Civil Law Torts and Damages Negligence Malfeasance Quasi-Delict

Remedial Law Evidence Hearsay Rule Res Gestae Startling Event

In March 1958, Rafael Carrascoso and several other Filipinos were tourists en route to Rome from Manila. Carrascoso was
issued a first class round trip ticket by Air France. But during a stop-over in Bangkok, he was asked by the plane manager of Air
France to vacate his seat because a white man allegedly has a better right than him. Carrascoso protested but when things got
heated and upon advise of other Filipinos on board, Carrascoso gave up his seat and was transferred to the planes tourist
class.
After their tourist trip when Carrascoso was already in the Philippines, he sued Air France for damages for the embarrassment
he suffered during his trip. In court, Carrascoso testified, among others, that he when he was forced to take the tourist class, he
went to the planes pantry where he was approached by a plane purser who told him that he noted in the planes journal the
following:
First-class passenger was forced to go to the tourist class against his will, and that the captain refused to intervene
The said testimony was admitted in favor of Carrascoso. The trial court eventually awarded damages in favor of Carrascoso.
This was affirmed by the Court of Appeals.
Air France is assailing the decision of the trial court and the CA. It avers that the issuance of a first class ticket to Carrascoso
was not an assurance that he will be seated in first class because allegedly in truth and in fact, that was not the true intent
between the parties.
Air France also questioned the admissibility of Carrascosos testimony regarding the note made by the purser because the said
note was never presented in court.
ISSUE 1: Whether or not Air France is liable for damages and on what basis.
ISSUE 2: Whether or not the testimony of Carrasoso regarding the note which was not presented in court is admissible in
evidence.
HELD 1: Yes. It appears that Air Frances liability is based on culpa-contractual and on culpa aquiliana.
Culpa Contractual
There exists a contract of carriage between Air France and Carrascoso. There was a contract to furnish Carrasocoso a first
class passage; Second, That said contract was breached when Air France failed to furnish first class transportation at Bangkok;
and Third, that there was bad faith when Air Frances 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.
The Supreme Court did not give credence to Air Frances claim that the issuance of a first class ticket to a passenger is not an
assurance that he will be given a first class seat. Such claim is simply incredible.
Culpa Aquiliana
Here, the SC ruled, even though there is a contract of carriage between Air France and Carrascoso, there is also a tortuous act
based on culpa aquiliana. Passengers do not contract merely for transportation. They have a right to be treated by the carriers
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. Air Frances contract with
Carrascoso is one attended with public duty. The stress of Carrascosos action is placed upon his wrongful expulsion. This is a
violation of public duty by the Air France a case of quasi-delict. Damages are proper.
HELD: 2: Yes. The testimony of Carrascoso must be admitted based on res gestae. 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. Besides, when the dialogue between Carrascoso and the purser 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. 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. It thus escapes the operation of the
hearsay rule. It forms part of the res gestae.

MINDANAO TERMINAL AND BROKERAGESERVICE, INC.

- versus
PHOENIX ASSURANCE COMPANY OF NEW YORK/MCGEE & CO., INC
G.R. No. 162467 May 8, 2009 Tinga, J.:
FACTS:
Del Monte Philippines, Inc. contracted petitioner Mindanao Terminal and Brokerage Service, Inc., a stevedoring company,
to load and stow a shipment of 146,288 cartons of fresh green Philippine bananas and 15,202cartons of fresh pineapples
belonging to Del Monte Fresh Produce International, Inc. into the cargo hold of the vessel M/V Mistrau. The vessel was
docked at the port of Davao City and the goods were to be transported by it to the port of Inchon, Korea in favor of
consignee Taegu Industries, Inc. Del Monte Produce insured the shipment under an "open cargopolicy" with private
respondent Phoenix Assurance Company of New York , a non-life insurance company, and private respondent McGee &
Co. Inc. (McGee), the underwriting manager/agent of Phoenix. The vessel set sail from the port of Davao City and arrived
at the port of Inchon, Korea. It was then discovered upon discharge that some of the cargo was in bad condition. The
Marine Cargo Damage Surveyor of Incok Loss and Average Adjuster of Korea, through its representative Byeong Yong
Ahn (Byeong),surveyed the extent of the damage of the shipment. In a survey report, it was stated that16,069 cartons of
the banana shipment and 2,185 cartons of the pineapple shipment were so damaged that they no longer had commercial
value. Mindanao Terminal loaded and stowed the cargoes aboard theM/V Mistrau. The vessel setsail from the port of
Davao City and arrived at the port of Inchon, Korea. It was then discovered upon discharge that some of the cargo was in
bad condition. Del Monte Produce filed a claim under the open cargo policy for the damages to its shipment. McGees
Marine Claims Insurance Adjuste revaluated the claim and recommended that payment in the amount of $210,266.43 be
made. Phoenix and McGee instituted an action for damages against Mindanao Terminal. After trial, the RTC held that the
only participation of Mindanao Terminal was to load the cargoes on board the
M/V Mistrau under the direction and supervision of the ships officers, who would not have accepted the cargoes on board
the vessel and signed the foremans report unless they were properly arranged and tightly secured to with stand voyage
across the open seas. Accordingly, Mindanao Terminal cannot be held liable for whatever happened to the cargoes after it
had loaded and stowed them. Moreover, citing the survey report, it was found by the RTC that the cargoes were damaged
on account of a typhoon which M/V Mistrau had encountered during the voyage. It was further held that Phoenix and
McGee had no cause of action against Mindanao Terminal because the latter, whose services were contracted by Del
Monte, a distinct corporation from Del Monte Produce, had no contract with the assured Del Monte Produce. The RTC
dismissed the complaint and awarded the counterclaim of Mindanao Terminal in the amount of P83,945.80 as actual
damages and P100,000.00 as attorneys fees.
ISSUE:
Whether or not Phoenix and McGee have a cause of action and whether Mindanao Terminal is liable for not having
exercised extraordinary diligence in the transport and storage of the cargo.
RULING:
No, in the present case, Mindanao Terminal, as a stevedore, was only charged with the loading and stowing of the
cargoes from the pier to the ships cargo hold; it was never the custodian of the shipment of Del Monte Produce. A
stevedore is not a common carrier for it does not transport goods or passengers; it is not akin to a warehouse man for it
does not store goods for profit.
**Phoenix and McGee appealed to the Court of Appeals. The appellate court reversed and set aside the decision The
same court ordered Mindanao Terminal to pay Phoenix and McGee "the total amount of $210,265.45 plus legal interest
from the filing of the complaint until fully paid and attorneys fees of 20% of the claim." It sustained Phoenixs and McGees
argument that the damage in the cargoes was the result of improper stowage by MindanaoTerminal.** Mindanao Terminal
filed a motion for reconsideration, which the Court of Appeals denied in its 26 February 2004 resolution. Hence, the
present petition for review.

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 167346

April 2, 2007

SOLIDBANK CORPORATION/ METROPOLITAN BANK AND TRUST COMPANY,* Petitioner,

vs.
SPOUSES PETER and SUSAN TAN, Respondents.
DECISION
CORONA, J.:
Assailed in this petition for review by certiorari under Rule 45 of the Rules of Court are the decision1 and resolution2 of the Court of
Appeals (CA) dated November 26, 2004 and March 1, 2005, respectively, in CA-G.R. CV No. 58618,3 affirming the decision of the
Regional Trial Court (RTC) of Manila, Branch 31.4
On December 2, 1991, respondents representative, Remigia Frias, deposited with petitioner ten checks worth P455,962. Grace Neri,
petitioners teller no. 8 in its Juan Luna, Manila Branch, received two deposit slips for the checks, an original and a duplicate. Neri
verified the checks and their amounts in the deposit slips then returned the duplicate copy to Frias and kept the original copy for
petitioner.
In accordance with the usual practice between petitioner and respondents, the latters passbook was left with petitioner for the
recording of the deposits on the banks ledger. Later, respondents retrieved the passbook and discovered that one of the checks,
Metropolitan Bank and Trust Company (Metrobank) check no. 403954, payable to cash in the sum of P250,000 was not posted therein.
Immediately, respondents notified petitioner of the problem. Petitioner showed respondent Peter Tan a duplicate
copy of a deposit slip indicating the list of checks deposited by Frias. But it did not include the missing check. The deposit slip bore the
stamp mark "teller no. 7" instead of "teller no. 8" who previously received the checks.
Still later, respondent Peter Tan learned from Metrobank (where he maintained an account) that Metrobank check no. 403954 had
cleared after it was inexplicably deposited by a certain Dolores Lagsac in Premier Bank in San Pedro, Laguna. Respondents demanded
that petitioner pay the amount of the check but it refused, hence, they filed a case for collection of a sum of money in the RTC of
Manila, Branch 31.
In its answer, petitioner averred that the deposit slips Frias used when she deposited the checks were spurious. Petitioner accused
respondents of engaging in a scheme to illegally exact money from it. It added that, contrary to the claim of respondents, it was "teller
no. 7" who received the deposit slips and, although respondents insisted that Frias deposited ten checks, only nine checks were
actually received by said teller. By way of counterclaim, it sought payment of P1,000,000 as actual and moral damages and P500,000
as exemplary damages.
After trial, the RTC found petitioner liable to respondents:
Upon examination of the oral, as well as of the documentary evidence which the parties presented at the trial in support of t heir
respective contentions, and after taking into consideration all the circumstances of the case, this Court believes that the loss of
Metrobank Check No. 403954 in the sum of P250,000.00 was due to the fault of [petitioner][It] retained the original copy of the
[deposit slip marked by "Teller No. 7"]. There is a presumption in law that evidence willfully suppressed would be adverse if produced.
Art. 1173 of the Civil Code states that "the fault or negligence of the obligor consists in the omission of that diligence which is required
by the nature of the obligation and corresponds with the circumstances of the person of the time and of the place"; and that "if the law
or contract does not state the diligence which is to be observed in the performance, the same as expected of a good father of a family
shall be required."
For failure to comply with its obligation, [petitioner] is presumed to have been at fault or to have acted negligently unless they prove
that they observe extraordinary diligence as prescribed in Arts. 1733 and 1735 of the Civil Code (Art. 1756)
xxx xxx xxx
WHEREFORE, premises considered, judgment is hereby rendered in favor of [respondents], ordering [petitioner] to pay the sum of
P250,000, with legal interest from the time the complaint [for collection of a sum of money] was filed until satisfied; P25,000.00 moral
damages; P25,000.00 exemplary damages plus 20% of the amount due [respondents] as and for attorneys fees. With costs.
SO ORDERED.5
Petitioner appealed to the CA which affirmed in toto the RTCs assailed decision:

Serious doubt [was] engendered by the fact that [petitioner] did not present the original of the deposit slip marked with "Teller No. 7"
and on which the entry as to Metrobank Check No. 403954 did not appear. Even the most cursory look at the handwriting thereon
reveal[ed] a very marked difference with that in the other deposit slips filled up [by Frias] on December 2, 1991. Said circumstances
spawn[ed] the belief thus, the said deposit slip was prepared by [petitioner] itself to cover up for the lost check.6
Petitioner filed a motion for reconsideration but the CA dismissed it. Hence, this appeal.1a\^/phi1.net
Before us, petitioner faults the CA for upholding the RTC decision. Petitioner argues that: (1) the findings of the RTC and the CA were
not supported by the evidence and records of the case; (2) the award of damages in favor of respondents was unwarranted and (3) the
application by the RTC, as affirmed by the CA, of the provisions of the Civil Code on common carriers to the instant case was
erroneous.7
The petition must fail.
On the first issue, petitioner contends that the lower courts erred in finding it negligent for the loss of the subject check. According to
petitioner, the fact that the check was deposited in Premier Bank affirmed its claim that it did not receive the check.
At the outset, the Court stresses that it accords respect to the factual findings of the trial court and, unless it overlooked substantial
matters that would alter the outcome of the case, this Court will not disturb such findings.8 We meticulously reviewed the records of the
case and found no reason to deviate from the rule. Moreover, since the CA affirmed these findings on appeal, they are final and
conclusive on us.9 We therefore sustain the RTCs and CAs findings that petitioner was indeed negligent and responsible for
respondents lost check.
On the issue of damages, petitioner argues that the moral and exemplary damages awarded by the lower courts had no legal basis. For
the award of moral damages to stand, petitioner avers that respondents should have proven the existence of bad faith by clear and
convincing evidence. According to petitioner, simple negligence cannot be a basis for its award. It insists that the award of exemplary
damages is justified only when the act complained of was done in a wanton, fraudulent and oppressive manner.10
We disagree.
While petitioner may argue that simple negligence does not warrant the award of moral damages, it nonetheless cannot insist that that
was all it was guilty of. It refused to produce the original copy of the deposit slip which could have proven its claim that it did not receive
respondents missing check. Thus, in suppressing the best evidence that could have bolstered its claim and confirmed its innocence,
the presumption now arises that it withheld the same for fraudulent purposes.11
Moreover, in presenting a false deposit slip in its attempt to feign innocence, petitioners bad faith was apparent and unmistakable. Bad
faith imports a dishonest purpose or some moral obliquity or conscious doing of a wrong that partakes of the nature of fraud.12
As to the award of exemplary damages, the law allows it by way of example for the public good. The business of banking is impressed
with public interest and great reliance is made on the banks sworn profession of diligence and meticulousness in giving irreproachable
service.13 For petitioners failure to carry out its responsibility and to account for respondents lost check, we hold that the lower courts
did not err in awarding exemplary damages to the latter.
On the last issue, we hold that the trial court did not commit any error.1awphi1.nt A cursory reading of its decision reveals that it
anchored its conclusion that petitioner was negligent on Article 1173 of the Civil Code.14
In citing the different provisions of the Civil Code on common carriers,15 the trial court merely made reference to the kind of diligence
that petitioner should have performed under the circumstances. In other words, like a common carrier whose business is also imbued
with public interest, petitioner should have exercised extraordinary diligence to negate its liability to respondents.
Assuming arguendo that the trial court indeed used the provisions on common carriers to pin down liability on petitioner, still we see no
reason to strike down the RTC and CA rulings on this ground alone.
In one case,16 the Court did not hesitate to apply the doctrine of last clear chance (commonly used in transportation laws involving
common carriers) to a banking transaction where it adjudged the bank responsible for the encashment of a forged check. There, we
enunciated that the degree of diligence required of banks is more than that of a good father of a family in keeping with their
responsibility to exercise the necessary care and prudence in handling their clients money.
We find no compelling reason to disallow the application of the provisions on common carriers to this case if only to emphasize the fact
that banking institutions (like petitioner) have the duty to exercise the highest degree of diligence when transacting with the public. By
the nature of their business, they are required to observe the highest standards of integrity and performance, and utmost
assiduousness as well.17
WHEREFORE, the assailed decision and resolution of the Court of Appeals dated November 26, 2004 and March 1, 2005, respectively,
in CA-G.R. CV No. 58618 are hereby AFFIRMED. Accordingly, the petition is DENIED.
Costs against petitioner.
SO ORDERED.