PNOC VS CA

Lessons Applicable: Kinds of Damages (Torts and Damages)

Laws Applicable:

FACTS:
September 21, 1977 early morning: M/V Maria Efigenia XV, owned by Maria Efigenia Fishing Corporation on
its way to Navotas, Metro Manila collided with the vessel Petroparcel owned by the Luzon Stevedoring
Corporation (LSC)
Board of Marine Inquiry, Philippine Coast Guard Commandant Simeon N. Alejandro found Petroparcel to be
at fault
Maria Efigenia sued the LSC and the Petroparcel captain, Edgardo Doruelo praying for an award of
P692,680.00 representing the value of the fishing nets, boat equipment and cargoes of M/V Maria Efigenia
XV with interest at the legal rate plus 25% as attorneys fees and later on amended to add the lost value
of the hull less the P200K insurance and unrealized profits and lost business opportunities
During the pendency of the case, PNOC Shipping and Transport Corporation sought to be substituted in
place of LSC as it acquired Petroparcel
Lower Court: against PNOC ordering it to pay P6,438,048 value of the fishing boat with interest plus P50K
attorney's fees and cost of suit
CA: affirmed in toto
ISSUE: W/N the damage was adequately proven
HELD: YES. affirming with modification actual damages of
therefor. P2M nominal damages instead.

P6,438,048.00 for lack of evidentiary bases

in connection with evidence which may appear to be of doubtful relevancy or incompetency or

admissibility, it is the safest policy to be liberal, not rejecting them on doubtful or technical grounds, but
admitting them unless plainly irrelevant, immaterial or incompetent, for the reason that their rejection
places them beyond the consideration of the court.
If they are thereafter found relevant or competent, can easily be remedied by completely discarding or
ignoring them
two kinds of actual or compensatory damages:
loss of what a person already possesses (dao emergente)
failure to receive as a benefit that which would have pertained to him
in the case of profit-earning chattels, what has to be assessed is the value of the chattel to its owner as a
going concern at the time and place of the loss, and this means, at least in the case of ships, that regard
must be had to existing and pending engagements
If the market value of the ship reflects the fact that it is in any case virtually certain of profitable
employment, then nothing can be added to that value in respect of charters actually lost, for to do so
would be pro tanto to compensate the plaintiff twice over.
if the ship is valued without reference to its actual future engagements and only in the light of its profitearning potentiality, then it may be necessary to add to the value thus assessed the anticipated profit on a
charter or other engagement which it was unable to fulfill.
damages cannot be presumed and courts, in making an award must point out specific facts that could
afford a basis for measuring whatever compensatory or actual damages are borne
proven through sole testimony of general manager without objection from LSC
Admissibility of evidence refers to the question of whether or not the circumstance (or evidence) is to
considered at all. On the other hand, the probative value of evidence refers to the question of whether or
not it proves an issue
Hearsay evidence whether objected to or not has no probative value.
In the absence of competent proof on the actual damage suffered, private respondent is `entitled to
nominal damages which, as the law says, is adjudicated in order that a right of the plaintiff, which has
been violated or invaded by defendant, may be vindicated and recognized, and not for the purpose of
indemnifying the plaintiff for any loss suffered
awarded in every obligation arising from law, contracts, quasi-contracts, acts or omissions punished by
law, and quasi-delicts, or in every case where property right has been invaded.

damages in name only and not in fact

amount to be awarded as nominal damages shall be equal or at least commensurate to the injury
sustained by private respondent considering the concept and purpose of such damages
Ordinarily, the receipt of insurance payments should diminish the total value of the vessel quoted by
private respondent in his complaint considering that such payment is causally related to the loss for which
it claimed compensation.
Its failure to pay the docket fee corresponding to its increased claim for damages under the amended
complaint should not be considered as having curtailed the lower courts jurisdiction since the unpaid
docket fee should be considered as a lien on the judgment
SPOUSES ZALAMEA and LIANA ZALAMEA vs. CA and TRANSWORLD AIRLINES, INC.
G.R. No. 104235 November 18, 1993
FACTS:
Petitioners-spouses Cesar Zalamea and Suthira Zalamea, and their daughter, Liana purchased 3 airline
tickets from the Manila agent of respondent TransWorld Airlines, Inc. for a flight to New York to Los Angeles.
The tickets of petitioners-spouses were purchased at a discount of 75% while that of their daughter was a
full fare ticket. All three tickets represented confirmed reservations.
On the appointed date, however, petitioners checked in but were placed on the wait-list because the
number of passengers who had checked in before them had already taken all the seats available on the
flight. Out of the 42 names on the wait list, the first 22 names were eventually allowed to board the flight
to Los Angeles, including petitioner Cesar Zalamea. The two others were not able to fly. Those holding fullfare tickets were given first priority among the wait-listed passengers. Mr. Zalamea, who was holding the
full-fare ticket of his daughter, was allowed to board the plane; while his wife and daughter, who presented
the discounted tickets were denied boarding.
Even in the next TWA flight to Los Angeles Mrs. Zalamea and her daughter, could not be accommodated
because it was also fully booked. Thus, they were constrained to book in another flight and purchased two
tickets from American Airlines. Upon their arrival in the Philippines, petitioners filed an action for damages
based on breach of contract of air carriage before the RTC- Makati. The lower court ruled in favor of
petitioners . CA held that moral damages are recoverable in a damage suit predicated upon a breach of
contract of carriage only where there is fraud or bad faith. Since it is a matter of record that overbooking of
flights is a common and accepted practice of airlines in the United States and is specifically allowed under
the Code of Federal Regulations by the Civil Aeronautics Board, no fraud nor bad faith could be imputed on
respondent TransWorld Airlines. Thus petitioners raised the case on petition for review on certiorari.
ISSUE;
WON TWZ acted with bad faith and would entitle Zalameas to Moral and Examplary damages.
RULING:
The U.S. law or regulation allegedly authorizing overbooking has never been proved. Foreign laws do not
prove themselves nor can the courts take judicial notice of them. Like any other fact, they must be alleged
and proved. Written law may be evidenced by an official publication thereof or by a copy attested by the
officer having the legal custody of the record, or by his deputy, and accompanied with a certificate that
such officer has custody. The certificate may be made by a secretary of an embassy or legation, consul
general, consul, vice-consul, or consular agent or by any officer in the foreign service of the Philippines
stationed in the foreign country in which the record is kept, and authenticated by the seal of his office.
Respondent TWA relied solely on the statement of Ms. Gwendolyn Lather, its customer service agent, in
her deposition that the Code of Federal Regulations of the Civil Aeronautics Board allows overbooking. No
official publication of said code was presented as evidence. Thus, respondent courts finding that
overbooking is specifically allowed by the US Code of Federal Regulations has no basis in fact.
Even if the claimed U.S. Code of Federal Regulations does exist, the same is not applicable to the case at
bar in accordance with the principle of lex loci contractus which require that the law of the place where the
airline ticket was issued should be applied by the court where the passengers are residents and nationals
of the forum and the ticket is issued in such State by the defendant airline. Since the tickets were sold and
issued in the Philippines, the applicable law in this case would be Philippine law.

Existing jurisprudence explicitly states that overbooking amounts to bad faith, entitling the passengers
concerned to an award of moral damages. In Alitalia Airways v. Court of Appeals, where passengers with
confirmed bookings were refused carriage on the last minute, this Court held that when an airline issues a
ticket to a passenger confirmed on a particular flight, on a certain date, a contract of carriage arises, and
the passenger has every right to expect that he would fly on that flight and on that date. If he does not,
then the carrier opens itself to a suit for breach of contract of carriage. Where an airline had deliberately
overbooked, it took the risk of having to deprive some passengers of their seats in case all of them would
show up for the check in. For the indignity and inconvenience of being refused a confirmed seat on the last
minute, said passenger is entitled to an award of moral damages.
For a contract of carriage generates a relation attended with public duty a duty to provide public service
and convenience to its passengers which must be paramount to self-interest or enrichment.
Respondent TWA is still guilty of bad faith in not informing its passengers beforehand that it could breach
the contract of carriage even if they have confirmed tickets if there was overbooking. Respondent TWA
should have incorporated stipulations on overbooking on the tickets issued or to properly inform its
passengers about these policies so that the latter would be prepared for such eventuality or would have
the choice to ride with another airline.
Respondent TWA was also guilty of not informing its passengers of its alleged policy of giving less priority
to discounted tickets. Neither did it present any argument of substance to show that petitioners were duly
apprised of the overbooked condition of the flight or that there is a hierarchy of boarding priorities in
booking passengers. It is evident that petitioners had the right to rely upon the assurance of respondent
TWA, thru its agent in Manila, then in New York, that their tickets represented confirmed seats without any
qualification. The failure of respondent TWA to so inform them when it could easily have done so thereby
enabling respondent to hold on to them as passengers up to the last minute amounts to bad faith.
Evidently, respondent TWA placed its self-interest over the rights of petitioners under their contracts of
carriage. Such conscious disregard of petitioners rights makes respondent TWA liable for moral damages.
To deter breach of contracts by respondent TWA in similar fashion in the future, we adjudge respondent
TWA liable for exemplary damages, as well.
In the case of Alitalia Airways v. Court of Appeals, this Court explicitly held that a passenger is entitled to
be reimbursed for the cost of the tickets he had to buy for a flight to another airline. Thus, instead of
simply being refunded for the cost of the unused TWA tickets, petitioners should be awarded the actual
cost of their flight from New York to Los Angeles.
WHEREFORE, the petition is hereby GRANTED and the decision of the respondent Court of Appeals is
hereby MODIFIED
FLORESCA VS PHILEX MINING
Perfecto Floresca et al are the heirs of the deceased employees of Philex Mining Corporation who, while
working at its copper mines underground operations in Tuba, Benguet on June 28, 1967, died as a result of
the cave-in that buried them in the tunnels of the mine. Theircomplaint alleges that Philex, in violation of
government rules and regulations, negligently and deliberately failed to take the required precautions for
the protection of the lives of its men working underground. Floresca et al moved to claim their benefits
pursuant to the Workmens Compensation Act before the Workmens Compensation Commission. They also
filed a separate civil case against Philex for damages.
Philex sought the dismissal of the civil case as it insisted that Floresca et al have already claimed benefits
under the Workmens Compensation Act.
ISSUE: Whether or not Philex is correct.
HELD: Yes. Under the law, Floresca et al could only do either one. If they filed for benefits under the WCA
then they will be estopped from proceeding with a civil case before the regular courts. Conversely, if they
sued before the civil courts then they would also be estopped from claiming benefits under the WCA.
HOWEVER, the Supreme Court ruled that Floresca et al are excused from this deficiency due to ignorance
of the fact. Had they been aware of such then they may have not availed of such a remedy. But, if in case
theyll win in the lower court whatever award may be granted, the amount given to them under the WCA
should be deducted. The SC emphasized that if they would go strictly by the book in this case then the

purpose of the law may be defeated. Idolatrous reverence for the letter of the law sacrifices the human
being. The spirit of the law insures mans survival and ennobles him. As Shakespeare said, the letter of the
law killeth but its spirit giveth life.
BOBIE ROSE FRIAS v. FLORA SAN DIEGO-SISON
2007 / Austria-Martinez
On 7 Dec 1990, Bobie Rose Frias and Dr. Flora San-Diego Sison entered into a MOA over Friasproperty
MOA consideration is 3M
Sison has 6 months from the date of contracts execution to notify Frias of her intention to purchase the
property with the improvements at 6.4M
Prior to this 6 month period, Frias may still offer the property to other persons, provided that 3M shall be
paid to Sison including interest based on prevailing compounded bank interest + amount of sale in excess
of 7M [should the property be sold at a price greater than 7M]
In case Frias has no other buyer within 6 months from the contracts execution, no interest shall be
charged by Sison on the 3M
In the event that on the 6th month, Sison would decide not to purchase the property, Frias has 6 months to
pay 3M (amount shall earn compounded bank interest for the last 6 months only)
3M treated as a loan and the property considered as the security for the mortgage
Upon notice of intention to purchase, Sison has 6 months to pay the balance of 3.4M (6.4M less 3M MOA
consideration)
Frias received from Sison 3M (2M in cash; 1M post-dated check dated February 28, 1990, instead of 1991,
which rendered the check stale). Frias gave Sison the TCT and the Deed of Absolute Sale over the property.
Sison decided not to purchase the property, so shenotified Frias through a letter dated March 20, 1991
[Frias received it only on June 11, 1991],and Sison reminded Frias of their agreement that the 2M Sison
paid should be considered as a loan payable within 6 months. Frias failed to pay this amount.
Sison filed a complaintfor sum of money with preliminary attachment. Sison averred that Frias tried to
deprive her of the security for the loan by making a false report of the loss of her owners copy of TCT,
executing an affidavit of loss and by filing a petition[1] for the issuance of a new owners duplicate copy.
RTC issued a writ of preliminary attachment upon the filing of a 2M bond.
RTC found that Frias was under obligation to pay Sison 2M with compounded interest pursuant to their
MOA. RTC ordered Frias to pay Sison:
2M + 32% annual interest beginning December 7, 1991 until fully paid
70k representing premiums paid by Sison on the attachment bond with legal interest counted from the
date of this decision until fully paid
100k moral, corrective, exemplary damages [liable for moral damages because of Frias fraudulent
scheme]
100k attorneys fees + cost of litigation
CA affirmed RTC with modification32% reduced to 25%. CA said that there was no basis for Frias to say
that the interest should be charged for 6 months only. It said that a loan always bears interest; otherwise,
it is not a loan. The interest should commence on June 7, 1991 until fully paid, with compounded bank
interest prevailing at the time [June 1991] the 2M was considered as a loan (as certified by the bank).
ISSUES & HOLDING Ratio only discusses topic of INTEREST (as per syllabus)
WON compounded bank interest should be limited to 6 months as contained in the MOA. NO
WON Sison is entitled to moral damages. YES
WON the grant of attorneys fees is proper, even if not mentioned in the body of the decision. NO
CA committed no error in awarding an annual 25% interest on the 2M even beyond the 6-month stipulated
period. In this case, the phrase for the last six months only should be taken in the context of the entire
agreement.
SC notes that the agreement speaks of two (2) periods of 6 months each (see FACTSwords in bold &
underline). No interest will be charged for the 1st 6-month period [while Sison was making up her mind],
but only for the 2nd 6-month period after Sison decided not to buy the property. There is nothing in the
MOA that suggests that interest will be charged for 6 months only even if it takes forever for Frias to pay
the loan.

The payment of regular interest constitutes the price or cost of the use of money, and until the principal
sum due is returned to the creditor, regular interest continues to accrue since the debtor continues to use
such principal amount. For a debtor to continue in possession of the principal of the loan and to continue to
use the same after maturity of the loan without payment of the monetary interest constitutes unjust
enrichment on the part of the debtor at the expense of the creditor.
CA DECISION AND RESOLUTION AFFIRMED WITH MODIFICATIONAward of attorneys fees deleted
[1] At first, Frias petition was granted, but it was eventually set aside, since RTC granted Sisons petition
for relief from judgment (as Sison was in possession of the owners duplicate copy).