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Victory Liner, Inc. v. Rosalito Gammad, et al. G.R. No.

159636, 25 November 2004 Facts: Marie Grace


Pagulayan-Gammad, respondent Rosalito’s wife, was on board a Victory Liner bus bound for Tugegarao
from Manila. The bus was running at a high speed and fell on a ravine somewhere in Santa Fe, Nueva
Vizcaya, which resulted in the death of Marie Grace. Respondents filed a complaint for damages arising
from culpa contractual against Victory Liner. Petitioner claimed that the incident was purely accidental
and that it has always exercised extraordinary diligence. The trial court rendered a decision in favour of
respondents, and ordered Victory Liner to pay the following: On appeal, the Court of Appeals affirmed
the decision but modified the award of damages: Cost of suit against petitioner is affirmed. Issue:
Whether the award of damages was proper. Ruling: No, the award of damages was not proper. It 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 P50,000.00. The award of compensatory damages for the loss of
the deceased's 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 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. In this case, the award of compensatory damages for loss
of earning capacity was on the basis of respondent’s testimony that Marie Grace was 39 years old and
works as a Section Chief of the BIR. No other evidence was presented. This is erroneous because the
deceased’s earnings does not fall within the exceptions. (Earning capacity should be substantiated by the
required documentary proof.) However, the fact of loss having been established, temperate damages in
the amount of P500,000.00 should be awarded to respondents. Under Article 2224 of the Civil Code,
temperate or moderate damages, which are more than nominal but less than compensatory damages,
may be recovered when the court finds that some pecuniary loss has been suffered but its amount can
not, from the nature of the case, be proved with certainty. The award of moral damages cannot be
lumped with exemplary damages because they are based on different rural foundations. 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. P100,000.00 as moral damages is awarded to compensate for the
death of Marie Grace resulting from Victory Liner’s breach of contract of carriage. P100,000.00 as
exemplary damages is also proper for Victory Liner’s failure to prove that it exercised extraordinary
diligence, it is presumed that it acted recklessly. Actual damages damages are only the substantiated and
proven expenses or those that appear to have been genuinely incurred in connection with the death,
wake or burial of the victim. In this case, P78,160.00 is proper, which was the amount supported by
official receipts. Under Article 2208 of the Civil Code, attorney’s fees may also be recovered where
exemplary damages are awarded. The 10% of the total amount adjudged is reasonable. In Eastern
Shipping Lines v. CA, it was held that when an obligation, regardless of its source, i.e., law, contracts,
quasi-contracts, delicts or quasi- delicts is breached, the contravenor can be held liable for payment of
interest in the concept of actual and compensatory damages. In this case, petitioner should be held
liable for payment of interest as damages for breach of contract of carriage. The interest due shall be
computed upon finality of the SC’s decision at the rate 12% per annum until satisfaction.

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