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TORTS CASE DIGEST SET 3 PAZ FORES vs. IRENEO MIRANDA [G.R. No.L-12163. March 4, 1959.] Reyes, JBL, J.: FACTS: Morning of March 22, 1953: The Accident - 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 hit the bridge wall. - One of the passengers on a jeepney driven by Eugenio Luga was respondent Miranda. - 5 passengers were injured, including the respondent who suffered a fracture of the upper right humerus. - What happened to Miranda after the accident? o taken to the National Orthopedic Hospital for treatment o later was subjected to a series of operations: May 23, 1953 (1st) - when wire loops were wound around the broken bones and screwed into place 2nd - effected to insert a metal splint 3rd - to remove such splint * At the time of the trial, it appears that respondent had not yet recovered the use of his right arm. - Luga the driver charged with serious physical injuries through reckless imprudence, and upon interposing a plea of guilty was sentenced accordingly (sa CFI Manila ito as far as i understood sakalatna details sa held) - Appellate court: o It rejected Petitioners contention that the evidence did not sufficiently establish the identity of the vehicle as that belonging to the petitioner because of the ff: Appellate court found, among other things, that it 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 "Dona Paz" painted below its windshield. 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 o Petitioners important 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 - Hence initial problem raised in this appeal was formulated "Is the approval of the Public Service Commission necessary for the sale of a public service vehicle even without conveying therewith the authority to operate the same?" ISSUE/S: A.) WON the approval of the Public Service Commission necessary for the sale of a public service vehicle even without conveying therewith the authority to operate the same? B.) WON moral damages can be recoverable in damage actions predicated on a breach of the contract of transportation HELD: A.) Assuming the dubious sale to be a fact, the Court of Appeals answered the query in the affirmative. The ruling should be upheld.
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- Section 20 of the Public Service Act (Commonwealth Act No. 146): "SEC. 20.Subject to established limitations and saving provisions to the contrary, it shall be unlawful for any public service or for the owner, lessee or operation thereof, without the previous approval and authority of the Commission previously had (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 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 or 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." Interpretation of the aforementioned was in Montoya vs. Ignacio: 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. - The line of reasoning of petitioner (contending that in those cases, the operator did not convey, by lease or by sale, the vehicle independently of his rights under the franchise.) does not find support in the law. o The provisions of the statute are clear and property, franchise, certificate, privileges or rights, or any part thereof of the owner or operator of the public service without approval or authorization 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. - The proviso contained in the aforequoted law, to the effect that nothing therein shall be construed "to prevent the transaction from being negotiated or completed 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 other proviso "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 of Indalecio de Torres vs. VisenteOna explains: "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 franchises enjoyed by every individual and company engaged in 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 freight from 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 for 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." -

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In Bachrach Motor Co. vs. Zamboanga Transportation Co.: that there may be a nunc pro tunc authorization which had 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.

B.) As to damages: 1.) Actual damages in this case: CFI Manila 10k award was reduced to 2k by CA 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 provide for the same, and since no appeal was interposed by said respondent, it was allegedly error for the Court of Appeals to award them motuproprio. Petitioner fails to note that attorney's fees are included in the concept of actual damaged under the Civil Code and may be awarded whenever the court deems it just and equitable (Art. 2208, Civil Code of the Philippines). SC sees no reason to alter these awards. 2.) As to Moral damages- SC ruled that same must be discarded. Moral damages are not recoverable in damage actions predicated 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; xxxxxxxxx ART. 2220.Willful injury to property may be a legal ground for awarding moral damages if the court should find that, under the circumstance, such damages are justly 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 articles 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 description 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 of quasi-delict in Act. 2176 of the Code expressly excludes the cases where there is a "preexisting contractual relation between the parties." "ART. 2176.Whoever by act or omission caused damage to another, there being fault or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no proexisting contractual relation between the parties, is called a quasi-delict and is governed by the provision 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 spouse, descendants and ascendants of the deceased passenger to "demand moral damages for mental anguish by reason of the death of the deceased" 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. SC think it is clear that the mere carelessness of the carrier's driver does not per se constitute or 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
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such malice to support the award of moral damages for breach of contract, therefore, without proof of bad faith or malice on the part of the defendant, as required by Art. 2220, would be to violate the clear provisions of the law, and constitute unwarranted judicial legislation. CAs invoking other cases was wrong. 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. Points by SC in this part: - Upon the other hand, the advantageous position of a party suing a carrier for breach of the contract of transportation explains, to some extent, the limitation 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 establish the fault of the carrier, or of his employees, and the burden is placed on the carrier to prove the it was due to an unforeseen event or to force majeure - 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 - The difference in conditions, defenses and proof, as well as the codal concept of quasi-delict as essentially extra contractual negligence, compel us to differentiate between action ex contractu, and actions quasi ex delicto, and prevent us from viewing the action for breach of contract as simultaneously embodying an action on tort. Neither 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 o THUS, the suggested theory 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 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 acted negligently (and not maliciously), and Art. 1762 speaks of negligence of 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 the 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, it the proximate cause thereof is the negligence of the common carrier, but the amount of damages shall be equitably reduced." o 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 consequence of the breach of the obligation, and which the parties have foreseen or could have reasonable foreseen at the time the obligation was constituted. o 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." - TEHERFORE, 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
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amount to malice; but that fact must be shown in evidence, from a mere finding that the contract was breached through negligence of the carrier's employees. **CA decision modified by eliminating the award of P5, 000.00 by way of moral damages. In all other respects, the judgment is affirmed. **

ALLIED BANKING CORPORATION, petitioner, vs. LIM SIO WAN, METROPOLITAN BANK AND TRUST CO., and PRODUCERS BANK,respondents.[G.R. No. 133179. March 27, 2008.] Facts: In November of 1983, Lim Sio Wan deposited with Allied Banking Corporation a money market placement of PhP1,152,597.35 for a term of 31 days to mature on December 15, 1983. On December 5, 1983, a person claiming to be Lim Sio Wan called up Cristina So, an officer of Allied, and instructed the latter to pre-terminate Lim SioWan's money market placement, to issue a manager's check representing the proceeds of the placement, and to give the check to one Deborah Dee Santos who would pick up the check. Lim Sio Wan described the appearance of Santos so that So could easily identify her. Later, Santos arrived at the bank and signed the application form for a manager's check to be issued.The bank issued Manager's Check No. 035669 for PhP1,158,648.49, representing the proceeds of Lim SioWan's money market placement in the name of Lim Sio Wan, as payee. The check was cross-checked "For Payee's Account Only" and given to Santos. Thereafter, the manager's check was deposited in the account of Filipinas Cement Corporation (FCC) at Metropolitan Bank and Trust Co.,with the forged signature of Lim Sio Wan as indorser. Earlier, on September 21, 1983, FCC had deposited a money market placement for PhP2 million with Producers Bank. Santos was the money market trader assigned to handle FCC's account. Such deposit is evidenced by Official Receipt No. 317568 and a Letter dated September 21, 1983 of Santos addressed to Angie Lazo of FCC, acknowledging receipt of the placement.The placement matured on October 25, 1983 and was rolled-over until December 5, 1983 as evidenced by a Letter dated October 25, 1983. When the placement matured, FCC demanded the payment of the proceeds of the placement. On December 5, 1983, the same date that So received the phone call instructing her to pre-terminate Lim SioWan's placement, the manager's check in the name of Lim Sio Wan was deposited in the account of FCC, purportedly representing the proceeds of FCC's money market placement with Producers Bank. In other words, the Allied check was deposited with Metrobank in the account of FCC as Producers Bank's payment of its obligation to FCC. To clear the check and in compliance with the requirements of the Philippine Clearing House Corporation (PCHC) Rules and Regulations, Metrobank stamped a guaranty on the check, which reads: "All prior endorsements and/or lack of endorsement guaranteed." The check was sent to Allied through the PCHC. Upon the presentment of the check, Allied funded the check even without checking the authenticity of Lim SioWan's purported indorsement. Thus, the amount on the face of the check was credited to the account of FCC. On December 9, 1983, Lim Sio Wan deposited with Allied a second money market placement to mature on January 9, 1984. On December 14, 1983, upon the maturity date of the first money market placement, Lim Sio Wan went to Allied to withdraw it. She was then informed that the placement had been pre-terminated upon her instructions. She denied giving any instructions and receiving the proceeds thereof. She desisted from further complaints when she was assured by the bank's manager that her money would be recovered. When Lim SioWan's second placement matured on January 9, 1984, So called Lim Sio Wan to ask for the latter's instructions on the second placement. Lim Sio Wan instructed So to roll-over the placement for another 30 days. On January 24, 1984, Lim Sio Wan, realizing that the promise that her money would be recovered would not materialize, sent a demand letter to Allied asking for the payment of the first placement. Allied refused to pay
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Lim Sio Wan, claiming that the latter had authorized the pre-termination of the placement and its subsequent release to Santos. RTCs Decision: For Allied Bank to pay Lim Sio Wan plus damages and atty. fees Allied Banks cross-claim against Metrobank is DISMISSED. Metrobanks third-party complaint as against Filipinas Cement Corporation is DISMISSED Filipinas Cement Corporations fourth-party complaint against Producers Bank is DISMISSED Court of Appeals Decision: CA Modified the decision by making Allied Banking Corporation to pay 60% and Metropolitan Bank and Trust Company 40% Issue: WON Allied Bank should be solely liable to Lim Sio Wan Held: Producers Bank must be held liable to Allied and Metrobank for the amount of the check which Allied and Metrobank are adjudged to pay Lim Sio Wan based on a proportion of 60:40.Lim Sio Wan, as creditor of the bank for her money market placement, is entitled to payment upon her request, or upon maturity of the placement, or until the bank is released from its obligation as debtor. Until any such event, the obligation of Allied to Lim Sio Wan remains unextinguished. In the instant case, the trial court correctly found Allied negligent in issuing the manager's check and in transmitting it to Santos without even a written authorization. In fact, Allied did not even ask for the certificate evidencing the money market placement or call up Lim Sio Wan at her residence or office to confirm her instructions. Both actions could have prevented the whole fraudulent transaction from unfolding. Allied's negligence must be considered as the proximate cause of the resulting loss. The liability of Allied, however, is concurrent with that of Metrobank as the last indorser of the check. When Metrobank indorsed the check in compliance with the PCHC Rules and Regulations without verifying the authenticity of Lim SioWan'sindorsement and when it accepted the check despite the fact that it was cross-checked payable to payee's account only, its negligent and cavalier indorsement contributed to the easier release of Lim SioWan's money and perpetuation of the fraud. Given the relative participation of Allied and Metrobank to the instant case, both banks cannot be adjudged as equally liable. Hence, the60:40 ratio of the liabilities of Allied and Metrobank, as ruled by the CA, must be upheld. Considering however that Producers Bank was unjustly enriched at the expense of Lim Sio Wan, Producers Bank should reimburse Allied and Metrobank for the amounts the two latter banks are ordered to pay Lim Sio Wan. With the paymentof FCCsmoney market placement and interest in Producers Banks indebtedness to FCC was extinguished, thereby benefitting the former. Clearly, Producers Bank was unjustly enriched at the expense of the other. [G.R. No. 108164. February 23, 1995.] FAR EAST BANK AND TRUST COMPANY, petitioner, vs. THE HONORABLE COURT OF APPEALS, LUIS A. LUNA and CLARITA S. LUNA, respondents. CAUSE OF ACTION: Civil action for damages NATURE OF THE CASE: Petition for review. FACTS: In October 1986, 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 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
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card, as a "Hot Card" or "Cancelled Card" in its master file.On 06 October 1988, Luis tendered a despedidalunch for a close friend, a Fil-Am, and another guest at the Bahia Rooftop Restaurant of the Hotel Intercon 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 Oct. 1988, Luis Luna, through counsel, demanded from FEBTC the payment of damages. Adrian V. Festejo, a VP of the bank, expressed the bank's apologies to Luis in his letter which stated that: In cases when a card is reported to our office as lost, FAREASTCARD undertakes the necessary action to avert its unauthorized use to protect its cardholders. However, it failed to inform him 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 him who was presenting the card at that time (for which reason, the unfortunate incident occurred). Festejo also sent a letter to the Manager of the Bahia Rooftop Restaurant to assure the latter that Luis was a very valued clients" of FEBTC. William Anthony King, F&B Manager of the Intercon, wrote back to say that the credibility of Luis had never been "in question." A copy of this reply was sent to Luis by Festejo. Still evidently feeling aggrieved, Luis filed a complaint for damages with the RTC of Pasig against FEBTC. Regional Trial Court of Pasig: Ordered 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. Court of Appeals: 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. ISSUE: Whether or not the petitioner is entitled to moral and exemplary damages. HELD: NO. In culpa 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. The 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. Bad faith, in this context, includes gross, but not simple, negligence. Exceptionally, in a contract of carriage, moral damages are also allowed in case of death of a passenger attributable to the fault (which is presumed) of the common carrier. Concededly, 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. Article 21 states: 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. Article 21 of the Code, it should be observed, contemplates a conscious act to cause harm. Thus, even if we are to assume that the provision could properly relate to a breach of contract, its application can be warranted only when the defendant's disregard of his contractual obligation is so deliberate as to approximate a degree of misconduct certainly no less worse than fraud or bad faith. Most importantly, Article 21 is a mere declaration of a general principle in human relations that clearly must, in any case, give way to the specific provision of Article 2220 of the Civil Code authorizing the grant of moral damages in culpa contractual solely when the breach is due to fraud or bad faith.
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Fores vs. Mirandaexplained with great clarity the predominance that we should give to Article 2220 in contractual relations; we quote: Anent the moral damages ordered to be paid to the respondent, the same must be discarded. We have repeatedly ruled that moral damages are not recoverable in damage actions predicated 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; xxxxxxxxx Art. 2220. Wilful 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. By contrasting the provisions of these two articles 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 contractual breach, but because the definition of quasi-delict in Art. 2176 of the Code expressly excludes the cases where there is a "preexisitng contractual relations 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 done. Such fault or negligence, if there is no pre-existing contractualrelation 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 spouse, descendants and ascendants of the deceased passenger to "demand moral damages for mental anguish by reason of the death of the deceased. 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 not per se constitute or 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.2220, would be to violate the clear provisions of the law, and constitute unwarranted judicial legislation. 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 the 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. The Court has not in the process overlooked another rule that a quasi-delict can be the cause for breaching a contract that might thereby permit the application of applicable principles on torteven where there is a pre-existing contract between the plaintiff and the defendant This doctrine, unfortunately, cannot improve private respondents'
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case for it can aptly govern only where the act or omission complained of would constitute an actionable tort independently of the contract. The test (whether a quasi-delict can be deemed to underlie the breach of a contract) can be stated thusly: Where, without a pre-existing contract between two parties, an act or omission can nonetheless amount to an actionable tort by itself, the fact that the parties are contractually bound is no bar to the application of quasi-delict provisions to the case. Here, private respondents' damage claim is predicated solely on their contractual relationship; without such agreement, the act or omission complained of cannot by itself be held to stand as a separate cause of action or as an independent actionable tort. Exemplary or corrective damages, in turn, are intended to serve as an example or as correction for the public good in addition to moral, temperate, liquidated or compensatory damages (Art. 2229, Civil Code. In criminal offenses, exemplary damages are imposed when the crime is committed with one or more aggravating circumstances (Art. 2230, Civil Code). In quasi-delicts, such damages are granted if the defendant is shown to have been so guilty of gross negligence as to approximate malice. In contracts and quasi-contracts, the court may award exemplary damages if the defendant is found to have acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner (Art. 2232, Civil Code). Given the above premises and the factual circumstances here obtaining, it would also be just as arduous to sustain the exemplary damages granted by the courts below. Nevertheless, the bank's failure, even perhaps inadvertent, to honor its credit card issued to private respondent Luis should entitle him to recover a measure of damages sanctioned under Article 2221 of the Civil Code providing thusly: Art. 2221. Nominal damages are adjudicated in order that a right of the plaintiff, which has been violated or invaded by the defendant, may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered by him. Reasonable attorney's fees may be recovered where the court deems such recovery to be just and equitable (Art. 2208, Civil Code). We see no issue of sound discretion on the part of the appellate court in allowing the award thereof by the trial court. DISPOSITION: The appealed decision is MODIFIED by deleting the award of moral and exemplary damages to private respondents; in its stead, petitioner is ordered to pay private respondent Luis A. Luna an amount of P5,000.00 by way of nominal damages. In all other respects, the appealed decision is AFFIRMED. AIR FRANCEvs. RAFAEL CARRASCOSO and THE HONORABLE COURT OF APPEALS G.R. No.L-21438. September 28, 1966. SANCHEZ, J p: FACTS: Plaintiff, a civil engineer, was a member of a group of 48 Filipino pilgrims that left Manila for Lourdes on March 30, 1958.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 traveled 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' and plaintiff reluctantly gave his 'first class' seat in the plane. CFI Ruling: The Court of First Instance of Manila 1 sentenced 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.
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CA Ruling: On appeal, the 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. Hence this petition for review on certiorari. Issue: Whether or not Carrasco is entitled to the 1st Class Seat and to award of damages. Held: YES. On CA's decision Air France charges that CA failed to make complete findings of fact on all issues presented. SC says that so long as CA's decision contains the facts necessary to warrant its conclusions, there is nothing wrong in withholding any specific finding of facts with respect to the evidence for the defense. On the seat issue If 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. On the issue of award of damages 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; and Third, 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 term bad faith in the complaint. But, the inference of bad faith is there, it may be drawn from the facts and circumstances set forth therein. For the willful malevolent act of petitioner's manager, petitioner, his employer, must answer. As provided in Article 21 of the Civil Code says: 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, the court applied the foregoing legal precept; and, held that upon the provisions of Article 2219 (10), Civil Code, moral damages are recoverable. On Quasi Delict, Contract of Transportation A contract to transport passengers is quite different in kind and degree from any other contractual relation.And 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.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 of quasi-delict. Damages are proper. PSBA vs. CA
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205 SCRA 729 PONENTE: Padilla, J. FACTS: On August 30, 1985, Carlitos Bautista was stabbed on the second-floor premises of the Philippine School of Business Administration (PSBA). At the time of his death, Carlitos was enrolled in the third year commerce course at the PSBA. It was established that his assailants were not members of the school's academic community but were elements from outside the school. The parents of the deceased filed a suit in the Regional Trial Court of Manila presided over by Judge (now Court of Appeals justice) Regina Ordoez-Benitez, for damages against the said PSBA and its corporate officers. The suit impleaded the PSBA and the following school authorities: Juan D. Lim (President), Benjamin P. Paulino (Vice-President), Antonio M. Magtalas (Treasurer/Cashier), Col. Pedro Sacro (Chief of Security) and a Lt. M. Soriano (Assistant Chief of Security). The parents of Carlitos Bautista sought to adjudge them liable for the victim's untimely demise due to their alleged negligence, recklessness and lack of security precautions, means and methods before, during and after the attack on the victim. During the proceedings a quo, Lt. M. Soriano terminated his relationship with the other petitioners by resigning from his position in the school. Defendants a quo sought to have the suit dismissed, alleging that since they are presumably sued under Article 2180 of the Civil Code, the complaint states no cause of action against them, as jurisprudence on the subject is to the effect that academic institutions, such as the PSBA, are beyond the ambit of the rule in the afore-stated article. RTC DECISION: Denied motion to dismiss.Also denied motion for reconsideration. CA DECISION:Denied motion for reconsideration. The respondent appellate court primarily anchored its decision on the law ofquasi-delicts, as enunciated in Articles 2176 and 2180 of the Civil Code. At any rate, the law holds the teachers and heads of the school staff liable unless they relieve themselves of such liability pursuant to the last paragraph of Article 2180 by "proving that they observed all the diligence to prevent damage." This can only be done at a trial on the merits of the case. ISSUE: Whether or not PSBA and the school authorities can be held liable under Art.2176 and Art.2180 for quasi-delict. HELD: NO. Article 2180, in conjunction with Article 2176 of the Civil Code, establishes the rule of in loco parentis. In all such cases, it had been stressed that the law (Article 2180) plainly provides that the damage should have been caused or inflicted by pupils or students of he educational institution sought to be held liable for the acts of its pupils or students while in its custody. This material situation does not exist in the present case for, as earlier indicated, the assailants of Carlitos were not students of the PSBA. However, does the appellate court's failure to consider such material facts mean the exculpation of the petitioners from liability? It does not necessarily follow. When an academic institution accepts students for enrollment, there is established a contract between them, resulting in bilateral obligations which both parties are bound to comply with. For its part, the school undertakes to provide the student with an education that would presumably suffice to equip him with the necessary tools and skills to pursue higher education or a profession. On the other hand, the student covenants to abide by the school's academic requirements and observe its rules and regulations. Because the circumstances of the present case evince a contractual relation between the PSBA and Carlitos Bautista, the rules on quasi-delict do not really govern. There is, as yet, no finding that the contract between the school and Bautista had been breached thru the former's negligence in providing proper security measures. This would be for the trial court to determine. A contractual relation is a condition sine qua nonto the school's liability. The negligence of the school cannot exist independently of the contract, unless the negligence occurs under the circumstances set out in Article 21 of the Civil Code. WHEREFORE, the foregoing premises considered, the petition is DENIED. The court of origin (RTC, Manila, Br. 47) is hereby ordered to continue proceedings consistent with this ruling of the Court.
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CalalasvsSunga G.R. No. 122039. May 31, 2000 Facts: Eliza Jujeurche G. Sunga, a college freshman at the Siliman University, took a passenger jeepney owned and operated by petitioner Vicente Calalas. Sunga was given by the conductor an "extension seat," at the rear end of the vehicle. Sunga gave way to the outgoing passenger. Just as she was doing so, an Isuzu truck driven by Iglecerio Verena and owned by Francisco Salva bumped the left rear portion of the jeepney. Calalas jeep was improperly parked with its rear portion protruding from the board shoulder of the road (violation of LTTC). Passenger Sunga who was sited on wooden stool as extended seat alighted to give way to another passenger alighting from the inside and in the process he was bumped by an overtaking truck owned by Salinas. Sunga sued Calalas breach of carriage. Calalas sued Salvas Tort As a result, Sunga was injured and confinement in the hospital. Her attending physician certified she would remain on a cast for aperiod of three months and would have to ambulate in crutches during said period. Sunga filed a complaint for damages against Calalas, alleging violation of the contract of carriage. Calalas, on the other hand, filed a third-party complaint against Francisco Salva, the owner of the Isuzu truck. The lower court rendered judgment against Salva as third-party defendant and absolved Calalas of liability, holding that it was the driver of the Isuzu truck who was responsible for the accident. It took cognizance of another case, filed by Calalas against Salva and Verena, for quasi-delict, the same court held Salva and his driver Verena jointly liable to Calalas for the damage to his jeepney. On appeal to the Court of Appeals, the ruling of the lower court was reversed and dismissed the third-party complaint against Salva and adjudged Calalas liable for damages to Sunga. Hence this petition. Issues: (1)Whether or not the negligence of Verena was the proximate cause of the accident negates the liability and that to rule otherwise would be to make the common carrier an insurer of the safety of its passengers. (2) Whether or not that the bumping of the jeepney by the truck owned by Salva was a caso fortuito. (3) Whether or not the award of moral damages to Sunga is supported evidence. Held: (1)Finding Salva and his driver Verena liable for the damage to petitioner's jeepney, should be binding on Sunga. It is immaterial that the proximate cause of the collision between the jeepney and the truck was the negligence of the truck driver. The doctrine of proximate cause is applicable only in actions for quasi-delict, not in actions involving breach of contract. The doctrine is a device for imputing liability to a person where there is no relation between him and another party. In such a case, the obligation iscreated by law itself. But, where there is a pre-existing contractual relation between the parties, it is the parties themselves who create the obligation, and the function of the law is merely to regulate the relation thus created. Insofar as contracts of carriage are concerned, some aspects regulated by the Civil Code are those respecting the diligence required of common carriers with regard to the safety of passengers as well as the presumption of negligence in cases of death or injury to passengers. (2)This is also true of petitioner's contention that the jeepney being bumped while it was improperly parked constitutes caso fortuito. The jeepney was not properly parked, its rear portion being exposed about two meters from the broad shoulders of the highway, and facing the middle of the highway in a diagonal angle and that petitioner's driver took in more passengers than the allowed seating capacity of the jeepney. Petitionershould have foreseen the danger of parking his jeepney with its body protruding two meters into the highway. (3)In this case, there is no legal basis for awarding moral damages since there was no factual finding by the appellate court that petitioner acted in bad faith in theperformance of the contract of carriage. Sunga's contention that petitioner's admission in open court that the driver of the jeepney failed to assist her in going to a nearby hospital cannot be construed as an admission of bad faith. The fact that it was the driver of the Isuzu truck who took her to the hospital does not imply that petitioner was utterly indifferent to the plight of his injured passenger.
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If at all, it is merely implied recognition by Verena that he was the one at fault for the accident. for emphasis: Defense of proximate cause is not available in breach of contract of carriage: only in tort cases. Neither is the defense of caso fortuitous where it is attended to by negligence which in Calalas case were overloading and parking improperly which are violation of the LTTC. Moral damages cannot be award in the absence of any injury or factual basis. There must be pleading and proof of moral suffering, mental anguish, fright, wounded feelings ad similar injury. AMADO PICART v. FRANK SMITH, Jr. G.R. No. L-12219 March 15, 1918 CRITERION FOR DETERMINING EXISTENCE OF NEGLI-GENCE.The test for determining whether a person is negligent in doing an act whereby injury or damage results to the person or property of another is this: Would a prudent man, in the position of the person to whom negligence is attributed, foresee harm to the person injured as a reasonable consequence of the course about to be pursued. CONTRIBUTORY NEGLIGENCE;SUCCESSIVE NEGLIGENT ACTS.Where both parties are guilty of negligence, but the negligent act of one succeeds that of the other by an appreciable interval of time, the one who has the last reasonable opportunity to avoid the impending harm and fails to do so is chargeable with the consequences, without reference to the prior negligence of the other party. FACTS: Picart was riding a pony halfway through the Carlatan Bridge, San Fernando, La Union when Smith Jr. approached from the opposite direction at the rate of about 10 to 12 miles per hour (16-20 km/hr). As Smith neared the bridge, he saw a horseman on it and blew his horn to give warning of his approach. He blew his horn again twice as it appeared to him that the man on horseback before him was not observing the rule of the road. Picart being perturbed by the novelty of the apparition or the rapidity of the approach, he pulled the pony closely up against the railing on the right side of the bridge instead of going to the left. He says that the reason he did this was that he thought he did not have sufficient time to get over to the other side. The bridge is shown to have a length of about 75 meters and a width of 4.80 meters. As the automobile approached, the defendant guided it toward his left, that being the proper side of the road for the machine. In so doing the defendant assumed that the horseman would move to the other side. The pony had not as yet exhibited fright, and the rider had made no sign for the automobile to stop. Seeing that the pony was apparently quiet, the defendant, instead of veering to the right while yet some distance away or slowing down, continued to approach directly toward the horse without diminution of speed. When he had gotten quite near, there being then no possibility of the horse getting across to the other side, the defendant quickly turned his car sufficiently to the right to escape hitting the horse alongside of the railing where it was then standing. This however frightened the horse, it turned its body which caused its hind leg to be hit by the flange (bumper yata to) of the car. The limb being broken, Picart was thrown off the horse. TRIAL COURT RULING: From a judgment of the Court of First Instance of the Province of La Union absolving the defendant from liability the plaintiff has appealed CA: Same! ISSUE: WON the defendant in maneuvering his car in the manner above described was guilty of negligence such
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as gives rise to a civil obligation to repair the damage done WON the plaintiff's contributory negligence should absolve the defendant of liability HELD: YES. As the defendant started across the bridge, he had the right to assume that the horse and the rider would pass over to the proper side; but as he moved toward the center of the bridge it was demonstrated to his eyes that this would not be done; and he must in a moment have perceived that it was too late for the horse to cross with safety in front of the moving vehicle. In the nature of things this change of situation occurred while the automobile was yet some distance away; and from this moment it was not longer within the power of the plaintiff to escape being run down by going to a place of greater safety. The control of the situation had then passed entirely to the defendant; and it was his duty either to bring his car to an immediate stop or, seeing that there were no other persons on the bridge, to take the other side and pass sufficiently far away from the horse to avoid the danger of collision. NO. It goes without saying that the plaintiff himself was not free from fault, for he was guilty of antecedent negligence in planting himself on the wrong side of the road. But as we have already stated, the defendant was also negligent; and in such case the problem always is to discover which agent is immediately and directly responsible. Under these circumstances the law is that the person who has the last fair chance to avoid the impending harm and fails to do so is chargeable with the consequences, without reference to the prior negligence of the other party.

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