Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-28512 February 28, 1973

PEDRO R. DAVILA and PRECIOSA C. TIRO, plaintiffs-appellants,

vs.
PHILIPPINE AIR LINES, defendant-appellant.

Dizon, De Guzman and Vitug and Pedro R. Davila for plaintiffs-appellants.

Siguion Reyna, Montecillo, Belo and Ongsiako for defendant-appellant.

MAKALINTAL, J.:

In Civil Case No. 5728 of the Court of First Instance of Iloilo (Pedro R. Davila and Preciosa C. Tirol, plaintiffs, vs. Philippine
Air Lines, Inc., defendant) judgment was rendered ordering the defendant to pay the plaintiffs various sums of money, as
follows:

(1) For the death of Pedro T. Davila, Jr. the amount of P6,000.00;

(2) For the loss of the earning capacity of the deceased at the rate of P12,000.00 per annum for five (5)
years in the amount of Sixty Thousand Pesos. (P60,000.00);

(3) For moral damages in favor of the plaintiffs Ten Thousand Pesos (P10,000.00);

(4) For exemplary damages in the amount of Ten Thousand Pesos (P10,000.00);

(5) For actual damages the amount of Five Thousand Pesos (P5,000.00) broken down to as follows: A
rolex watch valued at P600.00; a pistol worth P300.00; burial expenses P600.00; for the lot and the
mausoleum P3,500.00;

(6) For Attorney's fees the amount of Ten Thousand Pesos (P10,000.00) or a total amount of One Hundred
and One Thousand Pesos (P101,000.00)

To pay the costs of this proceedings.

Both parties appealed directly to this Court in view of the aggregate of the amounts awarded, the judgment having been
rendered before the effectivity of Rep. Act No. 5440. In this appeal the plaintiffs seek an increase in said amounts, and the
defendant, complete exoneration from, or at least mitigation of, liability.

The case arose from the tragic crash of a passenger plane of the defendant which took the lives of all its crew and
passengers. The plane, identified as PI-C133, was a DC-3 type of aircraft, manufactured in 1942 and acquired by the
defendant in 1948. It had flown almost 18,000 hours at the time of its ill-fated flight. Despite its age, however, it had been
certified as airworthy by the Civil Aeronautics Administration. On November 23, 1960, at 5:30 in the afternoon, it took off
from the Manduriao Airport, Iloilo, on its way to Manila, with 33 people on board, including the plane's complement. It did
not reach its destination, but crashed at Mt. Baco, Mindoro, one hour and fifteen minutes after take-off. A massive search
was undertaken by the defendant and by other parties as soon as it was realized that the plane's arrival in Manila was
overdue. The plaintiffs, parents of Pedro T. Davila, Jr., who was one of the passengers, had no definite news of what had
happened to their son, getting what information they could only from conflicting newspaper reports, until they received, on
December 19, 1960, a letter of condolence from the defendant's president Andres Soriano, informing them that their son
had died in the crash. And it was only on December 29 that his body was recovered an taken back to Iloilo.
The issues before the trial court, and now before Us in this appeal, are whether or not the defendant is liable for violation
of its contract of carriage and if so, for how much. The provisions of the Civil Code on this substantive question of liability
are clear and explicit. Article 1733 binds common carriers, "from the nature of their business and by reasons of public
policy, ... to observe extraordinary diligence in the vigilance ... for the safety of the passengers transported by them
according to all the circumstances of each case." Article 1755 establishes the standard of care required of a common
carrier, which is, "to carry the passengers safely as far as human care and foresight can provide, using the utmost
diligence of very cautious persons, with due regard for all the circumstances." Article 1756 fixes the burden of proof by
providing that "in case of death of or injuries to passengers, common carriers are presumed to have been at fault or to
have acted negligently, unless they prove that they observed extraordinary diligence as prescribed in Articles 1733 and
1755." Lastly, Article 1757 states that "the responsibility of a common carrier for the safety of passengers ... cannot be
dispensed with or lessened by stipulation, by the posting of notices, by statements on tickets, or otherwise."

The route prescribed by the Civil Aeronautics Administration for the flight of plane PI-C113 in the afternoon of November
23, 1960 was Iloilo-Romblon-Manila, the latter stage, denominated as airway "Amber I," being a straight lane from
Romblon to Manila. The prescribed elevation of the flight was 6,000 ft. The plane reported its position after take-off and
again when it was abeam the Roxas homer. However, it did not intercept airway "Amber I" over Romblon as it was
supposed to do, and the pilot did not give his position then although Romblon was a compulsory checking point. The fact
was that the plane had deviated from the prescribed route by 32 miles to the west when it crashed at Mt. Baco. The
reading of the altimeter of the plane when its wreckage was found was 6,800 ft.

There is a suggestion that in the course of the flight between Romblon and Mindoro the aircraft was drifted westward by
the cross-winds then blowing in the region. The defendant, however, has not given a definite explanation as to why, if such
was the case, the pilot failed to make the necessary correction in his flight to compensate for the drift. According to the
defendant's witness, Maj. Mijares, Chief of the Aviation Safety Division of the Civil Aeronautics Administration and
Chairman of the CAA Investigating Committee, there was a navigational error, to which several factors contributed: "the
weather observation at that time from the Weather Bureau was not so good between Mt. Baco and Romblon and the wind
aloft was quite strong, which would be also one of the causes for the drifting of the aircraft; and the other strong probability,
I would say, would be the malfunction of the aircraft's navigational instrument." He further explained that "a cross-wind can
drift the plane if the pilot will not make the necessary correction, if his navigational instrument is malfunctioning and the
visual reference outside the aircraft could not make the necessary corrections."

There is nothing in the testimony of Maj. Mijares to show just how strong the cross-winds were in the region at the time,
although in the investigation of the accident by the Senate Committee on transportation there was testimony that the cross-
winds had a velocity of either 20 to 25 knots or 25 to 35 knots an hour. Considering the relatively short distance from
Romblon to Mt. Baco and the brief span of time it would take to fly that distance, cross-winds with the velocity stated could
not have possibly deviated the plane by as much as 32 miles.

The defendant points out that the navigational instrument on board the plane consisted of two (2) sets of automatic
direction finders (ADF) which, when found after the crash, showed a reading that the aircraft was heading north, which was
the proper flight direction. This point, however, is of no vital significance in this case since it does not explain why the
aircraft was 32 miles off its prescribed route in the first place. It is suggested that the pilot did not notice the drift of his
plane because of poor visibility due to thick clouds, which prevented him from making the corresponding correction on the
basis of visual references to the terrain outside. But according to Maj. Mijares himself the report from the Weather Bureau
at the time showed that visibility was 15 miles between Romblon and Mt. Baco and that the clouds from 2,700 to 7,000 ft.
elevation were "scattered." And the profile of the probable weather cross-section along airway "Amber I" during the flight
(Exh. 33-A) shows that at 6,000 ft. the airlane was clear and free of clouds. The suggestion therefore that the pilot was
practically flying blind and consequently failed to notice the drift of the aircraft is not justified by the evidence. Indeed even
the investigating team of the defendant under the chairmanship of Capt. Jaime Manzano concluded in its report that
"based on the limited evidences available, the board is of the opinion that the probable cause was the inability of the pilot
to intersect airway "Amber I" over Romblon and to maintain track within its designated airway lane for reasons unknown."

What is undisputed therefore is that the pilot did not follow the route prescribed for his flight, at least between Romblon and
Manila. Since up to that point over Romblon, where he was supposed to intersect airway "Amber I" the weather was clear,
the most reasonable conclusion is that his failure to do so was intentional, and that he probably wanted to fly on a straight
line to Manila. It was a violation of air-craft traffic rules to which, under the circumstances, the accident may be directly
attributable.

In any case, absent a satisfactory explanation on the part of the defendant as to how and why the accident occurred, the
presumption is that it was at fault, under Article 1756 of the Civil Code.
The next question relates to the amount of damages that should be awarded to the plaintiffs, parents of the deceased. The
trial court fixed the indemnity for his death in the amount of P6,000.00. Pursuant to current jurisprudence on the point it
should be increased to P12,000.00.1

The deceased was employed as manager of a radio station2, from which he was earning P8,400.00 a year, consisting of a
monthly salary of P600.00 and allowance of P100.00. As a lawyer and junior partner of his father in the law office, he had
an annual income of P3,600.00. From farming he was getting an average of P3,000.00. All in all therefore the deceased
had gross earnings of P15,000.00 a year.

According to Article 2206, paragraph (1), of the Civil Code, "the defendant shall be liable for the loss of the earning
capacity of the deceased and indemnity shall be paid to the heirs of the latter." This Article, while referring to "damages for
death caused by crime or quasi-delict," is expressly made applicable by Article 1764 "to the death of a passenger caused
by the breach of contract by a common carrier."

The deceased, Pedro Davila, Jr., was single and 30 years of age when he died. At that age one's normal life expectancy is
33-1/3 years, according to the formula (2/3 x [80-30]) adopted by this Court in the case of Villa Rey Transit, Inc. vs. Court
of Appeals3 on the basis of the American Expectancy Table of Mortality or the Actuarial of Combined Experience Table of
Mortality. However, although the deceased was in relatively good health, his medical history shows that he had
complained of and been treated for such ailments as backaches, chest pains and occasional feelings of tiredness. It is
reasonable to make an allowance for these circumstances and consider, for purposes of this case, a reduction of his life
expectancy to 25 years.

In the same case of Villa Revenue Transit this Court stated:

"... earning capacity, as an element of damages to one's estate for his death by wrongful act is necessarily his net earning
capacity or his capacity to acquire money, less the necessary expense for his own living. Stated otherwise, the amount
recoverable is not loss of the entire earnings, but rather the loss of that portion of the earnings which the beneficiary would
have received. In other words, only net earnings, not gross earnings, are to be considered, that is, the total of the earnings
less expenses necessary in the creation of such earnings or income and less living and other incidental expenses."

Considering the fact that the deceased was getting his income from three (3) different sources, namely from managing a
radio station, from law practice and from farming, the expenses incidental to the generation of such income were
necessarily more than if he had only one source. Together with his living expenses, a deduction of P600.00 a month, or
P7,200.00 a year, seems to Us reasonable, leaving a net yearly income of P7,800.00. This amount, multiplied by 25 years,
or P195,000.00 is the amount which should be awarded to the plaintiffs in this particular respect.

Actual losses sustained consist of the following, as found by the trial court: "Rolex Watch — P600.00; pistol — P300.00;
Burial Expenses — P600.00; and cost of cemetery lot and mausoleum - P3,500.00."

Under Article 2206, in relation to Article 1764, of the Civil Code, the parents of the deceased are entitled to moral damages
for their mental anguish. The trial court awarded P10,000.00 in this concept, and We find no justification to change the
award, considering the long period of uncertainty and suffering the plaintiffs underwent from November 23, when the plane
crash occurred, to December 19, when they received a letter from the defendant's president confirming the death of their
son, and again to the following December 29, when his body was finally recovered and taken back to them.

With respect to the award of P10,000.00 as exemplary damages, it is Our opinion that the same should be eliminated.
According to Article 2232 of the Civil Code, in contracts and quasi-contracts the court may award exemplary damages if
the defendant acted in a wanton, fraudulent, reckless, oppressive or malevolent manner. The failure of the defendant here
to exercise extraordinary diligence, as required by law, does not amount to anyone of the circumstances contemplated in
the said provision.

The trial court has awarded attorney's fees of P10,000.00. We do not find this award groundless or the amount thereof
unreasonable.

The total of the different items above enumerated is P232,000.00. The judgment of the court a quo is therefore modified
accordingly and the defendant is ordered to pay the said amount to the plaintiffs, with legal interest thereon from the finality
of this judgment. With costs against the defendant.
 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. L-31150 July 22, 1975

KONINKLIJKE LUCHTVAART MAATSHAPPIJ N.V., otherwise known as KLM ROYAL DUTCH AIRLINES, petitioner,
vs.
THE HONORABLE COURT OF APPEALS, CONSUELO T. MENDOZA and RUFINO T. MENDOZA, respondents.

Picazo, Agcaoili, Santayana, Reyes and Tayao for petitioner.

Bengzon, Villegas, Zarraga, Narciso and Cudala for respondents.

CASTRO, J.:

In this appeal by way of certiorari the Koninklijke Luchtvaart Maatschappij N.V., otherwise known as the KLM Royal Dutch
Airlines (hereinafter referred to as the KLM) assails the award of damages made by the Court of Appeals in CA-G.R.
40620 in favor of the spouses Rufino T. Mendoza and Consuelo T. Mendoza (hereinafter referred to as the respondents). 1äw phï1.ñët

Sometime in March 1965 the respondents approached Tirso Reyes, manager of a branch of the Philippine Travel Bureau,
a travel agency, for consultations about a world tour which they were intending to make with their daughter and a niece.
Reyes submitted to them, after preliminary discussions, a tentative itinerary which prescribed a trip of thirty-five legs; the
respondents would fly on different airlines. Three segments of the trip, the longest, would be via KLM. The respondents
expressed a desire to visit Lourdes, France, and discussed with Reyes two alternate routes, namely, Paris to Lourdes and
Barcelona to Lourdes. The respondents decided on the Barcelona-Lourdes route with knowledge that only one airline, Aer
Lingus, serviced it.

The Philippine Travel Bureau to which Reyes was accredited was an agent for international air carriers which are members
of the International Air Transport Association, popularly known as the "IATA," of which both the KLM and the Aer Lingus
are members.

After about two weeks, the respondents approved the itinerary prepared for them, and asked Reyes to make the
necessary plane reservations. Reyes went to the KLM, for which the respondents had expressed preference. The KLM
thereafter secured seat reservations for the respondents and their two companions from the carriers which would ferry
them throughout their trip, with the exception of Aer Lingus. When the respondents left the Philippines (without their young
wards who had enplaned much earlier), they were issued KLM tickets for their entire trip. However, their coupon for the
Aer Lingus portion (Flight 861 for June 22, 1965) was marked "RQ" which meant "on request".

After sightseeing in American and European cities (they were in the meantime joined by their two young companions), the
respondents arrived in Frankfurt, Germany. They went to a KLM office there and obtained a confirmation from Aer Lingus
of seat reservations on flight 861. After meandering in London, Paris and Lisbon, the foursome finally took wing to
Barcelona for their trip to Lourdes, France.

In the afternoon of June 22, 1965 the respondents with their wards went to the Barcelona airport to take their plane which
arrived at 4:00 o'clock. At the airport, the manager of Aer Lingus directed the respondents to check in. They did so as
instructed and were accepted for passage. However, although their daughter and niece were allowed to take the plane, the
respondents were off-loaded on orders of the Aer Lingus manager who brusquely shoved them aside with the aid of a
policeman and who shouted at them, "Conos! Ignorantes Filipinos!"

Mrs. Mendoza later called up the manager of Aer Lingus and requested that they provide her and her husband means to
get to Lourdes, but the request was denied. A stranger, however, advised them to take a train, which the two did; despite
the third class accommodations and lack of food service, they reached Lourdes the following morning. During the train trip
the respondents had to suffer draft winds as they wore only minimum clothing, their luggage having gone ahead with the
Aer Lingus plane. They spent $50 for that train trip; their plane passage was worth $43.35.

On March 17, 1966 the respondents, referring to KLM as the principal of Aer Lingus, filed a complaint for damages with the
Court of First Instance of Manila arising from breach of contract of carriage and for the humiliating treatment received by
them at the hands of the Aer Lingus manager in Barcelona. After due hearing, the trial court awarded damages to the
respondents as follows: $43.35 or its peso equivalent as actual damages, P10,000 as moral damages, P5,000 as
exemplary damages, and P5,000 as attorney's fees, and expenses of litigation.

Both parties appealed to the Court of Appeals. The KLM sought complete exoneration; the respondents prayed for an
increase in the award of damages. In its decision of August 14, 1969 the Court of Appeals decreed as follows: "Appellant
KLM is condemned to pay unto the plaintiffs the sum of $43.35 as actual damages; P50,000 as moral damages; and
P6,000 as attorney's fees and costs."

Hence, the present recourse by the KLM.

The KLM prays for exculpation from damages on the strength of the following particulars which were advanced to but
rejected by the Court of Appeals:

(a) The air tickets issued to the respondents stipulate that carriage thereunder is subject to the "Convention for the
Unification of Certain Rules Relating to International Transportation by Air," otherwise known as the "Warsaw Convention,"
to which the Philippine Government is a party by adherence, and which pertinently provides.1

ART. 30. (1) In the case of transportation to be performed by various successive carriers and failing within
the definition set out in the third paragraph of Article I, each carrier who accepts passengers, baggage, or
goods shall be subject to the rules set out in the convention, and shall be deemed to be one of the
contracting parties to the contract of transportation insofar as the contract deals with that part of
transportation which is performed under his supervision.2

(2) In the case of transportation of this nature, the passenger or his representative can take action only
against the carrier who performed the transportation during which the accident or the delay occured, save
in the case where, by express agreement, the first carrier has assumed liability for the whole journey.
(emphasis supplied)

(b) On the inside front cover of each ticket the following appears under the heading "Conditions of Contract":

1 ... (a) Liability of carrier for damages shall be limited to occurrences on its own line, except in the case of
checked baggage as to which the passenger also has a right of action against the first or last carrier. A
carrier issuing a ticket or checking baggage for carriage over the lines of others does so only as agent..

(c) All that the KLM did after the respondents completed their arrangements with the travel agency was to request for seat
reservations among the airlines called for by the itinerary submitted to the KLM and to issue tickets for the entire flight as a
ticket-issuing agent.

The respondents rebut the foregoing arguments, thus:

(a) Article 30 of the Warsaw Convention has no application in the case at bar which involves, not an accident or delay, but
a willful misconduct on the part of the KLM's agent, the Aer Lingus. Under article 25 of the same Convention the following
is prescribed:

ART. 25. (1) The carrier shall not be entitled to avail himself of the provisions of this convention which
exclude or limit his liability, if the damage is caused by his willful misconduct or by such default on his part
as, in accordance with the law of the court to which the case is submitted, is considered to be equivalent to
willful misconduct.3

(2) Similarly, the carrier shall not be entitled to avail himself of the said provisions, if the damage is caused
under the same circumstances by any agent of the carrier acting within the scope of his employment.
(emphasis by respondents)
(b) The condition in their tickets which purportedly excuse the KLM from liability appears in very small print, to read which,
as found by the Court of Appeals, one has practically to use a magnifying glass.

(c) The first paragraph of the "Conditions of Contract" appearing identically on the KLM tickets issued to them idubitably
shows that their contract was one of continuous air transportation around the world:

1 ... "carriage" includes the air carrier issuing this ticket and all carriers that carry or undertake to carry the
passenger or his baggage hereunder or perform any other service incidental to such air carriage... Carriage
to be performed hereunder by several successive carrier is regarded as a single operation.

(d) The contract of air transportation was exclusively between the respondents and the KLM, the latter merely endorsing its
performance to other carriers, like Aer Lingus, as its subcontractors or agents, as evidenced by the passage tickets
themselves which on their face disclose that they are KLM tickets. Moreover, the respondents dealt only with KLM through
the travel agency.

1. The applicability insisted upon by the KLM of article 30 of the Warsaw Convention cannot be sustained. That article
presupposes the occurrence of either an accident or a delay, neither of which took place at the Barcelona airport; what is
here manifest, instead, is that the Aer Lingus, through its manager there, refused to transport the respondents to their
planned and contracted destination.

2. The argument that the KLM should not be held accountable for the tortious conduct of Aer Lingus because of the
provision printed on the respondents' tickets expressly limiting the KLM's liability for damages only to occurrences on its
own lines is unacceptable. As noted by the Court of Appeals that condition was printed in letters so small that one would
have to use a magnifying glass to read the words. Under the circumstances, it would be unfair and inequitable to charge
the respondents with automatic knowledge or notice of the said condition so as to preclude any doubt that it was fairly and
freely agreed upon by the respondents when they accepted the passage tickets issued to them by the KLM. As the airline
which issued those tickets with the knowledge that the respondents would be flown on the various legs of their journey by
different air carriers, the KLM was chargeable with the duty and responsibility of specifically informing the respondents of
conditions prescribed in their tickets or, in the very least, to ascertain that the respondents read them before they accepted
their passage tickets. A thorough search of the record, however, inexplicably fails to show that any effort was exerted by
the KLM officials or employees to discharge in a proper manner this responsibility to the respondents. Consequently, we
hold that the respondents cannot be bound by the provision in question by which KLM unilaterally assumed the role of a
mere ticket-issuing agent for other airlines and limited its liability only to untoward occurrences on its own lines.

3. Moreover, as maintained by the respondents and the Court of Appeals, the passage tickets of the respondents provide
that the carriage to be performed thereunder by several successive carriers "is to be regarded as a single operation,"
which is diametrically incompatible with the theory of the KLM that the respondents entered into a series of independent
contracts with the carriers which took them on the various segments of their trip. This position of KLM we reject. The
respondents dealt exclusively with the KLM which issued them tickets for their entire trip and which in effect guaranteed to
them that they would have sure space in Aer Lingus flight 861. The respondents, under that assurance of the
internationally prestigious KLM, naturally had the right to expect that their tickets would be honored by Aer Lingus to which,
in the legal sense, the KLM had indorsed and in effect guaranteed the performance of its principal engagement to carry out
the respondents' scheduled itinerary previously and mutually agreed upon between the parties.

4. The breach of that guarantee was aggravated by the discourteous and highly arbitrary conduct of an official of the Aer
Lingus which the KLM had engaged to transport the respondents on the Barcelona-Lourdes segment of their itinerary. It is
but just and in full accord with the policy expressly embodied in our civil law which enjoins courts to be more vigilant for the
protection of a contracting party who occupies an inferior position with respect to the other contracting party, that the KLM
should be held responsible for the abuse, injury and embarrassment suffered by the respondents at the hands of a
supercilious boor of the Aer Lingus.

ACCORDINGLY, the judgment of the Court of Appeals dated August 14, 1969 is affirmed, at KLM's cost.
 FIRST DIVISION

[G.R. No. 124110. April 20, 2001]

UNITED AIRLINES, INC., petitioner, vs. COURT OF APPEALS, ANICETO FONTANILLA,

in his personal capacity and in behalf of his minor son MYCHAL ANDREW
FONTANILLA respondents.

DECISION
KAPUNAN, J.:

On March 1, 1989, private respondent Aniceto Fontanilla purchased from petitioner United Airlines,
through the Philippine Travel Bureau in Manila, three (3) Visit the U.S.A. tickets for himself, his wife and
his minor son Mychal for the following routes:

(a) San Francisco to Washington (15 April 1989);

(b) Washington to Chicago (25 April 1989);

(c) Chicago to Los Angeles (29 April 1989);

(d) Los Angeles to San Francisco (01 May 1989 for petitioners wife and 05 May 1989 for petitioner and
his son).[1]

All flights had been confirmed previously by United Airlines.[2]

The Fontanillas proceeded to the United States as planned, where they used the first coupon from San
Francisco to Washington. On April 24, 1989, Aniceto Fontanilla bought two (2) additional coupons each
for himself, his wife and his son from petitioner at its office in Washington Dulles Airport. After paying
the penalty for rewriting their tickets, the Fontanillas were issued tickets with corresponding boarding
passes with the words CHECK-IN REQUIRED, for United Airlines Flight No. 1108, set to leave from Los
Angeles to San Francisco at 10:30 a.m. on May 5, 1989.[3]
The cause of the non-boarding of the Fontanillas on United Airlines Flight No. 1108 makes up the
bone of contention of this controversy.
Private respondents' version is as follows:
Aniceto Fontanilla and his son Mychal claim that on May 5, 1989, upon their arrival at the Los Angeles
Airport for their flight, they proceeded to United Airlines counter where they were attended by an employee
wearing a nameplate bearing the name LINDA. Linda examined their tickets, punched something into her
computer and then told them that boarding would be in fifteen minutes. [4]
When the flight was called, the Fontanillas proceeded to the plane. To their surprise, the stewardess at
the gate did not allow them to board the plane, as they had no assigned seat numbers. They were then
directed to go back to the check-in counter where Linda subsequently informed them that the flight had
been overbooked and asked them to wait.[5]
 The Fontanillas tried to explain to Linda the special circumstances of their visit. However, Linda told
them in arrogant manner, So what, I can not do anything about it.[6]
Subsequently, three other passengers with Caucasian features were graciously allowed to board, after
the Fontanillas were told that the flight had been overbooked. [7]
The plane then took off with the Fontanillas baggage in tow, leaving them behind. [8]
The Fontanillas then complained to Linda, who in turn gave them an ugly stare and rudely uttered, Its
not my fault. Its the fault of the company. Just sit down and wait.[9] When Mr. Fontanilla reminded Linda
of the inconvenience being caused to them, she bluntly retorted, Who do you think you are? You lousy
Flips are good for nothing beggars.You always ask for American aid. After which she remarked Dont
worry about your baggage. Anyway there is nothing in there. What are you doing here anyway? I will
report you to immigration. You Filipinos should go home.[10] Such rude statements were made in front of
other people in the airport causing the Fontanillas to suffer shame, humiliation and embarrassment. The
chastening situation even caused the younger Fontanilla to break into tears. [11]
After some time, Linda, without any explanation, offered the Fontanillas $50.00 each. She simply
said Take it or leave it. This, the Fontanillas declined.[12]
The Fontanillas then proceeded to the United Airlines customer service counter to plead their case. The
male employee at the counter reacted by shouting that he was ready for it and left without saying
anything.[13]
The Fontanillas were not booked on the next flight, which departed for San Francisco at 11:00 a.m. It
was only at 12:00 noon that they were able to leave Los Angeles on United Airlines Flight No. 803.
Petitioner United Airlines has a different version of what occurred at the Los Angeles Airport on May
5, 1989.
According to United Airlines, the Fontanillas did not initially go to the check-in counter to get their
seat assignments for UA Flight 1108. They instead proceeded to join the queue boarding the aircraft
without first securing their seat assignments as required in their ticket and boarding passes. Having no seat
assignments, the stewardess at the door of the plane instructed them to go to the check-in counter. When
the Fontanillas proceeded to the check-in counter, Linda Allen, the United Airlines Customer
Representative at the counter informed them that the flight was overbooked. She booked them on the next
available flight and offered them denied boarding compensation. Allen vehemently denies uttering the
derogatory and racist words attributed to her by the Fontanillas.[14]
The incident prompted the Fontanillas to file Civil Case No. 89-4268 for damages before the Regional
Trial Court of Makati. After trial on the merits, the trial court rendered a decision, the dispositive portion
of which reads as follows:

WHEREFORE, judgment is rendered dismissing the complaint. The counterclaim is likewise dismissed
as it appears that plaintiffs were not actuated by legal malice when they filed the instant complaint.[15]

On appeal, the Court of Appeals ruled in favor of the Fontanillas. The appellate court found that there
was an admission on the part of United Airlines that the Fontanillas did in fact observe the check-in
requirement. It ruled further that even assuming there was a failure to observe the check-in requirement,
United Airlines failed to comply with the procedure laid down in cases where a passenger is denied
boarding. The appellate court likewise gave credence to the claim of Aniceto Fontanilla that the employees
of United Airlines were discourteous and arbitrary and, worse, discriminatory. In light of such treatment,
the Fontanillas were entitled to moral damages. The dispositive portion of the decision of the respondent
Court of Appeals dated 29 September 1995, states as follows:

WHEREFORE, in view of the foregoing, judgment appealed herefrom is hereby REVERSED and SET
ASIDE, and a new judgment is entered ordering defendant-appellee to pay plaintiff-appellant the
following:

a) P200,000.00 as moral damages;

b) P200,000.00 as exemplary damages;

c) P50, 000.00 as attorneys fees.

No pronouncement as to costs.

SO ORDERED.[16]

Petitioner United Airlines now comes to this Court raising the following assignment of errors:
I

RESPONDENT COURT OF APPEALS GRAVELY ERRED IN RULING THAT THE TRIAL

COURT WAS WRONG IN FAILING TO CONSIDER THE ALLEGED ADMISSION THAT
PRIVATE RESPONDENT OBSERVED THE CHECK-IN REQUIREMENT.
II

RESPONDENT COURT OF APPEALS GRAVELY ERRED IN RULING THAT PRIVATE

RESPONDENTS FAILURE TO CHECK-IN WILL NOT DEFEAT HIS CLAIMS BECAUSE THE
DENIED BOARDING RULES WERE NOT COMPLIED WITH.
III

RESPONDENT COURT OF APPEALS GRAVELY ERRED IN RULING THAT PRIVATE

RESPONDENT IS ENTITLED TO MORAL DAMAGES OF P200, 000.
IV

RESPONDENT COURT OF APPEALS GRAVELY ERRED IN RULING THAT PRIVATE

RESPONDENT IS ENTITLED TO EXEMPLARY DAMAGES OF P200,000.
V

RESPONDENT COURT OF APPEALS GRAVELY ERRED IN RULING THAT PRIVATE

RESPONDENT IS ENTITLED TO ATTORNEYS FEES OF P50, 000.[17]

On the first issue raised by the petitioner, the respondent Court of Appeals ruled that when Rule 9,
Section 1 of the Rules of Court,[18] there was an implied admission in petitioner's answer in the allegations
in the complaint that private respondent and his son observed the check-in requirement at the Los Angeles
Airport. Thus:
 A perusal of the above pleadings filed before the trial court disclosed that there exists a blatant
admission on the part of the defendant-appellee that the plaintiffs-appellants indeed observed the check-in
requirement at the Los Angeles Airport on May 5, 1989. In view of defendant-appellees admission of
plaintiffs-appellants material averment in the complaint, We find no reason why the trial court should rule
against such admission.[19]
We disagree with the above conclusion reached by respondent Court of Appeals. Paragraph 7 of private
respondents' complaint states:

7. On May 5, 1989 at 9:45 a.m., plaintiff and his son checked in at defendants designated counter at the
airport in Los Angeles for their scheduled flight to San Francisco on defendants Flight No. 1108.[20]

Responding to the above allegations, petitioner averred in paragraph 4 of its answer, thus:

4. Admits the allegation set forth in paragraph 7 of the complaint except to deny that plaintiff and his son
checked in at 9:45 a.m., for lack of knowledge or information at this point in time as to the truth
thereof.[21]

The rule authorizing an answer that the defendant has no knowledge or information sufficient to form
a belief as to the truth of an averment and giving such answer the effect of a denial, does not apply where
the fact as to which want of knowledge is asserted is so plainly and necessarily within the defendant's
knowledge that his averment of ignorance must be palpably untrue.[22] Whether or not private respondents
checked in at petitioner's designated counter at the airport at 9:45 a.m. on May 5, 1989 must necessarily
be within petitioner's knowledge.
While there was no specific denial as to the fact of compliance with the check-in requirement by private
respondents, petitioner presented evidence to support its contention that there indeed was no compliance.
Private respondents then are said to have waived the rule on admission. It not only presented evidence
to support its contention that there was compliance with the check-in requirement, it even allowed
petitioner to present rebuttal evidence. In the case of Yu Chuck vs. "Kong Li Po," we ruled that:

The object of the rule is to relieve a party of the trouble and expense in proving in the first instance an
alleged fact, the existence or non-existence of which is necessarily within the knowledge of the adverse
party, and of the necessity (to his opponents case) of establishing which such adverse party is notified by
his opponents pleadings.

The plaintiff may, of course, waive the rule and that is what must be considered to have done (sic) by
introducing evidence as to the execution of the document and failing to object to the defendants evidence
in refutation; all this evidence is now competent and the case must be decided thereupon.[23]

The determination of the other issues raised is dependent on whether or not there was a breach of
contract in bad faith on the part of the petitioner in not allowing the Fontanillas to board United Airlines
Flight 1108.
It must be remembered that the general rule in civil cases is that the party having the burden of proof
of an essential fact must produce a preponderance of evidence thereon. [24] Although the evidence adduced
by the plaintiff is stronger than that presented by the defendant, a judgment cannot be entered in favor of
the former, if his evidence is not sufficient to sustain his cause of action. The plaintiff must rely on the
strength of his own evidence and not upon the weakness of the defendants. [25] Proceeding from this, and
considering the contradictory findings of facts by the Regional Trial Court and the Court of Appeals, the
question before this Court is whether or not private respondents were able to prove with adequate evidence
his allegations of breach of contract in bad faith.
We rule in the negative.
Time and again, the Court has pronounced that appellate courts should not, unless for strong and cogent
reasons, reverse the findings of facts of trial courts. This is so because trial judges are in a better position
to examine real evidence and at a vantage point to observe the actuation and the demeanor of the
witnesses.[26] While not the sole indicator of the credibility of a witness, it is of such weight that it has been
said to be the touchstone of credibility.[27]
Aniceto Fontanillas assertion that upon arrival at the airport at 9:45 a.m., he immediately proceeded to
the check-in counter, and that Linda Allen punched in something into the computer is specious and not
supported by the evidence on record. In support of their allegations, private respondents submitted a copy
of the boarding pass. Explicitly printed on the boarding pass are the words Check-In Required. Curiously,
the said pass did not indicate any seat number. If indeed the Fontanillas checked in at the designated time
as they claimed, why then were they not assigned seat numbers? Absent any showing that Linda was so
motivated, we do not buy into private respondents' claim that Linda intentionally deceived him, and made
him the laughing stock among the passengers.[28] Hence, as correctly observed by the trial court:

Plaintiffs fail to realize that their failure to check in, as expressly required in their boarding passes, is the
very reason why they were not given their respective seat numbers, which resulted in their being denied
boarding.[29]

Neither do we agree with the conclusion reached by the appellate court that private respondents' failure
to comply with the check-in requirement will not defeat his claim as the denied boarding rules were not
complied with. Notably, the appellate court relied on the Code of Federal Regulation Part on Oversales,
which states:

250.6 Exceptions to eligibility for denied boarding compensation.

A passenger denied board involuntarily from an oversold flight shall not be eligible for denied board
compensation if:

(a) The passenger does not comply with the carriers contract of carriage or tariff provisions regarding
ticketing, reconfirmation, check-in, and acceptability for transformation.

The appellate court, however, erred in applying the laws of the United States as, in the case at bar,
Philippine law is the applicable law. Although, the contract of carriage was to be performed in the United
States, the tickets were purchased through petitioners agent in Manila. It is true that the tickets were
rewritten in Washington, D.C. However, such fact did not change the nature of the original contract of
carriage entered into by the parties in Manila.
In the case of Zalamea vs. Court of Appeals,[30] this Court applied the doctrine of lex loci
contractus. According to the doctrine, as a general rule, the law of the place where a contract is made or
entered into governs with respect to its nature and validity, obligation and interpretation. This has been
said to be the rule even though the place where the contract was made is different from the place where it
is to be performed, and particularly so, if the place of the making and the place of performance are the
same. Hence, the court should apply the law of the place where the airline ticket was issued, when the
passengers are residents and nationals of the forum and the ticket is issued in such State by the defendant
airline.
 The law of the forum on the subject matter is Economic Regulations No. 7 as amended by Boarding
Priority and Denied Boarding Compensation of the Civil Aeronautics Board, which provides that the
check-in requirement be complied with before a passenger may claim against a carrier for being denied
boarding:

SEC. 5. Amount of Denied Boarding Compensation Subject to the exceptions provided hereinafter under
Section 6, carriers shall pay to passengers holding confirmed reserved space and who have presented
themselves at the proper place and time and fully complied with the carriers check-in and
reconfirmation procedures and who are acceptable for carriage under the Carriers tariffs but who have
been denied boarding for lack of space, a compensation at the rate of: xx

Private respondents' narration that they were subjected to harsh and derogatory remarks seems
incredulous. However, this Court will not attempt to surmise what really happened. Suffice to say, private
respondent was not able to prove his cause of action, for as the trial court correctly observed:

xxx plaintiffs claim to have been discriminated against and insulted in the presence of several
people. Unfortunately, plaintiffs limited their evidence to the testimony [of] Aniceto Fontanilla, without
any corroboration by the people who saw or heard the discriminatory remarks and insults; while such
limited testimony could possibly be true, it does not enable the Court to reach the conclusion that
plaintiffs have, by a preponderance of evidence, proven that they are entitled to P1,650,000.00 damages
from defendant.[31]

As to the award of moral and exemplary damages, we find error in the award of such by the Court of
Appeals. For the plaintiff to be entitled to an award of moral damages arising from a breach of contract of
carriage, the carrier must have acted with fraud or bad faith. The appellate court predicated its award on
our pronouncement in the case of Zalamea vs. Court of Appeals, supra, where we stated:

Existing jurisprudence explicitly states that overbooking amounts to bad faith, entitling passengers
concerned to an award of moral damages. In Alitalia Airways v. Court of Appeals, where passengers with
confirmed booking 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 check in. For the indignity and inconvenience of being refused a confirmed seat on
the last minute, said passenger is entitled to moral damages. (Emphasis supplied.)

However, the Courts ruling in said case should be read in consonance with existing laws, particularly,
Economic Regulations No. 7, as amended, of the Civil Aeronautics Board:

Sec 3. Scope. This regulation shall apply to every Philippine and foreign air carrier with respect to its
operation of flights or portions of flights originating from or terminating at, or serving a point within the
territory of the Republic of the Philippines insofar as it denies boarding to a passenger on a flight, or
portion of a flight inside or outside the Philippines, for which he holds confirmed reserved
space. Furthermore, this Regulation is designed to cover only honest mistakes on the part of the carriers
and excludes deliberate and willful acts of non-accommodation. Provided, however, that overbooking
not exceeding 10% of the seating capacity of the aircraft shall not be considered as a deliberate
and willful act of non-accommodation.
 What this Court considers as bad faith is the willful and deliberate overbooking on the part of the
airline carrier. The above-mentioned law clearly states that when the overbooking does not exceed ten
percent (10%), it is not considered as deliberate and therefore does not amount to bad faith. While there
may have been overbooking in this case, private respondents were not able to prove that the overbooking
on United Airlines Flight 1108 exceeded ten percent.
As earlier stated, the Court is of the opinion that the private respondents were not able to prove that
they were subjected to coarse and harsh treatment by the ground crew of United Airlines. Neither were
they able to show that there was bad faith on part of the carrier airline. Hence, the award of moral and
exemplary damages by the Court of Appeals is improper. Corollarily, the award of attorney's fees is,
likewise, denied for lack of any legal and factual basis.
WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals in CA-G.R. CV No.
37044 is hereby REVERSED and SET ASIDE. The decision of the Regional Trial Court of Makati City
in Civil Case No. 89-4268 dated April 8, 1991 is hereby REINSTATED.
SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 104235 November 18, 1993

SPOUSES CESAR & SUTHIRA ZALAMEA and LIANA ZALAMEA, petitioners,

vs.
HONORABLE COURT OF APPEALS and TRANSWORLD AIRLINES, INC., respondents.

Sycip, Salazar, Hernandez, Gatmaitan for petitioners.

Quisumbing, Torres & Evangelista for private-respondent.

NOCON, J.:

Disgruntled over TransWorld Airlines, Inc.'s refusal to accommodate them in TWA Flight 007 departing from New York to
Los Angeles on June 6, 1984 despite possession of confirmed tickets, petitioners filed an action for damages before the
Regional Trial Court of Makati, Metro Manila, Branch 145. Advocating petitioner's position, the trial court categorically ruled
that respondent TransWorld Airlines (TWA) breached its contract of carriage with petitioners and that said breach was
"characterized by bad faith." On appeal, however, the appellate court found that while there was a breach of contract on
respondent TWA's part, there was neither fraud nor bad faith because under the Code of Federal Regulations by the Civil
Aeronautics Board of the United States of America it is allowed to overbook flights.

The factual backdrop of the case is as follows:

Petitioners-spouses Cesar C. Zalamea and Suthira Zalamea, and their daughter, Liana Zalamea, purchased three (3)
airline tickets from the Manila agent of respondent TransWorld Airlines, Inc. for a flight to New York to Los Angeles on
June 6, 1984. 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.

While in New York, on June 4, 1984, petitioners received notice of the reconfirmation of their reservations for said flight.
On the appointed date, however, petitioners checked in at 10:00 a.m., an hour earlier than the scheduled flight at 11:00
a.m. 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. Liana Zalamea appeared as the No. 13 on the wait-list while the two other
Zalameas were listed as "No. 34, showing a party of two." 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, on the other
hand, at No. 34, being ranked lower than 22, were not able to fly. As it were, those holding full-fare 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. According to
Mr. Zalamea, it was only later when he discovered the he was holding his daughter's full-fare ticket.

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
at a cost of Nine Hundred Eighteen ($918.00) Dollars.

Upon their arrival in the Philippines, petitioners filed an action for damages based on breach of contract of air carriage
before the Regional Trial Court of Makati, Metro Manila, Branch 145. As aforesaid, the lower court ruled in favor of
petitioners in its decision 1 dated January 9, 1989 the dispositive portion of which states as follows:

WHEREFORE, judgment is hereby rendered ordering the defendant to pay plaintiffs the following amounts:
 (1) US $918.00, or its peso equivalent at the time of payment representing the price of the tickets bought
by Suthira and Liana Zalamea from American Airlines, to enable them to fly to Los Angeles from New York
City;

(2) US $159.49, or its peso equivalent at the time of payment, representing the price of Suthira Zalamea's
ticket for TWA Flight 007;

(3) Eight Thousand Nine Hundred Thirty-Four Pesos and Fifty Centavos (P8,934.50, Philippine Currency,
representing the price of Liana Zalamea's ticket for TWA Flight 007,

(4) Two Hundred Fifty Thousand Pesos (P250,000.00), Philippine Currency, as moral damages for all the
plaintiffs'

(5) One Hundred Thousand Pesos (P100,000.00), Philippine Currency, as and for attorney's fees; and

(6) The costs of suit.

SO ORDERED. 2

On appeal, the respondent Court of Appeals 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.

Moreover, while respondent TWA was remiss in not informing petitioners that the flight was overbooked and that even a
person with a confirmed reservation may be denied accommodation on an overbooked flight, nevertheless it ruled that
such omission or negligence cannot under the circumstances be considered to be so gross as to amount to bad faith.

Finally, it also held that there was no bad faith in placing petitioners in the wait-list along with forty-eight (48) other
passengers where full-fare first class tickets were given priority over discounted tickets.

The dispositive portion of the decision of respondent Court of Appeals3 dated October 25, 1991 states as follows:

WHEREFORE, in view of all the foregoing, the decision under review is hereby MODIFIED in that the
award of moral and exemplary damages to the plaintiffs is eliminated, and the defendant-appellant is
hereby ordered to pay the plaintiff the following amounts:

(1) US$159.49, or its peso equivalent at the time of the payment, representing the price of Suthira
Zalamea's ticket for TWA Flight 007;

(2) US$159.49, or its peso equivalent at the time of the payment, representing the price of Cesar
Zalamea's ticket for TWA Flight 007;

(3) P50,000.00 as and for attorney's fees.

(4) The costs of suit.

SO ORDERED.4

Not satisfied with the decision, petitioners raised the case on petition for review on certiorari and alleged the following
errors committed by the respondent Court of Appeals, to wit:

I.

. . . IN HOLDING THAT THERE WAS NO FRAUD OR BAD FAITH ON THE PART OF RESPONDENT
TWA BECAUSE IT HAS A RIGHT TO OVERBOOK FLIGHTS.

II.
 . . . IN ELIMINATING THE AWARD OF EXEMPLARY DAMAGES.

III.

. . . IN NOT ORDERING THE REFUND OF LIANA ZALAMEA'S TWA TICKET AND PAYMENT FOR THE
AMERICAN AIRLINES
TICKETS.5

That there was fraud or bad faith on the part of respondent airline when it did not allow petitioners to board their flight for
Los Angeles in spite of confirmed tickets cannot be disputed. 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.6 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.7

Respondent TWA relied solely on the statement of Ms. Gwendolyn Lather, its customer service agent, in her deposition
dated January 27, 1986 that the Code of Federal Regulations of the Civil Aeronautics Board allows overbooking. Aside
from said statement, no official publication of said code was presented as evidence. Thus, respondent court's 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.8 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,9 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.

Similarly, in Korean Airlines Co., Ltd. v. Court of Appeals, 10 where private respondent was not allowed to board the plane
because her seat had already been given to another passenger even before the allowable period for passengers to check
in had lapsed despite the fact that she had a confirmed ticket and she had arrived on time, this Court held that petitioner
airline acted in bad faith in violating private respondent's rights under their contract of carriage and is therefore liable for
the injuries she has sustained as a result.

In fact, existing jurisprudence abounds with rulings where the breach of contract of carriage amounts to bad faith. In Pan
American World Airways, Inc. v. Intermediate Appellate Court, 11 where a would-be passenger had the necessary ticket,
baggage claim and clearance from immigration all clearly and unmistakably showing that she was, in fact, included in the
passenger manifest of said flight, and yet was denied accommodation in said flight, this Court did not hesitate to affirm the
lower court's finding awarding her damages.

A contract to transport passengers is quite different in kind and degree from any other contractual relation. So ruled this
Court in Zulueta v. Pan American World Airways, Inc. 12 This is so, 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. Thus, it was also held that the switch of planes from Lockheed 1011 to a smaller Boeing 707
because there were only 138 confirmed economy class passengers who could very well be accommodated in the smaller
planes, thereby sacrificing the comfort of its first class passengers for the sake of economy, amounts to bad faith. Such
inattention and lack of care for the interest of its passengers who are entitled to its utmost consideration entitles the
passenger to an award of moral damages. 13

Even on the assumption that overbooking is allowed, 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 contends that Exhibit I, the detached flight coupon upon which were written the name of the passenger
and the points of origin and destination, contained such a notice. An examination of Exhibit I does not bear this out. At any
rate, said exhibit was not offered for the purpose of showing the existence of a notice of overbooking but to show that
Exhibit I was used for flight 007 in first class of June 11, 1984 from New York to Los Angeles.

Moreover, respondent TWA was also guilty of not informing its passengers of its alleged policy of giving less priority to
discounted tickets. While the petitioners had checked in at the same time, and held confirmed tickets, yet, only one of them
was allowed to board the plane ten minutes before departure time because the full-fare ticket he was holding was given
priority over discounted tickets. The other two petitioners were left behind.

It is respondent TWA's position that the practice of overbooking and the airline system of boarding priorities are reasonable
policies, which when implemented do not amount to bad faith. But the issue raised in this case is not the reasonableness
of said policies but whether or not said policies were incorporated or deemed written on petitioners' contracts of carriage.
Respondent TWA failed to show that there are provisions to that effect. 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.

Petitioners also assail the respondent court's decision not to require the refund of Liana Zalamea's ticket because the
ticket was used by her father. On this score, we uphold the respondent court. Petitioners had not shown with certainty that
the act of respondent TWA in allowing Mr. Zalamea to use the ticket of her daughter was due to inadvertence or deliberate
act. Petitioners had also failed to establish that they did not accede to said agreement. The logical conclusion, therefore, is
that both petitioners and respondent TWA agreed, albeit impliedly, to the course of action taken.

The respondent court erred, however, in not ordering the refund of the American Airlines tickets purchased and used by
petitioners Suthira and Liana. The evidence shows that petitioners Suthira and Liana were constrained to take the
American Airlines flight to Los Angeles not because they "opted not to use their TWA tickets on another TWA flight" but
because respondent TWA could not accommodate them either on the next TWA flight which was also fully booked. 14 The
purchase of the American Airlines tickets by petitioners Suthira and Liana was the consequence of respondent TWA's
unjustifiable breach of its contracts of carriage with petitioners. In accordance with Article 2201, New Civil Code,
respondent TWA should, therefore, be responsible for all damages which may be reasonably attributed to the non-
performance of its obligation. In the previously cited case of Alitalia Airways v. Court of Appeals, 15 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. On this score, we differ from the trial court's ruling which ordered not only the
reimbursement of the American Airlines tickets but also the refund of the unused TWA tickets. To require both prestations
would have enabled petitioners to fly from New York to Los Angeles without any fare being paid.

The award to petitioners of attorney's fees is also justified under Article 2208(2) of the Civil Code which allows recovery
when the defendant's act or omission has compelled plaintiff to litigate or to incur expenses to protect his interest.
However, the award for moral damages and exemplary damages by the trial court is excessive in the light of the fact that
only Suthira and Liana Zalamea were actually "bumped off." An award of P50,000.00 moral damages and another
P50,000.00 exemplary damages would suffice under the circumstances obtaining in the instant case.

WHEREFORE, the petition is hereby GRANTED and the decision of the respondent Court of Appeals is hereby MODIFIED
to the extent of adjudging respondent TransWorld Airlines to pay damages to petitioners in the following amounts, to wit:

(1) US$918.00 or its peso equivalent at the time of payment representing the price of the tickets bought by Suthira and
Liana Zalamea from American Airlines, to enable them to fly to Los Angeles from New York City;

(2) P50,000.00 as moral damages;

(3) P50,000.00 as exemplary damages;

(4) P50,000.00 as attorney's fees; and

(5) Costs of suit.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-28589 February 29, 1972

RAFAEL ZULUETA, ET AL., plaintiffs-appellees,

vs.
PAN AMERICAN WORLD AIRWAYS, INC., defendant-appellant.

Jose W. Diokno for plaintiffs-appellees.

Ross, Salcedo, Del Rosario, Bito and Misa for defendant-appellant.

CONCEPCION, C.J.:p

Appeal, taken by defendant Pan American World Airways, Inc., from a decision of the Court of First Instance of Rizal, sentencing said defendant to pay herein plaintiffs —
Rafael Zulueta, Telly Albert Zulueta and Carolinda Zulueta — "the sum of P5,502.85, as actual damages; plus the further sum of P1,000,000.00 as moral damages; the
further sum of P400,000.00 as exemplary damages; and attorney's fees in the sum of P100,000.00" with the costs against said defendant, hereinafter referred to as
PANAM for the sake of brevity.

It is not disputed that, on October 23, 1964, the spouse Rafael Zulueta and Telly Albert Zulueta — hereinafter referred to
as plaintiff and Mrs. Zulueta, respectively — as well as their daughter, Carolinda Zulueta — hereinafter referred to as Miss
Zulueta — were passengers aboard a PANAM plane, on Flight No. 841-23, from Honolulu to Manila, the first leg of which
was Wake Island. As the plane landed on said Island, the passengers were advised that they could disembark for a
stopover of about 30 minutes. Shortly before reaching that place, the flight was, according to the plaintiffs, "very rough."
Testifying for PANAM its purser, Miss Schmitz, asserted, however, that it was "very calm"; but her notes, Exhibit 7 —
prepared upon the request of Captain Zentner, on account of the incident involved in this case — state that there was
"unusually small amount of roughness," which His Honor, the Trial Judge, considered properly as "an admission that there
was roughness, only the degree thereof is in dispute." In any event, plaintiff testified that, having found the need to relieve
himself, he went to the men's comfort room at the terminal building, but found it full of soldiers, in view of which he walked
down the beach some 100 yards away.

Meanwhile, the flight was called and when the passengers had boarded the plane, plaintiff's absence was noticed. The
take-off was, accordingly, delayed and a search for him was conducted by Mrs. Zulueta, Miss Zulueta and other persons.
Minutes later, plaintiff was seen walking back from the beach towards the terminal. Heading towards the ramp of the plane,
plaintiff remarked, "You people almost made me miss your flight. You have a defective announcing system and I was not
paged." At this point, the decision appealed from has the following to say:

(1) Plaintiffs were on their way to the plane in order to board it, but defendant's employees — Kenneth
Sitton, defendants airport manager, according to plaintiffs; Wayne Pendleton, defendant's airport customer
service supervisor, according to defendant — stopped them at the gate. This is what the report of Wayne
Pendleton the airport customer service supervisor, says:

...I made no comment to the passenger but turned and led the group toward the ramp. Just as we reached
the boarding gate, Mr. Zulueta spoke to me for the first time saying, `You people almost made me miss
your flight. You have a defective announcing system and I was not paged."

I was about to make some reply when I noticed the captain of the flight standing on the ramp, midway
between the gate and the aircraft, and talking with the senior maintenance supervisor and several other
persons. The captain motioned for me to join him which I did, indicating to the Zulueta family that they
should wait for a moment at the gate.

-- Exh. 5 .
(2) Thereafter, one of defendant's employees — Mr. Sitton, according to plaintiffs; Mr. Pendleton according
to defendants — asked plaintiffs to turn over their baggage claim checks. Plaintiffs did so, handing him four
(4) claim checks.

(3) However, only three (3) bags were located and segregated from the rest of the passenger's luggage.
The items hand-carried by plaintiffs, except for plaintiff's overcoat, were also brought down. These hand-
carried items, however, were not opened or inspected; later, plaintiffs Mrs. Zulueta and Miss Zulueta were
permitted to reboard the plane with their hand-carried luggage; and when the plane took off, about two and
a half hours later, it carried plaintiff's fourth bag, his overcoat and the hand-carried luggage.

(4) Once three bags had been identified, and while the search was going on for the fourth bag, Mr. Sitton,
defendant's airport manager, demanded that plaintiffs open the bags (actually, they were closed, but not
locked) and allow defendant's employees to inspect them. Plaintiff Rafael Zulueta refused and warned that
defendant could open the bags only by force and at its peril of a law suit.

(5) Mr. Sitton, defendant's manager, then told plaintiff that he would not be allowed to proceed to Manila on
board the plane and handed Zulueta the following letters:

"'24 October 1964

Wake Island

"Mr. Zulueta:
Passenger aboard flight 84123
Honolulu/Manila .

Sir:

We are forced to off-load you from flight 84123 due to the fact that you have refused to
open your checked baggage for Inspection as requested.

During your stay on Wake Island, which will be for a minimum of one week, you will be
charged $13.30 per day for each member of your party.

K. Sitton
Airport Manager, Wake Island
Pan American World Airways, Inc."

— Exh. D

(6) All this happened in plain view and within earshot of the other passengers on the plane, many of whom
were Filipinos who knew plaintiffs;

The departure of the plane was delayed for about two hours

(7) Though originally all three plaintiffs had been off loaded, plaintiff requested that his wife and daughter
be permitted to continue with the flight. This was allowed but they were required to leave the three bags
behind. Nevertheless, the plane did fly with the Plaintiff's fourth bag; it was found among all other
passengers' luggage flown to Manila upon the plane's arrival here.

(8) Upon arrival at Manila, Mrs. Zulueta demanded of defendant's Manila office that it re-route plaintiff
Rafael Zulueta to Manila at the earliest possible time, by the fastest route, and at its expense; defendant
refused; so plaintiffs were forced to pay for his ticket and to send him money as he was without funds.

(9) On October 27, 1964, plaintiff Zulueta finally arrived at Manila, after spending two nights at Wake, going
back to Honolulu, and from Honolulu flying thru Tokyo to Manila.

(10) On December 21, 1964, plaintiffs demanded that defendant reimburse them in the sum of
P1,505,502.85 for damages but defendants refused to do so; hence this action.
In its brief, PANAM maintains that the trial court erred: (1) "in not granting defendant additional hearing dates (not a
postponement) for the presentation of its other witnesses"; (2) "in assuming it to be true that the reason plaintiff Rafael
Zulueta did not come aboard when the passengers were reboarded was that he had gone to the beach to relieve himself";
(3) "in not holding that the real reason why plaintiff Rafael Zulueta did not reboard the plane, when the announcement to
do so was made, was that he had a quarrel with his wife and after he was found at the beach and his intention to be left
behind at Wake was temporarily thwarted he did everything calculated to compel Pan American personnel to leave him
behind"; (4) "in accepting as true plaintiff Rafael Zulueta's claim of what occurred when; he arrived at the terminal after he
was found at the beach"; (5) "in not holding that the captain was entitled to an explanation for Zulueta's failure to reboard
and not having received a reasonable explanation and because of Zulueta's irrational behavior and refusal to have his
bags examined, the captain had the right and duty to leave Zulueta behind"; (6) "in condemning the defendant to pay
plaintiffs P5,502.85 as actual damages plus the further sum of P1,000,000.00 as moral damages, and the further sum of
P400,000.00 as exemplary damages, and attorneys' fees in the sum of P100,000.00"; and (7) "in not granting defendant's
counterclaim of attorney's fees and expenses of litigation." .

PANAM's first assignment of error refers to the denial of its motion, dated October 20, 1966, that it "be granted other
hearing dates about two months from today so as to be able to present defendant's other witnesses or their depositions."

It appears that the complaint in this case was filed on September 30, 1965. It was amended on December 1, 1965, and
again on April 14, 1966. PANAM answered the second amended complaint on May 6, 1966. After a pre-trial conference,
held on May 28, 1966, the case was set for hearing on June 1, 2 and 3, 1966. By subsequent agreement of the parties, the
hearing was, on June 3, 1966, reset for August 1, 2 and 3, 1966. Plaintiffs rested their case on August 2, 1966, whereupon
it was agreed that PANAM's witnesses would be presented "at a later date," months later, because they would "come from
far-flung places like Wake Island, San Francisco, Seattle and it will take time to arrange for their coming here." Accordingly
the case was reset for October 17, 18 and 19, 1966, at 8:30 a.m. On motion of the plaintiffs, the trial scheduled for October
17 was cancelled, without any objection on the part of PANAM but, to offset said action, additional hearings were set for
October 18 and 19, in the afternoon, apart from those originally set in the morning of these dates. Before the presentation
of PANAM's evidence, in the morning of October 18, 1966, plaintiffs' counsel asked for the names of the former's
witnesses, so that those not on the witness stand could be excluded from the courtroom. PANAM's counsel announced
that his witnesses were Marshall Stanley Ho, Kenneth Sitton, Michael Thomas, Wayne S. Pendleton, Capt. Robert Zentner
and Miss Carol Schmitz.

The defense then proceeded to introduce the testimony of said witnesses, and consumed therefor the morning and
afternoon of October 18 and the morning of October 19. Upon the conclusion, that morning, of the testimony of the last
witness for the defense, its counsel asked that it "be given an opportunity to present our other witnesses who are not
present today, at the convenience of the Court." The motion was denied, but, said counsel sought a reconsideration and
the court gave PANAM a last chance to present its "other witnesses" the next day, October 20. Instead of doing so,
PANAM filed a written motion reiterating its prayer for "other hearing dates about two months from today so as to be able
to present defendant's other witnesses or their depositions." Upon denial of this motion, PANAM made an offer of the
testimony it expected from one Edgardo Gavino, an unnamed meteorologist, either Sue Welby and/or Helga Schley, and
John C. Craig, Ida V. Pomeroy, Herman Jaffe, Gerry Cowles and Col. Nilo de Guia.

His Honor, the Trial Judge, did not commit a reversible error in denying said motion of October 20, 1966. PANAM knew, as
early as August 2, 1966, that its turn to present evidence would take place, as agreed upon, about two (2) months and a
half later, or on October 17, 18 and 19, 1966. PANAM has not offered any valid excuse for its failure to bring to court the
witnesses mentioned in said motion, despite the assurance given by its counsel, on August 2, 1966, that the defense
would "spare no effort to bring them here," or, if they could not be brought due to circumstances beyond PANAM's control,
to "submit their deposition." The records do not show that any such effort to bring the aforementioned witnesses had been
exerted. The defense has not even tried to explain why the deposition of said witnesses was not taken. What is worse, the
proffered explanation — that the six (6) persons who testified for the defense1 were believed, by defense counsel, to be
enough for the three (3) days of October set for the reception of his evidence2 — indicates that no effort whatsoever had
been made either to bring the "other witnesses"3 or to take and submit their depositions.

Besides, the testimony allegedly expected of said other witnesses for the defense — namely: (1) that there was, according
to official records, no turbulence in the flight from San Francisco to Honolulu, on which the testimony of Carol Schmitz had
touched; (2) that Ida V. Pomeroy and John C. Craig would say that the passengers were advised not to go beyond the
terminal and that the stopover would be for about 30 minutes only, on which duration of the stopover Miss Schmitz had,
also testified, as she could have similarly testified on said advice, had it been given; (3) that either Helga Schley or Sue
Welby would narrate the sympathy with which Mrs. Zulueta was allegedly treated during the flight from Wake Island to
Manila, which is not particularly relevant or material in the case at bar; (4) that Herman Jaffe, Gerry Cowles and Nilo de
Guia were, also, expected to corroborate the testimony of Capt. Zentner; and (5) that Edgardo Gavino was expected to
corroborate Michael Thomas regarding the remarks made by the plaintiff to Mrs. Zulueta and Miss Zulueta when they and
other members of the searching party found him in the early morning of October 23, 1964 -- were merely cumulative in
nature

Then, again, PANAM did not comply with section 4 of Rule 22 of the Rules of Court, reading:

SEC. 4. Requisites of motion to postpone trial for absence of evidence. — A motion to postpone a trial on
the ground of absence 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. But if the adverse party admits the facts to
be given in evidence, even if he objects or reserves the right to object to their admissibility, the trial must
not be postponed." .

Although this provision refers to motions "to postpone trial," it applies with equal force to motions like the one under
consideration, there being no plausible reason to distinguish between the same and a motion for postponement owing to
the "absence of evidence."

The second, third and fourth assignments of error are interrelated. They refer to the question whether the reason why
plaintiff went to the beach was to relieve himself, as testified to by him, or to remain in Wake Island because he had
quarreled with his wife, as contended by PANAM's counsel.

The latter contention however, is utterly devoid of merit. To begin with, plaintiff's testimony about what he did upon
reaching the beach is uncontradicted. Secondly, other portions of his testimony — such as, for instance, that the flight was
somewhat rough, shortly before reaching Wake Island; that there were quite a number of soldiers in the plane and, later, in
the terminal building; that he did not voluntarily remain in Wake Island, but was "off-loaded" by PANAM's agent therein —
are borne out by the very evidence for the defense. Thirdly, PANAM's efforts to show that plaintiff had decided to remain in
the Island because he had quarreled with Mrs. Zulueta — which is ridiculous — merely underscores the artificious nature
of PANAM's contention.

Fourthly, there is absolutely no direct evidence about said alleged quarrel. Nobody testified about it. Counsel for the
defense has, in effect, merely concluded that there must have been such quarrel because, when the searching party
located plaintiff, he — according to Stanley Ho — was "shouting in a loud tone of voice" — not at his wife, but —
"towards his wife and daughter," who headed said party and to which the words spoken were addressed, according to
plaintiff. Capt. Zentner said that plaintiff was "angry with them" — Mrs. Zulueta and Miss Zulueta — who Michael Thomas
affirmed — were saying "I am sorry, I am sorry"; whereas, Wayne S. Pendleton declared that Gavino told him that this
"seems to stem from a domestic issue" between Mr. and Mrs. Zulueta. Surely, this alleged surmise, not even by Pendleton
but by Gavino — who was not placed on the witness stand — cannot be taken as competent evidence that plaintiff had
quarreled with his wife, apart from the circumstance that such quarrel — if it took place and there is absolutely no evidence
or offer to prove that anything had transpired between husband and wife before reaching Wake Island which may suggest
a misunderstanding between them — does not warrant jumping at the conclusion that plaintiff had decided to remain in the
Island, for he would gain nothing thereby.

Needless to say, if plaintiff's purpose in going to the beach was to hide from Mrs. and Miss Zulueta and PANAM's
personnel, so that he may be left in the Island, he, surely, would not have walked back from the beach to the terminal,
before the plane had resumed its flight to Manila, thereby exposing his presence to the full view of those who were looking
for him.

Then, again, the words uttered by him as he saw the search party and approached the plane — "You people almost made
me miss your flight. You have a defective announcing system and I was not paged" — and the "belligerent" manner —
according to Captain Zentner — in which he said it revealed his feeling of distress at the thought that the plane could have
left without him.4

The second, third and fourth assignments of error are thus clearly untenable.

In connection with the fifth assignment of error, PANAM's witness, Captain Zentner, testified that, while he was outside the
plane, waiting for the result of the search, a "man" approached him and expressed concern over the situation; that the
"man" said he was with the State Department; that he, his wife and their children, who were on board the aircraft, would
not want to continue the flight unless the missing person was found; that the "man" expressed fear of a "bomb," a word he
used reluctantly, because he knew it is violative of a Federal law when said at the wrong time; that when plaintiff came,
Zentner asked him: "why did you not want to get on the airplane?"; that plaintiff then became "very angry" and spoke to
him "in a way I have not been spoken to in my whole adult life"; that the witness explained: "I am Captain of the aircraft
and it is my duty to see to the flight's safety"; that he (Zentner) then told Wayne Pendleton — PANAM's Customer Service
Supervisor — to get plaintiff's "bags off the plane to verify ... about the bomb"; that PANAM's airport manager (K. Sitton)
"got three bags of Mr. Zulueta"; that his fourth bag could not be located despite a thorough search; that believing that it
must have been left behind, in Honolulu, "we took off"; and that he (Zentner) would not have done so had he thought it was
still aboard.

The lower court did not err in giving no credence to this testimony.

Indeed, Captain Zentner did not explain why he seemingly assumed that the alleged apprehension of his informant was
justified. He did not ask the latter whether he knew anything in particular about plaintiff herein, although some members of
the crew would appear to have a notion that plaintiff is an impresario. Plaintiff himself intimated to them that he was well
known to the U.S. State Department. Apparently, Captain Zentner did not even know the informant's name. Neither did the
captain know whether the informant was really working for or in the State Department. In other words, there was nothing —
absolutely nothing — to justify the belief that the luggage of the missing person should be searched, in order to ascertain
whether there was a bomb in it; that, otherwise, his presence in the aircraft would be inimical to its safety; and that,
consequently, he should be off-loaded.

In fact, PANAM has not given the name of that "man" of the State Department. Neither has the defense tried to explain
such omission. Surely, PANAM's records would have disclosed the identity of said "man," if he were not a mere figment of
the imagination. The list of passengers has been marked as Exh. A, and yet PANAM has not pointed out who among them
is the aforementioned "man".

The trial court did not believe the testimony of Captain Zentner and rejected the theory of the defense, for the following
reasons:

(1) The defendant had contracted to transport plaintiff from Honolulu to Manila. It was its legal obligation to
do so, and it could be excused from complying with the obligation only, if the passenger had refused to
continue with the trip or it had become legally or physically impossible without the carrier's fault, to
transport him.

(2) In this case, it is plain that Zulueta was desirous of continuing with the trip. Although defendant's
witnesses claim that Zulueta refused to board the plane, its own evidence belies this claim. The letter, Exh.
"D", shows that it was defendant who off-loaded Zulueta; not Zulueta who resisted from continuing the trip.
In his testimony before the Court, Capt. Zentner, defendant's pilot, said that if a passenger voluntarily left
the plane, the term used would be `desistance' but the term "off-load" means that it is the decision of the
Captain not to allow the passenger or luggage to continue the flight. However, Capt. Zentner admitted on
his testimony that "his drunkenness... was of no consequence in my report; (it) ... had nothing to do with his
being belligerent and unfriendly in his attitude towards me and the rest of the members of the crew." The
written report of Capt. Zentner made in transit from Wake to Manila "intimated he might possibly continue;"
but "due to drinking, belligerent attitude, he was off-loaded along with his locked bags." (Exh. 10). In a later
report, Zentner admitted, "The decision to leave Mr. Zulueta and his locked luggage in Wake was mine and
alone." (Exh. 9). Defendant's airport customer service supervisor, W.S. Pendleton, reported that:

"After the search for Mr. Zulueta had continued almost 20 minutes and it was apparent that he was not be
found in the terminal building or immediate vicinity, I proceeded to the parking lot and picked up my jeep
continue the search in more remote areas. Just as I was getting underway, a small group of persons
approach from the direction of the beach and a voice called out the passenger had been found. Having
parked the jeep again, I walked toward the group and was met by PAA fleet-serviceman E. Gavino who
was walking somewhere ahead of the others. Mr. Gavino remarked to me privately that the trouble seemed
to have stemmed from some domestic difference between the Passenger and his wife who was not at his
side and returning with him to the gate.

"On hearing Mr. Gavino's remark, I made no comment to the passenger but turned and led the group
toward the ramp. Just as we reached the boarding gate, Mr. Zulueta spoke to me for the first time saying,
"You people almost made me miss your flight. You have a defective announcing system and I was not
paged."

— Exh. 5

Evidently, these could not have been the words of a man who refused to board the plane.
(3) There was no legal or physical impossibility for defendant to transport plaintiff Zulueta from Wake to
Manila as it had contracted to do. Defendant claims that the safety of its craft and of the other passengers
demanded that it inspect Zulueta's luggage and when he refused to allow inspection that it had no recourse
but to leave him behind. The truth that, knowing that of plaintiff's four pieces of luggage, one could still have
been — as it was — aboard, defendant's plane still flew on to Manila. Surely, if the defendant's pilot and
employees really believed that Zulueta had planted a bomb in one of the bags they would not have flown
on until they had made sure that the fourth bag had been left behind at Honolulu until enough time had
lapsed for the bomb to have been exploded, since presumably it had to have been set to go off before they
reached Manila.

"At any rate, it was quite evident that Zulueta had nothing to hide; for the report of defendant's witness, Mr.
Stanley E. Ho, U.S. Marshall on Wake, has this to say: "

"About twenty minutes later while an attempt was being made to locate another piece of Mr. Zulueta's
luggage his daughter, Carolinda approached her father and wanted to get some clothes from one of the
suitcases. Mr. Zulueta asked the undersigned if it was alright if he opened the suitcases and get the
necessary clothes. To this I stated he was free to open his luggage and obtain whatever he needed. Mr.
Zulueta opened a suitcase and took the dress for her then boarded the aircraft."

— Exh. 2B .

(4) What is evident to the Court is that defendant — acted in a manner deliberately calculated to humiliate
and shame plaintiffs. Although the plane was held up to wait for plaintiff — for, as the Captain admitted in
his testimony, he did so because he knew that it would be a week before another plane would come in for
Manila (t.s.n., 18 Oct. 1966, pp. 59-62) when plaintiff did come, he was met and treated roughly by
defendant's manager Sitton. Here is what Zulueta testified to:

"Q. — When you saw your wife and daughter what happened? A. — Then I started going
towards the airplane. At the ramp, I do not know what they call it, as soon as they arrived
there, there was a man who subsequently identified himself as Kenneth Sitton. He identified
himself as the Airport Manager of Wake Island. He did not ask me what happened, was I
sick, he looked at me and said, what in the hell do you think you are? Get on that plane.
Then I said, what right have you to talk to me that way, I am a paying passenger. Do not
treat me this way. And this started the altercation, and then he said, do you know you held
up the plane? And I answered, this is not my fault, I was sick. Did it not occur to you to ask
me how I feel; then he said get on that plane.

"Q. — What happened? A. — we started discussing kept saying, "You get on that plane"
and then I said, "I don't have to get on that plane." After a prolonged discussion, he said,
give me your baggage tags and I gave him four baggage tickets or tags. I did not realize
what he was up to until finally, I saw people coming down the airplane and police cars
arrived and people were coming down the ramp. I gave him the four baggage tags and a
few minutes late, he brought three baggages and said, open them up. I said, to begin with,
there is one baggage missing and that missing bag is my bag. Then I said you cannot make
me open these baggages unless you are United States customs authorities and when I
arrive in the Philippines they can be opened by the Philippine Customs authorities. But an
Airport Manager cannot make me open my bags unless you do exactly the same thing to all
the passengers. Open the bags of all the other passengers and I will open my bag.

"Q. — What did he say: A. — He just kept on saying open your bag, and I drew up my
hands and said, you want, you open yourself or give me a search warrant I shall open this
bag but give me a search warrant and then I asked, who is the Chief of Police, and he said,
"I am Chief of Police," then I said how can you be the Chief Police and Airport Manager and
then he started to talk about double compensation and by this time we were both quarreling
and he was shouting and so with me. Then there was a man who came around and said
`open the bag' and I said, show the warrant of arrest and do all the checking and the
discussion kept on going, and finally I said look, my fourth bag is missing and he said, "I
don't give damn." People at the time were surrounding us and staring at us and also the
passengers. My wife and daughter all along had been made to sit on a railing and this man
screaming and looking at my wife and daughter. Then he said, will you pull these three
monkeys out of here? then I said, will you send my wife and daughter up the plane which
 he did. However, they have come down in their slippers and when they were allowed to
return to the plane none of the defendant's personnel who had brought down the overcoats,
shoes and handcarried items of my wife and daughter ever offered to bring back the items
to the plane, until I demanded that one of the defendants should help my wife and daughter
which he did. And then one man told me, because you refused to open your bag, "we shall
hold you here in Wake Island." then I asked, are we under arrest? and the man answered,
no. And further stated, your wife and daughter can continue their flight but you will not go to
this flight an we will charge you $13.30 a day. Then I said, who are you to tell all these
things, and he answered, I am the manager. I said, put it in writing, then left and in few
minutes he came back and handed me this letter (witness referring to Exhibit D)." .

— t.s.n., August 1, 1966, pp. 15-21

Anyone in Zulueta's position would have reached the same way if he had had a sense of dignity. Evidently,
angered by Zulueta's reaction, irked by the delay he had caused them, defendant's employees decided to
teach him a lesson by forcing him to open his bags when there was no justifiable reason to do so:

(a) Defendant did not make any attempt to inquire from any passenger or even the crew who knew Mr.
Zulueta what his character and reputation are, before demanding that he open the bags; if it had done so,
Miss Schmitz, the purser, and Col. Villamor would have vouched for plaintiffs; for Miss Schmitz believed
she had flown before with the Zulueta's and they had been very nice people.

(b) Worse, defendant's manager Sitton admits that Zulueta had told him who he was and his social position
in Manila; still he insisted that the bags be opened. Moreover, some passengers had informed the
supervisor that Zulueta was "the impresario"; but they persisted in their demands.

(c) Defendant never identified the alleged State Department men who reportedly approached the Captain
and expressed fear about a bomb, nor did they confront him — if he existed with Mr. Zulueta despite Mr.
Zulueta's request.

(d) Defendant did not take any steps to put the luggage off-loaded far from its passengers and plane, a
strange procedure if it really believed the luggage contained a bomb;

(e) Defendant continued with the flight knowing one bag -- Zulueta's bag himself — had not been located
and without verifying from Honolulu if the bag had been found there, nor even advising Honolulu that a bag
possibly containing a bomb had been left there, again an inexplicable procedure if they sincerely believed
that Zulueta had planted a bomb;

(f) Defendant's manager himself took Zulueta and his off-loaded bags, in his own car, from the terminal
building to the hotel, which is also inconsistent with a serious belief that the luggages contained a bomb;

(g) Defendant knew that while Zulueta's bags were on the ground, he had opened one of them with the
permission and in the presence of the U. S. Marshall in order to enable his daughter to get a dress from the
bag; nothing suspicious was seen; still, defendant insisted on refusing to allow Zulueta to continue unless
he opened and allowed inspection of the bags by them; .

(h) Defendant completely changed his tone and behavior towards the Zulueta's after the plane had arrived
at Manila and the Captain learned that its Manila manager, Mr. Oppenheimer, was a friend of Zulueta;

(i) Meantime, the attitude of Pan American towards the Zulueta's caused other passengers to resent
Zulueta (See reports of Stewardesses and of Captain Zentner, Exhs. 7, 8, 9 and 10). "Many passengers
were angry towards the `missing passenger," says Miss Schmitz's report. "A few inquisitive PA
(passengers) — one woman quite rudely stared once we were airborne and left Mr. Zulueta behind ...
anyway I told the woman to sit down — so did Helga — so did the man near her," say Miss Schmitz's
personal notes. This confirms the testimony of plain plaintiffs that, all the while the search and discussions
were going on, they were the subject of stares, remarks and whisper comments from the passengers and
other persons around the plane.

(j) Defendant did not allow plaintiff Zulueta to board the plane at all, even though it was aware that some of
his personal belongings, such as his overcoat were on the plane. Plaintiffs so testified; and though
 defendant's witness Mr. Sitton denied it, claiming that plaintiff was always free to board the plane, this
denial is belied by the report of defendant's own witness, U.S. Marshall Ho, who said that:

"Ten minutes later, Mr. Zulueta asked if he could talk to his wife who was aboard the aircraft. I then
accompanied him and as we got to the ramp, we met Mr. Sitton who stated he would summon Mrs. Zulueta
from the aircraft. Mr. Sitton summoned Mrs. Zulueta and she met her husband at the foot of the ramp. Mr.
Zulueta then asked his wife and himself to which I replied I was not concerned what he had to say."

— Exh. 2-B

(k) Finally, to add further humiliation and heap indignity on plaintiffs, when Mrs. Zulueta arrived at Manila
and appealed to defendant's Manila manager, Mr. Oppenheimer, to see to it that her husband got back as
soon as possible and was made as comfortable as possible, at defendant's expense, Mr. Oppenheimer
refused to acknowledge any obligation to transport Mr. Zulueta back to Manila and forcing Mrs. Zulueta to
send her husband $100.00 for pocket money and pay for his fare from Wake to Manila, thru Honolulu and
Tokyo.

Upon a review of the record, We are satisfied that the foregoing findings of His Honor, the Trial Judge, are supported by a
preponderance of the evidence.

The last two (2) assignments of error are mere consequences of those already disposed of, and, hence, need no extended
discussion.

It is urged, however, that plaintiff is, at most, entitled to actual damages only, because he was the first to commit a breach
of contract, for having gone over 200 yards away from the terminal, where he could not expect to be paged. But, PANAM
has not pointed out what part of the contract has been violated thereby, apart from the fact that the award for damages
made in the decision appealed from was due, not to PANAM's failure to so page the plaintiff, but to the former's deliberate
act of leaving him at Wake Island, and the embarrassment and humiliation caused to him and his family in the presence of
many other persons. Then, also, considering the flat nature of the terrain in Wake Island, and the absence of buildings and
structures, other than the terminal and a modest "hotel," as well as plaintiff's need of relieving himself, he had to find a
place beyond the view of the people and near enough the sea to wash himself up before going back to the plane.

It is next argued that plaintiff was, also, guilty of contributory negligence for failure to reboard the plane within the 30
minutes announced before the passengers debarked therefrom. This might have justified a reduction of the damages, had
plaintiff been unwittingly left by the plane, owing to the negligence of PANAM personnel, or even, perhaps, wittingly, if he
could not be found before the plane's departure. It does not, and cannot have such justification in the case at bar, plaintiff
having shown up before the plane had taken off, and he having been off-loaded intentionally and with malice aforethought,
for his "belligerent" attitude, according to Captain Zentner; for having dared — despite his being one of "three monkeys,"
— the term used by Captain Zentner to refer to the Zulueta family — to answer him back — when he (Captain
Zentner)5 said: "what in the hell do you think you are ?" — in a way he had "not been spoken to" in his "whole adult life," in
the presence of the passengers and other PANAM employees; for having responded to a command of either Zentner or
Sitton to open his (plaintiff's) bags, with a categorical refusal and a challenge for Zentner or Sitton to open the bags without
a search warrant therefor, thereby making manifest the lack of authority of the aforementioned representative of PANAM to
issue said command and exposing him to ridicule before said passengers and employees. Besides, PANAM's own witness
and employee, Wayne Pendleton, testified the plane could not take off at 4:30, as scheduled, because "we were still
waiting for two (2) local passengers."

Article 2201 of our Civil Code reads:

In contracts and quasi-contracts, the damages for which the obligor who acted in good faith is liable shall
be those that are the natural and probable consequences of the breach of the obligation, and which the
parties have foreseen or could reasonably foreseen at the time the obligation was constituted.

In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible for all damages which
may be reasonably attributed to the non-performance of the obligation.

This responsibility applies to common carriers. Pursuant to Article 1759 of the same Code:
 ART. 1759. Common carriers are liable for the death or injuries to passengers through the negligence or
wilful acts of the former's employees, although such employees may have acted beyond the scope of their
authority or in violation of the orders of the common carriers.

This liability of the common carriers does not cease proof that they exercised all the diligence of a good
father of a family in the selection and supervision of their employees.

Referring now to the specific amounts to damages due to plaintiffs herein, We note that the sum of P5,502.85 awarded to
them as actual damages is not seriously disputed by PANAM.

As regards the moral and exemplary damages claimed by the plaintiffs, our Civil Code provides:

ART. 21. Any person who wilfully 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.

ART. 2217. Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched
reputation, wounded feelings, moral shock, social humiliation, and similar injury. Though incapable of
pecuniary computation, moral damages may be recovered if they are the proximate result of defendant's
wrongful act or omission.

ART. 2229. Exemplary or corrective damages are imposed, by way of example or correction for the public
good, in addition to the moral, temperate liquidated or compensatory damages.

ART. 2232. In contracts and quasi-contracts, the court may award exemplary damages if the defendant
acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner.

The records amply establish plaintiffs' right to recover both moral and exemplary damages. Indeed, the rude and rough
reception plaintiff received at the hands of Sitton or Captain Zentner when the latter met him at the ramp ("what in the hell
do you think you are? Get on that plane"); the menacing attitude of Zentner or Sitton and the supercilious manner in which
he had asked plaintiff to open his bags ("open your bag," and when told that a fourth bag was missing, "I don't give a
damn"); the abusive language and highly scornful reference to plaintiffs as monkeys by one of PANAM's employees (who
turning to Mrs. Zulueta and Miss Zulueta remarked, "will you pull these three monkeys out of here?"); the unfriendly
attitude, the ugly stares and unkind remarks to which plaintiffs were subjected, and their being cordoned by men in uniform
as if they were criminals, while plaintiff was arguing with Sitton; the airline officials' refusal to allow plaintiff to board the
plane on the pretext that he was hiding a bomb in his luggage and their arbitrary and high-handed decision to leave him in
Wake; Mrs. Zulueta's having suffered a nervous breakdown for which she was hospitalized as a result of the
embarrassment, insults and humiliations to which plaintiffs were exposed by the conduct of PANAM's employees; Miss
Zulueta's having suffered shame, humiliation and embarrassment for the treatment received by her parents at the
airport6 — all these justify an award for moral damages resulting from mental anguish, serious anxiety, wounded feelings,
moral shock, and social humiliation thereby suffered by plaintiffs.

The relation between carrier and passenger involves special and peculiar obligations and duties, differing
in kind and degree, from those of almost every other legal or contractual relation. On account of the
peculiar situation of the parties the law implies a promise and imposes upon the carrier the corresponding
duty of protection and courteous treatment. Therefore, the carrier is under the absolute duty of protecting
his passengers from assault or insult by himself or his servants. 7

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 air
carriage, therefore, generates a relation tended 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 right to be treated by the carrier's
employees with kindness, respect, courtesy and due consideration. They are titled 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. 8
 A carrier of passengers is as much bound to protect them from humiliation and insult as from physical
injury .. It is held in nearly all jurisdictions, if not universally, that a carrier is liable to a passenger for
humiliation and mental suffering caused by abusive or insulting language directed at such passenger by an
employee of the carrier. 9

Where a conductor uses language to a passenger which is calculated to insult, humiliate, or wound the
feelings of a person of ordinary feelings and sensibilities, the carrier is liable, because the contract of
carriage impliedly stipulates for decent, courteous, and respectful treatment, at hands of the carrier's
employees.10

The general rule that a carrier owes to a passenger highest degree of care has been held to include the
duty to protect the passenger from abusive language by the carrier's agents, or by others if under such
circumstances that the carrier's agents should have known about it and prevented it. Some of the courts
have mentioned the implied duty of the carrier, arising out of the contract of carriage, not to insult the
passenger, or permit him to be insulted, and even where no mention is made of this basis for liability, it is
apparent that it is the ground upon which recovery is allowed. 11

The question is whether the award of P1,000,000 as moral damages was proper and justified by the circumstances. It has
been held that the discretion in fixing moral damages lies in the trial court. 12 Among the factors courts take into account in
assessing moral damages are the professional, social, political and financial standing of the offended parties on one hand,
and the business and financial position of the offender on the other. 13

In comparatively recent cases in this jurisdiction, also involving breach of contract of air carriage, this Court awarded the
amount of P25,000, where plaintiff, a first-class passenger in an Air France plane from Manila to Rome was, in Bangkok,
forced by the manager of the airline company to leave his first class accommodation after he was already seated because
there was a white man who, the manager alleged, had a "better right" to the seat 14 ;the amount of P200,000, where
plaintiffs, upon confirmation of their reservation in defendant airline's flight from Tokyo to San Francisco were issued first
class tickets, but upon arrival in Tokyo were informed that there was no accommodation for them in the first class
compartment and told they could not go unless they took the tourist class 15 — in both of which cases the Court found the
airline companies to have acted in bad faith, or in a wanton, reckless and oppressive manner, justifying likewise the award
of exemplary damages.

None of the passengers involved in said cases was, however, off-loaded, much less in a place as barren and isolated as
Wake Island, with the prospect of being stranded there for a week. The aforementioned passengers were merely
constrained to take a tourist or third class accommodation in lieu of the first class passage they were entitled to. Then,
also, in none of said cases had the agents of the carrier acted with the degree of malice or bad faith of those of PANAM in
the case at bar, or caused to the offended passengers a mental suffering arising from injuries to feelings, fright and shock
due to abusive, rude and insulting language used by the carrier's employees in the presence and within the hearing of
others, comparable to that caused by PANAM's employees to plaintiffs herein

To some extent, however, plaintiff had contributed to the gravity of the situation because of the extreme belligerence with
which he had reacted on the occasion. We do not over-look the fact that he justly believed he should uphold and defend
his dignity and that of the people of this country that the discomfort, the difficulties, and, perhaps, the ordeal through which
he had gone to relieve himself — which were unknown to PANAM's agents — were such as to put him in no mood to be
understanding of the shortcoming of others; and that said PANAM agents should have first inquired, with an open mind,
about the cause of his delay instead of assuming that he was at fault and of taking an arrogant and overbearing attitude,
as if they were dealing with an inferior. Just the same, there is every reason to believe that, in all probability, things would
not have turned out as bad as they became had he not allowed himself, in a way, to be dragged to the level or plane on
which PANAM's personnel had placed themselves.

In view of this circumstance, We feel that the moral and exemplary damages collectible by the plaintiffs should be reduced
to one-half of the amounts awarded by the lower court, that is, to P500,000 for moral damages, and P200,000 for
exemplary damages, aside from the attorney's fees which should, likewise, be reduced to P75,000.

On April 22, 1971, Mrs. Zulueta filed a motion alleging that she had, for more than two (2) years, been actually living
separately from her husband, plaintiff Rafael Zulueta, and that she had decided to settle separately with PANAM and had
reached a full and complete settlement of all her differences with said defendant, and praying accordingly, that this case
be dismissed insofar as she is concerned, Required to comment on said motion, PANAM expressed no objection thereto.
Upon the other hand, plaintiff prayed that the motion be denied, upon the ground that the case at bar is one for damages
for breach of a contract of carriage, owing to the off-loading of plaintiff Rafael Zulueta, the husband and administrator of
the conjugal partnership, with the funds of which the PANAM had been paid under said contract; that the action was filed
by the plaintiffs as a family and the lower court had awarded damages to them as such family; that, although PANAM had
questioned the award of damages, it had not raised the question whether the lower court should have specified what
portion of the award should go to each plaintiff; that although Mr. and Mrs. Zulueta had, for sometime, been living
separately, this has been without judicial approval; that Mrs. Zulueta may not, therefore, bind the conjugal partnership or
settle this case separately; and that the sum given by PANAM to Mrs. Zulueta is believed to be P50,000, which is less than
3-1/2% of the award appealed from, thereby indicating the advisability of denying her motion to dismiss, for her own
protection.

Pursuant to a resolution, dated June 10, 1971, deferring action on said motion to dismiss until the case is considered on
the merits. We now hold that the motion should be, as it is hereby denied. Indeed, "(t)he wife cannot bind the conjugal
partnership without the husband's consent, except in cases provided by law," 16 and it has not been shown that this is one
of the cases so provided. Article 113 of our Civil 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 ..." — relied upon by PANAM —
does not warrant the conclusion drawn therefrom by the latter. Obviously the suit contemplated in subdivision (2) of said
Article 113 is one in which the wife is the real party — either plaintiff or defendant — in interest, and, in which, without
being so, the hush must be joined as a party, by reason only of his relation of affinity with her. Said provision cannot
possibly apply to a case, like the one at bar, in which the husband is the main party in interest, both as the person
principally grieved and as administrator of the conjugal partnership. Moreover, 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 conjugal
partnership, the damages recoverable for breach of such contract belongs to said partnership.

Modified, as above stated, in the sense that plaintiffs shall recover from defendant, Pan American World Airways, Inc., the
sums of P500,000 as moral damages, P200,000 as exemplary damages, and P75,000 as attorney's fees, apart from
P5,502.85 as actual damages, and without prejudice to deducting the aforementioned sum of P50,000 already paid Mrs.
Zulueta, the decision appealed from is hereby affirmed in all other respects, with the costs against said defendant.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-22415 March 30, 1966

FERNANDO LOPEZ, ET AL., plaintiffs-appellants,

vs.
PAN AMERICAN WORLD AIRWAYS, defendant-appellant.

Ross, Selph and Carrascoso for the defendant-appellant.

Vicente J. Francisco for the plaintiffs-appellants.

BENGZON, J.P., J.:

Plaintiffs and defendant appeal from a decision of the Court of First Instance of Rizal. Since the value in controversy
exceeds P200,000 the appeals were taken directly to this Court upon all questions involved (Sec. 17, par. 3[5], Judiciary
Act).

Stated briefly the facts not in dispute are as follows: Reservations for first class accommodations in Flight No. 2 of Pan
American World Airways — hereinafter otherwise called PAN-AM — from Tokyo to San Francisco on May 24, 1960 were
made with
PAN-AM on March 29, 1960, by "Your Travel Guide" agency, specifically, by Delfin Faustino, for then Senator Fernando
Lopez, his wife Maria J. Lopez, his son-in-law Alfredo Montelibano, Jr., and his daughter, Mrs. Alfredo Montelibano, Jr.,
(Milagros Lopez Montelibano). PAN-AM's San Francisco head office confirmed the reservations on March 31, 1960.

First class tickets for the abovementioned flight were subsequently issued by
PAN-AM on May 21 and 23, 1960, in favor of Senator Lopez and his party. The total fare of P9,444 for all of them was fully
paid before the tickets were issued.

As scheduled Senator Lopez and party left Manila by Northwest Airlines on May 24, 1960, arriving in Tokyo at 5:30 P.M. of
that day. As soon as they arrived Senator Lopez requested Minister Busuego of the Philippine Embassy to contact PAN-
AM's Tokyo office regarding their first class accommodations for that evening's flight. For the given reason that the first
class seats therein were all booked up, however, PAN-AM's Tokyo office informed Minister Busuego that PAN-AM could
not accommodate Senator Lopez and party in that trip as first class passengers. Senator Lopez thereupon gave their first
class tickets to Minister Busuego for him to show the same to PAN-AM's Tokyo office, but the latter firmly reiterated that
there was no accommodation for them in the first class, stating that they could not go in that flight unless they took the
tourist class therein.

Due to pressing engagements awaiting Senator Lopez and his wife, in the United States — he had to attend a business
conference in San Francisco the next day and she had to undergo a medical check-up in Mayo Clinic, Rochester,
Minnesota, on May 28, 1960 and needed three days rest before that in San Francisco — Senator Lopez and party were
constrained to take PAN-AM's flight from Tokyo to San Francisco as tourist passengers. Senator Lopez however made it
clear, as indicated in his letter to PAN-AM's Tokyo office on that date (Exh. A), that they did so "under protest" and without
prejudice to further action against the airline.
1äwphï1.ñët

Suit for damages was thereafter filed by Senator Lopez and party against PAN-AM on June 2, 1960 in the Court of First
Instance of Rizal. Alleging breach of contracts in bad faith by defendant, plaintiffs asked for P500,000 actual and moral
damages, P100,000 exemplary damages, P25,000 attorney's fees plus costs. PAN-AM filed its answer on June 22, 1960,
asserting that its failure to provide first class accommodations to plaintiffs was due to honest error of its employees. It also
interposed a counterclaim for attorney's fees of P25,000.

Subsequently, further pleadings were filed, thus: plaintiffs' answer to the counterclaim, on July 25, 1960; plaintiffs' reply
attached to motion for its admittance, on December 2, 1961; defendant's supplemental answer, on March 8, 1962;
plaintiffs' reply to supplemental answer, on March 10, 1962; and defendant's amended supplemental answer, on July 10,
1962.
After trial — which took twenty-two (22) days ranging from November 25, 1960 to January 5, 1963 — the Court of First
Instance rendered its decision on November 13, 1963, the dispositive portion stating:

In view of the foregoing considerations, judgment is hereby rendered in favor of the plaintiffs and against the
defendant, which is accordingly ordered to pay the plaintiffs the following: (a) P100,000.00 as moral damages; (b)
P20,000.00 as exemplary damages; (c) P25,000.00 as attorney's fees, and the costs of this action.

So ordered.

Plaintiffs, however, on November 21, 1963, moved for reconsideration of said judgment, asking that moral damages be
increased to P400,000 and that six per cent (6%) interest per annum on the amount of the award be granted. And
defendant opposed the same. Acting thereon the trial court issued an order on December 14, 1963, reconsidering the
dispositive part of its decision to read as follows:

In view of the foregoing considerations, judgment is hereby rendered in favor of the plaintiffs and against the
defendant, which is accordingly ordered to pay the plaintiffs the following: (a) P150,000.00 as moral damages; (b)
P25,000.00 as exemplary damages; with legal interest on both from the date of the filing of the complaint until paid;
and (c) P25,000.00 as attorney's fees; and the costs of this action.

So ordered.

It is from said judgment, as thus reconsidered, that both parties have appealed.

Defendant, as stated, has from the start admitted that it breached its contracts with plaintiffs to provide them with first class
accommodations in its Tokyo-San Francisco flight of May 24, 1960. In its appeal, however, it takes issue with the finding of
the court a quo that it acted in bad faith in the branch of said contracts. Plaintiffs, on the other hand, raise questions on
the amount of damages awarded in their favor, seeking that the same be increased to a total of P650,000.

Anent the issue of bad faith the records show the respective contentions of the parties as follows.

According to plaintiffs, defendant acted in bad faith because it deliberately refused to comply with its contract to provide
first class accommodations to plaintiffs, out of racial prejudice against Orientals. And in support of its contention that what
was done to plaintiffs is an oftrepeated practice of defendant, evidence was adduced relating to two previous instances of
alleged racial discrimination by defendant against Filipinos in favor of "white" passengers. Said previous occasions are
what allegedly happened to (1) Benito Jalbuena and (2) Cenon S. Cervantes and his wife.

And from plaintiffs' evidence this is what allegedly happened; Jalbuena bought a first class ticket from PAN-AM on April 13,
1960; he confirmed it on April 15, 1960 as to the Tokyo-Hongkong flight of April 20, 1960; PAN-AM similarly confirmed it on
April 20, 1960. At the airport he and another Oriental — Mr. Tung — were asked to step aside while other passengers -
including "white" passengers — boarded PAN-AM's plane. Then PAN-AM officials told them that one of them had to stay
behind. Since Mr. Tung was going all the way to London, Jalbuena was chosen to be left behind. PAN-AM's officials could
only explain by saying there was "some mistake". Jalbuena thereafter wrote PAN-AM to protest the incident (Exh. B).

As to Cenon S. Cervantes it would appear that in Flight No. 6 of PAN-AM on September 29, 1958 from Bangkok to
Hongkong, he and his wife had to take tourist class, although they had first class tickets, which they had previously
confirmed, because their seats in first class were given to "passengers from London."

Against the foregoing, however, defendant's evidence would seek to establish its theory of honest mistake, thus:

The first class reservations of Senator Lopez and party were made on March 29, 1960 together with those of four
members of the Rufino family, for a total of eight (8) seats, as shown in their joint reservation card (Exh. 1). Subsequently
on March 30, 1960, two other Rufinos secured reservations and were given a separate reservation card (Exh. 2). A new
reservation card consisting of two pages (Exhs. 3 and 4) was then made for the original of eight passengers, namely,
Senator Lopez and party and four members of the Rufino family, the first page (Exh. 3) referring to 2 Lopezes, 2
Montelibanos and 1 Rufino and the second page (Exh. 4) referring to 3 Rufinos. On April 18, 1960 "Your Travel Guide"
agency cancelled the reservations of the Rufinos. A telex message was thereupon sent on that date to PAN-AM's head
office at San Francisco by Mariano Herranz, PAN-AM's reservations employee at its office in Escolta, Manila. (Annex A-
Acker's to Exh. 6.) In said message, however, Herranz mistakenly cancelled all the seats that had been reserved, that is,
including those of Senator Lopez and party.
The next day — April 1960 — Herranz discovered his mistake, upon seeing the reservation card newly prepared by his co-
employee Pedro Asensi for Sen. Lopez and party to the exclusion of the Rufinos (Exh. 5). It was then that Herranz sent
another telex wire to the San Francisco head office, stating his error and asking for the reinstatement of the four (4) first
class seats reserved for Senator Lopez and party (Annex A-Velasco's to Exh. 6). San Francisco head office replied on
April 22, 1960 that Senator Lopez and party are waitlisted and that said office is unable to reinstate them (Annex B-
Velasco's to Exh. 6).

Since the flight involved was still more than a month away and confident that reinstatement would be made, Herranz forgot
the matter and told no one about it except his co-employee, either Armando Davila or Pedro Asensi or both of them (Tsn.,
123-124, 127, Nov. 17, 1961).

Subsequently, on April 27, 1960, Armando Davila, PAN-AM's reservations employee working in the same Escolta office as
Herranz, phoned PAN-AM's ticket sellers at its other office in the Manila Hotel, and confirmed the reservations of Senator
Lopez and party.

PAN-AM's reservations supervisor Alberto Jose, discovered Herranz's mistake after "Your Travel Guide" phone on May
18, 1960 to state that Senator Lopez and party were going to depart as scheduled. Accordingly, Jose sent a telex wire on
that date to PAN-AM's head office at San Francisco to report the error and asked said office to continue holding the
reservations of Senator Lopez and party (Annex B-Acker's to Exh. 6). Said message was reiterated by Jose in his telex
wire of May 19, 1960 (Annex C-Acker's to Exh. 6). San Francisco head office replied on May 19, 1960 that it regrets being
unable to confirm Senator Lopez and party for the reason that the flight was solidly booked (Exh. 7). Jose sent a third telex
wire on May 20, 1960 addressed to PAN-AM's offices at San Francisco, New York (Idlewild Airport), Tokyo and Hongkong,
asking all-out assistance towards restoring the cancelled spaces and for report of cancellations at their end (Annex D-
Acker's to Exh. 6). San Francisco head office reiterated on May 20, 1960 that it could not reinstate the spaces and referred
Jose to the Tokyo and Hongkong offices (Exh. 8). Also on May 20, the Tokyo office of PAN-AM wired Jose stating it will do
everything possible (Exh. 9).

Expecting that some cancellations of bookings would be made before the flight time, Jose decided to withhold from
Senator Lopez and party, or their agent, the information that their reservations had been cancelled.

Armando Davila having previously confirmed Senator Lopez and party's first class reservations to PAN-AM's ticket sellers
at its Manila Hotel office, the latter sold and issued in their favor the corresponding first class tickets on the 21st and 23rd
of May, 1960.

From the foregoing evidence of defendant it is in effect admitted that defendant — through its agents — first cancelled
plaintiffs, reservations by mistake and thereafter deliberately and intentionally withheld from plaintiffs or their travel agent
the fact of said cancellation, letting them go on believing that their first class reservations stood valid and confirmed. In so
misleading plaintiffs into purchasing first class tickets in the conviction that they had confirmed reservations for the same,
when in fact they had none, defendant wilfully and knowingly placed itself into the position of having to breach its a
foresaid contracts with plaintiffs should there be no last-minute cancellation by other passengers before flight time, as it
turned out in this case. Such actuation of defendant may indeed have been prompted by nothing more than the promotion
of its self-interest in holding on to Senator Lopez and party as passengers in its flight and foreclosing on their chances to
seek the services of other airlines that may have been able to afford them first class accommodations. All the time, in legal
contemplation such conduct already amounts to action in bad faith. For bad faith means a breach of a known duty through
some motive of interest or ill-will (Spiegel vs. Beacon Participations, 8 NE 2d 895, 907). As stated in Kamm v. Flink, 113
N.J.L. 582, 175 A. 62, 99 A.L.R. 1, 7: "Self-enrichment or fraternal interest, and not personal ill-will, may well have been
the motive; but it is malice nevertheless."

As of May 18, 1960 defendant's reservations supervisor, Alberto Jose knew that plaintiffs' reservations had been
cancelled. As of May 20 he knew that the San Francisco head office stated with finality that it could not reinstate plaintiffs'
cancelled reservations. And yet said reservations supervisor made the "decision" — to use his own, word — to withhold
the information from the plaintiffs. Said Alberto Jose in his testimony:

Q Why did you not notify them?

A Well, you see, sir, in my fifteen (15) years of service with the air lines business my experience is that even if the
flights are solidly booked months in advance, usually the flight departs with plenty of empty seats both on the first
class and tourist class. This is due to late cancellation of passengers, or because passengers do not show up in
the airport, and it was our hope others come in from another flight and, therefore, are delayed and, therefore,
missed their connections. This experience of mine, coupled with that wire from Tokyo that they would do
 everything possible prompted me to withhold the information, but unfortunately, instead of the first class seat that I
was hoping for and which I anticipated only the tourists class was open on which Senator and Mrs. Lopez, Mr. and
Mrs. Montelibano were accommodated. Well, I fully realize now the gravity of my decision in not advising Senator
and Mrs. Lopez, Mr. and Mrs. Montelibano nor their agents about the erroneous cancellation and for which I would
like them to know that I am very sorry.

xxx xxx xxx

Q So it was not your duty to notify Sen. Lopez and parties that their reservations had been cancelled since May 18,
1960?

A As I said before it was my duty. It was my duty but as I said again with respect to that duty I have the power to
make a decision or use my discretion and judgment whether I should go ahead and tell the passenger about the
cancellation. (Tsn., pp. 17-19, 28-29, March 15, 1962.)

At the time plaintiffs bought their tickets, defendant, therefore, in breach of its known duty, made plaintiffs believe that their
reservation had not been cancelled. An additional indication of this is the fact that upon the face of the two tickets of
record, namely, the ticket issued to Alfredo Montelibano, Jr. on May 21, 1960 (Exh. 22) and that issued to Mrs. Alfredo
Montelibano, Jr., on May 23, 1960 (Exh. 23), the reservation status is stated as "OK". Such willful-non-disclosure of the
cancellation or pretense that the reservations for plaintiffs stood — and not simply the erroneous cancellation itself — is
the factor to which is attributable the breach of the resulting contracts. And, as above-stated, in this respect defendant
clearly acted in bad faith.

As if to further emphasize its bad faith on the matter, defendant subsequently promoted the employee who cancelled
plaintiffs' reservations and told them nothing about it. The record shows that said employee — Mariano Herranz — was not
subjected to investigation and suspension by defendant but instead was given a reward in the form of an increase of salary
in June of the following year (Tsn., 86-88, Nov. 20, 1961).

At any rate, granting all the mistakes advanced by the defendant, there would at least be negligence so gross and reckless
as to amount to malice or bad faith (Fores vs. Miranda, L-12163, March 4, 1959; Necesito v. Paras, L-10605-06, June 30,
1958). Firstly, notwithstanding the entries in the reservation cards (Exhs. 1 & 3) that the reservations cancelled are those
of the Rufinos only, Herranz made the mistake, after reading said entries, of sending a wire cancelling all the reservations,
including those of Senator Lopez and party (Tsn., pp. 108-109, Nov. 17, 1961). Secondly, after sending a wire to San
Francisco head office on April 19, 1960 stating his error and asking for reinstatement, Herranz simply forgot about the
matter. Notwithstanding the reply of San Francisco head Office on April 22, 1960 that it cannot reinstate Senator Lopez
and party (Annex B-Velasco's to Exh. 6), it was assumed and taken for granted that reinstatement would be made. Thirdly,
Armando Davila confirmed plaintiff's reservations in a phone call on April 27, 1960 to defendant's ticket sellers, when at the
time it appeared in plaintiffs' reservation card (Exh. 5) that they were only waitlisted passengers. Fourthly, defendant's
ticket sellers issued plaintiffs' tickets on May 21 and 23, 1960, without first checking their reservations just before issuing
said tickets. And, finally, no one among defendant's agents notified Senator Lopez and party that their reservations had
been cancelled, a precaution that could have averted their entering with defendant into contracts that the latter had already
placed beyond its power to perform.

Accordingly, there being a clear admission in defendant's evidence of facts amounting to a bad faith on its part in regard to
the breach of its contracts with plaintiffs, it becomes unnecessary to further discuss the evidence adduced by plaintiffs to
establish defendant's bad faith. For what is admitted in the course of the trial does not need to be proved (Sec. 2, Rule
129, Rules of Court).

Addressing ourselves now to the question of damages, it is well to state at the outset those rules and principles. First,
moral damages are recoverable in breach of contracts where the defendant acted fraudulently or in bad faith (Art. 2220,
New Civil Code). Second, in addition to moral damages, exemplary or corrective damages may be imposed by way of
example or correction for the public good, in breach of contract where the defendant acted in a wanton, fraudulent,
reckless, oppressive or malevolent manner (Articles 2229, 2232, New Civil Code). And, third, a written contract for an
attorney's services shall control the amount to be paid therefor unless found by the court to be unconscionable or
unreasonable (Sec. 24, Rule 138, Rules of Court).

First, then, as to moral damages. As a proximate result of defendant's breach in bad faith of its contracts with plaintiffs, the
latter suffered social humiliation, wounded feelings, serious anxiety and mental anguish. For plaintiffs were travelling with
first class tickets issued by defendant and yet they were given only the tourist class. At stop-overs, they were expected to
be among the first-class passengers by those awaiting to welcome them, only to be found among the tourist passengers. It
may not be humiliating to travel as tourist passengers; it is humiliating to be compelled to travel as such, contrary to what is
rightfully to be expected from the contractual undertaking.

Senator Lopez was then Senate President Pro Tempore. International carriers like defendant know the prestige of such an
office. For the Senate is not only the Upper Chamber of the Philippine Congress, but the nation's treaty-ratifying body. It
may also be mentioned that in his aforesaid office Senator Lopez was in a position to preside in impeachment cases
should the Senate sit as Impeachment Tribunal. And he was former Vice-President of the Philippines. Senator Lopez was
going to the United States to attend a private business conference of the Binalbagan-Isabela Sugar Company; but his
aforesaid rank and position were by no means left behind, and in fact he had a second engagement awaiting him in the
United States: a banquet tendered by Filipino friends in his honor as Senate President Pro Tempore (Tsn., pp. 14-15, Nov.
25, 1960). For the moral damages sustained by him, therefore, an award of P100,000.00 is appropriate.

Mrs. Maria J. Lopez, as wife of Senator Lopez, shared his prestige and therefore his humiliation. In addition she suffered
physical discomfort during the 13-hour trip,(5 hours from Tokyo to Honolulu and 8 hours from Honolulu to San Francisco).
Although Senator Lopez stated that "she was quite well" (Tsn., p. 22, Nov. 25, 1960) — he obviously meant relatively well,
since the rest of his statement is that two months before, she was attackedby severe flu and lost 10 pounds of weight and
that she was advised by Dr. Sison to go to the United States as soon as possible for medical check-up and relaxation,
(Ibid). In fact, Senator Lopez stated, as shown a few pages after in the transcript of his testimony, that Mrs. Lopez was sick
when she left the Philippines:

A. Well, my wife really felt very bad during the entire trip from Tokyo to San Francisco. In the first place, she was
sick when we left the Philippines, and then with that discomfort which she [experienced] or suffered during that
evening, it was her worst experience. I myself, who was not sick, could not sleep because of the discomfort. (Tsn.,
pp. 27-28, Nov. 25, 1960).

It is not hard to see that in her condition then a physical discomfort sustained for thirteen hours may well be considered a
physical suffering. And even without regard to the noise and trepidation inside the plane — which defendant contends,
upon the strengh of expert testimony, to be practically the same in first class and tourist class — the fact that the seating
spaces in the tourist class are quite narrower than in first class, there beingsix seats to a row in the former as against four
to a row in the latter, and that in tourist class there is very little space for reclining in view of the closer distance between
rows (Tsn., p. 24, Nov. 25, 1960), will suffice to show that the aforesaid passenger indeed experienced physical suffering
during the trip. Added to this, of course, was the painfull thought that she was deprived by defendant — after having paid
for and expected the same — of the most suitable, place for her, the first class, where evidently the best of everything
would have been given her, the best seat, service, food and treatment. Such difference in comfort between first class and
tourist class is too obvious to be recounted, is in fact the reason for the former's existence, and is recognized by the airline
in charging a higher fare for it and by the passengers in paying said higher rate Accordingly, considering the totality of her
suffering and humiliation, an award to Mrs. Maria J. Lopez of P50,000.00 for moral damages will be reasonable.

Mr. and Mrs. Alfredo Montelibano, Jr., were travelling as immediate members of the family of Senator Lopez. They formed
part of the Senator's party as shown also by the reservation cards of PAN-AM. As such they likewise shared his prestige
and humiliation. Although defendant contends that a few weeks before the flight they had asked their reservations to be
charged from first class to tourist class — which did not materialize due to alleged full booking in the tourist class — the
same does not mean they suffered no shared in having to take tourist class during the flight. For by that time they had
already been made to pay for first class seats and therefore to expect first class accommodations. As stated, it is one thing
to take the tourist class by free choice; a far different thing to be compelled to take it notwithstanding having paid for first
class seats. Plaintiffs-appellants now ask P37,500.00 each for the two but we note that in their motion for reconsideration
filed in the court a quo, they were satisfied with P25,000.00 each for said persons. (Record on Appeal, p. 102). For their
social humiliation, therefore, the award to them of P25,000.00 each is reasonable.

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).

In view of its nature, it should be imposed in such an amount as to sufficiently and effectively deter similar breach of
contracts in the future by defendant or other airlines. In this light, we find it just to award P75,000.00 as exemplary or
corrective damages.

Now, as to attorney's fees, the record shows a written contract of services executed on June 1, 1960 (Exh. F) whereunder
plaintiffs-appellants engaged the services of their counsel — Atty. Vicente J. Francisco — and agreedto pay the sum of
P25,000.00 as attorney's fees upon the termination of the case in the Court of First Instance, and an additional sum of
P25,000.00 in the event the case is appealed to the Supreme Court. As said earlier, a written contract for attorney's
services shall control the amount to be paid therefor unless found by the court to be unconscionable or unreasonable. A
consideration of the subject matter of the present controversy, of the professional standing of the attorney for plaintiffs-
appellants, and of the extent of the service rendered by him, shows that said amount provided for in the written agreement
is reasonable. Said lawyer — whose prominence in the legal profession is well known — studied the case, prepared and
filed the complaint, conferred with witnesses, analyzed documentary evidence, personally appeared at the trial of the case
in twenty-two days, during a period of three years, prepared four sets of cross-interrogatories for deposition taking,
prepared several memoranda and the motion for reconsideration, filed a joint record on appeal with defendant, filed a brief
for plaintiffs as appellants consisting of 45 printed pages and a brief for plaintiffs as appellees consisting of 265 printed
pages. And we are further convinced of its reasonableness because defendant's counsel likewise valued at P50,000.00
the proper compensation for his services rendered to defendant in the trial court and on appeal.

In concluding, let it be stressed that the amount of damages awarded in this appeal has been determined by adequately
considering the official, political, social, and financial standing of the offended parties on one hand, and the business and
financial position of the offender on the other (Domingding v. Ng, 55 O.G. 10). And further considering the present rate of
exchange and the terms at which the amount of damages awarded would approximately be in U.S. dollars, this Court is all
the more of the view that said award is proper and reasonable.

Wherefore, the judgment appealed from is hereby modified so as to award in favor of plaintiffs and against defendant, the
following: (1) P200,000.00 as moral damages, divided among plaintiffs, thus: P100,000.00 for Senate President Pro
Tempore Fernando Lopez; P50,000.00 for his wife Maria J. Lopez; P25,000.00 for his son-in-law Alfredo Montelibano, Jr.;
and P25,000.00 for his daughter Mrs. Alfredo Montelibano, Jr.; (2) P75,000.00 as exemplary or corrective damages; (3)
interest at the legal rate of 6% per annum on the moral and exemplary damages aforestated, from December 14, 1963, the
date of the amended decision of the court a quo, until said damages are fully paid; (4) P50,000.00 as attorney's fees; and
(5) the costs. Counterclaim dismissed.So ordered.
 FIRST DIVISION

[G.R. No. 159636. November 25, 2004]

VICTORY LINER, INC., petitioner, vs. ROSALITO GAMMAD, APRIL ROSSAN P.

GAMMAD, ROI ROZANO P. GAMMAD and DIANA FRANCES P.
GAMMAD, respondents.

DECISION
YNARES-SANTIAGO, J.:

Assailed in this petition for review on certiorari is the April 11, 2003 decision of the Court of
[1]

Appeals in CA-G.R. CV No. 63290 which affirmed with modification the November 6, 1998
decision of the Regional Trial Court of Tuguegarao, Cagayan, Branch 5 finding petitioner Victory
[2]

Liner, Inc. liable for breach of contract of carriage in Civil Case No. 5023.
The facts as testified by respondent Rosalito Gammad show that on March 14, 1996, his wife
Marie Grace Pagulayan-Gammad, was on board an air-conditioned Victory Liner bus bound for
[3]

Tuguegarao, Cagayan from Manila. At about 3:00 a.m., the bus while running at a high speed
fell on a ravine somewhere in Barangay Baliling, Sta. Fe, Nueva Vizcaya, which resulted in the
death of Marie Grace and physical injuries to other passengers. [4]

On May 14, 1996, respondent heirs of the deceased filed a complaint for damages arising
[5]

from culpa contractual against petitioner. In its answer, the petitioner claimed that the incident
[6]

was purely accidental and that it has always exercised extraordinary diligence in its 50 years of
operation.
After several re-settings, pre-trial was set on April 10, 1997. For failure to appear on the
[7] [8]

said date, petitioner was declared as in default. However, on petitioners motion to lift the order
[9] [10]

of default, the same was granted by the trial court. [11]

At the pre-trial on May 6, 1997, petitioner did not want to admit the proposed stipulation that
the deceased was a passenger of the Victory Liner Bus which fell on the ravine and that she was
issued Passenger Ticket No. 977785. Respondents, for their part, did not accept petitioners
proposal to pay P50,000.00. [12]

After respondent Rosalito Gammad completed his direct testimony, cross-examination was
scheduled for November 17, 1997 but moved to December 8, 1997, because the parties and
[13] [14]

the counsel failed to appear. On December 8, 1997, counsel of petitioner was absent despite
due notice and was deemed to have waived right to cross-examine respondent Rosalito. [15]

Petitioners motion to reset the presentation of its evidence to March 25, 1998 was granted. [16]

However, on March 24, 1998, the counsel of petitioner sent the court a telegram requesting [17]

postponement but the telegram was received by the trial court on March 25, 1998, after it had
issued an order considering the case submitted for decision for failure of petitioner and counsel
to appear. [18]

On November 6, 1998, the trial court rendered its decision in favor of respondents, the
dispositive portion of which reads:
WHEREFORE, premises considered and in the interest of justice, judgment is hereby rendered in favor
of the plaintiffs and against the defendant Victory Liner, Incorporated, ordering the latter to pay the
following:

1. Actual Damages -------------------- P 122,000.00

2. Death Indemnity --------------------- 50,000.00
3. Exemplary and Moral Damages----- 400,000.00
4. Compensatory Damages ---------- 1,500,000.00
5. Attorneys Fees ------------ 10% of the total amount granted
6. Cost of the Suit.

SO ORDERED. [19]

On appeal by petitioner, the Court of Appeals affirmed the decision of the trial court with
modification as follows:

[T]he Decision dated 06 November 1998 is hereby MODIFIED to reflect that the following are hereby
adjudged in favor of plaintiffs-appellees:

1. Actual Damages in the amount of P88,270.00;

2. Compensatory Damages in the amount of P1,135,536,10;

3. Moral and Exemplary Damages in the amount of P400,000.00; and

4. Attorneys fees equivalent to 10% of the sum of the actual, compensatory, moral, and
exemplary damages herein adjudged.

The court a quos judgment of the cost of the suit against defendant-appellant is hereby AFFIRMED.

SO ORDERED. [20]

Represented by a new counsel, petitioner on May 21, 2003 filed a motion for reconsideration
praying that the case be remanded to the trial court for cross- examination of respondents witness
and for the presentation of its evidence; or in the alternative, dismiss the respondents
complaint. Invoking APEX Mining, Inc. v. Court of Appeals, petitioner argues, inter alia, that
[21] [22]

the decision of the trial court should be set aside because the negligence of its former counsel,
Atty. Antonio B. Paguirigan, in failing to appear at the scheduled hearings and move for
reconsideration of the orders declaring petitioner to have waived the right to cross-examine
respondents witness and right to present evidence, deprived petitioner of its day in court.
On August 21, 2003, the Court of Appeals denied petitioners motion for reconsideration. [23]

Hence, this petition for review principally based on the fact that the mistake or gross
negligence of its counsel deprived petitioner of due process of law. Petitioner also argues that
the trial courts award of damages were without basis and should be deleted.
The issues for resolution are: (1) whether petitioners counsel was guilty of gross negligence;
(2) whether petitioner should be held liable for breach of contract of carriage; and (3) whether the
award of damages was proper.
 It is settled that the negligence of counsel binds the client. This is based on the rule that any
act performed by a counsel within the scope of his general or implied authority is regarded as an
act of his client. Consequently, the mistake or negligence of counsel may result in the rendition
of an unfavorable judgment against the client. However, the application of the general rule to a
given case should be looked into and adopted according to the surrounding circumstances
obtaining. Thus, exceptions to the foregoing have been recognized by the court in cases where
reckless or gross negligence of counsel deprives the client of due process of law, or when its
application will result in outright deprivation of the clients liberty or property or where the interests
of justice so require, and accord relief to the client who suffered by reason of the lawyers gross
or palpable mistake or negligence. [24]

The exceptions, however, are not present in this case. The record shows that Atty. Paguirigan
filed an Answer and Pre-trial Brief for petitioner. Although initially declared as in default, Atty.
Paguirigan successfully moved for the setting aside of the order of default. In fact, petitioner was
represented by Atty. Paguirigan at the pre-trial who proposed settlement for P50,000.00.
Although Atty. Paguirigan failed to file motions for reconsideration of the orders declaring
petitioner to have waived the right to cross-examine respondents witness and to present
evidence, he nevertheless, filed a timely appeal with the Court of Appeals assailing the decision
of the trial court. Hence, petitioners claim that it was denied due process lacks basis.
Petitioner too is not entirely blameless. Prior to the issuance of the order declaring it as in
default for not appearing at the pre-trial, three notices (dated October 23, 1996, January 30,
[25]

1997, and March 26, 1997, ) requiring attendance at the pre-trial were sent and duly received
[26] [27]

by petitioner. However, it was only on April 27, 1997, after the issuance of the April 10, 1997
order of default for failure to appear at the pre-trial when petitioner, through its finance and
administrative manager, executed a special power of attorney authorizing Atty. Paguirigan or
[28]

any member of his law firm to represent petitioner at the pre-trial. Petitioner is guilty, at the least,
of contributory negligence and fault cannot be imputed solely on previous counsel.
The case of APEX Mining, Inc., invoked by petitioner is not on all fours with the case at bar.
In APEX, the negligent counsel not only allowed the adverse decision against his client to
become final and executory, but deliberately misrepresented in the progress report that the case
was still pending with the Court of Appeals when the same was dismissed 16 months
ago. These circumstances are absent in this case because Atty. Paguirigan timely filed an
[29]

appeal from the decision of the trial court with the Court of Appeals.
In Gold Line Transit, Inc. v. Ramos, the Court was similarly confronted with the issue of
[30]

whether or not the client should bear the adverse consequences of its counsels negligence. In
that case, Gold Line Transit, Inc. (Gold Line) and its lawyer failed to appear at the pre-trial despite
notice and was declared as in default. After the plaintiffs presentation of evidence ex parte, the
trial court rendered decision ordering Gold Line to pay damages to the heirs of its deceased
passenger. The decision became final and executory because counsel of Gold Line did not file
any appeal. Finding that Goldline was not denied due process of law and is thus bound by the
negligence of its lawyer, the Court held as follows

This leads us to the question of whether the negligence of counsel was so gross and reckless that
petitioner was deprived of its right to due process of law. We do not believe so. It cannot be denied that
the requirements of due process were observed in the instant case. Petitioner was never deprived of its
day in court, as in fact it was afforded every opportunity to be heard. Thus, it is of record that notices
were sent to petitioner and that its counsel was able to file a motion to dismiss the complaint, an answer
to the complaint, and even a pre-trial brief. What was irretrievably lost by petitioner was its opportunity
to participate in the trial of the case and to adduce evidence in its behalf because of negligence.

In the application of the principle of due process, what is sought to be safeguarded against is not the lack
of previous notice but the denial of the opportunity to be heard. The question is not whether petitioner
succeeded in defending its rights and interests, but simply, whether it had the opportunity to present its
side of the controversy. Verily, as petitioner retained the services of counsel of its choice, it should, as far
as this suit is concerned, bear the consequences of its choice of a faulty option. Its plea that it was
deprived of due process echoes on hollow ground and certainly cannot elicit approval nor sympathy.

To cater to petitioners arguments and reinstate its petition for relief from judgment would put a premium
on the negligence of its former counsel and encourage the non-termination of this case by reason thereof.
This is one case where petitioner has to bear the adverse consequences of its counsels act, for a client is
bound by the action of his counsel in the conduct of a case and he cannot thereafter be heard to complain
that the result might have been different had his counsel proceeded differently. The rationale for the rule
is easily discernible. If the negligence of counsel be admitted as a reason for opening cases, there would
never be an end to a suit so long as a new counsel could be hired every time it is shown that the prior
counsel had not been sufficiently diligent, experienced or learned. [31]

Similarly, in Macalalag v. Ombudsman, a Philippine Postal Corporation employee charged

[32]

with dishonesty was not able to file an answer and position paper. He was found guilty solely on
the basis of complainants evidence and was dismissed with forfeiture of all benefits and
disqualification from government service. Challenging the decision of the Ombudsman, the
employee contended that the gross negligence of his counsel deprived him of due process of
law. In debunking his contention, the Court said

Neither can he claim that he is not bound by his lawyers actions; it is only in case of gross or palpable
negligence of counsel when the courts can step in and accord relief to a client who would have suffered
thereby. If every perceived mistake, failure of diligence, lack of experience or insufficient legal
knowledge of the lawyer would be admitted as a reason for the reopening of a case, there would be no
end to controversy. Fundamental to our judicial system is the principle that every litigation must come to
an end. It would be a clear mockery if it were otherwise. Access to the courts is guaranteed, but there
must be a limit to it.

Viewed vis--vis the foregoing jurisprudence, to sustain petitioners argument that it was
denied due process of law due to negligence of its counsel would set a dangerous precedent. It
would enable every party to render inutile any adverse order or decision through the simple
expedient of alleging gross negligence on the part of its counsel. The Court will not countenance
such a farce which contradicts long-settled doctrines of trial and procedure. [33]

Anent the second issue, petitioner was correctly found liable for breach of contract of carriage.
A common carrier is bound to carry its passengers safely as far as human care and foresight can
provide, using the utmost diligence of very cautious persons, with due regard to all the
circumstances. In a contract of carriage, it is presumed that the common carrier was at fault or
was negligent when a passenger dies or is injured. Unless the presumption is rebutted, the
court need not even make an express finding of fault or negligence on the part of the
common carrier. This statutory presumption may only be overcome by evidence that the carrier
exercised extraordinary diligence. [34]
 In the instant case, there is no evidence to rebut the statutory presumption that the proximate
cause of Marie Graces death was the negligence of petitioner. Hence, the courts below correctly
ruled that petitioner was guilty of breach of contract of carriage.
Nevertheless, the award of damages should be modified.
Article 1764 in relation to Article 2206 of the Civil Code, holds the common carrier in
[35] [36]

breach of its contract of carriage that results in the death of a passenger liable to pay the
following: (1) indemnity for death, (2) indemnity for loss of earning capacity, and (3) moral
damages.
In the present case, respondent heirs of the deceased are entitled to indemnity for the death
of Marie Grace which under current jurisprudence is fixed at P50,000.00. [37]

The award of compensatory damages for the loss of the deceaseds earning capacity should
be deleted for lack of basis. As a rule, documentary evidence should be presented to substantiate
the claim for damages for loss of earning capacity. By way of exception, damages for loss of
earning capacity may be awarded despite the absence of documentary evidence when (1) the
deceased is self-employed earning less than the minimum wage under current labor laws, and
judicial notice may be taken of the fact that in the deceaseds line of work no documentary
evidence is available; or (2) the deceased is employed as a daily wage worker earning less than
the minimum wage under current labor laws. [38]

In People v. Oco, the evidence presented by the prosecution to recover damages for loss
[39]

of earning capacity was the bare testimony of the deceaseds wife that her husband was earning
P8,000.00 monthly as a legal researcher of a private corporation. Finding that the deceased was
neither self-employed nor employed as a daily-wage worker earning less than the minimum wage
under the labor laws existing at the time of his death, the Court held that testimonial evidence
alone is insufficient to justify an award for loss of earning capacity.
Likewise, in People v. Caraig, damages for loss of earning capacity was not awarded
[40]

because the circumstances of the 3 deceased did not fall within the recognized exceptions, and
except for the testimony of their wives, no documentary proof about their income was presented
by the prosecution. Thus

The testimonial evidence shows that Placido Agustin, Roberto Raagas, and Melencio Castro Jr. were not
self-employed or employed as daily-wage workers earning less than the minimum wage under the labor
laws existing at the time of their death. Placido Agustin was a Social Security System employee who
received a monthly salary of P5,000. Roberto Raagas was the President of Sinclair Security and
Allied Services, a family owned corporation, with a monthly compensation of P30,000. Melencio
Castro Jr. was a taxi driver of New Rocalex with an average daily earning of P500 or a monthly
earning of P7,500. Clearly, these cases do not fall under the exceptions where indemnity for loss of
earning capacity can be given despite lack of documentary evidence. Therefore, for lack of documentary
proof, no indemnity for loss of earning capacity can be given in these cases. (Emphasis supplied)

Here, the trial court and the Court of Appeals computed the award of compensatory damages
for loss of earning capacity only on the basis of the testimony of respondent Rosalito that the
deceased was 39 years of age and a Section Chief of the Bureau of Internal Revenue,
Tuguergarao District Office with a salary of P83,088.00 per annum when she died. No other [41]

evidence was presented. The award is clearly erroneous because the deceaseds earnings does
not fall within the exceptions.
 However, the fact of loss having been established, temperate damages in the amount of
P500,000.00 should be awarded to respondents. Under Article 2224 of the Civil Code, temperate
or moderate damages, which are more than nominal but less than compensatory damages, may
be recovered when the court finds that some pecuniary loss has been suffered but its amount
can not, from the nature of the case, be proved with certainty.
In Pleno v. Court of Appeals, the Court sustained the trial courts award of P200,000.00 as
[42]

temperate damages in lieu of actual damages for loss of earning capacity because the income
of the victim was not sufficiently proven, thus

The trial court based the amounts of damages awarded to the petitioner on the following circumstances:

As to the loss or impairment of earning capacity, there is no doubt that Pleno is an ent[re]preneur and the
founder of his own corporation, the Mayon Ceramics Corporation. It appears also that he is an
industrious and resourceful person with several projects in line, and were it not for the incident, might
have pushed them through. On the day of the incident, Pleno was driving homeward with geologist
Longley after an ocular inspection of the site of the Mayon Ceramics Corporation. His actual income
however has not been sufficiently established so that this Court cannot award actual damages, but, an
award of temperate or moderate damages may still be made on loss or impairment of earning capacity.
That Pleno sustained a permanent deformity due to a shortened left leg and that he also suffers from
double vision in his left eye is also established. Because of this, he suffers from some inferiority complex
and is no longer active in business as well as in social life. In similar cases as in Borromeo v. Manila
Electric Railroad Co., 44 Phil 165; Coriage, et al. v. LTB Co., et al., L-11037, Dec. 29, 1960, and in
Araneta, et al. v. Arreglado, et al., L-11394, Sept. 9, 1958, the proper award of damages were given.

We rule that the lower courts awards of damages are more consonant with the factual circumstances of
the instant case. The trial courts findings of facts are clear and well-developed. Each item of damages is
adequately supported by evidence on record.

Article 2224 of the Civil Code was likewise applied in the recent cases of People v.
Singh and People v. Almedilla, to justify the award of temperate damages in lieu of damages
[43] [44]

for loss of earning capacity which was not substantiated by the required documentary proof.
Anent the award of moral damages, the same cannot be lumped with exemplary damages
because they are based on different jural foundations. These damages are different in nature
[45]

and require separate determination. In culpa contractual or breach of contract, moral

[46]

damages may be recovered when the defendant acted in bad faith or was guilty of gross
negligence (amounting to bad faith) or in wanton disregard of contractual obligations and, as in
this case, when the act of breach of contract itself constitutes the tort that results in physical
injuries. By special rule in Article 1764 in relation to Article 2206 of the Civil Code, moral
damages may also be awarded in case the death of a passenger results from a breach of
carriage. On the other hand, exemplary damages, which are awarded by way of example or
[47]

correction for the public good may be recovered in contractual obligations if the defendant acted
in wanton, fraudulent, reckless, oppressive, or malevolent manner. [48]

Respondents in the instant case should be awarded moral damages to compensate for the
grief caused by the death of the deceased resulting from the petitioners breach of contract of
carriage. Furthermore, the petitioner failed to prove that it exercised the extraordinary diligence
required for common carriers, it is presumed to have acted recklessly. Thus, the award of
[49]

exemplary damages is proper. Under the circumstances, we find it reasonable to award

respondents the amount of P100,000.00 as moral damages and P100,000.00 as exemplary
damages. These amounts are not excessive. [50]

The actual damages awarded by the trial court reduced by the Court of Appeals should be
further reduced. In People v. Duban, it was held that only substantiated and proven expenses
[51]

or those that appear to have been genuinely incurred in connection with the death, wake or burial
of the victim will be recognized. A list of expenses (Exhibit J), and the contract/receipt for the
[52]

construction of the tomb (Exhibit F) in this case, cannot be considered competent proof and
[53]

cannot replace the official receipts necessary to justify the award. Hence, actual damages should
be further reduced to P78,160.00, which was the amount supported by official receipts.
[54]

Pursuant to Article 2208 of the Civil Code, attorneys fees may also be recovered in the case
[55]

at bar where exemplary damages are awarded. The Court finds the award of attorneys fees
equivalent to 10% of the total amount adjudged against petitioner reasonable.
Finally, in Eastern Shipping Lines, Inc. v. Court of Appeals, it was held that when an
[56]

obligation, regardless of its source, i.e., law, contracts, quasi-contracts, delicts or quasi-delicts is
breached, the contravenor can be held liable for payment of interest in the concept of actual and
compensatory damages, subject to the following rules, to wit

1. When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or
forbearance of money, the interest due should be that which may have been stipulated in writing.
Furthermore, the interest due shall itself earn legal interest from the time it is judicially demanded. In the
absence of stipulation, the rate of interest shall be 12% per annum to be computed from default, i.e., from
judicial or extrajudicial demand under and subject to the provisions of Article 1169 of the Civil Code.

2. When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the
amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per
annum. No interest, however, shall be adjudged on unliquidated claims or damages except when or until
the demand can be established with reasonable certainty. Accordingly, where the demand is established
with reasonable certainty, the interest shall begin to run from the time the claim is made judicially or
extrajudicially (Art. 1169, Civil Code) but when such certainty cannot be so reasonably established at the
time the demand is made, the interest shall begin to run only from the date the judgment of the court is
made (at which time the quantification of damages may be deemed to have been reasonably ascertained).
The actual base for the computation of legal interest shall, in any case, be on the amount finally
adjudged.

3. When the judgment of the court awarding a sum of money becomes final and executory, the rate
of legal interest, whether the case falls under paragraph 1 or paragraph 2, above, shall be 12% per
annum from such finality until its satisfaction, this interim period being deemed to be by then an
equivalent to a forbearance of credit. (Emphasis supplied).

In the instant case, petitioner should be held liable for payment of interest as damages for
breach of contract of carriage. Considering that the amounts payable by petitioner has been
determined with certainty only in the instant petition, the interest due shall be computed upon the
finality of this decision at the rate of 12% per annum until satisfaction, per paragraph 3 of the
aforecited rule. [57]

WHEREFORE, in view of all the foregoing, the petition is PARTIALLY GRANTED. The April
11, 2003 decision of the Court of Appeals in CA-G.R. CV No. 63290, which modified the decision
of the Regional Trial Court of Tuguegarao, Cagayan in Civil Case No. 5023, is AFFIRMED with
MODIFICATION. As modified, petitioner Victory Liner, Inc., is ordered to pay respondents the
following: (1) P50,000.00 as indemnity for the death of Marie Grace Pagulayan-Gammad; (2)
P100,000.00 as moral damages; (3) P100,000.00 as exemplary damages; (4) P78,160.00 as
actual damages; (5) P500,000.00 as temperate damages; (6) 10% of the total amount as
attorneys fees; and the costs of suit.
Furthermore, the total amount adjudged against petitioner shall earn interest at the rate of
12% per annum computed from the finality of this decision until fully paid.
SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 113578 July 14, 1995

SULPICIO LINES, INC., Petitioner,

vs.
The Honorable COURT OF APPEALS and TITO DURAN TABUQUILDE and ANGELINA DE PAZ
TABUQUILDE, respondents.

QUIASON, J.:

This is a petition for review on certiorari under Rule 45 of the Revised Rules of Court of the decision of the Court of
Appeals in CA-G.R. CV
No. 32864, which affirmed the decision of the Regional Trial Court, Branch 85, Quezon City in Civil Case No. Q-89-3048.

The Court of Appeals found:

On October 23, 1988, plaintiff Tito Duran Tabuquilde (hereinafter, "Tito") and his three-year old daughter
Jennifer Anne boarded the M/V Dona Marilyn at North Harbor, Manila, bringing with them several pieces of
luggage.

In the morning of October 24, 1988, the M/V Dona Marilyn, while in transit, encountered inclement weather
which caused huge waves due to Typhoon Unsang.

Notwithstanding the fact that Storm Signal No. 2 had been raised by the PAG-ASA authorities over Leyte
as early as 5:30 P.M. of October 23, 1988 and which signal was raised to Signal No. 3 by 10 P.M. of the
same day, the ship captain ordered the vessel to proceed to Tacloban when prudence dictated that he
should have taken it to the nearest port for shelter, thus violating his duty to exercise extraordinary
diligence in the carrying of passengers safely to their destination.

At about the same time, plaintiff-appellee Angelina Tabuquilde (hereinafter, "Angelina") mother of Jennifer
Anne, contacted the Sulpicio Office to verify radio reports that the vessel M/V Dona Marilyn was missing.
Employees of said Sulpicio Lines assured her that the ship was merely "hiding" thereby assuaging her
anxiety.

At around 2:00 P.M. of October 24, 1988, said vessel capsized, throwing plaintiff-appellee Tito and Jennifer
Anne, along with hundreds of passengers, into the tumultuous sea.

Tito tried to keep himself and his daughter afloat but to no avail as the waves got stronger and he was
subsequently separated from his daughter despite his efforts.

He found himself on Almagro Island in Samar the next day at round (sic) 11:00 A.M. and immediately
searched for his daughter among the survivors in the island, but the search proved fruitless.

In the meantime, Angelina tried to seek the assistance of the Sulpicio Lines in Manila to no avail, the latter
refusing to entertain her and hundreds of relatives of the other passengers who waited long hours outside
the Manila Office. Angelina spent sleepless nights worrying about her husband Tito and daughter Jennifer
Anne in view of the refusal of Sulpicio Lines to release a verification of the sinking of the ship.
 On October 26, 1988, Tito and other survivors in the Almagro Island were fetched and were brought to
Tacloban Medical Center for treatment.

On October 31, 1988, Tito reported the loss of his daughter, was informed that the corpse of a child with
his daughter's description had been found. Subsequently, Tito wrote a letter to his wife, reporting the sad
fact that Jennifer Anne was dead. Angelina suffered from shock and severe grief upon receipt of the news.

On November 3, 1988, the coffin bearing the corpse of Jennifer Anne was buried in Tanauan, Leyte.

On November 24, 1988, a claim for damages was filed by Tito with the defendant Sulpicio Lines in
connection with the death of the plaintiff-appellee's daughter and the loss of Tito's belongings worth
P27,580.00. (Appellees' Brief, pp. 2-4) ( Rollo, pp. 52-54).

On January 3, 1991, the trial court rendered a decision in Civil Case No. Q-89-3048 in favor of the plaintiffs Tito Duran
Tabuquilde and Angelina de Paz Tabuquilde (private respondents herein) and against defendant Sulpicio Lines, Inc.
(petitioner herein) ordering defendant to pay P27,580.00 as actual damages, P30,000.00 for the death of Jennifer
Tabuquilde, P100,000.00 as moral damages, P50,000.00 as exemplary damages, and P50,000.00 as attorney's fees, and
costs.

Petitioner appealed to the Court of Appeals which affirmed the decision of the trial court. Petitioner then filed a motion for
reconsideration which was denied. Hence, this petition.

II

Generally, the findings of fact of the trial court are entitled to great weight and not disturbed except for cogent reasons
(Gatmaitan v. Court of Appeals, 200 SCRA 37 [1991]). One of the accepted reasons is when the findings of fact are not
supported by the evidence (Sandoval Shipyard, Inc. v. Clave, 94 SCRA 472 [1979]). Corollary to this is the rule that actual
or compensatory damages, to be recovered, must be proved; otherwise, if the proof is flimsy, no damages will be awarded
(Dichoso v. Court of Appeals, 192 SCRA 169 [1990]).

In the case at bench, the trial court merely mentioned the fact of the loss and the value of the contents of the pieces of
baggage without stating the evidence on which it based its findings. There is no showing that the value of the contents of
the lost pieces of baggage was based on the bill of lading or was previously declared by respondent Tito D. Tabuquilde
before he boarded the ship. Hence, there can be no basis to award actual damages in the amount of P27,850.00.

The Court of Appeals was correct in confirming the award of damages for the death of the daughter of private respondents,
a passenger on board the stricken vessel of petitioner. It is true that under Article 2206 of the Civil Code of the Philippines,
only deaths caused by a crime as quasi delict are entitled to actual and compensatory damages without the need of proof
of the said damages. Said Article provides:

The amount of damages for death caused by a crime or quasi delict shall be at least Three Thousand
Pesos, even though there may have been mitigating circumstances. . . .

Deducing alone from said provision, one can conclude that damages arising from culpa contractual are not compensable
without proof of special damages sustained by the heirs of the victim.

However, the Civil Code, in Article 1764 thereof, expressly makes Article 2206 applicable "to the death of a passenger
caused by the breach of contract by a common carrier." Accordingly, a common carrier is liable for actual or compensatory
damages under Article 2206 in relation to Article 1764 of the Civil Code for deaths of its passengers caused by the breach
of the contract of transportation.

The trial court awarded an indemnity of P30,000.00 for the death of the daughter of private respondents. The award of
damages under Article 2206 has been increased to P50,000.00 (People v. Flores, 237 SCRA 653 [1994]).

With respect to the award of moral damages, the general rule is that said damages are not recoverable in culpa
contractual except when the presence of bad faith was proven (Trans World Air Lines v. Court of Appeals, 165 SCRA 143
[1988]). However, in breach of contract of carriage, moral damages may be recovered when it results in the death of a
passenger (Philippine Rabbit Bus Lines, Inc. v. Esguerra, 117 SCRA 741 [1982]; Vasquez v. Court of Appeals, 138 SCRA
553 [1985]).
With respect to the award of exemplary damages, Article 2232 of the Civil Code of the Philippines gives the Court the
discretion to grant said damages in breach of contract when the defendant acted in a wanton, fraudulent and reckless
manner (Air France v. Carrascoso, 18 SCRA 155 [1966]).

Furthermore, in the case of Mecenas v. Court of Appeals, 180 SCRA 83 (1989), we ruled that:

. . . . The Court will take judicial notice of the dreadful regularity with which grievous maritime disasters
occur in our waters with massive loss of life. The bulk of our population is too poor to afford domestic air
transportation. So it is that notwithstanding the frequent sinking of passenger in our waters, crowds of
people continue to travel by sea. This Court is prepared to use the instruments given to it by the law for
securing the ends of law and public policy. One of those instruments is the institution of exemplary
damages; one of those ends, of special importance in an archipelagic state like the Philippines, is the safe
and reliable carriage of people and goods by sea. . . . (at p. 100).

A common carrier is obliged to transport its passengers to their destinations with the utmost diligence of a very cautious
person (Laguna Tayabas Bus Co. v. Tiongson, 16 SCRA 940 [1966]). The trial court found that petitioner failed to exercise
the extraordinary diligence required of a common carrier, which resulted in the sinking of the M/V Dona Marilyn.

The trial court correctly concluded that the sinking of M/V Dona Marilyn was due to gross negligence, thus:

. . . [i]t is undisputed that Typhoon Unsang entered the Philippine Area of Responsibility on October 21,
1988. The rain in Metro Manila started after lunch of October 23, 1988, and at about 5:00 p.m. Public
Storm Signal No. 1 was hoisted over Metro Manila, Signal No. 2 in Leyte and Signal No. 3 in Samar. But at
10:00 o'clock (sic) in the morning of October 23, 1988, Public Storm Signal No. 1 was already hoisted over
the province of Leyte, which is the destination of M/V Dona Marilyn. This was raised to Signal No. 2 at 4:00
p.m. and Signal No. 3 at 10:00 p.m. on the same date. The following day, October 24, 1988, at 4:00 a.m.
and 10:00 a.m., Storm Signal No. 3 remained hoisted in Leyte. At 4 p.m. on October 24, 1988, Storm
Signal No. 3 remained hoisted in Leyte but was reduced to Storm Signal No. 2 (Exh. G). Signal No. 1 has
maximum winds at 60 kph within 36 hours; Signal No. 2 has maximum winds of from 60 kph to 100 kph
within a period of 24 hours; and Signal No. 3 has maximum winds of 100 kph and above within a period of
12 hours.

Warnings of the storm signal are issued by PAG-ASA thru DZZA, Office of Civil Defense, Philippine Navy,
Coast Guard, Radio Stations, and other offices, every six (6) hours as soon as a cyclone enters the
Philippine Area of Responsibility.

At 10:30 a.m. on October 24, 1988, the vessel was estimated to be between Mindoro and Masbate, and
the center of the typhoon then was around 130 degrees longitude with maximum winds of 65 kph (Exh. G-
3), with a "radius of rough to phenomenal sea at that time of 450 kms. North and 350 kms. elsewhere; 350
kms. North center and all throughout the rest" (p. 12, TSN, Lumalda, Feb. 19, 1990).

xxx xxx xxx

In the same manner, (referring to the negligence of the crew of the ship that sank in Vasquez v. Court of
Appeals, 138 SCRA 553 [1985]) the crew of the vessel M/V Dona Marilyn took a calculated risk when it
proceeded despite the typhoon brewing somewhere in the general direction to which the vessel was going.
The crew assumed a greater risk when, instead of dropping anchor in or at the periphery of the Port of
Calapan, or returning to the port of Manila which is nearer, proceeded on its voyage on the assumption that
it will be able to beat and race with the typhoon and reach its destination before it (Unsang) passes ( Rollo,
pp. 45-47).

The award of attorney's fees by the trial court to respondents is also assailed by petitioner, citing Mirasol v. De la Cruz, 84
SCRA 337 (1978). In this case, the petitioner filed before the Municipal Court an action for forcible entry against the private
respondent. The said court dismissed the complaint. On appeal, the Court of First Instance of Camarines Sur sustained
the decision of the lower court, dismissed the appeal and awarded attorney's fees in the sum of not less than P500.00 in
favor of private respondent. Upon appeal to us, we deleted the award of attorney's fees because the text of the appealed
decision was bereft of any findings of fact and law to justify such an award. Moreover, there was no proof, other than the
bare allegation of harassment that the adverse party had acted in bad faith. The aforementioned decision is inapposite to
the instant case where the decision clearly mentions the facts and the law upon which the award of attorney's fees were
based.
WHEREFORE, the decision of the Court of Appeals is AFFIRMED with the MODIFICATION that the award of P27,580.00
as actual damages for the loss of the contents of the pieces of baggage is deleted and that the award of P30,000.00 under
Article 2206 in relation Article 1764 is increased to P50,000.00.

SO ORDERED.
 SECOND DIVISION

[G.R. No. 128820. December 23, 1999]

PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. GAUDIOSO MORE, ERNESTO,

MORE and JERWIN MORE, accused-appellants.

DECISION
BELLOSILLO, J.:

GAUDIOSO, ERNESTO and JERWIN, all surnamed MORE, were found guilty of murder by the trial
court for the killing of Valentino Pagumay on 22 February 1994 and sentenced to reclusion perpetua with
all its accessory penalties and to pay P28,977.00 for funeral services and other expenses, P133,333.00 for
loss of income for five (5) years, P100,000.00 for moral damages, and the costs.[1] They now come to us
appealing their conviction.
The factual backdrop: On 22 February 1994 at about six o'clock in the evening, Valentino Pagumay
and Romeo Muralla were walking along the river in Brgy. Igsoligue, Miag-ao, Iloilo, on their way to
nearby Brgy. Igbogo to get some tuba when they chanced upon the More brothers Gaudioso alias "Nono,"
Ernesto alias "Didoy" and Jerwin alias "Max" some three hundred (300) meters away. As they drew near,
the accused who were armed with a gun and knives, inexplicably shouted why Valentino and Romeo were
pointing guns at them. Both Valentino and Romeo were unarmed. When Valentino nervously told Romeo,
who had no quarrel with the accused, that the More brothers were going to kill him, the duo ran as fast as
they could. But the accused chased them.
About three hundred (300) meters from where the chase began, the accused led by Jerwin finally caught
up with Valentino who was lagging behind Romeo. Jerwin stabbed Valentino at the left side of his
mouth. Ernesto followed by stabbing the victim in the chest. While Jerwin and Ernesto were stabbing
Valentino Gaudioso held their captive by the shoulders. Gaudioso then took his turn and stabbed Valentino
on the chest causing the latter to fall to the ground. The three (3) accused persisted in their criminal design
and pinned their victim down with their hands and knees. They took turns in stabbing him again several
times.
As the stabbing progressed Romeo was having an unobstructed view of the occurrence some ten (10)
meters away. After they were through with Valentino the accused turned to Romeo and warned him against
telling anybody about the incident and ordered him to go home. The three (3) More brothers then ran away.
When the More brothers were already farther down the river Romeo noticed Juanito Faromal standing
a few meters away from the crime scene. After seeing Valentino already lifeless Romeo left to inform the
victim's wife, but on the way he met Sgt. Romeo Gersa so he reported the matter to him. [2] Sgt. Gersa
pursued the accused but could not apprehend them as he already got tired. When he fired a warning shot
the three (3) accused retaliated and fired three (3) shots instead. Juanito corroborated the testimony of
Romeo regarding the assault except that according to him it was only Gaudioso who stabbed the victim
while his brothers Jerwin and Ernesto only assisted in restraining the victim.
The accused, on their part, invoked self defense. The version of Ernesto and Jerwin was that at about
six o'clock in the evening of 22 February 1994 they were walking along a road in Brgy. Igsoligue about
ten (10) arms' length ahead of their brother Gaudioso when they heard someone ask the latter for a light
for his cigarette. Ernesto and Jerwin did not recognize the voice. About two (2) minutes later they heard a
gun explode. They looked back and saw Gaudioso and Valentino already on the ground wrestling with
each other. Gaudioso was sitting astride Valentino as he stabbed the latter. [3] Ernesto and Jerwin rushed
towards the two (2) - Gaudioso and Valentino - entreating Gaudioso to stop, but to no avail. Gaudioso only
stopped when Valentino was already dead. Gaudioso then explained to his brothers that he stabbed
Valentino because the latter was going to shoot him. Afterwards they went home and did not report the
incident anymore to the barangay captain since it was already late.
Gaudioso claimed that when he handed his cigarette to Valentino upon the latter's request he, instead
of taking the cigarette, suddenly drew a .38 caliber gun and pointed it at him with the words: "I will shoot
you.[4] Reacting immediately, Gaudioso, using both hands, frustrated Valentino's attempt by grabbing the
latter's right hand that was holding the gun, twisted it, and then used his foot to outbalance Valentino
sending the latter to the ground. Thus Valentino was not able to fire his gun. Gaudioso then straddled
Valentino and pinned his left hand with his right knee while his left hand held Valentino's right that was
clutching the gun. In this position, Gaudioso repeatedly stabbed Valentino until the latter died.[5]
On 9 May 1996 the trial court found all three (3) accused, Gaudioso, Ernesto and Jerwin More, guilty
as principals by conspiracy for the murder of Valentino Pagumay, qualified by abuse of superior
strength. The trial court sustained the version of the prosecution and rejected the theory of self-defense
primarily in view of the eighteen (18) stab wounds sustained by the victim and the fact that they were
caused by at least two (2) different knives, one single-bladed and the other double-bladed, indicating that
there were at least two (2) assailants. The three (3) accused were accordingly sentenced to suffer the
penalty of reclusion perpetua with all its accessory penalties, and to pay damages in the total amount
of P262,310.00 plus the costs.
Accused-appellants contend in this appeal that the trial court erred: (a) in not appreciating in their favor
the justifying circumstance of self-defense, insisting that all the elements thereof were successfully
established, and, (b) in finding them guilty beyond reasonable doubt of murder notwithstanding the
inconsistencies in the testimonies of prosecution witnesses Romeo Muralla, Juanito Faromal and Sgt.
Gersa.
We find no merit in the appeal. When self-defense is invoked by an accused charged with murder or
homicide he necessarily owns up to the killing but may escape criminal liability by proving that it was
justified and that he incurred no criminal liability therefor.[6] Hence, the three (3) elements of self-defense,
namely: (a) unlawful aggression on the part of the victim; (b) reasonable necessity of the means employed
to prevent or repel the aggression; and, (c) lack of sufficient provocation on the part of the person defending
himself, which must be proved by clear and convincing evidence.[7] However, without unlawful aggression
there can be no self-defense, either complete or incomplete.[8]
In the instant case, accused-appellants sought to establish unlawful aggression on the part of Valentino
Pagumay by testifying that the latter, after asking Gaudioso for a light for his cigarette, suddenly and for
no reason at all, drew his gun and pointed it at Gaudioso with the threatening words, "I will shoot
you." However, quite an enlightening and revealing narrative follows thus:
Q: When Valentino Pagumay drew his gun from his waist what did you do?
A: Both my hands caught his hand holding the firearm x x x x
Q: When you were able to grab the hand of Valentino Pagumay what happened next?
A: He fell to the ground.
Q: So you want to tell the Court that immediately after you grabbed or took hold of his hand he immediately fell to the ground?
A: Yes sir because he wrestled with me when I took hold both of his hand (sic) and twisted his arm.
 Q: When Valentino Pagumay fell to the ground what did you do?
A: After he fell to the ground I sat on his abdomen. My right knee was pinning down his left hand while my left hand was
pinning on the ground his right hand and then I delivered several successive stab blows on his breast x x x x
Q: And how many times did you stab him?
A: I was not able to count the number of times because I was stabbing him successively.
Q: And you cannot estimate the number of stab blows you delivered to him?
A: I was not able to count the number of blows because I was stabbing and hitting him until his death (underscoring ours).[9]

Clearly, the unlawful aggression allegedly started by Valentino - assuming it to be true - had already
ceased by the time Gaudioso repeatedly stabbed Valentino to death. Gaudioso himself testified that after
Valentino threatened to shoot him, he was able to grab Valentino's right hand which was holding the gun,
outbalance him, and then pin both his hands while the latter was lying prone on the ground. Having thus
immobilized Valentino, there was obviously no more reason for Gaudioso to stab Valentino eighteen (18)
times as he did because the alleged unlawful aggression from Valentino had stopped. In legitimate self-
defense the aggression must still be existing or continuing when the person making the defense attacks or
injures the aggressor.[10] Thus when the unlawful aggression ceases to exist, the one making the defense has
no more right to kill the former aggressor.[11] In such cases, less violent means would have sufficed; hence,
if not resorted to, the plea of self-defense must fail.[12]
In the instant case Valentino was already effectively immobilized by Gaudioso, hence, the latter could
have either simply boxed the former with his free right hand, hit him on a non-vital part of his body,[13] or
better yet, summoned his brothers Ernesto and Jerwin who were just standing a few meters away to help
him in ensuring no further aggression from Valentino. However, quite inconsistent with his plea of self-
defense, Gaudioso did none of these things. Instead, he even ignored his brothers' entreaties for him to
stop, rebuffed their efforts to the extent of even accidentally hitting Jerwin as claimed by the latter, [14] and
continued stabbing Valentino successively until the latter died. [15]Considering all these, the plea of self-
defense cannot but be received with incredulity and disbelief.
In addition to the foregoing, several other circumstances exist to further undermine the plea of self-
defense and establish accused-appellants' collective guilt.
First, the trial court correctly noted that the victim sustained a total of eighteen (18) stab wounds,
fourteen (14) of which were inflicted on the anterior chest alone, and four (4) of which were fatal. It is an
oft-repeated rule that the presence of a large number of wounds on the part of the victim negates self-
defense because, rather than suggest an effort to defend oneself, it instead strongly indicates a determined
effort to kill the victim.[16] Second, the claim that Gaudioso alone killed Valentino in self-defense and that
Ernesto and Jerwin had nothing to do with the killing was disproved not only by Romeo and Juanito's
positive identification of Ernesto and Jerwin as co-conspirators (at least) to the crime but, more
importantly, by the fact that the stab wounds themselves indicated that there was actually more than one
assailant. As testified to by Dr. Mary Joyce M. Faeldan, the Acting Municipal Health Officer of Miag-ao
who autopsied the cadaver, the eighteen (18) stab wounds sustained by the victim were not all caused by
a single weapon but by two (2) kinds of knives, i.e., one single-bladed, and the other, double-bladed. While
three (3) stab wounds had blunt and contussed extremities indicating that they were inflicted with the use
of a blunt single-bladed knife, the remaining fourteen (14) stab wounds had regular distinct clean-cut edges
and sharp extremities indicating a sharp double-bladed knife as the murder weapon.[17] Since only
Gaudioso's right hand was free to hold a weapon, his left hand already gripping Valentino's right hand,
then it is quite obvious that his brothers likewise participated in the assault as claimed by the prosecution
witnesses because Gaudioso, evidently, could not have managed two (2) weapons at the same time with
only his right hand free.
 Third, accused-appellants did not inform the authorities about the incident. If they were really innocent
as they claimed to be, they should have told the authorities about the accidental killing. [18] Their excuse that
it was already late is not only shallow but quite incredible considering three (3) factors: (a) accused-
appellants managed to get home at the relatively early hour of 6:30 in the evening; [19] (b) the house of the
barangay captain to whom they could have reported the incident was a mere fifty (50) meters away from
their own house;[20] and, (c) Gaudioso was himself a barangay official making it easier for him to approach
the other barangay authorities who were but his colleagues.[21]
Fourth, accused-appellants do not deny that they did not surrender to Sgt. Gersa when the latter saw
them immediately after the killing. In fact, they ignored his warning shot and ran away. Worse, accused-
appellants even returned fire with three (3) gunshots of their own, continued their flight until Sgt. Gersa
gave up the chase through sheer exhaustion, and yielded only when they were already invited for
questioning by the police after having been identified as the killers by eyewitnesses Romeo Muralla and
Juanito Faromal.
On the alleged inconsistencies in the testimonies of the prosecution witnesses, suffice it to say that
inconsistencies on minor and trivial matters do not diminish but rather bolster a witness's credibility as
they in fact manifest spontaneity and lack of scheming. [22] In other words, they are badges of truth rather
than indicia of falsehood.[23] Thus the alleged contradictions on the relative positions of Romeo and
Valentino while the latter was being stabbed, whether it was Romeo or Juanito who informed the victim's
wife about the incident, and whether Juanito was indeed taken by Sgt. Gersa to Camp Monteclaro after the
incident, are but trivial and minor inconsistencies which neither detract from the essential integrity of the
prosecution's evidence nor strengthen accused-appellants' flagging plea of self-defense. Having already
pleaded self-defense, accused-appellants could not invoke the alleged weakness of the prosecution's
evidence, for, even if the latter were weak (which is certainly not so in the instant case), it could not be
disbelieved in view of their open admission of responsibility for the killing. [24]
On the civil liabilities of accused-appellants a modification of the amounts awarded by the trial court
is in order. By way of moral damages, the trial court awarded P100,000.00. Since the award is not meant
to enrich the heirs of the victim but only to compensate them for injuries sustained to their feelings we
reduce the amount to P50,000.00 consistent with prevailing jurisprudence.[25] A reduction of the actual
damages awarded is likewise proper. The trial court awarded P28,977.00 for various expenses incurred by
the victim's widow as a result of the killing. However, since only the costs of the tomb, coffin, embalming
and funeral services in the total amount of P8,977.00 were properly receipted[26] the estimated amount
of P20,000.00 allegedly spent for food and drinks consumed during the wake must be disallowed for not
having been competently proved. The Court can only give credit to expenses which have been duly
substantiated.[27]
On the victim's loss of earning capacity, Victoria Pagumay testified that her husband, a farmer, was 53
years old when he was killed, with an average annual income of P40,000.00
to P50,000.00.[28] Using P40,000.00 as the deceased's average annual income while still alive, the trial court
awarded P133,333.00 for loss of earning capacity after multiplying two-thirds (P26,666.67) of the victim's
average annual income[29]by five (5) years. No reason was given, and no legal basis exists, why lost income
was awarded for only five (5) years. On the contrary, the victim's lost earnings are to be computed
according to the formula adopted by the Court in several decided cases,[30] to wit: net earning capacity ("X")
equals life expectancy[31] multiplied by gross annual income[32] less living expenses.[33] Thus, the victim's lost
earning capacity amounted to P405,000.00 as may be shown hereunder -
X = 2(80-53) x [P45,000 - P22,500]
3
X = 2 (27) x P22,500
 3
X = 54 x P22,500
3
X = 18 x P22, 500
X = P405,000.00
Finally, an award of another P50,000.00 is warranted as civil indemnity for the death of the victim
without need of evidence or proof of damages.[34]
WHEREFORE, the appealed Decision dated 9 May 1996 of the Regional Trial Court of Iloilo City,
Branch 25, finding accused-appellants GAUDIOSO MORE, ERNESTO MORE and JERWIN MORE
guilty beyond reasonable doubt of Murder is AFFIRMED. Accused-appellants are ordered to pay, jointly
and severally, the heirs of Valentino Pagumay the following amounts: (a) P50,000.00 as civil indemnity;
(b) P50,000.00 as moral damages; (c) P8,977.00 as actual damages; and, (d) P405,000.00 for loss of
earning capacity. Costs against accused-appellants.
SO ORDERED.
 SECOND DIVISION

[G.R. No. 120874. July 31, 2003]

NAPOLEON TUGADE, SR., and RIZALINA FABRO-TUGADE, substituted by her heirs,

namely, Napoleon Sr., Napoleon Jr., and Zenaida, all surnamed
TUGADE, petitioners, vs. COURT OF APPEALS and PANGASINAN ELECTRIC
COOPERATIVE, INC., respondents.

DECISION
AUSTRIA-MARTINEZ, J.:

While this Court is not a trier of facts, there are instances however when we are called upon
to re-examine the factual findings of the trial court and the Court of Appeals and weigh, after
considering the records of the case, which of the conflicting findings is more in accord with law
and justice. Such is the case at bar.
[1]

The antecedent facts of this case are as follows:

On June 12, 1980 at around 12:00 noon, Engr. Henry Tugade of the Pangasinan Electric
Cooperative, Inc. (Panelco) rode in a company rover jeep together with four other employees
bound from the Panelco compound in Bani to Bolinao, Pangasinan. Somewhere in Tiep,
Pangasinan, a Dagupan bus that was also headed for Bolinao, began to follow the rover
jeep. While the bus was trying to overtake the jeep, the latter turned turtle and caused four of its
five occupants to fall out of the jeep causing the death of Tugade and another passenger by the
name of Consuelo Estolonio. [2]

Separate cases for damages, docketed as Civil Cases Nos. A-1368 and A-1384 were filed
by the heirs of the two deceased before the Regional Trial Court of Pangasinan against Panelco
and Dagupan Bus Co. and their respective drivers, Honorato Areola and Renato Quiambao. It is
Civil Case No. A-1368 filed by the heirs of Henry Tugade, which is now the subject of the present
petition.
The Regional Trial Court of Pangasinan (Branch 55) held Panelco and its driver liable, thus:

As a consequence and in view of the evidence on record, the Court holds and so finds that the
accident occurred due to the fault or negligence of Panelco and its driver Honorato Areola. The
negligence of Panelco consists in having allowed its rover jeep which is mechanically defective,
unsafe and not roadworthy to be operated on a highway. On the other hand, the defendant-driver
Honorato Areola was likewise, negligent in driving a vehicle which was not roadworthy, unsafe
and with a mechanical defect.

The Court finds that the defendants Panelco and Honorato Areola are liable to pay to the plaintiffs
in Civil Case No. A-1368 damages, as follows: actual damages, P99,131.00 (Exhibits H to H-3,
I to I-4 and K), attorneys fees, P20,000.00, moral damages, P20,000.00 and exemplary
damages, P10,000.00
As to loss of earning capacity, it has been held in Villa-Rey Transit vs. Court of Appeals, 31 SCRA
511, that this is based on net earnings and not gross earnings. No evidence was introduced to
show the net earnings. However, under the Circumstances, the Court holds that a monthly net
earning of P500.00 would be reasonable. Using the formula in the Villa-Rey case, the life
expectancy of the late Henry Tugade would be 36 years, hence the Court awards P216,000.00
for loss of earning capacity.

WHEREFORE, the Court hereby renders judgment:

1. Dismissing the complaint and cross-claim as against Dagupan Bus in Civil Case
No. A-1368;

2. Dismissing the complaint in Civil Case No. A-1384;

3. In Civil Case No. A-1368, ordering the defendants Pangasinan Electric

Cooperative, Inc., and Honorato Areola to pay, jointly and severally, to the
plaintiffs, the following:

P 99,131.00 as actual damages;

216,000.00 for loss of earning capacity;
20,000.00 moral damages; and
10,000.00 exemplary damages; and
20,000.00 attorneys fees

With costs against said defendants. [3]

In arriving at its decision, the trial court explained that:

xxx Rosie Castrence, a passenger of Bus No. 244 who saw the accident testified categorically
that the rover jeep turned turtle in front of the Dagupan Bus when the jeep was about 5 meters
in front of the Bus and the jeep turned turtle even without being bumped by the Dagupan Bus. The
Court considers this witness as an unbiased witness as she appears not to be an interested
party. She was also in a good position to observe in detail what actually happened at the scene
of the accident as she was seated on the right front seat of the bus. The Court believes this
witness more than the other witnesses who do not appear to be disinterested.

Furthermore, it is not credible that if the rover jeep was hit on its left rear, it will turn turtle on its
left side. The natural effect or tendency is for the jeep to be pushed or even thrown towards its
right side. If the jeep turned turtle towards the left, it must have been due to some other cause
than being hit by the bus on its left side.

The physical facts which do not lie as well as testimonial evidence support the stand of Dagupan
Bus that the bus did not hit the left rear of the rover jeep.

If the bus did not hit the left rear of the jeep what then caused the latter to turn turtle. There is
merit in the contention of defendant Dagupan Bus that the cause was due to some mechanical
defect. By Defendant Areolas own admission, the rover jeep was being fixed by the Chief
mechanic at the motor pool of Panelco, when he arrived at their compound, and that the jeep
was Quite old.
Likewise, Rosie Castrence also testified that when she first saw the Panelco jeep at Tiep, Bani,
Pangasinan, the jeep was already zig-zagging and wiggling, a sign that indeed the jeep had
some mechanical defect.

Another mark of a mechanical defect in the jeep was the fact that the right front wheel and rear
wheel of the jeep were detached because their spindles were broken. This came from the mouth
of Panelcos witness Florencio Celeste.

The next issue to be resolved is what was the cause of death of Henry Tugade? Plaintiffs theory
is, of course, that Henry Tugade died because he was run over and pinned under the left front
wheel of Dagupan Bus No. 244 crushing his head and upper body. This is the same theory of
defendants Panelco and Areola.Defendants Dagupan Bus and Quiambao deny this claim and
their theory is that Henry Tugades death was caused by the violent impact of his head against
the hard pavement of the road when he was thrown out of the rover jeep.

The plaintiffs theory is, however, contradicted by their own medico legal expert Dr. Wilfredo
Nazareno who testified positively that the fatal injury which caused the death of Henry Tugade
were the fractures on his head which could have been due to the impact of the head against the
asphalted road.

Again plaintiffs theory is contradicted by Panelcos own witness Florencio Celeste, Chief
Engineer, who was the only one who did not fall out of the jeep, when he testified that the left
front wheel of the bus did not rest on the head of Henry Tugade and the wheel of the bus did not
run over the head of the victim.

Rosie Castrence, a disinterested witness, also declared that the left front tire of the bus did not
run over the head of Henry Tugade. [4]

Petitioners went to the Court of Appeals questioning only the award of damages and
attorneys fees. They claimed that the lower court erred in: finding that the monthly earnings of
[5]

the late Henry Tugade at the time of his death was only P500.00; disregarding the evidence on
record showing the monthly earnings of the late Henry Tugade; not considering the social,
educational and economic status of the plaintiffs in its assessment of the moral and exemplary
damages; and setting the sum of P20,000.00 as attorneys fees. [6]

Respondent Panelco also appealed to the Court of Appeals from the decision of the trial court
and assailed its ruling that the negligence of Panelco and its driver was the proximate cause of
the accident.[7]

In its decision dated September 7, 1994, the Court of Appeals reversed the findings of the
[8]

trial court, declared that Dagupan Bus, as an employer, had exercised due diligence in the
selection and supervision of its employees and disposed of the case in this wise:

WHEREFORE, in view of all the foregoing, the decision of the court a quo is reversed, but only
insofar as it holds defendant Pangasinan Electric Cooperative, Inc. liable, and defendant Renato
Quiambao is ordered to pay to defendant-appellant Pangasinan Electric Cooperative, Inc.,
P7,500.00 as temperate damages, P10,000.00 as attorneys fees and costs of suit. [9]

The appellate court explained, thus:

The testimony of Castrence, on which the court a quo heavily relied in its finding of facts, is
contradicted by the greater weight of evidence on record.

First, there is no evidence whatsoever --- for either one of the parties --- of a blown-out tire. What
the evidence on record indicates is that the two right wheels of the jeep were detached. The
testimony regarding a blown-out tire is not even in consonance with the theory of Dagupan, that
is, that the wheels were detached due to mechanical defects.

Second, her testimony that the jeep was wiggling and zigzagging is contradicted by the
testimonies of Florencio Celeste and Cipriano Nacar, passengers of the jeep and witnesses for
plaintiffs Tugade, to the effect that their ride was smooth and normal. (TSN, September 29, 1983,
pp. 10, 43 & 66; November 20, 1984, p. 7)

Third, her testimony regarding the sitting arrangement of passengers of the jeep is contradicted
by the testimony of Cipriano Nacar, passenger of the jeep and witness for plaintiffs
Tugade. According to Nacar, he and Estolonio were seated at the rear of the jeep; the driver
Areola was behind the steering wheel, with Celeste to his right and Tugade on the rightmost. In
other words, Celeste was between Areola and Tugade, and no one was seated to the left of the
driver. (TSN, September 29, 1983, pp. 9-10)

Fourth, her testimony that Tugades head was about one foot from the left front tire of the bus is
likewise contradicted by the testimonies of Cipriano Nacar and Honorato Areola that the tire of
the bus was partly resting on the head of Tugade. In fact, the bus driver Renato Quiambao even
had to back up the bus so that Tugades body may be pulled out from below. (ibid., pp. 22-23)

Fifth, her testimony that Tugades shirt was checkered is also contradicted by Exhibit G, a
photograph of the deceased as he lay on the ground. The photograph shows Tugade wearing a
plain white shirt.

Finally, her testimony that she did not see Estolonio after the accident because the latter was
inside the jeep is again contradicted by the finding of the court a quo that all the passengers of
the rover jeep were thrown out of the vehicle except Florencio Celeste and the body of Henry
Tugade landed on the left lane of the road and was in front of the left front wheel of Bus No. 244.
(underscoring ours, Decision, p. 2) In other words, Estolonio, just like Tugade, was sprawled on
the ground. (ibid., p. 22)

Castrences testimony is also marred by improbabilities.

First, she claims to have noticed the color of Tugades pants who was seated --- in the front of
the jeep. It is quite improbable that Castrence, being seated inside the bus, could see the color
of the pants of Tugade who was seated on the front seat of the jeep. Second, while she noticed
the passengers in the front of the jeep --- indeed she even noticed the color of the pants one of
them was wearing --- she could not tell whether or not there were passengers at the back. Third,
it is also improbable that the driver and the passengers of the jeep simply continued with their
journey, oblivious to the wiggling and zigzagging of their vehicle.

Moreover, even disregarding the incredibility of Castrences testimony, still the version that the
accident was due to a mechanical defect that allowed the wheels to be detached cannot be given
credence. If the cause of the accident was that both wheels on the right side were detached, then
the jeep would not have turned turtle to its left, but to its right. If there had been no wheels to
support its right side, the jeep should have turned turtle to its right, but it turned to its left instead.

The court a quo reasons that it is not credible that if the rover jeep was hit on its left rear, it will
turn turtle on its left side. The natural effect or tendency is for the jeep to be pushed or even
thrown towards its right side. (Decision, p. 3) The court a quo, however, seems to have
disregarded the testimony of Honorato Areola that the jeep first swerved to the right, then to the
left. (TSN, October 15, 1984, p. 48) To be noted also is that a jeep is inherently maneuverable,
and may easily swerve from side to side when hit from its left rear portion. Moreover, after the
accident, both the jeep and the bus were at the left side of the highway. If the bus were not
attempting to overtake the jeep, why then was it at the left side of the highway?

As may be seen from the foregoing, the court a quo failed to take into account the discrepancies
and inconsistencies of Castrences testimony vis--vis established facts and other evidence on
record.

Moreover, the court a quo misappreciated the testimony of Areola that the jeep was being
checked up at the Panelco motor pool, and interpreted such testimony to mean that the jeep was
being fixed or repaired due to a mechanical defect. First, the mere fact that the jeep was at the
motor pool does not mean that it was there due to a mechanical defect. As testified by Areola, it
was being subjected to a check-up (TSN, October 9, 1984, pp. 41-42), which may have been
simply routinary. Second, even assuming that the jeep had a mechanical defect, its presence at
the motor pool may also mean that such defect had been repaired and that the jeep was quite
old does not necessarily mean that it had a mechanical defect. That two wheels were detached
from the jeep and that its spindle was broken can be just as reasonably explained by the fact that
the jeep turned turtle after being sideswiped by an overtaking bus.

On the contrary, Celeste and Nacar, witnesses for the plaintiffs Tugade, consistently testified that
their ride was normal and smooth.

In light of the foregoing, the conclusion must be that the accident was caused by the negligence
of Quiambao in driving Bus No. 244, as testified to by Areola, Nacar and Celeste, for which he
must be held civilly liable. xxx
[10]

Hence, petitioner filed the present petition for certiorari of the decision of the Court of
[11]

Appeals and the resolution dated June 27, 1995 denying petitioners motion for reconsideration.
Petitioners contend that the Court of Appeals:
I

COMMITTED AN ERROR OF LAW AND VIOLATED THE RULES OF EVIDENCE BY

REJECTING THE TESTIMONY OF A DISINTERESTED WITNESS AND ADMITTED THE
BIASED TESTIMONIES OF THE EMPLOYEES-WITNESSES FOR PRIVATE RESPONDENT
PANELCO.
II

COMMITTED AN ERROR OF LAW BY SUBSTITUTING ITS FINDINGS OF FACTS TO THAT

OF THE TRIAL COURT WHICH WAS IN A BETTER POSITION TO EVALUATE AT FIRST
HAND THE EVIDENCE ADDUCED BY THE PARTIES, PARTICULARLY THE SITUATION,
DEMEANOR AND SINCERITY OF THE WITNESSES.

III

MISINTERPRETED, IF NOT DELIBERATELY DISREGARDED, THE BREAKING OF THE

SPINDLE AND THE DETACHMENTS OF THE FRONT RIGHT AND REAR WHEELS OF THE
ROVER JEEP OF PRIVATE RESPONDENT PANELCO WHICH ARE CONCLUSIVE PROOF
OF THE ROAD UNWORTHINESS OF THE ROVER JEEP THAT TURNED TURTLE CAUSING
THE DEATH OF THE LATE HENRY TUGADE.

IV

ERRED IN ARRIVING AT A CONCLUSION THAT PRIVATE RESPONDENT WAS NOT

NEGLIGENT AT THE TIME OF THE ACCIDENT AND IS NOT THEREFORE LIABLE FOR THE
UNTIMELY DEATH OF HENRY TUGADE.

ERRED IN NOT APPLYING PERTINENT JURISPRUDENCE AND PROVISIONS OF LAWS IN

REVERSING THE DECISION OF THE TRIAL COURT. [12]

Petitioners stress that they only questioned before the Court of Appeals the amount of
damages, loss of earning capacity and attorneys fees awarded by the trial court in its decision,
but the appellate court disregarded the factual findings and conclusions of the trial court and
substituted its own findings of fact.Petitioners claim that this violates the doctrine that the findings
of the trial court on the credibility of witnesses are entitled to great weight on appeal as it is in a
better position to decide the question on credibility having seen and heard the witnesses
themselves. Petitioners further claim that: the Court of Appeals erroneously disregarded the
testimony of Rosie Castrence which the trial court found to be a disinterested party, based on
minor and trivial inconsistencies; the appellate court overlooked or failed to consider the
[13]

breaking of the spindles and the detachment of the front and rear wheels of the rover jeep owned
by and belonging to respondent Panelco which led the trial court to conclude that the accident
was due to the negligence of private respondent as it allowed its rover jeep which is mechanically
defective and not roadworthy to be operated on a highway and due to the negligence of
defendant Honorato Areola in driving a vehicle which was not roadworthy. [14]

In its Comment, respondent Panelco points out that the factual findings of the Court of
Appeals is not reviewable by the Supreme Court. [15]

Petitioners in their Reply, meanwhile, argue that where the findings of the Court of Appeals
and the trial court are contrary to each other, such as in this case, the Supreme Court may
scrutinize the evidence on record. [16]

In its Rejoinder, respondent Panelco reiterates that: the petitioners raised only factual issues
which in effect will make this Court a trier of facts; the Court of Appeals, contrary to the contention
of petitioners, actually set the record straight by carefully scrutinizing the factual evidence; the
appellate court pointed out in detail the inconsistencies in the findings of the lower court unlike
the haphazard way by which the lower court reached its conclusions. [17]

We find the petition to be impressed with merit.

 As mentioned earlier, it is settled that as a rule, our jurisdiction in cases brought to us from
the Court of Appeals is limited to the review and revision of errors of law allegedly committed by
the appellate court, as its findings of fact are deemed conclusive and we are not duty-bound to
analyze and weigh all over again the evidence already considered in the proceedings below. [18]

However, we have consistently enunciated that we may review the findings of fact of the
Court of Appeals:

(a) where there is grave abuse of discretion; (b) when the finding is grounded entirely on
speculations, surmises or conjectures; (c) when the inference made is manifestly mistaken,
absurd or impossible; (d) when the judgment of the Court of Appeals was based on a
misapprehension of facts; (e) when the factual findings are conflicting; (f) when the Court of
Appeals, in making its findings, went beyond the issues of the case and the same are contrary
to the admissions of both appellant and appellee; (g) when the Court of Appeals manifestly
overlooked certain relevant facts not disputed by the parties and which, if properly considered,
would justify a different conclusion; and, (h) where the findings of fact of the Court of Appeals
are contrary to those of the trial court, or are mere conclusions without citation of specific
evidence, or where the facts set forth by the petitioner are not disputed by the respondent, or
where the findings of fact of the Court of Appeals are premised on the absence of evidence and
are contradicted by the evidence on record. [Emphasis ours]
[19]

In this case, the factual findings of the trial court and the Court of Appeals are
conflicting. Thus, it behooves this Court to review the findings of facts of the lower courts.
The trial court gave weight to the testimony of Rosie Castrence, a passenger of Dagupan bus
who testified that the Panelco rover jeep turned turtle without being hit by the bus from
behind; while the Court of Appeals pointed out inconsistencies in her testimony and gave weight
to the version of the employees of Panelco that the jeep turned turtle because it was hit by the
bus from behind.
The trial court reasoned that Castrence, a fish vendor who happened to be a passenger at
the time of the accident, was credible and unbiased being a disinterested witness, unlike the
other witnesses who are employees of Panelco. It also explained that she was in a good position
to observe in detail what actually happened at the scene of the accident as she was seated at
the right front seat of the bus.
[20]

On the other hand, the Court of Appeals considered her testimony not worthy of belief
because of inconsistencies especially vis-a-vis the testimonies of the employees of Panelco,
namely: Areola, Nacar and Celeste, to which the appellate court gave greater weight and on
[21]

which basis it concluded that the accident was caused by the negligence of Quiambao in driving
Bus No. 244 for which he must be held civilly liable. [22]

In ascertaining the facts of the case, it would have greatly aided the courts if photographs of
the vehicles were presented during the trial. However, none was presented. Hence, we are
constrained to rely mainly on the testimonies of the witnesses.
After reviewing the entire records of the case, we find compelling reasons to reverse the
findings of the Court of Appeals, and affirm the appreciation of facts of the trial court.
It is basic that findings of facts of trial courts are accorded by appellate courts with great, if
not conclusive effect. This is because of the unique advantage enjoyed by trial courts of
observing at close range the demeanor, deportment and conduct of witnesses as they give their
testimonies. Trial courts have the unique advantage of being able to observe that elusive and
[23]

incommunicable evidence of the witness deportment on the stand while testifying --- the brazen
face of the liar, the glibness of the schooled witness in reciting a lesson, the itching over-
eagerness of the swift witness, as well as the honest face of the truthful one. Indeed, [24]

assignment of values to declarations on the witness stand is best done by the trial judge who,
unlike appellate magistrates, can weigh firsthand the testimony of a witness. [25]

While there may be inaccuracies in Castrences testimony as pointed out by the appellate
court---the mention of a blown out tire, the seating arrangement of the passengers of the rover
jeep, the color of the shirt of the deceased, and the location of all the passengers of the jeep after
it turned turtle---we deem such discrepancies negligible considering the totality of her
testimony. Records show that she was called to the witness stand six years after the accident
happened. It is therefore understandable that she would miss recalling some details. As we held
in the recent case of People vs. Delim:

The inconsistencies in the testimonies of [witnesses] do not render them incredible or their
testimonies barren of probative weight. It must be borne in mind that human memory is not as
unerring as a photograph and a persons sense of observation is impaired by many factors A
truth-telling witness is not always expected to give an error-free testimony considering the lapse
of time and the treachery of human memory. What is primordial is that the mass of testimony
jibes on material points, the slight clashing of statements dilute neither the witnesses credibility
nor the veracity of his testimonyInconsistencies on minor and trivial matters only serve to
strengthen rather than weaken the credibility of witnesses for they erase the suspicion of
rehearsed testimony. [26]

In her testimony, Rosie Castrence said that she saw the jeep turn turtle in front of their bus.
Q Mrs. Witness, you testified that the PANELCO jeep turned turtle infront of the Dagupan Bus, how close
was the Dagupan Bus to the PANELCO jeep when you saw it turn turtle?
A About five (5) meters infront the Dagupan Bus when it turn (sic) turtle, sir.
Q In other words, the jeep turned turtle even without being bumped by the Dagupan Bus?
A Yes, sir.[27]

She also testified that before the jeep turned turtle she saw that it was wiggling.
A When we were still at Barangay Tiep I have seen already that jeep.
xxx xxx xxx
Q What did you observe if any about the jeep that you were following?
A The jeep was already wiggling and was zigzagging along the way.[28]

We find this testimony not only credible but also consistent with the physical evidence as well
as the testimonies of Panelcos own employees.
Engr. Florencio Celeste, who was seated beside Henry Tugade, testified that after the jeep
turned turtle he saw that the right wheels were detached and that the spindle was broken.
Q If it turned turtle, did you observe the jeep suffered (sic) any mechanical defect or parts were broken?
A After the jeep turned turtle, I noticed that the right front wheel and rear wheel of the jeep were detached,
sir.

xxx xxx xxx

 Q Did you see how the wheels were detached?
A The spindle were (sic) broken, sir.[29]

Engr. Agustin Erezo, the Officer In Charge of the Motorpool of Panelco at the time of the
accident, also admitted in his testimony that the rover jeep was merely assembled in their
motorpool, thus:
Q You mentioned that the rover jeep was assembled in February 1980, if it was assembled in February
1980, what was the condition before you assembled? (sic)
A We put all the spare parts new, we bought all the spare parts new, all spare parts are new.
Q So you want to make us understand that it was almost a junk at the time you repair it?
A We bought the chassis, the engine and everything so all the spare parts are new.
Q At the time you repaired it in 1980 (interruption)
A I assembled it.[30]

xxx xxx xxx

Q Before you repaired it in February 1980, was it in running condition?
A Before we repaired it, it was not in running condition, there was no jeep before the repair, they are all
spare parts and we assembled it.[31]

The driver of the jeep and one of the defendants, Honorato Areola, also admitted that the
engine of the jeep at the time of the accident was already old.
Q And what year Mr. Witness is the model of the rover jeep if you really know the model of the different
vehicles?
A I already forgot, sir. It is diesel model.
Q To make specific Mr. Witness, what year was this model, was it the model 69, 65 or what?
A I cannot remember, sir.
Q But in your experience as driver, did this rover jeepney, new or old, at the time you drove it on June 12,
1980.
A Quite old already, sir.
Q What about the body of the jeepney, also old like the engine?
A The body is newly assembled, sir.[32]
Worth noting also is the admission of Engr. Celeste that the jeep did not have a speedometer.
Q Now, you estimated the speed of the jeep at 45 to 50 kilometers per hour, because according to you you
are also a driver and you always look at the speedometer is that correct?
A Yes, sir.
Q This rover jeep having been made, home made at the Panelco Motor pool, did not have speedometer, is
that correct?
A It does not have speedometer, so the speedometer does not function, sir.
Q Aside from the speedometer there were many parts of the jeep which were not functioning is that correct?
A All of those parts in the Panel board except its speedometer cable.
Q And so, when you said that the jeep was running about 45 to 50 kilometers the truth is the speed could
have been even less than 45 kilometers or more than 50 kilometers.
A That is approximate, sir.[33]
 In sum, we find that with the testimony of Castrence, the broken spindle of the rover jeep and
the admissions of Panelcos own employees that the jeep was merely assembled, had an old
engine, and did not have any speedometer, manifest gross negligence on the part of Panelco
and its driver Honorato Areola for which they should be held liable to pay damages. The trial
court correctly held both Panelco and its driver liable for using an unsafe vehicle in transporting
Panelcos employees.
As provided for in the New Civil Code:

Art. 2176. Whoever by act or omission causes damage to another, there being fault or
negligence, is obliged to pay for the damage done

Art. 2180. The obligation imposed by Article 2176 is demandable not only for ones own acts or
omissions, but also for those of persons for whom one is responsible.

xxx xxx xxx

Employers shall be liable for the damage caused by their employees and household helpers
acting within the scope of their assigned tasks, even though the former are not engaged in any
business or industry.

xxx xxx xxx

The responsibility treated of in this article shall cease when the persons herein mentioned prove
that they observed all the diligence of a good father of a family to prevent damage.

Areola, as driver of the vehicle, did not personally check the condition of the vehicle before
using it.
Q And when you arrive at the Panelco compound this jeep was already ready to be driven?
A It was in the motor pool we were checking up.
Q But you yourself did not go to the motor pool to get the jeep?
A I just see the jeep but I did not go under the jeep, sir.
Q You mean to say that the jeep was in an elevated flat (sic) form at the time when you saw it at the
Panelco compound being checked up?
A Its not in the elevated place but it was in the Panelco compound, I am looking for the Chief Mechanic
checking up the jeep. I was looking at the jeep being checked up by the Chief Mechanic, sir.
Q How many mechanics were attending this rover jeep at the time you were looking at the jeep?
A They were many but who was looking after was the Chief Mechanic, sir.

xxx xxx xxx

Q And these mechanics of the Panelco were helping or attending the Chief Mechanic?
A I do not know, sir, because they were doing something.
Q So all these persons were working on the rover jeep, is that correct?
A No, sir.[34] (sic)

What was admitted was the fact that it was his first time to drive said vehicle and that he did
[35]

not know whether or not the vehicle was registered at the time of the accident.
 Q xxx You are aware that the rover jeep was not registered for that year 1980, the jeep you were driving, is
that correct?
A That is what I do not know, sir.

xxx xxx xxx

Q Is it a matter of your practice, that when you drive a vehicle you do not determine and find out anymore
whether the registration certificate is found in the vehicle?
A I relied that the papers are complete, sir.
Q But you yourself do not examine anymore whether the vehicle that you are driving, that you are going to
drive has with the registration certificate.
A No more, sir.[36]
Panelco meanwhile is liable both as owner of the mechanically defective vehicle under Art.
2176 and as employer of the negligent driver under Art. 2180.
Under Art. 2180, Panelco as employer of Areola is primarily and solidarily liable for the quasi-
delict committed by the latter. It is presumed to be negligent in the selection and supervision of
its employees by operation of law and may be relieved of responsibility for the negligent acts of
its driver, who at the time was acting within the scope of his assigned task, only if it can show
that it observed all the diligence of a good father of a family to prevent damage. [37]

In this case, Panelco failed to show that it exercised the diligence of a good father of a family
to prevent the damage and that it was diligent in the selection and supervision of its employees.
Areola in his testimony admitted that he did not undergo physical examination when he was
hired as driver of the company and that there were no records of his examination and interview
[38]

during his application for employment. He also admitted that Panelco never gave them
[39]

seminars regarding driving but only received personal advice from the managers. [40]

The use of a vehicle with a defective speedometer has been held by this Court as an
indication of the owners laxity in the operation of its business and in the supervision of its
employees; clearly, a conduct below the diligence required by law. In this case, the rover jeep
[41]

of Panelco did not have a speedometer at all.

Finding both Panelco and its driver liable for the death of Henry Tugade, we now consider
the amount of damages that should be awarded to the heirs of the deceased.
Following Art. 2206 of the Civil Code and recent jurisprudence, the heirs of the victim in this
case are automatically entitled to P50,000.00 as indemnity for the death of Henry Tugade. [42]

Actual damages to be recoverable, must actually be proved and supported by receipts. In

this case, the petitioners failed to present any receipt to prove the expenses they
incurred. Nonetheless, temperate damages may still be given to the heirs of the victim under Art.
2224 of the Civil Code. Based on prevailing jurisprudence, the amount of P25,000.00 as
[43]

temperate damages is in order. [44]

We also find that petitioners are entitled to the award of attorneys fees which is proper where
the acts and omissions of a party have compelled another to litigate or incur expenses to protect
his rights and when deemed by the court as just and equitable. We find no cogent reason to
[45]

disturb the award of P20,000.00 as attorneys fees fixed by the trial court.
Moral damages should also be awarded for the mental anguish and moral suffering suffered
by the heirs of Henry Tugade brought about by his untimely demise. As held by this Court, the
award of moral damages is aimed at a restoration, within the limits possible, of the spiritual status
quo ante and therefore must be proportionate to the suffering inflicted. [46]

In this case, Napoleon Tugade, father of the deceased, testified as follows:

Q How many children do you have?
A We have three (3), sir.

xxx xxx xxx

Q about your second child, what is his profession or employment at present, will you name your second
child?
A He is the late Henry Tugade, an Agricultural Engineer.

xxx xxx xxx

Q At the time you learn the death of your son Henry, how did you feel?
A I was shocked and had a little mental torture because its a shock that he is still young to die and
professional and he is the only one earning among my children, so there was mental torture also to my
wife and to my family.[47]

Rizalina Tugade, mother of the victim, also testified as follows:

Q And Mrs. Witness, at the time your son died do you know if he was a member of some civic organizations
or associations?
A During his lifetime when he was studying, when he was student, at the Araneta Univeristy, he was the
President of the Engineers Club Society.
Q And of course as a mother, having his son that caliber, if said Henry your son, how did you feel on those
occasions, as he was a member of some organizations.
A I had a feeling of great pride, sir.
Q This pride enjoyed as a mother, did it continue to be still in you as a pride enjoyed by a mother.
A Well, my pride is no more sir, he already died.
Q And when at the time you learned for the first time of the death of your son Mrs. Witness, how did you feel
as mother.
A I was miserably shocked, sir.
Q Aside from the shock, what else.
A Well, I lost my hope, my pride and happiness.[48]

Under Art. 2206 of the Civil Code, the ascendants of the deceased may demand moral
damages for mental anguish by reason of the death of the deceased. Under the circumstances
of the case at bar an award of P100,000.00 would be appropriate. [49]

As to indemnity for loss of earning capacity, we take note of Exh. L-1 showing Henry [50]

Tugades compensation to be Eight Hundred Three Pesos (P803.00) a month which amounts to
an annual income of P9,636.00. He was 26 years old at the time of his death. Using the formula
enunciated in People vs. Napalit, we compute his lost earning capacity thus:
[51]

Net earning capacity = 2/3 x (80-26) x [P9,636.00 (P9,636.00)]

= 2/3 x (54) x P4,818.00

= 36 x P4,818.00

= P 173,448.00

WHEREFORE, we REVERSE and SET ASIDE the decision of the Court of Appeals; AFFIRM
the decision of the Regional Trial Court dated July 24, 1990 with the MODIFICATION that
Pangasinan Electric Cooperative, Inc. (PANELCO) and Honorato Areola are ordered to pay jointly
and severally the following amounts to the heirs of Henry Tugade:

1. Death indemnity in the amount of Fifty Thousand Pesos (P50,000.00);

2. Temperate damages in the amount of Twenty-Five Thousand Pesos (P25,000.00);

3. Attorneys fees in the amount of Twenty Thousand Pesos (P20,000.00);

4. Moral damages in the amount of One Hundred Thousand Pesos (P100,000.00);

5. Loss of earning capacity in the amount of One Hundred Seventy Three Thousand,
Three Hundred and Forty Eight Pesos (P173,448.00); and

6. the costs of suit.

SO ORDERED.