F Cases (Digested)

ACTIONS AND DAMAGES IN CASE OF BREACH

Fabre vs. Court of Appeals

259 SCRA 426
G.R. No. 111127
July 26, 1996

Facts: Petitioners Engracio Fabre, Jr. and his wife were owners of a Mazda minibus. They used the
bus principally in connection with a bus service for school children which they operated in Manila.
It was driven by Porfirio Cabil.

On November 2, 1984 private respondent Word for the World Christian Fellowship Inc. (WWCF)
arranged with the petitioners for the transportation of 33 members of its Young Adults Ministry
from Manila to La Union and back in consideration of which private respondent paid petitioners the
amount of P3,000.00.

The usual route to Caba, La Union was through Carmen, Pangasinan. However, the bridge at Carmen
was under repair, so that petitioner Cabil, who was unfamiliar with the area (it being his first trip to
La Union), was forced to take a detour through the town of Ba-ay in Lingayen, Pangasinan. At 11:30
that night, petitioner Cabil came upon a sharp curve on the highway. The road was slippery because
it was raining, causing the bus, which was running at the speed of 50 kilometers per hour, to skid to
the left road shoulder. The bus hit the left traffic steel brace and sign along the road and rammed
the fence of one Jesus Escano, then turned over and landed on its left side, coming to a full stop only
after a series of impacts. The bus came to rest off the road. A coconut tree which it had hit fell on it
and smashed its front portion. Because of the mishap, several passengers were injured particularly
Amyline Antonio.

Criminal complaint was filed against the driver and the spouses were also made jointly liable.
Spouses Fabre on the other hand contended that they are not liable since they are not a common
carrier. The RTC of Makati ruled in favor of the plaintiff and the defendants were ordered to pay
jointly and severally to the plaintiffs. The Court of Appeals affirmed the decision of the trial court.

Issue: Whether the spouses Fabre are common carriers?

Held: Petition was denied. Spouses Fabre are common carriers.

The Supreme Court held that this case actually involves a contract of carriage. Petitioners, the
Fabres, did not have to be engaged in the business of public transportation for the provisions of the
Civil Code on common carriers to apply to them. As this Court has held: 10 Art. 1732, Common
carriers are persons, corporations, firms or associations engaged in the business of carrying or
transporting passengers or goods or both, by land, water, or air for compensation, offering their
services to the public.

The above article makes no distinction between one whose principal business activity is the
carrying of persons or goods or both, and one who does such carrying only as an ancillary activity
(in local idiom, as "a sideline"). Article 1732 also carefully avoids making any distinction between a
person or enterprise offering transportation service on a regular or scheduled basis and one
offering such service on an occasional, episodic or unscheduled basis. Neither does Article 1732
distinguish between a carrier offering its services to the "general public," i.e., the general
community or population, and one who offers services or solicits business only from a narrow
segment of the general population. We think that Article 1732 deliberately refrained from making
such distinctions.

Victory Liner, Inc. v. Heirs of Andres Malecdan

G. R. No. 154278 December 27, 2002

FACTS:
Andres Malecdan was a 75 year-old farmer
r e s i d i n g i n B a r a n g a y N u n g n u n g a n 2 , Municipality of Cauayan, Province of Isabela. At
around 7pm, while Andres was crossing the National Highway on his way home from the farm, a
Dalin Liner bus on the south bound lane stopped to allow him and his carabao to pass. However, as
Andres was crossing the highway, a bus of Victory Liner, driven by Ricardo C.
Joson, Jr, bypassed the Dalin Bus" In so doing, theVictory Liner bus hit the old man and the
carabao on which he was riding. As a result, Andres Malecdan was thrown off the carabao,
while the beast toppled over. The Victory Liner bus sped past the old man, while the Dalin bus
proceeded to its destination without helping him.

The incident was witnessed by a neighbor, Virgilio Lorena, who was resting in a nearby
waitingshed after working on his farm. Malecdan sustained a wound on his left
shoulder, from which bone fragments protruded.
He was taken by Lorena and another person to the Cagayan District Hospital where he died a few
hours after arrival. The carabao also died soon afterwards. Subsequently, a criminal
complaint for reckless imprudence resulting in homicide and damage to property was
filed against the Victory Liner bus driver Ricardo Joson, Jr.

The wife and children of the late Andres brought another suit for damages in the Regional Trial
Court, which, in a decision rendered the driver guilty of gross negligence in the operation of his
vehicle and Victory Liner, Inc. also guilty of gross negligence in the selection and supervision
of Joson, Jr.

Issue:
W/N Victory Liner, Inc. can be held liable for the failure to exercise the
diligence of a good father of the family in the selection and supervision of its employee.

Ruling:

Article 2180 provides for the solidary liability of an employer for the
quasi-delict commited by an employer.
T h e r e s p o n s i b i l i t y o f e m p l o y e r s f o r t h e n e g l i g e n c e o f t h e i r employees
in the performance of their duties is primary and, therefore, the injured party may
recover from the employers directly, regardless of the solvency of their employees. The rationale
for the rule on vicarious liability has been explained thus:
What ha s e m e r g e d a s t h e m o d e r n j u s t i f i c a t i o n f o r v i c a r i o u s l i a b i l i t y i s a r u l e
o f p o l i c y , a deliberate allocation of a risk. The losses caused by the torts of employees, which as
a practical m a t t e r a r e s u r e t o o c c u r i n t h e c o n d u c t o f t h e e m p l o y e r s
enterprise, are placed upon that
enterprise itself, as a required cost of doing business.

T h e y a r e p l a c e d u p o n t h e e m p l o y e r because, having engaged in an enterprise, which

will on the basis of all past experience involve harm to others through the tort of employees,
and sought to profit by it, it is just that he, rather than the innocent injured plaintiff, should
bear them; and because he is better able to absorb them and to distribute them, through
prices, rates or liability insurance, to the public, and so to shift them to society, to the
community at large" Added to this is the make weight argument that an employer who is
held strictly liable is under the greatest incentive to be careful in the selection, instruction and
supervision of his servants, and to take every precaution to see that the enterprise is
conducted safely.

Spouses ONG vs. CA

G.R. No. 117103January 21, 1999

PETITIONERS: spouses Renato and Francia Ong

RESPONDENTS: Inland Railways, Inc. and Philtranco Service Enterprise Inc.
and PHILTRANCO SERVICE ENTERPRISE, INC.,

DOCTRINES:
1. damages must be proven and not presumed.
2. Identification of evidence is different from offer of evidence.
 Identification: marking of the evidence as an exhibit
 Offer: done when the party rests its case; evidence not offered cannot be considered by
the court.

FACTS:
BUS #1: owned by Inland, leased to Philtranco, driven by Coronel, and boarded by the Ong spouses.

BUS #2: owned by Philtranco and driven by MirallesBUS #1 boarded by the Ong spouses
slowed down to avoid a stalled cargo truck in Q.C. when it was bumped from the rear by BUS #2.
Francia sustained wounds and fractures in both of her legs and her right arm, while Renato suffered
injuries on his left chest, right knee, right arm and left eye.

Petitioners filed an action for damages against Philtranco and Inland. In their Complaint, they
alleged that they suffered injuries, preventing Francia from operating a sari-sari store at Las Piña's,
Metro Manila, where she derived a daily income of P200; and Renato from continuing his work as
an overseas contract worker (pipe welder) with a monthly salary of $690. Stating that they
incurred P10,000 as medical and miscellaneous expenses, they also claimed moral damages of
P500,000 each, exemplary and corrective damages ofP500,000 each, and compensatory damages of
P500,000 each plus 35 percent thereof as attorney's fees.
Philtranco filed a cross claim against Inland alleging that it was merely Inland’s lessee for BUS #1,
while Inland claimed that the driver of BUS #2 was at faultand actually fled the accident scene.
Both respondents then moved to submit the case for decision without presenting further evidence.

Paulita “Edith” Serra vs. Nelfa T. Mumar; G.R. No. 193861. March 14, 2012

Damages; loss of earning capacity. Damages for loss of earning capacity is in the nature of actual
damages, which as a rule must be duly proven by documentary evidence, not merely by the self-
serving testimony of the widow. 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 deceased’s 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.
It was error for the Court of Appeals to have awarded damages for loss of earning capacity based on
Nelfa’s testimony alone. First, while it is conceded that the deceased was self-employed, the Court
cannot accept that in his line of work there was no documentary proof available to prove his
income from such occupation. There would have been receipts, job orders, or some form of written
contract or agreement between the deceased and his clients when he is contracted for a job. Second,
and more importantly, decedent was not earning “less than the minimum wage” at the time of his
death.

PERENA VS. ZARATE

G.R. NO. 157917
August 29, 2012

FACTS:

Perenas were engaged in the business of transporting students to Don Bosco. The Zarates engaged
Perenas services to transport their son, Aaron, to school.

While on the way to school, the van’s air-conditioned unit was turned on and the stereo playing
loudly. The driver took a detour because they were running late due to the traffic in SLEX. The
detour was through a narrow path underneath the Magallanes Interchange used as short cut into
Makati. When the van was to traverse the PNR railroad crossing, the van was tailing a large
passenger bus so the driver’s view of the oncoming train was blocked. The train hit the van at the
rear end and the impact threw 9 students including Aaron out of the van. Aaron landed in the path
of the train which dragged his body and severed his head, instantaneously killing him.

The Zarates filed for damages against Alfaro, Perenas, PNR, and the train driver. The cause of action
against Perena was for contract of carriage while for PNR, quasi delict. Perena posited the defense
of diligence of a good father in the selection and supervision of their driver

ISSUE/S: Were Perenas and PNR jointly and severally liable for damages? Is the petitioner a
common carrier?
RULING:

YES. A school bus operator is a common carrier.

Perena’s defense of diligence of a good father in the selection and supervision of their driver is
unavailable for breach of contract of carriage. Perenas operated as a common carrier; and their
standard of care was extraordinary diligence, not only diligence of a good father.

A carrier is a person or corporation who undertakes to transport or convey goods from one place to
another, gratuitously or for hire. They may be private or common

Private carrier is one who, without holding himself or itself out to the public as ready to act for all
who may desire his or its services, undertakes, by special agreement in a particular instance only, to
transport goods or persons from one place to another either gratutitously or for hire. The diligence
required of a private carrier is only ordinary

Common Carrier is a person, corporation, firm or association engaged in the business of carrying or
transporting passengers or goods or both, by land, water, or air, for compensation, offering such
services to the public. Diligence required is to observe extraordinary diligence, and is presumed to
be at fault or to have acted negligently in case of the loss of effects of passengers, or death or
injuries to passengers

The true test for a common carrier is not the quantity or extent of business actually transacted, or
the number of conveyances, BUT WHETHER the undertaking is a part of the activity that he has
held out to the general public as his business or occupation.

The Perenas held themselves out as a ready transportation indiscriminately to the students of a
particular school living within or near where they operated the service and for a fee. Perena, being
a common carrier, was already presumed to be negligent at the time of the accident because death
occurred to their passenger. The omissions of care on the part of the driver constituted negligence.

PHILIPPINE AIRLINES, INC., Petitioner, vs.COURT OF APPEALS Respondents.

G.R. No. 123238September 22, 2008

FACTS:
Sometime before 2 May 1980, private respondents spouses Buncio purchased from petitioner
Philippine Airlines, Incorporated, two plane tickets for their two minor children, (Deanna), then 9
years of age, and (Nikolai), then 8 years old. Since Deanna and Nikolai will travel as unaccompanied
minors, petitioner required private respondents to accomplish, sign and submit to it an indemnity
bond. Private respondents complied with this requirement. For the purchase of the said two plane
tickets, petitioner agreed to transport Deanna and Nikolai on 2 May 1980 from Manila to San
Francisco, California, through one of its planes. Petitioner also agreed that upon the arrival of
Deanna and Nikolai in San Francisco Airport on 3 May 1980, it would again transport the two on
that same day through a connecting flight from San Francisco to Los Angeles, via another airline,
United Airways. Deanna and Nikolai then will be met by their grandmother, Mrs. Regalado, at the
Los Angeles Airport on their scheduled arrival on 3 May 1980.
On 2 May 1980, Deanna and Nikolai boarded Flight 106 in Manila.

On 3 May 1980, Deanna and Nikolai arrived at the San Francisco Airport. However, the staff of
United Airways refused to take aboard Deanna and Nikolai for their connecting flight to Los Angeles
because petitioner’s personnel in San Francisco could not produce the indemnity bond
accomplished and submitted by private respondents. The said indemnity bond was lost by
petitioner’s personnel during the previous stop-over in Honolulu, Hawaii. Deanna and Nikolai were
then left stranded at the San Francisco Airport. Subsequently, Mr. Strigl, then the Lead Traffic Agent
of petitioner in San Francisco took Deanna and Nikolai to his residence where they stayed
overnight.

Meanwhile, Mrs. Regalado and several relatives waited for the arrival of Deanna and Nikolai at the
Los Angeles Airport(LAX). When United Airways landed at the LAX and its passengers disembarked,
Mrs. Regalado sought Deanna and Nikolai but she failed to find them. Mrs. Regalado called private
respondents and informed them that Deanna and Nikolai did not arrive at LAX. Private respondents
inquired about the location of Deanna and Nikolai from petitioner’s personnel, but the latter replied
that they were still verifying their whereabouts. On the morning of 4 May 1980, Strigl took the kids
to San Francisco Airport where the two boarded a Western Airlines plane bound for Los Angeles.
Later that day, Deanna and Nikolai arrived at the Los Angeles Airport where they were met by Mrs.
Regalado.On July 1980, private respondents, through their lawyer, sent a letter to petitioner
demanding payment of 1 million pesos as damages for the gross negligence and inefficiency of its
employees in transporting Deanna and Nikolai. Petitioner didnot heed the demand.

On November 1981, private respondents filed a complaint for damages against petitioner before
the RTC. Privaterespondents alleged that Deanna and Nikolai were not able to take their connecting
flight from San Francisco to Los Angeles as scheduled because the required indemnity bond
was lost on account of the gross negligence and malevolent conduct of petitioner’s personnel. As a
consequence thereof, Deanna and Nikolai were stranded in San Francisco overnight, thereby
exposing them to grave danger. This dilemma caused Deanna, Nikolai, Mrs. Regalado and private
respondents to suffer serious anxiety, mental anguish, wounded feelings, and sleepless nights.

After trial, the RTC rendered a decision holding petitioner liable for damages for breach of contract
of carriage. It alsoheld that petitioner should pay exemplary damages by way of example or
correction for the public good under Article 2229 and 2232 of the Civil Code, plus attorney’s fees
and costs of suit.

Petitioner filed the instant petition. Petitioner maintains that moral damages may be awarded in a
breach of contract of air carriage only if the mishap results in death of a passenger or if the carrier
acted fraudulently or in bad faith, that is, by breach of a known duty through some motive of
interest or ill will, some dishonest purpose or conscious doing of wrong; if there was no finding of
fraud or bad faith on its part; if, although it lost the indemnity bond, there was no finding that such
loss was attended by ill will, or some motive of interest, or any dishonest purpose; and if there was
no finding that the loss was deliberate, intentional or consciously done.
G.R. No. 185891, June 26, 2013
CATHAY PACIFIC AIRWAYS, Petitioner, v. JUANITA REYES, WILFI EDO REYES,
MICHAEL ROY REYES, SIXTA LAPUZ, AND SAMPAGUITA TRAVEL CORP.,
Respondents.

TOPIC: Diligence of a good father of a family

FACTS
 Wilfredo made a travel reservation with Sampaguita Travel for his family’s trip to

1. Wilfredo made a travel reservation with Sampaguita Travel for his family’s trip to Adelaide,
Australia. Upon confirmation of their flight schedule, Wilfredo paid for the airfare and was
issued 4 Cathay Pacific roundtrip airplane tickets for Manila-Hong Kong-Adelaide- Hong
Kong-Manila.
2. One week before they were scheduled to fly back home, Wilfredo re-confirmed his One
week before they were scheduled to fly back home, Wilfredo re-confirmed his family’s
return flight with the Cathay Pacific office in Adelaide. They were advised that the
 On thereservation
day of theirwas “still okay
scheduled as scheduled”.
departure from Adelaide, Wilfredo and his family arrived
3. On the day of their scheduled departure from Adelaide, Wilfredo and his family arrived at
the airport on time. When the airport check-in opened, Wilfredo was informed by a staff
from Cathay Pacific that Wilfredo’s family did not have confirmed reservations, and only
Sixta’s
 Although, flight
they werebooking
allowed was confirmed.
to board the flight to Hong Kong, not all of them were
4. Although, they were allowed to board the flight to Hong Kong, not all of them were
allowed to board the flight to Manila as it was fully booked. Only Wilfredo’s mother-in-law,
 On theSixta, was allowed
following day, theto proceed
Reyeses to Manila
were finally from Hong
allowed to Kong.
board the next flight bound for
5. On the following day, the Reyeses were finally allowed to board the next flight bound for
Manila. in the Philippines, Wilfredo went Sampaguita Travel to report the incident.
 Upon arriving
6. Upon arriving in the Philippines, Wilfredo went Sampaguita Travel to report the incident.
He was informed by Sampaguita Travel that it was actually Cathay Pacific which cancelled
their bookings.

ISSUE:
(1) Whether Cathay Pacific breached its contract of carriage with the Wilfredo’s family? Yes
(2) Whether Sampaguita breached its contract of services with Wilfredo’s family? Yes

HELD:
Cathay
In contrast,
Pacific
thebreached
contractual
its contract
relation between
of carriage
Sampaguita
with the Reyeses
Travel and
when respondents
it disallowed
is a
1. In contrast, the contractual relation between Sampaguita Travel and respondents is a
contract for services. The object of the contract is arranging and facilitating the latter’s
booking and ticketing. It was even Sampaguita Travel which issued the tickets.
 Since the contract between the parties is an ordinary one for services, the standard of care
2. Since the contract between the parties is an ordinary one for services, the standard of care
required of respondent is that of a good father of a family under Article 1173 of the Civil
Code. This connotes reasonable care consistent with that which an ordinarily prudent
person would have observed when confronted with a similar situation. The test to
determine whether negligence attended the performance of an obligation is: did the
defendant in doing the alleged negligent act use that reasonable care and caution which an
ordinarily prudent person would have used in the same situation? If not, then he is guilty of
negligence.
3. There
Therewas
wasindeed
indeedfailure
failureononthe
thepart
partofofSampaguita
SampaguitaTravel
Traveltotoexercise
exercisedue
duediligence
diligenceinin
 performing its obligations under the contract of services. It was established by Cathay
Pacific, through the generation of the PNRs, that Sampaguita Travel failed to input the
correct ticket number for Wilfredo’s ticket. Cathay Pacific even asserted that Sampaguita
Travel made two fictitious bookings for Juanita and Michael.
4. The negligence
 The negligence of Sampaguita
of Sampaguita TravelTravel
rendersrenders
it alsoitliable
also for
liable for damages
damages

Expert Travel V. CA (1999)

G.R. No. 130030 June 25, 1999

Lessons Applicable: Cases where Moral Damage is allowed (Torts and damages)
Laws Applicable: Article 2219, Article 1764, Article 2206

FACTS:

 October 7, 1987: Exper travel & Tours, Inc. issued to Ricardo Lo 4 round-trip plane tickets for
Hongkong with hotel accommodations and transfers for P39,677.20
 Failing to pay the amount due, Expert filed a complaint for recovery plus damages
 CA affirmed RTC: Lo remitted the Monte de Piedad Check for P42,175.20 to Expert's
chairperson Ms. Ma. Rocio de Vega who in turn issued City Trust Check of P50,000

ISSUE:
W/N moral damages for negligence or quasi-delict that did not result to physical injury be awarded
to Lo

HELD:
NO. petition is GRANTED and the award of moral damages to respondent Ricardo Lo under the
assailed decision is DELETED

 An award of moral damages would require certain conditions to be met; to wit: (1) First, there
must be an injury, whether physical, mental or psychological, clearly sustained by the claimant;
(2) second, there must be a culpable act or omission factually established; (3) third, the
wrongful act or omission of the defendant is the proximate cause of the injury sustained by the
claimant; and (4) fourth, the award of damages is predicated on any of the cases stated in
Article 2219
 in culpa contractual or breach of contract:
 moral 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 his contractual obligation and,
exceptionally, when the act of breach of contract itself is constitutive of tort resulting 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
 In culpa aquiliana, or quasi-delict and contracts when breached by tort
 (a) when an act or omission causes physical injuries, or (b) where the defendant is guilty of
intentional tort
 In culpa criminal
 moral damages could be lawfully due when the accused is found guilty of physical injuries,
lascivious acts, adultery or concubinage, illegal or arbitrary detention, illegal arrest, illegal
search, or defamation
 Malicious prosecution can also give rise to a claim for moral damages
 The term "analogous cases," referred to in Article 2219, following the ejusdem generis rule,
must be held similar to those expressly enumerated by the law
 Excludes clearly unfounded civil suit

AIR FRANCE v. BONIFACIO H. GILLEGO

GR. No. 165266, December 15, 2010
FACTS:

Gillego, then incumbent Congressman and Chairman of the House of Representatives Committee on
Civil, Political and Human Rights, was invited to participate as one of the keynote speakers at the
89th Inter-Parliamentary Conference Symposium on Parliament Guardian of Human Rights to be
held in Budapest, Hungary and Tokyo, Japan.

On May 16, 1993, Gillego left Manila on board Air Frances aircraft bound for Paris, France. While
waiting at the Airport for his connecting flight to Budapest scheduled a few hours after his arrival
learned that Air France had another aircraft bound for Budapest with an earlier departure time
than his scheduled flight. He then made arrangements for the change in his booking. He was given a
corresponding ticket and boarding pass and also a new baggage claim stub for his checked-in
luggage. However, his baggage despite numerous follow-up was never delivered to him prompting
Gillego to purchase new set of clothes and other personal effects.

Gillego filed a complaint for damages against the Air France alleging that by reason of its negligence
and breach of obligation to transport and deliver his luggage, Gillego suffered inconvenience,
serious anxiety, physical suffering and sleepless nights. It was further alleged that due to the
physical, mental and emotional strain resulting from the loss of his luggage, aggravated by the fact
that he failed to take his regular medication, Gillego had to be taken to a medical clinic in Tokyo,
Japan for emergency treatment.

The RTC found there was gross negligence on the part of Air France. It likewise found Air France
guilty of willful misconduct as it persistently disregarded the rights of Gillego. As to the applicability
of the limited liability for lost baggage under the Warsaw Convention, the trial court rejected the
argument of Air France. The CA affirmed the trial courts decision.

ISSUES:

I. Was there legal and factual basis that Air France's actions were attended by gross negligence, bad
faith and willful misconduct and that it acted in a wanton, fraudulent, reckless, oppressive or
malevolent manner to justify award of moral and exemplary damages?
II. Is the amount of damages awarded by the RTC and affirmed by the CA as moral and exemplary
damages excessive, unconscionable and unreasonable?

HELD: I. In an action based on a breach of contract of carriage, the aggrieved party does not have to
prove that the common carrier was at fault or was negligent. All that he has to prove is the existence
of the contract and the fact of its non-performance by the carrier.

The action filed by the respondent is founded on such breach of the contract of carriage with
petitioner who offered no satisfactory explanation for the unreasonable delay in the delivery of
respondents baggage. The presumption of negligence was not overcome by the petitioner and
hence its liability for the delay was sufficiently established.

The Court held that the trial and appellate courts did not err in finding that petitioner acted in bad
faith in repeatedly ignoring respondents follow-up calls. Clearly, Air France did not give the
attention and care due to its passenger whose baggage was not transported and delivered to him at
his travel destination and scheduled time; inattention to and lack of care for the interest of its
passengers who are entitled to its utmost consideration, particularly as to their convenience,
amount to bad faith which entitles the passenger to an award of moral damages.

HELD: II. The amount of damages must be fair, reasonable and proportionate to the injury suffered.
The purpose of awarding moral damages is to enable the injured party to obtain means, diversion
or amusement that will serve to alleviate the moral suffering he has undergone by reason of
defendant's culpable action. On the other hand, the aim of awarding exemplary damages is to deter
serious wrongdoings. Hence, the Court held that the sum of P1,000,000.00 awarded by the trial
court is excessive and not proportionate to the loss or suffering inflicted on the passenger under the
circumstances.

DENIED

Kuwait Airways v. PAL (G.R. No. 156087)

Date: November 23, 2016Author: jaicdn0 Comments

Facts:

Kuwait Airways and Philippine Airlines (PAL) entered into a Commercial Agreement to assist each
other to develop traffic on the route Kuwait-Bangkok-Manila and vice-versa. Under the said
agreement, Kuwait Airways obligated itself to share with PAL revenue earned from the uplift of
passengers between Kuwait and Manila and vice-versa. Sometime later, delegations from
Philippines and Kuwait (Philippine Panel and Kuwait Panel) met and agreed that effective upon the
signing of the Confidential Memorandum of Understanding (CMU), the exercise of the third and
fourth freedom traffic rights shall not be subject to any royalty payment or commercial agreements.
The Philippine Panel composed of officials from CAB, DFA, and PAL and headed by the Executive
Director of the CAB signed the CMU – in behalf of the Philippine Government. A month later,
petitioner sent a letter informing PAL that by virtue of the CMU the termination of the royalty
payment is in effect. PAL insisted that the Agreement should continue to be in force and petitioner
is still obligated to pay PAL revenue until such date. Petitioner refusing to pay, PAL filed a complaint
before the RTC which ruled in its favor. Hence this petition.

Issue:

Whether or not CAB can compel PAL to terminate the Commercial Agreement with petitioner.

Ruling: NO.

[We do not doubt that the CAB, in the exercise of its statutory mandate, has the power to compel
Philippine Airlines to immediately terminate its Commercial Agreement with Kuwait Airways
pursuant to the CMU.Considering that it is the Philippine government that has the sole authority to
charter air policy and negotiate with foreign governments with respect to air traffic rights, the
government through the CAB has the indispensable authority to compel local air carriers to comply
with government determined policies, even at the expense of economic rights.]

However, this is not a case where the CAB had duly exercised its regulatory authority over a local
airline in order to implement or further government air policy. What happened instead was an
officer of the CAB, acting in behalf not of the Board but of the Philippine government, had
committed to a foreign nation the immediate abrogation of Philippine Airlines’ commercial
agreement with Kuwait Airways.

Nor can we presume, simply because Dr. Linlingan, Executive Director of the CAB had signed the
CMU in behalf of the Philippine Panel that he could have done so bearing the authority of the Board,
in the exercise of regulatory jurisdiction over Philippine Airlines. For one, the CAB is a collegial
body composed of five members and no one member–even the chairman–can act in behalf of the
entire Board. The Board is disabled from performing as such without a quorum. For another, the
Executive Director of the CAB is not even a member of the Board, per R.A. No. 776, as amended.

*The general rule is CAB has the power to regulate the airline companies/air transportation
industry BUT this case is an exception.

British Airways v. Court of Appeals

G.R. No. 121824, 29 January 1998, 285 SCRA 450

FACTS:
On April 16, 1989, Mahtani is on his way to Bombay, India from Manila. His trip was Manila-Hong
Kong via PAL and then Hong Kong-India via British Airways. Prior to his departure, he checked in
two pieces of luggage containing his clothing and other personal effects, confident that the same
would be transferred to his BA flight. Unfortunately, when he arrived in India, he discovered that
his luggage was missing.
The RTC awarded Mahtani damages which was affirmed by CA.
ISSUE:
Whether or not in a contract of air carriage a declaration by the passenger is needed to recover a
greater amount?

RULING:
American jurisprudence provides that an air carrier is not liable for the loss of baggage in an
amount in excess of the limits specified in the tariff which was filed with the proper authorities,
such tariff being binding on the passenger regardless of the passenger’s lack of knowledge thereof
or assent thereto. This doctrine is recognized in this jurisdiction.
The inescapable conclusion that BA had waived the defense of limited liability when it allowed
Mahtani to testify as to the actual damages he incurred due to misplacement of his luggage, without
any objection.
It is a well-settled doctrine that where the proponent offers evidence deemed by counsel of the
adverse party to be inadmissible for any reason, the latter has the right to object. However, such
right is a mere privilege which can be waived. Necessarily, the objection must be made at the
earliest opportunity, in case of silence when there is opportunity to speak may operate as a waiver
of objections.

China Airlines VS Chiok

GR 152122 30 July 2003

FACTS:
Daniel Chiok purchased a ticket from China Airlines Ltd. Covering Manila-Taipei-Hong Kong-Manila.
The ticket was exclusively endorsable to Philippine Airlines. The trips covered by the ticket were
pre-scheduled and confirmed.

In Taipei, Chiok went to CAL office to confirm his Hong Kong-Manila flight. CAL attached a yellow
sticker, indicating that flight was OK.

In Hong Kong, Chiok went to PAL office to confirm his Manila flight. PAL confirmed and attached its
own sticker.

During the scheduled flight bound to Manila, it was cancelled due to a typhoon. All confirmed ticket
holders were booked automatically for it’s next flight (next day)

However on the following day, a PAL employee informed Chiok that his name did not appear in
PAL’s computer list of passengers and therefore could not be permitted to board PAL flight no. PR
307.

Chiok filed a complaint for damages.

The Regional Trial Court held that CAL and PAL jointly and severely liable to correspondent,
affirmed by Court of Appeals.

ISSUE:
WON China Airline is liable as a principal carrier?
HELD:
In citing several cases:

As the principal in the contract of carriage, the petitioner in British Airways v. Court of Appeals was
held liable, even when the breach of contract had occurred, not on its own flight, but on that of
another airline. The Decision followed our ruling in Lufthansa German Airlines v. Court of Appeals,
in which we had held that the obligation of the ticket-issuing airline remained and did not cease,
regardless of the fact that another airline had undertaken to carry the passengers to one of their
destinations.

In the instant case, following the jurisprudence cited above, PAL acted as the carrying agent of CAL.
In the same way that we ruled against British Airways and Lufthansa in the aforementioned cases,
we also rule that CAL cannot evade liability to respondent, even though it may have been only a
ticket issuer for the Hong Kong-Manila sector.

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.

FACTS:
Aniceto Fontanilla bought from United Airlines,through the Philippine Travel Bureau in Manila,
three “Visit the U.S.A.” tickets from himself, his wife and his minors on, Mychal, to visit the cities of
Washington DC, Chicago and Los Angeles.All flights had been confirmed previously by United Airlines.
Having used the first coupon to DC and while at the Washington Dulles Airport, Anice to changed
their itinerary, paid the penalty for rewriting their tickets and was issued tickets with
corresponding boarding passes with the words: “Check-in-required.” They were then set to leave
but were denied boarding because the flight was overbooked. The CA ruled 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
applying the laws of the USA, relying on the Code of Federal Regulation Part on Oversales of the USA

ISSUE:
WON the CA is correct in applying the laws of USA.

HELD: No.

According to the doctrine of “lex loci contractus”, the law of the place where a contract is made or entered into governs with
respect to its nature and validity, obligation and interpretation shall govern. 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. Hence, the court should apply the
law of the place where the airline ticket was issued, where the passengers are residents and nationals of the forum and the
ticket is issued in such State by the defendant airline. Therefore, although, the contract of carriage was to be performed in the
United States, the tickets were purchased through petitioner’s agent in Manila. It is true that the tickets were "rewritten" in
D.C.,however, such fact did not change the nature of the original contract of carriage entered Into by the parties in Manila.
Cathay Pacific v. Vazquez
G.R. No. 150843; 14 March 2003

Facts:
Sps. Dr. Daniel and Maria Luisa Vazquez, resposdents, together with their maid and two friends
went to Hongkong for pleasure and business. On their return flight, they booked Cathay Pacific
Airways. While boarding, they were advised that there was a seat change from Business Class to
First Class. Dr. Vazquez refused the upgrade for the reason that it would not look nice for them as
hosts to travel First Class and their guests, in the Business Class; and that they were going to discuss
business matter during the flight. Cathay informed the Vazquezes that the Business Class was fully
booked, and that since they are Marco Polo Club members, they had the priority to be upgraded to
first class. Dr. Vazquez eventually gave in, after being prohibited to take the flight if they would not
avail themselves of the privilege. Upon their return to Manila, the Vazquezes filed a complaint and
demanded to be indemnified for the humiliation and embarrassment caused by Cathay’s employees.

Issues:
Are the Vazquezes obliged to avail the privilege and take the First Class flight?

Held:
No. A contract of carriage existed between Cathay and the Vazquezes. They voluntarily and freely
gave their consent to an agreement whose object was the transportation of the Vazquezes from
Manila to Hong Kong and back to Manila, with seats in the Business Class Section of the aircraft, and
whose cause or consideration was the fare paid by the Vazquezes to Cathay. The Vazquezes should
have been consulted first whether they wanted to avail themselves of the privilege or would
consent to a change of seat accommodation before their seat assignments were given to other
passengers. It should not have been imposed on them over their vehement objection. By insisting
on the upgrade, Cathay breached its contract of carriage with the Vazquezes.

Art. 1244. The debtor of a thing cannot compel the creditor to receive a different one, although the
latter may be of the same value as, or more valuable than that which is due.

In obligations to do or not to do, an act or forbearance cannot be substituted by another act or

forbearance against the obligee’s will.

NORTHWEST AIRLINES v. DELFIN S. CATAPANG

594 SCRA 401 (2009)

Any discourteous conduct on the part of the carrier’s employees toward a passenger gives the latter
an action for damages against the carrier.

FACTS:

Delfin S. Catapang requested First United Travel, Inc. (FUT) to issue in his favor a ticket that
would allow rebooking or rerouting of flights within the United States. FUT informed him that
Northwest Airlines, Inc. (Northwest) was willing to accommodate his request provided that he will
pay an additional US$50 for every rebooking or rerouting of flight. Catapang agreed with the
condition.

Upon Catapang‘s arrival in New York, he called up Northwest‘s office, which informed him that
his ticket was not ―rebookable or reroutable.‖ He thus proceeded to Northwest‘s nearest ticketing
office where he was treated in a rude manner by an employee who informed him that his ticket was
not rebookable or reroutable. He was further informed that his ticket was of a ―restricted type,‖
and he could not rebook unless he pays US644.00. Catapang paid that amount for rebooking.

Catapang, upon his return, filed with RTC of Makati a complaint for damages against Northwest.
The RTC ruled that Northwest was liable for breach of contract of carriage. On appeal, the Court of
Appeals, affirmed the trial court‘s Decision.

ISSUES:

Whether or not Northwest was right to assail the award to Catapang of moral
and exemplary damages by virtue of breach of contract

HELD:

When Catapang inquired from Northwest‘s agent FUT if he would be allowed to rebook/reroute
his flight, FUT advised him that he could, on the condition that he would pay $50 for every
rebooking. He was not told by FUT and the ticket did not reflect it that the ticket being issued to him
was a “restricted type” to call for its upgrading before a rebooking/rerouting

Northwest‘s breach in this case was aggravated by the undenied treatment received by Catapang
when he tried to rebook his ticket. Instead of civilly informing Catapang that his ticket could not be
rebooked, Northwst‘s agent in New York exhibited rudeness in the presence of Catapang‘s brother-
in-law and other customers, insulting Catapang by telling him that he could not understand English.

Passengers have the right to be treated by a carrier‘s employees with kindness, respect, courtesy
and due consideration. They are entitled to be protected against personal misconduct, injurious
language, indignities and abuses from such employees. So it is that any discourteous conduct on the
part of these employees toward a passenger gives the latter an action for damages against
the carrier.

AMERICAN AIRLINES, petitioner, vs. COURT OF APPEALS,

HON. BERNARD L. SALAS and DEMOCRITO MENDOZA, respondents
G.R No. 116044-45. March 9, 2000

Facts:

Private respondent purchased from Singapore Airlines in Manila conjunction tickets from Manila-
Singapore-Athens-Larnaca-Rome-Turin-Zurich-Geneva-Copenhagen-New York. In Geneva, he
decided to forego his trip to Copenhagen and go straight to New York. In the absence of a direct
flight under his conjunction tickets from Geneva to New York, he exchanged the unused portion of
the conjunction ticket for a one way ticket from Geneva to New York from American Airlines, which
issued its own ticket to respondent in Geneva and claimed the value of the unused portion of the
conjunction ticket from the International Air Transport Association (IATA) clearing house in
Geneva. In September, 1989, respondent filed an action for damages before the Regional Trial Court
of Cebu for the alleged embarrassment and mental anguish he suffered at the Geneva Airport when
American Airline’s security officers prevented him from boarding the plane.

Issue:

Whether or not the issuance of American Airlines of a new ticket in exchange of the
conjunction ticket the respondent purchased in Manila bar him from seeking recourse in Philippine
courts.

Ruling:

The petitioner contends that under Article 28 of the Warsaw Convention, action for damages may
only be brought upon the following courst:

a.) Domicile of the carrier

b.) Carrier’s principal place of business
c.) Place where carrier has a place of business
d.) Place of destination

Since neither of these elements is present in the case, the petitioner contends that plaintiff
cannot file the case in the Philippines. He further posits that the second contract cannot be deemed
as an extension of the first as the petitioner airline is not a participating airline in any of the
destinations under the first contract.

Respondent on the other hand contends that the second contract she entered into at Geneva is part
and parcel of the first contract, thus the third option under Article 28 of the Warsaw Convention
would apply to him. He further pointed out that petitioner cannot deny the contract of agency with
Singapore Airlines after it honored the conjunction tickets issued by the latter.

The court ruled that petitioner’s argument is void of merit with reference to Article 1(3) of the
Warsaw Convention. According to the said article, transportation to be performed by several
carriers shall be deemed as one and undivided. The number of tickets issued does not detract from
the oneness of the contract of carriage. Hence, the third option of the plaintiff under Article 28 of
the Warsaw Convention is clothed with jurisdiction.