SECOND DIVISION
[G.R. No. 219033. November 23, 2015.]
PHILIPPINE PLAZA HOLDINGS, INC., (THE WESTIN PHILIPPINE PLAZA), petitioner,vs. DALIA G. VIRAY, EMILY ALVAREZ AND SPOUSE JOSE ALVAREZ, ALL REPRESENTED BY ARMANI ALVAREZ, respondents.
NOTICE
Sirs/Mesdames :
Please take notice that the Court, Second Division, issued a Resolution dated 23 November 2015 which reads as follows:
"G.R. No. 219033 — Philippine Plaza Holdings, Inc., (The Westin Philippine Plaza) v. Dalia G. Viray, Emily Alvarez and spouse Jose Alvarez, all represented by Armani Alvarez
This is a petition for review on certiorari seeking to reverse and set aside the February 10, 2015 Decision 1 and the June 22, 2015 Resolution 2 of the Court of Appeals (CA) which affirmed the March 1, 2012 Decision 3 of the Regional Trial Court, Branch 119, Pasay City (RTC).
Respondents Dalia Viray and Emily Alvarez (respondents) alleged that sometime in August 2004, they decided to host the 60th wedding anniversary of their parents. The party was set to be held on June 11, 2005. As respondents resided in the United States, they requested their cousin, Sonia Tila (Sonia), who was then vacationing in the Philippines, to survey five-star hotels and to choose the best venue for the occasion.
Sonia recommended the Westin Philippine Plaza (now Sofitel) which was owned by the petitioner Philippine Plaza Holdings, Inc., (petitioner). She further suggested that they book the Davao Room on the ground floor because it had a direct view of the beautiful scenery outside.
Sometime in October 2004, respondent Dalia Viray (Viray), called the petitioner from overseas and was able to talk to Jun Mercado (Mercado) of the hotel's catering department. She then inquired whether the Davao Room was available for June 11, 2005. Mercado answered in the affirmative, provided that a reservation fee was paid. Hence, on January 5, 2005, Viray, through her representative, Yda Masukat (Yda), paid US$1,000.00 as reservation fee/down payment. An additional US$2,000.00 was paid to the petitioner on April 1, 2005. Viray also booked five guest rooms in the hotel, specifically, Rooms 0717, 0719, 0727, 0744, and 0750 from June 6, 2005 to June 12, 2005. IDSEAH
On June 6, 2005, respondents went to the hotel directly from the airport. They were dismayed to be greeted at the lobby by plywood billboards announcing that the hotel was under renovation. On that same day, Mercado told them that there was a problem with the Davao Room as it was temporarily used as part of the buffet dining room due to renovations. Instead, they were offered the Visayas Room on the second floor, which was totally enclosed by four wooden walls that blocked a direct view to the outside scenery. Bereft of any option to change the venue for lack of time to inform the guests, they agreed to take the Visayas Room.
On June 9, 2005, respondents went on a picnic and, upon their return, they discovered that the trash cans in Room No. 0727 were not emptied; that new linen was not provided; and that the blood-stained bedspread was not replaced. They also alleged that a pouch containing US$1,500.00 placed in the safety deposit box was missing and that one of the rooms they occupied, particularly Room 0727, had a bathroom sink with a cracked bowl. 4
On July 15, 2005, the respondents' legal counsel wrote a letter to the petitioner demanding indemnification in the amount of US$2,500.00 for actual, moral and exemplary damages for breach of contract and bad faith plus a written apology.
On July 26, 2005, the petitioner's legal counsel wrote a reply denying liability for the loss of the US$1,500.00 but not for breach of contract with bad faith and deficient services and facilities. 5
Hence, the respondents filed a complaint for breach of contract and damages against the petitioners before the RTC.
In its Answer with Counterclaim, 6 the petitioner averred that, as early as March 2005, they had already informed the respondents, through their representative, Yda, that the Davao Room would not be available on June 11, 2005 because of hotel renovations. The petitioner then suggested that the respondents choose another ballroom. When the respondents arrived in the morning of June 6, 2005, they had breakfast in the Davao Room and saw for themselves that the view was obstructed by the ongoing renovation.
After breakfast, the respondents approached Adelbert Beltran, the petitioner's Food and Beverage Supervisor, who toured them around the hotel, including the Visayas Room and the Sunset Pavilion. The respondents saw for themselves that the Visayas Room was bigger and aesthetically pleasing, considering that it had a high cathedral-like ceiling and adjoining veranda from where the guests could enjoy a magnificent view of the hotel pool and the Manila Bay.
After the tour, Mercado met with the respondents and discussed the option of using the alternative venues. They were assured that, while the Davao Room was being used as a temporary dining area, it could be made ready for the June 11, 2005 celebration should respondents insist in using the same. Mercado also offered the Visayas Room, a bigger venue. According to the petitioner, the respondents were so impressed with the appearance of the Visayas Room that they decided to transfer there. Thereafter, Viray signed the Banquet Event Order 7 which provided that the Visayas Room, foyer and veranda shall be available for their use from 3:00 o'clock in the afternoon to 12:00 o'clock midnight of June 11, 2005.
The petitioner also averred that Room 0727 was cleaned twice a day. An investigation was also launched to resolve the issue of loss of money from the safety deposit box.
Ruling of the Regional Trial Court
The RTC rendered judgment in favor of the respondents. It stated that the petitioner could not be held liable for the loss of money because there was no showing that it was kept in the safety deposit box. Further, the petitioner was only informed of the deposit after the alleged loss occurred. 8 Respondents' claim, that Room 0727 was in disarray, was likewise rejected by the trial court because it was unsubstantiated.
The RTC, however, found the petitioner liable for moral damages as it had acted in bad faith. The contract between the parties had already been perfected when Mercado assured Viray that the Davao Room would be available on June 11, 2005. Even the printed invitation distributed to the guests indicated that the event would be held in the Davao Room. The fact that the respondents agreed to hold the function in the Visayas room did not mean that they were not forced by the situation to accept the same. They were given no option but to accept the offer, considering that they did not have time to find another venue. The RTC increased the award of damages considering that the respondents, who are residents of the USA, "suffered emotional and mental agony due to the incident complained of, and spent their precious time and money in prosecuting this case through the long years to obtain justice against a financially viable defendant." 9
The RTC also awarded exemplary damages to deter other five-star hotels and other establishments from breaching their obligations. Likewise, the respondents were awarded attorney's fees as they were compelled to litigate the case to protect their rights. Thus, it disposed:
WHEREFORE, judgment is hereby rendered in favor of plaintiffs Dalia G. Viray, Emily Y. Alvarez and Spouse Jose Alvarez represented by Armani Alvarez against defendant Philippine Plaza Holdings, Inc. (The Westin Philippine Plaza) directing defendant to plaintiffs the following: aCIHcD
1. Moral Damages in the amount of P120,000.00.
2. Exemplary Damages in the amount of P50,000.00.
3. Attorney's Fees of P100,000.00.
SO ORDERED." 10
Ruling of the Court of Appeals
Aggrieved, the petitioner appealed before the CA. In its Appellant's Brief, the petitioner posited that the parties never signed any contract regarding the event prior to the respondents' arrival on June 6, 2005, and that, up to that point, Viray was still unsure as to what room to use for the venue. The petitioner insisted that the parties only came to an agreement as to the actual event venue when they signed the Banquet Event Order on June 6, 2005. 11
The CA affirmed the award of damages in favor of the respondents. It appears that the petitioner had no intention to fulfil its obligation to make the Davao Room available for the event on June 11, 2005. It was clear that the respondents had chosen the Davao Room. The invitations for the event clearly stated that the venue would be the Davao Room. Pursuant to the perfected contract between the parties, the petitioner obligated itself to make the Davao Room available for the respondents' event on June 11, 2005. The contract between the parties was perfected in January 2005, while renovations started in March 2005, and the event was set on June 11, 2005. If the petitioner was bent on complying with its obligation, it was certainly within its control to ensure that renovations were done by the time the event was to be held.
The CA also noted that the respondents were informed only five (5) days before the event that the Davao Room would not be available. Hence, respondents were left with no choice but to sign the Banquet Event Order. 12
Hence, this petition.
ISSUES
(1) WHETHER PETITIONER BREACHED ITS OBLIGATION WHEN IT CHANGED THE VENUE OF THE EVENT FROM THE DAVAO ROOM TO THE VISAYAS ROOM.
(2) WHETHER PETITIONER IS LIABLE FOR MORAL AND EXEMPLARY DAMAGES, AS WELL AS ATTORNEY'S FEES.
In its petition for review on certiorari, 13 the petitioner insists that the chosen venue was the Visayas Room as evidenced by the Banquet Event Order. Further, the petitioner never closed the option of using the Davao Room. In fact, petitioner had no other bookings for the Davao Room. Contrary to the findings of the CA, the suggestion to use the Visayas Room was merely an offer and nothing more. In paying the reservation fee, respondents were simply paying for an option on the right to use the Davao Room. Even assuming that there was a breach on petitioner's part, the same was only minor, considering that the respondents and their guests enjoyed the same five-star service and food.
The Court's Ruling
The petition is partly meritorious.
The change from
For a contract to be valid, it must have three essential elements: (1) consent of the contracting parties; (2) object certain which is the subject matter of the contract; and (3) cause of the obligation which is established. All these elements must be present to constitute a valid contract. Consent is essential to the existence of a contract; and where it is wanting, the contract is nonexistent. In a contract of sale, its perfection is consummated at the moment there is a meeting of the minds upon the thing that is the object of the contract and upon the price. Consent is manifested by the meeting of the offer and the acceptance of the thing and the cause, which are to constitute the contract. 14
In this case, the RTC and the CA correctly held that there was a perfected contract the moment respondents paid for the reservation fee, and not from the day Viray signed the Banquet Event Order. As early as October 2004, Viray and Mercado had already agreed that the Davao Room would be reserved upon payment of the reservation fee, hence, the meeting of the minds.
It was clear from the records that the respondents had their hearts set on the Davao Room. First, the respondents had already paid the US$1,000.00 reservation fee on January 5, 2005, to meet Mercado's condition. It must be recalled that Mercado himself affirmed the availability of the Davao Room provided that the respondents pay the reservation fee. Second, even before they paid the reservation fee, Viray called Mercado and categorically insisted that they want the Davao Room. Third, the invitation cards printed for the event specifically provided that the event was to be held at the Davao Room. Hence, from that point on, the petitioner's obligation arising from the contract, which was to make the Davao Room available for the event, had the force of law between the parties and should have been complied with in good faith. 15
A breach of contract is defined as the failure without legal reason to comply with the terms of a contract. It is also defined as the failure, without legal excuse, to perform any promise which forms the whole or part of the contract. 16 cHaCAS
Considering that the perfection of the contract occurred from the moment Viray paid the reservation fee, it follows that a change of venue from the Davao Room to the Visayas Room constituted a breach of the parties' contract. It bears stressing that the respondents had to organize the party all the way from the United States, as early as October 2004, only to be informed on June 6, 2005, or five days before the event, that the Davao Room would not be available. The timetable of the renovations was subject to petitioner's discretion and control. It was up to the petitioner's initiative to make sure that the Davao Room would be available for the event. 17 The respondents then were left with no choice but to sign the Banquet Event Order.
Respondents should be
To recover moral damages in an action for breach of contract, the breach must be palpably wanton, reckless and malicious, in bad faith, oppressive, or abusive. The person claiming bad faith must prove its existence by clear and convincing evidence for the law always presumes good faith. Bad faith does not simply connote bad judgment or negligence. It imports a dishonest purpose or some moral obliquity and conscious doing of a wrong, a breach of known duty through some motive or interest or ill will that partakes of the nature of fraud. It is, therefore, a question of intention, which can be inferred from one's conduct and/or contemporaneous statements. 18
The RTC and CA were in one in holding that the breach of contract was attended with bad faith.
In this case, the respondents were constrained to accept the Visayas Room for lack of time. If they were informed on time that the Davao Room would not be available, respondents would not have agreed to pay the reservation fee. The RTC correctly observed that the scenery and ambiance was the main consideration of the respondents in choosing the Davao Room.
Despite the down payment, the petitioner did not see to it that the Davao Room would be available to the respondents. Instead, the plaintiff used it as additional space for the buffet.
The Visayas Room would not do. It was enclosed by wooden walls. These walls obviously blocked the direct view of the scenery. Had they known earlier that the Davao Room would be unavailable due to the ongoing renovations, they could have shifted the reservation fee to another venue within the hotel or ultimately withdraw from the same. Yet, the petitioner waited for months to pass, even days preceding the event, to notify the respondents of the shortcomings of their favored venue.
Under Article 2229 of the Civil Code, "exemplary or corrective damages are imposed, by way of example or correction for the public good, in addition to the moral, temperate, liquidated or compensatory damages." Exemplary damages are designed by our civil law to permit the courts to reshape behaviour that is socially deleterious in its consequence by creating negative incentives or deterrents against such behaviour." 19 In contracts and quasi-contracts, the court may award exemplary damages if the defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner. 20
There being bad faith on the part of petitioners, the award of exemplary damages is warranted to deter establishments of this kind from committing the same acts.
Anent the award of attorney's fees, it is clear under Article 2208 of the Civil Code that the same can be recovered when exemplary damages are awarded or when the defendant's act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest.
Taking into account, however, that the event was sufficiently hosted by the petitioner sans the change in venue, the Court deems it fair and reasonable to reduce the awards to P100,000.00 as moral damages, P75,000.00 as exemplary damages, and P50,000.00 as attorney's fees.
WHEREFORE, the March 1, 2012 Decision of the Regional Trial Court, Branch 119, Pasay City, is MODIFIED to read as follows:
WHEREFORE, judgment is hereby rendered in favor of plaintiffs Dalia G. Viray, Emily Y. Alvarez and Spouse Jose Alvarez, represented by Armani Alvarez, against defendant Philippine Plaza Holdings, Inc. (The Westin Philippine Plaza), directing defendant to pay plaintiffs the following:
1. Moral Damages in the amount of P100,000.00.
2. Exemplary Damages in the amount of P75,000.00.
3. Attorneys Fees of P50,000.00.
The amounts shall earn interest at the rate of six percent (6%) per annum from the finality of this judgment until fully paid. (Carpio, J., on official leave; Brion, J., designated Acting Chairperson, per Special Order No. 2281, and Velasco, Jr., J., designated Acting Member, per Special Order No. 2282, both dated November 13, 2015)
SO ORDERED."
Very truly yours,
(SGD.) MA. LOURDES C. PERFECTODivision Clerk of Court
Footnotes
1. Rollo pp. 44-57, penned by Associate Justice Ramon M. Bato, Jr. with Associate Justice Manuel M. Barrios and Associate Justice Maria Elisa Sempio Diy, concurring.
2. Id. at 59-60.
3. Id. at 151-162.
4. Id. at 61-67.
5. Id. at 46.
6. Id. at 89-100.
7. Id. at 109-110.
8. Id. at 160.
9. Id. at 49-50.
10. Id. at 162.
11. Id.
12. Id. at 53-54.
13. Id. at 11-35.
14. Heirs of Intac v. Court of Appeals, G.R. No. 173211, October 11, 2012, 684 SCRA 88, 98.
15. Rollo, pp. 51-53.
16. Spouses Guanio v. Makati Shangri-la Hotel and Resort, 656 Phil. 608, 616 (2011).
17. Id. at 54.
18. Adriano v. Lasala, G.R. No. 197842, October 9, 2013, 707 SCRA 346, 358.
19. Montinola v. Philippine Airlines, G.R. No. 198656, September 8, 2014, 734 SCRA 439, 464.
20. Article 2232, New Civil Code of the Philippines.