Philippine Airlines, Inc. v. Court of Appeals
Philippine Airlines, Inc. v. Court of Appeals
Philippine Airlines, Inc. v. Court of Appeals
DECISION
CHICO-NAZARIO, J : p
Meanwhile, Mrs. Regalado and several relatives waited for the arrival of Deanna
and Nikolai at the Los Angeles Airport. When United Airways 996 landed at the Los
Angeles Airport and its passengers disembarked, Mrs. Regalado sought Deanna and
Nikolai but she failed to find them. Mrs. Regalado asked a stewardess of the United
Airways 996 if Deanna and Nikolai were on board but the stewardess told her that they
had no minor passengers. Mrs. Regalado called private respondents and informed them
that Deanna and Nikolai did not arrive at the Los Angeles Airport. 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 Deanna and Nikolai 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. Petitioner's personnel had previously informed Mrs. Regalado of the late
arrival of Deanna and Nikolai on 4 May 1980. AHTICD
In its answer 8 to the complaint, petitioner admitted that Deanna and Nikolai were
not allowed to take their connecting flight to Los Angeles and that they were stranded in
San Francisco. Petitioner, however, 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, Deanna and Nikolai
were personally escorted by Strigl, and the latter exerted efforts to make the connecting
flight of Deanna and Nikolai to Los Angeles possible. Further, Deanna and Nikolai 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. Petitioner asked the RTC to
dismiss the complaint based on the foregoing averments.
After trial, the RTC rendered a Decision on 2 April 1990 holding petitioner liable
for damages for breach of contract of carriage. It ruled that petitioner should pay moral
damages for its inattention and lack of care for the welfare of Deanna and Nikolai which,
in effect, amounted to bad faith, and for the agony brought by the incident to private
respondents and Mrs. Regalado. It also held 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. In sum, the RTC ordered
petitioner: (1) to pay Deanna and Nikolai P50,000.00 each as moral damages and
P25,000.00 each as exemplary damages; (2) to pay private respondent Aurora R.
Buncio, as mother of Deanna and Nikolai, P75,000.00 as moral damages; (3) to pay
Mrs. Regalado, as grandmother of Deanna and Nikolai, P30,000.00 as moral damages;
and (4) to pay an amount of P38,250.00 as attorney's fees and the costs of suit. Private
respondent Manuel S. Buncio was not awarded damages because his court testimony
was disregarded, as he failed to appear during his scheduled cross-examination. The
dispositive portion of the RTC Decision reads:
Petitioner filed the instant petition before us assigning the following errors: 11
I.
II.
III.
Anent the first assigned error, 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. 12
Petitioner also claims that it cannot be entirely blamed for the loss of the
indemnity bond; that during the stop-over of Flight 106 in Honolulu, Hawaii, USA, it gave
the indemnity bond to the immigration office therein as a matter of procedure; that the
indemnity bond was in the custody of the said immigration office when Flight 106 left
Honolulu, Hawaii, USA; that the said immigration office failed to return the indemnity
bond to petitioner's personnel before Flight 106 left Honolulu, Hawaii, USA; and that
even though it was negligent in overlooking the indemnity bond, there was still no
liability on its part because mere carelessness of the carrier does not per se constitute
or justify an inference of malice or bad faith. 13
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 airline's
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. 14
Private respondents and petitioner entered into a contract of air carriage when the
former purchased two plane tickets from the latter. Under this contract, petitioner
obliged itself (1) to transport Deanna and Nikolai, as unaccompanied minors, on 2 May
1980 from Manila to San Francisco through one of its planes, Flight 106; and (2) upon
the arrival of Deanna and Nikolai in San Francisco Airport on 3 May 1980, to transport
them on that same day from San Francisco to Los Angeles via a connecting flight on
United Airways 996. As it was, petitioner failed to transport Deanna and Nikolai from
San Francisco to Los Angeles on the day of their arrival at San Francisco. The staff of
United Airways 996 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. Thus, Deanna and
Nikolai were stranded in San Francisco and were forced to stay there overnight. It was
only on the following day that Deanna and Nikolai were able to leave San Francisco and
arrive at Los Angeles via another airline, Western Airlines. Clearly then, petitioner
breached its contract of carriage with private respondents. aECTc A
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. 15
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. 16
consequences without exerting any effort to avoid them.
In Singson v. Court of Appeals, 17 we ruled that a carrier's utter lack of care for
and sensitivity to the needs of its passengers constitutes gross negligence and is no
different from fraud, malice or bad faith. Likewise, in Philippine Airlines, Inc. v. Court of
Appeals, 18 we held that a carrier's 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 and entitles the passenger to an award of moral
damages. DHaECI
It was established in the instant case that since Deanna and Nikolai would travel
as unaccompanied minors, petitioner required private respondents to accomplish, sign
and submit to it an indemnity bond. Private respondents complied with this requirement.
Petitioner gave a copy of the indemnity bond to one of its personnel on Flight 106, since
it was required for the San Francisco-Los Angeles connecting flight of Deanna and
Nikolai. Petitioner's personnel lost the indemnity bond during the stop-over of Flight 106
in Honolulu, Hawaii. Thus, Deanna and Nikolai were not allowed to take their connecting
flight.
Evidently, petitioner was fully aware that Deanna and Nikolai would travel as
unaccompanied minors and, therefore, should be specially taken care of considering
their tender age and delicate situation. Petitioner also knew well that the indemnity bond
was required for Deanna and Nikolai to make a connecting flight from San Francisco to
Los Angeles, and that it was its duty to produce the indemnity bond to the staff of United
Airways 996 so that Deanna and Nikolai could board the connecting flight. Yet, despite
knowledge of the foregoing, it did not exercise utmost care in handling the indemnity
bond resulting in its loss in Honolulu, Hawaii. This was the proximate cause why
Deanna and Nikolai were not allowed to take the connecting flight and were thus
stranded overnight in San Francisco. Further, petitioner discovered that the indemnity
bond was lost only when Flight 106 had already landed in San Francisco Airport and
when the staff of United Airways 996 demanded the indemnity bond. This only manifests
that petitioner did not check or verify if the indemnity bond was in its custody before
leaving Honolulu, Hawaii for San Francisco. AaSTIH
The foregoing circumstances reflect petitioner's utter lack of care for and
inattention to the welfare of Deanna and Nikolai as unaccompanied minor passengers.
They also indicate petitioner's 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.
It is worth emphasizing that petitioner, as a common carrier, is bound by law to
exercise extraordinary diligence and utmost care in ensuring for the safety and welfare
of its passengers with due regard for all the circumstances. 19 The negligent acts of
petitioner signified more than inadvertence or inattention and thus constituted a radical
departure from the extraordinary standard of care required of common carriers. TDAc Ca
Petitioner's claim that it cannot be entirely blamed for the loss of the indemnity
bond because it gave the indemnity bond to the immigration office of Honolulu, Hawaii,
as a matter of procedure during the stop-over, and the said immigration office failed to
return the indemnity bond to petitioner's personnel before Flight 106 left Honolulu,
Hawaii, deserves scant consideration. It was petitioner's obligation to ensure that it had
the indemnity bond in its custody before leaving Honolulu, Hawaii for San Francisco.
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. Petitioner's insensitivity on this matter indicates that it fell short of the
extraordinary care that the law requires of common carriers.
Petitioner, nonetheless, insists that the following circumstances negate gross
negligence on its part: (1) Strigl requested the staff of United Airways 996 to allow
Deanna and Nikolai to board the plane even without the indemnity bond; (2) Strigl took
care of the two and brought them to his house upon refusal of the staff of the United
Airways 996 to board Deanna and Nikolai; (3) private respondent Aurora R. Buncio and
Mrs. Regalado were duly informed of Deanna and Nikolai's predicament; and (4)
Deanna and Nikolai were able to make a connecting flight via an alternative airline,
Western Airlines. 20 We do not agree. It was petitioner's duty to provide assistance to
Deanna and Nikolai for the inconveniences of delay in their transportation. These
actions are deemed part of their obligation as a common carrier, and are hardly anything
to rave about. 21
Apropos the second and third assigned error, petitioner argues that it was not
liable for exemplary damages because there was no wanton, fraudulent, reckless,
oppressive, or malevolent manner on its part. Further, exemplary damages may be
awarded only if it is proven that the plaintiff is entitled to moral damages. Petitioner
contends that since there was no proof that private respondents were entitled to moral
damages, then they are also not entitled to exemplary damages. 22
Petitioner also contends that no premium should be placed on the right to litigate;
that an award of attorney's fees and order of payment of costs must be justified in the
text of the decision; that such award cannot be imposed by mere conclusion without
supporting explanation; and that the RTC decision does not provide any justification for
the award of attorney's fees and order of payment of costs. 23
Article 2232 of the Civil Code provides that exemplary damages may be awarded
in a breach of contract if the defendant acted in a wanton, fraudulent, reckless,
oppressive or malevolent manner. In addition, Article 2234 thereof states that the
plaintiff must show that he is entitled to moral damages before he can be awarded
exemplary damages. CSc TED
As we have earlier found, 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 petitioner's gross negligence which amounted to bad faith. This
being the case, the award of exemplary damages is warranted.
Current jurisprudence 24 instructs that in awarding attorney's fees, the trial court
must state the factual, legal, or equitable justification for awarding the same, bearing in
mind that the award of attorney's 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 attorney's fees
be awarded every time a party wins a lawsuit. The matter of attorney's fees cannot be
dealt with only in the dispositive portion of the decision. The text of the decision must
state the reason behind the award of attorney's fees. Otherwise, its award is totally
unjustified. 25
In the instant case, the award of attorney's 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 RTC's award
of attorney's fees. ATDHSC
Since we have already resolved that the RTC and Court of Appeals were correct
in awarding moral and exemplary damages, we shall now determine whether their
corresponding amounts were proper.
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. 26 On the other hand, the aim of
awarding exemplary damages is to deter serious wrongdoings. 27
Article 2216 of the Civil Code provides that assessment of damages is left to the
discretion of the court according to the circumstances of each case. This discretion is
limited by the principle that the amount awarded should not be palpably excessive as to
indicate that it was the result of prejudice or corruption on the part of the trial court. 28
Simply put, the amount of damages must be fair, reasonable and proportionate to the
injury suffered.ICac DE
The RTC and the Court of Appeals ordered petitioner to pay Deanna and Nikolai
P50,000.00 each as moral damages. This amount is reasonable considering the
harrowing experience they underwent at their tender age and the danger they were
exposed to when they were stranded in San Francisco. 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. 29 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
P75,000.00 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. Private respondent
Aurora R. Buncio testified that she was very fearful for the lives of Deanna and Nikolai
when they were stranded in San Francisco, and that by reason thereof she suffered
emotional stress and experienced upset stomach. 30 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. Mrs. Regalado
testified that she was seriously worried when Deanna and Nikolai did not arrive in Los
Angeles on 3 May 1980, and she was hurt when she saw the two crying upon arriving in
Los Angeles on 4 May 1980. 31 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. 32
On another point, we held in Eastern Shipping Lines, Inc. v. Court of Appeals, 33
that 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.EIaDHS
In the instant case, petitioner's obligation arose from a contract of carriage and
not from a loan or forbearance of money. Thus, an interest of 6% per annum should be
imposed on the damages awarded, to be computed from the time of the extra-judicial
demand on 17 July 1980 up to the finality of this Decision. In addition, the interest shall
become 12% per annum from the finality of this Decision up to its satisfaction.
Finally, the records 34 show that Mrs. Regalado died on 1 March 1995 at the age
of 74, while Deanna passed away on 8 December 2003 at the age of 32. This being the
case, the foregoing award of damages plus interests in their favor should be given to
their respective heirs. EICSDT
Footnotes
2. Penned by Associate Justice Cancio C. Garcia (now a retired Associate Justice of this
Court) with Associate Justices Eugenio S. Labitoria and Portia Alino-Hormachuelos,
concurring; rollo, pp. 7-19.
5. This is a document wherein private respondents stated (1) that they made prior
arrangements to have Deanna and Nikolai accompanied at the airport of departure
which was Manila International Airport; (2) that upon the arrival of Deanna and Nikolai at
the airport of destination which was Los Angeles Airport (California, USA), they would
be met by their grandmother, Mrs. Josefa C. Regalado; and (3) that they would indemnify
petitioner for losses it might sustain for the welfare of Deanna and Nikolai. (Exhibit B,
records p. 325.)
7. Id. at 10-17.
8. Id. at 25-30.
9. Records, p. 337.
14. Japan Airlines v. Asuncion, G.R. No. 161730, 28 January 2005, 449 SCRA 544, 548.
15. Singson v. Court of Appeals, 346 Phil. 831, 838-839 (1997); China Airlines v. Chiok,
455 Phil. 169, 193 (2003); Villanueva v. Salvador, G.R. No. 139436, 25 January 2006,
480 SCRA 39, 49.
16. BPI Investment Corporation v. D.G. Carreon Commercial Corporation, 422 Phil. 367,
379 (2001).
24. Serrano v. Gutierrez, G.R. No. 162366, 10 November 2006, 506 SCRA 712, 724;
Buñing v. Santos, G.R. No. 152544, 19 September 2006, 502 SCRA 315, 321-323;
Ballesteros v. Abion, G.R. No. 143361, 9 February 2006, 482 SCRA 23, 39-40;
Villanueva v. Salvador, supra note 15 at 51-52.
26. Zenith Insurance Corporation v. Court of Appeals, G.R. No. 85296, 14 May 1990, 185
SCRA 398, 402-403.