FACTS:

This case involves a collision between a Twin Otter aircraft of Philippine Airways Corporation (PAC) and a Philippine Airlines (PAL) Boeing 737 at the Manila International Airport. On April 2, 1996, the Twin Otter arrived at the airport from El Nido, Palawan, with Ely B. Bungabong as the pilot and Michael F. Galvez as the co-pilot. After disembarking passengers, PAC's pilots started the engine to proceed to PAC's hangar at the other end of the airport.

At around 7:18 p.m., Galvez contacted ground control to ask for clearance to taxi to taxiway delta, which was granted by Rogelio Lim, the ground traffic controller. Upon reaching Taxiway Delta, Galvez repeated the request, which was granted. The Twin Otter proceeded to cross runway 13 without making a full stop at the holding point to request clearance.

Meanwhile, the PAL Boeing 737, piloted by Rogelio Casiño and Ruel Isaac, was preparing for take-off along runway 13. The PAL pilots requested clearance to push and start on runway 13, which was granted by Ernesto Linog, Jr., the air traffic controller. While on take-off roll, Casiño saw the Twin Otter about to cross runway 13.

When the Twin Otter was halfway through the runway, Galvez noticed the approaching Boeing 737 and told Bungabong about it. Bungabong tried to abort the take-off, but the collision still occurred. The Twin Otter was dragged around 100 meters away, resulting in significant damage to both aircraft.

On May 7, 1996, PAC, Bungabong, and Galvez filed a complaint for damages against PAL, Casiño, Isaac, and the Air Transportation Office (ATO) personnel. The trial court held that the negligence of the ATO's traffic control personnel was the proximate cause of the collision, while the negligence of the PAL pilots was the direct cause. The trial court ordered PAL, Casiño, Isaac, ATO, and its personnel to pay damages to the plaintiffs.

Both PAL and ATO, along with the other defendants, appealed the trial court's decision to the Court of Appeals (CA). The CA affirmed the trial court's decision in its entirety. PAL, Casiño, Isaac, GSIS (the insurer of the Boeing 737), ATO, and its personnel filed motions for reconsideration, which were denied except for the one filed by Linog, Jr., who was acquitted in the criminal case involving the collision.

The parties filed separate petitions for review before the Supreme Court, with the primary issue being the determination of liability for negligence under the circumstances.

ISSUES:

1. Whether the Court of Appeals' finding of fact and legal conclusion should be sustained based on the evidence on record.

2. Whether PAL's aircraft had the right of way at the time of the collision.

3. Whether PAC's pilots were grossly negligent for disregarding PAL's right of way.

4. Whether ATO, Alzola, Lim, and Linog, Jr. shared liability for the collision.

5. Whether Air Traffic Controller Linog, Jr. was negligent in issuing the clearance to take off to the Boeing 737.

6. Whether the pilots of Pacific Air Cargo (PAC) were grossly negligent in disregarding Philippine Airlines' (PAL) right of way.

7. Whether PAL's pilots were justified in assuming that the taxiing aircraft would respect their right of way.

8. Whether PAC and its pilots can claim damages.

9. Whether PAL is entitled to its counterclaim for actual or compensatory damages.

10. Whether the petition should be granted and the decisions of the lower courts set aside.

11. Whether the dismissal of the case against Ernesto Linog, Jr. should be sustained.

12. Whether the civil case for sum of money and damages filed by Pacific Airways Corporation (PAC), Ely B. Bungabong, and Michael F. Galvez should be dismissed for lack of legal basis.

13. Whether Philippine Airlines, Inc. is entitled to actual or compensatory damages.

14. Whether Rogelio Casiño and Ruel Isaac are entitled to moral damages, exemplary damages, and attorney's fees.

15. Whether the Government Service Insurance System, as insurer subrogee of Philippine Airlines, is entitled to actual or compensatory damages.

RULING:

1. The Court cannot sustain the finding of fact and legal conclusion of the Court of Appeals after thoroughly reviewing the evidence on record.

2. PAL's aircraft had the right of way at the time of the collision based on the Rules of the Air.

3. PAC's pilots were grossly negligent for disregarding PAL's right of way and failing to see PAL's aircraft before crossing the active runway.

4. ATO, Alzola, Lim, and Linog, Jr. share liability as the Rules of Air Control state that the pilots-in-command of aircraft are responsible for their operation and have final authority as to the disposition of the aircraft.

5. Air Traffic Controller Linog, Jr. was not negligent in issuing the clearance to take off to the Boeing 737. The trial court in the criminal case for reckless imprudence ruled that Linog, Jr. was not negligent, and the Court of Appeals absolved him of civil liability based on his acquittal in the criminal case.

6. The pilots of PAC were grossly negligent in disregarding PAL's right of way.

7. PAL's pilots were justified in assuming that the taxiing aircraft would respect their right of way.

8. PAC and its pilots cannot claim damages. Their own gross negligence was the immediate and proximate cause of their own injuries, and under the Civil Code, a plaintiff who was negligent cannot recover damages.

9. PAL is entitled to its counterclaim for actual or compensatory damages in the amount of US$548,819.93 representing lease charges during the period the Boeing 737 was not flying. PAL's insurer, GSIS, is also entitled to reimbursement for the amount it advanced for the repair of the damaged Boeing 737, in the total amount of US$2,775,366.84.

10. The petition is granted and the decisions of the lower courts are set aside.

11. The dismissal of the case against Ernesto Linog, Jr. is sustained.

12. The civil case for sum of money and damages filed by Pacific Airways Corporation (PAC), Ely B. Bungabong, and Michael F. Galvez is dismissed for lack of legal basis.

13. Philippine Airlines, Inc. is entitled to actual or compensatory damages in the amount of US$548,819.93.

14. Rogelio Casiño and Ruel Isaac are entitled to moral damages in the amount of P100,000, exemplary damages in the amount of P100,000, and attorney's fees in the amount of P50,000.

15. The Government Service Insurance System, as insurer subrogee of Philippine Airlines, is entitled to actual or compensatory damages in the amount of US$2,775,366.84.

PRINCIPLES:

• In a petition for review under Rule 45, only questions of law may be raised, except in certain exceptions.

• The judgment of the Court of Appeals may be reversed if it is premised on a misapprehension of facts or the Court of Appeals fails to notice certain relevant facts that justify a different conclusion.

• The Rules of the Air apply to all aircraft registered in the Philippines and govern the specific traffic management of aircraft at airports.

• When there is danger of collision between two aircraft taxiing on the maneuvering area of an aerodrome:

a) Head on or approximately head on, each aircraft shall stop or alter its course to the right.

b) On a converging course, the aircraft with the other on its right shall give way.

• An aircraft taxiing on the maneuvering area of an aerodrome shall give way to aircraft taking off or about to take off.

• Gross negligence is characterized by the want of even slight care and acting or omitting to act willfully and intentionally with a conscious indifference to consequences.

• The pilot-in-command of an aircraft is responsible for the operation of the aircraft and has final authority as to the disposition of the aircraft.

• Clearances issued by air traffic control do not relieve a pilot of any responsibility whatsoever in connection with a possible violation of applicable rules and regulations.

• Proximate cause is that cause, which, in natural and continuous sequence, unbroken by any efficient intervening cause, produces the injury, and without which the result would not have occurred.

• A plaintiff whose own negligence is the immediate and proximate cause of his injury cannot recover damages. If the plaintiff's negligence is only contributory and the immediate and proximate cause of the injury was the defendant's lack of due care, the plaintiff may recover damages, but the court shall mitigate the damages to be awarded.

• An insurer who has indemnified the insured for the injury or loss arising from the wrong or breach of contract shall be subrogated to the rights of the insured against the wrongdoer or the person who violated the contract. If the amount paid by the insurance company does not fully cover the injury or loss, the aggrieved party is entitled to recover the deficiency from the person causing the loss or injury.

• The award of moral and exemplary damages, as well as attorney's fees, in a counterclaim is discretionary and based on the facts and circumstances of each case.

• Actual or compensatory damages should be based on the actual losses sustained by the aggrieved parties and the gravity of the injuries.

• Moral damages may be awarded when the aggrieved parties suffer sleepless nights and temporary incapacity to work.

• Exemplary damages may be awarded when the defendant's act is characterized by gross negligence.

• Attorney's fees are generally not recoverable except when exemplary damages are awarded.

• The dismissal of a case may be warranted if there is lack of legal basis for the claims.

• Insurer subrogees are entitled to claim actual or compensatory damages on behalf of the insured party.