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LYDIA L. GERALDEZ v. CA

FACTS:

The petitioner, Lydia Geraldez, booked a European tour offered by private respondent Kenstar Travel Corporation after seeing advertisements in newspapers. She paid P190,000.00 for a 22-day tour. However, during the tour, she claimed that the tour did not meet the advertised standards. There was no European tour manager, the hotels were not first-class, the UGC Leather Factory was not visited, and the Filipino tour guide was an inexperienced first-timer.

Petitioner filed a complaint for damages and obtained a writ of preliminary attachment against private respondent. She also filed complaints before the Department of Tourism and the Securities and Exchange Commission. The trial court ordered private respondent to pay damages, but the appellate court removed the award for moral and exemplary damages while reducing the awards for nominal damages and attorney's fees.

The main issue is whether private respondent acted in bad faith or with gross negligence. Both the trial court and appellate court agreed that private respondent failed to fulfill its commitments under the tour program by not providing a European tour manager and assigning an inexperienced tour guide. The court found that there was no malice or bad faith on the part of private respondent, resulting in the removal of the award for moral and exemplary damages. Additionally, the award for nominal damages was reduced as petitioner did not suffer significant damage from the breach of contract.

Upon examining the case records, the Supreme Court held that private respondent committed fraudulent misrepresentations amounting to bad faith to the detriment of petitioner and the tour group.

The case involves petitioner Lydia Geraldez, who was a member of the Volare 3 tourist group organized by private respondent Kenstar Travel Corporation. They were provided with an inexperienced tour guide named Zapanta. Petitioner claimed that Zapanta's selection as the tour guide was a deliberate choice by private respondent to use the tourists as unwitting participants in an experimental training program. Petitioner alleged that Zapanta's inexperience resulted in a lack of proper assistance, failure to arrange medical attention, and failure to include the visit to the UGC Leather Factory in the itinerary.

Private respondent argued that Zapanta's daily calls to Manila were made to monitor the tour's progress and respond to any issues promptly. However, it was revealed that these calls were part of Zapanta's training and to receive instructions.

The choice of an inexperienced tour guide and the failure to fulfill commitments were deemed a deliberate disregard of assurances made to the tour group. It was also questioned whether any group of Filipino tourists would agree to be part of an employee training program in unfamiliar European countries. The representation of an "European Tour Manager" was also disputed, as it referred to an individual and not an organization.

Overall, petitioner and the tour group experienced agitation, anxiety, and dissatisfaction due to the inexperience and neglect of the tour guide and the failure of private respondent to fulfill its commitments.

In another case, petitioner Zapanta booked a European tour offered by respondent The Wings Transit, Inc. The advertisement stated that an "European Tour Manager" would accompany the tourists during the trip. The lower courts held that the advertisement represented a natural person as the tour manager, and the respondent had the obligation to provide local European tour guides, which they failed to do. The respondent argued that the term "European Tour Manager" referred to their organization, Kuoni Travel of Switzerland, and not an individual. The petitioner, however, did not provide any details or identify the guide during the trial. The respondent also argued that the word "he" in the advertisement includes the word "it."

ISSUES:

  1. Whether the advertisement by the travel agency represented that the European tour manager would be a natural person, and not a juridical one.

  2. Whether the travel agency had an obligation to provide local European tour guides.

  3. Whether the pronoun "he" in the advertisement could include an artificial or corporate being.

  4. Whether the travel agency explained the concept of a European tour manager to its clients at the pre-departure briefing.

  5. Whether the contractual limitation on the travel agency's responsibility is enforceable.

  6. Whether responsibility arising from fraudulent acts can be stipulated against by reason of public policy.

  7. Whether the fact that only one participant complained means that the tour was satisfactory.

  8. Whether or not the tour operator committed a grave misrepresentation by assuring that the hotels provided in the tour package would have complete amenities and be conveniently located.

  9. Whether or not the tour operator is responsible for the dissatisfaction and inconvenience experienced by the tourists due to the condition and location of the hotels.

  10. Whether the private respondent committed a breach of contract by providing substandard accommodations and failing to provide the promised services.

  11. Whether the private respondent can be held liable for moral and exemplary damages.

  12. Whether private respondent Kenstar Travel Corporation should be held liable for moral damages, exemplary damages, attorney's fees, and nominal damages.

RULING:

  1. Yes. The advertisement clearly represented that the European tour manager would be a natural person. A corporate entity cannot perform the necessary tasks of a tour manager effectively.

  2. Yes. The travel agency had an obligation to provide local European tour guides, which they failed to do.

  3. No. The word "he" in the advertisement referred to a natural person and not a juridical entity.

  4. No. The travel agency failed to prove that they explained the concept of a European tour manager to their clients.

  5. No. The contractual limitation on the travel agency's responsibility is not enforceable because responsibility arising from fraudulent acts cannot be stipulated against by reason of public policy.

  6. No. Responsibility arising from fraudulent acts cannot be stipulated against by reason of public policy.

  7. No. The fact that only one participant complained does not mean that the tour was satisfactory. The rights of a party cannot be prejudiced by the acts or omissions of others.

  8. The tour operator did commit a grave misrepresentation by falsely assuring that the hotels provided in the tour package would have complete amenities and be conveniently located.

  9. The tour operator is responsible for the dissatisfaction and inconvenience experienced by the tourists due to the condition and location of the hotels.

  10. Yes, the private respondent committed a breach of contract by providing substandard accommodations and failing to provide the promised services. The Court found that the private respondent's choice of hotels did not meet the standards of first-class accommodations as promised. These substandard accommodations and failure to provide the promised services constituted a breach of contract.

  11. Yes, the private respondent can be held liable for moral and exemplary damages. The Court held that the private respondent's misrepresentations in inducing the petitioner and other members of the tour group to enter into the contract amounted to fraud. As a result, the Court awarded moral damages to compensate the petitioner for the distress and anxiety suffered. The Court also awarded exemplary damages to deter travel agencies from resorting to false advertisements and enticements.

  12. The Court set aside the decision of the Court of Appeals and ordered Kenstar Travel Corporation to pay the following:

  13. P100,000.00 as moral damages

  14. P50,000.00 as exemplary damages

  15. P20,000.00 as attorney's fees

  16. The award for nominal damages was deleted.

PRINCIPLES:

  • A contract of adhesion must be construed strictly against the party who drafted it.

  • Responsibility arising from fraudulent acts cannot be stipulated against by reason of public policy.

  • The rights of a party cannot be prejudiced by the acts or omissions of others.

  • Tour operators have the responsibility to fulfill the promises and representations made in their tour packages.

  • Tour operators cannot escape responsibility by relying on third-party publications without verifying the accuracy of the information provided.

  • First-class hotels in Europe are expected to be equivalent to the first-class hotels in the Philippines.

  • Breach of contract occurs when a party fails to perform his obligations under the contract.

  • Moral damages may be awarded in breaches of contract where the obligor acted fraudulently or in bad faith.

  • Exemplary damages may be awarded by way of example or correction for the public good, in addition to moral damages.

  • Misrepresentations in inducing a contract may be dolo causante or dolo incidente, both of which may make the party employing them liable for damages.

  • Moral damages may be awarded in cases involving breach of contract when the act or omission amounts to fraud or bad faith.

  • Exemplary damages may be awarded as a form of punishment to the defendant and as a deterrent to others from committing similar acts.

  • Attorney's fees may be awarded when the claimant is compelled to litigate or incur expenses to protect one's rights.

  • Nominal damages are awarded to recognize a technical or slight breach of duty.