SECOND DIVISIONL.G. FOODS CORPORATION and VICTORINO GABOR,
Vice-President and General Manager,Petitioners,- versus -HON.
PHILADELFA B. PAGAPONG-AGRAVIADOR, in her capacity as Presiding
Judge of Regional Trial Court, Branch 43, Bacolod City, and SPS.
FLORENTINO and THERESA VALLEJERA,Respondents.G.R. No.
158995Present:PUNO,J.,
Chairperson,SANDOVAL-GUTIERREZ,CORONA,AZCUNA,
andGARCIA,JJ.Promulgated:September 26, 2006
x------------------------------------------------------------------------------------xD
E C I S I O NGARCIA,J.:Assailed and sought to be set aside in this
petition for review oncertiorariis the Decision[1]dated April 25,
2003 of the Court of Appeals (CA), as reiterated in its Resolution
of July 10, 2003,[2]inCA-G.R. SP No. 67600, affirmingan earlier
Order of the Regional Trial Court (RTC) of Bacolod City, Branch 43,
which denied the petitioners motion to dismiss in Civil Case No.
99-10845, an action for damages arising from a vehicular accident
thereat instituted by the herein private respondents - the spouses
Florentino Vallejera and Theresa Vallejera - against the
petitioners.The antecedent facts may be briefly stated as
follows:OnFebruary 26, 1996, Charles Vallereja, a 7-year old son of
the spouses Florentino Vallejera and Theresa Vallejera, was hit by
a Ford Fiera van owned by the petitioners and driven at the time by
their employee, Vincent Norman Yeneza y Ferrer. Charles died as a
result of the accident.In time, an Information forReckless
Imprudence Resulting to Homicidewas filed against the driver before
the Municipal Trial Court in Cities (MTCC),BacolodCity, docketed as
Criminal Case No. 67787, entitledPeople of thePhilippinesv. Vincent
Norman Yeneza.Unfortunately, before the trial could be concluded,
the accused driver committed suicide, evidently bothered by
conscience and remorse. On account thereof, the MTCC, in its order
ofSeptember 30, 1998, dismissed the criminal case.On June 23, 1999,
in the RTC of Bacolod City, the spouses Vallejera filed a
complaint[3]for damages against the petitioners as employers of the
deceased driver, basically alleging that as such employers, they
failed to exercise due diligence in the selection and supervision
of their employees. Thereat docketed as Civil Case No. 99-10845,
the complaint was raffled to Branch 43 of the court.In theirAnswer
with Compulsory Counterclaim,[4]the petitioners as defendants
denied liability for the death of the Vallejeras 7-year old son,
claiming that they had exercised the required due diligence in the
selection and supervision of their employees, including the
deceased driver. They thus prayed in their Answer for the dismissal
of the complaint for lack of cause of action on the part of the
Vallejera couple.During pre-trial, the defendant petitioners
insisted that their dismissal prayer be resolved. Hence, the trial
court required them to file within ten days a memorandum of
authorities supportive of their position.Instead, however, of the
required memorandum of authorities, the defendant petitioners filed
aMotion to Dismiss, principally arguing that the complaint is
basically a claim for subsidiary liability against an employer
under the provision of Article 103[5]of the Revised Penal Code.
Prescinding therefrom, they contend that there must first be a
judgment of conviction against their driver as a conditionsine qua
nonto hold them liable.Ergo,since the driver died during the
pendency of the criminal action, thesine qua noncondition for their
subsidiary liability was not fulfilled, hence the of lack of cause
of action on the part of the plaintiffs. They further argue that
since the plaintiffs did not make a reservation to institute a
separate action for damages when the criminal case was filed, the
damage suit in question is thereby deemed instituted with the
criminal action. which was already dismissed.In an Order
datedSeptember 4, 2001,[6]the trial court denied the motion to
dismiss for lack of merit and set the case for pre-trial. With
their motion for reconsideration having been denied by the same
court in its subsequent order[7]ofSeptember 26, 2001, the
petitioners then went oncertiorarito the CA inCA-G.R. SP No.
67600,imputing grave abuse of discretion on the partof the trial
judge in refusing to dismiss the basic complaint for damages in
Civil Case No. 99-10845.In the herein assailed
decision[8]datedApril 25, 2003, the CA deniedthe petition and
upheld the trial court. Partly says the CA in its challenged
issuance:xxxxxxxxxIt is clear that thecomplaintneither represents
nor implies that the responsibility charged was the petitioners
subsidiary liability under Art. 103,Revised Penal Code.As pointed
out [by the trial court] in the Order ofSeptember 4, 2001,
thecomplaintdoes not even allege the basic elements for such a
liability, like the conviction of the accused employeeand his
insolvency. Truly enough, a civil action to enforce subsidiary
liability separate and distinct from the criminal action is even
unnecessary.xxxxxxxxxSpecifically, Civil Case No. 99-10845 exacts
responsibility for fault or negligence under Art. 2176,Civil
Code,which is entirelyseparateanddistinctfrom the civil liability
arising from negligence under theRevised Penal Code.Verily,
therefore, the liability under Art. 2180,Civil Code,isdirect and
immediate, and not conditioned upon prior recourse against the
negligent employee or prior showing of the latters insolvency.
(Underscoring in the original.)In time, the petitioners moved for a
reconsideration buttheir motion was denied by the CA in its
resolution[9]ofJuly 10, 2003. Hence, the petitioners present
recourse on their submission that the appellate court committed
reversible error in upholding the trial courts denial of their
motion to dismiss.WeDENY.As the Court sees it, the sole issue for
resolution is whether the spouses Vallejeras cause of action in
Civil Case No. 99-10845 is founded on Article 103 of the Revised
Penal Code, as maintained by the petitioners, or derived from
Article 2180[10]of theCivil Code,as ruled by the two courts
below.It thus behooves us to examine the allegations of the
complaint for damages in Civil Case No. 99-10845.That complaint
alleged,inter alia,as follows:xxxxxxxxx3.That defendant [LG Food
Corporation] is the registered owner of a Ford Fiera Van with Plate
No. NMS 881 and employer sometime February of 1996 of one Vincent
Norman Yeneza y Ferrer, a salesman of said corporation;4.That
sometimeFebruary 26, 1996at around2:00 P.M.atRosario
St.,BacolodCity, the minor son of said plaintiffs [now
respondents], Charles Vallejera, 7 years old, was hit and bumped by
above-described vehicle then driven by said employee, Vincent
Norman Yeneza y Ferrer;5.That the mishap was due to the gross fault
and negligence of defendants employee, who drove said vehicle,
recklessly, negligently and at a high speed without regard to
traffic condition and safety of other road users and likewise to
the fault and negligence of the owner employer, herein defendants
LG Food Corporation who failed to exercise due diligence in the
selection and supervision of his employee, Vincent Norman Yeneza y
Ferrer;6.That as a result of said incident, plaintiffs son suffered
multiple body injuries which led to his untimely demise on that
very day;7.That a criminal case was filed against the defendants
employee, docketed as Criminal Case No. 67787, (earlier filed as
Crim. Case No. 96-17570 before RTC) before MTC-Branch III, entitled
People v. Yeneza for Reckless Imprudence resulting to Homicide, but
the same was dismissed because pending litigation, then
remorse-stricken [accused] committed suicide;xxxxxxxxx8.That the
injuries and complications as well as the resultant death suffered
by the late minor Charles Vallejera were due to the negligence and
imprudence of defendants employee;9.That defendant LG Foods
Corporation is civilly liable for the negligence/imprudence of its
employee since it failed to exercise the necessary diligence
required of a good father of the family in the selection and
supervision of his employee, Vincent Norman Yeneza y Ferrer which
diligence if exercised, would have prevented said
incident.(Bracketed words and emphasis ours.)Nothing in the
foregoing allegations suggests, even remotely, that the herein
petitioners are being made to account for their subsidiary
liability under Article 103 of theRevised Penal Code.As correctly
pointed outby the trial court in its order of September 4,
2001denying the petitionersMotion to Dismiss, the complaint did not
even aver the basic elements for the subsidiary liability of an
employer under Article 103 of the Revised Penal Code, such as the
prior conviction of the driver in the criminal case filed against
him nor his insolvency.Admittedly, the complaintdid not explicitly
state that plaintiff Vallejeraswere suing the defendant petitioners
for damages based onquasi-delict. Clear it is, however, from the
allegations of the complaint thatquasi-delictwas their choice of
remedy against the petitioners. To stress, the plaintiff spouses
alleged in their complaint gross fault and negligence on the part
of the driver and the failure of the petitioners, as employers, to
exercise due diligence in the selection and supervision of their
employees. The spouses further alleged that the petitioners are
civilly liable for the negligence/imprudence of their driver since
they failed to exercise the necessary diligence required of a good
father of the family in the selection and supervision of their
employees, which diligence, if exercised, could have prevented the
vehicular accident that resulted to the death of their 7-year old
son.Section 2, Rule 2, of the 1997 Rules of Civil Procedure defines
cause of action as the act or omission by which a party violates
the right of another.Such act or omission gives rise to an
obligation which may come from law, contracts,quasicontracts,
delicts orquasi-delicts.[11]Corollarily, an act or omission causing
damage to another may give rise to two separate civil liabilities
on the part of the offender, i.e., 1) civil liabilityex
delicto;[12]and 2) independent civil liabilities, such as those (a)
not arising from an act or omission complained of as felony (e.g.,
culpa contractualorobligations arising from law;[13]the intentional
torts;[14]andculpa aquiliana[15]); or (b) where the injured party
is granted a right to file an action independent and distinct from
the criminal action.[16]Either of these two possibleliabilities may
be enforced against the offender.[17]Stated otherwise, victims of
negligence or their heirs have a choice between an action to
enforce the civil liability arising fromculpa criminalunder Article
100 of the Revised Penal Code, and an action forquasi-delict(culpa
aquiliana) under Articles 2176 to 2194 of the Civil Code.If, as
here, the action chosen is forquasi-delict, the plaintiff may hold
the employer liable for the negligent act of its employee, subject
to the employers defense of exercise of the diligence of a good
father of the family.On the other hand, if the action chosen is
forculpa criminal,the plaintiff can hold the employer subsidiarily
liable only upon proof ofprior conviction of its
employee.[18]Article 1161[19]of the Civil Code provides that civil
obligation arising from criminal offenses shall be governed by
penal laws subject to the provision of Article 2177[20]and of the
pertinent provision of Chapter 2, Preliminary Title on Human
Relation, and of Title XVIII of this Book, regulating damages.
Plainly, Article 2177 provides for the alternative remedies the
plaintiff may choose from in case the obligation has the
possibility of arising indirectly from the delict/crime or directly
fromquasi-delict/tort.The choice is with the plaintiff who makes
known his cause of action in his initiatory pleading or
complaint,[21]and not with the defendant who can not ask for the
dismissal of the plaintiffs cause of action or lack of it based on
the defendants perception that the plaintiff should have opted to
file a claim under Article 103 of the Revised Penal Code.Under
Article 2180 of the Civil Code, the liability of the employer is
direct or immediate. It is not conditioned upon prior recourse
against the negligent employee and a prior showing of insolvency of
such employee.[22]Here, the complaint sufficiently alleged that the
death of the couples minorsonwascausedbythenegligentactof the
petitioners driver; and that the petitioners themselves were
civilly liable for the negligence of their driver for failing to
exercise the necessary diligence required of a good father of the
family in the selection and supervision of[their] employee, the
driver, which diligence, if exercised, would have prevented said
accident.Had the respondent spouses elected to sue the petitioners
based on Article103oftheRevisedPenal Code,theywouldhave alleged
that theguiltofthedriver had been proven beyond reasonable doubt;
that such accused driver is insolvent; that it is the subsidiary
liability of the defendant petitioners as employersto pay for the
damage done by their employee (driver) based on the principle that
every person criminally liable is also civilly liable.[23]Since
there was no conviction in the criminal case against the driver,
precisely because death intervened prior to the termination of the
criminal proceedings, the spouses recourse was, therefore, to sue
the petitioners for their direct and primary liability based
onquasi-delict.Besides, it is worthy to note that the petitioners,
in theirAnswer with Compulsory Counter-Claim,[24]repeatedly made
mention of Article 2180 of the Civil Code and anchored their
defense on their allegation that they had exercised due diligence
in the selection and supervision of [their] employees. The Court
views this defense as an admission that indeed the petitioners
acknowledged the private respondents cause of action as one
forquasi-delict under Article 2180 of the Civil
Code.Alltold,CivilCase No. 99-10845 is a negligence suit brought
under Article 2176 - Civil Code to recover damages primarily from
the petitioners as employers responsible for their negligent driver
pursuant to Article 2180 of theCivil Code.The obligation imposed by
Article 2176 is demandable not only for ones own acts or omissions,
but also for those of persons for whom one is responsible. Thus,
the employer is liable for damages caused by his employees and
household helpers acting within the scope of their assigned tasks,
even though the former is not engaged in any business or
industry.CitingManiago v. CA,[25]petitioner would argue that Civil
Case No. 99-10845 should have been dismissed for failure of the
respondent spouses to make a reservation to institute a separate
civil action for damages when the criminal case against the driver
was filed.The argument is specious.To start with, the petitioners
reliance onManiagois obviously misplaced. There, the civil case was
filed while the criminal case against the employee was still
pending. Here, the criminal case against the employee driver was
prematurely terminated due to his death. Precisely, Civil Case No.
99-10845 was filed by the respondent spouses because no remedy can
be obtained by them against the petitioners with the dismissal of
the criminal case against their driver during the pendency
thereof.The circumstance that no reservation to institute a
separate civil action for damages was made when the criminal case
was filed is of no moment for the simple reason that the criminal
case was dismissed without any pronouncement having been made
therein. In reality, therefor, it is as if there was no criminal
case to speak of in the first place. And for the petitioners to
insist for the conviction of their driver as a conditionsine qua
nonto hold them liable for damages is to ask for the impossible.IN
VIEW WHEREOF,the instant petition isDENIEDfor lack of merit.Costs
against the petitioners.SO ORDERED.CANCIO C. GARCIAAssociate
JusticeWE CONCUR:REYNATO S. PUNOAssociate
JusticeChairpersonANGELINA SANDOVAL-GUTIERREZAssociate
JusticeRENATO C. CORONAAssociate Justice
ADOLFO S. AZCUNAAssociate JusticeA T T E S T A T I O NI attest
that the conclusions in the above decision were reached in
consultation before the case was assigned to the writer of the
opinion of the Courts Division.REYNATO S. PUNOAssociate
JusticeChairperson, Second DivisionC E R T I F I C A T I O
NPursuant to Article VIII, Section 13 of the Constitution, and the
Division Chairperson's Attestation, it is hereby certified that the
conclusions in the above decision were reached in consultation
before the case was assigned to the writer of the opinion of the
Court.ARTEMIO V. PANGANIBANChief Justice
[1]Penned by Associate Justice Lucas P. Bersamin with Associate
Justices Ruben T. Reyes (now Presiding Justice) and Elvi John
Asuncion, concurring. Rollo, pp. 17-22.[2]Id.at 23.[3]Id.at
93-98.[4]Id.at 85-91.[5]Article 103.Subsidiary civil liability of
other persons. The subsidiary liability established in the next
preceding article shall also apply to employers, teachers, persons
and corporations engaged in any kind of industry for felonies
committed by their servants, pupils, workmen, apprentices, or
employees in the discharge of their duties.[6]Rollo, pp.
71-74.[7]Id.at 65.[8]Supra note 1.[9]Rollo, p. 23.[10]Article 2180.
The obligation imposed by Article 2176 is demandable not only for
ones own acts or omissions, but also for those of persons for whom
one is responsible.xxxxxxxxxEmployers shall be liable for the
damages caused by their employees and household helpers acting
within the scope of their assigned tasks, even though the former
are not engaged in any business or industry.xxxxxxxxxThe
responsibility treated of in this article shall cease when the
persons herein mentioned prove that they observed all the diligence
of a good father of a family to prevent damage. (1903a)[11]Article
1157, Civil Code of thePhilippines.[12]Article 100, Revised Penal
Code.[13]Article 31, Civil Code.[14]Articles 32 and 34, Civil
Code.[15]Article 2176, Civil Code.[16]Article 33, Civil
Code.[17]Cancio, Jr. v. Isip, G.R. No. 133978,November 12, 2002,
391 SCRA 393.[18]Joaquin, et al. v. Aniceto, et al.,120 Phil. 1100
(1964).[19]ARTICLE 1161.Civil obligations arising from criminal
offenses shall be governed by the penal laws, subject to the
provisions of article 2177, and of the pertinent provisions of
Chapter 2, Preliminary Title, on Human Relations, and of Title
XVIII of this Book, regulating damages.(1092a)[20]ARTICLE
2177.Responsibility for fault or negligence under the preceding
article is entirely separate and distinct from the civil liability
arising from negligence under the Penal Code.But the plaintiff
cannot recover damages twice for the same act or omission of the
defendant.(n)[21]Section 3, Rule 6, 1997 Rules on Criminal
Procedure.[22]Kapalaran Bus Lines v. Coronado, G.R. No.
85331,August 25, 1989, 176 SCRA 792.[23]Article 100, Revised Penal
Code.[24]Supra note 4.[25]G.R. 104392,February 20, 1996, 253 SCRA
674.
Republic of the PhilippinesSUPREME COURTManilaFIRST DIVISIONG.R.
No. 141910 August 6, 2002FGU INSURANCE
CORPORATION,petitioner,vs.G.P. SARMIENTO TRUCKING CORPORATION and
LAMBERT M. EROLES,respondents.VITUG,J.:G.P. Sarmiento Trucking
Corporation (GPS) undertook to deliver on 18 June 1994 thirty (30)
units of Condura S.D. white refrigerators aboard one of its Isuzu
truck, driven by Lambert Eroles, from the plant site of Concepcion
Industries, Inc., along South Superhighway in Alabang, Metro
Manila, to the Central Luzon Appliances in Dagupan City. While the
truck was traversing the north diversion road along McArthur
highway in Barangay Anupol, Bamban, Tarlac, it collided with an
unidentified truck, causing it to fall into a deep canal, resulting
in damage to the cargoes.FGU Insurance Corporation (FGU), an
insurer of the shipment, paid to Concepcion Industries, Inc., the
value of the covered cargoes in the sum of P204,450.00. FGU, in
turn, being the subrogee of the rights and interests of Concepcion
Industries, Inc., sought reimbursement of the amount it had paid to
the latter from GPS. Since the trucking company failed to heed the
claim, FGU filed a complaint for damages and breach of contract of
carriage against GPS and its driver Lambert Eroles with the
Regional Trial Court, Branch 66, of Makati City. In its answer,
respondents asserted that GPS was the exclusive hauler only of
Concepcion Industries, Inc., since 1988, and it was not so engaged
in business as a common carrier. Respondents further claimed that
the cause of damage was purely accidental.1wphi1.ntThe issues
having thus been joined, FGU presented its evidence, establishing
the extent of damage to the cargoes and the amount it had paid to
the assured. GPS, instead of submitting its evidence, filed with
leave of court a motion to dismiss the complaint by way of demurrer
to evidence on the ground that petitioner had failed to prove that
it was a common carrier.The trial court, in its order of 30 April
1996,1granted the motion to dismiss, explaining thusly:"Under
Section 1 of Rule 131 of the Rules of Court, it is provided that
Each party must prove his own affirmative allegation, xxx."In the
instant case, plaintiff did not present any single evidence that
would prove that defendant is a common carrier."x x x x x x x x
x"Accordingly, the application of the law on common carriers is not
warranted and the presumption of fault or negligence on the part of
a common carrier in case of loss, damage or deterioration of goods
during transport under 1735 of the Civil Code is not
availing."Thus, the laws governing the contract between the owner
of the cargo to whom the plaintiff was subrogated and the owner of
the vehicle which transports the cargo are the laws on obligation
and contract of the Civil Code as well as the law on quasi
delicts."Under the law on obligation and contract, negligence or
fault is not presumed. The law on quasi delict provides for some
presumption of negligence but only upon the attendance of some
circumstances. Thus, Article 2185 provides:Art. 2185. Unless there
is proof to the contrary, it is presumed that a person driving a
motor vehicle has been negligent if at the time of the mishap, he
was violating any traffic regulation."Evidence for the plaintiff
shows no proof that defendant was violating any traffic regulation.
Hence, the presumption of negligence is not obtaining."Considering
that plaintiff failed to adduce evidence that defendant is a common
carrier and defendants driver was the one negligent, defendant
cannot be made liable for the damages of the subject cargoes."2The
subsequent motion for reconsideration having been denied,3plaintiff
interposed an appeal to the Court of Appeals, contending that the
trial court had erred (a) in holding that the appellee corporation
was not a common carrier defined under the law and existing
jurisprudence; and (b) in dismissing the complaint on a demurrer to
evidence.The Court of Appeals rejected the appeal of petitioner and
ruled in favor of GPS. The appellate court, in its decision of 10
June 1999,4discoursed, among other things, that -"x x x in order
for the presumption of negligence provided for under the law
governing common carrier (Article 1735, Civil Code) to arise, the
appellant must first prove that the appellee is a common carrier.
Should the appellant fail to prove that the appellee is a common
carrier, the presumption would not arise; consequently, the
appellant would have to prove that the carrier was negligent."x x x
x x x x x x"Because it is the appellant who insists that the
appellees can still be considered as a common carrier, despite its
`limited clientele, (assuming it was really a common carrier), it
follows that it (appellant) has the burden of proving the same. It
(plaintiff-appellant) `must establish his case by a preponderance
of evidence, which means that the evidence as a whole adduced by
one side is superior to that of the other. (Summa Insurance
Corporation vs. Court of Appeals, 243 SCRA 175). This,
unfortunately, the appellant failed to do -- hence, the dismissal
of the plaintiffs complaint by the trial court is justified."x x x
x x x x x x"Based on the foregoing disquisitions and considering
the circumstances that the appellee trucking corporation has been
`its exclusive contractor, hauler since 1970, defendant has no
choice but to comply with the directive of its principal, the
inevitable conclusion is that the appellee is a private carrier."x
x x x x x x x x"x x x the lower court correctly ruled that 'the
application of the law on common carriers is not warranted and the
presumption of fault or negligence on the part of a common carrier
in case of loss, damage or deterioration of good[s] during
transport under [article] 1735 of the Civil Code is not availing.'
x x x."Finally, We advert to the long established rule that
conclusions and findings of fact of a trial court are entitled to
great weight on appeal and should not be disturbed unless for
strong and valid reasons."5Petitioner's motion for reconsideration
was likewise denied;6hence, the instant petition,7raising the
following issues:IWHETHER RESPONDENT GPS MAY BE CONSIDERED AS A
COMMON CARRIER AS DEFINED UNDER THE LAW AND EXISTING
JURISPRUDENCE.IIWHETHER RESPONDENT GPS, EITHER AS A COMMON CARRIER
OR A PRIVATE CARRIER, MAY BE PRESUMED TO HAVE BEEN NEGLIGENT WHEN
THE GOODS IT UNDERTOOK TO TRANSPORT SAFELY WERE SUBSEQUENTLY
DAMAGED WHILE IN ITS PROTECTIVE CUSTODY AND POSSESSION.IIIWHETHER
THE DOCTRINE OFRES IPSA LOQUITURIS APPLICABLE IN THE INSTANT
CASE.On the first issue, the Court finds the conclusion of the
trial court and the Court of Appeals to be amply justified. GPS,
being an exclusive contractor and hauler of Concepcion Industries,
Inc., rendering or offering its services to no other individual or
entity, cannot be considered a common carrier. Common carriers are
persons, corporations, firms or associations engaged in the
business of carrying or transporting passengers or goods or both,
by land, water, or air, for hire or compensation, offering their
services to thepublic,8whether to the public in general or to a
limited clientele in particular, but never on an exclusive
basis.9The true test of a common carrier is the carriage of
passengers or goods, providing space for those who opt to avail
themselves of its transportation service for a fee.10Given accepted
standards, GPS scarcely falls within the term "common carrier."The
above conclusion nothwithstanding, GPS cannot escape from
liability.Inculpa contractual, upon which the action of petitioner
rests as being the subrogee of Concepcion Industries, Inc., the
mere proof of the existence of the contract and the failure of its
compliance justify,prima facie, a corresponding right of
relief.11The law, recognizing the obligatory force of
contracts,12will not permit a party to be set free from liability
for any kind of misperformance of the contractual undertaking or a
contravention of the tenor thereof.13A breach upon the contract
confers upon the injured party a valid cause for recovering that
which may have been lost or suffered. The remedy serves to preserve
the interests of the promisee that may include his "expectation
interest," which is his interest in having the benefit of his
bargain by being put in as good a position as he would have been in
had the contract been performed, or his "reliance interest," which
is his interest in being reimbursed for loss caused by reliance on
the contract by being put in as good a position as he would have
been in had the contract not been made; or his "restitution
interest," which is his interest in having restored to him any
benefit that he has conferred on the other party.14Indeed,
agreements can accomplish little, either for their makers or for
society, unless they are made the basis for action.15The effect of
every infraction is to create a new duty, that is, to make
recompense to the one who has been injured by the failure of
another to observe his contractual obligation16unless he can show
extenuating circumstances, like proof of his exercise of due
diligence (normally that of the diligence of a good father of a
family or, exceptionally by stipulation or by law such as in the
case of common carriers, that of extraordinary diligence) or of the
attendance of fortuitous event, to excuse him from his ensuing
liability.Respondent trucking corporation recognizes the existence
of a contract of carriage between it and petitioners assured, and
admits that the cargoes it has assumed to deliver have been lost or
damaged while in its custody. In such a situation, a default on, or
failure of compliance with, the obligation in this case, the
delivery of the goods in its custody to the place of destination -
gives rise to a presumption of lack of care and corresponding
liability on the part of the contractual obligor the burden being
on him to establish otherwise. GPS has failed to do so.Respondent
driver, on the other hand, without concrete proof of his negligence
or fault, may not himself be ordered to pay petitioner. The driver,
not being a party to the contract of carriage between petitioners
principal and defendant, may not be held liable under the
agreement. A contract can only bind the parties who have entered
into it or their successors who have assumed their personality or
their juridical position.17Consonantly with the axiomres inter
alios acta aliis neque nocet prodest, such contract can neither
favor nor prejudice a third person. Petitioners civil action
against the driver can only be based onculpa aquiliana,which,
unlikeculpa contractual,would require the claimant for damages to
prove negligence or fault on the part of the defendant.18A word in
passing.Res ipsa loquitur,a doctrine being invoked by petitioner,
holds a defendant liable where the thing which caused the injury
complained of is shown to be under the latters management and the
accident is such that, in the ordinary course of things, cannot be
expected to happen if those who have its management or control use
proper care. It affords reasonable evidence, in the absence of
explanation by the defendant, that the accident arose from want of
care.19It is not a rule of substantive law and, as such, it does
not create an independent ground of liability. Instead, it is
regarded as a mode of proof, or a mere procedural convenience since
it furnishes a substitute for, and relieves the plaintiff of, the
burden of producing specific proof of negligence. The maxim simply
places on the defendant the burden of going forward with the
proof.20Resort to the doctrine, however, may be allowed only when
(a) the event is of a kind which does not ordinarily occur in the
absence of negligence; (b) other responsible causes, including the
conduct of the plaintiff and third persons, are sufficiently
eliminated by the evidence; and (c) the indicated negligence is
within the scope of the defendant's duty to the plaintiff.21Thus,
it is not applicable when an unexplained accident may be
attributable to one of several causes, for some of which the
defendant could not be responsible.22Res ipsa loquiturgenerally
finds relevance whether or not a contractual relationship exists
between the plaintiff and the defendant, for the inference of
negligence arises from the circumstances and nature of the
occurrence and not from the nature of the relation of the
parties.23Nevertheless, the requirement that responsible causes
other than those due to defendants conduct must first be
eliminated, for the doctrine to apply, should be understood as
being confined only to cases of pure (non-contractual) tort since
obviously the presumption of negligence inculpa contractual, as
previously so pointed out, immediately attaches by a failure of the
covenant or its tenor. In the case of the truck driver, whose
liability in a civil action is predicated onculpa acquiliana, while
he admittedly can be said to have been in control and management of
the vehicle which figured in the accident, it is not equally shown,
however, that the accident could have been exclusively due to his
negligence, a matter that can allow, forthwith,res ipsa loquiturto
work against him.If a demurrer to evidence is granted but on appeal
the order of dismissal is reversed, the movant shall be deemed to
have waived the right to present evidence.24Thus, respondent
corporation may no longer offer proof to establish that it has
exercised due care in transporting the cargoes of the assured so as
to still warrant a remand of the case to the trial
court.1wphi1.ntWHEREFORE, the order, dated 30 April 1996, of the
Regional Trial Court, Branch 66, of Makati City, and the decision,
dated 10 June 1999, of the Court of Appeals, areAFFIRMEDonly
insofar as respondent Lambert M. Eroles is concerned, but said
assailed order of the trial court and decision of the appellate
court areREVERSEDas regards G.P. Sarmiento Trucking Corporation
which, instead, is hereby ordered to pay FGU Insurance Corporation
the value of the damaged and lost cargoes in the amount of
P204,450.00. No costs.SO ORDERED.Davide, Jr., C.J., Kapunan,
Ynares-Santiago, and Austria-Martinez, JJ.,concur.
Footnotes1Rollo, p. 14.2Rollo, pp. 14-15.3Rollo, p. 174Rollo, p.
20.5Rollo, pp. 24-28.6Rollo, p. 32.7Rollo, p. 3.8Article 1732,
Civil Code.9Sec. 13[b], Public Service Act as amended; see also
Guzman vs. Court of Appeals, G.R. L-47822, 22 December
1988.10National Steel Corporation vs. Court of Appeals, 283 SCRA
45.11Calalas vs. Court of Appeals, 332 SCRA 356; Sabena Belgian
World Airlines vs. Court of Appeals, 255 SCRA 38.12See Articles
1159, 1308, 1315, 1356, Civil Code.13Anson on Contracts, 1939, p.
424; 17A Am Jur 2d, p. 728 citing Parks vs. Parks, 187 P2d
145.14Restatement, Second, Contracts, 344.15Fuller and Purdue, The
Reliance Interest in Contract Damages, 46 Yale L.J.61
(1936).16Richardson on Contracts, 1951, p. 309.17Article 1311,
Civil Code.18Calalas vs. Court of Appeals, supra; See Article 2176,
Civil Code.19Africa vs. Caltex (Phils.) Inc., 16 SCRA 448; Layugan
vs. Intermediate Appellate Court, 167 SCRA 376.20Ramos vs. Court of
Appeals, 321 SCRA 600.21Sangco, Torts and Damages V.1, 1993, p. 29,
citing 58 Am Jur 2d, pp. 56-58. See Ramos vs. Court of Appeals,
supra.22Words and Phrases Vol. 37, p. 483.2357B Am Jur 2d, p.
496.24Section 1, Rule 35, Rules of Court; Section 1, Rule 33, 1997
Rules of Civil Procedure.
Republic of the PhilippinesSUPREME COURTManilaEN BANCG.R. No.
L-12163 March 4, 1959PAZ FORES,petitioner,vs.IRENEO
MIRANDA,respondent.Alberto O. Villaraza for petitioner.Almazan and
Ereneta for respondent.REYES, J.B.L.,J.:Defendant-petitioner Paz
Fores brings this petition for review of the decision of the Court
of Appeals (C.A. Case No. 1437-R) awarding to the
plaintiff-respondent Ireneo Miranda the sums of P5,000 by way of
actual damages and counsel fees, and P10,000 as moral damages, with
costs.Respondent was one of the passengers on a jeepney driven by
Eugenio Luga. While the vehicle was descending the Sta. Mesa bridge
at an excessive rate of speed, the driver lost control thereof,
causing it to swerve and to his the bridge wall. The accident
occurred on the morning of March 22, 1953. Five of the passengers
were injured, including the respondent who suffered a fracture of
the upper right humerus. He was taken to the National Orthopedic
Hospital for treatment, and later was subjected to a series of
operations; the first on May 23, 1953, when wire loops were wound
around the broken bones and screwed into place; a second, effected
to insert a metal splint, and a third one to remove such splint. At
the time of the trial, it appears that respondent had not yet
recovered the use of his right arm.The driver was charged with
serious physical injuries through reckless imprudence, and upon
interposing a plea of guilty was sentenced accordingly.The
contention that the evidence did not sufficiently establish the
identity of the vehicle as the belonging to the petitioner was
rejected by the appellate court which found, among other things,
that is carried plate No. TPU-1163, SERIES OF 1952, Quezon City,
registered in the name of Paz Fores, (appellant herein) and that
the vehicle even had the name of "Doa Paz" painted below its wind
shield. No evidence to the contrary was introduced by the
petitioner, who relied on an attack upon the credibility of the two
policemen who went to the scene of the incident.A point to be
further remarked is petitioner's contention that on March 21, 1953,
or one day before the accident happened, she allegedly sold the
passenger jeep that was involved therein to a certain Carmen
Sackerman.The initial problem raised by the petitioner in this
appeal may be formulated thus "Is the approval of the Public
Service Commission necessary for the sale of apublic service
vehicleeven without conveying therewith the authority to operate
the same?" Assuming thedubioussale to be a fact, the court of
Appeals answered the query in the affirmative. The ruling should be
upheld.Section 20 of the Public Service Act (Commonwealth Act No.
146) provides:Sec. 20. Subject to established limitations and
exceptions and saving provisions to the contrary, it shall be
unlawful for any public service or for the owner, lessee or
operator thereof, without the previous approval and authority of
the Commission previously had x x x x x x x x x(g) To sell,
alienate, mortgage, encumber or lease its property, franchises,
certificates, privileges, or rights, or any part thereof; or merge
or consolidate its property, franchises, privileges or rights, or
any part thereof, with those of any other public service. The
approval herein required shall be given, after notice to the public
and after hearing the persons interested at a public hearing, if it
be shown that there are just and reasonable grounds for making the
mortgage or encumbrance, for liabilities of more than one year
maturity, or the sale, alienation, lease, merger, or consolidation
to be approved and that the same are not detrimental to the public
interest, and in case of a sale, the date on which the same is to
be consummated shall be fixed in the order of
approval:Provided,however, That nothing herein contained shall be
construed to prevent the transaction from being negotiated or
completed before its approval or to prevent the sale, alienation,
or lease by any public service of any of its property in the
ordinary course of its business.Interpreting the effects of this
particular provision of law, we have held in the recent cases
ofMontoya vs. Ignacio,*50 Off. Gaz. No. 1, p. 108;Timbol vs. Osias,
et al., G. R. No. L-7547, April 30, 1955, andMedina vs. Cresencia,
99 Phil., 506; 52 Off. Gaz. No. 10, p. 4606, that a transfer
contemplated by the law, if made without the requisite approval of
the Public Service Commission, is not effective and binding in so
far as the responsibility of the grantee under the franchise in
relation to the public is concerned. Petitioner assails, however,
the applicability of these rulings to the instant case, contending
that in those cases, the operator did not convey, by lease or by
sale, the vehicle independently of his rights under the franchise.
This line of reasoning does not find support in the law. The
provisions of the statute are clear and prohibit the sale,
alienation, lease, or encumbrance of the property, franchise,
certificate, privileges or rights, or any part thereof of the owner
or operator of the public service Commission. The law was designed
primarily for the protection of the public interest; and until the
approval of the public Service Commission is obtained the vehicle
is, in contemplation of law, still under the service of the owner
or operator standing in the records of the Commission which the
public has a right to rely upon.Theprovisocontained in the
aforequoted law, to the effect that nothing therein shall be
construed "to prevent the transaction from being negotiated or
complete before its approval", means only that the sale without the
required approval is still valid and binding between the parties
(Montoya vs. Ignacio,supra). The phrase "in the ordinary course of
its business" found in the otherproviso" or to prevent the sale,
alienation, or lease by any public service of any of its property".
As correctly observed by the lower court, could not have been
intended to include the sale of the vehicle itself, but at most may
refer only to such property that may be conceivably disposed or by
the carrier in the ordinary course of its business, like junked
equipment or spare parts.The case ofIndalecio de Torres vs. Vicente
Ona(63 Phil., 594, 597) is enlightening; and there, it was
held:Under the law, the Public Service Commission has not only
general supervision and regulation of, but also full jurisdiction
and control over all public utilities including the property,
equipment and facilities used, and the property rights and
franchise enjoyed by every individual and company engaged i the
performance of a public service in the sense this phrase is used in
the Public Service Act or Act No. 3108). By virtue of the
provisions of said Act,motor vehicles used in the performance of a
service, as the transportation of freightfrom one point to another,
have to this date been considered and they cannot but be so
considered-public service property; and, by reason of its own
nature, a TH truck, which means that the operator thereof places it
at the disposal of anybody who is willing to pay a rental of its
use, when he desires to transfer or carry his effects, merchandise
or any other cargo from one place to another, is necessarily a
public service property. (Emphasis supplied)Of course, this court
has held in the case ofBachrach Motor co. vs. Zamboanga
Transportation Co., 52 Phil., 244, that there may be anunc pro
tuncauthorization which has the effect of having the approval
retroact to the date of the transfer; but such outcome cannot
prejudice rights intervening in the meantime. It appears that no
such approval was given by the Commission before the accident
occurred.The P10,000 actual damages awarded by the Court of First
Instance of Manila were reduced by the Court of Appeals to only
P2,000, on the ground that a review of the records failed to
disclose a sufficient basis for the trial court's appraisal, since
the only evidence presented on this point consisted of respondent's
bare statement that his expenses and loss of income amounted to
P20,000. On the other hand, "it cannot be denied," the lower court
said, "that appellee (respondent) did incur expenses"' It is well
to note further that respondent was a painter by profession and a
professor of Fine Arts, so that the amount of P2,000 awarded cannot
be said to be excessive (see Arts. 2224 and 2225, Civil Code of the
Philippines). The attorney's fees in the sum of P3,000 also awarded
to the respondent are assailed on the ground that the Court of
First Instance did not provided for the same, and since no appeal
was interposed by said respondent, it was allegedly error for the
Court of Appeals to award themmotu proprio. Petitioner fails to
note that attorney's fees are included in the concept of actual
damages under the Civil Code and may be awarded whenever the court
deems it is just and equitable (Art. 2208, Civil Code of the
Philippines). We see no reason to alter these awards.Anent the
moral damages ordered to be paid to the respondent, the same must
be discarded. We have repeatedly ruled (Cachero vs. Manila Yellow
Taxicab Co. Inc., 101 Phil., 523; 54 Off. Gaz., [26], 6599;
Necesito, et al vs. Paras, 104 Phil., 75; 56 Off. Gaz., [23] 4023,
that moral damages are not recoverable in damage actions predicted
on a breach of the contract of transportation, in view of Articles
2219 and 2220 of the new Civil Code, which provide as follows:Art.
2219. Moral damages may be recovered in the following and analogous
cases:(1) A criminal offense resulting in physical injuries;(2)
Quasi-delicts causing physical injuries;x x x x x x x x xArt. 2220.
Willful injury to property may be a legal ground for awarding moral
damages if the court should find that, under circumstances, such
damages are justify due. The same rule applies to breaches of
contract where the defendant acted fraudulently or in bad faith.By
contrasting the provisions of these two article it immediately
becomes apparent that:(a) In case of breach of contract (including
one of transportation) proof of bad faith or fraud (dolus), i.e.,
wanton or deliberately injurious conduct, is essential to justify
an award of moral damages; and(b) That a breach of contract can not
be considered included in the descriptive term "analogous cases"
used in Art. 2219; not only because Art. 2220 specifically provides
for the damages that are caused by contractual breach, but because
the definition ofquasi-delictin Art. 2176 of the Code
expresslyexcludesthe cases where there is a "preexisting
contractual relation between the parties."Art. 2176. Whoever by act
or omission causes damage to another, there being fault or
negligence, is obliged to pay for the damage dome. Such fault or
negligence, if there is no pre-existing contractual relation
between the parties, is called a quasi-delict and is governed by
the provisions of this Chapter.The exception to the basic rule of
damages now under consideration is a mishap resulting in the death
of a passenger, in which case Article 1764 makes the common carrier
expressly subject to the rule of Art. 2206, that entitles the
deceased passenger to "demand moral damages for mental anguish by
reason of the death of the deceased" (Necesito vs. Paras, 104
Phil., 84, Resolution on motion to reconsider, September 11, 1958).
But the exceptional rule of Art. 1764 makes it all the more evident
that where the injured passenger does not die, moral damages are
not recoverable unless it is proved that the carrier was guilty of
malice or bad faith. We think it is clear that the mere
carelessness of the carrier's driver does notper seconstitute of
justify an inference of malice or bad faith on the part of the
carrier; and in the case at bar there is no other evidence of such
malice to support the award of moral damages by the Court of
Appeals. To award moral damages for breach of contract, therefore,
without proof of bad faith or malice on the part of the defendant,
as required by Art. 220, would be to violate the clear provisions
of the law, and constitute unwarranted judicial legislation.The
Court of Appeals has invoked our rulings inCastro vs. Acro Taxicab
Co., G.R. No. 49155, December 14, 1948 andLayda vs. Court of
Appeals, 90 Phil., 724; but these doctrines were predicated upon
our former law of damages, before judicial discretion in fixing
them became limited by the express provisions of the new Civil Code
(previously quoted). Hence, the aforesaid rulings are now
inapplicable.Upon the other hand, the advantageous position of a
party suing a carrier for breach of the contract of transportations
explains, to some extent, the limitations imposed by the new Code
on the amount of the recovery. The action for breach of contract
imposes on the defendant carrier a presumption of liability upon
mere proof of injury to the passenger; that latter is relieved from
the duty to established the fault of the carrier, or of his
employees, and the burden is placed on the carrier to prove that it
was due to an unforseen event or toforce majeure(Cangco vs. Manila
Railroad Co., 38 Phil., 768, 777). Moreover, the carrier, unlike in
suits for quasi-delict, may not escape liability by proving that it
has exercised due diligence in the selection and supervision of its
employees (Art. 1759, new civil code; Cangcovs. Manila Railroad
Co.,supra;Prado vs. Manila Electric Co., 51 Phil., 900).The
difference in conditions, defenses and proof, as well as the codal
concept ofquasi-delictas essentiallyextracontractualnegligence,
compel us to differentiate between actionex contractu,and
actionsquasi ex delicto,and prevent us from viewing the action for
breach of contract as simultaneously embodying an action on tort.
Neither can this action be taken as one to enforce on employee's
liability under Art. 103 of the Revised Penal Code, since the
responsibility is not alleged to be subsidiary, nor is there on
record any averment or proof that the driver of appellant was
insolvent. In fact, he is not even made a party to the suit.It is
also suggested that a carrier's violation of its engagement to
safety transport the passenger involves a breach of the passenger's
confidence, and therefore should be regarded as a breach of
contract in bad faith, justifying recovery of moral damages under
Art. 2220. This theory is untenable, for under it the carrier would
always be deemed in bad faith, in every case its obligation to the
passenger is infringed, and it would be never accountable for
simple negligence; while under the law (Art. 1756). the presumption
is that common carriers actednegligently(and not maliciously), and
Art. 1762 speaks ofnegligenceof the common carrier.ART. 1756. In
case of death of or injuries to passengers, common carriers are
presumed to have been at fault or to have acted negligently, unless
they prove that they observed extraordinary diligence as prescribed
in article 1733 and 1755.ART. 1762. The contributory negligence of
the passenger does not bar recovery of damages for his death or
injuries, if the proximate cause thereof is the negligence of the
common carrier, but the amount of damages shall be equitably
reduced.The distinction between fraud, bad faith or malice in the
sense of deliberate or wanton wrong doing and negligence (as mere
carelessness) is too fundamental in our law to be ignored (Arts.
1170-1172); their consequences being clearly differentiated by the
Code.ART. 2201. In contracts and quasi-contracts, the damages for
which the obligor who acted in good faith is liable shall be those
that are the natural and probable consequences of the breach of the
obligation, and which the parties have foreseen or could have
reasonably foreseen at the time the obligation was constituted.In
case of fraud, bad faith, malice or wanton attitude, the obligor
shall be responsible for all damages which may be reasonably
attributed to the non-performance of the obligation.It is to be
presumed, in the absence of statutory provision to the contrary,
that this difference was in the mind of the lawmakers when in Art.
2220 they limited recovery of moral damages to breaches of contract
in bad faith. It is true that negligence may be occasionally so
gross as to amount to malice; but that fact must be shown in
evidence, and a carrier's bad faith is not to be lightly inferred
from a mere finding that the contract was breached through
negligence of the carrier's employees.In view of the foregoing
considerations, the decision of the Court of Appeals is modified by
eliminating the award of P5,000.00 by way of moral damages. (Court
of Appeals Resolution of May 5, 1957). In all other respects, the
judgment is affirmed. No costs in this instance. So ordered.Paras,
C.J., Bengzon, Padilla, Montemayor, Reyes, A., Bautista Angelo,
Labrador, Concepcion and Endencia, JJ.,concur.
Republic of the PhilippinesSUPREME COURTManilaEN BANCG.R. No.
L-21438 September 28, 1966AIR FRANCE,petitioner,vs.RAFAEL
CARRASCOSO and the HONORABLE COURT OF APPEALS,respondents.Lichauco,
Picazo and Agcaoili for petitioner.Bengzon Villegas and Zarraga for
respondent R. Carrascoso.SANCHEZ,J.: The Court of First Instance of
Manila1sentenced petitioner to pay respondent Rafael Carrascoso
P25,000.00 by way of moral damages; P10,000.00 as exemplary
damages; P393.20 representing the difference in fare between first
class and tourist class for the portion of the trip Bangkok-Rome,
these various amounts with interest at the legal rate, from the
date of the filing of the complaint until paid; plus P3,000.00 for
attorneys' fees; and the costs of suit. On appeal,2the Court of
Appeals slightly reduced the amount of refund on Carrascoso's plane
ticket from P393.20 to P383.10, and voted to affirm the appealed
decision "in all other respects", with costs against petitioner.
The case is now before us for review oncertiorari. The facts
declared by the Court of Appeals as " fully supported by the
evidence of record", are: Plaintiff, a civil engineer, was a member
of a group of 48 Filipino pilgrims that left Manila for Lourdes on
March 30, 1958. On March 28, 1958, the defendant, Air France,
through its authorized agent, Philippine Air Lines, Inc., issued to
plaintiff a "first class" round trip airplane ticket from Manila to
Rome. From Manila to Bangkok, plaintiff travelled in "first class",
but at Bangkok, the Manager of the defendant airline forced
plaintiff to vacate the "first class" seat that he was occupying
because, in the words of the witness Ernesto G. Cuento, there was a
"white man", who, the Manager alleged, had a "better right" to the
seat. When asked to vacate his "first class" seat, the plaintiff,
as was to be expected, refused, and told defendant's Manager that
his seat would be taken over his dead body; a commotion ensued,
and, according to said Ernesto G. Cuento, "many of the Filipino
passengers got nervous in the tourist class; when they found out
that Mr. Carrascoso was having a hot discussion with the white man
[manager], they came all across to Mr. Carrascoso and pacified Mr.
Carrascoso to give his seat to the white man" (Transcript, p. 12,
Hearing of May 26, 1959); and plaintiff reluctantly gave his "first
class" seat in the plane.3 1. The trust of the relief petitioner
now seeks is that we review "all the findings"4of respondent Court
of Appeals. Petitioner charges that respondent court failed to make
complete findings of fact on all the issues properly laid before
it. We are asked to consider facts favorable to petitioner, and
then, to overturn the appellate court's decision. Coming into focus
is the constitutional mandate that "No decision shall be rendered
by any court of record without expressing therein clearly and
distinctly the facts and the law on which it is based".5This is
echoed in the statutory demand that a judgment determining the
merits of the case shall state "clearly and distinctly the facts
and the law on which it is based";6and that "Every decision of the
Court of Appeals shall contain complete findings of fact on all
issues properly raised before it".7 A decision with absolutely
nothing to support it is a nullity. It is open to direct
attack.8The law, however, solely insists that a decision state the
"essential ultimate facts" upon which the court's conclusion is
drawn.9A court of justice is not hidebound to write in its decision
every bit and piece of evidence10presented by one party and the
other upon the issues raised. Neither is it to be burdened with the
obligation "to specify in the sentence the facts"which a party
"considered as proved".11This is but a part of the mental process
from which the Court draws the essential ultimate facts. A decision
is not to be so clogged with details such that prolixity, if not
confusion, may result. So long as the decision of the Court of
Appeals contains the necessary facts to warrant its conclusions, it
is no error for said court to withhold therefrom "any specific
finding of facts with respect to the evidence for the defense".
Because as this Court well observed, "There is no law that so
requires".12Indeed, "the mere failure to specify (in the decision)
the contentions of the appellant and the reasons for refusing to
believe them is not sufficient to hold the same contrary to the
requirements of the provisions of law and the Constitution". It is
in this setting that inManigque, it was held that the mere fact
that the findings "were based entirely on the evidence for the
prosecution without taking into consideration or even mentioning
the appellant's side in the controversy as shown by his own
testimony", would not vitiate the judgment.13If the court did not
recite in the decision the testimony of each witness for, or each
item of evidence presented by, the defeated party, it does not mean
that the court has overlooked such testimony or such item of
evidence.14At any rate, the legal presumptions are that official
duty has been regularly performed, and that all the matters within
an issue in a case were laid before the court and passed upon by
it.15 Findings of fact, which the Court of Appeals is required to
make, maybe defined as "the written statement of the ultimate facts
as found by the court ... and essential to support the decision and
judgment rendered thereon".16They consist of the
court's"conclusions"withrespect to the determinative facts in
issue".17A question of law, upon the other hand, has been declared
as "one which does not call for an examination of the probative
value of the evidence presented by the parties."18 2. By statute,
"only questions of law may be raised" in an appeal by certiorari
from a judgment of the Court of Appeals.19That judgment is
conclusive as to the facts. It is not appropriately the business of
this Court to alter the facts or to review the questions of fact.20
With these guideposts, we now face the problem of whether the
findings of fact of the Court of Appeals support its judgment. 3.
Was Carrascoso entitled to the first class seat he claims? It is
conceded in all quarters that on March 28, 1958 he paid to and
received from petitioner a first class ticket. But petitioner
asserts that said ticket did not represent the true and complete
intent and agreement of the parties; that said respondent knew that
he did not have confirmed reservations for first class on any
specific flight, although he had tourist class protection; that,
accordingly, the issuance of a first class ticket was no guarantee
that he would have a first class ride, but that such would depend
upon the availability of first class seats. These are matters which
petitioner has thoroughly presented and discussed in its brief
before the Court of Appeals under its third assignment of error,
which reads: "The trial court erred in finding that plaintiff had
confirmed reservations for, and a right to, first class seats on
the "definite" segments of his journey, particularly that from
Saigon to Beirut".21 And, the Court of Appeals disposed of this
contention thus: Defendant seems to capitalize on the argument that
the issuance of a first-class ticket was no guarantee that the
passenger to whom the same had been issued, would be accommodated
in the first-class compartment, for as in the case of plaintiff he
had yet to make arrangements upon arrival at every station for the
necessary first-class reservation. We are not impressed by such a
reasoning. We cannot understand how a reputable firm like defendant
airplane company could have the indiscretion to give out tickets it
never meant to honor at all. It received the corresponding amount
in payment of first-class tickets and yet it allowed the passenger
to be at the mercy of its employees. It is more in keeping with the
ordinary course of business that the company should know whether or
riot the tickets it issues are to be honored or not.22 Not that the
Court of Appeals is alone. The trial court similarly disposed of
petitioner's contention, thus: On the fact that plaintiff paid for,
and was issued a "First class" ticket, there can be no question.
Apart from his testimony, see plaintiff's Exhibits "A", "A-1", "B",
"B-1," "B-2", "C" and "C-1", and defendant's own witness, Rafael
Altonaga, confirmed plaintiff's testimony and testified as
follows:Q. In these tickets there are marks "O.K." From what you
know, what does this OK mean?A. That the space is confirmed.Q.
Confirmed for first class?A. Yes, "first class". (Transcript, p.
169)x x x x x x x x x Defendant tried to prove by the testimony of
its witnesses Luis Zaldariaga and Rafael Altonaga that although
plaintiff paid for, and was issued a "first class" airplane ticket,
the ticket was subject to confirmation in Hongkong. The court
cannot give credit to the testimony of said witnesses. Oral
evidence cannot prevail over written evidence, and plaintiff's
Exhibits "A", "A-l", "B", "B-l", "C" and "C-1" belie the testimony
of said witnesses, and clearly show that the plaintiff was issued,
and paid for, a first class ticket without any reservation
whatever. Furthermore, as hereinabove shown, defendant's own
witness Rafael Altonaga testified that the reservation for a "first
class" accommodation for the plaintiff was confirmed. The court
cannot believe that after such confirmation defendant had a verbal
understanding with plaintiff that the "first class" ticket issued
to him by defendant would be subject to confirmation in Hongkong.23
We have heretofore adverted to the fact that except for a slight
difference of a few pesos in the amount refunded on Carrascoso's
ticket, the decision of the Court of First Instance was affirmed by
the Court of Appealsin all other respects. We hold the view that
such a judgment of affirmance has merged the judgment of the lower
court.24Implicit in that affirmance is a determination by the Court
of Appeals that the proceeding in the Court of First Instance was
free from prejudicial error and "all questions raised by the
assignments of error and all questions that might have been raised
are to be regarded as finally adjudicated against the appellant".
So also, the judgment affirmed "must be regarded as free from all
error".25We reached this policy construction because nothing in the
decision of the Court of Appeals on this point would suggest that
its findings of fact are in any way at war with those of the trial
court. Nor was said affirmance by the Court of Appeals upon a
ground or grounds different from those which were made the basis of
the conclusions of the trial court.26 If, as petitioner
underscores, a first-class-ticket holder is not entitled to a first
class seat, notwithstanding the fact that seat availability in
specific flights is therein confirmed, then an air passenger is
placed in the hollow of the hands of an airline. What security then
can a passenger have? It will always be an easy matter for an
airline aided by its employees, to strike out the very stipulations
in the ticket, and say that there was a verbal agreement to the
contrary. What if the passenger had a schedule to fulfill? We have
long learned that, as a rule, a written document speaks a uniform
language; that spoken word could be notoriously unreliable. If only
to achieve stability in the relations between passenger and air
carrier, adherence to the ticket so issued is desirable. Such is
the case here. The lower courts refused to believe the oral
evidence intended to defeat the covenants in the ticket. The
foregoing are the considerations which point to the conclusion that
there are facts upon which the Court of Appeals predicated the
finding that respondent Carrascoso had a first class ticket and was
entitled to a first class seat at Bangkok, which is a stopover in
the Saigon to Beirut leg of the flight.27We perceive no "welter of
distortions by the Court of Appeals of petitioner's statement of
its position", as charged by petitioner.28Nor do we subscribe to
petitioner's accusation that respondent Carrascoso "surreptitiously
took a first class seat to provoke an issue".29And this because, as
petitioner states, Carrascoso went to see the Manager at his office
in Bangkok "to confirm my seat and because from Saigon I was told
again to see the Manager".30Why, then, was he allowed to take a
first class seat in the plane at Bangkok, if he had no seat? Or, if
another had a better right to the seat? 4. Petitioner assails
respondent court's award of moral damages. Petitioner's trenchant
claim is that Carrascoso's action is planted upon breach of
contract; that to authorize an award for moral damages there must
be an averment of fraud or bad faith;31and that the decision of the
Court of Appeals fails to make a finding of bad faith. The pivotal
allegations in the complaint bearing on this issue are:3. That ...
plaintiff entered into acontractof air carriage with the Philippine
Air Lines for a valuable consideration, the latter acting as
general agents for and in behalf of the defendant, under which said
contract, plaintiff was entitled to, as defendant agreed to furnish
plaintiff, First Class passage on defendant's plane during the
entire duration of plaintiff's tour of Europe with Hongkong as
starting point up to and until plaintiff's return trip to Manila,
... .4. That, during the first two legs of the trip from Hongkong
to Saigon and from Saigon to Bangkok, defendant furnished to the
plaintiff First Class accommodation but only after protestations,
arguments and/or insistence were made by the plaintiff with
defendant's employees.5. That finally, defendantfailed to
provideFirst Class passage, but instead furnished plaintiff
onlyTouristClass accommodations from Bangkok to Teheran and/or
Casablanca, ... the plaintiff has beencompelledby defendant's
employees to leave the First Class accommodation berths at
Bangkokafter he was already seated.6. That consequently, the
plaintiff, desiring no repetition of the inconvenience and
embarrassments brought by defendant's breach of contract was forced
to take a Pan American World Airways plane on his return trip from
Madrid to Manila.32x x x x x x x x x 2. That likewise, as a result
of defendant's failure to furnish First Class accommodations
aforesaid, plaintiff suffered inconveniences, embarrassments, and
humiliations, thereby causing plaintiff mental anguish, serious
anxiety, wounded feelings, social humiliation, and the like injury,
resulting in moral damages in the amount of P30,000.00.33x x x x x
x x x x The foregoing, in our opinion, substantially aver:First,
That there was a contract to furnish plaintiff a first class
passage covering, amongst others, the Bangkok-Teheran leg;Second,
That said contract was breached when petitioner failed to furnish
first class transportation at Bangkok; andThird,that there was bad
faith when petitioner's employee compelled Carrascoso to leave his
first class accommodation berth"after he was already, seated"and to
take a seat in the tourist class, by reason of which he suffered
inconvenience, embarrassments and humiliations, thereby causing him
mental anguish, serious anxiety, wounded feelings and social
humiliation, resulting in moral damages. It is true that there is
no specific mention of the termbad faithin the complaint. But, the
inference of bad faith is there, it may be drawn from the facts and
circumstances set forth therein.34The contract was averred to
establish the relation between the parties. But the stress of the
action is put on wrongful expulsion. Quite apart from the foregoing
is that (a) right the start of the trial, respondent's counsel
placed petitioner on guard on what Carrascoso intended to prove:
That while sitting in the plane in Bangkok, Carrascoso wasoustedby
petitioner's manager who gave his seat to a white man;35and (b)
evidence of bad faith in the fulfillment of the contract was
presented without objection on the part of the petitioner. It is,
therefore, unnecessary to inquire as to whether or not there is
sufficient averment in the complaint to justify an award for moral
damages. Deficiency in the complaint, if any, was cured by the
evidence. An amendment thereof to conform to the evidence is not
even required.36On the question of bad faith, the Court of Appeals
declared: That the plaintiff was forced out of his seat in the
first class compartment of the plane belonging to the defendant Air
France while at Bangkok, and was transferred to the tourist class
not only without his consent but against his will, has been
sufficiently established by plaintiff in his testimony before the
court, corroborated by the corresponding entry made by the purser
of the plane in his notebook which notation reads as follows:
"First-class passenger was forced to go to the tourist class
against his will, and that the captain refused to intervene", and
by the testimony of an eye-witness, Ernesto G. Cuento, who was a
co-passenger. The captain of the plane who was asked by the manager
of defendant company at Bangkok to intervene even refused to do so.
It is noteworthy that no one on behalf of defendant ever
contradicted or denied this evidence for the plaintiff. It could
have been easy for defendant to present its manager at Bangkok to
testify at the trial of the case, or yet to secure his disposition;
but defendant did neither.37 The Court of appeals further stated
Neither is there evidence as to whether or not a prior reservation
was made by the white man. Hence, if the employees of the defendant
at Bangkok sold a first-class ticket to him when all the seats had
already been taken, surely the plaintiff should not have been
picked out as the one to suffer the consequences and to be
subjected to the humiliation and indignity of being ejected from
his seat in the presence of others. Instead of explaining to the
white man the improvidence committed by defendant's employees, the
manager adopted the more drastic step of ousting the plaintiff who
was then safely ensconsced in his rightful seat. We are
strengthened in our belief that this probably was what happened
there, by the testimony of defendant's witness Rafael Altonaga who,
when asked to explain the meaning of the letters "O.K." appearing
on the tickets of plaintiff, said "that the space is confirmed for
first class. Likewise, Zenaida Faustino, another witness for
defendant, who was the chief of the Reservation Office of
defendant, testified as follows:"Q How does the person in the
ticket-issuing office know what reservation the passenger has
arranged with you?A They call us up by phone and ask for the
confirmation." (t.s.n., p. 247, June 19, 1959) In this connection,
we quote with approval what the trial Judge has said on this point:
Why did the, using the words of witness Ernesto G. Cuento, "white
man" have a "better right" to the seat occupied by Mr. Carrascoso?
The record is silent. The defendant airline did not prove "any
better", nay, any right on the part of the "white man" to the
"First class" seat that the plaintiff was occupying and for which
he paid and was issued a corresponding "first class" ticket. If
there was a justified reason for the action of the defendant's
Manager in Bangkok, the defendant could have easily proven it by
having taken the testimony of the said Manager by deposition, but
defendant did not do so; the presumption is that evidence willfully
suppressed would be adverse if produced [Sec. 69, par (e), Rules of
Court]; and, under the circumstances, the Court is constrained to
find, as it does find, that the Manager of the defendant airline in
Bangkok not merely asked but threatened the plaintiff to throw him
out of the plane if he did not give up his "first class" seat
because the said Manager wanted to accommodate, using the words of
the witness Ernesto G. Cuento, the "white man".38 It is really
correct to say that the Court of Appeals in the quoted portion
first transcribed did not use the term "bad faith". But can it be
doubted that the recital of facts therein points to bad faith? The
manager not only prevented Carrascoso from enjoying his right to a
first class seat; worse, he imposed his arbitrary will; he forcibly
ejected him from his seat, made him suffer the humiliation of
having to go to the tourist class compartment - just to give way to
another passenger whose right thereto has not been established.
Certainly, this is bad faith. Unless, of course, bad faith has
assumed a meaning different from what is understood in law. For,
"bad faith" contemplates a "state of mind affirmatively operating
with furtive design or with some motive of self-interest or will or
for ulterior purpose."39 And if the foregoing were not yet
sufficient, there is the express finding ofbad faithin the judgment
of the Court of First Instance, thus: The evidence shows that the
defendant violated its contract of transportation with plaintiff in
bad faith, with the aggravating circumstances that defendant's
Manager in Bangkok went to the extent of threatening the plaintiff
in the presence of many passengers to have him thrown out of the
airplane to give the "first class" seat that he was occupying to,
again using the words of the witness Ernesto G. Cuento, a "white
man" whom he (defendant's Manager) wished to accommodate, and the
defendant has not proven that this "white man" had any "better
right" to occupy the "first class" seat that the plaintiff was
occupying, duly paid for, and for which the corresponding "first
class" ticket was issued by the defendant to him.40 5. The
responsibility of an employer for the tortious act of its employees
need not be essayed. It is well settled in law.41For the willful
malevolent act of petitioner's manager, petitioner, his employer,
must answer. Article 21 of the Civil Code says: ART. 21. Any person
who willfully causes loss or injury to another in a manner that is
contrary to morals, good customs or public policy shall compensate
the latter for the damage. In parallel circumstances, we applied
the foregoing legal precept; and, we held that upon the provisions
of Article 2219 (10), Civil Code, moral damages are recoverable.42
6. A contract to transport passengers is quite different in kind
and degree from any other contractual relation.43And this, because
of the relation which an air-carrier sustains with the public. Its
business is mainly with the travelling public. It invites people to
avail of the comforts and advantages it offers. The contract of air
carriage, therefore, generates a relation attended with a public
duty. Neglect or malfeasance of the carrier's employees, naturally,
could give ground for an action for damages. Passengers do not
contract merely for transportation. They have a 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 rule or discourteous conduct on the
part of employees towards a passenger gives the latter an action
for damages against the carrier.44 Thus, "Where a steamship
company45had accepted a passenger's check, it was a breach of
contract and a tort, giving a right of action for its agent in the
presence of third persons to falsely notify her that the check was
worthless and demand payment under threat of ejection, though the
language used was not insulting and she was not ejected."46And
this, because, although the relation of passenger and carrier is
"contractual both in origin and nature" nevertheless "the act that
breaks the contract may be also a tort".47And in another case,
"Where a passenger on a railroad train, when the conductor came to
collect his fare tendered him the cash fare to a point where the
train was scheduled not to stop, and told him that as soon as the
train reached such point he would pay the cash fare from that point
to destination, there was nothing in the conduct of the passenger
which justified the conductor in using insulting language to him,
as by calling him a lunatic,"48and the Supreme Court of South
Carolina there held the carrier liable for the mental suffering of
said passenger.1awphl.nt Petitioner's contract with Carrascoso is
one attended with public duty. The stress of Carrascoso's action as
we have said, is placed upon his wrongful expulsion. This is a
violation of public duty by the petitioner air carrier a case
ofquasi-delict. Damages are proper. 7. Petitioner draws our
attention to respondent Carrascoso's testimony, thus Q You
mentioned about an attendant. Who is that attendant and purser?A
When we left already that was already in the trip I could not help
it. So one of the flight attendants approached me and requested
from me my ticket and I said, What for? and she said, "We will note
that you transferred to the tourist class". I said, "Nothing of
that kind. That is tantamount to accepting my transfer." And I also
said, "You are not going to note anything there because I am
protesting to this transfer".Q Was she able to note it?A No,
because I did not give my ticket.Q About that purser?A Well, the
seats there are so close that you feel uncomfortable and you don't
have enough leg room, I stood up and I went to the pantry that was
next to me and the purser was there. He told me, "I have recorded
the incident in my notebook." He read it and translated it to me
because it was recorded in French "First class passenger was forced
to go to the tourist class against his will, and that the captain
refused to intervene."Mr. VALTE I move to strike out the last part
of the testimony of the witness because the best evidence would be
the notes. Your Honor.COURT I will allow that as part of his
testimony.49 Petitioner charges that the finding of the Court of
Appeals that the purser made an entry in his notebook reading
"First class passenger was forced to go to the tourist class
against his will, and that the captain refused to intervene" is
predicated upon evidence [Carrascoso's testimony above] which is
incompetent. We do not think so. The subject of inquiry is not the
entry, but the ouster incident. Testimony on the entry does not
come within the proscription of the best evidence rule. Such
testimony is admissible.49a Besides, from a reading of the
transcript just quoted, when the dialogue happened, the impact of
the startling occurrence was still fresh and continued to be felt.
The excitement had not as yet died down. Statements then, in this
environment, are admissible as part of theres gestae.50For, they
grow "out of the nervous excitement and mental and physical
condition of the declarant".51The utterance of the purser regarding
his entry in the notebook was spontaneous, and related to the
circumstances of the ouster incident. Its trustworthiness has been
guaranteed.52It thus escapes the operation of the hearsay rule. It
forms part of theres gestae. At all events, the entry was made
outside the Philippines. And, by an employee of petitioner. It
would have been an easy matter for petitioner to have contradicted
Carrascoso's testimony. If it were really true that no such entry
was made, the deposition of the purser could have cleared up the
matter. We, therefore, hold that the transcribed testimony of
Carrascoso is admissible in evidence. 8. Exemplary damages are well
awarded. The Civil Code gives the court ample power to grant
exemplary damages in contracts and quasi- contracts. The only
condition is that defendant should have "acted in a wanton,
fraudulent, reckless, oppressive, or malevolent manner."53The
manner of ejectment of respondent Carrascoso from his first class
seat fits into this legal precept. And this, in addition to moral
damages.54 9. The right to attorney's fees is fully established.
The grant of exemplary damages justifies a similar judgment for
attorneys' fees. The least that can be said is that the courts
below felt that it is but just and equitable that attorneys' fees
be given.55We do not intend to break faith with the tradition that
discretion well exercised as it was here should not be disturbed.
10. Questioned as excessive are the amounts decreed by both the
trial court and the Court of Appeals, thus: P25,000.00 as moral
damages; P10,000.00, by way of exemplary damages, and P3,000.00 as
attorneys' fees. The task of fixing these amounts is primarily with
the trial court.56The Court of Appeals did not interfere with the
same. The dictates of good sense suggest that we give our
imprimatur thereto. Because, the facts and circumstances point to
the reasonableness thereof.57 On balance, we say that the judgment
of the Court of Appeals does not suffer from reversible error. We
accordingly vote to affirm the same. Costs against petitioner. So
ordered.Concepcion, C.J., Reyes, J.B.L., Barrera, Dizon, Regala,
Makalintal, Zaldivar and Castro, JJ., concur.Bengzon, J.P., J.,
took no part.Footnotes1Civil Case No. 38810, "Rafael Carrascoso,
plaintiff, vs. Air France, defendant," R.A., pp. 79-80.2C.A.-G.R.
No. 26522-R, "Rafael Carrascoso, plaintiff-appellee, vs. Air
France, defendant-appellant."3Appendix A, petitioner's brief, pp
146-147. See also R.A., pp. 66-67.4Petitioner's brief, p.
142.5Section 12, Article VIII, Constitution.6Section 1, Rule 36,
Rules of Court. See also Section 2, Rule 120, in reference to
judgments in criminal cases.7Sec. 4. Rule 51; Sec. 33(2), Judiciary
Act of 1948, as amended.8Edwards vs. McCoy, 22 Phil. 598, 601;
Yangco vs. Court of First Instance of Manila, et al., 29 Phil. 183,
191.9Braga vs. Millora, 3 Phil. 458, 465.10Id.11Aringo vs. Arena 14
Phil. 263, 266; emphasis supplied.12Reyes vs. People. 71 Phil. 598,
600.13People vs. Manigque 35 O.G., No. 94, pp. 1682, 1683, citing
Section 133 of the Code of Civil Procedure and Section 12, Art.
VIII, Constitution,supra.14Badger et al. vs. Boyd, 65 S.W. (2d),
pp. 601, 610.15Section 5, (m) and (o), Rule 131, Rules of
Court.16In re Good's Estate, 266 P. (2d), pp. 719, 729.17Badger et
al. vs. Boyd,supra.18Goduco vs. Court of Appeals, et al., L-17647,
February 28, 1964.19Section 2, Rule 45, Rules of Court, formerly
Section 2, Rule 46 of the Rules of Court.20Medel, et al. vs.
Calasanz, et al. L-14835, August 31, 1960; Astraquillo, et al. vs.
Javier, et al., L-20034, January 30, 1965.21Petitioner's brief in
the Court of Appeals, pp. 82-98.22Decision of the Court of Appeals,
Appendix A, petitioner's brief, pp. 148-149.23R.A., pp. 67, 73.245
B C.J.S., p. 295; 3 Am. Jur. p. 678.253 Am. Jur., pp. 677-678.26See
Garcia Valdez vs. Seterana Tuason, 40 Phil, 943, 951.27Carrascoso's
ticket, according to petitioner (brief, pp. 7-8), shows:Segment or
legCarrierFlight No.Date of Departure
1. Manila to HongkongPAL300AMarch 30
2. Hongkong to SaigonVN(Air Vietnam)693March 31
3. Saigon to BeirutAF(Air France)245March 31
28Petitioner's brief, p. 50; see alsoid., pp. 37 and 46.29Id.,
p. 103.30Ibid., p. 102.31Article 2220, Civil Code reads: "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."32R.A., p. 2-4; emphasis supplied.33R.A., P. 5; second cause
of action.34Copeland vs. Dunehoo et al., 138 S.E., 267, 270. See
also 25 C.J.S., pp. 758-759; 15 Am. Jur., pp. 766-767.35Statement
of Attorney Villegas for respondent Carrascoso in open court.
Respondent's brief, p. 33.36Section 5, Rule 10, Rules of Court, in
part reads: "SEC. 5.Amendment to conform to or authorize
presentation of evidence.When issues not raised by the pleadings
are tried by express or implied consent of the parties, they shall
be treated in all respects, as if they had been raised in the
pleadings. Such amendment of the pleadings as may be necessary to
cause them to conform to the evidence and to raise these issues may
be made upon motion of any party at any time, even after judgment;
but failure so to amend does not affect the result of the trial of
these issues ..."; Co Tiamco vs. Diaz, etc., et al., 75 Phil. 672,
679; J.M. Tuason & Co., Inc., etc. vs. Bolanos, 95 Phil. 106,
110.37Decision, Court of Appeals, Appendix A of petitioner's brief,
pp. 147-148.38Decision of the Court of Appeals, Appendix A of
petitioner's brief, pp. 147-151.39Words & Phrases, Perm. Ed.,
Vol. 5, p. 13, citing Warfield Natural Gas Co. vs. Allen, 59 S.W.
(2d) 534, 538.40R.A., p.74; emphasis supplied.41Article 2180, Civil
Code.42Philippine Refining Co. vs. Garcia, et al., L-21871 and
L-21962, September 27, 1966.43See Section 4, Chapter 3, Title VIII,
Civil Code.444 R.C.L., pp. 1174-1175.45An air carrier is a common
carrier; and air transportation is similar or analogous to land and
water transportation. Mendoza vs. Philippine Air Lines, Inc., 90
Phil. 836, 841-842.46Austro-American S.S. Co. vs. Thomas, 248 F.
231.47Id., p. 233.48Lipman vs. Atlantic Coast Line R. Co., 93 S.E.
714, 716.49Petitioner's brief, pp, 104-105.49aV Moran, Comments on
the Rules of Court, 1963 ed., p. 76.50Section 36, Rule 130, Rules
of Court.51IV Martin, Rules of Court in the Philippines, 1963 ed.,
p. 324.52Ibid.53Article 2232, Civil Code.54Article 2229, Civil
Code.55Article 2208, (1) and (11), Civil Code.56Coleongco vs.
Claparols, L-18616, March 31, 1964; Corpus vs. Cuaderno, et al.,
L-23721, March 31, 1965.57Cf.Yutuk vs. Manila Electric Company,
L-13016, May 31, 1961; Lopez et al. vs. Pan American World Airways,
L-22415, March 30, 1966.
Republic of the PhilippinesSUPREME COURTManilaEN BANCG.R. No.
108164 February 23, 1995FAR EAST BANK AND TRUST
COMPANY,petitioner,vs.THE HONORABLE COURT OF APPEALS, LUIS A. LUNA
and CLARITA S. LUNA,respondents.VITUG,J.:Some time in October 1986,
private respondent Luis A. Luna applied for, and was accorded, a
FAREASTCARD issued by petitioner Far East Bank and Trust Company
("FEBTC") at its Pasig Branch. Upon his request, the bank also
issued a supplemental card to private respondent Clarita S. Luna.In
August 1988, Clarita lost her credit card. FEBTC was forthwith
informed. In order to replace the lost card, Clarita submitted an
affidavit of loss. In cases of this nature, the bank's internal
security procedures and policy would appear to be to meanwhile so
record the lost card, along with the principal card, as a "Hot
Card" or "Cancelled Card" in its master file.On 06 October 1988,
Luis tendered adespedidalunch for a close friend, a
Filipino-American, and another guest at the Bahia Rooftop
Restaurant of the Hotel Intercontinental Manila. To pay for the
lunch, Luis presented his FAREASTCARD to the attending waiter who
promptly had it verified through a telephone call to the bank's
Credit Card Department. Since the card was not honored, Luis was
forced to pay in cash the bill amounting to P588.13. Naturally,
Luis felt embarrassed by this incident.In a letter, dated 11
October 1988, private respondent Luis Luna, through counsel,
demanded from FEBTC the payment of damages. Adrian V. Festejo, a
vice-president of the bank, expressed the bank's apologies to Luis.
In his letter, dated 03 November 1988, Festejo, in part, said:In
cases when a card is reported to our office as lost, FAREASTCARD
undertakes the necessary action to avert its unauthorized use (such
as tagging the card as hotlisted), as it is always our intention to
protect our cardholders.An investigation of your case however,
revealed that FAREASTCARD failed to inform you about its security
policy. Furthermore, an overzealous employee of the Bank's Credit
Card Department did not consider the possibility that it may have
been you who was presenting the card at that time (for which
reason, the unfortunate incident occurred).1Festejo also sent a
letter to the Manager of the Bahia Rooftop Restaurant to assure the
latter that private respondents were "very valued clients" of
FEBTC. William Anthony King, Food and Beverage Manager of the
Intercontinental Hotel, wrote back to say that the credibility of
private respondent had never been "in question." A copy of this
reply was sent to Luis by Festejo.Still evidently feeling
aggrieved, private respondents, on 05 December 1988, filed a
complaint for damages with the Regional Trial Court ("RTC") of
Pasig against FEBTC.On 30 March 1990, the RTC of Pasig, given the
foregoing factual settings, rendered a decision ordering FEBTC to
pay private respondents (a) P300,000.00 moral damages; (b)
P50,000.00 exemplary damages; and (c) P20,000.00 attorney's fees.On
appeal to the Court of Appeals, the appellate court affirmed the
decision of the trial court.Its motion for reconsideration having
been denied by the appellate court, FEBTC has come to this Court
with this petition for review.There is merit in this appeal.Inculpa
contractual, moral damages may be recovered where the defendant is
shown to have acted in bad faith or with malice in the breach of
the contract.2The Civil Code provides:Art. 2220. 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. (Emphasis
supplied)Bad faith, in this context, includesgross, but not simple,
negligence.3Exceptionally, in a contract ofcarriage, moral damages
are also allowed in case of death of a passenger attributable to
the fault (which is presumed4) of the common carrier.5Concededly,
the bank was remiss in indeed neglecting to personally inform Luis
of his own card's cancellation. Nothing in the findings of the
trial court and the appellate court, however, can sufficiently
indicate any deliberate intent on the part of FEBTC to cause harm
to private respondents. Neither could FEBTC's negligence in failing
to give personal notice to Luis be considered so gross as to amount
to malice or bad faith.Malice or bad faith implies a conscious and
intentional design to do a wrongful act for a dishonest purpose or
moral obliquity; it is different from the negative idea of
negligence in that malice or bad faith contemplates a state of mind
affirmatively operating with furtive design or ill will.6We are not
unaware of the