DR. HERMAN ARMOVIT, DORA ARMOVIT AND JACQUELINE ARMOVIT, PETITIONERS, VS. COURT OF APPEALS, AND NORTHWEST AIRLINES, INC., RESPONDENTS.

Armovit versus Court of Appeals

The Case

This is a petition for review on certiorari brought by Dr. Herman Armovit, his wife Dora Armovit, and their daughter Jacqueline Armovit against the Court of Appeals and Northwest Airlines, Incorporated. The petitioners sued the airline for damages arising from a breach of their air-transport contracts after they were bumped off their return flight to the United States because of an erroneous departure time written on their tickets by the airline's own sales agent. The case matters because it fixes the standard for awarding moral damages in contracts of air carriage: gross negligence and rude treatment by a carrier can amount to malice and bad faith, and the testimony of a witness present throughout the incident can establish the passengers' wounded feelings even when the passengers themselves do not take the witness stand.

Procedural History

The petitioners filed an action for damages in the Regional Trial Court of Manila. After trial on the merits, the trial court rendered judgment in their favor, awarding actual, moral, exemplary, and nominal damages, plus attorney's fees and costs. Northwest Airlines appealed to the Court of Appeals. The Court of Appeals affirmed the finding of gross negligence and the award of actual damages, but eliminated the moral damages, reduced the exemplary damages, and deleted the nominal damages. The petitioners moved for reconsideration, which was denied. Both sides then elevated the matter to the Supreme Court by certiorari. The airline's petition was denied and judgment was entered against it, so only the petitioners' petition remained for resolution.

Facts

In October 1981, the Armovit family decided to spend their Christmas holidays in the Philippines. They purchased round-trip airline tickets from Northwest Airlines for the flight from the United States to Manila and back. Each of the petitioners' tickets, written in the hand of the airline's ticket sales agent, carried this entry for the Manila to Tokyo portion of the return flight: Northwest flight 002, date 17 January, time 10:30 in the morning, status confirmed.

Before the departure date, the petitioners re-confirmed their reservations through their representative Ernesto Madriaga, who personally presented the three tickets at the airline's Roxas Boulevard office. The departure time on the tickets was not changed. Their names appeared on the passenger manifest and were confirmed for flight 002.

On January 17, 1982, the petitioners arrived at the check-in counter at the Manila International Airport at 9:15 in the morning, one hour and fifteen minutes ahead of the 10:30 flight time recited in their tickets. They were rudely informed that they could not be accommodated because the flight scheduled at 9:15 was already taking off, and the 10:30 time on their tickets was erroneous. Dr. Armovit protested in extreme agitation, because the bump-off meant he would miss appointments with his patients in the United States. The family suffered anguish, wounded feelings, and serious anxiety through the day and night until the next morning, when they were finally told that seats would be available. They flew out on January 18, 1982, but were assured of that flight only on the very morning of that day.

Issues

• Whether or not the Court of Appeals erred in eliminating the award of moral damages on the ground that the petitioners did not take the witness stand and that the breach of contract was not malicious or fraudulent.
• Whether or not the reduction of the exemplary damages by the Court of Appeals was proper.
• Whether or not the deletion of the award of nominal damages was correct.

Applicable Provisions

Article 2220 of the Civil Code provides:

In contracts and quasi-contracts, the court may award moral damages in case of a breach thereof if the defendant acted fraudulently or in bad faith.

This is the provision the Court of Appeals invoked to delete the moral damages, and the provision the Supreme Court construes to hold that gross negligence amounting to malice and bad faith satisfies it.

Article 2229 of the Civil Code provides:

Exemplary or corrective damages are imposed, by way of example or correction for the public good, in addition to the moral, temperate, liquidated or compensatory damages.

This is the basis for the award of exemplary damages, which the Court of Appeals retained but reduced.

Article 2231 of the Civil Code provides:

In quasi-delicts, exemplary damages may be granted if the defendant acted with gross negligence.

This provision, read with Article 2229, supports the award of exemplary damages for the airline's gross negligence.

Ruling

On the first issue, the Court ruled that the Court of Appeals erred in deleting the moral damages. The appellate court itself had found gross negligence in the issuance of the tickets with the erroneous departure time, in the failure to correct the error upon re-confirmation, and in the rude manner by which the petitioners were informed they were bumped off. These, the Court held, are clear indicia of malice and bad faith that taint the breach of the air-transport contract and entitle the petitioners to moral damages. The Court recalled its rulings in Air France versus Carrascoso, Lopez versus Pan American World Airways, and Zulueta versus Pan American World Airways, and quoted the doctrine that a contract of air carriage generates a relation attended with a public duty:

Passengers do not contract merely for transportation. They have the right to be treated by the carrier's employees with kindness, respect, courtesy and due consideration. They are entitled to be protected against personal misconduct, injurious language, indignities and abuses from such employees. So it is, that any rude or discourteous conduct on the part of employees towards a passenger gives the latter an action for damages against the carrier.

On the objection that the petitioners did not testify, the Court held that the failure to appear was explained: the turmoil following the assassination of Senator Benigno Aquino, Junior, and the violent demonstrations sensationalized in the American media led them to refrain from returning at the time. In any event, the testimony of Atty. Raymund Armovit, who was with the petitioners from check-in until their departure, adequately established their serious anxiety, wounded feelings, and social humiliation. Considering, however, that the airline attended to their accommodations and boarded them the following day, the Court fixed moral damages at 100,000 pesos each.

On the second issue, the Court held that an award of exemplary damages is proper to provide an example for the public good, and that the award made by the appellate court is adequate.

On the third issue, the Court held that the deletion of nominal damages was well-taken, since nominal damages cannot co-exist with actual or compensatory damages.

Doctrine

A contract of air carriage is attended with a public duty, and passengers contract not merely for transportation but for kind, respectful, courteous, and considerate treatment. Under Article 2220 of the Civil Code, moral damages may be awarded for a breach of contract where the defendant acted fraudulently or in bad faith, and gross negligence in the issuance of tickets, failure to correct the error upon re-confirmation, and rude treatment of passengers are clear indicia of malice and bad faith. The passengers' wounded feelings may be established by the testimony of a witness who was present throughout the incident, even if the passengers themselves do not take the witness stand. Exemplary damages may be awarded by way of example or correction for the public good under Article 2229, and nominal damages cannot co-exist with actual or compensatory damages.

Disposition

The petition was granted, and the judgment of the Court of Appeals was modified to order Northwest Airlines to pay actual damages of 1,300 pesos with legal interest, moral damages of 100,000 pesos and exemplary damages of 100,000 pesos to Dr. Armovit, moral damages of 100,000 pesos and exemplary damages of 50,000 pesos to Mrs. Dora Armovit, moral damages of 100,000 pesos and exemplary damages of 20,000 pesos to Miss Jacqueline Armovit, and attorney's fees of five percent of the total awards, plus costs.

Remember This

The single line worth memorizing is that gross negligence and rude treatment by an air carrier amount to malice and bad faith, entitling bumped-off passengers to moral damages under Article 2220 of the Civil Code. Examiners like to use this case to test the award of moral damages in breach of contract, the sufficiency of a witness's testimony in place of the passengers' own, and the rule that nominal damages cannot co-exist with actual damages.