect to the attorney's fee of P2,000.00, the same need not be proved and is allowed in the discretion of the court after considering several factors which are discernible from the facts brought out during trial, such as its present in the instant case where respondent Esguerra as plaintiff in the lower court was compelled to litigate and incur expenses in order to protect his interest. SYLLABUS 1.CIVIL LAW; DAMAGES; MORAL DAMAGES GENERALLY NOT COVERABLE IN ACTIONS FOR DAMAGES BASED ON BREACH OF CONTRACT OF CARRIAGE. This Court has repeatedly held (Cachero v. Manila Yellow Taxicab, Inc., G.R. No. L-8721, May 23. 1957; Necesito v. Paras, et al., G.R. Nos. L-10605-10606, June 30, 1958; Fores v. Miranda, G.R. No. L-12163, March 4, 1959; Tamayo v. Aquino, et al., G.R. No. L-12634, May 29, 1959) that moral damages are not recoverable in actions for damages predicated on a breach of the contract of transportation, as in the instant case, in view of the provisions of Articles 2219 and 2220 of the New Civil Code. 2.ID.; ID.; ID.; EXCEPTION. The exceptions are (I) where the mishap results in the death of a passenger, and (2) where it is proved that the carrier was guilty of fraud or bad faith, even if death does not result. (Rex Taxicab Co., Inc. vs. Jose Bautista, et at., G.R. No. L15392, Sept. 30, 1960). 3.ID.; ID.; ID.; GENERAL RULE APPLIES TO CASE AT BAR. The Court of Appeals found that the two vehicles sideswiped each other at the middle of the road. In other words, both vehicles were in their respective lanes and that they did not invade the lane of the other. It cannot be said therefore that there was fraud or bad faith on the part of the carrier's driver. This being the case, no moral damages are recoverable. 4.LEGAL ETHICS; ATTORNEY'S FEES; RECOVERABLE WHERE PLAINTIFF IS COMPELLED TO LITIGATE AND INCUR EXPENSES IN ORDER TO PROTECT HIS INTEREST; CASE AT BAR. With respect to attorney's fee of P2,000.00, the same need not be proved as herein petitioners contended. The same is allowed in the discretion of the court after considering several factors which are discernible from the facts brought out during the trial. In this case, plaintiff was compelled to litigate and incur expenses in order to protect his interest.

DECISION RELOVA, J :
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In this petition for certiorari, petitioners pray that the portion of the decision of the Court of Appeals sentencing the Philippine Rabbit Bus Lines. Inc. to pay solidarily the sum of P5,000,00 as moral damages and sentencing both petitioners to pay respondent Patrocinio Esguerra the sum of P2,000.00 as attorney's fees, be revoked. Records show that the Court of First Instance of Manila rendered a decision in Civil Case No. 53698, entitled: Patrocinio Esguerra versus Philippine Rabbit Bus Lines, Inc., Nicasio de los Reyes, Transport Contractors, Inc. and Modesto Joaquin, the dispositive portion of which reads:
"WHEREFORE, judgment is hereby rendered dismissing the complaint against defendants Transport Contractors, Inc. and Modesto Joaquin but sentencing defendants Nicasio de los Reyes and Philippine Rabbit Bus Lines, Inc., jointly and severally, to pay the plaintiff the sum of P25,085.40 as compensatory damages, P5,000.00 as moral damages, P2,000.00 as attorney's fees and the costs of suit. The cross-claim of defendants Philippine Rabbit Bus Lines, Inc. and Transport Contractors, Inc. against each other are hereby dismissed."

The Court of Appeals modified the decision of the lower court as follows:
"From the foregoing it would appear that all the defendants are solidarily liable; but plaintiffs not having appealed the judgment, no affirmative relief therefrom which absolved defendants Transport Contractors, Inc. and Modesto Joaquin from the complaint as to make them co-responsible with appellantsRabbit Bus and Nicasio de los Reyes. Hence, except the obviously erroneous addition of the items for compensatory damages which would be P20,085.40, not P25,085.40 as stated in the dispositive part of the appealed decision, the judgment appealed from is in accordance with law and the evidence. "WHEREFORE, modified as indicated above, the judgment appealed from is affirmed in all other respects, with costs against all the defendants."

However, in a resolution, dated December 8, 1969, the Court of Appeals modified the dispositive portion of its decision promulgated on July 10, 1969 in the sense that:
". . . the defendants-appellees Transport Contractors, Inc. and Modesto Joaquin are ordered to pay solidarily with the defendants-appellants Philippine RabbitBus Lines, Inc. and Nicasio de los Reyes sums awarded in the judgment, with costs in this instance against all the defendants."

Patrocinio Esguerra was a paying passenger of Bus No. 223 of Philippine Rabbit Bus Lines, Inc. He boarded the said bus at the Manila terminal about four o'clock in the afternoon of November 6, 1961, bound for San Fernando, Pampanga. He sat at the left-end of the fourth

row behind the driver, close to the window. As the busapproached barrio San Marcos, Calumpit, Bulacan, a freight truck owned and operated by the Transport Contractors, Inc. was coming from the opposite direction. The vehicles sideswiped each other. The window glass near the driver's seat of the Rabbit Bus was detached and the left side of its body was damaged. The left forearm of Patrocinio Esguerra was hit by a hard blunt object, breaking the bones into small fragments while the soft tissues of the muscles and the skin were mascerated. He was immediately brought to the Bulacan Provincial Hospital in Malolos, Bulacan for treatment. The left arm was amputated. Plaintiff filed a case against the Philippine Rabbit Bus Lines, Inc. and the Transport Contractors, Inc., together with their respective drivers, praying that judgment be rendered in favor of the plaintiff and against the defendants requiring them to pay, jointly and severally damages, actual and compensatory, moral and exemplary, litigation expenses and costs. The Court of Appeals found that the two drivers of the two vehicles were reckless in driving. The two vehicles sideswiped each other at the middle of the road.
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"By and large, it is not denied that plaintiff's arm was so seriously injured as to need amputation as a result of the collision. It is neither denied that the Transcon truck hit the arm when it came in contact with the Rabbit Bus. It is immaterial which part of the truck hit it. The defendant carrier failed to exonerate itself from its presumed fault."

In this petition, Philippine Rabbit Bus Lines, Inc. and Nicasio de los Reyes contend that the award of P5,000.00 moral damages is contrary to law and violates the prevailing jurisprudence; that the award of P2,000.00 attorney's fees is bereft of legal and factual basis; that moral damages are not allowable against the carrier, if ex-contracto, except when the mishap results in death and where it is proved that the carrier was guilty of fraud or bad faith even if death did not result; that as passenger Esguerra did not die and no fraud or bad faith had been imputed, much less proved, against the carrier, they cannot be adjudged to pay moral damages. Further, petitioners claim that there is no evidence adduced by passenger Esguerra showing actual proof of expenses for attorney's fees. The contention of petitioners with respect to the award of moral damages is meritorious. This Court has repeatedly held (Cachero v. Manila Yellow Taxicab, Inc., G. R. No. L-8721, promulgated May 23, 1957; Necesito v. Paras, et al., G. R. No. L10605-10606, promulgated June 30, 1958; Fores v. Miranda, G. R. No. L-12163, promulgated March 4, 1959; Tamayo v. Aquino, et al., G. R. No. L-12634, promulgated May 29, 1959) that moral damages are not recoverable in actions for damages predicated on a breach of the contract of transportation, as in the instant case, in view of the provisions of Articles 2219 and 2220 of the New Civil Code. The exceptions are (1) where the mishap results in the death of a passenger, and (2) where it is proved that the carrier was guilty of fraud or bad faith, even if death does not result. (Rex Taxicab Co., Inc. vs. Jose Bautista, et al., G. R. No. L-15392, Sept. 30, 1960).
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The Court of Appeals found that the two vehicles sideswiped each other at the middle of the road. In other words, both vehicles were in their respective lanes and that they did not invade the lane of the other. It cannot be said therefore that there was fraud or bad faith on the part of the carrier's driver. This being the case, no moral damages are recoverable. However, with respect to attorney's fee of P2,000.00, the same need not be proved as herein petitioners contended. The same is allowed in the discretion of the court after considering several factors which are discernible from the facts brought out during the trial. In this case, plaintiff was compelled to litigate and incur expenses in order to protect his interest. ACCORDINGLY, this petition is granted with respect to that portion of the decision of the Court of Appeals sentencing herein petitioners to pay the sum of P5,000.00, as moral damages, which is hereby set aside. However, that portion of the decision sentencing petitioners to pay respondent Patrocinio Esguerra the sum of P2,000.00, as attorney's fees, stays. SO ORDERED. SWEET LINES, INC., petitioner, vs. THE HONORABLE COURT OF APPEALS, MICAELA B. QUINTOS, FR. JOSE BACATAN, S.J., MARCIANO CABRAS and ANDREA VELOSO, respondents.

Felixberto Leonardo and Ramon Tuangco for petitioner. Expedito P. Bugarin for respondents.
SYLLABUS 1.CIVIL LAW; COMMON CARRIERS; FAILURE TO FULFILL UNDERTAKING AND/OR INTERRUPTION OF TRIP; LIABILITY FOR DAMAGES; EXISTENCE OF FORTUITOUS EVENT. A CRUCIAL FACTOR. The crucial factor then is the existence of a fortuitous event or force majeure. Without it, the right to damages and indemnity exists against a captain who fails to fulfill his undertaking or where the interruption has been caused by the captain exclusively. As found by both Courts below, there was no fortuitous event or force majeure which prevented the vessel from fulfilling its undertaking of taking private respondents to Catbalogan. In the first place, mechanical defects in the carrier are not considered a caso fortuito that exempts the carrier from responsibility (Landingin vs. Pangasinan Transportation Co., 33 SCRA 284 [1970]). In the second place, even granting arguendo that the engine failure was a fortuitous event, it accounted only for the delay in departure. When the vessel finally left the port of Cebu on July 10, 1972, there was no longer any force mucure that justified by-passing a port of call. The vessel was completely repaired the following day after it was towed back to Cebu. In fact, after docking at Tacloban City, it left the next day for Manila to complete its voyage.

2.ID.; ID.; LIABILITY; MAY NOT BE DIMINISHED OR CANCELLED BY CONDITIONS PRINTED AT THE BACK OF THE TICKET. In defense, petitioner cannot rely on the conditions in small hold print at the back of the ticket. Even assuming that those conditions are squarely applicable to the case at bar, petitioner did not comply with the same. It did not cancel the ticket nor did it refund the value of the tickets to private respondents. Besides, it was not the vessel's sailing schedule that was involved. Private respondents' complaint is directed not at the delayed departure the next day but at the by-passing of Catbalogan, their destination. Had petitioner notified them previously, and offered to bring them to their destination at its expense, or refunded the value of the tickets purchased, perhaps, this controversy would not have arisen. Furthermore, the conditions relied upon by petitioner cannot prevail over Articles 614 and 698 of the Code of Commerce heretofore quoted. 3.ID.; ID.; CIVIL LIABILITY OF OWNER AND SHIP AGENT. The voyage to Catbalogan was "interrupted" by the captain upon instruction of management. The "interruption" was not due to fortuitous event or force 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. 4.ID.; MORAL DAMAGES; RECOVERABLE IN THE CASE AT BAR. 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. That finding of bad faith is binding on this Court, 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 the Court finds 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 illwill, may have been the motive, but it is malice nevertheless." Under the circumstances, however, the Court finds the award of moral damages excessive and accordingly reduce them to P3,000.00, respectively, for each of the private respondents. 5.ID.; ATTORNEY'S FEES; AWARD HELD REASONABLE. The total award of attorney's fees of P5,000.00 is in order considering that the case has reached this Tribunal. 6.ID.; EXEMPLARY DAMAGES; AWARD DISCRETIONARY UPON THE COURT. Insofar as exemplary damages are concerned, although there was bad faith, the Court is not inclined to grant them in addition to moral damages. Exemplary damages cannot be recovered as a matter of right; the Court decides whether or not they should be adjudicated. The objective to meet its schedule might have been called for, but petitioner should have taken the necessary steps for the protection of its passengers under its contract of carriage. 7.ID.; ACTUAL OR COMPENSATORY DAMAGES; NOT MITIGATED WHEN HARM OUTWEIGHS BENEFIT. Article 2215(2) of the Civil Code invoked by petitioner is inapplicable herein. The harm done to private respondents outweighs any benefits they may have derived from being transported to Tacloban instead of being taken to Catbalogan, their destination and the vessel's first port of call, pursuant to its normal schedule.

RESOLUTION MELENCIO-HERRERA, J :
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For having by-passed a port of call without previous notice, petitioner shipping company and the ship captain were sued for damages by four of its passengers, private respondents herein, before the then Court of First Instance of Cebu, Branch VIII. Briefly, the facts of record show that 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, awarded as follows:
"IN THE LIGHT OF THE FOREGOING OBSERVATIONS, judgment is rendered ordering the defendant Sweet Lines, Incorporated to pay to the plaintiffs the following: "1)P75,000.00 as moral damages divided among the plaintiffs as follows: P30,000.00 for Mrs. Micaela B. Quintos, P25,000.00 for Jesuit Father Jose Bacatan; P10,000.00 for Mrs. Andrea Veloso and P10,000.00 for plaintiff Mike Cabras; 2)P30,000.00 as exemplary or corrective damages; 3)Interest at the legal rate of 6% per annum on the moral and exemplary damages as set forth above from the date of this decision until said damages are fully paid; 4)P5,000.00 as attorney's fees; and 5)The costs. Counterclaim dismissed."

The governing provisions are found in the Code of Commerce and read as follows:
"ART. 614.A captain who, having agreed to make a voyage, fails to fulfill his undertaking, without being prevented by fortuitous event or force majeure, shall indemnify all the losses which his failure may cause, without prejudice to criminal penalties which may be proper.

and "ART. 698.In case of interruption of a voyage already begun, the passengers shall only be obliged to pay the fare in proportion to the distance covered, without right to recover damages if the interruption is due to fortuitous event or force majeure, but with a right to indemnity, if the interruption should have been caused by the captain exclusively. If the interruption should be caused by the disability of the vessel, and the passenger should agree to wait for her repairs, he may not be required to pay any increased fare of passage, but his living expenses during the delay shall be for his own account."

The crucial factor then is the existence of a fortuitous event or force majeure. Without it, the right to damages and indemnity exists against a captain who fails to fulfill his undertaking or where the interruption has been caused by the captain exclusively. As found by both Courts below, there was no fortuitous event or force majeure which prevented the vessel from fulfilling its undertaking of taking private respondents to Catbalogan. In the first place, mechanical defects in the carrier are not considered a caso fortuito that exempts the carrier from responsibility. 1 In the second place, even granting arguendo that the engine failure was a fortuitous event, it accounted only for the delay in departure. When the vessel finally left the port of Cebu on July 10, 1972, there was no longer any force majeure that justified by-passing a port of call. The vessel was completely repaired the following day after it was towed back to Cebu. In fact, after docking at Tacloban City, it left the next day for Manila to complete its voyage. 2 The reason for by-passing the port of Catbalogan, as admitted by petitioner's General Manager, was to enable the vessel to catch up with its schedule for the next week. The record also discloses that there were 50 passengers for Tacloban compared to 20 passengers for Catbalogan, 3 so that the Catbalogan phase could be scrapped without too much loss for the company.
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In defense, petitioner cannot rely on the conditions in small bold print at the back of the ticket reading:
"The passenger's acceptance of this ticket shall be considered as an acceptance of the following conditions:

3.In case the vessel cannot continue or complete the trip for any cause whatsoever, the carrier reserves the right to bring the passenger to his/her destination at the expense of the carrier or to cancel the ticket and refund the passenger the value of his/her ticket; xxx xxx xxx 11.The sailing schedule of the vessel for which this ticket was issued is subject to change without previous notice." (Exhibit "1-A").

Even assuming that those conditions are squarely applicable to the case at bar, petitioner did not comply with the same. It did not cancel the ticket nor did it refund the value of the tickets to private respondents. Besides, it was not the vessel's sailing schedule that was involved. Private respondents' complaint is directed not at the delayed departure the next day but at the by-passing of Catbalogan, their destination. Had petitioner notified them previously, and offered to bring them to their destination at its expense, or refunded the value of the tickets purchased, perhaps, this controversy would not have arisen. Furthermore, the conditions relied upon by petitioner cannot prevail over Articles 614 and 698 of the Code of Commerce heretofore quoted. 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. 4 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:
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"(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, defendantsappellants' 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. 5

That finding of bad faith is binding on us, since it is not the function of the Court to analyze and review evidence on this point all over again 6 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 illwill, may have been the motive, but it is malice nevertheless." 7

Under the circumstances, however, we find the award of moral damages excessive and accordingly reduce them to P3,000.00, respectively, for each of the private respondents.

The total award of attorney's fees of P5,000.00 is in order considering that the case has reached this Tribunal. Insofar as exemplary damages are concerned, although there was bad faith, we are not inclined to grant them in addition to moral damages. Exemplary damages cannot be recovered as a matter of right; the Court decides whether or not they should be adjudicated. 8 The objective to meet its schedule might have been called for, but petitioner should have taken the necessary steps for the protection of its passengers under its contract of carriage.
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Article 2215(2) of the Civil Code 9 invoked by petitioner is in-applicable herein. The harm done to private respondents outweighs any benefits they may have derived from being transported to Tacloban instead of being taken to Catbalogan, their destination and the vessel's first port of call, pursuant to its normal schedule. ACCORDINGLY, the judgment appealed from is hereby modified in that petitioner is hereby sentenced to indemnify private respondents in the sum of P3,000.00 each, without interest, plus P1,250.00, each, by way of attorney's fees and litigation expenses. Costs against petitioner. SO ORDERED.

DRA. SOFIA L. PRUDENCIADO, petitioner, vs. ALLIANCE TRANSPORT SYSTEM, INC. and JOSE LEYSON, et al., respondents. DECISION PARAS, J :
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This is a petition for review on certiorari of the decision 1 of the Court of Appeals dated May 4, 1971 in CA-G.R. No. 34832R entitled Dra. Sofia L. Prudenciado v.Alliance Transport System, Inc. and Jose Leyson, which modified the decision 2 of the Court of First Instance of Rizal, Quezon City, in Civil Case No. Q-5235 reducing the amount of moral damages from P25,000 to P2,000 and eliminating the award of exemplary damages and attorney's fees but granting actual damages of P2,451.27.
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The decretal portion of said decision reads:


"WHEREFORE, the decision appealed from is hereby modified, ordering appellants jointly and severally to pay plaintiff the sum of P2,451.27 for actual damages

representing the cost of the repair of the car of Plaintiff; (2) the sum of P2,000.00 as moral damages. No pronouncement as to costs."

The antecedent facts of this case as found by the trial court and by the Court of Appeals are as follows: At about 2:05 p.m. of May 11, 1960, Dra. Sofia L. Prudenciado was driving her own Chevrolet Bel Air car along Arroceros Street with the intention of crossing Taft Avenue in order to turn left, to go to the Philippine Normal College Compound where she would hold classes. She claimed that she was driving her car at the rate of 10 kmph; that before crossing Taft Ave. she stopped her car and looked to the right and to the left and not noticing any on-coming vehicle on either side she slowly proceeded on first gear to cross the same, but when she was almost at the center, near the island thereof, Jose Leyson who was driving People's Taxicab owned and operated by Alliance Transport System, Inc., suddenly bumped and struck Dra. Prudenciado's car, thereby causing physical injuries in different parts of her body, suffering more particularly brain concussion which subjected her to several physical examinations and to an encephalograph test while her car was damaged to the extent of P2,451.27. The damage to the taxicab amounted to P190.00 (Decision in Civil Case No. Q5235, CFI, Rizal; Record on Appeal, pp. 63-64; Decision, CA-G.R. No. 34832-R, Rollo, pp. 3738).
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Dra. Prudenciado filed a complaint for damages at the Court of First Instance of Rizal, Quezon City against the Alliance Transport System and Jose Leyson docketed as aforestated, Civil Case No. Q-5232 (Record on Appeal, pp. 2-11). After due hearing, the Court of First Instance of Rizal, Quezon City, found Jose Leyson guilty of negligence in the performance of his duties as taxicab driver which is the proximate cause of the accident in question. On the other hand, defendant Alliance Transport System, Inc. failed to prove to the satisfaction of the court that it had exercised the required diligence of a good father of the family in the selection, supervision and control of its employees including defendant Leyson. Consequently, both defendants were held jointly and severally liable for the physical injuries suffered by the plaintiff Dra. Sofia L. Prudenciado as well as for the damage to her car, in addition to the other consequential damages prayed for. The dispositive portion of said decision reads:
"IN VIEW OF THE FOREGOING CONSIDERATIONS judgment is rendered, one in favor of plaintiff and against the defendants, by ordering the said defendants, jointly and severally, to pay the plaintiff the sum of P2,451.27 for actual damages representing the cost for the repair of the car of plaintiff; P25,000.00 as moral damages; P5,000.00 as exemplary damages; and the further sum of P3,000.00 as attorney's fees, with costs against the defendants." (Record on Appeal, pp. 71-73).

On appeal, the Court of Appeals rendered the assailed decision on May 14, 1971 and denied petitioner's motion for reconsideration in its resolution dated July 20, 1971. Hence, this petition.

The petition was given due course in the resolution of this Court dated September 6, 1971 and petitioner filed her brief on November 10, 1971 (Rollo, p. 69) while respondents filed their brief on January 24, 1972 (Rollo, p. 86). Petitioner filed her Reply Brief on March 1, 1972 (Rollo, p. 96); after which the case was considered submitted for decision on the same date (Rollo, p. 99). In her brief, petitioner raised the following assignment of errors:
I THE RESPONDENT COURT OF APPEALS ERRED IN REDUCING THE AWARD OF MORAL DAMAGES TO THE PETITIONER FROM P25,000.00 AWARDED BY THE COURT OF FIRST INSTANCE OF RIZAL, BRANCH V, QUEZON CITY, TO P2,000.00 NOTWITHSTANDING THE FACT THAT THERE WAS NO FINDING THAT THE AWARD WAS PALPABLY AND SCANDALOUSLY EXCESSIVE AS TO INDICATE THAT IT WAS THE RESULT OF PASSION OR CORRUPTION ON THE PART OF THE TRIAL COURT; II THE RESPONDENT COURT OF APPEALS ERRED IN ELIMINATING THE AWARD OF EXEMPLARY DAMAGES OF P5,000.00 NOTWITHSTANDING THE FACT THAT THE FINDING OF THE SAID COURT ON THE EVIDENCE AND THE LAW APPLICABLE JUSTIFIED THE AWARD OF EXEMPLARY DAMAGES AS HELD BY THE SAID TRIAL COURT; III THE COURT OF APPEALS ERRED IN FINDING THAT HER DEMOTION IN RANK AS A PROFESSOR IN THE UNITED STATES WAS NOT SUBSTANTIATED AND IN MAKING THIS FINDING A BASIS FOR THE REDUCTION OF THE AWARD OF MORAL DAMAGES, NOTWITHSTANDING THAT IT IS ALREADY TOO FAR-FETCHED AND IT MERELY CONFIRMS THE TRUTH OF THE FACT THAT THE ACCUSED SUFFERED LOSS OF HER USUAL LIVELINESS; VIVACITY, ACTIVITY SELF-CONFIDENCE AND THAT SHE FEELS UNCERTAIN AND INSECURE AND THAT SHE WAS SUBJECTED TO EXTREME FRIGHT AND SERIOUS ANXIETY, SERIOUS APPREHENSION OF LOSING HER LIFE OR HER SENSES OR REASON AND OF HER PHYSICAL MOBILITY ANYTIME AND THAT SHE SUFFERED GREAT SHOCK AND SEVERE PAINS ON HER BACK NEAR THE LEFT SIDE OF HER SPINAL COLUMN OF THE LUMBAR REGION; IV THE RESPONDENT COURT OF APPEALS ALSO ERRED IN ELIMINATING THE AWARD OF ATTORNEY'S FEES TO THE PETITIONERS NOTWITHSTANDING THE FACT THAT SAID AWARD IS LEGAL AND PROPER; V

THE RESPONDENT COURT OF APPEALS ERRED IN ELIMINATING THE COSTS TAXED AGAINST THE RESPONDENTS NOTWITHSTANDING THE FACT THAT SAID COSTS ARE LEGAL AND PROPER; VI THE RESPONDENT COURT OF APPEALS ERRED IN FINDING THAT THE CLAIM OF DR. SOFIA L. PRUDENCIADO OF HER LOSS OF HER USUAL LIVELINESS, VIVACITY, ACTIVITY AND HER USUAL SELF CONFIDENCE, SUCH THAT SHE NOW FEELS UNCERTAIN AND INSECURE .. EXTREME FRIGHT AND SERIOUS ANXIETY, SERIOUS APPREHENSION OF LOSING HER LIFE OR HER SENSES OR REASON; OF HER PHYSICAL MOBILITY ANYTIME .. GREAT SHOCK AND SEVERE PAINS ON HER BACK NEAR THE LEFT SIDE OF HER SPINAL COLUMN IN THE LUMBAR REGION IS UNCORROBORATED NOTWITHSTANDING THE FACT OF THE CERTIFICATE, EXHIBIT "G" OF DR. DOMINADOR VERGARA, OF THE VETERANS MEMORIAL HOSPITAL AND DR. CONRADO ARAMIL, BRAIN SPECIALIST AND THE CORROBORATING TESTIMONY OF THE LATTER AFTER EXAMINATION AND TREATMENT OF PETITIONER; VII THE RESPONDENT COURT OF APPEALS ERRED IN SO MODIFYING THE DECISION OF THE TRIAL COURT NOTWITHSTANDING THE FACT THAT IT HAD NO POWER TO DO SO UNDER THE FACTS AND CIRCUMSTANCES OF THIS CASE AS FOUND BY THE COURT OF APPEALS; VIII THE RESPONDENT COURT OF APPEALS ERRED IN MODIFYING THE DECISION OF THE TRIAL COURT NOTWITHSTANDING THE FACT THAT THE DECISION OF SAID TRIAL COURT IS IN ACCORDANCE WITH LAW.

The Court of Appeals and the trial court are in accord in the finding that the accident was caused by the negligence of the taxi driver. The bone of contention is however in the award of damages, which crystalizes the errors assigned into one main issue, which is whether or not the Court of Appeals is justified in modifying or changing the grant of damages by the trial court.
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It is well settled that factual findings of the Court of Appeals are binding on the Supreme Court, but said findings are subject to scrutiny if such are diametrically opposed to those of the trial court (Samson v. CA, et al., G.R. No. L-40071, January 29, 1986). The Court of Appeals concedes that a concussion of the brain was suffered by Dra. Prudenciado but as to how serious was the concussion or how it had later become, and the disastrous extent of the injuries which she alleges to have sustained as a result of the accident, are seriously doubted by said Appellate Court. Specifically, said Court finds that Dra. Prudenciado's claim (which was sustained by the trial court) that because of aforesaid concussion, she eventually lost her usual liveliness, vivacity,

activity and her usual self-confidence, to the extent that now she feels uncertain and insecure, not to mention a sense of extreme fright and serious anxiety, serious apprehension of losing her life, or her senses or reason or her physical mobility momentarily, plus experiences of great shock and severe pains on her back near the left side of her spinal column in the lumbar region, was not supported by the deposition of Dr. Conrado Aramil, the specialist who attended to the plaintiff from May 14 to May 26, 1960 (TSN, July 13, 1960, pp. 72-73). From said deposition, it was gathered that Dra. Prudenciado suffered a mild abnormality, compatible with mild concussion of the brain (TSN, July 13, 1960, pp. 47-48); that the symptoms of any brain concussion usually are headache, dizziness, vomiting and lack of pep or alertness; and that the possible after effects that may be produced are persistent or irregular headaches, fluctuating dizziness. Accordingly, Dra. Prudenciado was advised "Just to watch herself if she would develop any alarming symptoms such as headache, dizziness or vomitings, to have her rechecked after several months for her to be sure." ( Ibid, pp. 51-52). It might also produce intellectual deterioration or lessening of intelligence, and even insanity. Dra. Prudenciado sought to establish that she had precisely suffered all those after effects except insanity; but the Court of Appeals ruled that her proof consisted merely in her own uncorroborated testimony. In support of her allegation she could not show any medical certificate tending to prove that she was indeed medically treated abroad for her brain ailment nor was there any showing in the documents presented that she was demoted to the rank of technical assistant because the San Francisco State College does not believe in her mental capacity any more.
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Finally, her statements that she is almost completely losing her voice, that she has a terrible headache when her head is pressed, that she has lost her sense of taste, that she is nervous and temperamental and that she has lapses of memory, are belied by the deposition of Dr. Aramil that the patient's EEG was already normal on May 26, 1960; and on cross-examination he declared that she was clinically symtomless when she was discharged from the hospital (TSN, July 13, 1960, pp. 75 76; 78-79). There is no argument that moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury. Though incapable of pecuniary computation, moral damages may be recovered if they are the proximate result of defendant's wrongful act or omission (People v. Baylon, 129 SCRA 62 [1984]). In the same manner, it is undisputed that the trial courts are given discretion to determine the amount of moral damages (Alcantara v. Surro, 93 Phil. 472) and that the Court of Appeals can only modify or change the amount awarded when they are palpably and scandalously excessive "so as to indicate that it was the result of passion, prejudice or corruption on the part of the trial court (Gellada v. Warner Barnes & Co., Inc., 57 O.G. (4) 7347, 7358; Sadie v. Bachrach Motors Co., Inc., 57 O.G. (4) 636 and Adone v. Bachrach Motor Co., Inc., 57 O.G. 656). But in more recent cases where the awards of moral and exemplary damages are far too excessive compared to the actual losses sustained by the aggrieved party, this Court ruled that they should be reduced to more reasonable amounts.

Thus, in the case of San Andres v. Court of Appeals (116 SCRA 85 [1982]) the Supreme Court ruled that while the amount of moral damages is a matter left largely to the sound discretion of a court, the same when found excessive should be reduced to more reasonable amounts, considering the attendant facts and circumstances. Moral damages, though incapable of pecuniary estimation, are in the category of an award designed to compensate the claimant for actual injury suffered and not to impose a penalty on the wrongdoer. In a much later case (Siguenza v. Court of Appeals, 137 SCRA 578-579 [1985]), the Supreme court, reiterating the above ruling, reduced the awards of moral and exemplary damages which were far too excessive compared to the actual losses sustained by the aggrieved parties and where the records show that the injury suffered was not serious or gross and, therefore, out of proportion to the amount of damages generously awarded by the trial court. In any case the Court held that "moral damages are emphatically not intended to enrich a complainant at the expense of a defendant. They are awarded only to enable the injured party to obtain means, diversion or amusements that will serve to alleviate the moral suffering he has undergone, by reason of the defendants' culpable action." The award of moral damages must be proportionate to the suffering inflicted (R & B Surety & Insurance Co., Inc. v. Intermediate Appellate Court, 129 SCRA 745 [1984] citing Grand Union Supermarket, Inc. v. Espino, Jr., 94 SCRA 966).
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Coming back to the case at bar, a careful review of the records makes it readily apparent that the injuries sustained by Dra. Prudenciado are not as serious or extensive as they were claimed to be, to warrant the damages awarded by the trial court. In fact, a closer scrutiny of the exhibits showing a moderate damage to the car can by no stretch of the imagination produce a logical conclusion that such disastrous effects of the accident sought to be established, actually took place, not to mention the fact that such were not supported by the medical findings presented. Unquestionably, therefore, the damages imposed by the lower court should be reduced to more reasonable levels. On the other hand, it will be observed that the reduction of the damages made by the Court of Appeals is both too drastic and unrealistic, to pass the test of reasonableness, which appears to be the underlying basis to justify such reduction. While the damages sought to be recovered were not satisfactorily established to the extent desired by the petitioner, it was nonetheless not disputed that an accident occurred due to the fault and negligence of the respondents; that Dra. Prudenciado suffered a brain concussion which although mild, can admittedly produce the effects complained of by her and that these symptoms can develop after several years and can lead to some serious handicaps or predispose the patient to other sickness (TSN, July 13, 1960, pp. 52-54). Being a doctor by profession, her fears can be more real and intense than an ordinary person. Otherwise stated, she is undeniably a proper recipient of moral damages which are proportionate to her suffering. As to exemplary damages, Article 2231 of the Civil Code provides:

"In quasi-delicts, exemplary damages may be granted if the defendant acted with grave negligence."

The rationale behind exemplary or corrective damages is, as the name implies, to provide an example or correction for the public good (Lopez, et al. v. Pan American World Airways, 16 SCRA 431).
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The findings of the trial court in the case at bar which became the basis of the award of exemplary damages are to the effect that it is more apparent from the facts, conditions and circumstances obtaining in the record of the case that respondent driver was running at high speed after turning to the right along Taft Ave. coming from Ayala Boulevard, considering that the traffic was clear. Failing to notice petitioner's car, he failed to apply his brakes and did not even swerve to the right to avoid the collision (Record on Appeal, pp. 69-70). The Court of Appeals conforms with aforesaid findings of the trial court but is not prepared to accept that there was gross negligence on the part of the driver to justify the imposition of exemplary damages. However, a driver running at full speed on a rainy day, on a slippery road in complete disregard of the hazards to life and limb of other people cannot be said to be acting in anything less than gross negligence. The frequent incidence of accidents of this nature caused by taxi drivers indeed demands corrective measures. PREMISES CONSIDERED, the assailed decision of the Court of Appeals is hereby MODIFIED insofar as the award of damages is concerned; and respondents are ordered to jointly and severally pay the petitioner; (1) the sum of P2,451.27 for actual damages representing the cost of the repair of her car; (2) the sum of P15,000.00 as moral damages; (3) the sum of P5,000.00 as exemplary damages; and (4) the sum of P3,000.00 as attorney's fees. No pronouncement as to costs.
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PAN AMERICAN WORLD AIRWAYS, INC., petitioner, vs. THE INTERMEDIATE APPELLATE COURT, TEOFISTA P. TINITIGAN, joined by her husband, SEVERINO TINITIGAN, respondents. SYLLABUS 1.REMEDIAL LAW; EVIDENCE; CREDIBILITY OF WITNESSES; FINDINGS OF FACT OF THE TRIAL COURT GENERALLY BINDING ON APPEAL. All of the issues raised by petitioner are factual issues which the trial court ruled upon by favoring plaintiff's evidence as more credible than the evidence for the defendant. A cursory reading of the decision of the trial court as well as the decision of the appellate court reveals that all evidence available were considered. It is not the function of this Court to analyze or weigh evidence all over again, as Our jurisdiction is limited to reviewing errors of law that might have been committed by the lower courts. Moreover, the findings of the lower court as to the credibility of the witnesses will not be generally disturbed on appeal and if the appeal is on questions of fact, the factual findings

of the appellate court are binding on Us (Collector of Customs of Manila vs. IAC, 137 SCRA 3). DECISION PARAS, J :
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Before Us is a petition to review by certiorari the judgment 1 of the respondent Court of Appeals (IAC) affirming with modification the decision 2 rendered by the trial court in favor of the plaintiff 3 and against the defendant 4 sentencing the latter to pay the former the sum of US$1,546.15 or its equivalent in Philippine Currency as actual and compensatory damages, P500,000.00 as moral damages, P200,000.00 as exemplary damages, P100,000.00 as attorney's fees and to pay the costs of litigation. The modification consists in that the payment of US$1,546.15 or its equivalent in Philippine Currency must be valued at the present rate of exchange. The statement of the case is as follows: 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.
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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 on August 6, 1980 in favor of plaintiff and awarded the amount of damages as prayed for. Defendant appealed said decision on both questions of fact and law to the respondent court assigning errors, to wit:
I.The lower court erred in holding that plaintiff had a confirmed reservation on Pan Am Flight 431 from Santo Domingo, Republica Dominica to San Juan, Puerto Rico on April 29, 1973.

II.The lower court erred in holding defendant-appellant liable for compensatory damages in the sum of US$1,546.15, moral damages in the sum of P500,000.00 and exemplary damages in the sum of P200,000.00, it being contrary to law and the evidence. III.The lower court erred in awarding attorney's fees to plaintiff. IV.The lower court erred in not dismissing the complaint.

Respondent-appellate Court affirmed the assailed judgment of the trial court with modification as earlier stated. Hence, the instant petition, appellant-petitioner submitting the following grounds:
I.Respondent is a holder of an open, unconfirmed or a standby ticket. II.Private respondent's ticket was not issued with an assigned seat. III.The issuance of the boarding card to respondent Tinitigan and the fact that she was allowed to go through the departure area passing through customs and immigration did not make her a confirmed passenger. IV.There is no evidence to support respondent court's findings that private respondent's seat was given to a white man. V.The conclusion that the luggage of private respondent was taken on board flight 431 is not borne out by the evidence. VI.Petitioner did not breach its contract with private respondent. VII.There is no evidence to support private respondent's alleged loss of $1,000.00 in profits.

In other words, the aforementioned grounds can be briefly stated as follows:


I.The respondent court misappreciated and ignored the facts of the case; II.The conclusions of the respondent court were not supported by the evidence.

Evidence for the plaintiff in the lower court consisted of Teofista Tinitigan's sole testimony in open court supported by documentary evidence marked as Exhibits "A" to "J" while evidence for the defendant consisted of documents marked as Exhibits "1" to "12."
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Findings of fact of the lower court show that plaintiff, a businesswoman and a multimillionaire in her own right as evidenced by Exhs. "J" to "J-7," (proprietor of Sampaguita Restaurant, New York City USA; Treasurer of the Molave Development Corp., Phil., proprietor of Cavite Household Appliances and Rowena's Handicraft, Phil.), was on a business trip with a Pan-Am ticket (San Francisco-Miami-Haiti-San Francisco). While in Haiti, she inquired from Pan-Am employees how she could proceed to San Juan, Puerto Rico for business reasons. Whereupon

she was advised that her ticket was valid for Sto. Domingo, Republica Dominica only but in Santo Domingo she could make arrangements with Pan-Am for her trip to San Juan. While in Sto. Domingo, after talking thru the telephone with Mrs. Lilibeth Warner, the former said that she (plaintiff) must be in San Juan that same day, to sign her contract or lose it. Plaintiff expected to make a profit of $1,000 in said contract. Plaintiff then proceeded to the airport at about 2 o'clock in the afternoon, or 3 hours ahead of the scheduled Pan Am flight. She was told to wait and upon the arrival of the plane bound for San Juan, she surrendered to the Pan Am employees passenger ticket No. 0264200919952 (Exh. "3") with Sto. Domingo-Miami Route and she was issued passenger ticket No. 023443466114 (Exh. "D" of Exh. "2") for flight No. 431 with Sto. Domingo-San Juan-Miami route. She was also issued baggage claim No. 474-618 (Exh. "A") and given the corresponding boarding pass (Exh. "B") and assigned seat 3-A (Exh. "B-1") after she paid the fare and terminal fee. Appellee was then instructed to proceed to the Immigration Section where her passport (Exh. "C") was stamped accordingly. While plaintiff was standing in line preparatory to boarding the aircraft, Rene Nolasco, a Pan Am employee ordered her in a loud voice to step out of line because her ticket was not confirmed to her consternation and embarrassment in the presence of several people who heard and order. Despite her pleas that she should be in San Juan because it was very important to her, she was not allowed to board the aircraft. And as if to add insult to injury, she saw that her seat was given to a white man prompting her to engage Nolasco, who knows both the English and Spanish languages, in a heated argument provoking her into telling him that she would file a suit against Pan Am. Later, a few Pan Am employees went near her to tell her she could finally board the plane and on the pretext that they would inspect her baggage, they led her to another place, which she finally realized, was not the departure area. Meanwhile, the plane took off without her but with her luggage on board. She was forced to return to her hotel without any luggage much less an extra dress. It was a good thing that the Hotel people remembered her because they do not usually accommodate female guests, without any luggage to stay in the hotel. While normally, hotel accommodation was paid before departure, plaintiff was made to pay the room accommodation in advance (Exh. "E"). She finally retrieved her luggage after five days in San Francisco after presenting her baggage ticket (Exh. "A"). She brought the matter to the attention of Mr. V.W. Smith, Manager of Pan Am in San Francisco, who sent a letter of apology (Exh. "G") for the "inconveniences" Pan Am caused her (plaintiff) and attached a refund check (Exh. "H") reflecting the value of the flight coupon issued for the flight from Sto. Domingo to San Juan in which plaintiff was denied boarding. On the other hand, there was no oral evidence for defendant Pan Am. Evidence consisted of documents which included depositions and counter depositions of witnesses and the following:
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"Exh. "1", Pan Am manifest on Flight 431 dated April 29, 1973 from Sto. Domingo to San Juan, Dominican Republic; Exh. 2, Ticket Coupon No. 026443466114 dated April

29, 1973 issued to plaintiff with status "open" with routing Sto. Domingo-Miami; Exh. 3, Ticket Coupon No. 0264200919952 dated April 29, 1973; Exh. 4, Letter of defendant's witness Raul Fiallo to Director of Pan Am, Manila dated March 29, 1974 furnishing a copy of said letter toPan Am Sto. Domingo; Exh. 5 Item No. 26 in Exhibit 1 enclosed in blue ink which reads "T. Tinitigan NB;" Exh. 6, Message sent by deponent Raul Fiallo to Mr. McKenzie, Pan Am, Manila; Exh. 7, Brown envelope containing the deposition of the witness; Exhs. 8, 8-A to 8-G, Certification of the deposition officer and the deposition of Raul Fiallo consisting of 8 pages in Spanish, Exh. 8-A-1, Signature of the deponent appearing at the left hand margin in every page of the deposition; Exhs. 9, 9-A to 9-F, Translation of the deposition from Spanish to English consisting of 7 pages; Exh. 10 Official Receipt representing fee of the Languages Internationale in translating the deposition from Spanish to English; Exh. 11, Deponent's answer to cross interrogatories written in Spanish; and Exh. 12, Translation to deponent's answer to cross-interrogatories from Spanish to English by Languages Internationale upon plaintiff's request. (pp. 46-47, Record on Appeal)

Considering the aforementioned evidence for both parties, the lower court said:
"Examining the evidence presented, the Court finds that the same preponderates in favor of the plaintiff. The plaintiff having been issued by the defendant with the necessary ticket (Exh. "D"), baggage claim symbol (Exh. "A"), the requisite boarding pass (Exh. "B") with assigned seat 3-A and her having been cleared through immigration (Exhs. C and C-1) all clearly and unmistakably show that plaintiff was indeed a confirmed passenger of defendant's Flight No. 431 for San Juan and that for all legal intents and purposes the contract of carriage between the plaintiff and the defendant was already perfected which bound the latter to transport the former to her place of destination on said Flight. This conclusion finds eloquent support in Exhibit Q of the defendant showing that plaintiff was included in the passenger manifest of said flight. The failure therefore of the defendant to accommodate plaintiff in said flight and the taking in by it of a white man in lieu of plaintiff, who was brazenly ordered by an employee of the defendant to get off the line and unceremoniously whisked off from the departure area on the pretext that her luggage had to undergo custom's inspection to plaintiff's chargrin and great humiliation, smacks of a clear case of racial discrimination for which the defendant should be held liable in damages to the plaintiff. Moreover, the written apology offered by the defendant to the plaintiff, thru its Manager in San Francisco, (Exh. G) is a tell-tale indication of an admission of fault by the defendant for the "inconvenience" it caused plaintiff. The defense put up by the defendant to the effect that the issuance by it of the boarding pass in favor of plaintiff with an assigned seat was merely in compliance with the formal requirements of immigration fails to generate belief. There was no evidence presented, save the evidently self-serving declaration of deponent Fiallo Rodriguez, of such a requirement by the immigration laws of said foreign country.

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Considering the sex, age and the social and business stature of the plaintiff in the community, the amounts of moral damages being claimed by her in the complaint cannot be said to be unreasonable. Moreover, the award of exemplary damages is called for under the circumstances to teach defendant a lesson for the public good. WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendant sentencing the latter to pay the former the sum of USS1,546.15 or its equivalent in Philippine Currency, as actual and compensatory damages, P200,000.00 as moral damages, P200,000.00 as exemplary damages, P20,000.00 as attorney's fees and the costs of litigation. SO ORDERED. (pp. 47-49, Record on Appeal).

In its ruling, the appellate respondent court was merely echoing the findings of the lower court and in finding no merit in the appeal, gave the following reasons:
FIRST:It is clear from the evidence that defendant issued n Passenger Ticket and
Baggage Check No. 026443466114 (Exh. "D") with assigned seat 3-A (Exh. "B-1") and the corresponding pass (Exh. "B") and baggage claim symbol (Exh "A"). Plaintiff was made to pay the fare and terminal fee. At the immigration section, plaintiff's passport (Exh. "C") was stamped accordingly (Exh. "C-3"). Plaintiff's name was included in the passenger manifest (Exh. "1," "5") of PANAM for Flight 431 dated April 19, 1973. And these show that plaintiff was indeed a confirmed passenger of defendant's Flight 431 for San Juan on April 29, 1973. There was, therefore, a contract or carriage perfected between plaintiff and defendant for the latter to take plaintiff to her place of destination. 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. Defendant has from the start argued that plaintiff was merely to chance passenger thus she had to give way to a passenger with a confirmed reservation. However, defendant through Mr. Jose Raul Fiolla Rodriguez, testified that he cannot say exactly what the total capacity of the plane on Flight 431 was; that he does not know whether Mrs. Tinitigan was allowed to buy a ticket because there was still space available; that he cannot say whether Mrs. Tinitigan was the first or last to buy a ticket to San Juan because there is no knowing; that there is no way of knowing who occupied the seat (3-A) assigned to Mrs. Tinitigan; that he does not know if the ticket number of the person who occupied seat 3-A was higher or lower that the ticket number of Mrs. Tinitigan because it cannot be determined; that a higher number than that of Mrs. Tinitigan's ticket does not necessarily mean that Mrs. Tinitigan bought her ticket ahead; that no one else with open ticket was assigned the same seat number as Mrs. Tinitigan; that PANAM does not practice the principle of "first come, first served." In other words, defendant would like us to believe that plaintiff was a chance passenger only and was not assured of her flight on that day. Defendant, however has no way of proving the same as it was not certain whether plaintiff was a chance passenger or not.

Bad faith means a breach of a known duty through some motive or interest or illwill. 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. LexLib 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. 5 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. An award of attorney's fees is also in order, having found bad faith on the part of defendant. WHEREFORE, the decision appealed from is hereby AFFIRMED with the following modifications: defendant is sentenced to pay the plaintiff the sum of US$1,546.15 or its equivalent in Philippine Currency at the present rate of exchange with the US dollar. Costs against defendant-appellant.

SO ORDERED. (pp. 3-5, Decision, pp. 96-98, Rollo)

It is noted that petitioner submitted in this petition the same grounds enumerated in its Motion for Reconsideration of the assailed judgment of the respondent appellate court anchoring its claim mainly on the appreciation of facts as supported by the evidence on record. These same grounds are also raised in petitioner's appeal from the judgment of the lower court to the respondent appellate court which affirmed the said assailed judgment. All of the issues raised by petitioner are factual issues which the trial court ruled upon by favoring plaintiff's evidence as more credible than the evidence for the defendant. A cursory reading of the decision of the trial court as well as the decision of the appellate court reveals that all evidence available were considered. It is not the function of this Court to analyze or weigh evidence all over again, as Our jurisdiction is limited to reviewing errors of law that might have been committed by the lower courts. Moreover, the findings of the lower court as to the credibility of the witnesses will not be generally disturbed on appeal and if the appeal is on questions of fact, the factual findings of the appellate court are binding on Us (Collector of Customs of Manila vs. IAC, 137 SCRA 3).
LibLex

We believe, however the amount of some damages awarded to be exorbitant: We therefore reduce the moral and exemplary damages to the combined total sum of Two Hundred Thousand (P200,000.00) Pesos and the attorney's fees to Twenty Thousand (P20,000.00) Pesos. The award of actual damages in the amount of One Thousand Five Hundred Forty Six American dollars and fifteen cents (US$1,546.15) computed at the exchange rate prevailing at the time of payment is hereby retained and granted. TRANS WORLD AIRLINES, petitioner, vs. COURT OF APPEALS and ROGELIO A. VINLUAN, respondents.

Guerrero & Torres Law Offices for petitioner. Angara, Abello, Concepcion, Regala & Cruz for private respondent. The Solicitor General for public respondent.
SYLLABUS 1.CIVIL LAW; DAMAGES; MORAL AND EXEMPLARY DAMAGES; BASIS FOR THE AWARD THEREOF IN THE CASE AT BAR. 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. 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. 2.ID.; ID.; MORAL DAMAGES; PRESENCE OF BAD FAITH JUSTIFIES AWARD THEREOF. 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. DECISION GANCAYCO, J :
p

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 York-Los Angeles portion of his ticket evidencing his confirmed reservation for said flight with the mark "OK." 1 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. On February 15, 1980, Vinluan filed an action for damages against the TWA in the Court of First Instance of Rizal alleging breach of contract and bad faith. After trial on the merits, a decision was rendered the dispositive part of which reads as follows:
"WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendant holding the latter liable to the former for the amount representing the difference in fare between first class and economy class accommodations on board Flight No. 6041 from New York to San Francisco, the amount of P500,000.00 as moral damages, the amount of P300,000.00 as exemplary damages and the amount of P100,000.00 as and for attorney's fees, all such amounts to earn interest at the rate of twelve (12%) percent per annum from February 15, 1980 when the complaint was filed until fully paid. Correspondingly, defendant's counterclaim is dismissed. Costs against the defendant. SO ORDERED."

Not satisfied therewith, the TWA appealed to the Court of Appeals wherein in due course a decision was rendered on May 27, 1987, 2 the dispositive part of which reads as follows:
"WHEREFORE, the decision dated March 8, 1984 is hereby modified by (1) fixing the interest which appellant must pay on the awards of moral and exemplary damages at six per cent (6%) per annum from the date of the decision a quo, March 8, 1984 until date of full payment and (2) reducing the attorney's fees to P50,000.00 without interest, the rest of the decision is affirmed. Costs against appellant. SO ORDERED."

Hence, the herein petition for review. The theory of the petitioner is that because of maintenance problems of the aircraft on the day of the flight, TWA Flight No. 41 was cancelled and a special Flight No. 6041 was organized to operate in lieu of Flight No. 41. 3 Flight No. 41 was to have utilized a Lockheed 1011 with 34 first class seats, but instead, a smaller Boeing 707 with only 16 first class seats was substituted for use in Flight No. 6041. Hence, passengers who had first class reservations on Flight No. 41 had to be accommodated on Flight No. 6041 on a first-come, first-served basis. An announcement was allegedly made to all passengers in the entire terminal of the airport advising them to get boarding cards for Flight No. 6041 to San Francisco and that the first ones getting them would get first preference as to seats in the aircraft. It denied declining to give any explanation for the downgrading of private respondent as well as the discourteous attitude of Mr. Braam.

On the other hand, private respondent asserts that he did not hear such announcement at the terminal and that he was among the early passengers to present his ticket for check-in only to be informed that there was no first class seat available for him and that he had to be downgraded. 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. 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. 4 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. 5 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. WHEREFORE, with the above modification reducing the moral and exemplary damages as above-stated, the decision subject of the petition for review is AFFIRMED in all other respects, without pronouncement as to costs in this instance.

SO ORDERED. DR. HERMAN ARMOVIT, DORA ARMOVIT AND JACQUELINE ARMOVIT, petitioners, vs. COURT OF APPEALS, AND NORTHWEST AIRLINES, INC., respondents.

Law Firm of Raymundo A. Armovit for petitioners. Quisumbing, Torres & Evangelista for private respondent.
SYLLABUS 1.CIVIL LAW; DAMAGES; GROUNDS FOR GRANTING THEREOF; GROSS NEGLIGENCE AMOUNTING TO MALICE AND BAD FAITH AND WHICH TAINTED THE BREACH OF CONTRACT. In Air France, this Court observed: "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 traveling public. It invites people to avail of the comforts and advantages it offers. The contract of air 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. "Passengers do not contract merely for transportation. They 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 rude or discourteous conduct on the part of

employees towards a passenger gives the latter an action for damages against the carrier." The gross negligence committed by private respondent in the issuance of the tickets
with entries as to the time of the flight, the failure to correct such erroneous entries and the manner by which petitioners were rudely informed that they were bumped off are clear indicia of such malice and bad faith and establish that private respondent committed a breach of contract which entitles petitioners to moral damages.

2.REMEDIAL LAW; EVIDENCE; FAILURE OF WITNESS TO TESTIFY ON THE SOCIAL HUMILIATION AND ANXIETY SUFFERED; JUSTIFIED IN CASE AT BAR. The appellate court observed that the petitioners failed to take the witness stand and testify on the matter. It overlooked however, that the failure of the petitioner to appear in court to testify was explained by them. The assassination of Senator Benigno Aquino, Jr. on August 21, 1983 following the year they were bumped off caused a turmoil in the country. This turmoil spilled over to the year 1984 when they were scheduled to testify. However, the violent demonstrations in the country were sensationalized in the U.S. media so petitioners were advised to refrain from returning to the Philippines at the time. Nevertheless, Atty. Raymund Armovit, brother of petitioner Dr. Armovit, took the witness stand as he was with the petitioners from the time they checked in up to the time of their ultimate departure. Atty. Raymund Armovit's testimony adequately and sufficiently established the serious anxiety, wounded feelings and social humiliation that petitioners suffered upon having been bumped

off. However, considering the circumstances of this case whereby the private respondent attended to the plight of the petitioners, taking care of their accommodations while waiting and boarding them in the flight back to the U.S. the following day, the Court finds that the petitioners are entitled to moral damages in the amount of P100,000.00 each. DECISION GANCAYCO, J :
p

This is a case which involves a Filipino physician and his family residing in the United States who came home to the Philippines on a Christmas visit. They were bumped off at the Manila International Airport on their return flight to the U.S. because of an erroneous entry in their plane tickets relating to their time of departure. In October 1981, the petitioners decided to spend their Christmas holidays with relatives and friends in the Philippines, so they purchased from private respondent, (Northwest Airlines, Inc.) three (3) round trip airline tickets from the U.S. to Manila and back, plus three (3) tickets for the rest of the children, though not involved in the suit. Each ticket of the petitioners which was in the handwriting of private respondent's tickets sales agent contains the following entry on the Manila to Tokyo portion of the return flight:
"from Manila to Tokyo, NW flight 002, date 17 January, time 10:30 A.M. Status, OK."
1

On their return trip from Manila to the U.S. scheduled on January 17, 1982, petitioner arrived at the check-in counter of private respondent at the Manila International Airport at 9:15 in the morning, which is a good one (1) hour and fifteen (15) minutes ahead of the 10:30 A.M. scheduled flight time recited in their tickets. Petitioners were rudely informed that they cannot be accommodated inasmuch as Flight 002 scheduled at 9:15 a.m. was already taking off and the 10:30 A.M. flight time entered in their plane tickets was erroneous. Previous to the said date of departure petitioners re-confirmed their reservations through their representative Ernesto Madriaga who personally presented the three (3) tickets at the private respondent's Roxas Boulevard office. 2 The departure time in the three (3) tickets of petitioners was not changed when re-confirmed. The names of petitioners appeared in the passenger manifest and confirmed as Passenger Nos. 306, 307, and 308, Flight 002. 3 Herein petitioner Dr. Armovit protested in extreme agitation that because of the bump-off he will not be able to keep his appointments with his patients in the U.S. Petitioners suffered anguish, wounded feelings, and serious anxiety day and night of January 17th until the morning of January 18th when they were finally informed that seats will be available for them on the flight that day. Because of the refusal of the private respondent to heed the repeated demands of the petitioners for compensatory damages arising from the aforesaid breach of their air-transport

contracts, 4 petitioners were compelled to file an action for damages in the Regional Trial Court of Manila. After trial on the merits, a decision was rendered on July 2, 1985, the dispositive part of which reads as follows:
"WHEREFORE, in view of the foregoing considerations, judgment is hereby rendered ordering defendant to pay plaintiffs actual, moral, exemplary and nominal damages, plus attorney's fees, as follows: a)Actual damages in favor of Dr. Herman Armovit in the sum of P1,300.00, with interest at the legal rate from January 17, 1982; b)Moral damages of P500,000.00, exemplary damages of P500,000.00, and nominal damages of P100,000.00 in favor of Dr. HermanArmovit; c)Moral damages of P300,000.00, exemplary damages of P300,000.00, and nominal damages of P50,000.00 in favor of Mrs. Dora Armovit; d)Moral damages of P300,000.00, exemplary damages of P300,000.00, and nominal damages of P50,000.00 in favor of Miss JacquelineArmovit; and e)Attorney's fees of 5% of the total awards under the above paragraphs. plus costs of suit."
5

Not satisfied therewith, private respondent interposed an appeal to the Court of Appeals wherein in due course a decision was rendered on June 20, 1989, the relevant portion and dispositive part of which read as follows:
"Plaintiffs-appellees had complied with the "72-hour reconfirmation rule." They had obtained reconfirmation from defendant-appellant of the time and date of their flight, as indicated in their tickets. The trial court said so and We find nothing significance to warrant a disturbance of such finding. On the allowance of damages, the trial court has discretion to grant and fix the amounts to be paid the prevailing party. In this case, there was gross negligence on the part of defendant-appellant in reconfirming the time and date of departure of Flight No. 002 as indicated in the three (3) tickets (Exhibits A, A-1 and A-2). And, as admitted by defendant-appellant, plaintiffs-appellees had arrived at the airport at 9:15 A.M. or one (1) hour before departure time of 10:30 A.M. Appellees' actual damages in the amount of P1,300.00 is maintained for being unrebutted by the Appellant. However, We modify the allowance of the other awards made by the trial court. The moral damages of P900,000.00 awarded to Appellees must be eliminated considering the following:
llcd

1.That the appellees did not take the witness stand to testify on their "social humiliation, wounded feelings and anxiety" and the breach of contract was not malicious or fraudulent. (Art. 2220, Civil Code). It has been held that: 'Nor was there error in the appealed decision in denying moral damages, not only on account of the plaintiff's failure to take the witness stand and testify to her social humiliation, wounded feelings, anxiety, etc., as the decision holds, but primarily because a breach of contract like that of defendant not being malicious or fraudulent, does not warrant the award of moral damages under Article 2220 of the Civil Code (Ventilla vs. Centeno, L-14333, 28 Jan. 1961; Fores vs. Miranda, L-12163; 4 March 1959; Francisco vs. GSIS, 7 SCRA 577).' 2.Furthermore, moral damages, though incapable of pecuniary estimation, are in the category of an award designed to compensate the claimant for actual injury suffered and not to impose a penalty on the wrongdoer (San Andres vs. Court of Appeals, 116 SCRA 85). In a later case, the Supreme Court held that moral damages are emphatically not intended to enrich a complainant at the expense of the defendant (R & B Surety vs. IAC, 129 SCRA 745) citing Grand Union Supermarket, Inc. vs. Espino Jr. 94 SCRA 966). However, there is no question that appellant acted with negligence in not informing appellees about the change of hour of departure. To provide an example or correction for the public good, therefore, the award of exemplary damages is proper (Art 2229 & 2231 Civil Code; Lopez v. Pan American World Airways, 16 SCRA 431; Prudenciado vs. Alliance Transport, 148 SCRA 440). Nonetheless, the awards granted by the trial court are far too exorbitant and excessive compared to the actual loss of P1,300.00. The authority of the Court of Appeals to modify or change the amounts of awards has been upheld in a long line of decisions. We reduce the award of exemplary damages from P500,000.00 to P100,000.00 in favor of Dr. Herman Armovit, from P500,000.00 to P50,000.00 in favor of Mrs. Dora Armovit; and from P300,000.00 to P20,000.00 in favor of Miss Jacqueline Armovit. (Gellada vs. Warner Barnes, 57 O.G. (4) 7347, Sadie vs. Bachrach, 57 O.G. (4) 636, Prudenciado vs. Alliance Transport, supra). The award of nominal damages has to be eliminated since we are already awarding actual loss. Nominal damages cannot co-exist with actual or compensatory damages (Vda. de Medina, et al. v. Cresencia, et al., 99 Phil. 506).

The award of 5% of the total damages as attorney's fees is reasonable. WHEREFORE, with the above modifications, the decision appealed from is hereby AFFIRMED in all other respects." 6

A motion for reconsideration thereof filed by the petitioners was denied in a resolution dated May 29, 1989. 7 Both petitioners and private respondent elevated the matter to this Court for review by certiorari.

The petition of private respondent was docketed as G.R. No. 86776. It was denied in a resolution of this Court dated July 10, 1989, and the motion for reconsideration thereof was denied in a resolution dated September 6, 1989. On October 12, 1989 this Court ordered the entry of judgment in this case and for the records to be remanded to the court of origin for prompt execution of the judgment. In the herein petition for review on certiorari filed by petitioner they claim that the questioned decision and resolution of the Court of Appeals should be struck down as an unlawful, unjust and reasonless departure from the decisions of this Court as far as the award for moral damages and the drastic reduction of the exemplary damages are concerned.
cdll

The petition is impressed with merit. The appellate court observed that private respondent was guilty of gross negligence not only in the issuance of the tickets by the erroneous entry of the date of departure and without changing or correcting the error when the said three (3) tickets were presented for reconfirmation. Nevertheless it deleted the award of moral damages on the ground that petitioners did not take the witness stand to testify on "their social humiliation, wounded feelings and anxiety, and that the breach of contract was not malicious or fraudulent." 8 We disagree. In Air France vs. Carrascoso, 9 Lopez vs. Pan American World Airways, 10 and Zulueta vs. Pan American World Airways, 11 this Court awarded damages for the gross negligence of the airline which amounted to malice and bad faith and which tainted the breach of air transportation contract. Thus in Air France, this Court observed:
"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 traveling public. It invites people to avail of the comforts and advantages it offers. The contract of air 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. "Passengers do not contract merely for transportation. They 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 rude or discourteous conduct on the part of employees towards a passenger gives the latter an action for damages against the carrier." 12

The gross negligence committed by private respondent in the issuance of the tickets with entries as to the time of the flight, the failure to correct such erroneous entries and the manner by which petitioners were rudely informed that they were bumped off are

clear indicia of such malice and bad faith and establish that private respondent committed a breach of contract which entitles petitioners to moral damages. The appellate court observed that the petitioners failed to take the witness stand and testify on the matter. It overlooked however, that the failure of the petitioner to appear in court to testify was explained by them. The assassination of Senator Benigno Aquino, Jr. on August 21, 1983 following the year they were bumped off caused a turmoil in the country. This turmoil spilled over to the year 1984 when they were scheduled to testify. However, the violent demonstrations in the country were sensationalized in the U.S. media so petitioners were advised to refrain from returning to the Philippines at the time.
LLjur

Nevertheless, Atty. Raymund Armovit, brother of petitioner Dr. Armovit, took the witness stand as he was with the petitioners from the time they checked in up to the time of their ultimate departure. He was a witness when the check-in officer rudely informed the petitioners that their flight had already taken off, while petitioner Dr. Armovit remonstrated that their tickets reflected their flight time to be 10:30 A.M.; that in anger and frustration, Dr. Armovit told the said check-in-officer that he had to be accommodated that morning so that he could attend to all his appointments in the U.S.; that petitioner Jacqueline Armovit also complained about not being able to report for work at the expiration of her leave of absence; that while petitioner had to accept private respondent's offer for hotel accommodations at the Philippine Village Hotel so that they could follow up and wait for their flight out of Manila the following day, petitioners did not use their meal coupons supplied because of the limitations thereon so they had to spend for lunch, dinner, and breakfast in the sum of P1,300.00 while waiting to be flown out of Manila; that Dr. Armovit had to forego the professional fees for the medical appointments he missed due to his inability to take the January 17 flight; that the petitioners were finally able to fly out of Manila on January 18, 1982, but were assured of this flight only on the very morning of that day, so that they experienced anxiety until they were assured seats for that flight. 13 No doubt Atty. Raymund Armovit's testimony adequately and sufficiently established the serious anxiety, wounded feelings and social humiliation that petitioners suffered upon having been bumped off. However, considering the circumstances of this case whereby the private respondent attended to the plight of the petitioners, taking care of their accommodations while waiting and boarding them in the flight back to the U.S. the following day, the Court finds that the petitioners are entitled to moral damages in the amount of P100,000.00 each. By the same token to provide an example for the public good, an award of exemplary damages is also proper. 14 The award of the appellate court is adequate.
llcd

Nevertheless, the deletion of the nominal damages by the appellate court is well-taken since there is an award of actual damages. Nominal damages cannot co-exist with actual or compensatory damages. 15 WHEREFORE, the petition is GRANTED. The questioned judgment of the Court of Appeals is hereby modified such that private respondent shall pay the following:

(a)actual damages in favor of Dr. Armovit in the sum of P1,300.00 with interest at the legal rate from January 17, 1982; (b)moral damages at P100,000.00 and exemplary damages and P100,000.00 in favor of Dr. Armovit; (c)moral damages of P100,000.00 and exemplary damages of P50,000.00 in favor of Mrs. Dora Armovit; (d)moral damages of P100,000.00 and exemplary damages in the amount of P20,000.00 in favor of Miss Jacqueline Armovit; and (e)attorney's fees at 5% of the total awards under the above paragraphs, plus the cost of suit. SO ORDERED.

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