Geraldez v.

CA

FACTS:

 An action for damages by reason of contractual breach was filed by petitioner

Lydia L. Geraldez against private respondent Kenstar Travel Corp. Petitioner
came to know about private respondent in Oct. 1989 from numerous
advertisements in newspapers of general circulation regarding tours in Europe.
 Petitioner then contacted private respondent by phone and the latter sent its
representative, Albert Vito Cruz, who gave her the brochure for the tour and
discussed its highlights. The European tours offered were classified into four, and
petitioner chose the classification denominated as “VOLARE 3” which covered a
22-day tour of Europe for $2,900. Petitioner paid the total equivalent amount of
P190,000 charged by private respondent for her and her sister, Dolores.
 Petitioner claimed that during the tour, she was very uneasy and disappointed
when the tour was contrary to what was stated in the brochure: there was no
European tour manager for their group of tourists, the hotels in which she and the
group were billeted were not first-class, the UGC Leather Factory which was
specifically added as a highlight of the tour was not visited, and the Filipino lady
tour guide by private respondent was a first timer, she was performing her duties
and responsibilities as such for the first time.
 REGIONAL TRIAL COURT: Petitioner moved for the issuance of a writ
of preliminary attachment against private respondent on the ground that it
committed fraud in contracting an obligation as contemplated in Section 1(d),
Rule 57 of the Rules of Court. No opposition appeared on record and this was
granted by the court a quo but preliminary attachment was lifted upon filing by
the private respondent of a counterbond amounting to P990,000. The court a quo
ruled in favor of the petitioner and ordered private respondent to pay petitioner
P500,000 as moral damages, P200,000 as nominal damages, P300,000 as
exemplary damages, P50,000 attorney’s fees and costs of the suit.
 Petitioner also filed other complaints before the Department of Tourism and
Securities and Exchange Commission where private respondent was meted a fine
of P10,000 by the Commission and P5,000 by the Department.
 Private respondent filed an appeal with CA and CA deleted the award for moral
and exemplary damages and reduced the awards for nominal damages and
attorney’s fees to P30,000 and P10,000 respectively. Hence, the private
respondent elevated the case to the Supreme Court

ISSUE: Whether or not private respondent acted in bad faith or with gross negligence
in discharging its obligations under the contract

RATIO: SC set aside the decision of the CA and ordered private respondent, Kenstar Travel
Corporation to pay petitioner the sums of P100,000 as moral damages, P50,000 as exemplary
damages, and P20,000 for attorney’s fees with costs against private respondent.
SC’s Contention:

 SC averred that the private respondent committed fraudulent misrepresentations

amounting to bad faith, to the prejudice of the petitioner and the members of the tour
group based on the following findings:
1. Private respondent assigned, Rowena Zapanta, a Filipino inexperienced tour
escort who had not even been to Europe hence cannot effectively acquaint
with the interesting areas in the cities and places included in the program or
promptly render necessary assistance. Additionally, private respondent afford
Zapanta an on-the-job training to later qualify her as an “experienced” tour
guide. With that private respondent manifested its indifference to the
inconvenience, satisfaction, and peace of mind of its client during the trip
despite its express commitment to provide certain facilities under the Volare 3
Tour Program.
***A tour guide is supposed to attend to the routinary needs of the tourists,
not only when the latter ask for the assistance but at the moment such need
becomes apparent- tourists are provided with sanitary surroundings, see to it
that basic personal necessities are provided, and actively arrange for medical
attention in case of accidents.
2. The tour group was unable to visit the UGC Leather Factory (one of the
highlights of the tour) which can be reflective of the neglect and ineptness of
Zapanta in following the itinerary. There was lack of due diligence on the part
of the private respondent in the selection of employees. Petitioner expected so
much from the visit as it was represented by private respondent that quality
leather goods could be bought there at lower prices.
3. Private respondent advertised in its tour contract that the tour will be
accompanied with a European tour manager. However, the private respondent
contended that the “European Tour Manager” does not refer to an individual
but to an organization, allegedly the Kuoni Travel of Switzerland which
supposedly prepared the itinerary for its “Volare Europe Tour”. SC held that a
cursory reading of the advertisement will readily reveal the express
representation that the contemplated European tour manager is a person and
not a juridical entity. Furthermore, the SC held that the meaning that will
determine the legal effect of a contract is that which is arrived at by objective
standards or what others think the person intends. Moreover, in an attempt to
justify its shortcomings, private respondent contends that the concept of a
European tour manager was explained to its clients at pre-departure briefing
but failed to substantiate its claim.
4. Private respondent committed grave misrepresentation when it assured its
clients that the hotels chosen would provide complete amenities and were
conveniently located along the way for the itineraries. Petitioner argued that it
was the opposite as some hotels were dirty, have incomplete amenities, and
dilapidated. Private respondent contends that it merely provided what was
commensurate to the tourists’ budget with which the SC held that the private
respondent could have increased the price to enable it to arrange the promised
accommodations.
 The private respondent sought sanctuary in the delimitation of its responsibility as printed
on the Volare 3 brochures, “neither will they be responsible for any act, error or
omission, or of any damages, injury, loss, accident, delay or irregularity which may be
occasioned by reason (of) or any defect in . . . lodging place or any facilities.” The SC
ruled that certain contracts which are drafter by only one party, usually corporation are
called contracts of adhesion. (Contracts of adhesion refer to contracts where the only
participation of the party is by affixing his signature or his “adhesion”.) The court ruled
that private respondent cannot be exculpated for the reason that responsibility arising
from fraudulent acts cannot be stipulated against by reason of public policy.
 Private respondent argued that the tour can be considered satisfactory since only the
petitioner out of the 18 participants in the Volare 3 Tour Program complained. The SC,
on the other hand, cited Section 28, Rule 130 of the Rules of Court which provides
that the rights of a party cannot be prejudiced by an act, declaration, or omission of
another, a statutory adaptation of the first branch of the hornbook rule of res inter
alios acta. Furthermore, it contends that there are tourists who chose to remain silent and
forego recourse to a suit to avoid the expenses and hassle of litigation.
 The SC averred that fraud or dolo employed at thetime of birth or perfection of a
contract may either be dolo causante or dolo incidente. Dolo causante according to
Art. 1338 are those deceptions or misrepresentations or a serious character employed by
one party and without which the other party would not have entered into the contract
while dolo incidente as referred to in Art. 1344 are those which are not serious in
character and without which the other party would still have entered into the contract.
Dolo causante is the essential cause of the consent while dolo incidente refers only to
some particular or accident of the obligations.
 SC held that private respondent has committed fraud (whether dolo causante or
dolo incidente) by making misrepresentations in its contracts with petitioner and
other members of the tour group which became patent in the light of after-events.
The petitioner was induced to join the Volare 3 tourists instead of travelling alone as she
relied on the reassuring thought that an experienced tour escort and European tour
manager would accompany them.