CONCEPT BUILDERS, INC.

v. NLRC G.R. No. 108734.

May 29, 1996 Doctrine of
Piercing the Veil of Corporate
Fiction
JUNE 26, 2018

FACTS:

Petitioner Concept Builders, Inc., a domestic corporation, is engaged in

the construction business. Private respondents were employed by said
company as laborers, carpenters and riggers.

Private respondents were served individual written notices of

termination of employment by petitioner, stating that their contracts of
employment had expired and the project in which they were hired had
been completed.

Private respondents filed a complaint for illegal dismissal, unfair labor

practice and non-payment of their legal holiday pay, overtime pay and
thirteenth-month pay against petitioner.

The Labor Arbiter (LA) rendered judgment ordering petitioner to

reinstate private respondents and to pay them back wages.

The NLRC dismissed the Motion for Reconsideration.

The LA issued a writ of execution directing the sheriff to execute the
Decision. The writ was partially satisfied through garnishment of sums
from petitioners debtor.

An Alias Writ of Execution was issued for the collection of the balance
of the judgment award, and to reinstate private respondents to their
former positions. However, the security guard on duty refused the
service of the Writ saying that petitioner no longer occupied the
premises.

The LA issued a second alias writ of execution.

The said writ had not been enforced by the special sheriff because, as
stated in his progress report,

1. All the employees inside petitioners premises

at 355 Maysan Road, Valenzuela, Metro Manila,
claimed that they were employees of Hydro
Pipes Philippines, Inc. (HPPI) and not by
respondent;
2. Levy was made upon personal properties he
found in the premises;
3. Security guards with high-powered guns
prevented him from removing the properties he
had levied upon.

The said special sheriff recommended that a break-open order be issued

to enable him to enter petitioners premises so that he could proceed with
the public auction sale of the aforesaid personal properties.

A certain Dennis Cuyegkeng filed a third-party claim alleging that the

properties sought to be levied upon by the sheriff were owned by Hydro
(Phils.), Inc. (HPPI) of which he is the Vice-President.
Private respondents filed a Motion for Issuance of a Break-Open Order,
alleging that HPPI and petitioner corporation were owned by the same
incorporators/stockholders.

HPPI filed an Opposition, contending that HPPI is a corporation which

is separate and distinct from petitioner.

The motion for break-open order was denied by the LA.

On appeal to the NLRC, a break-open order was issued, and the sheriff
was directed to proceed with the auction sale of the properties already
levied upon. It dismissed the third-party claim for lack of merit.

ISSUE:

Whether the doctrine of piercing the veil of corporate fiction is

applicable in this case.

RULING:

The corporate mask may be lifted and the corporate veil may be pierced
when a corporation is just but the alter ego of a person or of another
corporation. Where badges of fraud exist; where public convenience is
defeated; where a wrong is sought to be justified thereby, the corporate
fiction or the notion of legal entity should come to naught. The law in
these instances will regard the corporation as a mere association of
persons and, in case of two corporations, merge them into one.

It is a fundamental principle of corporation law that a corporation is an

entity separate and distinct from its stockholders and from other
corporations to which it may be connected. But, this separate and
distinct personality of a corporation is merely a fiction created by law
for convenience and to promote justice.

So, when the notion of separate juridical personality is used to defeat

public convenience, justify wrong, protect fraud or defend crime, or is
used as a device to defeat the labor laws, this separate personality of the
corporation may be disregarded or the veil of corporate fiction pierced.
This is true likewise when the corporation is merely an adjunct, a
business conduit or an alter ego of another corporation.

The conditions under which the juridical entity may be disregarded vary
according to the peculiar facts and circumstances of each case. No hard
and fast rule can be accurately laid down, but certainly, there are some
probative factors of identity that will justify the application of the
doctrine of piercing the corporate veil, to wit:

1. Stock ownership by one or common ownership

of both corporations.
2. Identity of directors and officers.
3. The manner of keeping corporate books and
records.
4. Methods of conducting the business.

The SEC en banc explained the instrumentality rule which the courts
have applied in disregarding the separate juridical personality of
corporations as follows:

Where one corporation is so organized and controlled and its affairs are
conducted so that it is, in fact, a mere instrumentality or adjunct of the
other, the fiction of the corporate entity of the instrumentality may be
disregarded. The control necessary to invoke the rule is not majority or
even complete stock control but such domination of finances, policies
and practices that the controlled corporation has, so to speak, no
separate mind, will or existence of its own, and is but a conduit for its
principal. It must be kept in mind that the control must be shown to have
been exercised at the time the acts complained of took place. Moreover,
the control and breach of duty must proximately cause the injury or
unjust loss for which the complaint is made.

The test in determining the applicability of the doctrine of piercing the

veil of corporate fiction is as follows:

1. Control, not mere majority or complete stock

control, but complete domination, not only of
finances but of policy and business practice in
respect to the transaction attacked so that the
corporate entity as to this transaction had at the
time no separate mind, will or existence of its
own;
2. Such control must have been used by the
defendant to commit fraud or wrong, to
perpetuate the violation of a statutory or other
positive legal duty, or dishonest and unjust act
in contravention of plaintiffs legal rights; and
3. The aforesaid control and breach of duty must
proximately cause the injury or unjust loss
complained of.

The absence of any one of these elements prevents piercing the

corporate veil. in applying the instrumentality or alter ego doctrine, the
courts are concerned with reality and not form, with how the
corporation operated and the individual defendants relationship to that
operation.

The question of whether a corporation is a mere alter ego, a mere sheet

or paper corporation, a sham or a subterfuge is purely one of fact.
Clearly, petitioner ceased its business operations in order to evade the
payment to private respondents of backwages and to bar their
reinstatement to their former positions.

HPPI is obviously a business conduit of petitioner corporation and its

emergence was skillfully orchestrated to avoid the financial liability that
already attached to petitioner corporation.

It is very obvious that the second corporation seeks the protective shield
of a corporate fiction whose veil in the present case could, and should,
be pierced as it was deliberately and maliciously designed to evade its
financial obligation to its employees.

— C O R P O R AT I O N L A W , M E R C A N T I L E
L AW , R E M E D I A L L AW —

VESAGAS v. CA G.R. No.

142924. December 5, 2001
Intra-corporate disputes, RTC
Jurisdiction, SEC Jurisdiction,
Non-joinder of parties
JUNE 26, 2018

FACTS:

The respondent spouses are members in good standing of the Luz

Village Tennis Club, Inc. (club).
They alleged that petitioner Teodoro B. Vesagas, who claims to be the
clubs duly elected president, in conspiracy with petitioner Wilfred D.
Asis, who, in turn, claims to be its duly elected vice-president and legal
counsel, summarily stripped them of their lawful membership, without
due process of law.

They filed a Complaint with the SEC on against the petitioners, asking
the Commission to declare as illegal their expulsion from the club as it
was allegedly done in utter disregard of the provisions of its by-laws as
well as the requirements of due process.

They also sought the annulment of the amendments to the by-laws,

changing the annual meeting of the club, and increasing the number of
trustees from nine to fifteen.

They prayed for the issuance of a TRO and Writ of Preliminary

Injunction. The application for TRO was denied by SEC Hearing
Officer.

Petitioners filed a motion to dismiss on the ground that the SEC lacks
jurisdiction over the subject matter of the case. The motion was denied.

Their MR was likewise denied. They filed a petition for certiorari with
the SEC En Banc seeking a review of the hearing officers orders. The
petition and their MR were denied.

Petitioners promptly sought relief with the CA contesting the ruling of

the Commission en banc.

The CA dismissed the petition for lack of merit. The subsequent motion
for reconsideration was also denied.
ISSUES:

1. Whether the SEC has jurisdiction over the case.

2. Whether Dismissal is the remedy for non-
joinder of parties.

RULING:

1.

Clearly, the Commission has jurisdiction over the said association.

The finding of the Commission, as the administrative agency tasked with

among others the function of registering and administering corporations,
is given great weight and accorded high respect. We therefore have no
reason to disturb this factual finding relating to the clubs registration and
incorporation.

In order that the commission can take cognizance of a case, the

controversy must pertain to any of the following relationships:

a) between the corporation, partnership or association and the public;

b) between the corporation, partnership or association and its

stockholders, partners, members, or officers;

c) between the corporation, partnership, or association and the state as

far as its franchise, permit or license to operate is concerned; and

d) among the stockholders, partners or associates themselves.

The fact that the parties involved in the controversy are all stockholders
or that the parties involved are the stockholders and the corporation,
does not necessarily place the dispute within the loop of jurisdiction of
the SEC.

Jurisdiction should be determined by considering not only the status or

relationship of the parties but also the nature of the question that is the
subject of their controversy.

We rule that the present dispute is intra-corporate in character. In the

first place, the parties here involved are officers and members of the
club. Respondents claim to be members of good standing of the club
until they were purportedly stripped of their membership in illegal
fashion. Petitioners, on the other hand, are its President and Vice-
President, respectively. More significantly, the present conflict relates to,
and in fact arose from, this relation between the parties. The subject of
the complaint, namely, the legality of the expulsion from membership of
the respondents and the validity of the amendments in the clubs by-laws
are, furthermore, within the Commissions jurisdiction.

The original complaint was filed at the SEC. Hence, the SEC still
exercised quasi-judicial functions over this type of suits. It is axiomatic
that jurisdiction is conferred by the Constitution and by the laws in force
at the time of the commencement of the action.

In particular, the Commission was thereupon empowered, under Sec. 5

of P.D. 902-A, to hear and decide cases involving intra-corporate
disputes, thus:

SEC. 5. In addition to the regulatory and adjudicative functions of the

Securities and Exchange Commission over corporations, partnerships
and other forms of association registered with it as expressly granted
under existing laws and decrees, it shall have original and exclusive
jurisdiction to hear and decide cases involving:
xxx

1. b) Controversies arising out of intra-corporate or

partnership relations, between and among
stockholders, members or associates; between
any or all of them and the corporation,
partnership or association of which they are the
stockholders, members or associates,
respectively; and between such corporation,
partnership or association and the state insofar
as it concerns their individual franchise or right
to exist as such entity;

x x x.[

The enactment of R.A. 8799, otherwise known as the Securities

Regulation Code, however, transferred the jurisdiction to resolve intra-
corporate controversies to courts of general jurisdiction or the
appropriate Regional Trial Courts, thus:

5.2. The Commissions jurisdiction over all cases enumerated under

Section 5 of Presidential Decree No. 902-A is hereby transferred to
the Courts of general jurisdiction or the appropriate Regional Trial
Court:Provided, that the Supreme Court in the exercise of its authority
may designate the Regional trial Court branches that shall exercise
jurisdiction over these cases. The Commission shall retain jurisdiction
over pending cases involving intra-corporate disputes submitted for final
resolution which should be resolved within one (1) year from the
enactment of this Code. The Commission shall retain jurisdiction over
pending suspension of payments/rehabilitation cases filed as of 30 June
2000 until finally disposed.
On August 22, 2000, The SC issued a resolution, in A.M. No. 00-8-10-
SC, Directing the Court Administrator and the Securities and Exchange
Commission to cause the actual transfer of the records of such cases and
all other SEC cases affected by R.A. No. 8799 to the appropriate
Regional Trial Courts x x x.

The SC also issued another resolution designating certain branches of

the Regional Trial Court to try and decide cases formerly cognizable by
the SEC.

Consequently, the case at bar should now be referred to the appropriate

Regional Trial Court.

2.

Dismissal is not the remedy for non-joinder of parties.

Under the Rules, the remedy is to implead the non-party, claimed to be

necessary or indispensable, in the action, thus:

SEC. 11. Misjoinder and non-joinder of parties. Neither misjoinder nor

non-joinder of parties is a ground for dismissal of an action.

Parties may be dropped or added by order of the court on motion of any

party or on its own initiative at any stage of the action and on such terms
as are just. Any claim against a misjoined party may be severed and
proceeded with separately.

— M E R C A N T I L E L AW —
 DELSAN TRANSPORT
LINES, INC., vs CA G.R. No.
127897 November 15, 2001
Common carrier, Marine
Insurance, Subrogation
OCTOBER 24, 2017

FACTS:

Caltex Philippines entered into a contract of affreightment with the

petitioner, Delsan Transport Lines, Inc., for a period of 1 year whereby
the said common carrier agreed to transport Caltex’s industrial fuel oil
from the Batangas-Bataan Refinery to different parts of the country.

Under the contract, petitioner took on board its vessel, MT Maysun,

industrial fuel oil of Caltex to be delivered tothe Caltex Oil Terminal in
Zamboanga City. The shipment was insured with the private respondent,
American Home Assurance Corporation.

The vessel sank taking with it the entire cargo of fuel oil. Private
respondent paid Caltex the sum of P5,096,635.57 representing the
insured value of the lost cargo. Exercising its right of subrogation the
private respondent demanded of the petitioner the sameamount it paid to
Caltex.

Due to its failure to collect from the petitioner despite prior demand,
private respondent filed a complaint with the RTC for collection of a
sum of money. The trial court dismissed the complaint against herein
petitioner. The trial court found that the vessel, MT Maysun, was
seaworthy to undertake the voyage as determined by the Philippine
Coast Guard per Survey Certificate Report No. M5-016-MH upon
inspection during its annual dry-docking and that the incident was
caused by unexpected inclement weather condition or force majeure,
thus exempting the common carrier (herein petitioner) from liability for
the loss of its cargo.

The decision of the trial court was reversed by the Court of Appeals. In
the absence of any explanation as to what may have caused the sinking
of the vessel coupled with the finding that the same was improperly
manned, the appellate court ruled that the petitioner is liable on its
obligation as common carrier to herein private respondent insurance
company as subrogee of Caltex.

ISSUE:

Whether the payment made by the private respondent to Caltex for the
insured value of the lost cargo amounted to an admission that the vessel
was seaworthy, thus precluding any action for recovery against the
petitioner.

RULING:

NO. The payment made by the private respondent for the insured value
of the lost cargo operates as waiver of its (private respondent) right to
enforce the term of the implied warranty against Caltex under the marine
insurance policy. However, the same cannot be validly interpreted as an
automatic admission of the vessel’s seaworthiness by the private
respondent as to foreclose recourse against the petitioner for any liability
under its contractual obligation as a common carrier. The fact of
payment grants the private respondent subrogatory right which enables it
to exercise
 — M E R C A N T I L E L AW —

FLEISCHER vs. BOTICA

NOLASCO CO., INC G.R. No.
23241 March 14, 1925
Corporation Law, Shares of
stock, Transfer of shares of
stock
OCTOBER 14, 2017

FACTS:

Manuel Gonzalez was the original owner of the five shares of stock in
question, of the Botica Nolasco, Inc.

He assigned and delivered said five shares to the plaintiff, Henry

Fleischer, in consideration of a large sum of money owed by Gonzalez to
Fleischer

In his amended complaint, plaintiff, Fleischer prayed for defendant to

register in the books of the corporation five shares of its stock in his
name and to pay him the sum of P500 for damages sustained by him
resulting from the refusal of the board of directors to register the shares
of stock in question. Defendant denied the allegations and alleged that
the defendant, pursuant to article 12 of its by-laws, had preferential right
to buy from the plaintiff said shares at the par value of P100 a share, plus
P90 as dividends and that said offer was refused by the plaintiff.
Trial Court judge held that, article 12 of the by-laws of the corporation
which gives it preferential right to buy its shares from retiring
stockholders, is in conflict with Sec 35 of the Corporation Law, and
rendered a judgment ordering the defendant corporation, through its
board of directors, to register in the books of said corporation the said
five shares of stock in the name of the plaintiff, Henry Fleischer, as the
shareholder or owner.

ISSUE:

Whether article 12 of the by-laws of the Botica Nolasco, Inc., is in

conflict with the provisions of the Corporation Law.

RULING:

Art. 12 article constitutes a by-law or regulation adopted by the Botica

Nolasco, Inc., governing the transfer of shares of stock of said
corporation. The latter part of said article creates in favor of the Botica
Nolasco, Inc., a preferential right to buy, under the same conditions, the
share or shares of stock of a retiring shareholder.

The particular provisions of the Corporation Law referring to transfer of

shares of stock are as follows:

SEC. 13. Every corporation has the power:

xxx xxx xxx

(7) To make by-laws, not inconsistent with any existing law, for the
fixing or changing of the number of its officers and directors within the
limits prescribed by law, and for the transferring of its stock, the
administration of its corporate affairs, etc.

xxx xxx xxx

SEC. 35. The capital stock of stock corporations shall be divided into
shares for which certificates signed by the president or the vice-
president, countersigned by the secretary or clerk and sealed with the
seal of the corporation, shall be issued in accordance with the by-laws.
Shares of stock so issued are personal property and may be transferred
by delivery of the certificate indorsed by the owner or his attorney in
fact or other person legally authorized to make the transfer. No transfer,
however, shall be valid, except as between the parties, until the transfer
is entered and noted upon the books of the corporation so as to show the
names of the parties to the transaction, that date of the transfer, the
number of the certificate, and the number of shares transferred.

No share of stock against which the corporation holds any unpaid claim
shall be transferable on the books of the corporation.

Section 13, par.7 empowers a corporation to make by-laws, not

inconsistent with any existing law, for the transferring of its stock. It
follows from said provision, that a by-law adopted by a corporation
relating to transfer of stock should be in harmony with the law on the
subject of transfer of stock.

Sec 35 defines the nature, character and transferability of shares of

stock. Said section contemplates no restriction as to whom they may be
transferred or sold. The holder of shares, as owner of personal property,
is at liberty, under said section, to dispose of them in favor of
whomsoever he pleases, without any other limitation in this respect,
than the general provisions of law. Therefore, a stock corporation in
adopting a by-law governing transfer of shares of stock should take into
consideration the specific provisions of section 35 of Act No. 1459, and
said by-law should be made to harmonize with said provisions. It should
not be inconsistent therewith.

The by-law now in question was adopted under the power conferred
upon the corporation by section 13, paragraph 7, above quoted; but in
adopting said by-law the corporation has transcended the limits fixed by
law in the same section, and has not taken into consideration the
provisions of section 35.

As a general rule, the by-laws of a corporation are valid if they are

reasonable and calculated to carry into effect the objects of the
corporation, and are not contradictory to the general policy of the laws
of the land.

It is equally well settled that by-laws of a corporation must be

reasonable and for a corporate purpose, and always within the charter
limits. They must always be strictly subordinate to the constitution and
the general laws of the land.

The decision of the lower court is affirmed.

— C I V I L L AW , M E R C A N T I L E L AW —

KEPPEL CEBU SHIPYARD,

INC. vs. PIONEER
INSURANCE AND SURETY
CORPORATION, PIONEER
INSURANCE AND SURETY
CORPORATION vs. KEPPEL
CEBU SHIPYARD, INC. G.R.
 Nos. 180880-81 G.R. Nos.
180896-97 September 25, 2009
Article 2180 of the Civil Code,
Marine Insurance, Negligence,
Damages
OCTOBER 23, 2017

FACTS:

WG & A JEBSENS SHIPMGMT. Owner/Operator of M/V

“SUPERFERRY 3” and KEPPEL CEBU SHIPYARD, INC. (KCSI)
enter into an agreement that the Drydocking and Repair of the above-
named vessel ordered by the Owner’s Authorized Representative shall
be carried out under the Keppel Cebu Shipyard Standard Conditions of
Contract for Ship repair, guidelines and regulations on safety and
security issued by Keppel Cebu Shipyard.

In the course of its repair, M/V “Superferry 3” was gutted by fire.

Claiming that the extent of the damage was pervasive, WG&A declared
the vessel’s damage as a “total constructive loss” and, hence, filed an
insurance claim with Pioneer.

Pioneer paid the insurance claim of WG&A, which in turn, executed a

Loss and Subrogation Receipt in favor of Pioneer.

Pioneer tried to collect from KCSI, but the latter denied any
responsibility for the loss of the subject vessel. As KCSI continuously
refused to pay despite repeated demands, Pioneer, filed a Request for
Arbitration before the Construction Industry Arbitration Commission
CIAC seeking for payment of U.S.$8,472,581.78 plus interest, among
others.

The CIAC rendered its Decision declaring both WG&A and KCSI guilty
of negligence, the CIAC ordered KCSI to pay Pioneer the amount of
P25,000,000.00, with interest at 6% per annum. Both Keppel and
Pioneer appealed to the CA.

The cases were consolidated in the CA. the CA rendered a decision

dismissing petitioner’s claims in its entirety. Keppel was declared as
equally negligent.

ISSUE:

To whom may negligence over the fire that broke out on board M/V
“Superferry 3” be imputed? What is the extent of the damage, if any?

RULING:

1. The issue of negligence

Undeniably, the immediate cause of the fire was the hot work done by
Angelino Sevillejo (Sevillejo) on the accommodation area of the vessel,
specifically on Deck A. As established before the CIAC –
Pioneer contends that KCSI should be held liable because Sevillejo was
its employee who, at the time the fire broke out, was doing his assigned
task, and that KCSI was solely responsible for all the hot works done on
board the vessel. We rule in favor of Pioneer.
At the time of the fire, Sevillejo was an employee of KCSI and was
subject to the latter’s direct control and supervision.There was a lapse in
KCSI’s supervision of Sevillejo’s work at the time the fire broke out.

KCSI failed to exercise the necessary degree of caution and foresight

called for by the circumstances.
The circumstances, taken collectively, yield the inevitable conclusion
that Sevillejo was negligent in the performance of his assigned task. His
negligence was the proximate cause of the fire on board M/V
“Superferry 3.” As he was then definitely engaged in the performance of
his assigned tasks as an employee of KCSI, his negligence gave rise to
the vicarious liability of his employer43 under Article 2180 of the Civil
Code.

KCSI failed to prove that it exercised the necessary diligence incumbent

upon it to rebut the legal presumption of its negligence in supervising
Sevillejo.44 Consequently, it is responsible for the damages caused by
the negligent act of its employee, and its liability is primary and solidary.

2. Damages

In marine insurance, a constructive total loss occurs under any of the

conditions set forth in Section 139 of the Insurance Code, which
provides—
Sec. 139. A person insured by a contract of marine insurance may
abandon the thing insured, or any particular portion hereof separately
valued by the policy, or otherwise separately insured, and recover for a
total loss thereof, when the cause of the loss is a peril insured against:
(a) If more than three-fourths thereof in value is actually lost, or would
have to be expended to recover it from the peril;
(b) If it is injured to such an extent as to reduce its value more than
three-fourths; x x x.

It cannot be denied that M/V “Superferry 3” suffered widespread

damage from the fire that occurred on February 8, 2000, a covered peril
under the marine insurance policies obtained by WG&A from Pioneer.
The estimates given by the three disinterested and qualified shipyards
show that the damage to the ship would exceed P270,000,000.00, or ¾
of the total value of the policies – P360,000,000.00. These estimates
constituted credible and acceptable proof of the extent of the damage
sustained by the vessel.
Considering the extent of the damage, WG&A opted to abandon the ship
and claimed the value of its policies. Pioneer, finding the claim
compensable, paid the claim, with WG&A issuing a Loss and
Subrogation Receipt evidencing receipt of the payment of the insurance
proceeds from Pioneer.
The Loss and Subrogation Receipt issued by WG&A to Pioneer is the
best evidence of payment of the insurance proceeds to the former, and no
controverting evidence was presented by KCSI to rebut the presumed
authority of the signatory to receive such payment.

— C I V I L L AW , M E R C A N T I L E L AW —

CITYTRUST BANKING
CORPORATION vs.CA and
EMME HERRERO G.R. No.
84281 May 27,1994 Nature of
Banks, Damages, Nominal
damages, Temperate damages
OCTOBER 24, 2017

FACTS:

Private respondent averred that she, a businesswoman, made regular

deposits, starting September of 1979, with petitioner Citytrust at its
Burgos branch in Calamba, Laguna. On 15 May 1980, she deposited
with petitioner the amount of Thirty One Thousand Five Hundred
Pesos(P31,500.00), in cash, in order to amply cover 6 postdated checks
she issued. When presented for encashment upon maturity, all the checks
were dishonored due to “insufficient funds.”Petitioner, in its answer,
asserted that it was due to private respondent’s fault that her checks were
dishonored. It averred that instead of stating her correct account number,
i.e., 29000823, inh er deposit slip, she inaccurately wrote 2900823. The
RTC dismissed the complaint for lack of merit.

The CA reversed the trial court’s decision.

ISSUE: Whether petitioner bank is liable.

RULING:

We are not persuaded that defendant bank was not free from blame for
the fiasco. The depositors are not concerned with banking procedure.
That is the responsibility of the bank and its employees. Bank clients are
supposed to rely on the services extended by the bank, including the
assurance that their deposits will be duly credited them as soon as they
are made. For, any delay in crediting their account can be embarrassing
to them as in the case of plaintiff.

The point is that as a business affected with public interest and because
of the nature of its functions, the bank is under obligation to treat the
accounts of its depositors with meticulous care,always having in mind
the fiduciary nature of their relationship. However it is wrong to award,
along with nominal damages, temperate or moderate damages. The two
awards are incompatible and cannot be granted concurrently. Nominal
damages are given 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 (Art. 2221).

Temperate or moderate damages, which are more than nominal but less
than compensatory damages, on the other hand, 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 reasonable certainty
(Art. 2224, New Civil Code). In the instant case, we also find need for
vindicating the wrong done on private respondent, and we accordingly
agree with the Court of Appeals in granting to her nominal damages but
not in similarly awarding temperate or moderate damages.