Actions and Damages

Solidary Liability
1. Construction Devt. Corp. of the Phil. (CDCP) v Estrella et al., September 8, 2006
Facts
Estrella and her granddaughter boarded in a BLTB bus. En route to Pasay City their bus was
rammed from behind by a tractor-truck of CDCP. Estrella and her daughter suffered injuries which
led to the filing of the complaint for damages against CDCP and BLTB alleging, among others, that
1) negligence and non-compliance with traffic laws, 2) failure to exercise the diligence of a good
father of a family in the selection and supervision of their employees.
The trial court found CDCP and BLTB jointly and severally liable for damages. CDCP and BLTBs
MR was denied. On appeal, the CA affirmed the trial court. Hence, the present petition brought by
CDCP arguing that BLTB and its driver should be solely liable.
Issue
Whether CDCP is jointly and severally liable to BLTB
Ruling
The case filed against CDCP is an action for culpa aquiliana. An action based on quasidelict may be instituted against the employer for an employees act or omission. The liability is
direct and primary, but is subject to the defense of due diligence in the selection and supervision
of the employee, a defense that CDCP failed to prove.
It was shown that CDCPs driver was driving recklessly by the skid marks. The same rule of
liability was applied in situations where the negligence of the driver of the bus on which plaintiff
was riding concurred with the negligence of a third party who was the driver of another vehicle,
thus causing an accident. The bus company, its driver, the operator of the other vehicle and the
driver of the vehicle were jointly and severally held liable to the injured passenger or the latter's
heirs. Nor should it make any difference that the liability of petitioner [bus owner] springs from
contract while that of respondents [owner and driver of other vehicle] arises from quasi-delict.
After all, it was permitted for them to allege alternative causes of action and join as many
parties as may be liable on such causes of action so long as private respondent and her coplaintiffs do not recover twice for the same injury.
Joint tort feasors are jointly and severally liable for the tort which they commit. The
persons injured may sue all of them or any number less than all. Each is liable for the whole
damages caused by all, and all together are jointly liable for the whole damage. It is no defense for
one sued alone, that the others who participated in the wrongful act are not joined with him as
defendants; nor is it any excuse for him that his participation in the tort was insignificant as
compared to that of the others.

2.

Loadmasters Customs Services, Inc. v Glodel Brokerage Corporation and R&B Insurance,
January 10, 2011
Facts
R&B Insurance insured the shipment of Columbia Wire and Cable Corporations shipment of
132 bundles of electric copper cathodes against All Risks. Columbia engaged the services of
Glodel for the release and withdrawal of the cargoes and the delivery to its warehouses. Glodel, in
turn, engaged the services of Loadmasters for the use of its delivery trucks to transport the
cargoes to Columbias warehouses.
Of the 6 trucks of Loadmaster en route to deliver the cargoes to Columbias Bulacan
Warehouse, only 5 reached the destination. One truck, loaded with 11 bundles or 232 pieces of
copper cathodes, failed to deliver its cargo. Later, the said truck was recovered but without the
missing cargo. R&B paid the insurance indemnity. R&B filed a complaint for damages against both
Loadmasters and Glodel.
The RTC held Glodel liable for the loss of the cargo. Both R&B Insurance and Glodel appealed to
the CA. The CA held Loadmasters jointly and severally liable with Glodel. Hence, the present

petition. Loadmasters argues that it cannot be considered an agent of Glodel because it never
represented the latter in its dealings with the consignee. At any rate, it further contends that
Glodel has no recourse against it for its failure to file a cross-claim
Issue
Who, between Glodel and Loadmasters, is liable to pay R&B Insurance for the amount of the
indemnity it paid Columbia
Ruling
Loadmasters and Glodel, being both common carriers, are mandated from the nature of their
business and for reasons of public policy, to observe the extraordinary diligence in the vigilance
over the goods transported by them according to all the circumstances of such case, as required
by Article 1733 of the Civil Code.
The Court is of the view that both Loadmasters and Glodel are jointly and severally liable to R
& B Insurance for the loss of the subject cargo. Under Article 2194 of the New Civil Code, "the
responsibility of two or more persons who are liable for a quasi-delict is solidary."
Loadmasters may not be a privy to the contract with Columbia but Article 2176 of the Civil
Code provides that Whoever by act or omission causes damage to another, there being fault or
negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no preexisting contractual relation between the parties, is called a quasi-delict and is governed by the
provisions of this Chapter. A tort may arise despite the absence of a contractual relationship.
The cargo was lost while in the custody of Loadmasters whose employees were instrumental in
the hijacking or robbery. As employer, Loadmasters should be made answerable for the damages
caused by its employees who acted within the scope of their assigned task. Loadmasters failed to
rebut the presumption of negligence in the selection or supervision of its employees.
Glodel is also liable because of its failure to exercise extraordinary diligence. It failed to ensure
that Loadmasters would fully comply with the undertaking to safely transport the subject cargo to
the designated destination. It should have been more prudent in entrusting the goods to
Loadmasters by taking precautionary measures, such as providing escorts to accompany the
trucks in delivering the cargoes.
Accordingly, there can be no contract of agency between the parties. Loadmasters never
represented Glodel. Neither was it ever authorized to make such representation. It is a settled rule
that the basis for agency is representation, that is, the agent acts for and on behalf of the principal
on matters within the scope of his authority and said acts have the same legal effect as if they
were personally executed by the principal. On the part of the principal, there must be an actual
intention to appoint or an intention naturally inferable from his words or actions, while on the part
of the agent, there must be an intention to accept the appointment and act on it. Such mutual
intent is not obtaining in this case.
Where several causes producing an injury are concurrent and each is an efficient cause without
which the injury would not have happened, the injury may be attributed to all or any of the causes
and recovery may be had against any or all of the responsible persons although under the
circumstances of the case, it may appear that one of them was more culpable, and that the duty
owed by them to the injured person was not the same. No actor's negligence ceases to be a
proximate cause merely because it does not exceed the negligence of other actors. Each
wrongdoer is responsible for the entire result and is liable as though his acts were the sole cause of
the injury.
Glodel cannot seek judicial sanction against Loadmasters because it did not file a cross-claim
against the latter.

Notice of Claim
1. Phil. Charter Insurance (PCI) v Chemoil Lighterage, June 29, 2005
Facts

Samkyung Co. shipped 62 tons of Dioctyl Phthalate (DOP) under one bill of lading on board MT
Tahibana and another 436 tons of DOP under another bill to the Philippines. The consignee was
Plastic Group Phil. (PGP).
PGP insured the cargo with PCI against all risks. The ocean tanker unloaded the cargo to a
Tanker Barge of Chemoil, which shall transport the same to Del Pan Bridge in Pasig River. It would
be unloaded to tanker trucks, also owned by Chemoil, and deliver it to PGPs storage tanks.
Upon delivery, PGP saw that the shipment showed discoloration, demonstrating damage. PGP
sent a letter to PCI for insurance claim for the loss it sustained due to contamination. The
inspection showed that the manhole covers of ballast tanks ceilings were loosely secured and that
the rubber gaskets of the covers re-acted to the chemical causing shrinkage thus, loosening the
covers and cargo ingress to the rusty ballast tanks.
PCI paid PGP. PGP filed an action for damages against Chemoil. The latter averred that PGPs
representative inspected the barge before loading and found it to be clean and dry and fit for
loading. That said representative supervised the entire loading and unloading of the shipment and
that the contract expressly stipulated waiver of liability from all claims arising from contamination,
loss of cargo or part thereof; that the consignee accepted the cargo without any protest or notice;
and it exercised extraordinary diligence in handling the cargo.
The trial court order Chemoil to pay PCI. On appeal, the CA gave credit to Chemoils assertion
that a phone call is not the required notice of claim by the Code of Commerse, and reversed the
trial court. Hence, the present petition.
Issue
Whether or not the notice of claim was filed within the required period
Ruling
Art. 366 of the Code of Commerce provides that Within twenty-four hours following the receipt
of the merchandise a claim may be made against the carrier on account of damage or average
found upon opening the packages, provided that the indications of the damage or average giving
rise to the claim cannot be ascertained from the exterior of said packages, in which case said claim
shall only be admitted at the time of the receipt of the packages.
After the periods mentioned have elapsed, or after the transportation charges have been paid,
no claim whatsoever shall be admitted against the carrier with regard to the condition in which the
goods transported were delivered.
A telephone call was made by Chan to Abastillas, informing the latter of the contamination.
However, nothing in the trial courts decision stated that the notice of claim was relayed or filed
with the respondent-carrier immediately or within a period of twenty-four hours from the time the
goods were received. The Court of Appeals made the same finding. Having examined the entire
records of the case, we cannot find a shred of evidence that will precisely and ultimately point to
the conclusion that the notice of claim was timely relayed or filed. Chan had no personal
knowledge that the drivers of the respondent were informed of the contamination.
This protects the carrier by affording it an opportunity to make an investigation of a claim while
the matter is fresh and easily investigated so as to safeguard itself from false and fraudulent
claims.
The filing of a claim with the carrier within the time limitation therefore actually constitutes a
condition precedent to the accrual of a right of action against a carrier for loss of, or damage to,
the goods. The shipper or consignee must allege and prove the fulfillment of the condition. If it fails
to do so, no right of action against the carrier can accrue in favor of the former.
It is not only when the period to make a claim has elapsed that no claim whatsoever shall be
admitted, as no claim may similarly be admitted after the transportation charges have been paid.
In this case, there is no question that the transportation charges have been paid, as admitted by
the petitioner, and the corresponding official receipt duly issued.

2. Aboitiz Shipping Corp. v Insurance Company of North America (ICNA), August 6, 2008
Facts
MSAS procured an all risk marine insurance policy from ICNA for transshipment of certain
wooden work tools and workbenches purchased for consignee Science Teaching Improvement
Project (STIP). The cargo, packed inside a container van, was shipped freight prepaid from
Germany on board M/S Katsuragi. A clean bill of lading was issued by Hapag-Lloyd which stated the
consignee to be STIP, Cebu City.
The container van was off-loaded at Singapore and transshipped on board M/S Vigour
Singapore. When the ship arrived and docked at Manila, the container van was again off-loaded.
The cargo was received by Aboitiz, which issued a bill of lading containing the notation grounded
outside warehouse. The container van was stripped and transferred to another crate/container
van without any notation on the condition of the cargo on the Stuffing/Stripping Report. The
container van was loaded on board Aboitizs vessel en route to Cebu.
The shipment arrived in Cebu City and discharged. It was brought to the Cebu Bonded
Warehousing Corporation pending clearance from the Customs. In the Stripping Report, Aboitizs
checker noted that the crates were slightly broken or cracked at the bottom.
The cargo was withdrawn by STIP and delivered to Don Bosco High School, and received by Mr.
Willig. Two days later, Willig, through a telephone call, informed Perez, the Claims Head of Aboitiz,
that the cargo sustained water damage. Perez inspected the contrainer and found that the
container van and other cargoes were completely dry. Perez found that except for the bottom of
the crate which was slightly broken, the crate itself appeared to be completely dry and had no
water marks. But he confirmed that the tools which were stored inside the crate were already
corroded. He further explained that the "grounded outside warehouse" notation in the bill of lading
referred only to the container van bearing the cargo.
STIP filed insurance claims with ICNA. The inspection showed the goods sustained water
damage, molds, and corrosion which were discovered upon delivery to consignee. STIP filed a
formal claim with Aboitiz. A supplemental report showed that PAGASA reported heavy rains that
caused water damage to the shipment, which were placed outside the warehouse of the Pier in
Manila as can be gleaned from the bill of lading which contained the notation grounded outside
warehouse. It was only 4 days after that the shipment was stuffed inside another container van
for shipment to Cebu.
ICNA paid the amount, and formally advised Aboitiz of the claim, which the latter did not settle.
The RTC rendered judgment against ICNA ruling that it failed to prove personality to sue because it
was ICNA UK who issued the policy not ICNA Phils. ICNA failed to produce evidence that it was a
foreign corporation duly licensed to do business in the Philippines. Thus, it lacked the capacity to
sue before Philippine Courts. On appeal, the CA reversed the RTC ruling holding that the right of
subrogation accrues simply upon payment by the insurance company of the insurance claim. As
subrogee, ICNA is entitled to reimbursement from Aboitiz, even assuming that it is an unlicensed
foreign corporation. The CA ruled that the presumption that the carrier was at fault or that it acted
negligently was not overcome by any countervailing evidence. Hence, Aboitiz brought the present
petition.
Issue
Was there a timely filing of the notice of claim as required under Article 366 of the Code of
Commerce
Ruling
The giving of notice of loss or injury is a condition precedent to the action for loss or injury or
the right to enforce the carrier's liability. Circumstances peculiar to this case lead Us to conclude
that the notice requirement was complied with.
The shipment was delivered on August 11, 1993. Although the letter informing the carrier of
the damage was dated August 15, 1993, that letter, together with the notice of claim, was
received by petitioner only on September 21, 1993. But petitioner admits that even before it

received the written notice of claim, Mr. Mayo B. Perez, Claims Head of the company, was informed
by telephone sometime in August 13, 1993. Mr. Perez then immediately went to the warehouse
and to the delivery site to inspect the goods in behalf of petitioner.
There are peculiar circumstances in the instant case that constrain Us to rule differently from
the PCIC case, albeit this ruling is being made pro hac vice, not to be made a precedent for other
cases.
Provisions specifying a time to give notice of damage to common carriers are ordinarily to be
given a reasonable and practical, rather than a strict construction.37 We give due consideration to
the fact that the final destination of the damaged cargo was a school institution where authorities
are bound by rules and regulations governing their actions. Understandably, when the goods were
delivered, the necessary clearance had to be made before the package was opened. Upon opening
and discovery of the damaged condition of the goods, a report to this effect had to pass through
the proper channels before it could be finalized and endorsed by the institution to the claims
department of the shipping company.
The call to petitioner was made two days from delivery, a reasonable period considering that
the goods could not have corroded instantly overnight such that it could only have sustained the
damage during transit. Moreover, petitioner was able to immediately inspect the damage while the
matter was still fresh. In so doing, the main objective of the prescribed time period was fulfilled.
Thus, there was substantial compliance with the notice requirement in this case.
Petitioner failed to overturn this presumption of negligence when it failed to explain where the
cargo was stored during the time rain fell on Manila and the bill of lading contained the notation
grounded outside warehouse.

Damages
1. Victory Liner, Inc. v Rosalito Gammad, et al., November 25, 2004
Facts
Gammad showed that his wife Marie Grace was on board a Victory Liner bus running at high
speed when it fell on a ravine, which resulted to her death and physical injuries to other
passengers.
The heirs of the deceased filed a complaint for damages arising from culpa contractual. the
petitioner claimed that the incident was purely accidental and that it has always exercised
extraordinary diligence.
The trial court ordered Victory Liner to pay actual damages, death indemnity, exemplary and
moral damages, compensatory damages, attorneys fees and cost of the suit. The CA affirmed the
trial courts decision but reduced the actual and exemplary damages. The CA denied the MR.
Hence, the present petition wherein VL argues that the award of damages were without basis and
should be deleted.
Issue
Whether the award of damages was proper
Ruling
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.
There is no evidence to rebut the statutory presumption that the proximate cause of Marie Graces
death was the negligence of petitioner.

Nevertheless, the award of damages should be modified. Article 1764 in relation to Article
2206 of the Civil Code, holds the common carrier in 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.
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. Rosalito did not present evidence attesting to Marie Graces earning
capacity as BIR Section Chief.
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 cannot,
from the nature of the case, be proved with certainty.
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 and
require separate determination. 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 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 correction for the public good may be
recovered in contractual obligations if the defendant acted in wanton, fraudulent, reckless,
oppressive, or malevolent manner.
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
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.
Actual damages should be further reduced to P78,160.00, which was the amount supported by
official receipts.
Pursuant to Article 2208 of the Civil Code, attorneys fees may also be recovered in the case 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.
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
2. Spouses Ong v CA, Inland Railways, Inc. and Philtranco, January 21, 1999
Facts
The Ongs boarded an Inland bus under a lease agreement with Philtranco, driven by Coronel.
When the bus slowed down to avoid a stalled cargo truck, it was bumped from the rear by another

bus, owned and operated by Philtranco and driven by Miralles. The spouses suffered injuries and
were brought to a hospital for treatment and were confined for 9 days.
Later, the Ongs filed an action against Philtranco and Inland alleging that they suffered
injuries, preventing Francia from operating a sari-sari store and Renato from continuing his work as
an OCW. The also claimed moral, exemplary and corrective damages, compensatory damages,
medical and miscellaneous expenses, and attorneys fees. They presented various documentary
evidence.
Philtranco answered that the Inland bus was owned by the latter and that they had an
agreement that Inland would be solely liable for all claims and liabilities arising from the operation
of said bus. With respect to its own bus, it exercised the diligence of a good father of a family in
the selection and supervision of its drivers, and that the proximate cause of the accident was the
negligence of either the cargo truck or the Inland bus which collided with said cargo truck.
Inland answered that the Police Report showed that Miralles was at fault and that Coronel
exercised extraordinary diligence as testified to by its passengers.
The trial court absolved Inland and found Philtranco liable for damages against the spouses
Ong. It ruled that the proximate cause of the accident was the bumping form behind by the
Philtranco bus. On appeal, the CA resolved that Philtranco should be absolved from liability
because the Police Report was not offered as evidence, hence, had no probative value. Instead it
was Inland who should be made liable on the basis of culpa contractual. Further, it reduced
Inlands liability based on the records and disallowed the award for unearned income and the
amount of moral damages was likewise reduced. Hence, the present petition.
Issue
1.

2.

Whether the Police Report, which was not formally offered in evidence, could be used to
establish a claim against Philtranco based on culpa aquiliana
Whether the reduction in the amounts of damages awarded was proper

Ruling
A formal offer is necessary, since judges are required to base their findings of fact and their
judgment solely and strictly upon the evidence offered by the parties at the trial. To allow parties
to attach any document to their pleadings and then expect the court to consider it as evidence,
even without formal offer and admission, may draw unwarranted consequences. Opposing parties
will be deprived of their chance to examine the document and to object to its admissibility. On the
other hand, the appellate court will have difficulty reviewing documents not previously scrutinized
the court below.
Granting arguendo that there was an agreement to submit the case for decision based on the
pleadings, this does not necessarily imply that petitioners are entitled to the award of damages.
The fundamental principle of the law on damages is that one injured by a breach of contract or by
a wrongful or negligent act or omission shall have a fair and just compensation, commensurate
with the loss sustained as a consequence of the defendant's acts. Hence, actual pecuniary
compensation is the general rule, except where the circumstances warrant the allowance of other
kinds of damages.
To be recoverable, actual damages must be pleaded and proven in Court. In no instance may
the trial judge award more than those so pleaded and proven. Damages cannot be presumed. The
award thereof must be based on the evidence presented, not on the personal knowledge of the
court. Damages, after all, are not intended to enrich the complainant at the expense of the
defendant.
In the case at bar, it was sufficiently shown during the trial that Francia's right arm could not
function in a normal manner and that, as a result, she suffered mental anguish and anxiety. Thus,
an increase in the amount of moral damages awarded, from P30,000 to P50,000, appears to be
reasonable and justified. Renato also suffered mental anxiety and anguish from the accident. Thus,
he should be separately awarded P30,000 as moral damages.

In the case at bar, petitioner failed to present evidence regarding the feasibility or
practicability and the cost of a restorative medical operation on her arm. Thus, there is no basis to
grant her P48,000 for such expense.
The appellate court was correct in deleting the award for unrealized income, because of
petitioner's utter failure to substantiate her claim. The bare and unsubstantiated assertion of
Francia that she usually earned P200 a day from her market stall is not the best evidence to prove
her claim of unrealized income for the eight-month period that her arm was in plaster cast.

3.

Northwest Airlines v Chiong, January 31, 2008

Facts
Philimare, as the authorized Philippine agent of TransOcean, hired Chiong as third engineer of
TransOceans vessel M/V Elbia. Subsequently, Philmare dispatched a letter of guarantee to CL
Hutchins and Co., TranOceans agent at the San Diego Port, confirming Chiongs arrival in time to
board the vessel. For this purpose, Philimare purchased for Chiong a Northwest plane ticket for San
Diego from Manila. Chiong, on queue at the check-in counter, was informed that his name did not
appear in the list of confirmed departing passengers. He was directed to speak to a man standing
outside the Northwests counters from whom Chiong could allegedly obtain a boarding pass.
Posthaste, Chiong approached the man but having no $100 to pay for the boarding pass he went
on queue at the check-in counter again and presented his ticket where he was made to wait. When
Chiong approached Calvo if she had money for the boarding pass, the latter found something
amiss because his plane ticket was already confirmed. Ultimately, Chiong was not allowed to board
the flight and was unable to work at the M/V Elbia.
It appears that Chiongs name was crossed out and substituted with "W. Costine" in
Northwests Air Passenger Manifest.
Chiong demanded as recompense: (1) the amount equivalent to Chiongs salary under the
latters Crew Agreement with TransOcean; (2) P15,000 for Chiongs expenses in fetching and
bringing his family from Samar to Manila; (3) P500,000 as moral damages; and (4) P500,000 as
legal fees. When Northwest demurred, Chiong filed a complaint for breach of contract of carriage.
Northwest contradicted the claim that it breached its contract of carriage with Chiong,
reiterating that Chiong had no cause of action against it because per its records, Chiong was a "noshow" passenger.
The RTC rendered a Decision finding preponderance of evidence in favor of Chiong, and holding
Northwest liable for breach of contract of carriage. The RTC ruled that the evidence adduced by the
parties supported the conclusion that Chiong was deliberately prevented from checking-in and his
boarding pass unjustifiably withheld to accommodate an American passenger by the name of W.
Costine. The CA affirmed the RTC ruling.
Issue
Whether Northwest breached its contract of carriage with Chiong and if so, whether it is liable
for compensatory, actual, moral and exemplary damages, attorneys fees, and costs of suit
Ruling
In addition to his testimony, Chiongs evidence consisted of a Northwest ticket, Chiongs
passport and seaman service record book duly stamped at the PCG counter, and the testimonies of
Calvo, Florencio Gomez, and Philippine Overseas Employment and Administration (POEA)
personnel who all identified the signature and stamp of the PCG on Chiongs passport.
Northwest did not present any evidence to support its belated defense that Chiong departed
from the Philippines on April 17, 1989 to work as Third Engineer on board M/V Elbia under the
original crew agreement. Its bare-faced claim that Chiong was a no-show passenger was belied by
the records.
Even if Chiong left the Philippines on April 17, 1989, it would not necessarily prove that Chiong
was a "no-show" on April 1, 1989. Neither does it negate the already established fact that Chiong
had a confirmed ticket for April 1, 1989, and first passed through the PCG counter without delay,
then reached and was at the Northwest check-in counters on time for the scheduled flight.

Northwest breached its contract of carriage with Chiong.

Time and again, we have declared that a contract of carriage, in this case, air transport, is
primarily intended to serve the traveling public and thus, imbued with public interest. The law
governing common carriers consequently imposes an exacting standard of conduct. As the
aggrieved party, Chiong only had to prove the existence of the contract and the fact of its nonperformance by Northwest, as carrier, in order to be awarded compensatory and actual damages.
Article 2220 of the Civil Code of the Philippines, an award of moral damages, in breaches of
contract, is in order upon a showing that the defendant acted fraudulently or in bad faith. Bad faith
does not simply connote bad judgment or negligence. It imports a dishonest purpose or some
moral obliquity and conscious doing of a wrong. It means breach of a known duty through some
motive, interest or ill will that partakes of the nature of fraud.
The award of exemplary damages is also correct given the evidence that Northwest acted in an
oppressive manner towards Chiong.
Attorneys fees may be awarded when a party is compelled to litigate or incur expenses to
protect his interest, or where the defendant acted in gross and evident bad faith in refusing to
satisfy the plaintiffs plainly valid, just and demandable claim.
4.

Japan Airlines, Inc. v Simangan, September 22, 2008

Facts
Simangan decided to donate a kidney to his ailing cousin Loreto, in California. Simangan
needed to go to the US to complete his preliminary work-up and donation surgery. Upon UCLAs
request, Simangan was issued an emergency US visa by the American Embassy in Manila.
Respondent purchased a round trip plane ticket from petitioner JAL and was issued the
corresponding boarding pass.
On the date of the flight, he went to the airport and was allowed to check-in at JALs counter.
His plane ticket, boarding pass, travel authority and personal articles were subjected to rigid
immigration and security routines. Respondent was then allowed to board the airplane.
While inside the airplane, JALs crew suspected Simangan of carrying a falsified travel
document and imputed that he would only use the trip to the US as a pretext to stay and work in
Japan. Later, he was ordered to leave the plane. Respondent protested, explaining that he was
issued a US visa. His pleas were ignored and was bumped off.
Respondent went to JAL's ground office and waited there for three hours. Meanwhile, the plane
took off and he was left behind. Afterwards, he was informed that his travel documents were,
indeed, in order. Respondent was refunded the cost of his plane ticket less the sum of US$500.00
which was deducted by JAL. Subsequently, respondent's U.S. visa was cancelled.
Respondent filed an action for damages against JAL. The latter denied the material allegations
of the complaint. The RTC ordered JAL to pay Simangan moral, exemplary damages and attorneys
fees, plus the cost of suit. The CA affirmed the RTCs decision but lowered the amount of moral and
exemplary damages and deleted the award of attorneys fees. Hence, the present petition.
Issue
Whether JAL is guilty of breach of contract of carriage, and if so liable for moral and exemplary
damages
Ruling
Since JAL definitely declared that the flight could not wait for respondent, it gave respondent
no choice but to be left behind. The latter was unceremoniously bumped off despite his
protestations and valid travel documents and notwithstanding his contract of carriage with JAL.
Damage had already been done when respondent was offered to fly the next day on July 30, 1992.
Said offer did not cure JAL's default.
Moreover, the reason behind the bumping off incident, as found by the RTC and CA, was that
JAL personnel imputed that respondent would only use the trip to the United States as a pretext to
stay and work in Japan.
Apart from the fact that respondent's plane ticket, boarding pass, travel authority and personal
articles already passed the rigid immigration and security routines, JAL, as a common carrier,
ought to know the kind of valid travel documents respondent carried. As provided in Article 1755 of

the New Civil Code: "A common carrier is bound to carry the passengers safely as far as human
care and foresight can provide, using the utmost diligence of very cautious persons, with a due
regard for all the circumstances." Thus, We find untenable JAL's defense of "verification of
respondent's documents" in its breach of contract of carriage.
The power to admit or not an alien into the country is a sovereign act which cannot be
interfered with even by JAL.
In an action for breach of contract of carriage, all that is required of plaintiff is to prove the
existence of such contract and its non-performance by the carrier through the latter's failure to
carry the passenger safely to his destination. Respondent has complied with these twin requisites.
As a general rule, moral damages are not recoverable in actions for damages predicated on a
breach of contract for it is not one of the items enumerated under Article 2219 of the Civil Code. As
an exception, such damages are recoverable: (1) in cases in which the mishap results in the death
of a passenger, as provided in Article 1764, in relation to Article 2206(3) of the Civil Code; and (2)
in the cases in which the carrier is guilty of fraud or bad faith, as provided in Article 2220. JAL
breached its contract of carriage with respondent in bad faith. JAL personnel summarily and
insolently ordered respondent to disembark while the latter was already settled in his assigned
seat. He was certainly embarrassed and humiliated when, in the presence of other passengers, the
appellant's airline staff shouted at him to stand up and arrogantly asked him to produce his travel
papers, without the least courtesy every human being is entitled to. Inattention to and lack of care
for the interests 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.
JAL is also liable for exemplary damages as its above-mentioned acts constitute wanton,
oppressive and malevolent acts against respondent. Exemplary damages, which are awarded by
way of example or correction for the public good, may be recovered in contractual obligations, as
in this case, if defendant acted in wanton, fraudulent, reckless, oppressive, or malevolent manner.
It was therefore erroneous for the CA to delete the award of attorney's fees on the ground that
the record is devoid of evidence to show the cost of the services of respondent's counsel. The
amount is actually discretionary upon the Court so long as it passes the test of reasonableness.
They may be recovered as actual or compensatory damages when exemplary damages are
awarded and whenever the court deems it just and equitable, as in this case.

5.

PAL v CA and Spouses Buncio, September 22, 2008

Facts
The spouses Buncio purchased from PAL two plane tickets for their 2 minor children. Since they
will travel as unaccompanied minors, PAL required the Buncios accomplished an indemnity bond as
required. PAL agreed to transport the minors from Manila to San Francisco, and upon arrival in SF,
to transport through a connecting flight to Los Angeles, via United Airways where they will be met
by their grandmother at the LAX.
When the children arrived at SF airport, United Airways refused to take them aboard because
PALs personnel in SF could not produce the indemnity bond submitted by the Buncios, which was
lost by PALs personnel during the previous stop-over in Honolulu. Subsequently, Mr. Strigl, Lead
Traffic Agent of PAL in SF, took the children to his residence where they stayed overnight.
When UAs airplane landed in LAX, Mrs. Regalado, the grandmother, found no children and
could not get any answer as to their whereabouts. Next day, the minors boarded a Western Airlines
plane bound for LA where they were met by Mrs. Regalado. PALs personnel had previously
informed her of the late arrival.
The Buncios sent a demand for damages for the gross negligence and inefficiency of its
employees, which went unheeded. Hence, a complaint was filed. Petitioner denied that the loss of
the indemnity bond was caused by the gross negligence and malevolent conduct of its personnel.
Petitioner averred that it always exercised the diligence of a good father of the family in the
selection, supervision and control of its employees. In addition, the children were personally

escorted by Strigl, and the latter exerted efforts to make the connecting flight of Deanna and
Nikolai to Los Angeles possible. Further, they were not left unattended from the time they were
stranded in San Francisco until they boarded Western Airlines for a connecting flight to Los
Angeles.
The RTC held PAL liable for damages for breach of contract of carriage and awarded moral and
exemplary damages plus attorneys fees and costs of suit. The CA affirmed the RTC in toto. Hence,
the present petition.
Issue
Whether PAL is liable for damages
Ruling
When an airline issues a ticket to a passenger, confirmed for a particular flight on a certain
date, a contract of carriage arises. The passenger has every right to expect that he be transported
on that flight and on that date, and it becomes the airlines obligation to carry him and his luggage
safely to the agreed destination without delay. If the passenger is not so transported or if in the
process of transporting, he dies or is injured, the carrier may be held liable for a breach of contract
of carriage.
In breach of contract of air carriage, moral damages may be recovered where (1) the mishap
results in the death of a passenger; or (2) where the carrier is guilty of fraud or bad faith; or (3)
where the negligence of the carrier is so gross and reckless as to virtually amount to bad faith.
Gross negligence implies a want or absence of or failure to exercise even slight care or
diligence, or the entire absence of care. It evinces a thoughtless disregard of consequences
without exerting any effort to avoid them.
Petitioner was fully aware that the children were travelling as unaccompanied minors and
require special care. They also knew that the indemnity bond was required for the children to make
the connecting flight. Yet, it did not exercise utmost care in handling the indemnity bond resulting
in its loss. This was the proximate loss of the failure of the minors to make their connecting flight.
This manifests that PAL did not check or verify if the indemnity bond was in its custody before
leaving Honolulu.
The foregoing circumstances reflect petitioners utter lack of care for and inattention to the
welfare of Deanna and Nikolai as unaccompanied minor passengers. They also indicate petitioners
failure to exercise even slight care and diligence in handling the indemnity bond. Clearly, the
negligence of petitioner was so gross and reckless that it amounted to bad faith.
Petitioner should have asked for the indemnity bond from the immigration office during the
stop-over instead of partly blaming the said office later on for the loss of the indemnity bond.
Petitioners insensitivity on this matter indicates that it fell short of the extraordinary care that the
law requires of common carriers.
Petitioner breached its contract of carriage with private respondents, and it acted recklessly
and malevolently in transporting Deanna and Nikolai as unaccompanied minors and in handling
their indemnity bond. We have also ascertained that private respondents are entitled to moral
damages because they have sufficiently established petitioners gross negligence which amounted
to bad faith. This being the case, the award of exemplary damages is warranted.
The award of attorneys fees is the exception, not the general rule, and it is not sound public
policy to place a penalty on the right to litigate; nor should attorneys fees be awarded every time
a party wins a lawsuit. The text of the decision must state the reason behind the award of
attorneys fees. Otherwise, its award is totally unjustified. In the instant case, the award of
attorneys fees was merely cited in the dispositive portion of the RTC decision without the RTC
stating any legal or factual basis for said award. Hence, the Court of Appeals erred in sustaining
the RTCs award of attorneys fees.
The RTC and the Court of Appeals ordered petitioner to pay Deanna and Nikolai P50,000 each
as moral damages. Both of them testified that they were afraid and were not able to eat and sleep
during the time they were stranded in San Francisco. Likewise, the award of P25,000.00 each to

Deanna and Nikolai as exemplary damages is fair so as to deter petitioner and other common
carriers from committing similar or other serious wrongdoings. Both courts also directed petitioner
to pay private respondent Aurora R. Buncio P75,000. as moral damages. This is equitable and
proportionate considering the serious anxiety and mental anguish she experienced as a mother
when Deanna and Nikolai were not allowed to take the connecting flight as scheduled and the fact
that they were stranded in a foreign country and in the company of strangers. Also, the award of
P30,000.00 as moral damages to Mrs. Regalado is appropriate because of the serious anxiety and
wounded feelings she felt as a grandmother when Deanna and Nikolai, whom she was to meet for
the first time, did not arrive at the Los Angeles Airport. The omission of award of damages to
private respondent Manuel S. Buncio was proper for lack of basis. His court testimony was rightly
disregarded by the RTC because he failed to appear in his scheduled cross-examination.
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 rate of 6% per annum. We further
declared that when the judgment of the court awarding a sum of money becomes final and
executory, the rate of legal interest, whether it is a loan/forbearance of money or not, shall be 12%
per annum from such finality until its satisfaction, this interim period being deemed to be then
equivalent to a forbearance of credit.

6.

Canada, under the name and style of Hi-Ball Freight Services v All Commodities Marketing
Corporation (ACMC), October 17, 2008
Facts
ACMC contracted Hi-Balls freight services to haul and deliver 1,000 sacks of sugar from Tondo
to Pepsi Cola at Muntinlupa. The transaction was covered by two delivery receipts of All Star, but
duly signed by Hi-Balls driver. Hi-Ball loaded the sacks into his 2 trucks; however, the same were
never delivered to Pepsi. The drivers of the trucks, along with the helpers, had vanished.
ACMC demanded payment of the value of the sugar, but the demand was not heeded.
Consequently, a complaint was filed to recover the value of the lost sugar. Hi-Ball averred that the
cargo were delivered to Pepsi. He rejected responsibility for the claim arguing that the loss of the
goods was either due to respondents negligence or due to fortuitous event. By way of
counterclaim, petitioner asserted his right to payment of P350,000, representing the value of the
truck that was allegedly seized by respondent.
The RTC ordered Hi-Ball to pay the value of the lost sugar, actual losses in terms of unearned
income, cost of money and opportunity lost, exemplary damages, costs of suit, litigation expenses
and attorneys fees. The CA affirmed the RTCs decision and rejected Hi-Balls totally new and
never raised before argument that there was no contract of carriage with ACMC. Hence, the
present petition where Hi-Ball passes responsibility to All Star, whose name appeared in the
delivery receipt.
Issue
Whether Hi-Ball was in breach of the contract of carriage and liable for damages
Ruling
At the trial court stage, petitioner insisted that the goods were delivered to the Pepsi Cola
Plant. He further argued that the loss was either due to the fault of respondent or due to fortuitous
event. After the RTC rendered an adverse decision, petitioner adopted a new theory, denying his
contract with respondent and passing all the responsibility to All Star. Points of law, theories, issues
and arguments not brought to the attention of the lower court ordinarily will not be considered by a
reviewing court because they cannot be raised for the first time at that late stage.
Petitioner had admitted his contract of carriage with respondent in the court a quo. Petitioner
also admitted that the truck drivers and helpers who loaded the goods were his employees. He
even tried to settle the case amicably, but negotiations for settlement had failed. These were
unmistakable admissions of petitioners contractual relation with respondent. In the absence of a

compelling reason to the contrary, petitioners admission of his contract with respondent is
definitely binding on him.
The exempting circumstance of caso fortuito may be availed of only when: (a) the cause of the
unforeseen and unexpected occurrence was independent of the human will; (b) it was impossible
to foresee the event which constituted the caso fortuito or, if it could be foreseen, it was
impossible to avoid; (c) the occurrence must be such as to render it impossible to perform an
obligation in a normal manner; and (d) the person tasked to perform the obligation must not have
participated in any course of conduct that aggravated the accident. Other than petitioners barefaced assertion that the cargo were lost due to fortuitous event, no evidence was offered to
substantiate it.
It is elementary that to recover damages there must be pleading and proof of actual damages
suffered. No actual damages can thus be awarded to respondent.
Temperate damages may be allowed in cases where from the nature of the case, definite proof
of pecuniary loss cannot be adduced, although the court is convinced that the aggrieved party
suffered some pecuniary loss. Undoubtedly, pecuniary loss had been suffered by respondent in this
case. But due to the insufficiency of evidence before us, we cannot establish the amount of such
loss with certainty. In this regard, considering the attendant circumstances, we find the amount of
P250,000 to be sufficient.
The grant of temperate damages paves the way for the award of exemplary damages. Under
Article 2234 of the Civil Code, a showing that the plaintiff is entitled to temperate damages allows
the award of exemplary damages. Thus, we uphold the award of P50,000 as exemplary damages.
We uphold respondents entitlement to attorneys fees, but we fix the amount at P50,000.00.

7.

UCPB General Insurance Co., Inc. v Aboitiz Shipping Corp., Eagle Express Lines, Damco Intermodal
Services, Inc., and Pimentel Customs Brokerage Co., February 10, 2009
Facts
San Miguel Corporation (SMC) purchased 3 units of waste water treatment plant from Super
Max. The goods came from USA and arrived at the port of Manila. The same were then transported
to Cebu on board MV Aboitiz Supercon II. After its arrival at the port of Cebu, the goods were
delivered to and received by SMC at its plant site where it was then discovered that one electrical
motor was damaged.
Pursuant to an insurance agreement UCPB paid SMC. UCPB filed a complaint as subrogee
against the defendants. The trial court ordered DAMCO, Eagle and Aboitiz solidarily liable to
plaintiff. The CA reversed the decision and ruled that UCPBs right of action did not accrue for
failure to file a formal notice of claim within 24 hours from SMCs receipt. UCPB claims that under
the Carriage of Goods by Sea Act (COGSA), notice of loss need not be given if the condition of the
cargo has been the subject of joint inspection such as, in this case, the inspection in the presence
of the Eagle Express representative at the time the cargo was opened at the ICTSI. UCPB further
claims that the issue of the applicability of Art. 366 of the Code of Commerce was never raised
before the trial court and should, therefore, not have been considered by the Court of Appeals.
Aboitiz argues that it obviously cannot be held liable for the damage to the cargo which, by
UCPBs admission, was incurred not during transshipment to Cebu on board one of Aboitizs
vessels, but was already existent at the time of unloading in Manila. Aboitiz also argues that Art.
366 is applicable.
Issue
Who is liable for the damage
Ruling
When the shipment was discharged and opened at the ICTSI in Manila in the presence of an
Eagle Express representative, the cargo had already been found damaged. When the cargo was
finally received by SMC at its Mandaue City warehouse, it was found in bad order, thereby

confirming the damage already uncovered in Manila. Even by the exercise of extraordinary
diligence, Aboitiz could not have undone the damage to the cargo that had already been there
when the same was shipped on board its vessel.
The claims were dated more than three months from receipt of the shipment and, at that, even
after the extent of the loss had already been determined by SMCs surveyor. The claim was,
therefore, clearly filed beyond the 24-hour time frame prescribed by Art. 366 of the Code of
Commerce.
The notice in writing need not be given if the state of the goods has at the time of their receipt
been the subject of joint survey or inspection.
UCPB seizes upon the last paragraph which dispenses with the written notice if the state of the
goods has been the subject of a joint survey which, in this case, was the opening of the shipment
in the presence of an Eagle Express representative. It should be noted at this point that the
applicability of the above-quoted provision of the COGSA was not raised as an issue by UCPB
before the trial court and was only cited by UCPB in its Memorandum in this case.
But Eagle Express had acted as the agent of the freight consolidator, not that of the carrier to
whom the notice should have been made.
UCPBs misrepresentation that the applicability of the Code of Commerce was not raised as an
issue before the trial court warrants the assessment of double costs of suit against it.

8.

Sulpicio Lines, Inc. v Curso, March 17, 2010

Facts
The MV Dona Marilyn sank at sea bound for Tacloban due to the inclement sea and weather
conditions brought by typhoon Unsang. Dr. Curso died as a result, along with hundreds of other
passengers. The surviving brothers and sisters of Dr. Curso filed a complaint for damages for
breach of contract of carriage by sea, averring negligence. SLI denied liability, invoking force
majeure, and that the vessel was seaworthy in all respects and was cleared by the PCG.
The RTC dismissed the complaint finding that the sinking of the vessel was due to force
majeure and that respondents failed to prove their claim for damages. The CA found SLI negligent
for not having apprised themselves of the weather reports. The Court doubts the fitness of the ship
for the voyage, since at the first sign of bad weather, the ships hydraulic system failed and had to
be repaired mid-voyage. The fact that the stud bolts in the ships hydraulic system gave way while
the ship was at sea discredits the theory that the appellee exercised due diligence in maintaining
the seaworthy condition of the vessel. The CA ordered SLI to compensate the plaintiffs for moral
damages, death indemnity, and loss of earning capacity, as well as costs of suit. Hence, the
present petition where SLI insists that the brothers and sisters were not entitled to moral damages.
Issue
Whether the brothers and sisters of a deceased passenger in a case of breach of contract of
carriage entitled to an award of moral damages against the carrier
Ruling
Article 2206. 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. In
addition:
Xxx
3) The spouse, legitimate and illegitimate descendants and ascendants of the deceased may
demand moral damages for mental anguish by reason of the death of the deceased.
The foregoing legal provisions set forth the persons entitled to moral damages. The omission
from Article 2206 (3) of the brothers and sisters of the deceased passenger reveals the legislative
intent to exclude them from the recovery of moral damages for mental anguish by reason of the
death of the deceased. Inclusio unius est exclusio alterius. The solemn power and duty of the

courts to interpret and apply the law do not include the power to correct the law by reading into it
what is not written therein. Thus, the CA erred in awarding moral damages to the respondents.
To be entitled to moral damages, the respondents must have a right based upon law. It is true
that under Article 1003 of the Civil Code they succeeded to the entire estate of the late Dr. Curso
in the absence of the latters descendants, ascendants, illegitimate children, and surviving spouse.
However, they were not included among the persons entitled to recover moral damages.
In fine, moral damages may be recovered in an action upon breach of contract of carriage only
when: (a) where death of a passenger results, or (b) it is proved that the carrier was guilty of fraud
and bad faith, even if death does not result. Article 2206 of the Civil Code entitles the descendants,
ascendants, illegitimate children, and surviving spouse of the deceased passenger to demand
moral damages for mental anguish by reason of the death of the deceased.

9.

Sps. Cruz v Sun Holidays, Inc., June 29, 2010

Facts
Sps. Cruz filed a complaint for damages against Sun Holidays arising from their sonss
death who perished with his wife on board the boat M/B Coco Beach III that capsized en route
to Batangas from Puerto Galera where the coupled had stayed at Coco Beach Island Resort
owned by Sun, by virtue of a tour package-contract with the latter. Eight passengers, including
petitioners son and his wife, died during the incident. Sun denied responsibility claiming
fortuitous event. Petitioners allege that as a common carrier, Sun was negligent in allowing the
boat to sail notwithstanding storm warning bulletins issued by PAGASA. Respondent denied
being a common carrier, alleging that its boats are not available to the general public as they
only ferry Resort guests and crew members. Nonetheless, it claimed that it exercised the
utmost diligence in ensuring the safety of its passengers; contrary to petitioners allegation,
there was no storm as the Coast Guard in fact cleared the voyage; and M/B Coco Beach III was
not filled to capacity and had sufficient life jackets for its passengers
The RTC dismissed the complaint. The CA denied the appeal holding that Sun is a
private carrier which is only required to observe ordinary diligence. That respondent in fact
observed extraordinary diligence in transporting its guests on board M/B Coco Beach III; and
that the proximate cause of the incident was a squall, a fortuitous event. Hence, the present
petition.
Issue
Whether Sun was guilty of breach of contract of carriage
Ruling
Respondent is a common carrier. Its ferry services are so intertwined with its main
business as to be properly considered ancillary thereto. The constancy of respondents ferry
services in its resort operations is underscored by its having its own Coco Beach boats. And the
tour packages it offers, which include the ferry services, may be availed of by anyone who can
afford to pay the same. These services are thus available to the public. The Court is aware of
the practice of beach resort operators offering tour packages to factor the transportation fee in
arriving at the tour package price.
The evidence shows that PAGASA issued 24-hour public weather forecasts and tropical
cyclone warnings for shipping on September 10 and 11, 2000 advising of tropical depressions
in Northern Luzon which would also affect the province of Mindoro.
To fully free a common carrier from any liability, the fortuitous event must have been
the proximate and only cause of the loss. And it should have exercised due diligence to
prevent or minimize the loss before, during and after the occurrence of the fortuitous event.
The occurrence of squalls was expected under the weather condition. Evidence shows
that M/B Coco Beach III suffered engine trouble before it capsized and sank. The incident was,
therefore, not completely free from human intervention.

The Civil Code holds the common carrier in 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.
Petitioners are entitled to indemnity for the death of Ruelito which is fixed at P50,000.
As for damages representing unearned income, the formula for its computation is:
Net Earning Capacity = life expectancy x (gross annual income - reasonable and necessary
living expenses).
Life expectancy is determined in accordance with the formula:
2/3 x [80 age of deceased at the time of death]
Respecting the award of moral damages, since respondent common carriers breach of
contract of carriage resulted in the death of petitioners son, following Article 1764 vis--vis
Article 2206 of the Civil Code, petitioners are entitled to moral damages.
Since respondent failed to prove that it exercised the extraordinary diligence required
of common carriers, it is presumed to have acted recklessly, thus warranting the award too of
exemplary damages, which are granted in contractual obligations if the defendant acted in a
wanton, fraudulent, reckless, oppressive or malevolent manner.
Pursuant to Article 2208 of the Civil Code, attorney's fees may also be awarded where
exemplary damages are awarded. The Court finds that 10% of the total amount adjudged
against respondent is reasonable for the purpose.

10. Heirs of Jose Ochoa v G&S Transport Corporation, March 9, 2011

Facts
Jose died while on board an Avis taxicab owned and operated by G&S, which was
cruising at high speed when it tried to overtake another vehicle, a ten-wheeler truck, which it
failed to do and instead rammed the railing throwing itself off the fly-over.
Joses wife and minor children demanded indemnity in the total amount of
P15,000,000. Unheeded, Ruby filed a complaint for damages. G&S answered that the cab was
bumped by an on-rushing van causing the taxicab to ram the railings and fall over. They
posited that it was a fortuitous event and/or the fault or negligence of the driver of the van
that hit the cab. It likewise claimed that it exercised the diligence required of a good father of a
family in the selection and supervision of its employees
The RTC found the driver of G&S to be negligent and the latter did not prove exercise
of diligence of a good father of a family in the selection and supervision of its employees as
insufficient. The heirs filed a motion for partial reconsideration asking for moral damages while
G&S filed an appeal. The trial court declared them entitled to moral and exemplary damages.
Because of this, G & S filed another Notice of Appeal. The CA ruled in favor of the heirs.
With respect to the award of P6,537,244.96 for Joses loss of earning capacity, the CA
declared the same unwarranted. It found the Certification issued by Joses employer, the
USAID, as self-serving, unreliable, and biased. While said certification states that Jose Marcial
was earning an annual salary of P450,844.49 at the time of his untimely demise, the CA noted
that same is unsupported by competent evidence such as income tax returns or receipts. The
CA found the award of P300,000 excessive and thus reduced the same to P200,000 as to make
it proportionate to the award of exemplary damages which is P50,000. Hence, the present
petition filed by both G&S and the heirs.
Issue
Whether G&S is liable for damages
Ruling
Both the trial court and the CA found that the accident which led to Jose Marcials
death was due to the reckless driving and gross negligence of G & S driver, Padilla, thereby
holding G & S liable to the heirs of Jose Marcial for breach of contract of carriage.

The action filed by the heirs is primarily for the recovery of damages arising from
breach of contract of carriage allegedly committed by G & S. Clearly, it is an independent civil
action arising from contract which is separate and distinct from the criminal action for reckless
imprudence resulting in homicide filed by the heirs against Padilla by reason of the same
incident. Hence, regardless of Padillas acquittal or conviction in said criminal case, same has
no bearing in the resolution of the present case.
The testimony of Joses wife that he was earning around P450,000 a year was
corroborated by a Certification issued by the USAID. It is highly improbable that such an
agency will issue a certification containing unreliable information regarding an employees
income. Besides, there exists a presumption that official duty has been regularly performed.
We thus find as sufficient and "somehow proportional to and in approximation of the
suffering inflicted" an award of moral damages in an amount similar to that awarded in Victory
which is P100,000.