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Civil LawTorts and DamagesNegligenceMalfeasanceQuasi-DelictRemedial LawEvidenceHearsay RuleRes GestaeStartling Event

In March 1958, Rafael Carrascoso and several other Filipinos were tourists en route to Rome from Manila. Carrascoso wasissued a first class round trip ticket by Air France. But during a stop-over in Bangkok, he was asked by the plane manager of AirFrance to vacate his seat because a white man allegedly has a better right than him. Carrascoso protested but when things goheated and upon advise of other Filipinos on board, Carrascoso gave up his seat and was transferred to the planes touristclass.

After their tourist trip when Carrascoso was already in the Philippines, he sued Air France for damages for the embarrassmen

he suffered during his trip. In court, Carrascoso testified, among others, that he when he was forced to take the tourist class, hewent to the planes pantry where he was approached by a plane purser who told him that he noted in the planes journal thefollowing:

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 CarrascosoThis 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 Carrascosowas not an assurance that he will be seated in first class because allegedly in truth and in fact, that was not the true intenbetween 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 inevidence.

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 firstclass 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 inconvenienceembarrassments and humiliations, thereby causing him mental anguish, serious anxiety, wounded feelings and socialhumiliation, 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 anassurance 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 acbased on culpa aquiliana. Passengers do not contract merely for transportation. They have a right to be treated by the carrie rsemployees with kindness, respect, courtesy and due consideration. They are entitled to be protected against personamisconduct, injurious language, indignities and abuses from such employees. So it is, that any rule or discourteous conduct onthe 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 aviolation 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, butthe ouster incident. Testimony on the entry does not come within the proscription of the best evidence rule. Such testimony isadmissible. Besides, when the dialogue between Carrascoso and the purser happened, the impact of the startling occurrencewas still fresh and continued to be felt. The excitement had not as yet died down. Statements then, in this environment, areadmissible as part of the res gestae. The utterance of the purser regarding his entry in the notebook was spontaneous, andrelated to the circumstances of the ouster incident. Its trustworthiness has been guaranteed. It thus escapes the operation of thehearsay rule. It forms part of the res gestae.

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MINDANAO TERMINAL AND BROKERAGESERVICE, INC.- versusPHOENIX 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 companyto load and stow a shipment of 146,288 cartons of fresh green Philippine bananas and 15,202cartons of fresh pineapplesbelonging to Del Monte Fresh Produce International, Inc. into the cargo hold of the vessel M/V Mistrau. The vessel wasdocked at the port of Davao City and the goods were to be transported by it to the port of Inchon, Korea in favor oconsignee Taegu Industries, Inc. Del Monte Produce insured the shipment under an "open cargopolicy" with privaterespondent 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 arrivedat the port of Inchon, Korea. It was then discovered upon discharge that some of the cargo was in bad condition. TheMarine Cargo Damage Surveyor of Incok Loss and Average Adjuster of Korea, through its representative Byeong YongAhn (Byeong),surveyed the extent of the damage of the shipment. In a survey report, it was stated that16,069 cartons ofthe banana shipment and 2,185 cartons of the pineapple shipment were so damaged that they no longer had commerciavalue. Mindanao Terminal loaded and stowed the cargoes aboard theM/V Mistrau. The vessel setsail from the port ofDavao City and arrived at the port of Inchon, Korea. It was then discovered upon discharge that some of the cargo was inbad 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 bemade. Phoenix and McGee instituted an action for damages against Mindanao Terminal. After trial, the RTC held that theonly participation of Mindanao Terminal was to load the cargoes on board theM/V Mistrau under the direction and supervision of the shipsofficers, who would not have accepted the cargoes on boardthe vessel and signed the foremans report unless they were properlyarranged and tightly secured to with stand voyageacross the open seas. Accordingly, Mindanao Terminal cannot be held liable for whatever happened to the cargoes after ihad loaded and stowed them. Moreover, citing the survey report, it was found by the RTC that the cargoes were damagedon account of a typhoon which M/V Mistrau had encountered during the voyage. It was further held that Phoenix andMcGee had no cause of action against Mindanao Terminal because the latter, whose services were contracted by DeMonte, a distinct corporation from Del Monte Produce, had no contract with the assured Del Monte Produce. The RTCdismissed the complaint and awarded the counterclaim of Mindanao Terminal in the amount of P83,945.80 as actuadamages 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 havingexercised 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 thecargoes from the pier to the ships cargo hold; it was never the custodian of the shipment of Del Monte Produce. Astevedore is not a common carrier for it does not transport goods or passengers; it is not akin to a warehouse man for itdoes not store goods for profit.

**Phoenix and McGee appealed to the Court of Appeals. The appellate court reversed and set aside the decision Thesame court ordered Mindanao Terminal to pay Phoenix and McGee "the total amount of $210,265.45 plus legal interesfrom the filing of the complaint until fully paid and attorneys fees of 20% of theclaim." It sustained Phoenixs and McGeesargument that the damage in the cargoes was the result of improper stowage by MindanaoTerminal.** Mindanao Terminalfiled a motion for reconsideration, which the Court of Appeals denied in its 26 February 2004 resolution. Hence, thepresent petition for review.

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Republic of the PhilippinesSUPREME COURTManila

FIRST DIVISION

G.R. No. 167346 April 2, 2007

SOLIDBANK CORPORATION/ METROPOLITAN BANK AND TRUST COMPANY,* Petitioner,vs.SPOUSES PETER and SUSAN TAN, Respondents.

D E C I S I O N

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 oAppeals (CA) dated November 26, 2004 and March 1, 2005, respectively, in CA-G.R. CV No. 58618,3 affirming the decision of theRegional 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 Neripetitioners teller no. 8 in its Juan Luna, Manila Branch, received two deposit slips for the checks, an original and a dupli cate. Nerverified the checks and their amounts in the deposit slips then returned the duplicate copy to Frias and kept the original copy forpetitioner.

In accordance with the usual practice between petitioner and respondents, the latters passbook was l eft with petitioner for therecording of the deposits on the banks ledger. Later, respondents retrieved the passbook and discovered that one of the chec ksMetropolitan 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 thestamp 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 hadcleared after it was inexplicably deposited by a certain Dolores Lagsac in Premier Bank in San Pedro, Laguna. Respondents demandedthat 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 ofManila, 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 "tellerno. 7" who received the deposit slips and, although respondents insisted that Frias deposited ten checks, only nine checks wereactually received by said teller. By way of counterclaim, it sought payment of P1,000,000 as actual and moral damages and P500,000as 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 theirrespective contentions, and after taking into consideration all the circumstances of the case, this Court believes that the loss ofMetrobank 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 requiredby the nature of the obligation and corresponds with the circumstances of the person of the time and of the place"; and that "if the lawor 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 provethat 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 ofP250,000, with legal interest from the time the complaint [for collection of a sum of money] was filed until satisfied; P25,000.00 moradamages; 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:

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Serious doubt [was] engendered by the fact that [petitioner] did not present the original of the deposit slip marked with "Teller No. 7and on which the entry as to Metrobank Check No. 403954 did not appear. Even the most cursory look at the handwriting thereonreveal[ed] a very marked difference with that in the other deposit slips filled up [by Frias] on December 2, 1991. Said circumstancesspawn[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 werenot supported by the evidence and records of the case; (2) the award of damages in favor of respondents was unwarranted and (3) theapplication 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 topetitioner, 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 substantiamatters that would alter the outcome of the case, this Court will not disturb such findings.8 We meticulously reviewed the records of thecase and found no reason to deviate from the rule. Moreover, since the CA affirmed these findings on appeal, they are final andconclusive on us.9 We therefore sustain the RTCs and CAs findings that petitioner was indeed negligent and responsible forrespondents lost check.

On the issue of damages, petitioner argues that the moral and exemplary damages awarded by the lower courts had no legal basis. Forthe award of moral damages to stand, petitioner avers that respondents should have proven the existence of bad faith by clear andconvincing evidence. According to petitioner, simple negligence cannot be a basis for its award. It insists that the award of exemplarydamages 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 thatwas 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 receiverespondents missing check. Thus, in suppressing the best evidence that could have bolstered its claim and confirmed its innocencethe 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. Badfaith 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 irreproachableservice.13 For petitioners failure to carry out its responsibility and to account for respondents lost check, we hold that the lower courtsdid 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 itanchored 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 diligencethat petitioner should have performed under the circumstances. In other words, like a common carrier whose business is also imbuedwith 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 noreason 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, weenunciated that the degree of diligence required of banks is more than that of a good father of a family in keeping with theirresponsibility 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 factthat banking institutions (like petitioner) have the duty to exercise the highest degree of diligence when transacting with the public. Bythe nature of their business, they are required to observe the highest standards of integrity and performance, and utmostassiduousness as well.17

WHEREFORE, the assailed decision and resolution of the Court of Appeals dated November 26, 2004 and March 1, 2005, respectivelyin CA-G.R. CV No. 58618 are hereby AFFIRMED. Accordingly, the petition is DENIED.

Costs against petitioner.SO ORDERED.