lbc express vs ca

602 SUPREMECOURTREPORTSANNOTATED

LBC Express, Inc. vs. Court of Appeals

G.R.No.108670.September21,1994.*

LBC EXPRESS, INC., petitioner, vs. THE COURT OFAPPEALS, ADOLFOM. CARLOTO, and RURAL BANKOFLABASON,INC.,respondents.

Damages; Moral damages cannot be awarded to a corporation,an artificial person which has no feelings, emotions or senses, andwhich cannot experience physical suffering and mentalanguish.—Therespondentcourterredinawardingmoraldamagesto the Rural Bank of Labason, Inc., an artificial person. Moraldamagesaregranted in recompense forphysical suffering,mentalanguish, fright, serious anxiety, besmirched reputation, woundedfeelings, moral shock, social humiliation, and similar injury. Acorporation,beinganartificialpersonandhavingexistenceonlyinlegal contemplation, has no feelings, no emotions, no senses;therefore, it cannot experience physical suffering and mentalanguish.Mentalsufferingcanbeexperiencedonlybyonehavinganervoussystemanditflowsfromrealills,sorrows,andgriefsoflife—all of which cannot be suffered by respondent bank as anartificialperson.

Same; Equity; The right to recover moral damages is based onequity and he who comes to court to demand equity must come withclean hands.—Wecanneithersustaintheawardofmoraldamagesin favor of the private respondents. The right to recover moraldamagesisbasedonequity.Moraldamagesarerecoverableonlyifthe case falls under Article 2219 of the Civil Code in relation toArticle 21. Part of conventional wisdom is that he who comes tocourttodemandequity,mustcomewithcleanhands.Inthecaseatbench,respondentCarloto

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*SECONDDIVISION.

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VOL.236,SEPTEMBER21,1994 603


is not without fault. He was fully aware that his rural bank’sobligationwouldmature onNovember21, 1984andhisbankhassetasidecashforthesebillspayable.HewasallsettogotoManilato settle this obligation.He has received the documents necessaryfortheapprovaloftheirrediscountingapplicationwiththeCentralBank. He has also received the plane ticket to go to Manila.Nevertheless,hedidnotimmediatelyproceedtoManilabutinsteadtarried for days allegedly claiming his ONE THOUSAND PESOS(P1,000.00) pocket money. Due to his delayed trip, he failed tosubmit the rediscounting papers to theCentralBank on time andhis bank was penalized THIRTYTWO THOUSAND PESOS(P32,000.00) for failure to pay its obligation on its due date. Theundue importance given by respondent Carloto to his ONETHOUSANDPESOS(P1,000.00)pocketmoneyisinexplicableforitwasnotindispensableforhimtofollowuphisbank’srediscountingapplicationwithCentralBank.

Same; Same; The attitude of a party in needing the money to“invite people for snack or dinner” in the course of followingupofficial business with the Central Bank speaks ill of his businessdealings.—According to said respondent, he needed themoney to“invitepeopleforasnackordinner.”Theattitudeofsaidrespondentspeaks ill of his ways of business dealings and cannot becountenancedbythisCourt.Verily,itwillberevoltingtooursenseofethicstouseitasbasisforawardingdamagesinfavorofprivaterespondentCarlotoandtheRuralBankofLabason,Inc.

Same; Same; Bad faith under the law cannot be presumed andit must be established by clear and convincing evidence.—Wealsohold that respondents failed to show that petitioner LBC’s latedelivery of the cashpackwasmotivated by personalmalice or badfaith,whether intentional or thrugrossnegligence. In fact, itwasproved during the trial that the cashpack was consigned onNovember16,1984,aFriday.ItwassenttoCebuonNovember19,1984, the next business day. Considering this circumstance,petitioner cannotbe chargedwithgrossneglect of duty.Bad faithunderthelawcannotbepresumed;itmustbeestablishedbyclearandconvincingevidence.

Same; Same; Contracts; In breach of contract cases where thedefendant is not shown to have acted fraudulently or in bad faith,liability for damages is limited to the natural and probableconsequences of the breach of the obligation which the parties hadforeseen or could reasonably have foreseen.—Again, the unbrokenjurisprudence is that in breach of contract cases where thedefendantisnotshowntohaveactedfraudulentlyorinbadfaith,liabilityfordamagesislimitedtothe

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the parties had foreseen or could reasonably have foreseen. Thedamages,however,willnotincludeliabilityformoraldamages.

Same; Same; Same; In a contractual or quasicontractualrelationship, exemplary damages may be awarded only if thedefendant had acted in a wanton, fraudulent, reckless, oppressive,or malevolent manner.—Prescindingfromthesepremises,theawardofexemplarydamagesmadebytherespondentcourtwouldhavenolegallegtosupportitself.UnderArticle2232oftheCivilCode,inacontractual or quasicontractual relationship, exemplary damagesmay be awarded only if the defendant had acted in “a wanton,fraudulent, reckless, oppressive, or malevolent manner.” TheestablishedfactsdonotsowarrantthecharacterizationoftheactionofpetitionerLBC.

PETITIONforreviewoncertiorariofadecisionoftheCourtofAppeals.

ThefactsarestatedintheopinionoftheCourt.Emmanuel D. Agustinforpetitioner.Bernardo P. Conchaforprivaterespondents.

PUNO,J.:

In this Petition for Review onCertiorari, petitioner LBCquestions the decision

1 of respondent Court of Appeals

affirming the judgment of the Regional Trial Court ofDipolog City, Branch 8, awarding moral and exemplarydamages, reimbursement of P32,000.00, and costs of suit;butdeletingtheamountofattorney’sfees.

PrivaterespondentAdolfoCarloto,incumbentPresidentManager of private respondent Rural Bank of Labason,alleged that onNovember 12, 1984, hewas inCebuCitytransactingbusinesswiththeCentralBankRegionalOffice.He was instructed to proceed to Manila on or beforeNovember 21, 1984 to followup theRural Bank’s plan ofpayment of rediscounting obligationswithCentralBank’smainofficeinManila.

2Hethenpurchaseda

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1 Herrera, Manuel, J., Ponente; Torres, Justo, and Gutierrez,

Angelina,JJ., concurring.2Rollo,CourtofAppealsDecision,p.78.

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CarlotoConcha to send him ONE THOUSAND PESOS(P1,000.00) for his pocket money in going to Manila andsome rediscounting papers thru petitioner’sLBCOffice atDipologCity.

3

On November 16, 1984, Mrs. Concha thru her clerk,Adelina Antigo consigned thru LBC Dipolog Branch thepertinent documents and the sum of ONE THOUSANDPESOS (P1,000.00) to respondent Carloto at No. 2Greyhound Subdivision, Kinasangan, Pardo, Cebu City.This was evidenced by LBC Air Cargo, Inc., CashpackDeliveryReceiptNo.34805.

OnNovember17, 1984, thedocuments arrivedwithoutthecashpack.RespondentCarlotomadepersonalfollowupsonthatsameday,andalsoonNovember19and20,1984atLBC’sofficeinCebubutpetitionerfailedtodelivertohimthecashpack.

Consequently,respondentCarlotosaidhewascompelledto go to Dipolog City onNovember 24, 1984 to claim themoneyatLBC’soffice.Hiseffortwasoncemoreinvain.OnNovember 27, 1984, hewent back to CebuCity at LBC’soffice.Hewas,however, advised that themoneyhasbeenreturned to LBC’s office in Dipolog City upon shipper’srequest. Again, he demanded for the ONE THOUSANDPESOS (P1,000.00) and refund of FORTYNINE PESOS(P49.00)LBCrevenuecharges.Hereceivedthemoneyonly

onDecember15,1984lesstherevenuecharges.RespondentCarlotoclaimedthatbecauseofthedelayin

the transmittal of the cashpack, he failed to submit therediscounting documents to Central Bank on time. As aconsequence,his ruralbankwasmade topay theCentralBankTHIRTYTWOTHOUSANDPESOS (P32,000.00) aspenaltyinterest.

4Heallegedlysufferedembarrassmentand

humiliation.Petitioner LBC, on the other hand, alleged that the

cashpackwasforwardedviaPALtoLBCCebuCitybranchonNovember22,1984.

5Onthesameday,itwasdeliveredat

respondent Carloto’s residence at No. 2 GreyhoundSubdivision, Kinasangan, Pardo, Cebu City. However, hewas not around to receive it. The delivery man servedinsteadaclaimnoticetoinsurehewould

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3Ibid.4Ibid.,p.79.5Ibid.

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Delivery Receipt No. 342805. Notwithstanding the saidnotice, respondent Carloto did not claim the cashpack atLBCCebu.OnNovember23,1984, itwasreturnedtotheshipper,ElsieCarlotoConchaatDipologCity.

Claiming that petitioner LBC wantonly and recklesslydisregardeditsobligation,respondentCarlotoinstitutedanaction for Damages Arising from Nonperformance ofObligation docketed as Civil Case No. 3679 before theRegionalTrialCourt ofDipologCity on January 4, 1985.OnJune25,1988,anamendedcomplaintwas filedwhererespondent rural bank joined as one of the plaintiffs andprayed for the reimbursement of THIRTYTWOTHOUSANDPESOS(P32,000.00).

After hearing, the trial court rendered its decision, thedispositiveportionofwhichreads:

“WHEREFORE,judgmentisherebyrendered:

1.

2.

3.

1.

2.

3.

Ordering the defendant LBC Air Cargo, Inc. to pay untoplaintiffAdolfoM.CarlotoandRuralBankofLabason,Inc.,moral damages in the amount of P10,000.00; exemplarydamagesintheamountofP5,000.00;attorney’sfeesintheamountofP3,000.00andlitigationexpensesofP1,000.00;

Sentencing defendant LBC Air Cargo, Inc., to reimburseplaintiffRuralBankofLabason,Inc.thesumofP32,000.00which the latter paid as penalty interest to the CentralBank of the Philippines as penalty interest for failure torediscountitsduebillsontimearisingfromthedefendant’sfailuretodeliverthecashpack,withlegalinterestcomputedfromthedateoffilingofthiscase;and

Orderingdefendanttopaythecostsoftheseproceedings.

SOORDERED.”6

On appeal, respondent court modified the judgment bydeletingtheawardofattorney’sfees.Petitioner’sMotionforReconsiderationwasdeniedinaResolutiondatedJanuary11,1993.

Hence, this petition raising the following questions, towit:

WhetherornotrespondentRuralBankofLabason,Inc., being an artificial person should be awardedmoraldamages.

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6Rollo,pp.127128,pennedbyRegionalTrialCourtJudgePelagioR.

Lachica.

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Whether or not the award of THIRTYTWOTHOUSAND PESOS (P32,000.00) was made withgraveabuseofdiscretion.Whether or not the respondent Court of Appealsgravely abused its discretion in affirming the trialcourt’s decision ordering petitioner LBC to paymoralandexemplarydamagesdespiteperformanceofitsobligation.

Wefindmeritinthepetition.Therespondentcourterredinawardingmoraldamages

totheRuralBankofLabason,Inc.,anartificialperson.Moral damages are granted in recompense for physical

suffering, mental anguish, fright, serious anxiety,besmirched reputation, wounded feelings, moral shock,socialhumiliation,andsimilarinjury.

7Acorporation,being

an artificial person and having existence only in legalcontemplation, has no feelings, no emotions, no senses;therefore, it cannot experience physical suffering andmentalanguish.

8Mentalsufferingcanbeexperiencedonly

byonehavinganervoussystemanditflowsfromrealills,sorrows,andgriefsof life

9—allofwhichcannotbesuffered

byrespondentbankasanartificialperson.Wecanneithersustain theawardofmoraldamages in

favoroftheprivaterespondents.Therighttorecovermoraldamagesisbasedonequity.MoraldamagesarerecoverableonlyifthecasefallsunderArticle2219oftheCivilCodeinrelationtoArticle21.

10Partofconventionalwisdomisthat

hewho comes to court to demand equity,must comewithcleanhands.

Inthecaseatbench,respondentCarloto isnotwithoutfault.Hewas fully aware that his rural bank’s obligationwouldmatureonNovember21,1984andhisbankhassetasidecashforthesebillspayable.

11Hewasallset togo to

Manila to settle this obligation. He has received thedocumentsnecessaryfortheapprovaloftheirrediscountingapplicationwiththeCentralBank.HehasalsoreceivedtheplanetickettogotoManila.Nevertheless,he

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7CivilCode,Article2217.8Tamayovs.UniversityofNegrosOccidental,58OGNo.37,p.6023,

September10,1962.9Supra.,atp.6032.10Garciano vs. Court of Appeals, G.R. No. 96126, August 10, 1992,

212SCRA436.11Rollo,p.214.

608



didnot immediatelyproceedtoManilabut insteadtarriedfor days allegedly claiminghisONETHOUSANDPESOS(P1,000.00)pocketmoney.Duetohisdelayedtrip,hefailedtosubmittherediscountingpaperstotheCentralBankontime and his bank was penalized THIRTYTWOTHOUSAND PESOS (P32,000.00) for failure to pay itsobligationonitsduedate.Theundueimportancegivenbyrespondent Carloto to his ONE THOUSAND PESOS(P1,000.00) pocket money is inexplicable for it was notindispensableforhimtofollowuphisbank’srediscountingapplication with Central Bank. According to saidrespondent, he needed the money to “invite people for asnackordinner.”

12Theattitudeofsaidrespondentspeaksill

of his ways of business dealings and cannot becountenanced by thisCourt.Verily, itwill be revolting tooursenseofethicstouseitasbasisforawardingdamagesinfavorofprivaterespondentCarlotoandtheRuralBankofLabason,Inc.

We also hold that respondents failed to show thatpetitioner LBC’s late delivery of the cashpack wasmotivated by personal malice or bad faith, whetherintentionalorthrugrossnegligence.Infact, itwasprovedduring the trial that the cashpack was consigned onNovember 16, 1984, a Friday. It was sent to Cebu onNovember19,1984,thenextbusinessday.Consideringthiscircumstance, petitioner cannot be charged with grossneglect of duty. Bad faith under the law can not bepresumed; itmust be established by clear and convincingevidence.

13 Again, the unbroken jurisprudence is that in

breachofcontractcaseswherethedefendantisnotshowntohave acted fraudulently or in bad faith, liability fordamages is limited to the natural and probableconsequences of the breach of the obligation which thepartieshadforeseenorcouldreasonablyhaveforeseen.Thedamages, however, will not include liability for moraldamages.

14

Prescindingfromthesepremises,theawardofexemplarydamagesmadebytherespondentcourtwouldhavenolegallegtosupportitself.UnderArticle2232oftheCivilCode,ina

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12Id.,p.216.

13See People’s Bank and Trust Co. vs. Syvel’s Inc., No. L29280,

August11,1988,164SCRA247.14SeeChinaAirlinesLimited vs.Court ofAppeals,G.R. No. 94590,

July29,1992,211SCRA897.

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contractual or quasicontractual relationship, exemplarydamagesmaybeawardedonlyifthedefendanthadactedin“a wanton, fraudulent, reckless, oppressive, or malevolentmanner.” The established facts do not so warrant thecharacterizationoftheactionofpetitionerLBC.

IN VIEW WHEREOF, the Decision of the respondentcourt dated September 30, 1992 is REVERSED and SETASIDE; and the Complaint in Civil Case No. 3679 isorderedDISMISSED.Nocosts.

SOORDERED.

Narvasa (C.J., Chairman), Padilla, Regalado andMendoza, JJ.,concur.

Judgment reversed and set aside.

Notes.—TheNationalTelecommunicationsCommissionhasnojurisdictiontoimposeafine.(Radio Communicationsof the Philippines, Inc. vs. National TelecommunicationsCommission,215SCRA455[1992])

The award of attorney’s feesmust be disallowedwherethe award of exemplary damages is eliminated. (AlbensonEnterprises Corporation vs. Court of Appeals,217SCRA16[1993])

——o0o——

610

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