G.R. No. 108253 - Geraldez vs. Court of Appeals

Petitioner: Lydia L. Geraldez, a Filipino tourist who purchased a European package tour from Kenstar Travel Corporation (Kenstar) for herself and her sister, Dolores.
Respondents: Court of Appeals (for its decision on appeal) and Kenstar Travel Corporation (tour operator).
Case: Petition for review of the Court of Appeals’ decision that deleted moral and exemplary damages and reduced nominal damages and attorney’s fees in Civil Case No. Q-90-4649 (RTC Quezon City, Branch 80).
Docket and date: G.R. No. 108253, Decision dated February 23, 1994; 300 Phil. 331.
RTC proceedings: After trial, the RTC awarded petitioner P500,000 moral damages; P200,000 nominal damages; P300,000 exemplary damages; P50,000 attorney’s fees; and costs.
CA ruling: Deleted moral and exemplary damages; reduced nominal damages to P30,000 and attorney’s fees to P10,000.
Ancillary proceedings: RTC issued a writ of preliminary attachment (Rule 57, Sec. 1[d]—fraud in contracting an obligation); attachment was lifted after Kenstar filed a counterbond of P990,000. During pendency, petitioner filed complaints with the SEC (PED Case No. 90-3738) and DOT (DOT Case No. 90-121), where Kenstar was fined P10,000 (SEC) and P5,000 (DOT), which Kenstar did not dispute.

Petitioner learned of Kenstar through advertisements offering European tours; Kenstar’s representative provided a brochure for the “VOLARE 3” 22-day Europe tour priced at US$2,990 per person.
Petitioner paid approximately P190,000 for two participants.
Brochure representations included:

A Filipino tour escort to accompany the tour.
A European Tour Manager who, as represented, would accompany the group, answer questions, and share expertise on European destinations.
First-class hotel accommodations with complete amenities and convenient locations relative to daily itineraries.
Specific highlights, including a visit to the UGC Leather Factory with discounted shopping opportunities.

No European Tour Manager accompanied the group despite repeated assurances during the tour that one would join later.
The Filipino tour escort provided by Kenstar, Rowena Zapanta, was inexperienced and a first-timer who had not been to Europe; she made daily overseas calls to Manila, revealing on-the-job training and remote supervision by Kenstar.
The group failed to visit the UGC Leather Factory during operating hours; they arrived when it was closed, negating the touted highlight and shopping opportunity.
Several hotels were substandard, distant from city centers, and lacked basic amenities (soap, towels, toilet paper); some accommodations were unsanitary and inconveniently located, causing distress to participants, including honeymooners.
The tour escort failed to anticipate or attend to routine needs; when petitioner’s sister suffered an accident, Zapanta called an ambulance but left with the rest of the group, leaving the sisters largely to fend for themselves.

Kenstar’s brochure used clear, personified language for the European Tour Manager (“he” will accompany, answer questions, share knowledge).
Zapanta admitted lack of experience and failure to ensure basic amenities; could not recall names of supposed local European guides.
Tour participants Luz Sui Haw and her husband corroborated petitioner’s complaints on hotel conditions, lack of amenities, and absence of a European Tour Manager; they detailed distances, poor conditions, and adverse effects (e.g., illness/itching during stay).
Hotel classification defenses based on international guides were unpersuasive; Kuoni Travel (Kenstar’s European operator) could have verified quality; “first-class” as represented should meet basic standards.
Kenstar argued “European Tour Manager” referred to Kuoni Travel (a juridical entity), invoked fine-print “responsibilities” clause limiting liability, claimed “substantial compliance,” budget-driven limitations (“best for their money”), and that only petitioner complained.
Petitioner asserted fraudulent inducement: Kenstar deliberately used an inexperienced escort for training at the expense of clients; misrepresented managerial support; failed to ensure highlight visits and promised hotel standards.

Both RTC and CA found material non-compliance with certain commitments (e.g., no European Tour Manager, first-timer escort, late arrival at leather factory).
Disagreement centered on bad faith: RTC found fraud/bad faith and granted moral/exemplary damages; CA found none, limiting recovery to nominal damages and reduced attorney’s fees.

Whether Kenstar acted in bad faith or with fraud (dolo) and/or gross negligence in the performance of its obligations under the VOLARE 3 tour contract.

Failure to provide a European Tour Manager and experienced guides as expressly represented.
Assignment of a first-timer Filipino tour escort and the manner of her supervision and performance.
Failure to deliver a key tour highlight (UGC Leather Factory visit) and to ensure first-class hotel accommodations with basic amenities and convenient locations.

Whether Kenstar can rely on fine-print limitation-of-liability clauses in its brochure/contract to avoid responsibility for contractual breaches or fraud.

Characterization as a contract of adhesion and standards for construing such clauses.
Public policy limits on stipulations against fraud.

Whether there was substantial compliance with the tour contract and whether “commendatory trade talk” in advertisements excuses non-performance.

Interpretation of brochure language and the objective theory of contracts.
The semantic claim that “European Tour Manager” refers to a juridical entity and that “he” includes “it.”

Whether the paucity of complaints from other tour participants negates petitioner’s claims or liability.

Moral damages in breach of contract upon proof of fraud or bad faith (Art. 2220, Civil Code).
Exemplary damages to deter wrongful conduct.
Nominal damages in light of other recoveries.
Attorney’s fees under Art. 2208.