oblicon prelims cases

8/10/2019 Oblicon Prelims Cases

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SECOND DIVISION

[G.R. No. 139523. May 26, 2005]

SPS. FELIPE AND LETICIA CANNU,petitioners, vs. SPS. GIL AND FERNANDINA GALANG ANDNATIONAL OME MORTGAGE FINANCE CORPORATION, respondents.

D E C I S I O N

CICO!NA"ARIO,J.#

Before Us is a Petition for Review on Certiorari which seeks to set aside the decision[1]of the Cortof !""ea#s dated $% Se"te&'er 1(() which a*r&ed with &odi+cation the decision of Branch 1$, ofthe Re-iona# .ria# Cort /R.C0 of akati Cit23 dis&issin- the co&"#aint for S"eci+c Perfor&ance andDa&a-es +#ed '2 "etitioners3 and its Reso#tion[4]dated 44 5#2 1((( den2in- "etitioners6 &otion forreconsideration7

! co&"#aint[$]for S"eci+c Perfor&ance and Da&a-es was +#ed '2 "etitioners8s"oses 9e#i"e and:eticia Cann a-ainst res"ondents8s"oses ;i# and 9ernandina ;a#an- and the Nationa# ]

arch 1$3 1((1 1,3%%%7%%[A]

!"ri# >3 1((1 1,3%%%7%%[)]

Nove&'er 4)3 1((1 ,3%%%7%%[(]

.ota# PA,3%%%7%%

.hs3 #eavin- a 'a#ance of P=,3%%%7%%7

! Deed of Sa#e with !ss&"tion of ort-a-e O'#i-ation[1%]dated 4% !-st 1((% was &ade andentered into '2 and 'etween s"oses 9ernandina and ;i# ;a#an- /vendors0 and s"oses :eticia and9e#i"e Cann /vendees0 over the hose and #ot in estion which contains3 inter alia3 the fo##owin-?

NOF3 .


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It is a s"ecia# condition of this contract that the Vendees sha## ass&e and contine with the "a2&entof the a&ortiation with the Nationa# [11]

arch 143 1((1 )3%%%7%% D8A4(=A)[14]

9e'rar2 =3 1((4 1%3%%%7%% D8(((14A[1$]

arch $13 1(($ >3%%%7%% E8,>$A=([1=]

!"ri# 1(3 1(($ 1%3%%%7%% E8,)4=$4[1,]

!"ri# 4A3 1(($ A3%%%7%% E8>1)$4>[1>]

P ,,3$147=A

Petitioners "aid the Keit2L or second &ort-a-e to CER9 Rea#t27[1A]

Des"ite reests fro& !de#ina R7 .i&'an- and 9ernandina ;a#an- to "a2 the 'a#anceof P=,3%%%7%% or in the a#ternative to vacate the "ro"ert2 in estion3 "etitioners refsed to do so7

In a #etter[1)]dated 4( arch 1(($3 "etitioner :eticia Cann infor&ed r7 9er&in .7 !ra-a3 VicePresident3 9nd ana-e&ent ;ro" of the N= as f## "a2&ent of her re&ainin- &ort-a-e #oan with N


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acknow#ed-e "#aintiMs as #e-a# assi-nees3 or #e-iti&ate tranferees and3 therefore3 sccessors8in8interest to the "ro"ert23 "#aintiMs sho#d have no #e-a# "ersona#it2 to c#ai& an2 ri-ht to the sa&e"ro"ert27[4$]

.he decreta# "ortion of the decision reads?

Pre&ises considered3 the fore-oin- co&"#aint has not 'een "roven even '2 "re"onderance ofevidence3 and3 as sch3 "#aintiMs have no case of action a-ainst the defendants herein7 .he a'ove8entit#ed case is ordered dis&issed for #ack of &erit7

5d-&ent is here'2 rendered '2 wa2 of conterc#ai&3 in favor of defendants and a-ainst "#aintiMs3 towit?

17 Orderin- the Deed of Sa#e Fith !ss&"tion of ort-a-e O'#i-ation /EHhs7 KCL and K$L0rescinded and here'2 dec#ared the sa&e as n##i+ed withot "redice for defendants8s"oses ;a#an-to retrn the "artia# "a2&ents &ade '2 "#aintiMs and the "#aintiMs are ordered3 on the other hand3 toretrn the "h2sica# and #e-a# "ossession of the s'ect "ro"ert2 to s"oses ;a#an- '2 wa2 of &ta#restittion

47 .o "a2 defendants s"oses ;a#an- and N3 1((1 for P1,3%%%7%% and on Nove&'er 4)3 1((13 for anotherP1,3%%%7%%7

9ro& 1((1 nti# the "resent3 no other "a2&ents were &ade '2 "#aintiMs8a""e##ants to defendants8a""e##ees s"oses ;a#an-7

Ot of the P4,%3%%%7%% "rchase "rice which was s""osed to 'e "aid on the da2 of the eHection ofcontract in 5#23 1((% "#aintiMs8a""e##ants have "aid3 in the s"an of ei-ht /)0 2ears3 fro& 1((% to"resent3 the a&ont of on#2 PA,3%%%7%%7 P#aintiMs8a""e##ants sho#d have "aid the P4,%3%%%7%% at theti&e of the eHection of contract in 1((%7 Ei-ht /)0 2ears have a#read2 #a"sed and "#aintiMs8a""e##antshave not 2et co&"#ied with their o'#i-ation7
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Fe consider this 'reach to 'e s'stantia#7

.he tender &ade '2 "#aintiMs8a""e##ants after the +#in- of this case3 of the ana-eria# Check in thea&ont of P4A)3(,A7%% dated 5anar2 4=3 1((= cannot 'e considered as an eMective &ode of"a2&ent7

Perfor&ance or "a2&ent &a2 'e eMected not '2 tender of "a2&ent a#one 't '2 'oth tender andconsi-nation7 It is consi-nation which is essentia# in order to eHtin-ish "#aintiMs8a""e##ants o'#i-ationto "a2 the 'a#ance of the "rchase "rice7

In addition3 "#aintiMs8a""e##ants fai#ed to co&"#2 with their o'#i-ation to "a2 the &onth#2 a&ortiationsde on the &ort-a-e7

In the s"an of three /$0 2ears fro& 1((% to 1(($3 "#aintiMs8a""e##ants &ade on#2 siH "a2&ents7 .he"a2&ents &ade '2 "#aintiMs8a""e##ants are not even s*cient to answer for the arreara-es3 interestsand "ena#t2 char-es7

On accont of these circ&stances3 the rescission of the Contract of Sa#e is warranted and sti+ed7

7 7 7

F


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Nowhere in the co&"#aint and answer of the "etitioners8s"oses Cann and res"ondents8s"oses;a#an- shows that the consideration is KP4,%3%%%7%%7L In fact3 what is c#ear is that of the P14%3%%%7%%to 'e "aid to the #atter3 on#2 PA,3%%%7%% was "aid to !de#ina .i&'an-3 the s"oses ;a#an-6s attorne28in8fact7 .his de'nks the "rovision in the Deed of Sa#e with !ss&"tion of ort-a-e that the a&ontof P4,%3%%%7%% has 'een received '2 "etitioners7

Inas&ch as the Deed of Sa#e with !ss&"tion of ort-a-e fai#ed to eH"ress the tre intent anda-ree&ent of the "arties re-ardin- its consideration3 the sa&e sho#d not 'e f##2 re#ied "on7 .hefore-oin- facts #ead s to ho#d that the case on hand fa##s within one of the reco-nied eHce"tions tothe "aro#e evidence r#e7 Under the R#es of Cort3 a "art2 &a2 "resent evidence to &odif23 eH"#ain oradd to the ter&s of the written a-ree&ent if he "ts in isse in his "#eadin-3 a&on- others3 its fai#reto eH"ress the tre intent and a-ree&ent of the "arties thereto7[$1]

In the case at 'ar3 when res"ondents8s"oses en&erated in their !nswer the ter&s andconditions for the sa#e of the "ro"ert2 nder #iti-ation3 which is diMerent fro& that stated in the Deedof Sa#e with !ss&"tion with ort-a-e3 the2 a#read2 "t in isse the &atter of consideration7 Sincethere is a diMerence as to what the tre consideration is3 this Cort has ad&itted evidence aliundetoeH"#ain sch inconsistenc27 .hs3 the Cort has #ooked into the "#eadin-s and testi&onies of the"arties to thresh ot the discre"anc2 and to c#arif2 the intent of the "arties7

!s re-ards the co&"tation[$4]of "etitioners as to the 'reakdown of the P4,%3%%%7%%consideration3 we +nd the sa&e to 'e se#f8servin- and ns""orted '2 evidence7

On the +rst assi-ned error3 "etitioners ar-e that the Cort erred when it r#ed that their 'reachof the o'#i-ation was s'stantia#7

Sett#ed is the r#e that rescission or3 &ore accrate#23 reso#tion3[$$]of a "art2 to an o'#i-ationnder !rtic#e 11(1[$=]is "redicated on a 'reach of faith '2 the other "art2 that vio#ates the reci"rocit2'etween the&7[$,]!rtic#e 11(1 reads?

!rt7 11(17 .he "ower to rescind o'#i-ations is i&"#ied in reci"roca# ones3 in case one of the o'#i-orssho#d not co&"#2 with what is inc&'ent "on hi&7

.he inred "art2 &a2 choose 'etween the f#+##&ent and the rescission of the o'#i-ation3 with the"a2&ent of da&a-es in either case7 ].he estion of whether a 'reach of contract is s'stantia# de"ends "onthe attendin- circ&stances[$A]and not &ere#2 on the "ercenta-e of the a&ont not "aid7

In the case at 'ar3 we +nd "etitioners6 fai#re to "a2 the re&ainin- 'a#ance of P=,3%%%7%% to 'es'stantia#7 Even ass&in- arguendothat on#2 said a&ont was #eft ot of the s""osedconsideration of P4,%3%%%7%%3 or ei-hteen /1)0 "ercent thereof3 this "ercenta-e is sti## s'stantia#7.aken to-ether with the fact that the #ast "a2&ent &ade was on 4) Nove&'er 1((13 ei-hteen &onths'efore the res"ondent 9ernandina ;a#an- "aid the otstandin- 'a#ance of the &ort-a-e #oan withN


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does not '2 itse#f "rodce #e-a# "a2&ent3 n#ess it is co&"#eted '2 consi-nation7[=%].heir fai#re tof#+## their o'#i-ation -ave the res"ondents8s"oses ;a#an- the ri-ht to rescission7

!nent the second assi-ned error3 we +nd that "etitioners were not re#i-ios in "a2in- thea&ortiation with the N


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Second3 what is stated in the 'ook of 5stice Ed-ardo :7 Paras is K[i]t /referrin- to the ri-ht torescind or reso#ve0 can 'e de&anded on#2 if the "#aintiM is read23 wi##in- and a'#e to co&"#2 with hisown o'#i-ation3 and the other is not7L In other words3 if one "art2 has co&"#ied or f#+##ed hiso'#i-ation3 and the other has not3 then the for&er can eHercise his ri-ht to rescind7 In this case3res"ondents8s"oses co&"#ied with their o'#i-ation when the2 -ave the "ossession of the "ro"ert2 inestion to "etitioners7 .hs3 the2 have the ri-ht to ask for the rescission of the Deed of Sa#e with!ss&"tion of ort-a-e7

On the forth assi-ned error3 "etitioners3 re#2in- on !rtic#e 1$)$ of the Civi# Code3 &aintain thatthe Cort of !""ea#s erred when it fai#ed to consider that the action for rescission is s'sidiar27

.heir re#iance on !rtic#e 1$)$ is &is"#aced7

.he s'sidiar2 character of the action for rescission a""#ies to contracts en&erated in !rtic#es1$)1[=)]of the Civi# Code7 .he contract invo#ved in the case 'efore s is not one of those &entionedtherein7 .he "rovision that a""#ies in the case at 'ar is !rtic#e 11(17

In the concrrin- o"inion of 5stice 5ose B7:7 Re2es in Universal Food Corp. v. Court of Appeals3[=(]rescission nder !rtic#e 11(1 was distin-ished fro& rescission nder !rtic#e 1$)17 5stice 57B7:7Re2es said?

7 7 7 .he rescission on accont of 'reach of sti"#ations is not "redicated on inr2 to econo&ic interestsof the "art2 "#aintiM 't on the 'reach of faith '2 the defendant3 that vio#ates the reci"rocit2 'etweenthe "arties7 It is not a s'sidiar2 action3 and !rtic#e 11(1 &a2 'e scanned withot disc#osin- an2wherethat the action for rescission therender is s'ordinated to an2thin- other than the c#"a'#e 'reach ofhis o'#i-ations '2 the defendant7 .his rescission is a "rinci"a# action reta#iator2 in character3 it 'ein-nst that a "art2 'e he#d 'ond to f#+## his "ro&ises when the other vio#ates his7 !s eH"ressed inthe o#d :atin a"horis&? Kon servanti !dem, non est !des servanda7L


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TIRD DI$ISION

$ICELET LALICON a%& G.R. No. 1'5((0$ICELEN LALICON, Petitioners3 Present?

C!RPIO3

$73 VE:!SCO3 5R73 C%airperson3 8 verss 8 !B!D3

ENDO!3 and SERENO3$$.

NATIONAL OUSING AUTORIT), Res"ondent7 Pro-ated?

5#2 1$3 4%11H 888888888888888888888888888888888888888888888888888888888888888888888888888888888888888 HDECISIONA*AD,J7?

.his case is a'ot /a0 the ri-ht of the Nationa#

de ti&e3 the Jeon Cit2 Re-istr2 of Deeds issed .ransfer Certi+cate of .it#e /.C.0 4AA$41 in the

na&e of the !#faros7 .he deed of sa#e "rovided3 a&on- others3 that the !#faros co#d se## the #andwithin +ve 2ears fro& the date of its re#ease fro& &ort-a-e withot N

!#faros so#d the sa&e to their son3 Victor !#faro3 who had taken in a co&&on8#aw wife3 Ceci#ia3 withwho& he had two da-hters3 "etitioners Vice#et and Vice#en :a#icon /the :a#icons07 Ceci#ia3 who had

the &eans3 had a hose 'i#t on the "ro"ert2 and "aid for the a&ortiations7 !fter f## "a2&ent of the

#oan or on arch 413 1((1 the N

transferred ownershi" of the #and to his i##e-iti&ate da-hters7

!'ot for and a ha#f 2ears after the re#ease of the &ort-a-e or on Octo'er =3 1((,3 Victor

re-istered the Nove&'er $%3 1((% sa#e of the #and in his favor3 res#tin- in the cance##ation of his
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"arents6 tit#e7 .he re-ister of deeds issed .C. 1=%>=> in Victor6s na&e7 On Dece&'er 1=3 1((,

Victor &ort-a-ed the #and to arce#a :ao Cha3 Rosa S23 !&"aro On-3 and Ida See7 S'seent#23 on

9e'rar2 1=3 1((A Victor so#d the "ro"ert2 to Cha3 one of the &ort-a-ees3 res#tin- in the

cance##ation of his .C. 1=%>=> and the issance of .C. N81A4$=4 in Cha6s na&e7

! 2ear #ater or on !"ri# 1%3 1(() the N

N

On 9e'rar2 143 4%%= the R.C rendered a decision in the case7 It r#ed that3 a#tho-h the !#faros

c#ear#2 vio#ated the +ve82ear "rohi'ition3 the N

ri-ht to do so had a#read2 "rescri'ed3 a""#2in- !rtic#e 1$)( of the New Civi# Code7 .he N

:a#icons3 who intervened3 +#ed their res"ective a""ea#s to the Cort of !""ea#s /C!07

On !-st 13 4%%) the C! reversed the R.C decision and fond the N

rescission7 .he C! dec#ared .C. 4AA$41 in the na&e of the !#faros and a## s'seent tit#es and deedsof sa#e n## and void7 It ordered Cha to reconve2 the s'ect #and to the N

therefore3 cannot 'e aMected '2 the rescission7

T+ R4%/ o + Co

F4/..he contract 'etween the N

Bt the :a#icons are tr2in- to 'e c#ever7 .he restriction c#ase is &ore of a condition on the

sa#e of the "ro"ert2 to the !#faros rather than a condition on the &ort-a-e constitted on it7 Indeed3

the "rohi'ition a-ainst resa#e re&ained even after the #and had 'een re#eased fro& the &ort-a-e7 .he
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+ve82ear restriction a-ainst resa#e3 conted fro& the re#ease of the "ro"ert2 fro& the N

&easres ot the desired ho#d that the -overn&ent fe#t it needed to ensre that its o'ective of

"rovidin- chea" hosin- for the ho&e#ess is not defeated '2 wi#2 entre"reners7

.he :a#icons c#ai& that the N

restriction as to warrant their "roceedin- with the sa#e when sch consent was not i&&ediate#2

forthco&in-7 !nd the resa#e withot the N

-overn&ent6s socia#ied hosin- "ro-ra& is to "reserve the 'ene+ciar26s ownershi"s for a reasona'#e

#en-th of ti&e3 here at #east within +ve 2ears fro& the ti&e he acired it free fro& an2 enc&'rance7

S-o%&. Invokin- the R.C r#in-3 the :a#icons c#ai& that nder !rtic#e 1$)( of the Civi# Code

the Kaction to c#ai& rescission &st 'e co&&enced within for 2earsL fro& the ti&e of the

co&&ission of the case for it7

Bt an action for rescission can "roceed fro& either !rtic#e 11(1 or !rtic#e 1$)17 It has 'een

he#d that !rtic#e 11(1 s"eaks of rescission in reci"roca# o'#i-ations within the conteHt of !rtic#e 114= of

the O#d Civi# Code which ses the ter& Kreso#tion7L Reso#tion a""#ies on#2 to reci"roca#

o'#i-ationssch that a 'reach on the "art of one "art2 constittes an i&"#ied reso#tor2 condition

which entit#es the other "art2 to rescission7 Reso#tion -rants the inred "art2 the o"tion to "rse3

as "rinci"a# actions3 either a rescission or s"eci+c "erfor&ance of the o'#i-ation3 with "a2&ent of

da&a-es in either case7

Rescission nder !rtic#e 1$)13 on the other hand3 was taken fro& !rtic#e 14(1 of the O#d Civi#

Code3 which is a s'sidiar2 action3 not 'ased on a "art26s 'reach of o'#i-ation7 [=] .he for82ear

"rescri"tive "eriod "rovided in !rtic#e 1$)( a""#ies to rescissions nder !rtic#e 1$)17

7

11== which is 1% 2ears fro& the ti&e the ri-ht of action accres7 .he N

9e'rar2 1)3 1((4 when it #earned of the !#faros6 for'idden sa#e of the "ro"ert2 to Victor7 Since the

N

T+4&..he Cort a#so a-rees with the C! that the :a#icons and Cha were not '2ers in -ood

faith7 Since the +ve82ear "rohi'ition a-ainst a#ienation withot the N

annotated on the "ro"ert26s tit#e3 the :a#icons ver2 we## knew that the !#faros6 sa#e of the "ro"ert2 to

their father3 Victor3 even 'efore the re#ease of the &ort-a-e vio#ated that "rohi'ition7

!s re-ards Cha3 she and a few others with her took the "ro"ert2 '2 wa2 of &ort-a-e fro&

Victor in 1((,3 we## within the "rohi'ited "eriod7 Cha knew3 therefore3 'ased on the annotated

restriction on the "ro"ert23 that Victor had no ri-ht to &ort-a-e the "ro"ert2 to her -ro" considerin-
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that the !#faros co#d not 2et se## the sa&e to hi& withot the N

Victor #ater so#d the "ro"ert2 to Cha after the +ve82ear restriction had #a"sed3 Cha cannot c#ai& #ack

of awareness of the i##e-a#it2 of Victor6s acisition of the "ro"ert2 fro& the !#faros7

:ast#23 since &ta# restittion is reired in cases invo#vin- rescission nder !rtic#e 11(13 [,]the

N interestper annum fro& the ti&e of the +na#it2 of this

d-&ent7 .he Cort wi## no #on-er dwe## on the &atter as to who has a 'etter ri-ht to receive the

a&ont fro& the N

who 'o-ht the s'ect #ot fro& Victor and o'tained for herse#f a tit#e to the sa&e3 as this &atter was

not raised as one of the isses in this case7 Cha6s a""ea# to the Cort in a se"arate case[>]havin-

'een denied de corse and N

MARIA LOURDES P. A. SERENO!ssociate 5stice

ATTESTATION

I attest that the conc#sions in the a'ove Decision had 'een reached in cons#tation 'efore thecase was assi-ned to the writer of the o"inion of the Cort6s Division7
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o""ortnit2 arises7 .hs3 a freent T2er 'ooked in the Bsiness C#ass has "riorit2 for "-radin- to9irst C#ass if the Bsiness C#ass Section is f##2 'ooked7

Res"ondents8s"oses Dr7 Danie# Earnshaw Vae and aria :isa adri-a# Vae are freentT2ers of Catha2 and are ;o#d Card &e&'ers of its arco Po#o C#'7 On 4= Se"te&'er 1((>3 theVaees3 to-ether with their &aid and two friends Pacita Cr and 5ose+na Ver-e# de Dios3 went to3 after Catha26s fai#re to -ive the& an2 feed'ack within its se#f8i&"oseddead#ine3 the Vaees institted 'efore the Re-iona# .ria# Cort of akati Cit2 an action for da&a-esa-ainst Catha23 "ra2in- for the "a2&ent to each of the& the a&onts of P4,%3%%% as te&"erateda&a-es P,%%3%%% as &ora# da&a-es P,%%3%%% as eHe&"#ar2 or corrective da&a-es and P4,%3%%%as attorne26s fees7

In their co&"#aint3 the Vaees a##e-ed that when the2 infor&ed s7 Chi that the2 "referred tosta2 in Bsiness C#ass3 s7 Chi Ko'stinate#23 nco&"ro&isin-#2 and in a #od3 discorteos and harshvoice threatenedL that the2 co#d not 'oard and #eave with the Ti-ht n#ess the2 -o to 9irst C#ass3

since the Bsiness C#ass was over'ooked7 s7 Chi6s #od and strin-ent shotin- anno2ed3e&'arrassed3 and h&i#iated the& 'ecase the incident was witnessed '2 a## the other "assen-erswaitin- for 'oardin-7 .he2 a#so c#ai&ed that the2 were nsti+a'#2 de#a2ed to 'oard the "#ane3 andwhen the2 were +na##2 "er&itted to -et into the aircraft3 the forward stora-e co&"art&ent was a#read2f##7 ! Ti-ht stewardess instrcted Dr7 Vae to "t his ro##8on #--a-e in the overhead stora-eco&"art&ent7 Becase he was not assisted '2 an2 of the crew in "ttin- " his #--a-e3 his 'i#atera#car"a# tnne# s2ndro&e was a--ravated3 casin- hi& eHtre&e "ain on his ar& and wrist7 .heVaees a#so averred that the2 K'e#on- to the ""er&ost and a'so#te#2 to" e#ite of 'oth Phi#i""ineSociet2 and the Phi#i""ine +nancia# co&&nit23 [and that] the2 were a&on- the wea#thiest "ersons inthe Phi#i""ine[s]7L


14/157

In its answer3 Catha2 a##e-ed that it is a "ractice a&onco&&ercia# air#ines to "-rade"assen-ers to the neHt 'etter c#ass of acco&&odation3 whenever an o""ortnit2 arises3 sch as whena certain section is f##2 'ooked7 Priorit2 in "-radin- is -iven to its freent T2ers3 who areconsidered favored "assen-ers #ike the Vaees7 .hs3 when the Bsiness C#ass Section of 9#i-htC8(%, was f##2 'ooked3 Catha26s co&"ter sorted ot the na&es of favored "assen-ers forinvo#ntar2 "-radin- to 9irst C#ass7 Fhen s7 Chi infor&ed the Vaees that the2 were "-radedto 9irst C#ass3 Dr7 Vae refsed7


15/157

d0 !ttorne26s fees and eH"enses of #iti-ation in the a&ont of P13%%%3%%%7%% foreach "#aintiM and

e0 Costs of sit7

SO ORDERED7

!ccordin- to the tria# cort3 Catha2 oMers varios c#asses of seats fro& which "assen-ers area##owed to choose re-ard#ess of their reasons or &otives3 whether it 'e de to 'd-etar2 constraints orwhi&7 .he choice i&"oses a c#ear o'#i-ation on Catha2 to trans"ort the "assen-ers in the c#asschosen '2 the&7 .he carrier cannot3 withot eH"osin- itse#f to #ia'i#it23 force a "assen-er toinvo#ntari#2 chan-e his choice7 .he "-radin- of the Vaees6 acco&&odation over and a'ovetheir vehe&ent o'ections was de to the over'ookin- of the Bsiness C#ass7 It was a "reteHt to "ackas &an2 "assen-ers as "ossi'#e into the "#ane to &aHi&ie Catha26s revenes7 Catha26s actations inthis case dis"#a2ed deceit3 -ross ne-#i-ence3 and 'ad faith3 which entit#ed the Vaees to awards forda&a-es7

On a""ea# '2 the "etitioners3 the Cort of !""ea#s3 in its decision of 4= 5#2 4%%13[4]de#eted theaward for eHe&"#ar2 da&a-es and it redced the awards for &ora# and no&ina# da&a-es for each ofthe Vaees to P4,%3%%% and P,%3%%%3 res"ective#23 and the attorne26s fees and #iti-ation eH"ensesto P,%3%%% for 'oth of the&7

.he Cort of !""ea#s ratiocinated that '2 "-radin- the Vaees to 9irst C#ass3 Catha2 novatedthe contract of carria-e withot the for&er6s consent7 .here was a 'reach of contract not 'ecaseCatha2 over'ooked the Bsiness C#ass Section of 9#i-ht C8(%, 't 'ecase the #atter "shed thro-hwith the "-radin- des"ite the o'ections of the Vaees7


16/157

.he ke2 isses for or consideration are whether /10 '2 "-radin- the seat acco&&odation of theVaees fro& Bsiness C#ass to 9irst C#ass Catha2 'reached its contract of carria-e with theVaees /40 the "-radin- was tainted with frad or 'ad faith and /$0 the Vaees are entit#ed toda&a-es7

Fe reso#ve the +rst isse in the a*r&ative7

! contract is a &eetin- of &inds 'etween two "ersons where'2 one a-rees to -ive so&ethin- or

render so&e service to another for a consideration7 .here is no contract n#ess the fo##owin- reisitesconcr? /10 consent of the contractin- "arties /40 an o'ect certain which is the s'ect of the contractand /$0 the case of the o'#i-ation which is esta'#ished7[=]Undo'ted#23 a contract of carria-e eHisted'etween Catha2 and the Vaees7 .he2 vo#ntari#2 and free#2 -ave their consent to an a-ree&entwhose o'ect was the trans"ortation of the Vaees fro& ani#a to


17/157


18/157

In this case3 we have r#ed that the 'reach of contract of carria-e3 which consisted in theinvo#ntar2 "-radin- of the Vaees6 seat acco&&odation3 was not attended '2 frad or 'adfaith7 .he Cort of !""ea#s6 award of &ora# da&a-es has3 therefore3 no #e- to stand on7

.he de#etion of the award for eHe&"#ar2 da&a-es '2 the Cort of !""ea#s is correct7 It is areisite in the -rant of eHe&"#ar2 da&a-es that the act of the oMender &st 'e acco&"anied '2 'adfaith or done in wanton3 frad#ent or &a#evo#ent &anner7[1,]Sch reisite is a'sent in this case7oreover3 to 'e entit#ed thereto the c#ai&ant &st +rst esta'#ish his ri-ht to &ora#3 te&"erate3 orco&"ensator2 da&a-es7[1>]Since the Vaees are not entit#ed to an2 of these da&a-es3 the awardfor eHe&"#ar2 da&a-es has no #e-a# 'asis7 !nd where the awards for &ora# and eHe&"#ar2 da&a-esare e#i&inated3 so &st the award for attorne26s fees7[1A]

.he &ost that can 'e add-ed in favor of the Vaees for Catha26s 'reach of contract is anaward for no&ina# da&a-es nder !rtic#e 4441 of the Civi# Code3 which reads as fo##ows?

!rtic#e 4441 of the Civi# Code "rovides?

!rtic#e 44417 No&ina# da&a-es are addicated in order that a ri-ht of the "#aintiM3 which has 'eenvio#ated or invaded '2 the defendant3 &a2 'e vindicated or reco-nied3 and not for the "r"ose ofinde&nif2in- the "#aintiM for an2 #oss sMered '2 hi&7

Forth notin- is the fact that in Catha26s e&orand& +#ed with this Cort3 it "ra2ed on#2 for thede#etion of the award for &ora# da&a-es7 It deferred to the Cort of !""ea#s6 discretion in awardin-no&ina# da&a-es ths?

!s far as the award of no&ina# da&a-es is concerned3 "etitioner res"ectf##2 defers to the


19/157

Nonethe#ess3 we a-ree with the innction eH"ressed '2 the Cort of !""ea#s that "assen-ers &st not"re2 on internationa# air#ines for da&a-e awards3 #ike Ktro"hies in a safari7L !fter a## neither the socia#standin- nor "resti-e of the "assen-er sho#d deter&ine the eHtent to which he wo#d sMer 'ecaseof a wron- done3 since the di-nit2 aMronted in the individa# is a a#it2 inherent in hi& and notconferred '2 these socia# indicators7[1(]

Fe ado"t as or own this o'servation of the Cort of !""ea#s7

7EREFORE3 the instant "etition is here'2 "art#2 ;R!N.ED7 .he Decision of the Cort of!""ea#s of 4= 5#2 4%%1 in C!8;7R7 CV No7 >$$$( is here'2 ODI9IED3 and as &odi+ed3 the awards for&ora# da&a-es and attorne26s fees are set aside and de#eted3 and the award for no&ina# da&a-es isredced to P,3%%%7

No "rononce&ent on costs7

SO ORDERED.

'itug, Carpio, andAzcuna, $$., concr.9nares:Santiago, $.,on #eave7

[1]Penned '2 5d-e Esco#astico O7 Cr3 5r7[4]Penned '2 !ssociate 5stice Fences#ao I7 !-nir3 5r73 with !ssociate 5stices Sa#vador 57 Va#de3 5r73 and

5an J7 Enrie3 5r73 concrrin-7

[$]$,A SCR! (( [4%%1]7

[=]!rtic#e 1$1)3 Civi# Code !BS8CBN Broadcastin- Cor"7 v7 Cort of !""ea#s3 $%1 SCR! ,A43 ,(4[1(((]7

[,]Fe'ster6s .hird New Internationa# Dictionar2 4A% /1()>07

[>]B#ack6s :aw Dictionar2 1A1 /,thed707

[A]Stron- v7 Re"ide3 =1 Phi#7 (=A3 (,> [1(%(]7

[)].an v7 Northwest !ir#ines3 Inc73 $4A SCR! 4>$3 4>) [4%%%]a-at v7 Cort of !""ea#s3 $$A SCR! 4()3

$%A [4%%%] orris v7 Cort of !""ea#s3 $,4 SCR! =4)3 =$A [4%%1] 9rancisco v7 9errer3 $,$SCR! 4>13 4>, [4%%1]7

[(].SN3 4 !"ri# 1())3 $A8$) .SN3 1A !"ri# 1())3 $A7

[1%]United !ir#ines3 Inc7 v7 Cort of !""ea#s3 supra note $7

[11]Cit2trst Bankin- Cor"oration v7 Vi##aneva3 $>1 SCR! ==>3 =,A [4%%1]7

[14]Cit2trst Bankin- Cor"oration v7 Vi##aneva3 supra 9rancisco v7 9errer3 supranote )3 at 4>>7

[1$]Catha2 Paci+c !irwa2s3 :td7 v7 Cort of !""ea#s3 41( SCR! ,4%3 ,4= [1(($]7

[1=]Id73 ,4> .an v7 Northwest !ir#ines3 Inc73 supranote ) orris v7 Cort of !""ea#s3 supranote )3 at=$>7

[1,]

orris v7 Cort of !""ea#s3supra

note )3 at =$>7[1>]!rtic#e 44$=3 Civi# Code7

[1A]Orosa v7 Cort of !""ea#s3 $4( SCR! >,43>>, [4%%%] orris v7 Cort of !""ea#s3supra note )3 at=$A8=$)7
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20/157

R:;4- o + P+44::4%/

S: Co

Ma%4a

SPECIAL SECOND DI$ISION

POLO S. PANTALEON3

Petitioner3

8 verss 8

AMERICAN E


21/157

FACTUAL ANTECEDENTS

.he esta'#ished antecedents of the case are narrated 'e#ow7

!E is a resident forei-n cor"oration en-a-ed in the 'siness of "rovidin- credit services

thro-h the o"eration of a char-e card s2ste&7 Panta#eon has 'een an !E cardho#der since 1()%7[$]

In Octo'er 1((13 Panta#eon3 to-ether with his wife /$ulialinda03 da-hter /egina03 and son

/Adrian oerto03 went on a -ided Ero"ean tor7 On Octo'er 4,3 1((13 the tor -ro" arrived

in !&sterda&7 De to their #ate arriva#3 the2 "ost"oned the tor of the cit2 for the fo##owin- da27[=]

.he neHt da23 the -ro" 'e-an their si-htseein- at arond )?,% a7&7 with a tri" to the Coster

Dia&ond


22/157

Fhen the Panta#eons +na##2 retrned to the tor 's3 the2 fond their trave# co&"anions

visi'#2 irritated7 .his irritation intensi+ed when the tor -ide annonced that the2 wo#d have to

cance# the tor 'ecase of #ack of ti&e as the2 a## had to 'e in Ca#ais3 Be#-i& '2 $ "7&7 to catch the

ferr2 to :ondon7[>]

9ro& the records3 it a""ears that after Panta#eon6s "rchase was trans&itted for a""rova# to

!E6s !&sterda& o*ce at (?4% a7&7 was referred to !E6s ani#ao*ce at (?$$ a7&7 and was

a""roved '2 the ani#a o*ce at 1%?1( a7&7 !t 1%?$) a7&73 !E6s ani#a o*ce +na##2 trans&itted the

!""rova# Code to !E6s !&sterda&o*ce7 In a##3 4 oo@ AME< a oa o =' 4%/ o a::o?

Pa%ao%/ :-+a/ a%& o a%/4 + a::o?a o + By /o.[A]

!fter the tri" to Ero"e3 the Panta#eon fa&i#2 "roceeded to the United States7 !-ain3 Panta#eon

eH"erienced de#a2 in secrin- a""rova# for "rchases sin- his !&erican EH"ress credit card on two

se"arate occasions7


23/157

Panta#eon estioned this decision viaa "etition for review on certiorariwith this Cort7

In or a2 )3 4%%( decision3 we reversed the a""e##ate cort6s decision and he#d that !Ewas -i#t2 ofmora solvendi3 or de'tor6s defa#t7 !E3 as de'tor3 had an o'#i-ation as the credit

"rovider to act on Panta#eon6s "rchase reests3 whether to a""rove or disa""rove the&3 with Kti&e#2

dis"atch7L Based on the evidence on record3 we fond that !E fai#ed to ti&e#2 act on Panta#eon6s

"rchases7

Based on the testi&on2 of !E6s credit athorier Ed-ardo 5arie3 the a""rova# ti&e for

credit card char-es wo#d 'e three to for seconds nder re-#ar circ&stances7 In Panta#eon6s case3

it took !E A) &intes to a""rove the !&sterda& "rchase7 Fe attri'ted this de#a2 to

!E6s ani#a credit athorier3 Ed-ardo 5arie3 who had to -o over Panta#eon6s "ast credit histor23

his "a2&ent record and his credit and 'ank references 'efore he a""roved the "rchase7 9indin- this

de#a2 nwarranted3 we reinstated the R.C decision and awarded Panta#eon &ora# and eHe&"#ar2

da&a-es3 as we## as attorne26s fees and costs of #iti-ation7

TE MOTION FOR RECONSIDERATION

In its &otion for reconsideration3 !E ar-es that this Cort erred when it fond !E -i#t2 of

c#"a'#e de#a2 in co&"#2in- with its o'#i-ation to act with ti&e#2 dis"atch on Panta#eon6s "rchases7

Fhi#e !E ad&its that it nor&a##2 takes seconds to a""rove char-e "rchases3 it e&"hasies thatPanta#eon eH"erienced de#a2 in!&sterda& 'ecase his transaction was not a nor&a# one7 .o reca##3

Panta#eon so-ht to char-e in a /4% a%/a-4o%ewe#r2 ite&s "rchased fro& Coster in the tota#

a&ont of USW1$3)4>7%% or P$)$3A=>71>7 Fhi#e the tota# a&ont of Panta#eon6s "revios "rchases

sin- his !E credit card did eHceed USW1$3)4>7%%3 !E "oints ot that these "rchases were

&ade in a s"an of &ore than 1% 2ears3 not in a sin-#e transaction7

Becase this was the 'i--est sin-#e transaction that Panta#eon ever &ade sin- his !E

credit card3 !E ar-es that the transaction necessari#2 reired the credit athorier to caref##2

review Panta#eon6s credit histor2 and 'ank references7 !E &aintains that it did this not on#2 to

ensre Panta#eon6s "rotection /to &ini&ie the "ossi'i#it2 that a third "art2 was frad#ent#2 sin- his

credit card03 't a#so to "rotect itse#f fro& the risk that Panta#eon &i-ht not 'e a'#e to "a2 for his

"rchases on credit7 .his caref# review3 accordin- to !E3 is a#so in kee"in- with the eHtraordinar2

de-ree of di#i-ence reired of 'anks in hand#in- its transactions7 !E conc#ded that in these #i-hts3

the thoro-h review of Panta#eon6s credit record was &otivated '2 #e-iti&ate concerns and co#d not

'e evidence of an2 i## wi##3 frad3 or ne-#i-ence '2 !E7


24/157

!E frther "oints ot that the "roHi&ate case of Panta#eon6s h&i#iation and

e&'arrass&ent was his own decision to "roceed with the "rchase des"ite his awareness that the tor

-ro" was waitin- for hi& and his wife7 Panta#eon co#d have "revented the h&i#iation had he

cance##ed the sa#e when he noticed that the credit a""rova# for the Coster "rchase was nsa##2

de#a2ed7

In his Co&&ent dated 9e'rar2 4=3 4%1%3 Panta#eon &aintains that !E was -i#t2 of mora

solvendi3 or de#a2 on the "art of the de'tor3 in co&"#2in- with its o'#i-ation to hi&7 Based on

ris"rdence3 a st case for de#a2 does not re#ieve the de'tor in de#a2 fro& the conseences of

de#a2 ths3 even if !E had a sti+a'#e reason for the de#a23 this reason wo#d not re#ieve it fro&

the #ia'i#it2 arisin- fro& its fai#re to ti&e#2 act on Panta#eon6s "rchase7

In res"onse to !E6s assertion that the de#a2 was in kee"in- with its dt2 to "erfor& its

o'#i-ation with eHtraordinar2 di#i-ence3 Panta#eon c#ai&s that this dt2 inc#des the ti&e#2 or "ro&"t

"erfor&ance of its o'#i-ation7

!s to !E6s contention that &ora# or eHe&"#ar2 da&a-es cannot 'e awarded a'sent a +ndin-

of &a#ice3 Panta#eon ar-es that evi# &otive or desi-n is not a#wa2s necessar2 to s""ort a +ndin- of

'ad faith -ross ne-#i-ence or wanton disre-ard of contracta# o'#i-ations is s*cient 'asis for the

award of &ora# and eHe&"#ar2 da&a-es7

OUR RULING

7 GRANT + o4o% o -o%/4&a4o%.

Brief historical ac!"ro#nd

! credit card is de+ned as Kan2 card3 "#ate3 co"on 'ook3 or other credit device eHistin- for the"r"ose of o'tainin- &one23 -oods3 "ro"ert23 #a'or or services or an2thin- of va#e on credit7L[(]It

traces its roots to the char-e card +rst introdced '2 the Diners C#' in New Gork Cit2 in 1(,%7[1%] !&erican EH"ress fo##owed sit '2 introdcin- its own char-e card to the !&erican &arket in 1(,)7[11]
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In the Phi#i""ines3 the now defnct Paci+c Bank was res"onsi'#e for 'rin-in- the +rst credit

card into the contr2 in the 1(A%s7 [14]


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sed Ksa##2 on a revo#vin- 'asis7L .his &eans that the cons&er8credit arran-e&ent

that eHists 'etween the isser and the ho#der of the credit card ena'#es the #atter to

"rocre -oods or services Kon a continin- 'asis as #on- as the otstandin- 'a#ance

does not eHceed a s"eci+ed #i&it7L .he card ho#der is3 therefore3 -iven Kthe "ower to

o'tain "resent contro# of -oods or service on a "ro&ise to "a2 for the& in the ftre7L

Bsiness esta'#ish&ents &a2 eHtend credit sa#es thro-h the se of the credit

card faci#ities of a non8'ank credit card co&"an2 to avoid the risk of nco##ecti'#e

acconts fro& their csto&ers7 Under this s2ste&3 the esta'#ish&ents do not de"osit

in their 'ank acconts the credit card drafts that arise fro& the credit sa#es7 Instead3

the2 &ere#2 record their receiva'#es fro& the credit card co&"an2 and "eriodica##2

send the drafts evidencin- those receiva'#es to the #atter7

.he credit card co&"an23 in trn3 sends checks as "a2&ent to these 'siness

esta'#ish&ents3 't it does not redee& the drafts at f## "rice7 .he a-ree&ent

'etween the& sa##2 "rovides for disconts to 'e taken '2 the co&"an2 "on its

rede&"tion of the drafts7 !t the end of each &onth3 it then 'i##s its credit card ho#ders

for their res"ective drafts redee&ed drin- the "revios &onth7 If the ho#ders fai# to

"a2 the a&onts owed3 the co&"an2 sstains the #oss7

Si&"#2 "t3 ever2 credit card transaction invo#ves three contracts3 na&e#2? /a0 the /a/

-o%a-'etween the credit card ho#der and the &erchant or the 'siness esta'#ish&ent which

acce"ted the credit card /'0 the oa% a%'etween the credit card isser and the credit card

ho#der and #ast#23 /c0 the :o4/ o :ay'etween the credit card isser and the &erchant or

'siness esta'#ish&ent7[1>]

Credit card iss#er $ cardholder relationship

Fhen a credit card co&"an2 -ives the ho#der the "rivi#e-e of char-in- ite&s at esta'#ish&entsassociated with the isser3[1A]a necessar2 estion in a #e-a# ana#2sis is X when does this re#ationshi"'e-in .here are two diver-in- views on the &atter7 In Cit( Stores Co. v. +enderson3[1)] another U7S7 decision3 he#d that?

.he issance of a credit card is 't an oMer to eHtend a #ine of o"en accont

credit7 It is ni#atera# and s""orted '2 no consideration7 .he oMer &a2 'e withdrawnat an2 ti&e3 withot "rior notice3 for an2 reason or3 indeed3 for no reason at a##3 and itswithdrawa# 'reaches no dt2 X for there is no dt2 to contine it X and vio#ates nori-hts7

.hs3 nder this view3 each credit card transaction is considered a se"arate oMer and acce"tance7


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ovac= v. Cities Service )il Co.[1(]echoed this view3 with the cort r#in- that the &ere

issance of a credit card did not create a contracta# re#ationshi" with the cardho#der7

On the other end of the s"ectr& is @ra( v. American ;>press Compan([4%]which reco-nied the

card &e&'ershi" a-ree&ent itse#f as a 'indin- contract 'etween the credit card isser and the card

ho#der7 Un#ike in the ovac=and the Cit( Storescases3 however3 the cardho#der in @ra("aid an anna#

fee for the "rivi#e-e of 'ein- an !&erican EH"ress cardho#der7

In or risdiction3 we -enera##2 adhere to the @ra(r#in-3 reco-niin- the re#ationshi" 'etween

the credit card isser and the credit card ho#der as a contracta# one that is -overned '2 the ter&s and

conditions fond in the card &e&'ershi" a-ree&ent7[41].his contract "rovides the ri-hts and #ia'i#ities

of a credit card co&"an2 to its cardho#ders and vice versa7

Fe note that a card &e&'ershi" a-ree&ent is a contract of adhesion as its ter&s are

"re"ared so#e#2 '2 the credit card isser3 with the cardho#der &ere#2 a*Hin- his si-natre

si-nif2in- his adhesion to these ter&s7[44].his circ&stance3 however3 does not render the

a-ree&ent void we have nifor he#d that contracts of adhesion are Kas 'indin- as ordinar2

contracts3 the reason 'ein- that the "art2 who adheres to the contract is free to reect it

entire#27L[4$].he on#2 eMect is that the ter&s of the contract are constred strict#2 a-ainst the "art2

who drafted it7[4=]

On A%E&'s oli"ations to (antaleon

Fe 'e-in '2 identif2in- the two "rivi#e-es that Panta#eon ass&es he is entit#ed to with the

issance of his !E credit card3 and on which he anchors his c#ai&s7 9irst3 Panta#eon "res&es that

since his credit card has no "re8set s"endin- #i&it3 !E has the o'#i-ation to a""rove a## his char-e

reests7 Converse#23 even if !E has no sch o'#i-ation3 at the ver2 #east it is o'#i-ed to act on his

char-e reests within a s"eci+c "eriod of ti&e7

i. )se of credit card a *ere o+er to enter into loan a"ree*ents

!#tho-h we reco-nie the eHistence of a re#ationshi" 'etween the credit card isser and

the credit card ho#der "on the acce"tance '2 the cardho#der of the ter&s of the card &e&'ershi"

a-ree&ent /csto&ari#2 si-ni+ed '2 the act of the cardho#der in si-nin- the 'ack of the credit

card03 +a? o &4/4%4/+ +4/ -o%a-a a4o%/+4: o + -&4o!&;o

a4o%/+4: +4-+ o%y a4// after+ -&4 -a& 4// +a/ a::o?& +
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-a&+o&/ :-+a/ /..he +rst re#ates &ere#2 to an a-ree&ent "rovidin- for credit

faci#it2 to the cardho#der7 .he #atter invo#ves the acta# credit on #oan a-ree&ent invo#vin- three

contracts3 na&e#2? the /a/ -o%a-'etween the credit card ho#der and the &erchant or the

'siness esta'#ish&ent which acce"ted the credit card the oa% a%'etween the credit

card isser and the credit card ho#der and the:o4/ o :ay'etween the credit card isser and

the &erchant or 'siness esta'#ish&ent7

9ro& the #oan a-ree&ent "ers"ective3 the contracta# re#ationshi" 'e-ins to eHist on#2 "on

the &eetin- of the oMer[4,]and acce"tance of the "arties invo#ved7 In &ore concrete ter&s3 when

cardho#ders se their credit cards to "a2 for their "rchases3 the2 &ere#2 oMer to enter into #oan

a-ree&ents with the credit card co&"an27 On#2 after the #atter a""roves the "rchase reests that

the "arties enter into 'indin- #oan contracts3 in kee"in- with !rtic#e 1$1( of the Civi# Code3 which

"rovides?

!rtic#e 1$1(7 Consent is &anifested '2 the &eetin- of the oMer and the

acce"tance "on the thin- and the case which are to constitte the contract7 .he

oMer &st 'e certain and the acce"tance a'so#te7 ! a#i+ed acce"tance constittes

a conter8oMer7

.his view +nds s""ort in the reservation fond in the card &e&'ershi" a-ree&ent itse#f3

"artic#ar#2 "ara-ra"h 1%3 which c#ear#2 states that !E K/?[/] + 4+ o &%y

a+o4a4o% o a%y /& C+a.L B2 so "rovidin-3 !E &ade its "osition c#ear that it has

no o'#i-ation to a""rove an2 and a## char-e reests &ade '2 its card ho#ders7

ii. A%E& not "#ilt of c#lpale dela

Since !E has no o'#i-ation to a""rove the "rchase reests of its credit cardho#ders3

Panta#eon cannot c#ai& that !E defa#ted in its o'#i-ation7 !rtic#e 11>( of the Civi# Code3 which

"rovides the reisites to ho#d a de'tor -i#t2 of c#"a'#e de#a23 states?

!rtic#e 11>(7 .hose o'#i-ed to de#iver or to do so&ethin- incr in de#a2 fro&

the ti&e the o'#i-ee dicia##2 or eHtradicia##2 de&ands fro& the& the f#+##&ent of

their o'#i-ation7 H H H7

.he three reisites for a +ndin- of defa#t are? /a0 that the o'#i-ation is de&anda'#e and

#iidated /'0 the de'tor de#a2s "erfor&ance and /c0 the creditor dicia##2 or eHtradicia##2 reires

the de'tor6s "erfor&ance7[4>]
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Based on the a'ove3 the +rst reisite is no #on-er &et 'ecase !E3 '2 the eH"ress ter&s of

the credit card a-ree&ent3 is not o'#i-ated to a""rove Panta#eon6s "rchase reest7 Fithot a

de&anda'#e o'#i-ation3 there can 'e no +ndin- of defa#t7

!"art fro& the #ack of an2 de&anda'#e o'#i-ation3 we a#so +nd that Panta#eon fai#ed to &ake

the de&and reired '2 !rtic#e 11>( of the Civi# Code7

!s "revios#2 esta'#ished3 the se of a credit card to "a2 for a "rchase is on#2 an oMer to the

credit card co&"an2 to enter a #oan a-ree&ent with the credit card ho#der7*o + -&4 -a&

4// a--:/ +4/ o, %o o;4a4o% a4% o + oa% a% >4// ;%

+.On the other hand3 a de&and is de+ned as the Kassertion of a #e-a# ri-ht HHH an askin- with

athorit23 c#ai&in- or cha##en-inas de7L [4A]A &a%& :/::o// + >4/%- o a%

o;4a4o% ;% + :a4/7

.hs3 ever2 ti&e that Panta#eon sed his !E credit card to "a2 for his "rchases3 what the

stores trans&itted to !E were his oMers to eHecte #oan contracts7 .hese o'vios#2 co#d not 'e

c#assi+ed as the de&and reired '2 #aw to &ake the de'tor in defa#t3 -iven that no o'#i-ation co#d

arise on the "art of !E nti# after !E trans&itted its acce"tance of Panta#eon6s oMers7 Panta#eon6s

act of Kinsistin- on and waitin- for the char-e "rchases to 'e a""roved '2 !EL[4)]is not the

de&and conte&"#ated '2 !rtic#e 11>( of the Civi# Code7

9or fai#in- to co&"#2 with the reisites of !rtic#e 11>(3 Panta#eon6s char-e that !E is -i#t2

of c#"a'#e de#a2 in a""rovin- his "rchase reests &st fai#7

iii. On A%E&'s oli"ation to act on the o+er -ithin a specic period of ti*e

Even ass&in- that !E had the ri-ht to review his credit card histor2 'efore it a""roved his

"rchase reests3 Panta#eon insists that !E had an o'#i-ation to act on his "rchase reests3

either to a""rove or den23 in Ka &atter of secondsL or Kin ti&e#2 dis"atch7L Panta#eon i&"resses "ons the eHistence of this o'#i-ation '2 e&"hasiin- two "oints? /a0 his card has no "re8set s"endin-

#i&it and /'0 in his twe#ve 2ears of sin- his !E card3 !E had a#wa2s a""roved his char-es in a

&atter of seconds7

Panta#eon6s assertions fai# to convince s7
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Fe ori-ina##2 he#d that !E was in c#"a'#e de#a2 when it acted on the Coster transaction3 as

we## as the two other transactions in the United States which took !E a""roHi&ate#2 1, to 4%

&intes to a""rove7 .his conc#sion a""ears va#id and reasona'#e at +rst -#ance3 co&"arin- the ti&e

it took to +na##2 -et the Coster "rchase a""roved /a tota# of A) &intes03 to !E6s Knor&a#L a""rova#

ti&e of three to for seconds /'ased on the testi&on2 of Ed-ardo 5ari-e3 as we## as Panta#eon6s

"revios eH"erience07 Fe co&e to a diMerent res#t3 however3 after a c#oser #ook at the facta# and

#e-a# circ&stances of the case7

!E6s credit athorier3 Ed-ardo 5ari-e3 eH"#ained that havin- no "re8set s"endin- #i&it in

a credit card si&"#2 &eans that the char-es &ade '2 the cardho#der are a""roved 'ased on his a'i#it2

to "a23 as de&onstrated '2 his "ast s"endin-3 "a2&ent "atterns3 and "ersona# resorces7[4(] Neverthe#ess3 ?y 4 Pa%ao% -+a/ a :-+a/ o% +4/ -&4 -a&, + -&4 -a&

-o:a%y /4 +a/ o &4% ++ 4 4 ao +4/ -+a, ;a/& o% +4/ :a/ -&4

+4/oy7 .his ri-ht to review a card ho#der6s credit histor23 a#tho-h not s"eci+ca##2 set ot in the card&e&'ershi" a-ree&ent3 is a necessar2 i&"#ication of !E6s ri-ht to den2 athoriation for an2

reested char-e7

!s for Panta#eon6s "revios eH"eriences with !E / i.e.3 that in the "ast 14 2ears3 !E has

a#wa2s a""roved his char-e reests in three or for seconds03 this record does not esta'#ish that

Panta#eon had a #e-a##2 enforcea'#e o'#i-ation to eH"ect !E to act on his char-e reests within a

&atter of seconds7 9or one3 Panta#eon fai#ed to "resent an2 evidence to s""ort his assertion that

!E acted on "rchase reests in a &atter of three or for seconds as an esta'#ished "ractice7 ore

i&"ortant#23 even if Panta#eon did "rove that !E3 as a &atter of "ractice or csto&3 acted on its

csto&ers6 "rchase reests in a &atter of seconds3 this wo#d sti## not 'e eno-h to esta'#ish a

#e-a##2 de&anda'#e ri-ht as a -enera# r#e3 a "ractice or csto& is not a sorce of a #e-a##2

de&anda'#e or enforcea'#e ri-ht7[$%]

Fe neHt eHa&ine the credit card &e&'ershi" a-ree&ent3 the contract that "ri&ari#2 -overns

the re#ationshi" 'etween !E and Panta#eon7 Si-ni+cant#23 + 4/ %o :o?4/4o% 4% +4/

a% +a o;4a/ AME< o a- o% a -a&+o& :-+a/ // 4+4% a

/:-4-ay &%& :4o& o 47 .hs3 re-ard#ess of whether the o'#i-ation is worded was to

Kact in a &atter of secondsL or to Kact in ti&e#2 dis"atch3L the fact re&ains that no o'#i-ation eHists on

the "art of !E to act within a s"eci+c "eriod of ti&e7 Even Panta#eon ad&its in his testi&on2 that he

co#d not reca## an2 "rovision in the !-ree&ent that -aranteed !E6s a""rova# of his char-e

reests within a &atter of &intes7[$1]

Nor can Panta#eon #ook to the #aw or -overn&ent issances as the sorce of !E6s a##e-ed

o'#i-ation to act "on his credit card "rchases within a &atter of seconds7 !s the fo##owin- srve2 of


31/157

Phi#i""ine #aw on credit card transactions de&onstrates3 the State does not reire credit card

co&"anies to act "on its cardho#ders6 "rchase reests within a s"eci+c "eriod of ti&e7

Re"'#ic !ct No7 )=)= /A 131303 or the !ccess Devices Re-#ation !ct of 1(()3 a""roved

on 9e'rar2 113 1(()3 is the contro##in- #e-is#ation


32/157

that re-#ates the issance and se of access devices3[$4]inc#din- credit cards7 .he &ore

sa#ient "ortions of this #aw inc#de the i&"osition of the o'#i-ation on a credit card co&"an2 to disc#ose

certain i&"ortant +nancia# infor&ation[$$]to credit card a""#icants3 as we## as a de+nition of the acts

that constitte access device frad7

!s +nancia# instittions en-a-ed in the 'siness of "rovidin- credit3 credit card co&"anies fa##

nder the s"ervisor2 "owers of the Ban-ko Sentra# n- Pi#i"inas /BS?07[$=]BSP Circ#ar No7 $()

dated !-st 413 4%%$ e&'odies the BSP6s "o#ic2 when it co&es to credit cards X

.he Ban-ko Sentra# n- Pi#i"inas /BSP0 sha## foster the deve#o"&ent of

cons&er credit thro-h innovative "rodcts sch as credit cards nder conditions

of fair and so#nd cons#*er credit practices7 .he BSP #ikewise encora-es

co&"etition and trans"arenc2 to ensre &ore e*cient de#iver2 of services and fair

dea#in-s with csto&ers7 /E&"hasis s""#ied0

Based on this Circ#ar3 KH H H [']efore issin- credit cards3 'anks andQor their s'sidiar2

credit card co&"anies &st eHercise "ro"er di#i-ence '2 ascertainin- that a""#icants "ossess -ood

credit standin- and are +nancia##2 ca"a'#e of f#+##in- their credit co&&it&ents7L[$,]!s the a'ove8

oted "o#ic2 eH"ress#2 states3 the -enera# intent is to foster Kfair and so#nd cons#*er credit

practices.L

Other than BSP Circ#ar No7 $()3 a re#ated circ#ar is BSP Circ#ar No7 =,=3 issed

on Se"te&'er 4=3 4%%=3 't this circ#ar &ere#2 en&erates the nfair co##ection "ractices of credit

card co&"anies X a &atter not re#evant to the isse at hand7

In #i-ht of the fore-oin-3 we +nd and so ho#d that !E is neither contracta##2 'ond

nor #e-a##2 o'#i-ated to act on its cardho#ders6 "rchase reests within an2 s"eci+c "eriod of ti&e3

&ch #ess a "eriod of a K&atter of secondsL that Panta#eon ses as his standard7 .he standard

therefore is i&"#icit and3 as in a## contracts3 &st 'e 'ased on fairness and reasona'#eness3 read in

re#ation to the Civi# Code "rovisions on h&an re#ations3 as wi## 'e discssed 'e#ow7

A%E& acted -ith "ood faith

.hs far3 we have a#read2 esta'#ished that? /a0 !E had neither a contracta# nor a #e-a#

o'#i-ation to act "on Panta#eon6s "rchases within a s"eci+c "eriod of ti&e and /'0 !E has a ri-ht

to review a cardho#der6s credit card histor27 O -o%44o% o +/ %4%/, +o?,

&o/ %o 4? AME< a% %44& 4+ o : o a-4o% o% -a&+o&/ :-+a/ //

o 4%&%4 :4o&/ o 47 In actin- on cardho#ders6 "rchase reests3 !E &st take care
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not to a'se its ri-hts and case inr2 to its c#ients andQor third "ersons7 Fe cite in this re-ard !rtic#e

1(3 in connction with !rtic#e 413 of the Civi# Code3 which "rovide?

!rtic#e 1(7 Ever2 "erson &st3 in the eHercise of his ri-hts and in the "erfor&ance of

his dties3 act with stice3 -ive ever2one his de and o'serve honest2 and -ood faith7

!rtic#e 417 !n2 "erson who wi##f##2 cases #oss or inr2 to another in a &anner that is

contrar2 to &ora#s3 -ood csto&s or "'#ic "o#ic2 sha## co&"ensate the #atter for the

da&a-e7

!rtic#e 1( "ervades the entire #e-a# s2ste& and ensres that a "erson sMerin- da&a-e in the

corse of another6s eHercise of ri-ht or "erfor&ance of dt23 sho#d +nd hi&se#f withot re#ief7[$>]It sets

the standard for the condct of a## "ersons3 whether arti+cia# or natra#3 and reires that ever2one3 in

the eHercise of ri-hts and the "erfor&ance of o'#i-ations3 &st? /a0 act with stice3 /'0 -ive ever2one

his de3 and /c0 o'serve honest2 and -ood faith7 It is not 'ecase a "erson invokes his ri-hts that he

can do an2thin-3 even to the "redice and disadvanta-e of another7[$A]

Fhi#e !rtic#e 1( en&erates the standards of condct3 !rtic#e 41 "rovides the re&ed2 for the

"erson inred '2 the wi##f# act3 an action for da&a-es7 Fe eH"#ained how these two "rovisions

corre#ate with each other in @F ;-uit(, Inc. v. 'alenzona?[$)]

[!rtic#e 1(]3 known to contain what is co&&on#2 referred to as the "rinci"#e of

a'se of ri-hts3 sets certain standards which &st 'e o'served not on#2 in the eHercise

of oneZs ri-hts 't a#so in the "erfor&ance of oneZs dties7 .hese standards are the

fo##owin-? to act with stice to -ive ever2one his de and to o'serve honest2 and

-ood faith7 .he #aw3 therefore3 reco-nies a "ri&ordia# #i&itation on a## ri-hts that in

their eHercise3 the nor&s of h&an condct set forth in !rtic#e 1( &st 'e o'served7 A

4+, +o+ ;y 4/ a ;-a/ -o%4& o a%& ;y a a/ /-+,

ay %?+// ;-o + /o- o /o 4a4y. 7+% a 4+ 4/

>-4/& 4% a a%% +4-+ &o/ %o -o%o 4+ + %o/ %/+4%& 4%

A4- 19 a%& // 4% &aa o a%o+, a a o% 4/ +;y

-o4& o +4-+ + o%&o / ; +& /:o%/4;.Bt whi#e !rtic#e

1( #a2s down a r#e of condct for the -overn&ent of h&an re#ations and for the

&aintenance of socia# order3 it does not "rovide a re&ed2 for its vio#ation7 ;enera##23

an action for da&a-es nder either !rtic#e 4% or !rtic#e 41 wo#d 'e "ro"er7

In the conteHt of a credit card re#ationshi"3 a#tho-h there is neither a contracta# sti"#ation nor

a s"eci+c #aw reirin- the credit card isser to act on the credit card ho#der6s oMer within a de+nite

"eriod of ti&e3 these "rinci"#es "rovide the standard '2 which to d-e !E6s actions7
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!ccordin- to Panta#eon3 even if !E did have a ri-ht to review his char-e "rchases3 it a'sed

this ri-ht when it nreasona'#2 de#a2ed the "rocessin- of the Coster char-e "rchase3 as we## as his

"rchase reests at the Richard et6 ;o#f Stdio and ids6 Un#i&ited Store !E sho#d have

known that its fai#re to act i&&ediate#2 on char-e referra#s wo#d entai# inconvenience and res#t in

h&i#iation3 e&'arrass&ent3 anHiet2 and distress to its cardho#ders who wo#d 'e reired to wait

'efore c#osin- their transactions7[$(]

It is an e#e&entar2 r#e in or risdiction that -ood faith is "res&ed and that the 'rden of

"rovin- 'ad faith rests "on the "art2 a##e-in- it7[=%]!#tho-h it took !E so&e ti&e 'efore it

a""roved Panta#eon6s three char-e reests3 we +nd no evidence to s--est that it acted with

de#i'erate intent to case Panta#eon an2 #oss or inr23 or acted in a &anner that was contrar2 to

&ora#s3 -ood csto&s or "'#ic "o#ic27 Fe -ive credence to !E6s c#ai& that its review "rocedre was

done to ensre Panta#eon6s own "rotection as a cardho#der and to "revent the "ossi'i#it2 that the

credit card was 'ein- frad#ent#2 sed '2 a third "erson7

Panta#eon contered that this review "rocedre is "ri&ari#2 intended to "rotect !E6s

interests3 to &ake sre that the cardho#der &akin- the "rchase has eno-h &eans to "a2 for the

credit eHtended7 Even if this were the case3 however3 we do not +nd an2 taint of 'ad faith in sch

&otive7 It is 't natra# for !E to want to ensre that it wi## eHtend credit on#2 to "eo"#e who wi##

have s*cient &eans to "a2 for their "rchases7 !E3 after a##3 is rnnin- a 'siness3 not a charit23

and it wo#d si&"#2 'e #dicros to s--est that it wo#d not want to earn "ro+t for its services7 .hs3

so #on- as !E eHercises its ri-hts3 "erfor&s its o'#i-ations3 and -enera##2 acts with -ood faith3 with

no intent to case har&3 even if it &a2 occasiona##2 inconvenience others3 it cannot 'e he#d #ia'#e for

da&a-es7

Fe a#so cannot trn a '#ind e2e to the circ&stances srrondin- the Coster transaction which3

in or o"inion3 sti+ed the wait7 In Ed-ardo 5ari-e6s own words?

J 41? Fith reference to the transaction at the Coster Dia&ond &intes3 &ore or #ess

!41? Becase we have to &ake certain considerations and eva#ations of [Panta#eon6s]

"ast s"endin- "attern with [!E] at that ti&e 'efore a""rovin- "#aintiM6s reest

'ecase [Panta#eon] was at that ti&e &akin- +4/ ?y / /4% -+a :-+a/

o USH13,'26[this is 'e#ow the USW1>31147,) acta##2 'i##ed and "aid for '2 the

"#aintiM 'ecase the diMerence was a#read2 ato&atica##2 a""roved '2 [!E] o*ce in

Nether#and[s] a%& + -o& o [Pa%ao%/] :a/ /:%&4% 4+ [AME


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transaction wo#d not have 'een a""roved at a## considerin- that the "ast s"endin-

"attern of the "#aintiM with [!E] at that ti&e does not s""ort his a'i#it2 to "a2 for

sch "rchase7[=1]

H H H H

J? Fh2 did it take so #on-

!? It took ti&e to review the accont on credit3 so3 if there is an2 de#inencies [sic] of

the card&e&'er7 .here are factors on decidin- the char-e itse#f which are standard

&easres in a""rovin- the athoriation7 Now in the case of r7 Panta#eon a#tho-h his

accont is sin-#e char-e "rchase of USW1$3)4>7 [sic] this is 'e#ow the USW1>3%%%7 "#s

acta##2 'i##ed H H H we wo#d have a#read2 dec#ined the char-e otri-ht and asked

hi& his 'ank accont to s""ort his char-e7 Bt de to the #en-th of his &e&'ershi"

as cardho#der we had to &ake a decision on hand7[=4]

!s Ed-ardo 5ari-e c#ari+ed3 the reason wh2 Panta#eon had to wait for !E6s a""rova# was

'ecase he had to -o over Panta#eon6s credit card histor2 for the "ast twe#ve &onths7[=$]It wo#d

certain#2 'e nst for s to "ena#ie !E for &ere#2 eHercisin- its ri-ht to review Panta#eon6s credit

histor2 &etic#os#27

9ina##23 we said in @arciano v. Court of Appealsthat Kt%e rig%t to recover 5moral damages7

under Article 02 is ased on e-uit(, and %e w%o comes to court to demand e-uit(, must come wit%

clean %ands. Article 02 s%ould e construed as granting t%e rig%t to recover damages to inured

persons w%o are not t%emselves at fault7L[==]!s wi## 'e discssed 'e#ow3 Panta#eon is not a '#a&e#ess

"art2 in a## this7

(antaleon's action -as the pro/i*ate ca#se for

his in0#r

Panta#eon &ain#2 anchors his c#ai& for &ora# and eHe&"#ar2 da&a-es on the

e&'arrass&ent and h&i#iation that he fe#t when the Ero"ean tor -ro" had to wait for hi& and his

wife for a""roHi&ate#2 $, &intes3 and eventa##2 had to cance# the !&sterda& cit2 tor7 !fter

thoro-h#2 reviewin- the records of this case3 we have co&e to the conc#sion that Panta#eon is the

"roHi&ate case for this e&'arrass&ent and h&i#iation7
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!s 'orne '2 the records3 Panta#eon knew even 'efore enterin- Coster that the tor -ro"

wo#d have to #eave the store '2 (?$% a7&7 to have eno-h ti&e to take the cit2 tor

of !&sterda& 'efore the2 #eft the contr27 !fter (?$% a7&73 Panta#eon6s son3 who had 'oarded the 's

ahead of his fa&i#23 retrned to the store to infor& his fa&i#2 that the2 were the on#2 ones not on the

's and that the entire tor -ro" was waitin- for the&7 Si-ni+cant#23 Pa%ao% 4& o -a%- +

/a a 9#(0 a.. ;-a/ + &4& %o a% o -a/ a%y 4%-o%?%4%- o + o o:7


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aMords no re&ed2 for da&a-es res#tin- fro& an act which does not a&ont to a #e-a#inr2 or wron-7 .hese sitations are often ca##ed damnum as-ue inuria.

In other words3 in order that a "#aintiM &a2 &aintain an action for the inries

of which he co&"#ains3 he &st esta'#ish that sch inries res#ted fro& a 'reach of

dt2 which the defendant owed to the "#aintiM 8 a concrrence of inr2 to the "#aintiM

and #e-a# res"onsi'i#it2 '2 the "erson casin- it7 T+ %&y4% ;a/4/ o +

aa& o o &aa/ 4/ + :4/ +a a% 4%&4?4&a a/ 4%B& 4%-o%:a4o% o a7 .hs3 there &st +rst 'e a 'reach of so&e dt2 and the

i&"osition of #ia'i#it2 for that 'reach 'efore da&a-es &a2 'e awarded and the 'reach

of sch dt2 sho#d 'e the "roHi&ate case of the inr27

(antaleon is not entitled to da*a"es

Becase !E neither 'reached its contract with Panta#eon3 nor acted with c#"a'#e de#a2 or

the wi##f# intent to case har&3 we +nd the award of &ora# da&a-es to Panta#eon nwarranted7

Si&i#ar#23 we +nd no 'asis to award eHe&"#ar2 da&a-es7 In contracts3 eHe&"#ar2 da&a-es can

on#2 'e awarded if a defendant acted Kin a wanton3 frad#ent3 reck#ess3 o""ressive or &a#evo#ent

&anner7L[=(].he "#aintiM &st a#so show that he is entit#ed to &ora#3 te&"erate3 or co&"ensator2

da&a-es 'efore the cort &a2 consider the estion of whether or not eHe&"#ar2 da&a-es sho#d 'e

awarded7[,%]

!s "revios#2 discssed3 it took !E so&e ti&e to a""rove Panta#eon6s "rchase reests

'ecase it had #e-iti&ate concerns on the a&ont 'ein- char-ed no &a#icios intent was everesta'#ished here7 In the a'sence of an2 other da&a-es3 the award of eHe&"#ar2 da&a-es c#ear#2 #acks

#e-a# 'asis7

Neither do we +nd an2 'asis for the award of attorne26s fees and costs of #iti-ation7 No

"re&i& sho#d 'e "#aced on the ri-ht to #iti-ate and not ever2 winnin- "art2 is entit#ed to an

ato&atic -rant of attorne2Zs fees7[,1].o 'e entit#ed to attorne26s fees and #iti-ation costs3 a "art2 &st

show that he fa##s nder one of the instances en&erated in!rtic#e 44%) of the Civi# Code7[,4].his3

Panta#eon fai#ed to do7 Since we e#i&inated the award of &ora# and eHe&"#ar2 da&a-es3 so &st we

de#ete the award for attorne2Zs fees and #iti-ation eH"enses7

:ast#23 a#tho-h we a*r& the res#t of the C! decision3 we do so for the reasons stated in this

Reso#tion and not for those fond in the C! decision7
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7EREFORE, "re&ises considered3 we SET ASIDE or a2 )3 4%%( Decision and GRANT the

"resent &otion for reconsideration7 .he Cort of !""ea#s Decision dated !-st 1)3 4%%> is

here'2 AFFIRMED. No costs7

SO ORDERED.

ARTURO D. *RION

!ssociate 5stice

7E CONCUR?

CONCITA CARPIO MORALES !ssociate 5stice

PRES*ITERO 8. $ELASCO, 8R.

!ssociate 5stice

TERESITA 8. LEONARDO!DE CASTRO

!ssociate 5stice

LUCAS P. *ERSAMIN

!ssociate 5stice


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ATTESTATION

9IRS. DIVISION

[G.R. No. 115129. F;ay 12, 199=]

IGNACIO *AR"AGA,petitioner, vs.COURT OF APPEALS a%& ANGELITO AL$IAR, respondents.

D E C I S I O N

*ELLOSILLO,J.#

.he Fatesordained that Christ&as 1((% 'e '#eak for I-nacio Bara-a and his fa&i#27 On thenineteenth of Dece&'er I-nacioZs wife scc&'ed to a de'i#itatin- ai#&ent after "ro#on-ed "ain and

sMerin-7 9orewarned '2 her attendin- "h2sicians of her i&"endin- death3 she eH"ressed her wish to'e #aid to rest 'efore Christ&as da2 to s"are her fa&i#2 fro& kee"in- #one#2 vi-i# over her re&ainswhi#e the who#e of Christendo& ce#e'rate the Nativit2 of their Redee&er7

Drained to the 'one fro& the tra-ed2 that 'efe## his fa&i#2 2et "reocc"ied with overseein- thewake for his de"arted wife3 I-nacio Bara-a set ot to arran-e for her inter&ent on the twent28forthof Dece&'er in o'edience semper !delisto her d2in- wish7 Bt her +na# entreat23 nfortnate#23 co#dnot 'e carried ot7 Dire events cons"ired to '#ock his "#ans that forthwith -ave hi& and his fa&i#2their -#oo&iest Christ&as ever7

.his is Bara-aZs stor27 On 41 Dece&'er 1((%3 at a'ot three oc#ock in the afternoon3 he went tothe hardware store of res"ondent !n-e#ito !#viar to inire a'ot the avai#a'i#it2 of certain &ateria#s to'e sed in the constrction of a niche for his wife7


40/157

were not 2et read2 for #oadin-7 Distressed that !#viarZs e&"#o2ees were not the #east concerned3des"ite his i&"assioned "#eas3 Bara-a decided to cance# his transaction with the store and #ook forconstrction &ateria#s e#sewhere7

In the afternoon of that da23 "etitioner was a'#e to '2 fro& another store7 Bt since darknesswas a#read2 settin- in and his workers had #eft3 he &ade " his &ind to start his "roect the fo##owin-&ornin-3 4$ Dece&'er7 Bt he knew that the niche wo#d not 'e +nish in ti&e for the sched#ed 'ria#the fo##owin- da27


41/157

#itt#e &ore ti&e to 'rin- the constrction &ateria#s over to the ce&eter2 since a few hors &ore wo#dnot rea##2 &atter and considerin- that his trck had a Tat tire7 Besides3 accordin- to hi&3 Bara-a sti##had s*cient ti&e to 'i#d the to&' for his wife7

.his is a -ratitos assertion that 'orders on ca##osness7 Private res"ondent had no ri-ht to&ani"#ate "etitionerZs ti&eta'#e and s'stitte it with his own7 Petitioner had a dead#ine to &eet7 !few hors of de#a2 was no "idd#in- &atter to hi& who in his 'ereave&ent had 2et to attend to other"ressin- fa&i#2 concerns7 Des"ite this3 res"ondentZs e&"#o2ees sti## &ade #i-ht of his earnesti&"ortnin-s for an i&&ediate de#iver27 !s "etitioner 'itter#2 dec#ared in cort \ H H H the2/res"ondentZs e&"#o2ees0 were &akin- a foo# ot of &e7\[,]

Fe a#so +nd nacce"ta'#e res"ondentZs sti+cation that his trck had a Tat tire3 for this event3 ifindeed it ha""ened3 was forseea'#e accordin- to the tria# cort3 and as sch sho#d have 'eenreasona'#2 -arded a-ainst7 .he natre of "rivate res"ondentZs 'siness reires that he sho#d 'eread2 at a## ti&es to &eet contin-encies of this kind7 One "iece of testi&on2 '2 res"ondentZs witnessarina Bonca#es has ca-ht or attention 8 that the de#iver2 trck arrived a #itt#e #ate thansa# ecause it came from a deliver( of materials in *angcaan, asmarias, Cavite7[>]Si-ni+cant#23this infor&ation was withhe#d '2 Bonca#es fro& "etitioner when the #atter was ne-otiatin- with her forthe "rchase of constrction &ateria#s7 Conseent#23 it is not nreasona'#e to s""ose that had sheto#d "etitioner of this fact and that the de#iver2 of the &ateria#s wo#d conseent#2 'e de#a2ed3"etitioner wo#d not have 'o-ht the &ateria#s fro& res"ondentZs hardware store 't e#sewherewhich co#d &eet his ti&e reire&ent7 .he de#i'erate s""ression of this infor&ation '2 itse#f

&anifests a certain de-ree of 'ad faith on the "art of res"ondentZs storekee"er7.he a""e##ate cort a""ears to have 'e#itt#ed "etitionerZs s'&ission that nder the "revai#in-

circ&stances ti&e was of the essence in the de#iver2 of the &ateria#s to the -rave site7


42/157

neivoca##2 within the rea#& of acta# or co&"ensator2 da&a-es7 PetitionerZs fai#re to "rove acta#eH"enditre conseent#2 condces to a fai#re of his c#ai&7 9or in deter&inin- acta# da&a-es3 thecort cannot re#2 on &ere assertions3 s"ec#ations3 conectres or -esswork 't &st de"end onco&"etent "roof and on the 'est evidence o'taina'#e re-ardin- the acta# a&ont of #oss7[)]

Fea*r& the award of attorne2Zs fees and #iti-ation eH"enses7 !ward of da&a-es3 attorne2Zs feesand #iti-ation costs is #eft to the sond discretion of the cort3 and if sch discretion 'e we## eHercised3as in this case3 it wi## not 'e distr'ed on a""ea#7 [(]

7EREFORE3 the decision of the Cort of !""ea#s is REVERSEDand SE. !SIDE eHce"t insofar asit ;R!N.ED on a &otion for reconsideration the refnd '2 "rivate res"ondent of the a&ontof P4311%7%% "aid '2 "etitioner for the constrction &ateria#s7 Conseent#23 eHce"t for the awardof P,3%%%7%% as te&"erate da&a-es which we de#ete3 the decision of the Re-iona# .ria# Cort -rantin-"etitioner /a0 P4311%7%% as refnd for the va#e of &ateria#s with interest co&"ted at the #e-a# rate"er ann& fro& the date of the +#in- of the case /'0P4%3%%%7%% as &ora# da&a-es /c0 P1%3%%%7%% aseHe&"#ar2 da&a-es /d0 P,3%%%7%% as #iti-ation eH"enses and /=0 P,3%%%7%% as attorne2Zs fees3 is!99IRED7 No costs7

SO ORDERED.

?adilla,/C%airman83 'itug, apunan,and +ermosisima, $r., $$., concr7

[1]!ssi-ned to R.C8Br7 413 I&s3 Cavite3 "resided over '2 5d-e Ro2 S7 de# Rosario3 ollo3 "7 >)7

[4]Decision "enned '2 5stice ane# C7 ].SN3 > Dece&'er 1((13 "7 $,7

[A]!rt7 11>(3 #ast "ar73 Civi# Code7

[)]Dichoso v7 Cort of !""ea#s3 ;7R7 No7 ,,>1$3 1% Dece&'er 1((%3 1(4 SCR! 1>( Peo"#e v7 Rosario3;7R7 No7 1%)A)(3 1) 5#2 1((,3 4=> SCR! >,)7

[(]Phi#i""ine !ir#ines, Inc. v. Cort of !""ea#s3 ;7R7 Nos7 ,%,%=8%,3 1$ !-st 1((%3 1)) SCR! =>17

SECOND DIVISION

[G.R. No. 1(5('3. No?; 19, 200(]

LOREN"O SIPPING CORP.,petitioner, vs. *8 MARTEL INTERNATIONAL, INC., respondent.

D E C I S I O N

CICO!NA"ARIO,J.#

.his is a "etition for review seekin- to set aside the Decision[1]of the Cort of !""ea#s in C!8;7R7CV No7 ,=$$= and its Reso#tion den2in- "etitioner6s &otion for reconsideration7
http://sc.judiciary.gov.ph/jurisprudence/1997/feb1997/115129.htm#_edn8http://sc.judiciary.gov.ph/jurisprudence/1997/feb1997/115129.htm#_edn9http://sc.judiciary.gov.ph/jurisprudence/1997/feb1997/115129.htm#_ednref1http://sc.judiciary.gov.ph/jurisprudence/1997/feb1997/115129.htm#_ednref1http://sc.judiciary.gov.ph/jurisprudence/1997/feb1997/115129.htm#_ednref2http://sc.judiciary.gov.ph/jurisprudence/1997/feb1997/115129.htm#_ednref2http://sc.judiciary.gov.ph/jurisprudence/1997/feb1997/115129.htm#_ednref3http://sc.judiciary.gov.ph/jurisprudence/1997/feb1997/115129.htm#_ednref3http://sc.judiciary.gov.ph/jurisprudence/1997/feb1997/115129.htm#_ednref4http://sc.judiciary.gov.ph/jurisprudence/1997/feb1997/115129.htm#_ednref4http://sc.judiciary.gov.ph/jurisprudence/1997/feb1997/115129.htm#_ednref5http://sc.judiciary.gov.ph/jurisprudence/1997/feb1997/115129.htm#_ednref5http://sc.judiciary.gov.ph/jurisprudence/1997/feb1997/115129.htm#_ednref6http://sc.judiciary.gov.ph/jurisprudence/1997/feb1997/115129.htm#_ednref6http://sc.judiciary.gov.ph/jurisprudence/1997/feb1997/115129.htm#_ednref7http://sc.judiciary.gov.ph/jurisprudence/1997/feb1997/115129.htm#_ednref7http://sc.judiciary.gov.ph/jurisprudence/1997/feb1997/115129.htm#_ednref8http://sc.judiciary.gov.ph/jurisprudence/1997/feb1997/115129.htm#_ednref8http://sc.judiciary.gov.ph/jurisprudence/1997/feb1997/115129.htm#_ednref9http://sc.judiciary.gov.ph/jurisprudence/1997/feb1997/115129.htm#_ednref9http://sc.judiciary.gov.ph/jurisprudence/2004/nov2004/145483.htm#_ftn1http://sc.judiciary.gov.ph/jurisprudence/1997/feb1997/115129.htm#_edn8http://sc.judiciary.gov.ph/jurisprudence/1997/feb1997/115129.htm#_edn9http://sc.judiciary.gov.ph/jurisprudence/1997/feb1997/115129.htm#_ednref1http://sc.judiciary.gov.ph/jurisprudence/1997/feb1997/115129.htm#_ednref2http://sc.judiciary.gov.ph/jurisprudence/1997/feb1997/115129.htm#_ednref3http://sc.judiciary.gov.ph/jurisprudence/1997/feb1997/115129.htm#_ednref4http://sc.judiciary.gov.ph/jurisprudence/1997/feb1997/115129.htm#_ednref5http://sc.judiciary.gov.ph/jurisprudence/1997/feb1997/115129.htm#_ednref6http://sc.judiciary.gov.ph/jurisprudence/1997/feb1997/115129.htm#_ednref7http://sc.judiciary.gov.ph/jurisprudence/1997/feb1997/115129.htm#_ednref8http://sc.judiciary.gov.ph/jurisprudence/1997/feb1997/115129.htm#_ednref9http://sc.judiciary.gov.ph/jurisprudence/2004/nov2004/145483.htm#_ftn1


43/157

.he facta# antecedents of this case are as fo##ows?

Petitioner :oreno Shi""in- Cor"oration is a do&estic cor"oration en-a-ed in coastwise shi""in-7It sed to own the car-o vesse# QV Dadian-as EH"ress7

U"on the other hand3 res"ondent B5 arthe# Internationa#3 Inc7 is a 'siness entit2 en-a-ed intradin-3 &arketin-3 and se##in- of varios indstria# co&&odities7 It is a#so an i&"orter and distri'torof diMerent 'rands of en-ines and s"are "arts7

9ro& 1()A " to the instittion of this case3 res"ondent s""#ied "etitioner with s"are "arts forthe #atter6s &arine en-ines7 So&eti&e in 1()(3 "etitioner asked res"ondent for a otation for varios&achine "arts7 !ccedin- to this reest3 res"ondent frnished "etitioner with a for&a# otation3[4]ths?

a2 $13 1()(INJ8>%($

:ORENO S "cs7 P ,3,4%7%% $$314%7%%P#n-er @ Barre# > "cs7 4A3>$%7%% 1>,3A)%7%%C2#inder


44/157

INV7

.ER O9 P!GEN.? 4, DOFN P!GEN., BI8ON.]:ike the "rchase order of %4Nove&'er 1()(3 the second "rchase order did not state the date of the c2#inder #iner6s de#iver27

On 4> 5anar2 1((%3 res"ondent de"osited "etitioner6s check that was "ostdated 1) 5anar21((%3 however3 the sa&e was dishonored '2 the drawee 'ank de to ins*cienc2 of fnds7 .here&ainin- nine "ostdated checks were eventa##2 retrned '2 res"ondent to "etitioner7

.he "arties "resented dis"arate acconts of what ha""ened to the check which was "revios#2dishonored7 Petitioner c#ai&ed that it re"#aced said check with a -ood one3 the "roceeds of which werea""#ied to its other o'#i-ation to res"ondent7 9or its "art3 res"ondent insisted that it retrned said"ostdated check to "etitioner7

Res"ondent thereafter "#aced the order for the two c2#inder #iners with its "rinci"a# in 5a"an3 DaieiSan-2o Co7 :td73 '2 o"enin- a #etter of credit on 4$ 9e'rar2 1((% nder its own na&e with the 9irstInterstate Bank of .ok2o7

On 4% !"ri# 1((%3 Paari##o de#ivered the two c2#inder #iners at "etitioner6s warehose in North


45/157

Frit of !ttach&ent[1,]attachin- thereto a conter8'ond as reired '2 the R#es of Cort7 On evendate3 the tria# cort issed an Order [1>]#iftin- the #ev2 on "etitioner6s "ro"erties and the -arnish&ent ofits 'ank acconts7

Petitioner afterwards +#ed its !nswer[1A]a##e-in- therein that ti&e was of the essence in thede#iver2 of the c2#inder #iners and that the de#iver2 on 4% !"ri# 1((% of said ite&s was #ate asres"ondent co&&itted to de#iver said ite&s Kwithin two /40 &onths after recei"t of +r& orderL [1)]fro&"etitioner7 Petitioner #ikewise so-ht conterc#ai&s for &ora# da&a-es3 eHe&"#ar2 da&a-es3 attorne26sfees "#s a""earance fees3 and eH"enses of #iti-ation7

S'seent#23 res"ondent +#ed a Second !&ended Co&"#aint with Pre#i&inar2 !ttach&ent dated4, Octo'er 1((17[1(].he a&end&ent introdced dea#t so#e#2 with the n&'er of "ostdated checksissed '2 "etitioner as f## "a2&ent for the +rst c2#inder #iner it ordered fro& res"ondent7 Fhereas inthe +rst a&ended co&"#aint3 on#2 nine "ostdated checks were invo#ved3 in its second a&endedco&"#aint3 res"ondent c#ai&ed that "etitioner acta##2 issed ten "ostdated checks7 Des"ite theo""osition '2 "etitioner3 the tria# cort ad&itted res"ondent6s Second !&ended Co&"#aint withPre#i&inar2 !ttach&ent7[4%]

Prior to the c

oblicon prelims cases

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