DAMAGES
1. THE ORCHARD GOLF & COUNTRY CLUB, INC.,
EXEQUIEL D. ROBLES, CARLO R.H. MAGNO, CONRADO L.
BENITEZ II, VICENTE R. SANTOS, HENRY CUA LOPING,
MARIZA SANTOS-TAN, TOMAS B. CLEMENTE III, and
FRANCIS C. MONTALLANA, petitioners, vs. ERNESTO V.
YU and MANUEL C. YUHICO, respondents.
Facts:This case is a continuation of Yu vs. The Orchard Gold &
Country Club, Inc. The relevant facts are as follows:
Yu and Yuhico went to Orchard Golf to play golf w/ another
member of the club. At the last minute, they were
informedthat the other member could not play with them. Due
to the no twosome policy of Orchard contained in their
handbook prohibiting less than 3 players from playing on
weekends an public holidays before 1pm. Yu decided to
convince Orchards assistant golf director to allow them to
play. The latter refused. Yu then shouted invectives at the
assistant golf director. Thus w/o the latters permission, they
were able to play. The lower court ruled by saying that the
Orchards decision suspending Yu and Yuhico is declared void.
Orchard is likewise directed to pay moral, exemplary
damages, attorneys fees, and costs of litigation
Issue: W/N the damages claimed could be awarded?
Ruling: No.
Yu and Yuhico acknowledged that there was an offense
committed. SimilarlyYuhico admitted that he was aware or
had prior knowledge of Orchards policy against twosomes,
contained in their handbook. However, they asserted that
such policy was relaxed by the management when a member
would not be prejudiced. However, the court ruled that such
claim is based not on concrete examples. No specific instance
as to when and under what circumstance the supposed
relaxation took place was cited.
As to the purported damages, Yuhico stated that he became
the butt of jokes of a another group of member-golfers in the
club. Also, Yu said that his friends in business started to
evade him. Respondents could not however present any
testimonial/documentary evidence to bolster their claims.
Thus, contrary to the findings of the trial courrts findings,
there is no factual/legal basis to grant moral/exemplary
damages, attorneys fees and costs of suit in favor of
respondents. The damages suffered, if there are any, partake
of the nature of a damnumabsqueinjuria.
One who makes use of his own legal right does no injury. Qui
jure suoutiturnullumdamnumfacit. If damage results from a
person's exercising his legal rights, it is
damnumabsqueinjuria.
In this case, respondents failed to prove by preponderance of
evidence that there is fault or negligence on the part of
petitioners in order to oblige them to pay for the alleged
damage sustained as a result of their suspension as Club
members. Certainly, membership in the Club is a privilege.
Regular members are entitled to use all the facilities and
privileges of the Club, subject to its rules and regulations. As
correctly pointed out by petitioners, the mental anguish
respondents experienced, assuming to be true, was brought
upon them by themselves for deliberately and consciously
violating the rules and regulations of the Club. Considering
that respondents were validly suspended, there is no reason
for the Club to compensate them
ACTUAL OR COMPENSATORY
1. PEOPLE OF THE PHILIPPINESvs. JESUS MUYCO and
ARNULFO MUYCO (at large)JESUS MUYCO,
Facts:
Jesus and Arnulfo are cousins. They joined Romeo and Ernesto
(uncle and nephew) to drink whisky under a mango tree.
Suddenly, without warning, Arnulfo grabbed Romeos hand
and while the latter was struggling, Jesus stabbed Romeo near
the collarbone. It was fatal and it killed Romeo. Ernesto was
frozen in shock and was only able to watch as Jesus and
Arnulfo drag the lifeless body of Romeo to the sugarcane field.
He managed to run when he saw Jesus and Arnulfo returning
from the field, pointing a knife at him. He ran and hid in the
opposite side of the field until it was dawn. The body was
found later in the evening.
When Jesus was caught he insisted that he was in someone
elses house and could not have committed the crime. Other
witnesses corroborated his testimony but he was still
convicted because of the court gave credence to the
testimony of Ernesto. Jesus states that Ernesto just standing
there during the altercation was contrary to human nature.
Issue: (Not really relevant I think the award of damages at
the end is relevant)
WON Ernestos testimony should be considered or given
weight
Ruling:
Yes.
Different people react differently to a given type of situation.
There is no standard form of human behavioral response
when one is confronted with a strange, startling or frightful
experience. One persons spontaneous or unthinking, or even
instinctive response to a horrid and repulsive stimulus may be
aggression, while another persons reaction may be cold
indifference. A witness inability to move, help or even to run
away when the incident occurs is not a ground to label his
testimony as doubtful and unworthy of belief. There is no
prescribed behavior when one is faced with a shocking event.
In the case of Ernesto Boteja, his inability to react was
understandable as he was shocked by the suddenness of the
event and considering that it was his first time to witness a
stabbing incident
Relevant Portion
In the instant case, the victim was nineteen (19) years old at
the time of his death and earning P1,600.00 monthly as a
farm laborer. Thus, his heirs are entitled to receive an award
for lost earnings in accordance with the following formula: 2/3
(80 ATD [age at time of death]) x (GAI [gross annual income])
80% GAI]
2/3 (80 19) x (P1,600 x 12) - 80% (P1,600.00 x 12)
2/3 (61) x P19,200 - 80% (P19,200)
40.67 x [P19,200 - P15,360]
40.67 x P3,840 = P156,172.80
On the basis of the above computation, the heirs of the
deceased Romeo Boteja Jr. are entitled to receive P156,172.80
from accused-appellant Jesus Muyco
2. VICTORY LINER, INC v. GAMMA
Facts:
Marie Grace Pagulayan-Gammad was on board an air-
conditioned Victory Liner bus bound for Tuguegarao, Cagayan
from Manila. At about 3:00 a.m., the bus, while running at a
high speed, fell on a ravine somewhere in Nueva Vizcaya.This
resulted in the death of Marie Grace and physical injuries to
other passengers. Respondent heirs of the deceased filed a
complaint for damages arising from culpa contractual against
petitioner. In its answer, the petitioner claimed that the
incident was purely accidental and that it has always
exercised extraordinary diligence in its 50 years of operation.
After respondent Rosalito Gammad completed his direct
testimony, cross-examination was scheduled for November
17, 1997 but moved to December 8, 1997, because the
parties and the counsel failed to appear. The counsel of the
petitioner was absent despite due notice and was deemed to
have waived right to cross-examine respondent Rosalito. The
petitioners counsel also failed to appear at the presentation
of evidence. The court already deemed the case submitted for
resolution when it received belatedly the telegram of
petitioners counsel requesting for postponement.
The trial court rendered its decision in favor of respondents.
On appeal by petitioner, the Court of Appeals affirmed the
decision of the trial court with modification.Represented by a
new counsel, petitioner filed a motion for reconsideration. The
Court of Appeals denied petitioners motion for
reconsideration.
Issues:
(1) whether petitioners counsel was guilty of gross
negligence
(2) whether petitioner should be held liable for breach of
contract of carriage
(3) whether the award of damages was proper
Ruling:
1) No. As a general rule, negligence of counsel binds the
client. This is based on the rule that any act performed by a
counsel within the scope of his general or implied authority is
regarded as an act of his client. However,there are certain
exceptions in cases where reckless or gross negligence of
counsel deprives the client of due process of law, or when its
application will result in outright deprivation of the clients
liberty or property or where the interests of justice so require,
and accord relief to the client who suffered by reason of the
lawyers gross or palpable mistake or negligence. The
exceptions, however, are not present in this case. Hence,
petitioners claim that it was denied due process lacks
basis.Petitioner is guilty, at the least, of contributory
negligence and fault cannot be imputed solely on previous
counsel.
We do not believe that the negligence of counsel was so gross
and reckless that petitioner was deprived of its right to due
process of law. Petitioner was never deprived of its day in
court, as in fact it was afforded every opportunity to be heard.
If every perceived mistake, failure of diligence, lack of
experience or insufficient legal knowledge of the lawyer would
be admitted as a reason for the reopening of a case, there
would be no end to controversy. Fundamental to our judicial
system is the principle that every litigation must come to an
end. It would be a clear mockery if it were otherwise. Access
to the courts is guaranteed, but there must be a limit to
it.Viewed vis--vis the foregoing jurisprudence, to sustain
petitioners argument that it was denied due process of law
due to negligence of its counsel would set a dangerous
precedent. It would enable every party to render inutile any
adverse order or decision through the simple expedient of
alleging gross negligence on the part of its counsel. The Court
will not countenance such a farce which contradicts long-
settled doctrines of trial and procedure.
2) Yes. Petitioner was correctly found liable for breach of
contract of carriage. A common carrier is bound to carry its
passengers safely as far as human care and foresight can
provide, using the utmost diligence of very cautious persons,
with due regard to all the circumstances. In a contract of
carriage, it is presumed that the common carrier was at fault
or was negligent when a passenger dies or is injured. Unless
the presumption is rebutted, the court need not even make an
express finding of fault or negligence on the part of the
common carrier. This statutory presumption may only be
overcome by evidence that the carrier exercised extraordinary
diligence. In the instant case, there is no evidence to rebut
the statutory presumption that the proximate cause of Marie
Graces death was the negligence of petitioner. Hence, the
courts below correctly ruled that petitioner was guilty of
breach of contract of carriage.
3. No. The award of damages should be modified.
Article 1764 in relation to Article 2206 of the Civil Code, holds
the common carrier in breach of its contract of carriage that
results in the death of a passenger liable to pay the following:
(1) indemnity for death, (2) indemnity for loss of earning
capacity, and (3) moral damages.
On actual and compensatory damages
Finally, in Eastern Shipping Lines, Inc. v. Court of Appeals,[56]
it was held that when an obligation, regardless of its source,
i.e., law, contracts, quasi-contracts, delicts or quasi-delicts is
breached, the contravenor can be held liable for payment of
interest in the concept of actual and compensatory damages,
subject to the following rules, to wit
1. When the obligation is breached, and it consists in the
payment of a sum of money, i.e., a loan or forbearance of
money, the interest due should be that which may have been
stipulated in writing. Furthermore, the interest due shall itself
earn legal interest from the time it is judicially demanded. In
the absence of stipulation, the rate of interest shall be 12%
per annum to be computed from default, i.e., from judicial or
extrajudicial demand under and subject to the provisions of
Article 1169 of the Civil Code.
2. When an obligation, not constituting a loan or forbearance
of money, is breached, an interest on the amount of damages
awarded may be imposed at the discretion of the court at the
rate of 6% per annum. No interest, however, shall be
adjudged on unliquidated claims or damages except when or
until the demand can be established with reasonable
certainty. Accordingly, where the demand is established with
reasonable certainty, the interest shall begin to run from the
time the claim is made judicially or extrajudicially (Art. 1169,
Civil Code) but when such certainty cannot be so reasonably
established at the time the demand is made, the interest shall
begin to run only from the date the judgment of the court is
made (at which time the quantification of damages may be
deemed to have been reasonably ascertained). The actual
base for the computation of legal interest shall, in any case,
be on the amount finally adjudged.
3. When the judgment of the court awarding a sum of money
becomes final and executory, the rate of legal interest,
whether the case falls under paragraph 1 or paragraph 2,
above, shall be 12% per annum from such finality until its
satisfaction, this interim period being deemed to be by then
an equivalent to a forbearance of credit. (Emphasis supplied).
In the instant case, petitioner should be held liable for
payment of interest as damages for breach of contract of
carriage. Considering that the amounts payable by petitioner
has been determined with certainty only in the instant
petition, the interest due shall be computed upon the finality
of this decision at the rate of 12% per annum until
satisfaction, per paragraph 3 of the aforecited rule.
WHEREFORE, in view of all the foregoing, the petition is
PARTIALLY GRANTED. The decision of the Court of Appeals,
which modified the decision of the Regional Trial Court of
Tuguegarao, Cagayan, is AFFIRMED with MODIFICATION. As
modified, petitioner Victory Liner, Inc., is ordered to pay
respondents the following: (1) P50,000.00 as indemnity for
the death of Marie Grace Pagulayan-Gammad; (2)
P100,000.00 as moral damages; (3) P100,000.00 as
exemplary damages; (4) P78,160.00 as actual damages; (5)
P500,000.00 as temperate damages; (6) 10% of the total
amount as attorneys fees; and the costs of suit.
Furthermore, the total amount adjudged against petitioner
shall earn interest at the rate of 12% per annum computed
from the finality of this decision until fully paid.SO ORDERED.
3. Phil Hawk Corp vs Vivian Tan Lee
Facts:
The accident involved a motorcycle, a passenger jeep, and a
bus which was owned by petitioner Philippine Hawk
Corporation, and was then being driven by Margarito Avila.
Respondent testified that she was riding on their motorcycle
in tandem with her husband, Silvino Tan, who was on the
wheel. They were on a stop position at the side of the
highway; and when they were about to make a turn, she saw
a bus running at fast speed coming toward them, and then
the bus hit a jeep parked on the roadside, and their
motorcycle as well. She lost consciousness and was brought
to the hospital but her husband died due to the vehicular
accident.
Ernest Ovial, the driver of the passenger jeep involved in the
accident testified that his jeep was parked on the left side of
the highway. He did not notice the motorcycle before the
accident but he saw the bus dragging the motorcycle along
the highway, and then the bus bumped his jeep and sped
away.The driver of petitioner's bus, Margarito Avila, testified
that he was driving his bus at 60 kilometers per hour when a
motorcycle ran from his left side of the highway, and as the
bus came near, the motorcycle crossed the path of the bus,
and so he turned the bus to the right. From his side mirror, he
saw that the motorcycle turned turtle (bumaliktad). He denied
that he bumped the motorcycle.
The trial court found Margarito Avila guilty of simple
negligence and held petitioner bus company liable for failing
to exercise the diligence of a good father of the family in the
selection and supervision of Avila, having failed to sufficiently
inculcate in him discipline and correct behavior on the road.
TC ordered the defendants Philippine Hawk and Avila to pay
jointly and solidarily the sum of P745,575.00 representing loss
of earnings and actual damages plus P50,000.00 as moral
damages.
CA affirmed the decision of the TC with modification in the
award of damages ordering the appellants Philippine Hawk
and Avila to pay jointly and severally the following
amount: (a) P168,019.55 as actual damages; (b) P10,000.00
as temperate damages; (c)P100,000.00 as moral damages;
(d) P590,000.00 as unearned income; and (e) P50,000.00 as
civil indemnity.
Issues:
Whether negligence may be attributed to petitioners driver
Whether the petitioner is liable to respondent for damages
and whether the damages awarded by CA are proper
Ruling:
The bus driver driving on the right side of the road already
saw the motorcycle on the left side of the road before the
collision and did not take the necessary precaution to slow
down, but drove on and bumped the motorcycle, and also the
passenger jeep parked on the left side of the road, showing
that the bus was negligent in veering to the left lane, causing
it to hit the motorcycle and the passenger jeep.
Petitioner is liable for having failed to sufficiently inculcate in
Avila the discipline and correct behavior on the road.
Petitioners tests were concentrated on the ability to drive and
physical fitness to do so. It did not know that Avila had been
previously involved in sideswiping incidents.
Petitioner contends that the CA erred in awarding other kinds
of damages in favor of respondent, who did not appeal from
the trial courts decision.
SEC. 8. Questions that may be decided. -- No error which does
not affect the jurisdiction over the subject matter or the
validity of the judgment appealed from or the proceedings
therein will be considered unless stated in the assignment of
errors, or closely related to or dependent on an assigned error
and properly argued in the brief, save as the court pass upon
plain errors and clerical errors.
Mr. Justice Florenz D. Regalado commented on this section,
thus:
xxx
2. The procedure in the Supreme Court being generally
the same as that in the Court of Appeals, unless
otherwise indicated (see Secs. 2 and 4, Rule 56), it has
been held that the latter is clothed with ample
authority to review matters, even if they are not
assigned as errors on appeal, if it finds that their
consideration is necessary in arriving at a just decision
of the case.
The indemnity for loss of earning capacity of the deceased is
provided for by Article 2206 of the Civil Code.Compensation of
this nature is awarded not for loss of earnings, but for loss of
capacity to earn money.
As a rule, documentary evidence should be presented to
substantiate the claim for damages for loss of earning
capacity. Except:
Damages for loss of earning capacity may be awarded despite
the absence of documentary evidence when:
the deceased is self-employed and earning less than the
minimum wage under current labor laws, in which case,
judicial notice may be taken of the fact that in the deceased's
line of work no documentary evidence is available; orthe
deceased is employed as a daily wage worker earning less
than the minimum wage under current labor laws.
Records show that respondents husband was leasing and
operating a Caltex gasoline station. She testified that her
husband earned an annual income of Php1M. She presented in
evidence a Certificate of Creditable Income Tax Withheld at
Source for the Year 1990, which showed that her husband
earned a gross income of P950,988.43 in 1990. It is
reasonable to use the Certificate and respondents testimony
as bases for fixing the gross annual income of the deceased at
Php1M before her husband died. No documentary evidence
was presented regarding the income derived from their copra
business; hence, the testimony of respondent as regards such
income cannot be considered.
In the computation of loss of earning capacity, only net
earnings, not gross earnings, are to be considered; that is, the
total of the earnings less expenses necessary for the creation
of such earnings or income, less living and other incidental
expenses. In the absence of documentary evidence, it is
reasonable to peg necessary expenses for the lease and
operation of the gasoline station at 80 percent of the gross
income, and peg living expenses at 50 percent of the net
income (gross income less necessary expenses).
The computation for loss of earning capacity is as follows:
Net Earning Capacity= Life Expectancy [2/3 (80-age at
the time of death)] x Gross Annual Income (GAI) - Reasonable
and Necessary Expenses (80% of GAI)
X = [2/3 (80-65)] x P1,000,000.00 - P800,000.00
X = 2/3 (15) x P200,000.00 - P100,000.00 <---(Living
Expenses)
X = 30/3 x P100,000.00
X = 10 x P100,000.00
X = P1,000,000.00
A review of the valid receipts submitted in evidence for actual
damages showed that the funeral and related expenses
amounted only to P114,948.60, while the medical expenses of
respondent amounted only to P12,244.25, yielding a total
of P127,192.85 in actual damages.
CA correctly sustained the award of moral damages in the
amount of P50,000.00 for the death of respondents husband.
Moral damages are awarded to allow the plaintiff to obtain
means, diversions or amusements that will serve to alleviate
the moral suffering he/she has undergone due to the
defendants culpable action and must, perforce, be
proportional to the suffering inflicted.
In the absence of competent proof of the actual damage
caused on the motorcycle or the actual cost of its repair, the
award of temperate damages by the CA in the amount
of P10,000.00 was reasonable under the circumstances.CA
correctly awarded moral damages for the physical injuries
sustained due to the vehicular accident. Under Art. 2219 of
the Civil Code,moral damages may be recovered in quasi-
delicts causing physical injuries. However, the award
of P50,000.00 should be reduced to P30,000.00 in accordance
with prevailing jurisprudence.
CA correctly awarded respondent civil indemnity for the death
of her husband, which has been fixed by current jurisprudence
and proper under Art. 2206 of the Civil Code at P50,000.00.
Petitioner Phil Hawk and Avila are ordered to pay jointly and
severally respondent Vivian Tan: (a) civil indemnity in the
amount of Php50K; (b) actual damages in the amount
of Php127,192.85; (c) moral damages in the amount Php80K
(50K + 30K); (d) indemnity for loss of earning capacity in the
amount of Php1M; and (e) temperate damages in the amount
Php10K.
4. PEOPLE VS. ASILAN
Facts:
- Asilan was charged with the complex crime of Direct
Assault with murder
- The allegations were that the said accused conspired
with another person whose name was still unknown
to feloniously attack, and assault POI CAAT, a
member of the Philippine National Police while in the
performance of his duty of handcuffing the at large
co-conspirator for illegal possession of a deadly
weapon.
- It was alleged that the accused repeatedly stabbed
CAAT with a fan knife and shooting him with CAATs
own gun. This led to his demise
RTC
- Found Asialn guilty of murder but not of direct
assault
- RTC held that witnesses had positively identified him
as the malefactor
- As to damages, the RTC found the prosecutions
evidence, which consisted of Adovas wife testimony,
and the receipts of the expenses she incurred in
Adovas hospitalization, wake, and burial, sufficient to
award moral and actual damages.
CA
- Affitmed
Issue: W/on the award of damages were proper?
Ruling:
- The award of damages should be increased
- As to actual damages, Adovass widow, Irene
Adovas, presented the receipts showing that she paid
25,224.00 to Our Lady of Lourdes Hospital, Inc., as
hospital expenses, 35,000.00 to Marulas Memorial
Homes and 20,000.00 to FunerariaSaranay as
funeral expenses
- Art 2206 of the Civil Code states that
o The amount of damages for death caused
by a crime or quasi-delict shall be at least
three thousand pesos, even though there
may have been mitigating
circumstances. In addition:
(1) The defendant shall be liable for
the loss of the earning capacity of
the deceased, and the indemnity
shall be paid to the heirs of the
latter; such indemnity shall in
every case be assessed and
awarded by the court, unless the
deceased on account of permanent
physical disability not caused by
the defendant, had no earning
capacity at the time of his death
- The wife of CAAT was able to testify and present
documentary evidence as to the earning capacity of
the deceased at the time of the death
- As a guide, the SC laid down factors in computing the
amount of damages recoverable for the loss of
earning capacity of deceased:
o The number of years on the basis of which
the damages shall be computed. This is
based on the formula (2/3 x 80 age of the
deceased at the time of his death = life
expectancy)
o The rate at which the losses sustained by
the heirs of the deceased should be fixed.
Net income is arrived at by
deducting the amount of the
victims living expenses from the
amount of his gross income
- The loss of earning capacity of Asilan is thus
computed as follows:
- Net Earning Capacity = life expectancy x [gross
annual income living expenses]
= 2/3 [80-age at time of death] x [gross annual
income 50% of gross annual income]
5. QUIRANTE V. IAC
Facts:
Dr. IndalecioCasasola (father of respondents) had a contract
with a building contractor named Norman GUERRERO.
The Philippine American General Insurance Co. Inc.
(PHILAMGEN, for short) acted as bondsman for
GUERRERO. In view of GUERRERO'S failure to perform his
part of the contract within the period specified, Dr.
IndalecioCasasola, thru his counsel, Atty. John Quirante,
sued both GUERRERO and PHILAMGEN before the Court
of first Instance of Manila, now the Regional Trial Court (RTC)
of Manila for damages, with PHILAMGEN filing a cross-claim
against GUERRERO for indemnification. The RTC rendered a
decision dated October 16, 1981 ruling in favor of Casasola by
rescinding the contract and ordering Guerrero and Philamgen
to pay:
- actual damages in the amount of P129,430.00,
- moral damages in the amount of P50,000.00,
- exemplary damages in the amount of
P40,000.00
- and attorney's fees in the amount of
P30,000.00;
- and ordering Guerrero alone to pay
liquidated damages of P300.00 a day from
December 15, 1978 to July 16, 1979
- and ordering PHILAMGEN to pay the plaintiff
the amount of the surety bond equivalent to
P120,000.00
A writ of execution was issued thereafter.
A petition was filed by PHILAMGEN before the IAC for the
quashal of the writ of execution and to compel the trial court
to give due course to the appeal, but this was dismissed.
Hence, the case was elevated before the SC. In the
meantime, on November 16, 1981, Dr. Casasola died
leaving his widow and several children as survivors.
Herein petitioner Quirante filed a motion in the trial
court for the confirmation of his attorneys fees
because according to him, there was an oral
agreement between him and Dr. Casasola. This was
allegedly confirmed by the widow, Asuncion Vda. deCasasola,
and the two daughters of the deceased, namely Mely C.
Garcia and Virginia C. Nazareno.
The RTC granted the motion for confirmation. However, the
IAC set aside the RTCs order and found the confirmation
premature:
Firstly, there is still pending in the Supreme Court a
petition which may or may not ultimately result in
the granting to the Isasola (sic) family of the total
amount of damages given by the respondent Judge.
Hence the award of damages confirmed in the two
assailed Orders may be premature. Secondly,
assuming that the grant of damages to the family is
eventually ratified, the alleged confirmation of
attorney's fees will not and should not adversely
affect the non-signatories thereto.
Issue:
WON petitioner, Atty. Quirante, can claim attorneys
fees
Ruling:
NO. The decision of the respondent court was affirmed.
Well settled is the rule that counsel's claim for
attorney's fees may be asserted either in the very
action in which the services in question have been
rendered, or in a separate action. If the first alternative is
chosen, the Court may pass upon said claim, even if its
amount were less than the minimum prescribed by law for the
jurisdiction of said court, upon the theory that the right to
recover attorney's fees is but an incident of the case in which
the services of counsel have been rendered ." It also rests on
the assumption that the court trying the case is to a certain
degree already familiar with the nature and extent of the
lawyer's services. The rule against multiplicity of suits will in
effect be subserved.
What is being claimed here as attorney's fees by
petitioners is, however, different from attorney's fees
as an item of damages provided for under Article 2208
of the Civil Code, wherein the award is made in favor of
the litigant, not of his counsel, and the litigant, not his
counsel, is the judgment creditor who may enforce the
judgment for attorney's fees by execution. Here, the
petitioner's claims are based on an alleged contract for
professional services, with them as the creditors and
the private respondents as the debtors.
The confirmation of attorney's fees is premature. As it
correctly pointed out, the petition for review on certiorari filed
by PHILAMGEN in this Court (G.R. No. 64834) "may or may
not ultimately result in the granting to the Isasola
family of the total amount of damages" awarded by the
trial court.
Since the main case from which the petitioner's claims
for their fees may arise has not yet become final, the
determination of the propriety of said fees and the
amount thereof should be held in abeyance.
On the effect of the alleged confirmation of the attorneys fees
by some heirs, the Court took exception to and reject that
portion of the decision of the respondent court which holds
that the alleged confirmation to attorney's fees should not
adversely affect the non-signatories thereto, since it is also
premised on the eventual grant of damages to the Casasola
family, hence the same objection of prematurity obtains and
such a holding may be pre-emptive of factual and evidentiary
matters that may be presented for consideration by the trial
court.
6. PHILIPPINE NATIONAL BANKvs. COURT OF APPEALS,
CAPITOL CITY DEVELOPMENT BANK, PHILIPPINE BANK
OF COMMUNICATIONS, and F. ABANTE
MARKETING(April 25, 1996)
Facts:
PNB now files petition for review (rule 45) assailing CAs denial
of its MR.
Ministry of Education and Culture (now Department of
Education, Culture and Sports [DECS]) issued a check with
serial number serial number 7-3666-223-3, payable to F.
Abante Marketing. This check was drawn against Philippine
National Bank.
F. Abante Marketing, a client of Capitol City Development Bank
(Capitol), deposited the questioned check in its savings
account with said bank. In turn, Capitol deposited the same in
its account with the Philippine Bank of Communications
(PBCom) which, in turn, sent the check to PNB for
clearing.PNB cleared the check as good and, thereafter,
PBCom credited Capitols account for the amount stated in the
check.Later, however,PNB returned the check to PBCom and
debited PBComs account for the amount covered by the
check, the reason being that there was a material alteration of
the check number.PBCom, as collecting agent of Capitol, then
proceeded to debit the latters account for the same amount,
and subsequently, sent the check back to PNB. PNB, however,
returned the check to PBCom.On the other hand, Capitol could
not, in turn, debit F. Abante Marketings account since the
latter had already withdrawn the amount of the check. Capitol
sought clarification from PBCom and demanded the re-
crediting of the amount. PBCom followed suit by requesting an
explanation and re-crediting from PNB. PNB did not heed the
demands, causing Capitol to file a suit against PBcom, who
filed a 3rd party suit for reimbursement against PNB. The trial
court ordered PNB to reimburse Capitol Bank, and also
ordered PNB to pay Capitol Bank attorneys fees.
Issue
1. WON an alteration of a serial number of a check is a
material alteration under the Negotiable Instruments
Law?
2. WON PNB can be held liable for attorneys fees despite
absence of malice or ill will? (one related to torts)
Ruling: PNB lost
1. no material alteration in this case: An alteration is
said to be material if it alters the effect of the
instrument. It means an unauthorized change in an
instrument that purports to modify in any respect the
obligation of a party or an unauthorized addition of
words or numbers or other change to an incomplete
instrument relating to the obligation of a party. In other
words, a material alteration is one which changes the
items which are required to be stated under Section 1 of
the Negotiable Instruments Law. (the alteration did not
change the instruments negotiability; review what
makes an instrument negotiable :D )
In this case, an alteration in the checks serial number is
not a material alteration contemplated by law. The
alteration did not change the relations between the
parties. The name of the drawer and the drawee were not
altered. The intended payee was the same. The sum of money
due to the payee remained the same. The checks serial
number is not the sole indication of its origin. Therefore, PNB
cannot refuse to accept the check in question on the ground
that the serial number was altered, the same being an
immaterial or innocent one.
effect of immaterial alteration: an innocent alteration
(generally, changes on items other than those required to
be stated under Sec. 1, N. I. L.) and
spoliation (alterations done by a stranger) will not avoid the
instrument, but the holder may enforce it only
according to its original tenor.
2. award of attorneys fees: the award of attorneys fees
was improper.
The award of attorneys fees lies within the discretion of the
court and depends upon the circumstances of each
case. However, the discretion of the court to award attorneys
fees under Article 2208 of the Civil Code of the Philippines
demands factual, legal and equitable justification, without
which the award is a conclusion without a premise and
improperly left to speculation and conjecture. It becomes a
violation of the proscription against the imposition of a
penalty on the right to litigate.
The reason for the award must be stated in the text of
the courts decision. If it is stated only in the
dispositive portion of the decision, the same shall be
disallowed. As to the award of attorneys fees being an
exception rather than the rule, it is necessary for the court to
make findings of fact and law that would bring the case within
the exception and justify the grant of the award.
In this case, the trial court and CA failed to explicitly state the
reason behind the award of attorneys fees.
Her was how the TC ruled on the award, which SC found
insufficient:
With respect to Capitols claim for damages consisting of
alleged loss of opportunity, this Court finds that Capitol
failed to adequately substantiate its claim. What Capitol
had presented was a self-serving, unsubstantiated and
speculative computation of what it allegedly could have
earned or realized were it not for the debit made by PBCom
which was triggered by the return and debit made by
PNB. However, this Court finds that it would be fair and
reasonable to impose interest at 12% per annum on the
principal amount of the check computed from October 19,
1981 (the date PBCom debited Capitols account) until the
amount is fully paid and reasonable attorneys fees.
7. PADILLO V. CA
Facts:
Padillo filed a petition for declaratory relief and damages
against Averia and Casilang alleging that she is the absolute
owner of the subject parcel of land which she purchased
Quicho and De Vera. She wanted an injunctive writ issued to
prohibit Averia and Casilang from the property and damages
be awarded to her including attorneys fees. Averia claimed
that the Padillos petition must be dismissed since a decision
has already been rendered in his favor holding him to be the
owner of the lot. A month after the decision, Padillo wanted
half of the lot to be declared under her ownership, to which
Averia filed another suit against Padillo to rescind the contract
between the latter and the original owner of the parcel of
land. When Padillo finally won the case and was held to be the
owner of one half of the parcel of land, she now instituted the
current suit to award her damages but the CA denied the
damages due to res judicata.
Issue: Whether or not res judicata bars her from getting
damages with the current case.
Ruling:
No, res judicata does not bar her. Although all the requisites of
res judicata can be found in this case, the specific case at bar
is not barred by a the prior judgment of the previous case
since it was erroneously suspended, not terminated.
As for Attorneys fees, the trial courts award is too
unreasonable. It must be reduced from P 107,000 to P 25,
000. Attorneys fees as damages is awarded only in the
instances specific in Article 2208 and it is not meant to enrish
the winning party at the expense of the losing litigant,
therefore it should reasonably reduced.
8. EASTERN SHIPPING LINES, INC. V. CA AND
MERCANTILE INSURANCE COY,
FACTS:
This is an action against defendants shipping company
(Eastern Shipping Lines), arrastre operator (Metro Port
Service, Inc.) and broker-forwarder (Allied Brokerage
Corporation) for damages sustained by a shipment while in
defendants' custody, filed by the insurer-subrogee (Mercantile
Insurance Co.) who paid the consignee the value of such
losses/damages.
Two fiber drums of riboflavin were shipped from Yokohama,
Japan for delivery vessel "SS EASTERN COMET" owned by
defendant Eastern Shipping Lines. The shipment was insured
under plaintiff's Marine Insurance Policy. Upon arrival of the
shipment in Manila, it was discharged unto the custody of
defendant Metro Port Service, Inc. The latter excepted to one
drum, said to be in bad order, which damage was unknown to
plaintiff.
When defendant Allied Brokerage Corporation received the
shipment from defendant Metro Port Service, Inc., one drum
was found opened and without seal. When defendant Allied
Brokerage Corporation made deliveries of the shipment to the
consignee's warehouse, the latter excepted to one drum
which contained spillages, while the rest of the contents was
adulterated/fake.
Claims were presented against defendants who failed and
refused to pay the same As a consequence of the losses
sustained, plaintiff was compelled to pay the consignee
P19,032.95 under the aforestated marine insurance policy, so
that it became subrogated to all the rights of action of said
consignee against defendants.
Both trial and appellate courts rendered judgments ordering
defendants to pay plaintiff the amount of P19,032.95, with the
present legal interest of 12% per annum from October 1,
1982, the date of filing of this complaints, until fully paid.
ISSUES:
1. Whether the payment of legal interest on an award
for loss or damage is to be computed from the time
the complaint is filed or from the date the decision
appealed from is rendered
2. Whether the applicable rate of interest, referred to
above, is twelve percent (12%) or six percent (6%).
HELD:
1. From the date decision was rendered.
Malayan Insurance Coy. v Manila Port Service held that the
amount awarded should bear legal interest from the date of
the decision of the court a quo, explaining that "if the suit
were for damages, 'unliquidated and not known until definitely
ascertained, assessed and determined by the courts after
proof,' then, interest 'should be from the date of the decision.
Thus, where the demand is established with reasonable
certainty, the interest shall begin to run from the time the
claim is made judicially or extrajudicially. But when such
certainty cannot be so reasonably established at the time the
demand is made, the interest shall begin to run only from the
date of judgment of the court is made.
2. The Court held that the legal interest is 6% computed
from the decision of the court a quo.
When an obligation, not constituting a loan or forbearance of
money, is breached, an interest on the amount of damages
awarded may be imposed at the discretion of the court at the
rate of 6% per annum. No interest shall be adjudged on
unliquidated claims or damages except when or until the
demand can be established with reasonable certainty.
When the judgment of the court awarding a sum of money
becomes final and executor, the rate of legal interest shall be
12% per annum from such finality until satisfaction, this
interim period being deemed to be by then an equivalent to a
forbearance of credit. The interest due shall be 12% per
annum to be computed from default, Judicial or Extrajudicial
Demand.
Summary of the established rule on interest in the concept of
actual/compensatory damages:
1. Payment of sum of money in the form of
loan/forbearance
a. Stipulated in writing interest shall earn from the time it is
judicially demanded
b. Absence of stipulation 12% per annum to be computed
from time of default (from time of judicial/extra-judicial
demand was made under Art. 1169)
2. Payment NOT in the form of loan/forbearance
- may be imposed at the discretion of the court at 6% per
annum
NO INTEREST SHALL BE ADJUDGED UNLESS THE DEMAND CAN
BE ESTABLISHED WITH REASONABLE CERTAINTY
a. When demand is established with reasonable certainty
interest begin to run from the time claim is made
judicially/extra-judicially
b. When demand is not certain interest shall begin to run
only from date of judgment of court is made
Base for Computation amount finally adjudged
9. ESTORES vs. SPOUSES ARTURO and LAURA
SUPANGAN
Re: Imposition of 12% interest in a contract involving a
conditional deed of sale and not a loan
On October 3, 1993, petitioner Estores and respondent-
spouses Supangan entered into a Conditional Deed of Sale
where Estores offered to sell and respondent-spouses offered
to buy a parcel of land at Naic, Cavite for the sum of P4.7
million.
The parties stipulated: (for recits)
1. Vendor will secure approved clearance from DAR
requirements of which are (sic):
a) Letter request
b) Title
c) Tax Declaration
d) Affidavit of Aggregate Landholding Vendor/Vendee
e) Certification from the Provl. Assessors as to Landholdings
of Vendor/Vendee
f) Affidavit of Non-Tenancy
g) Deed of Absolute Sale
4. Vendee shall be informed as to the status of DAR clearance
within 10 days upon signing of the documents.
6. Regarding the house located within the perimeter of the
subject [lot] owned by spouses [Magbago], said house shall be
moved outside the perimeter of this subject property to the
300 sq. m. area allocated for [it]. Vendor hereby accepts the
responsibility of seeing to it that such agreement is carried
out before full payment of the sale is made by vendee.
7. If and after the vendor has completed all necessary
documents for registration of the title and the vendee fails to
complete payment as per agreement, a forfeiture fee of 25%
or downpayment, shall be applied. However, if the vendor fails
to complete necessary documents within thirty days without
any sufficient reason, or without informing the vendee of its
status, vendee has the right to demand return of full amount
of down payment.
9. As to the boundaries and partition of the lots (15,018 sq. m.
and 300 sq. m.) Vendee shall be informed immediately of its
approval by the LRC.
10. The vendor assures the vendee of a peaceful transfer of
ownership.
Almost seven years from the time of the execution of the
contract and after payment of P3.5 million, Estores still failed
to comply with her obligation as provided in paragraphs 4, 6,
7, 9 and 10 of the contract. Respondent-spouses demanded
the return of the paid amount. Estores acknowledged receipt
of the P3.5 million and promised to return the same within
120 days. Respondent-spouses were amenable to the
proposal provided an interest of 12% compounded annually
shall be imposed on the P3.5 million. Petitioner still failed to
return the amount thus respondent-spouses filed a
Complaint for sum of money before the RTC Malabon against
Estores as well as Arias who allegedly acted as petitioners
agent.
Issues:
1. Whether or not it is proper to impose interest for an
obligation that does not involve a loan or forbearance of
money in the absence of stipulation of the parties.
2. Whether 6% or 12% interest rate applies
RTC Ruling: respondent-spouses entitled to interest but only at
the rate of 6% per annum and not 12% as prayed by them. It
also found respondent-spouses entitled to attorneys fees as
they were compelled to litigate to protect their interest.
CA Ruling: affirmed the ruling of the RTC finding the imposition
of 6% interest proper. However, the same shall start to run
only from September 27, 2000 when respondent-spouses
formally demanded the return of their money and not from
October 1993 when the contract was executed as held by the
RTC.
Petitioners Arguments
Petitioner insisted that she is not bound to pay interest on
the P3.5 million because the Conditional Deed of Sale only
provided for the return of the downpayment in case of failure
to comply with her obligations. Petitioner also argues that the
award of attorneys fees in favor of the respondent-spouses is
unwarranted because it cannot be said that the latter won
over the former since the CA even sustained her contention
that the imposition of 12% interest compounded annually is
totally uncalled for.
Respondent-spouses Arguments
Respondent-spouses aver that it is only fair that interest be
imposed on the amount they paid considering that petitioner
failed to return the amount upon demand and had been using
the P3.5 million for her benefit. Moreover, it is undisputed that
petitioner failed to perform her obligations to relocate the
house outside the perimeter of the subject property and to
complete the necessary documents. As regards the attorneys
fees, they claim that they are entitled to the same because
they were forced to litigate when petitioner unjustly withheld
the amount. Besides, the amount awarded by the CA is even
smaller compared to the filing fees they paid.
Ruling:
Interest may be imposed even in the absence of stipulation in
the contract.
We sustain the ruling of both the RTC and the CA that it is
proper to impose interest notwithstanding the absence of
stipulation in the contract. Article 2210 of the Civil Code
expressly provides that "[i]nterest may, in the discretion of
the court, be allowed upon damages awarded for breach of
contract." In this case, there is no question that petitioner is
legally obligated to return the P3.5 million because of her
failure to fulfill the obligation under the Conditional Deed of
Sale, despite demand. She has in fact admitted that the
conditions were not fulfilled and that she was willing to return
the full amount of P3.5 million but has not actually done so.
Petitioner enjoyed the use of the money from the time it was
given to her until now. Thus, she is already in default of her
obligation from the date of demand, i.e., on September 27,
2000.
The interest at the rate of 12% is applicable in the instant
case.
Anent the interest rate, the general rule is that the applicable
rate of interest "shall be computed in accordance with the
stipulation of the parties." Absent any stipulation, the
applicable rate of interest shall be 12% per annum "when the
obligation arises out of a loan or a forbearance of money,
goods or credits. In other cases, it shall be six percent (6%)."
The parties did not stipulate as to the applicable rate of
interest. But even if the transaction involved a Conditional
Deed of Sale, can the stipulation governing the return of the
money be considered as a forbearance of money which
required payment of interest at the rate of 12%? We believe
so.
In Crismina Garments, Inc. v. Court of Appeals, "forbearance"
was defined as a "contractual obligation of lender or creditor
to refrain during a given period of time, from requiring the
borrower or debtor to repay a loan or debt then due and
payable." This definition describes a loan where a debtor is
given a period within which to pay a loan or debt. In such
case, "forbearance of money, goods or credits" will have no
distinct definition from a loan.
We believe however, that the phrase "forbearance of money,
goods or credits" is meant to have a separate meaning from a
loan, otherwise there would have been no need to add that
phrase as a loan is already sufficiently defined in the Civil
Code. Forbearance of money, goods or credits should
therefore refer to arrangements other than loan agreements,
where a person acquiesces to the temporary use of his
money, goods or credits pending happening of certain events
or fulfillment of certain conditions.
In this case, the respondent-spouses parted with their money
even before the conditions were fulfilled. They have therefore
allowed or granted forbearance to the seller to use their
money pending fulfillment of the conditions. They were
deprived of the use of their money for the period pending
fulfillment of the conditions and when those conditions were
breached, they are entitled not only to the return of the
principal amount paid, but also to compensation for the use of
their money. And the compensation for the use of their
money, absent any stipulation, should be the same rate of
legal interest applicable to a loan since the use or deprivation
of funds is similar to a loan.
Petitioners unwarranted withholding of the money which
rightfully pertains to respondent-spouses amounts to
forbearance of money which can be considered as an
involuntary loan.
Thus, the applicable rate of interest is 12% per annum in
pursuant to the guidelines set in Eastern Shipping Lines, Inc.
v. CA. (see digest before this)
Eastern Shipping Lines, Inc. v. Court of Appeals and its
predecessor case, Reformina v. Tongol both involved torts
cases and hence, there was no forbearance of money, goods,
or credits. Further, the amount claimed (i.e., damages) could
not be established with reasonable certainty at the time the
claim was made. Hence, we arrived at a different ruling in
those cases.
Since the date of demand which is September 27, 2000 was
satisfactorily established during trial, then the interest rate of
12% should be reckoned from said date of demand until the
principal amount and the interest thereon is fully satisfied.
WHEREFORE, the Petition for Review is DENIED. The May 12,
2006 Decision of the Court of Appeals in CA-G.R. CV No.
83123 is AFFIRMED with MODIFICATIONS that the rate of
interest shall be twelve percent (12%) per annum, computed
from September 27, 2000 until fully satisfied. The award of
attorneys fees is further reduced to P50,000.00.
SO ORDERED
10. SUNGA-CHAN V. COURT OF APPEALS
Note: This case involves computations and shiz. Please be
guided by the full text while reading this because I cannot
possibly include the computations here, otherwise dili nani
digest. Hahaha.
Parties:
Petitioners Lilibeth Sunga-Chan and Cecilia Sunga
Respondents Court of Appeals; RTC Branch 11
Sindangan, Zamboanga Del Norte Judge, RTC Sheriff,
Clerk of Court of Manila, Lamberto T. Chua
Facts:
In 1977, Lamberto Chua and Jacinto Sunga formed a
partnership in the marketing of liquefied petroleum gas under
the business name Shellite Gas Appliance Center. For
convenience, the business was registered as a sole
proprietorship in the name of Jacinto, albeit the partnership
agreement called for equal sharing of the net profit.
When Jacinto died, his daughter and widow (petitioners,
respectively) continued with the business without Chuas
consent. The repeated demands of Chua for accounting and
winding up went unheeded, prompting him to file a complaint
against petitioners for Winding Up of Partnership Affairs,
Accounting, Appraisal and Recovery of Shares and Damages.
The RTC, on October 7, 1977found for Chua, which decision
was upheld by the CA and the Supreme Court. The RTCs
decision was declared final and executory on December 20,
2001.
Petitioners were ordered by the court among others to wind
up the affairs of the partnership after delivering to Chua all
the interest, shares, participation and equity in the
partnership, or the value thereof in money or moneys worth.
Unfortunately, there was a variance as regards the
computation of the amount of claims, each party having their
own CPA-certified valuation and accounting report.
Chua, using the compounding of interest method, arrived at
an aggregate claim of P14,277,344.94. Petitioners on the
other hand, arrived at an amount of P3,154,736.65. However,
on October 15, 2002,Chua submitted a new computation, this
time applying simple interest on the various items covered by
his claim and arrived at P8,733,644.75.
On November 6, 2002, the RTC issued a Resolution rejecting
the accounting report petitioners submitted, while approving
Chuas new computation. Moreover, a 12% interest rate was
added on the amounts due.
Petitioners thus filed the instant petition claiming that:
1. The proper interest rate is 6% and not 12%
2. The share of Chua in the partnership assets partake of an
unliquidated claim which, until reasonably determined,
shall not earn interest for him.
Relevant issues:
1. What is the proper imposable interest rate?
2. Is the share of Chua in the partnership assets a form of an
unliquidated claim?
Ruling:
1. 6% from October 7, 1977 to December 20, 2001, and
12% thereafter until fully paid.
In cases of award of interest in the concept of actual and
compensatory damages, the rate of interest, as well as
the accrual thereof, is imposed as follows:
A. When the obligation breached consists in the payment of a
sum of money, i.e. a loan or forbearance of money, the
interest should be:
(a) That which may have been stipulated in writing
(b) In the absence of stipulation, 12% per annum to
be computed from default
B. When an obligation not consisting of loans or forbearance of
money is breached, an interest on the amount of damages
may be imposed at the discretion of the court at the rate of
6% per annum.
No interest, however, shall be adjudged on
unliquidated claims or damages except when or until
the demand can be established with reasonable
certainty. Accordingly, where the demand is
established with reasonable certainty, the interest
shall begin to run from the time the claim is made
judicially or extrajudicially, but when such certainty
cannot be so reasonably established at the time the
demand is made, the interest shall begin to run only
from the date the judgment of the court is made, at
which time the quantification of damages may be
deemed to have been reasonably ascertained.
C. When the judgment of the court awarding a sum of money
becomes final and executory, the rate of legal interest,
whether the case falls under par A or B above, shall be 12%
per annum from such finality until its satisfaction, this interim
period being deemed to be by then an equivalent to a
forbearance of credit.
Guided by the foregoing rules, the award to Chua of the
amount representing earned but unremitted profits, i.e.,
P35,000 monthly must earn interest at 6% per annum
reckoned from October 7, 1997, the rendition date of the
RTC decision, until December 20, 2001, when the said
decision became final and executory. Thereafter, the total
of the monthly profits inclusive of the add on 6% interest
shall earn 12% per annum reckoned from December 20,
2001 until fully paid, as the award for that item is
considered to be, by then, equivalent to a forbearance of
credit.
Likewise, the P250,000 award, representing the goodwill
value of the business, the award of P50,000 for moral and
exemplary damages, P25,000 attorney's fee, and P25,000
litigation fee shall earn 12% per annum from December
20, 2001 until fully paid.
2. Yes. The share and interest of Chua on such partnership
assets partake on an unliquidated claim, which, until
reasonably determined, shall not earn interest for him. As
may be noted, the legal norm for interest to accrue is
"reasonably determinable", not, as Chua suggested and
the CA declared, determinable by mathematical
computation.
The October 7, 1997 RTC decision clearly directed
petitioners to render an accounting, inventory, and
appraisal of the partnership assets and then to wind up
the partnership affairs by restituting and delivering to
Chua his one-half share of the accounted partnership
assets. The directive itself is a recognition that the exact
share and interest of Chua over the partnership cannot be
 determined with reasonable precision without going
through with the inventory and accounting process.
In fine, a liquidated claim cannot validly be asserted
without accounting. In net effect, Chua's interest and
share over the partnership asset, exclusive of the
goodwill, assumed the nature of a liquidated claim only
after the trial court, through its November 6, 2002
resolution, approved the assets inventory and accounting
report on such assets.
Considering that Chua's computation of claim, as
approved by the trial court, was submitted only on
October 15, 2002, no interest in his favor can be added to
his share of the partnership assets. Consequently, the
aggregate amount of claims owing to Chua is only
P5,529,392.52.
(Please see page 9 of the full text of the case for the
computation)
11. AIR FRANCE PHILIPPINES V. DE CASTRO
Facts:
Respondent John Anthony Camilis file a case of for breach of
contract of carriage, damages and attorneyss fees against
petitioner Air France Philippines. It was alleged by respondent,
that he went to a pilgrimage with a group of Filipinos Secure
to; transit visa for Moscow. It was also alleged, That the AF
agentrudely denied his request to contact his travel
companions to inform them that he was being sent back to
Paris from Moscow with a police officer. The agent refused in
Rome to honor his confirmed flight to Paris. upon reaching
Paris for his connecting flight to Manila, he found out that the
AF agents did not check in his baggage and since he had to
retrieve his bags at the baggage area, and a complimentary
motel pass and (6) he was given a computer print-out of his
flight reservation for Manila but when he went to the airport,
he was told that the flight was overbooked.
Issue:
Whether or not Air france breached the contract of carriage
and the correct time to apply legal interest.
Ruling:
Yes. Air France is guilty of breach in the contract of carriage.
Preliminarily, on the issue pertaining to whether or not
respondent was entitled to damages and attorneys fees, the
same entails a resort to the parties respective evidence.
Thus, AF is clearly asking us to consider a question of
fact.Time and again, we have held that the jurisdiction of this
Court in a petition for review on certiorari under Rule 45 is
limited only to questions of law. Save for certain
exceptions, none of which are present in this case.
Furthermore, in the issue on the correct time in applying legal
interest, thus citing Eastern shipping lines, Inc v CA Pursuant
to this ruling, the legal interest is 6% p.a. and it shall be
reckoned from April 25, 2007 when the RTC rendered its
judgment, not from the time of respondents extrajudicial
demand. This must be so as it was at the time the RTC
rendered its judgment that the quantification of damages may
be deemed to have been reasonably ascertained. Then, from
the time this decision becomes final and executory, the
interest rate shall be 12% p.a. until full satisfaction.
12. BATONG BUHAY V. CA & INCO MINING CORP.
Facts:
Batong Buhay Gold Mines issued Stock Certificate No. 16807
covering 62, 495 shares with a par value of P0.01 per share to
Francisco Aguac who was then legally married to Paula G.
Aguac, but the said spouses had lived separately for more
than 14 years prior to the said date. In fact a criminal case for
concubinage was filed by Paula against Francisco.
Later, Francisco, without his wifes consent, sold his shares in
favour of Inco Mining Corporation. Paula, in turn, wrote a letter
to the president of Bagong Buhay asking that the transfer of
the shares be withheld as it is conjugal property and her share
of the proceeds was not given to her.
Inco Mining sent a letter to Del Rosario & Co., the transfer
agent of Batong Buhay, for the registration and transfer of the
stock certificate from Francisco Aguac to itself. The
defendants justify their refusal to transfer the shares of stock
in view of their apprehension that they might be held liable for
damages. So Inco Mining filed an action in court praying that
the defendants be ordered to issue and release the transfer
stock certificate and for the recovery of compensatory,
exemplary, and corrective damages and attorneys fees
CFI/RTC:
Ruled in favour of Inco Mining and ordered defendant
to affect the transfer of shares only, no mention
about the award of damages. But, Inco Mining was
not satisfied and appealed the already favourable
ruling anchored on the lower courts failure to award
damages.
CA:
Ruled in favour of Inco Mining and modified the lower
courts decision and awarded damages in the sum of
P5,625.55 with legal interest.
Issue:
Whether respondent may recover damages by way of
unrealized profits when it has not shown that it was
damaged in any manner by the act of petitioner.
Ruling:
NO!
The facts does not at all show that Inco Mining intended to
sell, or would sell or would have sold the stocks in question on
specified dates. While its true that shares of stock may go up
or down in value, still, whatever profits could have been made
are purely SPECULATIVE, for it was difficult to predict with any
degree of certainty the rise and fall in the value of the shares.
Thus, the Court has ruled that speculative damages cannot be
recovered.
It is easy to say now that had Inco Mining gained legal title to
the shares, it could have sold the same, and reaped a profit
but it could not do so because of Batong Buhays refusal to
transfer the stocks in the formers name at the time the
demand was made, but then it is also true that human nature,
being what it is, Inco Minings officials could also have refused
to sell and instead wait for expected further increase in value.
Dispositive:
Decision of CA is set aside. RTC decision reinstated.
NB: nowhere in the case did it mention the phrase good faith
on obligor. Probably, for fear of being sued for damages by
the wife, Batong Buhay did not affect the transfer of stocks in
good faith.
13. GENERAL ENTERPRISES, INC vs. LIANGA BAY
LOGGING COMPANY, INC.
Facts:
On May 25, 1959, Lianga Bay Logging Company, Inc., a
corporation duly organized under the laws of the Philippines,
and General Enterprises, Inc, another corporation, entered
into a contract, whereby the former, a producer of logs from a
timber concession at Lianga, Surigao, designated the latter as
distributor of a portion of its log production to Korea and
Europe on condition that it would pay the distributor a
commission of 13% of the gross f.o.b. value of the logs
exported. In the agreement, the Lianga Bay Logging
Company, Inc. was named as Producer and the General
Enterprises, Inc. as Distributor. The parties immediately began
implementing the provisions of the contract by having the
Distributor deliver to the Producer the tractor it agreed to
deliver and by having the Producer deliver logs to the
Distributor for export as agreed upon.
On October 27, 1959, the Producer sent a notice to the
Distributor stating that after the November shipment there
will be no longer logs available for export to Korea and Europe
"unless the price of such logs become comparable to what we
may expect to receive in the way of returns from lumber and
veneer of barterable and export grades". The Producer
thereafter stopped supplying logs for export, whereupon the
Distributor reminded the Producer that it had a contract to
fulfill relative to its log production as otherwise it would be
held responsible for the consequences of the breach that may
ensue, but the Producer did not heed this reminder adducing
reasons which in its opinion justify the action it had taken,
thereby causing the Distributor to initiate the present action
alleging breach of contract and praying for damages both
actual and compensatory.
The court a quo rendered decision in favor of the General
Enterprises and against Lianga Bay ordering the latter to pay
the sum of P400,000.00 as actual damages, the sum of
P100,000.00 as exemplary damages, and the sum of
P400,000.00 as attorney's fees and expenses of litigation. This
is an appeal from said decision.
Issue: Is the lower court's adjudication of actual and
exemplary damages and attorney's fees justified?
Ruling:
Lianga contends that they are unwarranted inasmuch as
General Enterprises has failed to adduce any evidence to
substantiate them even assuming arguendo that it has failed
to supply the additional monthly 2,000,000 board feet for the
remainder of the period agreed upon in the contract, Lianga
maintains that for General Enterprises to be entitled to
demand payment of sales that for General Enterprises to be
entitled to demand payment of sales that were not effected it
should have proved (1) that there are actual sales made of
General Enterprises which were not fulfilled, (2) that it had
obtained the best price for such sales, (3) that there are
buyers ready to buy at such price stating the volume they are
ready to buy, and (4) General Enterprises could not cover the
sales from the logs of other suppliers. Since these facts were
not proven, General Enterprises right to unearned
commissions must fail.
It appears in Liangs memorandum that during the period of
June to December, 1959, in spite of the short delivery incurred
by Liang, General Enterprises had been earning its
commission whenever logs were delivered to it. But from
January, 1960, General Enterprises has ceased to earn any
commission because Liang failed to deliver any log in violation
of their agreement. Had Liang continued to deliver the logs as
it was bound to pursuant to the agreement it is reasonable to
expect that it would have continued earning its commission in
much the same manner as it used to in connection with the
previous shipments of logs, which clearly indicates that it
failed to earn the commissions it should earn during this
period of time. And this commission is not difficult to
estimate. Thus, during the seventeen remaining months of the
contract, at the rate of at least 2,000,000 board feet, Liang
should have delivered thirty-four million board feet. If we take
the number of board feet delivered during the months prior to
the interruption, namely, 7,405,861 board feet, and the
commission received by General Enterprises thereon, which
amounts to P79,580,82, we would have that General
Enteprises received a commission of P.0107456 per board
feet. Multiplying 34 million board feet by P.0107456, the
product is P365,350.40, which represents the lucrum
cessans that should accrue to General Enterprises. The award
therefore, made by the court a quo of the amount of
P400,000.00 as compensatory damages is not speculative,
but based on reasonable estimate.
The court believes however, that the amount of P100,000.00
awarded to General Enterprises as exemplary damages is
somewhat excessive it appearing that Liang is suspending the
operation of the contract has not acted in a wanton,
oppressive or malevolent manner to deserve such a heavy
punishment within the purview of the law (Article 2232, new
Civil Code). The most that can be said is that Liang to suit its
purpose, has availed to certain misstatements or half truths
as reflected in the declarations of Mr. Dempsey, one of its high
officials, in an attempt to justify its desistance from the
contract. While this is reprehensible, it is not a wanton or
malevolent perversion of the truth. Hence, the award should
be mitigated and in our opinion the amount of P50,000.00 is a
reasonable exemplary penalty.
We also find reasonable the amount awarded by the court a
quo as attorney's fees considering the importance of this
litigation and the amount of time and effort therein involved.
This is justified under Article 2208 of the Civil Code.
WHEREFORE, the decision appealed from is hereby modified
by awarding to appellee only the amount of P50,000.00 as
exemplary damages. In all other respects, the decision is
affirmed, with costs.
14. MARIKINA AUTO LINE TRANSPORT CORPORATION
and FREDDIE L. SUELTO, vs. PEOPLE OF THE
PHILIPPINES and ERLINDA V. VALDELLON
Facts:
Erlinda V. Valdellon is the owner of a two-door commercial
apartment located at No. 31 Kamias Road, Quezon City. The
Marikina Auto Line Transport Corporation (MALTC) is the
owner-operator of a passenger bus with Plate Number NCV-
849. Suelto, its employee, was assigned as the regular driver
of the bus.
Suelto was driving the aforementioned passenger bus along
Kamias Road, Kamuning, Quezon City, going towards EDSA.
The bus suddenly swerved to the right and struck the terrace
of the commercial apartment owned by Valdellon located
along Kamuning Road. Reports shows that the extensive
damage caused by the impact and Senior Building Inspection
Officer of the City Engineer's Officerecommended that since
the structural members made of concrete had been displaced,
the terrace would have to be demolished "to keep its
monolithicness, and to insure the safety and stability of the
building."
Photographs of the damaged terrace were taken. Valdellon
commissioned Engr. Jesus R. Regal, Jr. to estimate the cost of
repairs, inclusive of labor and painting, and the latter pegged
the cost at P171,088.46.
Valdellon filed a criminal complaint for reckless imprudence
resulting in damage to property against Suelto. Valdellon also
filed a separate civil complaint against Suelto and the bus
company for damages.
The trial court rendered judgment finding Suelto guilty beyond
reasonable doubt of reckless imprudence resulting in damage
to property, and ordered MALTC and Suelto to pay, jointly and
severally, P150,000.00 to Valdellon, by way of actual and
compensatory damages, as well as attorney's fees and costs
of suit. On appeal, the CA affirmed the lower courts decision.
Issue:
Whether the prosecution failed to prove the crime charged
against petitioner Suelto;
Whether the prosecution failed to adduce evidence to prove
that respondent suffered actual damages in the amount of
P100,000.00; and
Whether the trial court erred in sentencing petitioner Suelto to
one (1) year prison term.
Ruling:
1. The People of the Philippines was able to prove beyond
reasonable doubt that petitioner Suelto swerved the bus to
the right with recklessness, thereby causing damage to the
terrace of private respondent's apartment. This was admitted
by Suelto himself.
Suelto narrated that he suddenly swerved the bus to the right
of the road causing it to hit the column of the terrace of
private respondent. Petitioners were burdened to prove that
the damage to the terrace of private respondent was not the
fault of petitioner Suelto. But petitioners failed to prove that
Suelto acted on an emergency caused by the sudden intrusion
of a passenger jeepney into the lane of the bus he was
driving.It was the burden of petitioners herein to prove
petitioner Suelto'sdefense that he acted on an emergency,
that is, he had to swerve the bus to the right to avoid colliding
with a passenger jeep coming from EDSA that had overtaken
another vehicle and intruded into the lane of the bus.
[O]ne who suddenly finds himself in a place of danger, and is
required to act without time to consider the best means that
may be adopted to avoid the impending danger, is not guilty
of negligence if he fails to adopt what subsequently and upon
reflection may appear to have been a better method unless
the emergency in which he finds himself is brought about by
his own negligence. (Gan v. Court of Appeals)
In relation toLand Transportation and Traffic Code mandating
motorists to drive and operate vehicles on the right side of the
road or highway, Article 2185 of the New Civil Code provides
that "unless there is proof to the contrary, it is presumed that
a person driving a motor vehicle has been negligent, if at the
time of mishap, he was violating any traffic regulation." By his
own admission, petitioner Suelto violated the Land
Transportation and Traffic Codewhen he suddenly swerved the
bus to the right, thereby causing damage to the property of
private respondent.
Also, it is clear from the evidence that the commercial
apartment of Dr.Valdellon sustained heavy damage caused by
the bus being driven by Suelto. "It seems highly improbable
that the said damages were not caused by a strong impact.
And, it is quite reasonable to conclude that, at the time of the
impact, the bus was traveling at a high speed when Suelto
tried to avoid the passenger jeepney." The pictures submitted
do not lie, having been taken immediately after the incident.
The damages could not have been caused except by a
speeding bus. Had the accused not been speeding, he could
have easily reduced his speed and come to a full stop when
he noticed the jeep. Were he more prudent in driving, he
could have avoided the incident or even if he could not avoid
the incident, the damages would have been less severe.
2. Respondents failed to prove that the damages to the
terrace caused by the incident amounted to P100,000.00. The
only evidence adduced by respondents to prove actual
damages claimed by private respondent were the summary
computation of damage made by Engr. Jesus R. Regal, Jr.
amounting to P171,088.46 and the receipt issued by the BB
Construction and Steel Fabricator to private respondent for
P35,000.00 representing cost for carpentry works, masonry,
welding, and electrical works. Respondents failed to present
Regal to testify on his estimation.
Under Article 2199 of the New Civil Code, actual damages
include all the natural and probable consequences of the act
or omission complained of, classified as one for the loss of
what a person already possesses (daoemergente) and the
other, for the failure to receive, as a benefit, that which would
have pertained to him (lucrocesante).
The burden of proof is on the party who would be defeated if
no evidence would be presented on either side. The burden is
to establish one's case by a preponderance of evidence which
means that the evidence, as a whole, adduced by one side, is
superior to that of the other. Actual damages are not
presumed. The claimant must prove the actual amount of loss
with a reasonable degree of certainty premised upon
competent proof and on the best evidence obtainable.
Specific facts that could afford a basis for measuring whatever
compensatory or actual damages are borne must be pointed
out. Actual damages cannot be anchored on mere surmises,
speculations or conjectures.
The Court further declared that "where goods are destroyed
by the wrongful act of defendant, the plaintiff is entitled to
their value at the time of the destruction, that is, normally,
the sum of money which he would have to pay in the market
for identical or essentially similar goods, plus in a proper case,
damages for the loss of the use during the period before
replacement.
While claimants' bare testimonial assertions in support of their
claims for damages should not be discarded altogether,
however, the same should be admitted with extreme caution.
Their testimonies should be viewed in light of claimants' self-
interest, hence, should not be taken as gospel truth. Such
assertion should be buttressed by independent evidence. An
estimate of the damage cost will not suffice.
However, that petitioners adduced evidence that, in their
view, the cost of the damage to the terrace of private
respondent would amount to P55,000.00. Accordingly, private
respondent is entitled to P55,000.00 actual damages.
The trial court erred in sentencing him to suffer a straight
penalty of one (1) year. This is so because under the third
paragraph of Article 365 of the Revised Penal Code, the
offender must be sentenced to pay a fine when the execution
of the act shall have only resulted in damage to property.
15.
MORAL DAMAGES
1. SIMEX INTERNATIONAL (MANILA) INC. VS. COURT OF
APPEALS
FACTS:
Simex International is a private corporation engaged in the
exportation of food products. It buys these products from
various local suppliers and then sells them abroad to the
Middle East and the United States. Most of its exports are
purchased by the petitioner on credit. Simex was a depositor
of the Far East Savings Bank and maintained a checking
account in its branch in Cubao, Quezon City which issued
several checks against its deposit but was surprised to learn
later that they had been dishonored for insufficient funds. As a
consequence, several suppliers sent a letter of demand to the
petitioner, threatening prosecution if the dishonored check
issued to it was not made good and also withheld delivery of
the order made by the petitioner. One supplier also cancelled
the petitioners credit line and demanded that future
payments be made by it in cash or certified check.
The petitioner complained to the respondent bank.
Investigation disclosed that the sum of P100,000.00 deposited
by the petitioner on May 25, 1981, had not been credited to it.
The error was rectified only a month after, and the dishonored
checks were paid after they were re-deposited. The petitioner
then filed a complaint in the then Court of First Instance of
Rizal against the bank for its gross and wanton negligence.
ISSUE:
Whether or not the bank can be held liable for negligence by
reason of its unjustified dishonor of a check
RULING
The depositor expects the bank to treat his account with the
utmost fidelity whether such account consists only of a few
hundred pesos or of millions. The bank must record every
single transaction accurately, down to the last centavo, and
as promptly as possible. This has to be done if the account is
to reflect at any given time the amount of money the
depositor can dispose of as he sees fit, confident that the
bank will deliver it as and to whomever he directs. A blunder
on the part of the bank, such as the dishonour of a check
without good reason, can cause the depositor not a little
embarrassment if not also financial loss and perhaps even
civil and criminal litigation.
Article 2205 of the Civil Code provides that actual or
compensatory damages may be received (2) for injury to the
plaintiff s business standing or commercial credit. There is no
question that the petitioner did sustain actual injury as a
result of the dishonored checks and that the existence of the
loss having been established absolute certainty as to its
amount is not required. 7 Such injury should bolster all the
more the demand of the petitioner for moral damages and
justifies the examination by this Court of the validity and
reasonableness of the said claim.
A bank may be held liable for damages by reason of its
unjustified dishonor of a check, which caused damage to its
clients credit standing. The bank must record every single
transaction accurately, down to the last centavo, and as
promptly as possible. This has to be done if the account is to
reflect at any given time the amount of money the depositor
can dispose of as he sees fit, confident that the bank will
deliver it as and to whomever he directs. The bank is a
fiduciary of the depositors money.
MORAL DAMAGES:
We agree that moral damages are not awarded to penalize
the defendant but to compensate the plaintiff for the injuries
he may have suffered. 8 In the case at bar, the petitioner is
seeking such damages for the prejudice sustained by it as a
result of the private respondent's fault. The respondent court
said that the claimed losses are purely speculative and are
not supported by substantial evidence, but if failed to consider
that the amount of such losses need not be established with
exactitude precisely because of their nature. Moral damages
are not susceptible of pecuniary estimation. Article 2216 of
the Civil Code specifically provides that "no proof of pecuniary
loss is necessary in order that moral, nominal, temperate,
liquidated or exemplary damages may be adjudicated." That
is why the determination of the amount to be awarded
(except liquidated damages) is left to the sound discretion of
the court, according to "the circumstances of each case."
From every viewpoint except that of the petitioner's, its claim
of moral damages in the amount of P1,000,000.00 is nothing
short of preposterous. Its business certainly is not that big, or
its name that prestigious, to sustain such an extravagant
pretense. Moreover, a corporation is not as a rule entitled to
moral damages because, not being a natural person, it cannot
experience physical suffering or such sentiments as wounded
feelings, serious anxiety, mental anguish and moral shock.
The only exception to this rule is where the corporation has a
good reputation that is debased, resulting in its social
humiliation. 9
We shall recognize that the petitioner did suffer injury
because of the private respondent's negligence that caused
the dishonor of the checks issued by it. The immediate
consequence was that its prestige was impaired because of
the bouncing checks and confidence in it as a reliable debtor
was diminished. The private respondent makes much of the
one instance when the petitioner was sued in a collection
case, but that did not prove that it did not have a good
reputation that could not be marred, more so since that case
was ultimately settled. 10 It does not appear that, as the
private respondent would portray it, the petitioner is an
unsavory and disreputable entity that has no good name to
protect.
Considering all this, we feel that the award of nominal
damages in the sum of P20,000.00 was not the proper relief to
which the petitioner was entitled. Under Article 2221 of the
Civil Code, "nominal damages are adjudicated in order that a
right of the plaintiff, which has been violated or invaded by
the defendant, may be vindicated or recognized, and not for
the purpose of indemnifying the plaintiff for any loss suffered
by him." As we have found that the petitioner has indeed
incurred loss through the fault of the private respondent, the
proper remedy is the award to it of moral damages, which we
impose, in our discretion, in the same amount of P20,000.00
2. LOURDES CYNTHIA MAKABALI and GEORGINA
MAKABALI, petitioners,
vs.
COURT OF APPEALS and BARON TRAVEL
CORPORATION, respondents.
Facts:
Petitioner Georgina Makabali had just graduated from the
College of Medicine, University of the Philippines, and as a
graduation gift from her father, was given a trip to Hongkong.
Since she had never been abroad, her parents insisted that
she be accompanied by her sister and co-petitioner Lourdes
Cynthia Makabali, a schoolteacher at the Colegio de San
Agustin, Dasmarias Village.
An advertisement of private respondent Baron Travel
Corporation in the March 30, 1969 issue of the newspaper The
Sunday Times' offering a package tour to Hongkong caught
the attention of petitioner Georgina Makabali.
At private respondent's office, petitioners were assured that
they would be going with a group of thirteen [13] other
travelers to be led by a tour guide, a certain Mr. Arsenio Rosal,
and that a representative of private respondent would see
them off at the Manila International Airport to give them final
instructions. Petitioners were also that they would be lodged
at the President Hotel in Hongkong. These promises and
representations convinced the petitioners to purchase the
Hongkong package tour offered by private respondent.
On the departure date, May 10, 1969, petitioners searched for
the tour group they were supposed to meet at the Manila
International Airport. They likewise searched for private
respondent's representative who would give them final
instructions on their trip to Hongkong. They met neither
private respondent's tour group nor its representative.
Inside the plane, petitioners did not meet anyone from the
Baron Tour Group. They looked for and found a certain Mr.
Arsenio Rosal who, to their embarrassment, protested that he
was not a tour guide but a business executive working with
International Harvester Macleod, Inc. and who was going to
Hongkong as a paying passenger. In fact, he knew no one
from private respondent Baron Travel Corporation and had
nothing to do with it.
In Hongkong, nobody met petitioners at the airport. W. Rosal
who was a member of the Abaya Tour Group, requested their
tour leader to accommodate petitioners provided they pay all
their expenses in Hongkong.
Thereafter, petitioners called up the President Hotel in
Hongkong where private respondent promised to book them
but it had no accommodations for them. Petitioners lost no
time in sending a cable to private respondent informing it that
they had no hotel accommodations.
Left with no alternative, petitioners tagged along with the
Abaya Tour Group. Petitioners claimed public humiliation due
to the fact that they had to pay for their lunch while the rest
of the group had prepaid meals. They could not go shopping
with the Abaya group for fear that their limited funds would
not be sufficient to pay for their hotel bills. There were times
when breakfast consisted of hot dogs bought along the
sidewalk while lunch and supper consisted of apples and
oranges.
According to petitioners, they had to scrimp on their limited
budget for fear that their meager pocket money would not be
enough to pay for their hotel bills. All these caused them
sleepless nights because of great worry, mental anguish and
public humiliation.
It was only at 9:00 in the morning of May 13, 1969 or on the
fourth day of the supposed five-day tour that petitioners were
notified that private respondent had finally made
arrangements for the payment of their bills. By that time, the
supposed tour was practically over.
Upon their return, petitioners complained to private
respondent who according to petitioners did not even bother
to apologize but simply ignored their complaint and gave
them the run around.
An action for moral and exemplary damages, attorney's fees
and costs was filed by the petitioners in the then Court of First
Instance of Manila, Branch XVI. The Trial Court rendered
judgment in petitioner's favor but awarded them only P500.00
as moral and exemplary damages, P100.00 as attorney's fees
and costs.
Unsatisfied, petitioners appealed to the Court of appeals
which ordered to pay the plaintiff the sum of P5,000.00 as
moral and exemplary damages and the sum of P1,000.00 as
attorney's fees and the costs.
Still unsatisfied, petitioners elevated this case to the Supreme
Court.
Issue:Whether or not petitioners are entitled to more than the
P5,000.00 moral and exemplary damages, P1,000.00
attorney's fees and costs awarded to them by the Court of
Appeals in the light of the circumstances of the case.
Ruling:
There is no hard and fast rule in the determination of what
would be a fair amount of moral damages, since each case
must be governed by its own peculiar circumstances.
Article 2217 of the Civil Code recognizes that moral damages
which include physical suffering, mental anguish, fright,
serious anxiety, besmirched reputation, wounded feelings,
moral shock, social humiliation and similar injury, are
incapable of pecuniary estimation.
It is essential however, in the award of damages that the
claimant must have satisfactorily proven during the trial the
existence of the factual basis of the damages and its causal
connection to defendant's acts. This is so because moral
damages, though incapable of pecuniary estimation, are in
the category of an award designed to compensate the
claimant for actual injury suffered and not to impose a penalty
on the wrongdoer, and are allowable only when specifically
prayed for in the complaint
As reflected in the records of the case, the Court of appeals
was in agreement with the findings of the trial court that
petitioners suffered anguish, embarrassment and mental
sufferings due to failure of private respondent to perform its
obligation to the petitioners. According to the Court of
Appeals, private respondent acted in wanton disregard of the
rights of petitioners. These pronouncements lay the basis and
justification for this Court to award petitioners moral and
exemplary damages.
It must be emphasized that moral damages are not intended
to enrich the complainant at the expense of a defendant. They
are awarded only to enable the injured parties to obtain
means, diversions or amusements that will serve to alleviate
the moral sufferings the injured parties have undergone by
reason of defendant's culpable action. In other words, the
award of moral damages is aimed at a restoration within the
limits of the possible, of the spiritual status quo ante; and
therefore it must be proportionate to the suffering
inflicted. The amount of P5,000.00 is minimal compared to the
sufferings and embarrassment of petitioners who left Manila
with high spirits and excitement hoping to enjoy their first trip
to a foreign land only to be met with uncertainties and
humiliations.
We note however that petitioners limited their claim for moral
and exemplary damages in their complaint filed with the Court
of First Instance to a total of P35,000.00 plus attorney's fees
and costs. We feel that Our award should not exceed the said
amount.
The decision of the Court of Appeals subject of the petition for
review is hereby modified, increasing the award to petitioners
of moral and exemplary damages to P35,000.00 and
attorney's fees to P5,000.00 with costs. This decision is
immediately executory.
3. PHILIPPINE NATIONAL BANK, vs THE HONORABLE COURT
OF APPEALS, NAPOLEON C. NAVARRO, PATRICIA CRUZ,
VICENTE B. MEDINA and LETICIA LOPEZ [G.R. No. L-45770.
March 30, 1988.]
Facts:
Private respondent Napoleon Navarro was an employee of
petitioner Philippine National Bank stationed at Cabanatuan
City as Branch Accountant. On various dates from 1962 to
1965, said private respondent Napoleon Navarro prepared
fifty-one [51] managers checks and their corresponding debit
tickets purportedly representing refund of deposits of
petitioners clients, although he knew that there were no
deposits necessitating such refund. He later caused to be
falsified and identified the signatures of the alleged clients as
payees and indorsers, encashed the checks, and appropriated
unto himself the proceeds in the aggregate amount of
P28,683.77. After the discovery of this anomaly, respondent
Navarro was dismissed from the service of Philippine National
Bank.
On February 25, 1965, petitioner bank filed before the then
Court of First Instance of Nueva Ecija Civil Case No. 4506
against Napoleon Navarro to recover the sum defalcated in
the amount of P13,906.81 with a prayer for a writ of
preliminary attachment against the properties of Napoleon
Navarro.
While the writ of preliminary attachment was in the process of
issuance, a Deed of Sale of Real Property and Dwelling House
dated February 22, 1965 executed by respondents Napoleon
Navarro and Patricia Cruz in favor of the other respondents
spouses Vicente Medina and Leticia Lopez over the formers
properties situated in Cabanatuan City was registered in the
Office of the Register of Deeds of Cabanatuan City at 11:50
oclock in the morning of February 25, 1965. Subsequently, a
new transfer certificate of title bearing No. T-9424 was issued
by the Register of Deeds of Cabanatuan City in the names of
spouses Vicente Medina and Leticia Lopez.
Civil Case No. 4507 was the action brought by petitioner
against private respondents seeking the annulment of the
Deed of Sale of Real Property and Dwelling House executed by
private respondent spouses Napoleon C. Navarro and Patricia
Cruz in favor of private respondents spouses Vicente E.
Medina and Leticia Lopez and covered by Transfer Certificate
of Title No. T-9424. According to petitioner, the sale was
fraudulently entered into between aforesaid parties to defeat
petitioners recovery of the amount defalcated by private
respondent Napoleon C. Navarro during the time that the
latter was employed by the former as accountant in its
Cabanatuan Branch, and which amount was the subject of
Civil Case No. 4506.chanroblesvirtualawlibrary
TRIAL COURT:
Petitioner Philippine National Bank appealed to respondent
Court of Appeals assailing the lower courts finding on the
plaintiff-appellants liability to the defendant-appellees
Vicente Medina and Leticia Lopez for moral and exemplary
damages in the amount of P100,000.00 on the counterclaim;
and in ordering plaintiff-appellant to pay defendants-appellees
Vicente Medina and Leticia Lopez the sum of P5,000.00 as
attorneys fees;
COURT OF APPEALS:
On the other hand, CA promulgated its assailed decision
based on these findings:
"There is no showing that the plaintiff acted maliciously and in
a wanton manner in filing Civil Case No. 4507 against the
spouses Vicente B. Medina and Leticia Lopez. There is no
doubt that the said spouses suffered mental anguish for
having been made defendants in Civil Case No. 4507.
However, under the established facts and circumstances the
amount of P100,000.00 awarded to said spouses as moral
damages is excessive. The moral and exemplary damages
awarded to spouses Vicente Medina and Leticia Lopez should
be reduced to P10,000.00.
"The defendants Vicente B. Medina and Leticia Lopez had to
engage counsel to resist the action instituted against them by
the Philippine National Bank. Hence, the trial court did not err
in awarding to said spouses the amount of P5,000.00 as
attorneys fees.
Issue:
W/N moral and exemplary damages may be awarded
Ruling:
The controversy revolves on the issue of consistency. Is
respondent appellate courts finding on the non-existence of
malice and bad faith on petitioners part when it filed Civil
Case No. 4507 consistent with the lower courts order
awarding moral and exemplary damages originally in the
amount of P100,000.00 but reduced to P10,000.00 by
respondent appellate court and attorneys fees in the amount
of P5,000.00 both in favor of private respondents spouses
Medina and Lopez?
As mentioned earlier, respondent appellate court ruled that
there is no showing that the plaintiff acted maliciously and in
a wanton manner in filing Civil Case No. 4507. It was however
further ruled that there is no doubt that said spouses suffered
mental anguish for having been made defendants in Civil
Case No. 4507. This Court is tasked to resolve this
inconsistency.
Article 2217 of the Civil Code recognizes that moral damages
include physical suffering, mental anguish, fright, serious
anxiety, besmirched reputation, wounded feelings, moral
shock, social humiliation and similar injury. Though incapable
of pecuniary computation, moral damages may be recovered
if they are the proximate result of the defendants wrongful
act or omission.
As to exemplary damages, Article 2229 of the Civil Code
provides that such damages may be imposed by way of
example or correction for the public good. While exemplary
damages cannot be recovered as a matter of right, 4 they
need not be proved, although plaintiff must show that he is
entitled to moral, temperate or compensatory damages
before the Court may consider the question of whether or not
exemplary damages should be awarded. 5
While no proof of pecuniary loss is necessary in order that
moral damages may be awarded, the amount of indemnity
being left to the discretion of the court, it is nevertheless
essential that the claimant satisfactorily proves the existence
of the factual basis of the damages and its causal relation to
defendants acts. This is so because moral damages though
incapable of pecuniary estimation, are in the category of an
award designed to compensate the claimant for actual injury
suffered and not to impose a penalty on the wrongdoer. Moral
damages, in other words, are not corrective or exemplary
damages. 7
For moral damages to be awarded, the law requires a
wrongful act or omission attributable to petitioner as the
proximate cause of the mental anguish suffered by private
respondents spouses Vicente E. Medina and Leticia Lopez.
Respondent appellate court categorically ruled in the negative
yet awarded moral and exemplary damages in the reduced
amount of P10,000.00 in favor of aforesaid respondent
spouses. This brings to light Our ruling in Boysaw v. Interphil
Promotions, Inc. 8 which enunciates
that:jgc:chanrobles.com.ph
"In order that a person may be made liable to the payment of
moral damages, the law requires that his act be wrongful. The
adverse result of an action does not per se make the act
wrongful and subject the actor to the payment of moral
damages. The law could not have meant to impose a penalty
on the right to litigate such right is so precious that moral
damages may not be charged on those who may exercise it
erroneously. For these the law taxes costs." 9
Conformably with settled jurisprudence and in agreement with
petitioners contention, We find the conclusion of respondent
appellate court that the filing of Civil Case No. 4507 was not
made maliciously and in a wanton manner inconsistent with
its award of moral and exemplary damages in the reduced
Because despite demand petitioner refused to pay, the city
amount of P10,000.00.
treasurer, with the approval of the Mayor of Butuan City
In the absence of malice and bad faith, the mental anguish issued a warrant of distraint and levy against petitioners
suffered by respondents spouses Medina and Lopez for having properties at its branch office in that city to enforce the
been made defendants in Civil Case No. 4507 is not that kind collection of the taxes assessed against it, i.e., under
of anxiety which would warrant the award of moral damages. Ordinance Nos. 11 and 110, and under Ordinance No. 110, for
The worries and anxieties suffered by respondents spouses the period corresponding to June 6 up to October 30, 1960,
Medina and Lopez were only such as are usually, caused to a
party haled into court as a defendant in a litigation. 10
Therefore, there is no sufficient justification for the award of
moral damages, more so, exemplary damages.
The San Miguel Brewery, Inc. instituted the present action in
the Court of First Instance of Manila, praying for an order
In the same manner that We find no basis for the award of directing the defendant Francisco Magno to release the
moral damages to respondents spouses Medina and Lopez, delivery trucks seized and impounded by the City Government
We find petitioner neither liable for attorneys fees.chanrobles of Butuan allegedly "without authority and for reasons
virtual lawlibrary unknown to the company", and to order the defendant to pay
to the plaintiff damages.
It is not sound public policy to place a penalty on the right to
litigate. To compel the defeated party to pay the fees of
counsel for his successful opponent would throw wide open
the door of temptation to the opposing party and his counsel
to swell the fees to undue proportions. To sentence litigant to Parenthetically, the action was brought against the defendant
pay his adversarys lawyers fees would be imposing a penalty Francisco Magno in his individual capacity, as disclosed in the
on his right to litigate. Even under the New Civil Code 11 a allegations in the complaint, and as expressly admitted in the
litigant would not be entitled to recover the fees paid to his
appellant's brief, thus "As a matter of fact, plaintiff filed this
attorney as damages where no bad faith on the part of his
action against Francisco Magno, not in his official capacity, but
adversary was shown. 12 Needless to say, award of attorneys
fees is the exception rather than the general rule in his individual capacity, . . . ."

4.

Magno interposed, among others, the defense that in seizing

5. SAN MIGUEL BREWERY, INC.,v.FRANCISCO MAGNO
Facts:
The Municipal Board of Butuan City passed Ordinance No. 11
imposing a tax of two per cent (2%) on the gross sales or
receipts of those engaged in the sale, trading in, or disposal of
all alcoholic or malt beverages, wines and mixed or fermented
liquors, including tuba, basi and tapuy.
the delivery trucks of the San Miguel Brewery, Inc., he was
acting, and was in the performance of his official duty, as
Treasurer of Butuan City, and, can not be hold liable to pay to
the company any damages. He set up a counterclaim of
P40,000.00 and P10,000.00 as moral and exemplary
damages, respectively, allegedly sustained by him and the
members of his family on account of the shock, fright,
wounded feelings, mental anguish, besmirched reputation,
and social humiliation they suffered by reason of the filing of
the case against him by the plaintiff, plus attorney's fees in
the amount of P2,000.00.
Issues:

Subsequently, Ordinance No. 110 amending Ordinance No. 11

1. W/N the trial court erred in not ordering Magnoto pay
was passed fixing instead a tax on the sale of beer at the rate
SMB damages.
of P.25 per case of twenty-four bottles, and on the sales of soft
drinks at the rate of P.10 per case of twenty-four bottles of
Coca-Cola, Pepsi-Cola, Tru-Orange, Seven-Up, Bireley, Soda 2. W/N the trial court erred in awarding damages in
Water, and any other kind of soft drinks or carbonated drinks. favor of Magno.

Petitioner maintains a warehouse or branch office in the City Ruling:

of Butuan and is engaged in the sale of beer and soft drinks in
said City. Although it appears to have paid the required taxes
under Ordinance No. 11 promptly and religiously upon the
effectivity of the ordinance, the company stopped paying the
taxes thereafter and thereby incurred in back taxes. 1. The argument is based on a wrong premise. It
erroneously assumes that the defendant
is personally liable for damages to the appellant,
 disregarding the established fact that the defendant
had issued the warrant of distraint and levy against
plaintiff's properties in his capacity as City Treasurer
of Butuan who, under the law, is empowered to issue
the warrant.
Ordinance No. 26 of the City of Butuan provides,
among others, as follows:
Sec. 1. Upon the failure of any person
owing any delinquent tax or delinquent
revenue to pay the same, at the time
required under existing ordinance, the City
Treasurer, his deputy, or any of his clerks
duly authorized in writing by the City
Treasurer may seize or distraint any goods,
chattels or effects, and other personal
property, including stocks and other
securities, debts, credits, bank accounts and
any interest in and rights to personal
property, of such person in sufficient
quantity to satisfy the tax, or charge,
together with any increment thereto
incident to delinquency, and the expenses
of the distraint.
Since there is no dispute that the appellee issued the
warrant of distraint and levy against the delivery
trucks of the appellant on January 9, 1961, in his
capacity as City Treasurer of Butuan, and as there is
no disagreement that defendant-appellee issued said
warrant by virtue of Ordinance No. 26 of the City of
Butuan, and not having been shown that the
defendant, either as a private citizen or as City
Treasurer of Butuan, had acted in bad faith, there can
be no question that appellee Francisco Magno, who
was merely performing a duty enjoined by law to be
performed when he issued the warrant of distraint
and levy, cannot be made to answer personally for
damages to the appellant.
2. In order that moral damages may be awarded, there
must be pleading and proof of moral suffering,
mental anguish, fright and the like. While no proof of
pecuniary loss is necessary in order that moral
damages may be awarded, the amount of indemnity
being left to the discretion of the court (Article 2216),
it is, nevertheless, essential that the claimant should
satisfactorily prove the existence of the factual basis
of the damages (Article 2217) and its causal
connection to defendant's acts.
This is so, because moral damages, though incapable
of pecuniary estimation, are in the category of an
award, designed to compensate the claimant for
actual injury suffered and not to impose a penalty on
the wrong-doer.
Neither may we consider the award as exemplary
damages, because the mere findings that certain
allegations in the complaint are not true, and the
plaintiff committed a mistake in instituting the action
against the wrong party, do not justify the award of
this kind of damages. Penalty in the concept of
damages should not be imposed simply because a
complaint is found unmeritorious by the courts.
The amount of attorney's fees, on the other hand, is
addressed to the sound discretion of the court. It may
be awarded along with expenses of litigation, other
than judicial costs, in cases where the court deems it
just and equitable under the circumstances of the
case. And when as in this case, the defendant public
officer was sued in his private capacity for acts done
in the performance of official duty required by law,
and was forced to employ the services of private
counsel to defend his rights, it is but proper that
attorney's fees be charged against the plaintiff.
Nominal damages may also be adjudicated.
6. ERWIN TULFO, Petitioner, vs. PEOPLE OF THE
PHILIPPINESand ATTY. CARLOS T. SO, Respondents
Facts:
Respondent Atty. So filed 4 four (4) separate informations for
the crime of libel against Petitioner Tulfo and three (3) others.
He argued that Petitioner Tulfo, being then the columnist,
publisher and managing editor, respectively of "REMATE", a
tabloid published daily and of general circulation in the
Philippines, did then and there willfully, unlawfully and
feloniously and with malicious intent to discredit or dishonor
him, and with the malicious intent of injuring and exposing
him to public hatred, contempt and ridicule, write and publish
in the regular issue of said publication on May 11, 1999, its
daily column "DIRECT HIT", quoted hereunder, to wit:
PINAKAMAYAMAN SA CUSTOMS
Ito palangsi Atty. Ding So ng Intelligence Division ng Bureau of
Customs and [sic] pinakamayamannayatana government
official sabuongbansasapangungurakotlamangdiyansa South
Harbor.
Hindi matibaganggagong attorney
dahilmalakasdawitosaIglesianiKristo.
Hoy, So! . . nakakahiya ka samga INC,
ikawnayataangpinakagago at magnanakawnamiyembronito.
Balitako, malapit ka nangitiwalag ng
nasabingsimbahandahilsamgakalokohan mo.
Abanganbukasangmgaraketni So sa BOC.
In his defense, Petitioner Tulfo argued that he did not write the
subject articles with malice, that he neither knew Atty. So nor
met him before the publication of the articles. He also claimed
that his articles had neither discredited nor dishonored the
complainant because as per his source in the Bureau of
Customs, Atty. So had been promoted.
Ruling:
Petitioner Tulfo is guilty of the crime of libel. He is also ordered
to pay 1 million pesos as moral damages.
 Moral damages may be awarded to compensate one for
manifold injuries such as physical suffering, mental anguish,
serious anxiety, besmirched reputation, wounded feelings and
social humiliation.
Although incapable of exactness and no proof of pecuniary
loss is necessary in order that moral damages may be
awarded, the amount of indemnity being left to the sound
discretion of the court, it is imperative, nevertheless, that (1)
injury must have been suffered by the claimant, and (2) such
injury must have sprung from any of the cases expressed in
Article 2219 and Article 2220 of the Civil Code. A causal
relation, in fine, must exist between the act or omission
referred to in the Code which underlies, or gives rise to, the
case or proceeding on the one hand, and the resulting injury,
on the other hand; i.e. the first must be the proximate cause
and the latter the direct consequence thereof.
It was the articles of Tulfo that caused injury to Atty. So, and
for that Atty. So deserves the award of moral damages.
Justification for the award of moral damages is found in Art.
2219(7) of the Civil Code, which states that moral damages
may be recovered in cases of libel, slander, or any other form
of defamation. As the cases involved are criminal cases of
libel, they fall squarely within the ambit of Art. 2219(7).
Moral damages can be awarded even in the absence of actual
or compensatory damages. The fact that no actual or
compensatory damage was proven before the trial court does
not adversely affect the offended partys right to recover
moral damages.
And while on the subject of moral damages, it may not be
amiss to state at this juncture that Tulfos libelous articles are
abhorrent not only because of its vilifying and demeaning
effect on Atty. So himself, but also because of their impact on
members of his family, especially on the children and possibly
even the childrens children.
The Court can perhaps take judicial notice that the sense of
kinship runs deeply in a typical Filipino family, such that the
whole family usually suffers or rejoices at the misfortune or
good fortune, as the case may be, of any of its member.
Accordingly, any attempt to dishonor or besmirch the name
and reputation of the head of the family, as here, invariably
puts the other members in a state of disrepute, distress, or
anxiety. This reality adds an imperative dimension to the
award of moral damages to the defamed party
7. GUILATCO VS. CITY OF DAGUPAN
Facts:
A civil action for recovery of damages was filed by the
petitioner Florentina A. Guilatco against the respondent City
of Dagupan
She alleged that she was about to board a motorized tricycle
at a sidewalk located at Perez Blvd. (a National Road, under
the control and supervision of the City of Dagupan) when
she accidentally fell into a manhole located on said
sidewalk, thereby causing her right leg to be fractured.
As a result thereof, she had to be hospitalized, operated on,
confined at hospitals; suffered severe or excruciating pain
not only on her right leg which was fractured but also on all
parts of her body; the pain has persisted even after her
discharge to the present. Despite her discharge from the
Hospital plaintiff is presently still wearing crutches and the
Court has actually observed that she has difficulty in
locomotion. From the time of the mishap up to the present,
plaintiff has not yet reported for duty as court interpreter,
as she has difficulty of locomotion in going up the stairs of
her office, located near the city hall in Dagupan City; she
has been deprived of said income as she has already
consumed her accrued leaves in the government service.
She has lost several pounds as a result of the accident and
she is no longer her former jovial self, she has been unable
to perform her religious, social, and other activities which
she used to do prior to the incident.
The city contends that Perez Boulevard, where the fatal
drainage hole is located, is a national road that is not under
the control or supervision of the City of Dagupan. Hence, no
liability should attach to the city. It submits that it is actually
the Ministry of Public Highways that has control or
supervision through the Highway Engineer which, by mere
coincidence, is held concurrently by the same person who is
also the City Engineer of Dagupan.
ISSUES:
Whether or not control or supervision over a national road by
the City of Dagupan exists, in effect binding the city to
answer for damages in accordance with article 2189 of the
Civil Code.
RULING:
On Respondents Liability
Yes, the City of Dagupan is liable. The liability of public
corporations for damages arising from injuries suffered by
pedestrians from the defective condition of roads is
expressed in the Civil Code as follows:
Article 2189. Provinces, cities and
municipalities shall be liable for damages for
the death of, or injuries suffered by, any
person by reason of the defective condition
of roads, streets, bridges, public buildings,
and other public works under their control or
supervision.
It is not even necessary for the defective road or street to
belong to the province, city or municipality for liability to
attach. The article only requires that either control or
supervision is exercised over the defective road or street. In
the case at bar, this control or supervision is provided for in
the charter of Dagupan and is exercised through the City
Engineer.
The charter of Dagupan also provides that the laying out,
construction and improvement of streets, avenues and
alleys and sidewalks, and regulation of the use thereof, may
be legislated by the Municipal Board. Thus the charter
clearly indicates that the city indeed has supervision
and control over the sidewalk where the open
drainage hole is located.
The express provision in the charter holding the city not liable
for damages or injuries sustained by persons or property
due to the failure of any city officer to enforce the
provisions of the charter, cannot be used to exempt the
city, as in the case at bar. The charter only lays
down general rules regulating the liability of the city. On the
other hand article 2189 applies in particular to the liability
arising from "defective streets, public buildings and other
public works."
On Moral Damages
Moral damages may be awarded even without proof of
pecuniary loss, inasmuch as the determination of the
amount is discretionary on the court. Though incapable of
pecuniary estimation, moral damages are in the nature of
an award to compensate the claimant for actual injury
suffered but which for some reason cannot be proven.
However, in awarding moral damages, the following should
be taken into consideration:
(1) First, the proximate cause of the injury must be the
claimee's acts.
(2) Second, there must be compensatory or actual damages
as satisfactory proof of the factual basis for damages.
(3) Third, the award of moral damages must be predicated
on any of the cases enumerated in the Civil Code.
In the case at bar, the physical suffering and mental anguish
suffered by the petitioner were proven. Witnesses from the
petitioner's place of work testified to the degeneration in
 her disposition-from being jovial to depressed. She refrained
from attending social and civic activities.
Nevertheless the award of moral damages at P 150,000.00 is
excessive. Her handicap was not permanent and disabled
her only during her treatment which lasted for one year.
Though evidence of moral loss and anguish existed to
warrant the award of damages, the moderating hand of the
law is called for. Although the assessment of the amount is
better left to the discretion of the trial court under
preceding jurisprudence, the amount of moral damages
should be reduced to P 20,000.00.
On Exemplary Damages
To serve as an example for the public good, it is high time that
the Court, through this case, should serve warning to the
city or cities concerned to be more conscious of their duty
and responsibility to their constituents, especially when
they are engaged in construction work or when there are
manholes on their sidewalks or streets which are
uncovered, to immediately cover the same, in order to
minimize or prevent accidents to the poor pedestrians.
Too often in the zeal to put up "public impact" projects such as
beautification drives, the end is more important than the
manner in which the work is carried out. Because of this
obsession for showing off, such trivial details as misplaced
flower pots betray the careless execution of the projects,
causing public inconvenience and inviting accidents.
8. FILINVEST V. MENDEZ
Facts:
Mendez purchased a Ford Cartina from Davao Motor Sales
Company and to secure the balance, he executed a
promissory note and chattel mortgage in favor of Davao Motor
Sales Company. Davao Motor assigned its rights, title and
interest in the PN and chattel mortgage to Filinvest. Mendez
failed to pay his monthly installments in February, March and
April due in the PN so the Filinvest sent written demands.
Mendez paid through a check which was returned on the
ground of insufficient funds. Filinvest filed an action for
recovery of personal property and/or sum of money against
Mendez.
The car was taken away from him on the day he used the car
to fetch a certain Col. Coronel to go to a conference, but after
pleading, the financing company released the car to Mendez.
Filinvest filed a motion in court seeking the dismissal of the
case saying that the obligation of the plaintiff has already
been updated. After this, Mendez filed a complaint for
SolutioIndebiti and damages alleging that the seizure order
was illegal as the unpaid installments had previously been
updated by the clearing of the check and that petitioner was
without right to claim from him the repossession expenses
and that due to the alleged unjustified repossession and the
factual circumstances attendant thereto, he is entitled to
moral damages.
Issue:
WON moral damages can be rewarded.
Ruling:
No. The award for moral damages has no factual basis. The
testimony of the driver of Mendez shows that the car was
seized at the residence of the respondent while the said driver
was cleaning the same. It is, therefore, not true that the
respondent was humiliated and embarrassed before his visitor
and among those attending the seminar. The rule is settled
that moral damages cannot be rewarded in the absence of a
wrongful act or omission or fraud or bad faith.
9. FERNANDO LOPEZ V. PAN AMERICAN WORLD
AIRWAYS
Facts:
A flight by Pan American for Tokyo to San Francisco was
reserved by Your Travel Agency, specifically Faustino. This was
a first class reservation for Senator Lopez, his wife, son-in-law,
and daughter. Pan Ams head office in San Francisco
confirmed the reservations. The tickets were subsequently
issued and fully paid.
Lopez and his family arrived in Tokyo and contacted Minister
Busuego of the Philippine Embassy to contact Pan Ams Tokyo
office regarding their reservation. They were informed that the
first class was already full. This prompted Lopez to take the
tourist class instead as he was due for a business conference
and medical check-up in San Francisco and Minnesota,
respectively. However, Lopez wrote Pan Am and cleared that
they only took the tourist class under protest.
Lopez filed a suit for damages alleging breach of contracts in
bad faith by Pan Am and asked for P 500,000 actual and moral
damages, P 100,000 exemplary damages, and P 25,000
attorneys fees. Pan Am answered that this was only due to
the honest error of its employees.
The trial court ruled in favour of Lopez but the awards were
decreased to: P 100,000 moral damages, P 20,000 exemplary
damages, and P 25,000 attorneys fees. Both the parties
appealed. The CA ruled still in favour of Lopez and only
increased the moral damages awarded by the trial court by P
50,000.
Issue/s:
1. WON Pan Am acted in bad faith in the breach
of its contract with Lopez
2. WON the damages awarded was just
Ruling:
1. Yes.
Pan Am admitted that it, through its agents, deliberately and
intentionally withheld from Lopez the fact of the cancellation
of their reservation and letting them to continue to believe
that everything was fine. Pan Am wilfully and knowingly
placed itself in the position of breaching the contract. The
following indicated bad faith:
a. The agents already know as early as May 18 that the
reservation has been cancelled and only waited until
May 24 (the date of the flight) and upon the inquiry
of Lopez to talk about the cancellation.
b. There was also no indication that the agents who are
responsible for the error were subjected to
disciplinary measures to correct their mishap.
c. There was an error on the part of Herranz to cancel
Lopezs reservations when it should only be the
Rufinos.
d. Herranz already know from phone call to San
Francisco head office that the Lopezs reservation
was already cancelled but still not relayed that fact.
e. They did not relay to the Lopezs that they were only
waitlisted passengers.
f. They issued tickets without clarifying the real status
of the reservation with an OK stamped at the
reservation status.
This shows than Pan Am acted by no other than the self-
interest of Pan Am and foreclosing the chance of Lopez to find
another airline. This all amounted to bad faith.Bad faith
means a breach of known duty through some motive of
interest or ill-will. If not, it is gross negligence still amounting
to bad faith.
The contention of Pan A that it was customary for them to not
inform the client as there will always be free seats on the date
of the flight because of intervening circumstances (e.g. other
passengers failed to catch their flight, or they took another
flight) cannot be used as a valid defense. Jose, the one in
charge, further said that it was up to his discretion to tell or
not to tell Lopez of the situation which clearly disregard his
duty to the Lopezs as passengers.
2. Yes, although with modifications.
As to the moral damages, they were just as Lopez suffered
social humiliation, wounded feelings, serious anxiety and
mental anguish. It was expected from the Lopez family to
travel on first class as they are of a high-rank in the society.
Sen. Lopez was a Senate President Pro Tempore and former
Vice President of the Phils. He will be attending in US a
banquet for his honor and is unjust to subject him to this kind
of humiliation (100,000). Furthermore, the wife, daughter, and
son-in-law also carries this prestige as they are the extension
of Sen. Lopez. Also, Mrs. Lopez also suffered discomfort due to
her sickness that prompted them to go to the US for a medical
check up. This is considered a physical suffering as the tourist
class is a lot noisier and with smaller places that she could not
recline in a 13 hour trip (50,000). It should also be noted that
they paid the price for the first class only to be put in the
tourist class. The Montelibanos earlier asked to be in the
tourist class but were not allowed as it was already full and
was forced to take the first class only to be informed that it
was also full (25,000 each). It was also establish that Pan Am
breached their contract in bad faith.
As to the exemplary damages, where it should be awarded to
deter a similar breach in the future, the award of P 75,000 is
just.
As to attorneys fees, it has been established that there was a
contract between Lopez and Atty. Francisco that Lopez will pay
him P 25,000 and another P 25,000 if the case shall be
elevated in SC. It has been ruled that contracts control the
awards unless it was shown that this was unconscionable.
Also, considering the stature of Atty. Francisco who labored for
the case in 3 years and with 265 printed pages, the award of P
50,000 is just.
It is to be noted that the awards are determined by the
official, political, social, and financial standing of the offended
in this case.
10. LAO VS CA
Facts:
Petitioner Dennis Lao was an employee of the New St. Joseph
Lumber & Hardware Supply, owned by the private respondent,
Chan Tong. In January 1981, St. Joseph Lumber filed a
collection suit against a customer, the private respondent,
Benjamin Espiritu, for unpaid purchases of construction
materials from St. Joseph Lumber.
In November 1981, St. Joseph Lumber filed a criminal
complaint for estafa against Espiritu, based on the same
transaction. Since the petitioner was the employee who
transacted business with Espiritu, he was directed by his
employer, the firm's owner, Chan Tong, to sign the affidavit or
complaint prepared by the firm's, lawyer, Attorney Manuel
Querubin.
An information for estafa was filed in the Court of First
Instance against Espiritu. The case was however later
dismissed because the court believed that Espiritu's liability
was only civil, not criminal. On April 12, 1984, Espiritu filed a
complaint for malicious prosecution against the petitioner and
St. Joseph Lumber. In his answer to the complaint, the
petitioner alleged that he acted only as agent or employee of
St. Joseph Lumber when he executed the affidavit which his
employer submitted to the investigating fiscal who conducted
the preliminary investigation of his employer's estafa charge
against Espiritu.
Issue:
Whether or not Lao is liable for damages against Espiritu?
Ruling:
No. Lao had a valid defense to the action for malicious
prosecution because it was his employer, St. Joseph Lumber,
not himself, that was the complainant in the estafa case
against Espiritu. It was Chan Tong, who filed the criminal
complaint. Lao was only a witness in the case. He had no
personal interest in the prosecution of Espiritu for he was not
the party defrauded by Espiritu. He executed the affidavit
which was used as basis of the criminal charge against
Espiritu because he was the salesman who sold the
construction materials to Espiritu. He was only an agent of St.
Joseph Lumber, hence, not personally liable to the party with
whom he contracted.
To maintain an action for damages based on malicious
prosecution, three elements must be present: First, the fact of
the prosecution and the further fact that the defendant was
himself the prosecutor, and that the action was finally
terminated with an acquittal; second, that in bringing the
action, the prosecutor acted without probable cause; and
third, the prosecutor was actuated or impelled by legal malice
Lao was not motivated by malice in making the affidavit upon
which the fiscal based the filing of the information against
Espiritu. He executed it as a salesman of the St. Joseph
Lumber from whom Espiritu made his purchases of
construction materials and who, therefore, had personal
knowledge of the transaction. Although the prosecution of
Espiritu for estafa did not prosper, the unsuccessful
prosecution may not be labelled as malicious. "Sound
principles of justice and public policy dictate that persons
shall have free resort to the courts for redress of wrongs and
vindication of their rights without later having to stand trial for
instituting prosecutions in good faith"
11.
12. EMILIANO B. RAMOS, ET. AL. v. GREGORIA T.
RAMOS, ET AL.
Facts:
Martin and Candida Ramos who died in separate dates were
survived by three legit children: Jose, Agustin, and Granada.
Martin Ramos had seven natural children: Atanacia, Timoteo,
Modesto, Manuel, Emiliano, Maria and Federico.
A special proceeding was instituted for the settlement of
estate of spouses Ramos. A project of partition was signed by
the three legit children and by two natural children (Atanacia
and Timoteo), and by TimoteoZayco in representation of other
5 natural children who were minors.
The estate consisted of 18 parcels of land, some heads of
cattle, and advances to the legit children. It was agreed in the
project of partition that Jose Ramos would pay the cash
adjudications to Atanacia, Timoteo and Manuel, while Agustin
would pay to Modesto, Federico, Emiliano and Maria. It was
further agreed that Jose and Agustin will pay Granada certain
sums each.
The project of partition was approved. A manifestation that
the heirs received their shares from the administrator was
submitted to the court but no receipts were attached to it.
Granada Ramos and the natural children were assumed to
have received their shares although it was Jose and Agustin,
not the administrator, who were supposed to pay the cash
adjudications.
Plaintiffs version of the case:

All the children, legit or acknowledged natural, lived together
in Hacienda Ylaya. Upon their fathers death, Rafael Ramos
administered the properties. The heirs were just given money
from time to time. Eventually, Rafael returned the
administration to the heirs, turning over Hacienda Ylaya to
Agustin and Hacienda Calaza to Jose. The plaintiffs (the
natural children) only depended on either Agustin or Jose for
support. They have been receiving varied amounts as their
share in the produce or income of the hacienda. No
accounting was ever made since the plaintiffs had confidence
on their brothers.
The plaintiffs did not know that intestate proceedings were
instituted for the distribution of the estate of their father. They
also had no idea that Timoteo was appointed their guardian.
They never received any sum of money in cash (the amount
for their share under the project of partition) from their
alleged guardian. They also alleged that neither did Atanacia
nor her husband sign any project of partition or any receipt of
share in the inheritance. In fact, Modesto and Manuel were no
longer minors at the time of the alleged project of partition
being approved. They only discovered later that the property
is under the name of Gregoria (widow of Jose) and her
daughter, Candida, when they insisted and inquired from RD.
They now bring the present suit for the reconveyance of their
share.
The lower court dismissed the complaint on the ground of res
judicata.
Plaintiffs appealed, as well as the defendants; the latter on
the ground that the lower court ignored their
counterclaim for P50,000 as moral damages and
P10,000 as attorneys fees. The defendants argued
that the action was baseless and was filed in gross and
evident bad faith. It was alleged that the action caused
defendants mental anguish, wounded feelings, moral
shock and serious anxiety and compelled them to hire
the services of counsel and incur litigation expenses.
Issue:
1. Whether the lower court erred in dismissing the plaintiffs
complaint?
2. Whether the defendants are entitled to moral
damages prayed for in their counterclaim?
Ruling:
1. No. The action for reconveyance filed by plaintiff was
already barred by prescription and res judicata. Atanacia,
Modesto and Manuel could have brought the action to
annul the partition in 1914, while Maria and Emiliano
could have brought the action in 1917, having reached 21
on that year. The instant action was filed only in 1957, 43
years after it accrued for Atanacia, Modesto and Manuel
and 40 years for Maria and Emiliano.
The Court said that the contentions presented by
plaintiffs would have deserved serious consideration if
the plaintiffs had not slept on their rights. They allowed
more than 40 years to elapse before they woke up and
complained that they were much aggrieved by the
partition.
2. No. The instant litigation does not fall within any of the
enumerated cases. Nor can it be regarded as analogous
to any of the cases mentioned in the Civil Code. The
worries and anxiety of a defendant in a litigation
that was not maliciously instituted are not the
moral damages contemplated in the law.
The adverse result of an action does not per se
make the act wrongful and subject the actor to the
payment of moral damages. The law could not have
meant to impose a penalty on the right to litigate,
such right is so precious that moral damages may
not be charged on those who may exercise it
erroneously.
Dispositive portion:WHEREFORE, the trial court's judgment is
affirmed with the clarification that defendants' counterclaim is
dismissed. No costs.
12. EMILIANO B. RAMOS, ET. AL. v. GREGORIA T.
RAMOS, ET AL.
G.R. No.L-19872. December 3, 1974
Facts:
Martin and Candida Ramos who died in separate dates were
survived by three legit children: Jose, Agustin, and Granada.
Martin Ramos had seven natural children: Atanacia, Timoteo,
Modesto, Manuel, Emiliano, Maria and Federico.
A special proceeding was instituted for the settlement of
estate of spouses Ramos. A project of partition was signed by
the three legit children and by two natural children (Atanacia
and Timoteo), and by TimoteoZayco in representation of other
5 natural children who were minors.
The estate consisted of 18 parcels of land, some heads of
cattle, and advances to the legit children. It was agreed in the
project of partition that Jose Ramos would pay the cash
adjudications to Atanacia, Timoteo and Manuel, while Agustin
would pay to Modesto, Federico, Emiliano and Maria. It was
further agreed that Jose and Agustin will pay Granada certain
sums each.
The project of partition was approved. A manifestation that
the heirs received their shares from the administrator was
submitted to the court but no receipts were attached to it.
Granada Ramos and the natural children were assumed to
have received their shares although it was Jose and Agustin,
not the administrator, who were supposed to pay the cash
adjudications.
Plaintiffs version of the case:
All the children, legit or acknowledged natural, lived together
in Hacienda Ylaya. Upon their fathers death, Rafael Ramos
administered the properties. The heirs were just given money
from time to time. Eventually, Rafael returned the
administration to the heirs, turning over Hacienda Ylaya to
Agustin and Hacienda Calaza to Jose. The plaintiffs (the
natural children) only depended on either Agustin or Jose for
support. They have been receiving varied amounts as their
share in the produce or income of the hacienda. No
accounting was ever made since the plaintiffs had confidence
on their brothers.
The plaintiffs did not know that intestate proceedings were
instituted for the distribution of the estate of their father. They
also had no idea that Timoteo was appointed their guardian.
They never received any sum of money in cash (the amount
for their share under the project of partition) from their
alleged guardian. They also alleged that neither did Atanacia
nor her husband sign any project of partition or any receipt of
share in the inheritance. In fact, Modesto and Manuel were no
longer minors at the time of the alleged project of partition
being approved. They only discovered later that the property
is under the name of Gregoria (widow of Jose) and her
daughter, Candida, when they insisted and inquired from RD.
They now bring the present suit for the reconveyance of their
share.
The lower court dismissed the complaint on the ground of res
judicata.
Plaintiffs appealed, as well as the defendants; the latter on
the ground that the lower court ignored their
counterclaim for P50,000 as moral damages and
P10,000 as attorneys fees. The defendants argued
that the action was baseless and was filed in gross and
evident bad faith. It was alleged that the action caused
defendants mental anguish, wounded feelings, moral
shock and serious anxiety and compelled them to hire
the services of counsel and incur litigation expenses.
Issue:
3. Whether the lower court erred in dismissing the plaintiffs
complaint?
4. Whether the defendants are entitled to moral
damages prayed for in their counterclaim?
Ruling:
3. No. The action for reconveyance filed by plaintiff was
already barred by prescription and res judicata. Atanacia,
Modesto and Manuel could have brought the action to
annul the partition in 1914, while Maria and Emiliano
could have brought the action in 1917, having reached 21
on that year. The instant action was filed only in 1957, 43
years after it accrued for Atanacia, Modesto and Manuel
and 40 years for Maria and Emiliano.
The Court said that the contentions presented by
plaintiffs would have deserved serious consideration if
the plaintiffs had not slept on their rights. They allowed
more than 40 years to elapse before they woke up and
complained that they were much aggrieved by the
partition.
4. No. The instant litigation does not fall within any of the
enumerated cases. Nor can it be regarded as analogous
to any of the cases mentioned in the Civil Code. The
worries and anxiety of a defendant in a litigation
that was not maliciously instituted are not the
moral damages contemplated in the law.
The adverse result of an action does not per se
make the act wrongful and subject the actor to the
payment of moral damages. The law could not have
meant to impose a penalty on the right to litigate,
such right is so precious that moral damages may
not be charged on those who may exercise it
erroneously.
Dispositive portion:WHEREFORE, the trial court's judgment is
affirmed with the clarification that defendants' counterclaim is
dismissed. No costs.
13. BEATRIZ GALANG vsHON. COURT OF APPEALS,
MAXIMO QUINIT and RODRIGO QUINIT
Facts:
This is an action against Rodrigo Quinit and his father Maximo
Quinit to recover damages claimed to have been sustained by
plaintiff Beatriz Galang for an alleged breach of promise on
the part of Rodrigo Quinit to marry her.
In due course, the Court of First Instance of Baguio, in which
the case was originally instituted, rendered a decision
sentencing the defendants jointly and severally to pay the
sums of P275.00, by way of actual damages, P5,000.00, as
moral damages, and P500.00, as attorney's fees, apart from
the costs.
On appeal, taken by the defendants, the Court of Appeals
absolved MaximinoQuinit, and accordingly, reversed said
decision insofar as he is concerned, and modified it as regards
Rodrigo Quinit, by eliminating the awards for moral damages
and attorney's fees. The case is before us on appeal by
certiorari taken by plaintiff Beatriz Galang.
Plaintiff and Rodrigo Quinit were engaged, but Rodrigo's
parents were strongly opposed to their marriage. From April
27, 1955, plaintiff and Rodrigo lived as husband and wife in
the house of Adolfo Dagawan located at Colorado Falls, Tuba,
Mountain Province, until May 9 when Rodrigo left and never
returned.
Issues:
1. Minor: Whether or not the CA was correct to absolve
MaximinoQuinit of liability.
2. Topic: Whether or not the CA was correct to delete
the award of moral damages.
Ruling:
1. Yes.
With respect to MaximinoQuinit the evidence for appellants
tends to show that he had never agreed to have his son marry
appellee nor to give a dowry to the latter; that he did not go
with appellee and Rodrigo to Colorado Falls and that he did
not concoct, much less carry out any plan to have his son
satisfy his lust and then get rid of appellee.
The court of first instance sustained plaintiff's pretense, but
the Court of Appeals considered her evidence unworthy of
credence, and, hence, absolved MaximinoQuinit. Plaintiff
maintains that the Court of Appeals had erred in the
appreciation of the evidence, but the findings of said Court on
the credibility of said evidence are beyond our power of
review on appeal by certiorari and, consequently, conclusive
upon us.
2. Yes.
It is next urged that said Court had also erred in not awarding
moral damages to plaintiff, who insists that moral damages
for breach of promise to marry are collectible under our laws,
but this question has already been settled adversely to
plaintiff's pretense in Hermosisima vs. Court of Appeals, L-
14628 (September 30, 1960).
14. MERCADO V. LIRA
Facts:
Gonzalo Mercado and others were the owners and operators
of the Laguna Transportation Company. One afternoon, while
its passenger bus No. 39 was making the trip from Batangas
to Manila, the left front tire of the bus blew out and sent it
swerving gradually toward the left side of the road, over the
shoulder and into a ravine. From the wreckage, several died
and others were injured. Among the fatalities was Ramon Lira,
Jr., son of Mr. and Mrs. Ramon Lira, Sr. and injured Nita Lira.
Two cases for recovery of damages were commenced against
the owners and operators: No. 104 (G.R. Nos. L-13328-29), by
the parents of deceased Ramon Lira, Jr. and No. 107 (G.R. No.
L-13358), in this Court by Nita Lira.
After a joint trial, defendants, Mercado and others were
sentenced to pay the following sums:
In Civil Case No. 104:
(1) For the death of Ramon Lira, Jr. including funeral and
church expenses P10,000.00;
(2) For loss of earning capacity of Ramon Lira, Jr. for ten
(10) years at P1,800.00 per annum 18,000.00;
(3) Moral damages for mental anguish, 4,000.00; and
(4) For expenses of litigation and attorney's fees,
4,000.00.
In Civil Case No. 107:
(1) For hospitalization and medical treatment of Nita Lira
P970.20; for the impairment of earning capacity,
1,000.00;
 (2) Moral damages for her physical and mental suffering
2,000.00; and
(3) For expenses of litigation and attorney's fees
1,000.00
Defendants appealed in both cases and plaintiff Nita Lira
appealed in No. 107. The Court of Appeals modified the
decision by reducing the amount awarded for the death of
Ramon Lira, Jr. including funeral and church services from
P10,000.00 to P5,062.50; reducing the amount awarded for
loss of earning capacity from P18,000.00 to P12,000.00 and
increasing the amount awarded to plaintiff-appellant Nita Lira
for moral damages from P2,000.00 to P5,000.00.
Pursuant to a motion for reconsideration, the Court of Appeals
granted moral damages in the case involving the death of
Ramon Lira, Jr., and eliminated the moral damages of
P5,000.00 awarded to Nita Lira involving physical injuries
caused upon her.
The amount of moral damages to be awarded, should be such
as may be reasonable and just under the circumstances in a
given case. The Court of Appeals found the other damages
not to be excessive. Moreover, petitioners never assailed the
reasonableness of the amount of the other damages awarded
to herein respondents. In fact, the petition limits the issues
only to the reasonableness of the P4,000.00 awarded by the
Court of Appeals as moral damages and the other amount of
P4,000.00 as attorney's fees.
Considering the mental anguish and sorrow that must
accompany and overwhelm the parents upon the tragic death
of a son, and considering the nature and extent of the
services rendered by counsel for respondents and other
circumstances of the case, We believe the awards given by
the Court of Appeals to respondents in the sum of P4,000.00
as moral damages for the death of Ramon Lira, Jr. and the
amount of P4,000.00 for attorney's fees and other expenses of
litigation, fair and reasonable.

Hence, a petition for certiorari to review the decision of the 2. A

Court of Appeals. passenger
who
Issue: suffered
1. Whether or not the Damages granted by the Court of physical
Appeals in the case involving the death of Ramon Lire, Jr., injuries
in excess of P3,000.00 was correct. because of
2. Whether or not the Court of Appeals erred in not the
awarding moral damages to petitioner Nita Lira for carrier's
physical injuries and mental suffering sustained by her, negligence
resulting from breach of the special contract of carriage (culpa
caused by the negligence of the respondents, contending contractual
that her case is analogous to cases of "quasi delicts ) cannot be
causing physical injuries" for which the new Civil Code considered
authorizes indemnification for moral damages in favor of in the
the injured party. descriptive
expression
Ruling: "analogous
1. Damages in cases used
excess of in Act
P3,000.00 2119" for
may be which the
awarded new Civil
for the Code
death of a authorizes
passenger, indemnifica
and in tion for
addition, moral
the heirs damages in
may favor of the
demand injured
moral party.
damages
commensur Moral damages are not recoverable in damage actions
ate with predicated on a breach of the contract of transportation
the mental except when there is evidence of fraud, malice or bad faith on
anguish the part of the carrier.Mere carelessness of the carrier's driver
suffered by does not per se constitute or justify an inference of malice or
them. bad faith on the part of the carrier; and in the case at bar
there is no other evidence of such malice to support the
Article 2206 of the new Civil Code expressly provides that the award of moral damages by the Court of Appeals. To award
amount of damages for death shall be "at least three moral damages for breach of contract, therefore, without
thousand pesos, even though there may have been mitigating proof of bad faith or malice on the part of the defendant, as
circumstances." In other words, the amount of damages to be required by Act 2220, would be to violate the clear provisions
awarded for the death of a passenger may be more than of the law, and constitute unwarranted judicial legislation.
P3,000.00. Article 2206 states further that "In addition" to the
amount of at least P3,000.00 to be awarded for the death of a
passenger, the spouse, legitimate and illegitimate 15. PERMEX INC. AND/OR JANE (JEAN) PUNZALAN,
descendants and ascendants of the deceased may demand PERSONNEL MANAGER AND EDGAR LIM, MANAGER VS.
moral damages as a consequence of the death of their NATIONAL LABOR RELATIONS COMMISSION AND
deceased kin, which simply means that once the above- EMMANUEL FILOTEO
mentioned heirs of the deceased claim compensation for
moral damages and are able to prove that they are entitled to Facts:
such award, it becomes the duty of the court to award moral
damages to the claimant in an amount commensurate with Permex initially hired Emmanuel Filoteo on October 1, 1990,
the mental anguish suffered by them. as a mechanic. Eventually, Filoteo was promoted to water
treatment operator, a position he held until his termination on
August 29, 1994. As water treatment operator, Filoteo did not
have a fixed working schedule. His hours of work were
dependent upon the company's shifting production schedules.
On July 31, 1994, Filoteo was scheduled for the night shift
from 7:00 p.m. to 7:00 a.m. the following day. That night he
reported for work together with his co-workers. They logged in
at the main gate and guardhouse of the petitioner's factory.
Filoteo entered his time-in at 8:45 p.m. and since he was
scheduled to work until 7:00 a.m. the next day, he wrote 7:00
a.m. in his scheduled time-out. This practice of indicating the
time out at the moment they time in, was customarily done by
most workers for convenience and practicality since at the
end of their work shift, they were often tired and in a hurry to
catch the available service vehicle for their trip home, so they
often forgot to log out. There were times also when the Log
Book was brought to the Office of the Personnel Manager and
they could not enter their time out. The company had
tolerated the practice.
On the evening of July 31, 1994, at around 9:20 p.m., Filoteo,
together with Pelayo (his co-worker), went to see the Assistant
Production Manager to inquire if "butchering" of fish would be
done that evening so they could start operating the boiler.
They were advised to wait from 9:30 p.m. to 10:00 p.m. for
confirmation. At or about 10:00 p.m., Filoteo and Pelayo went
back to the Assistant Production Manager's office. There they
were informed that there would be no "butchering" of tuna
that night. Filoteo then sought permission to go home, which
was granted. The next day, August 1, 1994, Filoteo reported
for work as usual. He proceeded to the Office of the Personnel
Manager to retime his DTR entry. Later, he received a
memorandum from the Assistant Personnel Officer asking him
to explain, in writing, the entry he made in his DTR. Filoteo
complied and submitted his written explanation that same
evening.
On August 8, 1994, Filoteo was suspended indefinitely. His
explanation was found unsatisfactory. He was dismissed from
employment on August 23, 1994. The dismissal arose from
Filoteo's alleged violation of Article 2 of the company rules
and regulations. The offense charged was entering in his DTR
that he had worked from 8:45 p.m. of July 31, 1994 to 7:00
a.m. of August 1, 1994, when in fact he had worked only up to
10:00 p.m. Filoteo then filed a complaint for illegal dismissal
with claims for separation pay, damages, and attorney's fees
with the Labor Arbiter.
Labor Arbiter dismissed the complaint for lack of merit.
Filoteo appealed to the NLRCwhich reversed and set aside the
Labor Arbiter's decision by disposing that:
WHEREFORE, the decision appealed from, is Vacated
and Set Aside and a new one entered declaring the
complainant to have been illegally dismissed by
respondent company. Accordingly, respondent
Permex, Inc., through its corporate officers, is hereby
ordered and directed to pay complainant, Emmanuel
Filoteo, separation pay at the rate of one (1) month
salary for every year of service or in the equivalent
of four (4) months separation pay and backwages
effective August 23, 1994 up to the promulgation of
this decision, inclusive of fringe benefits, if any.
Further, respondent company is ordered to pay
complainant moral and exemplary damages in the
sum of P10,000.00 and P5,000.00, respectively, as
well as attorney's fees equivalent to ten (10%)
percent of the total monetary award after
computation thereof at the execution stage.
SO ORDERED.
Subsequently, petitioners filed a motion for reconsideration
but were denied by the NLRC for lack of merit. Hence, this
petition before the SC.
Issues:
1) W/N public respondent (NLRC) erred when it ruled that
private respondent was illegally dismissed.
2) W/N public respondent erred when it awarded private
respondent (Filoteo) separation pay, backwages,
damages and attorney's fees without factual and legal
basis.
Ruling:
1) NO. The NLRC did not err when it ruled that private
respondent was illegally dismissed.
Whether private respondent was illegally dismissed or not is
governed by Article 282 of the Labor Code.
To constitute a valid dismissal from employment, two
requisites must concur:
a. the dismissal must be for any of the causes provided
for in Article 282 of the Labor Code; and
b. the employee must be afforded an opportunity to be
heard and defend himself.
This means that an employer can terminate the services of an
employee for just and valid causes, which must be supported
by clear and convincing evidence. It also means that,
procedurally, the employee must be given notice, with
adequate opportunity to be heard, before he is notified of his
actual dismissal for cause.
In the present case, the NLRC found that the two-fold
requirements for a valid dismissal were not satisfied by the
petitioners.First,petitioner's charge of serious misconduct of
falsification or deliberate misrepresentation was not
supported by the evidence on the record contrary to Art. 277
of the Labor Code which provides that the burden of
proving that the termination was for a valid or authorized
cause shall rest on the employer Second, the private
respondent was not afforded an opportunity to be heard. As
found by the NLRC:
Admittedly, complainant was suspended
indefinitely on August 8, 1994 and subsequently
dismissed on August 23, 1994 without any formal
investigation to enable complainant to defend
himself. Such dismissal, in our view, was too harsh a
penalty for an unintentional infraction, not to
mention that it was his first offense committed
without malice, and committed also by others who
were not equally penalized.
It is clear that the alleged false entry in private respondent's
DTR was actually the result of having logged his scheduled
time-out in advance on July 31, 1994. But it appears that
when he timed in, he had no idea that his work schedule
(night shift) would be cancelled. When it was confirmed at
10:00 p.m. that there was no "butchering" of tuna to be done,
those who reported for work were allowed to go home,
including private respondent. In fact, Filoteo even obtained
permission to leave from the Assistant Production Manager.

Considering the factory practice which management
tolerated, we are persuaded that Filoteo, in his rush to catch
the service vehicle, merely forgot to correct his initial time-out
entry. Nothing is shown to prove he deliberately falsified his
daily time record to deceive the company. The NLRC found
that even management's own evidence reflected that a
certain Felix Pelayo, a co-worker of private respondent, was
also allowed to go home that night and like private
respondent logged in advance 7:00 a.m. as his time-out. This
supports Filoteo's claim that it was common practice among
night-shift workers to log in their usual time-out in advance in
the daily time record.Moreover, this Court has previously ruled
that, where a violation of company policy or rules and
regulations was found to have been tolerated by
management, then the same could not serve as a basis for
termination.
All told we see NO reason to find that the NLRC gravely
abused its discretion when it ruled that private respondent
was illegally dismissed. Hence we concur in that ruling.
2) The NLRC did not err when it awarded Filoteo separation
pay, backwages and attorney's fees. HOWEVER, the SC
finds that the award of moral and exemplary damages by
the NLRC is not in order and must be DELETED.
Moral damages are recoverable only where the dismissal of
the employee was:
tainted by bad faith or fraud,
or where it constituted an act oppressive to labor,
and done in a manner contrary to morals, good
customs, or public policy.
Exemplary damages may be awarded only if the dismissal
was:
done in a wanton, oppressive, or malevolent
manner.
None of these circumstances exist in the present case.
WHEREFORE, the petition is DENIED. The assailed resolutions
of the National Labor Relations Commission dated March 14,
1996 and April 17, 1996 in NLRC CA No. M-002808-95 are
AFFIRMED with MODIFICATION. Petitioner Permex, through its
corporate officers, is ORDERED to pay jointly and solidarily the
private respondent separation pay at the rate of one (1)
month salary for every year of service as well as backwages
effective August 23, 1994, inclusive of fringe benefits if any,
with legal interest until fully paid, and attorney's fees
equivalent to ten (10%) percent of the total monetary award
computed at the execution stage hereof. THE AWARD OF
MORAL AND EXEMPLARY DAMAGES, HOWEVER, IS
DELETED.Costs against petitioners.
SO ORDERED.
16.
17. YASOA V. DE RAMOS
Facts:
Aurea Yasoa and her son, Saturnino, went to the house of
Jovencio de Ramos to ask for financial assistance in paying
their loans to PNB, otherwise their residential house and lot
would be foreclosed. Inasmuch as Aurea was his aunt,
Jovencio acceded to the request. They agreed that, upon
payment by Jovencio of the loan to PNB, half of Yasoas subject
property would be sold to him.
Jovencio paid Aureas bank loan. As agreed upon, Aurea
executed a deed of absolute sale in favor of Jovencio over half
of the lot consisting of 123 square meters. Thereafter, the lot
was surveyed and separate titles were issued by the Register
of Deeds of Sta. Cruz, Laguna in the names of Aurea and
Jovencio.
22 years later, Aurea filed an estafa complaint against
brothers Jovencio and Rodencio de Ramos on the ground that
she was deceived by them when she asked for their
assistance in 1971 concerning her mortgaged property. In her
complaint, Aurea alleged that Rodencio asked her to sign a
blank paper on the pretext that it would be used in the
redemption of the mortgaged property. Aurea signed the
blank paper without further inquiry because she trusted her
nephew, Rodencio. Aurea averred that she never sold any
portion of her property to Jovencio and never executed a deed
of sale.
Assistant Provincial Prosecutor Rodrigo B. Zayenis dismissed
the criminal complaint for estafa for lack of evidence. On
account of this dismissal, Jovencio and Rodencio filed a
complaint for damages on the ground of malicious prosecution
with the RTC. They alleged that the filing of the estafa
complaint against them was done with malice and it caused
irreparable injury to their reputation, as Aurea knew fully well
that she had already sold half of the property to Jovencio.
RTC - rendered a decision in favor of Jovencio and Rodencio.
A) P150,000.00 by way of moral damages;
B) P30,000.00 as exemplary damages;
C) P10,000.00 as attorneys fees incurred in defending
themselves from the criminal complaint for estafa;
D) P10,000.00 as attorneys fees and cost of litigation, and to
pay the costs.
There being no sufficient evidence established to prove the
claim for actual damages the same is hereby dismissed.
CA dismissed petition for certiorari under Rule 65. (wrong
remedy)
Issue:
Whether the filing of the criminal complaint for estafa by
petitioners against respondents constituted malicious
prosecution.
Ruling:
Yes.Malicious prosecution has been defined as an action for
damages brought by one against whom a criminal
prosecution, civil suit, or other legal proceeding has been
instituted maliciously and without probable cause, after the
termination of such prosecution, suit, or other proceeding in
favor of the defendant therein. To constitute malicious
prosecution, there must be proof that the prosecution was
prompted by a sinister design to vex or humiliate a person,
and that it was initiated deliberately by the defendant
knowing that his charges were false and groundless. The mere
act of submitting a case to the authorities for prosecution
does not make one liable for malicious prosecution.
In this case, there is reason to believe that a malicious intent
was behind the filing of the complaint for estafa against
respondents. The records show that the sale of the property
was evidenced by a deed of sale duly notarized and registered
with the local Register of Deeds. After the execution of the
deed of sale, the property was surveyed and divided into two
portions. Separate titles were then issued in the names of
Aurea Yasoa and Jovencio de Ramos. Since 1973, Jovencio had
been paying the realty taxes of the portion registered in his
name. In 1974, Aurea even requested Jovencio to use his
portion as bond for the temporary release of her son who was
charged with malicious mischief. Also, when Aurea borrowed
money from the Rural Bank of Lumban in 1973 and the PNB in
1979, only her portion covered by was mortgaged.
If petitioners had honestly believed that they still owned the
entire property, it would not have taken them 22 years to
question Jovencios ownership of half of the property. The only
conclusion that can be drawn from the circumstances is that
Aurea knew all along that she was no longer the owner of
Jovencios portion after having sold it to him way back in 1971.
Malicious prosecution, both in criminal and civil cases,
requires the elements of (1) malice and (2) absence of
probable cause.These two elements are present in the present
controversy. Petitioners were completely aware that Jovencio
was the rightful owner of the other lot, clearly signifying that
they were impelled by malice and avarice in bringing the
unfounded action. That there was no probable cause at all for
the filing of the estafa case against respondents led to the
dismissal of the charges filed by petitioners with the Provincial
Prosecutors Office in Siniloan, Laguna.
18. EQUITABLE BANKING CORPORATION v. JOSE T.
CALDERON, Dec. 14, 2004
Note: This is a case of damnum absque injuria
Facts:
Calderon was issued a Visa card by petitioner which
can be used for both peso and dollar transactions here and
outside the Philippines. The credit limit for the peso
transaction is P20 000 while a minimum deposit of $3 000 is
required to be maintained for dollar transactions. The
balance of the dollar account shall serve as the credit limit.
Calderon together with some reputable business
friends and associates, went to Hongkong for business and
pleasure trips. While in that country, Calderon, accompanied
by his friend (Ed De Leon),went to Gucci Department Store at
the basement of the Peninsula Hotel andpurchased several
Gucci items (t-shirts, jackets, a pair of shoes, etc.)
amounting HK$4,030.00 or equivalent to US$523.00.
Calderonpresented his Visa card to effect payment thereof on
credit. However, the saleslady in the presence of his friend
and other shoppers of different nationalities, informed him
that his Visa card was blacklisted. Calderon sought the
reconfirmation of the status of his Visa card from the
saleslady, but the latter simply did not honor it and even
threatened to cut it into pieces with the use of a pair of
scissors. Deeply embarrassed and humiliated, and in order to
avoid further indignities, Calderon paid cash for the Gucci
goods and items that he bought.
Upon his return to the Philippines, and claiming that
he suffered much torment and embarrassment on account of
EBC's wrongful act of blacklisting/suspending his VISA credit
card while at the Gucci store in Hongkong, Calderon filed with
the Regional Trial Court at Makati City a complaint for
damages against EBC.
EBC denied any liability to Calderon, alleging that
the latter's credit card privileges for dollar transactions were
earlier placed under suspension on account of Calderon's prior
use of the same card in excess of his credit limit, adding
that Calderon failed to settle said prior credit purchase on due
date, thereby causing his obligation to become past due.
Corollarily, EBC asserts that Calderon also failed to maintain
the required minimum deposit of $3,000.00.
The trial court, concluding that the defendant
bank was negligent if not in bad faith, in suspending, or
blacklisting plaintiffs credit card without notice or basis,
rendered judgment in favor of Calderon, awarding the latter
with actual, moral, exemplary damages as well as
attorneys fees and costs of suit.
CA affirmed such decision but only insofar as the
awards of moral damages, the amount of which was reduced
(from P200 000 to 100 000), and the costs of suits are
concerned.
Issue:
Whether or not Calderon is entitled to moral
damages despite CAs finding that EBC did not act with malice
or in bad faith.
Ruling:
In law, moral damages include physical suffering, mental
anguish, fright, serious anxiety, besmirched reputation,
wounded feelings, moral shock, social humiliation and similar
injury. However, to be entitled to the award thereof, it is not
enough that one merely suffered sleepless nights, mental
anguish or serious anxiety as a result of the actuations of the
other party. In Philippine Telegraph & Telephone Corporation v
CA, we have had the occasion to reiterate the conditions to be
met in order that moral damages may be recovered,
An award of moral damages would require, firstly,
evidence of besmirched reputation, or physical,
mental or psychological suffering sustained by the
claimant; secondly, a culpable act or omission
factually established; thirdly, proof that the wrongful
act or omission of the defendant is the proximate
cause of the damages sustained by the claimant; and
fourthly, that the case is predicated on any of the
instances expressed or envisioned by Articles 2219
and 2220 of the Civil Code.
Particularly, in culpa contractual or breach of contract,
as here, moral damages are recoverable only if the
defendant has acted fraudulently or in bad faith, or is
found guilty of gross negligence amounting to bad faith, or in
wanton disregard of his contractual obligations. Verily, the
breach must be wanton, reckless, malicious or in bad faith,
oppressive or abusive.
Here, the CA ruled, and rightly so, that no malice or bad faith
attended petitioner's dishonor of respondent's credit card. For,
as found no less by the same court, petitioner was justified in
doing so under the provisions of its Credit Card Agreement
with respondent, paragraph 3of which states:
. . . the CARDHOLDER agrees not to exceed
his/her approved credit limit, otherwise, all
charges incurred including charges incurred through
the use of the extension CARD/S, if any in excess of
credit limit shall become due and demandable and
the credit privileges shall be automatically
suspended without notice to the CARDHOLDER in
accordance with Section 11 hereof.
It may be so that respondent, a day before he left for
Hongkong, made a deposit of US$14,000.00 to his dollar
account with petitioner. The sad reality, however, is that he
never verified the status of his card before departing for
Hongkong, much less requested petitioner to reinstate the
same. As issuer of the card, petitioner has the option to
decide whether to reinstate or altogether terminate a credit
card previously suspended on considerations which the
petitioner deemed proper. That option is expressly embodied
in paragraph 12 of the same Credit Card Agreement.
Unquestionably, respondent suffered damages as a result of
the dishonor of his card. There is, however, a material
distinction between damages and injury.
Injury is the illegal invasion of a legal right; damage
is the loss, hurt or harm which results from the injury;
and damages are the recompense or compensation
awarded for the damage suffered. Thus, there can be
damage without injury in those instances which the
loss or harm was not the result of a violation of a
legal duty. In such cases the consequences must be
borne by the injured person alone, the law affords no
 remedy for damages resulting from an act which
does not amount to a legal injury or wrong. These
situations are often called damnum absque injuria.
In the situation in which respondent finds himself, his is a case
of damnum absque injuria.
On contracts of adhesion(included for recitation purposes
only)
We do not take issue with the appellate court in its
observation that the Credit Card Agreement herein involved is
a contract of adhesion, with the stipulations therein contained
unilaterally prepared and imposed by the petitioner to
prospective credit card holders on a take-it-or-leave-it basis.
We have equally ruled that such a contract is as binding as
ordinary contracts, the reason being that the party who
adheres to the contract is free to reject it entirely. Moreover,
the provision on automatic suspension without notice
embodied in the same Credit Card Agreement is couched in
clear and unambiguous term, not to say that the agreement
itself was entered into by respondent who, by his own
account, is a reputable businessman engaged in business
activities here and abroad.
On a final note, we emphasize that moral damages are in
the category of an award designed to compensate the
claim for actual injury suffered and not to impose a
penalty on the wrongdoer.
WHEREFORE, the instant petition is hereby GRANTED and the
decision under review REVERSED and SET ASIDE.
19.
20.
21. MAMBULAO LUMBER CO. V. PHILIPPINE NATIONAL
BANK
Facts:
On May 5, 1956, plaintiff Mambulao Lumber Co. applied for an
industrial loan of P155, 000 with defendant PNB with
collaterals. Only a loan of P100, 000 was approved. Various
amounts were released on different dates wherein plaintiff
Mambulao executed a promissory note wherein it promised to
pay to PNB the said sum in yearly instalments.
Plaintiff failed to pay the amortizations on the amounts
released to and received by it. Repeated demands were made
upon the plaintiff to pay its obligation but it failed or otherwise
refused to do so. Upon inspection and verification made by
employees of the PNB, it was found that the plaintiff had
already stopped operation about the end of 1957 or early part
of 1958.
The unpaid obligation of the plaintiff as of September 22,
1961, amounted to P57,646.59, excludingattorney's fees. A
foreclosure sale of the parcel of land, together with the
buildings and improvementsthereon was, held on November
21, 1961, and the said property was sold to the PNB for the
sum of P56,908.00, subject to the right of the plaintiff to
redeem the same within a period of one year.The plaintiff sent
a letter reiterating its request that the foreclosure sale of the
mortgaged chattels bediscontinued on the grounds that the
mortgaged indebtedness had been fully paid and that it could
not belegally effected at a place other than the City of Manila.
Trial court
Mambulao Lumber Company was ordered to pay to the
defendant PNB the sum of P3,582.52 with interest thereon at
the rate of 6% per annum.
Plaintiffs contention on appeal
The plaintiff argued that its totalindebtedness to the PNB as of
November 21, 1961, was only P56,485.87 and not P58,213.51
as concludedby the court a quo; hence, the proceeds of the
foreclosure sale of its real property alone in the amount of
P56,908.00 on that date, added to the sum of P738.59 it
remitted to the PNB thereafter was more thansufficient to
liquidate its obligation, thereby rendering the subsequent
foreclosure sale of its chattelsunlawful;
That for the acts of the PNB in proceeding with the sale of the
chattels, in utter disregard of plaintiff'svigorous opposition
thereto, and in taking possession thereof after the sale thru
force, intimidation,coercion, and by detaining its "man-in-
charge" of said properties,the PNB is liable to plaintiff
fordamages and attorney's fees.
Issue:
WON appellants claim for moral damages is proper
Ruling:
Herein appellant's claim for moral damages, however, seems
to have no legal or factual basis. Obviously, an artificial
person like herein appellant corporation cannot experience
physical sufferings, mental anguish, fright, serious anxiety,
wounded feelings, moral shock or social humiliation which are
the basis of moral damages. A corporation may have a good
reputation which, if besmirched, may also be a ground for the
award of moral damages. The same cannot be considered
under the facts of this case, however, not only because it is
admitted that herein appellant had already ceased in its
business operation at the time of the foreclosure sale of the
chattels, but also for the reason that whatever adverse effect
the foreclosure sale of the chattels could have upon its
reputation or business standing would undoubtedly be the
same whether the sale was conducted at Jose Panganiban.
CamarinesNorte, or in Manila which is the place agreed upon
by the parties in the mortgage contract.
But for the wrongful acts of herein appellee bank and the
deputy sheriff of CamarinesNorte in proceeding with the sale
in utter disregard of the agreement to have the chattels sold
in Manila as provided for in the mortgage contract, to which
their attentions were timely called by herein appellant, and in
disposing of the chattels in gross for the miserable amount of
P4,200.00, herein appellant should be awarded exemplary
damages in the sum of P10,000.00. The circumstances of the
case also warrant the award of P3,000.00 as attorney's fees
for herein appellant.
Wherefore and considering all the foregoing, the decision
appealed from should be, as hereby, it is set aside. The
Philippine National Bank and the Deputy Sheriff of the
province of CamarinesNorte are ordered to pay, jointly and
severally, to Mambulao Lumber Company the total amount of
P56,000.73, broken as follows: P150.73 overpaid by the latter
to the PNB, P42,850.00 the value of the chattels at the time of
the sale with interest at the rate of 6% per annum from
December 21, 1961, until fully paid, P10,000.00 in exemplary
damages, and P3,000.00 as attorney's fees. Costs against
both appellees.
22. ABS-CBN BROADCASTING
CORPORATION, petitioner, vs. HONORABLE COURT OF
APPEALS, REPUBLIC BROADCASTING CORP., VIVA
PRODUCTIONS, INC., and VICENTE DEL
ROSARIO, respondents.
TOPIC (MORAL DAMAGES ON CORPORATION) - The award of
moral damages cannot be granted in favor of a corporation
because, being an artificial person and having existence only
in legal contemplation, it has no feelings, no emotions, no
senses. It cannot, therefore, experience physical suffering and
mental anguish which can be experienced only by one having
a nervous system.
Facts:
ABS-CBN and VIVA executed a Film Exhibition Agreement
whereby the latter gave the former an exclusive right to
exhibit 24 VIVA Films for TV telecast. Later, VIVA, through
respondent Vincent del Rosario, offered ABS-CBN a list of 3
film packages (36 titles) from which the latter may exercise its
right of first refusal under their agreement. ABS-CBN ticked off
10 titles therefrom. Thereafter, Del Rosario offered ABS-CBN
airing rights over a package of 104 movies for P60 million. Del
Rosario, and Eugenio Lopez of ABS-CBN, met at a restaurant
to discuss the package proposal. According to Lopez, however,
what they agreed upon was ABS-CBN's exclusive film rights to
14 films for P36 million. Del Rosario denied the same. He
insisted that the discussion was on VIVA's offer of 104 films for
P60 million, to which ABS-CBN later made a counter proposal
but rejected by VIVA's Board of Directors. Hence, VIVA later
granted RBS the exclusive right to air the 104 VIVA films,
including the 14 films supposedly granted to ABS-CBN.
ABS-CBN then filed a complaint for specific performance with
prayer for injunction. The RTC granted the prayer and required
ABS-CBN post a P35 million bond, But while ABS-CBN was
moving for reduction of the bond, RBS offered to put up a
counterbond and was allowed to post P30 million. Later, the
RTC rendered a decision in favor of RBS and VIVA, ordering
ABS-CBN to pay RBS the amount it paid for the print
advertisement and premium on the counterbond, moral
damages, exemplary damages and attorney's fee. ABS-CBN
appealed to the Court of Appeals. Viva and Del Rosario also
appealed seeking moral and exemplary damages and
additional attorney's fees. The Court of Appeals affirmed the
RTC decision and sustained the monetary awards, VIVA's and
Del Rosario's appeals were denied.
Issue: Whether RBS is entitled to damages and attorney's
fees (IMPORTANT KAY MORAL DAMAGES)
Ruling: RBS is not entitled to any damages
ACTUAL DAMAGES
One is entitled to compensation for actual damages only for
such pecuniary loss suffered by him as he has duly proved.
The indemnification shall comprehend not only the value of
the loss suffered, but also that of the profits that the obligee
failed to obtain. In contracts and quasi-contracts the damages
which may be awarded are dependent on whether the obligor
acted with good faith or otherwise. In case of good faith, the
damages recoverable are those which are the natural and
probable consequences of the breach of the obligation and
which the parties have foreseen or could have reasonably
foreseen at the time of the constitution of the obligation. If the
obligor acted with fraud, bad faith, malice, or wanton attitude,
he shall be responsible for all damages which may be
reasonably attributed to the non-performance of the
obligation. Needless to state the award of actual damages
cannot be comprehended under the above law on actual
damages
ATTORNEYS FEES
The general rule is that attorney's fees cannot be recovered
as part of damages because of the policy that no premium
should be placed on the right to litigate. They are not to be
awarded every time a party wins a suit. The power of the
court to award attorney's fees under Article 2208 demands
factual, legal, and equitable justification. Even when a
claimant is compelled to litigate with third persons or to incur
expenses to protect his rights, still attorney's fees may not be
awarded where no sufficient showing of bad faith could be
reflected in a party's persistence in a case.
MORAL DAMAGES
Moral damages are in the category of an award designed to
compensate the claimant for actual injury suffered and not to
impose a penalty on the wrongdoer. The award is not meant
to enrich the complainant at the expense of the defendant,
but to enable the injured party to obtain means, diversion, or
amusements that will serve to obviate the moral suffering he
has undergone
The award of moral damages cannot be granted in favor of a
corporation because, being an artificial person and having
existence only in legal contemplation, it has no feelings, no
emotions, no senses. It cannot, therefore, experience physical
suffering and mental anguish which can be experienced only
by one having a nervous system
The statement in People v. Manero and Mambulao Lumber Co.
v. PNB that a corporation may recover moral damages if it
"has a good reputation that is debased, resulting in social
humiliation" is an obiter dictum. On this score alone the award
for damages must be set aside, since RBS is a corporation.
EXEMPLARY DAMAGES
These are imposed by way of example or correction for the
public good, in addition to moral, temperate, liquidated, or
compensatory damages.It may be reiterated that the claim of
RBS against ABS-CBN is not based on contract, quasi-contract,
delict, or quasi-delict. Hence, the claims for moral and
exemplary damages can only be based on Articles 19, 20, and
21 of the Civil Code. Malice or bad faith is at the core of
Articles 19, 20, and 21. Malice or bad faith implies a conscious
and intentional design to do a wrongful act for a dishonest
purpose or moral obliquity. Such must be substantiated by
evidence. There is no adequate proof that ABS-CBN was
inspired by malice or bad faith.
23.
24. FILIPINAS BROADCASTING NETWORK, INC.vs. AGO
MEDICAL AND EDUCATIONAL CENTER-BICOL CHRISTIAN
COLLEGE OF MEDICINE, (AMEC-BCCM) and ANGELITA F.
AGO
Facts:
Rima and Alegre are hosts of a radio programExpos aired
every morning over DZRC-AM, which is owned by Filipinas
Broadcasting Network, Inc. Expos is heard over Legazpi
City, the Albay municipalities and other Bicol areas. Sometime
in December of 1989, Rima and Alegre exposed various
alleged complaints from students, teachers and parents
against Ago Medical and Educational Center-Bicol Christian
College of Medicine (AMEC) and its administrators. Some of
the uttered statements include: greed for money on the part
of AMEC's administrators, AMEC is a dumping ground,
garbage of moral and physical misfits, and AMEC students
who graduate will be liabilities rather than assets of the
society, among others.
Claiming that the broadcasts were defamatory, AMEC and
Angelita Ago, as Dean of AMEC's College of Medicine, filed a
complaint for damagesagainst FBNI, Rima and Alegre.
TCfound FBNI and Alegre liable for libel except Rima since
Rima's statement are considered within the bounds of
freedom of speech, expression, and of the press. CA made
Rima solidarily liable with FBNI and Alegre.
Issue:
Whether the broadcasts are libelous to hold Rima and Alegra
liable to AMEC for damages
Whether FBNI is solidarily liable with Rima and Alegre for
payment of moral damages, attorney's fees and costs of suit.
Ruling:
The broadcasts are libelous
Every defamatory imputation is presumed malicious.Rima and
Alegre failed to show adequately their good intention and
justifiable motive in airing the supposed gripes of the
students. As hosts of a documentary or public affairs program,
Rima and Alegre should have presented the public issues
free from inaccurate and misleading information.Rima and
Alegre hardly made a thorough investigation of the students
alleged gripes.
Rima and Alegre cannot invoke the privilege of neutral
reportage1 because unfounded comments abound in the
broadcasts. Moreover, there is no existing controversy
involving AMEC when the broadcasts were made.
In Borjal, the Court elucidated on the DOCTRINE OF FAIR
COMMENT. In broad strokes, the doctrine means that if the
comment is an expression of opinion, based on established
facts, then it is immaterial that the opinion happens to be
mistaken, as long as it might reasonably be inferred from the
facts. Here, the questioned broadcasts are not based on
established facts.
Entitled to moral damages
A juridical person is generally not entitled to moral damages
because, unlike a natural person, it cannot experience
physical suffering or such sentiments as wounded feelings,
serious anxiety, mental anguish or moral shock.Nevertheless,
AMECs claim for moral damages falls under item 7 of Article
2219of the Civil Code. This provision expressly authorizes the
recovery of moral damages in cases of libel, slander or any
other form of defamation. The provision does not qualify
whether the plaintiff is a natural or juridical person. Therefore,
a juridical person such as a corporation can validly complain
for libel or any other form of defamation and claim for moral
damages.
Where the broadcast is libelous per se, the law implies
damages. In such a case, evidence of an honest mistake or
the want of character or reputation of the party libeled goes
only in mitigation of damages.Neither in such a case is the
plaintiff required to introduce evidence of actual damages as
a condition precedent to the recovery of some damages. In
this case, the broadcasts are libelous per se. Thus, AMEC is
entitled to moral damages.
No Attys fees
AMEC did not adduce evidence to warrant the award of
attorneys fees. It is an accepted doctrine that the award
thereof as an item of damages is the exception rather than
the rule, and counsels fees are not to be awarded every time
a party wins a suit. The power of the court to award attorney's
fees under Article 2208 of the Civil Code demands factual,
legal and equitable justification, without which the award is a
conclusion without a premise, its basis being improperly left to
speculation and conjecture.
FBNI is solidarily liable with Rima and Alegre
As operator of DZRC-AM and employer of Rima and Alegre,
FBNI is solidarily liable to pay for damages arising from the
libelous broadcasts. An employer and employee are solidarily
liable for a defamatory statement by the employee within the
course and scope of his or her employment, at least when the
employer authorizes or ratifies the defamation.
1Some courts in the United States apply thePrivilege of Neutral
Reportage in libel cases involving matters of public interest or public
figures. Under this privilege, a republisher who accurately and
disinterestedly reports certain defamatory statements made against
public figures is shielded from liability, regardless of the republisher's
subjective awareness of the truth or falsity of the accusation. The
privilege of neutral reportage applies where the defamed person is a
public figure who is involved in an existing controversy, and a party to
that controversy makes the defamatory statement
In this case, Rima and Alegre were clearly performing their
official duties as hosts of FBNIs radio program when they
aired the broadcasts. FBNI neither alleged nor proved that
Rima and Alegre went beyond the scope of their work at that
time. There was likewise no showing that FBNI did not
authorize and ratify the defamatory broadcasts.
Moreover, there is insufficient evidence on record that FBNI
exercised due diligence in the selection and supervision of its
employees. FBNI's alleged constant reminder to its
broadcasters to observe truth, fairness and objectivity and to
refrain from using libelous and indecent language is not
enough to prove due diligence. Adequate training of the
broadcasters on the industrys code of conduct, sufficient
information on libel laws, and continuous evaluation of the
broadcasters performance are but a few of the many ways of
showing diligence in the supervision of broadcasters.
Furthermore, FBNI admits that Rima and Alegre had
deficiencies in their KBP accreditation, which is one of FBNIs
requirements before it hires a broadcaster. Significantly,
membership in the KBP, while voluntary, indicates the
broadcasters strong commitment to observe the broadcast
industry's rules and regulations. Clearly, these circumstances
show FBNIs lack of diligence in selecting and supervising
Rima and Alegre.
25.
26. FLT PRIME INSURANCE CORPORATION v. CHEVRON
PHILIPPINES, INC.
[G.R. No. 177839, January 18, 2012]
Facts:
Respondent Chevron Philippines, Inc. sued petitioner FLT
Prime Insurance Corporation for the payment of unpaid oil and
petroleum purchases made by its distributor Fumitechniks
Corporation (Fumitechniks).
Fumitechniks, had applied for and was issued Surety Bond by
petitioner for the amount of P15,700,000.00. As stated in the
attached rider, the bond was in compliance with the
requirement for the grant of a credit line with the respondent
to guarantee payment/remittance of the cost of fuel products
withdrawn within the stipulated time in accordance with
the terms and conditions of the agreement.
Fumitechniks defaulted on its obligation. The check dated
December 14, 2001 it issued to respondent in the amount
of P11,461,773.10, when presented for payment, was
dishonored for reason of Account Closed. In a letter,
respondent notified petitioner of Fumitechniks unpaid
purchases in the total amount ofP15,084,030.30.
Simultaneously, a letterwas sent to Fumitechniks demanding
that the latter submit to petitioner, among others: copy of
the agreement secured by the Bond, together with copies of
documents such as delivery receipts.
Fumitechniks through its counsel wrote petitioners counsel
informing that it cannot submit the requested agreement
since no such agreement was executed between Fumitechniks
and respondent.
Consequently, petitioner advised respondent of the non-
existence of the principal agreement as confirmed by
Fumitechniks. Petitioner explained that being an accessory
contract, the bond cannot exist without a principal agreement
as it is essential that the copy of the basic contract be
submitted to the proposed surety for the appreciation of the
extent of the obligation to be covered by the bond applied for.
After trial, the RTC rendered judgment dismissing the
complaint as well as petitioners counterclaim. Said court
found that the terms and conditions of the oral credit line
agreement between respondent and Fumitechniks have not
been relayed to petitioner and neither were the same
conveyed even during trial. In holding that petitioner cannot
be held liable under the bond it issued to Fumitechniks, the
RTC noted the practice of petitioner to attach a copy of the
written agreement (principal contract) whenever it issues a
surety bond, or to be submitted later if not yet in the
possession of the assured, and in case of failure to submit the
said written agreement, the surety contract will not be binding
despite payment of the premium.
On appeal, the CA ruled in favor of respondent. Hence, the
present petition.
Issue:
(1) Whether a surety is liable to the creditor in the
absence of a written contract with the principal.
(2) Whether petitioner is entitled to moral damages.
Held:
(1) A surety contract is merely a collateral one, its basis
is the principal contract or undertaking which it
secures. Necessarily, the stipulations in such
principal agreement must at least be communicated
or made known to the surety particularly in this case
where the bond expressly guarantees the payment of
respondents fuel products withdrawn by
Fumitechniks in accordance with the terms and
conditions of their agreement. The bond specifically
makes reference to a written agreement. It is basic
that if the terms of a contract are clear and leave no
doubt upon the intention of the contracting parties,
the literal meaning of its stipulations shall control.
Obligations arising from contracts have the force of
law between the parties and should be complied with
in good faith.Respondent is charged with notice of
the specified form of the agreement or at least the
disclosure of basic terms and conditions of its
distributorship and credit agreements with its client
Fumitechniks after its acceptance of the bond
delivered by the latter. However, it never made any
effort to relay those terms and conditions of its
contract with Fumitechniks upon the commencement
of its transactions with said client, which obligations
are covered by the surety bond issued by
petitioner. Contrary to respondents assertion, there
is no indication in the records that petitioner had
actual knowledge of its alleged business practice of
not having writtencontracts with distributors; and
even assuming petitioner was aware of such
practice, the bond issued to Fumitechniks and
accepted by respondent specifically referred to a
written agreement.
(2) Finally, we hold that the trial court correctly
dismissed petitioners counterclaim for moral
damages and attorneys fees. The filing alone of a
civil action should not be a ground for an
award of moral damages in the same way that
a clearly unfounded civil action is not among
the grounds for moral damages.Besides, a
juridical person is generally not entitled to
moral damages because, unlike a natural
person, it cannot experience physical suffering
or such sentiments as wounded feelings,
serious anxiety, mental anguish or moral
shock. Although in some recent cases we have held
that the Court may allow the grant of moral damages
to corporations, it is not automatically granted;
there must still be proof of the existence of the
factual basis of the damage and its causal
relation to the defendants acts. This is so
because moral damages, though incapable of
pecuniary estimation, are in the category of an award
designed to compensate the claimant for actual
injury suffered and not to impose a penalty on the
wrongdoer. There is no evidence presented to
establish the factual basis of petitioners claim for
moral damages.
NOMINAL DAMAGES
1. GO VS. INTERMEDIATE APPELLATE COURT
Facts:
Floverto Jazmin, a visitor residing at Maravilla St. Mangatarem,
Pangasinan, is an American citizen and a retiree of the United
States Federal Government. Being a pensionado of the US
Government, he received annuity checks through Mangatarem
Post Office and used to encash it at the Prudential Bank
Branch at Clark Air Base, Pampanga. However, there was a
time that he was not able to receive the checks on time, thus
prompted him to write a complaint due to the delay.
Thereafter he received a substitute check and encashed it at
the Prudential Bank. Meanwhile, Agustin Go in his capacity as
the manager of the Solidbank (now Consolidated Bank and
Trust Corporation), allowed a person, in the name of Floverto
Jasmin, to open a savings account thereby depositing two US
Treasury Checks. Deposited checks were sent to the drawee
bank (First National City Bank). Having no reply from the
drawee bank, the Solidbank allowed the depositor to withdraw
the amount indicated in the checks.
A year later, the two dollar checks were returned to Solidbank
with the notation that there was an alteration. With that,
Jazmin received radio messages requiring him to appear
before the Philippine Constabulary regarding the complaint
filed by Go against him for estafa. It was then found out that
the depositor who withdrew the amount from Solidbank was
an impostor. Thus, Jazmin filed a case against Go at the CFI
Pangasinan for moral and exemplary damages. The lower
court ruled in favor of the plaintiff. Defendants appealed to
the IAC. Like the lower court, IAC ruled in favor of the plaintiff
but awarded nominal damages instead of moral and
exemplary damages. Thus, the case was elevated to the
Supreme Court.
Issue:
Whether or not Go and the Solidbank are liable for nominal
damages.
Ruling:
Yes, Go and the Solidbank are solidarily liable for nominal
damages.
Petitioner Go's negligence in fact led to the swindling of his
employer. Had Go exercised the diligence expected of him as
a bank officer and employee, he would have noticed the
glaring disparity between the payee's name and address on
the treasury checks involved and the name and address of the
depositor appearing in the bank's records. While at that stage
of events private respondent was still out of the picture, it
definitely was the start of his consequent involvement as his
name was illegally used in the illicit transaction. Again,
knowing that its viability depended on the confidence reposed
upon it by the public, the bank through its employees should
have exercised the caution expected of it.
Under the law, quasi-delict cases are one of the sources of
obligation. In this case, the defendant shall be liable for all
damages which are the natural and probable consequences
of the act or omission complained of. It is not necessary that
such damages have been foreseen or could have reasonably
been foreseen by the defendant. Go has the obligation to pay
nominal damages because of the Jazmins right being
violated and invaded in the case of estafa instituted at the
Philippine Constabulary. Nominal damages are awarded
instead of moral and exemplary damages.
2. EMERENCIANA M. VDA. DE MEDINA, ET
AL., Plaintiffs-Appellees, vs. GUILLERMO
CRESENCIA, ET AL., Defendants. GUILLERMO
CRESENCIA, Appellant.
Facts:
A passenger jeepney driven by BrigidoAvorque, smashed into
a Meralco post on Azcarraga Street, resulting in the death of
Vicente Medina, one of its passengers. A criminal case for
homicide through reckless imprudence was filed against
Avorque to which he pleaded guilty. The heirs of the deceased,
however, reserved their right to file a separate action for
damages
Subsequently they brought suit against the driver
BrigidoAvorque and Appellant Guillermo Cresencia, the
registered owner and operator of the jeepney in
question. Defendant BrigidoAvorque did not file any
answer;while Defendant Cresencia answered, disclaiming
liability on the ground that he had sold the jeepney in
question to one Maria A. Cudiamat;that the jeepney had been
repeatedly sold by one buyer after another, until the vehicle
was purchased by Rosario Avorque, the absolute owner
thereof at the time of the accident.
In view of Cresencias answer, Plaintiffs filed leave, and was
allowed, to amend their complaint making Rosario Avorque a
co-Defendant; and the latter, by way of answer, admitted
having purchased the aforesaid jeepney,but alleged in
defense that she was never the public utility operator thereof.
The lower court, by Judge Jose Zulueta, held that as far as the
public is concerned, Defendant Cresencia, in the eyes of the
law, continued to be the legal owner of the jeepney in
question; and rendered judgment against him, jointly and
severally with the driver BrigidoAvorque, for P6,000
compensatory damages, P30,000 moral damages, P10,000
exemplary damages, P10,000 nominal damages, P5,000
attorneys fees, and costs, while Defendant Rosario Avorque
was absolved from liability. From this
judgment, Defendant Cresencia appealed.
Issue: WON Cresencia should be held liable for the damages.
Ruling: YES! She is liable being the registered owner of the
vehicle at fault.
There must be approval of the Public Service Commission in
order that a franchise, or any privilege pertaining thereto,
may be sold or leased without infringing the certificate issued
to the grantee;and that if property covered by the franchise is
transferred or leased without this requisite approval, the
transfer is not binding against the public or the Service
Commission; and in contemplation of law, the grantee of
record continues to be responsible under the franchise in
relation to the Commission and to the public. There we gave
the reason for this rule to be as follows:
cralaw Since a franchise is personal in nature any transfer or
lease thereof should be notified to the Public Service
Commission so that the latter may take proper safeguards to
protect the interest of the public. In fact, the law requires that,
before the approval is granted, there should be a public
hearing, with notice to all interested parties, in order that the
Commission may determine if there are good and reasonable
grounds justifying the transfer or lease of the property
covered by the franchise, or if the sale or lease is detrimental
to public interest cralaw .
Appellant also argues that the basis of Plaintiffs action being
the employers subsidiary liability under the Revised Penal
Code for damages arising from his employees criminal acts, it
is Defendant Rosario Avorque who should answer subsidiarily
for the damages sustained by Plaintiffs, since she admits that
she, and not Appellant, is the employer of the negligent driver
BrigidoAvorque. The argument is untenable,
Cresencai is primary liable because the Plaintiffs action for
damages is independent of the criminal case filed against
BrigidoAvorque, and based, not on the employers subsidiary
liability under the Revised Penal Code, but on a breach of the
carriers contractual obligation to carry his passengers safely
to their destination (culpa contractual). And it is also for this
reason that there is no need of first proving the insolvency of
the driver BrigidoAvorque before damages can be recovered
from the carrier, for in culpa contractual, the liability of the
carrier is not merely subsidiary or secondary, but direct and
immediate.
The propriety of the damages awarded has not been
questioned, Nevertheless, it is patent upon the record that the
award of P10,000 by way of nominal damages is untenable as
a matter of law, since nominal damages cannot co-exist
with compensatory damages. The purpose of nominal
damages is to vindicate or recognize a right that has been
violated, in order to preclude further contest thereon;and not
for the purpose of indemnifying the Plaintiff for any loss
suffered by him. Since the court below has already awarded
compensatory and exemplary damages that are in themselves
a judicial recognition that Plaintiffs right was violated, the
award of nominal damages is unnecessary and improper.
Anyway, ten thousand pesos cannot, in common sense, be
deemed nominal.
3.
TEMPERATE OR MODERATE
1. SULPICIO LINES VS. SESANTE
Principle: Moral damages are meant to enable the injured
party to obtain the means, diversions or amusements in order
to alleviate the moral suffering. Exemplary damages are
designed to permit the courts to reshape behavior that is
socially deleterious in its consequence by creating negative
incentives or deterrents against such behavior.
Facts:
A passenger vessel owned and operated by Sulpicio sank. 150
Passengeres were lost. Sesante, as one of the passengers,
survived. He sued Sulpicio for breach of contract and
damages. During the time of the sinkage, he sufffered
tremendous hunger, thirst, pain, fear, shock, serious anxiety
and mental anguish, and that he sustained injuries, lost
money, jewelry, and other documents. Also, as basis for his
claim for damages, he aleged that Sulpicio was in bad faith in
allowing the vessel to sail despite the storm signal. He asked
for actual and moral damages. Petitioner, in its defense
insisted that its vessel was seaworthy and was cleared to sail
by the Port of Manila by the proper authorities, that the
sinking was due to force majeure, also that its crew was not
negligent as they made preparations to abandon the vessel
because they had launched the life rafts and had provided the
passengers assistance in that regard.
Issue:
 1. Is the complaint for breach of contract and damages
a personal action does not survive the death of the
plaintiff?
2. Is the petitioner liable for damages under Art. 1759
of the Civil Code?
3. Is there sufficient basis for awarding moral &
temperate damages?
Ruling:
1. Yes. It does survive the death of the plaintiff
Petitioner argues that breach of contract of carraige was
purely personal to Sesante and cannot be transferred to his
heirs upon the formers death. This is not correct. Sec 16 Rule
3 of the Rules of Court:
Section 16. Death of party; duty of counsel.
Whenever a party to a pending action dies, and
the claim is not thereby extinguished, it shall be
the duty of his counsel to inform the court within
thirty (30) days after such death of the fact thereof,
and to give the name and address of his legal
representative or representatives. Failure of counsel
to comply with his duty shall be a ground for
disciplinary action.
The heirs of the deceased may be allowed to be
substituted for the deceased, without requiring
the appointment of an executor or administrator and
the court may appoint a guardian ad litem for the
minor heirs.
2. Yes. Petitioner is liable for breach of contract of
carriage.
3.
Petitioner argues that an action for breach of COC under Art.
1759 of the Civil Code should be read in conjunction w/ Art.
2201 of the same code; that although Art. 1759 only provides
for a presumption of negligence, it does not envision
automatic liability; and that it was not guilty of bad faith
considering that the sinking of its vessel had been due to a
fortuituous event, an exempting circumstance under Art. 1174
of the Civil Code.
This is again incorrect. Article 1759 of the Civil Code does not
establish a presumption of negligence because it explicitly
makes the common carrier liable in the event of death or
injury to passengers due to the negligence or fault of the
common carrier's employees. It reads:
Article 1759. Common carriers are liable for the
death or injuries to passengers through the
negligence or willful acts of the former's
employees, although such employees may have
acted beyond the scope of their authority or in
violation of the orders of the common carriers.
This liability of the common carriers does not cease upon
proof that they exercised all the diligence of a good father of a
family in the selection and supervision of their employees.
The trial court is not required to make an express finding of
the common carriers fault or negligence. Even the mere proof
of injury relieves the passengers from establishing the
fault/negligence of the carrier or its employees. The petitioner
was directly liable to Sesante and his heirs. For a common
carrier to be absolved from liability in case of force majeure, it
is not enough that the accident was caused by a fortuitous
event. The common carrier must still prove that it did not
contribute to the occurrence of the incident due to its own or
its employees' negligence.
3. Award for Moral Damages is proper.
Moral damages can be recovered in an action upon breach of
contract only when:
1. Death of a passenger results; or
2. It is proven that the carrier was guilty of fraud/bad
faith, even if the death does not results.
However, moral damages may be awarded of the contractual
breach is found to be wanton and deliberately injurious, or if
the one responsible acted fraudulently or w/ malice or bad
faith. The court found that the petitioners officers and crew
was negligent in failing to ensure the safety of the
passengers.
While there is no hard-and-fast rule in determining what is a
fair and reasonable amount of moral damages, the discretion
to make the determination is lodged in the trial court with the
limitation that the amount should not be palpably and
scandalously excessive.
The CA enumerated the negligent acts committed by the
officers and crew. This was clearly established by the
investigation of the Board of Marine Inquiry where it was
found that:
1. The Chief Mate, when interviewed under oath, had
attested that he was not able to make stability
calculation of the ship vis--vis her cargo. He did not
even know the metacentric height (GM) of the ship
whether it be positive or negative.
2. As cargo officer of the ship, he failed to prepare a
detailed report of the ship's cargo stowage plan.
3. He likewise failed to conduct the soundings
(measurement) of the ballast tanks before the ship
departed from port. He readily presumed that the
ship was full of ballast since the ship was fully
ballasted when she left Cebu for Manila on 16
September 1998 and had never discharge[d] its
contents since that time.
4. Being the officer-in-charge for emergency situation
(sic) like this, he failed to execute and supervise the
actual abandonship (sic) procedure. There was no
announcement at the public address system of
abandonship (sic), no orderly distribution of life
jackets and no orderly launching of life rafts. The
witnesses have confirmed this finding on their sworn
statements.
5. There was miscalculation in judgment on the part of
the Captain when he erroneously navigated the ship
at her last crucial moment.
6. To aggravate his case, the Captain, having full
command and responsibility of the M/V Princess of
the Orient, had failed to ensure the proper execution
of the actual abandoning of the ship.
7. The deck and engine officers (Second Mate, Third
Mate, Chief Engineers, Second Engineer, Third
Engineer and Fourth Engineer), being in charge of
their respective abandonship (sic) post, failed to
supervise the crew and passengers in the proper
execution of abandonship (sic) procedure.
8. The Radio Officer (spark) failed to send the SOS
message in the internationally accepted
communication network (VHF Channel 16). Instead,
he used the Single Side Band (SSB) radio in informing
the company about the emergency situation.
The petitioner claims that temperate damages were
erroneously awarded because Sesante had not proved
pecuniary loss; and that the CA merely relied on his self-
serving testimony. Temperate damages may be recovered
when some pecuniary loss has been suffered but the amount
cannot, from the nature of the case, be proven with certainty
Indubitably, Sesante suffered some pecuniary loss from the
sinking of the vessel, but the value of the loss could not be
established with certainty. The CA, which can try facts and
appreciate evidence, pegged the value of the lost belongings
as itemized in the police report at P120,000.00. The valuation
approximated the costs of the lost belongings. In that context,
the valuation of P120,000.00 is correct, but to be regarded as
temperate damages
Should the petitioner be further held liable for
exemplary damages?
In contracts and quasi-contracts, the Court has the discretion
to award exemplary damages if the defendant acted in a
wanton, fraudulent, reckless, oppressive, or malevolent
manner.
First of all, exemplary damages did not have to be specifically
pleaded or proved, because the courts had the discretion to
award them for as long as the evidence so warranted.
And, secondly, exemplary damages are designed by our civil
law to "permit the courts to reshape behavior that is socially
deleterious in its consequence by creating negative incentives
or deterrents against such behavior
The BMI concluded that the captain had executed several
starboard maneuvers despite the critical situation of the
vessel, and that the maneuvers had greatly added to the
tilting of the vessel. It observed:
. . . In the open seas, with a fast speed of 14
knots, advance maneuvers such as this would
tend to bring the body of the ship in the
opposite side. In navigational terms, this
movement is described as the centripetal
force. This force is produced by the water
acting on the side of the ship away from the
center of the turn. The force is considered to
act atthe center of lateral resistance which, in
this case, is the centroid of the underwater
area of the ship's side away from the center of
the turn. In the case of the Princess, when the
Captain maneuvered her to starboard, her
body shifted its weight to port. Being already
inclined to an angle of 15 degrees, coupled
with the instantaneous movement of the ship,
the cargoes below deck could have completely
shifted its position and weight towards
portside. By this time, the ship being ravaged
simultaneously by ravaging waves and howling
winds on her starboard side, finally lost her
grip.
The actuations of the petitioner and its agents during the
incident attending the unfortunate sinking of the M/V Princess
of the Orient were far below the standard of care and
circumspection that the law on common carriers demanded.
Accordingly, we hereby fix the sum of P1,000,000.00 in order
to serve fully the objective of exemplarity among those
engaged in the business of transporting passengers and cargo
by sea. The amount would not be excessive, but proper.
2. MAXIMO PLENO, petitioner,
vs.
THE HONORABLE COURT OF APPEALS, PHILIPPINE
PAPER PRODUCTS, INC., and FLORANTE DE
LUNA respondents.
Facts:
Florante de Luna was driving a delivery truck owned by
Philippine Paper ProductsInc. at greater speed than what was
reasonable and proper along South Super Highway in Taguig
when he collided with the Volkswagen kombi van which was
being driven by Maximo Pleno along with a co-passenger from
new zealand. The crash caused Plenos van to swerve to the
right and crash into a parked cargo truckwoth chairs. As a
result, Plenowas hospitalized and his van was wrecked. Pleno
sued and was awarded actual, temperate, moral, exemplary
damages andattorneys fees by the trial court.
However, the CA reduced the amount of temperate and moral
damages given because they were too high.
Issue (other issues are evidentiary):
Whether or not the CA erred in reducing the amount of
temperate damages awarded?
Ruling:
The CA erred in reducing the award of temperate damages.
Temperate damages are included within the context of
compensatory damages. Inarriving at a reasonable level of
temperate damages to be awarded, trial courts are guidedby
our ruling that there are cases where from the nature of the
case, definite proof of pecuniary loss cannot be offered,
although the court is convinced that there has beensuch
loss.For instance, injury to one's commercial credit or to the
goodwill of a business firm isoften hard to show certainty in
terms of money. Should damages be denied for thatreason?
The judge should be empowered to calculate moderate
damages in such cases,rather than that the plaintiff should
suffer, without redress from the defendant's wrongful act. As
to the loss or impairment of earning capacity, there is no
doubt that Pleno is anentrepreneur and the founder of his own
corporation, the Mayon Ceramics Corporation.It appears also
that he is an industrious and resourceful person with several
projects inline and were it not for the incident, might have
pushed them through. His actual incomehowever has not
been sufficiently established so that this Court cannot award
actualdamages, but, an award of temperate or moderate
damages may still be made on loss orimpairment of earning
capacity. That Pleno sustained a permanent deformity due to
ashortened left leg and that he also suffers from double vision
in his left eye is alsoestablished. Because of this, he suffers
from some inferiority complex and is no longeractive in
business as well as in social life.
3.
4. GOVERNMENT SERVICE INSURANCE SYSTEM vs
SPOUSES GONZALO and MATILDE LABUNG-DEANG
Facts:
Sometime in December 1969, the spouses Deang obtained a
housing loan from the GSIS in the amount of eight thousand
five hundred pesos (P8,500.00. The loan was secured by a real
estate mortgage constituted over the spouses property
covered by Transfer Certificate of Title No. 14926-R issued by
the Register of Deeds of Pampanga. As required by the
mortgage deed, the spouses Daeng deposited the owners
duplicate copy of the title with the GSIS. Eleven months
before the maturity of the loan, spouses settled their
obligation with GSIS and requested for the release of the TCT
but personnel of the GSIS were not able to locate the Title
despite diligent efforts. Then, GSIS instituted action for the
reconstitution of the title and issued certificate of release of
mortgage.
Thereafter, spouses filed action for damages against GSIS and
alleged that the delay in releasing of their owners duplicate
copy of TCT had caused them damages on the account that,
they were unable to secure a loan from Milagros Runes, the
proceeds of which could have been used in defraying the
estimated cost of the renovation of their residential house and
which could have been invested in some profitable business
undertaking.
RTC and CA found GSIS liable for negligence.
Issue:
Whether the GSIS, as a GOCC primarily performing
governmental functions, is liable for a negligent act of its
employee acting within the scope of his assigned tasks.
Ruling:
Yes. GSIS is liable for damages.
Under the facts, there was a pre-existing contract between
the parties. GSIS and the spouses Deang had a loan
agreement secured by a real estate mortgage. The duty to
return the owners duplicate copy of title arose as soon as the
mortgage was released. GSIS insists that it was under no
obligation to return the owners duplicate copy of the title
immediately. This insistence is not warranted. Negligence is
obvious as the owners duplicate copy could not be returned to
the owners. Thus, the more applicable provisions of the Civil
Code are:
Article 1170. Those who in the performance of their
obligations are guilty of fraud, negligence, or delay and those
who in any manner contravene the tenor thereof are liable for
damages.
Article 2201. In contracts and quasi-contracts, the damages
for which the obligor who acted in good faith is liable shall be
those that are the natural and probable consequences of the
breach of the obligation, and which the parties have foreseen
or could have reasonably foreseen at the time the obligation
was constituted.
Since good faith is presumed and bad faith is a matter of fact
which should be proved,we shall treat GSIS as a party who
defaulted in its obligation to return the owners duplicate copy
of the title. As an obligor in good faith, GSIS is liable for all the
natural and probable consequences of the breach of the
obligation. The inability of the spouses Deang to secure
another loan and the damages they suffered thereby has its
roots in the failure of the GSIS to return the owners duplicate
copy of the title.
Ruling as to damages:
No actual damages should be awarded since it was not clearly
established by evidence.
No moral damages since GSIS did not act in bad faith.
However, since the spouses clearly suffered damages due to
the delay in releasing the TCT, temperate damages is
warranted. Article 2224. Temperate or moderate damages,
which are more than nominal but less than compensatory
damages, may be recovered when the court finds that some
pecuniary loss has been suffered but its amount cannot, from
the nature of the case, be proved with certainty.
GSIS submits that there must be proof of pecuniary loss. This
is untenable. The rationale behind temperate damages is
precisely that from the nature of the case, definite proof of
pecuniary loss cannot be offered. When the court is convinced
that there has been such loss, the judge is empowered to
calculate moderate damages, rather than let the complainant
suffer without redress from the defendant's wrongful act. 35
The award of twenty thousand pesos (P20,000.00) in
temperate damages is reasonable considering that GSIS spent
for the reconstitution of the owners' duplicate copy of the
title.
The Supreme Court did not find circumstances to justify the
award of attorney's fees. Attorneys fees which are granted as
an item of damages are generally not recoverable. The award
of attorneys fees is the exception rather than the rule and
counsels fees are not to be awarded every time a party wins a
suit. The award of attorneys fees demands factual, legal and
equitable justification; its basis cannot be left to speculation
or conjecture.
5.
6. PREMIERE DEVELOPMENT BANK V. CA
Facts:
- Shorter version:
Panacor acquired exclusive distributorship of Colgate
products. To meet the capital requirement, an initial inventory
level of P7.5M was required. To meet the capital
requirements, Panacor applied for a P4.1M loan from Premiere
Development Bank. This application was rejected after a
study of Panacors creditworthiness, and Premiere Bank
suggested that Arizona Transport, its affiliate company,
instead apply for the loan (with proceeds to be available to
Panacor). Eventually, a P6.1M loan was granted as evidenced
by a Credit Line Agreement. As security for the loan
Arizona applied for, Arizona, represented by its CEO &
Spouses Panaligan, executed a Real Estate Mortgage against
a parcel of land covered by TCT No. T-3475.
The P2.7M loan acquired from Premiere bank fell
short of the P4.1M credit line previously approved, so Panacor
negotiated for a take-out loan with Iba Finance Corporation in
the sum of P10M P7.5M to be released outright to take out
the loan from Premiere Bank & P2.5M to be released after the
cancellation by Premiere of the collatereal mortgage of the
property covered by TCT No. T-3475.
Iba Finance then sent a letter to the OIC of Premiere
Banks informing her of the loan and requesting the release of
TCT No. T-3475. She signed the letter and sent the original
copy to Premiere Banks legal office.
Premiere Bank sent a letter-reply to Iba-Finance,
informing the latter of its refusal to turn over the requested
documents on the ground that Arizona has existing unpaid
loan obligations. Thereafter, Iba-Finance paid Premiere Bank
the full amount of the outstanding loan, yet despite such
payment, Premiere Bank refused to release the requested
mortgage documents, specifically the duplicate copy of TCT.
Panacor then reqestedIba-Finance for the immediate
approval & release of the P2.5M to meet the required monthly
purchases from Colgate. Iba-Finance explained, however, that
the release was conditioned on the submission of the TCT &
cancellation by Premiere Bank of the mortgage. Panacor then
failed to generate the required capital to meet its distribution
and sales targets. Thereafter, Colgate informed Panacor of its
decision to terminate their distribution agreement.
Panacor and Arizona filed a complaint for specific
performance and damages against Premiere Bank before the
RTC, while Iba-Finance filed a complaint-in-intervention.
RTC In favor of Panacor&Iba-Finance
CA affirmed but lowered the damages to P500,000
In the meantime, a compromise agreement was
entered into between Iba-Finance and Premiere Bank.Iba-
Finance agreed to return without interest the amount of
P6,235,754.79 which Iba-Finance earlier remitted to Premiere
Bank to pay off the unpaid loans of Arizona. This compromise
agreement was approved.
- More comprehensive version:
On or about October 1994, Panacor Marketing Corporation, a
newly formed corporation, acquired an exclusive
distributorship of products manufactured by Colgate
Palmolive Philippines, Inc. To meet the capital requirements
of the exclusive distributorship, which required an initial
inventory level of P7.5 million, Panacor applied for a loan of complaint until full
P4.1 million with Premiere Development Bank. payment;
2) P1,000,000.00 as and for
After an extensive study of Panacors creditworthiness, exemplary damages;
Premiere Bank rejected the loan application and suggested 3) P100,000.00 as and for
that its affiliate company, Arizona Transport Corporation, reasonable attorneys fees;
should instead apply for the loan on condition that the and
proceeds thereof shall be made available to Panacor. 4) Costs of suit.
Eventually, Panacor was granted a P4.1 million credit line as - ToIba-Finance:
evidenced by a Credit Line Agreement. 1. 2) Ordering the defendant
Premiere Bank to pay to
As suggested, Arizona, which was an existing loan client, Intervenor IBA-Finance,
applied for and was granted a loan of P6.1 million. As security the following sums, to wit:
for the P6.1 million loan, Arizona, represented by its Chief 2) P1,000,000.00 as and by
Executive Officer Pedro Panaligan and spouses Pedro and way of exemplary
Marietta Panaligan in their personal capacities, executed a damages; and
Real Estate Mortgage against a parcel of land covered by TCT 3) P100,000.00 as and for
No. T-3475. reasonable attorneys fees;
and
Since the P2.7 million released by Premiere Bank fell short of 4) Costs of suit.
the P4.1 million credit line which was previously approved, The CA affirmed the decision, but lowered the exemplary
Panacor negotiated for a take-out loan with Iba Finance damages to P500,000.
Corporation in the sum of P10 million, P7.5 million of which
will be released outright in order to take-out the loan from In the meantime, a compromise agreement was entered into
Premiere Bank and the balance of P2.5 million (to complete between Iba-Finance and Premiere Bank whereby the latter
the needed capital of P4.1 million with Colgate) to be released agreed to return without interest the amount of P6,235,754.79
after the cancellation by Premiere of the collateral mortgage which Iba-Finance earlier remitted to Premiere Bank to pay off
on the property covered by TCT No. T-3475. the unpaid loans of Arizona. On March 11, 1999, the
compromise agreement was approved.
On October 5, 1995, Iba-Finance sent a letter to Ms. Arlene R.
Martillano, officer-in-charge of Premiere Banks San Juan Issues:
Branch, informing her of the approved loan in favor of Panacor
and Arizona, and requesting for the release of TCT No. T-3475. 1) WON the petitioner acted in bad faith in downgrading
Martillano, after reading the letter, affixed her signature of the loan of respondents thereby entitling them to an
conformity thereto and sent the original copy to Premiere award of actual and exemplary damages
Banks legal office. 2) WON there is basis or competent piece of evidence
to support an award of actual damages of
On October 12, 1995, Premiere Bank sent a letter-reply to Iba- P4,520,000
Finance, informing the latter of its refusal to turn over the
requested documents on the ground that Arizona had existing Ruling:
unpaid loan obligations and that it was the banks policy to
require full payment of all outstanding loan obligations prior to 1) Yes.
the release of mortgage documents. Thereafter, Premiere
Bank issued to Iba-Finance a Final Statement of Account It is clear that Premiere Bank deviated from the terms of the
showing Arizonas total loan indebtedness.Thereafter, Iba- credit line agreement when it unilaterally and arbitrarily
Finance paid to Premiere Bank the amount of P6,235,754.79 downgraded the credit line of Panacor from P4.1 million to
representing the full outstanding loan account of Arizona. P2.7 million.Having entered into a well-defined contractual
Despite such payment, Premiere Bank still refused to release relationship, it is imperative that the parties should honor and
the requested mortgage documents specifically, the owners adhere to their respective rights and obligations thereunder.
duplicate copy of TCT No. T-3475. Law and jurisprudence dictate that obligations arising from
contracts have the force of law between the contracting
On November 2, 1995, Panacor requested Iba-Finance for the parties and should be complied with in good faith.
immediate approval and release of the remaining P2.5 million
loan to meet the required monthly purchases from Colgate. Premiere Bank cannot justify its arbitrary act of downgrading
Iba-Finance explained however, that the processing of the the credit line on the alleged finding by its project analyst that
P2.5 million loan application was conditioned, among others, the distributorship was not financially feasible.
on the submission of the owners duplicate copy of TCT No. Notwithstanding the alleged forewarning, Premiere Bank still
3475 and the cancellation by Premiere Bank of Arizonas extended Arizona the loan of P6.1 million, albeit in
mortgage. Occasioned by Premiere Banks adamant refusal to contravention of the credit line agreement. This indubitably
release the mortgage cancellation document, Panacor failed indicates that Premiere Bank had deliberately and voluntarily
to generate the required capital to meet its distribution and granted the said loan despite its claim that the distributorship
sales targets. On December 7, 1995, Colgate informed contract was not viable.
Panacor of its decision to terminate their distribution
agreement. Equity demands that a party cannot disown it previous
declaration to the prejudice of the other party who relied
Panacor and Arizona filed a complaint for specific performance reasonably and justifiably on such declaration.
and damages against Premiere Bank before the Regional Trial
Court of Pasig City, docketed as Civil Case No. 65577.Iba- 2) No.
Finance filed a complaint-in-intervention.
To justify an award for actual damages, there must be
The RTC decided in favor of Panacor&Iba-Finance, ordering competent proof of the actual amount of loss.
Premiere to release the TCT to Iba-Finance & pay: Credence can be given only to claims, which are duly
- To Panacor: supported by receipts. The burden of proof is on the
1) P4,520,000.00 in addition party who will be defeated if no evidence is presented
to legal interest from the on either side.
time of filing of the
In the instant case, the actual damages were proven through
the sole testimony of Themistocles Ruguero, the vice
president for administration of Panacor. In his testimony, the
witness affirmed that Panacor incurred losses. Although the
lower court fixed the sum of P4,520,000.00 as the total
expenditures incurred by Panacor, it failed to show
how and in what manner the same were substantiated
by the claimant with reasonable certainty. Hence, the
claim for actual damages should be admitted with extreme
caution since it is only based on bare assertion without
support from independent evidence. Premieres failure to
prove actual expenditure consequently conduces to a failure
of its claim. In determining actual damages, the court cannot
rely on mere assertions, speculations, conjectures or
guesswork but must depend on competent proof and on the
best evidence obtainable regarding the actual amount of loss.
Even if not recoverable as compensatory damages,
Panacor may still be awarded damages in the concept
of temperate or moderate damages. When the court
finds that some pecuniary loss has been suffered but
the amount cannot, from the nature of the case, be
proved with certainty, temperate damages may be
recovered. Temperate damages may be allowed in
cases where from the nature of the case, definite proof
of pecuniary loss cannot be adduced, although the
court is convinced that the aggrieved party suffered
some pecuniary loss.
It is obvious that the wrongful acts of Premiere Bank adversely
affected, in one way or another, the commercial credit of
Panacor, greatly contributed to, if not, decisively caused the
premature stoppage of its business operations and the
consequent loss of business opportunity. Since these losses
are not susceptible to pecuniary estimation, temperate
damages may be awarded. Article 2216 of the Civil Code:
No proof of pecuniary loss is necessary in order that moral,
nominal, temperate, liquidated or exemplary damages may be
adjudicated. The assessment of such damages, except
liquidated ones, is left to the discretion of the Court, according
to the circumstances of each case.
Under the circumstances, the Court found the sum of
P200,000 as temperate damages reasonable.
7. ROGELIO E. RAMOS vs. COURT OF APPEALS, DELOS
SANTOS MEDICAL CENTER, DR. ORLINO
HOSAKA and DRA.
PERFECTAGUTIERREZ(December 29, 1999)
Facts:
Erlinda Ramos, a 47 year old mother of 3 and wife of Rogelio
Ramos, was a very normal woman aside from her occasional
complaints of discomfort due to pains allegedly caused by the
presence of a stone in her gall bladder. Due to the discomfort
she felt, she seeked medical advice and was advised to
undergo an operation for the removal of the stone. She
underwent a succcession of medical tests and was told that
she was fit for surgery. A date was set for her operation with
Dr. Hosaka at DLSMC. Prior operation, Rogelio asked and was
assured by Dr. Hosaka that he (hosaka) will look for a good a
anesthesiologist. Dra. Guitierrez was the assigned
anesthesiologist.
The operation did not go as smoothly as expected. As testified
by Herminda Cruz, sister of Erlinda who stayed with her inside
the operation room during the whole ordeal, the following
things occured: Dr. Hosaka arrived 5 hours later than the
specified time. During intubation by Dr. Guitierrez (idk what
process this is), Erlindas nailbed became bluish and and she
had to be placed in a trendelenburg position - a position
where the head of the patient is placed in a position lower
than her feet which is an indication that there is a decrease of
blood supply to the patients brain (upon recommendation of
another aneisthesiologist, Dr. Calderon, who rushed to the ER
after called). Thereafter, Erlinda was rushed to the ICU, where
she remained in a coma. It was only after 4 months that she
recovered and was allowed to be discharged from the
hospital. She incurred massive hospital expenses (P93,542.25)
and more expenses for constant medical attention at home
(monthly expense ranging from P8,000.00
to P10,000.00).Erlinda was also diagnosed to be suffering
from diffuse cerebral parenchymal damage.
This led to the filing for a civil case for damages by the
Ramoses against DLSMC, Dr. Hosaka and Dra. Guitierrez, on
the ground of negligence in the care of Erlinda. The Ramoses
believe that it was due to the hospitals faulty management of
her airway during the anesthesia phase that caused the
injury, while the hospital believes that it was Erlindas allergic
reaction to the anesthetic agent, Thiopental Sodium
(Pentothal) that caused the damage. The trial court ruled in
favor of the Ramoses: Dr. Guitierrez was negligent for not
exercising reasonable care during intubatio, Dr. Hosaka shall
be liable for Dra. Guitierrez negligence for he was the one
who promises a good anesthesiologist (and also for being
late), DLSMC was liable for the negligent acts of the doctors
and for not cancelling the operation despite Dr. Hosakas
delay. The Court of Appeals reversed the trial courts decision.
Issue: WON the hospitals negligence caused the comatose,
and thus entitles the Ramoses to damages?
Ruling: yes.
1.) Res Ipsa Loquitor applies in this case
When res ipsa loquitor is applicable to medical
malpractice suits test:whether or not in the process of the
operation any extraordinary incident or unusual event outside
of the routine performance occurred which is beyond the
regular scope of customary professional activity in such
operations, which, if unexplained would themselves
reasonably speak to the average man as the negligent cause
or causes of the untoward consequence
Despite the fact that the scope of res ipsa loquitur has been
measurably enlarged, it does not automatically apply to all
cases of medical negligence as to mechanically shift the
burden of proof to the defendant to show that he is not guilty
of the ascribed negligence. It is generally restricted to
situations in malpractice cases where a layman is able
to say, as a matter of common knowledge and
observation, that the consequences of professional
care were not as such as would ordinarily have
followed if due care had been exercised.
requisites of Res Ipsa Loquitor (and its presence in this
case)
1. The accident is of a kind which
ordinarily does not occur in the
absence of someones negligence;
- brain damageis an injury which does not
normally occur in the process of a gall bladder
operation.
 2. It is caused by an instrumentality within
the exclusive control of the defendant
or defendants;
- the instruments used in the administration of
anesthesia were all under the exclusive control of
private respondents, who are the physicians-in-
charge.
3. The possibility of contributing conduct
which would make the plaintiff
responsible is eliminated.
- Erlinda could not have been guilty of
contributory negligence because she was under the
influence of anesthetics which rendered her
unconscious.
2.) Herminda Cruz testimony is competent.
- CA was trying to say that since Herminda is only a
nurse, she is considered a layman in the process of
intubation, thus she is not competent to testify
on whether or not the intubation was a success.
- SC held that applying res ipsa loquitur, it is the
accepted rule that expert testimony is not
necessary for the proof of negligence in
non-technical matters or those of which an ordinary
person may be expected to have knowledge,
or where the lack of skill or want of care is so
obvious as to render expert testimony
unnecessary. As such, SC held that anesthesia
procedures have become so common, that even
an ordinary person can tell if it was administered
properly
3. Dra. Guitierrez was negligent
Defense of Dra Guitierrez: due to Erlindas obesity, it was
hard for her to insert the tube in Erlindas trachea
- SC held that Dra. Guitierrez herself was negligent for
not administering a pre- operative evaluation prior
administration of the anesthesia (which is normally
done to lesses anesthetic accidents). Dra. Gutierrez act of
seeing her patient for the first time only an hour before the
scheduled operative procedure was, therefore, an act of
exceptional negligence and professional
irresponsibility. The measures cautioning prudence and
vigilance in dealing with human lives lie at the core of the
physicians centuries-old Hippocratic Oath. Her failure to
follow this medical procedure is, therefore, a clear indicia of
her negligence.
4. the faulty intubation is truly the proximate cause of
Erlindas comatose condition.
hospitals defense: it was due to Erlindas allergies that
caused the complications suffered
- SC held that
A. The doctor that the defense presented cannot be given
credence for he was not an authority in the field of
anesthesiology. He was a pulmonologist, thus he
does not qualify as an expert witness of the court.
B. There was not evidence that the coma was triggered by an
allergic response. No evidence of stridor, skin
reactions, or wheezing - some of the more common
accompanying signs of an allergic reaction - appears on
record. No laboratory data were ever presented to
the court.
C. The faulty intubation is undeniably the proximate cause
which triggered the chain of events leading to Erlindas
brain damage and, ultimately, her comatosed
condition. SC stated basis saying that Scientific studies
point out that intubation problems are responsible for
1/3of deaths and serious injuries associated with
anesthesia.
5. Dr. Hosaka shall be negligent for Dra. Guitirrez
negligence
As the head of the surgical team (so-called captain of the
ship), it is the surgeons responsibility to see to it that those
under him perform their task in the proper manner.He
failed to see if his anesthesiologist observed proper
anesthesia protocols.
6. the hospital is also responsible for the negligence of
the doctors
Hospitals exercise significant control in the hiring and firing
of consultants and in the conduct of their work within the
hospital premises. In other words, private hospitals, hire,
fire and exercise real control over their attending and
visiting consultant staff. While consultants are not,
technically employees, a point which respondent hospital
asserts in denying all responsibility for the patients
condition, the control exercised, the hiring, and the right to
terminate consultants all fulfill the important hallmarks of
an employer-employee relationship, with the exception of
the payment of wages. (thus liable under Art 2180)
7. damages to be awarded (the one related to the
current topic
A. Actual and temeperate damages ( P1,352,000.00 as actual
damages computed as of the date of promulgation of this
decision plus a monthly payment of P8,000.00 up to the time
that petitioner Erlinda Ramos expires or miraculously
survives; andP1,500,000.00 as temperate damages)
Actual Damages/ Compensatory damages (Art 2199) can
only be awarded for costs that may be actually
liquidated. This fails to contemplate of a situation of
injuries with continuing and possible future
complications directly arising from the injury.In these
cases, the amount of damages which should be
awarded, if they are to adequately and correctly
respond to the injury caused, should be one which
compensates for pecuniary loss incurred and
proved, up to the time of trial; and one which
would meet pecuniary loss certain to be suffered
but which could not, from the nature of the case,
be made with certainty. In other words, temperate
damages can and should be awarded on top of
actual or compensatory damages in instances
where the injury is chronic and continuing. And
because of the unique nature of such cases, no
 incompatibility arises when both actual and temperate
damages are provided for. The reason is that these
damages cover two distinct phases.
In the instant case, petitioners were able to provide only
home-based nursing care for a comatose patient who
has remained in that condition for over a decade. Having
premised our award for compensatory damages on the
amount provided by petitioners at the onset of litigation,
it would be now much more in step with the interests of
justice if the value awarded for temperate damages
would allow petitioners to provide optimal care for their
loved one in a facility which generally specializes in such
care.
B. Moral Damages (P2,000,000.00 as moral damages)
Erlinda Ramos was in her mid-forties when the incident
occurred. She has been in a comatose state for over
fourteen years now. The burden of care has so far been
heroically shouldered by her husband and children, who,
in the intervening years have been deprived of the love
of a wife and a mother.The husband and the children, all
petitioners in this case, will have to live with the day to
day uncertainty of the patients illness, knowing any
hope of recovery is close to nil. They have fashioned
their daily lives around the nursing care of petitioner,
altering their long term goals to take into account their
life with a comatose patient
C. exemplary damages in the amount of P100,000.0
D. Attorneys fees (P100,000.00) - Considering the length and
nature of the instant suit
8. PT and T v. CA
Facts:
Sipe sent P 3000 to her sister in law, Escara, for the latters
tuition and her sons medical expenses. However, the money
never came until Sipe went to the office to check with the
branch cashier about the money she sent months prior. The
money was indeed belatedly sent due to the negligence of PT
and T and because of this, Escara was not able to enroll for
one semester. Therefore, Escara filed a suit for damages
which she won and was awarded actual, moral, and
exemplary damages, however, actual was later deleted since
they were not able to prove pecuniary loss. Now, PT and T
appealed to the SC, claiming that Escara should not be
awarded moral and exemplary damages due to Escarasfailre
to prove moral anguish.
Issue: Whether or not Moral and Exemplary damages should
be awarded.
Ruling: No, Moral damages cannot be awarded because there
was no clear indication of bad faith or gross negligence of PT
and Ts part in the delay. There was also some mistake on the
senders part for not addressing the remittance properly.
Exemplary damages should also not be awarded since moral,
temperate, or compensatory damages must first be awarded.
It can also only be awarded when there was wanton,
fraudulent, reckless, oppressive, or malevolent acts on the
part of PT and T but such were not found at all. But nominal
damages may be rewarded to vindicate the rights of Escara.
9. REPUBLIC V. TUVERA
Facts:
The instant action originated from a civil complaint for
restitution and damages filed by the Republic against Marcos
and his longtime aide Juan Tuvera, as well as Tuvera's son
Victor and a corporation the younger Tuvera had controlled,
Twin Peaks Development Corporation. Juan Tuvera, was then
the Presidential Executive Assistant of President Marcos.
Upon motion by respondents, the Sandiganbayan granted
them a separate pre-trial/trial from President Marcos, who was
then already in exile. After the Republic had presented its
evidence, the Tuveras successfully moved for the dismissal of
the case on demurrer to evidence.
Twin Peaks is a corporation with principal purpose of engaging
in the real estate business however they were able to engage
in logging operations by virtue of the Timber License
Agreement No. 356 granted by then President Marcos. On Feb.
25,1986, when President Marcos was ousted, President
Corazon Aquino assumed the presidency. Among her first acts
as President was to establish the PCGG, tasked with tracking
down the ill-gotten wealth procured by Marcos, his family, and
associates during his 20-year rule. On June 13, 1988, PCGG
issued a Writ of Sequestration on all assets, properties,
records, documents, and shares of stock of Twin Peaks on the
ground that all the assets of the corporation are ill-gotten
wealth for having been acquired directly or indirectly through
fraudulent and illegal means.
On Dec. 9, 1988, PCGG, in behalf of the Republic, filed the
complaint which is now the subject of this petition. Through
the Complaint, the Republic sought to recover funds allegedly
acquired by said parties in flagrant breach of trust and
fiduciary obligations with grave abuse of right and power in
violation of the Constitution and the laws of the Republic of
the Philippines. The complaint prayed that respondents pay
actual, moral, temperate and exemplary damages, among
others to the petitioner.
Issue:
Whether or not the Republic is entitled to temperate or
moderate damages.
Ruling:
Yes.
According to the Supreme Court, there is sufficient basis for
an award of temperate damages, sought by the Republic
notwithstanding the fact that a claim for both actual and
temperate damages is internally inconsistent. Temperate or
moderate damages avail when "the court finds that some
pecuniary loss has been suffered but its amount cannot from
the nature of the case, be proved with certainty." The textual
language might betray an intent that temperate damages do
not avail when the case, by its nature, is susceptible to proof
of pecuniary loss; and certainly the Republic could have
proved pecuniary loss herein. Still, jurisprudence applying
Article 2224 is clear that temperate damages may be
awarded even in instances where pecuniary loss could
theoretically have been proved with certainty.
In Viron Transportation Co., Inc. v. Delos Santos, a civil action
for damages involving a vehicular collision, temperate
damages were awarded for the resulting damage sustained by
a cargo truck, after the plaintiff had failed to submit
competent proof of actual damages.
Common law has influenced our law on torts and
damages. Notwithstanding the language of Article
2224, a line of jurisprudence has emerged authorizing
the award of temperate damages even in cases where
the amount of pecuniary loss could have been proven
with certainty, if no such adequate proof was
presented. The allowance of temperate damages when
actual damages were not adequately proven is ultimately a
rule drawn from equity, the principle affording relief to those
definitely injured who are unable to prove how definite the
injury. There is no impediment to apply this doctrine to the
case at bar, which involves one of the most daunting and
noble undertakings of our young democracythe recovery of
ill-gotten wealth salted away during the Marcos years. If the
doctrine can be justified to answer for the unlawful damage to
a cargo truck, it is a compounded wrath if it cannot answer for
the unlawful exploitation of our forests, to the injury of the
Filipino people. The amount of P1,000,000.00 as temperate
damages is proper.
10. PHIL. HAWK CORP VS VIVIAN TAN LEE
G.R. No. 166869, February 16, 2010
FACTS: Vivian Tan Lee was riding on their motorcycle in
tandem with her husband, who was on the wheel, at a place
after a Caltex gasoline station in Barangay Buensoceso,
Gumaca, Quezon on the way to Lopez, Quezon. They came
from the Pasumbal Machine Shop, where they inquired about
the repair of their tanker. They were on a stop position at the
side of the highway; and when they were about to make a
turn, she saw a bus running at fast speed coming toward
them, and then the bus hit a jeep parked on the roadside, and
their motorcycle as well. She lost consciousness and was
brought to the hospital, where she was confined for a week.
She suffered a fracture on her left chest, her left arm became
swollen, she felt pain in her bones, and had high blood
pressure while her husband died due to the vehicular
accident. The immediate cause of his death was massive
cerebral hemorrhage.
Ernest Ovial, the driver of the passenger jeep involved in the
accident, testified thathis jeep was parked on the left side of
the highway near the Pasumbal Machine Shop. He did not
notice the motorcycle before the accident. But he saw the bus
dragging the motorcycle along the highway, and then the bus
bumped his jeep and sped away.
DEFENSE:
Margarito Avila, the driver of petitioners bus, testified that the
motorcycle ran from his left side of the highway, and as the
bus came near, the motorcycle crossed the path of the bus,
and so he turned the bus to the right. He heard a loud
banging sound. From his side mirror, he saw that the
motorcycle turned turtle. He did not stop to help out of fear
for his life, but drove on and surrendered to the police. He
denied that he bumped the motorcycle.
TRIAL COURT: (granted loss of earning, actual damages, and
moral damage)
It agreed with the bus driver that the motorcycle was
moving ahead of the bus from the left side of the road
toward the right side of the road, but disagreed that the
motorcycle crossed the path of the bus while the bus was
running on the right side of the road.
If the bus were on the right side of the highway and
Margarito turned his bus to the right in an attempt to avoid
hitting it, then the bus would not have hit the passenger
jeep vehicle which was then parked on the left side of the
road. The fact that the bus hit the jeep too, shows that the
bus must have been running to the left lane of the
highway from right to the left, that the collision between it
and the parked jeep and the moving rightways cycle
became inevitable. Besides, Margarito said he saw the
motorcycle before the collision ahead of the bus; that
being so, an extra-cautious public utility driver should have
stepped on his brakes and slowed down. Here, the bus
never slowed down, it simply maintained its highway
speed and veered to the left. This is negligence indeed.
CA: Affirmed ruling of the TC but modified the damages: (a)
actual damages; (b) temperate damages; (c) moral
damages; (d) unearned income; and (e) civil indemnity.
After CAs ruling, petitioner contends that it was the only
one that appealed the decision of the trial court with
respect to the award of actual and moral damages; hence,
CA erred in awarding other kinds of damages in favor of
respondent, who did not appeal from TCs decision.
ISSUES:
(1) Whether or not negligence may be attributed to
petitioners driver, and whether negligence on his part was
the proximate cause of the accidentYES
(2) Whether or not the damages awarded by respondent Court
of Appeals are properYES
RULING:
(1) Findings of TC when affirmed by CA is conclusive.
(3)The procedure in the Supreme Court being generally the
same as that in the Court of Appeals, unless otherwise
indicated, it has been held that the latter is clothed with
ample authority to review matters, even if they are not
assigned as errors on appeal, if it finds that their
consideration is necessary in arriving at a just decision of the
case. (Section 8, Rule 51 of the 1997 Rules of Civil Procedure)
The trial court overlooked awarding the additional damages,
which were prayed for by respondent in her Amended
Complaint.
DISCUSSION ON DAMAGES AWARDED:
(you may go straight to temperate damages as this case
belongs to that topic)
AS TO LOSS OF EARNING CAPACITY: (Article 2206 of the
CC)
Compensation of this nature is awarded not for loss of
earnings, but for loss of capacity to earn money.
As a rule, documentary evidence should be presented to
substantiate the claim for damages for loss of earning
capacity. By way of exception, damages for loss of earning
capacity may be awarded despite the absence of
documentary evidence when:
(1) the deceased is self-employed and earning less than the
minimum wage under current labor laws, in which case,
judicial notice may be taken of the fact that in the deceased's
line of work no documentary evidence is available; or
(2) the deceased is employed as a daily wage worker earning
less than the minimum wage under current labor laws.
Lees husband was leasing and operating a Caltex gasoline
station in Gumaca, Quezon. Lee testified that her husband
earned an annual income of one million pesos. Lee presented
in evidence a Certificate of Creditable Income Tax Withheld at
Source for the Year 1990, which showed that respondents
husband earned a gross income of P950,988.43 in 1990. It is
reasonable to use the Certificate and respondents testimony
as bases for fixing the gross annual income of the deceased at
one million pesos before respondents husband died on March
17, 1999. However, no documentary evidence was presented
regarding the income derived from their copra business;
hence, the testimony of respondent as regards such income
cannot be considered.
COMPUTATION FOR LOSS OF EARNING CAPACITY:
Net Earning Capacity= Life Expectancy* x (Gross Annual
Income- Expenses)
*Life Expectancy: 2/3 (80-age at time of death)
AS TO ACTUAL DAMAGES:
Actual damages must be substantiated by documentary
evidence, such as receipts, in order to prove expenses
incurred as a result of the death of the victim or the physical
injuries sustained by the victim.
AS TO CIVIL INDEMNITY:
Fixed by current jurisprudence at P50,000.00.The award is
proper under Art. 2206 of the Civil Code.
AS TO MORAL DAMAGES:
Moral damages are not intended to enrich a plaintiff at the
expense of the defendant.They are awarded to allow the
plaintiff to obtain means, diversions or amusements that will
serve to alleviate the moral suffering he/she has undergone
due to the defendants culpable action and must, perforce, be
proportional to the suffering inflicted.
AS TO TEMPERATE DAMAGES:
CA correctly awarded temperate damages in the amount of
P10,000.00 for the damage caused on respondents
motorcycle. Under Art. 2224 of the Civil Code, temperate
damages may be recovered when the court finds that some
pecuniary loss has been suffered but its amount cannot, from
the nature of the case, be proved with certainty. The cost of
the repair of the motorcycle was prayed for by respondent in
her Complaint. However, the evidence presented was merely
a job estimate of the cost of the motorcycles repair amounting
to P17, 829.00. The Court of Appeals aptly held that there was
no doubt that the damage caused on the motorcycle was due
to the negligence of petitioners driver. In the absence of
competent proof of the actual damage caused on the
motorcycle or the actual cost of its repair, the award of
temperate damages by the appellate court in the amount of
P10,000.00 was reasonable under the circumstances.
WHEREFORE, the petition is DENIED. The Decision of the
Court of Appeals dated August 17, 2004 in CA-G.R. CV No.
70860 is hereby AFFIRMED with MODIFICATION. Petitioner
Philippine Hawk Corporation and Margarito Avila are hereby
ordered to pay jointly and severally respondent Vivian Lee
Tan: (a) civil indemnity in the amount of Fifty Thousand Pesos
(P50,000.00); (b) actual damages in the amount of One
Hundred Twenty-Seven Thousand One Hundred Ninety-Two
Pesos and Eighty-Five Centavos ( P127,192.85); (c) moral
damages in the amount of Eighty Thousand Pesos
(P80,000.00); (d) indemnity for loss of earning capacity in the
amount of One Million Pesos (P1,000,000.00); and (e)
temperate damages in the amount of Ten Thousand Pesos
(P10,000.00).
11. LETICIA TAN ET. AL. V. OMC CARRIERS AND
BONIFACIO ARAMBALA
Parties:
Petitioners Leticia Tan, Myrna Medina, Marilou Spooner,
RosalindaTan, And Mary Jane Tan, Mary Lyn Tan, Celedonio
Tan, Jr.,Mary Joy Tan, And Mark Allan Tan, represented
herein by their mother, Leticia Tan.
Respondents OMC Carriers, Inc. and Bonifacio Arambala
Facts:
On November 24, 1995, Bonifacio Arambala was driving a
trailer truck owned by OMC Carriers, Inc. when the truck
suddenly lost its brakes. Bonifacio and his companion both
jumped out and abandoned the truck. Driverless, the truck
rammed into the house and tailoring shop owned by Leticia
Tan and her husband Celedonio Tan, instantly killing the latter
who was standing at the doorway of the house at the time.
Petitioners, Leticia Tan et al. filed a complaint for damages
against respondents OMC Carriers and Bonifacio Arambala,
alleging that the accident occurred due to OMCs gross
negligence in not properly maintaining the truck, and to
Arambalas recklessness in abandoning the moving truck.
Petitioners thus pray that respondents be held jointly and
severally liable for the following:
1. Actual damages, which include damage to their
properties, funeral expenses and loss of earning capacity
2. Moral damages
3. Exemplary damages
4. Attorneys fees
Respondents denied any liability, claiming that the damage
was caused by a fortuitous event, since the truck skidded due
to the slippery condition of the road caused by spilled motor
oil.
Ruling of the RTC
The RTC found OMC and Arambala jointly and severally liable
to petitioners for damages. Under the doctrine of res ipsa
loquitor, it was unusual for a truck to suddenly lose its brakes.
The fact that the truck rammed into petitioners house raised
the presumption of negligence on the part of respondents.
Moreover, the damage was not due to fortuitous event. Even
with oil on the road, Arambala did not slow down or take any
precautionary measure to prevent the truck from skidding off
the road. Besides, the alleged oil on the road did not also
explain why the truck lost its brakes. Had OMC done a more
rigid inspection of the truck before its use, the defective brake
could have been discovered.
Ruling of the CA
The CA affirmed the RTCs findings on the issues of
respondents negligence and liability for damages. However, it
modified the damages awarded in the following manner:
1. Reduced the actual damages award from P355,895 to
P72,295 for only said amount was duly supported by
official receipts
2. Deleted the award for loss of earning capacity for failure
to substantiate the same with reasonable certainty
3. Reduced the exemplary damages from P500,000 to
P200,000
4. Deleted the award of attorneys fees2
Issue:
Whether the modification was proper.
Ruling:
Partly.
Temperate damages in lieu of actual damages
Actual damages to be recoverable, must not only be capable
of proof, but must actually be proved with a reasonable
degree of certainty. Courts cannot simply rely on speculation,
conjecture or guesswork in determining the fact and amount
of damages. Credence can be given only to claims which are
duly supported by receipts.
In this case, petitioners do not deny that they did not submit
any receipt to support their claim for actual damages to prove
the monetary value of the damage caused to the house and
tailoring shop when the truck rammed into them. Thus, no
2 Petitioners, in their petition for review on certiorari before the Supreme
Court, assert that the CA erred when it modified the award of damages, for
the following reasons:The reduction of the award of actual damages was
improper since the damages primarily refer to the value of their destroyed
property and not the cost of repairing or replacing them, which value cannot
be evidenced by receipts.
2. The deletion of the award for loss of earning capacity was improper as
Celedonio Tan was a self-employed tailor, and in said line of work, no
documentary evidence is available.
3. The reduction of exemplary fees was improper as respondents acted with
bad faith when they fabricated the oil slick on the road story, when
investigation reports provide otherwise.
4. The deletion of the award of attorneys fees was improper as they are
entitled to the same under Article 2208 of the Civil Code.
actual damages for the house and tailoring shop can be
awarded.
Nonetheless, absent competent proof on the actual damages
suffered, a party still has the option of claiming temperate
damages, which may be allowed in cases where, from the
nature of the case, definite proof of pecuniary loss cannot be
adduced although the court is convinced that the aggrieved
party suffered some pecuniary loss.
Article 2224 of the Civil Code provides:
Temperate or moderate damages, which are more than
nominal but less than compensatory damages, may be
recovered when the court finds that some pecuniary loss has
been suffered but its amount cannot, from the nature of the
case, be proved with certainty.
Here, the photographs the petitioners presented as evidence
show the extent of the damage done to the house, the
tailoring shop and the petitioners' appliances and equipment.
Irrefutably, this damage was directly attributable to
Arambala's gross negligence in handling OMC's truck. From
the attendant circumstances and given the property
destroyed, the amount of P200,000 is a fair and sufficient
award by way of temperate damages.
Temperate damages in lieu of loss of earning capacity
CA was correct in disallowing the award of actual damages for
loss of earning capacity.
As a rule, documentary evidence should be presented to
substantiate the claim for loss of earning capacity, except if
(1) the deceased is self-employed and earning less than the
minimum wage under current labor laws, in which case,
judicial notice may be taken of the fact that in the deceased's
line of work, no documentary evidence is available; or (2) the
deceased is employed as a daily wage worker earning less
than the minimum wage under current labor laws.
Prior to his death, Celedonio was a self-employed tailor who
earned approximately P156,000 a year, or P13,000 a month.
At the time of his death in 1995, the prevailing daily minimum
wage was P145.00, or P3,770 per month. Celedonio's alleged
monthly income of P13,000 greatly exceeded the prevailing
monthly minimum wage. Thus, the exception set forth above
does not apply.
Nonetheless, temperate damages may be awarded in lieu of
actual damages for loss of earning capacity where earning
capacity is plainly established but no evidence was presented
to support the allegation of the injured partys actual income.
In the present case, the income-earning capacity of the
deceased was never disputed. Petitioners, excluding Leticia
Tan, were all minors at the time the petition was filed and they
all relied mainly on the income earned by their father from his
tailoring activities for their sustenance and support. Under
these facts and taking into account the unrebutted annual
earnings of the deceased, petitioners are entitled to
temperate damages in the amount of P300,000to compensate
for damages for loss of the earning capacity of the deceased.
Reduction of exemplary damages proper
Exemplary or corrective damages are imposed by way of
example or correction for the public good, in addition to
moral, temperate, liquidated or compensatory damages. In
quasi-delicts, exemplary damages may be granted if the
defendant acted with gross negligence. The grant, however,
should be tempered, as it is not intended to enrich one party
or to impoverish another. Thus, the CA's reduction of the
exemplary damages awarded to the petitioners from
P500,000 to P200,000 is proper.
Attorneys fees in order
In view of the award of exemplary damages, it us also proper
to award the petitioners attorney's fees, in consonance with
Article 2208 (1) of the Civil Code. The award of attorney's
fees, equivalent to 10% of the total amount adjudged the
petitioners, is just and reasonable under the circumstances.
LIQUIDATED
1. LAMBERT V. FOX
Facts:
In 1911, a firm known as John R. Edgar & Co. found itself in
such condition financially that its creditors, including both
plaintiff and defendant, agreed to take over the business and
incorporate it. Plaintiff and defendant became the two largest
stockholders in the new corporation now called John R. Edgar
& Co., Inc. A few days later, plaintiff and defendant being the
largest stockholders, entered into an agreement where both
agreed that they will not sell, transfer, or otherwise dispose of
any part of their present holdings of stock till after one year
and that if either party violates the agreement it shall pay to
the other the sum of P1,000.00 as liquidated damages, unless
previous consent in writing to such disposition be obtained.
Notwithstanding this contract, defendant Fox sold his stock to
E.D. McCullough who belongs to a competitor firm!
Lower Court:
Ruled in favour of the defendant Fox upon the ground that the
intention of the parties as it appeared from the contract in
question was to the effect that the agreement should be good
and continue only until the corporation reached a sound
financial basis, and that event having occurred sometime
before the expiration of the year mentioned in the contract,
the purpose for which the contract was made had been
fulfilled and the defendant accordingly discharged of his
obligation thereunder.
Issues:
1. WON construction was necessary.
2. WON plaintiff can recover damages despite not
being able to prove damages in excess of the
actual damage suffered. (liquidated damage
under the contract is 1k, the actual price paid to
defendant Fox by McCullough was less than 1k)
Ruling:
1. The lower court erred in the construction of the
contract.
Construction and interpretation come only after it
has been demonstrated that application is impossible
or inadequate without them. They are the very last
functions which a court should exercise. In the case
at bar, the parties expressly stipulated that the
contract should last one year. Whatever the object
was in specifying the year, it was their agreement
that the contract should last a year and it was their
judgment and conviction that their purposes would
not be subserved in any less time.
2. In this jurisdiction, there is no difference
between a penalty and liquidated damages, so
far as legal results are concerned. Whatever
differences exists between them as a matter of
language, they are treated the same legally. In
either case the party to whom payment is to be
made is entitled to recover the sum stipulated
without necessity of proving damages. Indeed,
one of the primary purposes in fixing a penalty
 or in liquidated damages, is to avoid such Hence, this Petition.
necessity.
Issue: Whether HLC is liable for actual and liquidated
The only case recognized by the Civil Code in
damages (in relation to the topic only)
which the court is authorized to intervene for the
purpose of reducing the penalty stipulated in the
contract is when the principal obligation has Ruling:
been partly or irregularly fulfilled and the court
can see that the person demanding the penalty
Liability for Actual and Liquidated Damages
has received the benefit of such part or irregular
performance.
HLC avers that it should be exonerated from the
counterclaims for actual and liquidated damages, because its
failure to complete the project was due to respondents acts.
Central to the resolution of this issue is the question of which
2. H.L. CARLOS CONSTRUCTION, INC., vs. MARINA
party was in delay. Aside from the contentious Progress Billing
PROPERTIES CORPORATION, JESUS K. TYPOCO SR. and
No. 24, there are no other unpaid claims. The bills for extra
TAN YU,
work and change orders, aside from those for the beams and
columns, were premature and still subject to reconciliation
Facts: and adjustment. Hence, we cannot hold MPC liable for them.
In comparison, petitioner did not fulfill its contractual
obligations. It could not totally pass the blame to MPC for
MARINA PROPERTIES CORPORATION (MPC) is engaged in the
hiring a second contractor, because the latter was allowed to
business of real estate development. It entered into a contract
terminate the services of the contractor.
with HL CARLOS CONSTRUCTION, INC. (HLC) to construct
Phase III of a condominium complex called MARINA
BAYHOMES CONDOMINIUM PROJECT, consisting of townhouses "10.1 The OWNER shall have the right to terminate this
and villas, totaling 31 housing units, for a total consideration Contract in the event that the CONTRACTOR incurs a fifteen
of P38,580,609.00, within a period of 365 days from receipt of percent (15%) or greater slippage in the prosecution of the
Notice to Proceed. The original completion date of the overall work evaluated against the Project schedule as
project was May 16, 1989, but it was extended to October 31, indicated by the critical path of the approved PERT/CPM
1989 with a grace period until November 30, 1989. HLC network for the Project or as amended by Art. II herein.
instituted this case for sum of money against not only MPC
but also against the latters alleged president, Jesus K. Typoco,
Either party shall have the right to terminate this Contract for
Sr. (Typoco) and Tan Yu (Tan), seeking the payment of various
reason of violation or non-compliance by the other party of
sums with an aggregate amount of P14 million pesos, broken
the terms and conditions herein agreed upon.
down as follows:

HLC accomplished only approximately 80 percent of the

a) P7,065,885.03 for costs of labor escalation, change orders
project. In other words, it was already in delay at the time. In
and material price escalation;
addition, Engineer Miranda testified that it would lose money
b) P2,000,000.00 as additional compensatory damages,
even if it finished the project; thus, MPC already suspected
exclusive of the cost of suit.
that it had no intention of finishing the project at all. Petitioner
c) P3,147,992.00 representing retention money allegedly
was in delay and in breach of contract. Clearly, the obligor is
withheld by MPC on HLCs Progress Billings as of January
liable for damages that are the natural and probable
1990, and
consequences of its breach of obligation. HLC was already
d) P2,000,000.00 representing the value of construction
paid by MPC in the amount of P31,435,187 out of the total
materials allegedly withheld/detained by MPC.
contract price of P38,580,609; thus, only P7,145,422
remained outstanding. In order to finish the project, the latter
Typoco and Tan alleged that they are not parties to the had to contract the services of a second construction firm
Construction Contract and Amendatory Contract and are for P11,750,000. Hence, MPC suffered actual damages in the
therefore not liable to HLC. MPC on the other hand alleged amount of P4,604,579 for the completion of the project.
that the HLC has no cause of action against it and that it is not
entitled to its various claims. MPC interposed a counterclaim
HLC is also liable for liquidated damages as provided in the
in the aggregate sum of P68,296,227.14 for actual and
Contract, the pertinent portion of which is quoted as follows:
compensatory damages, liquidated damages, unliquidated
advances, and attorneys fees."
"4.1 Time is an essential feature of this Contract and in the
event that the CONTRACTOR fails to complete the contracted
The trial court ruled in favour of HLC as against MARINA
work within the stipulated time inclusive of any granted
PROPERTIES CORPORATION, TAN YU, and JESUS K. TYPOCO,
extension of time, the CONTRACTOR shall pay the OWNER, as
SR., who are hereby ordered to pay, jointly and severally. On
liquidated damages, the amount of one over one thousand
appeal, the CA held that respondents were not liable for
(1/1000) of the value of the contract price for each and every
escalations in the cost of labor and construction materials,
calendar day of delay (Sundays and Holidays included), not to
because of the following reasons: (1) the contract between
exceed 15% of [the] Contract amount, in the completion of
the parties was for a lump sum consideration, which did not
the work as specified in Article II above. It is understood that
allow for cost escalation; and (2) petitioner failed to show any
the liquidated damages herein provided are fixed, agreed
basis for the award sought. Furthermore, the CA ruled that
upon and not by way of penalty, and as such, the OWNER
petitioner was liable for actual and liquidated damages.
shall not be further required to prove that he has incurred
Accordingly, HLC had abandoned the project prior to its
actual damages to be entitled thereto. In the case of such
completion; hence, MPC contracted out the work to another
delays, the OWNER is hereby authorized to deduct the
entity and incurred actual damages in excess of the remaining
amount of liquidated damages from any money due or which
balance of the contract price. In addition, the Construction
may become due the CONTRACTOR in this or any other
Contract had stipulated payment of liquidated damages in an
contract or to collect such amount from the CONTRACTORs
amount equivalent to 1/1000 of the contract price for each
performance bond whichever is convenient and expeditious to
calendar day of delay.
the OWNER."
Liquidated damages are those that the parties agree to be
paid in case of a breach. As worded, the amount agreed upon
answers for damages suffered by the owner due to delays in
the completion of the project. Under Philippine laws, these
damages take the nature of penalties. A penal clause is an
accessory undertaking to assume greater liability in case of a
breach. It is attached to an obligation in order to ensure
performance.Thus, as held by the CA, petitioner is bound to
pay liquidated damages for 92 days, or from the expiration of
the grace period in the Amended Contract until February 1,
1990, when it effectively abandoned the project.
WHEREFORE, the Petition is partly GRANTED and the assailed
Decision MODIFIED. SO ORDERED.
3. SCOTT CONSULTANTS & RESOURCE DEVELOPMENT
CORPORATION, INC., petitioner, vs. COURT OF APPEALS
and PHILIPPINE ROCK PRODUCTS, INC.,respondents.
Facts:
SCOTT CONSULTANTS & RESOURCE DEVELOPMENT
CORPORATION, INC is a corporation organized under and by
virtue of the laws of the Philippines. It entered into an Option
Agreement with Lourdes Yaneza, a representative of
Kadakilaan Estate, "to develop, operate, mine and market the
products therefrom, and otherwise exploit properties with
respect to their alluvial precious metals," under government
laws and regulations and under the terms and conditions of
the Option Agreement;
Plaintiff and Juana B. Santos, a duly authorized representative
of San Mateo Mines Exploration, Inc., (SMMEI, for short), an
entity that has the "possession and beneficial use of the
mining claim" situated at San Isidro, Rodriguez, Rizal, entered
into an agreement, granting the plaintiff "the exclusive and
irrevocable right and privilege, to do all or any of the acts"
mentioned in the Agreement;
PHILIPPINE ROCK PRODUCTS, INC (Philrock)used to hold
an operating agreement with SMMEI a holder of an Industrial
Permit No. 40 and Commercial Permit No. 968 by the Bureau
of Mines and Geosciences for a five-year period. SMMEI
notified the defendant of the termination of their operating
agreement.
The COMPLAINT
Allegedly, Philrock has "prevented plaintiff from gaining
access, occupying, exploring and developing the existing
mining claims and despite a cease and desist order and a
letter from the Bureau of Mines to the defendant, the latter
"has prevented, impeded and/or otherwise denied plaintiff
access to its legitimate area of activity"; that by reasons of
the act of the defendant alleged in the next preceding
paragraphs, plaintiff sustained damage of not less than
P300,000.00 a day and asked for P500,000.00 exemplary
damages and P200,000.00 as attorney's fees.
Defense and Counterclaim of Philrock
As Defense of Philrock, it alleged that Puray Plant was
constructed on the land of Eligio Bautista, who had a lease
contract with Philrock; the site where the defendant performs
extraction process of retrum materials for the aggregate
products, by virtue of an operating permit issued by the
Bureau of Mines, is located about five (5) kilometers further
from the plant site which is also located five hundred (500)
meters away from the nearest national road the land to be
traversed from the national road to the plant site and from the
latter to the extraction site, are privately owned; that with the
acquisition of easement rights from the owners of the land in
favor of the defendant, the latter constructed access routes to
provide ingress to and egress from the extraction site and
caused the construction of a spillway, a private property of
the defendant devoted to its exclusive use to facilitate the
delivery of aggregate products to its various projects; that the
contract granting easement rights to defendant which is
recognized under P.D. No. 463carries with it the stipulation
that such grant shall be exclusive and before any third-
party make use of these access routes, the said third-
party must first secure written permission from the
defendant, and, as Counterclaim, defendant alleges that
as a result of the malicious acts of the plaintiff, the
employees and officers of the defendant-corporation,
experienced serious anxiety and mental anguish for
which plaintiff is liable for moral damages in the
amount of P1,000,000.00; P500,000.00 as exemplary
damages and P200,000.00 as and for attorney's fees.
In a third-party complaint filed against SMMEI,latter and
the third-party defendant, San Mateo Mines Exploration, Inc.,
entered into an operating agreement wherein Philrock shall
extract gravel and sand materials and other aggregate
products for a period of five (5) years; that on February 9,
1990, San Mateo Mines Exploration, Inc. sent a letter
unilaterally terminating the agreement; on February 14, 1990,
San Mateo Mines Exploration, Inc. entered into a substantially
the same agreement with the plaintiff for a higher
consideration and that Philrock suffered damages.
TRIAL COURTS RULING:
Validity of the SMMEI and Philrock agreement
Following the letter-directive by the Mines and Geo-Science
Sector, Region VI, of the Department of Environment and
Natural Resources, recognizing the validity and enforcement
of San Mateo Mines Exploration, Inc.'s agreement with the
defendant, this is binding upon the parties. The letter-directive
provides that onnce an operating agreement is registered with
our Office, the registration thereof partakes of official
cognizance of the agreement of the area covered
thereby and said area should not be the subject of
another operating agreement while the former is still
operative. Corollary to the above, a mining permit is for
the exclusive use of the permittee. As a consequence
thereof, the permittee can take one operator at a time, and he
is to operate within the area while the agreement
subsists. . . .
A party cannot also unilaterally terminate a contract it entered
into with another without justifiable cause. Going over the
records of the case, San Mateo Mines Exploration, Inc.'s basis
for unilaterally terminating its contract with defendant
Philrock is the one-sidedness and partiality of said agreement
(Annex "E" of the complaint). To the mind of this Court, such
does not constitute a justifiable cause as San Mateo Mines
Exploration, Inc. voluntarily entered into the said agreement.
In fact, a party's unilateral termination of a contract without
legal justification makes it liable for damages suffered
pursuant to Article 1170 of the New Civil
Code (Pacmac, Inc. vs. IAC, 150 SCRA 555).
Validity of the Contract with the Kadakilaan Estate
As regards the contract entered into by the plaintiff with the
Kadakilaan Estate, the same is in the nature of an Option
Agreement, giving plaintiff the right of exploration over the
mining claim area. The contract, however, stipulates that
"such right shall be for a period of twelve (12) months
counted from the date of this agreement." Paragraph 3 of the
contract sets a pre-condition on plaintiff the delivery of a
written notice to exercise the option within the twelve-month
period before it may be given the exclusive right to
develop, operate and mine the minerals found in the claim
area. This pre-condition, as observed by the Court, has never
been met by the plaintiff. As correctly pointed out by the
defendant, the option period expired on November 22,
1989, without plaintiff having exercised its option.
Under the law, if the terms of a contract are clear and leave
no doubt upon the intention of the contracting parties, the
literal meaning of its stipulations shall control (Art. 1370 of the
New Civil Code). Only when the terms of a contract are
susceptible of various interpretations, and the intention of the
parties is in doubt, may the authority of the Court be invoked
to rule on the same. In this case, there is no occasion which
could call for such determination by this Court, as the words
of the Option Agreement are clear and unequivocable.
Assuming that there is valid operating agreements,
plaintiffs conduct mining exploration on access routes
Assuming arguendo that plaintiff has valid operating
agreements, there are still certain requirements of the law
which, in the Court's belief, has never been satisfied. The
plaintiff does not pretend to conduct mining
exploration/operation on the access routes. These
areas, i.e., access routes, are to be utilized only as a means to
go to and come from on the plaintiff's legitimate area of
activity. These access routes have been built by defendant
Philrock after having entered into contracts granting
easement rights with the various landowners of Rodriguez,
Rizal. Plaintiff now claims that under the law, it is entitled to
make use of these access routes built by the defendant.
Plaintiff's intention, in effect, is to ask this Court that it grant
plaintiff similar easement rights already obtained by
defendant from the landowners. But plaintiffs remedy under
the law is to file an action for Eminent Domain against the
proper parties.
Award of damages
The Court finds that there is ample proof to grant the
defendant's claim for actual damages. There is no doubt that
the defendant sustained pecuniary loss due to the acts of the
plaintiff, including the filing of this complaint. The only
question that confronts this Court is the amount to be
awarded.
Due to the filing of this complaint, it was adequately shown
that the employees of the defendant Philrock became the
object of ridicule by the general public, and that they suffered
mental anxiety due to the same. A defending party may set
up a claim for money or any other relief which he may have
against the opposing party in a counterclaim. And the Court
may, if warranted, grant actual, moral or exemplary damages
as prayed (Agustin vs. Bacalan and the Provincial Sheriff of
Cebu, 135 SCRA 340).
In respect to attorney's fees, it should be held also that where
a claim therefore [sic] arises out of the filing of the complaint,
they, too, should be considered as in the nature of a
compulsory counterclaim (Tio Po vs. Bautista, 103 SCRA 388).
Attorney's fees should be held reasonable under the
Circumstances. 4
Dispositive portion thereof provides:
WHEREFORE, premises considered, this Court hereby renders
judgment in favor of the defendant Philippine Rock Products,
Inc. and against the plaintiff Scott Consultants & Resource
Development Corp., Inc., as follows:
(1) Ordering the dismissal of the case and the dissolution of
the Writ of Preliminary Mandatory Injunction;
(2) Sentencing the plaintiff to pay the defendant the sum of
Eight Hundred Thousand (P800,000.00) Pesos as
compensatory or actual damages; P300,000.00 as moral
damages and the sum of P50,000.00 as exemplary damages;
(3) Condemning the plaintiff to pay the defendant the sum of
P150,000.00 as and for attorney's fees; and
(4) To pay the costs. prcd
.
Issue: Whether petitioner is liable for damages
Ruling: No. Just as in the case of moral damages, there was
no credible proof of actual damages. The trial court made no
specific finding on the extent thereof. The lower court finds
that there is ample proof to grant the defendant's claim for
moral damages but it did not answer this question by making
specific references to the testimonies of the witnesses or to
the documentary evidence. Yet, in the dispositive portion of its
decision, it awarded compensatory and actual damages in the
staggering amount of P800,000.00.
In sustaining this award, the Court of Appeals quoted portions
of the testimonies of Antonio Ayson and Claro San Juan, the
Operations Manager of the Materials Division and the Plant
Superintendent of the Aggregate Crushing Plant, respectively,
of the private respondent but which do not at all support the
award. Ayson cites the private respondent's "non-full"
operation because the private respondent was unable to
extract aggregates from its own area due to the fence
constructed by the petitioner. San Juan speaks of "attention,
diverted to the entering of Scott Consultants to [our] area"
and lack of "sleep" and "anxiety" because of public ridicule.
How the award of P800,000.00 was arrived at was never
shown. It remains a pure speculation.
Article 2199 of the Civil Code provides that one is entitled to
adequate compensation only for such pecuniary loss suffered
by him as is duly proved. cdphil
No justification for the award of exemplary damages of
P50,000.00. 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 moral, temperate,
liquidated, or compensatory damages.
ART. 2234. While the amount of the exemplary damages need
not be proved, the plaintiff must show that he is entitled to
moral, temperate or compensatory damages before the court
may consider the question of whether or not exemplary
damages should be awarded. In case liquidated damages
have been agreed upon, although no proof of loss is necessary
in order that such liquidated damages may be recovered,
nevertheless, before the court may consider the question of
granting exemplary in addition to the liquidated damages, the
plaintiff must show that he would be entitled to moral,
temperate or compensatory damages were it not for the
stipulation for liquidated damages.
There was, therefore, no legal basis for the award of
exemplary damages since the private respondent was not
entitled to moral, temperate, or compensatory damages and
there was no agreement on stipulated damages.
Nor can we affirm the award for attorney's fees in the sum of
P50,000.00. Under Article 2208 of the Civil Code, in the
absence of stipulation, there can be no recovery of attorney's
fees and expenses of litigation other than judicial costs except
in the instances therein enumerated. The closest instance
which could be considered here is paragraph 11 of Article
2208 which provides for such recovery where the court deems
it just and equitable. The body of the decision of the trial
court, however, is devoid of any statement that it would be
just and equitable to award attorney's fees and of any finding
on the amount to be so awarded.
It is settled that the award of attorney's fees is the exception
rather than the rule and counsel's fees are not to be awarded
every time a party wins a suit. The power of the court to
award attorney's fees under Article 2208 of the Civil Code
demands factual, legal, and equitable justification; its basis
cannot be left to speculation or conjecture. Where granted,
the court must explicitly state in the body of the decision, and
not only in the dispositive portion thereof, the legal reason for
the award of attorney's fees.
EXEMPLARY OR CORRECTIVE DAMAGES
1.
2. DE LEON VS CA
Facts:
This is a petition for certiorari not for the main decision but on
the award of moral and exemplary damages.
Spouses Briones owned a fishpond wish they used to secure a
loan from SpsTantoco. The first mortgage amounted to
P20,000 and the second mortgage amounted to P68,000. Sps
Briones transferred the title and ownership of the fishpond
with corresponding liabilities to Sps De Leon. Despite knowing
from the annotations on the title that there were two
mortgages and that Briones was only able to pay the first
mortgage, De Leon sued Tantoco for the release of the
mortgage who refused as the mortgage has not been fully
satisfied.
De Leon was a lawyer
The lower court awarded payment by plaintiff to defendant
the sum of P100,000.00 as moral and exemplary damages,
and the further sum of P10,000.00 as attorney's fees;
payment of costs of plaintiff.
Issue:
Whether or not moral and exemplary damages were proper
Ruling:
Moral damages include physical suffering, mental anguish,
fright, serious anxiety, besmirched reputation, wounded
feelings, moral shock, social humiliation and similar injury.
Though incapable of pecuniary computation, moral damages
may be recovered if they are the proximate result of the
defendant's wrongful act or omission
On the other hand, jurisprudence sets certain conditions when
exemplary damages may be awarded, to wit:
(1) They may be imposed by way of example or correction
only in addition, among others, to compensatory damages
and cannot be recovered as a matter of right, their
determination depending upon the amount of compensatory
damages that may be awarded to the claimant;
(2) the claimant must first establish his right to moral,
temperate, liquidated or compensatory damages; and
(3) the wrongful act must be accompanied by bad faith, and
the award would be allowed only if the guilty party acted in a
wanton, fraudulent, reckless, oppressive or malevolant
manner. It may be awarded for breach of contract or
quasicontract.
Respondent Court found malice in petitioners'refusal to satisfy
respondent Tantocos lawful claim and in their subsequent
filing of the present case against respondent, and took into
consideration the worries and mental anxiety of respondent as
a result thereof.
The filing of the case against respondent being unfounded and
maliciously prosecuted satisfactorily proves the existence of
the factual basis for moral damages and the causal relation to
petitioners' acts
The entitlement to moral damages having been established
the award of exemplary damages is proper
While the award of moral and exemplary damages in an
aggregate amount may not be the usual way of awarding said
damages there is no question of respondent's entitlement to
moral and exemplary damage (Tan Kapoe v. Masa, supra). The
amount should be reduced, however, for being excessive
compared to the actual losses sustained by the aggrieved
party (Prudenciado v. Alliance Transport System, Inc., 148
SCRA 440 [1987]). Moral damages though incapable of
pecuniary estimations, are in the category of an award
designed to compensate the claimant for actual injury
suffered and not to impose a penalty of the wrongdoer (San
Andres v. Court of Appeals, 116 SCRA 85 [1982] cited in
Prudenciado v. Alliance Transport System, Inc. supra).
Time and again the Court has ruled that "moral damages are
emphatically not intended to enrich a complainant at the
expense of a defendant. They are awarded only to enable the
injured party to obtain means, diversion or amusements that
will serve to alleviate the moral suffering he has undergone,
by reason of the defendants' culpable action" (Grand Union
Supermarket, Inc. v. Espino, Jr., 94 SCRA 966 [1979]); R & B
Surety & Insurance Co., Inc. v. Intermediate Appellate Court,
129 SCRA 736 [1984]; Prudenciado v. Alliance Transport
System, Inc., supra).
PREMISES CONSIDERED, the assailed decision of the Court of
Appeals is AFFIRMED but the aggregate award of moral and
exemplary damages is reduced to P25,000.00.
3. DIOSDADO OCTOT, petitioner,
vs.JOSE R. YBAEZ, in his capacity as Regional Director
of Regional Health Office No. VII, CLEMENTE S.
GATMAITAN, in his capacity as Secretary of Health, and
Presidential Executive Assistant JACOBO C. CLAVE ,
respondents.
Facts:
Petitioner was employed as Security Guard since 1970 and at
the time of his separation from the service was receiving a
salary of P4,632 per annum plus P50.00 per month as cost of
living allowance. On October 1, 1975, petitioner was
summarily dismissed pursuant to P.D. No. 6 and LOI Nos. 14
and 14-A directing heads of departments and agencies Of the
government to weed out undesirable government officials and
employees, specifically those who were facing charges or
were notoriously undesirable on ground of dishonesty,
incompetence or other kinds of misconduct defined in the Civil
Service Law. Petitioner had been convicted by the Court of
First Instance of Cebu of the crime of libel, but his appeal
therefrom was pending in the Court of Appeals.
Believing that his dismissal was illegal, petitioner continued
reporting for work the whole month of October 1975 but
respondent Regional Director refused to order the release of
his salary for the period and instead ordered that his name be
deleted from the office payroll
In due time, petitioner was acquitted of the libel case by the
Court of Appeals. On March 10, 1977, one Mr. Alfredo Imbong
wrote to the Undersecretary of Justice assistance to reinstate
petitioner to his former position which letter was forwarded by
the Undersecretary of Justice to the Secretary of Health on
March 22, 1977. When the letter-request was referred by the
Secretary of Health to the Region Health Office for comment,
Dr.FelicitoAniceto, officer-in-Charge of the same regional office
favorably recommended petitioners reinstatement, not only
because of petitioner's acquittal in the case but also because
of his satisfactory performance rating.
Petitioner's papers were likewise favorably acted upon by the
Presidential Executive Assistant but in returning the papers to
the Secretary of Health, attention was invited to the provision
of LOI No. 647, dated December 27, 1977.
Upon his new appointment, petitioner did not appear. Instead
he filed the instant petition for mandamus wherein he prays
that respondents be ordered (1) to reinstate him to his former
position (2) to pay his back salary, as well as the cost of living
allowance of P50.00 a month from the date of his alleged
dismiss (3) to grant him compensatory, exemplary and moral
damages (4) to pay his attorney's fees and cost of the suit.
Issue: Whether petitioner is entitled to his claim for
backwages from the date of his dismissal in 1975 up to the
date of reinstatement and to moral and exemplary damages.
Ruling:
Backwages:
In the absence of Proof that respondent Regional Director
acted in bad faith and with grave abuse of discretion,
petitioner is not entitled to backwages and consequently
cannot claim for damages.
In the case at bar, the record manifests that respondents
officials were not motivated by ill will or personal malice in
dismissing petitioner but only by their desire to comply with
the mandates of Presidential Decree No. 6. Accordingly, when
petitioner was acquitted by the Court of Appeals, and made a
request for his reinstatement, respondents readily showed
their willingness to take him back and recommended to the
authorities concerned his reinstatement. Moreover, the Office
of the President of the Philippines, in approving the
reinstatement of petitioner, specifically invited attention to
the provisions of LOI No. 647 which does not authorize
payment of backwages of reinstated employees.
Moral Damages:
The Court likewise denies petitioner's claim for moral
damages, because as pointed out by the Solicitor General, if
there was any delay in his reinstatement, it was attributed to
his own fault and negligence.
Exemplary Damages:
Exemplary damages are not generally recoverable in a special
civil action for mandamus unless the defendant patently acted
with vindictiveness or wantonness and not in the exercise of
honest judgment. The claim for exemplary damages must
presuppose the existence of the circumstances enumerated in
Articles 2231 and 2232 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. Such
damages are required by public policy, for wanton acts must
be suppressed. They are an antidote so that the poison of
wickedness may not run through the body politic.
Thus, our jurisprudence sets certain conditions when
exemplary damages may be awarded, as follows:
First: They may be imposed by way of example or correction
only in addition, among others, to compensatory damages,
and cannot be recovered as a matter of right, their
determination depending upon the amount of compensatory
damages that may be awarded to the claimant.
Second: The claimant must first establish his right to moral,
temperate, liquidated or compensatory damages.
Third: The wrongful act must be accompanied by bad
faith, and the award would be allowed only if the guilty party
acted in a wanton, fraudulent, reckless, oppressive or
malevolent manner.
Considering that petitioner has already been reinstated to his
former position since 1979 pursuant to the Court's Resolution
of January 29, 1979, the petition for mandamus for his
reinstatement is now moot. Petitioner's claim for backwages
and damages is hereby denied.
3. BPI INVESTMENT VS. DG CARREON
FACTS:
Petitioner BPI Investment Corporation (BPI Investments),
formerly known as Ayala Investment and Development
Corporation, was engaged in money market
operations. Respondent D. G. Commercial Corporation was a
client of petitioner and started its money market placements
in September, 1978. The individual respondents, spouses
Daniel and Aurora Carreon and Josefa M. Jeceil also placed
with BPI Investments their personal money in money market
placements.
On November 15, 1979, D. G. Carreon Commercial
Corporation (D. G. Carreon, for brevity) placed with BPI
Investments P318,981.59 in money market placement with a
maturity term of thirty two days, or up to December 17, 1979,
at a maturity value of P323,518.22. BPI Investments issued
the corresponding sales order slip for straight sale and
confirmation slip.
On December 12, 1979, there appeared in BPI
Investments ledger due D. G. Carreon an amount
of P323,518.22, which is the exact amount to mature on
December 17, 1979. D. G. Carreon did not make any money
placement maturing on December 12, 1979. As a result of
this, Mr. CelsoAbrantes, an officer of BPI Investments called up
Aurora Carreon about the money market placement
supposedly maturing on December 12, 1979. Aurora Carreon
instructed Abrantes to roll over the amount of P323,518.22,
for another thirty days at 19% interest to mature on January
11, 1980. A sales order slip and a confirmation slip were
executed dated December 12, 1979.
On December 17, 1979, BPI Investments credited D. G.
Carreon with another P323,518.22 via roll over
of P300,000.00, for a term of one hundred twenty days at 19%
interest maturing on April 15, 1980, and P23,518.22, paid out
in cash. A sales order slip for straight sale and a confirmation
slip were executed. BPI Investments paid the money
placement on April 16, 1980. The money placement in the
amount of P319,000.00 that matured on April 16, 1980 was
again rolled over for a term of sixty one days at 19% interest
maturing on June 16, 1980, with a maturity value
of P329,443.81. The amount was again rolled over for a term
of thirty days at 18% interest maturing on July 16, 1980, and
again rolled over for another thirty days at 18% interest.
BPI Investments paid D. G. Carreon twice in interest of
the amount of P323,518.22, representing a single money
market placement, the first on December 12, 1979, and the
second on December 17, 1979.According to petitioner, their
bookkeeper made an error in posting 12-17 on the sales order
slip for 12-12. BPI Investments claimed that the same
placement was also booked as maturing on December 12,
1979.Aurora Carreon instructed BPI Investments to roll over
the whole amount of P323,518.22 for another thirty days, or
up to January 11, 1980, at 19% interest. BPI Investments
claimed that roll overs were subsequently made from
maturing payments on which BPI Investments had made over
payments at a total amount of P410,937.09, wherein all
payments were evidenced by checks issued by BPI
Investments to respondents.
On April 21, 1982, BPI Investments wrote respondents
Daniel Carreon and Aurora Carreon, demanding the return of
the overpayment of P410,937.09.[2] They discussed the matter
with BPI Investments.The respondents asserted that there was
no overpayment and asked for time to look for the
papers. Upon the request of BPI Investments, the spouses
Daniel and Aurora Carreon sent to BPI Investments a proposed
memorandum of agreement, dated May 7, 1982.
On May 10, 1982, BPI Investments, without responding
to the memorandum and proposal of D. G. Carreon filed a
complaint[4] for recovery of a sum of money against D. G.
Carreon with preliminary attachment.
 D.G. Carreon asked for compensatory damages in an
amount to be proven during the trial; spouses Daniel
and Aurora Carreon asked for moral damages
of P1,000,000.00 because of the humiliation, great
mental anguish, sleepless nights and deterioration of
health due to the filing of the complaint and
indiscriminate and wrongful attachment of their
property, especially their residential house and
payment of their money market placement
of P109,283.75. JosefaJeceil asked for moral damages
of P500,000.00, because of sleepless nights and
mental anguish, and payment of her money market
placement of P73,857.57; all defendants claimed for
exemplary damages and attorneys fees
of P100,000.00.
ISSUES:
(1) W/N petitioner guilty of gross negligence in the
handling of the money market placement of
respondents.
(2) W/N moral damages may be awarded.
(3) W/N temperate or moderate damages may be
awarded.
The Courts Ruling
(1) We find petitioner not guilty of gross negligence in the
handling of the money market placement of respondents.
Gross negligence implies a want or absence of or failure to
exercise slight care or diligence, or the entire absence of
care. It evinces a thoughtless disregard of consequences
without exerting any effort to avoid them.[28]
However, while petitioner BPI Investments may not be guilty
of gross negligence, it failed to prove by clear and convincing
evidence that D. G. Carreon indeed received money in excess
of what was due them. The alleged payments in the complaint
were admitted by plaintiff itself to be withdrawals from validly
issued commercial papers, duly verified and signed by at least
two authorized high-ranking officers of BPI Investments.[29]
The law on exemplary damages is found in Section 5, Chapter
3, Title XVIII, Book IV of the Civil Code. These are imposed by
way of example or correction for the public good, in addition
to moral, temperate, liquidated, or compensatory
damages. They are recoverable in criminal cases as part of
the civil liability when the crime was committed with one or
more aggravating circumstances; in quasi-delicts, if the
defendant acted with gross negligence; and in contracts and
quasi-contracts, if the defendant acted in a wanton,
fraudulent, reckless, oppressive, or malevolent manner.[30]
BPI Investments did not act in a wanton, fraudulent, reckless,
oppressive, or malevolent manner, when it asked for
preliminary attachment. It was just exercising a legal
option. The sheriff of the issuing court did the execution and
the attachment. Hence, BPI Investments is not to be blamed
for the excessive and wrongful attachment.
As to the finding of the appellate court that the filing of the
case aggravated and eventually caused the death of two of
the respondents, we agree with the petitioner that such
correlation is bereft of basis and is far fetched.
(2) The award of moral damages and attorneys fees is also not in
keeping with existing jurisprudence. Moral damages may be
awarded in a breach of contract when the defendant acted in
bad faith, or was guilty of gross negligence amounting to bad
faith, or in wanton disregard of his contractual
obligation. Finally, with the elimination of award of moral
damages, so must the award of attorneys fees be deleted.[31]
There is no doubt, however, that the damages sustained by
respondents were due to petitioners fault or negligence, short
of gross negligence.
(3) Temperate or moderate damages may be recovered when
the court finds that some pecuniary loss has been suffered but
its amount cannot, from the nature of the case, be proved
with certainty.[32] The Court deems it prudent to award
reasonable temperate damages to respondents under the
circumstances.[33]
As to the claim for payment of the money market placement
of JosefaJeceil, the trial court may release the deposited
amount of P73,857.57 to petitioner as the consignation was
not proper or warranted.
4. Bano v Bachelor Express, GR 191703, March 12,
2012
Facts:
In the early afternoon of November 6, 1993, respondent
WenifredoSalvaa (Salvaa) was driving the bus owned by
respondent Bachelor Express, Inc./Ceres Liner, Inc. with plate
number LVD-273 and body number 4042 (Bus 4042) along the
national highway at Magdum, Tagum City bound for Davao
City. At about 1:20 in the afternoon, he overtook a Lawin PUJ
jeepney while negotiating a blind curve in a descending road
at Km. 60, causing him to intrude into the opposite lane and
bump the 10-wheeler Hino dump truck of petitioner
CresencioBao (Bao) running uphill from the opposite direction.
The collision resulted in damage to both vehicles, the
subsequent death of the truck driver, AmancioAsumbrado
(Asumbrado), and serious physical injuries to bus driver
Salvaa.
On March 11, 1994, Bao and the heirs of Asumbrado
(collectively called petitioners) filed a complaint 4 for quasi-
delict, damages and attorney's fees against respondents,
accusing Salvaa of negligently driving Bus 4042 causing it to
collide with the dump truck.
Respondents denied liability, claiming that prior to the
collision, Bus 4042 was running out of control because of a
problem in the steering wheel system which could not have
been avoided despite their maintenance efforts. Instead, they
claimed that Asumbrado had the last clear chance to avoid
the collision had he not driven the dump truck at a very fast
speed.
RTC Salvaa liable
CA affirmed
Issue:
Whether respondent Salvaa was grossly negligent in
continuing to drive the bus even after he had discovered the
malfunction in its steering wheel
Whether CA erred in reducing the amounts of damages
awarded by the RTC despite sufficient evidence
Ruling: Affirmed
In the present case, records show that when bus driver Salvaa
overtook the jeepney in front of him, he was rounding a blind
curve along a descending road. Considering the road
condition, and that there was only one lane on each side of
the center line for the movement of traffic in opposite
directions, itwould have been more prudent for him to confine
his bus to its proper place. Having thus encroached on the
opposite lane in the process of overtaking the jeepney,
without ascertaining that it was clear of oncoming traffic that
resulted in the collision with the approaching dump truck
driven by deceased Asumbrado, Salvaa was grossly negligent
in driving his bus. He was remiss in his duty to determine that
the road was clear and not to proceed if he could not do so in
safety.
Consequently, the CA erred in deleting the awards of
exemplary damages, which the law grants to serve as a
warning to the public and as a deterrent against the repetition
of similar deleterious actions. However, the award should be
tempered as it is not intended to enrich one party or to
impoverish another.9 Thus, the Court reinstates
the separate awards of exemplary damages to petitioners in
the amount of P50,000.00.
With respect to Bao, the award of moral damages for the loss
of his dump truck was correctly deleted since the damage to
his vehicle was not shown to have been made willfully or
deliberately.However, the Court finds the grant of
P100,000.00 as temperate damages for the damaged vehicle
to be insufficient considering its type as a 10-wheeler dump
truck and its good running condition at the time of the
incident. Instead, the Court finds the amount of P400,000.00
as fair and reasonable under the circumstances. With respect
to the adjudged lost income from the dump truck, the Court
sustains, for being just and equitable, the award of temperate
damages in the sum of P200,000.00.
On the other hand, the Court upholds the grant to petitioner
Heirs of P19,136.90 as actual damages corresponding to the
pecuniary loss that they have actually sustained, P50,000.00
as death indemnity, the reduced awards of P50,000.00 as
moral damages and P415,640.16 as loss of earning capacity
of the deceased Asumbrado, which are all in conformity with
prevailing jurisprudence.11
Finally, the attorney's fees of P50,000.00 as awarded by the
CA is increased to P100,000.00 considering the length of time
that this case has been pending, or a period of about 18 years
since the complaint a quo was filed on March 11, 1994.
ASSESMENT OF DAMAGES
1. INHELDER CORPORATION v. COURT OF APPEALS AND
PANGANIBAN
Facts:
INHELDER is engaged in the manufacture and sale of
medicines and drug. Its principal office is at No. 41 Pioneer
Street, Mandaluyong, Rizal (now Metro Manila). McGaw Baxter
Laboratories, Inc. appears to be another Company also having
its principal office at No. 41 Pioneer Street.
INHELDER's lawyer, both in the COLLECTION CASE and in the
DAMAGE CASE is Atty. Maximo M. Fajardo, Jr. He appears to
have offices both at INHELDER (Annex "C", Petition for
Review) and at McGaw Baxter Laboratories, Inc. 1
The PANGANIBANS, physicians, are the owners of the
DOCTOR's CLINIC in Calapan and they purchased medicines
and drugs from INHELDER payable in installments. The
PANGANIBANS were able to pay the amount of P824.10 for
that purchase, leaving a balance of P561.00 which had
remained unpaid for approximately two years.
Subsequently, Atty. Fajardo sent a letter to the PANGANIBANS
requesting settlement of the said amount of P561.00. In their
reply, the PANGANIBANS requested a statement of account
which was sent to them on January 17, 1975 with a follow-up
letter, again, requesting remittance of the outstanding
balance of P561.00.
The PANGANIBANS alleged that they :sent PNB Check No.
32058 to (INHELDER) in the amount of P561.00, dated January
28, 1975, and said check was received by (INHELDER) on or
before February 5. 1975".
Atty. Fajardo prepared the complaint in the COLLECTION CASE,
which was filed with the MANDALUYONG COURT on February
12, 1975.
On February 19, 1975, INHELDER sent a letter to the
PANGANIBANS "acknowledging the receipt of the PNB Check
No. 32058 in the amount of P561.00 representing full
payment of the ('PANGANIBANS') account with INHELDER". 3
For the payment made by the PANGANIBANS to be effective,
the PNB Check must first be cleared with the PNB Branch in
Calapan, which could have been completed only on February
19, 1975.
The Panganibans filed a damage case against petitioner
alleging that INHELDER had filed a collection caseagainst the
Panganiban and the latter was subsequently dismissed since
it was clearly unfounded,- and that the PANGANIBANS were
entitled, as against INHELDER, to quantified damages totalling
P169,550.00.
The complaint of the PANGANIBANS was essentially for actual
and compensatory damages, moral damages and exemplary
damages, based on the alleged clearly
unfounded COLLECTION CASE.
After declaring INHELDER in default in the DAMAGE CASE, the
lower court, as well as the Appellate Court, rendered
judgment in favor of the PANGANIBANS.
Issue:
Whether or not the Panganibans are entitled to damages for
the clearly unfounded civil action.
Ruling:
On the above facts and circumstances, it should be difficult to
conclude that the COLLECTION CASE was a clearly
unfounded civil action. It is not clear that the account of the
PANGANIBANS had already been paid as of February 12, 1975.
Under Article 1249 of the Civil Code, payment should be held
effective only when PNB Check No. 32058 was actually cashed
by, or credited to the account of, INHELDER. If that did not
eventuate on or before February 12, 1975, and there is no
proof that it did, the account would still be unpaid, and the
complaint in the COLLECTION CASE, technically, could not be
considered as substantially unfounded.
Neither may it be said that the COLLECTION CASE was tender an issue" but as well "admitted material allegations" of
malicious. Malicious prosecution, to be the basis of a suit, the complaint. The lower court then rendered a judgment on
requires the elements of malice and want of probable the pleadings.
cause.There must be proof that the prosecution was prompted
by a sinister design to vex and humiliate a person, and that it Ruling:
was initiated deliberately knowing that the charge was false
and groundless. The lower court erred in rendering a judgment on the
pleadings. The case is remanded to the lower court for the
conduct of a full blown trial.
In the present case, there is no evidence on record, clearly
establishing these two elements. Although there may be want
The plaintiffs' claim for actual, moral, nominal and corrective
of probable cause, there is no proof that petitioner
damages, was controverted by the averment in the answer to
deliberately initiated the COLLECTION CASE knowing that the
the effect that the defendants "have no knowledge or
same was false and groundless.Nor can malice be inferred
information sufficient to form a belief as to the truth of the
from want of probable cause.
allegations" as to such damages, "the truth of the matter
being that the death of ReginoRaagas was occasioned by an
It should also be stressed that the mere filing of a suit does unforeseen event and/or by the fault of the small boy
'not render a person liable for malicious prosecution should he ReginoRaagas or his parents." Such averment has the effect of
be unsuccessful. The law could not have meant to impose a tendering a valid issue.
penalty on the right to litigate.
We held that even if the allegations regarding the amount of
damages in the complaint are not specifically denied in the
answer, such damages are not deemed admitted.
2, MELQUIADES RAAGAS and ADELA LAUDIANO
RAAGAS, vs. OCTAVIO TRAYA, MRS. OCTAVIO TRAYA and
We declared in no uncertain terms that actual damages must
BIENVENIDO CANCILLER
be proved, and that a court cannot rely on "speculation,
conjecture or guesswork" as to the fact and amount of
Facts:
damages, but must depend on actual proof that damage had
been suffered and on evidence of the actual amount.
Plaintiffs Spouses Raagas filed a case for damages against the
Defendants. They argued that while Defendant Canciller was
We reaffirmed the rule that although an allegation is not
"recklessly" driving a truck owned by his co-defendants, along
necessary in order that moral damages may be awarded, "it
the public highway in MacArthur, Leyte, the said vehicle ran
is, nevertheless, essential that the claimant satisfactorily
over the plaintiffs' three-year old son Regino causing his
prove the existence of the factual basis of the damage and its
instantaneous death.
causal relation to defendant's acts."
In their defense, the Defendants argued and specifically deny
The preceding disquisition points up the inescapable need of a
that Canciller was "driving recklessly" at the time of the
full-blown trial on the merits at which the parties will be
mishap, and assert that the truck "was fully loaded and was
afforded every opportunity to present evidence in support of
running at a very low speed and on the right side of the road";
their respective contentions and defenses.
that it was the child who "rushed from an unseen position and
bumped the truck so that he was hit by the left rear tire of the
said truck and died.

The Plaintiffs then moved for a judgment on the pleadings,

upon the claim that the defendants' answer not only "failed to