Paz Fores, Petitioner v. Ireneo Miranda, Respondent GR no. L-12163 March 4, 1959 Reyes, J.B.L., J.

Miranda was one ofhte passengers on a jeepney driven by Eugenio Luga. While the jeep was descending Sta. Mesa bridge at an excesisve speed, the driver lost control causing it to swerve and hit the bridge wall. Five of the passengers were injured, including Miranda who suffered a fracture of the upper right humerus. He wa subject to a series of operations yet at the time of the trial, he has notyet recovered the use of his right arm. Luga was charged with serious physicial injuries through reckless imprudence, and upon interposing a plea of guilty, was sentenced accordingly. It was alleged that the evidence failed to identify the vehicle but this was rejected by the appellate court which found that the jeep carried the plate no. TPU 1163, series of 1952 and registered in the name of Paz Forez and that the vehicle had the name of Dona Paz painted below the windshield. There was no evidence presented to prove the contrary. Fores also said that she allegedly sold the jeep involved to a Carmen Sackerman. ISSUE/s: 1.Is the approval of the Public Service Commission necessary for the sale of a public service vehicle even without conveying therewith the authority to operate the same? YES 2. WON moral damages may be awarded. NO. 1. The CA answered YES to this question. Under Sec. 20 of the Public Service Act it was unlawful for the owner, lessee or operator to sell, alienate, mortgage, encumber or lease its property among others without the previous approval and authority of the Commission. The transfer without the authority of the PSC is not effective and binding in so far as the respnsibility of the grantee under the franchise in relation to the public is concerned. Fores assails this arguing that the in the rulings being applied, the operator did not convey by lease or by sale, the vehicle independently of his rights under the franchise. SC no basis. The prohibition is clear, it was meant to protect the public interest. Until the approval is obtained, in contemplation of law, the vehicle is still under the service of the owner of operator standing in the records of the Commission which the public has to rely on the sale between the parties is still valid. 2. the P2,000 (reduced from P10,000) and the P3,000 as atty's fees were valid awards of actual damages. As for the moral damages, it must discarded. Moral damages are not recoverable in damage actions rediccted on a breach of the contract of transportation (art. 2219 and 2220 of the NCC). Thus, in case of breach of contract proof of bad faith or fraud is essential to justify an award of moral damages and that a brech of contract cannot be considered included in the descriptive term analogous cases in Art. 2219. Art. 2176 excludes cases where there is a preexisting contractual relation between the parties. The only exception is where death results from the accident. In this case, Art. 2206 provides that the deceased may demand moral damages for mental anguis by reason of the death of the deceased

ALLLIED BANKING VS LIM SIO WAN FACTS: Lim Sio Wan (deposited 1st money market) > Allied Bank > (pre-terminated and withdrawn) Santos > (through forged indorsement of Lim Sio Wan deposited in FCC account) Metrobank > (release in exchange of undertaking of reimbursement) FCC > (through Santos, as officer of Producers bank, deposited money market) Producers Bank September 21, 1983: FCC had deposited a money market placement for P 2M with Producers Bank Santos was the money market trader assigned to handle FCCs account Such deposit is evidenced by Official Receipt and a Letter When the placement matured, FCC demanded the payment of the proceeds of the placement November 14, 1983: Lim Sio Wan deposited with Allied Banking Corporation (Allied) a money market placement of P 1,152,597.35 for a term of 31 days December 5, 1983: a person claiming to be Lim Sio Wan called up Cristina So, an officer

of Allied, and instructed the latter to pre-terminate Lim Sio Wans money market placement, to issue a managers check representing the proceeds of the placement, and to give the check to Deborah Dee Santos who would pick up the check. Lim Sio Wan described the appearance of Santos Santos arrived at the bank and signed the application form for a managers check to be issued The bank issued Managers Check representing the proceeds of Lim Sio Wans money market placement in the name of Lim Sio Wan, as payee, crosschecked "For Payees Account Only" and given to Santos Allied managers check was deposited in the account of Filipinas Cement Corporation (FCC) at Metropolitan Bank and Trust Co. (Metrobank), with the forged signature of Lim Sio Wan as indorser Metrobank stamped a guaranty on the check, which reads: "All prior endorsements and/or lack of endorsement guaranteed." Upon the presentment of the check, Allied funded the check even without checking the authenticity of Lim Sio Wans purported indorsement. amount on the face of the check was credited to the account of FCC December 9, 1983: Lim Sio Wan deposited with Allied a second money market placement to mature on January 9, 1984 December 14, 1983: upon the maturity date of the first money market placement, Lim Sio Wan went to Allied to withdraw it. She was then informed that the placement had been preterminated upon her instructions which she denied Lim Sio Wan filed with the RTC against Allied to recover the proceeds of her first money market placement Allied filed a third party complaint against Metrobank and Santos Metrobank filed a fourth party complainagainst FCC FCC for its part filed a fifth party complaint against Producers Bank. Summonses were duly served upon all the parties except for Santos, who was no longer connected with Producers Bank May 15, 1984: Allied informed Metrobank that the signature on the check was forged Metrobank withheld the amount represented by the check from FCC. Metrobank agreed to release the amount to FCC after the FCC executed an undertaking, promising to indemnify Metrobank in case it was made to reimburse the amount Lim Sio Wan thereafter filed an amended complaint to include Metrobank as a party-defendant, along with Allied. RTC : Allied Bank to pay Lim Sio Wan plus damages and atty. fees Allied Banks cross-claim against Metrobank is DISMISSED. Metrobanks third-party complaint as against Filipinas Cement Corporation is DISMISSED Filipinas Cement Corporations fourth-party complaint against Producers Bank is DISMISSED CA: Modified. Allied Banking Corporation to pay 60% and Metropolitan Bank and Trust Company 40% ISSUE: W/N Allied should be solely liable to Lim Sio Wan.

HELD: YES. CA affirmed. Modified Porudcers Bank to reimburse Allied and Metrobank. Articles 1953 and 1980 of the Civil Code Art. 1953. A person who receives a loan of money or any other fungible thing acquires the ownership thereof, and is bound to pay to the creditor an equal amount of the same kind and quality. Art. 1980. Fixed, savings, and current deposits of money in banks and similar institutions shall be governed by the provisions concerning simple loan. bank deposit is in the nature of a simple loan or mutuum money market is a market dealing in standardized short-term credit instruments (involving large amounts) where lenders and borrowers do not deal directly with each other but through a middle man or dealer in open market. In a money market transaction, the investor is a lender who loans his money to a borrower through a middleman or dealer. Lim Sio Wan, as creditor of the bank for her money market placement, is entitled to payment upon her request, or upon maturity of the placement, or until the bank is released from its obligation as debtor GR: collecting bank which indorses a check bearing a forged indorsement and presents it to the drawee bank guarantees all prior indorsements, including the forged indorsement itself, and ultimately should be held liable therefor EX: when the issuance of the check itself was attended with negligence. Allied negligent in issuing the managers check and in transmitting it to Santos without even a written authorization Allied did not even ask for the certificate evidencing the money market placement or call up Lim Sio Wan at her residence or office to confirm her instructions. loss. Allieds negligence must be considered as the proximate cause of the resulting

When Metrobank indorsed the check without verifying the authenticity of Lim Sio Wans indorsement and when it accepted the check despite the fact that it was cross-checked payable to payees account only contributed to the easier release of Lim Sio Wans money and perpetuation of the fraud Given the relative participation of Allied and Metrobank to the instant case, both banks cannot be adjudged as equally liable. Hence, the 60:40 ratio of the liabilities of Allied and Metrobank, as ruled by the CA, must be upheld. FCC, having no participation in the negotiation of the check and in the forgery of Lim Sio Wans indorsement, can raise the real defense of forgery as against both banks Producers Bank was unjustly enriched at the expense of Lim Sio Wan Producers Bank should reimburse Allied and Metrobank for the amounts ordered to pay Lim Sio Wan

Far East Bank and Trust Company vs. Court of Appeals 241 SCRA 671 (February 23, 1995) Facts: Private respondent Luis Luna applied for and was accorded a Fareastcard issued by petitioner FEBTC. Upon his request, a supplemental card was issued to Clarita Luna. In August 1988, Clarita lost her card and FEBTC was forthwith informed. Due to bank policy, petitioner recorded the lost card, along with the principal card as a hot card or a cancelled card. In October, Luis used his card to pay for lunch at the Hotel Intercontinental Manila. However, after verifying with th e bank, the card was not honored and Luis had to pay cash. He was embarrassed by this incident. Luis, through counsel, wrote to petitioner and asked for the payment of damages. The VP of the bank wrote a letter to Luis and expressed his apologies in their failure to inform the latter of the bank's security policy. Also, the VP sent a letter to the hotel to assure the latter that the private respondents were very valued clients. Still feeling aggrieved, private respondent filed a complaint for damages in the RTC. The RTC ruled in their favor and ordered FEBTC to pay moral and exemplary damages. CA affirmed the said decision. Issue: Whether or not the award of damages is proper. Held: NO. In culpa contractual, moral damages may be recovered where the defendant is shown to have acted in bad faith or with malice in the breach of contract. (Art. 2220 NCC) While it is true that the bank was remiss in neglecting to personally inform Luis of his own card's cancellation, there is no finding that there was deliberate intent on the part of FEBTC to cause harm to Luis. Neither could FEBTC's negligence in failing to give personal notice to Luis be considered so gross as to amount to malice or bad faith. Malice or bad faith implies a conscious and intentional design to do a wrongful act for a dishonest purpose or moral obliquity; it is different from the negative idea of negligence in that malice or bad faith contemplates a state of mind affirmatively operating with furtive design or ill will. Thus, the award of moral damages is inordinate and substantially devoid of legal basis. Exemplary or corrective damages are awarded, in the case of quasi-delicts, if the defendant is shown to have been so guilty of gross negligence as to approximate malice. And in case of contracts and quasi-contracts, it is awarded when the defendant is found to have acted in a wanton, fraudulent, reckless, oppressive or malevolent manner. Thus, the award of exemplary damages is improper. NEVERTHELESS, the bank's failure to honor its credit card issued to Luis should entitle him to recover a measure of damages sanctioned under Article 2221 of the Civil Code: Art. 2221. Nominal damages are adjudicated in order that a right of the plaintiff, which has been violated or invaded by the defendant, may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered by him.

Air France vs. Carrascoso G.R. No. L-21438 September 28, 1966 Facts: Plaintiff Carrascoso, a civil engineer, was a member of a group of 48 Filipino pilgrims that left Manila for Lourdes. Air France, through its authorized agent, Philippine Air Lines, Inc., issued to plaintiff a first class round trip airplane ticket from Manila to Rome. From Manila to Bangkok, plaintiff travelled in first class, but at Bangkok, the Manager of t he defendant airline forced plaintiff to vacate the first class seat that he was occupying because, in the words of the witnes s Ernesto G. Cuento, there was a white man who, the Manager alleged had a better right to the seat. When asked to vacate his first class seat, the plaintiff refused, and told defendants Manager that his seat would be taken over his dead body. A commotion ensued, and, according to said Ernnesto G. Cuento, many of the Filipino passengers got nervous in the tourist class; when they found out that Mr. Casrrascoso was having a hot discussion with the white man [manager], they came all across to Mr. Carrascoso and pacified Mr. Carrascoso to give his seat to the white man and plaintiff reluctantly gave his first class seat in the plane. Carrascoso filed a case for damages. The CFI of Manila sentenced Air France to pay rCarrascoso P25,000.00 by way of moral damages; P10,000 as exemplary damages; P393.20 representing the difference in fare between first

class and tourist class for the portion of the trip Bangkok-Rome. The CA slightly reduced the amount of refund on Carrascoss plane ticket. Issue: WON Carrascosos action is planted upon breach of contract, with the existence of bad faith, entitling him to the award of damages. Held: There was a contract to furnish plaintiff a first class passage covering, amongst others, the Bangkok-Teheran leg. The said contract was breached when petitioner failed to furnish first class transportation at Bangkok. The evidence shows that defendant violated its contract of transportation with plaintiff in bad faith, with the aggravating circumstances that defendants Manager in Bangkok went to the extent of threatening the plaintiff in the presence of many passengers to have him thrown out of the airplane to give the first class seat that he was occupying to, again using the words of witness Ernesto G. Cuento, a white man whom he (defendants manager) wished to accommodate, and the defendant has not proved that this white man had any better right to occupy the first class seat that the plaintiff was occupying, duly paid for, and for which the corresponding first class ticket was issued. The responsibility of an employer for the act of its employees need not be essayed. It is well settled in law. For the willful malevolent act of petitioners manager, petitioner, his employer, must answer. Article 21 of the Civil Code says: ART. 21. Any person who willfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the damage. In parallel circumstances, we applied the foregoing legal percept; and, held upon the provisions of Article 2219 (10), Civil Code, moral damages are recoverable. 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 rude or discourteous conduct on the part of employees towards a passenger gives the latter an action for damages against the carrier. Thus, Where a steamship company had accepted a passengers check, it was a breach of contract and tort, giving a right of action for its agent in the presence of third persons to falsely notify her, that the check was worthless and demand payment under threat of ejection; though the language used was not insulting and she was not ejected. Although the relation of passenger and carrier is contractual both in origin and nature the act that breaks the contract may also be a tort. And in another case, Where a passenger on a rail-road train, when the conductor came to collect his fare, tendered him the cash fare to a point where the train was scheduled not to stop, and told him that as soon as the train reached such point he would pay the cash fare from that point to destination, there was nothing in the conduct of the passenger which justified the conductor in using insulting language to him, as by calling him a lunatic, and the Supreme Court of South Carolina there held the carrier liable for the mental suffering of said passenger. Petitioners contract with Carrascoso, is one attended with public duty. The stress of Carasscosos action as we have said, is placed upon his wrongful expulsion. This is a violation of public duty by the petitioner-air carrier-a case of quasi-delict. Damages are proper. Exemplary damages are well awarded. The Civil Code gives the Court ample to power to grant exemplary damages-in contracts and quasi-contracts. The only condition is that defendant should have acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner. The manner of ejectment of respondent Carrascoso from his first class seat fits into this legal precept. And this is in addition to moral damages.

PSBA vs. Court of Appeals 205 SCRA 729 (February 4, 1992) Facts: Carlito Bautista, a student of PSBA, was stabbed while on the second floor of Philippine School of Business Administration (PSBA) by some elements from outside the school. Carlito died. His parents, filed an action for damages against PSBA and the school authorities (President, Vice-President, Treasurer/Cashier,Chief of Security and Vice Chief of Security). Both the trial court and the CA ruled in favor of parents. Issue: Whether or not PSBA and the school authorities can be held liable under 2176 and 2180 for quasi-delict. Held: No. Article 2180 of the Civil Code provides that pupils or students of the educational institution should have caused the damage.

Article 2180, in conjunction with Article 2176 of the Civil Code, establishes the rule of in loco parentis. This Court discussed this doctrine in the cases of Exconde, Mendoza, Palisoc, and more recently, in Amadora vs. CA. In all such cases, it had been stressed that Article 2180 plainly provides that it is the students who must have caused the damage before the educational institution can be held liable for quasi-delict. In the case at bar, the assailants were not students or pupils of PSBA but were elements from outside the school. Hence, PSBA and its school authorities cannot be held liable under Article 2180. The circumstances of the present case evince a contractual relation between PSBA and Carlitos Bautista since they entered into a contract the moment Bautista enrolled in the school. There being a contract, the rules on quasi-delict do not really govern. However, should the act which breaches the contract be done in bad faith and be violative of Article 21 as ruled in the Air France case, then there is a cause to view the act as constituting quasi-delict. In the case at bar however, there is, as yet, no finding that the contract between the school and Bautista had been breached thru the former's negligence in providing security measures. This would be for the trial court to determine. And, even if there be, a finding of negligence, the same could give rise generally to a breach of contractual obligation only. In other words, a contractual relation is a condition sine qua non to the school's liability. The negligence of the school cannot exist independently on the contract, unless the negligence occurs under the circumstances set out in Article 21. Therefore, PSBA and its school authorities cannot be held liable for quasi-delict under Art. 2180. Vicente Calalas vs. Court of Appeals 332 SCRA 356 (2000) Facts: Eliza G. Sunga, a college freshman at Siliman University, took a passenger jeepney owned and operated by Vicente Calalas. She was given by the conductor an extension seat at the backdoor of the jeepney at the rear end. On their way, the jeepney stopped to let a passenger off. Sunga gave way to the outgoing passengers, just as she was doing so, an Isuzu truck driven by Iglecerio Verena which is owned by Francisco Salva bumped the left rear portion of the jeepney, which injured Sunga. Sunga then filed action for damages against Calalas for violation of contract of carriage, in failing to exercise the diligence required by him as a common carrier. Calalas, on the other hand filed a third-party complaint against Francisco Salva. Issue: Whether or not Calalas can blame Francisco Silva as the proximate cause of the loss. Held: No. There was a contract of carriage between the parties, which was violated, hence, proximate cause is immaterial. The Supreme Court found Calalas guilty of violating the contract of carriage as a driver failed to transport Sunga safely to her destination, being negligent in (1) not properly parking the jeepney; (2) taking more passengers, than the allowed capacity; and (3) the fact that Sunga was seated in an extension seat placed in a peril greater than that to which the other passengers were exposed. The determination of the proximate cause of the damage incurred, whether it was the collision between the jeepney and the truck or the negligence of the driver is immaterial. The doctrine of proximate cause is applicable only in actions of quasi-delict, not in actions involving breach of contract. Where there is a pre-existing contractual relation between parties it is the parties themselves that create the obligation and the law will merely regulate the relation created. (Since there was a contract of carriage here in the case at bar).

Negligence Picart vs. Smith 37 Phil 809 (March 15, 1918) Facts: Plaintiff, Picart was riding a pony on Carlatan Bridge, San Fernando. He pulled his pony over the bridges railing on the right instead of left upon seeing the automobile rapidly approaching. His pony was unfortunately frightened when the automobile passed so close to them. The horse was struck on the hock of the left hind leg by the flange of the car and the limb was broken. The horse fell and its rider was thrown off with some violence. As a result of its injuries the horse died. Picart received contusions which caused temporary unconsciousness and required medical attention for several days. Picart seeks to render the sum of Php31,000 as damages. CFI- La Union absolved Smith.

Issue:

Whether or not defendant was negligent and if the concept of last clear chance is attributable to him?

Held: The defendant Smith is negligent and liable under the doctrine of last clear chance even though the plaintiff was on the wrong side of the bridge. Defendant has had the opportunity to avoid the accident after realizing that the negligence by the plaintiff could not have placed him in a position of better safety. The last clear chance was passed unto the defendant driving the automobile. It was his duty to bring the car to an immediate stop or upon seeing no other persons were on the bridge to take the other side and pass far away from the pony to avoid collision. Instead of doing this, Smith ran straight on until he was almost upon the horse. When Smith exposed the horse and rider to this danger he was negligent in the eye of the law. Under the circumstances, the law is that the person who has the last clear chance to avoid the impending harm and fails to do is chargeable with the consequences, without reference to the prior negligence of the other party. The existence of negligence in a given case is not determined by reference to the personal judgment of the actor in the situation before him. The law considers what would be reckless, blameworthy, or negligent in the man of ordinary intelligence and prudence and determines liability by that. The Supreme Court reversed the judgment of the lower court, and rendered judgment that Picart recover of Smith the sum of P200, with costs of both instances. The court held that the sum awarded was estimated to include the value of the horse, medical expenses of Picart, the loss or damage occasioned to articles of his apparel, and lawful interest on the whole to the date of this recovery.