SUPREME COURT OF THE PHILIPPINES

PUBLIC INFORMATION OFFICE

3RepubHc of tbe flbilippines

~nprente QI:ourt
~tauiln
SECOND llIVISION
KLM ROYAL DUTCH AIRLINES, G.R. No. 212136
Petitioner,
Present:

PERLAS-BERNABE, S.A.J,
Chairperson,
- versus - I-IERNANTIO,
GAERLAN,
ROSARIO, *and
Dil\1AAl\lIPAO, JJ

DR. JOSE IVI. TIONGCO,

Respondent,
x,- - - -

n v c1e110Nr
VJ;..;,...,, .~.:, . J

HERNANDO~ J.:

Petitioner KLl\/1 Royal Dutch Airlines (petitioner/KLM) assails the

April 10, 2013 Decision,1 and the 1\/larch 27, 2014 Resolution2 of the Court of
Appeals (CA/appellate court) in CA-G.R,. CV No. 00884-JVIIl.J which affirmed
with modifications the January 16, 2006 Decision3 of the Regional Trial Court
(RTC/trial court), Branch 10 of Davao City.

The Antecedent Facts:

In October 1998, respondent Dr. Jose M. Tiongco (Dr. Tiongco), a

prominent surgeon and one of the founders of the Medical J\1ission Group
Hospital and Health Services in Davao City, was invited by the United
Nations - "World Health Org;:1.nization (UN-\VHO) to be a keynote speaker in

* Designated additional Member per raffle dated September 22, 2021 vicCJ J. Inting who concurred in the
assailed Decision.
1 f?ollo, pp. 41-63. Penned by Associate Justice Jhosep Y. Lopez (now a Member of this Court) and
concurred in by Associate Justices Edgardo T. Lloren and Henri Jean Paul B. Inting (now a Member of
this Court).
2 Id. at 65-68.
CA rollo, pp. 88-93. Penned by Judge Jaime V. Quil:ctin.
Decision 2 G.R. No. 212136

.· the 20th Anniversary of Alma-Ata Declaration to be held in Almaty,

Kazakhstan from November 27-28, 1998. Thus, Dr. Tiongco secured his visa
for Kazakhstan and purchased tickets for his flights. 4

There being no direct flight from J\1anila to Kazakhstan, Dr. Tiangco

had to fly to Singapore via Singapore Airlines where he would then take two
connecting flights to Almaty on board petitioner KLM, his 111ain carrier.
Below was his travel itinerary: 5

DESTINATION AIRLINE FLIGHT DATE ETD ETA

Manila-Singapore Singapore SQ75 J..Jov. 25, 1998 1800 2130
Airlines
Singapore-Amsterdam KLM KL838 Nov. 25, 1998 2335 0600
Amsterdam-Frankfurt KLM KL1765 Nov. 26, 1998 0820 0935
Frankfurt-Almaty Lufthansa LH3346 Nov. 26, 1998 1025 2205
German
Airlines

On November 25, 1998, Dr. Tiongco arrived at the Ninoy Aquino

International Airport in Manila for the first leg of his two-day flight to
Almaty. He went to the counter of Singapore Airlines and checked-in a
suitcase containing a copy of his speech, resource materials, clothing for the
event, and other personal items. Singapore Airlines departed frmn Manila as
scheduled. Upon arrival in Singapore at 9:30 in the evening, Dr. Tiongco
proceeded to the KLM counter to check in for his flight to Amsterdam,
Netherlands. K.LM flight no. KL838 departed at 11 :35 in the evening as
scheduled. 6

Dr. Tiongco arrived at Amsterdam the next day in time for his third flight
to Frankfurt, Germany. However, his flight to Frankfurt on board KLM flight
no. KLl 765 departed from Amsterdam 45 minutes late, or at 9:00 o'clock in
the morning. As a result, Dr. Tiongco missed his fourth flight, i.e. from
Frankfurt to Almaty. 7

Upon his an-ival in Frankfurt, Dr. Tiongco searched for a KLM

employee. After two hours, he found a KLIV[ employee whom he informed at
once about his missed flight to Almaty, as weU as his speaking engagement
and his checked-in suitcase. The employee assured him that his suitcase would
be travelling with him. I-le also instructed the doctor to approach a Turkish
Airlines employee to assist with the logistics of his trip to Almaty. 8 The KLM
employee then took Dr. Tiongco's boarding pass and gave him a new
itinerary,9 to wit:

4
Rollo, p. 42.
Id.
6
Id.
7
Id.
8
Id. at 43.
9
Id.
 Dycision 3 G.R. No. 212136

DESTINATION AIRLINE FLIGHT DATE ETD ETA

Frankfurt-Instanbul Lufthansa LH3454 Nov. 26, 1998 1235 0435
Gennan Airlines
Instanbul-Almaty Turkish Airlines TK1350 Nov. 26, 1998 1930 0439

Dr. Tiongco then boarded Lufthansa Gennan Airlines (Lufthansa) from

Frank:furt to Instanbul. As instructed, he approached a Turkish Airlines
employee who introduced him to a certain Miss Chizem, an employee of
Lufthansa who, in turn, gave Dr. Tiongco a new boarding pass. She also
assured him that his checked~in suitcase will be transoorted in the same
flight. 10 ,.

Before the passengers of Turkish Airlines flight no. TK1350 boarded, its
I

personnel asked them to identify their luggages on the tarmac. Dr. Tiongco
looked for his suitcase but could not locate it. I-le asked Ivir. Osman Bey (Bey)
of Turkish Airlines to ask Miss Chizem to find his missing suitcase. Thirty
minutes passed and yet his suitcase was not in sight. The Turkish Airlines
flight no. TK1350 personnel then instructed its passengers to board the plane.
So as not to miss his flight, l\!Ir. Bey told Dr. Tiongco to go on board. He
likewise assured Dr. Tiongco that his suitcase will be loaded in the next
available flight to Almaty as soon as it is found. Dr. Tiongco was left with no
other option but to board with only his carry-on bag. 11

When Dr. Tiongco arrived in Almaty, nobody from KLM, Lufthansa, or

Turkish Airlines assisted him. His suitcase was still nowhere to be found. He
then exited the airport, hailed a taxi cab, and proceeded to Regency Hotel
where the UN·-WHO convention would be held. 12

Upon arrival in the hotel, Dr. Tiongco took a shower and changed into a
pair of slacks and a sweatshirt. He went downstairs where the conference
would be held. Initially, however, Dr. Tiongco was not allowed entry into the
venue because of his inappropriate attire. Dr. Tiongco explained to the
organizers that his suitcase containing his ciothes and important materials for
his speech got lost during his flight. It was only then that he was allowed
inside the venue. 13

Dr. Tiongco then delivered his lecture without any of his visual aids and
despite being inappropriately attired. When he finished his speech, some of
. the attendees approached him and asked for his resource materials. However,
he was unable to give them the materials since these were also in his missing
· 14
smtcase.

io Id.
i1 Id.
12
Id. at 43-44.
13
Id. at 44.
14 Id.
Decision 4 G.R. No. 212136

On December 14, 1998, Dr. Tiongco returned to the Philippines. Three

months passed and still there was no news about what happened to his
luggage. Thus, on 1\!farch 15, 1999, respondent wrote Singapore Airlines,
KLM and Lufthansa, demanding for compensation for his lost luggage and the
inconvenience he sufferedY Lufthansa, in its letter 16 dated March 31, 1999,
denied his claim for compensation while KLM and Singapore Airlines, in
separate letters, 17 asked for time to investigate the incident. In a letter 18 dated
April 21, 1999, Singapore Airlines denied any liability. KLM, unfortunately,
did not write back to Dr. Tiongco. 19

Thus, on August 5, 1999, Dr. Tiongco filed a Complaint20 for Damages

and Attorney's Fees against KLI\1, Turkish Airlines, Singapore Airlines, and
Lufthansa.

KLM, Singapore Airlines, and Lufthansa filed their separate answers. 21

They all denied liability for the lost suitcase of Dr. Tiongco, and instead asked
for indemnification from Dr. Tiongco. 22

KLM23 insisted that it performed extraordinary diligence in transporting

Dr. Tiongco to his last destination. It denied liability for the lost suitcase since
it is not his first or last carrier. Even if found liable, KLM averred that the
amount of actual damages should only be $400, i.e., $20 per kilo, pursuant to
the Warsaw Convention since Dr. Tiongco did not declare the actual value of
his suitcase. 24

KLlvl further averred that contrary to Dr. Tiongco' s claim, he did not
immediately notify any personnel of the airline about the missing luggage. It
was only when he sent a demand letter to KLM that the latter was infonned of
the incident. Moreover, Dr. Tiangco did not suffer any damage as he was able
to deliver his speech in the convention.

Singapore Airlines also denied any liability smce it transported Dr.

Tiongco and his checked-in suitcase to Singapore. His suitcase was duly
transferred to KLM's flight no. KL838, the second leg of Dr. Tiongco's flight,
as acknowledged by its handling agent. Assuming it ha,s any liability arising
from the lost suitcase, Singapore Airlines insisted that it is only limited in
nature under the Warsaw Convention. 25

15
Records, pp. 383-388.
16
Id. at 393.
17
Id. at 389-390 and 392.
18
Id. at 549-550.
19
Rollo, p. 44.
20
Records, pp. 1-7.
21
22
Records, pp. 49-65; 99-110; 43-48.
Rollo, p. 45.
23
Records, pp. 49-65.
24 Id.
25
Records, pp. 99-110.
D,ecision 5 G.R. No. 212136

Lastly, Lufthansa averred that it is KLM which should be held liable for
the lost suitcase being the intermediate ca1Tier of Dr. Tiongco to Kazakhstan.
Like KLM, it maintained that its liability, if there is any, is limited to $20 per
kilo under the Warsaw Convention. 26

On June 13, 2001, Dr. Tiongco filed an Omnibus J\Aotion27 before the
RTC praying for the dropping of Turkish Airlines as one of the defendants and
for the admission of his An1ended Complaint. 28 In its September 3, 2001
29
Order, the RTC granted respondent's Omnibus lvfotion and admitted the
.Amended Complaint 30

Ruling of the ~egional Trial

Court:

In its January 16, 2006 Decision, 31 the RTC ruled that KL1V[ is solely
liable for the damages suffered by Dr. Tiongco on account of his lost suitcase.
KLM failed to exercise extraordinary care in handling the suitcase of Dr.
Tiongco when it wrongfully transfen:ed it to Lufthansa flight no. LHl 0381
instead of LH3346, Dr. Tiongco's flight to Almaty. KLI\1 also failed to
in1111ediately inquire about what happened to the suitcase after Dr. Tiongco
informed its personnel. 32

Further, the RTC rejected KL1\tfs claim that Singapore Airlines and
Turkish Airlines, being the first and last carriers of Dr. Tiongco, should be
held liable instead of I<LM. It noted that }(J_,M, being the airline which issued
the tickets, is the prirn;ipal in the contract of carriage and, hence, is liable for
the acts and omissions of the other carriers to which it endorsed the other legs
ofthe flight. 33

The RTC awarded Dr. Tiongco nominal damages considering his failure
to sufficiently prove the amount of actual damages he suffered. He was
likewise award~d moral damages, exemplary damages, and attorney's fees as
prayed for in the Complaint 34

Thefallo of the Decision reads:

WHEREFORE, this Court her~by sentt;;:nces Defendant lZLM to

indem.nify Plaintiff the following, to wit:

26 Id. at 43-38.
27
Id. at 204,206.
28 Id.
29
Id. at315-318.
3
o Id, at 315-318.
31 CA rollo, pp. 88-93.

n Id. nt 90-91.
33 ld. nt 91.
34 fd. at 92,-93.
Decision 6 G.R. No. 212136

1. Nominal Damages in the amount of P3,000,000.00;

2. Moral Damages in the amount of P3,000,000.00;
3. Exemplary Damages in the amount of P5,000,000.00;
4. Attorney's Fees in the amount of Pl,600,000.00.

Cost against Defendant KLM. 35

KLM filed a Motion for Reconsideration36 but it was denied by the RTC
in its Order37 dated May 30, 2006. Hence, KLM appealed to the CA.

Ruling of the Court of Appeals:

In its April 10, 2013 Decision, 38 the appellate court agreed with the trial
court on K.LM' s liability for breach of contract of caniage. However, it
modified the awards of damages for being excessive. The dispositive portion
of the CA Decision reads:

WHEREFORE, the Appeal is PARTLY GRANTED. The Decision dated

January 16, 2006 of the Regional Trial Comi, Branch 10, Davao City, is
AFFIRMED with MODIFICATION that KLM Royal Dutch Airlines shall pay
Dr. Jose M. Tiangco the following:

l) The awards of moral damages, exemplary . damages and nominal

damages are hereby reduced to Pl,000,000.00, P300,000.00 and P50,000.00,
respectively;

2) All of these amounts shall earn interest at the rate of 6% per annum
from January 16, 2006. Thereafter, the interest rate of 12% per annum shall be
applied from the finality of this Decision until fully satisfied;

3) The award of attorney's fees shall be reduced to the amount equivalent

to 20% of the total amount adjudged to Dr. Tiongco, and;

4) Costs.

SO ORDERED. 39

KJ..,M sought for reconsideration40 but it was denied m the CA's

Resolution41 dated March 27, 2014 for lack of merit.

Hence, this petition for review on certiorari. 42

35
Id. at 93.
36 Id. at 94-110.
37
Id. at 111.
38 Rollo, pp. 41-63.
39 Id. at 62.
4
° CA rollo, pp. 319-347.
41
Rollo, pp. 65-68.
42
Id. at 9-36.

7.
 Decision 7 G.R. No. 212136

KLM submits the following issues before this Court:

31. Whether or not there is legal basis to support the findings of the trial
court and the CA that KLM' s actions were attended by gross negligence, bad
faith and willful misconduct to justify the award of moral and exemplary
damages.

32. Whether or not the CA committed reversible error when it ignored

the fact that the trial court awarded attorney's fees in the dispositive portion of
its decision only and did not explain the reason for its imposition in the body of
the said decision.

33. The amounts awarded to respondent as moral and exemplary

damages are excessive, unconscionable and unreasonable. 43

In essence, the main issue for resolution is whether KI..,M acted in gross
negligence, bad faith and willfull misconduct in relation to the loss of Dr.
Tiongco' s suitcase so that the latter can be entitled to award of damages.

KLM alleges that its mere failure to deliver Dr. Tiongco' s suitcase does
not constitute gross negligence, willful misconduct, or proof of bad faith to
warrant the award of damages. Its personnel did not act rudely or use profane
language towards Dr. Tiongco. In fact, Dr. Tiongco did not complain about
any improper behavior of KLM' s personnel when he was searching for his
missing suitcase. KLM also avers that there are no bases for the awards of
damages, attorney's fees, and costs. Assuming that respondent is entitled to
these awards, KLl\,1 prays that they be reduced for being exorbitant, and that
interest charges not be applied for lack of basis thereof. 44 Lastly, KLM also
maintains that Dr. Tiongco is only entitled to nominal damages pursuant to the
Court's ruling in Alitalia v. Intermediate Appellate Court45 (Alitalia). 46

Our Ruling

The petition lacks merit.

The issues raised in tbe instant

petition are factual in :nature
which are not subject to review
under Rule 45 of tbe Rules of
. Court.

43
Id. at 13-14.
44
Id. at 14-33.
45 270 Phil. l 08 (1990).
46 Rollo, pp. 20-25.
Decision 8 G.R. No. 212136

Only questions of law may be raised in a petition for review on certiorari

under Rule 45 of the Rules of Court. The Court is not a trier of facts. Hence, it
is not our function to re-evaluate the probative value of the evidence of both
parties which were already considered in the proceedings below. 47

The parameters of a judicial review under a Rule 45 petition is discussed

in A1iro v. Vda. De Eredoros, 48 viz.:

a. Rule 45 petition is limited to questions of law

Before proceeding to the merits of the case, this Court deems it necessary
to emphasize that a petition for review under Rule. 45 is limited only to
questions of law. Factual questions are not the proper subject of an appeal by
certiorari. This Court will not review facts, as it is not our function to analyze
or weigh all over again evidence already considered in the proceedings below.
As held in Diokno v. Hon. Cacdac, a re-examination of factual findings 1s
outside the province of a petition for review on certiorari to wit:

It is aphoristic that a re-examination of factual findings cannot

be done through a petition for review on certiorari under Rule 45 of
the Rules of Court because as earlier stated, this Court is not a trier
of facts. xxx The Supreme Court is not duty-bound to analyze and
weigh again the evidence considered in the proceedings below. This
is already outside the province of the instant Petition for Ce1iiorari.

There is a question of law when the doubt or difference arises

as to what the law is on a certain set of facts; a question of fact, on
the other hand, exists when the doubt or difference arises as to the
truth or falsehood of the alleged facts. Unless the case falls under
any of the recognized exceptions, we are limited solely to the
review of legal questions.

b. Rule 45 petition is limited to errors of the appellate court

Furthermore, the "errors" which we may review in a petition for review

on certiorari are those of the CA, and not directly those of the trial court or the
quasi-judicial agency, tribunal, or officer which rendered the decision in the
first instance. It is imperative that we refrain from conducting further scrutiny
of the findings of fact made by trial courts, lest we convert this Court into a trier
of facts. As held in Reman Recio v. Heirs of the Spouses Agueda and Maria
Altamirano etc. et al. our review is limited only to the errors of law committed
by the appellate court, to wit:

Under Rule 45 of the Rules of Court, jurisdiction is generally limited to

the review of errors of law committed by the appellate court. The Supreme
Court is not obliged to
review an over again the evidence which the parties
adduced in the court a quo. Of course, the general rule admits of exceptions,
such as where the factual findings of the CA and the trial court are conflicting
or contradictory. 49 (Citations Omitted.)

47 See Gatan v. Vinarao, 820 Phil. 257,265 (2017), citing Miro v. Vda. De Erederos, 721 Phil. 772 (2013).
48
721 Phil. 772 (2013).
49
Id. at 785-787.
 Dycision 9 G.R. No. 212136

However, the rule is not without exception. In Medina v. Asistio, Jr., 50

the findings of fact of the CA may be passed upon and reviewed by this Court
iq the following instances:

(1) When the conclusion is a finding grounded entirely on speculation,

surmises or conjectures; (2) When the inference made is manifestly mistaken,
absurd or impossible; (3) Where there is a grave abuse of discretion; (4) Vvhen
the judgment is based on a misappreht.3nsion of facts; (5) When the findings of
fact are conflicting: (6) 'Nhen the Court of Appeals, in making its findings,
went beyond the issues of the case and the s.'lrne is contrary to the admissions of
both appellant and appellee; (7) The findings of the Court of Appeals are
contrary to those of the trial; (8) V✓hen the findings of fact are conclusions
without citation of specific evidence on which they are based; (9) When the
facts set forth in the petition as well as in the petitioner's main and reply briefs
are not disputed by the respondents; and (10) The finding of fact of the Court of
Appeals is premised on the supposed absence of evidence and is contradicted
by the evidence on record. 51 (Citations omitted.)

Upon careful perusal of the issues raised by KLM, the Court finds that
these are factual in nature which is beyond our jurisdiction in a petition for
review on certiorari. The arguments it posited in the petition are also
noticeably similar to those raised before the CA. Thus, to give due course to
the petition necessitates an evaluation all over again of the evidence presented
by the parties which were already thoroughly reviewed by the RTC and the
CA.

None of the exceptions is likewise present in the instant case. We note

that the CA affirmed the factual findings of the RTC that KLM, being the
main carrier, is liable for the lost suitcase of Dr. Tiangco and that it acted in
bad faith. The appellate 9ourt lik,ewise agreed with the trial court's disposition
on the awards of damages and attorney's foes, except that these were reduced.

Unfortunately, KIJvl failed to substantiate its olaim that the CA

misapprehended any facts or failed to r;onsider relevant facts to warrant a
· reversal of its assailed decision. \Ve stress that a party praying that this Court
review the fact1rnl findings of the appellate court must demonstrate and prove
that the case clearly :falls under the exceptions to the rule. 52 He or she must
duly prove to this Court that a review of the factual findings is necessary. 53
J\Aere assertion and qlaim that the case falls under the exceptions is
insufficient. 54 Hence, the hornbook doctrine that factual findings of the CA
affirming those of the RTC are final and conclusive55 stands as these findings
an; supported by substantial evidence and in a,~cord with law and

50
269 Phil. 225 (l 990).
51
Jd. at 232.
51
Pascualv. Burgos, 776 Phil. 167, UM (2016),
" Seeld. ·
5,1 IcL
55 Japan Airlines lJ, Simangan, 575 Phil. 359, 37:2 (:2008).
Decision 10 G.R. No. 212136

jurisprudence. There is therefore no cogent reason to disturb the factual

findings of both the RTC and the CA.

Assuming arguendo that the Court gives due course to the petition, We
find that the CA, in af:finning the :findings of the RTC, did not commit any
reversible error.

KLM is liable for breach of

contract of carriage.

A contract of caniage is one whereby a certain person or association of

persons obligate themselves to transport persons, things, or goods from one
place to another for a fixed price. 56 Under Article 1732 of the Civil Code, a
cornmon carrier refers to "persons, corporations, firms, or associations
engaged in the business of carrying or transporting passengers or goods or
both, by land, water, or air, for compensation, offering their services to the
public."

The nature of the business which involves the transportation of persons

or goods makes a contract of carriage imbued with public interest. It is
therefore bound to observe not just the due diligence of a good father of a
family but that of "extraordinary" care in the vigilance over the goods as
required under Article 1733 of the Civil Code. 57 The nature of a contract of
carriage is elucidated in Singson v. Court ofAppeals 58 in this wise:

A contract of air caITiage is a peculiar one. Imbued with public interest,

common carriers are required by law to carry passengers safely as far a human
care and foresight can provide, using the utmost diligence of a very cautious
person, with due regard for all the circumstances. A contract to transpmi
passengers is quite different in kind and degree from any other contractual
relation. And this is because its business is mainly with the traveling public. In
invites people to avail of the comforts and advantages it offers. The contract of
carriage, therefore, generates a relation attended with a public duty. Failure of
the carrier to observe this high degree of care and extraordinary diligence
renders it liable for any damage that may be sustained by its passengers. 59

Considering that a contract of carriage is vested with public interest, a

common carrier is presumed to have been at fault or to have acted negligently
in case of lost or damaged goods unless they prove that they observed
extraordinary diligence. 60 Hence, in an action based on a breach of contract of
carriage, the aggrieved party does not need to prove that the common carrier

56
Spouses Fernando v. Northwe:st Airlines, Inc., 805 Phil.501, 520 (2017).
57 CIVIL CODE, .Article 1733; Loadstar Shipping Compm1;y, Incorporated v. Malayan Insurance Company,
Incorporated, 809 Phil. 736 (20 l 7).
58
346 Phil. 831 ( 1997).
59
Id. at 835.
°
6
CIVIL CODE, A1iicle 1735.
 Decision 11
<•
G.R. No. 212136

was at fault or was negligent. 61 He or she is only required to prove the

existence of the contract and its non-performance by the carrier. 62

There is no dispute that ¥,.LIV[ and Dr. Tiongco entered into a contract of
carriage. Dr. Tiongco purchased tickets from the airline for his trip to Almaty,
Kazak.hstan. KLM, however, breached its contract with Dr. Tiangco when it
failed to deliver his checked-in suitcase at the designated place and time. The
suitcase contained his clothing for the conference where he was a guest
speaker, a copy of his speech, and his resource materials. Worse, Dr.
· Tiangco' s suitcase was never returned to him even after he arrived in Manila
from Almaty. Thus, KLl\tfs liability for the lost suitcase was sufficiently
established as it failed to overcome the presumption of negligence.

Bad faith on the part of KLM

was duly established.

Both the trial court and the appellate court already found KLM to have
acted in bad faith in dealing with Dr. Tiongco. Bad faith is a factual question
which is beyond the purview of this petition under Rule 45. Thus, ,ve are not
obliged to go over the evidence once more and recalibrate them for purposes
of this appeal.

We agree with the RTC and the CA that KLM acted in bad faith. It is
undisputed that Dr. Tiongco's luggage went missing during his flight, Even
after his return to the Philippines, Dr. Tiongco's suitcase was still missing.
Nobody from KJ___,M's personnel updated him of what happened to the search.
It was only when Dr. Tiongco wrote KLM a demand letter that the latter
reached out to him asking for time to investigate the matter. Yet, it did not
even notify him of the result of the purpo1ted investigation.

To make matters even worse, the Customer Relations Officer of KLM,

Arlene Almario, categorically testified that the suitcase was eventually found
in Almaty as shown in the baggage report dated December 18, 1998 of
Turkish Airlines. The said airline immediately notified KLM. However, KLM
did not bother to inform Dr. Tiongco that his suitcase had been found or took
the necessary steps to transport it back to Manila.

The case of Alitalia, 63 contrary to KI..,IVI' s claim, is inapplicable in the

case at bench. While both cases involve a lost luggage of an airline's
passenger, the luggage of Dr. Felipa in the Alitalia case was subsequently
returned to her after it was lost unlike in the case here where Dr. Tiongco 's
suitcase was never returned to him even after it was found. IVIore importantly,
. there was no bad faith on the part of the airline in Alitalia when it breached its
contract of carriage unlike in this case where KLM acted in bad faith.

61 Air France v. Gil/ego, 653 Phil. 138, 149 (2010).

62 Id.
63 Supra note 45.
Decision 12 G.R. No. 212136

The awards of moral and

exemplary damages a:re proper.

The bad faith on the part of I(IJ\/1 as found by the RTC and the CA thus
renders the same liable for moral and exemplary damages. However, the
amounts thereof must be modified further to be fair, reasonable, and
commensurate to the injury sustained by the passenger.

Under Article 2216 of the Civil Code, the assessment of damages is left
to the discretion of the court according to the circumstances of each case. The
courts must adhere to the principle that the amount of damages awarded
should not be palpably excessive as to indicate that it was the result of
prejudice or corruption on the part of the trial court. 64 It must therefore be fair,
reasonable, and proportionate to the injury suffered. 65

The award of moral damages is proper to enable the injured party to

obtain means of diversion or amusement that will serve to alleviate the moral
suffering they underwent because of another's culpable action. 66 Here, KLM
displayed indifference to the plight and inconvenience suffered by Dr.
Tiongco when he lost his luggage. It made empty promises that his luggage
would be travelling with him and even failed to inform Dr. Tiongco that his
suitcase had been found. Moreover, it did not return the luggage to him even
after it was found. Undeniably, KLM's bad faith, gross negligence, and lack of
care warrant the award of moral damages in accordance with Article 2220 of
the Civil Code, to wit:

Article 2220. Willful injury to property may be a legal ground for

awarding moral damages if the comt should find that, under the circumstances,
such damages are justly due. The same rule applies to breaches of contract
where the defendant acted fraudulently or in bad faith.

Guided by the foregoing, the Court modifies the award of moral damages
from Pl,000,000.00 to P300,000.00 in favor of Dr. Tiongco pursuant to our
pronouncement in Kierulf v. Court ofAppeals67 that "[t]he social and financial
standing of a claimant of moral damages may be considered in awarding
moral damages only if he or she was subjected to contemptuous conduct
despite the offender's knowledge of his or her social and financial standing."

The award of exemplary damages likewise needs to be modified.

Undoubtedly, KLM acted in a wanton, and reckless manner. Given the
surrounding facts and circumstances in the instant case, the Court holds that
the amount of Pl00,000.00 is sufficient

64
Air France v. Gillego, supra note 61 at 153.
65 Id. at ! 53-154.
66
Spouses Fernando v. Northwest Airlines, Inc., 805 Phil. 50 ! , 527(2017).
67
336 Phil. 414, 427 (1997).
 .
Decision 13 G.R. No. 212136

KLM is liable for temperate. not Jl ..

nominal, d.ainages.

Article 2221 of the Civil Code states that nominal damages may be
awarded in order that the plaintiff's right, which has been violated or invaded
by the defendant, may be vindicated or recognized, and not for the purpose of
indemnifying the plaintiff for any loss suffered. They are "recoverable where a
legal right is technically violated and must be vindicated against an invasion
that has produced no actual present loss of any.kind or where there has been a
breach of contract and no substantial injury or actual damages whatsoever
have been or can be shown." 68

On the other hand, A1iicle 2224 of the sarn.e Code states that temperate
damages or moderate damages, which are more than nominal but less than
compensatory damages, may be recovered when the court finds that some
pecuniary loss has been suffered but its amount cannot, from the nature of the
case, be provided with certainty. Simply put, temperate damages are awarded
when the injured party suffered some pecuniary loss but the amount thereof
cannot, from the nature of the case, be proven with certainty. 69

Dr. Tiongco incurred pecuniary loss when his suitcase containing his
personal belongings was lost during his flight and was never returned.
Unfortunately, he did not present any actual receipt that would have proved
the actual amount due, as mandated under Article 2199 of the Civil Code, so
as to entitle him to the award of actual damages. 70 This, however, does not
preclude Dr. Tiongco from recovering temperate damages, and not nominal
damages, since the exact amount of damage or pecuniary loss he sustained
was ,not duly established by competent evidence. Verily, the Court finds the
award of PS0,000.00 as temperate damages fair and reasonable in view of the
circumstances in this case.

KLM' s liability for temperate damages may not be limited to that

prescribed in Article 22(2) 71 of the \Varsaw Convention, as amended by the
68
Francisco v. Ferrer, 405 Phil. 741, 751 (2001), citing Areola v. Court of Appeals, 306 Phil. 656, 677
(1994).
69
Philippine Hawk Corporation v. Lee, 626 Phil. 483,499 (2010).
7
°
71
CIVIL CODE, Article 2199.
1. In the carriage of passengers the liability of the carrier for each passenger is limited to the sum of
250,000 francs ... Nevertheless, by special contrnct, the carrier and the passenger may agree to a higher
limit of liability.
2. a) In the carriage of registered baggage and of cargo, the liability of the carrier is limited to a sum of
250 francs per kilogramme, unless the passenger or consignor has made, at the time when the package was
handed over to the carrier, a special declaration of interest in delivery at destination and has paid a
supplementary sum if the case so requires. In that case the carrier will be liable to pay a sum not exceeding
the declared sum, unless he proves that sum is greater than the actual value to the consignor at delivery.
b) In the case of loss, damage or delay of part of registered baggage or cargo, or of any object contained
therein, the weight to be taken into com,ideration in determining the amount to which the carrier's liability
is limited shall be only the total weight of the package or packages concerned. Nevertheless, when the
loss, damage or delay of a part of the registered baggage or cargo, or of an object contained therein, affects
the value of other packages covered by the same baggage check or the same air way bill, the total weight
of such package or packages shall also be taken into consideration in determining the limit of liability.
Decision 14 G.R. No. 212136

Hague Protocol, in the presence of bad faith. 72 As aptly held in Northwest

Airlines, Inc. v. Court ofAppeals, 73 citing Alitalia: 74

The [Warsaw] Convention does not operate as an exclusive

enumeration of the instances of an airline's liability, or as an absolute limit of
the extent of that liability. Such a proposition is not borne out by the language
of the Convention, as this Court has now, and at an earlier time, pointed out.
Moreover, slight reflection readily leads to the conclusion that it should be
deemed a limit of liability only in those cases where the cause of the death or
injury to person, or destruction, loss or damage to property or delay in its
transport is not attributable to or attended by any willful misconduct, bad faith,
recklessness, or otherwise improper conduct on the part of any official or
employee for which the carrier is responsible, and there is otherwise no special
or extraordinary form of resulting injury. The Convention's provisions, in short,
do not "regulate or exclude liability for other breaches of contract by the
carrier" or misconduct of its officers and employees, or for some particular or
exceptional type of damage. 75

Imposition of attorney's fees and

legal interest was proper.

KLM avers that the award of attorney's fees should have been deleted for
lack of basis thereof. We disagree.

As a general rule, attorney's fees and expenses of litigation, other than

judicial costs, cannot be recovered in the absence of stipulation. This is
because of the policy that no premium should be placed on the right to
litigate. 76 Hence, attorney's fees are not to be awarded every time a party wins
a suit. 77 They may only be awarded in the following instances: 78

Article 2208 of the Civil Code states:

Art. 2208. In the absence of stipulation, attorney's fees and expenses of

litigation, other than judicial costs, cannot be recovered, except:

(1) When exemplary damages are awarded;

3. As regards objects of which the passenger takes charge himself the liability of the carrier is limited to
5000 francs per passenger.
4. The limits prescribed .. shall not prevent the court from awarding, in accordance with its own law, in
addition, the whole or part of the court costs and of the other expenses of litigation incurred by the
plaintiff. The foregoing provision shall not apply if the amount of the damages awarded, excluding court
costs and other expenses of the litigation, does not exceed the sum which the carrier has offered in writing
to the plaintiff within a period of six months from the date of the occurrence causing the damage, or before
the commencement of the action, if that is later.
72 Northwest Airlines, Inc. v. Court ofAppeals, 348 Phil. 438,450 (1998).
73
Id. at 451.
74
Supra note 45.
75 Northwest Airlines, Inc. v. Court r4Appeals, supra at 450-451.
76 Philippine National Construction Corporation v. APAC Marketing Cotporation, 710 Phil. 389, 395
(2013), citing A.BS-CBN Broadcasting Carp. v. Court a/Appeals, 361 Phil. 499 (1999).
77 Id.
78
CIVIL CODE, Article 2208.
I_)ecision 15 G.R. No. 212136

(2) When the defendant's act or omission has compelled the plaintiff to
litigate with third persons or to incur expenses to protect his interest;
(3) In criminal cases of malicious prosecution against the plaintiff;
(4) In case of a clearly unfounded civil action or proceeding against the
plaintiff;
(5) Where the defendant acted in gross and evident bad faith in refusing
to satisfy the plaintiff's plainly valid, just a11d demandable claim;
(6) In actions for legal support;
(7) In actions for the recovery of wages of household helpers, laborers
and skilled workers;
(8) In actions for indemnity under workmen's compensation and
employer's liability laws;
(9) In a separate civil action to recover civil liability arising from a crime;
(10) When at least double judicial costs are awarded;
(11) In any other case where the comi deems it just and equitable that
attorney's fees and expenses oflitigation should be recovered.

In all cases, the attorney's fees and expenses of litigation must be

reasonable.

An award of attorney's fees under Article 2208 demands factual, legal,

and equitable justification to avoid speculation and conjecture surrounding the
grant thereof. 79 It is therefore required for the courts to clearly and distinctly
set forth in their decisions their factval findings for the basis of the award. 80
The Court's pronouncement in Benedicto v. Villaflores 81 elucidated the
rationale on why courts must explain their decision for granting attorney's
fees:

It is settled that the award of attorney's fees is the exception rather than
the general rule; counsel's fees are not awarded every time a party prevails in a
suit because of the policy that no premium should be placed on the right to
litigate. Attorney's fees, as part of damages, are not necessarily equated to the
amount paid by a litigant to a lawyer. In the ordinary sense, attorney's fees
represent the reasonable compensation paid to a lawyer by his client for the
legal services he has rendered to the latter; while in its extraordinary concept,
they may be awarded by the court as indemnity for damages to be paid by the
losing party to the prevailing party. Attorney's fees as part of damages are
awarded only in the instance;, specified in Article 2208 of the Civil Code. As
such, it is necessary for the court to make findings of fact and law that would
bring the case within the ambit of these enumerated instances to justify the
grant of such award, and in all cases it must be reasonable. 82

The Court agrees with KLM- that the RTC failed to elaborate why Dr.
Tiongco is entitled to the award of attorney's fees. Admittedly, it simply made
a categorical statement that "other just and equitable reliefs were likewise
prayed for by Plaint~ff". 83 The RTC then merely stated the amount thereof in
the dispositive portion.

79 See Bun v. Bank of the Philippine Island,, 828 Phil. 152 (2018).
8
° CIVIL CODE, Article 2208.
81
646 Phil. 733 (2010).
82
Id. at 741-742.
83
CA rol!o, p. 93.
Decision 16 G.R. No. 212136

However, a perusal of the assailed Decision shows that the CA explained

that the award of attorney's fees is proper because exemplary damages are
likewise awarded to Dr. Tiongco pursuant to Article 2208( 1) of the Civil
Code. The CA did not simply adopt the findings of the RTC but it made an
independent assessment as to why attorney's fees should be awarded to him.
Although brief, the appellate court's explanation is sufficient to show that
there is factual and legal justification for the award thereof. Thus, the Court
sustains the the award of atton1ey's fees to Dr. Tiongco. The amount of
attorney's fees, equivalent to 20% of the total amount of the awards adjudged
to Dr. Tiongco is also proper for being reasonable and just.

KLM also argues that the CA erred in imposing legal interest because
neither was it granted by the RTC nor questioned on appeal by Dr. Tiangco.
KLM is clearly mistaken.

It must be remembered that when a case is appealed, as in this case, the

CA has the power to review the case in its entirety. It makes its own judgment
as it deems just under the circumstances. 84 Thus, the appellate court can
modify and/or include damages not awarded by the trial court if so warranted
after an independent evaluation of the case. This is in accord with its authority
to either affirm, reverse or modify the appealed decision of the trial court. As
aptly held in Heirs ofAlcaraz v. Republic: 85

In any event, when petitioners interposed an appeal to the Court of

Appeals, the appealed case was thereby thrown wide open for review by that
comi, which is thus necessarily empowered to come out with a judgment as it
thinks would be a just determination of the controversy. Given this power, the
appellate court has the authority to either affirm, reverse or modify the appealed
decision of the trial court. To withhold from the appellate court its power to
render an entirely new decision would violate its power of review and would, in
effect, render it incapable of correcting patent errors committed by the lower
courts. 86

In Eastern Shipping Lines, Inc. v. Court of Appeals, 87 the Court laid

down the guidelines in determining the appropriate legal interest, to wit:

II. With regard particularly to an award of interest in the concept of

actual and compensatory damages, the rate of interest, as well as the accrual
thereof, is imposed, as follows:

1. VVhen 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

84
United Coconut Planters Bank v. SpousE;s Uy, 823 Phil. 284, 293 (2018).
85
502 Phil. 521 (2005).
BG Id.
87
304 Phil. 236 (1994).
 Qecision 17 G.R. No. 212136

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 ce1iainty. 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 (A1i. 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 comi awarding a sum of money becomes

final and executory, the rate of legal interest, whether the case falls m1der
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. 88

However, these guidelines were modified pursuant to Bangko Sentral ng

Pilipinas Monetary Board (BSP-MB) Circular No. 799, Series of 2013, which
took effect on July 1, 2013.

Moreover, the Court laid down the new guidelines regarding the
imposition of legal interest in Nacar v. Gallery Frames 89 in this wise:

I. \Vhen 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 damages. The provisions under Title XVIII on "Damages" of
the Civil Code govern in determining the measure of recoverable damages.

IL With regard particularly to an award of interest in the concept of

actual and compensatory damages, the rate of interest, as well as the accrual
thereof, is imposed, as follows:

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 6% per an..nurn 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.

88
Id. at 252-254.
89
716 Phil. 267 (2013).
Decision 18 G.R. No. 212136•

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 ammm. No interest,
however, shall be adjudged on unliquidated claims or damages, except when
or until the demand can be established with reasonable ce1iainty.
A. ccordingly, where the di;;mand 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 cam1ot be so
reasonably established at the time the demand is made, the interest shall
begin to nm 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.

\Vhen 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 6% per anrmm from such finality
ur1til its satisfaction, this interim period being ckemed to be by then an
equivalent to a forbearance of credit.

Arid, in adclition to the above, judgments that have lJecome final and
executory prior to July 1, 2013, shall not be disturbed and shall continue to
be implemented applying the rate of intere:;;t fixed therein. 90

Applying the above-m~ntkmed guidelin~:s, the Court modifies the legal

interest to twelve percent ( l 2o/o) per annum from January 16, 2006, the date of
the RTC Decision, u11til June 30, 2013, and six percent (6%) per annum from
July 1, 2013 until full payment.

\'VHEREJ'ORE, the Petition for Revievv on Certiorari is DENIED.

The April 10, 2013 Decision of the Court of Appeals in CA-G,R. CV No.
00884-l\1JN is herebv AFFIRI\ilED with lVIODIFICATION in that:
.. . '# .- . . . .

( a) the av✓ards of damages and exemplary damages are hereby reduced

to fi300,000,00 and 'Pl 00,000.00, respl')ctively;
(b) ternperate darnages in the mnount of PS0,000.00 is :::}warded to Dr.
Jose 1Vt Tiongco in lieu of nominal darnages;
( c) the attorney's fees which is eqqivalent to 20o/'o of the total
monetary mv~rds is nmintained fi)r being n~asonable; and
( d) the total monetary awards shall bear interest of twelve percent
( ·,14, /o) per annum f'rorn ,ianuary
c)O'' " 1 o, '"'Q(V
'r "
J.' \?O, tne ciate o.f' ,l(.Ge I:lTf''
, ,_ ._,
Decision, to June 30, 2013: and six percent (6<%) per annum from
July 1, 2013 until full payme,nt.

10
' Id, at 282--283,
Qecision 19 G.R. No. 212136

SO ORDERED.

.
Associate Justice

WE CONCUR:

ESTELA ~j,~-BERNABE
Senior Associate Justice
Chairperson

~~~AN RICA
Associate Justice
Decision 20 G.R. No. 21213-li ' .

ATTESTATION

I attest that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Court's Division.

ESTELA M. ~~.ERNABE
Senior Associate Justice
Chairperson

CERT1FlCATION

Pursuant to Section 13, Article VIH of the Constitution, and the

Division Chairperson's Attestation, I certify that the conclusions in the above
Decision had been reached in consultation before the case was assigned to the
writer of the opinion of the Court's Division.

' .