MARITO T. BERNALES, PETITIONER, VS. NORTHWEST AIRLINES, RESPONDENT.

Bernales versus Northwest Airlines

The Case

This is a petition for review on certiorari brought by Marito T. Bernales, a lawyer, a university dean, and a member of the Sangguniang Panlalawigan of Camarines Sur, against Northwest Airlines. The action is one for moral and exemplary damages arising from an alleged breach of a contract of carriage. Bernales claims that the airline treated him rudely, ejected him from a shuttle bus at Narita Airport, and failed to bring him to Honolulu on time, causing him humiliation and mental anguish. The case matters because it fixes the rule on when moral damages may be awarded for a breach of a contract of carriage, and it clarifies the concept of bad faith as distinct from simple negligence or bad judgment.

Procedural History

Bernales filed a complaint for moral and exemplary damages against Northwest Airlines before the Regional Trial Court of Iriga City, Branch 60. After proceedings, the trial court rendered judgment in his favor, believing his version of events and ordering the airline to pay moral damages, exemplary damages, and attorney's fees.

Northwest Airlines appealed to the Court of Appeals. The Court of Appeals reversed the trial court and dismissed the complaint. It held that moral damages cannot be awarded in breaches of contracts of carriage except in cases of the death of a passenger or when the common carrier acted in bad faith. It found that the typhoon was the real and proximate cause of the cancellations, that the accusation of verbal abuse was contrary to ordinary human experience, that the airline could not be responsible for the remark of a fellow passenger, and that Bernales was not maliciously singled out. It concluded that the airline did not act in bad faith.

Bernales then filed this petition for review on certiorari before the Supreme Court, arguing that the Court of Appeals erred in finding good faith and in dismissing his complaint. Northwest Airlines countered that the petition raised only questions of fact, which are not proper in a petition for review on certiorari.

Facts

On the first of October 2002, Bernales and several prominent personalities from Bicol were bound for Honolulu, Hawaii, as delegates of a trade and tourism mission. They were economy class passengers of Northwest Airlines Flight Number 10 from Manila to Honolulu via Narita, Japan. They arrived at Narita International Airport at around eleven in the morning, and their connecting flight was scheduled at eight forty that evening. At around six in the evening, a typhoon hit Japan, and most flights, including their connecting flight, were cancelled. The airline did not cancel a later flight to Honolulu, Flight Number 22, to accommodate stranded passengers in case the storm subsided.

The storm subsided at around nine in the evening, and the airport resumed operations. The airport authority extended the airplane curfew to one in the morning to accommodate the delayed flights. The delegates opted to be wait-listed for Flight Number 22, and Bernales was placed last in the wait-list because he was the last economy class passenger to check in. To ensure departure before the curfew, the airline gave out dummy boarding passes to the wait-listed passengers. Bernales was given a dummy boarding pass for a seat in the name of another passenger, Eddie Tanno, and he thought it was a real boarding pass. When he proceeded to that seat, he found it occupied by Tanno, who irately asked him whether he could not read. An attendant escorted him to his allotted seat.

Flight Number 22 failed to depart in time to beat the curfew, and the passengers had to disembark and spend the night at the terminal with about fifteen hundred other stranded passengers. All nearby hotels were fully booked, and the airline provided blankets, pillows, snacks, water, and food coupons. Bernales claims he was made to sleep on the terminal floor and to use the public toilets. The delegates arrived in Honolulu the following day but missed their scheduled courtesy calls. Bernales then filed his complaint, alleging that a customer service agent had rudely ejected him from the shuttle bus and that the ordeal caused him immense mental anguish.

Issues

• Whether or not the petition, which raises questions of fact, may be entertained by the Supreme Court as an exception to the rule that the factual findings of the Court of Appeals are conclusive.
• Whether or not Northwest Airlines acted in bad faith, so as to justify an award of moral and exemplary damages for breach of the contract of carriage.
• Whether or not the airline is liable for the discomfort suffered by Bernales and for the insulting remark of a fellow passenger.

Applicable Provisions

Article 1764 of the Civil Code provides:

In case of death of a passenger, the carrier is liable for damages, unless it proves that it exercised extraordinary diligence in the vigilance over the goods and the safety of the passengers.

This provision, together with Article 2206, marks one of the instances in which moral damages may be recovered from a common carrier for breach of the contract of carriage.

Article 2220 of the Civil Code provides:

Willful injury to property may be a legal ground for awarding moral damages if the court 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.

This is the provision that governs the award of moral damages for a breach of contract, and it requires fraud or bad faith on the part of the defendant.

Section 1 of Rule 45 provides:

The petition shall raise only questions of law which must be distinctly set forth.

This provision governs the scope of a petition for review on certiorari and explains why the Court ordinarily does not review questions of fact.

Ruling

On the first issue, the Court acknowledged that the petition raised only questions of fact, which are not proper in a petition for review on certiorari, and that the factual findings of the Court of Appeals are ordinarily conclusive. However, it recognized exceptions to this rule, among them the situation in which the findings of the Court of Appeals are contrary to those of the trial court. Because the trial court believed Bernales while the Court of Appeals believed the airline, the case qualified as an exception, and the Court proceeded to review the records.

On the second issue, the Court agreed with the Court of Appeals. It held that moral damages predicated upon a breach of a contract of carriage are recoverable only where the mishap results in the death of a passenger, or where the carrier is guilty of fraud or bad faith. It defined bad faith as follows:

Bad faith is not simple negligence or bad judgment; it involves ill intentions and a conscious design to do a wrongful act for a dishonest purpose.

The Court found that the real and proximate cause of the airline's breach was a fortuitous event, the unusually strong typhoon that struck Japan and caused the cancellation of more than two hundred flights. It could not attribute bad faith to the airline for cancelling the flight, since pushing through would have endangered the lives of the passengers and the crew. The airline demonstrated good faith when it exerted its best efforts to accommodate the delayed passengers on the later flight, and the failure of that flight was caused by the mandatory airport curfew.

On the third issue, the Court found the airline not liable. It did not believe the accusation that the customer service agent verbally abused Bernales and forced him off the bus, as this was contrary to ordinary human experience, and the agent's good track record contradicted the portrayal of him as an unreasonably rude person. The Court also held that the airline could not be held responsible for the insulting remark of a fellow passenger, and that moral damages cannot be awarded for simple mistakes in the absence of bad faith. Finally, the Court found that the airline did not maliciously single out Bernales, since about fifteen hundred other stranded passengers endured the same discomforts, and the airline provided the comforts available under the circumstances.

Doctrine

Moral damages predicated upon a breach of a contract of carriage are recoverable only in two instances: where the mishap results in the death of a passenger, and where the carrier is guilty of fraud or bad faith. This rule is drawn from Article 1764 and Article 2220 of the Civil Code.

Bad faith is not simple negligence or bad judgment. It involves ill intentions and a conscious design to do a wrongful act for a dishonest purpose. Moral damages cannot be awarded for simple mistakes in the absence of bad faith.

A common carrier is not liable for a breach of the contract of carriage caused by a fortuitous event, and it is not liable for the acts of fellow passengers.

Although a petition for review on certiorari under Section 1 of Rule 45 shall raise only questions of law, the Court may review questions of fact when the findings of the Court of Appeals are contrary to those of the trial court.

Disposition

The Court denied the petition for lack of merit, with costs against Bernales, thereby affirming the dismissal of his complaint.

Remember This

The single line worth memorizing is that bad faith is not simple negligence or bad judgment, but ill intentions and a conscious design to do a wrongful act for a dishonest purpose. Examiners like to use this case on the recovery of moral damages for breach of a contract of carriage, on the distinction between bad faith and negligence, and on the exceptions to the rule that only questions of law may be raised in a petition for review on certiorari.