Republic of the Philippines Baliwag, A & J Trading and Recontique disclaimed responsibility for the mishap.

que disclaimed responsibility for the mishap. Baliwag alleged that the
SUPREME COURT accident was caused solely by the fault and negligence of A & J Trading and its driver, Recontique. Baliwag
Baguio City charged that Recontique failed to place an early warning device at the corner of the disabled cargo truck to warn
on coming vehicles.6 On the other hand, A & J Trading and Recontique alleged that the accident was the result of
the negligence and reckless driving of Santiago, bus driver of Baliwag.7
SECOND DIVISION

After hearing, the trial court found all the defendants liable, thus:

xxx xxx xxx

G.R. No. 116110 May 15, 1996

In view thereof, the Court holds that both defendants should be held liable; the defendant
BALIWAG TRANSIT, INC., petitioner,
Baliwag Transit, Inc. for having failed to deliver the plaintiff and her son to their point of
vs.
destination safely in violation of plaintiff's and defendant Baliwag Transit's contractual
COURT OF APPEALS, SPOUSES ANTONIO GARCIA & LETICIA GARCIA, A & J TRADING, AND JULIO
relation.
RECONTIQUE, respondents.

The defendant A & J and Julio Recontique for failure to provide its cargo truck with an
early warning device in violation of the Motor Vehicle Law.8

PUNO, J.:p
This is a petition for certiorari to review the Decision1 of the Court of Appeals in CA-G.R. CV-31246 awarding
damages in favor of the spouses Antonio and Leticia Garcia for breach of contract of carriage.2
The trial court ordered Baliwag, A & J Trading and Recontique to pay jointly and severally the Garcia spouses the
following: (1) P25,000,00 hospitalization and medication fee, (2) P450,000.00 loss of earnings in eight (8) years,
(3) P2,000.00 for the hospitalization of their son Allan Garcia, (4) P50,000.00 moral damages, and (5) P30,000.00
attorney's fee.9

The records show that on July 31, 1980, Leticia Garcia, and her five-year old son, Allan Garcia, boarded Baliwag On appeal, the Court of Appeals modified the trial court's Decision by absolving A & J Trading from liability and
Transit Bus No. 2036 bound for Cabanatuan City driven by Jaime Santiago. They took the seat behind the driver. by reducing the award of attorney's fees to P10,000.00 and loss of earnings to P300,000.00, respectively. 10

At about 7:30 in the evening, in Malimba, Gapan, Nueva Ecija, the bus passengers saw a cargo truck parked at Baliwag filed the present petition for review raising the following issues:
the shoulder of the national highway. Its left rear portion jutted to the outer lane, as the shoulder of the road
was too narrow to accommodate the whole truck. A kerosene lamp appeared at the edge of the road obviously
1. Did the Court of Appeals err in absolving A & J Trading from liability and holding Baliwag
to serve as a warning device. The truck driver, Julio Recontique, and his helper, Arturo Escala, were then
solely liable for the injuries suffered by Leticia and Allan Garcia in the accident?
replacing a flat tire. The truck is owned by respondent A & J Trading.

2. Is the amount of damages awarded by the Court of Appeals to the Garcia spouses
Bus driver Santiago was driving at an in ordinately fast speed and failed to notice the truck and the kerosene
correct?
lamp at the edge of the road. Santiago's passengers urged him to slow down but he paid them no heed. Santiago
even carried animated conversations with his co-employees while driving. When the danger of collision became
imminent, the bus passengers shouted "Babangga tayo!". Santiago stepped on the brake, but it was too late. His We affirm the factual findings of the Court of Appeals.
bus rammed into the stalled cargo truck. It caused the instant death of Santiago and Escala, and injury to several
others. Leticia and Allan Garcia were among the injured passengers.
I

Leticia suffered a fracture in her pelvis and right leg. They rushed her to the provincial hospital in Cabanatuan
As a common carrier, Baliwag breached its contract of carriage when it failed to deliver its passengers, Leticia
City where she treatment. After three days, she was transferred to the National Orthopedic Hospital where she
and Allan Garcia to their destination safe and sound. A common carrier is bound to carry its passengers safely as
was confined for more than a month.3 She underwent an operation for partial hip prosthesis.4
far as human care and foresight can provide, using the utmost diligence of a very cautious person, with due
regard for all the circumstances. 11 In a contract of carriage, it is presumed that the common carrier was at fault
Allan, on the other hand, broke a leg. He was also given emergency treatment at the provincial hospital. 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 as prescribed
Spouses Antonio and Leticia Garcia sued Baliwag Transit, Inc., A & J Trading and Julio Recontique for damages in
in Articles 1733 and 1755 of the Civil Code. 12
the Regional Trial Court of Bulacan.5 Leticia sued as an injured passenger of Baliwag and as mother of Allan. At
the time of the complaint, Allan was a minor, hence, the suit initiated by his parents in his favor.
The records are bereft of any proof to show that Baliwag exercised extra ordinary diligence. On the contrary, the
evidence demonstrates its driver's recklessness. Leticia Garcia testified that the bus was running at a very high
speed despite the drizzle and the darkness of the highway. The passengers pleaded for its driver to slow down,
but their plea was ignored. 13 Leticia also revealed that the driver was smelling of liquor. 14 She could smell him
as she was seated right behind the driver. Another passenger, Felix Cruz testified that immediately before the
collision, the bus driver was conversing with a co-employee. 15 All these prove the bus driver's wanton disregard
for the physical safety of his passengers, which makes Baliwag as a common carrier liable for damages under
Article 1759 of the Civil Code:
Art. 1759. Common carriers are liable for the death of or injuries to passengers through
the negligence or willfull 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 do not cease upon proof that they exercised all the
diligence of a good father of a family in the selection or supervision of their employees.
Baliwag cannot evade its liability by insisting that the accident was caused solely by the negligence of A & J
Trading and Julio Recontique. It harps on their alleged non use of an early warning device as testified to by Col.
Demetrio dela Cruz, the station commander of Gapan, Nueva Ecija who investigated the incident, and Francisco
Romano, the bus conductor.
The records do not bear out Baliwag's contention. Col. dela Cruz and Romano testified that they did not see any
early warning device at the scene of the accident. 16 They were referring to the triangular reflectorized plates in
red and yellow issued by the Land Transportation Office. However, the evidence shows that Recontique and
Ecala placed a kerosene lamp or torch at the edge of the road, near the rear portion of the truck to serve as an
early warning
device. 17 This substantially complies with Section 34 (g) of the Land Transportation and Traffic Code, to wit:
(g) Lights and reflector when parked or disabled. — Appropriate parking lights or flares
visible one hundred meters away shall be displayed at the corner of the vehicle whenever
such vehicle is parked on highways or in places that are not well-lighted or, is placed in
such manner as to endanger passing traffic. Furthermore, every motor vehicle shall be
provided at all times with built-in reflectors or other similar warning devices either pasted,
painted or attached at its front and back which shall likewise be visible at night at least
one hundred meters away. No vehicle not provided with any of the requirements
mentioned in this subsection shall be registered. (emphasis supplied)
Baliwag's argument that the kerosene lamp or torch does not substantially comply with the law is untenable.
The aforequoted law clearly allows the use not only of an early warning device of the triangular reflectorized
plates variety but also parking lights or flares visible one hundred meters away. Indeed, Col. dela Cruz himself
admitted that a kerosene lamp is an acceptable substitute for the reflectorized plates. 18 No negligence,
therefore, may be imputed to A & J Trading and its driver, Recontique.
Anent this factual issue, the analysis of evidence made by the Court of Appeals deserves our concurrence, viz:
xxx xxx xxx
In the case at bar, both the injured passengers of the Baliwag involved in the accident
testified that they saw some sort of kerosene or a torch on the rear portion of the truck
before the accident. Baliwag Transit's conductor attempted to defeat such testimony by
declaring that he noticed no early warning device in front of the truck.
Among the testimonies offered by the witnesses who were present at the scene of the
accident, we rule to uphold the affirmative testimonies given by the two injured
passengers and give less credence to the testimony of the bus conductor who solely
testified that no such early warning device exists.
The testimonies of injured passengers who may well be considered as disinterested
witness appear to be natural and more probable than the testimony given by; Francisco
Romano who is undoubtedly interested in the outcome of the case, being the conductor
of the defendant-appellant Baliwag Transit Inc.
It must be borne in mind that the situation then prevailing at the time of the accident was
admittedly drizzly and all dark. This being so, it would be improbable and perhaps
impossible on the part of the truck helper without the torch nor the kerosene to remove
the flat tires of the truck . Moreover, witness including the bus conductor himself
admitted that the passengers shouted, that they are going to bump before the collision
which consequently caused the bus driver to apply the brake 3 to 4 meters away from the
truck. Again, without the kerosene nor the torch in front of the truck, it would be
improbable for the driver, more so the passengers to notice the truck to be bumped by
the bus considering the darkness of the place at the time of the accident.
xxx xxx xxx
While it is true that the investigating officer testified that he found no early warning
device at the time of his investigation, We rule to give less credence to such testimony
insofar as he himself admitted on cross examination that he did not notice the presence of
any kerosene lamp at the back of the truck because when he arrived at the scene of the
accident, there were already many people surrounding the place (TSN, Aug. 22, 1989, p.
13). He further admitted that there exists a probability that the lights of the truck may
have been smashed by the bus at the time of the accident considering the location of the
truck where its rear portion was connected with the front portion of the bus (TSN, March
29, 1985, pp. Investigator's testimony therefore did not confirm nor deny the existence of
such warning device, making his testimony of little probative value. 19
We now review the amount of damages awarded to the Garcia spouses.
First, the propriety of the amount awarded as hospitalization and medical fees. The award of P25,000.00 is not
supported by the evidence on record. The Garcias presented receipts marked as Exhibits "B-1" to "B-42" but
their total amounted only to P5,017.74. To be sure, Leticia testified as to the extra amount spent for her medical
needs but without more reliable evidence, her lone testimony cannot justify the award of P25,000.00. To prove
actual damages, the best evidence available to the injured party must be presented. The court cannot rely on
uncorroborated testimony whose truth is suspect, but must depend upon competent proof that damages have
been actually suffered. 20 Thus, we reduce the actual damages for medical and hospitalization expenses to
P5,017.74.
Second, we find as reasonable the award of P300,000.00 representing Leticia's lost earnings. Before the
accident, Leticia was engaged in embroidery, earning P5,000.00 per month. 21 Her injuries forced her to stop
working. Considering the nature and extent of her injuries and the length of time it would take her to
recover, 22 we find it proper that Baliwag should compensate her lost income for five (5) years. 23

Third, the award of moral damages is in accord with law. In a breach of contract of carriage, moral damages are
recoverable if the carrier, through its agent, acted fraudulently or in bad faith. 24 The evidence show the gross
negligence of the driver of Baliwag bus which amounted to bad faith. Without doubt, Leticia and Allan
experienced physical suffering, mental anguish and serious anxiety by reason of the accident. Leticia underwent
an operation to replace her broken hip bone with a metal plate. She was confined at the National Orthopedic
Hospital for 45 days. The young Allan was also confined in the hospital for his foot injury. Contrary to the
contention of Baliwag, the decision of the trial court as affirmed by, the Court of Appeals awarded moral
damages to Antonio and Leticia Garcia not in their capacity as parents of Allan. Leticia was given moral damages
as an injured party. Allan was also granted moral damages as an injured party but because of his minority, the
award in his favor has to be given to his father who represented him in the suit.

Finally, we find the award of attorney's fees justified. The complaint for damages was instituted by the Garcia
spouses on December 15, 1982, following the unjustified refusal of Baliwag to settle their claim. The Decision
was promulgated by the trial court only on January 29, 1991 or about nine years later. Numerous pleadings were
filed before the trial court, the appellate court and to this Court. Given the complexity of the case and the
amount of damages involved, 25 the award of attorney's fee for P10,000.00 is just and reasonable.

IN VIEW WHEREOF, the Decision of the respondent Court of Appeals in CA-G.R. CV-31246 is AFFIRMED with the
MODIFICATION reducing the actual damages for hospitalization and medical fees to P5,017.74. No costs.

SO ORDERED.
 WHEREFORE, from the evidence adduced, judgment is hereby rendered in favor of plaintiff ordering
the defendant as follows:

1) To pay plaintiff the sum of P2,000,000.00 as moral damages, with legal rate of interest;
the sum of P90,000.00 per month and P18,000.00 per month representing plaintiff's
unrealized profits from his cement and gasoline station business, respectively, to
commence from October 16, 1984, with legal rate of interest until fully paid; the sum of
P250,000.00 as exemplary damages;

2) To off-set the sum of P960,000.00 deposited by plaintiff on January 20, 1984 and
THIRD DIVISION entered in his Passbook No. 38240, together with its incremental interests computed at
banking rate and to commence from January 20, 1984 with his agricultural loan account in
the sum of P1,300,000.00 with interest thereon computed at fourteen (14%) percent per
G.R. No. 111584 September 17, 2001
annum, to commence from January 4, 1984, covered by a real estate mortgage, both of
which shall have a cut-off time frame on the date of this decision;
PRODUCERS BANK OF THE PHILIPPINES, petitioner,
vs.
3) That should the said savings deposit and its interest be sufficient to cover the off-
COURT OF APPEALS and SPOUSES SALVADOR Y. CHUA and EMILIA U. CHUA, respondents.
setting, compensation shall take place and to be taken from the amounts awarded to
plaintiff in the form of moral, actual and compensatory damages;
MELO, J.:
4) That the time loan in the sum of P175,000.00 and the clean loan of P400,000.00, both
The instant petition assails the decision of the Court of Appeals in its CA G.R.CV No. 20220, dated October 31, without interest, shall be off-settled by the moral, actual and compensatory damages
1991, affirming with modification the decision of Branch 48 of the Regional Trial Court of the 6th Judicial Region herein awarded to plaintiff;
stationed in Bacolod City, as well as the resolution dated August 12, 1993 denying petitioner's motion for partial
consideration. Undersigned ponente was given this case in pursuance of A. M. No. 00-9-03-SC dated February
5) That after compensation or set-off had taken place, to pay plaintiff the balance of the
27, 2001 distributing the so-called back-log cases.
adjudged moral, actual and compensatory damages, with legal rate of interest until fully
paid;
The generative facts of the case may be chronicled as follows:
6) To render an accounting to plaintiff with respect to his Account Nos. 0142-0014-0 and
Sometime in April, 1982, respondent Salvador Chua was offered by Mr. Jimmy Rojas, manager of petitioner 042-0014-1 for the period covering January to December, 1982;
bank, to transfer his account from Pacific Banking Corporation to herein petitioner Producers Bank of the
Philippines. In view of Rojas' assurances of longer loan terms and lower rates of interest, respondent spouses
7) That in order to make the bank's record complete, to reform the deed of real estate
opened and maintained substantial savings and current deposits with the Bacolod branch of petitioner bank.
mortgage conformably with the agreement by stipulating in the said document that the
Likewise, private respondents obtained various loans from petitioner bank, one of which was a loan for
maturity date of the agricultural loan is April 5, 1987 at the same rate of interest of
P2,000,000.00 which was secured by a real estate mortgage and payable within a period of three (3) years or
fourteen (14%) percent per annum, deducting from the original amount of the loan the
from 1982 to 1985. On January 20, 1984, private respondents deposited with petitioner bank the total sum of
payments made on the principal and interests; this reformation shall take place
P960,000.00, which was duly entered in private respondents' savings account passbook. However, petitioner
simultaneously with the off-setting of accounts;
bank failed to credit this deposit in private respondents' savings account due to the fact that its Branch Manager,
Sixto Castillo, absconded with the money of the bank's depositors. Also, petitioner bank dishonored the checks
drawn out by private respondents in favor of their various creditors on the ground of insufficient funds, despite 8) To pay plaintiff the sum equivalent to fifteen (15%) percent of the amount representing
the fact that at that time, the balance of private respondents' deposit was in the amount of P1,051,051.19. the balance of the sums awarded as moral, actual and compensatory damages as
These events prompted private respondents to request for copies of their ledgers covering their savings and attorney's fees;
current accounts, but petitioner bank refused. Due to petitioner bank's refusal to furnish private respondents
copies of their ledgers, private respondents instituted on January 30, 1984 an action for damages against 9) To pay plaintiff the costs of suit;
petitioner bank which was docketed as Civil Case No. 2718. On the other hand, petitioner bank filed with the
City Sheriff of Bacolod a petition for extrajudicial foreclosure of the real estate mortgage during the pendency of
Civil Case No. 2718. As a result, private respondents filed a complaint for injunction and damages docketed as 10) The writ of preliminary injunction issued by this Court is rendered permanent; and
Civil Case No. 3276, alleging that the petition for extrajudicial foreclosure was without basis and was instituted
maliciously in order to harass private respondents. On April 26, 1988, the trial court rendered its decision on the 11) The counterclaim is hereby dismissed.
latter case, the dispositive portion of which reads:
 SO ORDERED.
(Rollo, pp. 261-263.)
On October 31, 1991, upon appeal by petitioner bank, the Court of Appeals modified the decision of the trial
court as follows:
WHEREFORE, from the evidence adduced, judgment is hereby rendered as follows:
1. Ordering the defendant —
a. To pay plaintiff the sum of P500,000.00 as moral and exemplary damages;
b. To pay the sum of P18,000.00 per month representing plaintiffs' unrealized profits from
his gasoline station business to commence from October 16, 1984, with legal rate of
interest, until fully paid;
c. To allow the plaintiffs to offset their financial obligation with the defendant bank by the
moral, exemplary, actual and compensatory damages herein awarded in favor of the
aforesaid plaintiffs;
d. If, after the off-setting, a balance remains in favor of the plaintiffs, to pay the said
plaintiffs such balance of the adjudged moral, exemplary, actual and compensatory
damages, with legal rate of interest until fully paid, as of the time of off-setting;
e. To render an accounting to plaintiffs with respect to their Account Nos. 0142-0014-0
and 042-0014-1 for the period covering January to December, 1982;
f. To pay plaintiffs the sum of P100,000.00 as attorney's fees.
g. To pay the costs of suit.
2. Ordering the plaintiffs —
a. To settle their loan obligation with the defendant bank within 90 days from the finality
of this decision, subject to the resolution of this Court to the effect that they shall be
relieved from the payment of penalties and surcharges on their outstanding balance
starting January 20, 1984;
3. The plaintiffs' prayer for reformation of their mortgage contract or annulment thereof is hereby
denied;
4. The counterclaim of defendant-appellant are hereby dismissed.
SO ORDERED.
(Rollo, pp. 86-87.)
Petitioner moved for a partial reconsideration of the above decision but the same was denied on August 12,
1993. Hence, the instant petition with the following submissions which allegedly warrant our review of the
assailed decision, viz.:
1. The Court of Appeals erred in not ruling that the application for extrajudicial foreclosure of real
estate mortgage is legal and valid;
2. The Court of Appeals erred in not granting petitioner bank its right to foreclose extrajudicially the
real estate mortgage and to proceed with its application for extrajudicial foreclosure of real estate
mortgage;
3. The Court of Appeals erred in ruling that private respondents be relieved from the payment of
penalties and surcharges on their outstanding balance starting January 20, 1984;
4. The Court of Appeals erred in awarding moral and exemplary damages of P500,000.00, unrealized
profit of P18,000.00 per month, and attorney's fees of P100,000.00 against petitioner bank;
5. The Court of Appeals erred in ordering an accounting to private respondents with respect to their
Account Nos. 0142-0014-0 and 042-0014-1 for the period covering January to December, 1982.
It should at once be apparent that except for the first and second imputed errors which involve petitioner bank's
right to foreclose extrajudicially the real estate mortgage, the resolution of the assigned errors entails a review
of the factual conclusions of the appellate court and the evidentiary bases thereof. Such an assessment is not, as
a rule, proper in appeals from the Court of Appeals which should be confined to a consideration and
determination only of issues of law as its findings of fact are deemed conclusive (Villanueva vs. Court of Appeals,
294 SCRA 90 [1998]) especially so in this case because the findings of fact of the appellate court concur with
those of the trial court. To reiterate, this Court's jurisdiction is only limited to reviewing errors of law in the
absence of any showing that the findings complained of are totally devoid of support in the record or they are
glaringly erroneous as to constitute serious abuse of discretion. Nonetheless, considering the amount involved,
as well as for the satisfaction of the parties who have vigorously pursued this case since 1984, the Court, in the
exercise of its discretion, examined the factual bases, particularly with respect to the propriety of the damages
awarded to private respondents.
The first and second assignments of error, being interrelated, shall be jointly discussed.
Petitioner contends that it has the right to foreclose the real estate mortgage executed by private respondents
in its favor as the loan under the real estate mortgage contract had become due and demandable. This
argument is not well-taken. Foreclosure is but a necessary consequence of non-payment of a mortgage
indebtedness. As a rule, the mortgage can be foreclosed only when the debt remains unpaid at the time it is due
(Gov't. of the P.I. vs. Espejo, 57 Phil. 496 [1932]). As found by the trial court and the Court of Appeals, and as
borne by the evidence on record, private respondents were constantly paying their loan obligations with
petitioner bank. In fact the amount of P960,000.00 was properly deposited with petitioner bank as evidenced by
the corresponding deposit slip and the entry made in private respondents' savings account passbook. It is,
therefore, not the fault of private respondents that their payment amounting to P960,000.00 was not credited
to their account. Thus, it is certain that the loan which was secured by a real estate mortgage cannot be
considered as unpaid so as to warrant foreclosure on the mortgage.
Clearly, private respondents have not yet defaulted on the payment of their loans. Moreover, the term of the or compensatory damages one is the loss of what a person already possesses, and the other is the failure to
loan, as agreed upon by the parties, is three years, or from 1982 to 1985. But petitioner filed its application for receive as a benefit that which would have pertained to him (Tolentino, Civil Code of the Phil., Vol. V, 1992 ed.,
extrajudicial foreclosure on October 15, 1984. Indisputably, the application for foreclosure of the mortgage on pp. 633-636). In the latter instance, the familiar rule is that damages consisting of unrealized profits, frequently
October 15, 1984 was premature because by then, private respondents' loan was not yet due and demandable. referred as "ganacias frustradas" or "lucrum cessans," are not to be granted on the basis of mere speculation,
conjecture, or surmise, but rather by reference to some reasonably definite standard such as market value,
established experienced, or direct inference from known circumstances (Talisay-Silay Milling Co., Inc. vs.
Likewise, both the Court of Appeals and the trial court found that private respondents are entitled to moral and
Asociacion de Agricultores de Talisay-Silay, Inc., 247 SCRA 361 [1995])
exemplary damages. We agree. Moral and exemplary damages may be awarded without proof of pecuniary loss.
In awarding such damages, the court shall take into account the circumstances obtaining in the case and assess
damages according to its discretion. As borne out by the record of this case, private respondents are engaged in In the case at bar, actual damages in the form of unrealized profits were awarded on the basis of the sole
several businesses, such as rice and corn trading, cement dealership, and gasoline proprietorship. The dishonor testimony of private respondent Salvador Chua, to wit:
of private respondents' checks and the foreclosure initiated by petitioner adversely affected the credit standing
as well as the business dealings of private respondents as their suppliers discontinued credit lines resulting in the
Atty. Chua:
collapse of their businesses. In the case of Leopoldo Araneta vs. Bank of America (40 SCRA 144 [1971]), we held
that:
Q: You mentioned earlier during your direct testimony that you are engaged in gasoline business.
Do you have a gasoline station?
"The financial credit of a businessman is a prized and valuable asset, it being a significant part of the
foundation of his business. Any adverse reflection thereon constitutes some financial loss to him."
A: Yes, sir.
The damage to private respondents' reputation and social standing entitles them to moral damages. Article
2217, in relation to Article 2220, of the Civil Code explicitly provides that "moral damages include physical Q: Where is that located?
suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social
humiliation, and similar injury." Obviously, petitioner bank's wrongful act caused serious anxiety, A: It is located at Corner Araneta-San Sebastian Sts.
embarrassment, and humiliation to private respondents for which they are entitled to recover moral damages in
the amount of P300,000.00 which we deem to be reasonable.
Q: Before the filing of the Extra Judicial Foreclosure, how much more or less, you earned from
that gasoline station by way of conservative estimate?
The award of exemplary damages is in order in view of the malicious and unwarranted application for
extrajudicial foreclosure by petitioner which was obviously done to harass, embarrass, annoy, or ridicule private
respondents. Likewise, petitioner, in its application for extrajudicial foreclosure, included the other loans of A: In my gasoline business, based on my record, I have an average of 114,000 liters.
private respondents which were not covered by the real estate mortgage agreement, such as the loan of
P175,000.00 which was a time loan, and the amount of P400,000.00 which was a clean loan. Moreover, Q: Do you mean to say you can dispose 114,000 liters a month?
petitioner unjustifiably refused to give private respondents copies of their account ledgers which would show
the deposits made by them. Also, petitioner bank's failure to credit the deposit in the account of private
respondents constituted gross negligence in the performance of its contractual obligation which amounts to A: Yes, sir.
evident bad faith. Verily, all these acts of petitioner were accompanied by bad faith and done in wanton,
fraudulent and malevolent manner warranting the award of exemplary damages in favor of private respondents, Q: How much is the mark up per liter?
in accordance with Article 2232 of the Civil Code which provides:
A: Before the publication of the Extra Judicial Foreclosure the markup is P0.27 per liter. So, it
ART. 2232. In contracts and quasi-contracts, the court may award exemplary damages if the comes out that the profit is P30,78.00 (sic).
defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner.
Q: How much is your overhead for disposing that much liters of gasoline every month?
Of course, a plaintiff need not prove the actual extent of exemplary damages, for its determination is addressed
to the sound discretion of the court upon proof of the plaintiff's entitlement to moral, temperate, or
A: The overhead is about 12,280.00.
compensatory damages (Article 2234, Civil Code). In the instant case, exemplary damages in the amount of
P150,000.00 are proper.
Q: That will give you an average of P18,000.00 a month?
Anent the award of actual damages, the Court of Appeals granted private respondents the amount of
P18,000.00 per month representing private respondents' unrealized profits from his gasoline station business, to A: Yes, sir.
commence from October 16, 1984. Under Articles 2199 and 2200 of the Civil Code, actual or compensatory
damages are those awarded in satisfaction of, or in recompense for, loss or injury sustained. They proceed from Q: After the filing of the Extra Judicial Foreclosure, what happened to your gasoline business?
a sense of natural justice and are designed to repair the wrong that has been done. There are two kinds of actual
 A: Because of the publication of the Extra Judicial Foreclosure I did not have credit line anymore. (2) when the defendant's act or omission has compelled the plaintiff to litigate with third
Since I have no capital I was forced to sell my right to operate to my relatives. persons or to incur expenses to protect his interest;

(tsn, March 25, 1986, pp. 9-12) WHEREFORE, the decision of the Court of Appeals in its CA-G.R. CV No. 20220 is affirmed with MODIFICATION
only as to the award of damages in that petitioner bank is ordered to pay private respondents the following:

However, other than the testimony of Salvador Chua, private respondents failed to present documentary 1. Three Hundred Thousand Pesos (P300,000.00) as moral damages;
evidence which is necessary to substantiate their claim for actual or compensatory damages. In order to recover
this kind of damages, the injured party must prove his case, thus: 2. One Hundred Fifty Thousand Pesos (P150,000.00) as exemplary damages; and

When the existence of a loss is established, absolute certainty as to its amount is not required. The benefit to be 3. One Hundred Thousand Pesos (P100,000.00) as attorney's fees and litigation expenses.
derived from a contract which one of the parties has absolutely failed to perform is of necessity to some extent,
a matter of speculation, but the injured party is not to be denied for that reason alone. He must produce the
best evidence of which his case is susceptible and if that evidence warrants the inference that he has been In all other respects, the said judgment is affirmed.
damaged by the loss of profits which he might with reasonable certainty have anticipated but for the
defendant's wrongful act, he is entitled to recover. (Cerreno vs. Tan Chuco, 28 Phil. 312 [1914] quoted in Central SO ORDERED.
Bank of the Philippines vs. Court of Appeals, 63 SCRA 431 [1975])

Applying the foregoing test to the instant case, the Court finds the evidence of private respondents insufficient
to be considered within the purview of "best evidence." The bare assertion of private respondent Salvador Chua
that he lost an average of P18,000.00 per month is inadequate if not speculative and should be admitted with
extreme caution especially because it is not supported by independent evidence. Private respondents could
have presented such evidence as reports on the average actual profits earned by their gasoline business, their
financial statements, and other evidence of profitability which could aid the court in arriving with reasonable
certainty at the amount of profits which private respondents failed to earn. Private respondents did not even
present any instrument or deed evidencing their claim that they have transferred their right to operate their
gasoline station to their relatives. We cannot, therefore, sustain the award of P18,000.00 a month as unrealized
profits commencing from October 16, 1984 because this amount is not amply justified by the evidence on
record.

Further, well-settled is the rule that even if the petition for extrajudicial foreclosure filed by petitioner against
private respondents is clearly unfounded, this does not necessarily mean, in the absence of specific facts proving
damages, that actual damage has been sustained. The Court cannot rely on speculations as to the fact and
amount of damages. It must depend on actual proof of the damages alleged to have been suffered (Perfecto vs.
Gonzales, 128 SCRA 635 [1984]).

Finally, the award of attorney's fees as part of damages is deemed just and equitable under the circumstances.
Attorney's fees may be awarded when a party is compelled to litigate or to incur expenses to protect his interest
by reason of an unjustified act of the other party (Ching Sen Ben vs. Court of Appeals, 314 SCRA 762 [1999]). In
this case, petitioner bank's act of not crediting private respondents' deposit of P960,000.00, as well as the
premature filing of the extrajudicial foreclosure, have compelled private respondents to institute an action for
injunction and damages primarily in order to protect their rights and interests. The award of attorney's fees is
also justified under Article 2208 of the Civil Code which provides:

ART. 2208. In the absence of stipulation, attorney's fees and expenses of litigation, other than judicial
costs, cannot be recovered, except:

(1) when exemplary damages are awarded;


FIRST DIVISION
G.R. No. 152040 March 31, 2006
MARIKINA AUTO LINE TRANSPORT CORPORATION and FREDDIE L. SUELTO, Petitioners,
vs.
PEOPLE OF THE PHILIPPINES and ERLINDA V. VALDELLON, Respondents.
DECISION
CALLEJO, SR., J.:
Before the Court is a Petition for Review on Certiorari of the Decision1 of the Court of Appeals (CA) in CA-G.R. CR
No. 16739 affirming the Joint Decision of the Regional Trial Court (RTC) in Criminal Case No. Q-93-42629 and Civil
Case No. Q-93-16051, where Freddie Suelto was convicted of reckless imprudence resulting in damages to
property.
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.2
At around 2:00 p.m. on October 3, 1992, Suelto was driving the aforementioned passenger bus along Kamias
Road, Kamuning, Quezon City, going towards Epifanio de los Santos Avenue (EDSA). The bus suddenly swerved
to the right and struck the terrace of the commercial apartment owned by Valdellon located along Kamuning
Road.3 Upon Valdellon’s request, the court ordered Sergio Pontiveros, the Senior Building Inspection Officer of
the City Engineer’s Office, to inspect the damaged terrace. Pontiveros submitted a report enumerating and
describing the damages:
(1) The front exterior and the right side concrete columns of the covered terrace were vertically
displaced from its original position causing exposure of the vertical reinforcement.
(2) The beams supporting the roof and parapet walls are found with cracks on top of the displaced
columns.
(3) The 6″ CHB walls at [the] right side of the covered terrace were found with cracks caused by this
accident.
(4) The front iron grills and concrete balusters were found totally damaged and the later [sic] beyond
repair.4
He recommended 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."5
Photographs6 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 P171,088.46.7
In a letter dated October 19, 1992 addressed to the bus company and Suelto, Valdellon demanded payment
of P148,440.00, within 10 days from receipt thereof, to cover the cost of the damage to the terrace.8 The bus
company and Suelto offered a P30,000.00 settlement which Valdellon refused.9
Valdellon filed a criminal complaint for reckless imprudence resulting in damage to property against Suelto.
After the requisite preliminary investigation, an Information was filed with the RTC of Quezon City. The
accusatory portion of the Information reads:
That on or about the 3rd day of October 1992, in Quezon City, Philippines, the said accused, being then the
driver and/or person in charge of a Marikina Auto Line bus bearing Plate No. NVC-849, did then and there
unlawfully, and feloniously drive, manage, and operate the same along Kamias Road, in said City, in a careless,
reckless, negligent, and imprudent manner, by then and there making the said vehicle run at a speed greater
than was reasonable and proper without taking the necessary precaution to avoid accident to person/s and
damage to property, and considering the condition of the traffic at said place at the time, causing as a
consequence of his said carelessness, negligence, imprudence and lack of precaution, the said vehicle so driven,
managed and operated by him to hit and bump, as in fact it hit and bump a commercial apartment belonging to
ERLINDA V. VALDELLON located at No. 31 Kamias Road, this City, thereby causing damages to said apartment in
the total amount of P171,088.46, Philippine Currency, to her damage and prejudice in the total amount
aforementioned.
CONTRARY TO LAW.10
Valdellon also filed a separate civil complaint against Suelto and the bus company for damages. She prayed that
after due proceedings, judgment be rendered in her favor, thus:
WHEREFORE, it is respectfully prayed of this Honorable Court to issue a writ of preliminary attachment against
the defendants upon approval of plaintiff’s bond, and after trial on the merits, to render a decision in favor of
the plaintiff, ordering the defendants, jointly and severally, to pay –
a) the total sum of P171,088.46 constituting the expenses for the repair of the damaged apartment of
plaintiff, with interests to be charged thereon at the legal rate from the date of the formal demand
until the whole obligation is fully paid;
b) the sum of not less than P20,000.00 each as compensatory and exemplary damages;
c) the sum of P20,000.00 as attorney’s fees and the sum of P1,000.00 for each appearance of
plaintiff’s counsel; and costs of suit;
PLAINTIFF further prays for such other reliefs as may be just and equitable in the premises.11
A joint trial of the two cases was ordered by the trial court.12
The trial court conducted an ocular inspection of the damaged terrace, where defendants offered to have it
repaired and restored to its original state. Valdellon, however, disagreed because she wanted the building
demolished to give way for the construction of a new one.13
During the trial, Valdellon testified on the damage caused to the terrace of her apartment, and, in support
thereof, adduced in evidence a receipt for P35,000.00, dated October 20, 1993, issued by the BB Construction
and Steel Fabricator for "carpentry, masonry, welding job and electrical [work]."14
Pontiveros of the Office of the City Engineer testified that there was a need to change the column of the terrace,
but that the building should also be demolished because "if concrete is destroyed, [one] cannot have it restored
to its original position."15
Engr. Jesus Regal, Jr., the proprietor of the SSP Construction, declared that he inspected the terrace and
estimated the cost of repairs, including labor, at P171,088.46.
Suelto testified that at 2:00 p.m. on October 3, 1992, he was driving the bus on its way to Ayala Avenue, Makati,
Metro Manila. When he reached the corner of K-H Street at Kamias Road, Quezon City, a passenger jeepney
suddenly crossed from EDSA going to V. Luna and swerved to the lane occupied by the bus. Suelto had to swerve
the bus to the right upon which it hit the side front of the terrace of Valdellon’s two-door apartment.16 Based on
his estimate, the cost to the damage on the terrace of the apartment amounted to P40,000.00.17 On cross-
examination, Suelto declared that he saw the passenger jeepney when it was a meter away from the bus. Before
then, he had seen some passenger jeepneys on the right trying to overtake one another.18
Architect Arnulfo Galapate testified that the cost of the repair of the damaged terrace amounted
to P55,000.00.19
On April 28, 1994, 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. The fallo of the decision reads:
WHEREFORE, finding the accused FREDDIE SUELTO Y LIWAG guilty beyond reasonable doubt of the crime of
Reckless Imprudence Resulting in Damage to Property, said accused is hereby sentenced to suffer imprisonment
of ONE (1) YEAR.
With respect to the civil liability, judgment is hereby rendered in favor of plaintiff Erlinda Valdellon and against
defendant Marikina Auto Line Transport Corporation and accused Freddie Suelto, where both are ordered,
jointly and severally, to pay plaintiff:
a. the sum of P150,000.00, as reasonable compensation sustained by plaintiff for her damaged
apartment;
b. the sum of P20,000.00, as compensatory and exemplary damages;
c. the sum of P20,000.00, as attorney’s fees; and,
d. the costs of suit.
SO ORDERED.20
MALTC and Suelto, now appellants, appealed the decision to the CA, alleging that the prosecution failed to prove
Suelto’s guilt beyond reasonable doubt. They averred that the prosecution merely relied on Valdellon, who
testified only on the damage caused to the terrace of her apartment which appellants also alleged was
excessive. Appellant Suelto further alleged that he should be acquitted in the criminal case for the prosecution’s
failure to prove his guilt beyond reasonable doubt. He maintained that, in an emergency case, he was not, in
law, negligent. Even if the appellate court affirmed his conviction, the penalty of imprisonment imposed on him
by the trial court is contrary to law.
In its Brief for the People of the Philippines, the Office of the Solicitor General (OSG) submitted that the
appealed decision should be affirmed with modification. On Suelto’s claim that the prosecution failed to prove
his guilt for the crime of reckless imprudence resulting in damage to property, the OSG contended that, applying
the principle of res ipsa loquitur, the prosecution was able to prove that he drove the bus with negligence and
recklessness. The OSG averred that the prosecution was able to prove that Suelto’s act of swerving the bus to
the right was the cause of damage to the terrace of Valdellon’s apartment, and in the absence of an explanation
to the contrary, the accident was evidently due to appellant’s want of care. Consequently, the OSG posited, the
burden was on the appellant to prove that, in swerving the bus to the right, he acted on an emergency, and
failed to discharge this burden. However, the OSG averred that the trial court erred in sentencing appellant to a
straight penalty of one year, and recommended a penalty of fine.
On June 20, 2000, the CA rendered judgment affirming the decision of the trial court, but the award for actual
damages was reduced to P100,000.00. The fallo of the decision reads:
WHEREFORE, premises considered, the decision dated April 28, 1994, rendered by the court a quo is AFFIRMED
with the modification that the sum of P150,000.00 as compensation sustained by the plaintiff-appellee for her
damaged apartment be reduced to P100,000.00 without pronouncement as to costs.
SO ORDERED.21
Appellants filed a Motion for Reconsideration, but the CA denied the same.22
MALTC and Suelto, now petitioners, filed the instant petition reiterating its submissions in the CA: (a) the
prosecution failed to prove the crime charged against petitioner Suelto; (b) the prosecution failed to adduce
evidence to prove that respondent suffered actual damages in the amount of P100,000.00; and (c) the trial court
erred in sentencing petitioner Suelto to one (1) year prison term.
On the first issue, petitioners aver that the prosecution was mandated to prove that petitioner Suelto acted with
recklessness in swerving the bus to the right thereby hitting the terrace of private respondent’s apartment.
However, the prosecution failed to discharge its burden. On the other hand, petitioner Suelto was able to prove
that he acted in an emergency when a passenger jeepney coming from EDSA towards the direction of the bus
overtook another vehicle and, in the process, intruded into the lane of the bus.
On the second issue, petitioners insist that private respondent was able to prove only the amount of P35,000.00
by way of actual damages; hence, the award of P100,000.00 is barren of factual basis.
On the third issue, petitioner Suelto posits that the straight penalty of imprisonment recommended by the trial
court, and affirmed by the CA, is contrary to Article 365 of the Revised Penal Code.
The petition is partially granted.
On the first issue, we find and so resolve that respondent 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. Although she did not testify to seeing the incident as it
happened, petitioner Suelto himself admitted this in his answer to the complaint in Civil Case No. Q-93-16051,
and when he testified in the trial court.
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.
We have reviewed the evidence on record and find that, as ruled by the trial court and the appellate court,
petitioners failed to prove that petitioner 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’s defense 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. The sudden emergency rule was enunciated by
this Court in Gan v. Court of Appeals,23 thus:
[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.
Under Section 37 of Republic Act No. 4136, as amended, otherwise known as the Land Transportation and
Traffic Code, motorists are mandated to drive and operate vehicles on the right side of the road or highway:
SEC. 37. Driving on right side of highway. – Unless a different course of action is required in the interest of the
safety and the security of life, person or property, or because of unreasonable difficulty of operation in
compliance herewith, every person operating a motor vehicle or an animal-drawn vehicle on a highway shall
pass to the right when meeting persons or vehicles coming toward him, and to the left when overtaking persons
or vehicles going the same direction, and when turning to the left in going from one highway to another, every
vehicle shall be conducted to the right of the center of the intersection of the highway.
Section 35 of the law provides, thus:
Sec. 35. Restriction as to speed.—(a) Any person driving a motor vehicle on a highway shall drive the same at a
careful and prudent speed, not greater nor less than is reasonable and proper, having due regard for the traffic,
the width of the highway, and of any other condition then and there existing; and no person shall drive any
motor vehicle upon a highway at such a speed as to endanger the life, limb and property of any person, nor at a
speed greater than will permit him to bring the vehicle to a stop within the assured clear distance ahead
(emphasis supplied).
In relation thereto, 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 Code
when he suddenly swerved the bus to the right, thereby causing damage to the property of private respondent.
However, the trial court correctly rejected petitioner Suelto’s defense, in light of his contradictory testimony vis-
à-vis his Counter-Affidavit submitted during the preliminary investigation:
It is clear from the photographs submitted by the prosecution (Exhs. C, D, G, H & I) 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." Such a conclusion finds support in the decision of the Supreme Court in People vs. Ison, 173 SCRA 118,
where the Court stated that "physical evidence is of the highest order. It speaks more eloquently than a hundred
witnesses." 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.
In addition to this, the accused has made conflicting statements in his counter-affidavit and his testimony in
court. In the former, he stated that the reason why he swerved to the right was because he wanted to avoid the
passenger jeepney in front of him that made a sudden stop. But, in his testimony in court, he said that it was to
avoid a passenger jeepney coming from EDSA that was overtaking by occupying his lane. Such glaring
inconsistencies on material points render the testimony of the witness doubtful and shatter his credibility.
Furthermore, the variance between testimony and prior statements renders the witness unreliable. Such
inconsistency results in the loss in the credibility of the witness and his testimony as to his prudence and
diligence.
As already maintained and concluded, the severe damages sustained could not have resulted had the accused
acted as a reasonable and prudent man would. The accused was not diligent as he claims to be. What is more
probable is that the accused had to swerve to the right and hit the commercial apartment of the plaintiff
because he could not make a full stop as he was driving too fast in a usually crowded street.24
Moreover, if the claim of petitioners were true, they should have filed a third-party complaint against the driver
of the offending passenger jeepney and the owner/operator thereof.
Petitioner Suelto’s reliance on the sudden emergency rule to escape conviction for the crime charged and his
civil liabilities based thereon is, thus, futile.
On the second issue, we agree with the contention of petitioners that 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. In its five-page decision,
the trial court awarded P150,000.00 as actual damages to private respondent but failed to state the factual basis
for such award. Indeed, the trial court merely declared in the decretal portion of its decision that the "sum
of P150,000.00 as reasonable compensation sustained by plaintiff for her damaged apartment." The appellate
court, for its part, failed to explain how it arrived at the amount of P100,000.00 in its three-page decision. Thus,
the appellate court merely declared:
With respect to the civil liability of the appellants, they contend that there was no urgent necessity to
completely demolish the apartment in question considering the nature of the damages sustained as a result of
the accident. Consequently, appellants continue, the award of P150,000.00 as compensation sustained by the
plaintiff-appellee for her damaged apartment is an unconscionable amount.
The damaged portions of the apartment in question are not disputed.
Considering the aforesaid damages which are the direct result of the accident, the reasonable, and adequate
compensation due is hereby fixed at P100,000.00.25
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 (daño
emergente) and the other, for the failure to receive, as a benefit, that which would have pertained to him (lucro
cesante). As expostulated by the Court in PNOC Shipping and Transport Corporation v. Court of Appeals:26
Under Article 2199 of the Civil Code, actual or compensatory damages are those awarded in satisfaction of, or in
recompense for, loss or injury sustained. They proceed from a sense of natural justice and are designed to repair
the wrong that has been done, to compensate for the injury inflicted and not to impose a penalty. In actions
based on torts or quasi-delicts, actual damages include all the natural and probable consequences of the act or
omission complained of. There are two kinds of actual or compensatory damages: one is the loss of what a
person already possesses (daño emergente), and the other is the failure to receive as a benefit that which would
have pertained to him (lucro cesante).27
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. As the Court declared:
As stated at the outset, to enable an injured party to recover actual or compensatory damages, he is required to
prove the actual amount of loss with reasonable degree of certainty premised upon competent proof and on the
best evidence available. The burden of proof is on the party who would be defeated if no evidence would be
presented on either side. He must establish his 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. In other words, damages cannot be
presumed and courts, in making an award, must point out specific facts that could afford a basis for measuring
whatever compensatory or actual damages are borne.28
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.29
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. In the language of the Court:
For this reason, Del Rosario’s claim that private respondent incurred losses in the total amount of P6,438,048.00
should be admitted with extreme caution considering that, because it was a bare assertion, it should be
supported by independent evidence. Moreover, because he was the owner of private respondent corporation
whatever testimony he would give with regard to the value of the lost vessel, its equipment and cargoes should
be viewed in the light of his self-interest therein. We agree with the Court of Appeals that his testimony as to the
equipment installed and the cargoes loaded on the vessel should be given credence considering his familiarity
thereto. However, we do not subscribe to the conclusion that his valuation of such equipment, cargo, and the
vessel itself should be accepted as gospel truth. We must, therefore, examine the documentary evidence
presented to support Del Rosario’s claim as regards the amount of losses.30
An estimate of the damage cost will not suffice:
Private respondents failed to adduce adequate and competent proof of the pecuniary loss they actually
incurred. It is not enough that the damage be capable of proof but must be actually proved with a reasonable
degree of certainty, pointing out specific facts that afford a basis for measuring whatever compensatory
damages are borne. Private respondents merely sustained an estimated amount needed for the repair of the
roof of their subject building. What is more, whether the necessary repairs were caused only by petitioner’s
alleged negligence in the maintenance of its school building, or included the ordinary wear and tear of the house
itself, is an essential question that remains indeterminable.31
We note, however, that petitioners adduced evidence that, in their view, the cost of the damage to the terrace
of private respondent would amount to P55,000.00.32 Accordingly, private respondent is entitled to P55,000.00
actual damages.
We also agree with petitioner Suelto’s contention that 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. The said provision reads in full:
ART. 365. Imprudence and negligence. – Any person who, by reckless imprudence, shall commit any act which,
had it been intentional, would constitute a grave felony, shall suffer the penalty of arresto mayor in its maximum
period, to prision correccional in its medium period; if it would have constituted a less grave felony, the penalty
of arresto mayor in its minimum and medium periods shall be imposed; if it would have constituted a light
felony, the penalty of arresto menor in its maximum period shall be imposed.
Any person who, by simple imprudence or negligence, shall commit an act which would, otherwise, constitute a
grave felony, shall suffer the penalty of arresto mayor in its medium and maximum periods; if it would have
constituted a less serious felony, the penalty of arresto mayor in its minimum period shall be imposed.
When the execution of the act covered by this article shall have only resulted in damage to the property of
another, the offender shall be punished by a fine ranging from an amount equal to the value of said damages to
three times such value, but which shall in no case be less than 25 pesos.
A fine not exceeding two hundred pesos and censure shall be imposed upon any person who, by simple
imprudence or negligence, shall cause some wrong which, if done maliciously, would have constituted a light
felony.
In the imposition of these penalties, the courts shall exercise their sound discretion, without regard to the rules
prescribed in Article 64 (Emphasis supplied).
In the present case, the only damage caused by petitioner Suelto’s act was to the terrace of private respondent’s
apartment, costing P55,000.00. Consequently, petitioner’s contention that the CA erred in
awarding P100,000.00 by way of actual damages to private respondent is correct. We agree that private
respondent is entitled to exemplary damages, and find that the award given by the trial court, as affirmed by the
CA, is reasonable. Considering the attendant circumstances, we rule that private respondent Valdellon is entitled
to only P20,000.00 by way of exemplary damages.

IN LIGHT OF ALL THE FOREGOING, the petition is PARTIALLY GRANTED. The joint decision of the Regional Trial
Court of Quezon City is AFFIRMED WITH THE MODIFICATION that petitioner Suelto is sentenced to pay a fine
of P55,000.00 with subsidiary imprisonment in case of insolvency. Petitioners are ORDERED to pay to Erlinda V.
Valdellon, jointly and severally, the total amount of P55,000.00 by way of actual damages, and P20,000.00 by
way of exemplary damages.

No pronouncement as to costs.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-25499 February 18, 1970
VILLA REY TRANSIT, INC., petitioner,
vs.
THE COURT OF APPEALS, TRINIDAD A. QUINTOS, PRIMA A. QUINTOS, AND JULITA A. QUINTOS, respondents.
Laurea and Pison for petitioner.
Bonifacio M. Abad, Jr. for respondents.
CONCEPCION, C.J.:
Petitioner, Villa Rey Transit, Inc., seeks the review by certiorari of a decision of the Court of Appeals affirming
that of the Court of First Instance of Pangasinan. The basic facts are set forth in said decision of the Court of
Appeals, from which We quote:
At about 1:30 in the morning of March 17, 1960, an Izuzu First Class passenger bus owned
and operated by the defendant, bearing Plate No. TPU-14871-Bulacan and driven by
Laureano Casim, left Lingayen, Pangasinan, for Manila. Among its paying passengers was
the deceased, Policronio Quintos, Jr. who sat on the first seat, second row, right side of
the bus. At about 4:55 o'clock a.m. when the vehicle was nearing the northern approach
of the Sadsaran Bridge on the national highway in barrio Sto. Domingo, municipality of
Minalin, Pampanga, it frontally hit the rear side of a bullcart filled with hay. As a result the
end of a bamboo pole placed on top of the hayload and tied to the cart to hold it in place,
hit the right side of the windshield of the bus. The protruding end of the bamboo pole,
about 8 feet long from the rear of the bullcart, penetrated through the glass windshield
and landed on the face of Policronio Quintos, Jr. who, because of the impact, fell from his
seat and was sprawled on the floor. The pole landed on his left eye and the bone of the
left side of his face was fractured. He suffered other multiple wounds and was rendered
unconscious due, among other causes to severe cerebral concussion. A La Mallorca
passenger bus going in the opposite direction towards San Fernando, Pampanga, reached
the scene of the mishap and it was stopped by Patrolman Felino Bacani of the municipal
police force of Minalin who, in the meantime, had gone to the scene to investigate.
Patrolman Bacani placed Policronio Quintos, Jr. and three other injured men who rode on
the bullcart aboard the La Mallorca bus and brought them to the provincial hospital of
Pampanga at San Fernando for medical assistance. Notwithstanding such assistance,
Policronio Quintos, Jr. died at 3:15 p.m. on the same day, March 17, 1960, due to
traumatic shock due to cerebral injuries.
The private respondents, Trinidad, Prima and Julita, all surnamed Quintos, are the sisters and only surviving heirs
of Policronio Quintos Jr., who died single, leaving no descendants nor ascendants. Said respondents herein
brought this action against herein petitioner, Villa Rey Transit, Inc., as owner and operator of said passenger bus,
bearing Plate No. TPU-14871-Bulacan, for breach of the contract of carriage between said petitioner and the
deceased Policronio Quintos, Jr., to recover the aggregate sum of P63,750.00 as damages, including attorney's
fees. Said petitioner — defendant in the court of first instance — contended that the mishap was due to a
fortuitous event, but this pretense was rejected by the trial court and the Court of Appeals, both of which found
that the accident and the death of Policronio had been due to the negligence of the bus driver, for whom
petitioner was liable under its contract of carriage with the deceased. In the language of His Honor, the trial
Judge:
The mishap was not the result of any unforeseeable fortuitous event or emergency but
was the direct result of the negligence of the driver of the defendant. The defendant must,
therefore, respond for damages resulting from its breach of contract for carriage. As the
complaint alleged a total damage of only P63,750.00 although as elsewhere shown in this
decision the damages for wake and burial expenses, loss of income, death of the victim,
and attorneys fee reach the aggregate of P79,615.95, this Court finds it just that said
damages be assessed at total of only P63,750.00 as prayed for in plaintiffs' amended
complaint.
The despositive part of the decision of the trial Court reads:
WHEREFORE, judgment is hereby rendered ordering the defendant to pay to the plaintiffs
the amount of P63,750.00 as damages for breach of contract of carriage resulting from the
death of Policronio Quintos, Jr.
which, as above indicated, was affirmed by the Court of Appeals. Hence, the present petition for review
on certiorari, filed by Villa Rey Transit, Inc.
The only issue raised in this appeal is the amount of damages recoverable by private respondents herein. The
determination of such amount depends, mainly upon two (2) factors, namely: (1) the number of years on the
basis of which the damages shall be computed and (2) the rate at which the losses sustained by said respondents
should be fixed.
The first factor was based by the trial court — the view of which was concurred in by the Court of Appeals —
upon the life expectancy of Policronio Quintos, Jr., which was placed at 33-1/3 years — he being over 29 years of
age (or around 30 years for purposes of computation) at the time of his demise — by applying the formula (2/3 x
[80-301 = life expectancy) adopted in the American Expectancy Table of Mortality or the actuarial of Combined
Experience Table of Mortality. Upon the other hand, petitioner maintains that the lower courts had erred in
adopting said formula and in not acting in accordance with Alcantara v. Surro1 in which the damages were
computed on a four (4) year basis, despite the fact that the victim therein was 39 years old, at the time of his
death, and had a life expectancy of 28.90 years.
The case cited is not, however, controlling in the one at bar. In the Alcantara case, none of the parties had
questioned the propriety of the four-year basis adopted by the trial court in making its award of damages. Both
parties appealed, but only as regards the amount thereof. The plaintiffs assailed the non-inclusion, in its
computation, of the bonus that the corporation, which was the victim's employer, had awarded to deserving
officers and employees, based upon the profits earned less than two (2) months before the accident that
resulted in his death. The defendants, in turn, objected to the sum awarded for the fourth year, which was
treble that of the previous years, based upon the increases given, in that fourth year, to other employees of the
same corporation. Neither this objection nor said claim for inclusion of the bonus was sustained by this Court. the loss sustained by his sisters may be roughly estimated at P1,000.00 a year or P33,333.33 for the 33-1/3 years
Accordingly, the same had not thereby laid down any rule on the length of time to be used in the computation of of his life expectancy. To this sum of P33,333.33, the following should be added: (a) P12,000.00, pursuant to
damages. On the contrary, it declared: Arts. 104 and 107 of the Revised Penal Code, in relation to Article 2206 of our Civil Code, as construed and
applied by this Court;8 (b) P1,727.95, actually spent by private respondents for medical and burial expenses; and
(c) attorney's fee, which was fixed by the trial court, at P500.00, but which, in view of the appeal taken by
The determination of the indemnity to be awarded to the heirs of a deceased person has
petitioner herein, first to the Court of Appeals and later to this Supreme Court, should be increased to
therefore no fixed basis. Much is left to the discretion of the court considering the moral
P2,500.00. In other words, the amount adjudged in the decision appealed from should be reduced to the
and material damages involved, and so it has been said that "(t)here can be no exact or
aggregate sum of P49,561.28, with interest thereon, at the legal rate, from December 29, 1961, date of the
uniform rule for measuring the value of a human life and the measure of damages cannot
promulgation of the decision of the trial court.
be arrived at by precise mathematical calculation, but the amount recoverable depends on
the particular facts and circumstances of each case. The life expectancy of the deceased or
of the beneficiary, whichever is shorter, is an important factor.' (25 C.J.S. 1241.) Other Thus modified, said decision and that of the Court of Appeals are hereby affirmed, in all other respects, with
factors that are usually considered are: (1) pecuniary loss to plaintiff or beneficiary (25 costs against petitioner, Villa Rey Transit, Inc. It is so ordered.
C.J.S. 1243-1250) ; (2) loss of support (25 C.J.S., 1250-1251); (3) loss of service (25 C.J.S.
1251-1254); (4) loss of society (25 C.J.S. 1254-1255); (5) mental suffering of beneficiaries
Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez, Castro, Fernando, Teehankee, Barredo and Villamor, JJ.,
(25 C.J.S., 1258-1259) ; and (6) medical and funeral expenses (26 C.J.S., 1254-1260)."2
concur.

Thus, life expectancy is, not only relevant, but, also, an important element in fixing the amount recoverable by
private respondents herein. Although it is not the sole element determinative of said amount, no cogent reason
has been given to warrant its disregard and the adoption, in the case at bar, of a purely arbitrary standard, such
as a four-year rule. In short, the Court of Appeals has not erred in basing the computation of petitioner's liability
upon the life expectancy of Policronio Quintos, Jr.

With respect to the rate at which the damages shall be computed, petitioner impugns the decision appealed
from upon the ground that the damages awarded therein will have to be paid now, whereas most of those
sought to be indemnified will be suffered years later. This argument is basically true, and this is, perhaps, one of
the reasons why the Alcantara case points out the absence of a "fixed basis" for the ascertainment of the
damages recoverable in litigations like the one at bar. Just the same, the force of the said argument of petitioner
herein is offset by the fact that, although payment of the award in the case at bar will have to take place upon
the finality of the decision therein, the liability of petitioner herein had been fixed at the rate only of P2,184.00 a
year, which is the annual salary of Policronio Quintos, Jr. at the time of his death, as a young "training assistant"
in the Bacnotan Cement Industries, Inc. In other words, unlike the Alcantara case, on which petitioner relies, the
lower courts did not consider, in the present case, Policronio's potentiality and capacity to increase his future
income. Indeed, upon the conclusion of his training period, he was supposed to have a better job and be
promoted from time to time, and, hence, to earn more, if not — considering the growing importance of trade,
commerce and industry and the concomitant rise in the income level of officers and employees
therein — much more.

At this juncture, it should be noted, also, that We are mainly concerned with the determination of the losses or
damages sustained by the private respondents, as dependents and intestate heirs of the deceased, and that said
damages consist, not of the full amount of his earnings, but of the support, they received or would have received
from him had he not died in consequence of the negligence of petitioner's agent. In fixing the amount of that
support, We must reckon with the "necessary expenses of his own living", which should be deducted from his
earnings. Thus, it has been consistently held that earning capacity, as an element of damages to one's estate for
his death by wrongful act is necessarily his net earning capacity or his capacity to acquire money, "less the
necessary expense for his own living.3 Stated otherwise, the amount recoverable is not loss of the entire earning,
but rather the loss of that portion of the earnings which the beneficiary would have received.4 In other words,
only net earnings, not gross earning, are to be considered5 that is, the total of the earnings less expenses
necessary in the creation of such earnings or income6 and less living and other incidental expenses.7

All things considered, We are of the opinion that it is fair and reasonable to fix the deductible living and other
expenses of the deceased at the sum of P1,184.00 a year, or about P100.00 a month, and that, consequently,
 Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 73905 September 30, 1991
MICHAEL T. DAVA, petitioner,
vs.
THE PEOPLE OF THE PHILIPPINES and the INTERMEDIATE APPELLATE COURT, respondents.
KV. Faylona & Associates for petitioner.
FERNAN, C.J.:
On October 19, 1975, while driving a car along Shaw Boulevard, Mandaluyong, Rizal, petitioner Michael T. Dava,
then holder of non-professional driver's license No. 14744271 with official receipt No. 7023037,2 bumped
pedestrians Bernadette Roxas Clamor and Dolores E. Roxas, causing death to former and physical injuries to the
latter.
As a consequence of said incident, Dava was brought to Mandaluyong Police headquarters where his driver's
license was confiscated by Cpl. Daniel Severino who later submitted Dava's driver's license to the fiscal's office in
Pasig, Rizal. license was thereafter presented as prosecution evidence in criminal case for homicide and serious
physical injuries reckless imprudence filed against Dava in the then Court First Instance of Rizal in Pasig.3
On April 12, 1978, Antonio Roxas, the brother of Bernadette and the father of Dolores, saw Dava driving a
maroon Volkswagen (beetle-type) car with plate No. AD-902 B. Knowing that Dava's driver's license was used as
an exhibit in court and that no traffic violation receipt had been issued to Dava, Roxas sought the help of then
Minister of Defense Juan Ponce Enrile in apprehending Dava for driving without a license.4 The Ministry of
Defense later indorsed Roxas' request for assistance to the Constabulary Highway Patrol Group (CHPG).
At around 7:30 in the evening of July 21, 1978, M/Sgt. Domingo Lising and S/Sgt. Arturo Viduya of the CHPG saw
the maroon Volkswagen car described by Roxas parked in front of the Uniwide Department Store near the then
Nation theater in Cubao, Quezon City. When the driver and his companion arrived, Lising and Viduya confronted
them and asked the driver for his license. They were shown non-professional driver's license No. 27068875 with
official receipt No. 06058706 issued by Agency 2L Pampanga in the name of Michael T. Dava. When asked about
the source of his license, Dava informed them that his officemate had secured it for him.
Lising and Viduya invited Dava to the CHPG office in Camp Crame, Quezon City for questioning. Dava refused to
give a statement upon the advice of his lawyer. Lising then submitted a spot report to Col. Maristela stating
therein that "subject had violated Section 31 of RA 4136 for false representation in the application of a driver's
license intended to be used as a legal license."7 In his affidavit of apprehension dated November 16, 1978, Lising
stated that he was 'about to book him for violation of Section 31 of Rep. Act 4136, when subsequent
investigation revealed that the Driver's License above-mentioned is a Fake and a Falsity' and therefore a case for
falsification and use of falsified documents under Section 172 of the Revised Penal Code should be filed against
Dava.8 Lising concluded that Dava's driver's license was fake because when he compared it with the xerox copy
of Dava's license which was attached to the record of the criminal case in Pasig, the signatures and the dates of
birth indicated in the two licenses did "not tally."9
Accordingly, an information for falsification of a public document was filed against Dava in the then Court of First
Instance of Rizal, Branch V at Quezon City.10 One of the prosecution witnesses was Caroline Vinluan of the
Angeles City branch of the Bureau of Land Transportation (BLT). He testified that hen was then the registrar of
the said office when Dava's driver' license was brought to him by lawyer Jose Francisco who was interested in
knowing whether it was genuine or fake and if was issued by the Angeles City agency of the BLT. He examine it
and found out that it was "fake or illegally issued" because form No. 2706887 was one of the fifty (50) forms
which had been reported missing from their office sometime in November, 1976 and that it was never issued to
any applicant for a license.11He added that any license that was not included their office index card was
considered as "coming from illegal source' and "not legally issued by any agency."12
Vinluan stated that although the form used for the license was genuine,13 the signature of the issuing official was
fake.14 He "believed" certain persons had been apprehended for "plasticization" of licenses outside their
office15 and that sometime November, 1976, agents of the National Bureau of Investigation raided the house of
a certain person who had in his possession some of the forms which had been missing from office.16 He
concluded that the license was fake because the form was issued by the central office to the Angeles agency, the
license appeared on its face to have been issued the San Fernando, Pampanga agency.17
Dava was convicted of the crime charged. He appealed to then Court of Appeals18 which affirmed the lower
court's decision on January 29, 1982. Dava filed a motion for reconsideration of the said decision contending
that the lower court had no jurisdiction to try the case. On April 27, 1982, the Court of Appeals reversed and set
aside its decision and issued a resolution the dispositive portion of which reads:
WHEREFORE, as prayed for, our decision is hereby reconsidered and set aside, and another judgment
shall be entered annulling the proceedings in the court a quo without prejudice to the refiling of the
charges with the proper court. (Rollo, pp. 35-36.)
Consequently, the case was refiled with the Regional Trial Court of Pampanga, Branch 47 at San Fernando as
Criminal Case No. 2422. The information for falsification of a public document reads as follows:
That on or about the 12th day of April, 1978, and for sometime prior thereto, in the municipality of
San Fernando, province of Pampanga, Philippines, and within the jurisdiction of this Honorable Court,
the above-named accused MICHAEL T. DAVA, a private individual, did then and there willfully,
unlawfully and feloniously falsify or cause to be falsified, a Non-Professional Driver's license with
Serial No. 2706887 covered by Official Receipt No. 0605870, dated January 24, 1978, a public
document, by making it appear that the signatories therein who are officials of the Pampanga LTC
Agency participated in the preparation thereof, when in truth and in fact they did not so participate
and the accused made use of the same knowing it to be falsified.
ALL CONTRARY TO LAW.
At the trial, the prosecution presented Antonio Roxas who testified on how he saw Dava driving a car and that,
knowing that Dava's license had been confiscated as a result of the filing of the homicide and serious physical
injuries through reckless imprudence case, he thereafter sought the assistance of then Minister Enrile in
apprehending Dava for driving without a license.19 For his part, Domingo Lising, who apprehended Dava,
narrated in court how he first saw Daya driving a car along Banahaw and N. Domingo Sts. in Quezon City until he
finally confronted Dava at the vicinity of the Araneta Coliseum and confiscated his driver's license. As earlier
stated, he conclude that the driver's license shown to him by Dava was fake because he noticed that, when
compared with the license attached to record of the criminal case filed against Dava, the license confiscated
bore a different signature and date of birth.20
Daniel Severino, a sergeant of the Mandaluyong police, testified that he investigated the traffic incident along
Shaw Boulevard on October 19, 1975 which involved Dava and the two relatives of Antonio Roxas. He himself
confiscated Dava's no professional driver's license No. 1474427 which he later turn over to the fiscal's office.21
In the course of Severino's testimony, the defense counsel informed the court that, upon a resolution of the
Court of Appeals, Dava was allowed by the lower court having jurisdiction over Criminal Case No. 16474 to
withdraw his driver's license 1474427 from the records of said case.22 When confronted by the court, Dava
volunteered that he withdrew said license in December, 1982 and surrendered it to the BLT Western District
Office so that he could renew his license.23 Hence, the evidence presented before the Court was a mere xerox
copy of said license24 which also bears a notation that Dava received original driver's license and its receipt on
December 15, 1982.25
Victor Martin, who had been the head of the San Fernando Pampanga branch of the BLT and whose name
appears registrar thereof in official receipt No. 0605870 which was supposed to be attached to Dava's driver's
license No. 270688 admitted that the form of the said license was genuine although he could not tell whether its
contents were likewise genuine because it was "opened" and "spliced."26 He asserted, however, that since the
said form "did not emanate" from his office and "a facsimile was not printed" over his name, said license was
"not OK".27
Martin said that he was informed by the property section of the BLT regional office that the number in the
license was one of "the numbers requisitioned by (the) Angeles City agency."28 He affirmed that drivers license
No. 2706887 "was not issued by (their) agency"29 although when recalled to the stand, he admitted that the "2L"
filled in the space for "Agency Code No." on the face of license No. 2706887 referred to the San Fernando
agency.30 Martin also confirmed the genuineness of official receipt No. 0605870 although it was his assistant
who signed it for him31 and affirmed that the amount of P10.00 indicated therein had been collected and
received by his office.32
Lawyer Jose Francisco testified that he went to the Angeles City office of the BLT to see its chief and inquire
about the number of driver's license issued to Dava and whether said office had indeed issued them. According
to him, the head of the office, Caroline Vinluan, advised him to verify from the index card in the possession of
the License Division head whether the Angeles City agency had indeed issued Dava's license.33 Thereafter, the
officer-in-charge of the License Division of the BLT in East Avenue, Quezon City, Leonardo R. Medina, issued a
certification dated December 24, 1979 to the effect that non-professional drivers license No. 2706887 in the
name of Dava was "not registered in (their) Index Card."34
Francisco also informed the court that Carolino Vinluan, the former head of the Angeles City BLT agency, had
died on May 12, 1980.35 He offered in evidence Vinluan's death certificate as Exh. J.
Another evidence presented by the prosecution was the transcript of stenographic notes of the testimony of
Carolino Vinluan which was taken on January 8, 1980 at the trial of Criminal Case No. Q-10759 before the then
Court of First Instance Rizal, Branch V at Quezon City. It was marked as Exh. K said exhibit was part of the record
of Criminal Case No. 10759 which was transmitted to the Regional Trial Court Pampanga.36
The defense presented only one witness: Felizardo Manalili. A friend of Dava and his former co-trainee at the
Sandoz Philippines, a pharmaceutical firm, Manalili testified that Dava quested him to secure a driver's license
for him because he had none. Manalili went to the San Fernando office of the Land Transportation Commission
(LTC) where he used to secure own license. At the LTC branch office, he was "approached"37 the fixers who
roamed around the compound. When he as them how much it would cost to secure a driver's license, he told
that it would amount to P70 .00.38 He agreed to pay amount and gave the fixers the personal data of Dava.39
After an hour, the fixers gave Manalili the license which was inside a plastic jacket. (Manalili identified the
license as Exh. B.) He examined it and found out that it looked "like a genuine and authentic driver's license" to
him. The license, which opened and unsealed, bore a signature in the portion which showed the name Romeo
Edu and contained all the personal data of Dava. Because it did not bear the signature of Dava Manalili
immediately gave the license to Dava and told him to sign it immediately. Dava did so in Manalili's presence.40
On March 22, 1984, the lower court rendered a decision41 finding that the license in question was "fake or
spurious", that was not duly issued by any proper government licensing age and that the accused directly
participated in the commission of the falsification or caused said falsification. The court took into account the
facts that Dava was "in dire need' of a license because of his work as a detailman; that he received his genuine
license from the court only on December 15, 1982, and that Dava himself personally requested his friend,
Manalili, to secure the license for him. It arrived at the conclusion that since Dava was the possessor or user of
the fake license, he himself was the forger or the one who caused its forgery or falsification. The dispositive
portion of the decision reads:
IN VIEW OF THE FOREGOING, this Court finds the accused Michael T. Dava guilty beyond reasonable
doubt, as principal of the came of Falsification of a Public Document, as defined and penalized under
the provisions of Article 172 of the Revised Penal Code, and considering the absence of any mitigating
or aggravating circumstance, hereby sentences him under the Indeterminate Sentence Law to suffer
an indeterminate imprisonment of one (1) year and eight (8) months of prision correecional as
minimum, to four (4) years, nine (9) months and ten (10) days of prision correccional as maximum;
and to pay a fine of Two Thousand Five Hundred (P2,500.00) Pesos, Philippine Currency, plus the
costs of this suit.
IT IS SO ORDERED.
Dava appealed to the then Intermediate Appellate Court,42 which on September 30, 1985 affirmed in in toto the
decision of the trial court. On February 27, 1986, the appellate court denied Dava's motion for the
reconsideration of said decision finding that no new grounds had been raised therein. Hence, the instant
petition for review on certiorari.
Petitioner assails herein the reliance of the courts below on the testimony of Carolino Vinluan on the ground
that being a part of the annulled proceedings in Criminal Case No. Q-10759, it may not be considered as
admissible in evidence as it cannot qualify as a "testimony at a former trial" under the provisions of Section 41,
Rule 130 of the Rules of Court.
We find petitioner's contention to be meritorious. The resolution of the then Intermediate Appellate Court in
CA-G.R. No. 24312-CR, expressly annulled the proceedings had in Criminal Case No. Q-10759 for lack of
jurisdiction of the Quezon City court over the case. That ruling is founded on solid jurisprudence. We had time
and again held that in the absence of proof that the party raising the issue of lack of jurisdiction is barred by
estoppel,43 a decision rendered by a court without jurisdiction is a total nullity.44 Being worthless in itself, all the
proceedings founded upon it are equally worthless.45 Hence, the testimony of Vinluan is not only inadmissible in
evidence but may well be considered as totally nonexistent.
With the testimony of the late Carolino Vinluan out of the way, is there sufficient evidence to warrant the
conviction of petitioner for the crime charged?
The information specifically charges the petitioner with having made it appear in his driver's license No. 2706887
that "officials of the Pampanga LTC agency participated" in in-preparation and with having used the said driver's
license knowing that it was falsified. The charges therefore are found on the provisions of Article 172 (1) of the
Revised Penal Code which punishes any private individual who shall commit any the falsification enumerated in
Article 171 specifically paragraph 2 thereof which penalizes the act of causing it to appear that persons (public
officials) have participated in any act proceeding when they did not in fact so participate. The information also
charges Dava with having knowingly used a false document under the last paragraph of Article 172.
The evidence at hand proves that petitioner, misrepresenting that he had no driver's license, asked his friend,
Manalili, to secure one for him. Sometime in November, 1976, Manalili, who used to get his own driver's license
in San Fernando, Pampanga, was able to secure petitioner's driver's license No. 2706887 through fixers at the
Land Transportation Commission (LTC) agency in said locality.46 On January 24, 1978, petitioner renewed his
license at the said office by paying the amount of P10.00 for which he was issued official receipt No. 0605870.47
In the renewal of drivers' license, the practice then was simply to present an official receipt showing that at the
previous year the licensee had paid for his driver's license to any agency of the LTC, and to pay the renewal fee.
As long as the transaction did not involve the issuance of "another form," a driver did not have to fill up an
application form for the renewal of a license. The said agency would then issue an official receipt evidencing the
renewal of the license but the driver's license itself would not be changed.48
Thus. on January 24,1978, when driver's license No. 2706887 together with official receipt No. 86432149 were
presented to the San Fernando LTC agency, the personnel therein issued official-receipt No. 0605870 in the
name of petitioner. Although the receipt was not personally signed by office registrar Victor Martin but by his
assistant, the receipt50 was genuine and the amount indicated therein was actually paid to and collected by the
San Fernando agency.51 The driver's license itself may not have been issued by said agency52 but its form was
likewise genuine. However, according to Martin, it was 'not OK' because it "did not emanate" from his office and
"a facsimile was not printed over" his name therein.53 Moreover, according to the officer-in-charge of the license
Division of the Bureau of Land Transportation in East Avenue, Quezon City, non-professional driver's license No.
2706887 in the name of Michael Dava Tolosa "is not registered" in their index card.54
Hence, while there is no doubt that driver's license No. 2706887 was a spurious one, the evidence do not
pinpoint the petition as the actual falsifier. Unfortunately, however, there are pieces of evidence which prove
beyond reasonable doubt at he caused the falsification and made use of the falsified driver's license knowing it
to be so.
The elements of the crime of using a falsified document in transaction (other than as evidence in a judicial
proceed penalized under the last paragraph of Article 172 are following: (a) the offender knew that a document
was falsified by another person; (b) the false document is embraced in Article 171 or in any of subdivisions Nos.
1 and 2 of Article 172; (c he used such document (not in judicial proceedings), and (d) the use of the false
document caused damage to another or at last it was used with intent to cause such damage.55 Except for last,
all of these elements have been proven beyond reason doubt in this case.
It is not disputed that it was petitioner himself who requested Manalili to get him a license. He misrepresented
to Manalili that he has not at any time been issued a driver's license.56 Through this misrepresentation and
capitalizing on Manalili awareness of the dire necessity of obtaining a driver's license the shortest time possible
to enable petitioner to perform duties as detailman, petitioner was able, in a very subtle clever manner, to
induce Manalili to deal with "fixers" in securing the subject driver's license. For indeed, there was no way
Manalili could obtain a drivers license in so short a without having to deal with "fixers." Thus, as petitioner
calculated, Manalili, who appeared to have been motivated by a sincere desire to help a friend, did not hesitate
to deal with three fixers whom he knew were not employees of the LTC to whom he paid P70.00 for the license
even if the legal fee then was only P15.00.57 As it was in truth petitioner who induced and left Manalili with no
choice but to seek the aid of fixers, the fact that it was Manalili and not petitioner who dealt directly with said
fixers cannot exculpate petitioner from the charge of falsification. He is, beyond reasonable doubt, a principal by
inducement in the commission of said crime.
Petitioner cannot feign ignorance of the spurious character of his second driver's license No. 2706887. Having
already obtained a driver's license, he knew that it was not legally possible for him to secure another one.
Otherwise, there would have been no need for him to misrepresent to his friend Manalili that he was not then a
holder of a driver's license. But even with this misrepresentation, petitioner cannot even begin to believe that
Manalili would be able to secure a driver's license through legal means in about an hour's time.58 The patent
irregularity in obtaining driver's license No. 2706887 was more than sufficient to arouse the suspicion of an
ordinary cautious and prudent man as to its genuineness and authenticity. In fact, Manalili testified that he
himself was surprised when the fixer handed to him the plastic jacket of the driver's license of Michael Dava on
November 4, 1976, a few hours after he had sought the fixer's assistance.59 In those days, all plastic jackets
emanated from the LTC Central Office, which accounted for the delay in the release of the license applied for.
Under these circumstances, no "reasonable and fairminded man" would say that petitioner did not know that
his license was a fake.60
A driver's license is a public document within the purview of Articles 171 and 172. The blank form of the drivers
license becomes a public document the moment it is accomplished.61 Thus, when driver's license No. 2706887
was filled up with petitioner's personal data and the signature of the region of the San Fernando LTC agency was
affixed therein, even if the same was simulated, the driver's license became a public document.
The third element of use of the falsified document is proven by the fact that when petitioner was apprehended
by Lising on April 12, 1978 it was in his possession and it was what he presented Lising to show that he had a
license. Because he was a detailman who did his job with the use of a car, it is probable that from November 4,
1976 (its date of issuance) until April 12, 1978, petitioner used driver's license No. 2706887.
The driver's license being a public document, proof of the fourth element of damage caused to another person
or at least an intent to cause such damage has become immaterial. In falsification of public or official
documents, the principal thing being punished is the violation of the public faith and the destruction of the truth
proclaimed therein.62
In his attempt at exculpation, petitioner asserts that the following ruling in People vs. Sendaydiego,63 should be
applied in his favor:
The rule is that if a person had in his possession a falsified document and he made use of it (uttered
it), taking advantage of it and profiting thereby, the presumption is that he is the material author of
the falsification. This is especially true if the use or uttering of the forged documents was so closely
connected in time with the forgery that the user or possessor may be proven to have the capacity of
committing the forgery, or to have close connection with the forgers, and therefore, had complicity in
the forgery (U.S. vs. Castillo, 6 Phil. 453; People vs. De Lara, 45 PMI. 754; People vs. Domingo, 49 Phil.
28: People vs. Astudillo, 60 Phil. 338; People vs. Manansala, 105 Phil. 1253). In the absence of a
satisfactory explanation, one who is found in possession of a forged document and who used or
uttered it is presumed to be the forger (Alarcon vs. Court of Appeals, L-21846, March 31, 1967, 19
SCRA 688; People vs. Caragao,
L-28258, December 27, 1969, 30 SCRA 993). (Emphasis supplied.)
We agree with the petitioner that the presumption enunciated in the Sendaydiego case is not absolute as it is
subject to the exception that the accused should have a satisfactory explanation why he is in possession of a
false document.64 His explanation, however, is unsatisfactory as it consists mainly in passing the buck to his
friend, Manalili. As stated above, Manalili himself could not have acted on his own accord without the prodding
of petitioner.

We cannot help but comment on petitioner's allegations on the role of fixers in government agencies. To him, a
fixer is a "necessary evil" who could do things fast for the right amount. He is "not necessarily involved in the
commission of forgery or falsification of official documents" and he shares his fees with "insiders."65

Fixers indeed appear as undetachable fixtures in government licensing agencies. Why they proliferate is a sad
commentary not only on our bureaucracy but also on our own people. While not all fixers are engaged in illegal
activities for some simple serve as "facilitators," they nonetheless provide sources for exploitation of the
unknowing common people who transact business with the government and for corruption of the gullible
government employees. Their unwanted presence must be dealt with accordingly and the soonest this is
undertaken by our government agencies the better for all of us.

WHEREFORE, the decision of the respondent appellate court is hereby affirmed. Let a copy of this decision be
served on that Department of Transportation and Communication. Cost against the petitioner.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. L-69666 January 23, 1992
THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
GUMERCINDO QUILATON y EBAROLA, defendant-appellant.
The Solicitor General for plaintiff-appellee.
Public Attorney's Office for accused-appellant
FELICIANO, J.:
Appellant Gumercindo Quilaton was found guilty of murder and sentenced to suffer the penalty of reclusion
perpetua, and required to pay the heirs of the offended party various amounts of money.
Appellant was tried and convicted under the following information:
That on or about the 16th day of August, 1983, in the municipality of San Simon, province
of Pampanga, Philippines, and within the jurisdiction of this Honorable Court, the above-
named accused GUMERCINDO QUILATON y EBAROLA alias "ROBERTO SANDOVAL" armed
with a knife (balisong), with deliberate intent to kill, by means of treachery and with
evident premeditation, did then and there wilfully, unlawfully and feloniously attack,
assault and wound ROLANDO S. MANAHAN, thereby inflicting upon him serious and fatal
injuries, which directly caused the death of the said Rolando S. Manahan.
All contrary to law. 1
Appellant pleaded not guilty on arraignment and the case proceeded to trial. In time, the trial court rendered
adecision with the following dispositive portion:
WHEREFORE, premises considered, the Court hereby finds the accused GUMERCINDO
QUILATON yERABOLA, also known as Roberto Sandoval guilty beyond reasonable doubt of
the crime of Murder ascharged in the Information and hereby sentences him to suffer the
penalty of Reclusion Perpetua.
The Court further sentences him to indemnify the heirs of Rolando S. Manahan the sum of
One Hundred Thousand (P100,000.00) Pesos, Philippine Currency, for the death of
Rolando S. Manahan, the sum of Twenty Six Thousand Four Hundred Forty Five
(P26,445.00) Pesos, Philippine Currency, for actual damages incurred for burial and other
expenses of the deceased, the sum of Two Hundred Fifty Thousand (P250,000.00) Pesos,
Philippine Currency, for moral damages. The Court further orders the accused to pay the
costs.
SO ORDERED. 2
Appellant has assigned the following errors in his brief:
1. The court a quo gravely erred in not finding that the victim was armed with a bladed
weapon and was the aggressor.
2. The court a quo gravely erred in finding that the killing of the victim was qualified by
treachery.
3. The court a quo gravely erred in not finding that the accused-appellant acted in self-
defense. 3
The evidence for the prosecution discloses that the appellant was a laborer in the Bureau of Forest Development
assigned at the PROFEM Nursery in San Agustin, San Simon, Pampanga until 3 June 1983 when his services were
terminated. While still a laborer and occasionally after his termination, appellant would spend the night in one
of the rooms of the PROFEM office. The PROFEM office, it seemed, was converted by appellant into sleeping
quarters during the night.
On 16 August 1983, between the hours of 6:00 and 9:00 o'clock in the evening, Rolando Manahan, then officer-
in-charge of the PROFEM, called for appellant to see Manahan at the latter's office. Appellant, who was around
the PROFEM office at that time, refused to see Manahan at his office. Rolando Manahan came out of his office
and proceeded to admonish appellant to discontinue his practice of sleeping inside the office, sometimes with
women brought from the town. Appellant was reported to have replied: "yes, sir, and from now on I will not
bring girls inside the office." A heated exchange of words then ensued between Rolando Manahan and
appellant.
Appellant who remained outside the office later requested Lamberto Abugan, an employee of the PROFEM, to
give him his (appellant's) bag of clothes which had been left inside the room. Lamberto Abugan initially refused,
but on instructions of Rolando Manahan, complied. With his bag of clothes, appellant left the office.
Rolando Manahan, however, decided to follow appellant, apparently to make certain that appellant would in
fact leave the premises of the Nursery. Lamberto Abugan, who had noticed Rolando Manahan leave the office,
also went out to look after them. Lamberto Abugan caught up with the two (2) at the provincial road where he
saw Rolando Manahan kick appellant's shoes which were lying on the road; the heated altercation between the
two (2) continued. Moments later, appellant pulled a fan knife (balisong) from his right hip and told Rolando
Manahan: "this time I am going to kill you, I shall not forgive you." Rolando Manahan started to run away;
appellant chased him.
Lamberto Abugan also ran from the scene to seek help. He proceeded to the police headquarters in San Simon,
Pampanga and from there returned to the provincial road aboard a tricycle in the company of Pfc. Nicolas
Yambao. They saw Rolando Manahan lying on the road, already dead. Appellant, upon the other hand, was
found in Sampaloc, Apalit, Pampanga where he was arrested and searched. A fan knife and a bloodstained shirt A Legaspi, sir.
were recovered from the possession of appellant. 4
Q Who was your Station Commander when you left Dalaguete,
A post mortem examination of the cadaver of Rolando Manahan was conducted by Dra. Maria Theresa Santos, Cebu?
Municipal Health Officer of San Simon, Pampanga. Dra. Santos' report indicated that Rolando Manahan
sustained seven (7) wounds, two (2) of which, located in the chest, were fatal. 5
A I do not know his name, sir.

Appellant submitted a different version of the facts. He alleged that on the night of 16 August 1983 when he left
Q Mr. Quilaton, is it not a fact that you have a pending case of
the PROFEM office, he became alarmed upon noting that Rolando Manahan was following him. Appellant
double murder in the Municipal Trial Court of Dalaguete, Cebu
quickened his steps but because the road was slippery, he fell on the ground with the bag he was carrying, and
docketed as Crim. Case No. 3032 before the Honorable Judge
his shoes spilled onto the road. Rolando Manahan kicked his shoes away and continued walking. As Rolando
Buenconsejo?
Manahan came nearer, appellant ran away only to be stopped in a fenced area. Rolando Manahan there
attacked him with a bladed weapon but appellant was able to wrest possession of the bladed weapon. Appellant
then instinctively stabbed Rolando Manahan until the latter died. Appellant claims that after the incident, he A I do not know that, sir.
walked towards Apalit, Pampanga to surrender as he did not know where the municipal building of San Simon,
Pampanga was. He was on his way to surrender when the police authorities arrested him. 6 Q You do not also know that there is also another pending murder
case docketed as Crim. Case No. 2710 before the Hon. Dominador
The principal contention of appellant is that he had acted in self-defense when he stabbed Rolando Manahan to Tumulak?
death. He imputes unlawful aggression to Rolando Manahan who, he claims, deeply resented him as a
cumulative result of antecedent events namely: (1) Rolando Manahan had been reprimanded for his inaction on A I do not know that, sir.
the report that had reached the Central Office that appellant was bringing girls during the night inside the
PROFEM office; and (2) Rolando Manahan, as officer-in-charge of the PROFEM, was humiliated by appellant's
lack of respect in refusing to see the former at his office. Thus, according to appellant, Rolando Manahan Q Will you deny that you have also another pending case before the
pursued him even as he had left the PROFEM office during the night of 16 August 1983. RTC, Branch 26 of Ardaos, Cebu?

By invoking self-defense as a justifying circumstance, appellant in effect admitted that he had indeed killed A None, sir.
Rolando Manahan. In order that he may be relieved of criminal liability, he is obliged to establish the presence of
the following requisites: (1) unlawful aggression; (2) reasonable necessity of the means employed to prevent or Q You mean you have no pending case in Cebu?
repel it; and (3) lack of sufficient provocation on the part of the person defending himself. 7 In so doing,
appellant must rely on the strength of his own evidence and not on the weakness of that of the prosecution for
even if the prosecution's evidence were weak, it cannot be disbelieved after appellant has admitted the killing. 8 A None, sir.

The evidence of appellant on his claim of self-defense consisted solely of his own testimony. The trial court Q Is it not a fact Mr. Quilaton that you were a convict-escapee in the
rejected that testimony, firstly, because it was not supported by convincing corroborative evidence and, Provincial Jail of Cebu?
secondly, because the trial court had perceived appellant to be a liar.
A No, sir.
During trial of the case, the prosecution had marked and offered in evidence the letter of the INP Station
Commander in Dalaguete, Cebu informing the INP Station Commander in San Simon, Pampanga that appellant Q Since you left Cebu, have you returned to Cebu?
had two (2) pending cases in Dalaguete, Cebu. One of those cases was for murder and the other for double
murder. Certified true copies of the alias warrants for the arrest of appellant in both cases were also marked in
A Not yet, sir. 10
evidence by the prosecution. 9 Appellant had denied the pendency of the cases. On cross-examination, he
testified as follows:
The trial court instead gave credence to the testimony of Lamberto Abugan who had seen appellant initiate a
deadly assault on the victim Roland Manahan by drawing a fan knife from his right hip and by announcing his
Q Mr. Quilaton, in your town in Dalaguete, Cebu your Mayor is Paz
intention to kill Manahan. The ordinary rule is that findings of fact of the trial court on the credibility of
Wong?
witnesses are entitled to great respect considering that the trial court was in a position to evaluate the
deportment of witnesses while testifying. 11 The Court does not see any compelling reason to depart from the
A I do not know her, sir. general rule.

Q And who is the mayor whom you know in your town?

This Court, however, agrees with the Solicitor General that appellant should be convicted of homicide only. The
information here filed specified treachery and evident premeditation as qualifying circumstances. The trial court
disregarded evident premeditation, holding that the prosecution had not adequately established the presence of
that circumstance. But it considered appellant's act of stabbing the unarmed Rolando Manahan as treachery and
took this into account in convicting appellant of murder.
Treachery cannot be appreciated in the absence of evidence of the mode of attack; 12 it cannot be presumed but
must be proven positively. 13 This is so because treachery exists only "when the offender commits any of the
crimes against the person, employing means, methods, or forms in the execution thereof which tend directly and
specially to insure its execution, without risk to himself arising from any defense which the offended party might
make." 14
The sole eyewitness to the incident which started inside the PROFEM Nursery and ended on the provincial road
was Lamberto Abugan. Lamberto Abugan had testified about a "falling out" or quarrel between Rolando
Manahan and appellant after the former confronted appellant and told him to desist from sleeping inside the
PROFEM office and from bringing women sleeping companions therein. This culminated in a heated argument
that led appellant to leave the office in haste and anger. The verbal dispute continued up to the provincial road
where Rolando Manahan had followed appellant. Lamberto Abugan, however, did not witness the actual
stabbing by appellant of Rolando Manahan as he ran away just then to seek help.
The testimony of Lamberto Abugan offers no sufficient basis for reasonably inferring that treachery attended the
commission of the crime. On the contrary, considering that the attack was preceded by a heated argument, it
cannot be fairly regarded as sudden and unexpected. The tense and hostile atmosphere should have sufficiently
put Rolando Manahan on guard against physical violence; Rolando Manahan should have been aware that he
was in effect inviting trouble in following appellant into the provincial road and kicking the latter's shoes that
had fallen to the ground.
The trial court had ordered appellant to pay the heirs of Rolando Manahan P26,445.00 as actual damages,
representing interment and related expenses incurred by the heirs of Rolando Manahan. The brother of Rolando
Manahan testified on this matter and submitted various receipts in support of their claim for actual damages;
appellant did not controvert this claim nor the amount thereof.
The amount of P100,000.00 awarded to the heirs of Rolando Manahan as indemnity for death must, however,
be reduced to P50,000.00 conformably with prevailing jurisprudence on the matter. 15 The propriety of the
award of P250,000.00 by the trial court in concept of moral damages needs some analysis.
The monetary liabilities of a person accused and convicted of a crime are specified in Article 2206 of the Civil
Code:
Art. 2206. 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;
(2) If the deceased was obliged to give support according to the provisions of article 291,
the recipient who is not an heir called to the decedent's inheritance by the law of testate
or intestate succession, may demand support from the person causing the death, for a
period not exceeding five years, the exact duration to be fixed by the court;
(3) The spouses, legitimate and illegitimate descendants and ascendants may
demand moral damagesfor mental anguish by reason of the death of the deceased.
(Emphasis supplied)
Aside, therefore, from the ordinary indemnity for death which is currently set by case law at P50,000.00,
appellant is obliged: (1) to compensate the heirs of Rolando Manahan for the latter's loss of earning capacity; (2)
to give support in the form of expenses for education to the sisters of Rolando Manahan who had been
dependent on him therefor; and (3) to pay the heirs of Rolando Manahan moral damages for the mental anguish
suffered by them. 16 In the instant case, the trial court lumped these monetary obligations into what it called
"moral damages."
The more important variables taken into account in determining the compensable amount of lost earnings are:
(1) the number of years for which the victim would otherwise have lived; and (2) the rate of loss sustained by the
heirs of the deceased. 17 In Villa Rey-Transit, Inc. v. Court of-Appeals (supra), the Court computed the first
factor, i.e., life expectancy, by applying the formula (2/3 x [80 - age at death) adopted in the American
Expectancy Table of Mortality or the actuarial Combined Experience Table of Mortality. That formula was
followed by the Court in cases subsequent to Villa Rey Transit, e.g. Philippine Airlines v. Court of
Appeals; 18 People v. Daniel (supra); and Dangwa Transportation Co., Inc. v. Court of Appeals. 19 The Court notes
that the formula used in Villa Rey Transit was based on a table derived from actuarial experience prior to 1970
when the decision in Villa Rey Transit was promulgated. Actuarial experience subsequent to 1970 has, however,
changed and indicates a longer life expectancy in the Philippines due to conditions including, among other
things, advances in medical science, improved nutrition and food supply, diet consciousness and health
maintenance. The 1970 mortality table was updated in 1980 to reflect the changes of conditions. 20
Considering that Rolando Manahan was 26 years of age at the time of death, he was expected to live for another
46 years. This is derived by using the generally accepted formula in computing for life expectancy, based on the
1980 CSO table:
S (Lx + 1, Lx + 2, . . ., Lx + n), where n = 100 - x
——————————— x = age upon death
Lx L = number of people in
sample surviving after x number of years
But a man does not normally continue working to earn money up to the final month or year of his life; hence 46
years could be reasonably reduced to 39 years. 21 Besides, Rolando Manahan was a government employee who
is expected to retire at the age of 65. If there are 261 working days in a year 22 and Rolando Manahan was
receiving P23.00 a day, 23 Rolando Manahan's gross earnings would be approximately P234,000.00. A reasonable
amount must be deducted therefrom that would represent Rolando Manahan's necessary expenses had he been
living, in this case P120,000.00. The net or compensable earnings lost by reason of Rolando Manahan's death is,
accordingly, P114,000.00.
Finally, the Court in the exercise of its discretion, considers it appropriate and reasonable to award the amount
of P20,000.00 to the heirs of Rolando Manahan by way of moral damages. Ruben Manahan, brother of Rolando
Manahan, testified that their mother suffered a mild stroke upon learning of Rolando Manahan's slaying; this
eventually resulted in the mother's semi-paralysis. 24

WHEREFORE, the Decision of the Regional Trial Court, Branch 54, Macabebe, Pampanga is hereby SET ASIDE; the
Court instead finds appellant Gumercindo Quilaton guilty of HOMICIDE. Applying the Indeterminate Sentence
Law, appellant is hereby SENTENCED to suffer imprisonment for an indeterminate period ranging from ten (10)
years as minimum to seventeen (17) years and four (4) months as maximum. Appellant is ORDERED to pay the
heirs of Rolando Manahan the following amounts:

1. P50,000.00 as indemnity for death;

2. P26,445.00 as actual damages;

3. P114,000.00 by way of lost earnings;

4. P10,000.00 by way of educational assistance to Rolando Manahan's two (2) sisters; and

5. P20,000.00 as moral damages.

Costs against appellant.

SO ORDERED.

EN BANC
G.R. No. 137457 November 21, 2001
PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
ROSAURO SIA y DICHOSO, JOHNNY BALALIO y DEZA, JIMMY PONCE y TOL and JOHN DOE @ PEDRO MUÑOZ
(at large), accused-appellants.
YNARES-SANTIAGO, J.:
Christian Bermudez was beaten to death and the taxicab he was driving was taken by the assailants. His lifeless
body, wrapped in a carton box, was recovered several days later in a fishpond in Meycauayan, Bulacan. For the
felonies, the above-named accused were indicted for violation of R.A. 6539, otherwise known as the Anti-
Carnapping Law, and Murder in two (2) separate Informations, to wit:
Criminal Case No. Q-95-63962 for Violation of the Anti-Carnapping Law:
That on or about August 23, 1995, in the City of Quezon, Metro Manila, Philippines and within the
jurisdiction of this Honorable Court, herein accused, conspiring, confederating and mutually helping
one another did then and there willfully, unlawfully and feloniously take, steal, and carry away one
(1) motor vehicle described as Toyota Tamaraw FX; Motor No. 2C-2983302; Chassis No. CF50-
0014375; Plate No. NYT-243, owned by BIENVENIDO CRUZ, killing the driver Christian Bermudez in
the process, to the damage and prejudice of the registered owner thereof and the heirs of Christian
Bermudez.
CONTRARY TO LAW.1
Criminal Case No. Q-95-63963 for Murder:
That on or about 23 August 1995, in the City of Quezon, Metro Manila, Philippines, and within the
jurisdiction of this Honorable Court, the above-named accused with intent to kill qualified by
treachery, evident premeditation, taking advantage of superior strength, employing means to
weaken the defense or of means of persons to insure or afford impunity, conspiring, confederating
and mutually helping one another, did then and there willfully, unlawfully and feloniously attack,
assault and use violence upon the person of CHRISTIAN BERMUDEZ by beating him on the head and
other parts of the body, thereby causing his death.
CONTRARY TO LAW.2
At the arraignment, only Johnny Balalio y Deza and Jimmy Ponce y Tol appeared and pleaded "Not Guilty."3 The
third accused, Rosauro Sia y Dichoso, escaped from police custody while on the way to the hospital for
treatment.4As a consequence, the two (2) cases were subsequently consolidated and jointly tried against
accused Johnny Balalio and Jimmy Ponce only.
After trial, the court a quo rendered judgment against both accused imposing upon them the supreme penalty
of Death, thus:
WHEREFORE, premises considered, judgment is hereby rendered finding the accused Johnny Balalio
and Jimmy Ponce GUILTY beyond reasonable doubt as principals by conspiracy of violation of R.A. No.
6539, as amended and hereby sentences them to suffer the penalty of DEATH.
Accused are likewise adjudged jointly and severally [liable] to pay to Agripina Bermudez, the mother
of the deceased Christian Bermudez the sums of:
a. P50,000.00 as compensatory damages for the death of Christian Bermudez;
b. P200,000.00 as burial and other expenses incurred in connection with the death of
Christian; and
c. P3,307,199.60 (2/3 x [80-27] x 300 per day x 26 days (excluding Sundays) x 12 months)
representing the loss of earning capacity of Christian Bermudez as taxi driver.
Costs against accused.
The cases of accused Rosauro Sia who escaped from custody before he was arraigned and as against
Peter Doe who was never apprehended and whose identity has never been known are hereby
ordered ARCHIVED, subject to activation when they are arrested and brought before the bar of
justice.
SO ORDERED.5itc-alf
On automatic review before this Court, accused-appellants raised the lone assigned error that:
THE COURT A QUO ERRED IN CONVICTING THE ACCUSED-APPELLANTS FOR VIOLATION OF RA 6539 (ANTI-
CARNAPPING LAW) SOLELY ON THE BASIS OF THE EXTRA-JUDICIAL CONFESSIONS OF ACCUSED ROSAURO SIA
AND JIMMY PONCE (EXHIBITS C AND D, RESPECTIVELY) WHICH ARE INADMISSIBLE IN EVIDENCE. 6
The facts as summed up by the trial court are as follows:itc-alf
The vehicle claimed as carnapped is registered in the name of complainant Bienvenido C. Cruz of No.
1125 Primero de Mayo Street, Tondo, Manila7 and operated as a taxi being Unit 2 of KIRBEE TAXI and
bearing the following description:
 Make/Type : Toyota Tamaraw FX Wagon
Motor Number : 2-C 2983302
Chassis No. : CF 50-0014375
Plate No. : NYT-243
Color : Maroon
The said taxi was taken from the garage and driven by its regular driver, Christian Bermudez, the
alleged murder victim at about 6:00 a.m. on August 23, 1995. The taxi was last seen at the vicinity of
the Pegasus Night Club in Quezon City at about 10:30 p.m. on the said date with an unidentified
passenger who surfaced later as the accused Rosauro Sia, whose true name is allegedly Antonio
Labrador (Mang Tony) and who resides at San Francisco Del Monte. Accused Rosauro Sia appears to
have gypped driver Christian Bermudez to service him the following day (August 24, 1995) in the
morning and to be paid P150.00 per hour which was apparently accepted because Rosauro gave
instructions to accused Johnny Balalio and Jimmy Ponce to wait for him (Christian) that following
morning. When Christian returned to Sia's residence in San Francisco Del Monte that morning, he was
told to come back in the afternoon because that was the instruction given him by accused Rosauro
Sia. When Christian returned in the afternoon in the Sia residence, he was asked to get inside. As
soon as he alighted from the Tamaraw FX taxi he was driving, his hands were tied by Johnny Balalio
and was handed to a certain "Pedro", the accused Peter Doe who has not been arrested and who told
Johnny Balalio and Johnny (sic) Ponce "Ako na'ng bahala dito". Christian was taken to accused
Rosauro and shortly afterwards, the latter was seen lugging with him a big carton box from which
blood was dripping. Accused Jimmy Ponce saw Rosauro hand the carton-wrapped lifeless body of
Christian inside the carnapped FX taxi. Before leaving with the lifeless body of Christian loaded in the
taxi, accused Sia gave P3,000.00 each to Jimmy Ponce, Johnny Balalio and "Pedro" and admonished
them not to say anything about what happened. The ring taken from Christians8 was given to accused
Jimmy Ponce by Rosauro Sia.
On August 26, 1995, the lifeless body of Christian Bermudez was found and retrieved from a fishpond
in Meycauayan, Bulacan. This fact was broadcast over the radio and, after hearing the same, Agripina
Bermudez went to see the lifeless body retrieved from the fishpond and confirmed it to be that of
Christian, whom she claims is her eldest son who was earning about P650.00 a day as a taxi driver.
Photographs were taken on the carton-wrapped body of Christian including one position which
shows the latter's body.9
Dr. Benito Caballero, Medico Legal Officer of Bulacan, conducted a postmortem examination of the
deceased body of Christian and found that the latter's death was due to shock caused by massive
external and intracranial hemorrhage on account of multiple lacerations on the head and fracture of
the skull due to use of hard object, possibly iron, for which he issued certificates of death and
postmortem death certificate.10
In the meantime, Bienvenido Cruz, the owner of the carnapped vehicle, reported to the police
authorities in Camp Crame the loss of his taxi.11 On September 21, 1995, at about 10:30 p.m., the
carnapped taxi was intercepted being driven by accused Rosauro Sia, who was immediately placed in
custody of the anti-carnapping authorities. While in custody, Rosauro Sia managed to escape but he
was recaptured on November 15, 1995 by the manhunt team created for that purpose. As accused
Rosauro Sia claimed that he bought the hot car from his co-accused Johnny Balalio and Jimmy Ponce,
the latter were picked up from their residence in Baseco, Isla Tawid, Port Area, Tondo, Manila and
investigated. Sworn Statement of the accused Rosauro Sia and Jimmy Ponce were taken12 narrating
their respective participations such as Sia's instruction to Jimmy to guard his (Sia's) gate to deter
passersby from snooping around and describing what transpired inside Sia's residence at San
Francisco Del Monte when Christian was tied and killed. The Sworn Statement of Bienvenido Cruz,
owner of the missing vehicle, was likewise taken. On the basis of the sworn statements of accused
Rosauro Sia and Jimmy Ponce, Dr. Benito Caballero, Provincial Health Officer of Bulacan, together
with the Certificate of Registration of the FX Taxi and the Death and Postmortem Certificates
mentioned heretofore, the Special Operations Unit, Traffic Management Command, PNP, Camp
Crame, referred the matter to the authorities of the Department of Justice who, after finding
probable cause in the preliminary investigation, filed these cases of Violation of R.A. 6539, as
amended, and of Murder against the above-named accused which were consolidated together in this
Branch for joint trial.13
In their lone assigned error, accused-appellants contend in sum that the extra-judicial confessions of accused
Rosauro Sia and Johnny Balalio, which the trial court heavily relied upon, are inadmissible in evidence since they
were executed in violation of their right to counsel. Specifically, accused-appellants argue that the said extra-
judicial statements are inadmissible because they were obtained without compliance with the requirements of
the law for their admissibility.14
The Solicitor General agrees, stating that during the custodial investigation, Ponce and Sia were not assisted by
counsel as required by the Constitution. The trial court's finding that Sia and Ponce were assisted by Prosecutor
Pormento when they executed their extra-judicial confessions did not meet the requirement of the law. The
Solicitor General further contends that, during his testimony, Ponce vehemently denied having voluntarily
executed his alleged statement; rather, he maintained that he was coerced to sign the same and that he did not
even know its contents.
Extra-judicial confessions must conform to the requirements of the Constitution.15 Indeed, a suspect's
confession, whether verbal or non-verbal when taken without the assistance of counsel without a valid waiver of
such assistance regardless of the absence of such coercion or the fact that it had been voluntarily given,16 is
inadmissible in evidence,17 even if appellant's confession were gospel truth.18
Be that as it may, the inadmissibility of the extra-judicial statements of Sia and Ponce will not absolve accused-
appellants from criminal liability because, as pointed out by the Solicitor General, there still is independent
evidence to establish their authorship of the victim's killing on the occasion of the carnapping. The Solicitor
General asserts that while there was no prosecution witness who positively identified accused-appellants
as particeps criminis, their culpability was nonetheless proven through circumstantial evidence.
We agree.
Direct evidence of the commission of the crime is not the only matrix wherefrom a court may draw its
conclusions and findings of guilt.19 The rules on evidence20 and case law sustain the conviction of the accused
through circumstantial evidence when the following requisites concur: (1) there must be more than one
circumstance; (2) the facts from which the inferences are derived are proven; and (3) the combination of all
circumstances is such as to produce a conviction beyond reasonable doubt of the guilt of the accused.21
A circumspect scrutiny of the testimonies of the witnesses of both prosecution and defense shows adequate
evidentiary bases to establish the aforementioned circumstances.@lawphil.net
First, when the police apprehended accused Rosauro Sia while he was in possession of the carnapped vehicle, he
immediately pointed to accused-appellants as his accomplices in taking away the victim's vehicle.22 Notably,
accused-appellants claimed to have met Sia for the first time on August 24, 1995, when Sia supposedly passed
by them looking for a certain person. They saw Sia for the second time on November 15, 1995, when Sia and
some policemen came to their place to arrest them. If accused-appellants did not actually participate in the
perpetration of the crime, it certainly defies reason why Sia would implicate them in so serious an offense when
they were practically strangers to him. In this regard, it must be borne in mind that the fact that a witness may
have been a co-conspirator in the commission of the offense is not in itself sufficient to dilute the credibility of
or, much less, be a ground to disregard altogether his testimony.23 Indeed:
By way of exception, the testimony of a co-conspirator may, even if uncorroborated, be sufficient as
when it is shown to be sincere in itself, because given unhesitatingly and in a straightforward manner,
and is full of details which by their nature could not have been the result of deliberate afterthought.24
Second, defense witness Porferio Fernando testified that accused-appellants were with Rosauro Sia from August
25-28, 1995.25 When accused-appellants came back on August 28, 1995; they informed him that they were to
guard a bodega owned by Sia, which contained a carnapped vehicle.26 This testimony of Fernando confirms the
fact that accused-appellants were in the company of Rosauro Sia during that critical period when the crime was
perpetrated.
Third, upon his arrest, accused-appellant Jimmy Ponce voluntarily surrendered to the police authorities a
ring,27admittedly belonging to the victim.28 It is a well-settled rule that when a person is found in possession of a
thing taken in the doing of a recent wrongful act, he is presumed to be the taker and doer of the whole
act.29 Thus, when property stolen is found in the possession of a person who is unable to give a satisfactory
explanation of his possession thereof, he may be deemed to have committed the crime of theft of said
property.30 More apropos to the peculiar facts prevailing herein is the case of People v. Prado,31 where we
stated:
In the absence of an explanation of how one has come into the possession of stolen effects belonging
to a person wounded and treacherously killed, he must necessarily be considered the author of the
aggression and death of the said person and of the robbery committed on him.
The application of this presumption validly applies to a case of carnapping for, indeed, the concept of unlawful
taking in theft, robbery and carnapping is the same and, had it not been for the enactment of the Anti-
Carnapping Act, the unlawful taking of the motor vehicle would certainly fall within the purview of either theft
or robbery.32
All told, the Court finds no reason to reverse the ruling of the court a quo insofar as the crimes were committed.
What remains to be determined is the propriety of the penalty imposed on accused-appellants.@lawphil.net
In connection with the penalty imposed, the Solicitor General invites the Court's attention to the erroneous
imposition by the trial court of death on the accused-appellants. He points out that while the sentence was
meted upon a finding that the aggravating circumstances of treachery, abuse of superior strength and evident
premeditation attended the commission of the crime, these were not duly established in the case at bar.
The observation is well-taken. Qualifying and aggravating circumstances which are taken into consideration for
the purpose of increasing the degree of the penalty imposed must be proven with equal certainty as the
commission of the act charged as criminal offense.33
With regard to alevosia, there is treachery when the offender commits any of the crimes against persons,
employing means, methods or forms in the execution thereof which tend directly and specially to insure its
execution, without risk to himself arising from the defense which the offended party might make.34 Treachery is
considered present when: (1) there is employment of means of execution that gives the person attacked no
opportunity to defend himself or to retaliate; and (2) the means or method of execution was deliberately or
consciously adopted by the culprit.35 For treachery to be appreciated, it must be present and seen by the witness
right at the inception of the attack.36 Where no particulars are known as to how the killing began, its
perpetration with treachery cannot merely be supposed.37
In this case, there was neither a description of how the attack was commenced — whether it was sudden,
unexpected and whether the victim was caught totally unaware — nor has there been a showing that the
method of execution in the commission of the crime was consciously or deliberately adopted by the malefactors.
To reiterate, alevosia cannot be established where no particulars are known regarding the manner in which the
aggression was carried out or how it developed.38 It must be based on positive or conclusive proof, not mere
suppositions or speculations,39 and must be proved as clearly and as convincingly as the killing itself.40
Similarly, the elements of evident premeditation must be established with equal certainty as the criminal act
itself before it can be appreciated as a qualifying circumstance.41 These elements are: (1) the time when the
accused determined to commit the crime; (2) an overt act manifestly indicating that they clung to their
determination to commit the crime; and (3) a sufficient lapse of time between the decision to commit the crime
and the execution thereof to allow the accused to reflect upon the consequences of their act.42 The essence of
evident premeditation is that the execution of the criminal act is preceded by cool thought and reflection upon
the resolution to carry out the criminal intent within a space of time sufficient to arrive at a calm judgment.43
In this case, there is no showing that the killing of Christian Bermudez was the product of cool thought and
reflection. There is absolutely no showing how and when the plan was hatched or how long a time had elapsed
before the crime was carried out. On the contrary, what appears very much evident is that he was killed on the
occasion of the carnapping itself. Without such evidence, mere presumptions and inferences, no matter how
logical and probable, will not suffice to warrant the appreciation of this qualifying circumstance of evident
premeditation.44
Abuse of superior strength cannot likewise be appreciated. In People v. Flores,45 this Court pointed out that this
aggravating circumstance necessitates the showing of the relative disparity in physical characteristics, usually
translating into the age, gender, the physical size and the strength of the aggressor and the victim. There is no
proof that accused-appellant utilized any notorious inequality to his advantage. In other words, mere superiority
in number is not enough to constitute superior strength.46
To be appreciated as a qualifying circumstance, what should be considered is not that there were three or more
assailants of one victim, but whether the aggressors purposely took advantage of their combined strength in
order to consummate the offense.47 In this case, the prosecution did not present any direct proof that there was
a deliberate intent on the part of accused-appellants to take advantage of the obvious inequality of force
between them and the victim.
In the absence of any qualifying or aggravating circumstances which would merit the imposition of death, the
proper imposable penalty should be reclusion perpetua, pursuant to Section 14 of R.A. No. 6539, viz:
Penalty for Carnapping — Any person who is found guilty of carnapping, as the term is defined in
Section Two of this Act, shall, irrespective of the value of the motor vehicle taken, be punished by
imprisonment of not less than fourteen years and eight months and not more than seventeen years
and four months, when the carnapping is committed without violence or intimidation of persons, or
force upon things; and by imprisonment for not less than seventeen years and four months and not
more than thirty years, when the carnapping is committed by means of violence against or
intimidation of any person, or force upon things; and the penalty of reclusion perpetua to death shall
 be imposed when the owner, driver or occupant of the carnapped motor vehicle is killed or raped in Gross Annual Earnings = P650 x 261 working days in a year
the course of the commission of the carnapping or on the occasion thereof. (Italics ours) = P169,650.00
Net Earning Capacity = 2/3 x (80-27) x [P169,650.00 - P84,825.00]
On the other hand, Article 63 (2) of the Revised Penal Code states:itc-alf = 35.33 x 84,825.00
= P2,996,867.20
Rules for the application of indivisible penalties. — In all cases in which the law prescribes a single
indivisible penalty, it shall be applied by the courts regardless of any mitigating or aggravating
Based on the foregoing computation, the award of the trial court with regard to lost income is thus modified
circumstances that may have attended the commission of the deed.@lawphil.net
accordingly.

In all cases in which the law prescribes a penalty composed of two indivisible penalties, the following
WHEREFORE, the decision of the Regional Trial Court of Quezon City, Branch 85, in Criminal Cases No. Q-95-
rules shall be observed in the application thereof:
63963, finding accused-appellant guilty beyond reasonable doubt of violation of Republic Act No. 6539 (The
Anti-Carnapping Law) is AFFIRMED with MODIFICATIONS. Accused-appellants are SENTENCED to suffer the
xxx xxx xxx penalty of reclusion perpetua; and are ORDERED, jointly and severally, to pay the heirs of the victim Christian
Bermudez the sum of P50,000.00 as civil indemnity, the sum of P50,000.00 as moral damages, and the sum of
2. When there are neither mitigating nor aggravating circumstances in the commission of the deed, P2,996,867.20 representing lost earnings. The award of P200,000.00 as burial and other expenses is DELETED for
the lesser penalty shall be applied.itc-alf lack of substantial proof.

Anent the civil indemnity award, this Court finds the amount of P50,000.00 as death indemnity proper, following SO ORDERED.itc-alf
prevailing jurisprudence,48 and in line with controlling policy.49 The award of civil indemnity may be granted
without any need of proof other than the death of the victim.50 Though not awarded by the trial court, the Davide, Jr., C.J., Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza, Panganiban, Quisumbing, Pardo, Buena, De
victim's heirs are likewise entitled to moral damages, pegged at P50,000.00 by controlling case law,51 taking into Leon, Jr., Sandoval-Gutierrez, and Carpio, JJ., concur.
consideration the pain and anguish of the victim's family52 brought about by his death.53

However, the award of P200,000.00 as burial and other expenses incurred in connection with the death of the
victim must be deleted. The records are bereft of any receipt or voucher to justify the trial court's award of
burial and other expenses incurred in connection with the victim's death. The rule is that every pecuniary loss
must be established by credible evidence before it may be awarded.54 Credence can be given only to claims
which are duly supported by receipts or other credible evidence.55

The trial court was correct in awarding damages for loss of earning capacity despite the non-availability of
documentary evidence.56 Damages representing net earning capacity have been awarded by the Court based on
testimony in several cases.57 However, the amount of the trial court's award needs to be recomputed and
modified accordingly.

In determining the amount of lost income, the following must be taken into account: (1) the number of years for
which the victim would otherwise have lived; and (2) the rate of the loss sustained by the heirs of the deceased.
The second variable is computed by multiplying the life expectancy by the net earnings of the deceased,
meaning total earnings less expenses necessary in the creation of such earnings or income less living and other
incidental expenses. Considering that there is no proof of living expenses of the deceased, net earnings are
computed at fifty percent (50%) of the gross earnings.58 The formula used by this Court in computing loss of
earning capacity is:

Net Earning Capacity = [2/3 x (80 - age at time of death) x (gross annual income -
reasonable and necessary living expenses)]59

In this case, the Court notes that the victim was 27 years old at the time of his death and his mother testified
that as a driver of the Tamaraw FX taxi, he was earning P650.00 a day.60 Hence, the damages payable for the loss
of the victim's earning capacity is computed thus:
 Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 97412 July 12, 1994
EASTERN SHIPPING LINES, INC., petitioner,
vs.
HON. COURT OF APPEALS AND MERCANTILE INSURANCE COMPANY, INC., respondents.
Alojada & Garcia and Jimenea, Dala & Zaragoza for petitoner.
Zapa Law Office for private respondent.
There were, to be sure, other factual issues that confronted both courts. Here, the appellate court said:
VITUG, J.:
The issues, albeit not completely novel, are: (a) whether or not a claim for damage sustained on a shipment of
goods can be a solidary, or joint and several, liability of the common carrier, the arrastre operator and the
customs broker; (b) 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; and (c) whether
the applicable rate of interest, referred to above, is twelve percent (12%) or six percent (6%).
The findings of the court a quo, adopted by the Court of Appeals, on the antecedent and undisputed facts that
have led to the controversy are hereunder reproduced:
This is an action against defendants shipping company, arrastre operator and broker-
forwarder for damages sustained by a shipment while in defendants' custody, filed by the
insurer-subrogee who paid the consignee the value of such losses/damages.
On December 4, 1981, two fiber drums of riboflavin were shipped from Yokohama, Japan
for delivery vessel "SS EASTERN COMET" owned by defendant Eastern Shipping Lines
under Bill of Lading
No. YMA-8 (Exh. B). The shipment was insured under plaintiff's Marine Insurance Policy
No. 81/01177 for P36,382,466.38.
Upon arrival of the shipment in Manila on December 12, 1981, 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.
On January 7, 1982 defendant Allied Brokerage Corporation received the shipment from
defendant Metro Port Service, Inc., one drum opened and without seal (per "Request for
Bad Order Survey." Exh. D).
On January 8 and 14, 1982, 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 (per "Bad Order Waybill" No.
10649, Exh. E).
Plaintiff contended that due to the losses/damage sustained by said drum, the consignee
suffered losses totaling P19,032.95, due to the fault and negligence of defendants. Claims
were presented against defendants who failed and refused to pay the same (Exhs. H, I, J,
K, L).
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 (per "Form of Subrogation",
"Release" and Philbanking check, Exhs. M, N, and O). (pp. 85-86, Rollo.)
Defendants filed their respective answers, traversing the material allegations of the
complaint contending that: As for defendant Eastern Shipping it alleged that the shipment
was discharged in good order from the vessel unto the custody of Metro Port Service so
that any damage/losses incurred after the shipment was incurred after the shipment was
turned over to the latter, is no longer its liability (p. 17, Record); Metroport averred that
although subject shipment was discharged unto its custody, portion of the same was
already in bad order (p. 11, Record); Allied Brokerage alleged that plaintiff has no cause of
action against it, not having negligent or at fault for the shipment was already in damage
and bad order condition when received by it, but nonetheless, it still exercised extra
ordinary care and diligence in the handling/delivery of the cargo to consignee in the same
condition shipment was received by it.
From the evidence the court found the following:
The issues are:
1. Whether or not the shipment sustained losses/damages;
2. Whether or not these losses/damages were sustained while in
the custody of defendants (in whose respective custody, if
determinable);
3. Whether or not defendant(s) should be held liable for the
losses/damages (see plaintiff's pre-Trial Brief, Records, p. 34; Allied's
pre-Trial Brief, adopting plaintiff's Records, p. 38).
 As to the first issue, there can be no doubt that the shipment 2. P3,000.00 as attorney's fees, and
sustained losses/damages. The two drums were shipped in good
order and condition, as clearly shown by the Bill of Lading and
3. Costs.
Commercial Invoice which do not indicate any damages drum that
was shipped (Exhs. B and C). But when on December 12, 1981 the
shipment was delivered to defendant Metro Port Service, Inc., it B. Dismissing the counterclaims and
excepted to one drum in bad order. crossclaim of defendant/cross-claimant Allied
Brokerage Corporation.
Correspondingly, as to the second issue, it follows that the
losses/damages were sustained while in the respective and/or SO ORDERED. (p. 207, Record).
successive custody and possession of defendants carrier (Eastern),
arrastre operator (Metro Port) and broker (Allied Brokerage). This Dissatisfied, defendant's recourse to US.
becomes evident when the Marine Cargo Survey Report (Exh. G),
with its "Additional Survey Notes", are considered. In the latter
notes, it is stated that when the shipment was "landed on vessel" to The appeal is devoid of merit.
dock of Pier # 15, South Harbor, Manila on December 12, 1981, it
was observed that "one (1) fiber drum (was) in damaged condition, After a careful scrutiny of the evidence on record. We find that the conclusion drawn
covered by the vessel's Agent's Bad Order Tally Sheet No. 86427." therefrom is correct. As there is sufficient evidence that the shipment sustained damage
The report further states that when defendant Allied Brokerage while in the successive possession of appellants, and therefore they are liable to the
withdrew the shipment from defendant arrastre operator's custody appellee, as subrogee for the amount it paid to the consignee. (pp. 87-89, Rollo.)
on January 7, 1982, one drum was found opened without seal, cello
bag partly torn but contents intact. Net unrecovered spillages was
15 kgs. The report went on to state that when the drums reached The Court of Appeals thus affirmed in toto the judgment of the court
the consignee, one drum was found with adulterated/faked a quo.
contents. It is obvious, therefore, that these losses/damages
occurred before the shipment reached the consignee while under In this petition, Eastern Shipping Lines, Inc., the common carrier, attributes error and grave abuse of discretion
the successive custodies of defendants. Under Art. 1737 of the New on the part of the appellate court when —
Civil Code, the common carrier's duty to observe extraordinary
diligence in the vigilance of goods remains in full force and effect
I. IT HELD PETITIONER CARRIER JOINTLY AND SEVERALLY LIABLE WITH THE ARRASTRE
even if the goods are temporarily unloaded and stored in transit in
OPERATOR AND CUSTOMS BROKER FOR THE CLAIM OF PRIVATE RESPONDENT AS
the warehouse of the carrier at the place of destination, until the
GRANTED IN THE QUESTIONED DECISION;
consignee has been advised and has had reasonable opportunity to
remove or dispose of the goods (Art. 1738, NCC). Defendant Eastern
Shipping's own exhibit, the "Turn-Over Survey of Bad Order II. IT HELD THAT THE GRANT OF INTEREST ON THE CLAIM OF PRIVATE RESPONDENT
Cargoes" (Exhs. 3-Eastern) states that on December 12, 1981 one SHOULD COMMENCE FROM THE DATE OF THE FILING OF THE COMPLAINT AT THE RATE
drum was found "open". OF TWELVE PERCENT PER ANNUM INSTEAD OF FROM THE DATE OF THE DECISION OF THE
TRIAL COURT AND ONLY AT THE RATE OF SIX PERCENT PER ANNUM, PRIVATE
RESPONDENT'S CLAIM BEING INDISPUTABLY UNLIQUIDATED.
and thus held:

The petition is, in part, granted.

WHEREFORE, PREMISES CONSIDERED, judgment is hereby rendered:

In this decision, we have begun by saying that the questions raised by petitioner carrier are not all that novel.
A. Ordering defendants to pay plaintiff, jointly and severally:
Indeed, we do have a fairly good number of previous decisions this Court can merely tack to.

1. The amount of P19,032.95, with the present legal interest of

The common carrier's duty to observe the requisite diligence in the shipment of goods lasts from the time the
12% per annum from October 1, 1982, the date of filing of this
articles are surrendered to or unconditionally placed in the possession of, and received by, the carrier for
complaints, until fully paid (the liability of defendant Eastern
transportation until delivered to, or until the lapse of a reasonable time for their acceptance by, the person
Shipping, Inc. shall not exceed US$500 per case or the CIF value of
entitled to receive them (Arts. 1736-1738, Civil Code; Ganzon vs. Court of Appeals, 161 SCRA 646; Kui Bai vs.
the loss, whichever is lesser, while the liability of defendant Metro
Dollar Steamship Lines, 52 Phil. 863). When the goods shipped either are lost or arrive in damaged condition, a
Port Service, Inc. shall be to the extent of the actual invoice value of
presumption arises against the carrier of its failure to observe that diligence, and there need not be an express
each package, crate box or container in no case to exceed P5,000.00
finding of negligence to hold it liable (Art. 1735, Civil Code; Philippine National Railways vs. Court of Appeals, 139
each, pursuant to Section 6.01 of the Management Contract);
SCRA 87; Metro Port Service vs. Court of Appeals, 131 SCRA 365). There are, of course, exceptional cases when
such presumption of fault is not observed but these cases, enumerated in Article 17341 of the Civil Code, are
exclusive, not one of which can be applied to this case.
The question of charging both the carrier and the arrastre operator with the obligation of properly delivering the
goods to the consignee has, too, been passed upon by the Court. In Fireman's Fund Insurance vs. Metro Port
Services (182 SCRA 455), we have explained, in holding the carrier and the arrastre operator liable
in solidum, thus:
The legal relationship between the consignee and the arrastre operator is akin to that of a
depositor and warehouseman (Lua Kian v. Manila Railroad Co., 19 SCRA 5 [1967]. The
relationship between the consignee and the common carrier is similar to that of the
consignee and the arrastre operator (Northern Motors, Inc. v. Prince Line, et al., 107 Phil.
253 [1960]). Since it is the duty of the ARRASTRE to take good care of the goods that are in
its custody and to deliver them in good condition to the consignee, such responsibility also
devolves upon the CARRIER. Both the ARRASTRE and the CARRIER are therefore charged
with the obligation to deliver the goods in good condition to the consignee.
We do not, of course, imply by the above pronouncement that the arrastre operator and the customs broker are
themselves always and necessarily liable solidarily with the carrier, or vice-versa, nor that attendant facts in a
given case may not vary the rule. The instant petition has been brought solely by Eastern Shipping Lines, which,
being the carrier and not having been able to rebut the presumption of fault, is, in any event, to be held liable in
this particular case. A factual finding of both the court a quo and the appellate court, we take note, is that "there
is sufficient evidence that the shipment sustained damage while in the successive possession of appellants" (the
herein petitioner among them). Accordingly, the liability imposed on Eastern Shipping Lines, Inc., the sole
petitioner in this case, is inevitable regardless of whether there are others solidarily liable with it.
It is over the issue of legal interest adjudged by the appellate court that deserves more than just a passing
remark.
Let us first see a chronological recitation of the major rulings of this Court:
The early case of Malayan Insurance Co., Inc., vs. Manila Port
Service,2 decided3 on 15 May 1969, involved a suit for recovery of money arising out of short deliveries and
pilferage of goods. In this case, appellee Malayan Insurance (the plaintiff in the lower court) averred in its
complaint that the total amount of its claim for the value of the undelivered goods amounted to P3,947.20. This
demand, however, was neither established in its totality nor definitely ascertained. In the stipulation of facts
later entered into by the parties, in lieu of proof, the amount of P1,447.51 was agreed upon. The trial court
rendered judgment ordering the appellants (defendants) Manila Port Service and Manila Railroad Company to
pay appellee Malayan Insurance the sum of P1,447.51 with legal interest thereon from the date the complaint
was filed on 28 December 1962 until full payment thereof. The appellants then assailed, inter alia, the award of
legal interest. In sustaining the appellants, this Court ruled:
Interest upon an obligation which calls for the payment of money, absent a stipulation, is
the legal rate. Such interest normally is allowable from the date of demand, judicial or
extrajudicial. The trial court opted for judicial demand as the starting point.
But then upon the provisions of Article 2213 of the Civil Code, interest "cannot be
recovered upon unliquidated claims or damages, except when the demand can be
established with reasonable certainty." And as was held by this Court in Rivera
vs. Perez,4 L-6998, February 29, 1956, if the suit were for damages, "unliquidated and not
known until definitely ascertained, assessed and determined by the courts after proof
(Montilla c. Corporacion de P.P. Agustinos, 25 Phil. 447; Lichauco v. Guzman,
38 Phil. 302)," then, interest "should be from the date of the decision." (Emphasis supplied)
The case of Reformina vs. Tomol,5 rendered on 11 October 1985, was for "Recovery of Damages for Injury to
Person and Loss of Property." After trial, the lower court decreed:
WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and third party
defendants and against the defendants and third party plaintiffs as follows:
Ordering defendants and third party plaintiffs Shell and Michael, Incorporated to pay
jointly and severally the following persons:
xxx xxx xxx
(g) Plaintiffs Pacita F. Reformina and Francisco Reformina the sum of P131,084.00 which is
the value of the boat F B Pacita III together with its accessories, fishing gear and
equipment minus P80,000.00 which is the value of the insurance recovered and the
amount of P10,000.00 a month as the estimated monthly loss suffered by them as a result
of the fire of May 6, 1969 up to the time they are actually paid or already the total sum of
P370,000.00 as of June 4, 1972 with legal interest from the filing of the complaint until
paid and to pay attorney's fees of P5,000.00 with costs against defendants and third party
plaintiffs. (Emphasis supplied.)
On appeal to the Court of Appeals, the latter modified the amount of damages awarded but
sustained the trial court in adjudging legal interest from the filing of the complaint until fully paid.
When the appellate court's decision became final, the case was remanded to the lower court for
execution, and this was when the trial court issued its assailed resolution which applied the 6%
interest per annum prescribed in Article 2209 of the Civil Code. In their petition for review
on certiorari, the petitioners contended that Central Bank Circular
No. 416, providing thus —
By virtue of the authority granted to it under Section 1 of Act 2655, as amended,
Monetary Board in its Resolution No. 1622 dated July 29, 1974, has prescribed that the
rate of interest for the loan, or forbearance of any money, goods, or credits and the rate
allowed in judgments, in the absence of express contract as to such rate of interest, shall
be twelve (12%) percent per annum. This Circular shall take effect immediately. (Emphasis
found in the text) —
should have, instead, been applied. This Court6 ruled:
The judgments spoken of and referred to are judgments in litigations involving loans or
forbearance of any money, goods or credits. Any other kind of monetary judgment which
has nothing to do with, nor involving loans or forbearance of any money, goods or credits
does not fall within the coverage of the said law for it is not within the ambit of the
authority granted to the Central Bank.
xxx xxx xxx
 Coming to the case at bar, the decision herein sought to be executed is one rendered in an
Action for Damages for injury to persons and loss of property and does not involve any
loan, much less forbearances of any money, goods or credits. As correctly argued by the
private respondents, the law applicable to the said case is Article 2209 of the New Civil
Code which reads —
Art. 2209. — If the obligation consists in the payment of a sum of
money, and the debtor incurs in delay, the indemnity for damages,
there being no stipulation to the contrary, shall be the payment of
interest agreed upon, and in the absence of stipulation, the legal
interest which is six percent per annum.
The above rule was reiterated in Philippine Rabbit Bus Lines, Inc., v. Cruz,7 promulgated on 28 July 1986. The case
was for damages occasioned by an injury to person and loss of property. The trial court awarded private
respondent Pedro Manabat actual and compensatory damages in the amount of P72,500.00 with legal interest
thereon from the filing of the complaint until fully paid. Relying on the Reformina v. Tomol case, this
Court8 modified the interest award from 12% to 6% interest per annum but sustained the time computation
thereof, i.e., from the filing of the complaint until fully paid.
In Nakpil and Sons vs. Court of Appeals,9 the trial court, in an action for the recovery of damages arising from the
collapse of a building, ordered,
inter alia, the "defendant United Construction Co., Inc. (one of the petitioners)
. . . to pay the plaintiff, . . . , the sum of P989,335.68 with interest at the legal rate from November 29, 1968, the
date of the filing of the complaint until full payment . . . ." Save from the modification of the amount granted by
the lower court, the Court of Appeals sustained the trial court's decision. When taken to this Court for review,
the case, on 03 October 1986, was decided, thus:
WHEREFORE, the decision appealed from is hereby MODIFIED and considering the special
and environmental circumstances of this case, we deem it reasonable to render a decision
imposing, as We do hereby impose, upon the defendant and the third-party defendants
(with the exception of Roman Ozaeta) a solidary (Art. 1723, Civil Code, Supra.
p. 10) indemnity in favor of the Philippine Bar Association of FIVE MILLION (P5,000,000.00)
Pesos to cover all damages (with the exception to attorney's fees) occasioned by the loss
of the building (including interest charges and lost rentals) and an additional ONE
HUNDRED THOUSAND (P100,000.00) Pesos as and for attorney's fees, the total sum being
payable upon the finality of this decision. Upon failure to pay on such finality, twelve (12%)
per cent interest per annum shall be imposed upon aforementioned amounts from finality
until paid. Solidary costs against the defendant and third-party defendants (Except Roman
Ozaeta). (Emphasis supplied)
A motion for reconsideration was filed by United Construction, contending that "the interest of
twelve (12%) per cent per annum imposed on the total amount of the monetary award was in
contravention of law." The Court10 ruled out the applicability of the Reformina and Philippine Rabbit
Bus Lines cases and, in its resolution of 15 April 1988, it explained:
There should be no dispute that the imposition of 12% interest pursuant to Central Bank
Circular No. 416 . . . is applicable only in the following: (1) loans; (2) forbearance of any
money, goods or credit; and
(3) rate allowed in judgments (judgments spoken of refer to judgments involving loans or
forbearance of any money, goods or credits. (Philippine Rabbit Bus Lines Inc. v. Cruz, 143
SCRA 160-161 [1986]; Reformina v. Tomol, Jr., 139 SCRA 260 [1985]). It is true that in the
instant case, there is neither a loan or a forbearance, but then no interest is actually
imposed provided the sums referred to in the judgment are paid upon the finality of the
judgment. It is delay in the payment of such final judgment, that will cause the imposition
of the interest.
It will be noted that in the cases already adverted to, the rate of interest is imposed on the
total sum, from the filing of the complaint until paid; in other words, as part of the
judgment for damages. Clearly, they are not applicable to the instant case. (Emphasis
supplied.)
The subsequent case of American Express International, Inc., vs. Intermediate Appellate Court11 was a petition
for review on certiorari from the decision, dated 27 February 1985, of the then Intermediate Appellate Court
reducing the amount of moral and exemplary damages awarded by the trial court, to P240,000.00 and
P100,000.00, respectively, and its resolution, dated 29 April 1985, restoring the amount of damages awarded by
the trial court, i.e., P2,000,000.00 as moral damages and P400,000.00 as exemplary damages with interest
thereon at 12% per annum from notice of judgment, plus costs of suit. In a decision of 09 November 1988, this
Court, while recognizing the right of the private respondent to recover damages, held the award, however, for
moral damages by the trial court, later sustained by the IAC, to be inconceivably large. The Court12 thus set aside
the decision of the appellate court and rendered a new one, "ordering the petitioner to pay private respondent
the sum of One Hundred Thousand (P100,000.00) Pesos as moral damages, with
six (6%) percent interest thereon computed from the finality of this decision until paid. (Emphasis supplied)
Reformina came into fore again in the 21 February 1989 case of Florendo v. Ruiz13 which arose from a breach of
employment contract. For having been illegally dismissed, the petitioner was awarded by the trial court moral
and exemplary damages without, however, providing any legal interest thereon. When the decision was
appealed to the Court of Appeals, the latter held:
WHEREFORE, except as modified hereinabove the decision of the CFI of Negros Oriental
dated October 31, 1972 is affirmed in all respects, with the modification that defendants-
appellants, except defendant-appellant Merton Munn, are ordered to pay, jointly and
severally, the amounts stated in the dispositive portion of the decision, including the sum
of P1,400.00 in concept of compensatory damages, with interest at the legal rate from the
date of the filing of the complaint until fully paid(Emphasis supplied.)
The petition for review to this Court was denied. The records were thereupon transmitted to the trial
court, and an entry of judgment was made. The writ of execution issued by the trial court directed
that only compensatory damages should earn interest at 6% per annum from the date of the filing of
the complaint. Ascribing grave abuse of discretion on the part of the trial judge, a petition
for certiorari assailed the said order. This Court said:
. . . , it is to be noted that the Court of Appeals ordered the payment of interest "at the
legal rate" from the time of the filing of the complaint. . . Said circular [Central Bank
Circular No. 416] does not apply to actions based on a breach of employment contract like
the case at bar. (Emphasis supplied)
The Court reiterated that the 6% interest per annum on the damages should be computed from the
time the complaint was filed until the amount is fully paid.
Quite recently, the Court had another occasion to rule on the matter. National Power Corporation case, on the award of interest. Nonetheless, it may not be unwise, by way of clarification and reconciliation, to
vs. Angas,14decided on 08 May 1992, involved the expropriation of certain parcels of land. After conducting a suggest the following rules of thumb for future guidance.
hearing on the complaints for eminent domain, the trial court ordered the petitioner to pay the private
respondents certain sums of money as just compensation for their lands so expropriated "with legal interest
I. When an obligation, regardless of its source, i.e., law, contracts, quasi-contracts, delicts or quasi-delicts18 is
thereon . . . until fully paid." Again, in applying the 6% legal interest per annum under the Civil Code, the
breached, the contravenor can be held liable for damages.19 The provisions under Title XVIII on "Damages" of the
Court15 declared:
Civil Code govern in determining the measure of recoverable damages.20

. . . , (T)he transaction involved is clearly not a loan or forbearance of money, goods or

credits but expropriation of certain parcels of land for a public purpose, the payment of
which is without stipulation regarding interest, and the interest adjudged by the trial court
is in the nature of indemnity for damages. The legal interest required to be paid on the
amount of just compensation for the properties expropriated is manifestly in the form of
indemnity for damages for the delay in the payment thereof. Therefore, since the kind of
interest involved in the joint judgment of the lower court sought to be enforced in this
case is interest by way of damages, and not by way of earnings from loans, etc. Art. 2209
of the Civil Code shall apply.
II. With regard particularly to an 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:
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.21 Furthermore, the
interest due shall itself earn legal interest from the time it is judicially demanded.22 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 116923 of the Civil Code.

Concededly, there have been seeming variances in the above holdings. The cases can perhaps be classified into
two groups according to the similarity of the issues involved and the corresponding rulings rendered by the
court. The "first group" would consist of the cases of Reformina v. Tomol (1985), Philippine Rabbit Bus Lines
v. Cruz(1986), Florendo v. Ruiz (1989)
and National Power Corporation v. Angas (1992). In the "second group" would be Malayan Insurance Company
v.Manila Port Service (1969), Nakpil and Sons v. Court of Appeals (1988), and American Express International
v.Intermediate Appellate Court (1988).
In the "first group", the basic issue focuses on the application of either the 6% (under the Civil Code) or 12%
(under the Central Bank Circular) interest per annum. It is easily discernible in these cases that there has been a
consistent holding that the Central Bank Circular imposing the 12% interest per annum applies only to loans or
forbearance16 of money, goods or credits, as well as to judgments involving such loan or forbearance of money,
goods or credits, and that the 6% interest under the Civil Code governs when the transaction involves the
payment of indemnities in the concept of damage arising from the breach or a delay in the performance of
obligations in general. Observe, too, that in these cases, a common time frame in the computation of the 6%
interest per annum has been applied, i.e., from the time the complaint is filed until the adjudged amount is fully
paid.
The "second group", did not alter the pronounced rule on the application of the 6% or 12% interest per
annum,17depending on whether or not the amount involved is a loan or forbearance, on the one hand, or one of
indemnity for damage, on the other hand. Unlike, however, the "first group" which remained consistent in
holding that the running of the legal interest should be from the time of the filing of the complaint until fully
paid, the "second group" varied on the commencement of the running of the legal interest.
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 court24 at the rate of 6% per annum.25 No interest,
however, shall be adjudged on unliquidated claims or damages except when or until the demand can be
established with reasonable certainty.26 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.
WHEREFORE, the petition is partly GRANTED. The appealed decision is AFFIRMED with the MODIFICATION that
the legal interest to be paid is SIX PERCENT (6%) on the amount due computed from the decision, dated
03 February 1988, of the court a quo. A TWELVE PERCENT (12%) interest, in lieu of SIX PERCENT (6%), shall be
imposed on such amount upon finality of this decision until the payment thereof.
SO ORDERED.

Malayan 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.'" American Express International v. IAC, introduced a different time frame for reckoning the 6% interest
by ordering it to be "computed from the finality of (the) decision until paid." The Nakpil and Sons case ruled that
12% interest per annum should be imposed from the finality of the decision until the judgment amount is paid.

The ostensible discord is not difficult to explain. The factual circumstances may have called for different
applications, guided by the rule that the courts are vested with discretion, depending on the equities of each
 Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 94563 March 5, 1991
MEYNARDO C. POLICARPIO and LOURDES POLICARPIO, petitioners,
vs.
HONORABLE COURT OF APPEALS, EVELYN Q. CATABAS, ROMULO Q. CATABAS and CLEMENTE
CATABAS, respondents.
Julian S. Yap for petitioners.
Manuel S. Fonacier, Jr. for private respondents.
GUTIERREZ, JR., J.:
This petition asks for the setting aside of the April 30, 1990 decision of the Court of Appeals in CA-G.R. Civil Case
No. 16069 the dispositive portion of which reads:
WHEREFORE, the appealed decision is SET ASIDE and in lieu thereof another one is hereby entered.
(1) Ordering appellees, (1) to authorize Philippine Commercial International Bank (PCIB) to release
their mortgaged TCT No. 501812 upon payment by Urban Development Bank (URBAN Bank) of their
mortgage loan obligation with said PCIB; and thereafter (2) to transfer the title in appellant's name;
(2) Ordering appellants, (1) to pay appellees a monthly rent of P2,500.00 for their use of the subject
property during the period from December 18, 1983 to the filing of the complaint a quo on January 5,
1985 when the judicial demand was made on appellees, or P31,250 for 125 months at 12%
interest per annum; (2) to reimburse appellees P2,812.60 for the capital gains tax, stamps and other
related expenses paid for by appellees; and (3) to pay and/or authorize Urban Bank to pay to
appellees the proceeds of the loan granted to appellants to the extent of P145,000.00 (unpaid
balance of the purchase price) less whatever amount is to be paid to PCIB for the outstanding
mortgage loan obligation of appellees with said bank. (Rollo, p. 54)
On November 25,1983, petitioners-spouses Meynardo C. Policarpio and Lourdes Policarpio and private
respondents Evelyn Romulo and Clemente, all surnamed Catabas executed a "Contract to Sell" whereby the
private respondents agreed to buy and the petitioners-spouses to sell a residential lot of about 300 square
meters with a house and other improvements located at Servillana Street, UE Village, Cainta, Rizal. The property
is covered by Transfer Certificate of Title No. 501812 Registry of Deeds, Province of Rizal. The agreed purchase
price was the amount of P270,000 payable as follows: (1) P10,000.00 upon signing of the Contract to Sell; and (2)
the balance of P260,000.00 to be paid from the proceeds of the private respondents' PAG-IBIG loan thru its
designated bank, the Urban Bank and which they guarantee and warrant to be approved and thereafter release
on or before the first week of December 1983; and to deliver to the petitioners-spouses the whole amount of
P260,000.00 on or before the first week of December 1983.
The "Contract to Sell" also provides that failure on the part of the vendees to pay the balance on the first week
of December, 1983 will automatically annul the contract and the vendors shall immediately return the
downpayment and that after full payment of the purchase price the vendors shall execute a deed of absolute
sale in favor of the vendee.
The private respondents were not able to pay the balance price on the first week of December 1983. However,
the petitioners-spouses did not return the P10,000 downpayment. The private respondents continued to make
partial payments which were received by the petitioners-spouses. All in all, the private respondents made partial
payments of P75,000.00 broken down as follows: (1) P10,000.00 at the time of the execution of the Contract to
Sell; (2) P50,000.00 on May 9, 1984; (3) Pl0,000.00 on June 4, 1984 and (4) P5,000.00 on June 7, 1984.
On April 9, 1984, the parties executed a deed of absolute sale over the subject property. Thereafter, the
petitioners-spouses delivered physical possession of the property to the private respondents.
On March 1, 1985, the private respondents filed with the Regional Trial Court of Pasig, Metro Manila a case for
specific performance and damages against the petitioners-spouses. They claimed that in view of the fact that
their PAG-IBIG loan was not processed on time without fault on their part, the parties executed a Deed of
Absolute Sale over the same property. They also claimed that the balance of P195,000.00 which is to be paid out
of the proceeds of the PAG-IBIG loan was already processed, approved and ready for availment provided all the
required documents and title to the property in the names of the private respondents are delivered to the
Urban Bank. However, the petitioners-spouses motivated by a desire to increase the contract price refused to
deliver and transfer the title of the property to the private respondents. They, therefore, prayed that the
petitioners- spouses be ordered to confirm the transfer to the private respondents of Transfer Certificate of Title
No. 501812 covering the property, subject matter of the "Deed of Absolute Sale" in order that the same may be
used as collateral for the approved PAG-IBIG loan; to execute all other documents and furnish the private
respondents certificate of clearance pursuant to existing laws so as to secure TCT No. 501812 in the name of the
private respondents. In addition, the private respondents asked for damages.
On the other hand, the petitioners-spouses averred that the Contract to Sell was automatically cancelled when
the private respondents violated the terms of the contract: (1) the balance of the purchase price was not paid on
or before the first week of December 1983; (2) the capital gains tax and documentary stamps for the sale of the
property were not paid by the private respondents. They, however, allowed the private respondents to occupy
the property when the latter agreed to the following terms:
a) The purchase price of the property shad be adjusted to P330,000.00 to cope with the adverse
effects of devaluation and full payment of the remaining balance shall be on or before May 30, 1984.
b) That within one (1) month plaintiffs (private respondents) would secure from other private sources
at least P90,000.00 so that defendants (petitioners) could pay their loan with the PCIB where the
subject property is mortgaged to enable the plaintiffs to pursue their PAG-IBIG loan, if they still so
desire with the defendants' title as security. (page 35, Rollo)
In accordance with the new terms, the parties allegedly executed the simulated Absolute Deed of Sale dated
April 9, 1984 and the petitioners-spouses accepted additional partial payment of P50,000.00. The consideration
stated in the deed of sale was undervalued to only P230,000.00 upon request of the private respondents in
order to save on expenses related to the transactions and also upon the private respondents' representation
that P230,000.00 was the maximum amount of loan they could obtain. However, the private respondents failed
to pay the remaining balance on or before May 30, 1984. Nevertheless, the private respondents paid on two
separate occasions the amount of P15,000.00 which the petitioners-spouses accepted when the former
promised that full payment would be made within July 1984, regardless of the outcome of their PAG-IBIG loan.
The petitioners-spouses asserted that the private respondents' failure to obtain their PAG-IBIG loan was their The record shows that neither of the parties objected to the different testimonies. Hence, the trial court had no
own fault and that the private respondents have never acquired title or ownership of the subject property option but to admit these conflicting testimonies. The issue was, therefore, reduced to the credibility of
despite the Deed of Absolute Sale. They averred that the Deed is subject to the terms and conditions of the witnesses.
Contract to Sell and/or the additional agreement of the parties. They also filed a counterclaim for damages.
After due trial, the trial court found for the petitioners-spouses. The complaint was dismissed. The dispositive
After a thorough examination of the record we are constrained to reverse the findings of the appellate court.
portion of the decision reads:

The appellate court's conclusion that the petitioners-spouses were at fault in the non-release of the private
WHEREFORE, and in view of the foregoing considerations, decision is hereby rendered dismissing
respondents' PAG-IBIG loan thru Urban Bank, has no factual basis.
plaintiffs' Complaint and rendering judgment in favor of defendants on their compulsory
counterclaim, as follows:
The subject property was mortgaged to the Philippine Commercial and Industrial Bank (PCIB). This fact was
known to the private respondents. In such a case, it may be assumed that the PCIB would not release the title of
1) The Contract to Sell which has been superseded by a simulated Deed of Absolute Sale entered into
the land without first getting paid. Consequently, the petitioners-spouses' contention that payment of the
by and between the parties are (sic) hereby declared of no further legal force and effect, provided
balance price of the subject parcel of land was not dependent upon the release of their title from the PCIB which
that the P75,000.00 which the plaintiffs paid as downpayment for subject property shall, up to that
would be used as collateral by the private respondents to secure their PAG-IBIG loan thru Urban Bank, is more
amount, be applied to the pecuniary awards in favor of defendants, to wit:
credible.

2) Plaintiffs are directed to vacate defendants' house and lot No. 22, Block 5 Servillana St., UE Village,
Cainta, Rizal, and to pay to defendants P2,500.00 monthly as reasonable value for the use and
occupation of the same since December 18, 1983 until possession thereof shall have been restored to
the defendants;
3) Plaintiffs shall reimburse defendants the sum of P6,500.00 paid by the latter as downpayment for a
lot in Mandaluyong, which was, however, forfeited, with 12% interest thereon per annum from date
said downpayment was made until the same shall have been fully reimbursed;
4) Plaintiffs shall pay to defendants P30,000.00 as moral damages; P20,000.00 as exemplary
damages; P30,000.00 for and as attorney's fees; and
5) Costs of suit. (Rollo, pp. 91-92)
Moreover, the Urban Bank letter signed by Assistant Manager Ms. Liza M. de los Reyes to PCIB dated July 2,
1984 (Exhibits G and G-1) shows that there is no basis for the conclusion that the petitioner-spouses " . . .
reneged on their agreement that Urban Bank would pay their mortgage loan obligation with PCIB so that their
TCT No. 501812 over the subject property could be released free of encumbrance and transferred in appellants'
name as the latter intended to use the title as collateral for their loan from Urban Bank." (page 45, Rollo) The
pertinent portion of the letter reads:
This is with reference to the real estate property of Meynardo C. Policarpio located at Servillana St., U.E.
Employees Village, Cainta, Rizal more particularly described as Lot 22, Block 5 covered by TCT No. 501812, which
is presently mortgaged in your favor to secure his loan with you.
Please be advised that Miss Evelyn Q. Catabas, who is purchasing the above-mentioned property has an
approved Pag-Ibig loan with us, part of which shall be used to settle Mr. Policarpio's loan with you.

As stated earlier, the trial court's decision was reversed and set aside by the Court of Appeals. A motion for Per the request of our client, with the conformity of Mr. Policarpio herein given, we shall release to you the
reconsideration was denied. Hence, this petition. amount of NINETY SIX THOUSAND THREE HUNDRED THIRTY SEVEN & 94/100 (P96,337.94) PESOS upon transfer
of title under the borrower's name, registration of mortgage in our favor and upon loan approval and takeout of
National Home Mortgage Finance Corporation.
In view of the conflicting findings of facts of the trial court and the appellate court we have decided to review
the evidence on record in order to arrive at the correct findings based on the record. (Robleza v. Court of
Appeals, 174 SCRA 354 [1989]). Any difference between the above-mentioned amount and the outstanding obligation shall be for the account of
Miss Catabas and shall be transacted directly with you. This letter supersedes our letter of Guaranty to Mr.
Policarpio on February 01, 1984.
It is to be observed that the parties' conflicting evidence centers on the Contract to Sell and Deed of Absolute
Sale executed by the parties on April 9, 1984. The parties introduced conflicting testimonies regarding the true
nature of the subject documents. This, in effect results in the non-application of the Parol Evidence Rule under We trust that this is satisfactory to you. Thank you.
Section 9, Rule 130 of the Rules of Court, to wit:
Very truly yours,
Sec. 9. Evidence of written agreements.—When the terms of an agreement have been reduced to
writing, it is considered as containing all the terms agreed upon and there can be between the parties
URBAN DEVELOPMENT BANK. (Rollo, pp. 45-46)
and their successors in interest, no evidence of such terms other than the contents of the written
agreement.
We find no relation between the supposed agreement on the part of the petitioners-spouses to have the
payment of the balance price dependent on the release of the PAG-IBIG loan and their alleged obligation to have
the title released by PCIB. On the contrary, this letter enhances the stand of the petitioners-spouses that they
signified their conformity to the letter upon the request of the private respondents to facilitate the release of any rate, the Deed of Absolute Sale executed by and between the parties is admittedly simulated,
the PAG-IBIG loan. whereupon it cannot be a valid basis as in this case, for an action for Specific Performance. (Rollo, p.
90)
According to the appellate court, the letter also disproves petitioners-spouses' "claim that the appellants
(private respondents) failed or refused to pay the defendants (petitioners-spouses) the P90,000.00 on time with It is to be noted that the appellate court questions the existence of Exhibit "L". The appellate court states:
which to pay the latter's PCIB loan resulting in the plaintiffs' (private respondents') failure to secure the release
of their PAG-IBIG loan of P260,000.00 which is due the defendants (petitioner-spouses) on or before the first
The trial court revealed the pivotal factor upon which it based its choice in reposing greater belief in
week of December, 1983 as stipulated in the Contract to Sell" (Paragraph 15, Answer, Record, p. 35). (Page
appellee Meynardo Policarpio's testimony. It is this factor, the trial court said, that reinforced the
46, Rollo)
truth of appellee's claim regarding the existence of an oral agreement to increase the purchase price.
Said the trial court:
We find the appellate court's conclusion unwarranted. The evidence on record shows that the private
respondents themselves did not blame the petitioners-spouses for the non-release of the PAG-IBIG loan on
xxx xxx xxx
December 1983 and that it was "due to time constraint the loan was not approved and released before the
deadline to pay the balance which expired the first week of December 1983." (page 82, Rollo) In fact in their
Memorandum the private respondents stated that: "private respondents failed to meet the "First Week of Unfortunately, no such 'Exh. "L" exists in the record. The actual 'Exh. "L" included among the
December 1983" deadline so that the "Contract to Sell" would have been cancelled as therein provided were it documentary evidence on record is a letter dated November 7, 1985 signed jointly by Urban Bank's
not for the fact that petitioners still pursued the sale and private respondents were still willing to buy." (pp. 145- Assistant Vice-President Prudeno L. Natividad and Mortgage Supervisor Marie Celine R. Gorres and
146, Rollo) addressed to appellee Evelyn Catabas. (Rollo, pp. 48-49)

Moreover, the appellate court gave credence to the private respondents' contention that the petitioners- The record, however, reveals the existence of Exhibit L. In fact, the private respondents themselves confirm the
spouses' main reason for reneging on the inter-bank arrangement between Urban Bank and PCIB was due to the existence of the November 23, 1984 letter which they reproduced in their Memorandum, to wit:
latter's insistence that the price of the subject property shall be increased to P330,000.00.
We are aware of our mutual endeavor to exhaust all possible means to find a solution to our problem
On the other hand, the petitioners-spouses maintain that there was an oral agreement between them and the of finalizing our purchase of your house and lot here at Servillana Street, U.E. Village, Cainta, Rizal,
private respondents as regards the increased price. more particularly described as Lot 22 Block 5, covered by TCT No. 501812, towards maintaining our
friendly relation and avoiding a possible litigation for our mutual benefit. For our part therefore, to
assuage your feeling which obviously is influenced by the present economic situation and for a higher
On this matter, we are inclined to give more credence to the trial court's findings as they are borne by the
price on said property, notwithstanding the agreed contract price of P270,000.00, we are offering our
evidence on record, to wit:
hand in friendship and propose to increase the price to a grand total of P312,000.00, no matter our
difficulties, I have to confess, to be paid as follows: (Rollo, p. 147)
The Court finds credence in the defendants' claim that the parties verbally agreed to increase the
consideration to P330,000.00. The price under the Contract to Sell which precluded transfer of
The tone of the letter gives credence to the petitioners-spouses' contention that the Absolute Deed of Sale was
possession to the plaintiffs until after full payment in effect, was P270,000.00. The default of the
only simulated, its execution only to facilitate the release of the private respondents' PAG-IBIG loan from Urban
plaintiffs under the said contract, the non-availment by the defendants of the automatic cancellation
Bank. It also gives credence to the petitioners-spouses' contention that they agreed to push thru with the sale
clause when the plaintiffs defaulted; the moving of the plaintiffs into the premises on December 18,
provided the price would be raised to P330,000.00. For, why then, did the respondents refer to ". . . our problem
1983 invariably necessitating the defendants to transfer elsewhere, the devaluation of the peso, the
of finalizing our purchase . . ." and offer P312,000.00 which was beyond the initial price of the subject property
longer waiting period imposed upon the defendants, their conformity to the letter from Urban Bank
of P270,000.00.
(Exh. "G") to PCIB and, finally, the execution of the Deed of Absolute Sale even without plaintiffs
paying for the price in full all taken together in their entirety, swing the pendulum of credibility
towards the fact of agreement of the parties to increase the price. Besides, it is highly improbable We rule that the findings of facts of the trial court which are at variance with those of the appellate court are
that after all the rigors and the hassles the defendants had been exposed to, before and after the more in consonance with the evidence on record. The trial court stated:
execution of the simulated Deed of Absolute Sale, the defendants would agree to lower the price of
P270,000.00 in the Contract to sell to P230,000.00 in the Deed of Absolute Sale. (Rollo, p. 89) The parties have common interests on the property. The defendants were interested to sell it in
order to settle their obligation with PCIB and to be able to buy another property. The plaintiffs were
xxx xxx xxx interested to buy the property but were not ready to pay immediately the agreed consideration.
Plaintiffs were depending on the loan that they jointly applied for with PAG-IBIG. In fact, if only to
augment their resources for its purpose, plaintiff Clemente Catabas who used to work with the
Furthermore the mere fact that the plaintiffs offered in their letter (Exh. "L") dated November 23,
Philippine Long Distance Telephone Company had to prematurely retire in order to collect his
1984 to pay P312,000.00 — which the defendants rejected—reinforces the truth of defendants' claim
retirement benefits.
that the parties, indeed, verbally agreed to increase the pace to P330,000.00. This intention must
prevail and the eleventh-hour repudiation by the plaintiffs, who under the present situation would
continue enriching themselves at the expense of the defendants cannot prevent its enforcement. At
Obviously, the defendants knew and took into consideration this financial handicap of the plaintiffs in
the execution of the Contract to Sell. Hence, the grace period to pay the balance of P260,000.00 up to
the first week of December 1983. By then, the plaintiffs were expecting the release of the loan they
applied for which was being followed up by their acquaintance at Urban Bank. The deadline came and
passed but no payment was made. The contract provided that failure to pay the balance will
"automatically cancel this contract and the vendor shall immediately return the downpayment of
P10,000.00, to the Vendees" but the transaction was not called off nor the Pl0,000.00 returned.
Evidently, the parties wanted the sale to go through. Defendant Meynardo Policarpio testified, and it
was not denied, that the plaintiffs requested the defendants to wait a little longer as the person
supposed to help hasten the release of the loan was busy since it was Christmas time then, and to
that request, the defendants acceded. This is the logical explanation of the plaintiffs moving into the
premises on December 18, 1983. It is at this point that the Court is impressed with the defendants'
gesture of good faith and accommodation. For although the Contract to Sell provided: "Vendees
shall not take possession of the property until aforesaid balance of P260,000.00 shall have been paid"
(emphasis supplied), the defendants, barely two (2) weeks after the contract should have been
automatically cancelled for the non-payment of the balance, allowed the plaintiffs to move in even if
they have to rent another place to stay.
Against this backdrop, there was no difficulty for the plaintiffs insuring the defendants' cooperation
to accelerate the release of the loan. Hence, when defendants were told it was necessary for them to
signify their conformity to the letter (Exhs. "G", "6") sent by Urban Bank to PCIB, they readily obliged.
The same alacrity was displayed regarding the Deed of Absolute Sale without which Urban Bank
would not release the loan. Again, at this point, the defendants' good faith and implicit trust in the
plaintiffs were generously portrayed. Although the consideration of P230,000.00 stated in the Deed
of Absolute Sale was not fully paid (the plaintiffs had paid only P75,000.00, with the amounts of
P10,000.00 and P5,000.00, being paid after April 9, 1984) the defendants executed the document.
True, there was the motivation for the defendants to sign because of the plaintiffs' verbal conformity
that the selling price would be increased to P330,000.00; but this was still a contingency wholly
dependent on plaintiff s word of honor, while the defendants' leverage had become a fait
accompli upon affixing their signatures due to the absolute nature of the sale and physical possession
of the premises delivered to the plaintiffs.
Up to this stage, the defendants have done everything within their capability to help the plaintiffs
effect the release of their loan.1âwphi1 At this point, too, the only impediment to Urban Bank's
release of the loan was the non-delivery of the title. It was a hitch that was later to spell the non-
release of the loan which plaintiffs impute, was due to the fault of the defendants.
In the institution of the Complaint, the plaintiffs were of the impression that the delivery of the title
to Urban Bank was the duty of the defendants which they failed to discharge and for which,
consequently, they should be held accountable. This frame of mind while impressive at first blush,
cannot be countenanced and finds no support from the evidence adduced.
The plaintiffs fully knew from the inception of the transaction that the defendants' title was
mortgaged with PCIB (Romulo Catabas, TSN, March 10, 1984 p. 20). Much as they would want to, the
defendants could not just get the title from PCIB without the mortgage balance being paid. Precisely,
the letter (Exh. "G", also Exh. "6") itself of the Urban Bank bearing defendants' signatures affixed
thereon, at the behest of the plaintiffs themselves, was directed to PCIB requesting the latter for the
delivery of the title, among other things, before the former pays off the mortgage balance thereat as
a pre-condition for the release of the loan. The plaintiffs are now in estoppel to assume—just
because it is expedient to do so — a posture inconsistent with this clear narration of facts. To hold
the defendants responsible for an act that PCIB alone could do is decidedly illogical and puerile (Rollo,
pp. 85-87)
Moreover, under the contract to sell, it is provided therein that failure on the part of the vendees (private
respondents) to pay the balance of the price on the first week of December 1983 will automatically cancel the
contract. The private respondents' obligation to pay was a suspensive condition to the obligation of the
petitioners-spouses to sell and deliver the subject property. Since, admittedly, the private respondents failed on
their obligation to pay, this rendered the contract to sell ineffective and without force and effect. (See Spouses
Eduardo and Ann Agustin v. Court of Appeals G.R. No. 84751, June 6, 1990)
The subsequent execution of the deed of sale did not in any manner transfer ownership of the property to the
private respondents. It is clear that the deed of sale was executed merely to facilitate the release of the private
respondents' PAG-IBIG loan from the Urban Bank and not for the purpose of actually transferring ownership.
With these findings, we rule that the private respondents are not entitled to specific performance. The
obligation in a contract of sale is reciprocal. (Cortez v. Bibaño and Borromeo 41 Phil. 298 [1920]). Since, the
vendees admittedly had not paid the full price of the property which was their obligation under the subject
contract they cannot now compel performance of the said contract.
Under the facts of the case, we agree with the trial court that the petitioners-spouses are entitled to moral
damages, to wit:
The defendants' claim of the trauma they suffered upon being sued by the plaintiffs inspires belief.
After doing everything in good faith within their capability to help accelerate the release of plaintiffs'
loan, their shock was understandable when the plaintiffs, in brazen disregard of their failure to
comply with their contractual obligation, suddenly filed the instant complaint. Rather than being
commended, as should have been expected, for walking the Biblical second mile in generous
accommodation of the plaintiffs, the defendants were instead unceremoniously brought to Court.
(Rollo, p. 90)
However, we find the award of P30,000.00 as moral damages excessive. In the case of Prudenciado v. Alliance
Transport System, Inc. (148 SCRA 440 [1987]) cited in Radio Communications of the Philippines, Inc. (RCPI), et al.
v. Rodriguez, G.R. No. 83768 February 28,1990 we held that ". . . moral damages are emphatically not intended
to enrich a complainant at the expense of a defendant. They are accorded 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. The award of moral damages must be proportionate to the suffering
inflicted." We rule that the amount of P15,000.00 as moral damages in favor of the petitioners-spouses would
be reasonable considering the facts and circumstances of the case.
The award of P20,000.00 exemplary damages is not proper considering that there is no showing that the private
respondents acted in "a wanton, fraudulent, reckless, oppressive, or malevolent manner." (Article 2232, Civil
Code).
Finally, we find the award of attorney's fees in favor of the petitioners-spouses unwarranted. In the case
of Radio Communications of the Philippines, Inc. v. Rodriguez, supra, citing the case of Stronghold Insurance
Company, Inc. v. Court of Appeals, 173 SCRA 619 [1989] we ruled:
 In Abrogar v. Intermediate Appellate Court (G.R. No. 67970, January 15, 1988, 157 SCRA 57) the Court
had occasion to state that '[t]he reason for the award of attorney's fees must be stated in the text of
the court's decision, otherwise, if it is stated only in the dispositive portion of the decision, the same
shall be disallowed on appeal. (at p. 61, citing Mirasol v. dela Cruz, G.R. No. L-32552, July 31, 1978, 84
SCRA 337).

Nowhere does the text of the decision of the trial court mention the reason for the award of attorney's fees. The
trial court's decision failed to justify the award of P30,000.00 as attorney's fees. The award of attorney's fees
must, therefore, be deleted. (See also Spouses Eduardo and Ann Agustin v. Court of Appeals, supra).

WHEREFORE, the questioned decision and Resolution of the Court of Appeals are REVERSED and SET ASIDE. The
decision of the Regional Trial Court Pasig, Metro Manila is hereby REINSTATED except that the award for moral
damages is reduced to P15,000.00 and the awards for exemplary damages in the amount of P20,000.00 and
attorney's fees in the amount of P30,000.00 are deleted.

SO ORDERED.

Fernan, C.J., Feliciano, Bidin and Davide, Jr., JJ., concur.


FIRST DIVISION
G.R. No. 146918 May 2, 2006
CITIBANK, N.A., Petitioner,
vs.
SPS. LUIS and CARMELITA CABAMONGAN and their sons LUISCABAMONGAN, JR. and LITO
CABAMONGAN, Respondents.
DECISION
AUSTRIA-MARTINEZ, J.:
Before the Court is a petition for review on certiorari of the Decision1 dated January 26, 2001 and the
Resolution2dated July 30, 2001 of the Court of Appeals (CA) in CA-G.R. CV No. 59033.
The factual background of the case is as follows:
On August 16, 1993, spouses Luis and Carmelita Cabamongan opened a joint "and/or" foreign currency time
deposit in trust for their sons Luis, Jr. and Lito at the Citibank, N.A., Makati branch, with Reference No. 60-
22214372, in the amount of $55,216.69 for a term of 182 days or until February 14, 1994, at 2.5625 per cent
interest per annum.3 Prior to maturity, or on November 10, 1993, a person claiming to be Carmelita went to the
Makati branch and pre-terminated the said foreign currency time deposit by presenting a passport, a Bank of
America Versatele Card, an ATM card and a Mabuhay Credit Card.4 She filled up the necessary forms for pre-
termination of deposits with the assistance of Account Officer Yeye San Pedro. While the transaction was being
processed, she was casually interviewed by San Pedro about her personal circumstances and investment
plans.5 Since the said person failed to surrender the original Certificate of Deposit, she had to execute a
notarized release and waiver document in favor of Citibank, pursuant to Citibank's internal procedure, before
the money was released to her.6The release and waiver document7 was not notarized on that same day but the
money was nonetheless given to the person withdrawing.8 The transaction lasted for about 40 minutes.9
After said person left, San Pedro realized that she left behind an identification card.10 Thus, San Pedro called up
Carmelita's listed address at No. 48 Ranger Street, Moonwalk Village, Las Pinas, Metro Manila on the same day
to have the card picked up.11 Marites, the wife of Lito, received San Pedro's call and was stunned by the news
that Carmelita preterminated her foreign currency time deposit because Carmelita was in the United States at
that time.12 The Cabamongan spouses work and reside in California. Marites made an overseas call to Carmelita
to inform her about what happened.13 The Cabamongan spouses were shocked at the news. It seems that
sometime between June 10 and 16, 1993, an unidentified person broke in at the couple's residence at No. 3268
Baldwin Park Boulevard, Baldwin Park, California. Initially, they reported that only Carmelita's jewelry box was
missing, but later on, they discovered that other items, such as their passports, bank deposit certificates,
including the subject foreign currency deposit, and identification cards were also missing.14 It was only then that
the Cabamongan spouses realized that their passports and bank deposit certificates were lost.15
Through various overseas calls, the Cabamongan spouses informed Citibank, thru San Pedro, that Carmelita was
in the United States and did not preterminate their deposit and that the person who did so was an impostor who
could have also been involved in the break-in of their California residence. San Pedro told the spouses to submit
the necessary documents to support their claim but Citibank concluded nonetheless that Carmelita indeed
preterminated her deposit. In a letter dated September 16, 1994, the Cabamongan spouses, through counsel,
made a formal demand upon Citibank for payment of their preterminated deposit in the amount of $55,216.69
with legal interests.16 In a letter dated November 28, 1994, Citibank, through counsel, refused the Cabamongan
spouses' demand for payment, asserting that the subject deposit was released to Carmelita upon proper
identification and verification.17
On January 27, 1995, the Cabamongan spouses filed a complaint against Citibank before the Regional Trial Court
of Makati for Specific Performance with Damages, docketed as Civil Case No 95-163 and raffled to Branch 150
(RTC).18
In its Answer dated April 20, 1995, Citibank insists that it was not negligent of its duties since the subject deposit
was released to Carmelita only upon proper identification and verification. 19
At the pre-trial conference the parties failed to arrive at an amicable settlement.20 Thus, trial on the merits
ensued.
For the plaintiffs, the Cabamongan spouses themselves and Florenda G. Negre, Documents Examiner II of the
Philippine National Police (PNP) Crime Laboratory in Camp Crame, Quezon City, testified. The Cabamongan
spouses, in essence, testified that Carmelita could not have preterminated the deposit account since she was in
California at the time of the incident.21 Negre testified that an examination of the questioned signature and the
samples of the standard signatures of Carmelita submitted in the RTC showed a significant divergence. She
concluded that they were not written by one and the same person.22
For the respondent, Citibank presented San Pedro and Cris Cabalatungan, Vice-President and In-Charge of
Security and Management Division. Both San Pedro and Cabalatungan testified that proper bank procedure was
followed and the deposit was released to Carmelita only upon proper identification and verification.23
On July 1, 1997, the RTC rendered a decision in favor of the Cabamongan spouses and against Citibank, the
dispositive portion of which reads, thus:
WHEREFORE, premises considered, defendant Citibank, N.A., is hereby ordered to pay the plaintiffs the
following:
1) the principal amount of their Foreign Currency Deposit (Reference No. 6022214372) amounting to
$55,216.69 or its Phil. Currency equivalent plus interests from August 16, 1993 until fully paid;
2) Moral damages of P50,000.00;
3) Attorney's fees of P50,000.00; and
 4) Cost of suit.
SO ORDERED.24
The RTC reasoned that:
xxx Citibank, N.A., committed negligence resulting to the undue suffering of the plaintiffs. The forgery of the
signatures of plaintiff Carmelita Cabamongan on the questioned documents has been categorically established
by the handwriting expert. xxx Defendant bank was clearly remiss in its duty and obligations to treat plaintiff's
account with the highest degree of care, considering the nature of their relationship. Banks are under the
obligation to treat the accounts of their depositors with meticulous care. This is the reason for their established
procedure of requiring several specimen signatures and recent picture from potential depositors. For every
transaction, the depositor's signature is passed upon by personnel to check and countercheck possible
irregularities and therefore must bear the blame when they fail to detect the forgery or discrepancy.25
Despite the favorable decision, the Cabamongan spouses filed on October 1, 1997 a motion to partially
reconsider the decision by praying for an increase of the amount of the damages awarded.26 Citibank opposed
the motion.27On November 19, 1997, the RTC granted the motion for partial reconsideration and amended the
dispositive portion of the decision as follows:
From the foregoing, and considering all the evidence laid down by the parties, the dispositive portion of the
court's decision dated July 1, 1997 is hereby amended and/or modified to read as follows:
WHEREFORE, defendant Citibank, N.A., is hereby ordered to pay the plaintiffs the following:
1) the principal amount of their foreign currency deposit (Reference No. 6022214372) amounting to
$55,216.69 or its Philippine currency equivalent (at the time of its actual payment or execution) plus
legal interest from Aug. 16, 1993 until fully paid.
2) moral damages in the amount of P200,000.00;
3) exemplary damages in the amount of P100,000.00;
4) attorney's fees of P100,000.00;
5) litigation expenses of P200,000.00;
6) cost of suit.
SO ORDERED.28
Dissatisfied, Citibank filed an appeal with the CA, docketed as CA-G.R. CV No. 59033.29 On January 26, 2001, the
CA rendered a decision sustaining the finding of the RTC that Citibank was negligent, ratiocinating in this wise:
In the instant case, it is beyond dispute that the subject foreign currency deposit was pre-terminated on 10
November 1993. But Carmelita Cabamongan, who works as a nursing aid (sic) at the Sierra View Care Center in
Baldwin Park, California, had shown through her Certificate of Employment and her Daily Time Record from the
[sic] January to December 1993 that she was in the United States at the time of the incident.
Defendant Citibank, N.A., however, insists that Carmelita was the one who pre-terminated the deposit despite
claims to the contrary. Its basis for saying so is the fact that the person who made the transaction on the
incident mentioned presented a valid passport and three (3) other identification cards. The attending account
officer examined these documents and even interviewed said person. She was satisfied that the person
presenting the documents was indeed Carmelita Cabamongan. However, such conclusion is belied by these
following circumstances.
First, the said person did not present the certificate of deposit issued to Carmelita Cabamongan. This would not
have been an insurmountable obstacle as the bank, in the absence of such certificate, allows the termination of
the deposit for as long as the depositor executes a notarized release and waiver document in favor of the bank.
However, this simple procedure was not followed by the bank, as it terminated the deposit and actually
delivered the money to the impostor without having the said document notarized on the flimsy excuse that
another department of the bank was in charge of notarization. The said procedure was obviously for the
protection of the bank but it deliberately ignored such precaution. At the very least, the conduct of the bank
amounts to negligence.
Second, in the internal memorandum of Account Officer Yeye San Pedro regarding the incident, she reported
that upon comparing the authentic signatures of Carmelita Cabamongan on file with the bank with the
signatures made by the person claiming to be Cabamongan on the documents required for the termination of
the deposit, she noticed that one letter in the latter [sic] signatures was different from that in the standard
signatures. She requested said person to sign again and scrutinized the identification cards presented.
Presumably, San Pedro was satisfied with the second set of signatures made as she eventually authorized the
termination of the deposit. However, upon examination of the signatures made during the incident by the
Philippine National Police (PNP) Crime Laboratory, the said signatures turned out to be forgeries. As the
qualifications of Document Examiner Florenda Negre were established and she satisfactorily testified on her
findings during the trial, we have no reason to doubt the validity of her findings. Again, the bank's negligence is
patent. San Pedro was able to detect discrepancies in the signatures but she did not exercise additional
precautions to ascertain the identity of the person she was dealing with. In fact, the entire transaction took only
40 minutes to complete despite the anomalous situation. Undoubtedly, the bank could have done a better job.
Third, as the bank had on file pictures of its depositors, it is inconceivable how bank employees could have been
duped by an impostor. San Pedro admitted in her testimony that the woman she dealt with did not resemble the
pictures appearing on the identification cards presented but San Pedro still went on with the sensitive
transaction. She did not mind such disturbing anomaly because she was convinced of the validity of the
passport. She also considered as decisive the fact that the impostor had a mole on her face in the same way that
the person in the pictures on the identification cards had a mole. These explanations do not account for the
disparity between the pictures and the actual appearance of the impostor. That said person was allowed to
withdraw the money anyway is beyond belief.
The above circumstances point to the bank's clear negligence. Bank transactions pass through a successive [sic]
of bank personnel, whose duty is to check and countercheck transactions for possible errors. While a bank is not
expected to be infallible, it must bear the blame for failing to discover mistakes of its employees despite
established bank procedure involving a battery of personnel designed to minimize if not eliminate errors. In the
instant case, Yeye San Pedro, the employee who primarily dealt with the impostor, did not follow bank
procedure when she did not have the waiver document notarized. She also openly courted disaster by ignoring
discrepancies between the actual appearance of the impostor and the pictures she presented, as well as the
disparities between the signatures made during the transaction and those on file with the bank. But even if San
Pedro was negligent, why must the other employees in the hierarchy of the bank's work flow allow such thing to
pass unnoticed and unrectified?30
The CA, however, disagreed with the damages awarded by the RTC. It held that, insofar as the date from which
legal interest of 12% is to run, it should be counted from September 16, 1994 when extrajudicial demand was
made. As to moral damages, the CA reduced it to P100,000.00 and deleted the awards of exemplary damages
and litigation expenses. Thus, the dispositive portion of the CA decision reads:
WHEREFORE, the decision of the trial court dated 01 July 1997, and its order dated 19 November 1997, are
hereby AFFIRMED with the MODIFICATION that the legal interest for actual damages awarded in the amount of
$55,216.69 shall run from 16 September 1994; exemplary damages amounting to P100,000.00 and litigation
expenses amounting to P200,000.00 are deleted; and moral damages is reduced to P100,000.00.
Costs against defendant.
SO ORDERED.31
The Cabamongan spouses filed a motion for partial reconsideration on the matter of the award of damages in
the decision.32 On July 30, 2001, the
CA granted in part said motion and modified its decision as follows:
1. The actual damages in amount of $55,216.69, representing the amount of appellees' foreign
currency time deposit shall earn an interest of 2.5625% for the period 16 August 1993 to 14 February
1994, as stipulated in the contract;
2. From 16 September 1994 until full payment, the amount of $55,216.69 shall earn interest at the
legal rate of 12% per annum, and;
3. The award of moral damages is reduced to P50,000.00.33
Dissatisfied, both parties filed separate petitions for review on certiorari with this Court. The Cabamongan
spouses' petition, docketed as G.R. No. 149234, was denied by the Court per its Resolution dated October 17,
2001.34 On the other hand, Citibank's petition was given due course by the Court per Resolution dated December
10, 2001 and the parties were required to submit their respective memoranda.35
Citibank poses the following errors for resolution:
1. THE HONORABLE COURT OF APPEALS GRAVELY ERRED AND GRAVELY ABUSED ITS DISCRETION IN
UPHOLDING THE LOWER COURT'S DECISION WHICH IS NOT BASED ON CLEAR EVIDENCE BUT ON
GRAVE MISAPPREHENSION OF FACTS.
2. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN UPHOLDING THE DECISION OF THE TRIAL
COURT AWARDING MORAL DAMAGES WHEN IN FACT THERE IS NO BASIS IN LAW AND FACT FOR SAID
AWARD.
3. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN RULING THAT THE PRINCIPAL AMOUNT
OF US$55,216.69 SHOULD EARN INTEREST AT THE RATE OF 12% PER ANNUM FROM 16 SEPTEMBER
1994 UNTIL FULL PAYMENT.36
Anent the first ground, Citibank contends that the CA erred in affirming the RTC's finding that it was negligent
since the said courts failed to appreciate the extra diligence of a good father of a family exercised by Citibank
thru San Pedro.
As to the second ground, Citibank argues that the Cabamongan spouses are not entitled to moral damages since
moral damages can be awarded only in cases of breach of contract where the bank has acted willfully,
fraudulently or in bad faith. It submits that it has not been shown in this case that Citibank acted willfully,
fraudulently or in bad faith and mere negligence, even if the Cabamongan spouses suffered mental anguish or
serious anxiety on account thereof, is not a ground for awarding moral damages.
On the third ground, Citibank avers that the interest rate should not be 12% but the stipulated rate of 2.5625%
per annum. It adds that there is no basis to pay the interest rate of 12% per annum from September 16, 1994
until full payment because as of said date there was no legal ground yet for the Cabamongan spouses to demand
payment of the principal and it is only after a final judgment is issued declaring that Citibank is obliged to return
the principal amount of US$55,216.69 when the right to demand payment starts and legal interest starts to run.
On the other hand, the Cabamongan spouses contend that Citibank's negligence has been established by
evidence. As to the interest rate, they submit that the stipulated interest of 2.5635% should apply for the 182-
day contract period from August 16, 1993 to February 14, 1993; thereafter, 12% should apply. They further
contend that the RTC's award of exemplary damages of P100,000.00 should be maintained. They submit that the
CA erred in treating the award of litigation expenses as lawyer's fees since they have shown that they incurred
actual expenses in litigating their claim against Citibank. They also contend that the CA erred in reducing the
award of moral damages in view of the degree of mental anguish and emotional fears, anxieties and
nervousness suffered by them.37
Subsequently, Citibank, thru a new counsel, submitted a Supplemental Memorandum,38 wherein it posits that,
assuming that it was negligent, the Cabamongan spouses were guilty of contributory negligence since they failed
to notify Citibank that they had migrated to the United States and were residents thereat and after having been
victims of a burglary, they should have immediately assessed their loss and informed Citibank of the
disappearance of the bank certificate, their passports and other identification cards, then the fraud would not
have been perpetuated and the losses avoided. It further argues that since the Cabamongan spouses are guilty
of contributory negligence, the doctrine of last clear chance is inapplicable.
Citibank's assertion that the Cabamongan spouses are guilty of contributory negligence and non-application of
the doctrine of last clear chance cannot pass muster since these contentions were raised for the first time only in
their Supplemental Memorandum. Indeed, the records show that said contention were neither pleaded in the
petition for review and the memorandum nor in Citibank's Answer to the complaint or in its appellant's brief
filed with the CA. To consider the alleged facts and arguments raised belatedly in a supplemental pleading to
herein petition for review at this very late stage in the proceedings would amount to trampling on the basic
principles of fair play, justice and due process.391avvphil.net
The Court has repeatedly emphasized that, since the banking business is impressed with public interest, of
paramount importance thereto is the trust and confidence of the public in general. Consequently, the highest
degree of diligence40 is expected,41 and high standards of integrity and performance are even required, of it.42 By
the nature of its functions, a bank is "under obligation to treat the accounts of its depositors with meticulous
care,43always having in mind the fiduciary nature of their relationship."44
In this case, it has been sufficiently shown that the signatures of Carmelita in the forms for pretermination of
deposits are forgeries. Citibank, with its signature verification procedure, failed to detect the forgery. Its
negligence consisted in the omission of that degree of diligence required of banks. The Court has held that a
bank is "bound to know the signatures of its customers; and if it pays a forged check, it must be considered as
making the payment out of its own funds, and cannot ordinarily charge the amount so paid to the account of the
depositor whose name was forged."45 Such principle equally applies here.
Citibank cannot label its negligence as mere mistake or human error. Banks handle daily transactions involving
millions of pesos.46 By the very nature of their works the degree of responsibility, care and trustworthiness
expected of their employees and officials is far greater than those of ordinary clerks and employees.47 Banks are
expected to exercise the highest degree of diligence in the selection and supervision of their employees.48
The Court agrees with the observation of the CA that Citibank, thru Account Officer San Pedro, openly courted
disaster when despite noticing discrepancies in the signature and photograph of the person claiming to be
Carmelita and the failure to surrender the original certificate of time deposit, the pretermination of the account
was allowed. Even the waiver document was not notarized, a procedure meant to protect the bank. For not
observing the degree of diligence required of banking institutions, whose business is impressed with public
interest, Citibank is liable for damages.
As to the interest rate, Citibank avers that the claim of the Cabamongan spouses does not constitute a loan or
forbearance of money and therefore, the interest rate of 6%, not 12%, applies.
The Court does not agree.
The time deposit subject matter of herein petition is a simple loan. The provisions of the New Civil Code on
simple loan govern the contract between a bank and its depositor. Specifically, Article 1980 thereof categorically
provides that ". . . savings . . . deposits of money in banks and similar institutions shall be governed by the
provisions concerning simple loan." Thus, the relationship between a bank and its depositor is that of a debtor-
creditor, the depositor being the creditor as it lends the bank money, and the bank is the debtor which agrees to
pay the depositor on demand.
The applicable interest rate on the actual damages of $55,216.69, should be in accordance with the guidelines
set forth in Eastern Shipping Lines, Inc. v. Court of Appeals49 to wit:
I. 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 damages. The provisions under Title XVIII
on "Damages" of the Civil Code govern in determining the measure of recoverable damages.
II. With regard particularly to an 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:
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.50
Thus, in a loan or forbearance of money, the interest due should be that stipulated in writing, and in the absence
thereof, the rate shall be 12% per annum counted from the time of demand. Accordingly, the stipulated interest
rate of 2.562% per annum shall apply for the 182-day contract period from August 16, 1993 to February 14,
1994. For the period from the date of extra-judicial demand, September 16, 1994, until full payment, the rate of
12% shall apply. As for the intervening period between February 15, 1994 to September 15, 1994, the rate of
interest then prevailing granted by Citibank shall apply since the time deposit provided for roll over upon
maturity of the principal and interest.51
As to moral damages, in culpa contractual or breach of contract, as in the case before the Court, moral damages
are recoverable only if the defendant has acted fraudulently or in bad faith,52 or is found guilty of gross
negligence amounting to bad faith, or in wanton disregard of his contractual obligations.53 The act of Citibank's
employee in allowing the pretermination of Cabamongan spouses' account despite the noted discrepancies in
Carmelita's signature and photograph, the absence of the original certificate of time deposit and the lack of
notarized waiver dormant, constitutes gross negligence amounting to bad faith under Article 2220 of the Civil
Code.
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 facts. The yardstick should be that it is not palpably and scandalously
excessive.54 The amount of P50,000.00 awarded by the CA is reasonable and just. Moreover, said award is
deemed final and executory insofar as respondents are concerned considering that their petition for review had
been denied by the Court in its final and executory Resolution dated October 17, 2001 in G.R. No. 149234.
Finally, Citibank contends that the award of attorney's fees should be deleted since such award appears only in
the dispositive portion of the decision of the RTC and the latter failed to elaborate, explain and justify the same.
Article 2208 of the New Civil Code enumerates the instances where such may be awarded and, in all cases, it
must be reasonable, just and equitable if the same were to be granted. Attorney's fees as part of damages are
not meant to enrich the winning party at the expense of the losing litigant. They are not awarded every time a
party prevails in a suit because of the policy that no premium should be placed on the right to litigate.55 The
award of attorney's fees is the exception rather than the general rule. As such, it is necessary for the court to
make findings of facts and law that would bring the case within the exception and justify the grant of such
award. The matter of attorney's fees cannot be mentioned only in the dispositive portion of the decision.56 They
must be clearly explained and justified by the trial court in the body of its decision. Consequently, the award of
attorney's fees should be deleted.

WHEREFORE, the instant petition is PARTIALLY GRANTED. The assailed Decision and Resolution
are AFFIRMED with MODIFICATIONS, as follows:

1. The interest shall be computed as follows:

a. The actual damages in principal amount of $55,216.69, representing the amount of

foreign currency time deposit shall earn interest at the stipulated rate of 2.5625% for the
period August 16, 1993 to February 14, 1994;

b. From February 15, 1994 to September 15, 1994, the principal amount of $55,216.69
and the interest earned as of February 14, 1994 shall earn interest at the rate then
prevailing granted by Citibank;

c. From September 16, 1994 until full payment, the principal amount of $55,216.69 and
the interest earned as of September 15, 1994, shall earn interest at the legal rate of 12%
per annum;

2. The award of attorney's fees is DELETED.

No pronouncement as to costs.

SO ORDERED.
 Republic of the Philippines bank, upon investigation, found that the money deposited was credited into another account and that was the
SUPREME COURT reason why the check issued by him could not be encashed upon presentation.
Manila
As a consequence, private respondent claimed that he suffered humiliation and embarrassment due to the
FIRST DIVISION bank's gross negligence. Complaint was filed in court which awarded private respondent damages, as follows:

G.R. No. L-66123 August 22, 1984 1) P75,000.00 as actual damages, to compensate plaintiff for the loss of business and
business opportunities;
THE MANILA BANKING CORPORATION, petitioner,
vs. 2) P25,000.00 as moral damages, to compensate plaintiff for the embarrassment,
INTERMEDIATE APPELLATE COURT AND WILFREDO J. RIVERA, respondents. humiliation and mental anguish suffered;

Simeon T. Asiar, Jr. for petitioner. 3) P10,000.00 as exemplary damages;

G.F. Mabunga, R.A. Pinpin & Associates for private respondent. 4) P25,000.00 as and for attorney's fees; and

5) Cost of suit. (pages 25-26, rollo).

RELOVA, J.: On appeal to the Intermediate Appellate Court, the judgment of the trial court was modified in the sense that —

Appeal from the judgment of the Intermediate Appellate Court in AC-G.R. CV No. 64721, entitled: Wilfredo J. ... the award of actual damage in the sum of P75,000.00 be eliminated and instead the
Rivera, plaintiff-appellee vs. The Manila Banking Corporation, defendant-appellant, which reads: sum of Ten Thousand (P10,000.00) Pesos be awarded as temperate damage and the
reduction of the award of attorney's fees to the sum of Fifteen Thousand (P15,000.00)
Pesos, the decision is affirmed in toto in all other respects. (page 28, rollo).
WHEREFORE, except as modified in the sense that the award of actual damage in the sum
of P75,000.00 be eliminated and instead the sum of Ten Thousand (P10,000.00) Pesos be
awarded as temperate damage and the reduction of the award of attomey's fees to the Upon the foregoing facts, respondent court ruled that —
sum of Fifteen Thousand (P15.000.00) Pesos, the decision is affirmed in toto in all other
respects.
The award for actual damages has no factual basis. How the sum of P75,000.00 in the
form of actual and compensatory damages was arrived at, was not at all shown by any
Costs against the appellant. (page 28, rollo). means before the Court a quo. While actual damages may have been suffered, the law
requires that such damages be proven by facts and figures. Indeed, while the appellee
overlooked presenting adequate proof of actual and compensatory damages. We,
Records show that in the morning of July 10, 1975 herein private respondent Wilfredo J. Rivera deposited with
however, find and so hold that there may indeed have been actual damages although the
petitioner bank the sum of P80,189.19. In the afternoon of the same day, private respondent Rivera issued a
amount thereof was not established. We merely award the sum of P10,000.00 in the form
Manila Banking Corporation Check No. 16756626 in the amount of P80,000.00 under Current Account No. 6-
of temperate damage in favor of the appellee.
05350-5 payable to Collins Philippines with whom he had a business transaction. Thereafter, private
respondent's wife received a letter of demand from Collins Philippines, dated July 15, 1975, saying that —
The appellant belittle the negligence of the bank especially so since the appellee's check
was ultimately encashed. The argument is specious. It does not require too much
Quite frankly, we are surprised why this has to happen considering our pleasant business
imagination to visualize the possibility that the appellee could have died right after the
relationship in the past and the representations and commitments you made to us prior to
deposit was made. Then the appellee could not have issued the check in question. The
the issuance of the above check. At any rate, just to be sure, we are redepositing the same
appellee could not have complained to the appellant about his check that was dishonored.
check with the fair warning that if the said check will again be dishonored, we shall close
The Bank may not have known about the wrong entry to the irreparable loss of the
our business dealings and institute proper action for the protection of our interest. (p. 26,
appellee. Indeed, the appellee is entitled to temperate damage.
rollo).

Regarding the award of attorney's fees, we find no reason to disturb it except as to the
His wife immediately informed him in the province about the letter of demand. Upon receipt of the message,
amount awarded which We find quite exorbitant and which We accordingly reduce to the
Mr. Rivera complained to the Public Relations Officer of petitioner bank, inviting attention to the letter received
sum of P15,000.00. Appellee is obviously entitled to it. (Art. 2208, New Civil Code)
by him from Collins Philippines complaining against the dishonor of his check. The Public Relations Officer of the
 We, however, find no merit in the challenge against the award for moral and exemplary
damages. The appellant argues that no moral damage should have been awarded because
no court action was taken by Collins Philippines against the appellee for issuing a check
that was dishonored. Moreover, the check was encashed the second time it was
presented. This being so, whatever warning or threat the Collins' letter posed the same
was rendered moot and academic when the check was ultimately honored. We do not
agree. When the Collins' letter (Exhibit "C") was received by the appellee, the latter
immediately felt embarrassed and humiliated. The mere fact that the check was honored
afterwards, did not repair the harm done. It may have only mitigated it.

Insofar as the award for the exemplary damage is concerned, suffice it to say that Banks
are required to safeguard public interest as mandated by Banking Laws, practices and
procedure. They are called upon to protect the faith of the people in the banking system.
The bank was remiss with its sworn duty. The Court a quo correctly awarded the sum of
P10,000.00 by way of exemplary damages. (pp. 27-28, rollo).

It is the submission of petitioner that (1) there is no evidence on record to support an award of temperate
damages in favor of respondent Rivera; (2) private respondent is not entitled to moral damages because his
credit and business standing was not impaired and he did not suffer serious anxiety and/or mental anguish; and
(3) petitioner should not be made to pay exemplary damages, attorney's fees and the costs of suit.

It will be noted that in respondent appellate court's decision, judgment was rendered eliminating the award of
actual damages and, instead, the amount of P10,000.00 was awarded the private respondent by way of
temperate damages and attorney's fees in the reduced amount of P15,000.00, and affirming the lower court's
decision in all other respects. This would mean that the amount of P25,000.00 as moral damages and P10,000.00
as exemplary damages still stay.

We agree with petitioner that private respondent is not entitled to moral damages considering that in a matter
of four hours the mistake was rectified and the payee, Collins Philippines, was paid the full amount of the check.
In the case of Singson vs. Bank of Philippine Island, 23 SCRA 1117, the plaintiffs commenced the action against
the bank and its President, Santiago Freixas for damages (P100,000.00 as moral damages, P20,000.00 as
exemplary damages, P20,000.00 as nominal damages, and P10,000.00 for attorney's fees and expenses of
litigation, plus the costs) in consequence of illegal freezing of plaintiff's account. This Court held that since "the
wrong done to the plaintiffs was remedied as soon as the President of the bank realized the mistake he and his
subordinate employee had committed, the Court finds that an award of nominal damages — the amount of
which need not be proven — in the sum of P1,000.00, in addition to attorney's fees in the sum of P500.00,
would suffice to vindicate plaintiff's rights."

In the case at bar, temperate or moderate damages are proper not for indemnification of loss suffered but for
the vindication or recognition of a right violated or invaded. Considering the facts of the case under appeal, the
sum of P5,000.00 as temperate or moderate damages would suffice, plus attorney's fees of P5,000.00.

WHEREFORE, the judgment appealed from is modified in the sense that petitioner bank is hereby sentenced to
pay private respondent Wilfredo J. Rivera the sums of P5,000.00, as temperate or moderate damages and
P5,000.00, as attorney's fees, apart from the costs.

SO ORDERED.