2.

Quasi Delict vs Breach of Contract

1.

Cangco vs Manila Railroad, 38 Phil 768

2.

Fores vs Miranda, 105 Phil 266

3.

Far East vs CA, 214 Scra 671

4.

Air France vs Carrascoso, 18 Scra 155

5.

PSBA vs CA, 205 Scra 729

6.

Syquia vs CA, 217 Scra 624

7.

Calalas vs Sunga, 332 Scra 356 (2000)

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-12191

October 14, 1918

JOSE CANGCO, plaintiff-appellant,

vs.
MANILA RAILROAD CO., defendant-appellee.
Ramon Sotelo for appellant.
Kincaid & Hartigan for appellee.

FISHER, J.:
At the time of the occurrence which gave rise to this litigation the plaintiff, Jose Cangco, was in the
employment of Manila Railroad Company in the capacity of clerk, with a monthly wage of P25. He
lived in the pueblo of San Mateo, in the province of Rizal, which is located upon the line of the
defendant railroad company; and in coming daily by train to the company's office in the city of Manila
where he worked, he used a pass, supplied by the company, which entitled him to ride upon the
company's trains free of charge. Upon the occasion in question, January 20, 1915, the plaintiff arose
from his seat in the second class-car where he was riding and, making, his exit through the door,
took his position upon the steps of the coach, seizing the upright guardrail with his right hand for
support.
On the side of the train where passengers alight at the San Mateo station there is a cement platform
which begins to rise with a moderate gradient some distance away from the company's office and
extends along in front of said office for a distance sufficient to cover the length of several coaches.
As the train slowed down another passenger, named Emilio Zuiga, also an employee of the railroad
company, got off the same car, alighting safely at the point where the platform begins to rise from the
level of the ground. When the train had proceeded a little farther the plaintiff Jose Cangco stepped
off also, but one or both of his feet came in contact with a sack of watermelons with the result that
his feet slipped from under him and he fell violently on the platform. His body at once rolled from the
platform and was drawn under the moving car, where his right arm was badly crushed and lacerated.
It appears that after the plaintiff alighted from the train the car moved forward possibly six meters
before it came to a full stop.
The accident occurred between 7 and 8 o'clock on a dark night, and as the railroad station was
lighted dimly by a single light located some distance away, objects on the platform where the
accident occurred were difficult to discern especially to a person emerging from a lighted car.
The explanation of the presence of a sack of melons on the platform where the plaintiff alighted is
found in the fact that it was the customary season for harvesting these melons and a large lot had
been brought to the station for the shipment to the market. They were contained in numerous sacks
which has been piled on the platform in a row one upon another. The testimony shows that this row
of sacks was so placed of melons and the edge of platform; and it is clear that the fall of the plaintiff

was due to the fact that his foot alighted upon one of these melons at the moment he stepped upon
the platform. His statement that he failed to see these objects in the darkness is readily to be
credited.
The plaintiff was drawn from under the car in an unconscious condition, and it appeared that the
injuries which he had received were very serious. He was therefore brought at once to a certain
hospital in the city of Manila where an examination was made and his arm was amputated. The
result of this operation was unsatisfactory, and the plaintiff was then carried to another hospital
where a second operation was performed and the member was again amputated higher up near the
shoulder. It appears in evidence that the plaintiff expended the sum of P790.25 in the form of
medical and surgical fees and for other expenses in connection with the process of his curation.
Upon August 31, 1915, he instituted this proceeding in the Court of First Instance of the city of
Manila to recover damages of the defendant company, founding his action upon the negligence of
the servants and employees of the defendant in placing the sacks of melons upon the platform and
leaving them so placed as to be a menace to the security of passenger alighting from the company's
trains. At the hearing in the Court of First Instance, his Honor, the trial judge, found the facts
substantially as above stated, and drew therefrom his conclusion to the effect that, although
negligence was attributable to the defendant by reason of the fact that the sacks of melons were so
placed as to obstruct passengers passing to and from the cars, nevertheless, the plaintiff himself
had failed to use due caution in alighting from the coach and was therefore precluded form
recovering. Judgment was accordingly entered in favor of the defendant company, and the plaintiff
appealed.
It can not be doubted that the employees of the railroad company were guilty of negligence in piling
these sacks on the platform in the manner above stated; that their presence caused the plaintiff to
fall as he alighted from the train; and that they therefore constituted an effective legal cause of the
injuries sustained by the plaintiff. It necessarily follows that the defendant company is liable for the
damage thereby occasioned unless recovery is barred by the plaintiff's own contributory negligence.
In resolving this problem it is necessary that each of these conceptions of liability, to-wit, the primary
responsibility of the defendant company and the contributory negligence of the plaintiff should be
separately examined.
It is important to note that the foundation of the legal liability of the defendant is the contract of
carriage, and that the obligation to respond for the damage which plaintiff has suffered arises, if at
all, from the breach of that contract by reason of the failure of defendant to exercise due care in its
performance. That is to say, its liability is direct and immediate, differing essentially, in legal viewpoint
from that presumptive responsibility for the negligence of its servants, imposed by article 1903 of the
Civil Code, which can be rebutted by proof of the exercise of due care in their selection and
supervision. Article 1903 of the Civil Code is not applicable to obligations arising ex contractu, but
only to extra-contractual obligations or to use the technical form of expression, that article relates
only toculpa aquiliana and not to culpa contractual.
Manresa (vol. 8, p. 67) in his commentaries upon articles 1103 and 1104 of the Civil Code, clearly
points out this distinction, which was also recognized by this Court in its decision in the case of
Rakes vs. Atlantic, Gulf and Pacific Co. (7 Phil. rep., 359). In commenting upon article 1093 Manresa
clearly points out the difference between "culpa, substantive and independent, which of itself
constitutes the source of an obligation between persons not formerly connected by any legal tie"
and culpa considered as an accident in the performance of an obligation already existing . . . ."

In the Rakes case (supra) the decision of this court was made to rest squarely upon the proposition
that article 1903 of the Civil Code is not applicable to acts of negligence which constitute the breach
of a contract.
Upon this point the Court said:
The acts to which these articles [1902 and 1903 of the Civil Code] are applicable are
understood to be those not growing out of pre-existing duties of the parties to one another.
But where relations already formed give rise to duties, whether springing from contract or
quasi-contract, then breaches of those duties are subject to article 1101, 1103, and 1104 of
the same code. (Rakes vs. Atlantic, Gulf and Pacific Co., 7 Phil. Rep., 359 at 365.)
This distinction is of the utmost importance. The liability, which, under the Spanish law, is, in certain
cases imposed upon employers with respect to damages occasioned by the negligence of their
employees to persons to whom they are not bound by contract, is not based, as in the English
Common Law, upon the principle of respondeat superior if it were, the master would be liable in
every case and unconditionally but upon the principle announced in article 1902 of the Civil Code,
which imposes upon all persons who by their fault or negligence, do injury to another, the obligation
of making good the damage caused. One who places a powerful automobile in the hands of a
servant whom he knows to be ignorant of the method of managing such a vehicle, is himself guilty of
an act of negligence which makes him liable for all the consequences of his imprudence. The
obligation to make good the damage arises at the very instant that the unskillful servant, while acting
within the scope of his employment causes the injury. The liability of the master is personal and
direct. But, if the master has not been guilty of any negligence whatever in the selection and
direction of the servant, he is not liable for the acts of the latter, whatever done within the scope of
his employment or not, if the damage done by the servant does not amount to a breach of the
contract between the master and the person injured.
It is not accurate to say that proof of diligence and care in the selection and control of the servant
relieves the master from liability for the latter's acts on the contrary, that proof shows that the
responsibility has never existed. As Manresa says (vol. 8, p. 68) the liability arising from extracontractual culpa is always based upon a voluntary act or omission which, without willful intent, but
by mere negligence or inattention, has caused damage to another. A master who exercises all
possible care in the selection of his servant, taking into consideration the qualifications they should
possess for the discharge of the duties which it is his purpose to confide to them, and directs them
with equal diligence, thereby performs his duty to third persons to whom he is bound by no
contractual ties, and he incurs no liability whatever if, by reason of the negligence of his servants,
even within the scope of their employment, such third person suffer damage. True it is that under
article 1903 of the Civil Code the law creates a presumption that he has been negligent in the
selection or direction of his servant, but the presumption is rebuttable and yield to proof of due care
and diligence in this respect.
The supreme court of Porto Rico, in interpreting identical provisions, as found in the Porto Rico
Code, has held that these articles are applicable to cases of extra-contractual culpa exclusively.
(Carmona vs. Cuesta, 20 Porto Rico Reports, 215.)
This distinction was again made patent by this Court in its decision in the case of Bahia vs. Litonjua
and Leynes, (30 Phil. rep., 624), which was an action brought upon the theory of the extracontractual liability of the defendant to respond for the damage caused by the carelessness of his
employee while acting within the scope of his employment. The Court, after citing the last paragraph
of article 1903 of the Civil Code, said:

From this article two things are apparent: (1) That when an injury is caused by the
negligence of a servant or employee there instantly arises a presumption of law that there
was negligence on the part of the master or employer either in selection of the servant or
employee, or in supervision over him after the selection, or both; and (2) that that
presumption is juris tantum and not juris et de jure, and consequently, may be rebutted. It
follows necessarily that if the employer shows to the satisfaction of the court that in selection
and supervision he has exercised the care and diligence of a good father of a family, the
presumption is overcome and he is relieved from liability.
This theory bases the responsibility of the master ultimately on his own negligence and not
on that of his servant. This is the notable peculiarity of the Spanish law of negligence. It is, of
course, in striking contrast to the American doctrine that, in relations with strangers, the
negligence of the servant in conclusively the negligence of the master.
The opinion there expressed by this Court, to the effect that in case of extra-contractual culpa based
upon negligence, it is necessary that there shall have been some fault attributable to the defendant
personally, and that the last paragraph of article 1903 merely establishes a rebuttable presumption,
is in complete accord with the authoritative opinion of Manresa, who says (vol. 12, p. 611) that the
liability created by article 1903 is imposed by reason of the breach of the duties inherent in the
special relations of authority or superiority existing between the person called upon to repair the
damage and the one who, by his act or omission, was the cause of it.
On the other hand, the liability of masters and employers for the negligent acts or omissions of their
servants or agents, when such acts or omissions cause damages which amount to the breach of a
contact, is not based upon a mere presumption of the master's negligence in their selection or
control, and proof of exercise of the utmost diligence and care in this regard does not relieve the
master of his liability for the breach of his contract.
Every legal obligation must of necessity be extra-contractual or contractual. Extra-contractual
obligation has its source in the breach or omission of those mutual duties which civilized society
imposes upon it members, or which arise from these relations, other than contractual, of certain
members of society to others, generally embraced in the concept of status. The legal rights of each
member of society constitute the measure of the corresponding legal duties, mainly negative in
character, which the existence of those rights imposes upon all other members of society. The
breach of these general duties whether due to willful intent or to mere inattention, if productive of
injury, give rise to an obligation to indemnify the injured party. The fundamental distinction between
obligations of this character and those which arise from contract, rests upon the fact that in cases of
non-contractual obligation it is the wrongful or negligent act or omission itself which creates
the vinculum juris, whereas in contractual relations the vinculum exists independently of the breach
of the voluntary duty assumed by the parties when entering into the contractual relation.
With respect to extra-contractual obligation arising from negligence, whether of act or omission, it is
competent for the legislature to elect and our Legislature has so elected whom such an
obligation is imposed is morally culpable, or, on the contrary, for reasons of public policy, to extend
that liability, without regard to the lack of moral culpability, so as to include responsibility for the
negligence of those person who acts or mission are imputable, by a legal fiction, to others who are in
a position to exercise an absolute or limited control over them. The legislature which adopted our
Civil Code has elected to limit extra-contractual liability with certain well-defined exceptions to
cases in which moral culpability can be directly imputed to the persons to be charged. This moral
responsibility may consist in having failed to exercise due care in the selection and control of one's
agents or servants, or in the control of persons who, by reason of their status, occupy a position of
dependency with respect to the person made liable for their conduct.

The position of a natural or juridical person who has undertaken by contract to render service to
another, is wholly different from that to which article 1903 relates. When the sources of the obligation
upon which plaintiff's cause of action depends is a negligent act or omission, the burden of proof
rests upon plaintiff to prove the negligence if he does not his action fails. But when the facts
averred show a contractual undertaking by defendant for the benefit of plaintiff, and it is alleged that
plaintiff has failed or refused to perform the contract, it is not necessary for plaintiff to specify in his
pleadings whether the breach of the contract is due to willful fault or to negligence on the part of the
defendant, or of his servants or agents. Proof of the contract and of its nonperformance is
sufficientprima facie to warrant a recovery.
As a general rule . . . it is logical that in case of extra-contractual culpa, a suing creditor
should assume the burden of proof of its existence, as the only fact upon which his action is
based; while on the contrary, in a case of negligence which presupposes the existence of a
contractual obligation, if the creditor shows that it exists and that it has been broken, it is not
necessary for him to prove negligence. (Manresa, vol. 8, p. 71 [1907 ed., p. 76]).
As it is not necessary for the plaintiff in an action for the breach of a contract to show that the breach
was due to the negligent conduct of defendant or of his servants, even though such be in fact the
actual cause of the breach, it is obvious that proof on the part of defendant that the negligence or
omission of his servants or agents caused the breach of the contract would not constitute a defense
to the action. If the negligence of servants or agents could be invoked as a means of discharging the
liability arising from contract, the anomalous result would be that person acting through the medium
of agents or servants in the performance of their contracts, would be in a better position than those
acting in person. If one delivers a valuable watch to watchmaker who contract to repair it, and the
bailee, by a personal negligent act causes its destruction, he is unquestionably liable. Would it be
logical to free him from his liability for the breach of his contract, which involves the duty to exercise
due care in the preservation of the watch, if he shows that it was his servant whose negligence
caused the injury? If such a theory could be accepted, juridical persons would enjoy practically
complete immunity from damages arising from the breach of their contracts if caused by negligent
acts as such juridical persons can of necessity only act through agents or servants, and it would no
doubt be true in most instances that reasonable care had been taken in selection and direction of
such servants. If one delivers securities to a banking corporation as collateral, and they are lost by
reason of the negligence of some clerk employed by the bank, would it be just and reasonable to
permit the bank to relieve itself of liability for the breach of its contract to return the collateral upon
the payment of the debt by proving that due care had been exercised in the selection and direction
of the clerk?
This distinction between culpa aquiliana, as the source of an obligation, and culpa contractual as a
mere incident to the performance of a contract has frequently been recognized by the supreme court
of Spain. (Sentencias of June 27, 1894; November 20, 1896; and December 13, 1896.) In the
decisions of November 20, 1896, it appeared that plaintiff's action arose ex contractu, but that
defendant sought to avail himself of the provisions of article 1902 of the Civil Code as a defense.
The Spanish Supreme Court rejected defendant's contention, saying:
These are not cases of injury caused, without any pre-existing obligation, by fault or
negligence, such as those to which article 1902 of the Civil Code relates, but of damages
caused by the defendant's failure to carry out the undertakings imposed by the
contracts . . . .
A brief review of the earlier decision of this court involving the liability of employers for damage done
by the negligent acts of their servants will show that in no case has the court ever decided that the

negligence of the defendant's servants has been held to constitute a defense to an action for
damages for breach of contract.
In the case of Johnson vs. David (5 Phil. Rep., 663), the court held that the owner of a carriage was
not liable for the damages caused by the negligence of his driver. In that case the court commented
on the fact that no evidence had been adduced in the trial court that the defendant had been
negligent in the employment of the driver, or that he had any knowledge of his lack of skill or
carefulness.
In the case of Baer Senior & Co's Successors vs. Compania Maritima (6 Phil. Rep., 215), the plaintiff
sued the defendant for damages caused by the loss of a barge belonging to plaintiff which was
allowed to get adrift by the negligence of defendant's servants in the course of the performance of a
contract of towage. The court held, citing Manresa (vol. 8, pp. 29, 69) that if the "obligation of the
defendant grew out of a contract made between it and the plaintiff . . . we do not think that the
provisions of articles 1902 and 1903 are applicable to the case."
In the case of Chapman vs. Underwood (27 Phil. Rep., 374), plaintiff sued the defendant to recover
damages for the personal injuries caused by the negligence of defendant's chauffeur while driving
defendant's automobile in which defendant was riding at the time. The court found that the damages
were caused by the negligence of the driver of the automobile, but held that the master was not
liable, although he was present at the time, saying:
. . . unless the negligent acts of the driver are continued for a length of time as to give the
owner a reasonable opportunity to observe them and to direct the driver to desist therefrom. .
. . The act complained of must be continued in the presence of the owner for such length of
time that the owner by his acquiescence, makes the driver's acts his own.
In the case of Yamada vs. Manila Railroad Co. and Bachrach Garage & Taxicab Co. (33 Phil. Rep.,
8), it is true that the court rested its conclusion as to the liability of the defendant upon article 1903,
although the facts disclosed that the injury complaint of by plaintiff constituted a breach of the duty to
him arising out of the contract of transportation. The express ground of the decision in this case was
that article 1903, in dealing with the liability of a master for the negligent acts of his servants "makes
the distinction between private individuals and public enterprise;" that as to the latter the law creates
a rebuttable presumption of negligence in the selection or direction of servants; and that in the
particular case the presumption of negligence had not been overcome.
It is evident, therefore that in its decision Yamada case, the court treated plaintiff's action as though
founded in tort rather than as based upon the breach of the contract of carriage, and an examination
of the pleadings and of the briefs shows that the questions of law were in fact discussed upon this
theory. Viewed from the standpoint of the defendant the practical result must have been the same in
any event. The proof disclosed beyond doubt that the defendant's servant was grossly negligent and
that his negligence was the proximate cause of plaintiff's injury. It also affirmatively appeared that
defendant had been guilty of negligence in its failure to exercise proper discretion in the direction of
the servant. Defendant was, therefore, liable for the injury suffered by plaintiff, whether the breach of
the duty were to be regarded as constituting culpa aquiliana or culpa contractual. As Manresa points
out (vol. 8, pp. 29 and 69) whether negligence occurs an incident in the course of the performance of
a contractual undertaking or its itself the source of an extra-contractual undertaking obligation, its
essential characteristics are identical. There is always an act or omission productive of damage due
to carelessness or inattention on the part of the defendant. Consequently, when the court holds that
a defendant is liable in damages for having failed to exercise due care, either directly, or in failing to
exercise proper care in the selection and direction of his servants, the practical result is identical in
either case. Therefore, it follows that it is not to be inferred, because the court held in the Yamada

case that defendant was liable for the damages negligently caused by its servants to a person to
whom it was bound by contract, and made reference to the fact that the defendant was negligent in
the selection and control of its servants, that in such a case the court would have held that it would
have been a good defense to the action, if presented squarely upon the theory of the breach of the
contract, for defendant to have proved that it did in fact exercise care in the selection and control of
the servant.
The true explanation of such cases is to be found by directing the attention to the relative spheres of
contractual and extra-contractual obligations. The field of non- contractual obligation is much more
broader than that of contractual obligations, comprising, as it does, the whole extent of juridical
human relations. These two fields, figuratively speaking, concentric; that is to say, the mere fact that
a person is bound to another by contract does not relieve him from extra-contractual liability to such
person. When such a contractual relation exists the obligor may break the contract under such
conditions that the same act which constitutes the source of an extra-contractual obligation had no
contract existed between the parties.
The contract of defendant to transport plaintiff carried with it, by implication, the duty to carry him in
safety and to provide safe means of entering and leaving its trains (civil code, article 1258). That
duty, being contractual, was direct and immediate, and its non-performance could not be excused by
proof that the fault was morally imputable to defendant's servants.
The railroad company's defense involves the assumption that even granting that the negligent
conduct of its servants in placing an obstruction upon the platform was a breach of its contractual
obligation to maintain safe means of approaching and leaving its trains, the direct and proximate
cause of the injury suffered by plaintiff was his own contributory negligence in failing to wait until the
train had come to a complete stop before alighting. Under the doctrine of comparative negligence
announced in the Rakes case (supra), if the accident was caused by plaintiff's own negligence, no
liability is imposed upon defendant's negligence and plaintiff's negligence merely contributed to his
injury, the damages should be apportioned. It is, therefore, important to ascertain if defendant was in
fact guilty of negligence.
It may be admitted that had plaintiff waited until the train had come to a full stop before alighting, the
particular injury suffered by him could not have occurred. Defendant contends, and cites many
authorities in support of the contention, that it is negligence per se for a passenger to alight from a
moving train. We are not disposed to subscribe to this doctrine in its absolute form. We are of the
opinion that this proposition is too badly stated and is at variance with the experience of every-day
life. In this particular instance, that the train was barely moving when plaintiff alighted is shown
conclusively by the fact that it came to stop within six meters from the place where he stepped from
it. Thousands of person alight from trains under these conditions every day of the year, and sustain
no injury where the company has kept its platform free from dangerous obstructions. There is no
reason to believe that plaintiff would have suffered any injury whatever in alighting as he did had it
not been for defendant's negligent failure to perform its duty to provide a safe alighting place.
We are of the opinion that the correct doctrine relating to this subject is that expressed in
Thompson's work on Negligence (vol. 3, sec. 3010) as follows:
The test by which to determine whether the passenger has been guilty of negligence in
attempting to alight from a moving railway train, is that of ordinary or reasonable care. It is to
be considered whether an ordinarily prudent person, of the age, sex and condition of the
passenger, would have acted as the passenger acted under the circumstances disclosed by
the evidence. This care has been defined to be, not the care which may or should be used
by the prudent man generally, but the care which a man of ordinary prudence would use

under similar circumstances, to avoid injury." (Thompson, Commentaries on Negligence, vol.

3, sec. 3010.)
Or, it we prefer to adopt the mode of exposition used by this court in Picart vs. Smith (37 Phil. rep.,
809), we may say that the test is this; Was there anything in the circumstances surrounding the
plaintiff at the time he alighted from the train which would have admonished a person of average
prudence that to get off the train under the conditions then existing was dangerous? If so, the plaintiff
should have desisted from alighting; and his failure so to desist was contributory negligence.
1awph!l.net

As the case now before us presents itself, the only fact from which a conclusion can be drawn to the
effect that plaintiff was guilty of contributory negligence is that he stepped off the car without being
able to discern clearly the condition of the platform and while the train was yet slowly moving. In
considering the situation thus presented, it should not be overlooked that the plaintiff was, as we
find, ignorant of the fact that the obstruction which was caused by the sacks of melons piled on the
platform existed; and as the defendant was bound by reason of its duty as a public carrier to afford
to its passengers facilities for safe egress from its trains, the plaintiff had a right to assume, in the
absence of some circumstance to warn him to the contrary, that the platform was clear. The place,
as we have already stated, was dark, or dimly lighted, and this also is proof of a failure upon the part
of the defendant in the performance of a duty owing by it to the plaintiff; for if it were by any
possibility concede that it had right to pile these sacks in the path of alighting passengers, the
placing of them adequately so that their presence would be revealed.
As pertinent to the question of contributory negligence on the part of the plaintiff in this case the
following circumstances are to be noted: The company's platform was constructed upon a level
higher than that of the roadbed and the surrounding ground. The distance from the steps of the car
to the spot where the alighting passenger would place his feet on the platform was thus reduced,
thereby decreasing the risk incident to stepping off. The nature of the platform, constructed as it was
of cement material, also assured to the passenger a stable and even surface on which to alight.
Furthermore, the plaintiff was possessed of the vigor and agility of young manhood, and it was by no
means so risky for him to get off while the train was yet moving as the same act would have been in
an aged or feeble person. In determining the question of contributory negligence in performing such
act that is to say, whether the passenger acted prudently or recklessly the age, sex, and
physical condition of the passenger are circumstances necessarily affecting the safety of the
passenger, and should be considered. Women, it has been observed, as a general rule are less
capable than men of alighting with safety under such conditions, as the nature of their wearing
apparel obstructs the free movement of the limbs. Again, it may be noted that the place was perfectly
familiar to the plaintiff as it was his daily custom to get on and of the train at this station. There could,
therefore, be no uncertainty in his mind with regard either to the length of the step which he was
required to take or the character of the platform where he was alighting. Our conclusion is that the
conduct of the plaintiff in undertaking to alight while the train was yet slightly under way was not
characterized by imprudence and that therefore he was not guilty of contributory negligence.
The evidence shows that the plaintiff, at the time of the accident, was earning P25 a month as a
copyist clerk, and that the injuries he has suffered have permanently disabled him from continuing
that employment. Defendant has not shown that any other gainful occupation is open to plaintiff. His
expectancy of life, according to the standard mortality tables, is approximately thirty-three years. We
are of the opinion that a fair compensation for the damage suffered by him for his permanent
disability is the sum of P2,500, and that he is also entitled to recover of defendant the additional sum
of P790.25 for medical attention, hospital services, and other incidental expenditures connected with
the treatment of his injuries.

The decision of lower court is reversed, and judgment is hereby rendered plaintiff for the sum of
P3,290.25, and for the costs of both instances. So ordered.
Arellano, C.J., Torres, Street and Avancea, JJ., concur.

Separate Opinions

MALCOLM, J., dissenting:

With one sentence in the majority decision, we are of full accord, namely, "It may be admitted that
had plaintiff waited until the train had come to a full stop before alighting, the particular injury
suffered by him could not have occurred." With the general rule relative to a passenger's contributory
negligence, we are likewise in full accord, namely, "An attempt to alight from a moving train is
negligence per se." Adding these two points together, should be absolved from the complaint, and
judgment affirmed.
Johnson, J., concur.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-12163

March 4, 1959

PAZ 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 a public service vehicle even without
conveying therewith the authority to operate the same?" Assuming the dubious sale 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
xxx

xxx

xxx

(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
of Montoya vs. Ignacio, *50 Off. Gaz. No. 1, p. 108; Timbol vs. Osias, et al., G. R. No. L-7547, April
30, 1955, and Medina 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.
The proviso contained 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 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. 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 of Bachrach Motor co. vs. Zamboanga Transportation Co.,
52 Phil., 244, that there may be a nunc pro tunc authorization 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 them motu 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;
xxx

xxx

xxx

Art. 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 of quasi-delict in Art. 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 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 not per se constitute 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 in Castro vs. Acro Taxicab Co., G.R. No. 49155,
December 14, 1948 and Layda 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 to force 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; Cangco vs. 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 of quasi-delict as
essentially extracontractual 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 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 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 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. 11701172); 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 Philippines

SUPREME COURT
Manila
EN BANC

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.

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 a despedida lunch 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). 1
Festejo 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.
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. 2 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.
(Emphasis supplied)
Bad faith, in this context, includes gross, but not simple, negligence. 3 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 4) of the common carrier. 5
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. 6
We are not unaware of the previous rulings of this Court, such as in American Express International,
Inc., vs.Intermediate Appellate Court (167 SCRA 209) and Bank of Philippine Islands
vs. Intermediate Appellate Court (206 SCRA 408), sanctioning the application of Article 21, in relation
to Article 2217 and Article 2219 7 of the Civil Code to a contractual breach similar to the case at bench.
Article 21 states:
Art. 21. Any person who wilfully 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.
Mr. Justice Jose B.L. Reyes, in his ponencia in Fores vs. Miranda 8 explained 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 (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 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;
xxx xxx xxx
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 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 spouse, descendants and ascendants of 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 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.
xxx xxx xxx
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 nonperformance 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 tort 9 even
where there is a pre-existing contract between the plaintiff and the defendant (Phil. Airlines vs. Court of
Appeals, 106 SCRA 143; Singson vs. Bank of Phil. Islands, 23 SCRA 1117; and Air France vs.
Carrascoso, 18 SCRA 155). This doctrine, unfortunately, cannot improve private respondents' 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.
The Court finds, therefore, the award of moral damages made by the court a quo, affirmed by the
appellate court, to be inordinate and substantially devoid of legal basis.

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; seePrudenciado vs. Alliance Transport System, 148 SCRA 440; Lopez vs. Pan American
World Airways, 16 SCRA 431). In criminal offenses, exemplary damages are imposed when the
crime is committed with one or more aggravating circumstances (Art. 2230, Civil Code). In quasidelicts, such damages are granted if the defendant is shown to have been so guilty of gross
negligence as to approximate malice (See Art. 2231, Civil Code; CLLC E.G. Gochangco Workers
Union vs. NLRC, 161 SCRA 655; Globe Mackay Cable and Radio Corp. vs. CA, 176 SCRA 778).
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; PNB vs. Gen. Acceptance and Finance Corp., 161 SCRA 449).
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 (see De Leon vs. Court of
Appeals, 165 SCRA 166).
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.
WHEREFORE, the petition for review is given due course. 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. No costs.
SO ORDERED.
Narvasa, C.J., Feliciano, Padilla, Bidin, Regalado, Davide, Jr., Romero, Bellosillo, Melo, Quiason,
Puno, Kapunan, Mendoza and Francisco, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-21438

September 28, 1966

AIR 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 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.
On appeal,2 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.
The case is now before us for review on certiorari.
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" 4 of 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". 5 This 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"; 6 and 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. 8 The law,
however, solely insists that a decision state the "essential ultimate facts" upon which the court's
conclusion is drawn. 9 A court of justice is not hidebound to write in its decision every bit and piece of
evidence 10 presented 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". 11 This
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". 12 Indeed,
"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 in Manigque, 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. 13 If 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. 14 At 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" with respect to the
determinative facts in issue". 17 A 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. 19 That 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)
xxx

xxx

xxx

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 "C1" 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 Appeals in 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". 25 We 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. 27 We perceive no "welter of distortions by the Court of Appeals of petitioner's statement of its
position", as charged by petitioner. 28 Nor do we subscribe to petitioner's accusation that respondent
Carrascoso "surreptitiously took a first class seat to provoke an issue". 29 And 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". 30 Why, 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;31 and 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 a contract of 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, defendant failed to provide First Class passage, but instead furnished plaintiff
only TouristClass accommodations from Bangkok to Teheran and/or Casablanca, ... the
plaintiff has been compelled by defendant's employees to leave the First Class
accommodation berths at Bangkok after 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.32
xxx

xxx

xxx

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 P30,000.00.33
xxx

xxx

xxx

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. 34 The 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 was ousted by petitioner's manager who gave his seat to a white man; 35 and (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. 36 On 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 of bad faith in 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. 41 For 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 company 45 had 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." 46 And 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". 47 And 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," 48 and
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 of quasi-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 the res gestae. 50 For, they
grow "out of the nervous excitement and mental and physical condition of the declarant". 51 The
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. 52 It thus escapes the
operation of the hearsay rule. It forms part of the res 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." 53 The 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. 55 We 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. 56 The
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.
Footnotes

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION

G.R. No. 84698 February 4, 1992

PHILIPPINE SCHOOL OF BUSINESS ADMINISTRATION, JUAN D. LIM, BENJAMIN P. PAULINO,
ANTONIO M. MAGTALAS, COL. PEDRO SACRO and LT. M. SORIANO, petitioners,
vs.
COURT OF APPEALS, HON. REGINA ORDOEZ-BENITEZ, in her capacity as Presiding Judge
of Branch 47, Regional Trial Court, Manila, SEGUNDA R. BAUTISTA and ARSENIA D.
BAUTISTA, respondents.
Balgos and Perez for petitioners.
Collantes, Ramirez & Associates for private respondents.

PADILLA, J.:
A stabbing incident on 30 August 1985 which caused the death of Carlitos Bautista while on the
second-floor premises of the Philippine School of Business Administration (PSBA) prompted the
parents of the deceased to file suit in the Regional Trial Court of Manila (Branch 47) presided over
by Judge (now Court of Appeals justice) Regina Ordoez-Benitez, for damages against the said
PSBA and its corporate officers. 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.
Specifically, 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). Substantially, the
plaintiffs (now private respondents) 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 (now petitioners) 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.
The respondent trial court, however, overruled petitioners' contention and thru an order dated 8
December 1987, denied their motion to dismiss. A subsequent motion for reconsideration was
similarly dealt with by an order dated 25 January 1988. Petitioners then assailed the trial court's
disposition before the respondent appellate court which, in a decision * promulgated on 10 June

1988, affirmed the trial court's orders. On 22 August 1988, the respondent appellate court resolved
to deny the petitioners' motion for reconsideration. Hence, this petition.
At the outset, it is to be observed that the respondent appellate court primarily anchored its decision
on the law ofquasi-delicts, as enunciated in Articles 2176 and 2180 of the Civil Code. 1 Pertinent
portions of the appellate court's now assailed ruling state:
Article 2180 (formerly Article 1903) of the Civil Code is an adoption from the old
Spanish Civil Code. The comments of Manresa and learned authorities on its
meaning should give way to present day changes. The law is not fixed and flexible
(sic); it must be dynamic. In fact, the greatest value and significance of law as a rule
of conduct in (sic) its flexibility to adopt to changing social conditions and its capacity
to meet the new challenges of progress.
Construed in the light of modern day educational system, Article 2180 cannot be
construed in its narrow concept as held in the old case of Exconde
vs. Capuno 2 and Mercado vs. Court of Appeals; 3hence, the ruling in the Palisoc 4 case
that it should apply to all kinds of educational institutions, academic or vocational.
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. 5
While we agree with the respondent appellate court that the motion to dismiss the complaint was
correctly denied and the complaint should be tried on the merits, we do not however agree with the
premises of the appellate court's ruling.
Article 2180, in conjunction with Article 2176 of the Civil Code, establishes the rule of in loco
parentis. This Court discussed this doctrine in the afore-cited cases of Exconde, Mendoza,
Palisoc and, more recently, in Amadora vs.Court of Appeals. 6 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. However, this material situation does not exist in the present case for, as
earlier indicated, the assailants of Carlitos were not students of the PSBA, for whose acts the school
could be made liable.
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. 7 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.
Institutions of learning must also meet the implicit or "built-in" obligation of providing their students
with an atmosphere that promotes or assists in attaining its primary undertaking of imparting
knowledge. Certainly, no student can absorb the intricacies of physics or higher mathematics or
explore the realm of the arts and other sciences when bullets are flying or grenades exploding in the
air or where there looms around the school premises a constant threat to life and limb. Necessarily,

the school must ensure that adequate steps are taken to maintain peace and order within the
campus premises and to prevent the breakdown thereof.
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. 8 A perusal of Article 2176 shows that obligations
arising from quasi-delicts or tort, also known as extra-contractual obligations, arise only between parties not otherwise bound by contract,
whether express or implied. However, this impression has not prevented this Court from determining the existence of a tort even when there
obtains a contract. In Air France vs. Carrascoso (124 Phil. 722), the private respondent was awarded damages for his unwarranted expulsion
from a first-class seat aboard the petitioner airline. It is noted, however, that the Court referred to the petitioner-airline's liability as one arising
from tort, not one arising from a contract of carriage. In effect, Air France is authority for the view that liability from tort may exist even if there
is a contract, for the act that breaks the contract may be also a tort. (Austro-America S.S. Co. vs. Thomas, 248 Fed. 231).

This view was not all that revolutionary, for even as early as 1918, this Court was already of a similar
mind. InCangco vs. Manila Railroad (38 Phil. 780), Mr. Justice Fisher elucidated thus:
The field of non-contractual obligation is much broader than that of contractual
obligation, comprising, as it does, the whole extent of juridical human relations.
These two fields, figuratively speaking, concentric; that is to say, the mere fact that a
person is bound to another by contract does not relieve him from extra-contractual
liability to such person. When such a contractual relation exists the obligor may break
the contract under such conditions that the same act which constitutes a breach of
the contract would have constituted the source of an extra-contractual obligation had
no contract existed between the parties.
Immediately what comes to mind is the chapter of the Civil Code on Human Relations, particularly
Article 21, which provides:
Any person who wilfully causes loss or injury to another in a manner that is contrary
to morals, good custom or public policy shall compensate the latter for the damage.
(emphasis supplied).
Air France penalized the racist policy of the airline which emboldened the petitioner's employee to
forcibly oust the private respondent to cater to the comfort of a white man who allegedly "had a
better right to the seat." In Austro-American, supra, the public embarrassment caused to the
passenger was the justification for the Circuit Court of Appeals, (Second Circuit), to award damages
to the latter. From the foregoing, it can be concluded that should the act which breaches a contract
be done in bad faith and be violative of Article 21, then there is a cause to view the act as
constituting a quasi-delict.
In the circumstances obtaining in the case at bar, however, 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. And, even if there
be a finding of negligence, the same could give rise generally to a breach of contractual obligation
only. Using the test of Cangco, supra, the negligence of the school would not be relevant absent a
contract. In fact, that negligence becomes material only because of the contractual relation between
PSBA and Bautista. In other words, a contractual relation is a condition sine qua non to 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.
This Court is not unmindful of the attendant difficulties posed by the obligation of schools, abovementioned, for conceptually a school, like a common carrier, cannot be an insurer of its students
against all risks. This is specially true in the populous student communities of the so-called
"university belt" in Manila where there have been reported several incidents ranging from gang wars
to other forms of hooliganism. It would not be equitable to expect of schools to anticipate all types of

violent trespass upon their premises, for notwithstanding the security measures installed, the same
may still fail against an individual or group determined to carry out a nefarious deed inside school
premises and environs. Should this be the case, the school may still avoid liability by proving that the
breach of its contractual obligation to the students was not due to its negligence, here statutorily
defined to be the omission of that degree of diligence which is required by the nature of the
obligation and corresponding to the circumstances of persons, time and place. 9
As the proceedings a quo have yet to commence on the substance of the private respondents'
complaint, the record is bereft of all the material facts. Obviously, at this stage, only the trial court
can make such a determination from the evidence still to unfold.
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.
Costs against the petitioners.
SO ORDERED.
Melencio-Herrera, Paras, Regalado and Nocon, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION

G.R. No. 98695 January 27, 1993

JUAN J. SYQUIA, CORAZON C. SYQUIA, CARLOTA C. SYQUIA, CARLOS C. SYQUIA and
ANTHONY C. SYQUIA, petitioners,
vs.
THE HONORABLE COURT OF APPEALS, and THE MANILA MEMORIAL PARK CEMETERY,
INC., respondents.
Pacis & Reyes Law Offices for petitioners.
Augusto S. San Pedro & Ari-Ben C. Sebastian for private respondents.

CAMPOS, JR., J.:

Herein petitioners, Juan J. Syquia and Corazon C. Syquia, Carlota C. Syquia, Carlos C. Syquia, and
Anthony Syquia, were the parents and siblings, respectively, of the deceased Vicente Juan Syquia.
On March 5, 1979, they filed a complaint 1 in the then Court of First Instance against herein private
respondent, Manila Memorial Park Cemetery, Inc. for recovery of damages arising from breach of contract
and/or quasi-delict. The trial court dismissed the complaint.
The antecedent facts, as gathered by the respondent Court, are as follows:
On March 5, 1979, Juan, Corazon, Carlota and Anthony all surnamed Syquia,
plaintiff-appellants herein, filed a complaint for damages against defendant-appellee,
Manila Memorial Park Cemetery, Inc.
The complaint alleged among others, that pursuant to a Deed of Sale (Contract No.
6885) dated August 27, 1969 and Interment Order No. 7106 dated July 21, 1978
executed between plaintiff-appellant Juan J. Syquia and defendant-appellee, the
former, father of deceased Vicente Juan J. Syquia authorized and instructed
defendant-appellee to inter the remains of deceased in the Manila Memorial Park
Cemetery in the morning of July 25, 1978 conformably and in accordance with
defendant-appellant's (sic) interment procedures; that on September 4, 1978,
preparatory to transferring the said remains to a newly purchased family plot also at
the Manila Memorial Park Cemetery, the concrete vault encasing the coffin of the
deceased was removed from its niche underground with the assistance of certain
employees of defendant-appellant (sic); that as the concrete vault was being raised
to the surface, plaintiffs-appellants discovered that the concrete vault had a hole
approximately three (3) inches in diameter near the bottom of one of the walls closing
out the width of the vault on one end and that for a certain length of time (one hour,

more or less), water drained out of the hole; that because of the aforesaid discovery,
plaintiffs-appellants became agitated and upset with concern that the water which
had collected inside the vault might have risen as it in fact did rise, to the level of the
coffin and flooded the same as well as the remains of the deceased with ill effects
thereto; that pursuant to an authority granted by the Municipal Court of Paraaque,
Metro Manila on September 14, 1978, plaintiffs-appellants with the assistance of
licensed morticians and certain personnel of defendant-appellant (sic) caused the
opening of the concrete vault on September 15, 1978; that upon opening the vault,
the following became apparent to the plaintiffs-appellants: (a) the interior walls of the
concrete vault showed evidence of total flooding; (b) the coffin was entirely damaged
by water, filth and silt causing the wooden parts to warp and separate and to crack
the viewing glass panel located directly above the head and torso of the deceased;
(c) the entire lining of the coffin, the clothing of the deceased, and the exposed parts
of the deceased's remains were damaged and soiled by the action of the water and
silt and were also coated with filth.
Due to the alleged unlawful and malicious breach by the defendant-appellee of its
obligation to deliver a defect-free concrete vault designed to protect the remains of
the deceased and the coffin against the elements which resulted in the desecration
of deceased's grave and in the alternative, because of defendant-appellee's gross
negligence conformably to Article 2176 of the New Civil Code in failing to seal the
concrete vault, the complaint prayed that judgment be rendered ordering defendantappellee to pay plaintiffs-appellants P30,000.00 for actual damages, P500,000.00 for
moral damages, exemplary damages in the amount determined by the court, 20% of
defendant-appellee's total liability as attorney's fees, and expenses of litigation and
costs of suit. 2
In dismissing the complaint, the trial court held that the contract between the parties did not
guarantee that the cement vault would be waterproof; that there could be no quasi-delict because
the defendant was not guilty of any fault or negligence, and because there was a pre-existing
contractual relation between the Syquias and defendant Manila Memorial Park Cemetery, Inc.. The
trial court also noted that the father himself, Juan Syquia, chose the gravesite despite knowing that
said area had to be constantly sprinkled with water to keep the grass green and that water would
eventually seep through the vault. The trial court also accepted the explanation given by defendant
for boring a hole at the bottom side of the vault: "The hole had to be bored through the concrete vault
because if it has no hole the vault will (sic) float and the grave would be filled with water and the
digging would caved (sic) in the earth, the earth would caved (sic) in the (sic) fill up the grave." 3
From this judgment, the Syquias appealed. They alleged that the trial court erred in holding that the
contract allowed the flooding of the vault; that there was no desecration; that the boring of the hole
was justifiable; and in not awarding damages.
The Court of Appeals in the Decision 4 dated December 7, 1990 however, affirmed the judgment of
dismissal. Petitioner's motion for reconsideration was denied in a Resolution dated April 25, 1991. 5
Unsatisfied with the respondent Court's decision, the Syquias filed the instant petition. They allege
herein that the Court of Appeals committed the following errors when it:
1. held that the contract and the Rules and Resolutions of private respondent allowed
the flooding of the vault and the entrance thereto of filth and silt;

2. held that the act of boring a hole was justifiable and corollarily, when it held that no
act of desecration was committed;
3. overlooked and refused to consider relevant, undisputed facts, such as those
which have been stipulated upon by the parties, testified to by private respondent's
witnesses, and admitted in the answer, which could have justified a different
conclusion;
4. held that there was no tort because of a pre-existing contract and the absence of
fault/negligence; and
5. did not award the P25,000.00 actual damages which was agreed upon by the
parties, moral and exemplary damages, and attorney's fees.
At the bottom of the entire proceedings is the act of boring a hole by private respondent on the vault
of the deceased kin of the bereaved petitioners. The latter allege that such act was either a breach
of private respondent's contractual obligation to provide a sealed vault, or, in the alternative, a
negligent act which constituted a quasi-delict. Nonetheless, petitioners claim that whatever kind of
negligence private respondent has committed, the latter is liable for desecrating the grave of
petitioners' dead.
In the instant case, We are called upon to determine whether the Manila Memorial Park Cemetery,
Inc., breached its contract with petitioners; or, alternatively, whether private respondent was guilty of
a tort.
We understand the feelings of petitioners and empathize with them. Unfortunately, however, We are
more inclined to answer the foregoing questions in the negative. There is not enough ground, both in
fact and in law, to justify a reversal of the decision of the respondent Court and to uphold the pleas of
the petitioners.
With respect to herein petitioners' averment that private respondent has committed culpa aquiliana,
the Court of Appeals found no negligent act on the part of private respondent to justify an award of
damages against it. Although a pre-existing contractual relation between the parties does not
preclude the existence of a culpa aquiliana, We find no reason to disregard the respondent's Court
finding that there was no negligence.
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 contractual relation between the parties, is called a quasidelict . . . . (Emphasis supplied).
In this case, it has been established that the Syquias and the Manila Memorial Park
Cemetery, Inc., entered into a contract entitled "Deed of Sale and Certificate of Perpetual
Care" 6 on August 27, 1969. That agreement governed the relations of the parties and defined
their respective rights and obligations. Hence, had there been actual negligence on the part of the
Manila Memorial Park Cemetery, Inc., it would be held liable not for a quasi-delict orculpa
aquiliana, but for culpa contractual as provided by Article 1170 of the Civil Code, to wit:
Those who in the performance of their obligations are guilty of fraud, negligence, or
delay, and those who in any manner contravene the tenor thereof, are liable for
damages.

The Manila Memorial Park Cemetery, Inc. bound itself to provide the concrete box to be send in the
interment. Rule 17 of the Rules and Regulations of private respondent provides that:
Rule 17. Every earth interment shall be made enclosed in a concrete box, or in an
outer wall of stone, brick or concrete, the actual installment of which shall be made
by the employees of the Association. 7
Pursuant to this above-mentioned Rule, a concrete vault was provided on July 27, 1978, the day
before the interment, and was, on the same day, installed by private respondent's employees in the
grave which was dug earlier. After the burial, the vault was covered by a cement lid.
Petitioners however claim that private respondent breached its contract with them as the latter held
out in the brochure it distributed that the . . . lot may hold single or double internment (sic)
underground in sealed concrete vault." 8 Petitioners claim that the vault provided by private respondent
was not sealed, that is, not waterproof. Consequently, water seeped through the cement enclosure and
damaged everything inside it.
We do not agree. There was no stipulation in the Deed of Sale and Certificate of Perpetual Care and
in the Rules and Regulations of the Manila Memorial Park Cemetery, Inc. that the vault would be
waterproof. Private respondent's witness, Mr. Dexter Heuschkel, explained that the term "sealed"
meant "closed." 9 On the other hand, the word "seal" is defined as . . . any of various closures or
fastenings . . . that cannot be opened without rupture and that serve as a check against tampering or
unauthorized opening." 10 The meaning that has been given by private respondent to the word conforms
with the cited dictionary definition. Moreover, it is also quite clear that "sealed" cannot be equated with
"waterproof". Well settled is the rule that when the terms of the contract are clear and leave no doubt as
to the intention of the contracting parties, then the literal meaning of the stipulation shall
control. 11 Contracts should be interpreted according to their literal meaning and should not be interpreted
beyond their obvious intendment. 12 As ruled by the respondent Court:
When plaintiff-appellant Juan J. Syquia affixed his signature to the Deed of Sale
(Exhibit "A") and the attached Rules and Regulations (Exhibit "1"), it can be assumed
that he has accepted defendant-appellee's undertaking to merely provide a concrete
vault. He can not now claim that said concrete vault must in addition, also be
waterproofed (sic). It is basic that the parties are bound by the terms of their contract,
which is the law between them (Rizal Commercial Banking Corporation vs. Court of
Appeals, et al. 178 SCRA 739). Where there is nothing in the contract which is
contrary to law, morals, good customs, public order, or public policy, the validity of the
contract must be sustained (Phil. American Insurance Co. vs. Judge Pineda, 175
SCRA 416). Consonant with this ruling, a contracting party cannot incur a liability
more than what is expressly specified in his undertaking. It cannot be extended by
implication, beyond the terms of the contract (Rizal Commercial Banking Corporation
vs. Court of Appeals, supra). And as a rule of evidence, where the terms of an
agreement are reduced to writing, the document itself, being constituted by the
parties as the expositor of their intentions, is the only instrument of evidence in
respect of that agreement which the law will recognize, so long as its (sic) exists for
the purpose of evidence (Starkie, Ev., pp. 648, 655, Kasheenath vs. Chundy, 5 W.R.
68 cited in Francisco, Revised Rules of Court in the Phil. p. 153, 1973 Ed.). And if the
terms of the contract are clear and leave no doubt upon the intention of the
contracting parties, the literal meaning of its stipulations shall control (Santos vs. CA,
et al., G. R. No. 83664, Nov. 13, 1989; Prudential Bank & Trust Co. vs. Community
Builders Co., Inc., 165 SCRA 285; Balatero vs. IAC, 154 SCRA 530). 13

We hold, therefore, that private respondent did not breach the tenor of its obligation to the Syquias.
While this may be so, can private respondent be liable for culpa aquiliana for boring the hole on the
vault? It cannot be denied that the hole made possible the entry of more water and soil than was
natural had there been no hole.
The law defines negligence as the "omission of that diligence which is required by the nature of the
obligation and corresponds with the circumstances of the persons, of the time and of the place." 14 In
the absence of stipulation or legal provision providing the contrary, the diligence to be observed in the
performance of the obligation is that which is expected of a good father of a family.
The circumstances surrounding the commission of the assailed act boring of the hole negate
the allegation of negligence. The reason for the act was explained by Henry Flores, Interment
Foreman, who said that:
Q It has been established in this particular case that a certain Vicente
Juan Syquia was interred on July 25, 1978 at the Paraaque
Cemetery of the Manila Memorial Park Cemetery, Inc., will you please
tell the Hon. Court what or whether you have participation in
connection with said internment (sic)?
A A day before Juan (sic) Syquia was buried our personnel dug a
grave. After digging the next morning a vault was taken and placed in
the grave and when the vault was placed on the grave a hole was
placed on the vault so that water could come into the vault because it
was raining heavily then because the vault has no hole the vault will
float and the grave would be filled with water and the digging would
caved (sic) in and the earth, the earth would (sic) caved in and fill up
the grave. 15 (Emphasis ours)
Except for the foreman's opinion that the concrete vault may float should there be a heavy rainfall,
from the above-mentioned explanation, private respondent has exercised the diligence of a good
father of a family in preventing the accumulation of water inside the vault which would have resulted
in the caving in of earth around the grave filling the same with earth.
Thus, finding no evidence of negligence on the part of private respondent, We find no reason to
award damages in favor of petitioners.
In the light of the foregoing facts, and construed in the language of the applicable laws and
jurisprudence, We are constrained to AFFIRM in toto the decision of the respondent Court of
Appeals dated December 7, 1990. No costs.
SO ORDERED.
Narvasa, C.J., Feliciano, Regalado and Nocon, JJ., concur.

SECOND DIVISION
[G.R. No. 122039. May 31, 2000]
VICENTE CALALAS, petitioner, vs. COURT OF APPEALS, ELIZA
JUJEURCHE SUNGA and FRANCISCO SALVA, respondents.
D E C I S I ON
MENDOZA, J.:
This is a petition for review on certiorari of the decision of the Court of
Appeals, dated March 31, 1991, reversing the contrary decision of the
Regional Trial Court, Branch 36, Dumaguete City, and awarding damages
instead to private respondent Eliza Jujeurche Sunga as plaintiff in an action
for breach of contract of carriage.
[1]

The facts, as found by the Court of Appeals, are as follows:

At 10 oclock in the morning of August 23, 1989, private respondent Eliza
Jujeurche G. Sunga, then a college freshman majoring in Physical Education
at the Siliman University, took a passenger jeepney owned and operated by
petitioner Vicente Calalas. As the jeepney was filled to capacity of about 24
passengers, Sunga was given by the conductor an "extension seat," a
wooden stool at the back of the door at the rear end of the vehicle. Sclaw
On the way to Poblacion Sibulan, Negros Occidental, the jeepney stopped to
let a passenger off. As she was seated at the rear 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. As a result, Sunga was injured. She sustained a
fracture of the "distal third of the left tibia-fibula with severe necrosis of the
underlying skin." Closed reduction of the fracture, long leg circular casting,
and case wedging were done under sedation. Her confinement in the hospital
lasted from August 23 to September 7, 1989. Her attending physician, Dr.
Danilo V. Oligario, an orthopedic surgeon, certified she would remain on a
cast for a period of three months and would have to ambulate in crutches
during said period.
On October 9, 1989, Sunga filed a complaint for damages against Calalas,
alleging violation of the contract of carriage by the former in failing to exercise

the diligence required of him as a common carrier. Calalas, on the other hand,
filed a third-party complaint against Francisco Salva, the owner of the Isuzu
truck. Korte
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
(Civil Case No. 3490), filed by Calalas against Salva and Verena, for quasidelict, in which Branch 37 of the same court held Salva and his driver Verena
jointly liable to Calalas for the damage to his jeepney. Rtcspped
On appeal to the Court of Appeals, the ruling of the lower court was reversed
on the ground that Sungas cause of action was based on a contract of
carriage, not quasi-delict, and that the common carrier failed to exercise the
diligence required under the Civil Code. The appellate court dismissed the
third-party complaint against Salva and adjudged Calalas liable for damages
to Sunga. The dispositive portion of its decision reads:
WHEREFORE, the decision appealed from is hereby REVERSED
and SET ASIDE, and another one is entered ordering defendantappellee Vicente Calalas to pay plaintiff-appellant:
(1) P50,000.00 as actual and compensatory damages;
(2) P50,000.00 as moral damages;
(3) P10,000.00 as attorneys fees; and
(4) P1,000.00 as expenses of litigation; and
(5) to pay the costs.
SO ORDERED.
Hence, this petition. Petitioner contends that the ruling in Civil Case No. 3490
that the negligence of Verena was the proximate cause of the accident
negates his liability and that to rule otherwise would be to make the common
carrier an insurer of the safety of its passengers. He contends that the
bumping of the jeepney by the truck owned by Salva was a caso fortuito.
Petitioner further assails the award of moral damages to Sunga on the ground
that it is not supported by evidence. Sdaadsc

The petition has no merit.

The argument that Sunga is bound by the ruling in Civil Case No. 3490 finding
the driver and the owner of the truck liable for quasi-delict ignores the fact that
she was never a party to that case and, therefore, the principle of res
judicata does not apply. Missdaa
Nor are the issues in Civil Case No. 3490 and in the present case the same.
The issue in Civil Case No. 3490 was whether Salva and his driver Verena
were liable for quasi-delict for the damage caused to petitioners jeepney. On
the other hand, the issue in this case is whether petitioner is liable on his
contract of carriage. The first, quasi-delict, also known as culpa
aquiliana or culpa extra contractual, has as its source the negligence of the
tortfeasor. The second, breach of contract or culpa contractual, is premised
upon the negligence in the performance of a contractual obligation.
Consequently, in quasi-delict, the negligence or fault should be clearly
established because it is the basis of the action, whereas in breach of
contract, the action can be prosecuted merely by proving the existence of the
contract and the fact that the obligor, in this case the common carrier, failed to
transport his passenger safely to his destination. In case of death or injuries
to passengers, Art. 1756 of the Civil Code provides that common carriers are
presumed to have been at fault or to have acted negligently unless they prove
that they observed extraordinary diligence as defined in Arts. 1733 and 1755
of the Code. This provision necessarily shifts to the common carrier the
burden of proof. Slxmis
[2]

There is, thus, no basis for the contention that the ruling in Civil Case No.
3490, finding Salva and his driver Verena liable for the damage to petitioners
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 is created 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. It provides: Slxsc

Art. 1733. Common carriers, from the nature of their business and
for reasons of public policy, are bound to observe extraordinary
diligence in the vigilance over the goods and for the safety of the
passengers transported by them, according to all the
circumstances of each case.
Such extraordinary diligence in the vigilance over the goods is
further expressed in articles 1734, 1735, and 1746, Nos. 5,6, and
7, while the extraordinary diligence for the safety of the
passengers is further set forth in articles 1755 and 1756.
Art. 1755. A common carrier is bound to carry the passengers
safely as far as human care and foresight can provide, using the
utmost diligence of very cautious persons, with due regard for all
the circumstances.
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 by articles 1733 and 1755.
In the case at bar, upon the happening of the accident, the presumption of
negligence at once arose, and it became the duty of petitioner to prove that he
had to observe extraordinary diligence in the care of his passengers. Scslx
Now, did the driver of jeepney carry Sunga "safely as far as human care and
foresight could provide, using the utmost diligence of very cautious persons,
with due regard for all the circumstances" as required by Art. 1755? We do not
think so. Several factors militate against petitioners contention. Slx
First, as found by the Court of Appeals, 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. This is
a violation of the R.A. No. 4136, as amended, or the Land Transportation and
Traffic Code, which provides:
Sec. 54. Obstruction of Traffic. - No person shall drive his motor
vehicle in such a manner as to obstruct or impede the passage of
any vehicle, nor, while discharging or taking on passengers or
loading or unloading freight, obstruct the free passage of other
vehicles on the highway.

Second, it is undisputed that petitioners driver took in more passengers than

the allowed seating capacity of the jeepney, a violation of 32(a) of the same
law. It provides: Mesm
Exceeding registered capacity. - No person operating any motor
vehicle shall allow more passengers or more freight or cargo in
his vehicle than its registered capacity.
The fact that Sunga was seated in an "extension seat" placed her in a peril
greater than that to which the other passengers were exposed. Therefore, not
only was petitioner unable to overcome the presumption of negligence
imposed on him for the injury sustained by Sunga, but also, the evidence
shows he was actually negligent in transporting passengers. Calrky
We find it hard to give serious thought to petitioners contention that Sungas
taking an "extension seat" amounted to an implied assumption of risk. It is
akin to arguing that the injuries to the many victims of the tragedies in our
seas should not be compensated merely because those passengers assumed
a greater risk of drowning by boarding an overloaded ferry. This is also true of
petitioners contention that the jeepney being bumped while it was improperly
parked constitutes caso fortuito. A caso fortuito is an event which could not be
foreseen, or which, though foreseen, was inevitable. This requires that the
following requirements be present: (a) the cause of the breach is independent
of the debtors will; (b) the event is unforeseeable or unavoidable; (c) the event
is such as to render it impossible for the debtor to fulfill his obligation in a
normal manner, and (d) the debtor did not take part in causing the injury to the
creditor. Petitioner should have foreseen the danger of parking his jeepney
with its body protruding two meters into the highway. Kycalr
[3]

[4]

Finally, petitioner challenges the award of moral damages alleging that it is

excessive and without basis in law. We find this contention well taken.
In awarding moral damages, the Court of Appeals stated: Kyle
Plaintiff-appellant at the time of the accident was a first-year
college student in that school year 1989-1990 at the Silliman
University, majoring in Physical Education. Because of the injury,
she was not able to enroll in the second semester of that school
year. She testified that she had no more intention of continuing
with her schooling, because she could not walk and decided not
to pursue her degree, major in Physical Education "because of my
leg which has a defect already."

Plaintiff-appellant likewise testified that even while she was under

confinement, she cried in pain because of her injured left foot. As
a result of her injury, the Orthopedic Surgeon also certified that
she has "residual bowing of the fracture side." She likewise
decided not to further pursue Physical Education as her major
subject, because "my left leg x x x has a defect already."
Those are her physical pains and moral sufferings, the inevitable
bedfellows of the injuries that she suffered. Under Article 2219 of
the Civil Code, she is entitled to recover moral damages in the
sum of P50,000.00, which is fair, just and reasonable.
As a general rule, moral damages are not recoverable in actions for damages
predicated on a breach of contract for it is not one of the items enumerated
under Art. 2219 of the Civil Code. As an exception, such damages are
recoverable: (1) in cases in which the mishap results in the death of a
passenger, as provided in Art. 1764, in relation to Art. 2206(3) of the Civil
Code; and (2) in the cases in which the carrier is guilty of fraud or bad faith, as
provided in Art. 2220.
[5]

[6]

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 the performance of the contract of carriage. Sungas contention that
petitioners 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. If at all, it is merely implied recognition by Verena that
he was the one at fault for the accident. Exsm
WHEREFORE, the decision of the Court of Appeals, dated March 31, 1995,
and its resolution, dated September 11, 1995, are AFFIRMED, with the
MODIFICATION that the award of moral damages is DELETED.
SO ORDERED.