G.R. No. 95582 October 7, 1991

DANGWA TRANSPORTATION CO., INC. and THEODORE LARDIZABAL y MALECDAN, petitioners, vs.COURT OF APPEALS, INOCENCIA CUDIAMAT, EMILIA CUDIAMAT BANDOY, FERNANDO CUDLAMAT, MARRIETA CUDIAMAT, NORMA CUDIAMAT, DANTE CUDIAMAT, SAMUEL CUDIAMAT and LIGAYA CUDIAMAT, all Heirs of the late Pedrito Cudiamat represented by Inocencia Cudiamat, respondents.

Francisco S. Reyes Law Office for petitioners.

Antonio C. de Guzman for private respondents. 

REGALADO, J.:p

On May 13, 1985, private respondents filed a complaint 1 for damages against petitioners for the death of Pedrito Cudiamat as a result of a vehicular accident which occurred on March 25, 1985 at Marivic, Sapid, Mankayan, Benguet. Among others, it was alleged that on said date, while petitioner Theodore M. Lardizabal was driving a passenger bus belonging to petitioner corporation in a reckless and imprudent manner and without due regard to traffic rules and regulations and safety to persons and property, it ran over its passenger, Pedrito Cudiamat. However, instead of bringing Pedrito immediately to the nearest hospital, the said driver, in utter bad faith and without regard to the welfare of the victim, first brought his other passengers and cargo to their respective destinations before banging said victim to the Lepanto Hospital where he expired.

On the other hand, petitioners alleged that they had observed and continued to observe the extraordinary diligence required in the operation of the transportation company and the supervision of the employees, even as they add that they are not absolute insurers of the safety of the public at large. Further, it was alleged that it was the victim's own carelessness and negligence which gave rise to the subject incident, hence they prayed for the dismissal of the complaint plus an award of damages in their favor by way of a counterclaim.

On July 29, 1988, the trial court rendered a decision, effectively in favor of petitioners, with this decretal portion:

IN VIEW OF ALL THE FOREGOING, judgment is hereby pronounced that Pedrito Cudiamat was negligent, which negligence was the proximate cause of his death. Nonetheless, defendants in equity, are hereby ordered to pay the heirs of Pedrito Cudiamat the sum of P10,000.00 which approximates the amount defendants initially offered said heirs for the amicable settlement of the case. No costs.

SO ORDERED. 2

Not satisfied therewith, private respondents appealed to the Court of Appeals which, in a decision 3 in CA-G.R. CV No. 19504 promulgated on August 14, 1990, set aside the decision of the lower court, and ordered petitioners to pay private respondents:

1. The sum of Thirty Thousand (P30,000.00) Pesos by way of indemnity for death of the victim Pedrito Cudiamat;

2. The sum of Twenty Thousand (P20,000.00) by way of moral damages;

3. The sum of Two Hundred Eighty Eight Thousand (P288,000.00) Pesos as actual and compensatory damages;

4. The costs of this suit. 4

Petitioners' motion for reconsideration was denied by the Court of Appeals in its resolution dated October 4, 1990,5 hence this petition with the central issue herein being whether respondent court erred in reversing the decision of the trial court and in finding petitioners negligent and liable for the damages claimed.

It is an established principle that the factual findings of the Court of Appeals as a rule are final and may not be reviewed by this Court on appeal. However, this is subject to settled exceptions, one of which is when the findings of the appellate court are contrary to those of the trial court, in which case a reexamination of the facts and evidence may be undertaken. 6

In the case at bar, the trial court and the Court of Appeal have discordant positions as to who between the petitioners an the victim is guilty of negligence. Perforce, we have had to conduct an evaluation of the evidence in this case for the prope calibration of their conflicting factual findings and legal conclusions.

The lower court, in declaring that the victim was negligent, made the following findings:

This Court is satisfied that Pedrito Cudiamat was negligent in trying to board a moving vehicle, especially with one of his hands holding an umbrella. And, without having given the driver or the conductor any indication that he wishes to board the bus. But defendants can also be found wanting of the necessary diligence. In this connection, it is safe to assume that when the deceased Cudiamat attempted to board defendants' bus, the vehicle's door was open instead of being closed. This should be so, for it is hard to believe that one would even attempt to board a vehicle (i)n motion if the door of said vehicle is closed. Here lies the defendant's lack of diligence. Under such circumstances, equity demands that there must be something given to the heirs of the victim to assuage their feelings. This, also considering that initially, defendant common carrier had made overtures to amicably settle the case. It did offer a certain monetary consideration to the victim's heirs. 7

However, respondent court, in arriving at a different opinion, declares that:

From the testimony of appellees'own witness in the person of Vitaliano Safarita, it is evident that the subject bus was at full stop when the victim Pedrito Cudiamat boarded the same as it was precisely on this instance where a certain Miss Abenoja alighted from the bus. Moreover, contrary to the assertion of the appellees, the victim did indicate his intention to board the bus as can be seen from the testimony of the said witness when he declared that Pedrito Cudiamat was no longer walking and made a sign to board the bus when the latter was still at a distance from him. It was at the instance when Pedrito Cudiamat was closing his umbrella at the platform of the bus when the latter made a sudden jerk movement (as) the driver commenced to accelerate the bus.

Evidently, the incident took place due to the gross negligence of the appellee-driver in prematurely stepping on the accelerator and in not waiting for the passenger to first secure his seat especially so when we take into account that the platform of the bus was at the time slippery and wet because of a drizzle. The defendants-appellees utterly failed to observe their duty and obligation as common carrier to the end that they should observe extra-ordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them according to the circumstances of each case (Article 1733, New Civil Code). 8

After a careful review of the evidence on record, we find no reason to disturb the above holding of the Court of Appeals. Its aforesaid findings are supported by the testimony of petitioners' own witnesses. One of them, Virginia Abalos, testified on cross-examination as follows:

Q It is not a fact Madam witness, that at bunkhouse 54, that is before the place of the incident, there is a crossing?

A The way going to the mines but it is not being pass(ed) by the bus.

Q And the incident happened before bunkhouse 56, is that not correct?

A It happened between 54 and 53 bunkhouses. 9

The bus conductor, Martin Anglog, also declared:

Q When you arrived at Lepanto on March 25, 1985, will you please inform this Honorable Court if there was anv unusual incident that occurred?

A When we delivered a baggage at Marivic because a person alighted there between Bunkhouse 53 and 54.

Q What happened when you delivered this passenger at this particular place in Lepanto?

A When we reached the place, a passenger alighted and I signalled my driver. When we stopped we went out because I saw an umbrella about a split second and I signalled again the driver, so the driver stopped and we went down and we saw Pedrito Cudiamat asking for help because he was lying down.

Q How far away was this certain person, Pedrito Cudiamat, when you saw him lying down — from the bus how far was he?

A It is about two to three meters.

Q On what direction of the bus was he found about three meters from the bus, was it at the front or at the back?

A At the back, sir. 10 (Emphasis supplied.)

The foregoing testimonies show that the place of the accident and the place where one of the passengers alighted were both between Bunkhouses 53 and 54, hence the finding of the Court of Appeals that the bus was at full stop when the victim boarded the same is correct. They further confirm the conclusion that the victim fell from the platform of the bus when it suddenly accelerated forward and was run over by the rear right tires of the vehicle, as shown by the physical evidence on where he was thereafter found in relation to the bus when it stopped. Under such circumstances, it cannot be said that the deceased was guilty of negligence.

The contention of petitioners that the driver and the conductor had no knowledge that the victim would ride on the bus, since the latter had supposedly not manifested his intention to board the same, does not merit consideration. When the bus is not in motion there is no necessity for a person who wants to ride the same to signal his intention to board. A public utility bus, once it stops, is in effect making a continuous offer to bus riders. Hence, it becomes the duty of the driver and the conductor, every time the bus stops, to do no act that would have the effect of increasing the peril to a passenger while he was attempting to board the same. The premature acceleration of the bus in this case was a breach of such duty. 11

It is the duty of common carriers of passengers, including common carriers by railroad train, streetcar, or motorbus, to stop their conveyances a reasonable length of time in order to afford passengers an opportunity to board and enter, and they are liable for injuries suffered by boarding passengers resulting from the sudden starting up or jerking of their conveyances while they are doing so. 12

Further, even assuming that the bus was moving, the act of the victim in boarding the same cannot be considered negligent under the circumstances. As clearly explained in the testimony of the aforestated witness for petitioners, Virginia Abalos, th bus had "just started" and "was still in slow motion" at the point where the victim had boarded and was on its platform. 13

It is not negligence per se, or as a matter of law, for one attempt to board a train or streetcar which is moving slowly. 14 An ordinarily prudent person would have made the attempt board the moving conveyance under the same or similar circumstances. The fact that passengers board and alight from slowly moving vehicle is a matter of common experience both the driver and conductor in this case could not have been unaware of such an ordinary practice.

The victim herein, by stepping and standing on the platform of the bus, is already considered a passenger and is entitled all the rights and protection pertaining to such a contractual relation. Hence, it has been held that the duty which the carrier passengers owes to its patrons extends to persons boarding cars as well as to those alighting therefrom. 15

Common carriers, from the nature of their business and reasons of public policy, are bound to observe extraordina diligence for the safety of the passengers transported by the according to all the circumstances of each case. 16 A common carrier is bound to carry the passengers safely as far as human care and foresight can provide, using the utmost diligence very cautious persons, with a due regard for all the circumstances. 17

It has also been repeatedly held that in an action based on a contract of carriage, the court need not make an express finding of fault or negligence on the part of the carrier in order to hold it responsible to pay the damages sought by the passenger. By contract of carriage, the carrier assumes the express obligation to transport the passenger to his destination safely and observe extraordinary diligence with a due regard for all the circumstances, and any injury that might be suffered by the passenger is right away attributable to the fault or negligence of the carrier. This is an exception to the general rule that negligence must be proved, and it is therefore incumbent upon the carrier to prove that it has exercised extraordinary diligence as prescribed in Articles 1733 and 1755 of the Civil Code. 18

Moreover, the circumstances under which the driver and the conductor failed to bring the gravely injured victim immediately to the hospital for medical treatment is a patent and incontrovertible proof of their negligence. It defies understanding and can even be stigmatized as callous indifference. The evidence shows that after the accident the bus could have forthwith turned at Bunk 56 and thence to the hospital, but its driver instead opted to first proceed to Bunk 70 to allow a passenger to alight and to deliver a refrigerator, despite the serious condition of the victim. The vacuous reason given by petitioners that it was the wife of the deceased who caused the delay was tersely and correctly confuted by respondent court:

... The pretension of the appellees that the delay was due to the fact that they had to wait for about twenty minutes for Inocencia Cudiamat to get dressed deserves scant consideration. It is rather scandalous and deplorable for a wife whose husband is at the verge of dying to have the luxury of dressing herself up for about twenty minutes before attending to help her distressed and helpless husband. 19

Further, it cannot be said that the main intention of petitioner Lardizabal in going to Bunk 70 was to inform the victim's family of the mishap, since it was not said bus driver nor the conductor but the companion of the victim who informed his family thereof. 20 In fact, it was only after the refrigerator was unloaded that one of the passengers thought of sending somebody to the house of the victim, as shown by the testimony of Virginia Abalos again, to wit:

Q Why, what happened to your refrigerator at that particular time?

A I asked them to bring it down because that is the nearest place to our house and when I went down and asked somebody to bring down the refrigerator, I also asked somebody to call the family of Mr. Cudiamat.

COURT:

Q Why did you ask somebody to call the family of Mr. Cudiamat?

A Because Mr. Cudiamat met an accident, so I ask somebody to call for the family of Mr. Cudiamat.

Q But nobody ask(ed) you to call for the family of Mr. Cudiamat?

A No sir. 21

With respect to the award of damages, an oversight was, however, committed by respondent Court of Appeals in computing the actual damages based on the gross income of the victim. The rule is that the amount recoverable by the heirs of a victim of a tort is not the loss of the entire earnings, but rather the loss of that portion of the earnings which the beneficiary would have received. In other words, only net earnings, not gross earnings, are to be considered, that is, the total of the earnings less expenses necessary in the creation of such earnings or income and minus living and other incidental expenses. 22

We are of the opinion that the deductible living and other expense of the deceased may fairly and reasonably be fixed at P500.00 a month or P6,000.00 a year. In adjudicating the actual or compensatory damages, respondent court found that the deceased was 48 years old, in good health with a remaining productive life expectancy of 12 years, and then earning P24,000.00 a year. Using the gross annual income as the basis, and multiplying the same by 12 years, it accordingly awarded P288,000. Applying the aforestated rule on computation based on the net earnings, said award must be, as it hereby is, rectified and reduced to P216,000.00. However, in accordance with prevailing jurisprudence, the death indemnity is hereby increased to P50,000.00. 23

WHEREFORE, subject to the above modifications, the challenged judgment and resolution of respondent Court of Appeals are hereby AFFIRMED in all other respects.

SO ORDERED.

G.R. No. 140698               June 20, 2003

ROGELIO ENGADA, Petitioner, vs.HON. COURT OF APPEALS, Former Fourteenth Division, Manila, and PEOPLE OF THE PHILIPPINES,Respondents.

D E C I S I O N

QUISUMBING, J.:

This petition for review seeks the reversal of the decision1 dated May 31, 1999 of the Court of Appeals in CA-G.R. CR No. 18358, which affirmed with modification the judgment2 dated August 25, 1994, of the Regional Trial Court of Iloilo City, Branch 29, in Criminal Case No. 36223. The RTC found petitioner guilty beyond reasonable doubt of simple imprudence resulting in physical injuries and damage to property, and sentenced him to (a) suffer imprisonment for one month and one day of arresto mayor, (b) pay private complainant, Mrs. Sheila Seyan, the amount of fifty one thousand pesos (P51,000) for the total destruction of the Toyota Tamaraw jeepney, and one hundred ten thousand pesos (P110,000) for her hospital and medical expenses, and (c) pay the costs of suit. The CA increased the prison term imposed on petitioner to four months of arresto mayor.

The facts culled from the records are as follows:

On November 29, 1989, at about 1:30 in the afternoon, Edwin Iran was driving a blue Toyota Tamaraw jeepney bound for Iloilo City. On board was Sheila Seyan, the registered owner of the Tamaraw. While traversing the road along Barangay Acquit, Barotac Nuevo, the Tamaraw passengers allegedly saw from the opposite direction a speeding Isuzu pick-up, driven by petitioner Rogelio Engada. The pick-up had just negotiated a hilly gradient on the highway. When it was just a few meters away from the Tamaraw, the Isuzu pick-up’s right signal light flashed, at the same time, it swerved to its left, encroaching upon the lane of the Tamaraw and headed towards a head-on collision course with it. Seyan shouted at Iran to avoid the pick-up. Iran swerved to his left but the pick-up also swerved to its right. Thus, the pick-up collided with the Tamaraw, hitting the latter at its right front passenger side. The impact caused the head and chassis of the Tamaraw to separate from its body. Seyan was thrown out of the Tamaraw and landed on a ricefield. The pick-up stopped diagonally astride the center of the road.

Seyan and Iran were brought to Barotac Nuevo Medicare Hospital.3 Seyan was profusely bleeding from her nose and was in a state of shock with her eyes closed. In the afternoon of the same day, November 29, 1989, she was transferred to St. Paul’s Hospital in Iloilo City where she was confined. Her medical certificate revealed that she suffered a fracture on the right femur, lacerated wound on the right foot, multiple contusions, abrasions, blunt abdominal injury, and lacerations of the upper-lower pole of the right kidney.4 She was discharged from the hospital only on January 15, 1990.

Seyan incurred P130,000 in medical expenses. The Toyota Tamaraw jeepney ended up in the junk heap. Its total loss was computed at P80,000.

A criminal complaint for damage to property through reckless imprudence with serious physical injuries was filed with the Municipal Trial Court of Barotac Nuevo against petitioner Rogelio Engada and Edwin Iran.5 Probable cause was found against petitioner, while the complaint against Iran was dismissed.6

Consequently, an Information was filed against petitioner charging him with serious physical injuries and damage to property through reckless imprudence, thus:

That on or about November 29, 1989, in the Municipality of Barotac Nuevo, Province of Iloilo, Philippines, and within the jurisdiction of this Honorable Court, the above-named accused Rogelio Engada driving an Isuzu Pick-up with Plate No. SAR 117 owned by the Land Bank of the Philippines, did then and there wilfully, unlawfully and with reckless imprudence drive said pick-up in a careless, reckless and imprudent manner with disregard of traffic laws and regulations, and as a result of such negligent and reckless driving the Isuzu Pick-up driven by the accused bumped a Toyota Tamaraw jeep with Plate No. FBF 601 owned by Joelito and Sheila Seyan and driven by Edwin Iran thereby causing damage to the Toyota Tamaraw in the amount of P80,000.00 and serious physical injuries to Mrs. Sheila Seyan who was riding said vehicle, the injuries barring complications will heal in more than 30 days.

CONTRARY TO LAW.7

After trial, the court rendered on August 25, 1994 a decision, disposing as follows:

WHEREFORE, the Court, finding the accused guilty beyond reasonable doubt of Simple Imprudence resulting [in] physical injuries and damage to property defined and penalized in Article 263, paragraph 4 and in relation with Article 365, paragraph 2 of the Revised Penal Code, hereby sentences the accused Rogelio Engada to suffer imprisonment of ONE (1) MONTH and ONE (1) DAY of arresto mayor.

Accused is further ordered to pay complainant Mrs. Sheila Seyan the amount of P51,000.00 for the total destruction of the Toyota Tamaraw Jeepney and P110,000.00 for indemnification of hospital and medical expenses, and to pay the cost of the suit.

SO ORDERED.8

Petitioner appealed to the Court of Appeals. On May 31, 1999, the CA dismissed the appeal and affirmed withmodification the trial court’s decision, thus:

WHEREFORE, the instant appeal is hereby DISMISSED. Accordingly, the appealed decision is hereby AFFIRMED with modification as to the penalty imposed upon the accused who is hereby sentenced to suffer imprisonment of FOUR (4) MONTHS of arresto mayor.

SO ORDERED.9

Petitioner filed a motion for reconsideration, but it was denied. Hence, the instant petition, wherein petitioner raises the issue of:

WHETHER OR NOT THE FINDINGS OF RESPONDENT COURT OF APPEALS ARE SUPPORTED BY THE EVIDENCE OR BASED ON A MISAPPREHENSION OF FACTS RESULTING IN A MANIFESTLY MISTAKEN INFERENCE SPECIFICALLY ON WHAT WAS THE PROXIMATE CAUSE OF THE ACCIDENT AND WHOSE ACT WAS IT.10

Petitioner claims innocence and seeks acquittal. 1âwphi1 He contends that in this case we should relax the rule that only legal questions can be raised in a petition for review under Rule 45 of the Rules of Court. According to him, the Court of Appeals misapprehended the facts, and erred in its conclusion as to the proximate cause of the collision. He insists that the Court of Appeals erred when it found

him negligent for occupying the lane of the Tamaraw jeepney, and then failing to return to his original lane at the safest and earliest opportunity.

Petitioner further contends that the CA failed to consider that he already relayed his intention to go back to his lane by flashing the pick-up’s right signal light. He submits that at that moment Iran, the driver of the Tamaraw, had no more reason to swerve to his left. Had Iran not swerved to the left, according to petitioner, the collision would have been avoided. It was Iran who was clearly negligent, says petitioner. Citing our ruling in McKee v. Intermediate Appellate Court,11 petitioner avers that although his act of occupying the Tamaraw’s lane was the initial act in the chain of events, Iran’s swerving to the left after petitioner flashed his right turn signal, constituted a sufficient intervening event, which proximately caused the eventual injuries and damages to private complainant.

Petitioner also claims that the Court of Appeals erred when it found that the pick-up approached the Tamaraw at a fast speed. He maintains that this was not borne by the evidence on record.

The Office of the Solicitor General, as counsel for the state, counters that the Court of Appeals did not err in convicting the accused, now petitioner herein. Petitioner’s negligence was the proximate cause of the accident, according to the OSG, for the following reasons: First, petitioner for no justifiable reason occupied the opposite lane. Second, while on the wrong lane, petitioner was driving the Isuzu pick-up fast, and he returned to his own lane only at the last minute. This left Iran, the driver of the Tamaraw, with no opportunity to reflect on the safest way to avoid the accident. Iran’s swerving to the left was his reaction to petitioner’s wrongful act, which appropriately calls for the application of the emergency rule. The rationale of this rule is that a person who is confronted with a sudden emergency might have no time for thought, and he must make a prompt decision based largely upon impulse or instinct. Thus, he cannot be held to the same standard of conduct as one who had an opportunity to reflect, even though it later appears that he made the wrong decision. Clearly, under the emergency rule petitioner cannot shift the blame to Iran, concludes the OSG.

As to petitioner’s claim that there was no evidence showing that the pick-up was running very fast, the OSG avers that this is rebutted by the testimony of Seyan and Iran who both testified that petitioner drove the pick-up at a fast speed when it encroached on their lane immediately before the collision.

Did the Court of Appeals err in finding that the action of petitioner, Rogelio Engada, was the proximate cause of the collision? This is the crux of the present petition.

In our view, petitioner’s attempt to pin the blame on Edwin Iran, the driver of the Tamaraw, for the vehicular collision is unfounded. Iran swerved to the left only to avoid petitioner’s pick-up, which was already on a head to head position going against Iran’s Tamaraw jeepney immediately before the vehicles collided. This fact has been established by the evidence on record. No convincing proof was adduced by petitioner that the driver of the Tamaraw, Iran, could have avoided a head-on collision.

We note that petitioner admitted his Isuzu pick-up intruded into the lane of the Tamaraw jeepney. Prosecution witness Nelson Alobin, one of those who went to the scene of the incident immediately, testified that when he arrived at the place where the collision took place, he saw the pick-up positioned diagonally at the center of the road.12 Its head was towards the direction of Barotac Nuevo and the rear tires were just a few inches beyond the center of the lane.13 Moving backwards facing Barotac Nuevo, at two arms length away from the pick-up, Alobin also saw a tire mark, 12 inches long and located at the left side of the center line going to the right side.14

The above circumstance corroborates the testimony of both Seyan and Iran that, immediately before the collision, the pick-up was not on its proper lane but on the other lane (the left lane rather than the right) directly on collision course with the Tamaraw jeepney. The tire mark reveals the short distance between the two vehicles when the Isuzu pick-up attempted to return to its proper lane.

It is a settled rule that a driver abandoning his proper lane for the purpose of overtaking another vehicle in an ordinary situation has the duty to see to it that the road is clear and he should not proceed if he cannot do so in safety.15 This rule is consistent with Section 41, paragraph (a) of R.A. 4136 as amended, otherwise known as The Land Transportation and Traffic Code, which provides:

Sec. 41. Restrictions on overtaking and passing. – (a) The driver of a vehicle shall not drive to the left side of the center line of a highway in overtaking or passing another vehicle proceeding in the same direction, unless such left side is clearly visible and is free of oncoming traffic for a sufficient distance ahead to permit such overtaking or passing to be made in safety.

In the present case, there was only a distance of 30 meters from the Tamaraw jeepney when the Isuzu pick-up abandoned its lane and swerved to the left of the center line.16 In addition, petitioner was running at a fast clip while traversing this lane. This was testified to by Seyan and Iran, unrebutted by petitioner. The resulting damage to the Tamaraw jeepney, at the point where the head and chassis were separated from the body, bolsters this conclusion that petitioner was speeding. In our view, petitioner was negligent in several ways, and his negligence was the proximate cause of the collision. In abandoning his lane, he did not see to it first that the opposite lane was free of oncoming traffic and was available for a safe passage. Further, after seeing the Tamaraw jeepney ahead, petitioner did not slow down, contrary to the rule set in Batangas Laguna Tayabas Bus Co. v. IAC,17 thus:

…[O]r if, after attempting to pass, the driver of the overtaking vehicle finds that he cannot make the passage in safety, the latter must slacken his speed so as to avoid the danger of a collision, even bringing his car to a stop if necessary.

For failing to observe the duty of diligence and care imposed on drivers of vehicles abandoning their lane, petitioner must be held liable.

Iran could not be faulted when in his attempt to avoid the pick-up, he swerved to his left. Petitioner’s acts had put Iran in an emergency situation which forced him to act quickly. An individual who suddenly finds himself in a situation of danger and is required to act without much time to consider the best means that may be adopted to avoid the impending danger, is not guilty of negligence if he fails to undertake what subsequently and upon reflection may appear to be a better solution, unless the emergency was brought by his own negligence.18

Petitioner tries to extricate himself from liability by invoking the doctrine of last clear chance. He avers that between him and Iran, the latter had the last clear chance to avoid the collision, hence Iran must be held liable.

The doctrine of last clear chance states that a person who has the last clear chance or opportunity of avoiding an accident, notwithstanding the negligent acts of his opponent, is considered in law solely responsible for the consequences of the accident.19 But as already stated on this point, no convincing evidence was adduced by petitioner to support his invocation of the abovecited doctrine. Instead, what has been shown is the presence of an emergency and the proper application of the emergency rule. Petitioner’s act of swerving to the Tamaraw’s lane at a distance of 30 meters from it and driving the Isuzu pick-up at a fast speed as it approached the Tamaraw, denied Iran time and opportunity to ponder the situation at all. There was no clear chance to speak of. Accordingly, the

Court of Appeals did not err in holding petitioner responsible for the vehicular collision and the resulting damages, including the injuries suffered by Mrs. Sheila Seyan and the total loss of the Tamaraw jeepney. It also did not err in imposing on petitioner the sentence of four (4) months of arresto mayor.20

WHEREFORE, the instant petition is DENIED for lack of merit. The assailed decision of the Court of Appeals in CA-G.R. CR No. 18358 is AFFIRMED. Costs against petitioner.

SO ORDERED.

G.R. No. 153076             June 21, 2007

LAPANDAY AGRICULTURAL and DEVELOPMENT CORPORATION (LADECO), HENRY BERENGUEL, and APOLONIO R. DEOCAMPO, petitioners, vs.MICHAEL RAYMOND ANGALA, respondent.

D E C I S I O N

CARPIO, J.:

The Case

Before the Court is a petition for review1 assailing the 25 July 2001 Decision2 and 11 March 2002 Resolution3 of the Court of Appeals in CA-G.R. CV No. 51134.

The Antecedent Facts

On 4 May 1993, at about 2:45 p.m., a Datsun crewcab with plate no. PEC-903 driven by Apolonio Deocampo (Deocampo) bumped into a 1958 Chevy pick-up with plate no. MAM-475 owned by Michael Raymond Angala (respondent) and driven by Bernulfo Borres (Borres). Lapanday Agricultural and Development Corporation (LADECO) owned the crewcab which was assigned to its manager Manuel Mendez (Mendez). Deocampo was the driver and bodyguard of Mendez. Both vehicles were running along Rafael Castillo St., Agdao, Davao City heading north towards Lanang, Davao City. The left door, front left fender, and part of the front bumper of the pick-up were damaged.

Respondent filed an action for Quasi-Delict, Damages, and Attorney’s Fees against LADECO, its administrative officer Henry Berenguel4 (Berenguel) and Deocampo. Respondent alleged that his pick-up was slowing down to about five to ten kilometers per hour (kph) and was making a left turn preparatory to turning south when it was bumped from behind by the crewcab which was running at around 60 to 70 kph. The crewcab stopped 21 meters from the point of impact. Respondent alleged that he heard a screeching sound before the impact. Respondent was seated beside the driver and was looking at the speedometer when the accident took place. Respondent testified that Borres made a signal because he noticed a blinking light while looking at the speedometer.5

Respondent sent a demand letter to LADECO for the payment of the damages he incurred because of the accident but he did not receive any reply. Thus, respondent filed the case against LADECO, Berenguel, and Deocampo.

Deocampo alleged that the pick-up and the crewcab he was driving were both running at about 40 kph. The pick-up was running along the outer lane. The pick-up was about 10 meters away when it made a U-turn towards the left. Deocampo testified that he did not see any signal from the pick-up.6 Deocampo alleged that he tried to avoid the pick-up but he was unable to avoid the collision. Deocampo stated that he did not apply the brakes because he knew the collision was unavoidable. Deocampo admitted that he stepped on the brakes only after the collision.

The Ruling of the Trial Court

In its 3 March 1995 Decision,7 the Regional Trial Court of Davao City, Branch 15 (trial court) ruled:

WHEREFORE, judgment is hereby rendered ordering the defendants LADECO and Apolonio Deocampo to solidarily pay the plaintiffs the following sums:

1. Twenty three thousand two hundred (P23,200.00) pesos as actual damages.

2. Ten thousand (P10,000.00) pesos as moral damages.

3. Ten thousand (P10,000.00) pesos as attorney’s fees.

4. Costs of suit.

SO ORDERED.8

The trial court found that the crewcab was running very fast while following the pick-up and that the crewcab’s speed was the proximate cause of the accident. The trial court observed that the crewcab stopped 21 meters away from the point of impact despite Deocampo’s claim that he stepped on the brakes moments after the collision. The trial court ruled that Deocampo had the last opportunity to avoid the accident.

The trial court found that Berenguel was not liable because he was not the owner of the crewcab.

LADECO and Deocampo (petitioners)9 filed a motion for reconsideration. The trial court denied petitioners’ motion in its 13 June 1995 Order.10

Petitioners filed an appeal before the Court of Appeals.

The Ruling of the Court of Appeals

The Court of Appeals affirmed in toto  the trial court’s decision.

The Court of Appeals sustained the finding of the trial court that Deocampo was negligent. The Court of Appeals applied the doctrine of last clear chance and ruled that Deocampo had the responsibility of avoiding the pick-up.

The Court of Appeals also sustained the solidary liability of LADECO and Deocampo. The Court of Appeals ruled that under Article 2180 of the Civil Code, the negligence of the driver is presumed to be the negligence of the owner of the vehicle.

The dispositive portion of the Court of Appeals’ Decision reads:

WHEREFORE, premises considered, the appeal is DISMISSED for lack of merit, and the assailed Decision of the Court a quo in Civil Case No. 22067-93 is AFFIRMED in toto. Costs against defendants-appellants.

SO ORDERED.11

Petitioners filed a motion for reconsideration. In its 11 March 2002 Resolution, the Court of Appeals denied the motion for lack of merit.

Hence, the petition before this Court.

The Issues

The issues before the Court are the following:

1. Whether the provisions of Section 45(b) of Republic Act No. 413612 (RA 4136) and Article 2185 of the Civil Code apply to this case; and

2. Whether respondent is entitled to the damages awarded.

The Ruling of this Court

The petition is partly meritorious.

Both Drivers are Negligent

Both the trial court and the Court of Appeals found that Deocampo was at fault because he was driving very fast prior to the collision. The Court of Appeals sustained the trial court’s finding that Deocampo was running more than the normal cruising speed. Both the trial court and the Court of Appeals noted that the crewcab stopped 21 meters away from the point of impact. Deocampo admitted that he stepped on the brakes only after the collision.

Petitioners allege that Borres did not take the proper lane before executing the U-turn. Petitioners allege that Borres violated Section 45(b) of RA 4136 and it was his recklessness that was the proximate cause of the accident.

Section 45(b) of RA 4136 states:

Sec. 45. Turning at intersections. x x x

(b) The driver of a vehicle intending to turn to the left shall approach such intersection in the lane for traffic to the right of and nearest to the center line of the highway, and, in turning, shall pass to the left of the center of the intersection, except that, upon highways laned for traffic and upon one-way highways, a left turn shall be made from the left lane of traffic in the direction in which the vehicle is proceeding.

Petitioners further allege that since Borres was violating a traffic rule at the time of the accident, respondent and Borres were the parties at fault. Petitioners cite Article 2185 of the Civil Code, thus:

Art. 2185. Unless there is proof to the contrary, it is presumed that a person driving a motor vehicle has been negligent if at the time of the mishap, he was violating any traffic regulation.

We rule that both parties were negligent in this case. Borres was at the outer lane when he executed a U-turn. Following Section 45(b) of RA 4136, Borres should have stayed at the inner lane which is the lane nearest to the center of the highway. However, Deocampo was equally negligent. Borres slowed down the pick-up preparatory to executing the U-turn. Deocampo should have also slowed down when the pick-up slowed down. Deocampo admitted that he noticed the pick-up when it was still about 20 meters away from him.13 Vehicular traffic was light at the time of the incident. The pick-up and the crewcab were the only vehicles on the road.14 Deocampo could have avoided the crewcab if he was not driving very fast before the collision, as found by both the trial court and the Court of Appeals. We sustain this finding since factual findings of the Court of Appeals affirming those of the trial court are conclusive and binding on this Court.15 Further, the crewcab stopped 21 meters from the point of impact. It would not have happened if Deocampo was not driving very fast.

Doctrine of Last Clear Chance Applies

Since both parties are at fault in this case, the doctrine of last clear chance applies.

The doctrine of last clear chance states that where both parties are negligent but the negligent act of one is appreciably later than that of the other, or where it is impossible to determine whose fault or negligence caused the loss, the one who had the last clear opportunity to avoid the loss but failed to do so is chargeable with the loss.16 In this case, Deocampo had the last clear chance to avoid the collision. Since Deocampo was driving the rear vehicle, he had full control of the situation since he was in a position to observe the vehicle in front of him.17Deocampo had the responsibility of avoiding bumping the vehicle in front of him.18 A U-turn is done at a much slower speed to avoid skidding and overturning, compared to running straight ahead.19 Deocampo could have avoided the vehicle if he was not driving very fast while following the pick-up. Deocampo was not only driving fast, he also admitted that he did not step on the brakes even upon seeing the pick-up. He only stepped on the brakes after the collision.

Petitioners are Solidarily Liable

LADECO alleges that it should not be held jointly and severally liable with Deocampo because it exercised due diligence in the supervision and selection of its employees. Aside from this statement, LADECO did not proffer any proof to show how it exercised due diligence in the supervision and selection of its employees. LADECO did not show its policy in hiring its drivers, or the manner in which it supervised its drivers. LADECO failed to substantiate its allegation that it exercised due diligence in the supervision and selection of its employees.

Hence, we hold LADECO solidarily liable with Deocampo.

Respondent is Entitled to Moral Damages

We sustain the award of moral damages. Moral damages are awarded to allow a plaintiff to obtain means, diversion, or amusement that will serve to alleviate the moral suffering he has undergone due to the defendant’s culpable action.20 The trial court found that respondent, who was on board the pick-up when the collision took place, suffered shock, serious anxiety, and fright when the crewcab bumped his pick-up. We sustain the trial court and the Court of Appeals in ruling that respondent sufficiently showed that he suffered shock, serious anxiety, and fright which entitle him to moral damages.

Both the trial court and the Court of Appeals failed to give any justification for the award of attorney’s fees. Awards of attorney’s fees must be based on findings of fact and of law and stated in the decision of the trial court.21Further, no premium should be placed on the right to litigate.22 Hence, we delete the award of attorney’s fees.

WHEREFORE, we AFFIRM the 25 July 2001 Decision and 11 March 2002 Resolution of the Court of Appeals in CA-G.R. CV No. 51134 with MODIFICATION by deleting the award of attorney’s fees.

SO ORDERED.

G.R. No. 119756 March 18, 1999

FORTUNE EXPRESS, INC., petitioner, vs.COURT OF APPEALS, PAULIE U.CAORONG, and minor childrenYASSER KING CAORONG, ROSE HEINNI and PRINCE ALEXANDER, all surnamed CAORONG, and represented by their mother PAULIE U. CAORONG, respondents.

 

MENDOZA, J.:

This is an appeal by petition for review on certiorari of the decision, dated July 29, 1994, of the Court of Appeals, which reversed the decision of the Regional Trial Court, Branch VI, Iligan City. The aforesaid decision of the trial court dismissed the complaint of public respondents against petitioner for damages for breach of contract of carriage filed on the ground that petitioner had not exercised the required degree of diligence in the operation of one of its buses. Atty. Talib Caorong, whose heirs are private respondents herein, was a passenger of the bus and was killed in the ambush involving said bus.

The facts of the instant case are as follows:

Petitioner is a bus company in northern Mindanao. Private respondent Paulie Caorong is the widow of Atty. Caorong, while private respondents Yasser King, Rose Heinni, and Prince Alexander are their minor children.

On November 18, 1989, a bus of petitioner figured in an accident with a jeepney in Kauswagan, Lanao del Norte, resulting in the death of several passengers of the jeepney, including two Maranaos. Crisanto Generalao, a volunteer field agent of the Constabulary Regional Security Unit No. X, conducted an investigation of the accident. He found that the owner of the jeepney was a Maranao residing in Delabayan, Lanao del Norte and that certain Maranaos were planning to take revenge on the petitioner by burning some of its buses. Generalao rendered a report on his findings to Sgt. Reynaldo Bastasa of the Philippine Constabulary Regional Headquarters at Cagayan de Oro. Upon the instruction of Sgt. Bastasa, he went to see Diosdado Bravo, operations manager of petitioner, its main office in Cagayan de Oro City. Bravo assured him that the necessary precautions to insure the safety of lives and property would be taken. 1

At about 6:45 P.M. on November 22, 1989, three armed Maranaos who pretended to be passengers, seized a bus of petitioner at Linamon, Lanao del Norte while on its way to Iligan City. Among the passengers of the bus was Atty. Caorong. The leader of the Maranaos, identified as one Bashier Mananggolo, ordered the driver, Godofredo Cabatuan, to stop the bus on the side of the highway.

Mananggolo then shot Cabatuan on the arm, which caused him to slump on the steering wheel. The one of the companions of Mananggolo started pouring gasoline inside the bus, as the other held the passenger at bay with a handgun. Mananggolo then ordered the passenger to get off the bus. The passengers, including Atty. Caorong, stepped out of the bus and went behind the bushes in a field some distance from the highway. 2

However, Atty. Caorong returned to the bus to retrieve something from the overhead rack. at that time, one of the armed men was pouring gasoline on the head of the driver. Cabatuan, who had meantime regained consciousness, heard Atty. Caorong pleading with the armed men to spare the driver as he was innocent of any wrong doing and was only trying to make a living. The armed men were, however, adamant as they repeated the warning that they were going to burn the bus along with its driver. During this exchange between Atty. Caorong and the assailants, Cabatuan climbed out of the left window of the bus and crawled to the canal on the opposite side of the highway. He heard shots from inside the bus. Larry de la Cruz, one of the passengers, saw that Atty. Caorong was hit. Then the bus was set on fire. Some of the passengers were able to pull Atty. Caorong out of the burning bus and rush him to the Mercy Community Hospital in Iligan City, but he died while undergoing operation.3

The private respondents brought this suit for breach of contract of carriage in the Regional Trial Court, Branch VI, Iligan City. In its decision, dated December 28, 1990, the trial court dismissed the complaint, holding as follows:

The fact that defendant, through Operations Manager Diosdado Bravo, was informed of the "rumors" that the Moslems intended to take revenge by burning five buses of defendant is established since the latter also utilized Crisanto Generalao as a witness. Yet despite this information, the plaintiffs charge, defendant did not take proper precautions. . . . Consequently, plaintiffs now fault the defendant for ignoring the report. Their position is that the defendant should have provided its buses with security guards. Does the law require common carriers to install security guards in its buses for the protection and safety of its passengers? Is the failure to post guards on omission of the duty to "exercise the diligence of a good father of the family" which could have prevented the killing of Atty. Caorong? To our mind, the diligence demanded by law does not include the posting of security guard in buses. It is an obligation that properly belongs to the State. Besides, will the presence of one or two security guards suffice to deter a determined assault of the lawless and thus prevent the injury complained of? Maybe so, but again, perhaps not. In other words, the presence of a security guard is not a guarantee that the killing of Atty. Caorong would have been definitely avoided.

xxx xxx xxx

Accordingly, the failure of defendant to accord faith and credit to the report of Mr. Generalao and the fact that it did not provide security to its buses cannot, in the light of the circumstances, be characterized as negligence.

Finally, the evidence clearly shows that the assalants did not have the least intention of the harming any of the passengers. They ordered all the passengers to alight and set fire on the bus only after all the passengers were out of danger. The death of Atty. Caorong was an unexpected and unforseen occurrense over which defendant had no control. Atty. Caorong performed an act of charity and heroism in coming to the succor of the driver even in the face of danger. He deserves the undying gratitude of the driver whose life he saved. No one should blame him for an act of

extraordinary charity and altruism which cost his life. But neither should any blame be laid on the doorstep of defendant. His death was solely due to the willfull acts of the lawless which defendant could neither prevent nor to stop.

WHEREFORE, in view of the foregoing, the complaint is hereby dismissed. For lack of merit, the counter-claim is likewise dismissed. No costs. 4

On appeal, however, the Court of Appeals reversed. It held:

In the case at bench, how did defendant-appellee react to the tip or information that certain Maranao hotheads were planning to burn five of its buses out of revenge for the deaths of two Maranaos in an earlier collision involving appellee's bus? Except for the remarks of appellee's operations manager that "we will have our action . . . . and I'll be the one to settle it personally," nothing concrete whatsoever was taken by appellee or its employees to prevent the execution of the threat. Defendant-appellee never adopted even a single safety measure for the protection of its paying passengers. Were there available safeguards? Of course, there were: one was frisking passengers particularly those en route to the area where the threats were likely to be carried out such as where the earlier accident occurred or the place of influence of the victims or their locality. If frisking was resorted to, even temporarily, . . . . appellee might be legally excused from liabilty. Frisking of passengers picked up along the route could have been implemented by the bus conductor; for those boarding at the bus terminal, frisking could have been conducted by him and perhaps by additional personnel of defendant-appellee. On hindsight, the handguns and especially the gallon of gasoline used by the felons all of which were brought inside the bus would have been discovered, thus preventing the burning of the bus and the fatal shooting of the victim.

Appellee's argument that there is no law requiring it to provide guards on its buses and that the safety of citizens is the duty of the government, is not well taken. To be sure, appellee is not expected to assign security guards on all its buses; if at all, it has the duty to post guards only on its buses plying predominantly Maranaos areas. As discussed in the next preceding paragraph, least appellee could have done in response to the report was to adopt a system of verification such as the frisking of passengers boarding at its buses. Nothing, and no repeat, nothing at all, was done by defendant-appellee to protect its innocent passengers from the danger arising from the "Maranao threats." It must be observed that frisking is not a novelty as a safety measure in our society. Sensitive places — in fact, nearly all important places — have applied this method of security enhancement. Gadgets and devices are avilable in the market for this purpose. It would not have weighed much against the budget of the bus company if such items were made available to its personnel to cope up with situations such as the "Maranaos threats."

In view of the constitutional right to personal privacy, our pronouncement in this decision should not be construed as an advocacy of mandatory frisking in all public conveyances. What we are saying is that given the circumstances obtaining in the case at bench that: (a) two Maranaos died because of a vehicular collision involving one of appellee's vehicles; (b) appellee received a written report from a member of the Regional Security Unit, Constabulary Security Group, that the tribal/ethnic group of the two deceased were planning to burn five buses of appellee out of revenge; and (c) appelle did nothing — absolutely nothing — for the safety of its passengers travelling in the area of influence of the victims, appellee has failed to exercise the

degree of dilegence required of common carriers. Hence, appellee must be adjudge liable.

xxx xxx xxx

WHEREFORE the decision appealed from is hereby REVERSED and another rendered ordering defendant-appellee to pay plaintiffs-appellants the following:

1) P3,399,649.20 as death indemnity;

2) P50,000.00 and P500.00 per appearance as attorney's fee and

Costs against defendant-appellee. 5

Hence, this appeal. Petitioner contends:

(A) THAT PUBLIC RESPONDENT ERRED IN REVERSING THE DECISION OF THE REGIONAL TRIAL COURT DATED DECEMBER 28, 1990 DISMISSING THE COMPLAINT AS WELL AS THE COUNTERCLAIM, AND FINDING FOR PRIVATE RESPONDENTS BY ORDERING PETITIONER TO PAY THE GARGANTUAN SUM OF P3,449,649.20 PLUS P500.00 PER APPEARANCE AS ATTORNEY'S FEES, AS WELL AS DENYING PETITIONERS MOTION FRO RECONSIDERATION AND THE SUPPLEMENT TO SAID MOTION, WHILE HOLDING, AMONG OTHERS, THAT THE PETITIONER BREACHED THE CONTRACT OF THE CARRIAGE BY ITS FAILURE TO EXCERCISE THE REQUIRED DEGREE OF DILIGENCE;

(B) THAT THE ACTS OF THE MARANAO OUTLAWS WERE SO GRAVE, IRRESISTABLE, VIOLENT, AND FORCEFULL, AS TO BE REGARDED ASCASO FORTUITO; AND

(C) THAT PUBLIC RESPONDENT COURT OF APPEALS SERIOUSLY ERRED IN HOLDING THAT PETITIONER COULD HAVE PROVIDED ADEQUATE SECURITY IN PREDOMINANTLY MUSLIM AREAS AS PART OF ITS DUTY TO OBSERVE EXTRA-ORDINARY DILIGENCE AS A COMMON CARRIER.

The instant has no merit.

First. Petitioner's Breach of the Contract of Carriage.

Art. 1763 of the Civil Code provides that a common carrier is responsible for injuries suffered by a passenger on account of wilfull acts of other passengers, if the employees of the common carrier could have prevented the act through the exercise of the diligence of a good father of a family. In the present case, it is clear that because of the negligence of petitioner's employees, the seizure of the bus by Mananggolo and his men was made possible.

Despite warning by the Philippine Constabulary at Cagayan de Oro that the Maranaos were planning to take revenge on the petitioner by burning some of its buses and the assurance of petitioner's operation manager, Diosdado Bravo, that the necessary precautions would be taken, petitioner did nothing to protect the safety of its passengers.

Had petitioner and its employees been vigilant they would not have failed to see that the malefactors had a large quantity of gasoline with them. Under the circumstances, simple precautionary measures to protect the safety of passengers, such as frisking passengers and inspecting their baggages, preferably with non-intrusive gadgets such as metal detectors, before allowing them on board could have been employed without violating the passenger's constitutional rights. As this Court amended in Gacal v. Philippine Air Lines, Inc., 6 a common carrier can be held liable for failing to prevent a hijacking by frisking passengers and inspecting their baggages.

From the foregoing, it is evident that petitioner's employees failed to prevent the attack on one of petitioner's buses because they did not exercise the diligence of a good father of a family. Hence, petitioner should be held liable for the death of Atty. Caorong.

Second. Seizure of Petitioner's Bus not a Case of Force Majeure

The petitioner contends that the seizure of its bus by the armed assailants was a fortuitous event for which it could not be held liable.

Art. 1174 of the Civil Code defines a fortuitous event as an occurence which could not be foreseen, is inevitable. In Yobido v. Court of Appeals, 7 we held that to considered as force majeure, it is necessary that (1) the cause of the breach of the obligation must be independent of the human will; (2) the event must be either unforeseeable or unavoidable; (3) the occurence must be render it impossible for the debtor to fulfill the obligation in a normal manner; and (4) the obligor must be free of participation in, or aggravation of, the injury to the creditor. The absence of any of the requisites mentioned above would prevent the obligor from being excused from liability.

Thus, in Vasquez v. Court of Appeals, 8 it was held that the common carrier was liable for its failure to take the necessary precautions against an approaching typhoon, of which it was warned, resulting in the loss of the lives of several passengers. The event was forseeable, and, thus, the second requisite mentioned above was not fulfilled. This ruling applies by analogy to the present case. Despite the report of PC agent Generalao that the Maranaos were going to attack its buses, petitioner took no steps to safeguard the lives and properties of its passengers. The seizure of the bus of the petitioner was foreseeable and, therefore, was not a fortuitous event which would exempt petitioner from liabilty.

Petitioner invokes the ruling in Pilapil v. Court of Appeals, 9 and De Guzman v. Court of Appeals, 10 in support of its contention that the seizure of its bus by the assailants constitutes force majeure. In Pilapil v. Court of Appeals, 11 it was held that a common carrier is not liable for failing to install window grills on its buses to protect the passengers from injuries cause by rocks hurled at the bus by lawless elements. On the other hand, in De Guzman v. Court of Appeals, 12 it was ruled that a common carriers is not responsible for goods lost as a result of a robbery which is attended by grave or irresistable threat, violence, or force.

It is clear that the cases of Pilapil and De Guzman do not apply to the prensent case. Art. 1755 of the Civil Code provides that "a common carrier is bound to carry the passengers as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with due regard for all the circumstances." Thus, we held in Pilapil and De Guzman that the respondents therein were not negligent in failing to take special precautions against threats to the safety of passengers which could not be foreseen, such as tortious or criminal acts of third persons. In the present case, this factor of unforeseeability (the second requisite for an event to be considered force majeure) is lacking. As already stated, despite the report of PC agent Generalao that the Maranaos were planning to burn some of petitioner's buses and the assurance of petitioner's operation manager (Diosdado Bravo) that the necessary precautions would be taken, nothing was really done by petitioner to protect the safety of passengers.

Third. Deceased not Guilty of Contributory Negligence

The petitioner contends that Atty. Caorong was guilty of contributory negligence in returning to the bus to retrieve something. But Atty. Caorong did not act recklessly. It should be pointed out that the intended targets of the violence were petitioners and its employees, not its passengers. The assailant's motive was to retaliate for the loss of life of two Maranaos as a result of the collision between petitioner's bus and the jeepney in which the two Maranaos were riding. Mananggolo, the leader of the group which had hijacked the bus, ordered the passengers to get off the bus as they intended to burn it and its driver. The armed men actually allowed Atty. Caorong to retrieve something from the bus. What apparently angered them was his attempt to help the driver of the bus by pleading for his life. He was playing the role of the good Samaritan. Certainly, this act cannot considered an act of negligence, let alone recklessness.

Fourth. Petitioner Liable to Private Respaondents for Damages

We now consider the question of damages that the heirs of Atty. Caorong, private respondents herein, are entitled to recover from the petitioner.

Indemnity for Death. Art. 1764 of the Civil Code, in relation to Art. 2206 thereof, provides for the payment of indemnity for the death of passengers caused by the breach of contract of carriage by a common carrier. Initially fixed in Art. 2206 at P3,000.00, the amount of the said indemnity for death has through the years been gradually increased in view of the declining value of the peso. It is presently fixed at P50,000.00. 13 Private respondents are entitled to this amount.

Actual Damages. Art. 2199 provides that "except as provided by law or by stipulation, one is entitled to an adequate compensation only for such pecuniary loss suffered by him as has duly proved." The trial court found that the private respondents spent P30,000.00 for the wake and burial of Atty. Caorong. 14 Since petitioner does not question this finding of the trial court, it is liable to private respondent in the said amount as actual damages.

Moral Damages. Under Art. 2206, 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 trial court found that private respondent Paulie Caorong suffered pain from the death of her husband and worry on how to provide support for their minor children, private respondents Yasser King, Rose Heinni, and Prince Alexander. 15 The petitioner likewise does not question this finding of the trial court. Thus, in accordance with recent decisions of this Court, 16 we hold that the petitioner is liable to the private respondents in the amount of P100,000.00 as moral damages for the death of Atty. Caorong.

Exemplary Damages. Art. 2232 provides that "in contracts and quasi-contracts, the court may award exemplary damages if the defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent reckless manner." In the present case, the petitioner acted in a wanton and reckless manner. Despite warning that the Maranaos were planning to take revenge against the petitioner by burning some of its buses, and contary to the assurance made by its operations manager that the necessary precautions would be take, the petitioner and its employees did nothing to protect the safety of passengers. Under the circumtances, we deem it reasonable to award private respondents exemplary damages in the amount of P100,000.00. 17

Attorney's Fees. Pursuant to Art. 2208, attorney's fees may be recovered when, as in the instant case, exemplary damages are awarded. In the recent case of Sulpicio Lines, Inc. v. Court of Appeals, 18 we held an award of P50,000.00 as attorney's fees to be reasonable. Hence, the private respondents are entitled to attorney's fees in that amount.

Compensation for Loss of Earning Capacity. Art. 1764 of the Civil Code, in relation to Art. 2206 thereof, provides that in addition to the indemnity for death arising from the breach of contrtact of carriage by a common carrier, the "defendant shall be liable for the loss of the earning capacity of the deceased, and the indemnity shall be paid to the heirs of the latter." The formula established in decided cases for computing net earning capacity is as follows:19

Gross Necessary

Net Earning = Life x Annual — Living

Capacity Expectancy Income Expenses

Life expectancy is equivalent to two thirds (2/3) multiplied by the difference of eighty (80) and the age of the deceased. 20 Since Atty. Caorong was 37 years old at that time of his death, 21 he had a life expectancy of 28 2/3 more years. 22 His projected gross annual income, computed based on his monthly salary of P11,385.00. 23 as a lawyer in the Department of Agrarian Reform at the time of his death, was P148,005.00. 24 Allowing for necessary living expenses of fifty percent (50%) 25 of his projected gross annual income, his total earning capacity amounts to P2,121,404.90. 26 Hence, the petitioner is liable to the private respondents in the said amount as a compensation for loss of earning capacity.

WHEREFORE, the decision, dated July 29, 1994, of the Court of Appeals is hereby AFFIRMED with the MODIFICATION that petitioner Fortune Express, Inc. is ordered to pay the following amounts to private respondents Paulie, Yasser King, Rose Heinni, and Prince Alexander Caorong:

1. death indemnity in the amount of fifty thousand pesos (P50,000.00);

2. actual damages in the amount of thirty thousand pesos (P30,000.00);

3. moral damages in the amount of one hundred thousand pesos (P100,000.00);

4. exemplary damages in the amount of one hundred thousand pesos (P100,000.00);

5. attorney's fees in the amount of fifty thousand pesos (P50,000.00);

6. compensation for loss of earning capacity in the amount of two million one hundred twenty-one thousand four hundred four pesos and ninety centavos (P2,121,404.90); and

7. cost of suits.

SO ORDERED.

G.R. No. 170141             April 22, 2008

JAPAN AIRLINES, petitioner, vs.JESUS SIMANGAN, respondent.

D E C I S I O N

REYES R.T., J.:

WHEN an airline issues a ticket to a passenger confirmed on a particular flight on a certain date, a contract of carriage arises, and the passenger has every right to expect that he would fly on that flight and on that date. If he does not, then the carrier opens itself to a suit for breach of contract of carriage.1

The power to admit or not an alien into the country is a sovereign act which cannot be interfered with even by Japan Airlines (JAL).2

In this petition for review on certiorari,3 petitioner JAL appeals the: (1) Decision4 dated May 31, 2005 of the Court of Appeals (CA) ordering it to pay respondent Jesus Simangan moral and exemplary damages; and (2) Resolution5 of the same court dated September 28, 2005 denying JAL's motion for reconsideration.

The Facts

In 1991, respondent Jesus Simangan decided to donate a kidney to his ailing cousin, Loreto Simangan, in UCLA School of Medicine in Los Angeles, California, U.S.A. Upon request of UCLA, respondent undertook a series of laboratory tests at the National Kidney Institute in Quezon City to verify whether his blood and tissue type are compatible with Loreto's.6 Fortunately, said tests proved that respondent's blood and tissue type were well-matched with Loreto's.7

Respondent needed to go to the United States to complete his preliminary work-up and donation surgery. Hence, to facilitate respondent's travel to the United States, UCLA wrote a letter to the American Consulate in Manila to arrange for his visa. In due time, respondent was issued an emergency U.S. visa by the American Embassy in Manila.8

Having obtained an emergency U.S. visa, respondent purchased a round trip plane ticket from petitioner JAL for US$1,485.00 and was issued the corresponding boarding pass.9 He was scheduled to a particular flight bound for Los Angeles, California, U.S.A. via Narita, Japan.10

On July 29, 1992, the date of his flight, respondent went to Ninoy Aquino International Airport in the company of several relatives and friends.11 He was allowed to check-in at JAL's counter.12 His plane ticket, boarding pass, travel authority and personal articles were subjected to rigid immigration and security routines.13 After passing through said immigration and security procedures, respondent was allowed by JAL to enter its airplane.14

While inside the airplane, JAL's airline crew suspected respondent of carrying a falsified travel document and imputed that he would only use the trip to the United States as a pretext to stay and work in Japan.15 The stewardess asked respondent to show his travel documents. Shortly after, the stewardess along with a Japanese and a Filipino haughtily ordered him to stand up and leave the plane.16 Respondent protested, explaining that he was issued a U.S. visa. Just to allow him to board the plane, he pleaded with JAL to closely monitor his movements when the aircraft stops over in Narita.17 His pleas were ignored. He was then constrained to go out of the plane.18 In a nutshell, respondent was bumped off the flight.

Respondent went to JAL's ground office and waited there for three hours. Meanwhile, the plane took off and he was left behind.19 Afterwards, he was informed that his travel documents were, indeed, in order.20 Respondent was refunded the cost of his plane ticket less the sum of US$500.00 which was deducted by JAL.21 Subsequently, respondent's U.S. visa was cancelled.22

Displeased by the turn of events, respondent filed an action for damages against JAL with the Regional Trial Court (RTC) in Valenzuela City, docketed as Civil Case No. 4195-V-93. He claimed he was not able to donate his kidney to Loreto; and that he suffered terrible embarrassment and mental anguish.23 He prayed that he be awarded P3 million as moral damages, P1.5 million as exemplary damages and P500,000.00 as attorney's fees.24

JAL denied the material allegations of the complaint. It argued, among others, that its failure to allow respondent to fly on his scheduled departure was due to "a need for his travel documents to be authenticated by the United States Embassy"25 because no one from JAL's airport staff had encountered a parole visa before.26 It posited that the authentication required additional time; that respondent was advised to take the flight the following day, July 30, 1992. JAL alleged that respondent agreed to be rebooked on July 30, 1992.27

JAL also lodged a counterclaim anchored on respondent's alleged wrongful institution of the complaint. It prayed for litigation expenses, exemplary damages and attorney's fees.28

On September 21, 2000, the RTC presided by Judge Floro P. Alejo rendered its decision in favor of respondent (plaintiff), disposing as follows:

WHEREFORE, judgment is hereby rendered ordering the defendant to pay the plaintiff the amount ofP1,000,000.00 as moral damages, the amount of P500,000.00 as exemplary damages and the amount ofP250,000.00 as attorney's fees, plus the cost of suit.29

The RTC explained:

In summarily and insolently ordering the plaintiff to disembark while the latter was already settled in his assigned seat, the defendant violated the contract of carriage; that when the plaintiff was ordered out of the plane under the pretext that the genuineness of his travel documents would be verified it had caused him embarrassment and besmirched reputation; and that when the plaintiff was finally not allowed to take the flight, he suffered more wounded feelings and social humiliation for which the plaintiff was asking to be awarded moral and exemplary damages as well as attorney's fees.

The reason given by the defendant that what prompted them to investigate the genuineness of the travel documents of the plaintiff was that the plaintiff was not then carrying a regular visa but just a letter does not appear satisfactory. The defendant is engaged in transporting passengers by plane from country to country and is therefore conversant with the travel documents. The defendant should not be allowed to pretend, to the prejudice of the plaintiff

not to know that the travel documents of the plaintiff are valid documents to allow him entry in the United States.

The foregoing act of the defendant in ordering the plaintiff to deplane while already settled in his assigned seat clearly demonstrated that the defendant breached its contract of carriage with the plaintiff as passenger in bad faith and as such the plaintiff is entitled to moral and exemplary damages as well as to an award of attorney's fees.30

Disagreeing with the RTC judgment, JAL appealed to the CA contending that it is not guilty of breach of contract of carriage, hence, not liable for damages.31 It posited that it is the one entitled to recover on its counterclaim.32

CA Ruling

In a Decision33 dated May 31, 2005, the CA affirmed the decision of the RTC with modification in that it lowered the amount of moral and exemplary damages and deleted the award of attorney's fees. The fallo of the CA decision reads:

WHEREFORE, the appealed Decision is AFFIRMED with MODIFICATION. Appellant JAPAN AIR LINES is ordered to pay appellee JESUS SIMANGAN the reduced sums, as follows: Five Hundred Thousand Pesos (P500,000.00) as moral damages, and Two Hundred Fifty Thousand Pesos (P250,000.00) as exemplary damages. The award of attorney's fees is hereby DELETED.34

The CA elucidated that since JAL issued to respondent a round trip plane ticket for a lawful consideration, "there arose a perfected contract between them."35 It found that respondent was "haughtily ejected"36 by JAL and that "he was certainly embarrassed and humiliated"37 when, in the presence of other passengers, JAL'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";38 and that "he was compelled to deplane on the grounds that his papers were fake."39

The CA ratiocinated:

While the protection of passengers must take precedence over convenience, the implementation of security measures must be attended by basic courtesies.

In fact, breach of the contract of carriage creates against the carrier a presumption of liability, by a simple proof of injury, relieving the injured passenger of the duty to establish the fault of the carrier or of his employees; and placing on the carrier the burden to prove that it was due to an unforeseen event or toforce majeure.

That appellee possessed bogus travel documents and that he might stay illegally in Japan are allegations without substantiation. Also, appellant's attempt to rebook appellee the following day was too late and did not relieve it from liability. The damage had been done. Besides, its belated theory of novation, i.e., that appellant's original obligation to carry appellee to Narita and Los Angeles on July 29, 1992 was extinguished by novation when appellant and appellant agreed that appellee will instead take appellant's flight to Narita on the following day, July 30, 1992, deserves little attention. It is inappropriate at bar. Questions not taken up during the trial cannot be raised for the first time on appeal.40 (Underscoring ours and citations were omitted)

Citing Ortigas, Jr. v. Lufthansa German Airlines,41 the CA declared that "(i)n contracts of common carriage, inattention and lack of care on the part of the carrier resulting in the failure of the passenger to be accommodated in the class contracted for amounts to bad faith or fraud which entitles the passengers to the award of moral damages in accordance with Article 2220 of the Civil Code."42

Nevertheless, the CA modified the damages awarded by the RTC. It explained:

Fundamental in the law on damages is that one injured by a breach of a contract, or by a wrongful or negligent act or omission shall have a fair and just compensation commensurate to the loss sustained as consequence of the defendant's act. Being discretionary on the court, the amount, however, should not be palpably and scandalously excessive.

Here, the trial court's award of P1,000,000.00 as moral damages appears to be overblown. No other proof of appellee's social standing, profession, financial capabilities was presented except that he was single and a businessman. To Us, the sum of 500,000.00 is just and fair. For, moral damages are emphatically not intended to enrich a complainant at the expense of the defendant. They are awarded only to enable the injured party to obtain means, diversion or amusements that will serve to alleviate the moral suffering he has undergone, by reason of the defendant's culpable action.

Moreover, the grant of P500,000.00 as exemplary damages needs to be reduced to a reasonable level. The award of exemplary damages is designed to permit the courts to mould behavior that has socially deleterious consequences and its imposition is required by public policy to suppress the wanton acts of the offender. Hence, the sum of P250,000.00 is adequate under the circumstances.

The award of P250,000.00 as attorney's fees lacks factual basis. Appellee was definitely compelled to litigate in protecting his rights and in seeking relief from appellant's misdeeds. Yet, the record is devoid of evidence to show the cost of the services of his counsel and/or the actual expenses incurred in prosecuting his action.43 (Citations were omitted)

When JAL's motion for reconsideration was denied, it resorted to the petition at bar.

Issues

JAL poses the following issues -

I.

WHETHER OR NOT THE COURT OF APPEALS ERRED IN RULING THAT RESPONDENT WAS ENTITLED TO MORAL DAMAGES, CONSIDERING THAT:

A. JAL WAS NOT GUILTY OF BREACH OF CONTRACT.

B. MORAL DAMAGES MAY BE AWARDED IN BREACH OF CONTRACT CASES ONLY WHEN THE BREACH IS ATTENDED BY FRAUD OR BAD FAITH. ASSUMING ARGUENDO THAT JAL WAS GUILTY OF BREACH, JAL DID NOT ACT FRAUDULENTLY OR IN BAD FAITH AS TO ENTITLE RESPONDENT TO MORAL DAMAGES.

C. THE LAW DISTINGUISHES A CONTRACTUAL BREACH EFFECTED IN GOOD FAITH FROM ONE ATTENDED BY BAD FAITH.

II.

WHETHER OR NOT THE COURT OF APPEALS ERRED IN RULING THAT RESPONDENT WAS ENTITLED TO EXEMPLARY DAMAGES CONSIDERING THAT:

A. EXEMPLARY DAMAGES ARE NOT RECOVERABLE IN BREACH OF CONTRACT OF CARRIAGE UNLESS THE CARRIER IS GUILTY OF WANTON, FRAUDULENT, RECKLESS, OPPRESSIVE OR MALEVOLENT CONDUCT.

B. ASSUMING ARGUENDO THAT JAL WAS GUILTY OF BREACH, JAL DID NOT ACT IN A WANTON FRAUDULENT, RECKLESS, OPPRESSIVE OR MALEVOLENT MANNER AS TO ENTITLE RESPONDENT TO EXEMPLARY DAMAGES.

III.

ASSUMING ARGUENDO THAT RESPONDENT WAS ENTITLED TO AN AWARD OF DAMAGES, WHETHER OR NOT THE COURT OF APPEALS AWARD OF P 750,000 IN DAMAGES WAS EXCESSIVEAND UNPRECEDENTED.

IV.

WHETHER OR NOT THE COURT OF APPEALS ERRED IN NOT FINDING FOR JAL ON ITSCOUNTERCLAIM.44 (Underscoring Ours)

Basically, there are three (3) issues to resolve here: (1) whether or not JAL is guilty of contract of carriage; (2) whether or not respondent is entitled to moral and exemplary damages; and (3) whether or not JAL is entitled to its counterclaim for damages.

Our Ruling

This Court is not a trier of facts.

Chiefly, the issues are factual. The RTC findings of facts were affirmed by the CA. The CA also gave its nod to the reasoning of the RTC except as to the awards of damages, which were reduced, and that of attorney's fees, which was deleted.

We are not a trier of facts. We generally rely upon, and are bound by, the conclusions on this matter of the lower courts, which are better equipped and have better opportunity to assess the evidence first-hand, including the testimony of the witnesses.45

We have repeatedly held that the findings of fact of the CA are final and conclusive and cannot be reviewed on appeal to the Supreme Court provided they are based on substantial evidence.46 We have no jurisdiction, as a rule, to reverse their findings.47 Among the exceptions to this rule are: (a) when the conclusion is a finding grounded entirely on speculations, surmises or conjectures; (b) when the inference made is manifestly mistaken, absurd or impossible; (c) where there is grave abuse of discretion; (d) when the judgment is based on a misapprehension of facts; (e) when the findings of facts are conflicting; (f) when the CA, in making its findings, went beyond the issues of the case and the same is contrary to the admissions of both appellant and appellee.48

The said exceptions, which are being invoked by JAL, are not found here. There is no indication that the findings of the CA are contrary to the evidence on record or that vital testimonies of JAL's witnesses were disregarded. Neither did the CA commit misapprehension of facts nor did it fail to consider relevant facts. Likewise, there was no grave abuse of discretion in the appreciation of facts or mistaken and absurd inferences.

We thus sustain the coherent facts as established by the courts below, there being no sufficient showing that the said courts committed reversible error in reaching their conclusions.

JAL is guilty of breach ofcontract of carriage.

That respondent purchased a round trip plane ticket from JAL and was issued the corresponding boarding pass is uncontroverted.49 His plane ticket, boarding pass, travel authority and personal articles were subjected to rigid immigration and security procedure.50 After passing through said immigration and security procedure, he was allowed by JAL to enter its airplane to fly to Los Angeles, California, U.S.A. via Narita, Japan.51 Concisely, there was a contract of carriage between JAL and respondent.

Nevertheless, JAL made respondent get off the plane on his scheduled departure on July 29, 1992. He was not allowed by JAL to fly. JAL thus failed to comply with its obligation under the contract of carriage.

JAL justifies its action by arguing that there was "a need to verify the authenticity of respondent's travel document."52 It alleged that no one from its airport staff had encountered a parole visa before.53 It further contended that respondent agreed to fly the next day so that it could first verify his travel document, hence, there was novation.54 It maintained that it was not guilty of breach of contract of carriage as respondent was not able to travel to the United States due to his own voluntary desistance.55

We cannot agree. JAL did not allow respondent to fly. It informed respondent that there was a need to first check the authenticity of his travel documents with the U.S. Embassy.56 As admitted by JAL, "the flight could not wait for Mr. Simangan because it was ready to depart."57

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.

Considering that respondent was forced to get out of the plane and left behind against his will, he could not have freely consented to be rebooked the next day. In short, he did not agree to the alleged novation. Since novation implies a waiver of the right the creditor had before the novation, such waiver must be express.58 It cannot be supposed, without clear proof, that respondent had willingly done away with his right to fly on July 29, 1992.

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.59

Apart from the fact that respondent's plane ticket, boarding pass, travel authority and personal articles already passed the rigid immigration and security routines,60 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."61 Thus, We find untenable JAL's defense of "verification of respondent's documents" in its breach of contract of carriage.

It bears repeating that the power to admit or not an alien into the country is a sovereign act which cannot be interfered with even by JAL.62

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.63 Respondent has complied with these twin requisites.

Respondent is entitled to moral and exemplary damages and attorney's fees plus legal interest.

With reference to moral damages, JAL alleged that they are not recoverable in actions ex contractu except only when the breach is attended by fraud or bad faith. It is contended that it did not act fraudulently or in bad faith towards respondent, hence, it may not be held liable for moral damages.

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.64 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 2220.65

The acts committed by JAL against respondent amounts to bad faith. As found by the RTC, 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 ordered out of the plane under the alleged reason that the genuineness of his travel documents should be verified.

These findings of facts were upheld by the CA, to wit:

x x x he was haughtily ejected by appellant. 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. Then, he was compelled to deplane on the grounds that his papers were fake. His protestation of having been issued a U.S. visa coupled with his plea to appellant to closely monitor his movements when the aircraft stops over in Narita, were ignored. Worse, he was made to wait for many hours at the office of appellant only to be told later that he has valid travel documents.66 (Underscoring ours)

Clearly, JAL is liable for moral damages. It is firmly settled that moral damages are recoverable in suits predicated on breach of a contract of carriage where it is proved that the carrier was guilty of fraud or bad faith, as in this case. 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. What the law considers as bad faith which may furnish the ground for an award of moral damages would be bad faith in securing the

contract and in the execution thereof, as well as in the enforcement of its terms, or any other kind of deceit.67

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.68

Exemplary damages are designed by our civil law to permit the courts to reshape behaviour that is socially deleterious in its consequence by creating negative incentives or deterrents against such behaviour. In requiring compliance with the standard of extraordinary diligence, a standard which is, in fact, that of the highest possible degree of diligence, from common carriers and in creating a presumption of negligence against them, the law seeks to compel them to control their employees, to tame their reckless instincts and to force them to take adequate care of human beings and their property.69

Neglect or malfeasance of the carrier's employees could give ground for an action for damages. Passengers have a right to be treated by the carrier's employees with kindness, respect, courtesy and due consideration and are entitled to be protected against personal misconduct, injurious language, indignities and abuses from such employees.70

The assessment of P500,000.00 as moral damages and P100,000.00 as exemplary damages in respondent's favor is, in Our view, reasonable and realistic. This award is reasonably sufficient to indemnify him for the humiliation and embarrassment he suffered. This also serves as an example to discourage the repetition of similar oppressive acts.

With respect to attorney's fees, they may be awarded when defendant's act or omission has compelled plaintiff to litigate with third persons or to incur expenses to protect his interest.71 The Court, in Construction Development Corporation of the Philippines v. Estrella,72 citing Traders Royal Bank Employees Union-Independent v. National Labor Relations Commission,73 elucidated thus:

There are two commonly accepted concepts of attorney's fees, the so-called ordinary and extraordinary. In its ordinary concept, an attorney's fee is the reasonable compensation paid to a lawyer by his client for the legal services he has rendered to the latter. The basis of this compensation is the fact of his employment by and his agreement with the client.

In its extraordinary concept, an attorney's fee is an indemnity for damages ordered by the court to be paid by the losing party in a litigation. The basis of this is any of the cases provided by law where such award can be made, such as those authorized in Article 2208, Civil Code, and is payable not to the lawyer but to the client, unless they have agreed that the award shall pertain to the lawyer as additional compensation or as part thereof.74

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,75 as in this case.

Considering the factual backdrop of this case, attorney's fees in the amount of P200,000.00 is reasonably modest.

The above liabilities of JAL in the total amount of P800,000.00 earn legal interest pursuant to the Court's ruling inConstruction Development Corporation of the Philippines v. Estrella,76 citing Eastern Shipping Lines, Inc. v. Court of Appeals,77 to wit:

Regarding the imposition of legal interest at the rate of 6% from the time of the filing of the complaint, we held in Eastern Shipping Lines, Inc. v. Court of Appeals, 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, subject to the following rules, to wit -

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

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

3. When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest, whether the case falls under paragraph 1 or paragraph 2, above, shall be 12% per annum from such finality until its satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of credit.78 (Emphasis supplied and citations omitted)

Accordingly, in addition to the said total amount of P800,000.00, JAL is liable to pay respondent legal interest. Pursuant to the above ruling of the Court, the legal interest is 6% and it shall be reckoned from September 21, 2000 when the RTC rendered its judgment. From the time this Decision becomes final and executory, the interest rate shall be 12% until its satisfaction.

JAL is not entitled to its counterclaim for damages.

The counterclaim of JAL in its Answer79 is a compulsory counterclaim for damages and attorney's fees arising from the filing of the complaint. There is no mention of any other counter claims.

This compulsory counterclaim of JAL arising from the filing of the complaint may not be granted inasmuch as the complaint against it is obviously not malicious or unfounded. It was filed by respondent precisely to claim his right to damages against JAL. Well-settled is the rule that the commencement of an action does not per se make the action wrongful and subject the action to damages, for the law could not have meant to impose a penalty on the right to litigate.80

We reiterate case law that if damages result from a party's exercise of a right, it is damnum absque injuria.81Lawful acts give rise to no injury. Walang perhuwisyong maaring idulot ang paggamit sa sariling karapatan.

During the trial, however, JAL presented a witness who testified that JAL suffered further damages. Allegedly, respondent caused the publications of his subject complaint against JAL in the newspaper for which JAL suffered damages.82

Although these additional damages allegedly suffered by JAL were not incorporated in its Answer as they arose subsequent to its filing, JAL's witness was able to testify on the same before the RTC.83 Hence, although these issues were not raised by the pleadings, they shall be treated in all respects as if they had been raised in the pleadings.

As provided in Section 5, Rule 10 of the Rules of Court, "(w)hen issues not raised by the pleadings are tried with the express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings."

Nevertheless, JAL's counterclaim cannot be granted.

JAL is a common carrier. JAL's business is mainly with the traveling public. It invites people to avail themselves of the comforts and advantages it offers.84 Since JAL deals with the public, its bumping off of respondent without a valid reason naturally drew public attention and generated a public issue.

The publications involved matters about which the public has the right to be informed because they relate to a public issue. This public issue or concern is a legitimate topic of a public comment that may be validly published.

Assuming that respondent, indeed, caused the publication of his complaint, he may not be held liable for damages for it. The constitutional guarantee of freedom of the speech and of the press includes fair commentaries on matters of public interest. This is explained by the Court in Borjal v. Court of Appeals,85 to wit:

To reiterate, fair commentaries on matters of public interest are privileged and constitute a valid defense in an action for libel or slander. The doctrine of fair comment means that while in general every discreditable imputation publicly made is deemed false, because every man is presumed innocent until his guilt is judicially proved, and every false imputation is deemed malicious, nevertheless, when the discreditable imputation is directed against a public person in his public capacity, it is not necessarily actionable. In order that such discreditable imputation to a public official may be actionable, it must either be a false allegation of fact or a comment based on a false supposition. If the comment is an expression of opinion, based on established facts, then it is immaterial that the opinion happens to be mistaken, as long as it might reasonably be inferred from the facts.86 (Citations omitted and underscoring ours)

Even though JAL is not a public official, the rule on privileged commentaries on matters of public interest applies to it. The privilege applies not only to public officials but extends to a great variety of subjects, and includes matters of public concern, public men, and candidates for office.87

Hence, pursuant to the Borjal case, there must be an actual malice in order that a discreditable imputation to a public person in his public capacity or to a public official may be actionable. To be considered malicious, the libelous statements must be shown to have been written or published with the knowledge that they are false or in reckless disregard of whether they are false or not.88

Considering that the published articles involve matters of public interest and that its expressed opinion is not malicious but based on established facts, the imputations against JAL are not actionable. Therefore, JAL may not claim damages for them.

WHEREFORE, the petition is DENIED. The appealed Decision of the Court of Appeals is AFFIRMED WITH MODIFICATION. As modified, petitioner Japan Airlines is ordered to pay respondent Jesus Simangan the following: (1) P500,000.00 as moral damages; (2) P100,000.00 as exemplary damages; and (3) P200,000.00 as attorney's fees.

The total amount adjudged shall earn legal interest at the rate of 6% per annum from the date of judgment of the Regional Trial Court on September 21, 2000 until the finality of this Decision. From the time this Decision becomes final and executory, the unpaid amount, if any, shall earn legal interest at the rate of 12% per annum until its satisfaction.

SO ORDERED.