Digest Spec

8/21/2019 Digest Spec

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#4 NES

G.R. No. 108164 February 23, 1995

FAR EAST BANK AND TRUST !"#AN$, petitioner,

vs.T%E %!N!RAB&E !URT !F A##EA&S, &U'S A. &UNA a() &AR'TA S.

&UNA, respondents.

Some time in October 1986, private respondent Luis A. Luna applied for, and was accorded, a

FARAS!"AR# issued b$ petitioner Far ast %an& and !rust "ompan$ '(F%!"() at its *asi+

%ranc. -pon is reuest, te ban& also issued a supplemental card to private respondent

"larita S. Luna.

/n Au+ust 1988, "larita lost er credit card. F%!" was fortwit informed. /n order to replace

te lost card, "larita submitted an a0davit of loss. /n cases of tis nature, te ban&s internal

securit$ procedures and polic$ would appear to be to meanwile so record te lost card,

alon+ wit te principal card, as a (2ot "ard( or ("ancelled "ard( in its master 3le.

On 46 October 1988, Luis tendered a despedida lunc for a close friend, a Filipino5American,

and anoter +uest at te %aia Rooftop Restaurant of te 2otel /ntercontinental anila. !o

pa$ for te lunc, Luis presented is FARAS!"AR# to te attendin+ waiter wo promptl$

ad it veri3ed trou+ a telepone call to te ban&s "redit "ard #epartment. Since te card

was not onored, Luis was forced to pa$ in cas te bill amountin+ to *788.1. aturall$,

Luis felt embarrassed b$ tis incident.

/n a letter, dated 11 October 1988, private respondent Luis Luna, trou+ counsel,

demanded from F%!" te pa$ment of dama+es. Adrian :. Feste;o, a vice5president of te

ban&, e<pressed te ban&s apolo+ies to Luis. /n is letter, dated 4 ovember 1988, Feste;o,

in part, said=

/n cases wen a card is reported to our o0ce as lost, FARAS!"AR# underta&es te

necessar$ action to avert its unautori>ed use 'suc as ta++in+ te card as otlisted), as it is

alwa$s our intention to protect our cardolders.

An investi+ation of $our case owever, revealed tat FARAS!"AR# failed to inform $ou

about its securit$ polic$. Furtermore, an over>ealous emplo$ee of te %an&s "redit "ard

#epartment did not consider te possibilit$ tat it ma$ ave been $ou wo was presentin+

te card at tat time 'for wic reason, te unfortunate incident occurred). 1

Feste;o also sent a letter to te ana+er of te %aia Rooftop Restaurant to assure te latter

tat private respondents were (ver$ valued clients( of F%!". ?illiam Anton$ @in+, Food

and %evera+e ana+er of te /ntercontinental 2otel, wrote bac& to sa$ tat te credibilit$ of

private respondent ad never been (in uestion.( A cop$ of tis repl$ was sent to Luis b$

Feste;o.



Still evidentl$ feelin+ a++rieved, private respondents, on 47 #ecember 1988, 3led a

complaint for dama+es wit te Re+ional !rial "ourt '(R!"() of *asi+ a+ainst F%!".

On 4 arc 1994, te R!" of *asi+, +iven te fore+oin+ factual settin+s, rendered a decision

orderin+ F%!" to pa$ private respondents 'a) *44,444.44 moral dama+es 'b) *74,444.44

e<emplar$ dama+es and 'c) *B4,444.44 attorne$s fees.

'**ue+ !N FEBT -* -abe /o ay /e )aae*

%e)+

o. /n culpa contractual, moral dama+es ma$ be recovered were te defendant is sown to

ave acted in bad fait or wit malice in te breac of te contract. Art. BBB4. ?illful in;ur$

to propert$ ma$ be a le+al +round for awardin+ moral dama+es if te court sould 3nd tat,

under te circumstances, suc dama+es are ;ustl$ due. The same rule applies to breaches of

contract where the defendant acted fraudulently or in bad faith.

%ad fait, in tis conte<t, includes gross, but not simple, ne+li+ence. 3 <ceptionall$, in a

contract of carriage, moral dama+es are also allowed in case of deat of a passen+er

attributable to te fault 'wic is presumed 4) of te common carrier. 5

"oncededl$, te ban& was remiss in indeed ne+lectin+ to personall$ inform Luis of is own

cards cancellation. otin+ in te 3ndin+s of te trial court and te appellate court,

owever, can su0cientl$ indicate an$ deliberate intent on te part of F%!" to cause arm

to private respondents. eiter could F%!"s ne+li+ence in failin+ to +ive personal notice to

Luis be considered so +ross as to amount to malice or bad fait.

alice or bad fait implies a conscious and intentional desi+n to do a wron+ful act for a

disonest purpose or moral obliuit$ it is diCerent from te ne+ative idea of ne+li+ence in

tat malice or bad fait contemplates a state of mind a0rmativel$ operatin+ wit furtive

desi+n or ill will. 6

sanctionin+ te application of Article B1, in relation to Article BB1D and Article BB19 of te

"ivil "ode to a contractual breac similar to te case at benc. Article B1 states=

Art. B1. An$ person wo wilfull$ causes loss or in;ur$ to anoter in a manner tat is contrar$

to morals, +ood customs or public polic$ sall compensate te latter for te dama+e.

Article B1 of te "ode, it sould be observed, contemplates a conscious act to cause arm.

!us, even if we are to assume tat te provision could properl$ relate to a breac ofcontract, its application can be warranted onl$ wen te defendants disre+ard of is

contractual obli+ation is so deliberate as to appro<imate a de+ree of misconduct certainl$ no

less worse tan fraud or bad fait. ost importantl$, Article B1 is a mere declaration of a

+eneral principle in uman relations tat clearl$ must, in an$ case, +ive wa$ to te speci3c

provision of Article BBB4 of te "ivil "ode autori>in+ te +rant of moral dama+es in culpa

contractual solel$ wen te breac is due to fraud or bad fait.



Anent te moral dama+es ordered to be paid to te respondent, te same must be

discarded. ?e ave repeatedl$ ruled tat moral dama+es are not recoverable in dama+e

actions predicated on a breac of te contract of transportation, in view of Articles BB19 and

BBB4 of te new "ivil "ode, wic provide as follows=

Art. BB19. oral dama+es ma$ be recovered in te followin+ and analo+ous cases=

'1) A criminal oCense resultin+ in p$sical in;uries

'B) Euasi5delicts causin+ p$sical in;uries

<<< <<< <<<

Art. BBB4. ?ilful in;ur$ to propert$ ma$ be a le+al +round for awardin+ moral dama+es if te

court sould 3nd tat, under te circumstances, suc dama+es are ;ustl$ due. !e same rule

applies to breaces of contract were te defendant acted fraudulentl$ or in bad fait.

%$ contrastin+ te provisions of tese two articles it immediatel$ becomes apparent tat=

'a) /n case of breac of contract 'includin+ one of transportation) proof of bad fait or fraud

'dolus), i.e., wanton or deliberatel$ in;urious conduct, is essential to ;ustif$ an award of moral

dama+es and

'b) !at a breac of contract can not be considered included in te descriptive term

(analo+ous cases( used in Art. BB19 not onl$ because Art. BBB4 speci3call$ provides for te

dama+es tat are caused contractual breac, but because te de3nition of uasi5delict in

Art. B1D6 of te "ode e<pressl$ e<cludes te cases were tere is a (pree<isitn+ contractual

relations between te parties.(

Art. B1D6. ?oever b$ act or omission causes dama+e to anoter, tere bein+ fault or

ne+li+ence, is obli+ed to pa$ for te dama+e done. Suc fault or ne+li+ence, if tere is no

pre5e<istin+ contractual relation between te parties, is called a uasi5delict and is +overned

b$ te provisions of tis "apter.

!e e<ception to te basic rule of dama+es now under consideration is a misap

resultin+ in te deat of a passen+er, in wic case Article 1D6 ma&es te common

carrier e<pressl$ sub;ect to te rule of Art. BB46, tat entitles te spouse,

descendants and ascendants of te deceased passen+er to (demand moral dama+es

for mental an+uis b$ reason of te deat of te deceased( 'ecesito vs. *aras, 14*il. 8, Resolution on motion to reconsider, September 11, 1978). %ut te

e<ceptional rule of Art. 1D6 ma&es it all te more evident tat were te in;ured

passen+er does not die, moral dama+es are not recoverable unless it is proved tat

te carrier was +uilt$ of malice or bad fait. !o award moral dama+es for breac of

contract, terefore, witout proof of bad fait or malice on te part of te defendant, as

reuired b$ Art. BBB4, would be to violate te clear provisions of te law, and constitute

unwarranted ;udicial le+islation.



!e distinction between fraud, bad fait or malice in te sense of deliberate or wanton wron+

doin+ and ne+li+ence 'as mere carelessness) is too fundamental in our law to be i+nored

'Arts. 11D4511DB) teir conseuences bein+ clearl$ diCerentiated b$ te "ode.

/n case of fraud, bad fait, malice or wanton attitude, te obli+or sall be responsible for all

dama+es wic ma$ be reasonabl$ attributed to te non5performance of te obli+ation.

/t is to be presumed, in te absence of statutor$ provision to te contrar$, tat tis diCerence

was in te mind of te lawma&ers wen in Art. BBB4 te$ limited recover$ of moral dama+es

to breaces of contract in bad fait. /t is true tat ne+li+ence ma$ be occasionall$ so +ross

as to amount to malice but te fact must be sown in evidence, and a carriers bad fait is

not to be li+tl$ inferred from a mere 3ndin+ tat te contract was breaced trou+

ne+li+ence of te carriers emplo$ees.

. 2ere, private respondents dama+e claim is predicated solel$ on teir contractual

relationsip witout suc a+reement, te act or omission complained of cannot b$ itself be

eld to stand as a separate cause of action or as an independent actionable tort.

!e "ourt 3nds, terefore, te award of moral dama+es made b$ te court a quo, a0rmed

b$ te appellate court, to be inordinate and substantiall$ devoid of le+al basis.

<emplar$ or corrective dama+es, in turn, are intended to serve as an e<ample or as

correction for te public +ood in addition to moral, temperate, liuidated or

compensator$ dama+es.

/n criminal oenses, e<emplar$ dama+es are imposed wen te crime is committed

wit one or more a++ravatin+ circumstances 'Art. BB4, "ivil "ode). /n quasi-delicts,

suc dama+es are +ranted if te defendant is sown to ave been so +uilt$ of +rossne+li+ence as to appro<imate malice 'See Art. BB1, "ivil "ode "LL" .G.

Gocan+co ?or&ers -nion vs. LR", 161 S"RA 677 Globe ac&a$ "able and Radio

"orp. vs. "A, 1D6 S"RA DD8). /n contracts and quasi-contracts, te court ma$ award

e<emplar$ dama+es if te defendant is found to ave acted in a wanton, fraudulent,

rec&less, oppressive, or malevolent manner.

Given te above premises and te factual circumstances ere obtainin+, it would also

be ;ust as arduous to sustain te e<emplar$ dama+es +ranted b$ te courts below,everteless, te ban&s failure, even peraps inadvertent, to onor its credit card issued to

private respondent Luis sould entitle im to recover a measure of dama+es sanctioned

under Article BBB1 of te "ivil "ode providin+ tusl$=

Art. BBB1. ominal dama+es are ad;udicated in order tat a ri+t of te plaintiC, wic as

been violated or invaded b$ te defendant, ma$ be vindicated or reco+ni>ed, and not for te

purpose of indemnif$in+ te plaintiC for an$ loss suCered b$ im.



Reasonable attorne$s fees ma$ be recovered were te court deems suc recover$ to be

;ust and euitable 'Art. BB48, "ivil "ode). ?e see no issue of sound discretion on te part of

te appellate court in allowin+ te award tereof b$ te trial court.

13 NES

G.R. No. 14161 uy 28, 2006

BANKARD, 'N., petitioner,

vs.

DR. ANT!N'! N!7AK FE&''AN!, respondent.

Respondent #r. Antonio ova& Feliciano is te older of *"/%an& astercard o. 74D5B6145

44445786, issued and mana+ed b$ petitioner %an&ard, /nc. An e<tension of te card,

*"/%an& astercard o. 74D5B611544445786, was issued to is wife, rs. arietta .

Feliciano.

On Hune 19, 1997, respondent used is *"/%an& astercard o. 74D5B614544445

786 to pa$ a brea&fast bill in !oronto, "anada. !e card was, owever, disonored

for pa$ment. Respondents +uests, #r. %ellaIor %umanla+ and tree oter Filipino

doctors based in "anada, ad to pa$ te bill. Respondent immediatel$ called te -S

toll5free number of petitioner to inuire on te cause of disonor. 2e was informed

tat te reason was te nonpa$ment of is last billin+ statement. Respondent denied

tat e failed to pa$, and reuested te person on te line to verif$ te correct status

of is credit card a+ain.

!e followin+ da$, respondent met wit #r. %umanla+ to reimburse er for te cost of te

brea&fast te previous da$. !ereafter, #r. %umanla+ accompanied te respondent to te

ddie %auer Fairview all, a presti+ious mall in !oronto, were te latter bou+t several

dressin+ items. Respondent presented is *"/%an& astercard o. 74D5B614544445786 for

pa$ment. A+ain, te card was disonored to te embarrassment of te respondent. ?orse,

te mana+er of te department store con3scated te card in front of #r. %umanla+ and oter

soppers. Respondent protested but te mana+er called securit$ and forcibl$ retained te

card. !o end te commotion tat ensued, respondent ;ust as&ed for a receipt for te

con3scated card.

On October 7, 1997, respondent 3led a complaint a+ainst petitioner %an&ard, /nc.and astercard /nternational for breac of contractual ri+ts and dama+es before te

R!"5a&ati "it$, doc&eted as "ivil "ase o. 97519B. Respondent alle+ed tat e is a

older in +ood standin+ for more tan ten '14) $ears of *"/%an& astercard o.

74D5B614544445786, and tat petitioner and astercard /nternational rene+ed on

teir a+reement b$ suspendin+ te services of te card witout notice to im. ,

respondent suCered social umiliation, embarrassment and besmirced reputation.



!e "anadian5based doctors, wo were is +uests durin+ te brea&fast meetin+ in

!oronto and wom e e<pected to donate at least 3ft$ tousand "anadian dollars to

is caritable clinic in a&ati, witdrew teir contributions because of te incidents.

/n defense, petitioner claimed due dili+ence before suspendin+ te privile+es of

respondents credit card. *etitioner alle+ed tat on Hune 1, 1997, it received a fraudalert or warnin+ bulletin from %an& /nternational /ndonesia. A fraud alert or warnin+

bulletin is a notice b$ tele<7 or telepone addressed to te issuer of a card wen a

fraudulent or counterfeit use of te card as been detected or suspected b$ an

acuirer. *etitioners fraud anal$st, r. Ferdinand Lope>, ten accessed petitioners

director$ of cardolders to identif$ te older of *"/%an& astercard o. 74D5B6115

44445786. !e director$ sowed tat te principal cardolder for *"/%an&

astercard o. 74D5B611544445786 was respondent #r. Antonio ova& Feliciano,

and tat te credit card was te e<tension card issued to is wife, arietta Feliciano.

r. Lope> immediatel$ called respondent at is clinic but te latter was not tere. r.

Lope> concluded tat te transaction involvin+ *"/%an& astercard o. 74D5B611544445786 was counterfeit. 2e sent a notice of card account bloc&in+ to te Autori>ation

#epartment. 2e li&ewise sent a written notice to te Felicianos tat *"/%an& astercard o.

74D5B611544445786 ad a counterfeit movement in anoter countr$ and tat petitioner is

temporaril$ suspendin+ te services of te card includin+ te principal card, *"/%an&

astercard o. 74D5B614544445786, pendin+ investi+ation on te matter. !e Felicianos

were reuired to submit an a0davit of disclaim and potocopies of teir passports. !e

Felicianos did not respond to te noti3cation.

, te trial court decided te case in favor of respondent.6/t found tat petitioners

ne+li+ence was te immediate and pro<imate cause of respondents in;ur$. Altou+

te claim for actual dama+es was disallowed for lac& of proof, petitioner was orderedto pa$= '1) *1,444,444.44 as moral dama+es, 'B) *B44,444.44 as e<emplar$

dama+es, and ') *144,444.44 for attorne$s fees and costs of suit.

/ssues=

?O te ban& acted wit due dili+ence in suspendin+ te card 555 O

?O te ban& is liable for dama+es 555 JS

2eld=

?illful in;ur$ to propert$ ma$ be a le+al +round for awardin+ moral dama+es if te

court sould 3nd tat, under te circumstances, suc dama+es are ;ustl$ due. Te

*ae rue a-e* /o breae* o o(/ra/ :ere /e )ee()a(/ a/e)

rau)ue(/y or -( ba) a-/. moral dama+es ma$ be recovered in culpa

contractual were te defendant acted in bad fait or wit malice in te breac of

te contract. 92owever,a conscious or intentional desi+n need not alwa$s be present since

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ne+li+ence ma$ occasionall$ be so +ross as to amount to malice or bad fait.14 %ad fait, in

te conte<t of Art. BBB4 of te "ivil "ode, includes gross ne+li+ence.11 !us, we ave eld in

a number of cases tat moral dama+es ma$ be awarded in culpa contractual or breac of

contract wen te defendant acted fraudulentl$ or in bad fait, or is +uilt$ of +ross

ne+li+ence amountin+ to bad fait, or in wanton disre+ard of is contractual obli+ations. 1B

*etitioner alle+ed tat it suspended te privile+es of respondents credit card onl$ after it

received te fraud alert from /ndonesia, and after its fraud anal$st, r. Lope>, tried to contact

bot te respondent and is wife at is clinic and at ome. At 3rst blus, bad fait or malice

appears not to be attributable to petitioner. 2owever, we 3nd tat its eCorts at personall$

contactin+ respondent re+ardin+ te suspension of is credit card fall sort of te de+ree of

dili+ence reuired b$ te circumstances. no furter eCort was e<erted to personall$

inform respondent about te cancellation of is card. *etitioner ad more tan

enou+ time witin wic to do so considerin+ tat it was not until four ') da$s later

or Hune 18, 1997 tat respondent left for "anada. *etitioner claims tat it suspended

respondents card to protect im from fraudulent transactions. 2owever, wile

petitioners motive as to be lauded, we 3nd it lamentable tat petitioner was noteuall$ >ealous in protectin+ respondent from potentiall$ embarrassin+ and

umiliatin+ situations tat ma$ arise from te unsuspectin+ use of is suspended

*"/%an& astercard o. 74D5B614544445786. "onsiderin+ te widespread use of

access devices in commercial and oter transactions,1 petitioner and oter issuers of

credit cards sould not onl$ +uard a+ainst fraudulent uses of credit cards but sould

also be protective of +enuine uses tereof b$ te true cardolders. /n te case at bar,

te dut$ is muc more demandin+ for te evidence sows tat respondent is a credit

cardolder for more tan ten '14) $ears in +ood standin+, and as not been sown to

ave violated an$ of te provisions of is credit card a+reement wit petitioner. !o

reiterate, moral dama+es ma$ be awarded in a breac of contract wen te defendant actedfraudulentl$ or in bad fait, or is +uilt$ of +ross ne+li+ence amountin+ to bad fait.1

. 2owever, since moral dama+es are patentl$ not meant to enric te complainant at te

e<pense of te defendant and sould onl$ be commensurate wit te actual loss or in;ur$

suCered,16 we reduce te amount awarded b$ te "ourt of Appeals from *844,444.44

to *744,444.44.

?e li&ewise a0rm te award for attorne$s fees. *laintiC was compelled to liti+ate to protect

is interest, and te lower courts deemed it ;ust and euitable to award im attorne$s

fees.1D !e respondent ad to vindicate is ri+ts up to te i+est court of te land.

'N 7'E %ERE!F, te petition is DEN'ED.















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