G.R. No. L-78015 December 11, 1987
Malaysian Airline System Bernad, petitioner, vs. The Honorable Court of Appeals and Renato Arellano, respondent.

FACTS

Petitioner Malaysian Airline System (MAS) recruited private respondent Renato Arellano, a pilot from Philippine Airlines, under a two-year contract starting 1979. On April 12, 1981, an aircraft he piloted suffered a tire burst upon landing. MAS placed him under preventive suspension and conducted an investigation. Pending this investigation, on May 5, 1981, MAS offered and Arellano accepted a one-year contract renewal, which contained a condition submitting him to the jurisdiction of Malaysian courts. Subsequently, MAS found him negligent and dismissed him effective July 30, 1981.
Arellano initially sought relief in Malaysian courts without success. He then filed a complaint for illegal dismissal and damages before the Regional Trial Court of Manila. MAS moved to dismiss on grounds of lack of jurisdiction and improper venue, but the trial court, the Court of Appeals, and ultimately the Supreme Court denied the motion. After trial, the RTC found Arellano not guilty of negligence, attributing the accident to aircraft defects and ground crew failure. It ruled that his dismissal was in bad faith, connected to a pilot protest against discriminatory pay. The trial court awarded him substantial damages exceeding P8 million, which the Court of Appeals affirmed in toto.

ISSUE

Whether the Court of Appeals committed reversible error in affirming the trial court’s factual findings and the award of damages.

RULING

The Supreme Court affirmed the factual findings but modified the award of damages. On the factual findings, the Court upheld the conclusions of the lower courts that Arellano was not negligent and was dismissed in bad faith. The Court reiterated the doctrine that factual findings of the Court of Appeals are final and conclusive when based on substantial evidence. It examined the exceptions to this rule and found none applicable, as there was no showing that the conclusions were grounded on speculation, were manifestly mistaken, or constituted grave abuse of discretion.
However, the Court found the award of damages inordinate and called for its moderation. It recalculated the actual damages based on the evidence, arriving at an aggregate of P605,920.40 for unearned salaries and transfer expenses. While conceding that moral and exemplary damages were due, the Court reduced them to P500,000.00 collectively and fixed attorney’s fees at P25,000.00, disallowing all other awards. The Court cautioned against improvident and excessive awards that could undermine public confidence in the judiciary, emphasizing that damages must be realistic and judicious. Thus, the petition was denied but the damages award was modified.