In a breach of contract of carriage case, the Supreme Court clarified that moral damages are recoverable only if the accident results in the death of a passenger or if the carrier acted fraudulently or in bad faith. The Court emphasized the distinction between negligence and bad faith, specifying that moral damages cannot be awarded based on mere negligence without proving malicious intent or deliberate wrongdoing. This ruling protects common carriers from unwarranted claims while ensuring redress for passengers when malice or gross misconduct is evident.

Collision Course: When Does a Bus Accident Warrant Moral Damages?

This case stems from a bus accident on Kennon Road involving Judith D. Darines and her daughter, Joyce D. Darines, who sustained injuries when the bus they were riding collided with a parked truck. The petitioners sued the bus operator, Eduardo Quiñones, and the driver, Rolando Quitan, for breach of contract of carriage, seeking actual, moral, exemplary, and temperate damages. The central legal question revolves around whether the petitioners are entitled to moral and exemplary damages and attorney’s fees, given the nature of their injuries and the circumstances surrounding the accident. The case hinges on establishing whether the respondents’ actions constituted not merely negligence, but fraud or bad faith, which is a prerequisite for awarding moral damages in breach of contract cases.

The petitioners argued that the reckless driving of Quitan constituted a breach of contract, entitling them to damages. They also claimed that Quiñones failed to exercise extraordinary diligence in the selection and supervision of his employees. However, the respondents countered that the accident was due to the negligence of the truck driver who parked without warning devices, and that Quiñones had exercised due diligence in the selection and supervision of his employees. The Regional Trial Court (RTC) initially awarded moral and exemplary damages and attorney’s fees, but the Court of Appeals (CA) reversed this decision, stating that there was no proof of fraud or bad faith on the part of the respondents. The Supreme Court then took on the task of clarifying when moral damages may be awarded in breach of contract cases, specifically in the context of common carriers.

The Supreme Court emphasized the distinction between actions arising from breach of contract (culpa contractual) and those arising from negligence (culpa aquiliana). In a breach of contract of carriage, the liability of the common carrier is rooted in the failure to transport the passenger safely to their destination as stipulated in the contract. This differs from culpa aquiliana, which arises from the negligent acts or omissions of a tortfeasor, independent of any contractual relationship. This distinction is crucial because the grounds for awarding moral damages differ depending on the nature of the action. The Court cited Article 1764, in relation to Article 2206(3) of the Civil Code, and Article 2220 thereof, to underscore this point.

Article 1764. Damages in cases comprised in this Section shall be awarded in accordance with Title XVIII of this Book, concerning Damages. Article 2206 shall also apply to the death of a passenger caused by the breach of contract by a common carrier.

Article 2220. Willful injury to property may be a legal ground for awarding moral damages if the court should find that, under the circumstances, such damages are justly due. The same rule applies to breaches of contract where the defendant acted fraudulently or in bad faith.

The Court clarified that fraud or bad faith implies deliberate or wanton wrongdoing, or a deliberate disregard of contractual obligations, while negligence merely implies carelessness. The High Court provided the legal definitions. Fraud, in this context, includes inducement through insidious machination, referring to deceitful strategies or plans with an evil purpose. Bad faith, on the other hand, involves a breach of a known duty through some motive, interest, or ill will that partakes of the nature of fraud. In this case, the petitioners did not sufficiently prove that the respondents acted with fraud or bad faith. They only showed negligence.

Building on this principle, the Supreme Court referenced several precedents where it disallowed the recovery of moral damages in breach of contract cases absent a showing of fraud or bad faith on the part of the common carrier. The High Court, in Viluan v. Court of Appeals, and Bulante v. Chu Liante, disallowed the recovery of moral damages in actions for breach of contract for lack of showing that the common carrier committed fraud or bad faith in performing its obligation. Similarly, in Verzosa v. Baytan, the Court did not also grant moral damages in an action for breach of contract as there was neither allegation nor proof that the common carrier committed fraud or bad faith.

To award moral damages for breach of contract, therefore, without proof of bad faith or malice on the part of the defendant, as required by [Article 2220 of the Civil Code], would be to violate the clear provisions of the law, and constitute unwarranted judicial legislation.

This approach contrasts with cases like Gatchalian v. Delim, and Mr. & Mrs. Fabre, Jr. v. Court of Appeals, where the Court awarded moral damages because the common carrier committed gross negligence, which amounted to bad faith. In Mr. & Mrs. Fabre, Jr., the driver was not experienced in long-distance travel, was unfamiliar with the route, and drove at a speed of 50 kilometers per hour on a slippery road at night, leading to the accident. In these cases, the negligence was so egregious that it indicated a deliberate disregard for the safety of the passengers, thus justifying the award of moral damages.

The Court also addressed the issue of exemplary damages, noting that they may be awarded only in addition to moral, temperate, liquidated, or compensatory damages, per Articles 2229 and 2234 of the Civil Code. Because the petitioners were not entitled to moral damages, their claim for exemplary damages also failed. Similarly, attorney’s fees were not granted, as none of the circumstances under Article 2208 of the Civil Code, which would justify such an award, were present. The Supreme Court, in affirming the Court of Appeals’ decision, reinforced the principle that moral damages require a showing of fraud or bad faith, not mere negligence, in breach of contract cases.

FAQs

What was the key issue in this case?	The key issue was whether the petitioners were entitled to moral and exemplary damages and attorney’s fees in a breach of contract of carriage case, given the absence of fraud or bad faith on the part of the respondents.
What is the difference between culpa contractual and culpa aquiliana?	Culpa contractual arises from the breach of a contractual obligation, while culpa aquiliana arises from negligence independent of any contract. In this case, the action was for breach of contract of carriage.
Under what circumstances can moral damages be awarded in a breach of contract of carriage case?	Moral damages can be awarded if the accident results in the death of a passenger or if the carrier acted fraudulently or in bad faith. Simple negligence is not enough for moral damages.
What constitutes fraud or bad faith in the context of a breach of contract?	Fraud or bad faith implies deliberate or wanton wrongdoing or a deliberate disregard of contractual obligations. It goes beyond simple negligence or carelessness.
Why were exemplary damages denied in this case?	Exemplary damages were denied because they can only be awarded in addition to moral, temperate, liquidated, or compensatory damages. Since the petitioners were not entitled to any of these, exemplary damages could not be granted.
What is the basis for awarding attorney’s fees in a civil case?	Attorney’s fees can be awarded under specific circumstances outlined in Article 2208 of the Civil Code, such as when exemplary damages are awarded or when the defendant acted in gross and evident bad faith. None of these circumstances were present in this case.
What was the significance of the Supreme Court’s decision?	The Supreme Court’s decision clarified the threshold for awarding moral and exemplary damages in breach of contract of carriage cases, requiring proof of fraud or bad faith, not just negligence. This distinction protects common carriers from unwarranted claims.
How did the Court differentiate the facts of this case from previous rulings?	The Court distinguished this case from previous rulings where moral damages were awarded by highlighting the absence of gross negligence amounting to bad faith. In those cases, the carrier’s actions demonstrated a clear disregard for passenger safety.

In conclusion, the Supreme Court’s decision in this case reinforces the importance of establishing fraud or bad faith, not merely negligence, to claim moral damages in breach of contract of carriage cases. This ruling sets a clear precedent for future cases involving common carriers and injured passengers, ensuring that awards of damages are based on solid legal grounds and substantiated by evidence of malicious or deliberate wrongdoing.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: JUDITH D. DARINES AND JOYCE D. DARINES, VS. EDUARDO QUIÑONES AND ROLANDO QUITAN, G.R. No. 206468, August 02, 2017