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Full Text Part 2 DAMAGES

Full Text Part 2 DAMAGES

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I. INTRODUCTORY CONCEPTS II.

ACTUAL OR COMPENSATORY

PART II. DAMAGES

b.3 loss of earning capacity for personal injury b.3.1 formula in determining loss of earning capacity 2/3 x (80-ATD) x (GAI) G.R. No. 132252 April 27, 2000 PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. JESUS MUYCO and ARNULFO MUYCO (at large), accused, JESUS MUYCO, accused-appellant. BELLOSILLO, J.: JESUS MUYCO and ARNULFO MUYCO, cousins, were charged with murder for the death of Romeo Boteja Jr. on 13 May 1995. Only Jesus Muyco was apprehended while Arnulfo Muyco remains at large. On 11 September 1997 the Regional Trial Court, Br. 25, Iloilo City, found Jesus guilty as charged and correspondingly sentenced him to reclusion perpetua and to pay the heirs of Romeo Boteja Jr. P30,000.00 as death indemnity and P27,000.00 as funeral expenses. Jesus Muyco in this appeal submits that the lower court erred (a) in giving credence to the testimony of Ernesto Boteja, which he (Jesus) claims to be improbable and incredible; (b) in finding him guilty despite the failure of the prosecution to overcome the presumption of his innocence; (c) in disregarding his alibi; and, (d) in appreciating the qualifying aggravating circumstance of treachery. These contentions are without merit as shown by these facts: From 6:00 o'clock to 7:00 o'clock in the evening of 13 May 1995, Jesus Muyco and Arnulfo Muyco together with Romeo Boteja Jr. were in the house of Narciso Nadales at Barangay Pamuringao-Garrido, Cabatuan, Iloilo. At about 9:00 o'clock the trio were seen walking towards the barangay dancehall where they met Ernesto Boteja, an uncle of Romeo and a relative by affinity of Jesus and Arnulfo. Romeo invited his uncle Ernesto for a drink so they all went to the store of Agnes Cao about a hundred (100) meters away from the dancehall to buy whisky. As the store was about to close, Jesus, Arnulfo, Romeo and Ernesto decided to drink their whisky under a mango tree nearby. After drinking for a while, Arnulfo suddenly grabbed the hands of Romeo, and while the latter was struggling, Jesus stabbed him with a knife hitting him near his collarbone. It was fatal. Arnulfo then dragged the lifeless body of Romeo towards the nearby sugarcane field with Jesus following them. Ernesto was shocked by the startling occurrence. He was virtually immobilized. He only moved from there to run for his life when he Saw Jesus and Arnulfo returning from the field with Jesus pointing a knife at him. Ernesto fled towards the opposite side of the sugarcane field and stayed there until dawn. Romeo's body was found lifeless at 11:00 o'clock that same evening. Leticia Boteja, mother of the victim, testified that she incurred P27,000.00 for funeral expenses. Dr. Ricardo Jaboneta autopsied the body of Romeo and found that he sustained one (1) stab wound which penetrated his chest wall. It was fatal. Narciso Nadales narrated that from 6:00 o'clock until 7:00 o'clock in the evening of 13 May 1995 Jesus, Arnulfo and the deceased were in his house drinking. The group left at around 7:30 o'clock in the evening to go to the dancehall. Leo Boteja, another prosecution witness, testified that on 13 May 1995 he joined Jesus, Arnulfo and the victim in the house of Narciso Nadales. They drank mucho. At around 7:30 o'clock in the evening he left for home while Jesus, Arnulfo and the victim proceeded to the dancehall. About two (2) hours later, he also went to the dancehall but could not find Jesus, Arnulfo and the deceased there. At 11:00 o'clock that evening he learned that Romeo Boteja Jr. was killed and his cadaver was found in the sugarcane field. Jesus denied participation in the killing of Romeo Boteja, Jr. and insisted on his alibi. He averred that on 12 May 1995 he visited his brother Severe Muyco at Bgy. Pamuringao-Garrido, Cabatuan, Iloilo, as he got married there a year ago. From 10:00 o'clock in the morning to 5:00 o'clock in the afternoon of 13 May 1995 he drank with his brother Severo, cousin Arnulfo, uncle Crispin Debucon and the deceased Romeo Boteja Jr. whom he met drank for the first time. He did not know whose house it was where they drank. Upon the prodding of Severe, he left Cabatuan and proceeded to Passi, Iloilo, which is about fifty (50) kilometers away, arriving there at 7:00 o'clock in the evening. He spent the night in the house of his cousin Nestor Muyco. Vicente Inion and Joean Nufable corroborated accused-appellant's alibi. Both asserted that they saw Jesus in the house of Nestor in Passi, Iloilo, on the night of 13 May 1995. As already stated, the court a quo ruled against accused-appellant and found him guilty of murder. It did not give any probative value to his denial and alibi in view of his positive identification by prosecution witness Ernesto Boteja. Accused-appellant imputes error on the part of the court a quo in lending credence to the testimony of Ernesto Boteja, contending that his testimony was improbable and incredible. He argues that Ernesto's inaction when his nephew Romeo was stabbed just a meter away from him is contrary to human nature.1âwphi1.nêt We disagree. Different people react differently to a given type of situation. There is no standard form of human behavioral response when one is confronted with a strange, startling or frightful experience. One person's 1

spontaneous or unthinking, or even instinctive response to a horrid and repulsive stimulus may be aggression, while another person's reaction may be cold indifference. 1 A witness' inability to move, help or even to run away when the incident occurs is not a ground to label his testimony as doubtful and unworthy of belief. There is no prescribed behavior when one is faced with a shocking event. In the case of Ernesto Boteja, his inability to react was understandable as he was shocked by the suddenness of the event and considering that it was his first time to witness a stabbing incident. Thus — Q: After Romeo Boteja Jr. was hit and . . . was struggling, what happened next? A: Arnulfo Muyco dragged Romeo towards the sugarcane field. Q: What about you, what did you do? A: I was stunned that being the first time I saw a person stabbed. I was not able to move. I just stayed there. . . . Q: How about during the period that your nephew was stabbed up to the time that he was dragged to the sugarcane field? What did you do? A: I remained standing. I got stunned and nervous. Q: You mean that you remained there standing from the time your nephew was stabbed up to the time that he was dragged? A: Yes sir, because I was nervous. 2 Accused-appellant also cites inconsistencies in the testimony of Ernesto. A close scrutiny of the records however would reveal that there are none at all. That Ernesto testified having seen the victim stabbed on his neck instead of his collarbone was not inconsistency. Dr. Jaboneta who autopsied the body of the victim explained that the wound inflicted was just below the collarbone. For a lay-man like Ernesto who does not have any medical background at all, there is little or no material difference between a neck and a collarbone. Besides, it would be too much to expect from Ernesto to be perfectly accurate in reporting the location of the wound considering the circumstances surrounding the incident. Inconsistencies and discrepancies in the testimony of a witness on minor details only serve to strengthen the credibility of the witness. 3 What is material is that a witness positively identified the two (2) accused as the perpetrators of the crime. This Court has ruled often enough that discrepancies in minor details indicate veracity rather than prevarication. They tend to bolster the probative value of the testimony being questioned. They enhance, rather than destroy, the witness' credibility and the truthfulness of his testimony as they erase any suspicion of being a rehearsed testimony. 4 Contrary to accused-appellant's assertion, the prosecution has more than overcome his presumed innocence; it has satisfactorily established his guilt beyond reasonable doubt. Plainly, his alibi could not be given any weight at all in view of his positive identification by the prosecution's eyewitness. No ill-motive was imputed to Ernesto Boteja that would so move him to falsely testify against accused-appellant. The trial court properly assessed his testimony as credible and trustworthy. We find no reason not to affirm its findings. Weak as it was, accused-appellant's alibi became all the more ineffectual when he failed to demonstrate that it was physically impossible for him to be at the crime scene at the time it was committed. He testified being in Passi, Iloilo, during the stabbing incident. Passi, Iloilo is only fifty (50) kilometers from Cabatuan, Iloilo, the place where the crime was committed. He did not offer any evidence to prove impossibility of access between the two (2) places when the crime transpired. 5 Significantly, the defense even failed to fully establish the presence of accused-appellant in Passi on the night of 13 May 1995. This Court agrees with the court below that treachery attended the commission of the crime. The evidence amply proves that Romeo Boteja Jr. was killed in a manner ensuring suddenness and surprise that virtually incapacitated the victim from offering any resistance or defense. The victim did not have any inkling of the lurking danger to his life. He might have felt at ease with Jesus and Arnulfo for he had been drinking with them since 6:00 o'clock that evening of 13 May 1995 until he was stabbed to death. The attack was so sudden and unexpected that the victim failed to offer any resistance at all. All he could do was to struggle faintly against his attackers. On the other hand, this Court notes that the trial court failed to award damages for loss of earning capacity despite the testimony of Leticia Boteja to this effect. In People v. Dizon 6 this Court discussed the requisites for such award — As a rule, documentary evidence should be presented to substantiate the claim for loss of earning capacity. In People v. Verde, the non-presentation of evidence to support the claim for damages for loss of earning capacity did not prevent this Court from awarding said damages. The testimony of the victim's wife as to earning capacity of her murdered husband, who was then 48 years old and was earning P200.00 a day as a tricycle driver, sufficed to establish the basis for such an award. In this case, Erwin Gesmundo was only 15 years old at the time of his death and was earning a daily wage of P100.00 as a construction worker. As in People v. Verde, this Court is inclined to grant the claim for damages for loss of earning capacity despite the absence of documentary evidence. To be able to claim damages for loss of earning capacity despite the nonavailability of documentary evidence, there must be oral testimony that: (a) the victim was self-employed earning less than the minimum wage under the current labor laws and judicial notice was taken of the fact that in the victim's line of work, no documentary evidence is available; (b) the victim was employed as a daily wage worker earning less than the minimum wage under current labor laws. . . 2

In the instant case, the victim was nineteen (19) years old at the time of his death and earning P1,600.00 monthly as a farm laborer. Thus, his heirs are entitled to receive an award for lost earnings in accordance with the following formula: 2/3 (80 - ATD [age at time of death]) x (GAI [gross annual income]) - 80% GAI. 7 Thus — 2/3 (80-19) x (P1,600 x 12) - 80% (P1,600.00 x 12) 2/3 (61) x P19,200 - 80% (P19,200) 40.67 x [P19,200 - P15,360] 40.67 x P3,840 = P156,172.80 ========== On the basis of the above computation, the heirs of the deceased Romeo Boteja Jr. are entitled to receive P156,172.80 from accused-appellant Jesus Muyco. WHEREFORE, the Decision appealed from finding accused-appellant JESUS MUYCO guilty of murder aggravated by treachery and sentencing him to reclusion perpetua, and to pay the heirs of Romeo Boteja Jr. P27,000.00 for funeral expenses is AFFIRMED with the MODIFICATION that the death indemnity is increased to P50,000.00. Accused-appellant is further directed to pay the heirs of his victim the amount of P156,172.80 for lost earnings conformably with prevailing jurisprudence. Costs against accused-appellant. SO ORDERED. G.R. No. 159636 November 25, 2004

VICTORY LINER, INC., petitioner, vs. ROSALITO GAMMAD, APRIL ROSSAN P. GAMMAD, ROI ROZANO P. GAMMAD and DIANA FRANCES P. GAMMAD, respondents. YNARES-SANTIAGO, J.: Assailed in this petition for review on certiorari is the April 11, 2003 decision1 of the Court of Appeals in CA-G.R. CV No. 63290 which affirmed with modification the November 6, 1998 decision2 of the Regional Trial Court of Tuguegarao, Cagayan, Branch 5 finding petitioner Victory Liner, Inc. liable for breach of contract of carriage in Civil Case No. 5023. The facts as testified by respondent Rosalito Gammad show that on March 14, 1996, his wife Marie Grace Pagulayan-Gammad,3 was on board an air-conditioned Victory Liner bus bound for Tuguegarao, Cagayan from Manila. At about 3:00 a.m., the bus while running at a high speed fell on a ravine somewhere in Barangay Baliling, Sta. Fe, Nueva Vizcaya, which resulted in the death of Marie Grace and physical injuries to other passengers.4 On May 14, 1996, respondent heirs of the deceased filed a complaint5 for damages arising from culpa contractual against petitioner. In its answer,6 the petitioner claimed that the incident was purely accidental and that it has always exercised extraordinary diligence in its 50 years of operation. After several re-settings,7 pre-trial was set on April 10, 1997.8 For failure to appear on the said date, petitioner was declared as in default.9 However, on petitioner’s motion10 to lift the order of default, the same was granted by the trial court.11 At the pre-trial on May 6, 1997, petitioner did not want to admit the proposed stipulation that the deceased was a passenger of the Victory Liner Bus which fell on the ravine and that she was issued Passenger Ticket No. 977785. Respondents, for their part, did not accept petitioner’s proposal to pay P50,000.00.12 After respondent Rosalito Gammad completed his direct testimony, cross-examination was scheduled for November 17, 199713 but moved to December 8, 1997,14 because the parties and the counsel failed to appear. On December 8, 1997, counsel of petitioner was absent despite due notice and was deemed to have waived right to cross-examine respondent Rosalito.15 Petitioner’s motion to reset the presentation of its evidence to March 25, 199816 was granted. However, on March 24, 1998, the counsel of petitioner sent the court a telegram17 requesting postponement but the telegram was received by the trial court on March 25, 1998, after it had issued an order considering the case submitted for decision for failure of petitioner and counsel to appear.18 On November 6, 1998, the trial court rendered its decision in favor of respondents, the dispositive portion of which reads: WHEREFORE, premises considered and in the interest of justice, judgment is hereby rendered in favor of the plaintiffs and against the defendant Victory Liner, Incorporated, ordering the latter to pay the following: 1. 2. 3. 4. 5. 6. Actual Damages -------------------- P 122,000.00 Death Indemnity --------------------- 50,000.00 Exemplary and Moral Damages----- 400,000.00 Compensatory Damages ---------- 1,500,000.00 Attorney’s Fees --------------------- 10% of the total amount granted Cost of the Suit. 3

SO ORDERED.19 On appeal by petitioner, the Court of Appeals affirmed the decision of the trial court with modification as follows: [T]he Decision dated 06 November 1998 is hereby MODIFIED to reflect that the following are hereby adjudged in favor of plaintiffs-appellees: 1. Actual Damages in the amount of P88,270.00; 2. Compensatory Damages in the amount of P1,135,536,10; 3. Moral and Exemplary Damages in the amount of P400,000.00; and 4. Attorney’s fees equivalent to 10% of the sum of the actual, compensatory, moral, and exemplary damages herein adjudged. The court a quo’s judgment of the cost of the suit against defendant-appellant is hereby AFFIRMED. SO ORDERED.20 Represented by a new counsel, petitioner on May 21, 2003 filed a motion for reconsideration praying that the case be remanded to the trial court for cross- examination of respondents’ witness and for the presentation of its evidence; or in the alternative, dismiss the respondents’ complaint.21 Invoking APEX Mining, Inc. v. Court of Appeals,22 petitioner argues, inter alia, that the decision of the trial court should be set aside because the negligence of its former counsel, Atty. Antonio B. Paguirigan, in failing to appear at the scheduled hearings and move for reconsideration of the orders declaring petitioner to have waived the right to cross-examine respondents’ witness and right to present evidence, deprived petitioner of its day in court. On August 21, 2003, the Court of Appeals denied petitioner’s motion for reconsideration.23 Hence, this petition for review principally based on the fact that the mistake or gross negligence of its counsel deprived petitioner of due process of law. Petitioner also argues that the trial court’s award of damages were without basis and should be deleted. The issues for resolution are: (1) whether petitioner’s counsel was guilty of gross negligence; (2) whether petitioner should be held liable for breach of contract of carriage; and (3) whether the award of damages was proper. It is settled that the negligence of counsel binds the client. This is based on the rule that any act performed by a counsel within the scope of his general or implied authority is regarded as an act of his client. Consequently, the mistake or negligence of counsel may result in the rendition of an unfavorable judgment against the client. However, the application of the general rule to a given case should be looked into and adopted according to the surrounding circumstances obtaining. Thus, exceptions to the foregoing have been recognized by the court in cases where reckless or gross negligence of counsel deprives the client of due process of law, or when its application will result in outright deprivation of the client’s liberty or property or where the interests of justice so require, and accord relief to the client who suffered by reason of the lawyer’s gross or palpable mistake or negligence.24 The exceptions, however, are not present in this case. The record shows that Atty. Paguirigan filed an Answer and Pre-trial Brief for petitioner. Although initially declared as in default, Atty. Paguirigan successfully moved for the setting aside of the order of default. In fact, petitioner was represented by Atty. Paguirigan at the pretrial who proposed settlement for P50,000.00. Although Atty. Paguirigan failed to file motions for reconsideration of the orders declaring petitioner to have waived the right to cross-examine respondents’ witness and to present evidence, he nevertheless, filed a timely appeal with the Court of Appeals assailing the decision of the trial court. Hence, petitioner’s claim that it was denied due process lacks basis. Petitioner too is not entirely blameless. Prior to the issuance of the order declaring it as in default for not appearing at the pre-trial, three notices (dated October 23, 1996,25 January 30, 1997,26 and March 26, 1997,27) requiring attendance at the pre-trial were sent and duly received by petitioner. However, it was only on April 27, 1997, after the issuance of the April 10, 1997 order of default for failure to appear at the pre-trial when petitioner, through its finance and administrative manager, executed a special power of attorney28 authorizing Atty. Paguirigan or any member of his law firm to represent petitioner at the pre-trial. Petitioner is guilty, at the least, of contributory negligence and fault cannot be imputed solely on previous counsel. The case of APEX Mining, Inc., invoked by petitioner is not on all fours with the case at bar. In APEX, the negligent counsel not only allowed the adverse decision against his client to become final and executory, but deliberately misrepresented in the progress report that the case was still pending with the Court of Appeals when the same was dismissed 16 months ago.29 These circumstances are absent in this case because Atty. Paguirigan timely filed an appeal from the decision of the trial court with the Court of Appeals. In Gold Line Transit, Inc. v. Ramos,30 the Court was similarly confronted with the issue of whether or not the client should bear the adverse consequences of its counsel’s negligence. In that case, Gold Line Transit, Inc. (Gold Line) and its lawyer failed to appear at the pre-trial despite notice and was declared as in default. After the plaintiff’s presentation of evidence ex parte, the trial court rendered decision ordering Gold Line to pay damages to the heirs of its deceased passenger. The decision became final and executory because counsel of Gold Line did not file any appeal. Finding that Goldline was not denied due process of law and is thus bound by the negligence of its lawyer, the Court held as follows – This leads us to the question of whether the negligence of counsel was so gross and reckless that petitioner was deprived of its right to due process of law. We do not believe so. It cannot be denied that the requirements 4

with due regard to all the circumstances. failure of diligence. whether it had the opportunity to present its side of the controversy. the Court held that testimonial evidence alone is insufficient to justify an award for loss of earning capacity. Ombudsman.33 Anent the second issue. Nevertheless. Verily. To cater to petitioner’s arguments and reinstate its petition for relief from judgment would put a premium on the negligence of its former counsel and encourage the non-termination of this case by reason thereof.000. Oco.31 Similarly. It would be a clear mockery if it were otherwise. In a contract of carriage. as far as this suit is concerned. A common carrier is bound to carry its passengers safely as far as human care and foresight can provide. If the negligence of counsel be admitted as a reason for opening cases. Thus. Challenging the decision of the Ombudsman. The rationale for the rule is easily discernible. The Court will not countenance such a farce which contradicts long-settled doctrines of trial and procedure.of due process were observed in the instant case. but there must be a limit to it. What was irretrievably lost by petitioner was its opportunity to participate in the trial of the case and to adduce evidence in its behalf because of negligence. Its plea that it was deprived of due process echoes on hollow ground and certainly cannot elicit approval nor sympathy. If every perceived mistake.38 In People v. to sustain petitioner’s argument that it was denied due process of law due to negligence of its counsel would set a dangerous precedent. experienced or learned. for a client is bound by the action of his counsel in the conduct of a case and he cannot thereafter be heard to complain that the result might have been different had his counsel proceeded differently. Finding that the deceased was neither self-employed nor employed as a daily-wage worker earning less than the minimum wage under the labor laws existing at the time of his death. By way of exception. In the present case. lack of experience or insufficient legal knowledge of the lawyer would be admitted as a reason for the reopening of a case.000. This is one case where petitioner has to bear the adverse consequences of its counsel’s act. and (3) moral damages.39 the evidence presented by the prosecution to recover damages for loss of earning capacity was the bare testimony of the deceased’s wife that her husband was earning P8. there is no evidence to rebut the statutory presumption that the proximate cause of Marie Grace’s death was the negligence of petitioner. the employee contended that the gross negligence of his counsel deprived him of due process of law. and judicial notice may be taken of the fact that in the deceased’s line of work no documentary evidence is available. in Macalalag v. holds the common carrier in breach of its contract of carriage that results in the death of a passenger liable to pay the following: (1) indemnity for death. it should. It would enable every party to render inutile any adverse order or decision through the simple expedient of alleging gross negligence on the part of its counsel. 5 . Access to the courts is guaranteed. it is of record that notices were sent to petitioner and that its counsel was able to file a motion to dismiss the complaint. bear the consequences of its choice of a faulty option. damages for loss of earning capacity may be awarded despite the absence of documentary evidence when (1) the deceased is self-employed earning less than the minimum wage under current labor laws.32 a Philippine Postal Corporation employee charged with dishonesty was not able to file an answer and position paper. it is presumed that the common carrier was at fault or was negligent when a passenger dies or is injured.00. This statutory presumption may only be overcome by evidence that the carrier exercised extraordinary diligence. and even a pre-trial brief. what is sought to be safeguarded against is not the lack of previous notice but the denial of the opportunity to be heard. or (2) the deceased is employed as a daily wage worker earning less than the minimum wage under current labor laws. Unless the presumption is rebutted. Fundamental to our judicial system is the principle that every litigation must come to an end. Viewed vis-à-vis the foregoing jurisprudence. documentary evidence should be presented to substantiate the claim for damages for loss of earning capacity. but simply. Petitioner was never deprived of its day in court. As a rule. In the application of the principle of due process. (2) indemnity for loss of earning capacity. there would be no end to controversy. petitioner was correctly found liable for breach of contract of carriage. In debunking his contention.37 The award of compensatory damages for the loss of the deceased’s earning capacity should be deleted for lack of basis. it is only in case of gross or palpable negligence of counsel when the courts can step in and accord relief to a client who would have suffered thereby. the award of damages should be modified. using the utmost diligence of very cautious persons.34 In the instant case. the courts below correctly ruled that petitioner was guilty of breach of contract of carriage.00 monthly as a legal researcher of a private corporation. respondent heirs of the deceased are entitled to indemnity for the death of Marie Grace which under current jurisprudence is fixed at P50. The question is not whether petitioner succeeded in defending its rights and interests. an answer to the complaint. the court need not even make an express finding of fault or negligence on the part of the common carrier. He was found guilty solely on the basis of complainant’s evidence and was dismissed with forfeiture of all benefits and disqualification from government service. the Court said – Neither can he claim that he is not bound by his lawyer’s actions. there would never be an end to a suit so long as a new counsel could be hired every time it is shown that the prior counsel had not been sufficiently diligent. Hence. as in fact it was afforded every opportunity to be heard. as petitioner retained the services of counsel of its choice. Article 176435 in relation to Article 220636 of the Civil Code.

45 These damages are different in nature and require separate determination. v. might have pushed them through. et al. the petitioner failed to prove that it exercised the extraordinary diligence required for common carriers. Under Article 2224 of the Civil Code. A list of expenses (Exhibit "J").000. et al. 9. were not selfemployed or employed as daily-wage workers earning less than the minimum wage under the labor laws existing at the time of their death. The trial court’s findings of facts are clear and well-developed. which are more than nominal but less than compensatory damages. In Pleno v. and except for the testimony of their wives. or malevolent manner.00. Dec. the Mayon Ceramics Corporation. In similar cases as in Borromeo v. et al. wake or burial of the victim will be recognized. there is no doubt that Pleno is an ent[re]preneur and the founder of his own corporation.000.00 as moral damages and P100. but. These amounts are not excessive..51 it was held that only substantiated and proven expenses or those that appear to have been genuinely incurred in connection with the death. On the day of the incident. et al. Roberto Raagas. it is presumed to have acted recklessly. The award is clearly erroneous because the deceased’s earnings does not fall within the exceptions. as in this case.Likewise.. an award of temperate or moderate damages may still be made on loss or impairment of earning capacity. 29.160. "As to the loss or impairment of earning capacity.. Clearly. was a taxi driver of New Rocalex with an average daily earning of P500 or a monthly earning of P7. Arreglado. Pleno was driving homeward with geologist Longley after an ocular inspection of the site of the Mayon Ceramics Corporation. the proper award of damages were given.00 as temperate damages in lieu of actual damages for loss of earning capacity because the income of the victim was not sufficiently proven. be proved with certainty. the trial court and the Court of Appeals computed the award of compensatory damages for loss of earning capacity only on the basis of the testimony of respondent Rosalito that the deceased was 39 years of age and a Section Chief of the Bureau of Internal Revenue. these cases do not fall under the exceptions where indemnity for loss of earning capacity can be given despite lack of documentary evidence.000. His actual income however has not been sufficiently established so that this Court cannot award actual damages.500. the award of exemplary damages is proper. Thus – The testimonial evidence shows that Placido Agustin.00 as exemplary damages. Furthermore.088.54 which was the amount supported by official receipts. actual damages should be further reduced to P78. for lack of documentary proof. L11037. Because of this. Each item of damages is adequately supported by evidence on record. temperate or moderate damages. LTB Co. Duban. and were it not for the incident. in People v. However. with a monthly compensation of P30. exemplary damages.42 the Court sustained the trial court’s award of P200. the fact of loss having been established. cannot be considered competent proof and cannot replace the official receipts necessary to justify the award. no indemnity for loss of earning capacity can be given in these cases. which are awarded by way of example or correction for the public good may be recovered in contractual obligations if the defendant acted in wanton." .000. may be recovered when the court finds that some pecuniary loss has been suffered but its amount can not.46 In culpa contractual or breach of contract. reckless. It appears also that he is an industrious and resourceful person with several projects in line. Tuguergarao District Office with a salary of P83. Under the circumstances. 1960.47 On the other hand.48 Respondents in the instant case should be awarded moral damages to compensate for the grief caused by the death of the deceased resulting from the petitioner’s breach of contract of carriage.40 damages for loss of earning capacity was not awarded because the circumstances of the 3 deceased did not fall within the recognized exceptions. Therefore..52 and the contract/receipt for the construction of the tomb (Exhibit "F")53 in this case.00 should be awarded to respondents. when the act of breach of contract itself constitutes the tort that results in physical injuries. and Melencio Castro Jr. 44 Phil 165. 1958. Manila Electric Railroad Co.50 The actual damages awarded by the trial court reduced by the Court of Appeals should be further reduced.. Almedilla. 6 . the same cannot be lumped with exemplary damages because they are based on different jural foundations. Melencio Castro Jr.44 to justify the award of temperate damages in lieu of damages for loss of earning capacity which was not substantiated by the required documentary proof. he suffers from some inferiority complex and is no longer active in business as well as in social life. Article 2224 of the Civil Code was likewise applied in the recent cases of People v. Anent the award of moral damages. In People v. Placido Agustin was a Social Security System employee who received a monthly salary of P5. Roberto Raagas was the President of Sinclair Security and Allied Services. We rule that the lower court’s awards of damages are more consonant with the factual circumstances of the instant case.. Hence. L-11394. Court of Appeals. thus – The trial court based the amounts of damages awarded to the petitioner on the following circumstances: . no documentary proof about their income was presented by the prosecution. Coriage.. By special rule in Article 1764 in relation to Article 2206 of the Civil Code. Caraig. v. from the nature of the case. That Pleno sustained a permanent deformity due to a shortened left leg and that he also suffers from double vision in his left eye is also established. Singh43 and People v. (Emphasis supplied) Here..41 No other evidence was presented. fraudulent.000. moral damages may be recovered when the defendant acted in bad faith or was guilty of gross negligence (amounting to bad faith) or in wanton disregard of contractual obligations and.49 Thus.00 per annum when she died. moral damages may also be awarded in case the death of a passenger results from a breach of carriage. Sept. a family owned corporation. oppressive. and in Araneta. temperate damages in the amount of P500. we find it reasonable to award respondents the amount of P100.000.

The facts are as follows: On March 15. respondent filed an Amended Complaint. No. Q-91-9191. affirming with modification the Decision of the Regional Trial Court (RTC) of Quezon City.e. is breached. delicts or quasi-delicts is breached. and caused respondent physical injuries. Inc. in view of all the foregoing. is ordered to pay respondents the following: (1) P50. Inc. arising from a vehicular accident that occurred on March 17. funeral and interment expenses. 2003 decision of the Court of Appeals in CA-G. is AFFIRMED with MODIFICATION. 2001.000. The accident resulted in the death of respondent’s husband. where the demand is established with reasonable certainty. Court of Appeals. As modified. 1169. (2) P100. shall be 12% per annum from such finality until its satisfaction. regardless of its source.R. 63290. to wit – 1.57 WHEREFORE..00 as exemplary damages. When an obligation.00 as temperate damages. which modified the decision of the Regional Trial Court of Tuguegarao. Civil Code) but when such certainty cannot be so reasonably established at the time the demand is made. ordering petitioner Philippine Hawk Corporation and Margarito Avila to jointly and severally pay respondent Vivian Tan Lee damages as a result of a vehicular accident. a loan or forbearance of money. an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum. When the judgment of the court awarding a sum of money becomes final and executory. The actual base for the computation of legal interest shall. 2. contracts. law. In the absence of stipulation. G. and other just and equitable reliefs. moral and exemplary damages.000. however. 2005. petitioner should be held liable for payment of interest as damages for breach of contract of carriage. attorney’s fees may also be recovered in the case at bar where exemplary damages are awarded. 166869 February 16. 1991 in Barangay Buensoceso.R. the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art. v. Silvino Tan. the interest due shall be computed upon the finality of this decision at the rate of 12% per annum until satisfaction. i.: This is a Petition for Review on Certiorari of the Decision of the Court of Appeals in CA-G. (3) P100. and it consists in the payment of a sum of money. Gumaca. (5) P500.000. dated March 16. (4) P78.. Finally.160. the interest due should be that which may have been stipulated in writing.R.00 as indemnity for the death of Marie Grace Pagulayan-Gammad. Respondent sought the payment of indemnity for the death of Silvino Tan. in Civil Case No. this interim period being deemed to be by then an equivalent to a forbearance of credit. 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). respondent Vivian Tan Lee filed before the RTC of Quezon City a Complaint against petitioner Philippine Hawk Corporation and defendant Margarito Avila for damages based on quasidelict. shall be adjudged on unliquidated claims or damages except when or until the demand can be established with reasonable certainty. per paragraph 3 of the aforecited rule. in her own behalf and in behalf of her children. 2010 PHILIPPINE HAWK CORPORATION. in Eastern Shipping Lines. Cagayan in Civil Case No. 3. CV No. i. No interest. above.e. (Emphasis supplied). the contravenor can be held liable for payment of interest in the concept of actual and compensatory damages.00 as actual damages. VIVIAN TAN LEE. J. i.56 it was held that when an obligation. and the costs of suit. 5023. the interest due shall itself earn legal interest from the time it is judicially demanded. the rate of legal interest. whether the case falls under paragraph 1 or paragraph 2. On June 18. quasi-contracts. the petition is partially granted.000. promulgated on August 17. the rate of interest shall be 12% per annum to be computed from default. be on the amount finally adjudged.00 as moral damages. petitioner Victory Liner. medical and hospitalization expenses. 70860. not constituting a loan or forbearance of money. subject to the following rules. SO ORDERED. Accordingly.. Quezon. Petitioner vs.. in the civil case for damages against petitioner. Furthermore. 7 . in any case. The April 11. the cost of the motorcycle’s repair. (6) 10% of the total amount as attorneys fees. The Court finds the award of attorney’s fees equivalent to 10% of the total amount adjudged against petitioner reasonable. the total amount adjudged against petitioner shall earn interest at the rate of 12% per annum computed from the finality of this decision until fully paid. Branch 102. 2004.e. In the instant case. When the obligation is breached. attorney’s fees. Considering that the amounts payable by petitioner has been determined with certainty only in the instant petition. from judicial or extrajudicial demand under and subject to the provisions of Article 1169 of the Civil Code. CV No. Furthermore.Pursuant to Article 220855 of the Civil Code. Respondent PERALTA. 1992.

the driver of the passenger jeep involved in the accident. The immediate cause of his death was massive cerebral hemorrhage.. the driver of petitioner’s bus. but drove on and surrendered to the police. and when they were about to make a turn. Quezon. Respondent further testified that her husband was leasing and operating a Caltex gasoline station in Gumaca. They came from the Pasumbal Machine Shop. Respondent’s husband died due to the vehicular accident. were involved in an accident.00 a month or P36. Quezon on the way to Lopez. she saw a bus running at fast speed coming toward them. 1991. Gumaca. and had high blood pressure. the bus conductor. three of whom are now residents of the United States. He denied that he bumped the motorcycle. Gumaca. Luke’s Hospital in Quezon City. As a result of the accident. he was driving his bus at 60 kilometers per hour on the Maharlika Highway. Whether or not the proximate cause of the accident causing physical injuries upon the plaintiff Vivian Lee Tan and resulting in the death of the latter’s husband was the recklessness and negligence of Margarito Avila or the deceased Silvino Tan. while on board a motorcycle with [P]late No. 119. including Margarito Avila. She was later transferred to St. DA-5480 driven by the latter. and a bus with Body No. and then the bus hit a jeep parked on the roadside. Rodolfo Ilagan. Sisperes. The deceased Silvino Tan is survived by his wife.m. testified that in the afternoon of March 17. the motorcycle crossed the path of the bus. In its Answer. in Bgy. and then the bus bumped his jeep and sped away. She lost consciousness and was brought to the hospital in Gumaca. plaintiff Vivian Lee Tan and her husband Silvino Tan. at about 4:30 p. Petitioner asserted that it exercised the diligence of a good father of the family in the selection and supervision of its employees. testified that. 4. the trial court issued a Pre-trial Order stating that the parties manifested that there was no possibility of amicable settlement between them.00 a year. alleging that the immediate and proximate cause of the accident was the recklessness or lack of caution of Silvino Tan. where they inquired about the repair of their tanker. Margarito Avila. Respondent testified that on March 17. and was then being driven by Margarito Avila. she felt pain in her bones. Ernest Ovial. they agreed to stipulate on the following facts: 1. On March 25. He did not stop to help out of fear for his life. They were on a stop position at the side of the highway. Quezon. 1991. where she was confined for a week. she was riding on their motorcycle in tandem with her husband. The parties also agreed on the following issues: 1.The accident involved a motorcycle. a motorcycle ran from his left side of the highway. Gumaca. at a place after a Caltex gasoline station in Barangay Buensoceso. and their motorcycle as well. 1999. operations officer of petitioner. He did not notice the motorcycle before the accident. his jeep was parked on the left side of the highway near the Pasumbal Machine Shop.000. and Whether or not defendant Philippine Hawk Transport Corporation exercised the diligence of a good father of the family in the selection and supervision of its driver Margarito Avila. 1993. Quezon. When they were at Barangay Buensoceso. which gave them an income of P3. On March 17. testified that on March 17. a passenger jeep. 2. 2. He heard a loud banging sound. 1991. her left arm became swollen. She suffered a fracture on her left chest. But he saw the bus dragging the motorcycle along the highway. Avila further testified that he had previously been involved in sideswiping incidents. The bus was owned by petitioner Philippine Hawk Corporation.000. Silvino Tan died on the spot while plaintiff Vivian Lee Tan suffered physical injuries which necessitated medical attention and hospitalization. They also had a copra business. but he forgot how many times. petitioner denied liability for the vehicular accident. like their other drivers. and a Metro Bus with [P]late No. Manila. For the defense. Quezon. 8 . However. Domingo S. and so he turned the bus to the right. who was on the wheel. Buensoceso. and as the bus came near. he saw that the motorcycle turned turtle (“bumaliktad”). Quezon that yielded one million pesos a year in revenue. From his side mirror. NXR-262 driven by Margarito Avila. testified that the motorcycle bumped the left side of the bus that was running at 40 kilometers per hour. 3. and Defendant Margarito Avila is an employee of defendant Philippine Hawk. Avila was subjected to and passed the following requirements: (1) Submission of NBI clearance. plaintiff Vivian Lee Tan and four children.

which caused the collision with the motorcycle and the passenger jeep parked on the left side of the road. but he just maintained his speed and veered to the left. the trial court rendered judgment against petitioner and defendant Margarito Avila. The assailed decision dated March 16. (2) whether or not petitioner is liable to 9 . The motorcycle crossed the highway in a zigzag manner and bumped the side of the bus. On appeal. just as the passenger jeep was. (4) Test of his driving ability. but disagreed that the motorcycle crossed the path of the bus while the bus was running on the right side of the road. and whether negligence on his part was the proximate cause of the accident. the appeal is DENIED. therefore.00 representing loss of earnings and actual damages plus P50. (c) P100. attained finality. 1999. suddenly emerged from the left side of the road from a machine shop. particularly his defensive skill.00 as unearned income. Prior to the accident. having failed to sufficiently inculcate in him discipline and correct behavior on the road.000. The dispositive portion of the decision reads: WHEREFORE. No. G.000. The Court of Appeals committed reversible error in its finding that the petitioner’s bus driver saw the motorcycle of private respondent executing a U-turn on the highway “about fifteen (15) meters away” and thereafter held that the Doctrine of Last Clear was applicable to the instant case. which was then parked on the left side of the road.55 as actual damages.00 as temperate damages. Inc. No.(2) Certification from his previous employer that he had no bad record. then the bus would not have hit the passenger jeep. (d) P590.00 as moral damages. Gumaca. testified that the bus was running on the highway on a straight path when a motorcycle. The trial court held petitioner bus company liable for failing to exercise the diligence of a good father of the family in the selection and supervision of Avila. Petitioner filed this petition. The fact that the bus also hit the passenger jeep showed that the bus must have been running from the right lane to the left lane of the highway. Delos Santos. November 22. (b) P10. 134622. and (5) Review of his driving skill every six months. and Margarito Avila turned his bus to the right in an attempt to avoid hitting the motorcyle. G. resulting in the death of Silvino Tan and causing physical injuries to respondent. The Court of Appeals committed reversible error in awarding damages in total disregard of the established doctrine laid down in Danao v. The trial court agreed with the bus driver that the motorcycle was moving ahead of the bus from the left side of the road toward the right side of the road. In its Decision dated March 16.R. Abubakar. (3) Physical examination to determine his fitness to drive. Efren Delantar. 154 SCRA 447 and Viron Transportation Co.575. in total disregard of the doctrine laid down by this Court in Abubakar v. The trial court held that if the bus were on the right side of the highway. Quezon. 138296. This was a palpable error for the simple reason that the aforesaid distance was the distance of the witness to the bus and not the distance of the bus to the respondent’s motorcycle. and which had. 2001 is hereby AFFIRMED with MODIFICATION. the motorcycle was in a running position moving toward the right side of the highway. a Barangay Kagawad in Buensoceso. Appellants Philippine Hawk and Avila are hereby ordered to pay jointly and severally appellee the following amount: (a) P168. The trial court stated that since Avila saw the motorcycle before the collision. 2001. Court of Appeals..000. the Court of Appeals affirmed the decision of the trial court with modification in the award of damages. the issues raised by petitioner are: (1) whether or not negligence may be attributed to petitioner’s driver.000. the motorcycle was on the left side of the road. foregoing premises considered. raising the following issues: 1) The Court of Appeals committed grave abuse of discretion amounting to lack of jurisdiction in passing upon an issue. v. 2) 3) In short. the dispositive portion of which reads: ACCORDINGLY. October 22. 2000.000. and judgment is hereby rendered in favor of the plaintiff Vivian Lee Tan and h[er] husband’s heirs ordering the defendants Philippine Hawk Corporation and Margarito Avila to pay them jointly and solidarily the sum of P745.00 as civil indemnity. and (e) P50.R. The trial court found Margarito Avila guilty of simple negligence. as clearly borne out by the records. MARGARITO AVILA is adjudged guilty of simple negligence.019. The trial court found that before the collision. which had not been raised on appeal.00 as moral damages. with a woman behind its driver. he should have stepped on the brakes and slowed down.

Petitioner contends that the Court of Appeals was mistaken in stating that the bus driver saw respondent’s motorcycle “about 15 meters away” before the collision. for having failed to sufficiently inculcate in him discipline and correct behavior on the road. and not the distance of the bus from the motorcycle. was guilty of simple negligence as affirmed by the appellate court. Questions that may be decided. which was the basis for the conclusion that Avila was guilty of simple negligence. To avoid liability for a quasi-delict committed by his employee. and found no cogent reason to disturb the findings of the trial court. that being so. Margarito Avila. but drove on and bumped the motorcycle. As regards the issue on the damages awarded. had the last clear chance to avoid the accident. an extra-cautious public utility driver should have stepped on his brakes and slowed down. which caused physical injuries to respondent and the death of respondent’s husband. Rule 51 of the 1997 Rules of Civil Procedure provides: SEC. Petitioner’s contention is unmeritorious. Foreseeability is the fundamental test of negligence. the bus never slowed down. -. it simply maintained its highway speed and veered to the left. already saw the motorcycle on the left side of the road before the collision. or closely related to or dependent on an assigned error and properly argued in the brief. Petitioner asserts that this mistaken assumption of the Court of Appeals made it conclude that the bus driver. and (3) whether or not the damages awarded by respondent Court of Appeals are proper. who was driving on the right side of the road. are conclusive on this Court when supported by the evidence on record. Petitioner seeks a review of the factual findings of the trial court. petitioner’s tests were concentrated on the ability to drive and physical fitness to do so. a defendant must have acted or failed to act in such a way that an ordinary reasonable man would have realized that certain interests of certain persons were unreasonably subjected to a general but definite class of risks. that petitioner’s driver was negligent in driving the bus. petitioner contends that it was the only one that appealed the decision of the trial court with respect to the award of actual and moral damages. Besides. In this case. save as the court pass upon plain errors and clerical errors. Indeed. Margarito said he saw the motorcycle before the collision ahead of the bus. To be negligent. as testified to by its witness Efren Delantar Ong. thus: The Court agree[s] with the bus driver Margarito that the motorcycle was moving ahead of the bus towards the right side from the left side of the road. The Court upholds the finding of the trial court and the Court of Appeals that petitioner is liable to respondent. This is negligence indeed. which were sustained by the Court of Appeals. an employer must overcome the presumption by presenting convincing proof that he exercised the care and diligence of a good father of a family in the selection and supervision of his employee. showing that the bus was negligent in veering to the left lane. because the said distance.respondent for damages. that the collision between it and the parked jeep and the moving rightways cycle became inevitable. who was about 15 meters away from the bus when he saw the vehicular accident.No error which does not affect the jurisdiction over the subject matter or the validity of the judgment appealed from or the proceedings therein will be considered unless stated in the assignment of errors. However. The Court has carefully reviewed the records of this case. Section 8. especially when affirmed by the Court of Appeals. If the bus were on the right side of the highway and Margarito turned his bus to the right in an attempt to avoid hitting it. Here. the Court of Appeals erred in awarding other kinds of damages in favor of respondent. The fact that the bus hit the jeep too. the bus driver. was Ong’s distance from the bus. who did not appeal from the trial court’s decision. Margarito Avila. this fact does not affect the finding of the trial court that petitioner’s bus driver. A review of the records showed that it was petitioner’s witness. 8. Nevertheless. but disagrees with him that it crossed the path of the bus while the bus was running on the right side of the highway. and also the passenger jeep parked on the left side of the road. The rule is settled that the findings of the trial court. he did not take the necessary precaution to slow down. then the bus would not have hit the passenger jeep vehicle which was then parked on the left side of the road. since it failed to exercise the diligence of a good father of the family in the selection and supervision of its bus driver. there instantly arises a presumption that the employer failed to exercise the due diligence of a good father of the family in the selection or supervision of its employees. Efren Delantar Ong. shows that the bus must have been running to the left lane of the highway from right to the left. Margarito Avila. 10 . causing it to hit the motorcycle and the passenger jeep. Whenever an employee’s negligence causes damage or injury to another. It also did not know that Avila had been previously involved in sideswiping incidents. hence.

00 for funeral expenses). hence. 18. 8 of this Rule. 2 and 4. it is reasonable to peg necessary expenses for the lease and operation of the gasoline station at 80 percent of the gross income. In the absence of documentary evidence. moral damages for his death. Regalado commented on this section. et al. 76 Phil. the trial court awarded respondent the sum of P745. No. The basic procedural rule is that only errors claimed and assigned by a party will be considered by the court. or upon which the determination of the question raised by error properly assigned is dependent. although the amount of the latter award was modified. Respondent testified that her husband earned an annual income of one million pesos. Regalado to explain the section above. that is. Lufthansa German Airlines.Philippine National Bank v. now includes some substantial changes in the rules on assignment of errors. and actual damages. The procedure in the Supreme Court being generally the same as that in the Court of Appeals. only net earnings. Soco vs. the records show that respondent’s husband was leasing and operating a Caltex gasoline station in Gumaca.43 in 1990. the Court of Appeals sustained the award by the trial court for loss of earning capacity of the deceased Silvino Tan.988. if it finds that their consideration is necessary in arriving at a just decision of the case. judicial notice may be taken of the fact that in the deceased's line of work no documentary evidence is available. which showed that respondent’s husband earned a gross income of P950. vs.575. or (2) the deceased is employed as a daily wage worker earning less than the minimum wage under current labor laws. Mr. it has been held that the latter is clothed with ample authority to review matters. L-34931. Also. 1975. Sec. which is an amendment of the former Sec. even if the error complained of by a party is not expressly stated in his assignment of errors but the same is closely related to or dependent on an assigned error and properly argued in his brief. and peg living expenses at 50 percent of the net income (gross income less necessary expenses).. not the admissions made by respondent during the trial. Mar. It may also be observed that under Sec.575. 649). Quezon. no documentary evidence was presented regarding the income derived from their copra business. These changes are of jurisprudential origin. such error may now be considered by the court. except errors affecting its jurisdiction over the subject matter. representing loss of earning capacity (P590. an unassigned error closely related to an error properly assigned (PCIB vs. plus P50. documentary evidence should be presented to substantiate the claim for damages for loss of earning capacity. CA.000.00) and actual damages (P155. Also. Respondent presented in evidence a Certificate of Creditable Income Tax Withheld at Source for the Year 1990. Militante. June 28. On appeal to the Court of Appeals. G. Compensation of this nature is awarded not for loss of earnings. To this exception has now been added errors affecting the validity of the judgment appealed from or the proceedings therein. Rabat cited the book of Justice Florenz D. Rule 56). unless otherwise indicated (see Secs. It is reasonable to use the Certificate and respondent’s testimony as bases for fixing the gross annual income of the deceased at one million pesos before respondent’s husband died on March 17. L-28773. 1988). the total of the earnings less expenses necessary for the creation of such earnings or income. By way of exception. 7 of this Rule. 2. In this case. 1999. although it was not specifically assigned by the appellant (Dilag vs.00. Jr. The indemnity for loss of earning capacity of the deceased is provided for by Article 2206 of the Civil Code.00 as moral damages. the testimony of respondent as regards such income cannot be considered. petitioner assigned as error the award of damages by the trial court on the ground that it was based merely on suppositions and surmises. less living and other incidental expenses. In the computation of loss of earning capacity. the computation for loss of earning capacity is as follows: Net Earning = Life Expectancy Capacity x Gross Annual Income – Reasonable and (GAI) Necessary [2/3 (80-age at the 11 . et al. not gross earnings. June 30. Heirs of Resurreccion. are to be considered. Justice Florenz D. 1983). in which case. 58961. However.000. but for loss of capacity to earn money. will be considered by the appellate court notwithstanding the failure to assign it as error (Ortigas. 8. the appellate court is authorized to consider a plain error. thus: 1. In its Decision. In this case. otherwise it would be sacrificing substance for technicalities. even if they are not assigned as errors on appeal. damages for loss of earning capacity may be awarded despite the absence of documentary evidence when: (1) the deceased is self-employed and earning less than the minimum wage under current labor laws. thus: In his book..R. In this case for damages based on quasi-delict. As a rule.

Moral damages are not intended to enrich a plaintiff at the expense of the defendant.000.00.00).000.000.000. Petitioner Philippine Hawk Corporation and Margarito Avila are hereby ordered to pay jointly and severally respondent Vivian Lee Tan: (a) civil indemnity in the amount of Fifty Thousand Pesos (P50. and moral damages for the physical injuries sustained by respondent in addition to the damages granted by the trial court to respondent. Under Art. SO ORDERED.00 for the damage caused on respondent’s motorcycle. The Decision of the Court of Appeals dated August 17. if it finds that their consideration is necessary in arriving at a just decision of the case. temperate damages “may be recovered when the court finds that some pecuniary loss has been suffered but its amount cannot. yielding a total of P127. the Court of Appeals correctly awarded respondent civil indemnity for the death of her husband. temperate damages.000.948. The appellate court is clothed with ample authority to review matters. in order to prove expenses incurred as a result of the death of the victim or the physical injuries sustained by the victim.000. moral damages may be recovered in quasi-delicts causing physical injuries. However.000. In addition. However. (b) actual damages in the amount of One Hundred TwentySeven Thousand One Hundred Ninety-Two Pesos and Eighty-Five Centavos ( P127.000. and (e) temperate damages in the amount of Ten Thousand Pesos (P10.000.00 for the death of respondent’s husband.25. 2219 of the Civil Code. even if they are not assigned as errors in the appeal.60. the Court of Appeals correctly sustained the award of moral damages in the amount of P50.00 in accordance with prevailing jurisprudence.time of death)] Expenses (80% of GAI) X X = [2/3 (80-65)] = 2/3 (15) x x P1.000. be proportional to the suffering inflicted. which were prayed for by respondent in her Amended Complaint. wake.4 Attorney’s fees and interest 12 . CV No.000. They are awarded to allow the plaintiff to obtain means.575.00).00 was reasonable under the circumstances. WHEREFORE. The trial court overlooked awarding the additional damages. In the absence of competent proof of the actual damage caused on the motorcycle or the actual cost of its repair. the evidence presented was merely a job estimate of the cost of the motorcycle’s repair amounting to P17.00 (Living Expenses) X X X = 30/3 = 10 = P1. the award of temperate damages by the appellate court in the amount of P10. (c) moral damages in the amount of Eighty Thousand Pesos (P80. perforce. diversions or amusements that will serve to alleviate the moral suffering he/she has undergone due to the defendant’s culpable action and must. (d) indemnity for loss of earning capacity in the amount of One Million Pesos (P1.85 in actual damages.000. 70860 is hereby AFFIRMED with MODIFICATION. Actual damages must be substantiated by documentary evidence.” The cost of the repair of the motorcycle was prayed for by respondent in her Complaint. 2004 in CA-G. 2224 of the Civil Code.R.00 should be reduced to P30. 829. Under Art. be proved with certainty. the petition is DENIED. The award is proper under Art. such as receipts.244. In fine.00 P100.00).192. b.000.019. The Court of Appeals aptly held that there was no doubt that the damage caused on the motorcycle was due to the negligence of petitioner’s driver.000. and interment of respondent’s husband in the amount of P154.00 x x P100.000.000. while the medical expenses of respondent amounted only to P12. 2206 of the Civil Code.00 P200. The Court of Appeals also correctly awarded respondent moral damages for the physical injuries she sustained due to the vehicular accident. which has been fixed by current jurisprudence at P50.192. and the medical expenses of respondent in the amount of P168. the award of P50. the Court of Appeals correctly awarded civil indemnity for the death of respondent’s husband.00).00 The Court of Appeals also awarded actual damages for the expenses incurred in connection with the death. Further. the Court of Appeals correctly awarded temperate damages in the amount of P10.85). Costs against petitioner.000.00 - P800. Moreover. A review of the valid receipts submitted in evidence showed that the funeral and related expenses amounted only to P114.30.55.000.00.000. from the nature of the case.00 P100.000.

de Casasola. thus: Firstly. Secondly. 10 On June 18. 1983 8 so the case was elevated to this Court in G. 9 In the meantime. 11 These are the two orders which are assailed in this case. Indalecio Casasola (father of respondents) had a contract with a building contractor named Norman GUERRERO. 1979. (PHILAMGEN. assuming that the grant of damages to the family is eventually ratified. on November 16.G. the Court may pass upon said claim. The RTC rendered a decision dated October 16. B. Asuncion Vda. Indalecio Casasola. thru his counsel. the trial court ruled in favor of the plaintiff by rescinding the contract. No. The trial court thereafter issued a writ of execution. for short) acted as bondsman for GUERRERO. REGALADO. . No.000. Petitioner avers that pursuant to said agreement. ordering Guerrero alone to pay liquidated damages of P300. 73886 January 31. No.00 and attorney's fees in the amount of P30. MANUEL C. 1978 to July 16. with PHILAMGEN filing a cross-claim against GUERRERO for indemnification. THE HONORABLE INTERMEDIATE APPELLATE COURT. 1982. petitioners.000. It also denied the motion for reconsideration of the order of confirmation in its second order dated May 25. moral damages in the amount of P50. now the Regional Trial Court (RTC) of Manila for damages. 13 13 . the attorney's fees would be computed as follows: A.R. 1985 in AC-G. herein petitioner Quirante filed a motion in the trial court for the confirmation of his attorney's fees. ordering GUERRERO and PHILAMGEN to pay the plaintiff actual damages in the amount of P129. 5 A motion for reconsideration filed by PHILAMGEN was denied by the trial court on November 4. Nazareno. 7 A petition was filed in AC-G. vs.R.R. which agreement was allegedly confirmed in writing by the widow. Garcia and Virginia C.00. or in a separate action. Hence the award of damages confirmed in the two assailed Orders may be premature. We hereby SET ASIDE his questioned orders of March 20. and ordering PHILAMGEN to pay the plaintiff the amount of the surety bond equivalent to P120. Dante Cruz. Atty. in view of the grave abuse of discretion (amounting to lack of jurisdiction) committed by the respondent Judge. there is still pending in the Supreme Court a petition which may or may not ultimately result in the granting to the Isasola (sic) family of the total amount of damages given by the respondent Judge. WHEREFORE. CASASOLA. it shall be divided equally between the Heirs of I. 1983. 64334.. 1984. The restraining order previously issued is made permanent.000. 1981. Casasola with regard to his attorney's fees." 12 It also rests on the assumption that the court trying the case is to a certain degree already familiar with the nature and extent of the lawyer's services. 1984..00.00. 1989 JOHN C. According to him. 3 The challenged decision of respondent court succinctly sets out the factual origin of this case as follows: . even if its amount were less than the minimum prescribed by law for the jurisdiction of said court. Dr. exemplary damages in the amount of P40.R. Quirante & Associates Law Office for petitioners. 4 In said decision. Casasola died leaving his widow and several children as survivors. 2 which found the petition for certiorari therein meritorious.000. and the two daughters of the deceased.430. Casasola. namely Mely C. The rule against multiplicity of suits will in effect be subserved. respondents. J. Well settled is the rule that counsel's claim for attorney's fees may be asserted either in the very action in which the services in question have been rendered.: This appeal by certiorari seeks to set aside the judgment' 1 of the former Intermediate Appellate Court promulgated on November 6. The Philippine American General Insurance Co.00. The petition was dismissed on May 4. No. 1984. 1984 and May 25. despite an opposition thereto. Inc.00. R.00 a day from December 15. John C.S. In case the Honorable Court awards damages in excess of the P120. sued both GUERRERO and PHILAMGEN before the Court of first Instance of Manila. Dr. the alleged confirmation of attorney's fees will not and should not adversely affect the non-signatories thereto. upon the theory that the right to recover attorney's fees is but an incident of the case in which the services of counsel have been rendered . SP-03640. Bernaldo & Associates for private respondents. the attorney's fees of the undersigned counsel (Atty.. Quirante and Atty. Quirante) shall be P30. Dr. If the first alternative is chosen. 00202 with the Intermediate Appellate Court for the quashal of the writ of execution and to compel the trial court to give due course to the appeal. 1981. CASASOLA. Atty. and ESTRELLITA C. 6 Not satisfied with the decision of the trial court.000.000.000.. In case of recovery of the P120.00 bond. PHILAMGEN filed a notice of appeal but the same was not given due course because it was allegedly filed out of time. there was an oral agreement between him and the late Dr. The trial court granted the motion for confirmation in an order dated March 20.00 surety bond. John Quirante. In view of GUERRERO'S failure to perform his part of the contract within the period specified. QUIRANTE and DANTE CRUZ.

on the sharing basis hereinbefore stated.000. sent the check to petitioner for clearing. CV No. 1981 in the amount of P97.What is being claimed here as attorney's fees by petitioners is. and F. with the foregoing observation. CAPITOL CITY DEVELOPMENT BANK. we agree with the respondent court that the confirmation of attorney's fees is premature. take exception to and reject that portion of the decision of the respondent court which holds that the alleged confirmation to attorney's fees should not adversely affect the non-signatories thereto. it was ruled that: . not his counsel. 122920 to the Court of Appeal. respondents.R. We are of the considered view that the orderly administration of justice dictates that such issue be likewise determined by the court a quo inasmuch as it also necessarily involves the same contingencies in determining the propriety and assessing the extent of recovery of attorney's fees by both petitioners herein. to determine with evidentiary support such matters like the basis for the entitlement in the fees of petitioner Dante Cruz and as to whether the agreement allegedly entered into with the late Dr. plus an additional amount in case the award is in excess of said P120.00 surety bond. an attorney's fee cannot be determined until after the main litigation has been decided and the subject of recovery is at the disposition of the court.: This is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the decision dated April 29. SO ORDERED. dated August 7. 1992. 1981. with them as the creditors and the private respondents as the debtors. after the entire case shall have been adjudicated. not of his counsel.650. No. 00202 and ordering the respondent Regional Trial Court of Manila to certify the appeal of PHILAMGEN from said trial court's decision in Civil Case No. This especially true in the light of subsequent developments in G. No. No. PHILIPPINE BANK OF COMMUNICATIONS. denying petitioner Philippine National Bank's motion for reconsideration of said decision. A check with serial number 7-3666-223-3.00 in case of recovery of the P120. different from attorney's fees as an item of damages provided for under Article 2208 of the Civil Code. Capitol deposited the same in its account with the Philippine Bank of Communications (PBCom) which.R. as contended by petitioner Quirante. 1996 PHILIPPINE NATIONAL BANK. It is subject to the condition that the fee shall be P30. a client of Capitol City Development Bank (Capitol). Said decision of the Court became final and executory on June 25. WHEREFORE. petitioners chose to assert their claims in the same action..000. Casasola would be binding on all his heirs.R. inclusive of any liability of PHILAMGEN and the respective participations of the heirs of Dr. KAPUNAN. and the litigant. As it correctly pointed out. In a decision promulgated on May 21.00 was issued by the Ministry of Education and Culture (now Department of Education. This check was drawn against Philippine National Bank (herein petitioner). Thus. 14 . The issue over attorney's fee only arises when something has been recovered from which the fee is to be paid. ABANTE MARKETING. 64834) "may or may not ultimately result in the granting to the Isasola (sic) family of the total amount of damages" awarded by the trial court. J. 24776 and its resolution dated September 16. COURT OF APPEALS. the determination of the propriety of said fees and the amount thereof should be held in abeyance. 14 Here. In turn. With regard to the effect of the alleged confirmation of the attorney's fees by some of the heirs of the deceased. the decision of the respondent court subject of the present recourse is hereby AFFIRMED. wherein the award is made in favor of the litigant. G. This procedure gains added validity in the light of the rule that the remedy for recovering attorney's fees as an incident of the main action may be availed of only when something is due to the client. however. hence the same objection of prematurity obtains and such a holding may be pre-emptive of factual and evidentiary matters that may be presented for consideration by the trial court. petitioner. the Court rendered judgment setting aside the decision of May 4. therefore. Abante Marketing. Nevertheless. deposited the questioned check in its savings account with said bank. 15 It is further observed that the supposed contract alleged by petitioners as the basis for their fees provides that the recovery of the amounts claimed is subject to certain contingencies. the petition for review on certiorari filed by PHILAMGEN in this Court (G. is the judgment creditor who may enforce the judgment for attorney's fees by execution. This is also a proper remedy under our jurisprudence.R. The facts of the case are as follows. Since the main case from which the petitioner's claims for their fees may arise has not yet become final.00 bond.. 64334. vs. On August 11. No. The court below will be in a better position. Culture and Sports [DECS]) payable to F. in turn. since it is also premised on the eventual grant of damages to the Casasola family. F. 1987. We. the petitioner's claims are based on an alleged contract for professional services. Casasola in the award. Abante Marketing.000.R. In filing the motion for confirmation of attorney's fees. 1983 of the Intermediate Appellate Court in AC-G. 107508 April 25. 1992 of respondent Court of Appeals in CA-G. 1987.

the reason being that there was a "material alteration" of the check number. as collecting agent of Capitol. petitioner filed the instant petition which raises the following issues: I WHETHER OR NOT AN ALTERATION OF THE SERIAL NUMBER OF A CHECK IS A MATERIAL ALTERATION UNDER THE NEGOTIABLE INSTRUMENTS LAW. 4.) No pronouncement as to costs.00. it filed a civil suit with the Regional Trial Court of Manila against PBCom which. 1981.000. 1981 until the amount is fully paid. On the other hand.Petitioner cleared the check as good and. judgment is hereby rendered as follows: 1. then proceeded to debit the latter's account for the same amount. sent the check back to petitioner. filed a third-party complaint against petitioner for reimbursement/indemnity with respect to the claims of Capitol.) On Philippine National Bank's fourth-party complaint. Petitioner. returned the check to PBCom. defendant Philippine Bank of Communications is ordered to recredit or reimburse plaintiff Capitol City Development Bank the amount of P97. the decretal portion of which reads: WHEREFORE. thereafter.) On plaintiffs complaint. 1992 for lack of merit. and subsequently. 1989. Abante Marketing's account since the latter had already withdrawn the amount of the check as of October 15. Capitol sought clarification from PBCom and demanded the re-crediting of the amount. debit F. 2. and Philippine National Bank to be. however. the judgment appealed from is modified by exempting PBCom from liability to plaintiff-appellee for attorney's fees and ordering PNB to honor the check for P97. 3.000.00. plus interest of 12 percent thereto from October 19. PBCom credited Capitol's account for the amount stated in the check. Since the demands of Capitol were not heeded. and pay plaintiff-appellee attorney's fees of P10. However. with interest as declared by the trial court. 2 A motion for reconsideration of the decision was denied by the respondent Court in its resolution dated September 16. SO ORDERED. SO ORDERED. but PBCom is entitled to reimbursement/indemnity from PNB. 5. Philippine Bank of Communications is ordered to pay Capitol City Development Bank attorney's fees in the amount of Ten Thousand (P10. On October 3.) The Counterclaims of PBCom and PNB are hereby dismissed. F. in turn.) On Philippine Bank of Communications third-party complaint third-party defendant PNB is ordered to reimburse and indemnify Philippine Bank of Communications for whatever amount PBCom pays to plaintiff. No pronouncement as to costs. PBCom followed suit by requesting an explanation and re-crediting from petitioner. PBCom shall re-credit plaintiffappellee's account with it with the amount. on October 19. Capitol could not.00. 6. 3 Hence. petitioner returned the check to PBCom and debited PBCom's account for the amount covered by the check. Abante Marketing. 1981. PBCom. After the check shall have been honored by PNB.650. Abante Marketing is ordered to reimburse and indemnify PNB for whatever amount PNB pays to PBCom.650. 1992. Abante Marketing for the same amount. 1 An appeal was interposed before the respondent Court of Appeals which rendered its decision on April 29. II 15 . on its part.00) Pesos. the Regional Trial Court rendered its decision the dispositive portion of which reads: WHEREFORE. Petitioner. in turn reimbursed or indemnified by F. in turn. filed a fourth-party complaint against F.) On attorney's fees.

(d) Must be payable to order or to bearer. III WHETHER OR NOT A DRAWEE BANK WHO FAILED TO RETURN A. (c) Must be payable on demand. We shall first deal with the effect of the alteration of the serial number on the negotiability of the check in question. 2031) 5 which provides: Sec. 7 It means an unauthorized change in an instrument that purports to modify in any respect the obligation of a party or an unauthorized addition of words or numbers or other change to an incomplete instrument relating to the obligation of a party. It maintains that under Section 125(f). either for principal or interest. and (e) Where the instrument is addressed to a drawee. 16 . Petitioner alleges that there is no hard and fast rule in the interpretation of the aforequoted provision of the Negotiable Instruments Law. or at a fixed or determinable future time. (c) The time or place of payment. any change that alters the effect of the instrument is a material alteration. IV WHETHER OR NOT IN THE ABSENCE OF MALICE OR ILL WILL PETITIONER PNB MAY BE HELD LIABLE FOR ATTORNEY'S FEES. — Form of negotiable instruments.WHETHER OR NOT A CERTIFICATION HEREIN ISSUED BY THE MINISTRY OF EDUCATION CAN BE GIVEN WEIGHT IN EVIDENCE. What constitutes a material alteration. a material alteration is one which changes the items which are required to be stated under Section 1 of the Negotiable Instruments Law. he must be named or otherwise indicated therein with reasonable certainty. Section 1 of the Negotiable Instruments Law provides: Sec. 8 In other words. Any alteration which changes: (a) The date. CHECK WITHIN THE TWENTY FOUR (24) HOUR CLEARING PERIOD MAY RECOVER THE VALUE OF THE CHECK FROM THE COLLECTING BANK. or any other change or addition which alters the effect of the instrument in any respect. 225. An instrument to be negotiable must conform to the following requirements: (a) It must be in writing and signed by the maker or drawer. (b) Must contain an unconditional promise or order to pay a sum certain in money. 6 We do not agree. Petitioner anchors its position on Section 125 of the Negotiable Instruments Law (ACT No. (d) The number or the relations of the parties. An alteration is said to be material if it alters the effect of the instrument. 4 We find no merit in the petition. is a material alteration. (e) The medium or currency in which payment is to be made. (b) The sum payable. (f) Or which adds a place of payment where no place of payment is specified. 1.

" Justice Jose C. (3) Adding the date of maturity as a marginal notation. (8) Where there was a blank for the place of payment.L. "Extended to ________. Immaterial Alterations: (1) Changing "I promise to pay" to "We promise to pay". the instrument being otherwise unchanged. Material Alterations: (1) Substituting the words "or bearer" for "order. or order $9 fifty cents CTR" The insertion of the figure 5 before the figure 9." 9 Reproduced hereunder are some examples of material and immaterial alterations: A. (9) Striking out the name of the payee and substituting that of the person who actually discounted the note. 1. Mich. N. (4) Filling in the date of actual delivery where the makers of a note gave it with the date in blank. (2) Adding the word "annual" after the interest clause. (5) Adding the words "with interest" with or without a fixed rate." The holder on or after maturity wrote in the blank space the words "May 1. (6) An alteration in the maturity of a note. filling in the blank with the place desired. 5. Aug. Crystal Falls. (10) The indorsement of a note by a stranger after its delivery to the payee at the time the note was negotiated to the plaintiff. "July ____.In his book entitled "Pandect of Commercial Law and Jurisprudence. Vitug opines that "an innocent alteration (generally." (8) Plaintiff. (3) A change in the date from which interest is to run. whether the time for payment is thereby curtailed or extended." (2) Writing "protest waived" above blank indorsements. Pay to G. changes on items other than those required to be stated under Sec.) and spoliation (alterations done by a stranger) will not avoid the instrument. (7) An instrument was payable "First Nat'l Bank" the plaintiff added the word "Marion. but the holder may enforce it only according to its original tenor. (4) A check was originally drawn as follows: "Iron County Bank. (9) Adding to an indorsee's name the abbreviation "Cash" when it had been agreed that the draft should be discounted by the trust company of which the indorsee was cashier." as a reference memorandum of a promise made by him to the principal maker at the time the words were written to extend the time of payment." (5) An alteration of the marginal figures of a note where the sum stated in words in the body remained unchanged. without consent of the defendant.L. where there are two makers. struck out the name of the defendant as payee and inserted the name of the maker of the original note. 1901. 1913. 17 ." (7) A printed form of promissory note had on the margin the printed words. (6) The insertion of the legal rate of interest where the note had a provision for "interest at _______ per cent. 10 B.I. (10) Substituting the address of the maker for the name of a co-maker.

all it need do is to get hold of a TCAA Check and have the serial numbers of portion (sic) thereof changed or altered to make it appear that the same was issued by the MEG. 11 The case at bench is unique in the sense that what was altered is the serial number of the check in question. the alteration in the number of the check did not affect or change the liability of the Ministry of Education and Culture under the check and. The series number of said check was not included among those requisition by this Office from the Bureau of Treasury. Hence. Abante Marketing in the amount of NINETY (S)EVEN THOUSAND SIX HUNDRED FIFTY PESOS ONLY (P97. 18 . .650. 12 xxx xxx xxx Petitioner's arguments fail to convince. 1985 TO WHOM IT MAY CONCERN: This is to certify that according to the records of this Office. Despite these findings. 13 (Emphasis ours. It is issued by the Bureau of Treasury sizeable bundles of checks in booklet form with serial numbers different from other government office or agency. The aforementioned alteration did not change the relations between the parties. Thus." and below the name of the payee are the rubber-stamped words: "Ministry of Educ. The sum of money due to the payee remained the same. . Now. second line from the top: "MINISTRY OF EDUCATION AND CULTURE. The owner and issuer of the check is boldly and clearly printed on its face. The intended payee was the same. 1981 drawn in favor of F. stated. Cashier III of the MEC clearly shows that the check was altered. SN73666223-3 dated August 7. without the consent of a surety co-maker. The identity of the issuing government office or agency was not changed thereby and the amount of the check was not charged against the account of another government office or agency which had no liability under the check. rendering the referral to the serial number redundant and inconsequential. And as (a) safety measure. The name of the drawer and the drawee were not altered. the name of the government agency which issued the subject check was prominently printed therein. The ownership of the check is established without the necessity of recourse to the serial number. petitioner insists. Penomio C. The check's issuer was therefore sufficiently identified. A concrete example is that of the disbursements of the Ministry of Education and Culture. every government office o(r) agency (is) assigned TCAA checks bearing different number series.(11) An extension of time given by the holder of a note to the principal maker.) Petitioner. thus cannot refuse to accept the check in question on the ground that the serial number was altered. We now go to the second issue. & Culture. Dumlao and of the resident Auditor. is not an essential requisite for negotiability under Section 1 of the Negotiable Instruments Law.. Said certification reads: July 22. however. Otherwise." These words are not alleged to have been falsely or fraudulently intercalated into the check. Batonghinog. Neither is the authenticity of the different codes appearing therein questioned . The genuineness of the amount and the signatures therein of then Deputy Minister of Education Hermenegildo C. an item which.00) was not issued by this Office nor released to the payee concerned. its alteration in this case had no material effect whatsoever on the integrity of the check. is immaterial. we quote with favor the findings of the respondent court: xxx xxx xxx If the purpose of the serial number is merely to identify the issuing government office or agency. therefore. that: xxx xxx xxx It is an accepted concept. that a TCAA check by its very nature is the medium of exchange of governments (sic) instrumentalities of agencies. Alvarez are not challenged. TCAA PNB Check Mo. the same being an immaterial or innocent one. It is petitioner's submission that the certification issued by Minrado C. besides being a negotiable instrument itself. it can readily be observed. it is through the serial numbers that (a) TCAA Check is determined to have been issued by a particular office or agency of the government. Neither there any proof that the amount of the check was erroneously charged against the account of a government office or agency other than the Ministry of Education and Culture. for fictitious payee to succeed in its malicious intentions to defraud the government. The check's serial number is not the sole indication of its origin. As succinctly found by the Court of Appeals.

Court of Appeals: 19 The award of attorney's fees lies within the discretion of the court and depends upon the circumstances of each case. We agree with the respondent court. Intermediate Appellate Court. No. 1983.) And contrary to the Court of Appeal's resolution.000. In their respective decisions. BATONGHINOG (Cashier III) Petitioner claims that even if the author of the certification issued by the Ministry of Education and Culture (MEG) was not presented. Anent the third issue — whether or not the drawee bank may still recover the value of the check from the collecting bank even if it failed to return the check within the twenty-four (24) hour clearing period because the check was tampered — suffice it to state that since there is no material alteration in the check. It becomes a violation of the proscription against the imposition of a penalty on the right to litigate (Universal Shipping Lines. The reason for the award must be stated in the text of the court's decision. (SGD. Intermediate Appellate Court. the amount of P10. the same being in all respects negotiable. as we previously emphasized. Inc. COURT OF APPEALS. petitioner. J. Moreover. The one who signed the certification was not presented before the trial court to prove that the said document was really the document he prepared and that the signature below the said document is his own signature.. petitioner has no right to dishonor it and return it to PBCom. legal and equitable justification. this Court finds that Capitol failed to adequately substantiate its claim. respondents. 1981 (the date PBCom debited Capitol's account) until the amount is fully paid and reasonable attorney's fees. Civil Case No. still the best evidence of the material alteration would be the disputed check itself and the serial number thereon.00 as attorney's fees is hereby deleted. without which the award is a conclusion without a premise and improperly left to speculation and conjecture. However. 9114 on the ground of res judicata. 40142 reversing the Decision2 dated March 31. vs. which found its way to this Court via the instant petition. and TOMAS AVERIA. the change of its serial number not being substantial to its negotiability.. 2001 VERONICA PADILLO. WHEREFORE.R. JR.: Before us is a petition for review on certiorari of the Decision1 of the Court of Appeals dated November 22. 119707 November 29. Neither did petitioner present an eyewitness to the execution of the questioned document who could possibly identify it. assigning the latter as one of the errors committed by the trial court. 17 (Emphasis ours. we cannot rule on the authenticity of the contents of the certification. As to the award of attorney's fees being an exception rather than the rule.R. Petitioner thus assails the refusal of respondent court to give weight to the certification because the author thereof was not presented to identify it and to be cross-examined thereon. the decision of the Court of Appeals is hereby AFFIRMED. except for the deletion of the award of attorney's fees. In the petition filed against 19 . the same shall be disallowed. 1992 of the Regional Trial Court of Lucena City. v. petitioner unambiguously questioned before it the award of attorney's fees. The trial court merely ruled as follows: With respect to Capitol's claim for damages consisting of alleged loss of opportunity. 188 SCRA 170 [1990]). 16 Absent this proof. 18 The foregoing is in conformity with the guiding principles laid down in a long line of cases and reiterated recently in Consolidated Bank & Trust Corporation (Solidbank) v. Branch 54 in Civil Case No. SO ORDERED. However. 9114.) MINRADO C. the trial court and the Court of Appeals failed to explicitly state the rationale for the said award. premises considered. G. it is necessary for the court to make findings of fact and law that would bring the case within the exception and justify the grant of the award (Refractories Corporation of the Philippines v. DE LEON. If it is stated only in the dispositive portion of the decision. CV No.Very truly yours. the discretion of the court to award attorney's fees under Article 2208 of the Civil Code of the Philippines demands factual. this Court finds that it would be fair and reasonable to impose interest at 12% per annum on the principal amount of the check computed from October 19. unsubstantiated and speculative computation of what it allegedly could have earned or realized were it not for the debit made by PBCom which was triggered by the return and debit made by PNB. 176 SCRA 539 [176 SCRA 539]). 1994 in CA-G. JR. However. is a petition3 for declaratory relief and damages initiated by petitioner Veronica Padillo4 on December 14. there was no material alteration on the check. What Capitol had presented was a self-serving.

Petitioner ascribed fault upon Averia and Casilang with unlawful refusal to turn over the property in her favor. No. that judgment be rendered ordering respondent Averia and Casilang to pay jointly and severally to petitioner Padillo: (a) One Hundred Fifty Thousand Pesos (P150. de Vera-Quicho. 1982 wherein Marina M. 1982 wherein Margarita de Vera11 sold to petitioner Padillo her one-half (½) pro-indiviso share of the lot and the building erected thereon. 1982. Quezon Province for improper venue.13 Petitioner Padillo sought the dismissal of the amended complaint. 1984.10 was instituted by petitioner Padillo on July 6.00) annual unrealized income for the use of her said property from January 4. 374-82 was appealed to the Court of Appeals20 which rendered judgment on December 28. 1690-G. 37482. covered by TCT No.16 In the meantime. and one Beato Casilang. 1982 subject of M. Civil Case No.respondent Tomas Averia. thus.plus Six Hundred Pesos (P600. Pursuant to the Supreme Court's decision. considering the refusal of the Register of Deeds to register said deed of sale in view of a restraining order issued in Civil Case No. 1620-G. estoppel.9 M. The petition to register the deed was opposed by respondent Averia. T9863. which declared petitioner Padillo as sole and exclusive owner of the property in question and ordered the Register of Deeds of Lucena City to register the questioned deed of sale in favor of petitioner Padillo.8 The said decision became final and executory as no motion for reconsideration or appeal was filed therefrom. 374 82. 1620-G was instituted by respondent Averia against Marina M.5 a suit for rescission of two (2) deeds solely for harassment and dilatory purposes although the suit actually established petitioner's right of ownership over the subject property. 1991 for failure to show that the Court of Appeals had committed any reversible error in the questioned judgment. covered and described in Transfer Certificate of Title (TCT) No. The decision of the RTC in M. 1983 was rendered in M. In a Decision dated December 29. Civil Case No. 1982. de Vera-Quicho and Margarita de Vera. 374-82 wherein Branch 57 of the RTC. 1982 per Entry No. 1982 to compel the Register of Deeds of Lucena City to register the deed of sale dated February 10. which she purchased from Marina M. On July 7. No.C. a suit for specific performance against Marina M.C. In his Answer. T-9863. and Civil Case No. Lucena City.23 20 . and that respondent Averia even instituted Civil Case No. 1690-G was instituted by respondent Averia against spouses Edilberto de Mesa and petitioner Padillo.19 The Supreme Court set aside the September 23. laches. the Supreme Court declared that the trial court has jurisdiction since Section 2 of Presidential Decree No. Branch 62 in said Civil Case No. a decision dated September 23. No. Quezon Province. a new trial was conducted in M. res judicata and lack of cause of action. (b) moral and exemplary damages the amount of which she leaves to the court for proper evaluation and (c) attorney's fees of Eighty Thousand Pesos (P80. No. 1988. Lucena City ordered the Register of Deeds to register the deed of sale dated February 10. No. 374-82. 1983. respondent Averia appealed to the Supreme Court via a petition for review on certiorari which was denied in a Resolution dated June 17.14 In an Order dated September 30. and prohibiting respondents from disturbing the same. 1982 executed in his favor by Marina M. C. 1983 decision of the trial court and ordered a new trial where all parties interested in the case may appear and be given opportunity to be heard. 1986.C. Dissatisfied. there were already three (3) actions which involved the said property. 374-82 via a petition for certiorari and prohibition in G. namely. A subsequent decision dated June 2.15 Respondent Averia interposed an appeal with the Court of Appeals. de Vera-Quicho. He further raised the defenses of litis pendencia. 1990 sustaining the decision of the trial court.21 Respondent Averia sought reconsideration but the same was denied in a Resolution dated August 26. and ultimately. 374-82. namely: (a) the "Kasulatan ng Bilihan na may Pasubali" dated January 5. and prayed for the dismissal of the petition as well as the grant of his counterclaims for damages.00) . Petitioner Padillo prayed for the issuance of an injunctive writ to place her in the possession and use of her said property. no.12 The said case is a complaint for rescission of two(2) deeds of sale. 54967. 1620-G. the trial court rendered a Decision dated May 5. 1982. Quezon. 1620-G.R. On March 2. 1983. It appears that prior to the institution of Civil Case No. 1620-G ordered Marina M. he vacated the subject property and. 1991.000. No. No. T-9863 and enjoined the Register of Deeds of Lucena City to desist from entering any encumbrance or transaction on said certificate of title and/or cancel the same except in favor of respondent Averia. Respondent Averia claimed ownership of the same lot subject of TCT No. 1690-G was dismissed by Branch 61 of the RTC of Gumaca.C.C. T-9863. and (b) the deed of sale dated February 10. de Vera-Quicho and the Register of Deeds of Lucena City for specific performance and/or damages which involved the lot subject of the sale.00) per appearance in court. 1529 (Property Registration Decree) eliminated the distinction between the general jurisdiction and the limited jurisdiction of the Regional Trial Court acting as a cadastral court under Section 112 of Act 496 (Land Registration Act).C. M. respondent Averia filed his Answer with Counterclaim and Motion to Dismiss7 wherein he invoked the decision rendered in Civil Case No. the case against him should be dismissed. 1983 rendered by the Regional Trial Court of Gumaca. Civil Case No. de Vera-Quicho sold to petitioner Padillo her one-half (½) pro-indiviso share over lot together with the house thereon.000. Jr.6 Casilang specifically denied the material allegations of the petition. subject of TCT No. He alleged that as early as June 1.17 Respondent Averia assailed the decision in M. 9114. 1991.22 A subsequent motion for leave to file a second motion for reconsideration was likewise denied on October 21. de Vera-Quicho to execute the necessary documents over the property covered by said Transfer Certificate of Title (TCT) No. 6512918 with the Supreme Court contending that the trial court has no jurisdiction to order the registration of a deed of sale which is opposed on the ground of an antecedent contract to sell. T-9863 by virtue of an unregistered contract to sell dated January 5. 1690-G. 374-82. petitioner Padillo alleged that she is the absolute owner of a Two Hundred Fifty-One (251) square meter parcel of land with improvements thereon located in Quezon Avenue. No. during the pendency of M.C. which was registered and annotated at the back of said TCT on January 11. Civil Case No. Following notice and hearing in the new trial.

28 When M. docketed as CA-G.30 No appeal was filed therefrom.000. 198726 but resolution of respondent Averia's November 18.000. No. In finding the decision in the former case a bar to the latter. the appellee is correctly perceived by the appellant to have already lost her right to recover the same in the instant suit. No. and the clarification of the expanded jurisdiction of the court a quo. 132 SCRA 302. 1989 rendered a decision therein ordering the suspension of the proceedings in Civil Case No. Venturanza. 179 SCRA S06. Jr. 3) Moral damages of P50. in view of the foregoing considerations.00. 9114 to await the final termination of M. in a decision dated September 16. which on December 21. 374-82. 133 SCRA 344. On the principle. rendered the following pronouncements: 21 . vs. 1620-G. 374-82 was finally resolved in the decision dated May 5. No. Bugnay Construction and Development Corp. 1690-G.34 Disagreeing with the foregoing disquisition. No.C. 374-82. MC No. NLRC. that res judicata bars not only the relitigation in a subsequent action of the issues raised.31 With the Supreme Court denying the petition to challenge the Court of Appeal's affirmance of the decision in M. and 5) Costs of suit. 165 SCRA 515). the trial court in an Order dated June 1. the court a quo clearly erred in not holding the instant action to be barred by prior judgment. 9114. Laron. 182 SCRA 492. to Veronica Padillo and to pay the latter the following amounts: 1) Unrealized income from the lot and building in the sum of P150.00. 9114. Carandang vs. . Court of Appeals. but also the ventilation in said subsequent suit of any other issue which could have been raised in the first but was not (Africa vs. 1987. passed upon and adjudicated. 1992 Decision33 in Civil Case No. 15356 became final. 9114 was resumed on November 19. It matters little that the instant case is supposedly one for declaratory relief and damages. moreover. Court.C. 37442 then pending appeal with the Court of Appeals. 176 SCRA 804). 1982 until Tomas Averia vacates the same. 1988. dismissed on account of improper venue. SP No. 9114.R.C. 1987 Motion to Dismiss27 was deferred in view of the pendency of M.32 the trial court rendered the assailed March 31. CV No. vs. judgment is rendered ordering Tomas Averia. or any persons claiming any right from him. Intermediate Appellate Court. 1994 reversing the trial court based on the ground of res judicata. 1988 proceeded to deny respondent Averia's Motion to Dismiss and Motion to Suspend Further Proceeding in Civil Case No.000. before the Court of Appeals.000. A party cannot — by varying the form of action or adopting a different method of presenting his case — escape the operation of the principle that one and the same cause of action shall not be twice litigated between the parties and their privies (Filipinas Investment and Finance Corp. may not — strictly speaking — be considered an adjudication of the case on the merits .C. 2) Attorneys fees in the sum of P107. Varo.00 plus P1.29 Thereafter. issued an Order dated March 20. the decision of the appellate court in CA-G. 1995. to vacate and surrender the possession of the lot covered by TCT No. Catholic Vicar Apostolic of the Mountain Province vs. the Court is guided by the long-standing rule that a final judgment or order on the merits rendered by a court having jurisdiction over the subject matter and the parties is conclusive in a subsequent case between the same parties and their successors-in-interest litigating upon the same thing and issue (Vencilao vs. 15356. On appeal to the Court of Appeals. citing Sy Kao vs. hence. the dismissal of Civil Case No. 170 SCRA 776). SP No.00. 374-82.00 per appearance in the hearing of the case and litigation expenses of P10. the appellate court in CA-G. 374-82. the trial court in Civil Case No.R.C. The Court of Appeals.000. in resolving petitioners motion for reconsideration in the negative.000.24 When the Court of Appeals subsequently affirmed. which reads: WHEREFORE. petitioner sought reconsideration of the same but it proved unavailing inasmuch as petitioners motion for reconsideration35 was denied in a Resolution36 dated April 7. No. 1984 wherein it deferred the resolution of respondent Averia's motion to dismiss and ordered the case temporarily archived in view of the pendency in the Court of Appeals of the appeal of respondent Averia in Civil Case No. respondent Averia assailed the denial of his motion to dismiss in a petition for certiorari and prohibition. . SO ORDERED. 4) Exemplary damages of P20.00 every year from January 5. 1690-G for improper venue.While the foregoing proceedings ensued in M. T9863 of the Registry of Deeds of Lucena City and the building erected thereon.25 the hearing in Civil Case No. Civil Case No. while the former case is one originally for registration of the appellee's documents of title. 40142 rendered its subject decision on November 22.R. The appellate court ratiocinated: The Court finds that res judicata bars the appellee's claims. xxx xxx xxx Not having claimed the damages she supposedly suffered despite the new trial ordered for MC No. 374-82 resolved the case on the merits.

No. Quezon on the ground of improper venue. finally. THE RESPONDENT COURT OF APPEALS ERRED AMOUNTING TO GRAVE ABUSE OF DISCRETION IN FAILING TO NOTE THE BAD FAITH OF PRIVATE RESPONDENT IN MOST OF HIS ACTS TO POSSESS A PROPERTY NOT HIS OWN. 1690-G for the Regional Trial Court of Gumaca. 1690-G as that which the Gumaca Court dismissed on account of improper venue. 18802 AND THAT OF THE SUPREME COURT IN G. While it is readily conceded that the Court was obviously referring to Civil Case No. D.C. G. 1620-G was dismissed by the Regional Trial Court of Gumaca. C. When the three (3) identities are present. 96662. may be as follows: xxx xxx xxx (b) In other cases. x x x37 Hence.). Lastly. CV NO.C. the Court.38 Petitioner attacks the appellate court's posture that petitioner should have set up her claim for unrealized income. NO. — The effect of a judgment or final order rendered by a court of the Philippines. that only is deemed to have been adjudged in a former judgment or final order which appears upon its face to have been so adjudged. The doctrine of res judicata is embodied in Section 47. the judgment on the merits rendered in the first constitutes an absolute bar to 22 . Neither could she invoke art counterclaim for damages in Civil Case No. E.Contrary. conclusive between the parties and their successors in interest by title subsequent to the commencement of the action or special proceeding. Branch 61 promptly dismissed it.R.R. Considering that the December 21. Bar by prior judgment exists when. Rule 39 of the Revised Rules of Court. 1989 decision promulgated in CA-G. between the first case where the judgment was rendered. The fact that its new trial was only ordered on December 29. THE MEMBERS OF THE FIRST DIVISION OF RESPONDENT COURT GRAVELY ABUSED THEIR DISCRETION IN VIOLATING THE CONSTITUTIONAL MANDATE ON "CONSULATION" AS PROVIDED IN SECTION 13. NO. NO. F. to [Padillo's] position. 374-82 is one actually quoted from the trial court's March 31.R. with respect to the matter directly adjudged or as to any other matter that could have been raised in relation thereto. 37442 and that Civil Case No. 47. to wit: A. 1989 decision rendered in CA-G. 1992 decision which [Padillo] did not and still does not contest. the passage which states that the self-same was filed ahead of MC No. or which was actually and necessarily included therein or necessary thereto. fails to appreciate the sapience of [Padillo's] invocation thereof as a bar to the appeal herein perfected by [Averia]. as well as moral and exemplary damages. THE RESPONDENT COURT OF APPEALS ERRED IN REVERSING THE JUST AND EQUITABLE JUDGMENT OF THE TRIAL COURT IN CIVIL CASE NO. 15356 BETWEEN THE SAME PARTIES ON THE SAME CAUSE AND ISSUES. the judgment or final order is. the Court's application of the principle of res judicata was neither based nor in any way dependent on the inaccuracies emphasized in the motion and incidents she filed. Quezon. having jurisdiction to pronounce the judgment or final order. Furthermore. rec. Corrected though the Court may stand on these particulars. repugnant to the prohibition against multiplicity of suits to allow [Padillo] — or any party-litigant for that matter — to claim in a separate action the damages she supposedly suffered as a consequence to the filing of another. litigation expenses and/or attorney's fees. THE RESPONDENT COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN DISREGARDING THE EFFECT OF THE JUDGMENTS OF A CO-EQUAL COURT IN CA-G.R. 1986 together with a clarification of the land registration court's expanded jurisdiction under Section 2 of Presidential Decree No. 9114. 96662 DECLARING PETITIONER THE ABSOLUTE OWNER OF THE COMMERCIAL PROPERTY UNDER TCT NO. ARTICLE VIII OF THE FUNDAMENTAL LAW. there is identity of parties. it bears emphasis that the instant case was determined to be barred by res judicata not so much on account of the decision rendered in Civil Case No. Section 49 (b) refers to bar by prior judgment while Section 49 (c) enunciates conclusiveness of judgment. RESPONDENT COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN FAILING TO NOTE AND OBSERVE THAT PRIVATE RESPONDENT INTENTIONALLY PROLONG THE UNDUE EXPLOITATION OF PFTITIONER'S REALTY EVEN AFTER THE SUPREME COURT'S DECISION IN G. 374-82. No. petitioner interposed the instant petition for review anchored on seven (7) assigned errors.C. 15356. moreover. It is. 200.R. res judicata as a ground for the dismissal of the instant case was already rejected by the Court of Appeals in the December 21. petitioner cites anew the alleged inaccuracies in the finding that Civil Case No. 1592 effectively rendered the decision promulgated therein a bar to the claim for damages [Padillo] pursued in the instant case. subject matter and cause of action. 1690-G but by that rendered in MC No. however. SP No. 37s82. 1690-G was filed ahead of M. 374-82 for she contends that it was not anticipated that respondent Averia would oppose M. SP No. however. Effect of judgments or final orders.R. THE RESPONDENT COURT OF APPEALS COMMITTED REVERSIBLE ERROR AMOUNTING TO GRAVE 'ABUSE OF DISCRETION IN ITS INCORRECT CITATIONS AND PERCEPTIONS OF FACTS UPON WHICH IT PREDICATED ITS DECISION. as a distinct cause of action in M.39 which states: Sec. litigating for the same thing and under the same title and in the same capacity. (c) In any other litigation between the same parties or their successors in interest. B. 15356 granted the petition then filed by [Averia] (p. and the second case where such judgment is invoked. THE RESPONDENT COURT OF APPEALS ERRED IN NULLIFYING THE JUDGMENT OF THE APPELLATE COURT IN CA-G. It consequently matters little that the latter case was originally filed ahead of the former as [Padillo] had been wont to stress. T-9863. No.

Without the rule there would be no end to criticism. and applies only to that one case. following clarification by the Supreme Court of its expanded jurisdiction. 2.' Again. there is no identity of cause of action. this Court would have subscribed to the appellate court's conclusion that M. not only prescribed the duty and limit the power of the trial court to strict obedience and conformity thereto. only as to those matters actually and directly controverted and determined. there would be endless litigation.the subsequent action.48 thus: A well-known legal principle is that when an appellate court has once declared the law in a case. No. and 4. not only as to every matter which was offered and received to sustain or defeat the claim or demand. Law of the case has been defined as the opinion delivered on a former appeal. if they so choose. the remedy of the party deeming himself aggrieved being to seek a rehearing. to wit: 1. More specifically.C. and reason. It relates entirely to questions of law. 'There would be no end to a suit if every obstinate litigant could. while it may be reversed in other cases.41 M. The administration of justice is a practical affair. such declaration continues to be the law of that case even on a subsequent appeal. Such a rule is 'necessary to enable an appellate court to perform its duties satisfactorily and efficiently. M. No.C. is a final judgment. reexamination. and identity of cause of action.C.50 In the 1975 case of Comilang v.' x x x The phrase "Law of the Case" is described in a decision coming from the Supreme Court of Missouri in the following graphical language: The general rule.C. and is confined in its operation to subsequent proceedings in the same case. The rule made by an appellate court. The doctrine of res judicata differs therefrom in that it is applicable to the conclusive determination of issues of fact. or on the chance of our rewriting propositions once gravely ruled on solemn argument and handed down as the law of a given case. It must be a judgment or order on the merits. irrespective of formal. No. whether correct on general principles or not. the judgment is conclusive in the second case. The rule is grounded on convenience. it means that whatever is once irrevocably established as the controlling legal rule or decision between the same parties in the same case continues to be the law of the case. 9114 since all four (4) essential requisites in order for res judicata as a "bar by prior judgment" to attach are present in the instant case. 37442 barred petitioner's claim for damages in Civil Case No. and reformulation. Law of the case does not have the finality of the doctrine of res judicata. as affirmed by the Court of Appeals and the Supreme Court. compel a court to listen to criticisms on their opinions. It must have been rendered by a court having jurisdiction over the subject matter and the parties. It would be intolerable if parties litigant were allowed to speculate on changes in the personnel of a court. 374-82. 37482 and Civil Case No. but they become and remain the law of the case in all after steps below or above on subsequent appeal. but as to any other admissible matter which might have been offered for that purpose. 374-82.).47 The concept of Law of the Case was further elucidated in the 1919 case of Zarate v. subject matter and causes of action.42 Branch 57 of the Regional Trial Court of Lucena City. cannot be departed from in subsequent proceedings in the same case. is a judgment on the merits. x x x49 The appellate court apparently overlooked the significance of this principle called the law of the case which is totally different from the concept of res judicata. The subject matter of both actions is the parcel of land and building erected thereon covered by TCT No.45 However. A judgment is on the merits when it determines the rights and liabilities of the parties based on the disclosed facts. But where between the first case wherein judgment is rendered and the second case wherein such judgment is invoked.43 had obtained jurisdiction over the subject matter as well as the parties thereto. a different conclusion is warranted under the principle of law of the case. experience. The causes of action are also identical since the same evidence would support and establish M. which would be impossible if a question. 9114. No. were to be litigated anew in the same case upon any and every subsequent appeal." as applied to a former decision of an appellate court. technical or dilatory objections. identity of subject matter. Courts are allowed. although it may include questions of law. and although it may apply to collateral proceedings in 23 . T-9863. The former judgment must be final. once considered and decided by it. so long as the facts on which such decision was predicated continue to be the facts of the case before the court. there is identity of parties. the rule is necessary as a matter of policy to end litigation. It is final as to the claim or demand in controversy. whether on the general law or the law as applied to the concrete facts. 374-82 and Civil Case No. including the parties and those in privity with them.C. or speculate of chances from changes in its members. reagitation. whereas res judicata forecloses parties or privies in one case by what has been done in another case. 374-82. In short. by repeated appeals. There must be between the first and second action identity of parties. is that legal conclusions announced on a first appeal. No. as affirmed by the Court of Appeals and the Supreme Court.51 a further distinction was made in this manner: The doctrine of law of the case is akin to that of former adjudication. would result in the foolishness of the inquisitive youth who pulled up his corn to see how it grew. The rule is a practical and a good one of frequent and beneficial use. in the new trial it conducted in M.C. and not as to matters merely involved therein. merely expresses the practice of the courts in refusing to reopen what has been decided. This is what is termed conclusiveness of judgment. but is more limited in its application. The "Law of the Case. 3. No. nakedly and badly put. The judgment of Branch 57 of Lucena City in M. Director of Lands.46 As a general rule. Court of Appeals (Fifth Division. to act like ordinary sensible persons. 9114 both involved the petitioner and respondent Averia.44 Finally. a decision on a prior appeal of the same case is held to be the law of the case whether that question is right or wrong. An itch to reopen questions foreclosed on a first appeal.40 Under ordinary circumstances.

Significantly in the instant case. which fell on 1982 to 1986. there is no sufficient justification for the award of moral damages. in CA-G. Concerning the alleged forgone income of One Hundred Fifty Thousand Pesos (P150.63 The emotional distress.R.C. 9114 was docketed.C. SP No. it is generally concerned with the effect of an adjudication in a wholly independent proceeding. No.C. Notwithstanding the foregoing conclusion.600. No. 15356 and continuing to pursue her claim for damages in Civil Case No. 15356. the testimonial evidence on alleged unrealized income earlier referred to is not enough to warrant the award of damages.53 we consider such amount of expected profit highly conjectural and speculative. SP No. 374-82 does not per se make such actions or appeals wrongful and subject respondent Averia to payment of moral damages. 374-82.C.R.R.R. Well-entrenched is the doctrine that actual. more so. SP No. The decision of the Court of Appeals in CA-G. 374-82 was pending.54 Verily. Thus. should not be faulted for yielding in good faith to the ruling of the Court of Appeals. 15356.00) a year during the sixth (6th) to tenth (10th) year of the Contract of Lease between Marina de Vera Quicho.00) a month or Nine Thousand Six Hundred Pesos (P9. SP No.R. No. 15356 has become the law of the case as between herein petitioner Padillo and respondent Averia. 9114. It is worthwhile to consider that at the time this Court in G. When the issue of the dismissal of Civil Case No.C. 9114 has been settled in CA-G.000. which would ultimately result in res judicata. 37482. the resolution therein of the appellate court which ordered the suspension instead of dismissal of Civil Case No. 9114 to await the final termination of M.00) for that period of time. No. 9114.C. 65129 on December 29. Petitioner did not detail out how such huge amount of income could have been derived from the use of the disputed lot and building. the mental anguish suffered by a person for having been made a party in a civil case is not the kind of anxiety which would warrant the award of moral damages. 374 82 had long been resolved by the trial court and pending appeal with the Court of Appeals.000. the ruling of the Court of Appeals in CA-G. 9114 on the ground of pendency of M. The only amount of unrealized income petitioner should be entitled to is the unrealized monthly rentals which respondent Averia admits to be in the amount of Eight Hundred Pesos (P800. Therefore. as Lessee. No. malice or bad faith is immediately ascribable against the said respondent to warrant such an award.R.52 It is not subject to review or reversal in any court. 1690-G while M. the trial court chose to merely defer resolution thereof. as Lessor. therefore. compensatory and consequential damages must be proved. No. If the proof adduced thereon is flimsy and insufficient. as in this case. One may have erred.C.600. the law of the case on the matter of the pendency of M. The issue of whether the trial court in M. 9114 was already existent. With an allegation that respondent made millions for the improper use and exploitation of the property. The decision of the Court of Appeals was promulgated on December 21. No. Civil Case No. No. It is too vague and unspecified to induce faith and reliance. No. SP No. even if erroneous.R.00) shall earn interest57 at the legal rate58 computed from the finality of this decision.the same action or general proceeding. It cannot be logically inferred that just because respondent Averia instituted Civil Case No. became final. 374-82 to bar Civil Case No. instead of dismissing the case and/or ordering that the claim for damages be filed in M.R. 374-82. The law could not have meant to impose a penalty on the right to litigate. and must therefore be deleted. Furthermore. while agreeing with respondent Averia's arguments on the existence of litis pendentia. but error alone is not a ground for moral damages.59 On the award of moral and exemplary damages in the amounts of Fifty Thousand Pesos (P50. 198660 long after the dismissal of Civil Case No. this Court is not inclined to sustain the monetary award for damages granted by the trial court. 15356 on the matter of the issue of existence of M. no damages will be allowed.C. And when the said issue of litis pendentia was raised before the Court of Appeals via a special civil action of certiorari in CA-G. Fourteenth Division. No.600. 374-82 was raised before the trial court wherein the said Civil Case No.56 it is but just for him to pay petitioner the unrealized rentals of Ninety-Seven Thousand Six Hundred Pesos (P97.61 That respondent Averia instituted a separate suit which was subsequently dismissed and all actions or appeals taken by respondent Averia relative to M. SP No.000. No. the award thereof is the exception rather than the general rule.00) per year since 1982 as testified on by petitioner as the income she could have realized had possession of the property not been withheld from her by respondent Averia. we find that there is no sound basis for the award. counsel's fees are not awarded every time a party prevails in a suit because of the policy that no premium should be placed 24 . respectively. 15356. 374-82 could adjudicate contentious issues was only resolved by this Court in G. after clarifying the expanded jurisdiction of the trial court with authority to decide non-contentious and contentious issues. Since no appeal was filed from the decision of the Court of Appeals in CA-G.55 Inasmuch as respondent Averia had been in possession of the property from January 1982 to February 1992 when he vacated the property.C. Such right is so precious that moral damages may not be charged on those who may exercise it erroneously. and cannot be presumed. exemplary damages.00) and Twenty Thousand Pesos (P20. 65129 ordered the new trial of M. 37442 as a bar to Civil Case No. Petitioner. petitioner's testimony regarding the matter of unrealized income is sadly lacking of the requisite details on how such huge amount of income could be made possible.C. 1989 and by then. No. M. incorrectly ordered the mere suspension of Civil Case No. With respect to attorney's fees. and may no longer be disturbed or modified. said amount of Ninety-Seven Thousand Six Hundred Pesos (P97. 1690-G which was instituted by respondent Averia. 9114 should dictate all further proceedings.62 In the absence of malice and bad faith.00). and respondent Averia. the Court of Appeals. worries and anxieties suffered by her and her husband64 are only such as are usually caused to a party hauled into Court as a party in a litigation.

INC. Rollo. As a consequence of the losses sustained. Japan for delivery vessel "SS EASTERN COMET" owned by defendant Eastern Shipping Lines under Bill of Lading No. VITUG. 1994 EASTERN SHIPPING LINES. While we respect the trial court's exercise of its discretion in this case.032. so that it became subrogated to all the rights of action of said consignee against defendants (per "Form of Subrogation". there is no need to delve any further on the other assigned errors. B).382. said to be in bad order. two fiber drums of riboflavin were shipped from Yokohama. which damage was unknown to plaintiff. and (c) whether the applicable rate of interest. Jr. while the rest of the contents was adulterated/fake (per "Bad Order Waybill" No.000. defendant Allied Brokerage Corporation made deliveries of the shipment to the consignee's warehouse. On January 7.000.000. Dala & Zaragoza for petitoner. respondents. K. Thus. "Release" and Philbanking check. and in all cases it must be reasonable. (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. YMA-8 (Exh.000. The latter excepted to one drum which contained spillages. N. on the antecedent and undisputed facts that have led to the controversy are hereunder reproduced: This is an action against defendants shipping company. The Decision of the Court of Appeals dated November 22. (pp. No. the appellate court said: 25 . attorney's fees represent the reasonable compensation paid to a lawyer by his client for the legal services he has rendered to the latter.000. while in its extraordinary concept. to be sure. and O). is twelve percent (12%) or six percent (6%). other factual issues that confronted both courts. M. Inc. arrastre operator and broker-forwarder for damages sustained by a shipment while in defendants' custody.) There were.95. filed by the insurer-subrogee who paid the consignee the value of such losses/damages. it was discharged unto the custody of defendant Metro Port Service.67 As such. to pay petitioner Veronica Padillo the amounts of (a) Ninety-Seven Thousand Six Hundred Pesos (P97.00) plus One Thousand Pesos (P1. 10649. H. Plaintiff contended that due to the losses/damage sustained by said drum.95 under the aforestated marine insurance policy. 1994 in CA-G.65 Attorney's fees as part of damages are not the same as attorney's fees in the concept of the amount paid to a lawyer. liability of the common carrier.on the right to litigate. 8586. HON. Because of the conclusions we have thus reached. Claims were presented against defendants who failed and refused to pay the same (Exhs. petitioner.466.R. it should be reasonably reduced to Twenty-Five Thousand Pesos (P25. the instant petition is GRANTED. COURT OF APPEALS AND MERCANTILE INSURANCE COMPANY. On December 4. to be unreasonable and excessive. Inc.R. In the ordinary sense.00). 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.032. albeit not completely novel.. J. we find the award of the trial court of attorney's fees in the sum of One Hundred Seven Thousand Pesos (P107. and (b) Twenty-Five Thousand Pesos (P25. The shipment was insured under plaintiff's Marine Insurance Policy No.: The issues. 97412 July 12. the arrastre operator and the customs broker. due to the fault and negligence of defendants.00). E).600. the trial court may award attorney's fees where it deems just and equitable that it be so granted. 1981. SO ORDERED. Zapa Law Office for private respondent.38. vs.00) as attorney's fees. Upon arrival of the shipment in Manila on December 12. J. 40142 is REVERSED and SET ASIDE and another in its stead is hereby rendered ORDERING respondent Tomas Averia.. plaintiff was compelled to pay the consignee P19. On January 8 and 14. one drum opened and without seal (per "Request for Bad Order Survey. The latter excepted to one drum. 1981. CV No." Exh. Attorney's fees as part of damages is not meant to enrich the winning party at the expense of the losing litigant. I. Exh. The findings of the court a quo. adopted by the Court of Appeals. they may be awarded by the court as indemnity for damages to be paid by the losing party to the prevailing party. Thereunder. D). Alojada & Garcia and Jimenea.66 Attorney's fees as part of damages is awarded only in the instances specified in Article 2208 of the Civil Code. WHEREFORE. Here.. or joint and several. G. the consignee suffered losses totaling P19.. 1982 defendant Allied Brokerage Corporation received the shipment from defendant Metro Port Service. 81/01177 for P36.00) per appearance in the hearing of the case and litigation expenses of Ten Thousand Pesos (P10. L). Exhs. 1982. referred to above. are: (a) whether or not a claim for damage sustained on a shipment of goods can be a solidary. INC.00) as unrealized rentals which shall earn interest at the legal rate from the finality of the this decision until fully paid.

the date of filing of this complaints. Metroport averred that although subject shipment was discharged unto its custody. adopting plaintiff's Records. 1981. But when on December 12. We find that the conclusion drawn therefrom is correct. cello bag partly torn but contents intact. Manila on December 12. Dissatisfied. The two drums were shipped in good order and condition. Inc. Allied Brokerage alleged that plaintiff has no cause of action against it. p. the "Turn-Over Survey of Bad Order Cargoes" (Exhs. covered by the vessel's Agent's Bad Order Tally Sheet No. It is obvious. as to the second issue. The amount of P19.95. Record). it follows that the losses/damages were sustained while in the respective and/or successive custody and possession of defendants carrier (Eastern). crate box or container in no case to exceed P5. Defendant Eastern Shipping's own exhibit. Record). Correspondingly. p. while the liability of defendant Metro Port Service. judgment is hereby rendered: A. as subrogee for the amount it paid to the consignee. NCC). pursuant to Section 6. are considered. Allied's pre-Trial Brief. 1981 one drum was found "open". 11. not having negligent or at fault for the shipment was already in damage and bad order condition when received by it. 87-89. 86427. is no longer its liability (p. As there is sufficient evidence that the shipment sustained damage while in the successive possession of appellants. Dismissing the counterclaims and crossclaim of defendant/cross-claimant Allied Brokerage Corporation. Costs. if determinable). P3. Records. Under Art. 26 . SO ORDERED.Defendants filed their respective answers. whichever is lesser. 207. As to the first issue. This becomes evident when the Marine Cargo Survey Report (Exh. 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." The report further states that when defendant Allied Brokerage withdrew the shipment from defendant arrastre operator's custody on January 7. and therefore they are liable to the appellee. 1982. 2. and 3. South Harbor. Whether or not these losses/damages were sustained while in the custody of defendants (in whose respective custody. portion of the same was already in bad order (p. it excepted to one drum in bad order. PREMISES CONSIDERED. From the evidence the court found the following: The issues are: 1. 3. Net unrecovered spillages was 15 kgs.01 of the Management Contract). 38).00 each. shall be to the extent of the actual invoice value of each package. 1738. Inc. arrastre operator (Metro Port) and broker (Allied Brokerage). Record). 1982. 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. one drum was found opened without seal. jointly and severally: 1. defendant's recourse to US. that these losses/damages occurred before the shipment reached the consignee while under the successive custodies of defendants. until fully paid (the liability of defendant Eastern Shipping. 17. The appeal is devoid of merit. Rollo. Whether or not the shipment sustained losses/damages. it was observed that "one (1) fiber drum (was) in damaged condition.00 as attorney's fees.000. shall not exceed US$500 per case or the CIF value of the loss. it is stated that when the shipment was "landed on vessel" to dock of Pier # 15. one drum was found with adulterated/faked contents.) The Court of Appeals thus affirmed in toto the judgment of the court a quo. G). with its "Additional Survey Notes". and thus held: WHEREFORE. the common carrier's duty to observe extraordinary diligence in the vigilance of goods remains in full force and effect even if the goods are temporarily unloaded and stored in transit in the warehouse of the carrier at the place of destination. as clearly shown by the Bill of Lading and Commercial Invoice which do not indicate any damages drum that was shipped (Exhs. until the consignee has been advised and has had reasonable opportunity to remove or dispose of the goods (Art. Ordering defendants to pay plaintiff.000. 1737 of the New Civil Code. (pp. After a careful scrutiny of the evidence on record. B and C). but nonetheless. Inc. In the latter notes. The report went on to state that when the drums reached the consignee. 1981 the shipment was delivered to defendant Metro Port Service. (p. 2. 34.032. 3-Eastern) states that on December 12. there can be no doubt that the shipment sustained losses/damages.. B. with the present legal interest of 12% per annum from October 1. Whether or not defendant(s) should be held liable for the losses/damages (see plaintiff's pre-Trial Brief. therefore.

2 decided 3 on 15 May 1969.. Court of Appeals. Manila Railroad Co. Kui Bai vs. is the legal rate. In this case. This demand. Dollar Steamship Lines. or vice-versa." then. Civil Code. enumerated in Article 1734 1 of the Civil Code. 447. and received by. Metro Port Services (182 SCRA 455). are exclusive. too. in holding the carrier and the arrastre operator liable in solidum. which. we do have a fairly good number of previous decisions this Court can merely tack to. of course. The question of charging both the carrier and the arrastre operator with the obligation of properly delivering the goods to the consignee has.P. the liability imposed on Eastern Shipping Lines. Agustinos. February 29. II. In this decision. Inc. Inc. Tomol. 161 SCRA 646. 5 rendered on 11 October 1985. Philippine National Railways vs.In this petition. 131 SCRA 365). nor that attendant facts in a given case may not vary the rule. v. Indeed. been passed upon by the Court. The common carrier's duty to observe the requisite diligence in the shipment of goods lasts from the time the articles are surrendered to or unconditionally placed in the possession of. was for "Recovery of Damages for Injury to Person and Loss of Property. judicial or extrajudicial. to be held liable in this particular case. we take note. 1735. Corporacion de P. Both the ARRASTRE and the CARRIER are therefore charged with the obligation to deliver the goods in good condition to the consignee. is that "there is sufficient evidence that the shipment sustained damage while in the successive possession of appellants" (the herein petitioner among them).51 with legal interest thereon from the date the complaint was filed on 28 December 1962 until full payment thereof. the sole petitioner in this case. 1956. "unliquidated and not known until definitely ascertained. in lieu of proof.20.447. Such interest normally is allowable from the date of demand. The instant petition has been brought solely by Eastern Shipping Lines. of course. IT HELD THAT THE GRANT OF INTEREST ON THE CLAIM OF PRIVATE RESPONDENT SHOULD COMMENCE FROM THE DATE OF THE FILING OF THE COMPLAINT AT THE RATE 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. was neither established in its totality nor definitely ascertained. interest "should be from the date of the decision. In sustaining the appellants. and there need not be an express finding of negligence to hold it liable (Art. the common carrier. or until the lapse of a reasonable time for their acceptance by. the carrier for transportation until delivered to. the person entitled to receive them (Arts. IT HELD PETITIONER CARRIER JOINTLY AND SEVERALLY LIABLE WITH THE ARRASTRE OPERATOR AND CUSTOMS BROKER FOR THE CLAIM OF PRIVATE RESPONDENT AS GRANTED IN THE QUESTIONED DECISION. a presumption arises against the carrier of its failure to observe that diligence. Perez. interest "cannot be recovered upon unliquidated claims or damages. the amount of P1. 302). is. PRIVATE RESPONDENT'S CLAIM BEING INDISPUTABLY UNLIQUIDATED.447. Metro Port Service vs. Accordingly. granted. in part. Manila Port Service. however. 107 Phil. attributes error and grave abuse of discretion on the part of the appellate court when — I.51 was agreed upon. It is over the issue of legal interest adjudged by the appellate court that deserves more than just a passing remark. the award of legal interest. if the suit were for damages. we have begun by saying that the questions raised by petitioner carrier are not all that novel. Prince Line. absent a stipulation. inter alia. But then upon the provisions of Article 2213 of the Civil Code. In the stipulation of facts later entered into by the parties. 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. 19 SCRA 5 [1967]. The petition is. Let us first see a chronological recitation of the major rulings of this Court: The early case of Malayan Insurance Co. Guzman.. imply by the above pronouncement that the arrastre operator and the customs broker are themselves always and necessarily liable solidarily with the carrier. the lower court decreed: 27 . Civil Code.947. 1736-1738. such responsibility also devolves upon the CARRIER." And as was held by this Court in Rivera vs. Lichauco v. 139 SCRA 87. The appellants then assailed. When the goods shipped either are lost or arrive in damaged condition.. exceptional cases when such presumption of fault is not observed but these cases. vs. Court of Appeals. Eastern Shipping Lines. in any event. The relationship between the consignee and the common carrier is similar to that of the consignee and the arrastre operator (Northern Motors. 4 L-6998. Ganzon vs. Inc. is inevitable regardless of whether there are others solidarily liable with it." (Emphasis supplied) The case of Reformina vs. In Fireman's Fund Insurance vs. we have explained. involved a suit for recovery of money arising out of short deliveries and pilferage of goods. 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. 38 Phil. except when the demand can be established with reasonable certainty. assessed and determined by the courts after proof (Montilla c. 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. The trial court opted for judicial demand as the starting point. 25 Phil. et al. being the carrier and not having been able to rebut the presumption of fault. not one of which can be applied to this case. We do not. 253 [1960]).... A factual finding of both the court a quo and the appellate court. this Court ruled: Interest upon an obligation which calls for the payment of money. There are." After trial. 52 Phil. Court of Appeals. thus: The legal relationship between the consignee and the arrastre operator is akin to that of a depositor and warehouseman (Lua Kian v. 863). Inc.

00 a month as the estimated monthly loss suffered by them as a result of the fire of May 6. ordered. thus: WHEREFORE. 416. in the absence of express contract as to such rate of interest. 1974. Cruz. Any other kind of monetary judgment which has nothing to do with. this Court 8 modified the interest award from 12% to 6% interest per annum but sustained the time computation thereof. goods or credits.00 as of June 4. Relying on the Reformina v. Inc. . 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.000. 1972 with legal interest from the filing of the complaint until paid and to pay attorney's fees of P5. the indemnity for damages. When taken to this Court for review.000. 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. Inc.68 with interest at the legal rate from November 29.. the decision appealed from is hereby MODIFIED and considering the special and environmental circumstances of this case. much less forbearances of any money. .00) Pesos as and for attorney's fees.00 with legal interest thereon from the filing of the complaint until fully paid. . the legal interest which is six percent per annum. In their petition for review on certiorari. (Emphasis supplied) A motion for reconsideration was filed by United Construction. the Court of Appeals sustained the trial court's decision..e.000. we deem it reasonable to render a decision imposing. it explained: 28 . i. the law applicable to the said case is Article 2209 of the New Civil Code which reads — Art.WHEREFORE. Monetary Board in its Resolution No. . 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.000. (Emphasis supplied. Civil Code. there being no stipulation to the contrary. as amended. . and the debtor incurs in delay. the total sum being payable upon the finality of this decision. 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. (one of the petitioners) . This Circular shall take effect immediately.00 which is the value of the boat F B Pacita III together with its accessories. fishing gear and equipment minus P80. upon the defendant and the third-party defendants (with the exception of Roman Ozaeta) a solidary (Art. nor involving loans or forbearance of any money. the case.000. instead.500.000. the petitioners contended that Central Bank Circular No. Incorporated to pay jointly and severally the following persons: xxx xxx xxx (g) Plaintiffs Pacita F. 10) indemnity in favor of the Philippine Bar Association of FIVE MILLION (P5. . 7 promulgated on 28 July 1986. or forbearance of any money. shall be twelve (12%) percent per annum. to pay the plaintiff. and in the absence of stipulation.000. shall be the payment of interest agreed upon.) On appeal to the Court of Appeals. The trial court awarded private respondent Pedro Manabat actual and compensatory damages in the amount of P72. 1723. In Nakpil and Sons vs.084. goods. When the appellate court's decision became final. p. as We do hereby impose.00 which is the value of the insurance recovered and the amount of P10. Reformina and Francisco Reformina the sum of P131.. providing thus — By virtue of the authority granted to it under Section 1 of Act 2655. (Emphasis found in the text) — should have. . goods or credits. 1622 dated July 29. xxx xxx xxx Coming to the case at bar. the case was remanded to the lower court for execution. 9 the trial court. or credits and the rate allowed in judgments. from the filing of the complaint until fully paid." Save from the modification of the amount granted by the lower court. 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. 1968.335. As correctly argued by the private respondents. 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. the date of the filing of the complaint until full payment . — If the obligation consists in the payment of a sum of money. Upon failure to pay on such finality. the "defendant United Construction Co. Court of Appeals.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. Supra. has prescribed that the rate of interest for the loan. inter alia. v. Solidary costs against the defendant and third-party defendants (Except Roman Ozaeta). 2209. in its resolution of 15 April 1988. twelve (12%) per cent interest per annum shall be imposed upon aforementioned amounts from finality until paid. The above rule was reiterated in Philippine Rabbit Bus Lines. The case was for damages occasioned by an injury to person and loss of property. This Court 6 ruled: The judgments spoken of and referred to are judgments in litigations involving loans or forbearance of any money. been applied. was decided. 1969 up to the time they are actually paid or already the total sum of P370. . on 03 October 1986. the sum of P989." The Court 10 ruled out the applicability of the Reformina and Philippine Rabbit Bus Lines cases and. .00 with costs against defendants and third party plaintiffs. Tomol case. in an action for the recovery of damages arising from the collapse of a building.

including the sum of P1. 416] does not apply to actions based on a breach of employment contract like the case at bar. the rate of interest is imposed on the total sum. involved the expropriation of certain parcels of land.00 as exemplary damages with interest thereon at 12% per annum from notice of judgment. 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 forbearance 16 of money.400. and not by way of earnings from loans. held the award. Ruiz (1989) and National Power Corporation v. the latter held: WHEREFORE. Florendo v. the payment of which is without stipulation regarding interest. This Court said: .000.00) Pesos as moral damages. Angas (1992). . Art.00 in concept of compensatory damages. the amounts stated in the dispositive portion of the decision.000. Intermediate Appellate Court 11 was a petition for review on certiorari from the decision." Again. It will be noted that in the cases already adverted to.There should be no dispute that the imposition of 12% interest pursuant to Central Bank Circular No. and its resolution. 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. and American Express International v. Cruz. . . to P240. Observe. 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. 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. a common time frame in the computation of the 6% 29 . the petitioner was awarded by the trial court moral and exemplary damages without. Manila Port Service (1969). Inc. etc. . 416 . the Court 15 declared: . After conducting a hearing on the complaints for eminent domain. .00 as moral damages and P400. v. (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. 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. Jr.. 143 SCRA 160-161 [1986]. . 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. of the then Intermediate Appellate Court reducing the amount of moral and exemplary damages awarded by the trial court. The records were thereupon transmitted to the trial court. Intermediate Appellate Court (1988). a petition for certiorari assailed the said order. (Philippine Rabbit Bus Lines Inc. goods or credits.000. for moral damages by the trial court. In the "second group" would be Malayan Insurance Company v. with the modification that defendants-appellants. Ruiz 13 which arose from a breach of employment contract. goods or credits. 139 SCRA 260 [1985]). however. goods or credits. as part of the judgment for damages. (Emphasis supplied. Reformina v. jointly and severally. with interest at the legal rate from the date of the filing of the complaint until fully paid (Emphasis supplied. . (Emphasis supplied) Reformina came into fore again in the 21 February 1989 case of Florendo v.00 and P100. in other words. P2. 14 decided on 08 May 1992. (T)he transaction involved is clearly not a loan or forbearance of money. Tomol (1985). this Court.000.e. goods or credit.000. Concededly. In a decision of 09 November 1988. The Court 12 thus set aside the decision of the appellate court and rendered a new one. until fully paid. Clearly.) The subsequent case of American Express International. is applicable only in the following: (1) loans. vs. For having been illegally dismissed. that in these cases. Angas. . providing any legal interest thereon. . that will cause the imposition of the interest. Cruz (1986). It is delay in the payment of such final judgment. with six (6%) percent interest thereon computed from the finality of this decision until paid. later sustained by the IAC. from the filing of the complaint until paid. in applying the 6% legal interest per annum under the Civil Code. except as modified hereinabove the decision of the CFI of Negros Oriental dated October 31. and the interest adjudged by the trial court is in the nature of indemnity for damages. to be inconceivably large. but then no interest is actually imposed provided the sums referred to in the judgment are paid upon the finality of the judgment. dated 29 April 1985. Ascribing grave abuse of discretion on the part of the trial judge. 2209 of the Civil Code shall apply.000. plus costs of suit. Philippine Rabbit Bus Lines v. Said circular [Central Bank Circular No. Quite recently. . 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 thereon .00. are ordered to pay. and (3) rate allowed in judgments (judgments spoken of refer to judgments involving loans or forbearance of any money. 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. too. and an entry of judgment was made. they are not applicable to the instant case. except defendant-appellant Merton Munn. Court of Appeals (1988). dated 27 February 1985. Tomol. 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. there is neither a loan or a forbearance. National Power Corporation vs. however. It is true that in the instant case. (2) forbearance of any money. In the "first group". i. .. "ordering the petitioner to pay private respondent the sum of One Hundred Thousand (P100.. When the decision was appealed to the Court of Appeals. Therefore. goods or credits but expropriation of certain parcels of land for a public purpose. there have been seeming variances in the above holdings. The "first group" would consist of the cases of Reformina v. Nakpil and Sons v. restoring the amount of damages awarded by the trial court. 1972 is affirmed in all respects. as well as to judgments involving such loan or forbearance of money. while recognizing the right of the private respondent to recover damages. respectively. the Court had another occasion to rule on the matter.) The petition for review to this Court was denied. .

e. Branch 11 in Sindangan. 164401 June 25.. I.R. as follows: 1. THE HONORABLE COURT OF APPEALS. introduced a different time frame for reckoning the 6% interest by ordering it to be "computed from the finality of (the) decision until paid. respondents. i. 2002 and January 7. Branch 11. SP No. where the demand is established with reasonable certainty. of the court a quo. a loan or forbearance of money. the interest due should be that which may have been stipulated in writing. 25 No interest. explaining that "if the suit were for damages. 'unliquidated and not known until definitely ascertained. Regional Trial Court. is imposed. 2003 and July 6.e. 26 Accordingly. on the one hand. When an obligation. in any case. it may not be unwise. Malayan held that the amount awarded should bear legal interest from the date of the decision of the court a quo. 2003. this interim period being deemed to be by then an equivalent to a forbearance of credit.' then. however. S-494. i. an interest on the amount of damages awarded may be imposed at the discretion of the court 24 at the rate of 6% per annum. 20 II. Chua. depending on the equities of each case. and recovery of shares commenced thereat by respondent Lamberto T. WHEREFORE. assessed and determined by the courts after proof. SO ORDERED. contracts. Nonetheless. When the obligation is breached.R. the rate of interest shall be 12% per annum to be computed from default. With regard particularly to an award of interest in the concept of actual and compensatory damages. the interest due shall itself earn legal interest from the time it is judicially demanded. i. 2004. 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. JR. 22 In the absence of stipulation. A TWELVE PERCENT (12%) interest." 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. on the award of interest. CHUA. delicts or quasi-delicts 18 is breached. whether the case falls under paragraph 1 or paragraph 2. Branch 11. from judicial or extrajudicial demand under and subject to the provisions of Article 1169 23 of the Civil Code. by way of clarification and reconciliation. the contravenor can be held liable for damages. to suggest the following rules of thumb for future guidance. Zamboanga Del Norte.interest per annum has been applied. regardless of its source. The "second group". as Ex-Officio Sheriff. The impugned CA Decision and Resolution denied the petition for certiorari interposed by petitioners assailing the Resolutions2 dated November 6. as well as the accrual thereof. 2.'" American Express International v. and LAMBERTO T. of the Regional Trial Court (RTC). G. seeking to nullify and set aside the Decision1 and Resolution dated November 6. a suit for winding up of partnership affairs.. The actual base for the computation of legal interest shall.. 75688. vs. respectively. shall be imposed on such amount upon finality of this decision until the payment thereof. on the other hand. did not alter the pronounced rule on the application of the 6% or 12% interest per annum. Zamboanga Del Norte. from the time the complaint is filed until the adjudged amount is fully paid. the petition is partly GRANTED.e. dated 03 February 1988. in lieu of SIX PERCENT (6%). 17 depending on whether or not the amount involved is a loan or forbearance. Sindangan. interest 'should be from the date of the decision. IAC. above. 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). Zamboanga Del Norte in Civil Case No. When an obligation. J. 3. 1169.. shall be adjudged on unliquidated claims or damages except when or until the demand can be established with reasonable certainty.e. Civil Code) but when such certainty cannot be so reasonably established at the time the demand is made. When the judgment of the court awarding a sum of money becomes final and executory. and it consists in the payment of a sum of money. however. petitioners. of the Court of Appeals (CA) in CA-G. guided by the rule that the courts are vested with discretion. quasi-contracts.. i. be on the amount finally adjudged. 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. law. the rate of legal interest. Unlike. The Facts 30 . 2008 LILIBETH SUNGA-CHAN and CECILIA SUNGA. accounting. shall be 12% per annum from such finality until its satisfaction. respectively. Sindangan. No. VELASCO. or one of indemnity for damage. is breached. not constituting a loan or forbearance of money. 21 Furthermore. the rate of interest. The factual circumstances may have called for different applications. the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art.: The Case Before us is a petition for review under Rule 45. THE CLERK OF COURT OF MANILA. the "second group" varied on the commencement of the running of the legal interest. THE REGIONAL TRIAL COURT SHERIFF. 19 The provisions under Title XVIII on "Damages" of the Civil Code govern in determining the measure of recoverable damages. THE HONORABLE PRESIDING JUDGE. The ostensible discord is not difficult to explain.

SO ORDERED. For convenience. the RTC granted Chua’s motion for execution. the RTC. to appear and submit an accounting report on the winding up of the partnership on the scheduled hearings on April 29 and 30.000. prompting him to file on June 22.000. as plaintiff a quo.In 1977. with legal rate of interest until fully paid. after delivering to the plaintiff all the ½ interest.00 as attorney’s [fee] and P25. 1992. assets and good will in schedules A. The RTC’s decision would subsequently be upheld by the CA in CA-G. The fallo of the RTC’s decision reads: WHEREFORE. petitioner Lilibeth Sunga-Chan. Appraisal and Recovery of Shares and Damages with Writ of Preliminary Attachment. (3) DIRECTING them to restitute and pay to the plaintiff ½ shares and interest of the plaintiff in the partnership of the listed properties. After Jacinto’s death in 1989. CV No. profits. in an omnibus motion of April 3.R. 1997. and. and appraisal of all these properties.00 as moral and exemplary damages. judgment finding for Chua.344. (6) FINDING them especially Lilibeth Sunga-Chan guilty of breach of trust and in bad faith and hold them liable to the plaintiff the sum of P50. 1992 a Complaint for Winding Up of a Partnership Affairs. despite notice. Shellite Gas Appliance Center (Shellite).000. (5) ORDERING them to wind up the affairs of the partnership and terminate its business activities pursuant to law.3 The corresponding Entry of Judgment4 would later issue declaring the October 7. Gahuman. Chua. albeit the partnership arrangement called for equal sharing of the net profit. S-494 of the RTC in Sindangan. continued with the business without Chua’s consent.277. to the Court and to plaintiff for approval or disapproval. A and B on pages 4-5 of this petition as basis. (2) ORDERING them to return and restitute to the partnership any and all properties. inter alia. 143340. 2001.8 Chua’s aggregate claim.R. for. issued an amended writ of execution. In the report under the heading. acting on another motion of Chua. asked the trial court to commission a certified public accountant (CPA) to undertake the accounting work and inventory of the partnership assets if petitioners refuse to do it within the time set by the court.) Via an Order6 dated January 16. Zamboanga del Norte and raffled to Branch 11 of the court. and married daughter. petitioner Cecilia Sunga.7 It seems. the business. the RTC rendered. assets. arrived at using the compounding-of-interest method. income. pursued under the name. assets. his widow. the RTC admitted and approved the computation of claims in view of petitioners’ failure and refusal.00 as litigation expenses.5 (Emphasis supplied. 2002. etc. submit an inventory. amounted to PhP 14. (4) ORDERING them to pay the plaintiff earned but unreceived income and profits from the partnership from 1988 to May 30. Chua later moved to withdraw his motion and instead ask the admission of an accounting report prepared by CPA Cheryl A. shares. Chua and Jacinto Sunga formed a partnership to engage in the marketing of liquefied petroleum gas. NO special pronouncements as to COSTS. on October 7. 2002. Chua’s subsequent repeated demands for accounting and winding up went unheeded. Computation of Claims. when the plaintiff learned of the closure of the store the sum of P35. 58751 and by this Court per its Decision dated August 15. that the amended writ of execution could not be immediately implemented. or the value thereof in money or money’s worth. Over a month later. (7) DIRECTING them to reimburse and pay the sum of P25. No. income and profits of [Shellite] since the time of death of Jacinto L. participation and equity in the partnership.00 per month. docketed as Civil Case No. 2002. however. Sunga. income and profits they misapplied and converted to their own use and advantage that legally pertain to the plaintiff and account for the properties mentioned in pars.9 31 .000. judgment is hereby rendered in favor of the plaintiff and against the defendants. on pages 4-5 of the petition. assets. as follows: (1) DIRECTING them to render an accounting in acceptable form under accounting procedures and standards of the properties. B and C. After trial. Accounting. 1997 RTC decision final and executory as of December 20. if the properties are not physically divisible. 2001 in G. from whom they continued the business operations including all businesses derived from [Shellite]. Subsequently. was registered as a sole proprietorship in the name of Jacinto.94.

2.10 Chua. premises considered. assailing the November 6.14 In due time. as the computation done by CPA Gahuman was made in "acceptable form under accounting procedures and standards of the properties. SO RESOLVED. that the Computation of Claims submitted by the plaintiff dated October 15. by not appearing on the hearing dates.75. Petitioners.733. The 12% interest added on the amounts due is proper as the unwarranted keeping by petitioners of Chua’s money passes as an involuntary loan and forbearance of money. In it. as it is hereby resolved. in its entirety. 2002. DISAPPROVING for the purpose.R. assets. the CA.644. Finally. 3 of the October 7. the RTC issued a Resolution. 1997 RTC decision as the phrase "shares and interests" mentioned therein refers not to an imposition of interest for use of money in a loan or credit. The Ruling of the CA As stated at the outset. in the herein assailed Decision of November 6. On November 6. scheduled to consider Chua’s computation of claims. as required.e. i. The reiterative arguments set forth in petitioners’ pleadings below were part of their delaying tactics. Under this methodology. The Issues Hence. Petitioners had more than enough time to question the award and it is now too late in the day to change what had become final and executory. the CA ruled that the imposition of interest is not based on par. Petitioners had come to the appellate court at least thrice and to this Court twice. submitted a new computation. The appellate court also held that the imposition of interest on the partnership assets falls under par. 2004. April 29 and 30. while approving the new computation of claims Chua submitted.154. 2 in relation to par. petitioners limited Chua’s entitlement from the winding up of partnership affairs to an aggregate amount of PhP 3.75 be APPROVED in all respects as the final computation and accounting of the defendants’ liabilities in favor of the plaintiff in the above-captioned case.11 this time applying simple interest on the various items covered by his claim. thus: WHEREFORE. the recourse docketed as CA-G. petitioners. the CA explained that the imposition of the 12% interest for forbearance of credit or money was proper pursuant to paragraph 1 of the October 7. but their motion was denied by the RTC per its Resolution of January 7.. interest is recoverable as an element of damage. an accounting of the winding up of the partnership.736. SO ORDERED. 2002 and January 7. 1 of the final RTC decision as the restitution mentioned therein does not simply mean restoration but also reparation for the injury or damage committed against the rightful owner of the property. the computation and accounting filed by the defendants. denied the petition for certiorari. petitioners went to the CA on a petition for certiorari15 under Rule 65. on the other hand. or rendering.13 Petitioners sought reconsideration. Therein. SP No. on September 24.733. 2003. 2002. are deemed to have waived their right to interpose any objection to the computation of claims thus submitted by Chua. 2003. the instant petition with petitioners raising the following issues for our consideration: I. The fallo of the resolution reads: WHEREFORE.12 rejecting the accounting report petitioners submitted."18 Moreover. 2002 amounting to P8. 75688. 32 . 1997 RTC decision.65 only.644. therefore. this Court resolves. the CA declared the partnership assets referred to in the final decision as "liquidated claim" since the claim of Chua is ascertainable by mathematical computation. Petitioners’ motion for reconsideration was rejected by the appellate court through the assailed Resolution17 dated July 6. 2003 resolutions of the RTC. 3. submitted their own CPA-certified valuation and accounting report.16 The CA predicated its denial action on the ensuing main premises: 1. 2002. Chua’s aggregate claim went down to PhP 8. the foregoing considered. the Petition is hereby DENIED for lack of merit. income and profits of [Shellite].After another lengthy proceedings. but to a legal share or right.

2005. 3.75. 208782. Owing to the clashing ownership claims over the leased Paco property. 2005. 2005. On May 31. Third on the petitioners’ list of unliquidated claims is the yet-to-be established value of the one-half partnership share and interest adjudicated to Chua. 208782. coupled with the filing of an unlawful detainer suit before the Metropolitan Trial Court (MeTC) in Manila against PNB. Court of Appeals. II. Manila.25 enjoining the RTC and the sheriff from enforcing the April 11. the imposable rate should only be 6% and computed from the finality of the RTC’s underlying decision.19 Significant Intervening Events In the meantime. the Court.29 33 . Petitioners also question the imposition of 12% interest on the claimed monthly profits of PhP 35. 2005. Whether or not the absolute community of property of spouses Lilibeth Sunga Chan with her husband Norberto Chan can be lawfully made to answer for the liability of Lilibeth Chan under the judgment. i. suspending the execution proceedings before it. 5. Chua moved for the issuance of a final deed of sale and a writ of possession. confirmed the sheriff’s final deed of sale.20 over which a building leased to the Philippine National Bank (PNB) stood. with a tender of PhP 8 million. interests on what they considered as unliquidated claims. the RTC issued an Order26 on June 17. v. 2.000. citing Article 221328 of the Civil Code. SP No. 208782 and to issue a new certificate. 2005 writ of possession and the May 24. 2005. they submit. petitioners filed before this Court a petition for the issuance of a temporary restraining order (TRO). Petitioners again interposed an opposition in which they informed the RTC that this Court had already granted due course to their petition for review on January 31.21 emerged as the winning bidder. the following relevant events transpired: 1. from December 20. And in this regard. Following the RTC’s approval of Chua’s computation of claims in the amount of PhP 8. On May 3. the consignation of the monthly rentals with the MeTC hearing the ejectment case. the sheriff of Manila levied upon petitioner Sunga-Chan’s property located along Linao St. 75688. allowed. He also asked the RTC to order the Registry of Deeds of Manila to cancel TCT No. 1992. 6. covered by Transfer Certificate of Title (TCT) No. III. in the execution of its final judgment. The Court’s Ruling The petition is partly meritorious.000. 2005 Notice to Vacate. To petitioners. 2005. Chua moved for the confirmation of the sheriff’s final deed of sale and for the issuance of an order for the cancellation of TCT No. Despite petitioners’ opposition on the ground of prematurity.644.. Consequently. In the auction sale of the levied lot. reckoned from 1988 to October 15. which. Chua. Whether or not the Sheriff can enforce the whole divisible obligation under judgment only against one Defendant. the sheriff of Manila issued a Notice to Vacate24 against petitioners. Among these was the claim for goodwill upon which the RTC attached a monetary value of PhP 250. Inc.R. On February 18. Paco. pending resolution of the instant petition for review and even before the resolution by the CA of its CA-G. First Issue: Interest Proper in Forbearance of Credit Petitioners. and granted a writ of possession23 in favor of Chua. citing Eastern Shipping Lines.733. 7. fault the trial court for imposing. petitioners. compelling petitioners to repair to this Court anew for the resolution of their petition for a TRO. the Court issued a TRO. must first be determined with reasonable certainty in a judicial proceeding. 4. via a Resolution..e. 2005. a final deed of sale22 was issued on February 16. 2006. On January 21. 2005. 2005. by Resolution27 dated April 26. 208782. 2001. ordered the Registry of Deeds of Manila to cancel TCT No. On May 24.Whether or not the Regional Trial Court can [impose] interest on a final judgment of unliquidated claims. the RTC. upon the bank’s motion. On April 11.

2002 (Schedule 3) 4.16 1.000.154. of this item.00 C Legal interest on share of assets from June 1. 15.49 250.000.00 50.000. In Reformina v. the most compelling and cogent reasons. agreed on the monetary value. (3) amount of profits from 1988 through May 30. 2 50% share in the monetary value of goodwill (500. In fact.65 As may be recalled. Thus. confirmatory of the trial court’s own.613. PhP 250. the Court is loathed to disturb the trial court’s approval of the amount of PhP 250. 2002 at 12% interest per year (Schedule 2) 2.65. we reproduce the summary valuations and accounting reports on the computation of claims certified to by the parties’ respective CPAs.225.00 25.000.000. 1992. 1988 to Oct.000.00 P 8. that is. petitioners acknowledged the following to be due to Chua: Total Assets – Schedule 1 50% due to Lamberto Chua Total Alleged Profit. not being a trier of facts. From the foregoing submitted valuation reports. 1992 to Oct. who came up with the figure of only PhP 3.000. or PhP 1.75 D Unreceived profits from 1988 to 1992 and its corresponding interest from Jan.550.978.550. Neither is the Court inclined to interfere with the CA’s conclusion as to the total amount of the partnership profit. 416 shall be adjudged only in cases involving the loan or forbearance of money. to wit: (1) the aggregate amount of the partnership assets bearing on the 50% share of Chua thereon. Clearly then. May 1992-Sch. the parties. Chua claimed the following: A 50% share on assets (exclusive of goodwill) at fair market value (Schedule 1) P 1. the imposable rate of interest applicable.215.644. This brings us to the question of the propriety of the imposition of interest and..75.35 P1. Tomol.000 x 50%) 250.613.758. PhP 1.00 25. We highlight the substantial differences in the accounting reports on the following items.00 B 50% share in the monetary value of goodwill (P500.855.00 P3. if proper.000. but rejected that of petitioners.00 25.75 On the other hand. i. To be sure.154. to be paid to Chua.000. Petitioners are partly correct. generated for the period January 1988 through May 30. it is not the duty of the Court.733. 1. and the total partnership assets of PhP 3. Jr.30 the Court held that the legal interest at 12% per annum under Central Bank (CB) Circular No. due Chua. pertains to Chua as his share.761. representing the monetary value of the goodwill. absent.000.008. there can be no dispute about the goodwill earned thru the years by Shellite. (2) interests added on Chua’s share of the assets. inclusive of goodwill. 15. as here.869. 1992. by their own judicial admissions.100. and (4) interests added on the amount entered as profits.733. For clarity.431. Needless to stress..000.956.736. to analyze or weigh all over again the evidence or premises supportive of such determination. 50% of which.644.000 x 50%) Moral and Exemplary Damages Attorney’s Fee Litigation Fee TOTAL AMOUNT P2.00 E Damages F Attorney’s fees G Litigation fees TOTAL AMOUNT 50. And for transactions involving payment of indemnities in the concept of damages arising from default in the 34 . net of alleged payments made to Chua.00 25.227.613. petitioners contradict themselves when they say that such amount of goodwill is without basis.e. the trial court admitted and approved Chua’s computation of claims amounting to PhP 8. Net of Payments Made.736.would ascribe error on the RTC for adding a 12% per annum interest on the approved valuation of the one-half share of the assets. petitioners have not adduced adequate evidence to belie the above CA’s factual determination.

until December 20. and in the absence of stipulation. i. shall be 12% per annum from such finality until its satisfaction.000 for moral and exemplary damages. II. by then. an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum. 1169. 416 shall apply only to loans or forbearance of money. The actual base for the computation of legal interest shall. is breached. 2209 pertinently provides: Art. When an obligation not constituting loans or forbearance of money is breached. the award of PhP 50."32 with the application of both rates reckoned "from the time the complaint was filed until the [adjudged] amount is fully paid. and the debtor incurs in delay. – When an obligation.e. synthesized the rules on the imposition of interest. from January 1988 until May 30. the legal interest. as well as the accrual thereof."34 Otherwise formulated. the PhP 250.e. 1992. or credits. Likewise. the award to Chua of the amount representing earned but unremitted profits. determinable by mathematical computation. or credit. If the obligation consists in the payment of a sum of money. which is six per cent per annum. 2001 until fully paid. 2209 of the Civil Code prescribing a yearly 6% interest. The provisions under Title XVIII on "Damages" of the Civil Code govern in determining the measure of recoverable damages. the indemnity for damages. there being no stipulation to the contrary. has been described as a contractual obligation of a lender or creditor to refrain. Civil Code) but when such certainty cannot be so reasonably established at the time the demand is made. the rate of interest. equivalent to a forbearance of credit. 3. however."33 In either instance. and appraisal of the partnership assets and then to wind up the 35 .000 attorney’s fee. The Court has certainly not lost sight of the fact that the October 7. as Chua suggested and the CA declared. until reasonably determined. from judicial or extrajudicial demand under and subject to the provisions of Article 1169 of the Civil Code. where the demand is established with reasonable certainty." not. inventory. and PhP 25. – With regard particularly to an award of interest in the concept of actual and compensatory damages. shall be the payment of the interest agreed upon. shall be adjudged on unliquidated claims or damages except when or until the demand can be established with reasonable certainty. Anent the impasse over the partnership assets. 1997. during a given period of time. goods. the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art. As may be noted. Accordingly.e. goods. representing the goodwill value of the business. we are inclined to agree with petitioners’ assertion that Chua’s share and interest on such assets partake of an unliquidated claim which. as follows: 1. PhP 35. be on the amount finally adjudged. the rate of legal interest. the interest due shall itself earn legal interest from the time it is judicially demanded. or credit. if proper. Furthermore. Inc. is imposed. the norm to be followed in the future on the rates and application thereof is: I. and the applicable rate. In the absence of stipulation.35 Guided by the foregoing rules..performance of obligations in general and/or for money judgment not involving a loan or forbearance of money. depending on the equities of each case. goods. shall not earn interest for him. the legal norm for interest to accrue is "reasonably determinable. the rendition date of the RTC decision. The term "forbearance. When the judgment of the court awarding a sum of money becomes final and executory. 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). No interest. Thereafter.000 award. this interim period being deemed to be by then an equivalent to a forbearance of credit. the interest due should be that which may have been stipulated in writing. PhP 25... on the award of interest. i. whether the case falls under paragraph 1 or paragraph 2. the rate of interest shall be 12% per annum to be computed from default. while the 6% per annum under Art. from requiring the borrower or debtor to repay the loan or debt then due and payable. the governing provision is Art. the contravenor can be held liable for damages. when the said decision became final and executory. i. 2001. 1997 RTC decision clearly directed petitioners to render an accounting. 2209." within the context of usury law. above. the reckoning period for the commencement of the running of the legal interest shall be subject to the condition "that the courts are vested with discretion. 2. a loan or forbearance of money. in any case. When the obligation breached consists in the payment of a sum of money. regardless of its source.000 monthly.000 litigation fee shall earn 12% per annum from December 20. must earn interest at 6% per annum reckoned from October 7. as the award for that item is considered to be. 2209 of the Civil Code applies "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. as follows: The 12% per annum rate under CB Circular No. the total of the monthly profits inclusive of the add on 6% interest shall earn 12% per annum reckoned from December 20.31 Eastern Shipping Lines. 2001 until fully paid. Art. as well as to judgments involving such loan or forbearance of money.

and recovery of shares and damages is clearly a suit to enforce a solidary or joint and several obligation on the part of petitioners. 1992 (5) 6% interest on unreceived profits from January 1.000.54 50. 1207 of the Civil Code thus provides: Art.00 9.000. In net effect. The concurrence of two or more creditors or of two or more debtors in one and the same obligation does not imply that each one of the former has a right to demand. the acts complained of not being severable in nature. accounting.000.360.14 PhP 5. exclusive of the goodwill. attorney’s fee. Consequently. the continuance of the business and management of Shellite by petitioners against the will of Chua gave rise to a solidary obligation. 200136 (6) 12% interest on unreceived profits from December 20.00 24.00 250.000 x 50%) (3) 12% interest on share of goodwill from December 20. was submitted only on October 15. 2000 [PhP 250. instead of solidary.00 1.074. entire compliance with the prestation. 1988 to December 20. 2002. 2002 resolution. approved the assets inventory and accounting report on such assets.000. and litigation fee from December 20. a liquidated claim cannot validly be asserted without accounting. For the other. Indeed.362.215. we hold that the obligation of petitioners is solidary for several reasons.000 x 12% x 299/365 days] TOTAL AMOUNT Second Issue: Petitioners’ Obligation Solidary Petitioners. render an accounting of partnership assets. Considering that Chua’s computation of claim. 2002 [PhP 3.613.362. 36 PhP 1. particularly the levy on execution of the absolute community property of spouses petitioner Sunga-Chan and Norberto Chan. the computation of claims of Chua should be as follows: (1) 50% share on assets (exclusive of goodwill) at fair market value (2) 50% share in the monetary value of goodwill (PhP 500. impugn the implementation of the amended writ of execution. the law itself imposes solidary obligation.50 x 12% x 299/365 days] (7) Moral and exemplary damages (8) Attorney’s fee (9) Litigation fee (10) 12% interest on moral and exemplary damages. or when the law or the nature of the obligation requires solidarity.529. For one. the complaint of Chua for winding up of partnership affairs. The need for the imposition of a solidary liability becomes all the more pronounced considering the impossibility of quantifying how much of the partnership assets or profits was misappropriated by each petitioner.52 . through its November 6. In this kind of situation. no interest in his favor can be added to his share of the partnership assets.392. and to wind up the partnership affairs is divisible ought to be dismissed. or that each of the latter is bound to render.000.575.partnership affairs by restituting and delivering to Chua his one-half share of the accounted partnership assets.00 25. 2002 [PhP 100. (Emphasis ours. it is well-nigh impossible to draw the line between when the liability of one petitioner ends and the liability of the other starts.550.34 1.830. Art. Under the circumstances surrounding the case.50 316. 2001 to October 15. The directive itself is a recognition that the exact share and interest of Chua over the partnership cannot be determined with reasonable precision without going through with the inventory and accounting process. assumed the nature of a liquidated claim only after the trial court. appraisal.12 x 299/365 days] (4) Unreceived profits from 1988 to May 30. liability for any and all claims of Chua is obviously petitioners’ thesis. There is solidary liability only when the obligation expressly so states. Joint. the duty of petitioners to remit to Chua his half interest and share of the total partnership assets proceeds from petitioners’ indivisible obligation to render an accounting and inventory of such assets. as approved by the trial court.000 x 0.) Any suggestion that the obligation to undertake an inventory. 1207. Chua’s interest and share over the partnership asset. 2001 to October 15. As it were.00 25. 2001 to October 15. In fine.855. on the submission that their liability under the RTC decision is divisible.

470. confirming the sheriff’s final deed of sale of the levied property. Art. as the highest bidder. The Court needs to dwell on it lengthily. are AFFIRMED with the modification that the approved claim of respondent Chua is hereby corrected and adjusted to cover only the aggregate amount of PhP 5. their absolute community property may be held liable for the obligations contracted by either spouse. representing the excess of the purchase price over his legitimate claims.48 to petitioner Sunga-Chan. fetched a price of PhP 8 million.607. SO ORDERED. 2005 resolution. Accordingly. 2004 was annotated on TCT No.52. subject to the payment by Chua of PhP 2.392. Given the solidary liability of petitioners to satisfy the judgment award. and issuing a writ of possession in favor of respondent Chua. 208782. (Emphasis ours.48. Specifically. albeit the Court restrained the enforcement of the RTC’s package of orders via a TRO issued on May 31. the use and appropriation by petitioner Sunga-Chan of the assets of Shellite even after the business was discontinued on May 30.607. or after the effectivity of the Family Code on August 3. 94. is AFFIRMED. Third Issue: Community Property Liable Primarily anchored as the last issue is the erroneous theory of divisibility of petitioners’ obligation and their joint liability therefor.470.) Absent any indication otherwise. ordering the Registry of Deeds of Manila to cancel TCT No. and issuing a writ of possession in favor of Chua.529. as the case may be. Withal. and (3) for the RTC to issue a writ of possession in his favor. 75688 are hereby AFFIRMED with the following MODIFICATIONS: (1) The Resolutions dated November 6. And it cannot be overemphasized that the TRO issued by the Court on May 31. Zamboanga Del Norte in Civil Case No.392. we affirm the RTC’s April 11. and The TRO issued by the Court on May 31. (2) to issue a new TCT in his name. of spouses Norberto and Sunga-Chan does not per se vitiate the levy and the consequent sale of the property.R. Branch 11 in Sindangan. (3) Debts and obligations contracted by either spouse without the consent of the other to the extent that the family may have been benefited. the records show that spouses Sunga-Chan and Norberto were married on February 4. ordering the Registry of Deeds of Manila to cancel TCT No. or by both spouses.48 to petitioner Sunga-Chan. S-494. No pronouncement as to costs. 2005. or by one spouse with the consent of the other. 2003 of the RTC.529. Verily. Therefore.52. 1992. 208782. 2005 in the instant petition is LIFTED. confirming the sheriff’s final deed of sale of the levied property. 37 . In net effect. SP No. Chua moved for the issuance of a final deed of sale (1) to order the Registry of Deeds of Manila to cancel TCT No. 2005 of the RTC. the corresponding certificate of sale dated January 15. The fact that the levied parcel of land is a conjugal or community property. Following the auction.37 Rule 39 of the Rules of Court. 1988. the RTC granted Chua’s motion. the assailed decision and resolution of the CA in CA-G. as readjusted in this disposition. this petition is PARTLY GRANTED.607. Parenthetically. said property is not among those exempted from execution under Section 13. (2) Subject to the payment by respondent Chua of PhP 2. WHEREFORE. 2005 came after the auction sale in question. respondent sheriff cannot really be faulted for levying upon and then selling at public auction the property of petitioner Sunga-Chan to answer for the whole obligation of petitioners. as effectively upheld by the CA. And as earlier stated. 2005. Chua owes petitioner Sunga-Chan the amount of PhP 2.470. they having resisted in bad faith a legitimate claim and thus compelled Chua to litigate. 2002 and January 7. 208782. The absolute community of property shall be liable for: (1) x x x x (2) All debts and obligations contracted during the marriage by the designated administrator-spouse for the benefit of the community.And for a third. amounts to only PhP 5. whereas Sunga-Chan’s auctioned property which Chua acquired. It may be stressed at this juncture that Chua’s legitimate claim against petitioners. On January 21. petitioners’ obligation for the payment of damages and attorney’s and litigation fees ought to be solidary in nature. 208782. the Resolution dated April 11. 94 of said Code pertinently provides: Art. 1992 may reasonably be considered to have been used for her and her husband’s benefit.

From the date of finality of the judgment until the obligation is totally paid. as a result of which he was denied entry to Moscow and was subjected to humiliating interrogation by the police.3 save for certain exceptions.000 attorney’s fees. 38 . The appellate court affirmed the award of P1 million moral damages and P300. Preliminarily. Thus.000.4 none of which are present in this case. As such.000 attorney’s fees to respondent.R. On appeal. who was responsible for having the correct travel documents. the same entails a resort to the parties’ respective evidence. even if respondent was entitled to the same. Respondent.a. 188961 October 13. on the other hand. However. According to the CA. However. Time and again. Lastly. (5) he had to shoulder his extended stay in Paris for AF’s failure to make good its representation that he would be given a complimentary motel pass and (6) he was given a computer print-out of his flight reservation for Manila but when he went to the airport. the amounts awarded were exorbitant. and worse. AF was guilty of bad faith for which respondent ought to be compensated. It was only when he made a scene that the AF agent boarded him on an AF flight to Hongkong and placed him on a connecting Philippine Airlines flight to Manila.1 The CA ruled that it was respondent (as passenger). Ms.G. 2009 AIR FRANCE PHILIPPINES/KLM AIR FRANCE. this amount represented the expenses respondent incurred from the time he was unable to join his group in Rome (due to the unfounded "communiqué" of Ms. P1 million moral damages. it argued that the interest rate should run not from the time of respondent’s extrajudicial demand but from the time of judgment of the RTC. AF is clearly asking us to consider a question of fact. and not AF. J. 12% interest p. but before judgment becomes final. The appellate court pointed out that. P1 million exemplary damages and P300. CORONA. The CA further imposed interest at the rate of 6% p. the appellate court stated that this fact did not absolve AF from liability for damages. According to respondent: (1) AF’s agent in Paris failed to inform him of the need to secure a transit visa for Moscow. Soeyesol) rudely denied his request to contact his travel companions to inform them that he was being sent back to Paris from Moscow with a police escort. Essentially. We deny the petition.: Respondent John Anthony de Camilis filed a case for breach of contract of carriage.a. respondent’s expenses for the Moscow leg of the trip must be borne by him as AF could not be faulted when he was refused entry to Moscow for lack of a transit visa. No. Respondent alleged that he went on a pilgrimage with a group of Filipinos to selected countries in Europe. Soeyesol even reported him as a security threat which resulted in his being subjected to further interrogation by the police in Paris and Rome. Hence. verbal abuse and abject lack of respect and consideration. he missed his connecting flight. shall be imposed. The RTC found that AF breached its contract of carriage and that it was liable to pay P200. the Court of Appeals (CA) affirmed the RTC decision with modifications. damages and attorney’s fees against petitioner Air France Philippines/KLM Air France (AF) in the Regional Trial Court (RTC) of Makati City. The CA also decreased the exemplary damages from P1 million to P300. AF added that. he was told that the flight was overbooked. this recourse. (2) another AF agent (a certain Ms. Branch 59. AF assails the CA’s award of moral and exemplary damages and attorney’s fees to respondent as the alleged injury sustained was not clearly established. also lifted his flight coupons for the rest of his trip. it reduced the actual damages to US$906 (or its peso equivalent). The CA agreed with the findings of fact of the RTC that AF’s agents and representatives repeatedly subjected respondent to very poor service. vs. on the issue pertaining to whether or not respondent was entitled to damages and attorney’s fees. (4) upon reaching Paris for his connecting flight to Manila. he found out that the AF agents did not check in his baggage and since he had to retrieve his bags at the baggage area.000 actual damages. (3) AF agents in Rome refused to honor his confirmed flight to Paris. we have held that the jurisdiction of this Court in a petition for review on certiorari under Rule 45 is limited only to questions of law. JOHN ANTHONY DE CAMILIS. Soeyesol that he was a security threat) up to the time his flight reservation from Paris to Manila was dishonored for which he was forced to stay in Paris for two additional days. Petitioner. from the date of extrajudicial demand2 until full satisfaction.

1. Petitioner is ordered to PAY legal interest of 6% p. Estrella. 1976 which denied petitioner's motion for reconsideration of the subject decision and petition and/or motion for new trial.a.625. the petition is hereby DENIED. the legal interest is 6% p. 1970 is hereby declared permanent. are as follows: The defendant Batong Buhay Gold Mines. Then.01 per share to Francisco Aguac who was then legally married to Paula G.R. Aguac. 39 .55.a. Upon the other hand. Inc.495 shares with a par value of P0. and dismissing the complaint with respect to defendant Del Rosario and Company. 1969. not from the time of respondent’s extrajudicial demand. The decision of the Court of Appeals in CA-G.5 citing Eastern Shipping Lines. and the writ of preliminary mandatory injunction issued on March 16. (pp. We see no reason to disturb their findings. 16807 to and in the name of plaintiff INCORPORATED Mining Corporation. 79183 Also sought for review are the resolutions of the aforenamed court dated October 21. on all sums awarded until their full satisfaction. Ilagan Alcantara & Mosqueda Law Office for private respondent. No. 67-68. good faith on obligor G.R. Tañada & Tañada Law Office for petitioner. respondents. the judgment appealed from is hereby modified by adding the following to the dispositive portion thereof: Ordering defendant Batong Buhay Gold Mines. SO ORDERED. 1987 BATONG BUHAY GOLD MINES. Aguac. Branch 11 in Civil Case No. until full satisfaction. PARAS. Makati City and 12% p. Branch 59. issued Stock Certificate No. Extent of Recoverable Damages c.a. 51313-R which modified the decision of the then Court of First Instance (CFI) of Manila. The above liabilities of AF shall earn legal interest pursuant to the Court’s ruling in Construction Development Corporation of the Philippines v. vs. IT IS SO ORDERED. 16807 covering 62. SO ORDERED. J. THE COURT OF APPEALS and INC. Caparas. 2007 when the RTC rendered its judgment. and it shall be reckoned from April 25. 1976 of the Court of Appeals (CA) in CA-G. On December 16. from the date of promulgation of the decision dated April 25.495 shares covered by Stock Certificate No. This must be so as it was at the time the RTC rendered its judgment that the quantification of damages may be deemed to have been reasonably ascertained. to pay to the plaintiff the sum of P5. with interest at the legal rate from March 5. Rollo) The antecedent facts. INC. The dispositive portion of the CFI judgment reads: WHEREFORE. the said transaction being evidenced by a deed of sale (Exhibit D). Tañada. Inc. but the said spouses had lived separately for more than fourteen (14) years prior to the said date. as found by the Court of Appeals. from the time this decision becomes final and executory.Both the RTC and the CA have competently ruled on the issue of respondent’s entitlement to damages and attorney’s fees as they properly laid down both the factual and legal bases for their respective decisions.. 1970 until full payment. L-45048 January 7.374. CV No. 90151 is AFFIRMED. Quisumbing. the interest rate shall be 12% p. c.R.70 in favor of the plaintiff. Francisco Aguac sold his 62. 2007 of the Regional Trial Court. MINING CORPORATION. The said sale was made by Francisco Aguac without the knowledge or consent of his wife Paula G. 16807 for the sum of P9. Defendant Batong Buhay shall pay the costs. Inc. v. Costs against petitioner.1 In contracts and quasi-contracts where there is – c. the Court renders judgment enjoining the defendants to effect the transfer of the shares covered by Stock Certificate No. from the time the decision of this Court attains finality. 1976 and November 12. WHEREFORE. petitioner.61avvphi1 Pursuant to this ruling. CA.a.a. No.: This is a petition to review the decision dated August 27. Sanchez. the decretal portion of the CA decision states: WHEREFORE. respectively.

it received the letter of Paula G.495 shares of defendant Batong Buhay. asking that the transfer of the shares sold by her husband be withheld. 10. 27650 dated January 5. Paula G. exemplary and corrective damages and attorney's fees." and further advised that the plaintiff communicate directly with Batong Buhay for further details (Exhibit 1). inasmuch as there was a "technical problem that has developed in the transfer of stock. or would sell or would have sold the stocks in question on specified dates. Francisco Aguac." On October 28. for it was difficult to predict with any decree of certainty the 40 . plaintiff's counsel requested information as to the action taken on the transfer of Stock Certificate No. or merely on the basis of pure assumption. but would also show the untenability and illegality of private respondent's position? We answer the first issue in the negative. 1970. entitled "People vs. 1970. Stock Certificate No. respondent appellate court rendered the subject decision the dispositive portion of which has already been quoted hereinabove. In a reply letter dated February 28. Inc. nothing about which having heard despite the lapse of over a month (Exhibit H). cost of injunction bond and expenses of litigation. While it is true that shares of stock may go up or down in value (as in fact the concerned shares here really rose from fifteen (15) centavos to twenty three or twenty four (23/24) centavos per share and then fell to about two (2) centavos per share. in fact. plaintiff's counsel presented Stock Certificate No. 1986. On March 2. Aguac advising it to withhold the transfer of the subject shares of stock on the ground that the same are conjugal property.495 shares covered thereby to the plaintiff and had. and for the recovery of compensatory. 1970. On March 5. 1970. The trial court granted the prayer for the issuance of the writ of preliminary mandatory injunction in its order of March 16. 1970. this petition. Petitioner company also alleges that the claim for unrealized profit must be duly and sufficiently established. petitioner poses the following issues: 1. A writ of preliminary mandatory injunction was prayed for to order the defendants to issue immediately the transfer certificate covering the aforesaid shares of stock of defendant Batong Buhay in the name of the plaintiff." The defendants justify their refusal to transfer the shares of stock of Francisco Aguac in the name of the plaintiff in view of their apprehension that they might he held liable for damages under Article 173 of the Civil Code and the ruling of the Supreme Court in Bucoy vs. 16807 was cancelled and new Stock Certificate No. 16807 duly endorsed by Francisco Aguac for registration and transfer of the said stock certificate in the name of the plaintiff (Exhibit F). et al. 27650 dated January 5. The stipulation of facts of the parties does not at all show that private respondent intended to sell. the plaintiff commenced this action before the Court of First Instance of Manila. formerly registered in the name of Francisco Aguac. In assailing the decision of the Court of Appeals. that is. 1970 also addressed to Del Rosario and Company. 16807 and transfer the 62. The said letter was addressed to defendant Del Rosario and Company which was the transfer agent of Batong Buhay at that time. Private respondent seasonably appealed the aforesaid decision to the Court of Appeals anchored on the lower court's alleged failure to award damages for the wrongful refusal of petitioner to transfer the subject shares of stock and alleged failure to award attorney's fees. prepared new Stock Certificate No.lwphl@itç It developed that when Batong Buhay was about to effect the cancellation of Stock Certificate No. Aguac wrote a letter to the president of defendant Batong Buhay Gold Mines. 16807 in favor of the plaintiff. 1970. May the appellate court deny the petitioner the chance to present evidence discovered after judgment which were not only very material to its case. or can the respondent recover damages by way of unrealized profits when it has not shown that it was damaged in any manner by the act of petitioner? 2. 23 SCRA 248. 1969. praying that the defendants be ordered to issue and release the transfer stock certificate covering 62. May the Court of Appeals award damages by way of unrealized profits despite the absence of supporting evidence. docketed as Criminal Case No. 16807 in the name of herein respondent Incoporated Mining Corporation and declaring permanent the writ of preliminary mandatory injunction issued on March 16. In compliance therewith. Del Rosario and Company informed plaintiff's counsel that Batong Buhay has referred the matter to their attorneys. in favor of the plaintiff. 1970 was issued to and received by the plaintiff on July 20. that the claimant must submit proof that it was in fact damaged because of petitioner's act or omission. 1969. 1970 Francisco Aguac was charged in a criminal complaint Pasil Kalinga-Apayao. Paulino. On January 5. On August 27. Hence. speculation or conjecture. under a covering letter dated December 26. In a letter dated February 24.On the same date of the sale. in view of the defendant's inaction on the request for the transfer of the stock certificate in its name. December 16. the trial court handed down its judgment ordering the defendant (herein petitioner) to effect the transfer of the shares covered by Stock Certificate No. 1971. still whatever profits could have been made are purely SPECULATIVE. 1970. The petitioner alleges that the appellate court gravely and categorically erred in awarding damages by way of unrealized profit (or lucro cesante) to private respondent. inasmuch as the same constituted conjugal property and her share of proceeds of the sale was not given to her (Exhibit 1).

RESOLUTION BAUTISTA ANGELO. Plaintiff opposed the motion for reconsideration and new trial on the ground that no new point has been raised therein but that it would only unduly delay the disposition of the case. a sale must always precede the supply or delivery of logs. But... If there is no sale there is no commission. Defendant. or whether defendant had the right to suspend its operation as a consequence of its request for renegotiation of prices. INC. It is true that a sale must always precede the supply or delivery of logs and the commission is earned only on sales made. SO ORDERED. LIANGA BAY LOGGING COMPANY.b bad faith in obligor G. it could have sold the same and reaped a profit of P5. 1964 on the grounds that the amount of P400. It is easy to say now that had private respondent gained legal title to the shares. We do not need to repeat here the discussion we have made thereon. defendant-appellant. in disregard of its express covenant. To this opposition defendant filed a reply and a counter-manifestation. therefore. But defendant prevented this for reasons of its own. and that the award of exemplary damages and attorney's fees to plaintiff is unjustified. We find no necessity to discuss the second issue." Defendant's counsel now finds this premise erroneous because it assumes facts not in accordance with the mode of implementation of the agreement in question. 1964 GENERAL ENTERPRISES. according to said mode.861 board feet of defendant's logs in the year 1959 the sum of P66. As a basis for the actual damages awarded to plaintiff we stated in our decision that "whether logs were delivered to plaintiff. We only need to emphasize that.1 It is not. proper to base such damages purely in transactions that had been accomplished in the past and ignore those that could have been accomplished in the future. The question of whether the obligation to supply the additional monthly two million board feet during the remaining period of the agreement is mandatory or conditional. that assuming the agreement entered into between the parties to be valid. No. are matters that have already been discussed in our main decision. Counsel predicates his argument on something which plaintiff was precisely prevented from doing. vs.405. it held itself liable for all consequential damages that may result from such breach. filed a motion for a new trial based on a new evidence which allegedly could not have been discovered during the trial consisting of a contract executed between the plaintiff and the Basilan Lumber Company and of a record of the export of logs of the latter company during the years 1960 and 1961 which allegedly tend to show that even if additional quantity of logs were made available by defendant to plaintiff during the remaining period of the contract. Thus this Court has ruled that speculative damages cannot be recovered. counsel concludes. If no sale is made by plaintiff. plaintiff would have undoubtedly continued the flow of sales in pursuance of the agreement. in addition. It is claimed that. plus another record tending to show that plaintiff reported to the government as commission received from the sale of 7. So. As the law says. defendant is not guilty of breach thereof because its obligation to supply the monthly two million board feet for the remainder of the period of the agreement was not mandatory but conditional. private respondent's officials could also have refused to sell and instead wait for expected further increases in value. aside from the fact that it had the right to suspend the operation of the agreement under the proviso contained in paragraph 8 thereof.00 awarded to plaintiff as lucrum cessans is not justified considering the evidence available. WHEREFORE. the latter would not have been able to sell said logs. whether foreseen or unforeseen.1. J. plaintiff-appellee. defendant does not have to supply or deliver any quantity of logs. plaintiff earned the commission. it is erroneous to assume that had the operation of the agreement continued plaintiff would have earned its commission on the basis of the 34 million board feet called for during the remaining period of the agreement. being what it is. In view of what has been said. The commission is earned only on sales made.000. c.: Defendant seeks the reconsideration of our decision rendered on August 31. L-18487 November 28. the assailed decision and resolutions of the Court of Appeals are hereby SET ASIDE. in 41 . since defendant is guilty of breaking the agreement for reasons purely of its own. that the request of defendant for the renegotiation of the prices of logs which was refused by plaintiff was a right expressly granted to it in paragraph 2 of said agreement. No costs.86 which merely represents 8% of the 13% commission agreed upon between plaintiff and defendant to bolster its claim that 5% of said commission should be deducted from the lucrum cessans that may be awarded to plaintiff.036.R. Had defendant continued to deliver the logs plaintiff could have continued earning its commission in much the same way as in previous shipments. and one of the items that may be considered in determining said damages is the failure to realize whatever profits could have been earned during the remaining life of the agreement.95 but it could not do so because of petitioner's refusal to transfer the stocks in the former's name at the time demand was made. but then it is also true that human nature. how could plaintiff conclude sales when defendant has stubbornly refused to continue with the operation of the contract in spite of the warning given to it by plaintiff? Had the operation not been stopped.624. and a new one is hereby rendered REINSTATING the decision of the trial court. INC.rise and fall in the value of the shares.

where Freddie Suelto was convicted of reckless imprudence resulting in damages to property. as may be gathered from defendant's brief (pp. the contract with Basilan Lumber Company alleged to be a newly discovered evidence is not really so for it could have been presented during the trial.R. c."5 42 . and it complied with its commitments with said entities. is that what plaintiff had paid in its previous sales in the form of commission to Frinat International was 2% and not 5% as claimed.2 At around 2:00 p.142. because at the time of the execution of the agreement plaintiff was also the distributor of other companies. No. Suelto was driving the aforementioned passenger bus along Kamias Road. vs. As already stated in our main decision. was assigned as the regular driver of the bus. we hereby modify our decision rendered on August 31. Suelto. Martha Enterprises. Petitioners. But we agree with counsel that the commission paid by plaintiff to Frinat International in the sale of logs of defendant should be deducted from the award made in its favor. (3) The 6″ CHB walls at [the] right side of the covered terrace were found with cracks caused by this accident. As a matter of fact.76. in the discretion of the court. The exemplary damages and attorney's fees awarded in the decision are in our opinion proper and so further discussion thereof is unnecessary. Quezon City. SR. Valdellon is the owner of a two-door commercial apartment located at No. "the obligor shall be responsible for all damages that may be reasonably attributed to the non-performance of the obligation" (Article 2201. and to insure the safety and stability of the building. the terrace would have to be demolished "to keep its monolithicness. Erlinda V. the Senior Building Inspection Officer of the City Engineer’s Office.2 In crimes and quasi-delicts G. plaintiff has to pay a commission of 2% to a sub-agent (appellee's brief pp. On one hand. Quezon City. 152040 March 31. 88. Respondents. Deducting therefrom the 2 % commission that corresponds to Frinat International. which amounts to P56. The motion for new trial is denied.m. 21 and 85). to inspect the damaged terrace. On the other hand.350.64 as lucrum cessans affirming said decision in all other respects. it shows that the 5% commission earned by Frinat International.: Before the Court is a Petition for Review on Certiorari of the Decision1 of the Court of Appeals (CA) in CA-G. WHEREFORE. the court ordered Sergio Pontiveros. Selective Philippine Lumber Company.0107456 per board foot. 6. With regard to the motion for a new trial. The bus suddenly swerved to the right and struck the terrace of the commercial apartment owned by Valdellon located along Kamuning Road.142. CALLEJO. which should be the lucrum cessans to which plaintiff is entitled. therefore. 85.4 He recommended that since the structural members made of concrete had been displaced. Multiplying 34 million board feet by P. interest may be allowed upon damages awarded for breach of contract. we do not deem it justified to further charge interest on the damages herein involved. going towards Epifanio de los Santos Avenue (EDSA). This is the most that can be deducted from the 13% commission corresponding to plaintiff. CR No. 70.0107456. as sub-agent. (4) The front iron grills and concrete balusters were found totally damaged and the later [sic] beyond repair. The most that can be said. the original of said contract was already presented as Exhibit O and claimed in the brief to have been the basis of the agreement in question. Kamuning. Considering the circumstances of this case.207. The claim that plaintiff turned down offers for distribution from other companies does not necessarily prove that even if defendant had continued to make available the 2 million board feet monthly plaintiff could not have been able to sell the same. the product is P365. J. (2) The beams supporting the roof and parapet walls are found with cracks on top of the displaced columns. 31 Kamias Road.. new Civil Code).R. plaintiff itself admitted that it does not in all cases receive the whole 13% commission because in cases where plaintiff's officials could not personally contact the buyers or conclude sales with them.64. like the Basilan Lumber Company. the commission earned by plaintiff based on actual sales effected during the first seven months was P. 141 and 197). Q-93-16051.case of fraud or bad faith. its employee. 1964 in the sense of awarding to plaintiff the sum of P309. the balance is P309. 16739 affirming the Joint Decision of the Regional Trial Court (RTC) in Criminal Case No. 2006 MARIKINA AUTO LINE TRANSPORT CORPORATION and FREDDIE L. SUELTO. 1992. The total board feet which under the terms of the agreement defendant was obligated to deliver for the next 17 months is 34 million board feet.3 Upon Valdellon’s request. PEOPLE OF THE PHILIPPINES and ERLINDA V. was paid by defendant as an additional commission. Q-93-42629 and Civil Case No. 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. But what is the rate of such commission? The record does not appear clear on this matter. The Marikina Auto Line Transport Corporation (MALTC) is the owner-operator of a passenger bus with Plate Number NCV-849. VALDELLON. Under Article 2210. on October 3.40.

to estimate the cost of repairs.46.17 On cross-examination. a passenger jeepney suddenly crossed from EDSA going to V.46.00 to Valdellon.00. in said City. masonry. the cost to the damage on the terrace of the apartment amounted to P40. thus: WHEREFORE. Valdellon. within 10 days from receipt thereof. but that the building should also be demolished because "if concrete is destroyed. jointly and severally.440. 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.19 On April 28. the said accused. and considering the condition of the traffic at said place at the time. and costs of suit. and the latter pegged the cost at P171. ordering the defendants. on October 3. negligence. Luna and swerved to the lane occupied by the bus. She prayed that after due proceedings. and.9 Valdellon filed a criminal complaint for reckless imprudence resulting in damage to property against Suelto. After the requisite preliminary investigation. reckless. Suelto declared that he saw the passenger jeepney when it was a meter away from the bus. Jesus Regal.000.000. an Information was filed with the RTC of Quezon City. to pay – a) the total sum of P171. imprudence and lack of precaution. Metro Manila. issued by the BB Construction and Steel Fabricator for "carpentry. the proprietor of the SSP Construction. however.00. Philippine Currency.088. Jesus R.088. 1992 addressed to the bus company and Suelto.7 In a letter dated October 19."14 Pontiveros of the Office of the City Engineer testified that there was a need to change the column of the terrace.000. dated October 20. VALDELLON located at No. Jr. he had seen some passenger jeepneys on the right trying to overtake one another.m. the said vehicle so driven. P150. c) the sum of P20.00 for each appearance of plaintiff’s counsel. the trial court rendered judgment finding Suelto guilty beyond reasonable doubt of reckless imprudence resulting in damage to property. 1992. and operate the same along Kamias Road. Regal.Photographs6 of the damaged terrace were taken.00 settlement which Valdellon refused. in a careless. Valdellon demanded payment of P148. declared that he inspected the terrace and estimated the cost of repairs. The accusatory portion of the Information reads: That on or about the 3rd day of October 1992. as well as attorney’s fees and costs of suit. When he reached the corner of K-H Street at Kamias Road. being then the driver and/or person in charge of a Marikina Auto Line bus bearing Plate No. thereby causing damages to said apartment in the total amount of P171.16 Based on his estimate.8 The bus company and Suelto offered a P30.000. Quezon City. Before then. and ordered MALTC and Suelto to pay. The fallo of the decision reads: 43 . CONTRARY TO LAW. Jr.000.46.000.088. manage. [one] cannot have it restored to its original position.. Philippines.46 constituting the expenses for the repair of the damaged apartment of plaintiff. to render a decision in favor of the plaintiff. 1993. at P171.18 Architect Arnulfo Galapate testified that the cost of the repair of the damaged terrace amounted to P55. adduced in evidence a receipt for P35. 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.00 each as compensatory and exemplary damages.12 The trial court conducted an ocular inspection of the damaged terrace. inclusive of labor and painting. he was driving the bus on its way to Ayala Avenue. NVC-849. 1994.00. Valdellon commissioned Engr. jointly and severally. Valdellon testified on the damage caused to the terrace of her apartment. Makati.00. this City. to cover the cost of the damage to the terrace. Suelto testified that at 2:00 p. disagreed because she wanted the building demolished to give way for the construction of a new one.13 During the trial. it is respectfully prayed of this Honorable Court to issue a writ of preliminary attachment against the defendants upon approval of plaintiff’s bond. as in fact it hit and bump a commercial apartment belonging to ERLINDA V.11 A joint trial of the two cases was ordered by the trial court. b) the sum of not less than P20. and after trial on the merits.088. to her damage and prejudice in the total amount aforementioned. and imprudent manner. 31 Kamias Road. PLAINTIFF further prays for such other reliefs as may be just and equitable in the premises. in support thereof. where defendants offered to have it repaired and restored to its original state. including labor.10 Valdellon also filed a separate civil complaint against Suelto and the bus company for damages. managed and operated by him to hit and bump.000. did then and there unlawfully. welding job and electrical [work]. and feloniously drive. negligent."15 Engr. by way of actual and compensatory damages. with interests to be charged thereon at the legal rate from the date of the formal demand until the whole obligation is fully paid. judgment be rendered in her favor. causing as a consequence of his said carelessness.000. in Quezon City.00 as attorney’s fees and the sum of P1.

petitioner Suelto himself admitted this in his answer to the complaint in Civil Case No. jointly and severally. b. in swerving the bus to the right. 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.00.000.00 as compensation sustained by the plaintiff-appellee for her damaged apartment be reduced to P100.00. filed the instant petition reiterating its submissions in the CA: (a) the prosecution failed to prove the crime charged against petitioner Suelto.00. In its Brief for the People of the Philippines. the OSG averred that the trial court erred in sentencing appellant to a straight penalty of one year. Q-9316051. he acted on an emergency. the penalty of imprisonment imposed on him by the trial court is contrary to law.000. 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.00 is barren of factual basis. 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. SO ORDERED. He maintained that. Although she did not testify to seeing the incident as it happened.000. the prosecution was able to prove that he drove the bus with negligence and recklessness.WHEREFORE. the OSG posited. now appellants. petitioner Suelto posits that the straight penalty of imprisonment recommended by the trial court. now petitioners. The petition is partially granted. the sum of P20.000. applying the principle of res ipsa loquitur. On Suelto’s claim that the prosecution failed to prove his guilt for the crime of reckless imprudence resulting in damage to property.22 MALTC and Suelto. alleging that the prosecution failed to prove Suelto’s guilt beyond reasonable doubt. premises considered.00 by way of actual damages.000. the costs of suit.21 Appellants filed a Motion for Reconsideration. as attorney’s fees. but the CA denied the same. On the third issue. as reasonable compensation sustained by plaintiff for her damaged apartment. Consequently. On the second issue. 1994. d. petitioners insist that private respondent was able to prove only the amount of P35. in an emergency case. c. the prosecution failed to discharge its burden. SO ORDERED. judgment is hereby rendered in favor of plaintiff Erlinda Valdellon and against defendant Marikina Auto Line Transport Corporation and accused Freddie Suelto. appealed the decision to the CA. and recommended a penalty of fine. On the other hand. the Office of the Solicitor General (OSG) submitted that the appealed decision should be affirmed with modification. and in the absence of an explanation to the contrary. With respect to the civil liability. but the award for actual damages was reduced to P100. 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. On June 20. 44 .20 MALTC and Suelto.00 without pronouncement as to costs. the award of P100. and failed to discharge this burden. The fallo of the decision reads: WHEREFORE. the decision dated April 28. in law. hence. the sum of P150. thereby causing damage to the terrace of private respondent’s apartment. and (c) the trial court erred in sentencing petitioner Suelto to one (1) year prison term. is contrary to Article 365 of the Revised Penal Code. said accused is hereby sentenced to suffer imprisonment of ONE (1) YEAR. where both are ordered. as compensatory and exemplary damages. who testified only on the damage caused to the terrace of her apartment which appellants also alleged was excessive. and. finding the accused FREDDIE SUELTO Y LIWAG guilty beyond reasonable doubt of the crime of Reckless Imprudence Resulting in Damage to Property. and affirmed by the CA. the accident was evidently due to appellant’s want of care.00. 2000. They averred that the prosecution merely relied on Valdellon.00. However. Petitioners were burdened to prove that the damage to the terrace of private respondent was not the fault of petitioner Suelto. Even if the appellate court affirmed his conviction.000.000. in the process. and when he testified in the trial court. rendered by the court a quo is AFFIRMED with the modification that the sum of P150. intruded into the lane of the bus. On the first issue. he was not. the OSG contended that. (b) the prosecution failed to adduce evidence to prove that respondent suffered actual damages in the amount of P100. the sum of P20.000. negligent.000. 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. the CA rendered judgment affirming the decision of the trial court. 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. the burden was on the appellant to prove that. to pay plaintiff: a.

G. The accused was not diligent as he claims to be. at the time of the impact. Driving on right side of highway." The pictures submitted do not lie. Regal. As already maintained and concluded. having been taken immediately after the incident. In relation thereto.We have reviewed the evidence on record and find that. Jr. the accused has made conflicting statements in his counter-affidavit and his testimony in court. if at the time of mishap. futile." By his own admission. The damages could not have been caused except by a speeding bus. in light of his contradictory testimony visà-vis his Counter-Affidavit submitted during the preliminary investigation: It is clear from the photographs submitted by the prosecution (Exhs.—(a) Any person driving a motor vehicle on a highway shall drive the same at a careful and prudent speed. The sudden emergency rule was enunciated by this Court in Gan v.00. 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 addition to this. 173 SCRA 118. where the Court stated that "physical evidence is of the highest order. Were he more prudent in driving. Had the accused not been speeding. person or property. in his testimony in court. However. 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. the bus was traveling at a high speed when Suelto tried to avoid the passenger jeepney. Ison. Such glaring inconsistencies on material points render the testimony of the witness doubtful and shatter his credibility. he could have avoided the incident or even if he could not avoid the incident. that is. motorists are mandated to drive and operate vehicles on the right side of the road or highway: SEC. petitioner Suelto violated the Land Transportation and Traffic Code when he suddenly swerved the bus to the right. Furthermore. and of any other condition then and there existing.088. as ruled by the trial court and the appellate court.24 Moreover. 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 variance between testimony and prior statements renders the witness unreliable. 4136. Jesus R. thereby causing damage to the property of private respondent. and is required to act without time to consider the best means that may be adopted to avoid the impending danger. 37. 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. and no person shall drive any motor vehicle upon a highway at such a speed as to endanger the life. it is quite reasonable to conclude that. Restriction as to speed. In the former. the trial court correctly rejected petitioner Suelto’s defense. if the claim of petitioners were true.23 thus: [O]ne who suddenly finds himself in a place of danger. and to the left when overtaking persons or vehicles going the same direction. it is presumed that a person driving a motor vehicle has been negligent. The only evidence adduced by respondents to prove actual damages claimed by private respondent were the summary computation of damage made by Engr. thus: Sec. 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.000. It speaks more eloquently than a hundred witnesses. H & I) that the commercial apartment of Dr. limb and property of any person. But. he said that it was to avoid a passenger jeepney coming from EDSA that was overtaking by occupying his lane. D. or because of unreasonable difficulty of operation in compliance herewith. the damages would have been less severe. 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. thus. the width of the highway. And. they should have filed a third-party complaint against the driver of the offending passenger jeepney and the owner/operator thereof. he could have easily reduced his speed and come to a full stop when he noticed the jeep. Such inconsistency results in the loss in the credibility of the witness and his testimony as to his prudence and diligence. and when turning to the left in going from one highway to another. not greater nor less than is reasonable and proper." Such a conclusion finds support in the decision of the Supreme Court in People vs. the severe damages sustained could not have resulted had the accused acted as a reasonable and prudent man would.46 and the receipt issued by the BB 45 . he was violating any traffic regulation. having due regard for the traffic. Section 35 of the law provides. 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. 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. Article 2185 of the New Civil Code provides that "unless there is proof to the contrary. 35. Under Section 37 of Republic Act No. C. Court of Appeals. as amended. Petitioner Suelto’s reliance on the sudden emergency rule to escape conviction for the crime charged and his civil liabilities based thereon is. It was the burden of petitioners herein to prove petitioner Suelto’s defense that he acted on an emergency. otherwise known as the Land Transportation and Traffic Code. amounting to P171. every vehicle shall be conducted to the right of the center of the intersection of the highway. "It seems highly improbable that the said damages were not caused by a strong impact. – Unless a different course of action is required in the interest of the safety and the security of life. On the second issue. Valdellon sustained heavy damage caused by the bus being driven by Suelto.

must point out specific facts that could afford a basis for measuring whatever compensatory or actual damages are borne. therefore. as a benefit. and the other is the failure to receive as a benefit that which would have pertained to him (lucro cesante). Moreover. The burden is to establish one’s case by a preponderance of evidence which means that the evidence. Respondents failed to present Regal to testify on his estimation. because it was a bare assertion.000. the appellate court merely declared: With respect to the civil liability of the appellants. as a whole. The damaged portions of the apartment in question are not disputed. In the language of the Court: For this reason. As expostulated by the Court in PNOC Shipping and Transport Corporation v. The burden of proof is on the party who would be defeated if no evidence would be presented on either side. adduced by one side is superior to that of the other. failed to explain how it arrived at the amount of P100. cargo. we do not subscribe to the conclusion that his valuation of such equipment.31 46 . is superior to that of the other. Thus. the reasonable. plus in a proper case. We must.000.00. Considering the aforesaid damages which are the direct result of the accident. and adequate compensation due is hereby fixed at P100. 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.000. welding. They proceed from a sense of natural justice and are designed to repair the wrong that has been done. should not be taken as gospel truth. Indeed.00 as compensation sustained by the plaintiff-appellee for her damaged apartment is an unconscionable amount. hence.00 representing cost for carpentry works. the trial court merely declared in the decretal portion of its decision that the "sum of P150. Such assertion should be buttressed by independent evidence. it should be supported by independent evidence. or in recompense for. its equipment and cargoes should be viewed in the light of his self-interest therein. There are two kinds of actual or compensatory damages: one is the loss of what a person already possesses (daño emergente). examine the documentary evidence presented to support Del Rosario’s claim as regards the amount of losses. pointing out specific facts that afford a basis for measuring whatever compensatory damages are borne. 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. to compensate for the injury inflicted and not to impose a penalty. It is not enough that the damage be capable of proof but must be actually proved with a reasonable degree of certainty. that which would have pertained to him (lucro cesante). adduced by one side.00 as actual damages to private respondent but failed to state the factual basis for such award. loss or injury sustained. for its part." The appellate court. In its five-page decision.000. in making an award. to enable an injured party to recover actual or compensatory damages. however. for the failure to receive. the award of P150.048. that is. He must establish his case by a preponderance of evidence which means that the evidence. 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. Actual damages are not presumed. and electrical works. or included the ordinary wear and tear of the house itself.00 should be admitted with extreme caution considering that. Del Rosario’s claim that private respondent incurred losses in the total amount of P6.30 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. Court of Appeals:26 Under Article 2199 of the Civil Code. damages for the loss of the use during the period before replacement. as a whole. 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. appellants continue. Consequently. In other words. and the vessel itself should be accepted as gospel truth. normally. speculations or conjectures. Specific facts that could afford a basis for measuring whatever compensatory or actual damages are borne must be pointed out. actual damages include all the natural and probable consequences of the act or omission complained of. the same should be admitted with extreme caution. In actions based on torts or quasi-delicts.27 The burden of proof is on the party who would be defeated if no evidence would be presented on either side.438. actual or compensatory damages are those awarded in satisfaction of. What is more.Construction and Steel Fabricator to private respondent for P35. Private respondents merely sustained an estimated amount needed for the repair of the roof of their subject building. classified as one for the loss of what a person already possesses (daño emergente) and the other. actual damages include all the natural and probable consequences of the act or omission complained of. is an essential question that remains indeterminable. masonry. As the Court declared: As stated at the outset.000. damages cannot be presumed and courts.28 The Court further declared that "where goods are destroyed by the wrongful act of defendant.00 in its three-page decision. because he was the owner of private respondent corporation whatever testimony he would give with regard to the value of the lost vessel. the sum of money which he would have to pay in the market for identical or essentially similar goods. However. Actual damages cannot be anchored on mere surmises.25 Under Article 2199 of the New Civil Code.000. Their testimonies should be viewed in light of claimants’ self-interest. the trial court awarded P150. the plaintiff is entitled to their value at the time of the destruction.29 While claimants’ bare testimonial assertions in support of their claims for damages should not be discarded altogether.00 as reasonable compensation sustained by plaintiff for her damaged apartment. whether the necessary repairs were caused only by petitioner’s alleged negligence in the maintenance of its school building.

Check No. – Any person who. however. It buys these products from various local suppliers and then sells them abroad. A fine not exceeding two hundred pesos and censure shall be imposed upon any person who. the offender must be sentenced to pay a fine when the execution of the act shall have only resulted in damage to property. The negligence of the private respondent has already been established. petitioner. vs. specifically moral and exemplary damages.000. When the execution of the act covered by this article shall have only resulted in damage to the property of another. shall commit an act which would. 215391 dated May 29. Valdellon. Imprudence and negligence. for P16. CRUZ. Inc. by simple imprudence or negligence. III. private respondent is entitled to P55. THE HONORABLE COURT OF APPEALS and TRADERS ROYAL BANK. Cubao.00 by way of actual damages to private respondent is correct. Porcuincula for petitioner. The petitioner was a depositor of the respondent bank and maintained a checking account in its branch at Romulo Avenue. the penalty of arresto mayor in its minimum period shall be imposed. IN LIGHT OF ALL THE FOREGOING. 88013 March 19.00: 47 .00 by way of exemplary damages.380. 1981.000.000. if done maliciously. in favor of California Manufacturing Company. would constitute a grave felony. the cost of the damage to the terrace of private respondent would amount to P55.32 Accordingly. 365. 1 Subsequently. if it would have constituted a less serious felony. Any person who. we rule that private respondent Valdellon is entitled to only P20. This is so because under the third paragraph of Article 365 of the Revised Penal Code. is reasonable. 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. The petitioner is a private corporation engaged in the exportation of food products. The dishonored checks are the following: 1.00. jointly and severally. particularly in the United States. SO ORDERED.000. Gonzalez. and find that the award given by the trial court. had it been intentional. the penalty of arresto mayor in its minimum and medium periods shall be imposed. In the present case. The parties agree on the basic facts. the offender shall be punished by a fine ranging from an amount equal to the value of said damages to three times such value. by reckless imprudence. as affirmed by the CA. shall suffer the penalty of arresto mayor in its maximum period. if so. shall commit any act which.00 by way of actual damages. shall cause some wrong which. Quezon City. respondents. On May 25. 1990 SIMEX INTERNATIONAL (MANILA). if it would have constituted a light felony.00 with subsidiary imprisonment in case of insolvency. that petitioners adduced evidence that. Petitioners are ORDERED to pay to Erlinda V. INCORPORATED.000. Considering the attendant circumstances. costing P55.480. San Agustin & Sinense for private respondent.We note.000. Don P.: We are concerned in this case with the question of damages. No pronouncement as to costs. in what amounts. We agree that private respondent is entitled to exemplary damages. without regard to the rules prescribed in Article 64 (Emphasis supplied). by simple imprudence or negligence. Most of its exports are purchased by the petitioner on credit.00. Consequently. San Juan. shall suffer the penalty of arresto mayor in its medium and maximum periods. otherwise. No. The said provision reads in full: ART.74.000. 1981. to prision correccional in its medium period.00 actual damages. the penalty of arresto menor in its maximum period shall be imposed. the only damage caused by petitioner Suelto’s act was to the terrace of private respondent’s apartment.000.00 by way of exemplary damages. constitute a grave felony. but which shall in no case be less than 25 pesos. the courts shall exercise their sound discretion. and P20. would have constituted a light felony. thus increasing its balance as of that date to P190. Purpose G. petitioner’s contention that the CA erred in awarding P100. the total amount of P55. All we have to ascertain is whether the petitioner is entitled to the said damages and. if it would have constituted a less grave felony.00. 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. the petitioner deposited to its account in the said bank the amount of P100. the petition is PARTIALLY GRANTED. MORAL DAMAGES b. the petitioner issued several checks against its deposit but was suprised to learn later that they had been dishonored for insufficient funds. Canada and the Middle East. in their view. J. In the imposition of these penalties.R.000.

This rather lackadaisical attitude toward the complaining depositor constituted the gross negligence. 3 Investigation disclosed that the sum of P100. The petitioner complained to the respondent bank on June 10. This Court has carefully examined the facts of this case and finds that it cannot share some of the conclusions of the lower courts. This was simply glossed over if not. However.000. 1981. Serquinia rendered judgment holding that moral and exemplary damages were not called for under the circumstances.00 attorney's fees and costs. in favor of Baguio Country Club Corporation in the amount of P4.953. justifies the grant of moral damages. It credited the said amount in favor of plaintiff-appellant in less than a month. plus 25% attorney's fees. The dishonored checks were eventually paid. Check No.385. 150 SCRA 280). he ordered the defendant to pay nominal damages in the amount of P20. observing that the plaintiff's right had been violated. Similar letters were sent to the petitioner by the Malabon Long Life Trading. However. the petitioner demanded reparation from the respondent bank for its "gross and wanton negligence.00 on May 25. on June 15. Check No. 215474 dated June 10.000. It is this ruling that is faulted in the petition now before us. 1981. indeed. on June 10. wanton and gross bad faith and negligence on the part of the defendantappellant. But the bank rectified its records. It is true that the dishonored checks were. Its standing was reduced in the business community. "eventually" paid. threatening prosecution if the dishonored check issued to it was not made good. 1981. 215441 dated June 5. 1981. 215451 dated June 4. a letter of demand to the petitioner.00. Check No. in the amount of P27.00 plus P5.00: 6. After trial. Its reputation was tarnished.000. aggravated by the lack of promptitude in repairing its error.386. Check No. The petitioner then filed a complaint in the then Court of First Instance of Rizal claiming from the private respondent moral damages in the sum of P1.000. 5 This decision was affirmed in toto by the respondent court.000. Greg Pedreño in the amount of P7. 6 The respondent court found with the trial court that the private respondent was guilty of negligence but agreed that the petitioner was nevertheless not entitled to moral damages. as the Court of Appeals put it. and the dishonored checks were paid after they were re-deposited. 1981.000. The fact is that the petitioner's credit line was canceled and its orders were not acted upon pending receipt of actual payment by the suppliers. 215477 dated June 9. Article 2205 of the Civil Code provides that actual or compensatory damages may be received "(2) for injury to the plaintiff s business standing or commercial credit. 1981. Malabon also canceled the petitioner's credit line and demanded that future payments be made by it in cash or certified check. action on the pending orders of the petitioner with the other suppliers whose checks were dishonored was also deferred. 215480 dated June 9. and by the G. and U. Check No.00 deposited by the petitioner on May 25.00. 1981. in favor of Enriqueta Bayla in the amount of P6. the decision practically ignored the prejudice suffered by the petitioner." This demand was not met. Indeed.906. and costs. had not been credited to it. 1981.00: 5. 1981. Check No.00 and exemplary damages in the sum of P500. that the respondent court said had not been established by the petitioner. if not wanton bad faith.275." 7 Such injury should bolster all the more the demand of 48 . 1981. We also note that while stressing the rectification made by the respondent bank. 215412 dated June 10. the checks should have been paid immediately upon presentment.2. this took almost a month when. 215426 dated May 28. As the Court sees it. in favor of Mr.024.02: and 8. 2 As a consequence. 1981. All this was due to the fault of the respondent bank which was undeniably remiss in its duty to the petitioner. the initial carelessness of the respondent bank. in favor of the Bureau of Internal Revenue in the amount of P3. The respondent bank has not even explained why it was committed at all. there was the omission by the defendant-appellee bank to credit appellant's deposit of P100. in favor of Sea-Land Services. 4. 1981.000. Meantime. properly. It seems to us that the negligence of the private respondent had been brushed off rather lightly as if it were a minor infraction requiring no more than a slap on the wrist. 4 In its letter dated June 20. fraudulent. Enterprises. Its business declined. 1981. The error should not have been committed in the first place.73: 3. It also withheld delivery of the order made by the petitioner. Parogurga.45: 7. The error was rectified on June 17." There is no question that the petitioner did sustain actual injury as a result of the dishonored checks and that the existence of the loss having been established "absolute certainty as to its amount is not required. 1981. We feel it is not enough to say that the private respondent rectified its records and credited the deposit in less than a month as if this were sufficient repentance. It said: The essential ingredient of moral damages is proof of bad faith (De Aparicio vs. Judge Johnico G.00.080. Check No. Inc. These circumstances negate any imputation or insinuation of malicious. in favor of Malabon Longlife Trading Corporation in the amount of P42. in favor of Malabon Longlife Trading Corporation in the amount of P12. disbelieved. 1981. the California Manufacturing Corporation sent on June 9.

the respondent bank did not immediately correct it but did so only one week later or twenty-three days after the deposit was made. Now for the exemplary damages. or its name that prestigious. or malevolent manner. knowing that they will be safe in its custody and will even earn some interest for him. The private respondent makes much of the one instance when the petitioner was sued in a collection case. the depositor expects the bank to treat his account with the utmost fidelity." From every viewpoint except that of the petitioner's. Art. not only in the form of loans when needed but more often in the conduct of their day-to-day transactions like the issuance or encashment of checks. with equal faith. This has to be done if the account is to reflect at any given time the amount of money the depositor can dispose of as he sees fit. The point is that as a business affected with public interest and because of the nature of its functions. The only exception to this rule is where the corporation has a good reputation that is debased. "nominal damages are adjudicated in order that a right of the plaintiff. most of all. confidence. Exemplary or corrective damages are imposed. by way of example or correction for the public good. 8 In the case at bar. As for business entities like the petitioner. temperate. In contracts and quasi-contracts. Whether as mere passive entities for the safekeeping and saving of money or as active instruments of business and commerce. Considering all this. the petitioner is an unsavory and disreputable entity that has no good name to protect. Thus. In the case at bar. in our discretion. a corporation is not as a rule entitled to moral damages because. reckless. in the same amount of P20. nominal. which has been violated or invaded by the defendant. resulting in its social humiliation. the proper remedy is the award to it of moral damages. such as the dishonor of a check without good reason. whether such account consists only of a few hundred pesos or of millions." That is why the determination of the amount to be awarded (except liquidated damages) is left to the sound discretion of the court. The ordinary person. and not for the purpose of indemnifying the plaintiff for any loss suffered by him.the petitioner for moral damages and justifies the examination by this Court of the validity and reasonableness of the said claim. "by way of example or correction for the public good. and as promptly as possible. The immediate consequence was that its prestige was impaired because of the bouncing checks and confidence in it as a reliable debtor was diminished.00. can cause the depositor not a little embarrassment if not also financial loss and perhaps even civil and criminal litigation. in the exercise of its discretion. having been informed of its error in not crediting the deposit in question to the petitioner. in addition to the moral. which we impose. Moral damages are not susceptible of pecuniary estimation. The bank must record every single transaction accurately. always having in mind the fiduciary nature of their relationship. the bank is a trusted and active associate that can help in the running of their affairs. it cannot experience physical suffering or such sentiments as wounded feelings. according to "the circumstances of each case. but that did not prove that it did not have a good reputation that could not be marred. its claim of moral damages in the amount of P1. fraudulent. We agree that moral damages are not awarded to penalize the defendant but to compensate the plaintiff for the injuries he may have suffered. It bears repeating that the record does not contain any satisfactory explanation of why the error was made in the first place and why it was not corrected immediately after its discovery. It is expected that this ruling will serve as a warning and deterrent 49 .00 is nothing short of preposterous. Such ineptness comes under the concept of the wanton manner contemplated in the Civil Code that calls for the imposition of exemplary damages. as the private respondent would portray it. more so since that case was ultimately settled. who have come to regard them with respect and even gratitude and. even the humble wage-earner has not hesitated to entrust his life's savings to the bank of his choice. to sustain such an extravagant pretense." As we have found that the petitioner has indeed incurred loss through the fault of the private respondent. 10 It does not appear that. not being a natural person. liquidated or compensatory damages. the bank is under obligation to treat the accounts of its depositors with meticulous care. 9 We shall recognize that the petitioner did suffer injury because of the private respondent's negligence that caused the dishonor of the checks issued by it. What is especially deplorable is that. we feel that the award of nominal damages in the sum of P20. serious anxiety. After deliberating on this particular matter. The banking system is an indispensable institution in the modern world and plays a vital role in the economic life of every civilized nation. banks have become an ubiquitous presence among the people." in the words of the law.000. 2229. down to the last centavo. temperate. but if failed to consider that the amount of such losses need not be established with exactitude precisely because of their nature.000. the court may award exemplary damages if the defendant acted in a wanton. mental anguish and moral shock.00.000. hereby imposes upon the respondent bank exemplary damages in the amount of P50. A blunder on the part of the bank. Article 2216 of the Civil Code specifically provides that "no proof of pecuniary loss is necessary in order that moral.00 was not the proper relief to which the petitioner was entitled.000. Under Article 2221 of the Civil Code. 2232. The pertinent provisions of the Civil Code are the following: Art. the Court. may be vindicated or recognized. Moreover. it is obvious that the respondent bank was remiss in that duty and violated that relationship. In every case. usually maintains a modest checking account for security and convenience in the settling of his monthly bills and the payment of ordinary expenses. the petitioner is seeking such damages for the prejudice sustained by it as a result of the private respondent's fault. liquidated or exemplary damages may be adjudicated.000. The respondent court said that the claimed losses are purely speculative and are not supported by substantial evidence. Its business certainly is not that big. confident that the bank will deliver it as and to whomever he directs. oppressive.

Inside the plane.000. Since she had never been abroad. In fact. J. The next morning. An advertisement of private respondent Baron Travel Corporation in the March 30. SO ORDERED. There were times when breakfast consisted of hot dogs bought along the sidewalk while lunch and supper consisted of apples and oranges. description of the tour.000. Left with no alternative. 1988 LOURDES CYNTHIA MAKABALI and GEORGINA MAKABALI. they had to scrimp on their limited budget for fear that their meager pocket money would not be enough to pay for their hotel bills. They likewise searched for private respondent's representative who would give them final instructions on their trip to Hongkong. petitioners were assured that they would be going with a group of thirteen [13] other travelers to be led by a tour guide. respondents. According to petitioners. On the third night. FERNAN. was given a trip to Hongkong. the supposed tour was practically over.00 attorney's fees and costs awarded to them by the Court of Appeals in the light of the circumstances of the case. They looked for and found a certain Mr. moral damages in the amount of P20. and that a representative of private respondent would see them off at the Manila International Airport to give them final instructions. In response to her inquiry. and as a graduation gift from her father. petitioners. petitioners complained to private respondent who according to petitioners did not even bother to apologize but simply ignored their complaint and gave them the run around. requested their tour leader to accommodate petitioners provided they pay all their expenses in Hongkong. W. they tried to place a long-distance call to their home but could not get through. nobody met petitioners at the airport. petitioners sent a cable to their parents. a schoolteacher at the Colegio de San Agustin. tour conditions and brochure. and exemplary damages in the amount of P50. mental anguish and public humiliation. When they were paged through the public address system to board their plane for Hongkong. they had no choice but to do so without receiving any instructions from private respondent's representative. L-46877 January 22. It was only at 9:00 in the morning of May 13. Inc. At private respondent's office. University of the Philippines.R. petitioners searched for the tour group they were supposed to meet at the Manila International Airport. 1969 or on the fourth day of the supposed five-day tour that petitioners were notified that private respondent had finally made arrangements for the payment of their bills. Dasmariñas Village.000. ACCORDINGLY. petitioners did not meet anyone from the Baron Tour Group. private respondent sent her the literature pertaining to its Hongkong package tour together with the time schedule. Upon their return. Thereafter. They met neither private respondent's tour group nor its representative. By that time.00 moral and exemplary damages.00. Rosal who was a member of the Abaya Tour Group.000. to their embarrassment. Petitioners lost no time in sending a cable to private respondent informing it that they had no hotel accommodations. No. COURT OF APPEALS and BARON TRAVEL CORPORATION. protested that he was not a tour guide but a business executive working with International Harvester Macleod. in lieu of nominal damages. a certain Mr. Petitioner Georgina Makabali had just graduated from the College of Medicine. 1969. G. 50 . petitioners tagged along with the Abaya Tour Group. 1969 issue of the newspaper The Sunday Times' offering a package tour to Hongkong caught the attention of petitioner Georgina Makabali. P1. her parents insisted that she be accompanied by her sister and co-petitioner Lourdes Cynthia Makabali.: The sole issue in this petition for review is whether or not petitioners are entitled to more than the P5. May 10.00 plus the original award of attorney's fees in the amount of P5. Petitioners were also that they would be lodged at the President Hotel in Hongkong.00. petitioners called up the President Hotel in Hongkong where private respondent promised to book them but it had no accommodations for them. Arsenio Rosal who. These promises and representations convinced the petitioners to purchase the Hongkong package tour offered by private respondent. Petitioners claimed public humiliation due to the fact that they had to pay for their lunch while the rest of the group had prepaid meals. All these caused them sleepless nights because of great worry. and costs. They could not go shopping with the Abaya group for fear that their limited funds would not be sufficient to pay for their hotel bills. On the departure date. the appealed judgment is hereby MODIFIED and the private respondent is ordered to pay the petitioner.against the repetition of the ineptness and indefference that has been displayed here.000. In Hongkong. he knew no one from private respondent Baron Travel Corporation and had nothing to do with it. Arsenio Rosal. vs. and who was going to Hongkong as a paying passenger. lest the confidence of the public in the banking system be further impaired.

000. 10 and P200.000. embarrassment and mental sufferings due to failure of private respondent to perform its obligation to the petitioners. P100.00 as moral damages. Lufthansa German Airlines].00 [Northwest Airlines. There is no doubt that the plaintiffs suffered humiliation and anxiety during the first days of their stay in Hongkong. there is no hard and fast rule in the determination of what would be a fair amount of moral damages.00 as moral and exemplary damages and the amount of P1. Under the established facts and equity of the case. 9 P150. Cuenca] 7 P25. moral shock. Petitioners in their complaint prayed for an award of P100 as actual and compensatory damages. It is essential however. P6.00. exemplary damages are imposed by way of example or correction for the public good. the Court of appeals was in agreement with the findings of the trial court that petitioners suffered anguish. serious anxiety. 12 As to exemplary damages. 14 As reflected in the records of the case. the amounts awarded as damages and attorney's fees by the trial court are inadequate. stating the following as its justification for the award: Plaintiffs claim P35. private respondent acted in wanton 51 . 1 Unsatisfied. Branch XVI and docketed as Civil Case No.00 [KLM Royal Dutch Airlines v. 8 P50. the decision appealed from is hereby modified in that the defendant is ordered to pay the plaintiff the sum of P5.000.000. Travel agents are only paid 10% commissions for the trips they sell. AND OF PETITIONER LOURDES CYNTHIA MAKABALI. The Court of Appeals made the following findings and ruling: It is a fact that the plaintiff had to shift for themselves upon arriving in Hongkong and that defendant arranged for the hotel bills of plaintiffs only after said plaintiffs had cabled it for confirmation. in Lopez P75.000. Inc.000.An action for moral and exemplary damages.000. However. in Ortigas P100. although plaintiff must show that he is entitled to moral. Air France v. social humiliation and similar injury. It will thus be noted that We have awarded moral and exemplary damages depending upon the facts attendant to each case.00 [Lopez v. 11 to P500. attorney's fees and costs was filed by the petitioners in the then Court of First Instance of Manila. fright. temperate or compensatory damages before the court may consider the question of whether or not exemplary damages should be awarded.00 [Zulueta v.000. 76912. 13 and are allowable only when specifically prayed for in the complaint. Besides. P30. WHO IS A DOCTOR OF MEDICINE. 2 Still unsatisfied. petitioners appeared to the Court of appeals. The trial court correctly stated that the amount of damages claimed by the plaintiffs are too high. It will also be noted that We gave separate awards for moral and exemplary damages.000. WHEREFORE. Pan American World Airways]. 3 To begin with.00 AS ATTORNEY'S FEES IN THE LIGHT OF THE SOCIAL STANDING OF PETITIONER GEORGINA MAKABALI. such as physical suffering and the like. Court of Appeals]. IN THE LIGHT OF THE SLEEPLESS NIGHTS AND PUBLIC HUMILIATION THEY SUFFERED FOR THREE DAYS AND THREE NIGHTS. Pan American World Airways]. petitioners elevated this case to Us on a petition for review on a lone assignment of error. are incapable of pecuniary estimation. to wit: THE COURT OF APPEALS ERRED IN AWARDING PETITIONERS THE PITIFUL SUMS OF P5. WHO IS A TEACHER.00 [Ortigas v. While exemplary damages cannot be recovered as a matter of right. IN THE LIGHT OF THE CALLOUS FAILURE OF PRIVATE RESPONDENT TO HAVE ANYONE ATTEND TO PETITIONER IN SPITE OF THE FACT THAT IT RAKES IN MORE THAN HALF A MILLION PESOS A MONTH FROM AIR FREIGHT ALONE. As to exemplary damages. Manila Electric Company.000. We awarded in Yutuk and Air France P10. wounded feelings.000.00. Baron rectified on time its oversight and made it possible for the plaintiff to enjoy the rest of their trip. This is as it should be because the nature and purposes of said damages are different. This is so because moral damages. While moral damages have to do with injury personal to the awardee. besmirched reputation. mental anguish.00 as attorney's fees and the costs. the plaintiffs are entitled to the sum of P5.00 [Yutuk v. These are too much and too high.000. v. The defendant was remiss in the performance of its obligation to the plaintiffs. though incapable of pecuniary estimation.000. 6 A review of related jurisprudence shows that We had awarded moral damages in more or less similar cases ranging from P20. It acted in wanton disregard of the rights of the plaintiffs. Article 2229 of the Civil Code provides that such damages may be imposed by way of example or correction for the public good.00. in the award of damages that the claimant must have satisfactorily proven during the trial the existence of the factual basis of the damages and its causal connection to defendant's acts.000.00 as attorney's fees. Private respondent likewise appealed.00 as exemplary damages plus attorney's fees and costs the Court rendered judgment in petitioner's favor but awarded them only P500.000 for damages aside from attorney's fees.00 AS MORAL AND EXEMPLARY DAMAGES AND P1. Carrascoso].000.00 as moral and exemplary damages.00 as moral and exemplary damages and the sum of P1. 5 they need not be proved.00 as attorney's fees and costs. 4 Article 2217 of the Civil Code recognizes that moral damages which include physical suffering. SO ORDERED. are in the category of an award designed to compensate the claimant for actual injury suffered and not to impose a penalty on the wrongdoer.00 and in Zulueta P200. since each case must be governed by its own peculiar circumstances.060.000.000. According to the Court of Appeals.

1976 in CA-G. An answer with counterclaim was filed by the defendants Vicente Medina and Leticia Lopez alleging good faith in the acquisition of the property in question and seeking payment of damages.81 with a prayer for a writ of preliminary attachment against the properties of Napoleon Navarro. petitioner bank filed before the then Court of First Instance of Nueva Ecija Civil Case No. c. Private respondent Napoleon Navarro was an employee of petitioner Philippine National Bank stationed at Cabanatuan City as Branch Accountant. T-9424 issued as a consequence of said sale.00.000. increasing the award to petitioners of moral and exemplary damages to P35. respondents. PATRICIA CRUZ. of the spiritual status quo ante.00 plus attorney's fees and costs. and appropriated unto himself the proceeds in the aggregate amount of P28. THE HONORABLE COURT OF APPEALS. We feel that Our award should not exceed the said amount. VICENTE B. 4506 and 4507. FERNAN. 4506 against Napoleon Navarro to recover the sum defalcated in the amount of P 13. Subsequently. On various dates from 1962 to 1965. Quantum of Evidence G. the decision of the Court of Appeals subject of the petition for review is hereby modified.00 is minimal compared to the sufferings and embarrassment of petitioners who left Manila with high spirits and excitement hoping to enjoy their first trip to a foreign land only to be met with uncertainties and humiliations. vs. a Deed of Sale of Real Property and Dwelling House dated February 22. Navarro and his wife Patricia Cruz and the spouses Vicente Medina and Leticia Lopez for the annulment of the aforesaid Deed of Sale and the cancellation of the Transfer Certificate of Title No.000. In the light of the circumstances obtaining in the case at bar. 1966.683.000. 1965. petitioner. No. NAPOLEON C.000.77. 4507 against respondents Napoleon C. SO ORDERED.000. We note however that petitioners limited their claim for moral and exemplary damages in their complaint filed with the Court of First Instance to a total of P35. T-9424 was issued by the Register of Deeds of Cabanatuan City in the names of spouses Vicente Medina and Leticia Lopez.00 as attorney's fees. 4507 and on the counterclaim modifying the decision of the trial court by reducing the award of moral and exemplary damages from P100.disregard of the rights of petitioners. respondent Navarro was dismissed from the service of Philippine National Bank. encashed the checks.R. 1965.00 and lawyer's fees in the amount of P1. 15 The amount of P5. the award of moral damages is aimed at a restoration within the limits of the possible. NAVARRO.000. the anxiety they must have felt in their first journey to a foreign land under uncertain circumstances and with meager funds which could run out any time. and therefore it must be proportionate to the suffering inflicted. Id private respondent Napoleon Navarro prepared fifty-one [51] manager's checks and their corresponding debit tickets purportedly representing refund of deposits of petitioner's clients although he knew that there were no deposits necessitating such refund. MEDINA and LETICIA LOPEZ.000. We are inclined to award damages to the petitioner more than what was awarded by the Court of Appeals.683. He later caused to be falsified and Identified the signatures of the alleged clients as payees and indorsers. 1965 executed by respondents Napoleon Navarro and Patricia Cruz in favor of the other respondents spouses Vicente Medina and Leticia Lopez over the former's properties situated in Cabanatuan City was registered in the Office of the Register of Deeds of Cabanatuan City at 11:50 o'clock in the morning of February 25. an amended complaint was filed. It must be emphasized that moral damages are not intended to enrich the complainant at the expense of a defendant. On February 25. Subsequently. without pronouncement as to costs. These pronouncements lay the basis and justification for this Court to award petitioners moral and exemplary damages. WHEREFORE. They are awarded only to enable the injured parties to obtain means. 1988 PHILIPPINE NATIONAL BANK. especially the social standing of petitioners and the embarrassment and humiliation suffered by them. claiming that the filing of the complaint was without legal factual basis and that it besmirched their reputation causing them damages of P50. diversions or amusements that will serve to alleviate the moral sufferings the injured parties have undergone by reason of defendant's culpable action. petitioner Philippine National Bank filed Civil Case No.00 with legal interest from the date of filing of the counterclaim and ordering petitioner bank to pay the amount of P5.000.77 after further reconstruction and verification of the records of plaintiffs Cabanatuan Branch. the trial court ordered the consolidation of Civil Cases Nos.00 and attorney's fees to P5.: This is a petition for review on certiorari of the decision rendered by respondent Court of Appeals dated December 27. This decision is immediately executory. 52 . On motion of petitioner. a new transfer certificate of title beating No. L-45770 March 30. While the writ of preliminary attachment was in the process of issuance.906. Burden of Proof. the only difference with the original complaint being the amount defalcated by defendant Napoleon Navarro which was finally placed at P28.00 with costs.00 to P10. On February 26. J. as well as from the Resolution denying petitioner's motion for reconsideration. After the discovery of this anomaly. No.000.R. 48720-R dismissing the complaint of petitioner Philippine National Bank in Civil Case No. In other words.

00 awarded to said spouses as moral damages is excessive. However. [d] in admitting the motion to admit Answer with amended counterclaim dated June 19. assailing the lower court's finding [a] on defendant Navarro's liability to the plaintiff in the amount of P13. Medina and Leticia Lopez. the complaint is dismissed and the plaintiff Philippine National Bank is ordered to pay defendants Vicente Medina and Leticia Lopez the amount of P10. There is no complete evidence to show that the sale of the real property and dwelling house dated February 22.000.683. It seems that the purpose of the sale was to enable defendant Napoleon C. SO ORDERED. the lower court rendered judgment the dispositive portion reading as follows: WHEREFORE. and for lawyer's fees of P5. Rule 1 0 in conjunction with Sections 4. defendant in Civil Case No. No.00 on the counterclaim. only petitioner PNB came to this Court through the instant petition for review and only in so far as the decision of the Appellate Court in Civil Case No. the date of the filing of the complaint and in Civil Case No. 4506 liable to the plaintiff in the amount of P13. Medina and Leticia Lopez had to engage counsel to resist the action instituted against them by the Philippine National Bank. WHEREFORE. There is evidence that the plaintiff was aware of the negotiations between defendant Napoleon C. without pronouncement as to costs. under the established facts and circumstances the amount of P100. Medina.00 was insufficient in fact and in law. 4506. Navarro is ordered to pay the plaintiff the amount of P28. the decision appealed from is hereby modified in that in Civil Case No.00. 4507 against the spouses Vicente B.00 to P5. 4507 against the defendants is dismissed for lack of evidence. On December 27. Navarro to pay the plaintiff the amount that said Navarro defalcated There is no showing that the plaintiff acted maliciously and in a wanton manner in filing Civil Case No. [c] in ordering plaintiff-appellant to pay defendants. private respondents and defendants Vicente Medina and Leticia Lopez filed a Motion to Admit Answer with Amended Counterclaim in Civil Case No.000.906. In view of the foregoing.appellant's liability to the defendant-appellees Vicente Medina and Leticia Lopez for moral and exemplary damages in the amount of P100.906. The defendants Vicente B. 1970.000. the trial court did not err in awarding to said spouses the amount of P 5. 48719-20-R. and 6 of Rule 15 of the Revised Rules of Court.683. Petitioner contends that: I 53 . this Court finds the plaintiff Philippine National Bank liable to said defendants for moral and exemplary damages of P100.81.000. There is no doubt that the Id spouses suffered mental anguish for having been made defendants in Civil Case No. 4507 whereby the amount claimed for damages was increased to P100. 4507. hence it should be disregarded.00 which the plaintiffs must pay to the said defendants with interest at the legal rate from the filing of the counterclaim. and that the supposed evidence presented to show that said defendants suffered moral damages in the amount of P100.000. 9424 under the names of spouses Vicente Medina and Leticia Lopez issued by virtue thereof.77 evidenced by fifty.one [511 manager's checks all fraudulently encashed by the said defendant. [b] on the plaintiff.00 as attorney's fees.000.00 and the costs of this suit.683.00 and the increase of their lawyer's fees from P1. Navarro and defendants Vicente B.appellees Vicente Medina and Leticia Lopez the sum of P5.On June 22. petitioner filed an opposition to the motion to admit answer with amended counterclaim contending that petitioner was not given an opportunity to be heard and to oppose the admission of the aforementioned pleading. 1 On August 26. 1970. 1970 together with the answer with amended counterclaim flied by defendants-appellees Vicente Medina and Leticia Lopez for the reason that said motion does not conform with Section 3. F-l to DDD-l inclusive showing that the total amount defalcated by defendant Napoleon C.77 as borne out by the evidence.00 and lawyer's fees increased to P5. the defendant Napoleon C. petitioner Philippine National Bank appealed to respondent Court of Appeals where the case was docketed as CA-G.000. The moral and exemplary damages awarded to spouses Vicente Medina and Leticia Lopez should be reduced to P10.000. and [e] in not declaring the Deed of Sale of Real Property and Dwelling House dated February 22. 1965. 4507 is concerned. 4507.000.906. 2 From this decision of the lower court.000. On the counterclaim by defendants Vicente Medina and Leticia Lopez. While both motions were denied. 5.81 and not P28. The complaint of the plaintiff in Civil Case No. This motion was allowed by the lower court in an Order dated June 24. the lower court erred when it held that defendant Napoleon Navarro was liable to the plaintiff only in the amount of P13. with costs against the plaintiff.00 as attorney's fees. Hence.000.00 as moral and exemplary damages with legal interest from the date of the filing of the counterclaim and the amount of P5.00 as attorney's fees. Medina and Leticia Lopez. 1976. 1970.00. 1965 executed by defendants Napoleon Navarro and Patricia Cruz in favor of the defendants Vicente B. Exhibits F. Medina and Leticia Lopez moved for a reconsideration of said decision. Navarro was in the amount of P 28.000.81. respondent appellate court promulgated its assailed decision based on these findings: The plaintiff has presented indubitable evidence consisting of manager's checks as well as the corresponding debit tickets.000.R.000. judgment is rendered finding Napoleon Navarro.77 with legal interest from February 25. 3 Both petitioner and private respondents Vicente E. 1965 executed between defendants-appellees as rescissible and in not cancelling TCT No. and Leticia Lopez was undertaken in fraud of creditors. Prior thereto.

00. We find the conclusion of respondent appellate court that the filing of Civil Case No. Navarro and Patricia Cruz in favor of private respondents spouses Vicente E.PNB's COMPLAINT IN CIVIL CASE NO.00 by respondent appellate court and attorney's fees in the amount of P5. The law could not have meant to impose a penalty on the right to litigate such right is so precious that moral damages may not be charged on those who may exercise it erroneously. 9 Conformably with settled jurisprudence and in agreement with petitioner's contention.000. 4507 was not made maliciously and in a wanton manner inconsistent with its award of moral and exemplary damages in the reduced amount of P10.00 AS ATTORNEY'S FEES HAS NO BASIS IN FACT AND IN LAW. The controversy revolves on the issue of consistency. Medina and Leticia Lopez. social humiliation and similar injury. besmirched reputation. are in the category of an award designed to compensate the claimant for actual injury suffered and not to impose a penalty on the wrongdoer. the law requires that his act be wrongful. moral shock. As to exemplary damages. mental anguish. temperate or compensatory damages before the Court may consider the question of whether or not exemplary damages should be awarded. The adverse result of an action does not per se make the act wrongful and subject the actor to the payment of moral damages.000. According to petitioner. Inc.000. Article 2217 of the Civil Code recognizes that moral damages include physical suffering. serious anxiety. the law requires a wrongful act or omission attributable to petitioner as the proximate cause of the mental anguish suffered by private respondents spouses Vicente E. the amount of indemnity being left to the discretion of the court. 4506. 5 While no proof of pecuniary loss is necessary in order that moral damages may be awarded.00 in favor of aforesaid respondent spouses. Is respondent appellate court's finding on the nonexistence of malice and bad faith on petitioner's part when it filed Civil Case No. In the absence of malice and bad faith. This Court is tasked to resolve this inconsistency. 8 which enunciates that: In order that a person may be made liable to the payment of moral damages. Civil Case No.00. For these the law taxes costs. 7 For moral damages to be awarded.5. IV RESPONDENTS SPOUSES MEDINA AND LOPEZ' MOTION TO ADMIT ANSWER WITH AMENDED COUNTERCLAIM CONTRAVENES SECTION 3. and which amount was the subject of Civil Case No. & 6. 4507 Was the action brought by petitioner against private respondents seeking the annulment of the Deed of Sale of Real Property and Dwelling House executed by private respondent spouses Napoleon C.000. 4507 IS WITHOUT BASIS IN LAW AND IN FACT. Navarro during the time that the latter was employed by the former as accountant in its Cabanatuan Branch. Though incapable of pecuniary computation. 4507 consistent with the lower court's order awarding moral and exemplary damages originally in the amount of P100. respondent appellate court ruled that there is no showing that the plaintiff acted maliciously and in a wanton manner in filing Civil Case No. This brings to light Our ruling in Boysaw v. 4507. This is so because moral damages though incapable of pecuniary estimation. moral damages may be recovered if they are the proximate result of the defendant's wrongful act or omission. are not corrective or exemplary damages. fright. the sale was fraudulently entered into between aforesaid parties to defeat petitioner's recovery of the amount defalcated by private respondent Napoleon C. 4507 WAS NOT MADE MALICIOUSLY AND IN A WANTON MANNER IS INCONSISTENT WITH ITS AWARD OF MORAL AND EXEMPLARY DAMAGES IN THE REDUCED AMOUNT OF P10.000. T-9424. 4507. Article 2229 of the Civil Code provides that such damages may be imposed by way of example or correction for the public good.00 both in favor of private respondents spouses Medina and Lopez? As mentioned earlier.000.000. 4 they need not be proved. HENCE NO BASIS FOR THE AWARD OF MORAL AND EXEMPLARY DAMAGES. V THE DISMISSAL OF CIVIL CASE NO. Moral damages. 4507 WAS NOT FILED MALICIOUSLY AND IN BAD FAITH. 6 it is nevertheless essential that the claimant satisfactorily proves the existence of the factual basis of the damages and its causal relation to defendant's acts. While exemplary damages cannot be recovered as a matter of right. II THE CONCLUSION OF THE RESPONDENT COURT THAT THE FILING OF CML CASE NO. It was however further ruled that there is no doubt that said spouses suffered mental anguish for having been made defendants in Civil Case No. the mental anguish suffered by respondents spouses Medina and Lopez for having been made defendants in Civil Case No. 4507 is not that kind of anxiety which would warrant the 54 . Respondent appellate court categorically ruled in the negative yet awarded moral and exemplary damages in the reduced amount of P10. although plaintiff must show that he is entitled to moral.00 but reduced to P10. wounded feelings. III THE AWARD OF P5. RULE 10 IN CONJUNCTION WITH SECTIONS 4. Interphil Promotions. in other words. RULE 15 OF THE REVISED RULES OF COURT. Medina and Leticia Lopez and covered by Transfer Certificate of Title No.

1970. 1970 and a motion for reconsideration upon its denial. are liberally construed to promote their object and to assist the parties in obtaining just. We consider the judicial policy on rules of procedure. unless there are circumstances such inexcusable delay or the taking of the adverse party by surprise or the like. Absent the recognized exceptions. 4507 hinges on a determination of pertinent facts the resultant findings of which when supported by substantial evidence are beyond Our power of review. It was shown that the purpose of the sale was to enable private respondent Napoleon C. however. Mercantile. petitioner filed an opposition to the assailed motion stating petitioner's legal grounds therefor and subsequently a motion for reconsideration of the denial of aforesaid opposition. at which date and hour the undersigned will submit the same for the consideration of the Honorable Court. Rule 15 of the Revised Rules of Court which provides that notice of a motion shall be served by the applicant to all parties concerned. specially on matters which the court may dispose of on its own motion.. 12 Needless to say. petitioner filed an opposition on July 7. 16 Thus. and of any affidavits and other papers accompanying it. in line with the liberal judicial policy on rules of procedure. Lapses in the literal observance of a rule of procedure may be overlooked when they have not prejudiced the adverse party and have not deprived the court of its authority. This is one day short of the three [31 day notice rule provided under Section 4. Rules of procedure. Respondent appellate court ruled there is no complete evidence to show that the sale of real property and dwelling house was executed to defraud petitioner bank but there is evidence that the latter knew of the impending sale between private respondents themselves. petitioner questions the dismissal of Civil Case No. Records show that petitioner received a copy of the motion on June 26. Inc. more so. 1970. which might justify a refusal permission to amend. Navarro to pay the petitioner the amount that private respondent Navarro defalcated These pronouncements in the assailed decision of respondent appellate court for the dismissal of Civil Case No. To this motion.award of moral damages.L. petitioner assigns a procedural flaw to the Motion to Admit Answer with Amended Counterclaim filed on June 22. v. Intermediate Appellate Court 15 We ruled: Procedural due process is not based solely on a mechanistic and literal application of a rule such that any deviation is inexorably fatal. there is no sufficient justification for the award of moral damages.5 and 6 of Rule 15 of the Revised Rules of Court. Rules of Court]. 14 These circumstances do not obtain in the case at bar. In E. We find no reversible error committed by the trial court in admitting private respondents spouses Medina and Lopez' Motion to Admit Answer with Amended Counterclaim. finding of facts of the Court of Appeals are conclusive on the parties and the Supreme Court 17 on the tenet that this Court decides appeals which only involve questions of law and that it is not the function of the Supreme Court to analyze and to weigh 55 . In resolving this error. 1970. The worries and anxieties suffered by respondents spouses Medina and Lopez were only such as are usually. In the same manner that We find no basis for the award of moral damages to respondents spouses Medina and Lopez. The court. caused to a party haled into court as a defendant in a litigation. Amendments to pleadings are generally favored and should be liberally allowed in furtherance of justice order that every case may so far as possible be determined on its real facts and in order to speed the trial causes or prevent the circuity of action and unnecessary expense. the assailed portion pertaining to the Notice addressed to the Clerk of Court which reads: THE CLERK OF COURT May you please include the foregoing motion in the Court's calendar for hearing on June 24. To sentence litigant to pay his adversary's lawyer's fees would be imposing a penalty on his right to litigate.1970 while the motion was set for hearing and heard on June 24. 4507 by the lower court as affirmed by the respondent appellate court contending that the same was done without basis in law and in fact. award of attorney's fees is the exception rather than the general rule. in of as of As aforementioned. 10 Therefore. The motion was filed on June 22. Rule 1. 1970 at 9:00 o'clock in the morning or as soon thereafter as counsel may be heard. together with a copy of the motion. We find petitioner neither liable for attorney's fees. at least three [3] days before the hearing thereof. Rule 10 in conjunction with Sections 4. Finally. It is not sound public policy to place a penalty on the right to litigate. Even under the New Civil Code 11 a litigant would not be entitled to recover the fees paid to his attorney as damages where no bad faith on the part of his adversary was shown. et al. This eliminates the element of surprise and denial of due process sought to be avoided in instances where amendments to pleadings are snowed. 1970 by private respondents spouses Medina and Lopez. for good cause may hear a motion on shorter notice. exemplary damages. .. speedy and inexpensive determination of every action and proceeding [Section 2. To compel the defeated party to pay the fees of counsel for his successful opponent would throw wide open the door of temptation to the opposing party and his counsel to swell the fees to undue proportions. and this includes the three-day notice requirement. 13 Petitioner asserts that the foregoing notice contravenes Section 3. In the fourth assignment of error. The hearing was requested to be set on June 24.

Medina and Leticia Lopez. did not have a current year registration plate .. . and Bienvenido Canciller. 1968 MELQUIADES RAAGAS and ADELA LAUDIANO RAAGAS. We so held in Philippine National Bank vs. On May 4 the plaintiffs' moved for a judgment on the pleadings. and that each time they allowed him to drive it was only after a check of his physical condition and the mechanical fitness of the truck assigned to him. June 30. vs. August 21. or otherwise admits the material allegations of the adverse party's pleading. Alabastro. March 14.R. he was violating any traffic regulation (article 2185. Suntay Tanjangco vs. along the public highway in MacArthur.. was controverted by the averment in the answer to the effect that the defendants "have no knowledge or information sufficient to form a belief as to the truth of the allegations" as to such damages." Such averment has the effect of tendering a valid issue. while the latter was "recklessly" driving a truck owned by his co-defendants. Court of Agrarian Relations.000 as attorney's fees. L-20081 February 27. L-12332. 1968. P2. It is our view that the court erred. the said truck without proper license . except for the deletion of the award of moral and exemplary damages as well as attorney's fees to private respondents spouses Vicente E. . Tian Ho." and that "unless there is proof to the contrary.000 for attorney's fees. Dec. Section 10 of Rule 35 of the old Rules of Court 1 authorized a judgment on the pleadings "where an answer fails to tender an issue.000. . new Civil Code). filed on April 22. et al. to which the other issues are subsidiary or intestinal. plus costs. L-18820. G. P1. that it was the child who "rushed from an unseen position and bumped the truck so that he was hit by the left rear tire of the said truck and died". for the year 1958 when the accident occurred that "this failure . to pay "to the plaintiffs the sum of P10." The defendants appealed to the Court of Appeals. moral. when the accident occurred. L-23348. No costs. CASTRO.. L-15861. MRS. "the truth of the matter being that the death of Regino Raagas was occasioned by an unforeseen event and/or by the fault of the small boy Regino Raagas or his parents. it is presumed that a person driving a motor vehicle has been negligent if at the time of the mishap. The lower court denied the request for lack of "proper notice to the adverse party". 23. L-19762. P1. defendants-appellants. Realino for defendants-appellants. . J. No. Tiausas for plaintiff-appellee. . et al. OCTAVIO TRAYA and BIENVENIDO CANCILLER. . 1962 and Lim Giok vs. Jovellanos. Leyte. P1. nominal and corrective damages in a sum to be determined by the court. which certified the case to this Court because the issues raised are purely of law. No. and consequently the defendants are not to blame for the accident which was "entirely attributable to an unforeseen event" or due to the fault of the child and negligence of his parents. and the costs. 48720 is hereby affirmed in all other respects. Villa-Abrille. The plaintiffs' claim for actual. SO ORDERED.000 for the death of their child Regino Laudiano Raagas. 18 WHEREFORE.000 for moral damages.such evidence all over again. Victoriano M. and assert that the truck "was fully loaded and was running at a very low speed and on the right side of the road". 1957 and in Benavides vs. and considered the case submitted for decision upon the filing of the plaintiffs' memorandum. jointly and severally. we held that even if the allegations regarding the amount of damages in the complaint are not specifically denied in the answer. 1967 A PHILD 453. In Tomassi vs. L-9419. however. May 29. such damages are not deemed admitted. December 29.: The complaint filed on April 1. 1960. On June 24 it rendered a judgment on the pleadings. On the previous day. 1958. Miguel V. 1967. alleges in essence that on or about April 9. has the effect of admitting hypothetically that they operated . plaintiffs-appellees." The court reasoned that the denial in the answer of the charge of reckless driving "did not affect the plaintiffs' positive allegation in their complaint that the truck . condemning the defendants. . April 16.000 actual damages. 1960. The plaintiffs ask for actual damages in the sum of P10. upon the claim that the defendants' answer not only "failed to tender an issue" but as well "admitted material allegations" of the complaint. . the defendants specifically deny that Canciller was "driving recklessly" at the time of the mishap. the clerk of court received a telegram from the defendants' counsel requesting for postponement of the hearing to July 2 on the ground that he was sick of influenza. that the defendant-spouses have exercised due diligence in the selection and supervision of their driver Canciller. its jurisdiction being limited to reviewing errors of law that might have been committed by the lower court. P1. and Delfin vs." The court went on to conclude that under the circumstances a judgment on the pleadings was "irremediably proper and fitting. L-7047. is whether the court a quo acted correctly when it rendered judgment on the pleadings. whom they hired in 1946 only after a thorough study of his background as a truck driver. his wife. 1960 with the Court of First Instance of Leyte (civil case 2749) by the spouses Melquiades Raagas and Adela Laudiano Raagas against Octavio Traya. we declared in no uncertain terms that actual 56 . 1964. moral.000 for expenses of litigation. OCTAVIO TRAYA. the decision of the Court of Appeals in CAG. In their answer with counterclaim for moral and actual damages and attorney's fees. In Abubakar Tan vs. nominal and corrective damages." The vital issue. the said vehicle ran over the plaintiffs' three-year old son Regino causing his instantaneous death.R.. Lacson. Bataan Cigar and Cigarette Factory. therefore. This motion was set for hearing on June 18.

but must depend on actual proof that damage had been suffered and on evidence of the actual amount. defendant-appellee. essential that the claimant satisfactorily prove the existence of the factual basis of the damage and its causal relation to defendant's acts. No pronouncement as to costs.. at Butuan City with warnings that a warrant of distraint and levy will be issued against its properties unless it settles its tax liability under the ordinance aforesaid. Verbal demands were made by the City Treasurer of Butuan on the representative of the San Miguel Brewery. (Sec. 1960. "that the power of distraint and levy as embodied in your Charter (Republic Act No. at its branch office in that city to enforce the collection of the taxes assessed against it." The preceding disquisition points up the inescapable need of a full-blown trial on the merits at which the parties will be afforded every opportunity to present evidence in support of their respective contentions and defenses. plaintiff-appellant. July 27.R. ACCORDINGLY. FRANCISCO MAGNO. Inc. Although it appears to have paid the required taxes under Ordinance No. amounting to P9. with the approval of the Mayor of Butuan City issued a warrant of distraint and levy against the properties of the San Miguel Brewery. (Sec. and costs.00 corresponding to the period from January 9. 1961. 11.00 as attorney's fees. including penalties corresponding to the period from May. 11 promptly and religiously upon the effectivity of the ordinance. and P3. 110 amending Ordinance No.00 for each day thereafter 57 . the city treasurer. the San Miguel Brewery. we reaffirmed the rule that although an allegation is not necessary in order that moral damages may be awarded.10 per case of twenty-four bottles of Coca-Cola. including tuba. al. 11 amending Ordinance No. a corporation organized and existing under the laws of the Philippines with principal offices at Manila. or a total of P24. instituted the present action in the Court of First Instance of Manila.000. received a formal letter of demand for payment of its tax liability from the City Treasurer of Butuan. in Malonzo vs. 523.damages must be proved.00 in damages.. L-21879 September 29. promptly answered and explained that he may issue warrants of distraint and levy upon properties of delinquent taxpayers under Ordinance No.000. conjecture or guesswork" as to the fact and amount of damages. Pepsi-Cola. voluntarily surrendered the two (2) delivery trucks of the company seized under the warrant to the said City Treasurer at about 5 o'clock in the afternoon of the same day. INC.. or disposal of all alcoholic or malt beverages. Rosales and Jose R. Several other written demands were thereafter made by the City Treasurer of Butuan to officials of plaintiff's branch office in said city. 1960 is set aside. in a letter dated September 29. Seven-Up. requesting more time "within which to act on said demand and in order to refer the matter to its Manila Office". the Municipal Board of Butuan City passed Ordinance No. "it is. Picazo and Agcaoili for plaintiff-appellant. at about 9 o'clock in the morning. 1961 to January 10.) The San Miguel Brewery. including penalty. L-13851. Inc. 26 of the City of Butuan. 1960. 1967 SAN MIGUEL BREWERY. nevertheless. the amount of P15.96. G. to which the Branch Manager of the company at Cagayan de Oro City who has supervision of the company's warehouse at Butuan City.) On June 6. Thereafter. P1. for the period corresponding to June 6 up to October 30.129. Lichauco. upon previous arrangement with the representative of the City Treasurer of Butuan. 1960. respectively. on January 6. To this. vs. in civil case No. answered on October 10. Inc. praying for an order directing the defendant Francisco Magno to release the delivery trucks seized and impounded by the City Government of Butuan allegedly "without authority and for reasons unknown to the company". the judgment on the pleadings of June 24. and thereby incurred in back taxes. Soda Water. the facts of the case that gave rise to the controversy are as follows: On December 14.42. Tru-Orange. wines and mixed or fermented liquors. i. 1961. under Ordinance Nos. Annex A. 1961. the same Municipal Board passed Ordinance No. On January 12.000. 3. 1 [e]. Villanueva for defendant-appellee.000. 2 [e] and Sec. Finally. and that a court cannot rely on "speculation. 1960. and on the sales of soft drinks at the rate of P. Inc. From the stipulation of facts submitted by the parties in the lower court and the various annexes referred to therein. and any other kind of soft drinks or carbonated drinks. 1960. 1950. The appeal was originally lodged with the Court of Appeals which certified the case to this Court. the company stopped paying the taxes thereafter (Annex D). counsel for the company wrote a letter to the City Treasurer of Butuan questioning the power of the city government of Butuan to levy upon its properties pointing out. 46039. but failed to yield any concrete result. On September 23. and this case is hereby remanded to the court of origin for trial on the merits.. and to order the defendant to pay to the plaintiff damages in the amount of P6. Accordingly. and ordering it to pay to the defendant P2. as amended). the San Miguel Brewery. J. 1961. 1957 to August 15. 1960. Bireley. Annex B. basi and tapuy.25 per case of twenty-four bottles. Inc. maintains a warehouse or branch office in the City of Butuan and is engaged in the sale of beer and soft drinks in said City.747. Inc. the City Treasurer of Butuan.: An appeal from a decision of the Court of First Instance of Manila. can only be exercised by your goodselves in respect to delinquencies in the payment of real estate taxes". trading in.. 11 and 110. and under Ordinance No. 110. No. Galang et.32. a notice of seizure by virtue of the warrant of distraint and levy was served on the company's Branch Manager at Butuan City who. imposing a tax of two per cent (2%) on the gross sales or receipts of those engaged in the sale. 1960. fixing instead a tax on the sale of beer at the rate of P.618. Jose V.e. On January 9. ANGELES. dismissing the complaint filed by the San Miguel Brewery. the issue involved being purely one of law. 7 of said City.

00 and P10. Montecillo & Belo. vs. Del Rosario. Vera and Cu Unjieng. 555-556). 1963. 1962. . chattels or effects. Ponce Enrile. 192. Ordinance No. J. The contention is untenable.nèt Moreover. they submitted a stipulation of facts along with documentary evidence on the basis of which the court a quo. in criminal cases. Benito and Ocampo. appellant assails the conclusion of the court that "the allegation in the complaint (par. 26 Phil. He is not the proper party against whom the alleged invalidity of the ordinance in question should be pleaded. mental anguish. and it has been held that a constitutional question will be considered by an appellate court at any time.. 1. We do not find any of the exceptions aforementioned applicable to this case to justify a conclusion that the validity of Ordinance No. his deputy. where it involves the jurisdiction of the court below. nor is this the proper proceeding wherein the alleged infirmity of the said ordinance may be raised. The same rule should apply where the validity of a municipal ordinance is questioned. so that if not raised by the pleadings.) The exceptions are. Inc. besmirched reputation. paid under protest the taxes assessed against it by the City Treasurer of Butuan. Robb and Hilscher vs. de Guzman. To the charge that Ordinance No. but in his individual capacity. notwithstanding the admission of the defendant in the stipulation of facts that the San Miguel Brewery. 137. plus attorney's fees in the amount of P2. 26 of the City of Butuan. 1960. Parenthetically. fright. (See also Cadwallader-Gibson Lumber Co. the City Treasurer. 37 O. either in the trial court or on appeal. he was acting. respectively. as Treasurer of Butuan City. Under the first assignment of error. A municipal ordinance is not subject to collateral attack.. debts. 1961. supra. 164 citing 12 C. 5) that the seizure of plaintiff's trucks was made for reasons unknown to the plaintiff. and forthwith the impounded trucks were released. Public policy forbids collateral impeachment of legislative acts (43 C. 1961 to February 8. therefore. 62 Phil. incurred damages in that amount. wounded feelings. People of the Philippines. it is admitted that on September 29. the defense that in seizing the delivery trucks of the San Miguel Brewery. it will not be considered on appeal (People and Hongkong & Shanghai Banking Corporation vs. it is contended that the trial court fell into error in not ordering the defendant-appellee to pay to the appellant in damages the amount of P2. though raised for the first time on appeal. The argument is based on a wrong premise.000. is false". In cases where the constitutionality of statutes are directly put in issue. 13). is empowered to issue the warrant. and as expressly admitted in the appellant's brief. vs. January 31. reveals that except for the general averment therein that its delivery trucks were seized and impounded by order of the defendant Francisco Magno "without authority of law and for reasons unknown to the plaintiff". L. 68 Phil. Instead. as follows: Sec. the San Miguel Brewery. can not be hold liable to pay to the company any damages. . which is without factual basis as pointed out above. 26 of the City of Butuan is ultra vires. Inc. rendered the decision appealed from.. vs. allegedly sustained by him and the members of his family on account of the shock. in a letter of the City Treasurer of Butuan to Attys. under the law. It erroneously assumes that the defendant is personally liable for damages to the appellant. 786).00 per day which the plaintiff was compelled to secure and use for the period from January 9. 320. and. During the pendency of the action. Under the second assignment of error. among others. if it appears that a determination of the question is necessary to a decision of the case. Sofronio L. and other personal property. Inc. J.00. 26 of the City of Butuan provides." (p. said counsel was informed that the city government was exercising its power of levy and distraint against properties of taxpayers under Ordinance No. p. no mention was made in the stipulation of facts nor any evidence ever introduced during the trial of the case in the lower court. plus the costs of the suit.that the trucks remain impounded and unused by the plaintiff. among others. A motion for reconsideration of the decision having been denied. bank accounts and any interest in and 58 .000. credits. and social humiliation they suffered by reason of the filing of the case against him by the plaintiff.. Appellant.000. Francisco Magno is sued in this case not in his capacity as City Treasurer of Butuan but in his individual capacity. An examination of the complaint filed in this case. to show that it was the intention of the appellant to place in issue the validity of the ordinance aforesaid. in civil cases. defendant Francisco Marco interposed. because it is not sustained by the evidence. 26 of the city. L-18240. plaintiff filed this action against Francisco Magno. P. ordinarily it may not be raised at the trial. as disclosed in the allegations in the complaint. it has been held that it is the duty of the court to pass on the constitutional question. Siguion Reyna.00. In his answer. counsel for the plaintiff. and if not raised in the trial court.G. including stocks and other securities.160. not in his official capacity. . the action was brought against the defendant Francisco Magno in his individual capacity. on April 2. suffice it to say that the same may not be considered in this appeal. In paragraph 8 of the stipulation of facts.1awphîl. representing the hire of two (2) trucks at the rate of P80. Macondray & Co. — Upon the failure of any person owing any delinquent tax or delinquent revenue to pay the same. said appellant claiming that it was only at the time that the stipulation of facts was being prepared that the defendant-appellee made mention for the first time of his alleged authority to issue a warrant of distraint and levy against properties of tax delinquents under Ordinance No. the plaintiff interposed the instant appeal. . as stated in Hongkong etc. the general rule is. during which time the two delivery trucks of the plaintiff were impounded by the appellee. at the time required under existing ordinance. that the question of constitutionality must be raised at the earliest opportunity. The parties submitted no testimonial evidence. thus — "As a matter of fact. 26 of the City of Butuan may be properly passed upon in this appeal. where the question may be raised at any stage of the proceedings. or any of his clerks duly authorized in writing by the City Treasurer may seize or distraint any goods. Quimson vs.. Cu Unjieng. and was in the performance of his official duty. may not now feign ignorance of such notice which appears in the records.00 as moral and exemplary damages. disregarding the established fact that the defendant had issued the warrant of distraint and levy against plaintiff's properties in his capacity as City Treasurer of Butuan who. He set up a counterclaim of P40.

designed to compensate the claimant for actual injury suffered and not to impose a penalty on the wrong-doer (Algarra vs. and costs. fright and the like (Darang vs. mental anguish. J. the trial court sentenced the plaintiff to pay to the defendant. who was merely performing a duty enjoined by law to be performed when he issued the warrant of distraint and levy. it is. Judgment is affirmed in all other respects.rights to personal property. Belizar. 1961. Galang. the decision appealed from is modified. WHEREFORE. and as there is no disagreement that defendant-appellee issued said warrant by virtue of Ordinance No. It may be awarded along with expenses of litigation.000. 161176 September 16. and was forced to employ the services of private counsel to defend his rights. and the expenses of the distraint. CARLOS T. x-----------------------------------------------------------------------------------------x VELASCO. Respondents. d.00. do not justify the award of this kind of damages. and it falls on the courts to determine whether or not that line has been crossed.COURT OF APPEALS. are in the category of an award. 1967). Nevertheless. In respect of the appellee's counterclaim for moral and exemplary damages. because moral damages. of such person in sufficient quantity to satisfy the tax.: The freedom of the press is one of the cherished hallmarks of our democracy. or charge.000 exemplary damages and P2. and PHILIP PICHAY. When awardable. is addressed to the sound discretion of the court. there must be pleading and proof of moral suffering. Nominal damages may also be adjudicated. Petitioners. 1960). 27 Phil. There is a fine line between freedom of expression and libel.000. Stipulation of Facts). July 27. JOCELYN BARLIZO.000. damages in the sum of P2. The amount of attorney's fees. other than judicial costs. REY SALAO. together with any increment thereto incident to delinquency.000. the freedom it enjoys must be balanced with responsibility. 284.versus .00 as nominal damages. there can be no question that appellee Francisco Magno. L-19487.000. P10.R. essential that the claimant should satisfactorily prove the existence of the factual basis of the damages (Article 2217) and its causal connection to defendant's acts. when not G. 161032 September 16. in cases where the court deems it just and equitable under the circumstances of the case. setting aside the award of P2.00 nominal damages. 15. the trial court said: With respect to the counterclaim of defendant. is just and equitable in the premises. Petitioner –versus– PEOPLE OF THE PHILIPPINES and ATTY. This is so. We believe the award of P2. the defendant public officer was sued in his private capacity for acts done in the performance of official duty required by law. but even as we strive to protect and respect the fourth estate. 59 .R. had acted in bad faith. 2008 ERWIN TULFO. .. While no proof of pecuniary loss is necessary in order that moral damages may be awarded.00 to the defendant in concept of damages. Sandejas. No. No. under the third assignment of error. though incapable of pecuniary estimation.00 attorney's fees. it appears that defendant introduced no evidence to support his claim for P40. because the mere findings that certain allegations in the complaint are not true. Finally.00. The portals of the courts of justice should not be closed to litigants who ask for the protection of their rights. Respondents. January 31. and not having been shown that the defendant. And when as in this case. and the plaintiff committed a mistake in instituting the action against the wrong party. It infringes upon the right of a citizen to have access to the courts. L-13851. x-------------------------------------------x G. but increasing the attorney's fees to P2. in his capacity as City Treasurer of Butuan. on the other hand. Costs against plaintiff-appellant. 26 of the City of Butuan above-quoted (Par. the amount of indemnity being left to the discretion of the court (Article 2216). appellant maintains that the trial court should not have awarded damages in favor of the appellee under the counterclaim of the latter. PEOPLE OF THE PHILIPPINES. it is but proper that attorney's fees be charged against the plaintiff. Penalty in the concept of damages should not be imposed simply because a complaint is found unmeritorious by the courts. nevertheless. 2008 SUSAN CAMBRI. In order that moral damages may be awarded. SO.000. and ordering the plaintiff to pay to the defendant P100.00 moral damages. and CARLOS SO. either as a private citizen or as City Treasurer of Butuan. Neither may we consider the award as exemplary damages.00 attorney's fees and P100. JR. for the reason that no evidence was introduced by the appellee in support of the moral and exemplary damages he and his family allegedly suffered. cannot be made to answer personally for damages to the appellant. Since there is no dispute that the appellee issued the warrant of distraint and levy against the delivery trucks of the appellant on January 9. Malonzo vs. It argues further that attorney's fees should not have been assessed against it.

quoted hereunder. a corrupt public official.. four (4) separate informations were filed on September 8. write and publish in the regular issue of said publication on May 11. . So. conspiring and confederating together and mutually helping one another. Ding So ng Intelligence Division ng Bureau of Customs and [sic] pinakamayaman na yata na government official sa buong bansa sa pangungurakot lamang diyan sa South Harbor. CARLOS DING SO. bakit hindi na lang tumayo ng sarili niyang robbery-hold-up gang para kumita ng mas mabilis. the above-named accused. Si So ang nagpapadrino sa mga pag-inspection ng mga container na ito. and Philip Pichay. contempt and ridicule. 1999 in Pasay City.[2] Criminal Case No. Rey Salao. contempt and ridicule. being then the columnist. WHEREIN said complainant was indicated as an extortionist. respectively of REMATE. ATTY. and with the malicious intent of injuring and exposing said complainant to public hatred. So! . quoted hereunder. publisher and managing editor. a tabloid published daily and of general circulation in the Philippines. Carlos Ding So of the Bureau of Customs. as president of the Carlo Publishing House. 99-1598 That on or about the 11th day of May. 1999. nakakahiya ka sa mga INC. 1999. 1999 in Pasay City. Metro Manila. unlawfully and feloniously and with malicious intent to discredit or dishonor complainant. write and publish in the regular issue of said publication on May 12. malapit ka nang itiwalag ng nasabing simbahan dahil sa mga kalokohan mo. 60 . Siyempre-binibigyan din niya ng salapi yung ibang mga ahensiya para pumikit na lang at itikom ang kanilang nga [sic] bibig diyan sa mga buwayang taga BOC. respectively of REMATE.The Facts On the complaint of Atty. as author/writer. and with the malicious intent of injuring and exposing said complainant to public hatred. as city editor. with the crime of libel in connection with the publication of the articles in the column Direct Hit in the issues of May 11. ATTY. the above-named accused. Ewan ko ba rito kay Atty. 1999. in daily column DIRECT HIT. unlawfully and feloniously and with malicious intent to discredit or dishonor complainant. ikaw na yata ang pinakagago at magnanakaw na miyembro nito. Daan-daang libong piso ang kinikita ng masiba at matakaw na si So sa mga importer na ayaw ideklara ang totoong laman ng mga container para makaiwas sa pagbayad ng malaking customs duties at taxes. and June 25. These were assigned to Branch 112 and docketed as Criminal Case Nos. Bankrupt na nga. Philippines and within the jurisdiction of this Honorable Court. Inc. being then the columnist. publisher and managing editor. 1999. Hoy. May 12. May 19. to wit: PINAKAMAYAMAN SA CUSTOMS Ito palang si Atty.[1] The four informations read as follows: Criminal Case No. as managing editor. Susan Cambri. all as already stated. Balita ko. a tabloid published daily and of general circulation in the Philippines. discrediting and ridiculing him before the bar of public opinion. Awang-awa ako sa ating gobyerno. 1999 with the Regional Trial Court in (RTC) Pasay City. Philippines and within the jurisdiction of this Honorable Court. Jocelyn Barlizo. 1999. Hindi matibag ang gagong attorney dahil malakas daw ito sa Iglesia ni Kristo. smuggler and having illegally acquired wealth. 1999. to wit: SI ATTY. Metro Manila. as national editor. and charged petitioners Erwin Tulfo. SO NG BOC LINTEK din sa pangungurakot itong Ding So ng Bureau of Customs Intelligence Unit sa South Harbor. with the object of destroying his reputation. its daily column DIRECT HIT. 99-1597 to 99-1600. ninanakawan pa ng mga kawatan tulad ni So. Abangan bukas ang mga raket ni So sa BOC. 99-1599 That on or about the 12th day of May. of the daily tabloid Remate. did then and there willfully. did then and there willfully. CARLOS DING SO. conspiring and confederating together and mutually helping one another.

Mas bagay sa iyo ang pagiging buwayang naka korbata at holdaper. So . The prosecution presented documentary evidence as well. and with the malicious intent of injuring and exposing said complainant to public hatred. . saksakan din ng lakas itong si Daniel Aquino ng Presidential Anti-Smuggling Unit na nakatalaga sa South Harbor. (4) the existence and genuineness of the Remate newspaper. a tabloid published daily and of general circulation in the Philippines. did then and there willfully. Pag hindi nagbigay ng pera ang mga brokers. publisher and managing editor. to wit: xxxx Nagfile ng P10 M na libel suit itong si Atty. Buhay ka pa sinusunog na ang iyong kaluluwa sa impyerno.[6] The prosecution presented four witnesses. all as already stated. . while Barlizo and Pichay were arraigned on December 15. 1999. 1999. write and publish in the regular issue of said publication on June 25. So since 1992 and had worked with him in the Customs Intelligence and Investigation Service Division of the Bureau of Customs. They all pleaded not guilty to the offenses charged. ATTY. (2) that the accused and complaining witness did not know each other during all the time material to the four dates of publication. with the object of destroying his reputation. being then the columnist. namely: Oscar M. and that the articles were untrue because he had known Atty. dagdagan mo pa ang pagnanakaw mo dahil hindi kita tatantanan. Metro Manila. magnanakaw na tunay itong si Aquino. Magnanakaw ka So!! WHEREIN said complainant was indicated as an extortionist. smuggler and having illegally acquired wealth. and Cambri were arraigned. its daily column DIRECT HIT. with the object of destroying his reputation. Hoy. 99-1597 That on or about 25th day of June.[4] Criminal Case No. Ablan testified that he had read the four columns written by Tulfo. At pre-trial. Jr. Salao. (5) the column therein and its authorship and the alleged libelous statement as well as the editorial post containing the designated positions of the other accused. contempt and ridicule. ang lakad nito. 1999 in Pasay City. maiipit ang pagre-release ng kanilang kargamento.[5] On November 3. all as already stated. a corrupt public official. . Philippines and within the jurisdiction of this Honorable Court.[3] Criminal Case No. discrediting and ridiculing him before the bar of public opinion. being then the columnist.. 1999. James Fortes. all as already stated. he 61 . 99-1600 That on or about 19th day of May. CARLOS DING T. hindi bagay sa iyo ang pagiging attorney . a corrupt public official. unlawfully and feloniously and with malicious intent to discredit or dishonor complainant. Metro Manila. the above-named accused. in daily column DIRECT HIT. CARLOS DING SO. Tulfo. the following were admitted by petitioners: (1) that during the four dates of the publication of the questioned articles. discrediting and ridiculing him before the bar of public opinion. 1999. and complainant Atty. unlawfully and feloniously and with malicious intent to discredit or dishonor complainant. smuggler and having illegally acquired wealth. ATTY. the above-named accused. a tabloid published daily and of general circulation in the Philippines. the complaining witness was not assigned at South Harbor. conspiring and confederating together and mutually helping one another. smuggler and having illegally acquired wealth. publisher and managing editor. (3) that Remate is a newspaper/tabloid of general circulation in the Philippines. and with the malicious intent of injuring and exposing said complainant to public hatred. Nagalit itong tarantadong si Atty. with the object of destroying his reputation. and (6) the prosecutions qualified admission that it is the duty of media persons to expose corruption. respectively of REMATE. So dahil binanatan ko siya at inexpose ang kagaguhan niya sa BOC. did then and there willfully. quoted hereunder. WHEREIN said complainant was indicated as an extortionist. Panghihingi ng pera sa mga brokers. conspiring and confederating together and mutually helping one another. Ablan. Gladys Fontanilla. WHEREIN said complainant was indicated as an extortionist. contempt and ridicule. Atty.. He further testified that upon reading the articles written by Tulfo. quoted hereunder. Carlos So ng Bureau of Customs laban sa inyong lingkod at ilang opisyales ng Remate sa Pasay City Court. a corrupt public official.Hoy So. discrediting and ridiculing him before the bar of public opinion. respectively of REMATE. So. Philippines and within the jurisdiction of this Honorable Court. write and publish in the regular issue of said publication on May 19. 1999 in Pasay City. . Ding So ng Bureau of Customs Intelligence Division. SO. Tulad ni So. to wit: xxxx Tulad ni Atty.

000. He testified that petitioner Tulfos act of imputing upon him criminality. She claimed that none among her co-accused from the Remate newspaper edited the columns of Tulfo. So because the subject articles identified Atty. 1999. he believed that these were untrue. Carlos as Atty. petitioner Tulfo testified that he did not write the subject articles with malice. Bureau of Customs and there was only one Atty. managing editor. He testified that he is an employee of Carlo Publishing House. Fortes testified that he knew Atty. intrigues.[13] Petitioner Cambri. Ding So in the Intelligence Division of the Customs Intelligence and Investigation Service or in the entire Bureau of Customs. brother of petitioner Erwin Tulfo. he also filed 14 cases of libel against Raffy Tulfo.[11] In his defense. they are equally responsible and liable to the same extent as if they were the author of the articles. SUSAN CAMBRI. 99-1598 to 99-1600. for Criminal Case Nos. managing editor of Remate. encode. Carlos T.concluded that they referred to Atty. evaluate. and embarrassment. and that Tulfo was under the supervision of Rey Briones. whose duties and responsibilities are the typesetting. Vice President for Editorial and Head of the Editorial Division. the officers are herself. [9] Atty. So nor met him before the publication of the articles. and that he had several sources in the Bureau of Customs. under Article 355 of the same Code. editing. He further testified that he is also known as Atty. So or Atty. Ding So at the South Harbor. the RTC found petitioners guilty of the crime of Libel. the Court finds the accused ERWIN TULFO. She testified that petitioner Barlizo is her subordinate. 1999. as defined in Article 353 of the Revised Penal Code. that the publication and editing of the subject articles were the responsibility of Tulfo. He testified that the company practice was to have the columnists report directly to the vice-president of editorials. Tulfo claimed that it was the practice of certain people to use other peoples names to advance their corrupt practices. mental anguish. or publication of the column of Tulfo because the column was not edited. Lydia Bueno. He also testified that Ding is his nickname and that he is the only person in the entire Bureau of Customs who goes by the name of Atty. So. Salao further testified that he had no participation in the subject articles of Tulfo. that the duties of the position are to edit. She further testified that she had no participation in the writing. and that having read the articles of Tulfo. and that in the Editorial Division. her supervisor. Briones. Records Officer I of the Bureau of Customs. The dispositive portion reads as follows: WHEREFORE. JOCELYN BARLIZO and PHILIP PICHAY guilty beyond reasonable doubt of four (4) counts of the crime of LIBEL.[12] Petitioner Salao testified that he came to know Atty. testified that she classifies the news articles written by the reporters. She also testified that the page wherein Tulfos column appeared was supervised by Bueno as news editor. nor had he anything to do with the latters column. He further testified that Tulfo was already a regular contributor. Inc. there was only one employee by the name of Atty. or a fine ranging from P200. editing. as he knew Atty. Carlos T. wounded feelings.00 Pesos or both. and penalized by prision correccional in its minimum and medium periods.[15] The Ruling of the RTC In a Decision dated November 17. that he had been connected with the Bureau of Customs since October 1981. the Metro page. and that he was assigned as Officer-in-Charge (OIC) of the Customs Intelligence and Investigation Service Division at the Manila International Container Port since December 27. He executed two complaint-affidavits. his co-officers and employees and superior officers in the Bureau of Customs. co-officers of the Armed Forces of the Philippines. Ding So. that he was designated as the national editor of the newspaper Remate since December 1999. Carlos Ding So of the Bureau of Customs. since December 1998. Carlos Ding So. 62 . Carlos Ding So. because as a columnist. 1999 and the other dated July 5.[14] Petitioner Pichay testified that he had been the president of Carlo Publishing House. So before the subject articles. city editor. So who was also known as Atty. He said it also caused him and his family sleepless nights. that the columnists were given autonomy on their columns. Inc. assailing his honesty and integrity. Carlos Ding So when the latter filed a case against them. but against a person by the name of Atty. He further testified that he included in his complaint for libel the officers of Remate such as the publisher. Atty. He also claimed that his articles had neither discredited nor dishonored the complainant because as per his source in the Bureau of Customs. Prior to this. So had been promoted.00 Pesos to P6. particularly in the South Harbor. and layout of the page assigned to her. as news and city editor. one dated June 4. testified that she issued a certification in connection with these cases upon the request of Atty. 2000. and contempt among his co-members in the legal profession. So testified that he was the private complainant in these consolidated cases. co-members and peers in the Iglesia ni Kristo.[8] This certification stated that as per records available in her office. So of the South Harbor was not directed against the complainant.[10] Atty. He further testified that he did not do any research on Atty.. and Salao as national editor. and that he was given blanket authority to write what he wanted to write. He testified that his criticism of a certain Atty. caused him dishonor. and that the vice-president for editorials is the one who would decide what articles are to be published and what are not. discredit. that he neither knew Atty. he had to rely on his source. and supervise layout of the news from the provinces. Ding So of the Customs Intelligence and Investigation Service Division. and among ordinary persons who had read said articles.[7] Fontanilla. REY SALAO. So as a fellow member of the Iglesia Ni Kristo and as a lawyer. and national editor because under Article 360 of the Revised Penal Code (RPC).

HE CRITICIZED ANOTHER PERSON WORKING AT THE SOUTH HARBOR. for EACH count with accessory penalties provided by law. 63 .[16] The Ruling of the Court of Appeals Before the Court of Appeals (CA). 161032. while the rest of his co-accused filed a motion for reconsideration dated July 2. No.R. In a Resolution dated December 11. the two cases were consolidated since both cases arise from the same set of facts. both motions were denied for lack of merit. and Pichay brought a similar petition docketed as G. Salao. Jocelyn Barlizo and Philip Pichay wrote and published the four (4) defamatory articles with reckless disregard. in case of insolvency. of whether it was false or not. SO ORDERED.000. THE LOWER COURT ERRED IN IGNORING THE LACK OF THE ESSENTIAL ELEMENT OF DISCREDIT OR DISHONOR. His co-accused assigned the following errors: A The trial court seriously erred in holding accused Susan Cambri. being. CR No. as minimum. as moral damages. as maximum.00) PESOS. by way of exemplary damages. THERE WAS NO MALICE AGAINST THE PRIVATE COMPLAINANT ATTY. the Eighth Division of the CA dismissed the appeal and affirmed the judgment of the trial court. jointly and severally. to FOUR (4) YEARS and TWO (2) MONTHS of prision correccional. 161176. AS DEFINED BY JURISPRUDENCE. the CA erred in concluding that malice in law exists by the courts having incorrectly reasoned out that malice was presumed in the instant case. THE LOWER COURT ERRED IN IGNORING THE UNREBUTTED TESTIMONY OF THE APPELLANT THAT HE DID NOT CRITICIZE THE PRIVATE COMPLAINANT WORKING AT THE NAIA. all with subsidiary imprisonment. [17] 2. involve the same parties. 25318 which affirmed the decision of the RTC. assail the same decision of the CA.R. B The trial court seriously erred in concluding that libel was committed by all of the accused on the basis of its finding that the elements of libel have been satisfactorily established by evidence on record. HENCE. seeking the nullification of the same CA decision. as actual damages. In a Resolution dated March 15. 2003. Jocelyn Barlizo and Philip Pichay liable for the defamations contained in the questioned articles despite the fact that the trial court did not have any finding as to their participation in the writing. they are hereby ordered to pay. Considering that the accused Erwin Tulfo. 2003 was filed by Tulfo. the Court hereby sentences EACH of the accused to suffer imprisonment of SIX (6) MONTHS of arresto mayor. the sum of EIGHT HUNDRED THOUSAND (P800. Rey Salao.R. CARLOS DING SO. in the mind of the Court. and seek identical reliefs. the Honorable CA erred in not declaring the assailed articles as privileged.Applying the Indeterminate Sentence Law. 2003.00).000. 2003.[21] Assignment of Errors Petitioner Tulfo submitted the following assignment of errors: I Assuming that the Prosecution presented credible and relevant evidence. THE ELEMENT OF IDENTITY IS LACKING. A motion for reconsideration dated June 30. Barlizo.00). Rey Salao. the sum of ONE MILLION PESOS (P1.000. Susan Cambri. Petitioners Cambri. Tulfo assigned the following errors: 1. and an additional amount of FIVE HUNDRED THOUSAND PESOS (P500. 2004. and to pay the costs. No.000. the said articles libelous per se. C The trial court seriously erred in considering complainant to be the one referred to by Erwin Tulfo in his articles in question. seeking to reverse the Decision of the CA in CA-G. editing and/or publication of the questioned articles. 3.[20] Petitions for Review on Certiorari under Rule 45 Tulfo brought this petition docketed as G.[18] In a Decision[19] dated June 17.

Salao And Barlizo Liable For The Defamatory Articles In The May 11. however. Whether or not the subject articles are privileged communications must first be established by the defense. 354 of the RPC. Art. In passing. 354 of the RPC does not apply. Even so. Likewise. considering that an appeal in a criminal proceeding throws the whole case open for review. indeed. neither the RTC nor the CA had a chance to properly consider and evaluate this defense. and upheld the same when it came to commentaries made on public figures and matters of public interest. Court of Appeals. This lays an unusual burden on the part of the prosecution. Inc. the lower court. and it was error on the part of the trial and appellate courts to use the presumption of malice in law in Art. Tulfo now draws parallels between his case and that of Art Borjal. This case must be distinguished from Borjal on several points. the subject is a public official. who served as the OIC of the Bureau of Customs Intelligence and Investigation Service at the Ninoy Aquino International Airport (NAIA) at the time of the printing of the allegedly libelous articles. whereas in the present case. Third. The assignment of errors of petitioner Tulfo shall be discussed first.[25] It shall be discussed and has yet to be determined whether or not the articles fall under the category of fair commentaries. The exercise of this right or any right enshrined in the Bill of Rights.[22] Petitioners Cambri.[24] In essence. The recognition of a right is not free license for the one claiming it to run roughshod over the rights of others. it was held in Borjal that the articles written by Art Borjal were fair commentaries on matters of public interest. committed gross error as defined by the provisions of Section 6 of Rule 45 by its misappreciation of the evidence presented on matters substantial and material to the guilt or innocence of the petitioner. He argues that it is the burden of the prosecution to prove malice in fact. Responsibility of the Press The Court has long respected the freedom of the press. which shall be differentiated from the present case in discussing the second assignment of error of Tulfo. the Court. Barlizo. Without Taking Into Account The Unrebutted Evidence That Petitioners Had No Participation In The Editing Or Publication Of The Defamatory Articles In Question. Thus. the subject in Borjal was a private citizen. B -The Court Of Appeals Committed Grave Abuse Of Discretion In Manifestly Disregarding The Unrebutted Evidence That Petitioners Had No Participation In The Editing Or Publication Of The Defamatory Articles In Question. Even in cases wherein the freedom of the press was given greater weight over the rights of individuals. Finally. 1999 Issues Of Remate Simply Because They Were Managing Editor. it must be noted that the defense of Tulfos articles being qualifiedly privileged communication is raised for the first time in the present petition. The Journalists Code of Ethics adopted by the National Union of Journalists of the Philippines shows that the press recognizes that it has standards to follow in the exercise of press freedom.[23] Our Ruling The petitions must be dismissed. and the CA to refute a defense that Tulfo had never raised before them. the RTC. Second. Freedom of the Press v. C -The Court Of Appeals Seriously Misappreciated The Evidence In Holding That The Person Referred To In The Published Articles Was Private Complainant Atty. In his appeal. as follows: A -The Court of Appeals Seriously Erred In Its Application of Article 360 Of The Revised Penal Code By Holding Cambri. he argues that the subject articles fall under qualifiedly privileged communication under Borjal and that the presumption of malice in Art. the ruling in Borjal was that there was no sufficient identification of the complainant. Tulfo claims that the CA erred in not applying the ruling in Borjal v. it shall be dealt with now. Carlos So. are matters of public interest. Salao. it cannot be refuted that the goings-on at the Bureau of Customs. and Pichay submitted their own assignment of errors.II Even assuming arguendo that the articles complained of are not privileged. has stressed that such freedom is not absolute and unbounded. nonetheless. It is now a matter of establishing whether the articles of Tulfo are protected as qualified privileged communication or are defamatory and written with malice. and was not a criminal case. the first being that Borjal stemmed from a civil action for damages based on libel. I of said code states that journalists recognize the duty to air the other side and 64 . comes with an equal burden of responsible exercise of that right. and argues that the prosecution should have proved malice in fact. that this freedom carries duties and responsibilities. 19 And June 25. There is no question of the status of Atty. and this particular issue was never brought before either the RTC or the CA. 12. So as a public official. for which he would be liable. a government agency. National Editor And City Editor Respectively Of Remate And By Holding Pichay Also Liable For Libel Merely Because He Was The President Of Carlo Publishing House. which it failed to do at the level of the RTC and the CA.

the duty to correct substantive errors promptly. Art. VIII states that journalists shall presume persons accused of crime of being innocent until proven otherwise. In the present case, it cannot be said that Tulfo followed the Journalists Code of Ethics and exercised his journalistic freedom responsibly. In his series of articles, he targeted one Atty. Ding So of the Bureau of Customs as being involved in criminal activities, and was using his public position for personal gain. He went even further than that, and called Atty. So an embarrassment to his religion, saying ikaw na yata ang pinakagago at magnanakaw sa miyembro nito. [26] He accused Atty. So of stealing from the government with his alleged corrupt activities.[27] And when Atty. So filed a libel suit against him, Tulfo wrote another article, challenging Atty. So, saying, Nagalit itong tarantadong si Atty. So dahil binabantayan ko siya at in-expose ang kagaguhan niya sa [Bureau of Customs]. [28] In his testimony, Tulfo admitted that he did not personally know Atty. So, and had neither met nor known him prior to the publication of the subject articles. He also admitted that he did not conduct a more in-depth research of his allegations before he published them, and relied only on his source at the Bureau of Customs. In his defense before the trial court, Tulfo claimed knowledge of people using the names of others for personal gain, and even stated that he had been the victim of such a practice. He argued then that it may have been someone else using the name of Atty. So for corrupt practices at the South Harbor, and this person was the target of his articles. This argument weakens his case further, for even with the knowledge that he may be in error, even knowing of the possibility that someone else may have used Atty. Sos name, as Tulfo surmised, he made no effort to verify the information given by his source or even to ascertain the identity of the person he was accusing. The trial court found Tulfos accusations against Atty. So to be false, but Tulfo argues that the falsity of contents of articles does not affect their privileged character. It may be that the falsity of the articles does not prove malice. Neither did Borjal give journalists carte blanche with regard to their publications. It cannot be said that a false article accusing a public figure would always be covered by the mantle of qualified privileged communication. The portion of Borjal cited by Tulfo must be scrutinized further: Even assuming that the contents of the articles are false, mere error, inaccuracy or even falsity alone does not prove actual malice. Errors or misstatements are inevitable in any scheme of truly free expression and debate. Consistent with good faith and reasonable care, the press should not be held to account, to a point of suppression, for honest mistakes or imperfections in the choice of language. There must be some room for misstatement of fact as well as for misjudgment. Only by giving them much leeway and tolerance can they courageously and effectively function as critical agencies in our democracy. In Bulletin Publishing Corp. v. Noel we held A newspaper especially one national in reach and coverage, should be free to report on events and developments in which the public has a legitimate interest with minimum fear of being hauled to court by one group or another on criminal or civil charges for libel, so long as the newspaper respects and keeps within the standards of morality and civility prevailing within the general community. To avoid the self-censorship that would necessarily accompany strict liability for erroneous statements, rules governing liability for injury to reputation are required to allow an adequate margin of error by protecting some inaccuracies. It is for the same reason that the New York Times doctrine requires that liability for defamation of a public official or public figure may not be imposed in the absence of proof of actual malice on the part of the person making the libelous statement.[29] (Emphasis supplied.) Reading more deeply into the case, the exercise of press freedom must be done consistent with good faith and reasonable care. This was clearly abandoned by Tulfo when he wrote the subject articles. This is no case of mere error or honest mistake, but a case of a journalist abdicating his responsibility to verify his story and instead misinforming the public. Journalists may be allowed an adequate margin of error in the exercise of their profession, but this margin does not expand to cover every defamatory or injurious statement they may make in the furtherance of their profession, nor does this margin cover total abandonment of responsibility. Borjal may have expanded the protection of qualified privileged communication beyond the instances given in Art. 354 of the RPC, but this expansion does not cover Tulfo. The addition to the instances of qualified privileged communications is reproduced as follows: To reiterate, fair commentaries on matters of public interest are privileged and constitute a valid defense in an action for libel or slander. The doctrine of fair comment means that while in general every discreditable imputation publicly made is deemed false, because every man is presumed innocent until his guilt is judicially proved, and every false imputation is deemed malicious, nevertheless, when the discreditable imputation is directed against a public person in his public capacity, it is not necessarily actionable. In order that such discreditable imputation to a public official may be actionable, it must either be a false 65

allegation of fact or a comment based on a false supposition. If the comment is an expression of opinion, based on established facts, then it is immaterial that the opinion happens to be mistaken, as long as it might reasonably be inferred from the facts.[30] (Emphasis supplied.) The expansion speaks of fair commentaries on matters of public interest. While Borjal places fair commentaries within the scope of qualified privileged communication, the mere fact that the subject of the article is a public figure or a matter of public interest does not automatically exclude the author from liability. Borjal allows that for a discreditable imputation to a public official to be actionable, it must be a false allegation of fact or a comment based on a false supposition. As previously mentioned, the trial court found that the allegations against Atty. So were false and that Tulfo did not exert effort to verify the information before publishing his articles. Tulfo offered no proof for his accusations. He claimed to have a source in the Bureau of Customs and relied only on this source for his columns, but did no further research on his story. The records of the case are bereft of any showing that Atty. So was indeed the villain Tulfo pictured him to be. Tulfos articles related no specific details or acts committed to prove Atty. So was indeed a corrupt public official. These columns were unsubstantiated attacks on Atty. So, and cannot be countenanced as being privileged simply because the target was a public official. Although wider latitude is given to defamatory utterances against public officials in connection with or relevant to their performance of official duties, or against public officials in relation to matters of public interest involving them, such defamatory utterances do not automatically fall within the ambit of constitutionally protected speech.[31] Journalists still bear the burden of writing responsibly when practicing their profession, even when writing about public figures or matters of public interest. As held in In Re: Emil P. Jurado: Surely it cannot be postulated that the law protects a journalist who deliberately prints lies or distorts the truth; or that a newsman may ecape liability who publishes derogatory or defamatory allegations against a person or entity, but recognizes no obligation bona fide to establish beforehand the factual basis of such imputations and refuses to submit proof thereof when challenged to do so. It outrages all notions of fair play and due process, and reduces to uselessness all the injunctions of the Journalists Code of Ethics to allow a newsman, with all the potential of his profession to influence popular belief and shape public opinion, to make shameful and offensive charges destructive of personal or institutional honor and repute, and when called upon to justify the same, cavalierly beg off by claiming that to do so would compromise his sources and demanding acceptance of his word for the reliability of those sources.[32] The prosecution showed that Tulfo could present no proof of his allegations against Atty. So, only citing his one unnamed source. It is not demanded of him that he name his source. The confidentiality of sources and their importance to journalists are accepted and respected. What cannot be accepted are journalists making no efforts to verify the information given by a source, and using that unverified information to throw wild accusations and besmirch the name of possibly an innocent person. Journalists have a responsibility to report the truth, and in doing so must at least investigate their stories before publication, and be able to back up their stories with proof. The rumors and gossips spread by unnamed sources are not truth. Journalists are not storytellers or novelists who may just spin tales out of fevered imaginings, and pass them off as reality. There must be some foundation to their reports; these reports must be warranted by facts. Jurado also established that the journalist should exercise some degree of care even when writing about public officials. The case stated: Clearly, the public interest involved in freedom of speech and the individual interest of judges (and for that matter, all other public officials) in the maintenance of private honor and reputation need to be accommodated one to the other. And the point of adjustment or accommodation between these two legitimate interests is precisely found in the norm which requires those who, invoking freedom of speech, publish statements which are clearly defamatory to identifiable judges or other public officials to exercise bona fide care in ascertaining the truth of the statements they publish. The norm does not require that a journalist guarantee the truth of what he says or publishes. But the norm does prohibit the reckless disregard of private reputation by publishing or circulating defamatory statements without any bona fide effort to ascertain the truth thereof. That this norm represents the generally accepted point of balance or adjustment between the two interests involved is clear from a consideration of both the pertinent civil law norms and the Code of Ethics adopted by the journalism profession in the Philippines.[33] Tulfo has clearly failed in this regard. His articles cannot even be considered as qualified privileged communication under the second paragraph of Art. 354 of the RPC which exempts from the presumption of malice a fair and true report, made in good faith, without any comments or remarks, of any judicial, legislative, or other official proceedings which are not of confidential nature, or any statement, report, or speech delivered in said proceedings, or of any other act performed by public officers in the exercise of their functions. This particular provision has several elements which must be present in order for the report to be exempt from the presumption of malice. The provision can be dissected as follows: In order that the publication of a report of an official proceeding may be considered privileged, the following conditions must exist: 66

(a)

(b) (c)

That it is a fair and true report of a judicial, legislative, or other official proceedings which are not of confidential nature, or of a statement, report or speech delivered in said proceedings, or of any other act performed by a public officer in the exercise of his functions; That it is made in good faith; and That it is without any comments or remarks.[34]

The articles clearly are not the fair and true reports contemplated by the provision. They provide no details of the acts committed by the subject, Atty. So. They are plain and simple baseless accusations, backed up by the word of one unnamed source. Good faith is lacking, as Tulfo failed to substantiate or even attempt to verify his story before publication. Tulfo goes even further to attack the character of the subject, Atty. So, even calling him a disgrace to his religion and the legal profession. As none of the elements of the second paragraph of Art. 354 of the RPC is present in Tulfos articles, it cannot thus be argued that they are qualified privileged communications under the RPC. Breaking down the provision further, looking at the terms fair and true, Tulfos articles do not meet the standard. Fair is defined as having the qualities of impartiality and honesty.[35] True is defined as conformable to fact; correct; exact; actual; genuine; honest.[36] Tulfo failed to satisfy these requirements, as he did not do research before making his allegations, and it has been shown that these allegations were baseless. The articles are not fair and true reports, but merely wild accusations. Even assuming arguendo that the subject articles are covered by the shield of qualified privileged communication, this would still not protect Tulfo. In claiming that his articles were covered by qualified privileged communication, Tulfo argues that the presumption of malice in law under Art. 354 of the RPC is no longer present, placing upon the prosecution the burden of proving malice in fact. He then argues that for him to be liable, there should have been evidence that he was motivated by ill will or spite in writing the subject articles. The test to be followed is that laid down in New York Times Co. v. Sullivan,[37] and reiterated in Flor v. People, which should be to determine whether the defamatory statement was made with actual malice, that is, with knowledge that it was false or with reckless disregard of whether it was false or not.[38] The trial court found that Tulfo had in fact written and published the subject articles with reckless disregard of whether the same were false or not, as proven by the prosecution. There was the finding that Tulfo failed to verify the information on which he based his writings, and that the defense presented no evidence to show that the accusations against Atty. So were true. Tulfo cannot argue that because he did not know the subject, Atty. So, personally, there was no malice attendant in his articles. The test laid down is the reckless disregard test, and Tulfo has failed to meet that test. The fact that Tulfo published another article lambasting respondent Atty. So can be considered as further evidence of malice, as held in U.S. vs. Montalvo,[39] wherein publication after the commencement of an action was taken as further evidence of a malicious design to injure the victim. Tulfo did not relent nor did he pause to consider his actions, but went on to continue defaming respondent Atty. So. This is a clear indication of his intent to malign Atty. So, no matter the cost, and is proof of malice. Leaving the discussion of qualified privileged communication, Tulfo also argues that the lower court misappreciated the evidence presented as to the identity of the complainant: that Tulfo wrote about Atty. Ding So, an official of the Bureau of Customs who worked at the South Harbor, whereas the complainant was Atty. Carlos So who worked at the NAIA. He claims that there has arisen a cloud of doubt as to the identity of the real party referred to in the articles. This argument is patently without merit. The prosecution was able to present the testimonies of two other witnesses who identified Atty. So from Tulfos articles. There is the certification that there is only one Atty. So in the Bureau of Customs. And most damning to Tulfos case is the last column he wrote on the matter, referring to the libel suit against him by Atty. So of the Bureau of Customs. In this article, Tulfo launched further attacks against Atty. So, stating that the libel case was due to the exposs Tulfo had written on the corrupt acts committed by Atty. So in the Bureau of Customs. This last article is an admission on the part of Tulfo that Atty. So was in fact the target of his attacks. He cannot now point to a putative Atty. Ding So at South Harbor, or someone else using the name of Atty. So as the real subject of his attacks, when he did not investigate the existence or non-existence of an Atty. So at South Harbor, nor investigate the alleged corrupt acts of Atty. So of the Bureau of Customs. Tulfo cannot say that there is doubt as to the identity of the Atty. So referred to in his articles, when all the evidence points to one Atty. So, the complainant in the present case. Having discussed the issue of qualified privileged communication and the matter of the identity of the person referred to in the subject articles, there remains the petition of the editors and president of Remate, the paper on which the subject articles appeared. In sum, petitioners Cambri, Salao, Barlizo, and Pichay all claim that they had no participation in the editing or writing of the subject articles, and are thus not liable. 67

The argument must fail. The language of Art. 360 of the RPC is plain. It lists the persons responsible for libel: Art. 360. Persons responsible.Any person who shall publish, exhibit, or cause the publication or exhibition of any defamation in writing or by similar means, shall be responsible for the same. The author or editor of a book or pamphlet, or the editor or business manager of a daily newspaper, magazine or serial publication, shall be responsible for the defamations contained therein to the same extent as if he were the author thereof. The claim that they had no participation does not shield them from liability. The provision in the RPC does not provide absence of participation as a defense, but rather plainly and specifically states the responsibility of those involved in publishing newspapers and other periodicals. It is not a matter of whether or not they conspired in preparing and publishing the subject articles, because the law simply so states that they are liable as they were the author. Neither the publisher nor the editors can disclaim liability for libelous articles that appear on their paper by simply saying they had no participation in the preparation of the same. They cannot say that Tulfo was all alone in the publication of Remate, on which the subject articles appeared, when they themselves clearly hold positions of authority in the newspaper, or in the case of Pichay, as the president in the publishing company. As Tulfo cannot simply say that he is not liable because he did not fulfill his responsibility as a journalist, the other petitioners cannot simply say that they are not liable because they did not fulfill their responsibilities as editors and publishers. An editor or manager of a newspaper, who has active charge and control of its management, conduct, and policy, generally is held to be equally liable with the owner for the publication therein of a libelous article.[40] On the theory that it is the duty of the editor or manager to know and control the contents of the paper,[41] it is held that said person cannot evade responsibility by abandoning the duties to employees,[42] so that it is immaterial whether or not the editor or manager knew the contents of the publication.[43] In Fermin v. People of the Philippines,[44] the Court held that the publisher could not escape liability by claiming lack of participation in the preparation and publication of a libelous article. The Court cited U.S. v. Ocampo, stating the rationale for holding the persons enumerated in Art. 360 of the RPC criminally liable, and it is worth reiterating: According to the legal doctrines and jurisprudence of the United States, the printer of a publication containing libelous matter is liable for the same by reason of his direct connection therewith and his cognizance of the contents thereof. With regard to a publication in which a libel is printed, not only is the publisher but also all other persons who in any way participate in or have any connection with its publication are liable as publishers. xxxx In the case of State vs. Mason (26 L.R.A., 779; 26 Oreg., 273, 46 Am. St. Rep., 629), the question of the responsibility of the manager or proprietor of a newspaper was discussed. The court said, among other things (pp. 782, 783): The question then recurs as to whether the manager or proprietor of a newspaper can escape criminal responsibility solely on the ground that the libelous article was published without his knowledge or consent. When a libel is published in a newspaper, such fact alone is sufficient evidence prima facie to charge the manager or proprietor with the guilt of its publication. The manager and proprietor of a newspaper, we think ought to be held prima facie criminally for whatever appears in his paper; and it should be no defense that the publication was made without his knowledge or consent, x x x. One who furnishes the means for carrying on the publication of a newspaper and entrusts its management to servants or employees whom he selects and controls may be said to cause to be published what actually appears, and should be held responsible therefore, whether he was individually concerned in the publication or not, x x x. Criminal responsibility for the acts of an agent or servant in the course of his employment necessarily implies some degree of guilt or delinquency on the part of the publisher; x x x. We think, therefore, the mere fact that the libelous article was published in the newspaper without the knowledge or consent of its proprietor or manager is no defense to a criminal prosecution against such proprietor or manager. In the case of Commonwealth vs. Morgan (107 Mass., 197), this same question was considered and the court held that in the criminal prosecution of a publisher of a newspaper in which a libel appears, he is prima facie presumed to have published the libel, and that the exclusion of an offer by the defendant to prove that he never saw the libel and was not aware of its publication until it was pointed out to him and that an apology and retraction were afterwards published in the same paper, gave him no ground for exception. In this same case, Mr. Justice Colt, speaking for the court, said: 68

said: An information for libel will lie against the publisher of a papers. and his liability is shared by the agent and all others who aid in publishing it. or any other form of defamation. the amount of indemnity being left to the sound discretion of the court.[49] It was the articles of Tulfo that caused injury to Atty. In Del Mundo v. removed the penalty of imprisonment and instead imposed a fine as penalty.. calculated to compensate the claimant for the injury suffered. Freedom of expression as well as freedom of the press may not be unrestrained. the punishment must still be tempered with justice. so too must Cambri. We have emphasized that these damages cannot be presumed. 221. as Tulfo. 441. an English author. v. and the resulting injury. nevertheless. 1 Bishops Criminal Law.[45] Under Art. Moral damages. Jr. Justification for the award of moral damages is found in Art. Commonwealth vs. People. This was also the opinion of Lord Hale. with subsidiary imprisonment in case of insolvency. should suffice. So deserves the award of moral damages. they fall squarely within the ambit of Art. Though we find petitioners guilty of the crime charged. in a criminal case for libel. and Mr. They did not apply for probation to avoid service of sentence possibly in the belief that they have not committed any crime.[48] Lastly. to use reasonable caution in the conduct of his business that no libels be published. Such damages. A causal relation. 360 of the RPC. Such compensation is referred to as actual or compensatory damages.[50] 69 . As the cases involved are criminal cases of libel. People vs. So. 21) Lord Kenyon said that he was clearly of the opinion that the proprietor of a newspaper was answerable criminally as well as civilly for the acts of his servants or agents for misconduct in the management of the paper. Clay (86 Ill. has been found guilty of libel. 1649. In light of this. The fact that no actual or compensatory damage was proven before the trial court does not adversely affect the offended partys right to recover moral damages. which may be used for the publication of improper communications. as regards actual and moral damages: A party is entitled to an adequate compensation for such pecuniary loss actually suffered by him as he has duly proved.[47] the accused was merely fined in lieu of the original penalty of imprisonment and fine. Court of Appeals. There was no showing of any pecuniary loss suffered by the complainant Atty. the author of the subject articles. must exist between the act or omission referred to in the Code which underlies. 2219(7) of the Civil Code. In Buatis. Walter (3 Esp.[46] the Court. i. and for that Atty. the first must be the proximate cause and the latter the direct consequence thereof. on the other hand. but neither must it be reined in too harshly. and courts. secs. and (2) such injury must have sprung from any of the cases expressed in Article 2219 and Article 2220 of the Civil Code. Without proof of actual loss that can be measured. These damages must be understood to be in the concept of grants.. in making an award must point out specific facts which could afford a basis for measuring whatever compensatory or actual damages are borne. 147) the court held that A person who makes a defamatory statement to the agent of a newspaper for publication. Mr. Salao..) The above doctrine is also the doctrine established by the English courts. in fine. In Sazon v. 219. Petitioners are to be punished for libel for the first time. wounded feelings and social humiliation. the difficulties and hazards they encounter in their line of work must also be taken into consideration.It is the duty of the proprietor of a public paper. upon the other hand. or gives rise to. is liable both civilly and criminally. Although incapable of exactness and no proof of pecuniary loss is necessary in order that moral damages may be awarded. to be recoverable. mental anguish. that (1) injury must have been suffered by the claimant. Court of Appeals. 195. the responsibilities of the members of the press notwithstanding. which states that moral damages may be recovered in cases of libel.000 for each count of libel. Art. in his work on Libel and Slander. besmirched reputation. considering the necessity of a free press balanced with the necessity of a responsible press. (Whartons Criminal Law. 136 Mass. the case or proceeding on the one hand. may be awarded to compensate one for manifold injuries such as physical suffering. Lofft. Damon. secs. 2219(7). Wilson. and Pichay. Justice Foster. serious anxiety. Justice Powell. although he did not know of its being put into the paper and stopped the sale as soon as he discovered it. Except as provided by law or by stipulation.e. Barlizo. 64 Ill. one is entitled to an adequate compensation only for such pecuniary loss suffered by him as he has duly proved.. 1627. the award of actual damages cannot stand. 2199 of the Civil Code provides. In the case of Rex vs. it is imperative. The award of damages by the lower court must be modified. not punitive or corrective in nature. Moral damages can be awarded even in the absence of actual or compensatory damages. So. slander. In the case of People vs. it was held. but must actually be proved with a reasonable degree of certainty. the penalty of a fine of PhP 6. must not only be capable of proof.

Reports and accusation of official misconduct often times merit front page or primetime treatment. The power of the press and the corresponding duty to exercise that power judiciously cannot be understated. the Court finds the accused ERWIN TULFO. any attempt to dishonor or besmirch the name and reputation of the head of the family. there must be a corresponding sanction. the necessity that it be free does not mean that it be totally unfettered. But even with the need for a free press.R. Through its widespread reach and the information it imparts. if they are not required to make the slightest effort to verify their accusations. To show that they have exercised their freedom responsibly. however. it behooves government functionaries to respect the value of openness and refrain from concealing from media corruption and other anomalous practices occurring within their backyard. with subsidiary imprisonment in case of insolvency. no exemplary damages can be awarded. Journalists are supposed to be reporters of facts. There must be further investigation conducted. It can turn the tide of public opinion for or against someone.000) for each count of libel. On the other hand. CR No. to have liberal discussion and dissemination of ideas. 25318 is hereby AFFIRMED with the MODIFICATIONS that in lieu of imprisonment. 2230 of the Civil Code. cannot be justified. No aggravating circumstances accompanied the commission of the libelous acts. WHEREFORE. In criminal offenses. 2000 of the RTC. 99-1597 to 99-1600 is modified to read as follows: WHEREFORE. Nos. Under Art. SUSAN CAMBRI. or anxiety. The unfairness needs no belaboring. The award of exemplary damages. 2003 in CA-G. especially on the children and possibly even the childrens children. perfunctory coverage. It is in fact too easy for journalists to destroy the reputation and honor of public officials.R. public service also unduly suffers. public officials also deserve respect and protection against false innuendoes and unfounded accusation of official wrongdoing from an abusive press. It falls on the press to wield such enormous power responsibly. and must be able to back up their stories with solid research. Accordingly. This reality adds an imperative dimension to the award of moral damages to the defamed party. but also because of their impact on members of his family. exemplary damages as a part of the civil liability may be imposed when the crime was committed with one or more aggravating circumstances. but always guided by conscience and careful thought. Conclusion The press wields enormous power. and for the abuse of the freedom. In the ultimate analysis. Those who would publish under the aegis of freedom of the press must also acknowledge the corollary duty to publish responsibly. while the award of actual damages and exemplary damages is DELETED. the penalty to be imposed upon petitioners shall be a fine of six thousand pesos (PhP 6. JOCELYN BARLIZO. It is in the interest of society to have a free press. while defenses set up. the law and jurisprudence on libel heavily tilt in favor of press freedom. as defined in Article 353 of the Revised Penal Code. and to encourage people to engage in healthy debate. 161032 and 161176 are DISMISSED. but in this particular case. they must go beyond merely relying on unfounded rumors or shadowy anonymous sources. it can build up heroes or create villains. it may not be amiss to state at this juncture that Tulfos libelous articles are abhorrent not only because of its vilifying and demeaning effect on Atty. not fiction. as the case may be. So himself. leaves a stigmatizing mark not only on the person but also the office to which he belongs. invariably puts the other members in a state of disrepute. retraction issued. The Decision dated November 17. The balm of clear conscience is sometimes not enough. A robust and independently free press is doubtless one of the most effective checks on government power and abuses. It is through this that society can progress and develop. The CA Decision dated June 17. as here. 70 . of any of its member. and sentences EACH of the accused to pay a fine of SIX THOUSAND PESOS (PhP 6. the lesson to be learned is that such a mighty weapon should not be wielded recklessly or thoughtlessly.000) per count of libel with subsidiary imprisonment.And while on the subject of moral damages. Branch 112 in Pasay City in Criminal Case Nos. in view of the foregoing. REY SALAO. thus. The common but most unkind perception is that government institutions and their officers and employees are fair game to official and personal attacks and even ridicule. such that the whole family usually suffers or rejoices at the misfortune or good fortune. it can mold and shape thoughts and opinions of the people. as here. some shred of proof found to support allegations of misconduct or even criminal activity. in case of insolvency. As it were. if ever. It may be a clich that the pen is mightier than the sword. the petitions in G. Such damages are separate and distinct from fines and shall be paid to the offended party. or acquittal rendered get no more. Hence. It is still acknowledged that the freedom can be abused. The Court can perhaps take judicial notice that the sense of kinship runs deeply in a typical Filipino family. And the practice on the ground is just as disconcerting. distress. Perhaps lost in the traditional press freedom versus government impasse is the fact that a maliciously false imputation of corruption and dishonesty against a public official. and PHILIP PICHAY guilty beyond reasonable doubt of four (4) counts of the crime of LIBEL.

Dr.. admitted the existence of said manhole along the sidewalk in Perez Blvd. 61516 March 21. at first at the Pangasinan Provincial Hospital.000. as she has difficulty of locomotion in going up the stairs of her office. and Philip Pichay wrote and published the four (4) defamatory articles with reckless disregard whether it was false or not. the pain has persisted even after her discharge from the Medical City General Hospital on October 9.420. J. C and subexhibits) on the sidewalk along Perez Blvd. P 7. confined. but since July 25. admittedly a National Road in front of the Luzon Colleges. As a result thereof. the sum of ONE MILLION PESOS (PhP 1. 1978 up to the present she has been deprived of said income as she has already consumed her accrued leaves in the government service. wide by 75 cms. plaintiff suffered severe or excruciating pain not only on her right leg which was fractured but also on all parts of her body. long by 150 cms. Guilatco.00 as exemplary damages. 1989 FLORENTINA A. the following judgment was rendered against the respondent City of Dagupan: xxx (1) Ordering defendant City of Dagupan to pay plaintiff actual damages in the amount of P 15.000. (2) Dismissing plaintiffs complaint as against defendant City Engr. Jocelyn Barlizo. they are hereby ordered to pay complainant Atty. No. jointly and severally. Carlos T.: In a civil action 1 for recovery of damages filed by the petitioner Florentina A. G. G-1 to G-19) have confirmed beyond shadow of any doubt the extent of the fracture and injuries sustained by the plaintiff as a result of the mishap. The claim of actual and exemplary damages is denied for lack of merit. as well as Dr. deep (see Exhs. Costs against petitioners. SARMIENTO.000. thereby causing her right leg to be fractured.000. D and D-1). Alfredo G. F] and P 450. as other receipts were either lost or misplaced. (a National Road. B.000.053.924 (namely P8.Considering that the accused Erwin Tulfo. 1978. and other activities which she used to do prior to the incident. Norberto Felix and Dr.00 in all. Tangco. She earns at least P 720. and litigation expenses. 1978 up to the present. from July 25 to August 3. GUILATCO. 1978 (or for a period of 16 days). Dominado Manzano of the Provincial Hospital. for lack of merit. under the control and supervision of the City of Dagupan) accidentally fell into a manhole located on said sidewalk. vs. SO ORDERED. social. while she was about to board a motorized tricycle at a sidewalk located at Perez Blvd. see also Exhs.65 (Exh. Petitioner. herein plaintiff. Respondents.00 a month consisting of her monthly salary and other means of income. plaintiff has not yet reported for duty as court interpreter. H to H-60].. She has lost several pounds as a result of the accident and she is no longer her former jovial self. operated on. Defendant Alfredo Tangco. long by 1 1/2 feet wide or 42 cms. she has been unable to perform her religious. G. F. the said articles being libelous per se.00 as attorney's fees. a Court Interpreter of Branch III. City Engineer of the Public Works and Building Official for Dagupan City. medical and other expenses [Exhs. On the other hand. and (3) Dismissing the counterclaims of defendant City of Dagupan and defendant City Engr. to the present. Susan Cambri.00 as hospital. H to H-60) or a total of P 10. I. Antonio Sison of the Medical City General Hospital in Mandaluyong Rizal (Exh. 1978 which was partially covered by a concrete flower pot by leaving gaping hole about 2 ft.000) as moral damages. medication and other expenses to the tune of P 8. CITY OF DAGUPAN. So. P 150. and P 3. Alfredo G. P 50. De Asis and Cerezo corroborated the testimony of the plaintiff regarding the mishap and they have confirmed the existence of the manhole (Exhs. located near the city hall in Dagupan City. Despite her discharge from the Hospital plaintiff is presently still wearing crutches and the Court has actually observed that she has difficulty in locomotion. He also admitted that said manhole (there are at least 11 in all 71 . CFI--Dagupan City.R. plus costs and to appropriate through its Sangguniang Panglunsod (City Council) said amounts for said purpose.00 as moral damages. at the time of the incident on July 25. A. and the HONORABLE COURT OF APPEALS.00 as bonus). she had to be hospitalized. She also incurred hospitalization. 2 The facts found by the trial court are as follows: 3 It would appear from the evidences that on July 25. City Engineer of Dagupan City and admittedly ex-officio Highway Engineer. Rey Salao. From the time of the mishap on July 25. Tangco.054. 1978.00 as lost income for one (1) year [Exh. Patrolman Claveria. during the period of her confinement in said two hospitals.

including the Perez Blvd. 7-1 thereof. On the other hand article 2189 applies in particular to the liability arising from "defective streets. After examination of the findings and conclusions of the trial court and those of the appellate court. The article only requires that either control or supervision is exercised over the defective road or street. But as City Engineer of Dagupan City. 22. in accordance with the ordinance relating thereto. public buildings and other public works." 9 The City Engineer. Ernesto Solermo also a maintenance Engineer. duties and compensation-There shall be a city engineer.appellee to prove that the City of Dagupan had "control or supervision" over Perez Boulevard. is a national road that is not under the control or supervision of the City of Dagupan. in effect binding the city to answer for damages in accordance with article 2189 of the Civil Code. In this review on certiorari. Hence. It submits that it is actually the Ministry of Public Highways that has control or supervision through the Highway Engineer which. The City Engineer--His powers. that in his capacity as ex-officio Highway Engineer for Dagupan City he exercises supervision and control over National roads. The express provision in the charter holding the city not liable for damages or injuries sustained by persons or property due to the failure of any city officer to enforce the provisions of the charter. he supervises the maintenance of said manholes or drainage system and sees to it that they are properly covered. But the city can not be excused from liability by the argument that the duty of the City Engineer to supervise or control the said provincial road belongs more to his functions as an ex-officio Highway Engineer of the Ministry 72 . He shall have the following duties: xxx (j) He shall have the care and custody of the public system of waterworks and sewers. we agree with those of the trial court and of the petitioner. 5 The city contends that Perez Boulevard. Mr. this control or supervision is provided for in the charter of Dagupan and is exercised through the City Engineer who has the following duties: Sec.) is owned by the National Government and the sidewalk on which they are found along Perez Blvd. In his answer defendant Tangco expressly admitted in par. Tangco.8 The charter only lays down general rules regulating the liability of the city. where the fatal drainage hole is located. as well as the arguments presented by the parties. maintain and regulate the use of the same. and all private sewers. Santiago de Vera (Maintenance Foreman) and Engr. Hence. xxx The same charter of Dagupan also provides that the laying out. where the incident happened. and other public works under their control or supervision. and the job is specifically done by his subordinates. are also owned by the National Government. In the case at bar.in Perez Blvd. admits that he exercises control or supervision over the said road. streets. Mr. is held concurrently by the same person who is also the City Engineer of Dagupan. as in the case at bar. avenues and alleys and sidewalks. and regulation of the use thereof. by mere coincidence. any person by reason of the defective condition of roads. He shall receive a salary of not exceeding three thousand pesos per annum. The liability of public corporations for damages arising from injuries suffered by pedestrians from the defective condition of roads is expressed in the Civil Code as follows: Article 2189. no liability should attach to the city. Provinces. shall inspect and regulate the use of all private systems for supplying water to the city and its inhabitants. city or municipality for liability to attach. and all sources of water supply. the appellate court 4 reversed the lower court findings on the ground that no evidence was presented by the plaintiff. cities and municipalities shall be liable for damages for the death of. may be legislated by the Municipal Board . and shall control. 7 Thus the charter clearly indicates that the city indeed has supervision and control over the sidewalk where the open drainage hole is located. It is not even necessary for the defective road or street to belong to the province. we grant the petition. we have simplified the errors assigned by the petitioner to a single issue: whether or not control or supervision over a national road by the City of Dagupan exists. construction and improvement of streets. can not be used to exempt the city. who shall be in charge of the department of Engineering and Public Works. or injuries suffered by. bridges. Alfredo G. and their connection with the public sewer system. public buildings. On appeal by the respondent City of Dagupan.

the petitioner was able to secure an order for garnishment of the funds of the City deposited with the Philippine National Bank. there must be compensatory or actual damages as satisfactory proof of the factual basis for damages. they are detailed with the City of Dagupan and hence receive instruction and supervision from the city through the City Engineer. She refrained from attending social and civic activities. However. no doubt that the City Engineer exercises control or supervision over the public works in question. Though evidence of moral loss and anguish existed to warrant the award of damages. the trial court correctly pointed out the basis: To serve as an example for the public good. as Building Official for Dagupan City.053.00 by virtue of P. 73 .15 (3) Third. We rule that the execution of the judgment of the trial court pending appeal was premature.19 resulting in exhorbitant amounts. and other public works pertaining to the City Engineer is coursed through a Maintenance Foreman and a Maintenance Engineer.14 (2) Second. the following should be taken into consideration: (1) First. As for the award of exemplary damages.of Public Highway than as a city officer." 10 This function of supervision over streets. Witnesses from the petitioner's place of work testified to the degeneration in her disposition-from being jovial to depressed.00. Willelmo Fortun. the liability of the city to the petitioner under article 2198 of the Civil Code is clear. it is high time that the Court.00 should be reduced to the proven expenses of P 8. 1096. respectively.000. should serve warning to the city or cities concerned to be more conscious of their duty and responsibility to their constituents. the physical suffering and mental anguish suffered by the petitioner were proven.65 only.Officio Highway Engineer. Her handicap was not permanent and disabled her only during her treatment which lasted for one year.D. receives the following monthly compensation: P 1. We do not find any good reason to justify the issuance of an order of execution even before the expiration of the time to appeal. 16 In the case at bar. The trial court should not have rounded off the amount. Too often in the zeal to put up "public impact" projects such as beautification drives. P 200. the proximate cause of the injury must be the claimee's acts. moral damages may be awarded even without proof of pecuniary loss.17 Nevertheless the award of moral damages at P 150.00 from the Ministry of Public Highways. as ExOfficio City Engineer of the Bureau of Public Works. therefore. Romeo D. moral damages are in the nature of an award to compensate the claimant for actual injury suffered but which for some reason can not be proven.11 Although these last two officials are employees of the National Government. the amount of moral damages should be reduced to P 20.000.00 is excessive. inasmuch as the determination of the amount is discretionary on the court. the actual damages awarded to the petitioner in the amount of P 10. Tangco "(i)n his official capacity as City Engineer of Dagupan. especially when they are engaged in construction work or when there are manholes on their sidewalks or streets which are uncovered. P 100. This order for garnishment was revoked subsequently by the succeeding presiding judge.810. his salary from the city government substantially exceeds the honorarium. Magat.66 from Dagupan City. Without the actual proof of loss. such trivial details as misplaced flower pots betray the careless execution of the projects.000. causing public inconvenience and inviting accidents.13 Though incapable of pecuniary estimation.00 from the Bureau of Public Works and P 500. the award of actual damages becomes erroneous.20 Although the assessment of the amount is better left to the discretion of the trial court 21 under preceding jurisprudence. in order to minimize or prevent accidents to the poor pedestrians. the end is more important than the manner in which the work is carried out. and became the basis for the petitioner's motion for reconsideration which was also denied. Hon. to immediately cover the same. Hence. This is because while he is entitled to an honorarium from the Ministry of Public Highways. Because of this obsession for showing off. in awarding moral damages.18 the moderating hand of the law is called for. Alfredo G. conjecture or guess work" as to the amount. public buildings. through this case. the court can not rely on "speculation. The Court has time and again called attention to the reprehensible propensity of trial judges to award damages without basis. and. Hon. Pending appeal by the respondent City of Dagupan from the trial court to the appellate court. the award of moral damages must be predicated on any of the cases enumerated in the Civil Code. There is. In determining actual damages. last but not the least. 12 On the other hand. Be all that as it may. from the then presiding judge. We do not agree. as Ex.

his wife Maria J. arriving in Tokyo at 5:30 P.924 (namely P 8. P 7. medical and other expenses.WHEREFORE. as indicated in his letter to PAN-AM's Tokyo office on that date (Exh. plaintiffs asked for P500. J. As scheduled Senator Lopez and party left Manila by Northwest Airlines on May 24. 1966 FERNANDO LOPEZ.000. For the given reason that the first class seats therein were all booked up.000 exemplary damages. Alleging breach of contracts in bad faith by defendant. the petition is GRANTED. Lopez. for then Senator Fernando Lopez. P100. Minnesota. 2 of Pan American World Airways — hereinafter otherwise called PAN-AM — from Tokyo to San Francisco on May 24.444 for all of them was fully paid before the tickets were issued.000 attorney's fees plus costs. Vicente J. 1960 in the Court of First Instance of Rizal. 1963. on March 10. Rochester. No. P25. Jr.420. PAN AMERICAN WORLD AIRWAYS. in favor of Senator Lopez and his party. Francisco for the plaintiffs-appellants. G. Alfredo Montelibano. plaintiffs-appellants. 17. 1960. Ross.000.. 1979. 1960. ET AL.000. Senator Lopez however made it clear.ñët Suit for damages was thereafter filed by Senator Lopez and party against PAN-AM on June 2. the dispositive portion stating: In view of the foregoing considerations. 1960. Selph and Carrascoso for the defendant-appellant. but the latter firmly reiterated that there was no accommodation for them in the first class. par.00 as attorney's fees. So ordered. by Delfin Faustino. It also interposed a counterclaim for attorney's fees of P25.000 the appeals were taken directly to this Court upon all questions involved (Sec. on December 2.000. P 20. 1961. J. SO ORDERED.000 actual and moral damages. dated March 12. of that day. 1960. L-22415 March 30.: Plaintiffs and defendant appeal from a decision of the Court of First Instance of Rizal. asserting that its failure to provide first class accommodations to plaintiffs was due to honest error of its employees. however. July 31. which is accordingly ordered to pay the plaintiffs the following: (a) P100. As soon as they arrived Senator Lopez requested Minister Busuego of the Philippine Embassy to contact PAN-AM's Tokyo office regarding their first class accommodations for that evening's flight. 74 . L-66419. and defendant's amended supplemental answer. Subsequently. on July 25. his son-in-law Alfredo Montelibano. that they did so "under protest" and without prejudice to further action against the airline. 3[5]. Jr. judgment is hereby rendered in favor of the plaintiffs and against the defendant. (c) P25. Due to pressing engagements awaiting Senator Lopez and his wife.000. The total fare of P9. defendant-appellant. PAN-AM's San Francisco head office confirmed the reservations on March 31.00 as hospital.00 as bonus). on July 10. No.M.P.00 as lost income for one (1) year and P 450. 1963 — the Court of First Instance rendered its decision on November 13.1äwphï1. 1979 and amended on March 13. A). The assailed decision and resolution of the respondent Court of Appeals are hereby REVERSED and SET ASIDE and the decision of the trial court. (Milagros Lopez Montelibano). plaintiffs' reply to supplemental answer. First class tickets for the abovementioned flight were subsequently issued by PAN-AM on May 21 and 23. in the United States — he had to attend a business conference in San Francisco the next day and she had to undergo a medical check-up in Mayo Clinic. Senator Lopez thereupon gave their first class tickets to Minister Busuego for him to show the same to PAN-AM's Tokyo office.00 remain the same. Mrs.00 as exemplary damages. 1962.. PAN-AM's Tokyo office informed Minister Busuego that PAN-AM could not accommodate Senator Lopez and party in that trip as first class passengers. 1987 – URL NOT FOUND G.00 as exemplary damages. Since the value in controversy exceeds P200. thus: plaintiffs' answer to the counterclaim. on May 28. defendant's supplemental answer. The attorney's fees of P 3. 1960 were made with PAN-AM on March 29. and his daughter.000. vs. (b) P20. BENGZON. 1962.054. Ivan Mendez. 1960 and needed three days rest before that in San Francisco — Senator Lopez and party were constrained to take PAN-AM's flight from Tokyo to San Francisco as tourist passengers. 1960.. 1962. Stated briefly the facts not in dispute are as follows: Reservations for first class accommodations in Flight No. by "Your Travel Guide" agency. Judiciary Act).000. After trial — which took twenty-two (22) days ranging from November 25.. on March 8. PAN-AM filed its answer on June 22. 1960. plaintiffs' reply attached to motion for its admittance.R. further pleadings were filed. and the costs of this action.00 as moral damages. Filinvest Credit Corporation vs. 1960 to January 5. is hereby REINSTATED with the indicated modifications as regards the amounts awarded: (1) Ordering the defendant City of Dagupan to pay the plaintiff actual damages in the amount of P 15.00 as moral damages and P 10. stating that they could not go in that flight unless they took the tourist class therein. specifically.R.

reconsidering the dispositive part of its decision to read as follows: In view of the foregoing considerations. 2). on April 27. Accordingly.00 as moral damages. two other Rufinos secured reservations and were given a separate reservation card (Exh. Jalbuena bought a first class ticket from PAN-AM on April 13. has from the start admitted that it breached its contracts with plaintiffs to provide them with first class accommodations in its Tokyo-San Francisco flight of May 24. San Francisco head office replied on May 19. 1960 that it regrets being unable to confirm Senator Lopez and party for the reason that the 75 . defendant acted in bad faith because it deliberately refused to comply with its contract to provide first class accommodations to plaintiffs. San Francisco head office replied on April 22. that both parties have appealed. for a total of eight (8) seats. 1961). 1960 (Annex C-Acker's to Exh. Plaintiffs. 1963." Against the foregoing. Acting thereon the trial court issued an order on December 14. although they had first class tickets. that is.000. and the costs of this action. 3 and 4) was then made for the original of eight passengers. 123-124. Lopez and party to the exclusion of the Rufinos (Exh. 1960. On April 18. on November 21. Anent the issue of bad faith the records show the respective contentions of the parties as follows. 6. 17. Subsequently on March 30. he and his wife had to take tourist class. PAN-AM's reservations employee working in the same Escolta office as Herranz. and (c) P25. namely. phoned PAN-AM's ticket sellers at its other office in the Manila Hotel. 1960 that Senator Lopez and party are waitlisted and that said office is unable to reinstate them (Annex B-Velasco's to Exh. Jose sent a telex wire on that date to PAN-AM's head office at San Francisco to report the error and asked said office to continue holding the reservations of Senator Lopez and party (Annex B-Acker's to Exh. Since Mr. So ordered. 1960 to state that Senator Lopez and party were going to depart as scheduled. 1). (b) P25. PANAM's reservations employee at its office in Escolta. PAN-AM similarly confirmed it on April 20. And defendant opposed the same. PAN-AM's officials could only explain by saying there was "some mistake". 1960.. Subsequently. Herranz mistakenly cancelled all the seats that had been reserved. 6 of PAN-AM on September 29.Plaintiffs. however.000. Since the flight involved was still more than a month away and confident that reinstatement would be made. as thus reconsidered. 6). raise questions on the amount of damages awarded in their favor. 1960. At the airport he and another Oriental — Mr. because their seats in first class were given to "passengers from London. moved for reconsideration of said judgment. Then PAN-AM officials told them that one of them had to stay behind. Herranz forgot the matter and told no one about it except his co-employee. however. evidence was adduced relating to two previous instances of alleged racial discrimination by defendant against Filipinos in favor of "white" passengers. Senator Lopez and party and four members of the Rufino family. defendant's evidence would seek to establish its theory of honest mistake.000. (Annex A-Acker's to Exh. Jalbuena thereafter wrote PAN-AM to protest the incident (Exh. A telex message was thereupon sent on that date to PAN-AM's head office at San Francisco by Mariano Herranz.000 and that six per cent (6%) interest per annum on the amount of the award be granted. 1958 from Bangkok to Hongkong. seeking that the same be increased to a total of P650. B). Tung — were asked to step aside while other passengers . It is from said judgment. 1960 as to the Tokyo-Hongkong flight of April 20. as shown in their joint reservation card (Exh. which they had previously confirmed. Said previous occasions are what allegedly happened to (1) Benito Jalbuena and (2) Cenon S. Defendant. the first page (Exh. A new reservation card consisting of two pages (Exhs. 6). upon seeing the reservation card newly prepared by his co-employee Pedro Asensi for Sen. Tung was going all the way to London. 6).00 as attorney's fees.00 as exemplary damages. Jalbuena was chosen to be left behind. PAN-AM's reservations supervisor Alberto Jose. and confirmed the reservations of Senator Lopez and party. 4) referring to 3 Rufinos. it takes issue with the finding of the court a quo that it acted in bad faith in the branch of said contracts. out of racial prejudice against Orientals. asking that moral damages be increased to P400. 6). on the other hand. The next day — April 1960 — Herranz discovered his mistake. as stated. In its appeal.000. 1960 "Your Travel Guide" agency cancelled the reservations of the Rufinos. 1960. including those of Senator Lopez and party. And in support of its contention that what was done to plaintiffs is an oftrepeated practice of defendant. 1960. According to plaintiffs. stating his error and asking for the reinstatement of the four (4) first class seats reserved for Senator Lopez and party (Annex A-Velasco's to Exh. And from plaintiffs' evidence this is what allegedly happened. with legal interest on both from the date of the filing of the complaint until paid. Cervantes and his wife. Manila. 1963. judgment is hereby rendered in favor of the plaintiffs and against the defendant.including "white" passengers — boarded PAN-AM's plane. 127. It was then that Herranz sent another telex wire to the San Francisco head office. 2 Montelibanos and 1 Rufino and the second page (Exh. thus: The first class reservations of Senator Lopez and party were made on March 29.) In said message. Said message was reiterated by Jose in his telex wire of May 19. As to Cenon S. Armando Davila. 3) referring to 2 Lopezes. 1960 together with those of four members of the Rufino family. which is accordingly ordered to pay the plaintiffs the following: (a) P150. he confirmed it on April 15. however. Nov. Cervantes it would appear that in Flight No. discovered Herranz's mistake after "Your Travel Guide" phone on May 18. 1960. 5). either Armando Davila or Pedro Asensi or both of them (Tsn. however.

asking all-out assistance towards restoring the cancelled spaces and for report of cancellations at their end (Annex D-Acker's to Exh. 1 & 3) that the reservations cancelled are those of the Rufinos only. in this respect defendant clearly acted in bad faith. 23).flight was solidly booked (Exh. may well have been the motive. Alberto Jose knew that plaintiffs' reservations had been cancelled. word — to withhold the information from the plaintiffs. March 4.L. 7). are delayed and. Tokyo and Hongkong. 1961). As of May 20 he knew that the San Francisco head office stated with finality that it could not reinstate plaintiffs' cancelled reservations. or their agent. Also on May 20. Herranz simply forgot about the matter. the Tokyo office of PAN-AM wired Jose stating it will do everything possible (Exh. As stated in Kamm v. Herranz made the mistake. I fully realize now the gravity of my decision in not advising Senator and Mrs. San Francisco head office reiterated on May 20. 175 A. instead of the first class seat that I was hoping for and which I anticipated only the tourists class was open on which Senator and Mrs. 86-88. Said Alberto Jose in his testimony: Q Why did you not notify them? A Well. 1959. notwithstanding the entries in the reservation cards (Exhs. as above-stated. missed their connections. 1960. therefore. 1958). of sending a wire cancelling all the reservations. coupled with that wire from Tokyo that they would do everything possible prompted me to withhold the information. From the foregoing evidence of defendant it is in effect admitted that defendant — through its agents — first cancelled plaintiffs. in my fifteen (15) years of service with the air lines business my experience is that even if the flights are solidly booked months in advance. the information that their reservations had been cancelled. therefore.J. and Mrs. Jr. Well. Jose sent a third telex wire on May 20. 1961). 17-19. and it was our hope others come in from another flight and. 28-29. (Tsn.L. 1960 (Exh. Mr. All the time. sir. In so misleading plaintiffs into purchasing first class tickets in the conviction that they had confirmed reservations for the same. 6). Mr. For bad faith means a breach of a known duty through some motive of interest or ill-will (Spiegel vs. Secondly.. This is due to late cancellation of passengers. Firstly. and Mrs. defendant. there would at least be negligence so gross and reckless as to amount to malice or bad faith (Fores vs. Lopez.. 7: "Self-enrichment or fraternal interest. At any rate. made plaintiffs believe that their reservation had not been cancelled. 8 NE 2d 895. Paras. Nov. Armando Davila 76 . but unfortunately. 62. Flink. the ticket issued to Alfredo Montelibano. 20. And. 99 A. 1960 that it could not reinstate the spaces and referred Jose to the Tokyo and Hongkong offices (Exh." As of May 18. 1.R.) At the time plaintiffs bought their tickets. granting all the mistakes advanced by the defendant. It was my duty but as I said again with respect to that duty I have the power to make a decision or use my discretion and judgment whether I should go ahead and tell the passenger about the cancellation. Notwithstanding the reply of San Francisco head Office on April 22. The record shows that said employee — Mariano Herranz — was not subjected to investigation and suspension by defendant but instead was given a reward in the form of an increase of salary in June of the following year (Tsn. Lopez and parties that their reservations had been cancelled since May 18. you see. after sending a wire to San Francisco head office on April 19. L-12163. 108-109. xxx xxx xxx Q So it was not your duty to notify Sen. it was assumed and taken for granted that reinstatement would be made. This experience of mine. 9). 1962. Montelibano nor their agents about the erroneous cancellation and for which I would like them to know that I am very sorry. L-10605-06. And yet said reservations supervisor made the "decision" — to use his own. including those of Senator Lopez and party (Tsn. but it is malice nevertheless.. 1960 that it cannot reinstate Senator Lopez and party (Annex B-Velasco's to Exh. defendant wilfully and knowingly placed itself into the position of having to breach its a foresaid contracts with plaintiffs should there be no last-minute cancellation by other passengers before flight time. reservations by mistake and thereafter deliberately and intentionally withheld from plaintiffs or their travel agent the fact of said cancellation. 907). 1960 defendant's reservations supervisor. Necesito v. New York (Idlewild Airport). Expecting that some cancellations of bookings would be made before the flight time. 17. Beacon Participations. Thirdly. 113 N. the reservation status is stated as "OK". usually the flight departs with plenty of empty seats both on the first class and tourist class. Miranda. March 15. the latter sold and issued in their favor the corresponding first class tickets on the 21st and 23rd of May. Alfredo Montelibano. 1960 (Exh. as it turned out in this case. and not personal ill-will. on May 23. defendant subsequently promoted the employee who cancelled plaintiffs' reservations and told them nothing about it. 8). As if to further emphasize its bad faith on the matter. 6). pp. after reading said entries. in breach of its known duty. Nov. 22) and that issued to Mrs. therefore. Such willful-non-disclosure of the cancellation or pretense that the reservations for plaintiffs stood — and not simply the erroneous cancellation itself — is the factor to which is attributable the breach of the resulting contracts. 1960 addressed to PAN-AM's offices at San Francisco. Armando Davila having previously confirmed Senator Lopez and party's first class reservations to PAN-AM's ticket sellers at its Manila Hotel office. pp. namely. June 30. An additional indication of this is the fact that upon the face of the two tickets of record. on May 21. Jr. 582. Montelibano were accommodated. Jose decided to withhold from Senator Lopez and party. Such actuation of defendant may indeed have been prompted by nothing more than the promotion of its self-interest in holding on to Senator Lopez and party as passengers in its flight and foreclosing on their chances to seek the services of other airlines that may have been able to afford them first class accommodations. in legal contemplation such conduct already amounts to action in bad faith.. Lopez. or because passengers do not show up in the airport. when in fact they had none. 1960? A As I said before it was my duty. 1960 stating his error and asking for reinstatement. letting them go on believing that their first class reservations stood valid and confirmed.

Fourthly. 25. the latter suffered social humiliation. Added to this. third. reckless. of course. Alfredo Montelibano. In the first place. moral damages are recoverable in breach of contracts where the defendant acted fraudulently or in bad faith (Art.confirmed plaintiff's reservations in a phone call on April 27. a far different thing to be compelled to take it notwithstanding having paid for first class seats. As such they likewise shared his prestige and humiliation. they were satisfied with P25. Addressing ourselves now to the question of damages. 5) that they were only waitlisted passengers. it is humiliating to be compelled to travel as such. In addition she suffered physical discomfort during the 13-hour trip.00 for moral damages will be reasonable. place for her. 24. defendant's ticket sellers issued plaintiffs' tickets on May 21 and 23. serious anxiety and mental anguish. in addition to moral damages. In fact. Senator Lopez was then Senate President Pro Tempore. 27-28. Nov. For their social humiliation. exemplary or corrective damages may be imposed by way of example or correction for the public good. 2220. shared his prestige and therefore his humiliation. New Civil Code). but his aforesaid rank and position were by no means left behind. it was her worst experience. Senator Lopez was going to the United States to attend a private business conference of the Binalbagan-Isabela Sugar Company. as shown a few pages after in the transcript of his testimony. Although Senator Lopez stated that "she was quite well" (Tsn.000. is in fact the reason for the former's existence. oppressive or malevolent manner (Articles 2229. New Civil Code). wounded feelings. 1960 to defendant's ticket sellers. Sison to go to the United States as soon as possible for medical check-up and relaxation. 1960) — he obviously meant relatively well. It may also be mentioned that in his aforesaid office Senator Lopez was in a position to preside in impeachment cases should the Senate sit as Impeachment Tribunal. then. 102). she was sick when we left the Philippines. an award to Mrs. there beingsix seats to a row in the former as against four to a row in the latter. the award to them of P25. For what is admitted in the course of the trial does not need to be proved (Sec. when at the time it appeared in plaintiffs' reservation card (Exh. p. For by that time they had already been made to pay for first class seats and therefore to expect first class accommodations. and Mrs. who was not sick. (Ibid). therefore.00 each for the two but we note that in their motion for reconsideration filed in the court a quo. 14-15. It is not hard to see that in her condition then a physical discomfort sustained for thirteen hours may well be considered a physical suffering. 2. and that in tourist class there is very little space for reclining in view of the closer distance between rows (Tsn.. p. First. And. and is recognized by the airline in charging a higher fare for it and by the passengers in paying said higher rate Accordingly. only to be found among the tourist passengers. (Record on Appeal. 25. I myself. food and treatment. it is one thing to take the tourist class by free choice. As stated. 2232. the first class. as wife of Senator Lopez. Accordingly.. 1960. And he was former VicePresident of the Philippines. my wife really felt very bad during the entire trip from Tokyo to San Francisco. Nov. the best seat. 25. Such difference in comfort between first class and tourist class is too obvious to be recounted. For plaintiffs were travelling with first class tickets issued by defendant and yet they were given only the tourist class. to be practically the same in first class and tourist class — the fact that the seating spaces in the tourist class are quite narrower than in first class. service. First. 77 . Mrs. Nov.00 each is reasonable. without first checking their reservations just before issuing said tickets. contrary to what is rightfully to be expected from the contractual undertaking.000. she was attackedby severe flu and lost 10 pounds of weight and that she was advised by Dr. and then with that discomfort which she [experienced] or suffered during that evening. where evidently the best of everything would have been given her. therefore. 24. fraudulent. And. At stop-overs. pp. Maria J. no one among defendant's agents notified Senator Lopez and party that their reservations had been cancelled. As a proximate result of defendant's breach in bad faith of its contracts with plaintiffs. p. finally.500. it is well to state at the outset those rules and principles. was the painfull thought that she was deprived by defendant — after having paid for and expected the same — of the most suitable. in breach of contract where the defendant acted in a wanton. but the nation's treaty-ratifying body. Lopez. could not sleep because of the discomfort.. Mr. Lopez was sick when she left the Philippines: A. as to moral damages. considering the totality of her suffering and humiliation. Well. a written contract for an attorney's services shall control the amount to be paid therefor unless found by the court to be unconscionable or unreasonable (Sec. 1960). Lopez of P50. For the Senate is not only the Upper Chamber of the Philippine Congress. Maria J.. Rules of Court). 1960). For the moral damages sustained by him. International carriers like defendant know the prestige of such an office. Although defendant contends that a few weeks before the flight they had asked their reservations to be charged from first class to tourist class — which did not materialize due to alleged full booking in the tourist class — the same does not mean they suffered no shared in having to take tourist class during the flight. an award of P100. Senator Lopez stated. that Mrs. were travelling as immediate members of the family of Senator Lopez. 1960). Second. and in fact he had a second engagement awaiting him in the United States: a banquet tendered by Filipino friends in his honor as Senate President Pro Tempore (Tsn. (Tsn. Rule 138.. Nov. will suffice to show that the aforesaid passenger indeed experienced physical suffering during the trip. It may not be humiliating to travel as tourist passengers. there being a clear admission in defendant's evidence of facts amounting to a bad faith on its part in regard to the breach of its contracts with plaintiffs. Rules of Court). pp. since the rest of his statement is that two months before. a precaution that could have averted their entering with defendant into contracts that the latter had already placed beyond its power to perform. And even without regard to the noise and trepidation inside the plane — which defendant contends. upon the strengh of expert testimony. 25.000. it becomes unnecessary to further discuss the evidence adduced by plaintiffs to establish defendant's bad faith.00 is appropriate. They formed part of the Senator's party as shown also by the reservation cards of PAN-AM. Jr. 22. Rule 129. they were expected to be among the first-class passengers by those awaiting to welcome them. Plaintiffsappellants now ask P37.(5 hours from Tokyo to Honolulu and 8 hours from Honolulu to San Francisco).00 each for said persons.000.

to sign the affidavit or complaint prepared by the firm's. The issue in this case is whether the damages awarded to the defaulting debtor may be satisfied by execution against the employee's property since his employer's business has already folded up. COURT OF APPEALS. and of the extent of the service rendered by him. as to attorney's fees. Basa for private respondent.00 for Senate President Pro Tempore Fernando Lopez. Manuel LL. Enrique M. and P100. from December 14. filed a joint record on appeal with defendant. he was directed by his employer.000. Francisco — and agreedto pay the sum of P25. P50. Chan Tong. personally appeared at the trial of the case in twenty-two days. In January 1981.000 as actual damages. 1991 DENNIS L. Wherefore. a written contract for attorney's services shall control the amount to be paid therefor unless found by the court to be unconscionable or unreasonable. G.000.000. dollars. (2) P75. Rizal. of the professional standing of the attorney for plaintiffs-appellants. Joseph Lumber filed a collection suit against a customer. In view of its nature. BENJAMIN L.. Finding probable cause after conducting a preliminary investigation of the charge. Lopez. Benjamin Espiritu. So ordered. the date of the amended decision of the court a quo. the following: (1) P200. And we are further convinced of its reasonableness because defendant's counsel likewise valued at P50. Defendant having breached its contracts in bad faith. during a period of three years. prepared several memoranda and the motion for reconsideration.00 for his sonin-law Alfredo Montelibano. Alfredo Montelibano. F) whereunder plaintiffs-appellants engaged the services of their counsel — Atty.000. 1960 (Exh.. LAO. 10). Since the petitioner was the employee who transacted business with Espiritu. and the business and financial position of the offender on the other (Domingding v. Jr. conferred with witnesses. the private respondent. 1963.00 for his daughter Mrs. St. St. not criminal. Querubin for and in his own behalf. Chan Tong. the firm's owner. the court. we find it just to award P75. The case was however later dismissed because the court believed that Espiritu's liability was only civil. to provide an example or correction for public good. MANUEL QUERUBIN and CHAN TONG. And further considering the present rate of exchange and the terms at which the amount of damages awarded would approximately be in U. As said earlier. Vicente J. Joseph Lumber filed a criminal complaint for estafa against Espiritu. Now. (4) P50. let it be stressed that the amount of damages awarded in this appeal has been determined by adequately considering the official. lawyer. social. Regional Trial Court.00 as exemplary or corrective damages.The rationale behind exemplary or corrective damages is. for unpaid purchases of construction materials from St.00 the proper compensation for his services rendered to defendant in the trial court and on appeal. prepared four sets of cross-interrogatories for deposition taking. the judgment appealed from is hereby modified so as to award in favor of plaintiffs and against defendant. hereinafter called St.00 for his wife Maria J.000. shows that said amount provided for in the written agreement is reasonable. 78 . the investigating fiscal filed an information for estafa in the Court of First Instance of Quezon City against Espiritu. divided among plaintiffs.000 as moral damages. In concluding. Counterclaim dismissed. Petitioner Dennis Lao was an employee of the New St.00 as attorney's fees upon the termination of the case in the Court of First Instance.G.R. Espiritu filed a complaint for malicious prosecution against the petitioner and St.00 as moral damages. as stated earlier. P25.000.000. In this light. Sumulong & Associates Law Offices for petitioner. the petitioner was sued. the record shows a written contract of services executed on June 1. 55 O. A consideration of the subject matter of the present controversy. owned by the private respondent. Said lawyer — whose prominence in the legal profession is well known — studied the case.00 as attorney's fees. for damages for malicious prosecution. upon the advice of its lawyer. vs. as the name implies. respondents. prepared and filed the complaint. may award exemplary damages in addition to moral damages (Articles 2229. 2232. Joseph Lumber & Hardware Supply. and financial standing of the offended parties on one hand. thus: P100. Ng. and (5) the costs. together with his employer.000 as attorney's fees. P10.000. petitioner. On April 12. Joseph Lumber. 1984. ESPIRITU. this Court is all the more of the view that said award is proper and reasonable.000. and an additional sum of P25. Attorney Manuel Querubin. Joseph Lumber. F. New Civil Code).00 as exemplary or corrective damages. GRIÑO-AQUINO. filed a brief for plaintiffs as appellants consisting of 45 printed pages and a brief for plaintiffs as appellees consisting of 265 printed pages. In November 1981.:p For being a witness in an unsuccessful estafa case which his employer filed against a debtor who had defaulted in paying his just obligation.00 in the event the case is appealed to the Supreme Court. J.000. it should be imposed in such an amount as to sufficiently and effectively deter similar breach of contracts in the future by defendant or other airlines.S. based on the same transaction. JUDGE FLORENTINO FLOR. Jr. Joseph Lumber. praying that the defendants be ordered to pay him P500. analyzed documentary evidence.000. until said damages are fully paid. (3) interest at the legal rate of 6% per annum on the moral and exemplary damages aforestated. 82808 July 11. and P25. No. political. HON. Branch 89 of Morong.

in not holding that he (petitioner Lao) has a valid defense to the action for malicious prosecution in Civil Case No. To maintain an action for damages based on malicious prosecution. the defendants. Joseph Lumber when he executed the affidavit which his employer submitted to the investigating fiscal who conducted the preliminary investigation of his employer's estafa charge against Espiritu.000 as attorney's fees.R. filed the criminal complaint against Espiritu. 103 Phil. Joseph Lumber. The appellate court dismissed his appeal on May 21. On November 11. 1984. "Sound principles of justice and public policy dictate that persons shall have free resort to the courts for redress of wrongs and vindication of their rights without later having to stand trial for instituting prosecutions in good faith" (Buenaventura vs. Vergara. therefore. 698). three elements must be present: First. Domingo. not himself. "Benjamin L. Joseph Lumber and Hardware Supply. Although the prosecution of Espiritu for estafa did not prosper. He appealed to the Court of Appeals (CA-G. 1985 insofar as he is concerned. hence. Philippine Products Co. The private respondent was allowed to present his evidence ex parte. the prosecutor was actuated or impelled by legal malice (Ferrer vs. There is merit in petitioner's contention that he was deprived of his day in court in the damage suit filed by Espiritu. 2. Lao was not motivated by malice in making the affidavit upon which the fiscal based the filing of the information against Espiritu. 84-M) because it was his employer. 1987. 1985. He executed it as an employee. Joseph Lumber. On November 13. In fact. On January 22. a decision was rendered by the trial court in favor of Espiritu ordering the defendants Lao and St. plaintiff-appellee vs. had personal knowledge of the transaction. as found and certified by the investigating fiscal himself. and third. and the order of default was set aside. the petitioner alleged that he acted only as agent or employee of St.In his answer to the complaint. he (Attorney Querubin) neglected to attend other pre-trial conferences set by the court. negligence. He was only an agent of St. They were once more declared in default. vs. the owner of the St. On February 25. Petitioner's motion for reconsideration of the decision was denied by the trial court. The prosecutor was his employer.000 as moral damages. Chan Tong or the St. they were declared in default. 52 O. defendants-appellant"). Joseph Lumber. and costs. 1984. failed to notify Lao. St. and 3. The petition is meritorious. again failed to attend the pretrial despite due notice to the latter who. the motion was granted. 1984. However. The petitioner avers that the Court of Appeals erred: 1. Joseph Lumber from whom Espiritu made his purchases of construction materials and who. the unsuccessful prosecution may not be labelled as malicious. Since the defendants and their counsel failed to appear in court. the fact of the prosecution and the further fact that the defendant was himself the prosecutor. who. Lao had a valid defense to the action for malicious prosecution (Civil Case No. 122 Phil. Civil Code. Dennis Lao and New St. P5. that was the complainant in the estafa case against Espiritu. 06796. CV No. including herein petition petitioner Lao. Lao was only a witness in the case. 1897. He had no personal interest in the prosecution of Espiritu for he was not the party defrauded by Espiritu. He filed this special civil action of certiorari and prohibition to partially annul the appellate court's decision and to enjoin the execution of said decision against him. second. 79 . the prosecutor acted without probable cause. and dereliction of duty of Attorney Manuel Querubin whom his employer had hired to act as counsel for him and the St. and that the action was finally terminated with an acquittal. the defendants filed a motion for reconsideration of the order of default. Espiritu. There was probable cause for the charge of estafa against Espiritu. Joseph Lumber. negligence and dereliction of duty of the lawyer whom his employer hired as his and the company's counsel. and their counsel. however. not the prosecutor in the estafa case. Joseph Lumber to pay jointly and severally to Espiritu the sums of P100. but it was denied by the trial court. 1985. Lao filed a motion for new trial on the ground of accident and insufficiency of evidence. Attorney Querubin neglected to defend Lao. 239). He executed the affidavit which was used as basis of the criminal charge against Espiritu because he was the salesman who sold the construction materials to Espiritu. that in bringing the action. 291). He concentrated on the defense of the company and completely forgot his duty to defend Lao as well. due to the gross ignorance. upon advice of his counsel. Lao was only a witness. a salesman of the St. The pre-trial of the case was set on October 30. but who failed to protect his interest and even acted in a manner inimical to him. Joseph Lumber. On January 16. 84-M. 1985.G. in not holding that he was deprived of a day in court due to the gross ignorance. in not partially annulling the decision of the trial court dated January 22. It was Chan Tong. not personally liable to the party with whom he contracted (Art. He never informed Lao about the pre-trial conferences. Primateria Societe Anonyme. Sto.

When adverse judgment was entered by the court against Lao and the lumber company. REYES. Its execution against the petitioner cannot be allowed to proceed. that she had no residence certificate at the time and she was asked to secure one. and participation in the estate to Rizalina Santos Rivera.00. and what she signed the day before was a sale of her share in the inheritance. testified that on 7 December 1954 she asked Jose D.000. written in Tagalog. 1963 ADELA SANTOS GUTIERREZ. are as follows: That the plaintiff and the defendants are the only legal heirs of the late Irene Santos of Malabon. J. which she did. and the other defendant.000.800. motion. Rizalina Santos Rivera. The defendant. No. that while they were waiting for the lawyer. payable in installments: the first in the sum of P10.R. Q-20086 for estafa against said private respondent. the plaintiff called on Attorney Alfonso Ponce Enrile. 3726. He allowed it to become final. Attorney Querubin did not file a motion for reconsideration of the decision. who had not yet arrived. WHEREFORE. which she did sign. L-17117 July 31. Montecillo and Belo for plaintiff-appellant. Joseph Lumber was insolvent. that on their way home. a manifestation. Espiritu levied on the petitioner's car to satisfy the judgment in his favor since the company itself had no more assets that he could seize.. plaintiff-appellant.: Direct appeal by both the plaintiff and the defendants from a decision of the Court of First Instance of Rizal. and thereafter Jose D. had gone out of business. Rizal. in consideration of P50. In view of the foregoing circumstances. 80 . vs.00.00 by way of advance payment on her share in the estate of her deceased aunt. is no longer entitled to the service of any pleading. Ponce Enrile. and counterclaimed for P200. Pasig. The defendants answered denying the charges. and with the plaintiff assuming to pay her share in the estate and inheritance taxes.00 in one (1) year. On this day also.00 attorneys' fees. because of the allegedly malicious charges and filing of the suit. and brought it to the said law office. 2100. that Villegas pacified her by telling her that they would talk it over in the house. Flores. after which Attorney Flores translated to her in Tagalog this second document. which turned out to be a manifestation for the court. purporting to be a sale of her share and participation in the estate in favor of Rizalina Santos Rivera. interests. 13 January 1955. was again asked to sign another document. that while there she. Costs against the private respondent. SO ORDERED. alone and in her own behalf.000.L. who advised her to deposit in court the amount that she waived. the plaintiff filed the present case to annul the aforesaid deed of sale on grounds of fraud and mistake. Joseph Lumber to pay the damages awarded to the private respondent Benjamin Espiritu. because anyway Espiritu would not be able to satisfy his judgment against Chan Tong who had informed his lawyer that the St.00 moral and exemplary damages and P50. but Villegas.B. she simply obeyed.00. 1987. that she upbraided Villegas but she did not inform Flores of the deception. solidarily liable with St. the plaintiff asked both the said lawyer and Villegas what the document was all about. Rizal. Said petitioner is hereby absolved from any liability to the private respondent arising from the unsuccessful prosecution of Criminal Case No. The plaintiff. answered her that as his lawyer advised him that he had no authority to give such an advance he would ask Rizalina Santos Rivera if she could lend him the money. On 12 January 1955. and docketed therein as Special Proceeding No. The probate court granted the petition on 5 January 1955.000. judgment is hereby rendered partially setting aside the decision of the Court of Appeals dated May 21. who died intestate on 11 November 1954. while the plaintiff. that in the afternoon of 12 January 1955. Dennis Lao. and that she. Siguion Reyna. This deed was notarized by Severo Jovellanos on 13 January 1955.00 upon signing. in its Civil Case No. Rizal. about which the parties are not in controversy.000.000. Jose D. the plaintiff. they were told to sit in the reception room. in turn. to be evidenced in writing.000. Villegas counter-offered to give the plaintiff a loan of P10. Macapagal and Dizon for defendants-appellants. that that same evening. defendants-appellants. order. while the balance would be paid by check that same evening. VILLEGAS and RIZALINA SANTOS RIVERA. are the nieces of the said decedent. A few days after the death of Irene Santos. the defendants invited the plaintiff to go with them to Manila without informing her of the purpose of the trip. to which proposition the plaintiff agreed because she was planning a business venture. Pasay City Branch. instead of the P2. On 27 July 1955. they went to the law office of Attorney Modesto Flores.00. entitled "Kasulatan Ng Bilihan At Salinan". which. with the explanation that the plaintiff's son-in-law's debt of P2. that at about Christmas time. G.000. or decision filed or promulgated in the probate court. that when she was asked to sign the document on the space indicated to her. The facts.000. Villegas for a loan of P2. and the plaintiff and Rizalina were given copies of a document which the former was not able to read on account of her poor eyesight and her failure to bring her eyeglasses with her. As a result. is the surviving spouse. Delgado. to her surprise. Villegas qualified as the administrator of the estate. a petition for the administration of her estate was filed with the Court of First Instance of Rizal. and the balance of P40. in Malabon. insofar as it declared the petitioner. he would give to the plaintiff.000. that on 14 January 1955. Adela Santos Gutierrez signed a four-page document (Exhibit "A"). J. Villegas admitted that he and Rizalina wanted the document to be a sale instead of a loan. but neither of them answered her. and did not have any leviable assets. that when Attorney Flores arrived.00 would be deducted from the amount of P10. the judgment against Lao was a nullity and should be set aside.00 originally asked. JOSE D. that she did secure one the following day. Adela Santos Gutierrez. Villegas gave the plaintiff the sum of P4. the plaintiff signed a "Manifestation" (Exhibit "B") purporting to inform the probate court that the plaintiff had sold all her rights. Villegas.

000. The lower court erred in dismissing plaintiff-appellant's complaint. These circumstances. failed to include certain properties. Moreover.000. and. Her alleged poor eye-sight has not been shown with convincing evidence. are badges of fraud that contributed to her being an easy victim of her opponents' deceit. Under the present situation. but Villegas. her consent was vitiated by gross mistake because the defendants misled and deceived her as to the actual and real value of the estate of Irene Santos because the inventory. The facts. With the unfavorable treatment that the plaintiff claims to have received at the hands of the defendant Villegas since childhood. plaintiffs and defendants regularly appealed to this Court directly. Exhibit "A".00 in full payment of the purchase price. 81 . if at all listed. and the notary public. was with her during the signing of the deed of sale on 12 January 1955. The plaintiff depicts herself as an unschooled simpleton that attained only the third grade. that she was an avid reader of Tagalog literature. that of the instrumental witnesses. she readily identified a letter from the Bureau of Internal Revenue. provided the plaintiff paid her share in the estate and inheritance taxes. in which Exhibit "A" was couched. yet the plaintiff allegedly came to live with the defendants only to provide company to her uncle-in-law during his bereavement on the death o her aunt.00. The lower court erred in rejecting plaintiff-appellant's claim that on account of the fraud practiced upon her by the defendants-appellants. Whereupon. Plaintiff has herself testified that she needed money to engage in business in Mindoro. or which. Jovita. as the favorite. which was filed in Special Proceeding 2100 of the probate court. 2. which is contradicted by that of defendants and their witnesses.000. first in English. after consulting. The lower court erred in refusing to find the price of P50. and also during the notarization of the same and the signing again of the "Manifestation" on 13 January 1955. as shown by the record. furthermore. Their evidence varies from that of the plaintiff's in the following particulars: That the plaintiff did not ask for a loan but offered to sell her share in the inheritance to Villegas for the purpose of investing the proceeds in business. that said pleading was first translated and explained to the plaintiff before she signed it. through her lawyer. "she is a woman of average intelligence capable of understanding the consequences of a signature affixed to a document". she consented to the execution of Exhibits "A" and "B" under the mistaken notion that those documents related to the loan agreement she and the defendants-appellants had previously agreed upon. coupled with the inadequacy of consideration.1äwphï1. and being advised by his lawyer that he could not buy property under his administration suggested to the plaintiff to ask Rizalina instead. but. in the absence of other evidence manifesting a scheme to commit it and which would link the lawyer who caused its preparation. within one year therefrom. upon signing of the contract. that when the plaintiff mentioned her proposition to Rizalina. the first. and the balance. The trial court rejected the pretensions of both parties. and that there was no impelling need for her to sell the property. 4. that she has poor eye-sight.000. and then finalized it in Tagalog. the amounts involved being in excess of P200. let along her signing a four-page document. they are paraphernal properties of the deceased. Rizalina. in fact. 3. Exhibit "A" should be deemed as a partition and as such it is rescindible on account of lesion since the amount to be received by the plaintiff-appellant under that instrument is less by more than one-fourth (1/4) of the true value of the share of which she is entitled. the latter was at first reluctant to agree to the price of P50. in the sum of P10. with her eyeglasses on. however. the careful preparation of the document cannot be taken against the defendants as an indication of fraud.00. it cannot be expected that the plaintiff would be unwary of whatever he would ask her to do. in view of the relationship of trust and confidence between the parties.ñët The foregoing facts are disputed by the defendants. do not support the plaintiff's conclusions. The alleged indicia of fraud upon which she rests her case are backed only by her own uncorroborated testimony. on the contrary.000. as the lower court stated. forwarded to the plaintiff a cashier's check drawn on the Prudential Bank and Trust Company payable to the plaintiff in the sum of P40. The lower court erred in disregarding plaintiff-appellant's contention that under Article 1082 of the Civil Code of the Philippines. The alleged existence of a relationship of trust and confidence which was supposedly taken advantage of by the defendants is belied by the plaintiffs own assertion that her defendant uncle-in-law and her deceased aunt had treated her as the underdog since childhood. that a year thereafter. Rizalina Santos Rivera. dismissing the complaint as well on the counterclaim.00 as a grossly inadequate consideration for the alleged sale and assignment of plaintiff-appellant's share in the estate of the late Irene Santos. which was. even without eyeglasses. 5. that in signing the deed of sale. were either undervalued or stated to be conjugal when. or more particularly on 5 January 1956. during the trial. The lawyer. Plaintiff's lack of formal education was no handicap to her ability to read and write the Tagalog dialect. the plaintiff reasons out. while picturing the defendants as intelligent and clever persons.The plaintiff claims. the presumption of fraud arises. The lower court erred in relying upon the appraisal made by the Bureau of Internal Revenue Examiner Bernardo Tamese for the purpose of determining the true and fair market value of the estate of Irene Santos and the share of the plaintiff-appellant in such estate. The defendants. who dictated the draft of the deed. on the other hand. that the plaintiff's daughter. low degree of intelligence. that the latter read and signed the deed. with the stipulation that it be paid in two installments. refuse acceptance by the plaintiff. but later on they agreed on said price. and her sister. Plaintiff also asked that certain withdrawals made by Rizalina Santos Rivera from the bank overdraft account of the deceased should be brought to collation. continues the plaintiff.00. fully acquitted himself on the witness stand of the possible stigma of being a party to the alleged fraud. The plaintiffs assignments of error recite: 1. proved in convincing detail the circumstances surrounding the execution of the questioned deed through their own testimony.

These real properties were appraised by the Bureau of Internal Revenue for purposes of fixing the amount of estate and inheritance taxes to be paid. and Pampanga. "27" to "28-A"). having a net conjugal estate of P8. Exhibit "L" to "L-4" which were also submitted by the plaintiff to prove the market value of the properties in Bulacan and Pampanga are worthless as evidence in that matter. The destruction of the pre-war records of that Court should undoubtedly impose caution before accepting at face value this sort of copies. we note that the trial court preferred to adopt the appraisal of the examiner of the Bureau of Internal Revenue.502. 13 January 1955? Why did she accept the first installment payment on 14 January 1955 when.00. Director of Forestry" (Exhibit G-2).R. Tamese valued the property in Famy. she had already learned of the fraud when Atty. after an ocular inspection of the properties and investigation of the deeds of title and tax declarations covering the same. "San Pedro. 654. Rizal. The findings of Mr.00 although in the inventory of defendant Villegas each parcel was valued only at P1. How could the plaintiff have simply obeyed and signed the deed. Exhibit "B".263. Vera (Exhs. It is also to be noted that in said Report the paraphernal properties of Irene Santos were included. according to her version of what transpired. nor any signature attesting its authenticity. to at least corroborate her testimony? She was present during the signing of Exhibits "A" and "C". Bernardo Tamese.00 should be deducted. from which the expenses and claims amounting to P138. What motive had Villegas. In this respect. (Exhibits "22" and "22-A") and was worth only P15. and there is no evidence to justify such conclusion.). over that of witness Santiago presented by the appellant. since it bears no signatures or certification by the Clerk of the Court of Appeals that purportedly rendered it. the trial court made the following cogent observations in its decision: It is a fact that Irene Santos owned real properties situated in the City of Manila. Rizal. The claim of grossly inadequate consideration for the sale is predicted by the plaintiff upon a double theme:(a) that the inventory of the estate of Irene Santos did not include certain properties in Rizal (a one-sixth undivided interest in an estate in Montalban. yet it is not shown that the defendants took any steps to prevent her from bringing her eyeglasses. some of which are paraphernal (Exhibits "H" to "H-3") and the rest are conjugal. it must be admitted that there was no preparation to insure its success. Tamese as noted down by him in his worksheet. . were submitted to his superior officers (Exhibit "B") and the same were approved by the Superintendent and Senior Revenue Examiners and confirmed by the Commissioner of Internal Revenue. not supported by reliable evidence of genuineness and authenticity.00 for every hectare of fishpond of Irene Santos and yet was found to have no properties to his name in the provinces of Bulacan and Pampanga. appraised and considered in determining the total value of the estate of the old woman. The deeds of sale. of 1010. The checks (Exhibits 3 to 3-F) and deposit slips (Exhibits 4 to 4-F) evidence that the amounts drawn were duly returned. Lolita.00 after his death (Exhibits "23" to "23-B"). No. in case CA-G. there are certain questions which have not been satisfactorily explained by the plaintiff. These facts belie the claim of plaintiff that there was undervaluation of the properties of the deceased. Moreover the official appraisal made by the Government deserves more credit than the testimony of the witness Bernardo Santiago who pretended to be in a position to pay P3. on the other hand. Neither do we find merit in the charge that plaintiff's sister. We are not prepared to declare the rejection of this exhibit to be erroneous.931. The trial court found the fair value of the conjugal estate to be P147. without having noted the word "LIMAMPUNG LIBONG PISO" written in bold capital letters in the four-page deed of sale? How could she claim ignorance of the contents and import of the deed which she signed on 12 January 1955 when she even secured a residence certificate and turned to the same law office with it on the following day. To sustain the claim of deliberate undervaluation would necessarily imply that the Internal Revenue examiner Tamese and his superiors deliberately betrayed their official duty. a man 80 years of age. on 13 January 1955? Why is it that during the trial she readily identified Exhibit "Q" (a letter from the Bureau of Internal Revenue) without wearing eyeglasses but could not identify Exhibit "A" without wearing them.194. the latter acting through Deputy Commissioner Misael P. Rizalina Santos Rivera. Exhibit "7" and which is reproduced in page 15 hereof. Flores explained to her the "manifestation". Bernardo Tamese.9999 has. Laguna.00. had siphoned off money and properties from her aunt's overdraft account. Exhibit "A". of which one82 . As to the first. and such carelessness renders the whole charge of deceit absurd and incredible. It is to be observed that in his report Mr. vs. according to her. We find no reversible error in these conclusion of the court a quo. and (b) an alleged gross under valuation of the estate properties. plaintiff would have flatly refused to sign.000. It is undeniable that had she been able to read the deed. when a comparison of the type of print between these exhibits shows no appreciable difference at all? The lack of a satisfactory explanation to these questions impels affirmance of the lower court's finding that no fraud or mistake vitiated the consent of the plaintiff in affixing her signature to the deed. while. As to the averred undervaluation. made in assessing the inheritance taxes due on the estate of Irene Santos. at P2. for committing the alleged fraud against the plaintiff? Why did not the plaintiff present her daughter.00. If fraud there was. and in the provinces of Laguna. et al. and this Court sees no ground for disturbing the findings of these public officials in the absence of proof of any irregularity in their actuations. in the absence of proof that the properties covered by said documents are of the same kind and class and are similarly situated as those of the deceased. Hence. the court below rejected the plaintiff-appellant's evidence consisting in a simple copy of a purported decision of the pre-war Court of Appeals. which had ample opportunity to estimate the credibility of the contrasting witnesses and evidence. Bulacan.All the foregoing circumstances pointed to by the plaintiff as badges of fraud do not stand unexplained.000. and approved by the superior officers of the Bureau. One striking feature of plaintiff's story is that the success of defendants' alleged machinations wholly rested on the most fortuitous circumstance of plaintiff's not bringing her eyeglasses when she signed the deed conveying her interest to her sister. and their fair market value was determined by the examiner. the claim of gross inadequacy of the price must be rejected as unproved.

J. 1082. it is not to be lightly inferred. On December 10. on the strength of Article 1082 of the Civil Code. gives a partible estate of P216. Exhibit "A". suffered by plaintiff from her sale of P50. plaintiffs-appellants. according to the plaintiff.00 under the contract. AQUINO.00 of an individed heredity interest worth P54. 217 (its 83 . has not been pleaded either by answer or motion to dismiss. may also be rescinded on account of lesion. and. 217. ET AL. ET AL. but her failure to seek an amicable settlement before filing suit. No costs in this instance. We find no reason for disturbing the decision appealed from. and vicissitudes attendant to the judicial liquidation and settlement of the estate. Granting. since the undivided share of the widower Villegas remained unchanged). 1906 and October 26. 4522). as required of relatives by Article 222 of the Civil Code. This article reads: ART. rescissible on the ground of lesion.". for which the P50.00. although it should purport to be a sale. Agustin and Granada. RAMOS. Maria and Federico. As to moral damages. L-19872 December 3. The case was docketed as Civil Case No.00 is certainly less than the one-fourth (1/4) required by Article 1098 of the Code. RAMOS. Every act which is intended to put an end to indivision among co-heirs and legatees or devisees is deemed to be a partition.664. Hilado and Hilado for defendants-appellants. being valid and binding. if any. or any other transaction. we are not disposed to vary the lower court's refusal to award them damages and attorney's fees. amounts to P54. San Diego for plaintiffs-appellants. temperate. having received only P50. considering that appellant was to obtain it free from the troubles. 1001).half (P4. A partition.00 payable under Exhibit "A" is certainly not an inadequate price. The one-fourth share of the plaintiff-appellant. which was terminated on March 4.. blocks the grant of exemplary damages (Civil Code.00. the absence of actual damages. by at least one-fourth. and of plaintiff's share therein.R. and that the judgment therein is res judicata and bars any litigation regarding the same estate (Civil Case no. than the share to which he is entitled.513. Article 2234). Exhibit "A". the record shows no proof of mental suffering on the part of defendants upon which the award can be based. Such awards are primarily in the discretion of the trial court. under Article 1098. Turning now to the defendant's appeal. The evidenced values of the properties in the estate of Irene Santos. an exchange. valued at P212. While fraud may be proved entirely by circumstantial evidence. Timoteo. Modesto. No. Art. and it has found no facts upon which such award can be made. 1974 EMILIANO B. render unnecessary any extended discussion of her alternative claim that the contract. is. as nearest collateral relatives (Civil Code. or compensatory. The next question is whether the contract of sale and assignment. to which she is entitled to an aliquot one-fourth (1/4) as an heir. she is entitled to a rescission thereof.000. arguendo. should be deemed a partition under Article 1082 of the Civil Code of the Philippines (notwithstanding the fact that it did not totally terminate the indivision among the coheirs of Irene Santos. still the lesion. rescindible on account of lesion of one fourth. over one million pesos. Quisumbing and Maximino M. 1906 a special proceeding was instituted in the Court of First Instance of Negros Occidental for the settlement of the intestate estate of the said spouses. 1888. Our review of the evidence discloses that the evidence for appellant does not suffice to overcome the presumption of good faith and regularity in human affairs. delays. suffering.50) pertained to the deceased. GREGORIA T. Humberto V. therefore. moral.000. that the assignment of her hereditary share in favor of her sister. Rizalina. the same is hereby affirmed. as niece of the deceased. defendants-appellants. nonetheless. and she contends that inasmuch as the net hereditary estate of the deceased is. Martin Ramos was also survived by his seven natural children named Atanacia. respectively.:p The parties appealed from the decision of the Court of First Instance of Negros Occidental. Adding to that half the net paraphernal estate. The theory of the plaintiff is that the contract should be deemed a partition. which provides: ART.50 to be divided (in the absence of ascendants and descendants) half to the surviving spouse and half to the two nieces. They were survived by their three legitimate children named Jose. when any one of the co-heirs received things whose value is less.000. Not only were the allegations of fraud in plaintiff's complaint privileged in character. dismissing plaintiffs' complaint and holding that the intestate estate of Martin Ramos was settled in Civil Case No. should be regarded as a partition. G. a lesion of more than one-fourth (1/4). therefore.1914. Emiliano.. Manuel. In addition. The documentary evidence reveals the following facts: The spouses Martin Ramos and Candida Tanate died on October 4. and. 1098.161. judicial or extrajudicial.131. vs.000. a compromise. considering the value of the things at the time they were adjudicated.

760. Federico. approved the project of partition as well as the intervention of Timoteo Zayco as guardian of the five heirs. By way of explanation. 4). provided that it can be included within the third for free disposal. Kabankalan.78. located in Barrio Binicuel. representing a one-seventh (1/7) of a one-sixth (1/6) portion in certain head of cattle allegedly representing one-third of the free portion of the estate of Martin Ramos. Nepomuceno asked the administrator to submit a report. some head of cattle and the advances to the legitimate children(Exh. which was signed by Jose.66 3. by the two natural children. The legitimate children may satisfy the portion pertaining to the natural children in cash.497.35.93. Atanacia and Timoteo.984.68 Natural children: 4. To Granada Ramos: (a) a parcel of riceland with a capacity of 16 cavans of seedlings. Martin Ramos. (Article 840 was applied in the project of partition when it stated that each natural child had "una septima partede un sexto de semovientes" but the statement in the project of partition that each legitimate child was entitled to "un tercio delos cinco quintos de los semovientes" is erroneous. which included the Hacienda Ylaya with an area of 185 hectares and (b) some head of cattle 36. with an aggregate value of 12.46 represented the estate of Martin Ramos. and also natural children. was appointed administrator. It was further agreed that Jose Ramos and Agustin Ramos would pay their sister. Timoteo.48.51 It was agreed in the project of partition that Jose Ramos would pay the cash adjudications to Atanacia.891.66 2. who were minors. The court declared that the proceeding would be considered closed and the record should be archived as soon as proof was submitted that each heir had received the portion adjudicated to him (Exh. Rafael O.785. and (d) some head of cattle P25.1913. The sum of P1. (b) a one-hectare town lot. It should be "un tercii de los cinco sextos de los semovientes"). were adjudicated personal properties valued at P1. The partition was made in accordance with the old Civil Code which provides: ART.35 which represented the oneseventh share of each natural child in the free portion of the estate of their putative father. The shares of the seven natural children were to be taken from that one-third free portion. Negros Occidental and (b) some head of cattle 1. To Agustin Ramos: (a) the remaining fourteen (14) lots out of the eighteen lots described in the inventory. The record does not show whether assessed or market values were used in appraising the eighteen parcels of land. from which it must betaken.48 by seven gives a result of P1. 1914. G. Under that project of partition. In the project of partition the conjugal hereditary estate was appraised at P74. and by Timoteo Zayco in representation of the other five natural children who were minors. inasmuch as the ganancial estate had an appraised value of P74. A project of partition dated April 25. One-third thereof was the free portion or P12. a brother of Martin. It consisted of eighteen parcels of land. 1913 was submitted. after deducting the burial and funeral expenses.492. The estate was administered for more than six years (Exh.51 Total adjudications P75. Federico. Emiliano and Maria.302. I and J). in his "decision" dated April 28.783.35 consisting of (a) cash amounting to P1.497. legally acknowledged. 3). 84 . Timoteo and Manuel. 3). at a fair valuation. 3) and which was to be satisfied in cash. H. It was signed by the three legitimate children. 1914 Judge V.497. or in other property of the estate. Judge Richard Campbell. In a manifestation dated February 24. was the amount which was indicated in the project of partition(Exh. complete with the supporting evidence. Ramos.35 and (b) P25. the sums of P3.291. Agustin and Granada. To each of the seven (7) natural children named Atanacia. the following adjudications were made to the heirs: Legitimate children: Value 1.expediente is still existing). Dividing P12. it may be stated that. showing that the shared of the heirs had been delivered to them as required in the decision of April 28. It was sworn to before the justice of the peace (Exh.291. as the legal share of each natural child. Emiliano and Maria. To Jose Ramos: (a) Hacienda Calaza with an area of 328 hectares.785. each of the latter shall be entitled to one-half of the portion pertaining to each of the legitimate children not bettered.93. When the testator leaves legitimate children or descendants. In an order dated February 3. 3). Granada. F.972. The second paragraph of article 840 gives the legitimate children the right to satisfy in cash the hereditary portions of the natural children.36 and P14. while Agustin Ramos would pay the cash adjudications to Modesto. 840.984. one-half thereof or the sum of P37.1913 (Exh. 5). Modesto.273. Jose. Manuel. respectively (Exh. (c) a 23-hectare lot in Sitio Bingig.

Plaintiffs asked money from Agustin pertaining to their share in the produce of Hacienda Ylaya and received varied amounts. including plaintiffs. saying he would return the administration of the properties. Plaintiff Maria Ramos. Hacienda Calaza consists of sugar land. "Upon their father's death. Atanacia and Timoteo all surnamed Ramos. — A summary of plaintiffs' oral evidence is found in pages 4 to 13 of their wellwritten brief. 6). their father and mother. his properties were left under the administration of Rafael Ramos. only left said house in 1911. Note that Granada Ramos and the natural children were assumed to have received their shares from the administrator although according to the object of partition. 85 . Plaintiffs received varied amounts or sums of money from Jose as their shares in the produce of Hacienda Ylaya more or less about P100 a year. RT-2232 TCT No. 2159. both located in Himamaylay. and by Timoteo Zayco.. now deceased and substituted by his widow. . now under the support of Agustin Ramos. 8): Original Lot No 1370 1371 1372 1375 2158 2159 2161 2163 Registration Aug. mostly during the milling season every year while he was alive up to his death in 1930.000 piculs. continued to give plaintiffs money pertaining to their shares in the products of Hacienda Calaza. hemos recibido del Administrador Judicial Rafael O. RT-2238 TCT No. No receipts were attached to the manifestation. as shown below (Exh. Even defendant Gregoria Ramos. Granada Ramos. continued to live in the same house of their father in Hacienda Ylaya. the younger brother of their father and their uncle. Plaintiff Modesto Ramos who 'could understand Spanish a little'. She however stopped doing so in 1951... "All said children. Emiliano Ramos. 1370. moreover. 1. "Jose Ramos gave plaintiffs also money as their shares from the products of Hacienda Calaza. and maintained close and harmonious relations with them even after the death of their father. widow of Jose Ramos. and having as its present actual value P500. the most valuable of which were the Hacienda Calaza and Hacienda Ylaya. who died in 1906 in the municipality of Himamaylan. herself. telling them that the lessee Estanislao Lacson was not able to pay the lease rental. RT-2236 TCT No. more or less. sometimes around P50 at a time. 1923 — do — — do — — do — Sept. who herself testified that she has 'a very low educational attainment'. Exhibit 6. and receiving P90 or P100 more or less a year. lived together in Hacienda Ylaya during his lifetime and were under his care. 1923 — do — — do — — do — Present title TCT No.Agustin. giving plaintiffs money as their shares of the produce of said properties but plaintiffs not receiving any property or piece of land however. Plaintiff Emiliano lived there with Agustin. received P300 from Jose Ramos in 1918 taken from the products of Hacienda Calaza when he went to the United States to study. which are involved in this case were registered (as of 1958) in equal shares in the names of Gregoria Ramos and her daughter. left considerable real estate. respectively being brother and sister. "Agustin Ramos supported plaintiffs. the guardian. "Upon Jose Ramos death his widow Gregoria Ramos. Ramostodas y cada una de las participaciones a que respectivamente tenemos derecho en los bienes relictor de los finados esposos Martin Ramos y Candida Tanate. admitted that she dealt with plaintiffs as family relations. getting more when needed. defendants and plaintiffs alike. 10. All said children continued to live in said house of their father for years even after his death. Apparently. RT-2233 TCT No. Rosario Tragico. RT-2235 TCT No. RT-2237 TCT No. Jose Ramos and Agustin Ramos (not the administrator) were supposed to pay the cash adjudications to each of them. plaintiff Manuel stayed there for one year and lived later with Jose Ramos for four years. whether legitimate or acknowledged natural. his first cousin. Lots Nos. and which was sworn to before the justice of the peace on March 2 (not 4). (Exh. until he transferred to Hacienda Calaza where he helped Jose Ramos supervise the work in said hacienda. the only source of income of Agustin coming from said hacienda. palay land and nipa groves with an area of 400 hectares and with a sugar quota allotment of 10. Rafael Ramos continued to administer those properties of their father. RT-2231 Date Dec. in the house of their father. they acknowledged: . 1933 — do — — do — — do — — do — — do — — do — — do — Plaintiffs' version of the case. He turned over Hacienda Ylaya to Agustin Ramos and Hacienda Calaza to Jose Ramos. 1372. "All the children of martin Ramos. 29. lived there until 1916 when she got married. especially seeing them during Sundays in church as they lived with their father. until 1913 when Rafael Ramos gathered all the heirs. helping him supervise the work in Hacienda Ylaya.000 more or less. It is reproduced below (omitting the citations of the transcript): Martin Ramos. RT-2230 TCT No.1914. getting the money from the produce of Hacienda Ylaya. Negros Occidental. Granada. the manifestation was not in strict conformity with the terms of judge Nepomuceno's order and with the project of partition itself.. 1371. 1914 and filed in court on March 5. completo acuerto y conformidad con elproyecto de reparticion que nosotros mismo sometemos al Juzgado en 25 de Abril de 1913 . Even Maria Ramos who upon her marriage in 1916 lived in La Cartota with her husband was given money whenever she went to Himamaylan. Negros Occidental. 1375. 2158. 2161 and 2163(eight lots) of the Himamaylan cadastre (page 8 of the Record on Appeal does not mention Lot 1370).

4 and 6).The complaint is silent as to the fate of Federico Ramos. The defendants denied the existence of a trust. his wife Gregoria and his daughter Candida in whose names the said eight lots are now registered as shown in Exhibit 8 and in page 4 hereof. Abintesdado de los finados esposos Martin Ramos y Candida Tanate (Exh. in the aforementioned eight (8) lots which apparently form part of Hacienda Calaza. the lower court dismissed the complaint on the ground of res judicata. And the said one-sixth portion was the share of his seven legally acknowledged natural children under article 840 of the old Civil Code). that he did not authorized anyone to include him as a plaintiff and that he did not want to be a party in this case. 3. Nestor Olmedo did not sign any receipt allegedly containing the signatures of Atanacia assisted by himself as husband.785. and daughter. Timoteo Ramos. 86 . and Timoteo Zayco as guardian adlitem of the minors Modesto. the decision and the receipt of shares forming part of the expediente of Civil Case No. manifested that he had already received his own share of the inheritance. Manuel. "Plaintiffs only discovered later on that the property administered by their elder brother Jose had a Torrens Title in the name of his widow. on Appeal). their uncle and brother-in-law of defendant widow Gregoria was appointed their guardian. or Appeal. They therefore did not intervene in the said cadastral proceedings because they were promised that they(defendants Jose and Agustin) would 'be the ones responsible to have it registered in the names of the heirs'. He moved that his name be stricken out of the complaint (44-45 Rec.35 each — from said alleged guardian as their supposed share in the estate of their father under any alleged project of partition. "Neither did Atanacia Ramos nor her husband. One-sixth represented the one-third free portion of Martin Ramos' one-half shares in the said lots. the seventh natural child of Martin Ramos. 217 of the Court of First Instance of Negros Occidental. Emiliano Ramos. Granada Ramos and the heirs of Jose Ramos for the purpose of securing a reconveyance of the supposed participations of plaintiffs Atanacia. both being of age at that time. (2) in denying their right to share in their father's estate and (3) in holding that the action was barred by res judicata or the prior judgment in the special proceeding for the settlement of Martin Ramos' intestate estate. Emiliano. when plaintiff Modesto's children insisted and inquired from the Register of Deeds sometime in 1956 or 1957. E. who was joined as a co-plaintiff. Federico. Timoteo Ramos. Candida. Civil Case No. They pleaded the defenses of (a) release of claim as shown in the project of partition. No guardian could in law act on their behalf. The action is really directed against the heirs of Jose Ramos. (4-13 Brief). Maria and Modesto. 1957 against defendants Agustin Ramos. "Plaintiffs did not know of any proceedings of Civil Case No. They never received any sum of money in cash — the alleged insignificant sum of P1. namely. plaintiffs Modesto and Manuel were in 1913 no longer minors at the time of the alleged project of partition of the estate being approved. was substituted by his widow and their ten children (Exh. Emiliano and Maria know (that) Timoteo Zayco. Plaintiffs were 'assured' by defendants brothers. Plaintiffs did not file and cadastral answer because defendants Jose and Agustin told them 'not to worry about it as they have to answer for all the heirs'. Plaintiffs did not intervene in the intestate proceedings for (the) settlement of the estate of their brother Jose as they did not know of it. who died in 1958.000 plus costs and expenses of this litigation"."There was never any accounting made to plaintiffs by Jose Ramos. Plaintiffs then went to see their elder brother Jose to inform him that there was a card issued to them regarding the survey and gave him 'a free hand to do something as an administrator'. Manuel. Exh. Emiliano and Maria. upon his death. Nestor Olmedo. sign any project of partition or any receipt of share in(the) inheritance of Martin Ramos in cash. Nor was any accounting made by his widow. The plaintiffs vigorously press on this Court their theory that the plaintiffs. "Plaintiffs did not know that intestate proceedings were instituted for the distribution of the estate of their father. "Plaintiffs were thus constrained to bring the present suit before the Court of First Instance of Negros Occidental on September 5. 7). 217 (Exh. 217. defendant Gregoria Ramos. (The plaintiffs did not specify that the said shares would amount to one-sixth of the said eight cadastral lots. — The plaintiffs contend that the trial court erred (1) in dismissing their complaint. Gregoria. F to J and 1 to 6). plaintiff Modesto Ramos was informed by the Surveying Department that they were going to survey these properties. (c) res judicata and (d) prescription. Plaintiffs' appeal. plaintiffs reposing confidence in their elder brother. No deed of trust was alleged and proven. There was an express admission by defendant Gregoria Ramos that Timoteo Zayco was her brother-in-law. Proceedings in the lower court. — The instant action was filed on September 5. As already noted. all surnamed Ramos. plaintiff Manuel Ramos moreover having confidence in her. as acknowledged natural children. Manual. It is predicated on the theory that plaintiffs' shares were held in trust by the defendants. 1957 seeking for the reconveyance in their favor by defendants Gregoria and daughter Candida and husband Jose Bayot of their corresponding participations in said parcels of land in accordance with article 840 of the old Civil Code and attorney's fees in the sum of P10. The plaintiffs as well as the defendants appealed. "Before the survey of these properties by the Cadastral Court. after trial. As a matter of fact. 61-64 Rec. Neither did plaintiffs Modesto. were grievously prejudiced by the partition and that the doctrine of res judicata should not bar their action. (b) lack of cause of action.

283[4] and 2266[3].J. "Trusts are either express or implied. Even the lower court. 722).A preliminary issue.S. Under the circumstances. personal. defendants' contention that the plaintiffs were not legally acknowledged natural children may just as well be passed upon. Julio vs. 7260727). 1144. However. independently of the particular intention of the parties" (89 C. 76 Phil.S. Express trusts are created by the intention of the trust or of the parties. which should first be resolved. There is a fiduciary relation between the trustee and the cestui que trust as regards certain property. Castro. Infante vs." (89 C. to the beneficial enjoyment of property. See Padilla vs. L-19012. 712). It is true that the acknowledgment of the plaintiffs is not evidenced by a record of birth. and responsibilities which are not strictly technical trusts." (Art. 725).S. Obviously. Plaintiffs' action is anchored on that premise.J. either expressly or impliedly evincing a direct intention to create a trust." (89 C. it may be regarded as conclusive against them. Mitchell. The defendants. one in whom confidence is reposed is known as the trustee. which is relied upon by the defendants to support their defense of res judicata. 4 Phil. or will. as natural children of Martin Ramos. Siguiong vs. The defendants failed to impugn that conclusion in their appellants' brief. but by the construction of equity in order to satisfy the demands of justice. 5.S.S. real. Art. "If a person obtains legal title to property by fraud or concealment. but in its more restricted sense it is a trust raised by implication of law and presumed always to have been contemplated by the parties. but not expressed in the deed or instrument of conveyance" (89 C.J. but the words 'trust' is frequently employed to indicate duties. "A resulting trust is broadly defined as a trust which is raised or created by the act or construction of law. Implied trusts come into being by operation of law. Arro. 85 Phil. Inasmuch as trust is the main thrust of plaintiffs' action. or by words either expressly or impliedly evincing an intention to create a trust" (89 C. 69. in contesting the lower court's finding that the plaintiffs were legally acknowledged children. On the other hand. Lucero vs. a trust is defined as the right. "In its technical legal sense. it being sufficient that a trust is clearly intended" (Ibid. 862). money or choses inaction (Pacheco vs. or which are super induced on the transaction by operation of law as matters of equity. Macadaeg.S. without being expressed. the legal title to which is vested in another. a constructive trust is "a trust not created by any words. 981. will or other public document (Art. received shares in his estate implies that they were acknowledged. Not having done so. Figueras. 1967. 135. it will be useful to make a brief disgression of the nature of trusts (fideicomisos) and on the availability of prescription and laches to bar the action for reconveyance of property allegedly held in trust." A 87 . 217. 60 Phil. 94 Phil. 546). 45 Phil. defendants Agustin Ramos and Granada Ramos and the late Jose Ramos accorded successional rights to the plaintiffs because martin Ramos and members of his family had treated them as his children.J. and the person for whose benefit the trust has been created is referred to as the beneficiary" (Art. Examples of resulting trusts are found in article 1448 to 1455 of the Civil Code. Agustin Ramos and Granada Ramos and the heirs of Jose Ramos are estopped from attacking plaintiffs' status as acknowledged natural children (See Arts. 724). courts of equity will impress upon the title a so-called constructive trust in favor of the defrauded party. Civil Code). 1443 and 1457). 8 Phil. 80). Dalandan. Court of Appeals. With it the question of res judicata and the existence of a trust are inextricably interwoven. 131. 5 Phil. The reasonable inference is that they were in the continuous possession of the status of natural children of Martin Ramos. De Guzman. 722). An implied trust may be proven by oral evidence" (Ibid. 1444.179). That is the proposition advanced by the plaintiffs in their reply-brief. Arts. It is true that an appellee may make an assignment of error in his brief but that rule refers to an appellee who is not an appellant (Saenz vs. 53 SCRA 168. But the record of Civil Case No. September 28. "Implied trust are those which. "No particular words are required for the creation of an express trust. They are ordinarily subdivided into resulting and constructive trusts (89 C. as evidenced by his direct acts and the acts of his family (Art. In a more restricted sense and as contra distinguished from a resulting trust. 505). Siguiong. Caluag. "No express trusts concerning an immovable or any interest therein may be proven by oral evidence. a constructive trust is a trust "raised by construction of law. relations. 96 Phil. We hold that the trial court's conclusion is correct. Tuason de Perez vs. Old Civil Code). New Civil Code). is the correctness of the trial court's "inexorable conclusion" that the plaintiffs were the legally acknowledged natural children of Martin Ramos. 1440. enforceable solely in equity. "A person who establishes a trust is called the trust or. or arising by operation of law". are deducible from the nature of the transaction as matters of intent. since an appellee is allowed to point out the errors committed by the trial court against him (Relativo vs. Unacknowledged natural children have no rights whatsoever(Buenaventura vs. Urbano. Presumably.J. It does not arise by agreement or intention but by operation of law.J. 1973. The defendants in their appellees' brief assail that conclusion. 1. 11. October 30. 852). The crucial issue is prescription. Civil Code). by some writing or deed. "Express trusts are those which are created by the direct and positive acts of the parties. L-31569. the intention as to which is to be found in the nature of their transaction. after treating the plaintiffs in 1913 in the intestate proceeding as acknowledged natural children. had no choice but to reaffirm that same holding in its 1961 decision in this case. assume that the legitimate children committed a mistake in conferring successional rights on the plaintiffs. The fact that the plaintiffs. Crisolo vs. 738. 21 SCRA 543. indubitably shows that the plaintiffs were treated as acknowledged natural children of Martin Ramos. Old Civil Code). that fact was well-known in the community. 563.

20 SCRA 219. Those transactions prove that the heirs of Jose Ramos had repudiated any trust which was supposedly constituted over Hacienda Calaza in favor of the plaintiffs. They reached the age of twenty-one years in 1917. L-20449. 228. The delay was inexcusable. 105 Phil. Salinas vs. or that an action to compel a trustee to convey property registered in his name in trust for the benefit of the cestui qui trust does not prescribed (Manalang vs. L-19060. 4895. 55 Phil. 100 Phil. Laguna vs. L-18838. Jacinto vs. May 31. January 30. Consing (Exh. the decision and the manifestation as to the receipt of shares (Exh. Peckson. section 38 of Act 190 provides that the law of prescription does not apply "in the case of a continuing and subsisting trust" (Diaz vs. Diaz vs. 63 O. Meneses.G. 147 Phil. the longest period of extinctive prescription was only ten years Diaz vs. as to Maria and Emiliano. 8 to 19). 49 Phil. Martinez vs. 1956. Treasurer of the P. Cristobal. Ramos and Candida Ramos leased the said lots to Felix Yulo (Exh. vs. 261. 31. The instant action is unquestionably barred by prescription and res judicata. There is a rule that a trustee cannot acquire by prescription the ownership of property entrusted to him (Palma vs. Gerona vs.G. Jacinto. satisfactory. Gerona vs. Santos. 77 Phil. 1964. the action was filed forty years after it accrued. A trust must be proven by clear. Soler. They could have brought the action from that year. Rosello. or that the defense of prescription cannot be set up in an action to recover property held by a person in trust for the benefit of another(Sevilla vs. Diones. The prescriptibility of an action for reconveyance based on constructive trust is now settled (Alzona vs. As to Atanacia. 4 SCRA 84). 277). Not being adverse. Nava and Aquino. Neither have the plaintiffs specified the kind of implied trust contemplated in their action. 103 Phil. 98 Phil. In the cadastral proceedings.. Buencamino vs. the said lots were adjudicated to his widow and daughter (Exh. 1456. 403. Cuaycong vs. L-19073. J. Reyes. In 1932 Gregoria T. 94 Phil. L-17957. After the death of Jose Ramos. 11033. 1351. Fabian vs. Civil Code). January 29.S. Cuaycong. 23). Gampona. 37). De Pasion. Caladiao vs. 407). April 28. 4 SCRA 450.I. Compare with Mejia vs. Henares. January 30. 20). 776. The rule of imprescriptibility of the action to recover property held in trust may possibly apply to resulting trusts as long as the trustee has not repudiated the trust (Heirs of Candelaria vs. supra. 153. Levantino. Civil Case No. Tuason. G. 135. A to D). De Guzman. 1962. its enforcement may be barred by laches (90 C. 1962. Court of Appeals. 116. (b) such positive acts of repudiation have been made known to the cestui qui trust and(c) the evidence thereon is clear and conclusive (Laguna vs. The instant action was filed only in 1957. February 28. Romero. 4 and 6)negatives the existence of an express trust. 449-450. Compare with Cuison vs. its enforcement may be barred by laches. Fernandez and Bengzon. 502-3. 42 Phil. L-22587. The rule of imprescriptibility was misapplied to constructive trusts (Geronimo and Isidoro vs. 100 Phil. 12 SCRA 199. 10 SCRA 691). he does not acquire by prescription the property held in trust. 122. 994). De Pasion vs. 4 SCRA 1221. which supervened after the closure of the intestate proceeding. 11 SCRA 153. 112 Phil. 729. 16 SCRA 849). Grano. Acquisitive prescription may bar the action of the beneficiary against the trustee in an express trust for the recovery of the property held in trust where (a) the trustee has performed unequivocal acts of repudiation amounting to an ouster of the cestui qui trust.). Quito. From that year. 35. With respect to constructive trusts. 63 O. Cristobal vs. 810). 3. Thus. 566. Civil Code). Levantino. 105 Phil. Golfeo vs. 887-889. supra. L-17957. 244. Jimenez. L-21616. We have stated that whether it is a resulting or constructive trust. equivocal or indefinite declarations (De Leon vs. 109 Phil. Maria Ramos and Emiliano Ramos were both born in 1896. 1967. Modesto and Manuel. 500. Gonzales vs. Atanacia. or that property held in trust can be recovered by the beneficiary regardless of the lapse of time (Marabilles vs.J. May 25. L-10228. 27 SCRA 1179. De Guzman. 63 O. December 11. 97. Capunitan. Those public documents prove that the estate of Martin Ramos was settled in that proceeding and that adjudications were made to his seven natural children. Jacinto. the rule is different.g. supra. particularly the project of partition. See Tamayo vs. De los Angeles. 138. 1969. 88 . 1965. Vistan. 973. The plaintiffs did not prove any express trust in this case. 1962. The basis of the rule is that the possession of a trustee is not adverse. 1962. G. Ramos to the exclusion of the plaintiffs (Exh. 5 SCRA 371). 97 Phil. Bancairen vs. 651. 54 Am Jur. Claridad vs. 64.157). 22). 50 Phil. L-15539. 21 SCRA 1192). Canlas. May 29. Fabian. 1967. That rule applies squarely to express trusts. Bonin and Nestor Olmedo. Prescription may supervene in an implied trust (Bueno vs. 62 O. Casanas vs. were already of age in 1914 (Exh. they could have brought the action to annul the partition. 145. the action was filed forty-three years after it accrued and. supra. 71 Phil. Sumira vs. the eight lots involved herein were claimed by the spouses Jose Ramos and Gregoria T. 875).constructive trust is not a trust in the technical sense(Gayondato vs. 712). Bonin and Olmedo in 1935 sold their lease rights over Hacienda Calaza to Jesus S. Gorricho and Aguado. Gorricho and Aguado. the husband of plaintiff Atanacia Ramos (Exh. Zuniga. 74 Phil. an express trust cannot be proven by parol evidence(Pascual vs. all surnamed Ramos. As already noted. 8). Bonaga vs. Callejo. 139. 112 Phil. See Art. 1968.. Tuason & Co. And whether the trust is resulting or constructive. 126 Juan vs. 217. 62 O. May 31.266. 97 Phil. M. Compare with the rule regarding co-owners found in the last paragraph of article 494. whose statute of limitations applies to this case (Art. Modesto and Manuel. The expediente of the intestate proceeding. Magdangal. Civil Code. Under Act 190. Gorricho and Aguado. Matias. 13 SCRA 80. It cannot rest on vague and uncertain evidence or on loose. and convincing evidence.Yulo in 1934 transferred his lease rights over Hacienda Calazato Juan S. 50 Phil. Gomez.

it maybe clarified that in the settlement of a decedent's estate it is not de rigueur for the heirs to sign a partition agreement. and the action was brought only in the year 1948. Ortuzar. it was contended that there was fraud because the real properties of the decedent were all adjudicated to the eldest son. Barretto-Datu. In short. it was anomalous that the manifestation. but once it had become final. Monteclaro. Villanueva. the natural children were short-changed in the computation of the value of their shares which the legitimate children could pay in case as allowed in article 840 of the old Civil Code. the plaintiffs contend that the partition was not binding on them (Note that their brother. supra). "If eternal vigilance is the price of safety. In connection with the res judicata aspect of the case. But is was possible that the lands were undervalued or were not properly appraised at their fair market value and. were given only cash and shares of stocks. the same should have been corrected by opportune appeal. considered himself bound by that partition). They assert that the lopsided and defective partition was not implemented. the guardianship proceedings in 1931. "A final order of distribution of the estate of a deceased person vests the title to the land of the estate in the distributes" (Syllabus. 3 and 6)without understanding those documents which were in Spanish. The allege that Atanacia Ramos signed the project of partition and the "receipt" of share (Exh. 96 Phil. their claims can hardly evoke judicial compassion. while the two daughters. in Association Cooperativa de Credito Agricola de Miagao vs. Cuaycong. Vigilantibus et non dormientibus jura subveniunt. the partition agreement was theoretically correct since the seven natural children were given their full legitime. It is of common knowledge that anyone who received lands in the partition of a decedent's estate would ultimately have an advantage over the one who received cash because lands increase in value as time goes by while money is easily spent. Maria Ramos and Emiliano Ramos. in the absence of such cause or reason that the law itself fixes as a ground for invalidity" (on page 634). one cannot sleep on one's right for more than a tenth of a century and except it to be preserved in its pristine purity" (Ozaeta. They ask that the case be remanded to the lower court for the determination and adjudication of their rightful shares. "As the administration proceedings ended in the year 1916. said: "In any case. the action for reconveyance was seasonably brought. 45 Phil. All those contentions would have a semblance of cogency and would deserve serious consideration if the plaintiffs had not slept on their rights. The alleged trustee was an overseer who secured title in his name for the land of his brother which was under his administration. its binding effect is like that of any other judgment in rem. therefore. The action had already prescribed. On certain occasions. Cuaycong vs. the two were denied due process. Gonzaga. The leading case of Severino vs. 622. does not involve any issue of prescription or laches. Rules of Court). Timoteo. 3 to 6). the action was barred by laches (on page 637). and as a matter of principle and policy we should sustain its regularity. 1964. 44 Phil. A judgment in an intestate proceeding may be considered asa judgment in rem (Varela vs. where the action for the reconveyance of property held in trust accrued in 1936 and it was filed only in 1961 or after the lapse of twenty-five years. 91) which in this case was Judge Campbell's decision (Exh. Severino. 89 Phil. They allowed more than forty years to elapse before they woke up and complained that they were much aggrieved by the partition. Barretto-Datu. 267. that vests title in the distributees" (Reyes vs. J. As pointed out in the statement if facts. A partition approved by the court in 1939 could no longer be contested in 1956 on the ground of fraud. L-18788. "It is the judicial decree of distribution. where a partition judicially approved in 1916 was sought to be annulled in 1948 on the ground of fraud. the partition was given the stamp of judicial approval. he had admitted that he was merely the administrator of the land and not its true owner. 89 .This case is similar to Go Chi Gun vs. 4). "The fact that one of the distributees was a minor at the time the court issued the decree of distribution does not imply that the court had no jurisdiction to enter the decree of distribution. Rule 39. No receipts were submitted to the court to prove that Jose Ramos and Agustin Ramos paid to the plaintiffs the cash adjudicated to them in the project of partition. when in the project of partition itself. Roman Catholic Bishop of Nueva Caceres. in upholding the petition. 49[a]. The plaintiffs accused Zayco of not having competently protected the interests of the minors. See Lopez vs. See Sec. The plaintiffs pinpoint certain alleged irregularities in the intestate proceeding. That action was barred. He could not have acquired it by prescription because his possession was not adverse. There is a ruling that "if that decree of distribution was erroneous or not in conformity with law or the testament. 95 Phil.it was stipulated that Jose Ramos and Agustin Ramos would be the ones to pay the cash settlement for their shares. 895. 900). In that case. 343. consequently. Co. The plaintiffs have only themselves to blame if the courts at this late hour can no longer afford them relief against the inequities allegedly vitiating the partition of their father's estate. citing Ramos vs. Santos vs. 10 SCRA 167. 248. 742). L-17818. which under article 942 of the old Civil Code was their share as legal heirs. 19 SCRA 85. who were minors. supra. 283). 281. Under the circumstances. more than 32 years from the time of the distribution and 27 years from the termination of guardianship proceedings". should recite that they received their shares from the administrator. evidencing the alleged receipt by the natural children of their shares. January 25. repeatedly cited by the plaintiffs. The aver that Modesto Ramos and Manuel Ramos were already of age in 1913 and could not therefore have been represented by Timoteo Zayco as guardian ad litem and that. as approved by the probate court (Exh. More in point is the Cuaycong case. unless properly set aside for lack of jurisdiction or fraud".1967." (Reyes vs. January 31. This Court. 74 Phil. On its face. once final. supra.

it may be noted that the filing of the instant case long after the death of Jose Ramos and other persons involved in the intestate proceeding renders it difficult to determine with certitude whether the plaintiffs had really been defrauded. no attorney's fees should be granted to the defendants. the charge of fraud rests principally on the testimony of a single witness who. 507. which belonged to him. The instant litigation does not fall within any of the enumerated cases. 733. Gustilo. and in parol agreements.. 14 SCRA 887). The worries and anxiety of a defendant in a litigation that was not maliciously instituted are not the moral damages contemplated in the law (Solis & Yarisantos vs. Gregoria T. Emilio Tevez.. and as it thus removed from the parties all the immediate means to verify the nature of the original transactions. The most that can fairly be expected. 1967. it operates by way of presumption. (See Herrera vs. But length of time necessarily obscures all human evidence. the award of reasonable attorney's fees is governed by article 2208 of the Civil Code which lays down the general rule that. In passing upon controversies of this character experience teaches the danger of accepting lightly charged of fraud made many years after the transaction in question was accomplished. Article 2208 specifies eleven instances where attorney's fees may be recovered. Justice Story: . or to expect a satisfactory explanation of every difficulty. from the frailty of memory. might have impelled them to ask the courts to reexamine the partition of their father's estate. Nor can it be regarded as analogous to any of the cases mentioned in those articles. 741). after a great length of time. to require exact proof of all the minute circumstances of any transaction. and to substitute general presumption of law. and human infirmity. The defendants did not point out the specific provision of article 2208 on which their counterclaim may be predicated. unless the evidence of fraud be clear. An adverse decision does not ipso facto justify the award of attorney's fees to the winning party (Herrera vs. mother of the defendant Agueda Longa. Twano and Castro. They prayed for exemplary damages. Heirs of Justiva vs. [U. In this connection it is well to bear in mind the following impressive language of Mr. beyond a reasonable doubt (Prevost vs. Longa. Ramos. and. 99 Phil. such right is so precious that moral damages may not be charged on those who may exercise it erroneously. It will be borne in mind also that. for. All indications point to the fact that the plaintiffs honestly thought that they had a good cause of action. to disturb their ashes. G. it cannot be asseverated with dogmatic finality that plaintiffs' action was manifestly unfounded or was maliciously filed to harass and embarrass the defendants. L-23729. it would be the height of injustice and cruelty. real or apparent with which it may be incumbered. Inasmuch as some of the plaintiffs were minors when the partition of their father's landed estate was made. and violate the sanctity of the grave. The defendants argue that plaintiffs' action was baseless and was filed in gross and evident bad faith. Articles 2219 and 2220 (also 1764 and 2206) of the Civil Code indicate the cases where morel damages may be recovered. in the absence of stipulation. Luy Kim Guan. Inc. May 16. Hence. vs. Fraud. 779). insofar as oral proof is concerned. for exact knowledge. attorney's fees and litigation expenses cannot be recovered.. Salvador. 1028. and considering that they were not allotted even a few square meters out of the hundreds of hectares of lands. August 14. that the material facts can be given with certainty to a common intent.481. L-17022. as to the dead. they had reason to feel aggrieved and to seek redress for their grievances. 112 Phil. 90 . What Justice Street said in Sinco vs. in such cases. if fraud was committed. and against imputation of fraud. the most that we can hope is to arrive at probable conjectures. It is alleged that the action caused defendants mental anguish. if the parties are living. Cf. supra. in favor of innocence. ought not lightly to be imputed to the living. the legal presumption is the other way. so far as practicable. 110 Phil. is. while Agapito Longa is now living in Spain.000 as attorney's fees. It is not sound public policy to set a premium on the right to litigate. or breach of trust. 814). In the case before us the guardia. They acted in evident good faith. Arevalo. 518-9 is relevant to this case. moral shock and serious anxiety and compelled them to hire the service of counsel and incur litigation expenses. Jose Ramos. when death may have sealed the lips of the principal actors and changes effected by time may have given a totally different color to the cause of controversy.]. 110 Phil. 6959. to put the blame on others. 20 SCRA 61).000 as moral damages and P10. On the other hand. Jose Bayor and Agustin Ramos appealed from the lower court's decision insofar as it ignored their counterclaim for P50.S. The law could not have meant to impose a penalty on the right to litigate. 498). defendants' claim for moral damages cannot be sustained (Ventanilla vs." (Barretto vs. 61 O. if the parties are dead. Court of Appeals. Luy Kim. 1965. Under the facts of the case. It would be unreasonable. Gratz. Candida Ramos. 811. 51 Phil. was a participant therein and who naturally would now be anxious. Those circumstances as well as the marked contrast between their indigence and the affluence of the heirs of their half-brother. wounded feelings. is dead. We hold that. — Defendants Granada Ramos. "The adverse result of an action does not per se make the act wrongful and subject the actor to the payment of moral damages. 6 Wheat.000. are not here to answer for themselves.Parenthetically. 1020. In their brief the claim for attorney's fees was increased to P20. and the cases rest in confidence. notwithstanding the dismissal of the action. Lazatin vs. 771. Defendants' appeal. Rizal Surety & Insurance Co. Centeno. The same is true of Trinidad Diago. What may possibly apply to defendants' counterclaim are paragraphs four and eleven which respectively provide that attorney's fees may be recovered "in case of a clearly unfounded civil action or proceeding against the plaintiff"(defendant is a plaintiff in his counterclaim) or "in any other cases where the court deems it just and equitable" that attorney's fees should be awarded.

Since no compensatory and moral damages have been awarded in this case, defendants' claim for exemplary damages, which was ventilated for the first time in their appellants' brief, may be as an afterthought, cannot be granted(Art. 2229, Civil Code). WHEREFORE, the trial court's judgment is affirmed with the clarification that defendants' counterclaim is dismissed. No costs. SO ORDERED. G.R. No. 76221 July 29, 1991 SPOUSES RUBEN AND LUZ GALANG, petitioners, vs. COURT OF APPEALS AND LEONARDO DE LEON, respondents. Joanes G. Caacbay for petitioners. Almoradie-Lee & Associates for private respondent. FERNAN, C.J.:p In an ejectment suit filed by private respondent Leonardo de Leon, owner of a 6-door apartment at 1177 Quiricada Extension, Tondo, Manila, against petitioners spouses Ruben and Luz Galang, lessee of one of the units, the Metropolitan Trial Court of Manila, Branch V, rendered a decision on February 27, 1986 1 ordering petitioners herein to vacate the premises in question, to pay P130 per month from September 1985 until the premises are vacated, and P1,000 attorney's fees. On appeal by petitioners herein, the Regional Trial Court of Manila, Branch XL, affirmed on July 22, 1986 the decision of the Metropolitan Trial Court of Manila. 2 Dissatisfied, petitioners elevated the case to the Court of Appeals in a petition for review. After therein respondents' comment was filed, the petition was given due course in a resolution dated September 1, 1986, which also required petitioners to deposit the amount of P80.40 for costs within three (3) days from notice thereof, failure of which, the petition shall be dismissed. Respondents were required to answer the petition which shall take the place of respondents' brief within 10 days from receipt of the resolution and copy of the petition. Within five (5) days from receipt of the respondents' answer, petitioners may reply thereto. 3 Petitioners' counsel, Atty. Cirilo Doronila of the Citizens Legal Assistance Office (now Public Assistance Office) received said resolution on September 5, 1986. On September 9, 1986, or four (4) days from receipt, he filed a motion for extension of 30 days from September 8, 1986 within which to pay costs. On September 16, 1986, the Court of Appeals promulgated a resolution dismissing the petition for review for failure of petitioners to pay the costs of P80.40 within three (3) days from notice of the resolution of September 1, 1986. The motion of petitioners for an extention of time to pay costs was likewise denied in the same resolution for having been filed one (1) day after due date, hence out of time. 4 Petitioners filed a motion for reconsideration contending that their counsel was not able to notify them of the order to pay costs within three (3) days from September 5, 1986. In a resolution dated October 9, 1986, the Court of Appeals denied said motion for reconsideration. 5 Meanwhile, on the same date, or on October 9, 1986, petitioners filed a supplemental motion for reconsideration, followed by a memorandum in support of the motion and supplemental motion for reconsideration with prayer for the acceptance of the deposit of P80.40 and for the issuance of a restraining order. Acting on the pleadings filed by petitioners as wen as private respondent's opposition to said motion for reconsideration, the Court of Appeals promulgated a resolution on October 27, 1986 finding no reason to disturb its resolution of October 9, 1986 denying the motion for reconsideration. 6 Petitioners are now before this Court seeking to set aside the questioned resolutions of the respondent Court of Appeals dated September 16, 1986 and October 9, 1986 and praying that judgment be rendered ordering respondent appellate court to admit petitioners' payment of P80.40 as costs in C.A.-G.R. No. SP-09717 and to decide the case on the merits. Imputing error and grave abuse of discretion on the Court of Appeals in dismissing the petition for review for non-payment of P80.40 as costs within three (3) days from notice and in denying the motion for extension of time to pay costs for being filed one (1) day late, petitioners claim that there is nothing in the Rules of Court governing the procedure in the Court of Appeals (Rule 46 to Rule 55) that requires payment of costs within three (3) days from notice of the order; that the period of three (3) days from notice for a party-litigant to perform an act is too short a time for counsel to contact petitioners who were not themselves duly furnished with a copy of the resolution of September 1, 1986; that under the Rules of Court, Batas Pambansa Blg. 129, and the Interim Rules and Guidelines, ten (10) days is the shortest period within which a party-litigant in the Court of Appeals should perform a required act. While it is true that litigation is not a game of technicalities and that the rules of procedure should not be strictly enforced at the cost of substantial justice, this does not mean that the Rules of Court may be ignored at will and at random to the prejudice of the orderly presentation and assessment of the issues and their just resolution. Justice eschews anarchy. 7 The Court in said case stated, thus:

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Rules of procedure are intended to ensure the orderly administration of justice and the protection of substantive rights in judicial and extrajudicial proceedings. It is a mistake to purpose (sic) that substantive law and adjective law are contradictory to each other or, as has often been suggested, that enforcement of procedural rules should never be permitted if it will result in prejudice to the substantive rights of litigants. This is not exactly true; the to give effect to both kinds of law, as complementing each other, in the just and speedy resolution of the dispute between the parties. Observance of both substantive rights is equally guaranteed by due process whatever the source of such rights, be it the Constitution itself or only a statute or a rule of court. It is not entirely correct for petitioners to claim that the dismissal of the petition for review of the decision of the RTC in cases falling under the original exclusive jurisdiction of municipal and city courts on the ground of nonpayment of costs within three (3) days from notice is without authority and legal basis. The Court of Appeals, pursuant to its rule- making power under Rule 54 of the Rules of Court, promulgated an en banc Resolution on August 12, 1971 governing the practice to be observed in elevating to the Court of Appeals for review decisions of CFIs (now RTCs) in cases falling under the original exclusive jurisdiction of municipal and city courts. Section 2 of said en banc Resolution provides, thus: SECTION 2. Upon filing of the petition, the petitioner shall pay to the Clerk of the Court of Appeals the docketing fee. If the Court finds that, from the allegations of the petition, the same is not prima facie meritorious or is intended manifestly for delay, the Court may outright dismiss the petition, otherwise, the same shall be given due course, in which case, the petitioner shall deposit the amount of eighty pesos (P80.00) for cost within three (3) days from notice of the resolution gluing due course to the petition. Upon the failure of the petitioner to deposit the amount for costs within the said period of three (3) days, the petition shall be dismissed. 8 Section 22 par. (2) of the Interim or Transitory Rules and Guidelines Relative to the Implementation of the Judiciary Reorganization Act of 1981 adopted the Resolution dated August 12, 1971 of the Court of Appeals as the governing rules of procedure in the review of appealed cases from the Regional Trial Courts. As quoted above, the rule is clear that upon failure of the petitioner to deposit the amount for costs within the said period of three (3) days, the petition shall be dismissed. Records show that petitioners filed on September 9, 1986, or one (1) day after expiration of the three (3) day period, a motion for a 30-day extension of time to deposit costs. Yet even if said motion were granted by the Court of Appeals, the purchase and payment by petitioner of Money Order No. 6618804 On October 13, 1986 for costs was five (5) days late from the expiration of the supposed 30 day extension on October 8, 1986. Manifestly, there was no serious intention on the part of petitioners to comply in good faith with the order of the Court of Appeals. Procedural rules are not to be belittled or dismissed simply because their non-observance may have resulted in prejudice to a party's substantive rights. Like all rules, they are required to be followed except only for the most persuasive of reasons when they may be relaxed to relieve a litigant of an injustice not commensurate with the degree of his thoughtlessness in not complying with the procedure prescribed. 9 In the instant case, petitioners have not pleaded the most persuasive of reasons which would make this Court relax the cited rule of procedure embodied in the August 21, 1971 Resolution of the Court of Appeals. The attendant circumstances in cases where a liberal interpretation of the Rules was adopted by the Court are absent in the instant case. What is obviously clear is that while the case was on appeal before the Regional Trial Court, petitioners ignored the order dated May 14, 1986 of the said RTC to file their memorandum within ten (10) days from notice. The case was thus decided on July 22, 1986 without petitioners' memorandum. 10 Even that early stage of the case, petitioner's had already chosen to ignore the order of the Regional Trial Court. The Court cannot now stamp with approval the second defiance of the rule of procedure before the Court of Appeals. The reason cited that petitioners were not themselves furnished with a copy of the resolution of September 1, 1986 does not call for a liberal application of the Rules. It is basic that notice to counsel is notice to the client. Under Section 2 of Rule 13 of the Rules of Court, if any of the parties in a case has appeared by an attorney or attorneys, service upon him shall be made upon his attorney or one of them, unless service upon the party himself is ordered by the court. No such order to serve copy of the orders, notices, etc. upon petitioners herein was given by the court. Even if the deposit of costs were to be allowed by the Court on the ground of liberal application of the rules, still, the Court in the exercise of its discretionary power, instead of remanding the case to the Court of Appeals, finds that the instant petition lacks merit. The legitimate need of the owner/lessor to repossess his property for use of any immediate member of his family is a valid ground to eject petitioners from the questioned premises under Section 5 par. (c) of Batas Pambansa Blg. 25. The factual question of whether or not all the requisites provided under Section 5 par. (c) of Batas Pambansa are present in the instant case was properly addressed and resolved by the trial court. Records show that private respondent's sister Consuelo De Leon is staying with their parents in a rented apartment of only about 48 square meters at 1111 Quiricada Extension, Tondo, Manila. 11 The intended use of the questioned premises by his parents and sister is a legitimate need under Section 5 par. (c) of B.P. 25 as private respondent is the one paying for their monthly rentals. The desire of private respondent to repossess the questioned premises in order to provide his parents and sister with a decent place to stay must be given the traditional respect and recognition. Besides, it was not clearly proven that private respondent is an owner of any other property in Manila. It is settled that a lease on a month to month basis is a lease contract with a definite period. 12 As this Court ruled in Baens vs. Court of Appeals, 13 even if the month to month arrangement is on a verbal basis, if it is shown that the lessor needs the property for his own use or for the use of any immediate member of the family or for any of the other statutory grounds to eject under Section 5 of Batas Pambansa Blg. 25, which happens to 92

be applicable, then the lease is considered terminated as of the end of the month, after proper notice or demand to vacate has been given. 14 As early as June 7, 1985, private respondents had demanded that petitioners vacate the premises in question on September 15, 1985. The ejectment case was filed on October 7, 1985 after a lapse of more than three (3) months from receipt of said notice. While the sympathies of the Court are with the lessees, who must now face displacement and relocation with all their attendant inconvenience and expense, but the law, as the Court aptly observed in Pascua vs. Court of Appeals, 15 is on the side of the lessors, who and so must be upheld. That law, let it be stressed, is not less humane because it favors the landlord, for social justice is for fairness to all or it is no justice at all. WHEREFORE, in view of the foregoing, the petition is DISMISSED for lack of merit. This decision is immediately executory. Costs against petitioners. SO ORDERED. G.R. Nos. L-13328-29 September 29, 1961

GONZALO MERCADO, ET AL., petitioners, vs. RAMON LIRA and JUANA C. DE LIRA, respondents. -----------------------------G.R. No. L-13358 September 29, 1961

NITA LIRA, petitioner, vs. GONZALO MERCADO, ET AL., respondents. Juan Nabong for petitioners. Mariano H. de Joya And Maximo A. Savellano, Jr. for respondents. PAREDES, J.: Gonzalo Mercado and others were the owners and operators of the Laguna Transportation Company. In the afternoon of April 21, 1951, while its passenger bus No. 39 was making the trip from Batangas to Manila on the concrete highway at barrio Tulo, Calamba, Laguna, the left front tire of the bus blew out and sent it swerving gradually toward the left side of the road, over the shoulder and into a ravine some 270 meters away. From the wreckage, the bodies of the passengers, several dead, others injured, were recovered, and among the fatalities was Ramon Lira, Jr. (24), son of Mr. and Mrs. Ramon Lira, Sr. and injured Nita Lira. Two cases for recovery of damages were commenced against the owners and operators in the Court of First Instance of Batangas: No. 104 (now G.R. Nos. L-13326-29, in this Court) by the parents of deceased Ramon Lira, Jr. and No. 107 (now G.R. No. L-13358, in this Court) by Nita Lira. After a joint-trial, defendants, Mercado and others were sentenced to pay the following sums: In Civil Case No. 104: For the death of Ramon Lira, Jr. including funeral and church expenses P10,000.00 For loss of earning capacity of Ramon Lira, Jr. for ten (10) years at P1,800.00 per annum 18,000.00 Moral damages for mental anguish 4,000.00 For expenses of litigation and attorney's fees 4,000.00 TOTAL P36,000.00 In Civil Case No. 107: For hospitalization and medical treatment of Nita Lira For the impairment of earning capacity Moral damages for her physical and mental suffering For expenses of litigation and attorney's fees 970.20 1,000.00 2,000.00 1,000.00 P4,970.20

TOTAL

Defendants appealed in both cases and plaintiff Nita Lira appealed in No. 107 (being cases CA-G.R. No. 15422 and CA-G.R. No. 15423-R). The Court of Appeals render judgment as follows: As far as the other items are concerned, we find them to be reasonable and fully supported by the evidence. Wherefore, the judgment appealed from is hereby modified by reducing the amount awarded for the death of Ramon Lira, Jr. including funeral and church services from P10,000.00 to P5,062.50; reducing the amount awarded for loss of earning capacity from P18,000.00 to P2,000.00 and increasing the amount awarded to plaintiff-appellant Nita Lira for moral damages from P2,000.00 to P5,000.00. In Civil Case No. 104 (CA-G.R. No. 15422-R), therefore, defendant should pay a total of P25,032.56; and in civil case No. 107 (CA-G.R. No. 15422-R), they should pay a total of P7,970.20. In all other respects the said judgment is affirmed, without pronouncement as to costs this instance. On December 19, 1957, and in pursuance of a motion for reconsideration, the Court of Appeals issued the following resolution: In view of the foregoing considerations, the judgment heretofore rendered is hereby modified by eliminating therefrom the award of P5,000.00 by way of moral damages to plaintiff Nita Lira in case CA-G.R. No. 15422-R, maintaining said judgment in all other respects.

93

In other words, in the case CA-G.R. No. 15422-R, involving the death of Ramon Lira, Jr., the Court of Appeals granted moral damages, and in the case of CA-G.R. No. 15422-R, involving physical injuries caused upon Nita Lira, moral damages of P5,000.00 awarded her, were eliminated. Hence, a petition for certiorari to review the decision of the Court of Appeals was filed by Gonzalo Mercado, et al., petitioners, against Ramon Lira, et al., (G.R. No. L-13328-29), and another similar petition was filed by Nita Lira, petitioner vs. Gonzalo Mercado, et al., respondents (G.R. No. L-13358). Counsel for the Mercados, defined their position as follows: Article 2206 of the Civil Code fixes the amount of damages for death at only P3,000.00. The heirs of the deceased may also claim for moral damages, although awarding it is not obligatory like the damages for loss of earning capacity. Paragraph 3 of Art. 2206 states that the heirs may demand for moral damages for mental anguish by reason of the death of the deceased. The amount of moral damages, therefore, should be made only nominal if the heirs have already been compensated very substantially for the death of the deceased, which in this case has been set by the Court of Appeals at P5,052.50 and loss of earning at P12,000.00 and the attorney's fees at P4,000.00 which already amount to P21,052.50. We respectfully submit, therefore, that, even if granting that the respondents are entitled to moral damages, yet the same should not be fixed in such an amount as to kill the entire business of the respondents who are public service operators, by the enormous amounts they have to pay on account of the negligence of one driver. In this case, we respectfully submit that the amount of P500.00 is a reasonable moral damage considering that the other damages already awarded are excessive. In the same way that the attorney's fees should also be reduced to only P1,500.00. and ended with a prayer that "the decision of the Court of Appeals be modified so that the respondents should pay only the sum of P500.00 as moral damages and P1,500.00 for attorney's fees. The pertinent provisions of the new Civil Code state: — Art. 1764. — Damages in cases comprised in this Section shall be awarded in accordance with Title XVIII of this Book, concerning Damages. Article 2206 shall also apply to the death of a passenger caused by the breach of contract by a common carrier. 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: . . . (3) The spouses, legitimate and illegitimate descendants and ascendants of the deceased may demand moral damages for mental anguish by reason of the death of the deceased. It is thus seen that Article 2206 of the new Civil Code, expressly provides that the amount of damages for death shall be "at least three thousand pesos, even though there may have been mitigating circumstances." In other words, the amount of damages to be awarded for the death of a passenger may be more than P3,000.00. It is argued that the award for moral damages for mental anguish caused by the death of a passenger is not obligatory, and that the amount should only be nominal if the heirs have already been compensated substantially for the death of the deceased. Article 2206 states further that "In addition" to the amount of at least P3,000.00 to be awarded for the death of a passenger, the spouse, legitimate and illegitimate descendants and ascendants of the deceased may demand moral damages as a consequence of the death of their deceased kin, which simply means that once the above-mentioned heirs of the deceased claim compensation for moral damages and are able to prove that they are entitled to such award, it becomes the duty of the court to award moral damages to the claimant in an amount commensurate with the mental anguish suffered by them. In the Civil Code, nominal damages are treated separately from moral damages. Any amount that should be awarded as nominal damages, should not be confused or interlinked with moral damages which, by itself, is a distinct class of damages. Of course, the amount of moral damages to be awarded, should be such as may be reasonable and just under the circumstances in a given case. Petitioners' claim that as the other damages awarded to said respondents are already excessive, the award for moral damages should be reduced to P500.00. But the Court of Appeals found the other damages not to be excessive, and as far as this factual finding is concerned, we are not authorized to rule otherwise. Moreover, petitioners never assailed in their motion for reconsideration of the decision of the Court of Appeals, dated July 11, 1957, as well as in their instant petition for certiorari, the reasonableness of the amount of the other damages awarded to herein respondents. In fact, the petition limits the issues only to the reasonableness of the P4,000.00 awarded by the Court of Appeals as moral damages and the other amount of P4,000.00 as attorney's fees. Considering the mental anguish and sorrow that must accompany and overwhelm the parents upon the tragic death of a son, and considering the nature and extent of the services rendered by counsel for respondents and other circumstances of the case, we believe the awards given by the Court of Appeals to respondents in the sum of P4,000.00 as moral damages for the death of Ramon Lira, Jr. and the amount of P4,000.00 for attorney's fees and other expenses of litigation, fair and reasonable (par. 11, Art. 2208, N.C.C.).1awphîl.nèt With respect to G.R. No. L-13358, it is alleged that the respondent Court of Appeals erred in its resolution dated December 19, 1957, in not awarding moral damages to petitioner Nita Lira for physical injuries and mental suffering sustained by her, resulting from breach of the special contract of carriage caused by the negligence of the respondents, contending that her case is analogous to cases of "quasi delicts causing physical injuries" for which the new Civil Code authorizes indemnification for moral damages in favor of the injured party (par. 2, Art. 2219 N.C.C.). Petitioner contends that in the case of Cachero v. Manila Yellow Taxicab Co., G.R. No. L-5721, May 23, 1957; (54 Off. Gaz. No. 26, p. 6599), this Court had not expressly declared or impliedly stated that the award of moral damages to a passenger who has sustained physical injuries is not an "analogous case". And Cachero in said case, did not invoke the analogous applicability of said provision of law, (par. 2, Art. 2219) to his case. 94

Sept. We think it is clear that the mere carelessness of the carrier's driver does not per se constitute or justify an inference of malice or bad faith on the part of the carrier. in support of her theme." By contrasting the provisions of these two articles it immediately becomes apparent that: (a) In cases of breach of contract (including one transportation) proof of bad faith or fraud (dolus). Inc. . No. the same must be discarded. before judicial discretion in fixing them became limited by the express provisions of the new Civil Code (previously quoted). L-8721. 900). 1958). the latter is relieved from the duty to establish the fault of the carrier or of his employees. wanton or deliberately injurious conduct. . 1958). in every case its obligation to the passenger is infringed. but because the definition of quasi-delict in Art. if there is no preexisting contractual relation between the parties. and constitute unwarranted judicial legislation. i. defenses and proof. L-10605. in which case Art. 38 Phil. Necesito. 2220.R. for under it the carrier would always be deemed in bad faith. 1959 — the facts of which are identical to those of the present one. Reyes. is essential to justify an award of moral damages. 1759. Hence. (2) Quasi-delicts causing physical injuries. Since the submission of her brief on February 21. 1952.. is obliged to pay for the damage done. The action for the breach of contract imposes on the defendant carrier a presumption of liability upon mere proof of injury to the passenger. he is not even made a party to the suit. without proof of bad faith or malice on the part of the defendant. Manila Railroad Co. No. 2219. Willful injury to property may be a legal ground for awarding moral damages if the court should find that. may not escape liability by proving that it has exercised due diligence in the selection and supervision of its employees (Art. Nos. the aforesaid rulings are now inapplicable. new Civ. 1764 makes it all the more evident that where the injured passenger does not die. 2220. and the burden is placed on the carrier to prove that it was due to an unforeseen event or to force majeure (Cangco v. Dec.. the carrier. justifying recovery of moral damages under Art. Moreover.. Manila Railroad Co. The same rule applies to breaches of contract where the defendant acted fraudulently or in bad faith. June 30.B. et al. G. moral damages are not recoverable unless it is proved that the carrier was guilty of malice or bad faith. March 4. Resolution on motion to reconsider. 1957. Code.. which provide as follows: "Art. We have repeatedly ruled (Cachero v. and therefore should be regarded as a breach of contract in bad faith. The difference in conditions. This Court. No. since the responsibility is not alleged to be subsidiary. Such fault or negligence. L-49155. May 23. 2176 of the Code expressly excludes the cases where there is a 'preexisting contractual relation between the parties. speaking thru Mr. 2206. nor is there on record any averment or proof that the driver of appellant was insolvent. prevent us from viewing the action for breach of contract as simultaneously embodying an action on tort.e. 2220 specifically provides for the damages that are caused by contractual breach. In fact. Whoever by act or omission causes damage to another. 1948 and Layda v. Prado v. No.R. Acro Taxicab Co. Paras. therefore. compel us to differentiate between actions excontractu. among them is the case of Paz Fores v. unlike in suits for quasidelict. 103 of the Rev. L12163.' The exception to the basic rule of damages now under consideration is a mishap resulting in the death of a passenger.R. several cases have reached this Court raising the same question. Cangco v. and it would never be 95 . as required by Art. the limitations imposed by the new Code on the amount of the recovery. Court of Appeals.. No.R. is called a quasi-delict and is governed by the provisions of this Chapter. Manila Elec. Manila Yellow Taxicab Co. G.. G. that entitles the spouse. there being fault or negligence.. Upon the other hand. G.' Art. 1958. G. v. and. under the circumstances. 768. stating that the issue raised by her was of first impression. not only because Art. supra. This theory is untenable. 29. Jan. said — . Anent the moral damages ordered to be paid to the respondent. but these doctrines were predicated upon our former law of damages. The Court of Appeals has invoked our rulings in Castro v. such damages are justly due. the advantageous position of a party suing a carrier for breach of the contract of transportation explains. 1764 makes the common carrier expressly subject to the rule of Art. in view of Articles 2219 and 2220 of the new Civil Code. xxx xxx xxx "Art. and in the case at bar there is no other evidence of such malice to support the award of moral damages by the Court of Appeals.R. L-10605-10606. Co. Irene Miranda. G. however. 14.Much space was allotted by petitioner in her brief. descendants and ascendants of the deceased passenger to 'demand moral damages for mental anguish by reason of the death of the deceased' (Necesito v. to some extent. and actions quasi ex delicto. 2219. It is also suggested that a carrier's violation of its engagement to safely transport the passenger involves a breach of the passenger's confidence. 2176.R. L-4487. . 11. Justice J. and (b) That a breach of contract can not be considered included in the descriptive term 'analogous cases used in Art. To award moral damages for breach of contract. Paras. 777). Moral damages may be recovered in the following and analogous cases: (1) A criminal offense resulting in physical injuries. But the exceptional rule of Art. that moral damages are not recoverable in damage actions predicated on a breach of the contract of transportation. 51 Phil.L. as well as the codal concept of quasi-delict as essentially extra-contractual negligence. Neither can this action be taken as one to enforce on employer's liability under Art. 2220 would be to violate the clear provisions of the law. Penal Code.

L. 1959. which reversed the decision of the Labor Arbiter in NLRC Case No. Bautista. In case of fraud. As water treatment operator. a position he held until his termination on August 29. 1996. Filoteo was promoted to water treatment operator. 1996. 29. Aquino.R. therefore. QUISUMBING. It is true that negligence may be occasionally so gross as to amount to malice. His hours of work were dependent upon the company's shifting production schedules. but that fact must be shown in evidence. as well as its Resolution. bad faith or malice (in the sense of deliberate or wanton wrongdoing) and negligence (as mere carelessness) is too fundamental in our law to be ignored (Arts. Eventually. cannot be considered in the descriptive expression 'analogous cases'. but the amount of damages shall be equitably reduced. xxx xxx xxx "Art. v. Its office and factory are both located in Zamboanga City. 96 . Permex Producer and Exporter Corporation (hereinafter Permex). MANAGER. Nos. Baytan L-14092.e. 1960. 1957). L-15392. without costs in this instance. Co-petitioners Edgar Lim and Jean Punzalan1 are its Manager and Personnel Manager. an employee of Permex. The contributory negligence of the passenger does not bar recovery of damages for his death or injuries. Petitioner. both for export and domestic consumption. and (2) that in cases of breach of contract (including one of transportation) proof of bad faith or fraud (dolus) i. the presumption is that common carriers acted negligently (and not maliciously). and/or JANE (JEAN) PUNZALAN. 2220 they limited recovery of moral damages to breaches of contract in bad faith. (See also Tamayo v. #36. he was dismissed allegedly for falsifying his daily time record. In contracts and quasi-contracts. vs. dated March 14. dated April 17. in the absence of statutory provision to the contrary. malice or wanton attitude. J. their consequences being clearly differentiated by the Code. L-12634 & L-12720. and Art. Private respondent Emmanuel Filoteo. that this difference was in the mind of the lawmakers when in Art. L-1332829 and L-13358 (Court of Appeals resolution dated December 19. unless they prove that they observed extraordinary diligence as prescribed in articles 1733 and 1755. L-11037. No. 2219". 1170-1172)." The distinction between fraud. 5617). (56 O. bad faith. malice or bad faith. as far as moral damages is concerned. 1762 speaks of negligence of the common carrier. therefore. and a carrier's bad faith is not to be lightly inferred from a mere finding that the contract was breached through negligence of the carrier's employees. NATIONAL LABOR RELATIONS COMMISSION and EMMANUEL FILOTEO. if the proximate cause thereof is the negligence of the common carrier. 2000 PERMEX INC. the decision of the Court of Appeals in G. Versoza v. IN VIEW OF THE FOREGOING CONSIDERATIONS. There being no evidence of fraud.R. Moral damages was. while under the law (Art. and which the parties have foreseen or could have reasonably foreseen at the time the obligation was constituted. 1756). 1994.G. the cause of petitioner Nita Lira should fail. because the cause of the accident was merely the bursting of a tire while the bus was overspeeding. We gleaned. Rex Taxicab Inc. from the above mentioned decisions. More specifically. as found by both the NLRC and the Labor Arbiter. 1990. contemplated by law. as a mechanic. used in Art. Bus.. is a company engaged in the business of canning tuna and sardines. was terminated by petitioners allegedly for flagrantly and deliberately violating company rules and regulations. 1756. 30.: This special civil action for certiorari impugns the Resolution of the National Labor Relations Commission.accountable for simple negligence. In case of death of or injuries to passengers common carriers are presumed to have been at fault or to have acted negligently. correctly eliminated by the Court of Appeals." It is to be presumed. on the part of the respondents." "Art. 2201. hereby is affirmed. the damages for which the obligor who acted in good faith is liable shall be those that are the natural and probable consequences of the breach of the obligation.T. Filoteo did not have a fixed working schedule. Cariaga v. Sept. Dec. 29. the obligor shall be responsible for all damages which may be reasonably attributed to the non-performance of the obligation. PERSONNEL MANAGER and EDGAR LIM. The pertinent facts. G. Fifth Division. 1762. RAB-0900259-94. Apr. May 29. respectively. denying the motion for reconsideration. respondents. 125031 January 24. wanton or deliberate injurious conduct is essential to justify an award of moral damages. 1960. (1) that the case of a passenger of a carrier who suffered physical injuries "because of the carrier's negligence (culpa contractual). are as follows: Permex initially hired Emmanuel Filoteo on October 1. p. "Art. 1960). petitioners.

at around 9:20 p.m.m. III PUBLIC RESPONDENT ERRED WHEN IT AWARDED PRIVATE RESPONDENT SEPARATION PAY. is Vacated and Set Aside and a new one entered declaring the complainant to have been illegally dismissed by respondent company.. The next day. 1994.On July 31.m. The company had tolerated the practice. of July 31. 1996. in view of the foregoing considerations. At or about 10:00 p. when in fact he had worked only up to 10:00 p. Finding merit therein.000. We will now consider these assigned errors to resolve the principal issue of whether or not private respondent was illegally terminated from his employment. the present petition. They logged in at the main gate and guardhouse of the petitioner's factory. Filoteo complied and submitted his written explanation that same evening. Filoteo then sought permission to go home. the next day. of August 1. the Commission's Fifth Division promulgated its resolution. On August 8.000.m. in writing.. Filoteo reported for work as usual. There they were informed that there would be no "butchering" of tuna that night. through its corporate officers. He was dismissed from employment on August 23. complainant's claims for damages and attorney's fees be dismissed for lack of merit. to 10:00 p. the entry he made in his DTR. He proceeded to the Office of the Personnel Manager to retime his DTR entry. Filoteo filed a complaint for illegal dismissal with claims for separation pay. His explanation was found unsatisfactory. is hereby ordered and directed to pay complainant. inclusive of fringe benefits. petitioners filed a motion for reconsideration. DAMAGES AND ATTORNEY'S FEES SANS FACTUAL AND LEGAL BASIS. Hence. Further. 1994 to 7:00 a. to 7:00 a. as well as attorney's fees equivalent to ten (10%) percent of the total monetary award after computation thereof at the execution stage. in his scheduled time-out. respondent company is ordered to pay complainant moral and exemplary damages in the sum of P10. damages. reversing and setting aside the Labor Arbiter's decision. Filoteo then hurriedly got his things and dashed off to the exit gate to catch the service jeep provided by Permex. Emmanuel Filoteo. the decision appealed from. On September 5.m. 1994. However. They were advised to wait from 9:30 p.2 Filoteo appealed to the NLRC.1âwphi1. The decretal portion of the decision reads: WHEREFORE.00 by way of indemnity pay. together with Pelayo. The offense charged was entering in his DTR that he had worked from 8:45 p. He then remembered that he had to make a re-entry in his daily time record for the previous day. respectively.m. 1995. and since he was scheduled to work until 7:00 a. he wrote 7:00 a. Filoteo and Pelayo went back to the Assistant Production Manager's office. he received a memorandum from the Assistant Personnel Officer asking him to explain. which was granted. Later. 1994 up to the promulgation of this decision.m. On June 9.00. 97 .nêt On the evening of July 31. for violation of compliance of (sic) procedural due process. The dismissal arose from Filoteo's alleged violation of Article 2 of the company rules and regulations. Filoteo entered his time-in at 8:45 p. It was denied for lack of merit by the NLRC in a resolution dated April 17.m. His complaint was docketed as NLRC Case No. Filoteo was scheduled for the night shift from 7:00 p. by disposing as follows: WHEREFORE. the Labor Arbiter dismissed the complaint for lack of merit. so they often forgot to log out. for confirmation.00 and P5.m. respondent Permex.000. This practice of indicating the time out at the moment they time in. August 1. they were often tired and in a hurry to catch the available service vehicle for their trip home. judgment is hereby rendered dismissing the complaint for lack of merit. SO ORDERED. 1994. 1994. and attorney's fees with the Labor Arbiter. went to see the Assistant Production Manager to inquire if "butchering" of fish would be done that evening so they could start operating the boiler. the following day. 1994. That night he reported for work together with his co-workers. BACKWAGES. There were times also when the Log Book was brought to the Office of the Personnel Manager and they could not enter their time out. the respondent is hereby ordered thru its Authorized Officer to pay complainant P1. 1996. Filoteo.3 On April 3.m. Accordingly..m. if any. was customarily done by most workers for convenience and practicality since at the end of their work shift. assigning the following errors: I PUBLIC RESPONDENT'S RESOLUTIONS ARE CONTRARY TO THE EVIDENCE ON RECORD AND ADMITTED FACTS. Filoteo was suspended indefinitely. 1994. II PUBLIC RESPONDENT ERRED WHEN IT RULED THAT PRIVATE RESPONDENT WAS ILLEGALLY DISMISSED.m. separation pay at the rate of one (1) month salary for every year of service or in the equivalent of four (4) months separation pay and backwages effective August 23. Furthermore. Inc. RAB 09-09-00259-94. SO ORDERED. Felix Pelayo and Manuel Manzan. 1994.

in this case. Hence we concur in that ruling. Admittedly. good customs. complainant's dismissal as correctly held by the Labor Arbiter was tainted with arbitrariness for failure of respondent company (petitioner herein) to observe procedural due process in effecting his dismissal. is DELETED. The award of moral and exemplary damages. 2004 98 .10 before he is notified of his actual dismissal for cause. those who reported for work were allowed to go home.14 None of these circumstances exist in the present case. the NLRC found that the two-fold requirements for a valid dismissal were not satisfied by the petitioners. Miscellaneous provisions. WHEREFORE.R.11 Such dismissal. two requisites must concur: (a) the dismissal must be for any of the causes provided for in Article 282 of the Labor Code. procedurally. and (b) the employee must be afforded an opportunity to be heard and defend himself. Costs against petitioners. we find that the award of moral and exemplary damages by the public respondent is not in order and must be deleted. 277. was also allowed to go home that night and like private respondent logged in advance 7:00 a.4 For the Court is not a trier of facts. in our view. Nonetheless. that there was no "butchering" of tuna to be done. as early as Tide Water Associated Oil Co. In the present case.7 To constitute a valid dismissal from employment. we are persuaded that Filoteo. — xxx xxx xxx (b) Subject to the constitutional right of workers to security of tenure and their right to be protected against dismissal except for a just and authorized cause. which must be supported by clear and convincing evidence. petitioner's charge of serious misconduct of falsification or deliberate misrepresentation was not supported by the evidence on the record contrary to Art. v. resort to judicial review of the decisions of the NLRC in a special civil action for certiorari under Rule 65 of the Rules of Court. In fact. is ORDERED to pay jointly and solidarily the private respondent separation pay at the rate of one (1) month salary for every year of service as well as backwages effective August 23.5 Second. . and done in a manner contrary to morals. Moral damages are recoverable only where the dismissal of the employee was tainted by bad faith or fraud. Victory Employees and Laborers' Association.Note that. Whether private respondent was illegally dismissed or not is governed by Article 282 of the Labor Code. then the same could not serve as a basis for termination. petitioners seek a reversal of the public respondent's findings of the facts. 1994 and subsequently dismissed on August 23. Considering the factory practice which management tolerated. Aside from the fact that there was no valid and justifiable cause for his outright dismissal from the service. M-002808-95 are AFFIRMED with MODIFICATION. where a violation of company policy or breach of company rules and regulations was found to have been tolerated by management. 1994 without any formal investigation to enable complainant to defend himself.9 It also means that. The NLRC found that even management's own evidence reflected that a certain Felix Pelayo.8 This means that an employer can terminate the services of an employee for just and valid causes. We are therefore constrained not to disturb said findings of fact. All told we see no reason to find that the NLRC gravely abused its discretion when it ruled that private respondent was illegally dismissed. But it appears that when he timed in. 1994. or where it constituted an act oppressive to labor. Second. is limited only to the question generally of grave abuse of discretion amounting to lack or excess of jurisdiction. Moreover. the NLRC's factual findings are supported by the evidence on record. we ruled that.13 Exemplary damages may be awarded only if the dismissal was done in a wanton. or malevolent manner.m. the petition is DENIED. G. 277 of the Labor Code which provides that: Art. the employee must be given notice. SO ORDERED. he had no idea that his work schedule (night shift) would be cancelled. Petitioner Permex. No.6 Thirdly. 85 Phil. First. 156339 October 6. 1994. complainant was suspended indefinitely on August 8. inclusive of fringe benefits if any. particularly where the NLRC and the Labor Arbiter are in agreement. the private respondent was not afforded an opportunity to be heard. a co-worker of private respondent. 166 (1949). not to mention that it was his first offense committed without malice. 1996 in NLRC CA No. with legal interest until fully paid.m. in his rush to catch the service vehicle. through its corporate officers. merely forgot to correct his initial time-out entry. including private respondent. The assailed resolutions of the National Labor Relations Commission dated March 14. are deemed binding and conclusive upon the Court. . . . oppressive. with adequate opportunity to be heard. was too harsh a penalty for an unintentional infraction. The burden of proving that the termination was for a valid or authorized cause shall rest on the employer. Filoteo even obtained permission to leave from the Assistant Production Manager. . as his time-out. and committed also by others who were not equally penalized. 1996 and April 17. and attorney's fees equivalent to ten (10%) percent of the total monetary award computed at the execution stage hereof. But as the Court has repeatedly ruled the findings of facts of the NLRC. or public policy. however.12 It is clear that the alleged false entry in private respondent's DTR was actually the result of having logged his scheduled time-out in advance on July 31. When it was confirmed at 10:00 p. This supports Filoteo's claim that it was common practice among night-shift workers to log in their usual time-out in advance in the daily time record. As found by the NLRC: . Nothing is shown to prove he deliberately falsified his daily time record to deceive the company. . firstly.

upon payment by Jovencio of the loan to PNB. SC-3230.000. Aurea averred that she never sold any portion of her property to Jovencio and never executed a deed of sale. Their subsequent motion for reconsideration was likewise denied on December 12. Saturnino. 73251). Aurea was thus forced to seek the advice of Judge Enrique Almario. vs. RODENCIO and JOVENCIO. Aurea alleged that Rodencio asked her to sign a blank paper on the pretext that it would be used in the redemption of the mortgaged property. SP No. We agree with the appellate court that the remedy availed of by petitioners was inappropriate as Rule 65 of the Rules of Court cannot be a substitute for a lost appeal. 73252) and Jovencio (TCT No.000. Rodencio. B) P30. 1994. Cruz. SO ORDERED. On December 29. the instant petition. C) P10.2 which was docketed as Civil Case No. the trial court rendered a decision in favor of Jovencio and Rodencio. Aurea executed a deed of absolute sale in favor of Jovencio over half of the lot consisting of 123 square meters. 69300. covered by TCT No. Jovencio paid Aurea’s bank loan. Branch 91. Aurea Yasoña and her son. CORONA.R. pursuant to a deed of sale apparently executed by Aurea in favor of Jovencio. 1971. as Aurea knew fully well that she had already sold half of the property to Jovencio. 2002 on the ground that petitioners availed of the wrong remedy. The records disclose that in November 1971. Thereafter. Twenty-two years later. went to the house of Jovencio de Ramos to ask for financial assistance in paying their loans to Philippine National Bank (PNB). The principal question to be resolved is whether the filing of the criminal complaint for estafa by petitioners against respondents constituted malicious prosecution. both YASOÑA and sisters: TERESITA YASOÑA BALLESTERO and ERLINDA YASOÑA TUGADI.00 by way of moral damages. when Nimpha inquired from the Register of Deeds. Aurea signed the blank paper without further inquiry because she trusted her nephew. finding that plaintiffs have established their case by preponderance of evidence. Jovencio acceded to the request. In her complaint. otherwise their residential house and lot. DE YASOÑA.000. Hence. VIOLETA YASOÑA. They alleged that the filing of the estafa complaint against them was done with malice and it caused irreparable injury to their reputation. and to pay the costs. she was shocked to find out that the lot had been divided into two. they heard nothing from Rodencio and this prompted Nimpha Yasoña Bondoc to confront Rodencio but she was told that the title was still with the Register of Deeds.: Before this Court is a petition for review on certiorari seeking the reversal of the decision1 of the Court of Appeals dated June 14. T-32810.3 Petitioner Violeta Yasoña.4 and that. who suggested filing a complaint for estafa. On October 5. Zayenis dismissed the criminal complaint for estafa for lack of evidence. The dispositive portion stated: WHEREFORE. the lot was surveyed and separate titles were issued by the Register of Deeds of Sta. Laguna in the names of Aurea (TCT No. Inasmuch as Aurea was his aunt. personally and as heir of deceased sister defendant PELAGIA YASOÑA and as attorney–in–fact of her brothers ALEJANDRO and EUSTAQUIO.000. another relative. However. Laguna. both surnamed DE RAMOS. filed a petition for certiorari under Rule 65 with the Court of Appeals which dismissed the same on June 14. They agreed that. Aurea filed an estafa complaint against brothers Jovencio and Rodencio de Ramos on the ground that she was deceived by them when she asked for their assistance in 1971 concerning her mortgaged property. Cruz. in August 1993. respondents. As agreed upon. and mother AUREA VDA. 2002 in CA-G. Jovencio and Rodencio filed a complaint for damages on the ground of malicious prosecution with the Regional Trial Court of Sta. There being no sufficient evidence established to prove the claim for actual damages the same is hereby dismissed. in any event.00 as exemplary damages. petitioners are liable for malicious prosecution.MS. half of Yasoñas’ subject property would be sold to him. petitioners. 2002 and its resolution dated December 12. Assistant Provincial Prosecutor Rodrigo B. premises considered. 2000. would be foreclosed. Thereafter. On account of this dismissal. judgment is hereby rendered in their favor and against the defendants ordering the latter to pay the former as follows: A) P150. 99 .00 as attorney’s fees and cost of litigation. 2000. D) P10. personally and on behalf of her brothers and sisters and mother Aurea. J.00 as attorney’s fees incurred in defending themselves from the criminal complaint for estafa. On February 21.

either in his capacity as President or Chairman of the Board thereon. however. Likewise. petitioner Equitable Banking Corporation (EBC)." there must be proof that the prosecution was prompted by a sinister design to vex or humiliate a person.In this jurisdiction. he is a stockholder of PLDT and a member of the Manila Polo Club." To constitute "malicious prosecution. Thus. Petitioners’ reliance on Drilon vs. In sum. A suit for malicious prosecution will prosper where legal prosecution is carried out without probable cause. who travels at least seven times a year in the U. engaged in commercial banking. the property was surveyed and divided into two portions. the investigating panel found that there was probable cause to hold private respondent Homobono Adaza for trial for the crime of rebellion with murder and frustrated murder. 20021 of the Court of Appeals in CA-G.S. G. vs. extension of loans and credit card facilities. Since 1973. Calderon (Calderon for brevity). 73252 was mortgaged. while in the 100 .000. petitioner. respondent. such as acceptance of deposits. both in criminal and civil cases. 73252) and Jovencio de Ramos (TCT No. Court of Appeals8 is misplaced. J. the decision declaring petitioners liable for malicious prosecution is hereby AFFIRMED in toto.: Thru this petition for review on certiorari under Rule 45 of the Rules of Court. Laguna. or other proceeding in favor of the defendant therein. which partially affirmed an earlier decision of the Regional Trial Court at Makati City. CALDERON.R. it would not have taken them 22 years to question Jovencio’s ownership of half of the property. 60016. Petitioners were completely aware that Jovencio was the rightful owner of the lot covered by TCT No. or other legal proceeding has been instituted maliciously and without probable cause. Separate titles were then issued in the names of Aurea Yasoña (TCT No. Jose T. He is a seasoned traveler. Malicious prosecution. Calderon. SO ORDERED. after the termination of such prosecution. the complaint for estafa was dismissed outright as the prosecutor did not find any probable cause against respondents. JOSE T. The only conclusion that can be drawn from the circumstances is that Aurea knew all along that she was no longer the owner of Jovencio’s portion after having sold it to him way back in 1971. the defendant-appellant [now petitioner] Equitable Banking Corporation (EBC for brevity).5 Concededly. is a businessman engaged in several business activities here and abroad. WHEREFORE. seeks the reversal and setting aside of the decision dated November 25. as follows: Plaintiff-appellee [now respondent] Jose T. Calderon applied and was issued an Equitable International Visa card (Visa card for brevity). among others. 73251). civil suit.6 In this case. The records show that the sale of the property was evidenced by a deed of sale duly notarized and registered with the local Register of Deeds. Furthermore. CV No. Aurea even requested Jovencio to use his portion as bond for the temporary release of her son who was charged with malicious mischief. 73251. there is reason to believe that a malicious intent was behind the filing of the complaint for estafa against respondents. Branch 61. Also. GARCIA. among others. it was only in 1993 when petitioners decided to file the estafa complaint against respondents. On the other hand. 2004 EQUITABLE BANKING CORPORATION. All these pieces of evidence indicate that Aurea had long acknowledged Jovencio’s ownership of half of the property. we find no reversible error on the part of the appellate court in dismissing the petition and in effect affirming the trial court’s decision holding petitioners liable for damages for the malicious prosecution of respondents. no other evidence was presented by them to substantiate their claim. requires the elements of (1) malice and (2) absence of probable cause. the term "malicious prosecution" has been defined as "an action for damages brought by one against whom a criminal prosecution. petitioner (now Senate President) Franklin Drilon could not be held liable for malicious prosecution as there existed probable cause for the criminal case. Europe and Asia.R.7 These two elements are present in the present controversy. Jovencio had been paying the realty taxes of the portion registered in his name. 156168 December 14. The said Visa card can be used for both peso and dollar transactions within and outside the Philippines. suit. In addition thereto. If petitioners had honestly believed that they still owned the entire property. Here. clearly signifying that they were impelled by malice and avarice in bringing the unfounded action. In 1974. The credit limit for the peso transaction is TWENTY THOUSAND (P20. insofar as it grants moral damages and costs of suit to herein respondent. and that it was initiated deliberately by the defendant knowing that his charges were false and groundless. only her portion covered by TCT No. the mere act of submitting a case to the authorities for prosecution does not make one liable for malicious prosecution.00) PESOS. That there was no probable cause at all for the filing of the estafa case against respondents led to the dismissal of the charges filed by petitioners with the Provincial Prosecutor’s Office in Siniloan. when Aurea borrowed money from the Rural Bank of Lumban in 1973 and the PNB in 1979.. The decision under review recites the factual background of the case. other than petitioners’ bare allegations. After the execution of the deed of sale. is one of the leading commercial banking institutions in the Philippines. xxx xxx xxx Sometime in September 1984. It must be noted that in Drilon. No.

Deeply embarrassed and humiliated. In its Answer. informed him that his Visa card was blacklisted. serious anxiety. in a decision dated November 25. the amount of P100. but the latter simply did not honor it and even threatened to cut it into pieces with the use of a pair of scissors.00 as attorney’s fees plus P500. besmirched reputation. alleging that the latter’s credit card privileges for dollar transactions were earlier placed under suspension on account of Calderon’s prior use of the same card in excess of his credit limit. the sum of P200. EBC went to the Court of Appeals (CA). the same is reduced to One Hundred Thousand (P100. EBC is now with us via the instant petition on its lone submission that "THE COURT OF APPEALS ERRED IN HOLDING THAT THE RESPONDENT IS ENTITLED TO MORAL DAMAGES NOTWITHSTANDING ITS FINDING THAT PETITIONER’S ACTIONS HAVE NOT BEEN ATTENDED WITH ANY MALICE OR BAD FAITH. Calderon filed with the Regional Trial Court at Makati City a complaint for damages2 against EBC. Calderon purchased several Gucci items (t-shirts. Shortly thereafter.00. to be sworn to in court. costs of suit. the CA. of their respective witnesses. fright. There and then. Ed De Leon went to Gucci Department Store located at the basement of the Peninsula Hotel (Hongkong). The cost of his total purchase amounted to HK$4. etc. Therefrom.5 affirmed that of the trial court but only insofar as the awards of moral damages. To expedite the direct examination of witnesses. Evidently unwilling to accept a judgment short of complete exemption from any liability to Calderon. Calderon together with some reputable business friends and associates.030. and the costs of suits are concerned.R. and claiming that he suffered much torment and embarrassment on account of EBC’s wrongful act of blacklisting/suspending his VISA credit card while at the Gucci store in Hongkong. wounded feelings. went to Hongkong for business and pleasure trips."7 The petition is impressed with merit. Eventually. thus: WHEREFORE PREMISES ABOVE CONSIDERED.8 However.). Corollarily. mental anguish.00 as exemplary damages. 3. the decision of the court a quo dated 10 October 1997 is AFFIRMED insofar as the awards of moral damages and costs of suit are concerned. in consideration of the foregoing disquisitions. the trial court required the parties to submit affidavits. anent the award of moral damages. whereat its recourse was docketed as CA G. judgment is hereby rendered in favor of plaintiff as against defendant EQUITABLE BANKING CORPORATION.3 EBC denied any liability to Calderon. SO ORDERED. However. He then presented and gave his credit card to the saleslady who promptly referred it to the store cashier for verification. After due proceedings. moral damages include physical suffering. Instead of paying the said items in cash.000. 60016. Upon his return to the Philippines. More specifically.000. thereby causing his obligation to become past due. rendered judgment in favor of Calderon. in the presence of his friend.000. 4. the saleslady. 4921 6400 0001 9373) to effect payment thereof on credit. 2002. The rest of the awards are deleted.dollar transactions. with cross examination to be made in open court. in suspending.10 we have had the occasion to reiterate the conditions to be met in order that moral damages may be recovered. In April 1986. to be entitled to the award thereof. EBC asserts that Calderon also failed to maintain the required minimum deposit of $3. mental anguish or serious anxiety as a result of the actuations of the other party.00 as and by way of moral damages. SO ORDERED. the CA decision dispositively reads:6 WHEREFORE. social humiliation and similar injury. Calderon is required to maintain a dollar account with a minimum deposit of $3. it is not enough that one merely suffered sleepless nights.4 the trial court.9 In Philippine Telegraph & Telephone Corporation vs. jackets. Specifically on 30 April 1986.000. or ‘blacklisting’ plaintiff’s credit card without notice or basis". moral shock. which is hereby ORDERED to pay plaintiff as follows: 1.00 or equivalent to US$523.00. In law. concluding that "defendant bank was negligent if not in bad faith. 1997. and in order to avoid further indignities. Calderon sought the reconfirmation of the status of his Visa card from the saleslady. Calderon paid cash for the Gucci goods and items that he bought. the amount of which was even reduced.00. Calderon accompanied by his friend. viz: 101 . 2. the sum of US$150. adding that Calderon failed to settle said prior credit purchase on due date. Ed De Leon and other shoppers of different nationalities. in a decision dated October 10. the sum of P100. in question-and-answer form. Court of Appeals.00) Pesos.00 per court hearing and 5.000. a pair of shoes. he used his Visa card (No.00 as actual damages.000. the balance of dollar account shall serve as the credit limit. CV No.

April 30. Unquestionably. We are thus at a loss to understand why. made a deposit of US$14. respondent could not have justifiably assumed that petitioner must have reinstated his card by reason alone of his having deposited US$14.00 in his dollar account as evidenced by the pertinent monthly statement of respondent’s credit card transactions and his bank passbook. is that he never verified the status of his card before departing for Hongkong.11 or is found guilty of gross negligence amounting to bad faith. while only having a deposit of US$3. a day before he left for Hongkong. petitioner was justified in doing so under the provisions of its Credit Card Agreement14 with respondent. if any in excess of credit limit shall become due and demandable and the credit privileges shall be automatically suspended without notice to the CARDHOLDER in accordance with Section 11 hereof. or in wanton disregard of his contractual obligations.18 Even on the aspect of negligence. that the case is predicated on any of the instances expressed or envisioned by Articles 2219 and 2220 of the Civil Code. Given the above. and fourthly. respondent however failed to make good on his commitment. respondent suffered damages as a result of the dishonor of his card. it was only four months later – on 31 January 1986. secondly. But. evidence of besmirched reputation. later.12 Verily. a material distinction between damages and injury. That option. much less requested petitioner to reinstate the same.94 after satisfaction of his outstanding accounts.17 And. otherwise. not the least of which are the cardholder’s payment record.89 in his dollar account to cover his purchases. a day before he left for Hongkong. however. firstly. as a consequence thereof.226. the CA ruled. all charges incurred including charges incurred through the use of the extension CARD/S. a culpable act or omission factually established. the CA justified the award on its assessment that EBC was negligent in not informing Calderon that his credit card was already suspended even before he left for Hongkong. petitioner has the option to decide whether to reinstate or altogether terminate a credit card previously suspended on considerations which the petitioner deemed proper.13 Here. mental or psychological suffering sustained by the claimant. As issuer of the card. respondent made another deposit of US$14. ratiocinating that petitioner’s right to automatically suspend a cardholder’s privileges without notice should not have been indiscriminately used in the case of respondent because the latter has already paid his past obligations and has an existing dollar deposit in an amount more than the required minimum for credit card at the time he made his purchases in Hongkong.639. and rightly so. and with the express provision on automatic suspension without notice under paragraph 3.15 which explanations were never controverted by respondent: "xxx prior to the incident in question (i. paragraph 3 of which states: xxx the CARDHOLDER agrees not to exceed his/her approved credit limit. paragraph 12 of which unmistakably states: The issuer shall likewise have the option of reinstating the card holder’s privileges which have been terminated for any reason whatsoever upon submission of a new accomplished application form if required by the issuer and upon payment of an additional processing fee equivalent to annual fee. Oliquiano. despite its very own finding of absence of bad faith or malice on the part of the petitioner. thus exceeding his credit limit. To quote from our decision in BPI Express Card Corporation vs. in culpa contractual or breach of contract. Particularly. oppressive or abusive. after all.704. that respondent deposited the sum of P14. his card privileges for dollar transactions were suspended. as found no less by the same court..00 to his dollar account with petitioner. of the parties’ Credit Card Agreement. For. certainly. capacity to pay and compliance with any additional requirements imposed by it. petitioner could not have been properly adjudged liable for moral damages. however. there is simply no basis for holding petitioner negligent for not notifying respondent of the suspended status of his credit card privileges.000. Zamora and Mr. respondent likewise failed to make the required deposit on the due date of the purchases as stated in the pertinent monthly statement of account. or physical. the said amount however was not sufficient to maintain the required minimum dollar deposit of $3. It may be so that respondent."16 The foregoing are based on the sworn affidavit of petitioner’s Collection Manager. The sad reality.00 as the respondent’s dollar deposit stood at only US$2. respondent made credit purchases in Japan and Hongkong from August to September 1985 amounting to US$14. the CA nonetheless adjudged it liable for moral damages to respondent. these purchases were accommodated by the petitioner on the condition that the amount needed to cover the same will be deposited in a few days as represented by respondent’s secretary and his company’s general manager – a certain Mrs. malicious or in bad faith. therefore. thirdly. in holding petitioner liable for moral damages.000.000. thus the same remained under suspension.501. There is. Quite evidently. is expressly embodied in the same Credit Card Agreement.00 in his dollar account but did not bother to request the petitioner for the reinstatement of his credit card privileges for dollar transactions.e. as explained by the petitioner in the memorandum it filed with this Court. the breach must be wanton. as here. reckless. supra. Court of Appeals:19 102 .R. a certain Lourdes Canlas. proof that the wrongful act or omission of the defendant is the proximate cause of the damages sustained by the claimant. who was never cross examined by the respondent nor did the latter present any evidence to refute its veracity. moral damages are recoverable only if the defendant has acted fraudulently or in bad faith. 1986 when the purchases at the Gucci store in Hongkong were made).000. F.00 a day before he left for Hongkong.12. that no malice or bad faith attended petitioner’s dishonor of respondent’s credit card.An award of moral damages would require.

the following amounts: 1. is a reputable businessman engaged in business activities here and abroad. with the stipulations therein contained unilaterally prepared and imposed by the petitioner to prospective credit card holders on a take-it-or-leave-it basis.a concurrence of injury to the plaintiff and legal responsibility by the person causing it. In other words. and the breach of such duty should be the proximate cause of the injury. Thus. 2001 Decision1 of the Court of Appeals2 (CA) in CA-GR CV No. he must establish that such injuries resulted from a breach of duty which the defendant owed to the plaintiff. In the situation in which respondent finds himself. The underlying basis for the award of tort damages is the premise that an individual was injured in contemplation of law. the dispositive portion of the Regional Trial Court (RTC) Decision4 that was reversed by the CA disposed thus: "WHEREFORE.00 as moral damages. and damages are the recompense or compensation awarded for the damage suffered. But nominal damages may be allowed under the circumstances in the case herein. Court of Appeals:20 A contract of adhesion is one in which one of the contracting parties imposes a ready-made form of contract which the other party may accept or reject. however. the judgment of July 29. PANGANIBAN.R.000. P500. Thus. there must first be a breach of some duty and the imposition of liability for that breach before damages may be awarded. 2003 VICTORINO SAVELLANO. Failing in this. As said by us in Polotan. ill will. J. These situations are often called damnum absque injuria. SAVELLANO. P3. we emphasize that "moral damages are in the category of an award designed to compensate the claim for actual injury suffered and not to impose a penalty on the wrongdoer. vs. 103 . malice or wanton conduct. seeking to set aside the June 29. SO ORDERED. G.: When. vs. One party prepares the stipulation in the contract. 3. not to say that the agreement itself was entered into by respondent who. decision is hereby rendered in favor of the plaintiffs and against the defendant. the provision on automatic suspension without notice embodied in the same Credit Card Agreement is couched in clear and unambiguous term. On a final note. 151783 July 8. However. there can be damage without injury in those instances in which the loss or harm was not the result of a violation of a legal duty.000. by his own account.000."3 On the other hand."21 Moreover.00 as actual damages. respondent. while the other party merely affixes his signature or his ‘adhesion’ thereto giving no room for negotiation and depriving the latter of the opportunity to bargain on equal footing. and 4. a commercial airline is unable to ferry its passengers on the original contracted route. Sr. in order that a plaintiff may maintain an action for the injuries of which he complains. We do not take issue with the appellate court in its observation that the Credit Card Agreement herein involved is a contract of adhesion. it cannot just unilaterally shuttle them. it nonetheless has the duty of fulfilling its responsibility of carrying them to their contracted destination on the most convenient route possible. sentencing the latter to pay to the former. the law affords no remedy for damages resulting from an act which does not amount to a legal injury or wrong.Injury is the illegal invasion of a legal right. NORTHWEST AIRLINES. to other routes or stopping places outside of the contracted sectors. petitioners.00 as exemplary damages. P500. On the same breath. the instant petition is hereby GRANTED and the decision under review REVERSED and SET ASIDE. 1994 is hereby REVERSED and SET ASIDE and another rendered DISMISSING [petitioners'] Complaint. No. VIRGINIA B. Neither will actual damages be granted in the absence of convincing and timely proof of loss.000. moral damages cannot be awarded without proof of the carrier's bad faith. damage is the loss. premises considered. his is a case of damnum absque injuria. P500. we have equally ruled that such a contract is "as binding as ordinary contracts. the reason being that the party who adheres to the contract is free to reject it entirely. hurt or harm which results from the injury.000. SAVELLANO and DEOGRACIAS B. 47165. The Case Before the Court is a Petition for Review under Rule 45 of the Rules of Court. 2. as a result of engine malfunction. (Emphasis supplied)."22 WHEREFORE. No pronouncement as to costs. without their consent.00 as attorney's fees. The dispositive part of the Decision reads: "WHEREFORE. In such cases the consequences must be borne by the injured person alone. but cannot modify.

Philippines using the NW round-trip tickets which were issued at [respondent's] Manila ticketing office. Manila on October 29. (Seattle time) the following day. for lack of merit. "By letter of November 22.e. of the same day. 104 . "In Los Angeles. 1991. for departure. none was posted for a Manila flight. "On October 27. 1991. "After being airborne for approximately two and one-half (2½) hours or at about 4:15 p. "[Petitioners] and the other passengers proceeded to Gate 8 of the Seattle Airport where they were instructed to go home to Manila the next day. at the time [of] the incident subject of the case. making them skip the 6:30 a.000. On getting wind of information that they were 'bumped off'. impelling [petitioners] to file a case for damages at the RTC of Cabugao. "[Respondent's] counterclaim is ordered dismissed.00 as damages for what they claimed to be the humiliation and inconvenience they suffered in the hands of its personnel. "[Petitioners] who were travelling as a family were assigned one room at the hotel. [respondent's] ground stewardess belatedly advised them that instead of flying to Manila they would have to board NW Flight 94. on board the same plane with the same itinerary. and at the expense of [respondent]. "Prior to leaving the hotel. "[Petitioners] were expected to arrive at the Ninoy Aquino International Airport (NAIA). two (2) pieces of Tag Heuer watch and three (3) boxes of Elizabeth Arden [perfumes]."All such sums shall bear legal interest. 1991 (Seattle. October 29.00 each. former Chairman of the Commission on Elections and Regional Trial Court (RTC) judge. a DC-10 plane. camera. It was only after they complained to the NW personnel that the latter 'finally changed the board to include Manila. [petitioners] met at the lobby Col. [petitioners] through counsel demanded from [respondent] the amount of P3. they discovered that the would-have-been handcarried items which were not allowed to be placed inside the passengers' baggage compartment had been ransacked and the contents thereof stolen. on the other hand. USA on board Northwest Airlines (NW) Flight 27.' "Before boarding NW Flight 23 for Manila via Seoul. Manila where they saw Col. At around 12:00 midnight. When [Petitioner] Savellano insisted theirs was a direct flight to Manila. Deogracias. 1991. hotel breakfast. the Vice-Governor of Ilocos Sur. Delfin and his wife as well as the other passengers of the distressed flight who unlike them [petitioners] who left Seattle on October 28.00.000.m.000. [Respondent] did not accede to the demand. who informed them that he and some passengers were leaving the next day. embarrassment. they were teased for taking the longer and tiresome route to the Philippines. 1991. Inc. and jeans he bought for his children. however. a Filipino co-passenger who was also travelling Business Class. [petitioner] Virginia developed nervousness. the female ground stewardess just told them to hurry up as they were the last passengers to board. the NW shuttle bus fetched them early. she took 'valium' to calm her nerves and 'cough syrup' for the fever and colds she had developed during the trip. To reach the airport on time. [petitioners] and the other passengers became confused for while 'there was a sort of a board' which announced a Seoul-Bangkok flight.00. at around 1:45 p."5 The Facts The facts of the case are summarized by the CA as follows: "[Petitioner] Victorino Savellano (Savellano) was a Cabugao.. and the clothes. two (2) Perry Gan shoes worth US$250. The couple's x x x son [Petitioner] Deogracias was. NW Flight 27's pilot made an emergency landing in Seattle after announcing that a fire had started in one of the plane's engines. 'using the same boarding passes with the same seating arrangements'. [petitioners] encountered another problem. October 27. 1991. Ilocos Sur mayor for many terms. four (4) watches costing US$40. "[Petitioners] concede that they were not downgraded in any of the flights on their way home to Manila. and humiliation for taking a longer route. October 28. 139 SCRA 260) from the date of the filing of the complaint until fully paid. they were awakened by a phone call from [respondent's] personnel who advised them to be at the Seattle Airport by 7:00 a. [petitioners] departed from San Francisco. personal computer. Virginia was later to claim having lost her diamond earrings costing P300. Tomol. "On [petitioners'] arrival at the NAIA.m. His wife. Their only complaint is that they suffered inconvenience. Costs against the x x x Northwest Airlines. however. Business Class. "On account of the 'engine failure' of the plane. USA time).m.. [Petitioner] Virginia is a businesswoman and operates several rural banks in Ilocos Sur. 1991 (Manila time) or after twelve (12) hours of travel. bound for Manila. 6% per annum pursuant to Article 2209 of the Civil Code (Reformina vs. "When [petitioners] claimed their luggage at the baggage carousel. 1991. left Seattle on October 29. i. "[Respondent's] shuttle bus thereafter brought all passengers to the Seattle Red Lion Hotel where they were billeted by.m. bound for a 3-hour flight to Los Angeles for a connecting flight to Manila. Ilocos Sur — subject of the present appeal. Roberto Delfin. claimed to have lost two (2) pairs of Cole Haan shoes which he bought for his wife. Their three small handcarried items which were not padlocked as they were merely closed by zippers were 'not allowed' to be placed inside the passengers' baggage compartments of the plane by an arrogant NW ground stewardess. "When [petitioners] reached the Seattle Airport.

1991. and may alter or omit stopping places shown on the ticket in case of necessity. they had the right to be placed on Flight 27. First Issue: Breach of Contract Petitioners' contract of carriage with Northwest was for the San Francisco-Tokyo (Narita)-Manila flights scheduled for October 27.e. negligence or malice in transporting them via the Seattle-Los Angeles-Seoul-Manila route. NW Flight 27 on 27 October 1991) constitutes breach by respondent airline of its air-carriage contract? "And if so. x x x . not the cancellation of the original itinerary. petitioners ask this Court to rule on these issues: " x x x [W]hether or not petitioners' discriminatory bump-off from NW Flight No.8 Issues In their appeal."During the trial. moral and exemplary damages — including attorney's fees — as a consequence?"9 The Court's Ruling The Petition is partly meritorious. but its substitution.10 Thus. Just as it is odd why no receipts for alleged purchases for valuable pasalubongs including Tag Huer watches. the passengers' manifest of the same distressed plane from Seattle to Tokyo which took off on October 29. the [RTC]. "The subpoena duces tecum was served on December 1. which they allegedly had not contracted for or agreed to. 1991. Hence. 1991. This itinerary was not followed when the aircraft used for the first segment of the journey developed engine trouble. they were being discriminated against. "In granting moral and actual damages to [petitioners]. It unilaterally decided on the most expedient way for them to reach their final destination. Ilocos Sur rendered judgment in favor of [petitioners] x x x. the [RTC] credited [petitioners'] claim that they were excluded from the Seattle-Tokyo-Manila flight to accommodate several Japanese passengers bound for Japan. i. Passengers' Consent 105 . given the ease with which it could have been done as the small luggage was merely closed by zipper. And as basis of its award of actual damages arising from the allegedly lost articles contained in the would-havebeen handcarried [luggage]. it proffering that its Minneapolis head office retains documents only for one year after which they are destroyed. 1993 but was not complied with. " x x x Branch 24 of the RTC of Cabugao. issued on October 29. even the trial court's award of actual damages was reversed by the appellate court. camera and personal computer were presented x x x "7 Thus. 0027 on 28 October 1991 (not the diversion of the distressed plane to Seattle the day before. They add that in being treated differently and shabbily. which had a connecting flight from Japan to Manila. which are printed on the airline ticket. A contract is the law between the parties. 1991. it did not take the time to explain how it would be meeting its contractual obligation to transport them to their final destination. on motion of [petitioners]. passing on the lack of receipts covering the same. by [respondent]. however.12 Undeniably. Condition 9 in the agreement states that a " x x x [c]arrier may without notice substitute alternate carriers or aircraft. 1993 a subpoena duces tecum directing [respondent] to submit the passengers' manifest of the distressed flight from San Francisco to Tokyo on October 27. in determining whether petitioners' rights were violated. we must look into its provisions. it held that there was no basis for the RTC's award of moral and exemplary damages."6 Ruling of the Court of Appeals The CA ruled that petitioners had failed to show respondent's bad faith. They insist that. It further ruled: "[Petitioners'] testimonial claim of losses is unsupported by any other evidence at all. whether or not petitioners are entitled to actual. the [RTC]. It is odd and even contrary to human experience for [petitioner] Virginia not to have taken out a P300. Neither did it find any reason to grant attorney's fees. Petitioners stress that they are questioning. and the passenger manifest of the substitute plane from Seattle to Los Angeles and Los Angeles to Seoul enroute to Manila which took off on October 28. like the other passengers of the distressed flight.00 pair of diamond earrings from an unlocked small luggage after such luggage was not allowed to be placed inside the passenger's baggage compartment. took judicial notice of the Filipinos' practice of often bringing home pasalubong for friends and relatives. Its employees merely hustled the confused petitioners into boarding one plane after another without giving the latter a choice from other courses of action that were available.000. Hence this Petition."11 The basis of the Complaint was the way respondent allegedly treated petitioners like puppets that could be shuttled to Manila via Los Angeles and Seoul without their consent.

1170. the Court is hard pressed to determine if there was a "case of necessity" sanctioning the alteration of the Tokyo stopping place in the case of petitioners. Pan American World Airways." (Emphasis supplied) "Art. bad faith. The ambiguities in the contract. It may be that the Northwest connecting flight from Seattle to Tokyo to Manila could no longer accommodate them. It appears that the passengers of the distressed flight were randomly divided into two groups. recklessness and malevolence to respondent. 106 . we hold that in the absence of a demonstrated necessity thereof and their rerouting to Los Angeles and Seoul as stopping places without their consent. while the CA found none and hence deleted the award of damages. Thus. then it must be construed to mean that such unilateral change was not permitted. should be construed against the party that caused its preparation — in this case. so we will not delve into this matter. In the absence of convincing evidence. negligence. True. We are not convinced. the obligor shall be responsible for all damages which may be reasonably attributed to the non-performance of the obligation. The airplane engine trouble that developed during the flight bound for Tokyo from San Francisco definitely merited the "necessity" of landing the plane at some place for repair — in this case. Second Issue: Damages Being guilty of a breach of their contract. petitioners failed to present convincing evidence to back this allegation. Lopez. Proof of Necessity of Alteration Furthermore. after the distressed flight landed in Seattle. Pan American World Airways. Northwest failed to show a "case of necessity" for changing the stopping place from Tokyo to Los Angeles and Seoul. Yet it may also be that there were other carriers that could have accommodated them for these sectors of their journey. In the absence of evidence as to the actual situation. Those who in the performance of their obligations are guilty of fraud. we cannot find respondent guilty of bad faith. much less agreed to or been prepared for. what other stopping places petitioners should take and when they should fly. which took into account only the passengers' final destination.19 and Ortigas Jr.15 An exception to this rule is when the lower court and the CA arrive at different factual findings. One group was made to take the Tokyo-Manila flight. respondent. or delay and those who in any manner contravene the tenor thereof are liable for damages. the Court is now behooved to review the basis for sustaining the award or deletion of damages. Substituting aircrafts or carriers without notice is entirely different from changing stopping places or connecting cities without notice. v.17 The records show that respondent was impelled by sincere motives to get petitioners to their final destination by whatever was the most expeditious course — in its judgment. nothing there permits shuttling passengers — without so much as a by your-leave — to stopping places that they have not been previously notified of. and which the parties have foreseen or could have reasonably foreseen at the time the obligation was constituted. Inc. Thus. being one of adhesion. However. respondent committed a breach of the contract of carriage. Petitioners impute oppression. and the other. if not in theirs. the damages for which the obligor who acted in good faith is liable shall be those that are the natural and probable consequences of the breach of the obligation. we find nothing there authorizing Northwest to decide unilaterally. This responsibility it failed to discharge. and whose route they might have preferred to the more circuitous one unilaterally chosen for them by respondent." "In case of fraud. Lufthansa German Airlines20 to support their claim for moral and exemplary damages. malice or wanton attitude. which state: "Art. Petitioners do not question the stop in Seattle.13 Since the conditions enumerated on the ticket do not specifically allow it to change stopping places or to fly the passengers to alternate connecting cities without consulting them. In contracts and quasi-contracts.18 Zulueta v. discrimination.After an examination of the conditions printed on the airline ticket. Condition 9 on the ticket allowed respondent to substitute alternate carriers or aircraft without notice. the Los Angeles-Seoul-Manila flight. the factual findings of the CA when supported by substantial evidence on record are final and conclusive and may not be reviewed on appeal. The burden of proving it necessarily fell on respondent. There is no persuasive evidence that they were maliciously singled out to fly the Seattle-Los Angeles-Seoul-Manila route. the change in petitioners' flight itinerary does not fall under the situation covered by the phrase "may alter or omit stopping places shown on the ticket in case of necessity. 2201. No explanation whatsoever was given to petitioners as to why they were not similarly allowed to do so. The selection of who was to take which flight was handled via the computer reservation system. Zulueta and Ortigas Rulings Not Applicable Petitioners cite the cases of Lopez v. Though they claim that they were not accommodated on Flight 27 from Seattle to Tokyo because respondent had taken on Japanese passengers. Seattle — but not that of shuttling petitioners to other connecting points thereafter without their consent.16 In this case."14 A case of necessity must first be proven. the trial court found the presence of bad faith and hence awarded moral and exemplary damages. respondent may be held liable for damages suffered by petitioners in accordance with Articles 1170 and 2201 of the Civil Code. It is a fact that some of the passengers on the distressed flight continued on to the Tokyo (Narita) connecting place." As a general rule.

000. in Loipez despite sufficient time — one month — to inform the passengers of what had happened to their booking.24 Neither are exemplary damages proper in the present case.In Lopez. may be vindicated or recognized. when in truth such was not the case. In Zulueta. ill will.00 as attorney's fees. Lufthansa succeeded in keeping him as a passenger by assuring him that he would be given first-class accommodation at the next stop. His reserved first class seat was.00 as moral damages. Thus. the Lopezes discovered they had no first-class accommodations. while bad faith is a matter of fact that needs to be proved21 by the party alleging it. Here. was difficult to satisfy perfectly. But expecting other cancellations before the flight scheduled a month later. malice or wanton conduct. Honorable Fernando Lopez. herein petitioners will not be totally deprived of compensation. he could not be located immediately."25 Respondent has not been proven to have acted in that manner. given to a Belgian. the Court held there was a breach of the contract of carriage. 2222. the Court explained. The Court awarded to the Zuluetas P500. with malice aforethought. and not for the purpose of indemnifying the plaintiff for any loss suffered by him. The reservation having been confirmed. fraudulent. however.000. the breach appears to be of graver nature. and without consulting petitioners and securing their consent to the new stopping places. Rafael Zulueta was intentionally off-loaded and left at Wake Island with the prospect of being stranded there for a week. or malevolent manner. first-class tickets were subsequently issued in their favor. Thus. it can only be found guilty of having acted without first considering and weighing all other possible courses of actions it could have taken. which has been violated or invaded by the defendant. the passenger was coming home to Manila from Honolulu via a Pan-American flight. In a breach of contract. In Ortigas. in addition to the Northwest employees' normal workload. At most. 646. The unexpected and sudden requirement of having to arrange the connecting flights of every single person in the distressed plane in just a few hours." To summarize. The court may award nominal damages in every obligation arising from any source enumerated in article 1157. the defendant was able to retain the business and to promote its self-interest at the expense of embarrassment." 107 . or that they worried and experienced mental anxiety. his daughter and his son-in-law — made first-class reservations with the Pan American World Airways on its Tokyo-San Francisco flight.00 as exemplary damages and P75. These cases are different from and inapplicable to the present case. then an incumbent senator and former Vice President of the Philippines — together with his wife. for his "belligerent" attitude. Nominal damages are adjudicated in order that a right of the plaintiff. with the result that upon arrival in Tokyo. such damages are not awarded if the defendant is not shown to have acted fraudulently or with malice or bad faith. The failure of the defendant to inform the plaintiffs on time that their reservations for the first class had long been cancelled was considered as the element of bad faith entitling them to moral damages for the contractual breach. defendant's agent cancelled the reservation. who may not be discriminated against with impunity. from which we quote: "Art. And in Ortigas. there is no showing that the breach of contract was done with the same entrepreneurial motive or self-interest as in Lopez or with ill will as in Zulueta and Ortigas. " x x x [W]hen it comes to contracts of common carriage. The Civil Code provides that "[i]n contracts and quasi-contracts. he was forced to take economy class on the same flight. the passenger was intentionally downgraded in favor of a European. apart from the actual damages of P5. Nominal damages may be awarded as provided by the Civil Code. and the pilot went to the extent of referring to the Zuluetas as "those monkeys." "Art.85. Petitioners have failed to show convincingly that they were rerouted by respondent to Los Angeles and Seoul because of malice. an altercation ensued between him and the Pan-Am employees. But in the instant case.000. Good faith is presumed. In justifying the award of moral and exemplary damages. Francisco Ortigas Jr. since the preference given to the Belgian passenger over plaintiff was done willfully and in wanton disregard of plaintiff's rights and his dignity as a human being and as a Filipino. According to the Court. The proper arrangements therefor had supposedly been made already. they were compelled to take the tourist class. the airline agent intentionally withheld that information from them. respondent cannot be held liable for moral damages.23 Insufficient to warrant the award of moral damages is the fact that complainants suffered economic hardship. P200. We cannot find respondent liable for exemplary damages for its imperfection of neglecting to consult with the passengers beforehand. or in every case where any property right has been invaded. One of them remonstrated: "What in the hell do you think you are? Get on that plane. Nevertheless. In the absence of bad faith. however. reckless. In the light of these facts. As a result. had a confirmed and validated first-class ticket for Lufthansa's Flight No. the passenger was deliberately off-loaded after being gravely insulted during an altercation. At flight time. Article 2219 of the Civil Code22 enumerates the instances in which moral damages may be awarded. discomfort and humiliation on their part.502. The plane had a stopover at Wake Island. 2221. just so the senator could be on time for his pressing engagements in the United States. the reservations supervisor decided to withhold the information from them. inattention and lack of care on the part of the carrier resulting in the failure of the passenger to be accommodated in the class contracted for amounts to bad faith or fraud which entitles the passenger to the award of moral damages in accordance with Article 2220 of the Civil Code. the court may award exemplary damages if the defendant acted in a wanton." Subsequently." An exchange of angry words followed. where Rafael Zulueta went down to relieve himself. such omission had placed them in a predicament that enabled the company to keep them as — their passengers in the tourist class. Mistakenly. profit motive or self-interest. oppressive. In Zulueta. Upon being found.

is hereby MODIFIED by deleting that portion regarding defendants-appellants’ liabilities for the payment of the actual damages amounting to HK$14. regional trial court judge and chairman of the Commission on Elections. A claim for the alleged lost items from the baggage of petitioners cannot prosper. petitioner. continuous trip. Receipt by the person entitled to delivery of luggage or goods without complaint is prima facie evidence that the same have been delivered in good condition and in accordance with the document of carriage. it will be proper to grant one hundred fifty thousand pesos (P150. petitioners never lodged a complaint with any Northwest airport personnel. The Conditions printed on the airline ticket plainly read: "2. 1991 demand letter. 2. save in the case of fraud on his part. Respondent is ORDERED to pay one hundred fifty thousand pesos (P150. in case of delay."30 The pertinent provisions of the Rules Relating to International Carriage by Air (Warsaw Convention) state: "Article 26 1. substantial or specific damages were shown to have resulted from the breach. 1991 of Branch 31. and."4 108 . They paid more for better service. in Civil Case No. No. the person entitled to delivery must complain to the carrier forthwith after the discovery of the damage. Every complaint must be made in writing upon the document of carriage or by separate notice in writing dispatched within the times aforesaid. SO ORDERED.00 while all other respects are AFFIRMED.26 The amount of such damages is addressed to the sound discretion of the court. premises considered. Checked baggage will be delivered to bearer of the baggage check. 3. Victorino Savellano was a former mayor." After allegedly finding that their luggage had been ransacked. PANGANIBAN. Savellano was the president of five rural banks. 2002 Resolution3 of the Court of Appeals (CA) in CA-GR CV No. WHEREFORE. within three days from the date of receipt in the case of luggage and seven days from date of receipt in the case of goods. G. at the latest. 45832. Failing complaint within the times aforesaid. 2001 Decision2 and the February 7. no action shall lie against the carrier. and the assailed Decision MODIFIED. because they failed to give timely notice of the loss to respondent. x x x . We also consider their social and official status. For reasons of public interest and policy. no claim can be heard or admitted against respondent with respect to alleged damage to or loss of petitioners' baggage. In the case of delay the complaint must be made at the latest within fourteen days from the date on which the luggage or goods have been placed at his disposal. Manila. 82-13690. In case of damage. we must consider that petitioners suffered the inconvenience of having to wake up early after a bad night and having to miss breakfast. National Capital Judicial Region. thus. J. Costs against defendants-appellants. The challenged Decision disposed as follows: "WHEREFORE. 152122 July 30. Regional Trial Court. the ticket-issuing airline acts as principal in a contract of carriage and is thus liable for the acts and the omissions of any errant carrier to which it may have endorsed any sector of the entire. and at the latest. Virginia B. within 7 days from receipt. pronouncement as to costs.80 and US$2. complaint must be made within 21 days from date the baggage was delivered.R. No. respondent. in order to vindicate and recognize their right29 to be notified and consulted before their contracted stopping place was changed. Neither did they mention the alleged loss of their valuables in their November 22.27 In the present case. Hence. taking into account the relevant circumstances. rushing them and making them miss their small comforts was not a trivial thing. in accordance with the parties' contract of carriage. as well as the fact that they were business class passengers. DANIEL CHIOK. and Deogracias Savellano was then the incumbent vice governor of Ilocos Sur.000) to each of the three petitioners as nominal damages. 2003 CHINA AIRLINES.000.000) as nominal damages28 to each of them.: A common carrier has a peculiar relationship with and an exacting responsibility to its passengers. 4. xxx xxx xxx "7. the Petition is hereby PARTIALLY GRANTED. vs.31 Hence. the assailed Decision dated July 5. The Case Before the Court is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Court. Carriage hereunder is subject to the rules and limitations relating to liability established by the Warsaw Convention unless such carriage is not `International carriage' as defined by that Convention.128.Nominal damages are recoverable if no actual. In case of damage to baggage moving in international transportation complaint must be made in writing to carrier forthwith after discovery of damage. seeking to reverse the August 7.

00. which was to leave the next day. with Branch 31. 3.00. he ha[d] to reach Manila on November 25. The latter then wrote the following.. The Facts The facts are narrated by the CA5 as follows: "On September 18. which number was ‘R/MN62’. ridiculed and humiliated him in the presence of so many people. and (h) a [pair of] Christian Dior reading glasses.000. Realizing that his new Samsonite luggage was missing.’ The latter sought to recover his luggage but found only 2 which were placed at the end of the passengers line. Actual damages in the amount of HK$14. who previously confirmed his flight back to Manila. Regional Trial Court. He also alleged that PAL’s personnel. It did not. PR 311 and attached its own sticker. Carmen directed PAL personnel to transfer counters. He was then informed that all the confirmed ticket holders of PAL Flight No. upon reaching the PAL counter. The latter. Before he left for said trip. 1982 for damages. Subsequently. specifically Carmen. US$2. P50. Later. (g) a tie clip with a garnet birthstone and diamond worth P1.000. "When Chiok reached Hongkong. Chiok lost his clutch bag containing the following. (b) HK$2.m. Subsequently. for which reason he lost the business option aforementioned. PR 311. 1981.00. 1981.00. including his clutch bag. PR 307. (CAL for brevity) airline passenger ticket number 297:4402:004:278:5 for air transportation covering Manila-TaipeiHongkong-Manila. he complained to Carmen.80 or its equivalent in Philippine Currency at the time of the loss of the luggage consisting of cosmetic products. The PAL office confirmed his return trip on board Flight No. (f) a Cartier watch worth about P7. Said ticket was exclusively endorseable to Philippine Airlines. defendant PAL refused to accommodate him in Flight No. Chiok had already placed his travel documents.000.000. Chiok went to the airport. Chiok proceeded to PAL’s Hongkong office and confronted PAL’s reservation officer. Carie Chao (hereafter referred to as Chao). "Meanwhile. 1981. Ltd. When he arrived in Taipei.500. he went to the PAL office and sought to reconfirm his flight back to Manila. 1981.00 by way of moral damages. (c) Taipei $8."6 The Regional Trial Court (RTC) of Manila held CAL and PAL jointly and severally liable to respondent.00 by way of exemplary damages or corrective damages. On November 24. In the ensuing commotion. However. to wit: ‘PAL STAFF CARMEN CHAN CHKD WITH R/C KENNY AT 1005H NO SUCH NAME IN COMPUTER FOR 311/24 NOV AND 307/25 NOV. "Thereafter. docketed as Civil Case No. Chiok went to the PAL check-in counter and it was Carmen who attended to him. Lok called the attention of Carmen Chan (hereafter referred to as Carmen).128. judgment is hereby rendered in favor of plaintiff and against the defendants to jointly and severally pay: 1. "Chiok then decided to use another CAL ticket with No. which contained cosmetics worth HK$14. The CAL office attached a yellow sticker appropriately indicating that his flight status was OK.80. once again. he alleged that defendants are solidarily liable for the damages he suffered. PAL’s terminal supervisor. PR 311 were automatically booked for its next flight.00. Cathay Pacific stewardess Lok Chan (hereafter referred to as Lok) ha[d] taken and received Chiok’s plane ticket and his luggage. on November 21. Manila. As this juncture. Ltd. Further. against PAL and CAL. to wit: (a) $2. PR 311 scheduled to depart that evening. Chiok as plaintiff. 2.128. He then informed PAL personnel that. Chao told Chiok that his name was on the list and pointed to the latter his computer number listed on the PAL confirmation sticker attached to his plane ticket.500. PR 311 was cancelled because of a typhoon in Manila. Chiok took his trip from Manila to Taipei using [the] CAL ticket. Chiok requested Carmen to put into writing the alleged reason why he was not allowed to take his flight. 1981 because of a business option which he ha[d] to execute on said date.000. Chiok saw a poster stating that PAL Flight No. (e) a three-piece set of gold (18 carats) cross pens valued at P3. "Thereafter. PAL personnel informed him that he could now check-in. Carmen informed Chiok that his name did not appear in PAL’s computer list of passengers and therefore could not be permitted to board PAL Flight No. "Consequently. National Capital Judicial Region. as defendants.000. Chiok proceeded to Hongkong International Airport for his return trip to Manila. 307. on top of the PAL check-in counter. he was placed on stand-by and at around 7:30 p. since one is the agent of the other. filed a Complaint on November 9. the trips covered by the ticket were pre-scheduled and confirmed by the former.800.00 or its equivalent at the time of the loss of the clutch bag containing the money. he went to the CAL office and confirmed his Hongkong to Manila trip on board PAL Flight No.00. being the founding director of the Philippine Polysterene Paper Corporation. It disposed as follows: "WHEREFORE. "On November 25.000. 109 . P200. Daniel Chiok (hereafter referred to as Chiok) purchased from China Airlines. 297:4402:004:370:5 and asked Chao if this ticket could be used to book him for the said flight. 4. and informed the latter that Chiok’s name was not in the computer list of passengers. "Subsequently. 82-13690. rule on their respective cross-claims.The assailed Resolution denied Petitioner’s Motion for Partial Reconsideration. however. (d) P2. "He alleged therein that despite several confirmations of his flight. (PAL for brevity). this time on board PAL Flight No. booked and confirmed the former’s trip.

because the lost piece of luggage and clutch bag had not actually been "checked in" or delivered to PAL for transportation to Manila. To preclude any doubt that the contract was fairly and freely agreed upon when the passenger accepted the passage ticket. the appellate court sustained the award of moral and exemplary damages. 65 SCRA 237 and in magnifying its misconduct by denying the petitioner’s Motion for Reconsideration on a mere syllabus. not CAL. the appellate court held that the carrier had reneged on its obligation to transport respondent when. as found by the trial court. In support of its Decision. docketed as GR No."7 The two carriers appealed the RTC Decision to the CA. The Court of Appeals committed an error of law when it did not apply applicable precedents on the case before it. "It would be unfair and inequitable to charge a passenger with automatic knowledge or notice of a condition which purportedly would excuse the carrier from liability."10 CAL and PAL filed separate Petitions to assail the CA Decision. however. the latter cannot be bound by the conditions by which the carrier assumed the role of a mere ticket-issuing agent for other airlines and limited its liability only to untoward occurrences in its own lines. Ruling that the airline’s negligence was the proximate cause of his excoriating experience. "Where the passage tickets provide that the carriage to be performed thereunder by several successive carriers ‘is to be regarded as a single operation. the Court of Appeals debunked petitioner’s claim that it had merely acted as an issuing agent for the ticket covering the Hong Kong-Manila leg of respondent’s journey. inasmuch as the latter’s employees had acted negligently.80 and US$2. Issues In its Memorandum. the appellate court ruled that petitioner had failed to raise any new matter or issue that would warrant a modification or a reversal of the Decision. The CA. Ruling of the Court of Appeals Affirming the RTC. As to the alleged misquotation. On August 28. "3. Only the appeal of CAL11 remains in this Court. Court of Appeals. Absent any showing that the carrier’s officials or employees discharged this responsibility to the passenger. the variance was "more apparent than real since the difference [was] only in form and not in substance. the passenger can take action only against the carrier who performed the transportation during which the accident or the delay occurred presupposes the occurrence of either an accident or delay in the course of the air trip. in the very least. the CA held that while the portion it had cited appeared to be different from the wording of the actual ruling. 2001 Resolution. the carrier who issued the ticket must inform the passenger of the conditions prescribed in the ticket or. unofficial at that. Petitioner likewise prayed for a ruling on its cross-claim against PAL. not on the actual ruling therein. ascertain that the passenger read them before he accepted the passage ticket.5.00. CA. where the notice is written at the back of the ticket in letters so small that one has to use a magnifying glass to read the words. The Court of Appeals committed judicial misconduct in finding liability against the petitioner on the basis of a misquotation from KLM Royal Dutch Airlines vs. for failure to serve the CA a copy of the Petition as required by Section 3. In its October 3. 2001. The Court of Appeals committed a non sequitur when it did not rule on the cross-claim of the petitioner. Moreover."9 On PAL’s appeal. in relation to Section 5(d) of Rule 56 and paragraph 2 of Revised Circular No. 1-88 of this Court. deleted the RTC’s award of actual damages amounting to HK$14. Attorney[’]s fees equivalent to 10% of the amounts due and demandable and awarded in favor of the plaintiff. contending that the appellate court had erroneously relied on a mere syllabus of KLM v. the CA quoted a purported ruling of this Court in KLM Royal Dutch Airlines v. The costs of this proceedings. Rule 45.128. was liable for the actual carriage of that segment. this Court denied PAL’s appeal. petitioner raises the following issues for the Court’s consideration: "1. Denying the Motion. 2002. his name did not appear in the computerized list of passengers. and does not apply if the damage is caused by the willful misconduct on the part of the carrier’s employee or agent acting within the scope of his employment.. Court of Appeals8 as follows: "Article 30 of the Warsaw providing that in case of transportation to be performed by various successive carriers.000. it argued that respondent was fully aware that the booking for the PAL sector had been made only upon his request.’ the carrier which issued the tickets for the entire trip in effect guaranteed to the passenger that the latter shall have sure space in the various carriers which would ferry him through the various segments of the trip. in spite of the confirmations he had secured for Flight PR 311. and that only PAL. and the ticket-issuing carrier assumes full responsibility for the entire trip and shall be held accountable for the breach of that guaranty whether the breach occurred in its own lines or in those of the other carriers."12 110 . PAL’s Motion for Reconsideration was denied with finality on January 21. "2. petitioner filed a Motion for Partial Reconsideration. and 6. et al. 149544.

Indeed. 111 .The Court’s Ruling The Petition is not meritorious. When sued for breach of contract. since this case is not administrative in nature. the present action is an appeal from the CA’s Decision. naturally had the right to expect that their tickets would be honored by Aer Lingus to which. the KLM was chargeable with the duty and responsibility of specifically informing the respondents of conditions prescribed in their tickets or. CA.’ which is diametrically incompatible with the theory of the KLM that the respondents entered into a series of independent contracts with the carriers which took them on the various segments of their trip.14 By the same token. it would be unfair and inequitable to charge the respondents with automatic knowledge or notice of the said condition so as to preclude any doubt that it was fairly and freely agreed upon by the respondents when they accepted the passage tickets issued to them by the KLM. due process requires that in administrative proceedings. That article presupposes the occurrence of either an accident or a delay. for this lapse. In the case at bar. As the airline which issued those tickets with the knowledge that the respondents would be flown on the various legs of their journey by different air carriers. stating that when transportation was to be performed by various successive carriers. judges should do no less by strictly abiding by this rule when they quote cases that support their judgments and decisions. CA. refused to transport the respondents to their planned and contracted destination. On the day of their departure. Under the circumstances. neither of which took place at the Barcelona airport. through its manager there. The argument that the KLM should not be held accountable for the tortious conduct of Aer Lingus because of the provision printed on the respondents' tickets expressly limiting the KLM's liability for damages only to occurrences on its own lines is unacceptable. By merely including the lapse as an assigned error here without any adequate and proper administrative case therefor. These two suits are independent of and separate from each other and cannot be mixed in the same proceedings. At the KLM office in Frankfurt. in the very least. Second. under that assurance of the internationally prestigious KLM. we hold that the respondents cannot be bound by the provision in question by which KLM unilaterally assumed the role of a mere ticket-issuing agent for other airlines and limited its liability only to untoward occurrences on its own lines. "2. KLM sought to be excused for the wrongful conduct of Aer Lingus by arguing that its liability for damages was limited only to occurrences on its own sectors. the passenger could take action only against the carrier that had performed the transportation when the accident or delay occurred. they obtained a confirmation from Aer Lingus of their seat reservations on its Flight 861. Moreover. This position of KLM we reject. in an attempt to justify its action. it cited Article 30 of the Warsaw Convention. lawyers and litigants are mandated to quote decisions of this Court accurately. instead. Canon 3 of the Code of Judicial Conduct enjoins them to perform official duties diligently by being faithful to the law and maintaining their professional competence. the airline rudely off-loaded them. To support its argument. Germany. First. Moreover. what is here manifest. the respondents must first be given an opportunity to be heard before sanctions can be imposed. is that the Aer Lingus. CA. however. such misconduct was allegedly aggravated when the CA. held that the difference between the actual ruling and the syllabus was "more apparent than real. CA In KLM v. Consequently. the KLM had indorsed and in effect guaranteed the performance of its principal engagement to carry out the respondents' scheduled itinerary previously and mutually agreed upon between the parties. we can only determine whether the error in quotation would be sufficient to reverse or modify the CA Decision. A thorough search of the record. in the legal sense. the petitioner therein issued tickets to the Mendoza spouses for their world tour. which was serviced by the Irish airline Aer Lingus. First Issue: Alleged Judicial Misconduct Petitioner charges the CA with judicial misconduct for quoting from and basing its ruling against the two airlines on an unofficial syllabus of this Court’s ruling in KLM v. to ascertain that the respondents read them before they accepted their passage tickets. However. The applicability insisted upon by the KLM of article 30 of the Warsaw Convention cannot be sustained. however. petitioner cannot expect the imposition of an administrative sanction. we cannot rule on the CA justices’ administrative liability. The tour included a Barcelona-Lourdes route. Applicability of KLM v. The respondents. not an administrative case against the magistrates concerned. the passage tickets of the respondents provide that the carriage to be performed thereunder by several successive carriers ‘is to be regarded as a single operation."13 We agree with petitioner that the CA committed a lapse when it relied merely on the unofficial syllabus of our ruling in KLM v. In holding KLM liable for damages. "3. we ruled as follows: "1. as maintained by the respondents and the Court of Appeals. The respondents dealt exclusively with the KLM which issued them tickets for their entire trip and which in effect guaranteed to them that they would have sure space in Aer Lingus flight 861. if any. As noted by the Court of Appeals that condition was printed in letters so small that one would have to use a magnifying glass to read the words. inexplicably fails to show that any effort was exerted by the KLM officials or employees to discharge in a proper manner this responsibility to the respondents.

in effect guaranteed that the carrier. assure him of a space therein and transport him on a particular segment of his trip. The petitioner’s argument that it is not a designated carrier in the original conjunction tickets and that it issued its own ticket is not decisive of its liability. CA. and by the existing practices of the International Air Transport Association (IATA). that the KLM should be held responsible for the abuse. which is still being updated. while the endorsee-airline is the agent. i. notably China Airlines v. It is but just and in full accord with the policy expressly embodied in our civil law which enjoins courts to be more vigilant for the protection of a contracting party who occupies an inferior position with respect to the other contracting party. the ticket-issuing airline is the principal in a contract of carriage. regardless of those instances when actual carriage was to be performed by another carrier. when the petitioner accepted the unused portion of the conjunction tickets. petitioner -. when used to support a judgment or ruling.as the ticket-issuing carrier (like KLM) -. suzerainty. such as defendant-appellant PAL would honor his ticket.760 and having the same 112 . It elucidated on this point as follows: "By the very nature of their contract. should be quoted accurately. with the former endorsing to PAL the Hong Kong-to-Manila segment of the journey. Intermediate Appellate Court20 and China Airlines v.24 we have noted that under a general pool partnership agreement. the CA ruled that under the contract of transportation. or under a ticket and any conjunction ticket issued therewith. as to the segment of the trip the petitioner agreed to undertake. and it shall not lose its international character merely because one contract or a series of contracts is to be performed entirely within a territory subject to the sovereignty. or authority of the same High Contracting Party.was liable regardless of the fact that PAL was to perform or had performed the actual carriage. The issuance of a confirmed CAL ticket in favor of [respondent] covering his entire trip abroad concretely attests to this. we have found after careful deliberation that the assailed Decision is supported in substance by KLM v. As such.. mandate."23 Article 15 of IATA-Recommended Practice similarly provides: "Carriage to be performed by several successive carriers under one ticket. this Court hereby exhorts members of the bar and the bench to refer to and quote from the official repository of our decisions. to be one undivided transportation. Court of Appeals. whether it has been agreed upon under the form of a single contract or of a series of contracts. the Philippine Reports.18 We remind them that the Court’s ponencia. to avert similar incidents in the future. for the purposes of this Convention. Petitioner posits that the CA Decision must be annulled. A member airline which enters into a contract of carriage consisting of a series of trips to be performed by different carriers is authorized to receive the fare for the whole trip and through the required process of interline settlement of accounts by way of the IATA clearing house an airline is duly compensated for the segment of the trip serviced. This also serves as proof that defendant-appellant CAL." In American Airlines v. The new ticket was simply a replacement for the unused portion of the conjunction ticket. injury and embarrassment suffered by the respondents at the hands of a supercilious boor of the Aer Lingus. whenever practicable. Article 1. is regarded as a single operation. not only because it was rooted on an erroneous quotation."4. Geneva to New York. Singapore Airlines. Nonetheless. defendant-appellant CAL is clearly liable under the contract of carriage with [respondent] and remains to be so."15 In the instant case. if it has been regarded by the parties as a single operation. "x x x Members of the IATA are under a general pool partnership agreement wherein they act as agent of each other in the issuance of tickets to contracted passengers to boost ticket sales worldwide and at the same time provide passengers easy access to airlines which are otherwise inaccessible in some parts of the world. This jurisprudential rule is supported by the Warsaw Convention.e."16 Notwithstanding the errant quotation. they may resort to unofficial sources like the SCRA. entered it in the IATA clearing house and undertook to transport the private respondent over the route covered by the unused portion of the conjunction tickets. Such contract of carriage has always been treated in this jurisdiction as a single operation.17 In the absence of this primary source. but also because it disregarded jurisprudence. The misquotation by the CA cannot serve as basis for the reversal of its ruling. Court of Appeals. Thus. both tickets being for the same amount of US$ 2. Section 3 of the Warsaw Convention states: "Transportation to be performed by several successive air carriers shall be deemed. the petitioner thereby assumed the obligation to take the place of the carrier originally designated in the original conjunction ticket.19 Second Issue: Liability of the Ticket-Issuing Airline We now come to the main issue of whether CAL is liable for damages. The breach of that guarantee was aggravated by the discourteous and highly arbitrary conduct of an official of the Aer Lingus which the KLM had engaged to transport the respondents on the Barcelona-Lourdes segment of their itinerary.22 to which the Philippines is a party. the petitioner tacitly recognized its commitment under the IATA pool arrangement to act as agent of the principal contracting airline. Booking and reservation among airline members are allowed even by telephone and it has become an accepted practice among them.21 Jurisprudence Supports CA Decision It is significant to note that the contract of air transportation was between petitioner and respondent.

he was harangued and prevented from boarding the original and the replacement flights. however. clearly constitutive of gross negligence. the Supreme Court is not a trier of facts. as the principal in the contract of carriage. following the jurisprudence cited above. 1981. the law governing them imposes an exacting standard. After he had been directed to pay the terminal fee. Court of Appeals. even when the breach of contract had occurred.33 Time and time again. the findings of fact of the CA affirming those of the RTC will not be disturbed by this Court. Thus. To make matters worse."25 Likewise. As a rule also.27 in which we had held that the obligation of the ticket-issuing airline remained and did not cease. holding a confirmed ticket for the former flight. Instead. PAL breached its duty to transport him. regardless of the fact that another airline had undertaken to carry the passengers to one of their destinations. It was that mistake that had caused the omission of his name from the passenger list despite his confirmed flight ticket. Pan American World Airways. the petitioner in British Airways v. In Lopez v. It is true that due to a typhoon. As the rule now stands. The records amply establish that he secured repeated confirmations of his PR 311 flight on November 24. [are] acts evidently indistinguishable or no different from fraud."36 (Italics supplied) 113 . therefore. Article 2206 shall also apply to the death of a passenger caused by the breach of contract by a common carrier. Willful injury to property may be a legal ground for awarding moral damages if the court should find that.as in the present recourse -. PAL acted as the carrying agent of CAL. Moral and Exemplary Damages Both the trial and the appellate courts found that respondent had satisfactorily proven the existence of the factual basis for the damages adjudged against petitioner and PAL. we also rule that CAL cannot evade liability to respondent. his pieces of luggage were removed from the weighing-in counter despite his protestations. concerning Damages." (Italics supplied) There is no occasion for us to invoke Article 1764 here.may be raised in petitions for review under Rule 45. PAL voluntarily obligated itself to automatically transfer all confirmed passengers of PR 311 to the next available flight.points of departure and destination. Moral damages cannot be awarded in breaches of carriage contracts.32 It is relevant to point out that the employees of PAL were utterly insensitive to his need to be in Manila on November 25. malice and bad faith. The Decision followed our ruling in Lufthansa German Airlines v. By constituting itself as an agent of the principal carrier the petitioner’s undertaking should be taken as part of a single operation under the contract of carriage executed by the private respondent and Singapore Airlines in Manila. That duty arose when its agent confirmed his reservation for Flight PR 311.34 In Singson v. recklessness and wanton disregard of the rights of the latter. the award of moral and exemplary damages. 1981. with malice or in bad faith. such damages are justly due. not on its own flight. Damages in cases comprised in this Section shall be awarded in accordance with Title XVIII of this Book. xxx xxx xxx "Article 2220. Court of Appeals. As a rule. We must therefore determine if CAL or its agent (PAL) is guilty of bad faith that would entitle respondent to moral damages. PR 307. In the case at bar. but on that of another airline. on the following day.30 and it became demandable when he presented himself for the trip on November 24. This fact. PAL was unable to transport respondent on Flight PR 311 on November 24. except in the two instances contemplated in Articles 1764 and 2220 of the Civil Code. presented himself for the latter. who had no confirmed tickets or reservations. only questions of law -. to board Flight PR 307. Hence. it is evident that the glitch was the airline’s fault. PAL allowed a group of non-revenue passengers. In the instant case. under the circumstances. even though it may have been only a ticket issuer for the Hong KongManila sector. 1981. The same rule applies to breaches of contract where the defendant acted fraudulently or in bad faith. However. Court of Appeals26 was held liable. no serious attempt was made by PAL to secure the all-important transportation of respondent to Manila on the following day.31 That responsibility was subsisting when respondent. is proper. he had every reason to expect that he would be put on the replacement flight as a confirmed passenger. did not terminate the carrier’s responsibility to its passengers. which we quote: "Article 1764.29 we defined bad faith as a breach of a known duty through some motive of interest or ill will. 1981. where in breaching the contract of carriage the defendant airline is shown to have acted fraudulently. in addition to actual damages. this Court has stressed that the business of common carriers is imbued with public interest and duty. In the same way that we ruled against British Airways and Lufthansa in the aforementioned cases.28 Indeed. the known duty of PAL was to transport herein respondent from Hong Kong to Manila. By merely looking at his ticket and validation sticker. and to the likelihood that his business affairs in the city would be jeopardized because of a mistake on their part.35 we said: "x x x [T]he carrier's utter lack of care and sensitivity to the needs of its passengers.

Now of course you will agree with me Miss Chan that this yellow stub here which has been marked as Exh. Yes. 114 . on this. Miss Chan what do you understand by these entries here R bar M N 6 V?41 This is what we call a computer reference.K. The pertinent portions of the Oral Deposition are reproduced as follows: "Q Now you said that flight PR 311 on 24th November was cancelled due to [a] typhoon and naturally the passengers on said flight had to be accommodated on the first flight the following day or the first flight subsequently. correct? A Correct. Atty. Q Now you stated in your answer to the procedure taken.37 the Court reminded airline companies that due to the nature of their business. Calica: Q Per procedure. A Yes. A and A-1.K. 24th November.] what do you do with the passengers on the cancelled flight who are expected to check-in on the flights if this flight is cancelled or not operating due to typhoon or other reasons[?] In other words.K. Q You agree with me. they must require them to be so. A-1-B for 24 November is O. Chiok when he checked-in at [F]light 307.K.] then the Reservations Office will not be able to do that.? A Q A May I x x x look at them. they must not merely give cursory instructions to their personnel to be more accommodating towards customers. Miss Chan. Q I see. passengers and the general public."40 xxx xxx xxx "Q I see. no. it says O. That was the ticket he used. 25 November ‘81? A Q A [Are you] now asking me whether he used this ticket with this sticker? No. but [there is] no validation. Fruto: Q A Did you say ‘were not notified?’ I believe they were not. [W]ill you tell the Honorable Deposition Officer the procedure followed by Philippine Airlines in the handling of passengers of cancelled flight[s] like that of PR 311 which was cancelled due to [a] typhoon? A The procedure will be: all the confirmed passengers from [PR] 311 24th November [are] automatically transfer[red] to [PR] 307.. what should have been done by Reservations Office when a flight is cancelled for one reason or another? A If there is enough time.In Saludo v. are they not notified of the cancellation? A I think all these passengers were not notified because of a typhoon and Philippine Airlines Reservation were [sic] not able to call every passenger by phone. This is a computer reference showing that the name of Mr. The acts of PAL’s employees. that all confirmed passengers on flight 311. A I believe I saw it. x x x. Reservations Office x x x call[s] up all the passengers and tell[s] them the reason. Q You saw it. particularly Chan.K.] were automatically transferred to 307 as a protection for the passengers. 25th November[. another sticker Exh. Atty. Yes. clearly fell short of the extraordinary standard of care that the law requires of common carriers. [are you] asking me whether I saw this ticket? Atty. and this is his computer number. show[s] that the status on flight 311. of course. correct? A Yes. Q Aside from this procedure[. But if there [is] no time[. Chiok has been entered in Philippine Airline’s computer. is O. Will you please go over this ticket and tell the court whether this is the ticket that was used precisely by Mr. I was on day-off. Fruto: Yes. And you will also agree with me that in this ticket of flight 311. Court of Appeals. O. 24 November[.38 As narrated in Chan’s oral deposition.] as a protection for all disconfirmed passengers. O. A-1-A. no. I [will] show you a ticket which has been marked as Exh. but believe me.39 the manner in which the airline discharged its responsibility to respondent and its other passengers manifested a lack of the requisite diligence and due regard for their welfare.

[he] was also automatically transferred to flight 307 the following day? A Should be. petitioner therein had exercised diligent efforts in assisting the private respondent change his flight schedule.45 Having found no gross negligence or recklessness.K. That sticker also contained the entry "RMN6V. in which case. Intermediate Appellate Court. In the instant case. Mr. Chiok’s reservation [on] flight 311. we found no bad faith or malice in the airline’s breach of its contractual obligation. Since the status of respondent on Flight PR 311 was "OK." as a matter of right testified to by PAL’s witness. he should have been automatically transferred to and allowed to board Flight 307 the following day. 24 November to flight 307. 1981 PR 311 flight and. Court of Appeals47 is likewise inapplicable. the breach of contract and the negligence of the carrier in effecting the immediate flight connection for therein private respondent was incurred in good faith. between six and eight o’clock in the evening of 25 November ‘81. In view of the foregoing.. we cannot apply our 1989 ruling in China Airlines v."42 xxx xxx xxx "Q So.Q So that since following the O. Yes. Chiok already told you that he just [came] from the Swire Building where Philippine Airlines had [its] offices and that he told you that his space for 311 25 November 81 was confirmed? A Q A Q there? Yes.46 This Court’s 1992 ruling in China Airlines v. A Q A Yes. as shown by the flow of telexes from one of the airline’s offices to the others. it is just an agency for selling Philippine Airlines ticket." Ms Chan explicitly acknowledged that such entry was a computer reference that meant that respondent’s name had been entered in PAL’s computer.by personally going to the carrier’s offices where he was consistently assured of a seat thereon -. but how many [exactly].49 we said: "x x x Although the rule is that moral damages predicated upon a breach of contract of carriage may only be recoverable in instances where the mishap results in the death of a passenger.K.not only once. 1981 -. Now do you remember how many passengers x x x were transferred from flight 311. In that case. 25 November 81? A I can only give you a very brief idea because that was supposed to be air bus so it should be able to accommodate 246 people. Since he had secured confirmation of his flight -. we thereby deleted the award of moral and exemplary damages against it.51 Third Issue: Propriety of the Cross-Claim 115 .. And also to confirm spaces for and on behalf of Philippine Airlines. That is what he told you. Court of Appeals. The status of this flight was marked "OK" on a validating sticker placed on his ticket. And besides around six o’ clock they’re close[d] in Central. I don’t know. In that case."43 Under the foregoing circumstances.44 which petitioner urges us to adopt. we stress that respondent had repeatedly secured confirmations of his PR 311 flight on November 24. He insisted on that flight? Yes.48 We held that. status of Mr.Philippine Airlines and verify indeed if Mr.initially from CAL and subsequently from the PAL office in Hong Kong. or where the carrier is guilty of fraud or bad faith. Clearly resulting from negligence on the part of PAL was its claim that his name was not included in its list of passengers for the November 24. in the list of the replacement flight PR 307. Chiok was A Swire House building is not directly under Philippine Airlines. we rule that moral and exemplary50 damages were properly awarded by the lower courts. O.PAL’s negligence was so gross and reckless that it amounted to bad faith. Q Should be. the passenger likewise becomes entitled to recover moral damages. In Singson v. Q So this Swire Building is an agency authorized by Philippine Airlines to issue tickets for and on behalf of Philippine Airlines and also. but twice -." In the present case. petitioner failed to exhibit the same care and sensitivity to respondent’s needs. And did you not try to call up Swire Building-. there are situations where the negligence of the carrier is so gross and reckless as to virtually amount to bad faith. consequently.

That the subsequent foreclosure sale of its chattels is null and void. Petitioner submits that the CA should have ruled on the cross-claim.: An appeal from a decision. plaintiff-appellant.52 with interest thereon at the rate of 6% per annum from December 22.00 on that date. No. That for the acts of the PNB in proceeding with the sale of the chattels. and without whom no final determination of the case can be had.908. cannot be bound thereby.52 the Court stated: "x x x. 1961." PAL’s interest may be affected by any ruling of this Court on CAL’s cross-claim. 4. Although PAL was petitioner’s co-party in the case before the RTC and the CA. not only because it had already settled its indebtedness to the PNB at the time the sale was effected. Costs against petitioner. it is imperative and in accordance with due process and fair play that PAL should have been impleaded as a party in the present proceedings. e. petitioner failed to include the airline in the present recourse. Latest rule on corporations G. the plaintiff advances several propositions in its brief which may be restated as follows: 1. Such crossclaim may include a claim that the party against whom it is asserted is or may be liable to the cross-claimant for all or part of a claim asserted in the action against the cross-claimant. Hence. 1964. L-22973 January 30. . not being a party in the present case.51 as concluded by the court a quo. That its total indebtedness to the PNB as of November 21. PAL is an indispensable party. versus Philippine National Bank and Anacleto Heraldo.A cross claim is any claim by one party against a co-party arising out of the transaction or occurrence that is the subject matter either of the original action or of a counterclaim therein. but also for the reason that the said sale was not conducted in accordance with the provisions of the Chattel Mortgage Law and the venue agreed upon by the parties in the mortgage contract. dated April 2.R. ANGELES. 2. 3.821. 116 . xxx xxx xxx "Without the presence of indispensable parties to a suit or proceeding.582. Section 8 of Rule 6 of the Rules of Court reads: "Sec. 1968 MAMBULAO LUMBER COMPANY. defendants-appellees. is liable to the plaintiff for its value. Galang for defendants-appellees. considering that the RTC had found that it was PAL’s employees who had acted negligently. and 5." For purposes of a ruling on the cross-claim. entitled "Mambulao Lumber Company. 52089.We now look into the propriety of the ruling on CAL’s cross-claim against PAL.53 WHEREFORE.213. J. was only P56.54 as expenses of the foreclosure sale. hence. Tomas Besa and Jose B. defendants". the proceeds of the foreclosure sale of its real property alone in the amount of P56. SO ORDERED. judgment of a court cannot attain real finality. coercion. An indispensable party is one whose interest will be affected by the court’s action in the litigation. and the costs of suit. PHILIPPINE NATIONAL BANK and ANACLETO HERALDO Deputy Provincial Sheriff of Camarines Norte. added to the sum of P738. in utter disregard of plaintiff's vigorous opposition thereto. Hence.485. having illegally sold the chattels. of the Court of First Instance of Manila in Civil Case No. Cross-claim. In his absence there cannot be a resolution of the dispute of the parties before the court which is effective. Vilar and Arthur Tordesillas for plaintiff-appellant.59 it remitted to the PNB thereafter was more than sufficient to liquidate its obligation. 1961 until fully paid. before this Court can make a final ruling on this matter. vs. The party’s interest in the subject matter of the suit and in the relief sought are so inextricably intertwined with the other parties that his legal presence as a party to the proceeding is an absolute necessity. 8. intimidation. CA. the Petition is DENIED. or equitable. In seeking the reversal of the decision. the Court has no jurisdiction over it. dismissing the complaint against both defendants and sentencing the plaintiff to pay to defendant Philippine National Bank (PNB for short) the sum of P3. That it is not liable to pay PNB the amount of P5.35 for attorney's fees and the additional sum of P298.87 and not P58. plaintiff. Ernesto P. complete. to make any ruling on the cross-claim in the present Petition would not be legally feasible because PAL. Consequently. and in taking possession thereof after the sale thru force. That the PNB. In BA Finance Corporation v. thereby rendering the subsequent foreclosure sale of its chattels unlawful.

the said Deputy Sheriff issued the corresponding notice of public auction sale of the mortgaged chattels to be held on November 21. On November 9. province of Camarines Norte. 1961. 1956. 1961.908. one to the Naga Branch of the PNB and another to the Provincial Sheriff of Camarines Norte. at the same time and place. The antecedent facts of the case.59.and by detaining its "man-in-charge" of said properties. the last of which would be on July 31. 1961. 1961. allegedly in full settlement of the balance of the obligation of the plaintiff after the application thereto of the sum of P56. On November 19. The application. 1961. protesting against the foreclosure of the real estate and chattel mortgages on the grounds that they could not be effected unless a Court's order was issued against it (plaintiff) for said purpose and that the foreclosure proceedings. Camarines Norte. it was intimated that if the public auction sale would be suspended and the plaintiff would be given an extension of ninety (90) days. on November 21. 1961. the PNB sent a letter to the Provincial Sheriff of Camarines Norte requesting him to take possession of the parcel of land. 1956 the plaintiff applied for an industrial loan of P155. On November 6. it was found that the plaintiff had already stopped operation about the end of 1957 or early part of 1958. the PNB sent a letter to the Provincial Sheriff of Camarines Norte requesting him to take possession of the chattels mortgaged to it by the plaintiff and sell them at public auction also on November 21.40 beginning July 31. logging and transportation equipments as collaterals. covered by Transfer Certificate of Title No. 381. 1961. and covered by Transfer Certificate of Title No. between 9:00 and 12:00 a. the Provincial Sheriff of Camarines Norte issued the corresponding notice of extra-judicial sale and sent a copy thereof to the plaintiff.528.m. 1961. posted as registered air mail matter. In said letter to the Naga Branch of the PNB. plus 6% annual interest therefore from September 23. the plaintiff reiterated 117 . On the same day. the PNB made another release of P15. where the mortgaged chattels were situated. for the satisfaction of the unpaid obligation of the plaintiff. 1961.59. Deputy Provincial Sheriff Heraldo executed a certificate of sale in favor of the PNB and a copy thereof was sent to the plaintiff. held on November 21. together with the improvements existing thereon. In a letter dated December 14. according to the terms of the mortgage contracts. subject to the right of the plaintiff to redeem the same within a period of one year. as found by the trial court. 381. 381 of the land records of Camarines Norte. for the satisfaction of the sum of P57.00. The letter of the plaintiff to the Naga Branch of the PNB was construed by the latter as a request for extension of the foreclosure sale of the mortgaged chattels and so it advised the Sheriff of Camarines Norte to defer it to December 21. together with the buildings and improvements thereon. are as follows: On May 5.64 beginning July 31. On November 8. The plaintiff failed to pay the amortization on the amounts released to and received by it. and the said property was sold to the PNB for the sum of P56. 1961. however. Deputy Provincial Sheriff Anacleto Heraldo took possession of the chattels mortgaged by the plaintiff and made an inventory thereof in the presence of a PC Sergeant and a policeman of the municipality of Jose Panganiban. together with the buildings and improvements existing thereon. According to the notice. the latter executed another promissory note wherein it agreed to pay to the former the said sum in five equal yearly installments at the rate of P3. 1961 (but apparently posted several days later).m. In compliance with the request. as amended.. excluding attorney's fees. for which the plaintiff signed a promissory note wherein it promised to pay to the PNB the said sum in five equal yearly installments at the rate of P6.00 representing the proceeds of the foreclosure sale of parcel of land described in Transfer Certificate of Title No. and to sell it at public auction in accordance with the provisions of Act No. covered by Transfer Certificate of Title No. and ending on July 31. which as of September 22. the plaintiff mortgaged to defendant PNB a parcel of land.646.000 only. was. rolling unit and other fixed assets of the plaintiff. 1957. 1957.m. its obligation would be settled satisfactorily because an important negotiation was then going on for the sale of its "whole interest" for an amount more than sufficient to liquidate said obligation. 1961. Camarines Norte. situated in the poblacion of Jose Panganiban (formerly Mambulao). Upon inspection and verification made by employees of the PNB. the plaintiff sent separate letters.908. On August 2. 1961. 1961. in Mambulao. On the same date. the PNB released from the approved loan the sum of P27. amounted to P57. at the ground floor of the Court House in Daet. attorney's fees equivalent to 10% of the amount due and the costs and expenses of the sale.679.500. all situated in its compound in the aforementioned municipality. on October 16. On September 27. the PNB sent notice to the plaintiff that the former was foreclosing extrajudicially the chattels mortgaged by the latter and that the auction sale thereof would be held on November 21. 381 of the land records of said province.646. at 10:00 a. 1956. as well as various sawmill equipment. On October 19. 1961. Province of Camarines Norte. and every year thereafter.500 as part of the approved loan granted to the plaintiff and so on the said date.000 with the Naga Branch of defendant PNB and the former offered real estate. 1961. was approved for a loan of P100. 1961. the plaintiff sent a bank draft for P738. machinery. should be made in Manila. Repeated demands were made upon the plaintiff to pay its obligation but it failed or otherwise refused to do so. A copy of said advice was sent to the plaintiff for its information and guidance. however. 3135. the PNB is liable to plaintiff for damages and attorney's fees. In the said letter. at the plaintiff's compound situated in the municipality of Jose Panganiban. To secure the payment of the loan.59 to the Naga Branch of the PNB. the mortgaged property would be sold at public auction at 10:00 a. The foreclosure sale of the parcel of land..

the trial court added 6% interest per annum from September 23. and the costs. we find that the agreed interest on the loan of P43. however. On the following day.59. There is merit to this claim. 118 . 1961.161. which in turn sold them to Mariano Bundok. The plaintiff did not follow the advice but on the contrary it made known of its intention to file appropriate action or actions for the protection of its interests. compound interest shall not be reckoned. as per promissory note of the same date (Exhibit C-4) — was six per cent (6%) per annum from the respective date of said notes "until paid". Accordingly. which were bought by it at the foreclosure sale and subsequently sold to Mariano Bundok.87 as of November 21. Salgado immediately sent a wire to the President of the plaintiff in Manila.59 with the advice.213. Thru the intervention.00 released on August 2. which was stated in the request for the foreclosure of the real estate mortgage. and they informed Luis Salgado. In the meantime. would be made. In a letter dated December 26. the parties may. the Manager of the Naga Branch of the PNB advised the plaintiff giving it priority to repurchase the chattels acquired by the former at public auction. the plaintiff advised the Provincial Sheriff of Camarines Norte that it had fully paid its obligation to the PNB. 1961.00 — P27. the trucks of Mariano Bundok were able finally to haul the properties originally mortgaged by the plaintiff to the PNB. Salgado was at first reluctant to allow any piece of property to be taken out of the compound of the plaintiff. two trucks and men of Mariano Bundok arrived but Salgado did not permit them to take out any equipment from inside the compound of the plaintiff.59 as of that date. This offer was reiterated in a letter dated January 3. and of Article 1959 of the same code which ordains that interest due and unpaid shall not earn interest. 1961. and not P58. This is also the clear mandate of Article 2212 of the new Civil Code which provides that interest due shall earn legal interest only from the time it is judicially demanded. Upon the foregoing facts.485. This is an error.76. 1961. Chief Security Guard of the premises. or in default thereof. the foreclosure sale of the mortgaged chattels was held at 10:00 a. except by agreement. 1961 (day following the date of the questioned foreclosure of plaintiff's chattels) until fully paid. when the sale of real property was effected. and they were awarded to the PNB for the sum of P4. plus interest thereon and guarding fees. the Attorney of the Naga Branch of the PNB.m. We shall discuss the various points raised in appellant's brief in seriatim. On May 24. that the properties therein had been auctioned and bought by the PNB. 1961. several employees of the PNB arrived in the compound of the plaintiff in Jose Panganiban. In the afternoon of the same day. by stipulation. promissory note or other instrument or contract. 1961. 2655 expressly provides that in computing the interest on any obligation. 1961.000.51 as found by the trial court.00 a day beginning December 19.52 with interest thereon at the rate of 6% per annum from December 22. whenever the debt is judicially claimed. On December 18. and to this erroneously computed total of P57. In the statement of account of the appellant as of September 22. Salgado received a telegram from plaintiff's President directing him not to deliver the "chattels" without court order. 1956. Camarines Norte. The first question Mambulao Lumber Company poses is that which relates to the amount of its indebtedness to the PNB arising out of the principal loans and the accrued interest thereon. with the suggestion that it exercise its right of redemption and that it apply for the condonation of the attorney's fees. The employees of the PNB explained that should Salgado refuse. with the information that the company was then filing an action for damages against the PNB. Upon being advised that the purchaser would take delivery of the things he bought. Mambulao Lumber Company interposed the instant appeal.200 and the corresponding bill of sale was issued in its favor by Deputy Provincial Sheriff Heraldo. of the local police and PC soldiers. to which should be added the expenses of guarding the mortgaged chattels at the rate of P4.500. Section 5 of Act No. It is contended that its obligation under the terms of the two promissory notes it had executed in favor of the PNB amounts only to P56. sentenced the Mambulao Lumber Company to pay to the defendant PNB the sum of P3. wrote to the plaintiff acknowledging the remittance of P738. asking advice as to what he should do. On December 21. 1961. and on the basis of these compounded amounts charged additional delinquency interest on them up to September 22. 1961 to November 21 of the same year. 1962. interest on accrued interests from the time the various amortizations of the loan became due until the real estate mortgage executed to secure the loan was extra-judicially foreclosed on November 21. In effect. as stated in the first paragraph of this opinion. and the trial court has adjudicated to it.00 released on October 19. 1961. Mariano Bundok was able to take out from the plaintiff's compound two truckloads of equipment. 1961. 1956 as per promissory note of even date (Exhibit C-3). 1962. Of course.76. In a letter dated December 16. Examining the terms of the promissory note executed by the appellant in favor of the PNB.59.646. It was further explained in said letter that the sum of P57. that as of that date the balance of the account of the plaintiff was P9. submitted by the PNB. the PNB had compounded the principal of the loan and the accrued 6% interest thereon each time the yearly amortizations became due.161. and P15. the PNB has claimed.its request that the foreclosure sale of the mortgaged chattels be discontinued on the grounds that the mortgaged indebtedness had been fully paid and that it could not be legally effected at a place other than the City of Manila. of the Attorney of the Naga Branch of the PNB to the plaintiff.646.500. however. it appears that in arriving at the total indebtedness of P57.582.646. May 25. 1962. Apprehensive of the risk that he would take. the trial court rendered the decision appealed from which. did not include the 10% attorney's fees and expenses of the sale. and enclosed therewith a copy of its letter to the latter dated December 14. the plaintiff was advised that the foreclosure sale scheduled on the 21st of said month would be stopped if a remittance of P9. he would be exposing himself to a litigation wherein he could be held liable to pay big sum of money by way of damages.

the award of P5. the trial court fell into error when it awarded interest on accrued interests. 2 and (2) that attorney's fees will not be allowed when the attorney conducting the foreclosure proceedings is an officer of the corporation (mortgagee) who receives a salary for all the legal services performed by him for the corporation. The parties to the mortgage appear to have stipulated under paragraph (c) thereof.54 as his commission for the sale (par. Admittedly. While the phrase "in all cases" appears to be part of the second sentence. Obviously. should not be deducted from the proceeds of the sale of the real property. which as added principal shall earn new interest. Appellant next assails the award of attorney's fees and the expenses of the foreclosure sale in favor of the PNB. In this respect. the most that he may be entitled to. a reading of the whole context of the stipulation would readily show that it logically refers to extra-judicial foreclosure found in the first sentence and to judicial foreclosure mentioned in the next sentence. according to the appellant. We find the above stipulation to pay attorney's fees clear enough to cover both cases of foreclosure sale mentioned thereunder. 7. It is to be borne in mind that the fees enumerated under paragraphs k and n. benefits and profits derived from the mortgaged property before the sale. not only because there is no express agreement in the real estate mortgage contract to pay attorney's fees in case the same is extra-judicially foreclosed. but in the absence of evidence to show at least the number of working days the sheriff concerned actually spent in connection with the extrajudicial foreclosure sale. There is reason for the appellant to assail the award of P298. and not in cases of extra-judicial foreclosure of mortgages under Act 3135. cannot be favorably considered. There was. but such stipulation is nowhere to be found in the terms of the promissory notes involved in this case. .. still. however. Rule 130 of the Old Rules) or a total of P298. Sec.capitalize the interest due and unpaid. was sold for P56.54 allowed as expenses of the extra-judicial sale of the real property. Rule 130 of the Old Rules) and P297. It likewise decries the award of attorney's fees which. Clearly therefore.. For the purpose of extra-judicial foreclosure. as would readily be revealed by an examination of the pertinent provision of the mortgage contract. n. attorney's fees hereby fixed at Ten Per cent (10%) of the total indebtedness then unpaid which in no case shall be less than P100. The court below committed error in applying the provisions of the Rules of Court for purposes of arriving at the amount awarded.. the PNB failed to prove during the trial of the case. With respect to the amount of P298. therefore. inter alia: . Sec. and to hold possession of the same and the rents.54 as expenses of the sale. . judicially or extra-judicially. factual or legal. It is suggested by the appellant. without any bond. k. the Sheriff's fees would be P1 for advertising the sale (par. And the ambiguity in the stipulation suggested and pointed out by the appellant by reason of the faulty sentence construction should not be made to defeat the otherwise clear intention of the parties in the agreement. 7. In case of judicial foreclosure. to sign all documents and to perform all acts requisite and necessary to accomplish said purpose and to appoint its substitute as such attorney-in-fact with the same powers as above specified. i. The very same authority first cited suggests that said principle is not absolute. as amended.54 as expenses of the sale should be set aside. but they should not be applied in this case. 381. As to the fact that the 119 . and the other for conducting the auction sale and issuance of the corresponding certificate of sale in favor of the buyer. 3 These authorities are indeed enlightening.00 exclusive of all fees allowed by law. without any agreement to that effect and before they had been judicially demanded. the trial court said: The parcel of land. But the claim of the appellant that the real estate mortgage does not provide for attorney's fees in case the same is extra-judicially foreclosed. the award of P298. no evidence how much was the expenses of the foreclosure sale although from the pertinent provisions of the Rules of Court. Section 7. but also for the reason that the PNB neither spent nor incurred any obligation to pay attorney's fees in connection with the said extrajudicial foreclosure under consideration. and the expenses of collection shall be the obligation of the Mortgagor and shall with priority. only by a sheriff serving processes of the court in connection with judicial foreclosure of mortgages under Rule 68 of the new Rules. however. and should not have been awarded. .908. Neither may expenses for publication of the notice be legally allowed in the absence of evidence on record to support it. to take charge of the mortgaged property at once. considering the circumstance that the PNB did not actually spend anything by way of attorney's fees in connection with the sale.821. the Mortgagor hereby consents to the appointment of the Mortgagee or any of its employees as receiver.35 for attorney's fees has no legal justification.00 as a reasonable allowance for two day's work — one for the preparation of the necessary notices of sale. that even if the above stipulation to pay attorney's fees were applicable to the extra-judicial foreclosure sale of its real properties. appellant cites authorities to the effect: (1) that when the mortgagee has neither paid nor incurred any obligation to pay an attorney in connection with the foreclosure sale. There is really no evidence of record to support the conclusion that the PNB is entitled to the amount awarded as expenses of the extra-judicial foreclosure sale. of Rule 130 (now Rule 141) are demandable. for there is authority to the contrary. the Mortgagor hereby agrees further that in all cases. In support of this proposition. appellant maintains that the same has no basis. less the costs and expenses of the receivership. that it actually spent any amount in connection with the said foreclosure sale. would be the amount of P10.e.54. be paid to the Mortgagee out of any sums realized as rents and profits derived from the mortgaged property or from the proceeds realized from the sale of the said property and this mortgage shall likewise stand as security therefor. as pointed out by the appellee bank. the Mortgagor hereby appoints the Mortgagee his attorney-in-fact to sell the property mortgaged under Act 3135. 1 It is true. that courts should take judicial notice of the fees provided for by law which need not be proved. together with the buildings and improvements existing thereon covered by Transfer Certificate of Title No. The law applicable is Section 4 of Act 3135 which provides that the officer conducting the sale is entitled to collect a fee of P5. the claim for such fees should be denied.00 for each day of actual work performed in addition to his expenses in connection with the foreclosure sale.

it is unreasonable when. as in other contracts. 1961 8. we are reluctant to exonerate herein appellant from the payment of the stipulated attorney's fees on this ground alone. and whether or not the fee is contingent or absolute.00 (1) Interest at 6% per annum from Aug. In order to enable the court to ignore an express contract for an attorney's fees.35 is far too excessive a fee for such services.00 (1) Interest at 6% per annum from Oct. considering the express agreement between the parties in the mortgage contract under which appellant became liable to pay the same. Considering the above circumstances mentioned. 7 From the stipulation in the mortgage contract earlier quoted. 1961 when the real estate mortgage was foreclosed. Contracts for attorney's services in this jurisdiction stands upon an entirely different footing from contracts for the payment of compensation for any other services. 4 Since then this Court has invariably fixed counsel fees on a quantum meruit basis whenever the fees stipulated appear excessive.86 120 . and hence. the results secured. 5 And it is not material that the present action is between the debtor and the creditor. and even when an express contract is made the court can ignore it and limit the recovery to reasonable compensation if the amount of the stipulated fee is found by the court to be unreasonable. As court have power to fix the fee as between attorney and client. It is enough that it is unreasonable or unconscionable. 1956 P15.19. and for purposes of determining the total obligation of herein appellant to the PNB as of November 21.500. irrespective of the manner the foreclosure of the mortgage is to be effected. it being a recognized rule that an attorney may properly charge a much larger fee when it is to be contingent than when it is not. 1956 to Nov.495. The lawful purpose to be accomplished by such a stipulation is to permit the creditor to receive the amount due him under his contract without a deduction of the expenses caused by the delinquency of the debtor. the responsibility imposed. as in this case.foreclosure proceeding's were handled by an attorney of the legal staff of the PNB. where it is said that such obligation has the force of law between the contracting parties. the professional standing of the attorney. we find merit in the contention of the appellant that the award of P5. the skill and experience called for in the performance of the service.115. It is to be assumed though. Civil Code). as such a fee is obviously far greater than is necessary to remunerate the attorney for the work involved and is therefore unreasonable. Principal Loan (a) Promissory note dated August 2. Nor should it be ignored that sound public policy demands that courts disregard stipulations for counsel fees. Again. From the foregoing discussion of the first two errors assigned.08 II. is now deeply rooted in this jurisdiction to entertain any serious objection to it. 21. it is not necessary to show. this Court has explained: But the principle that it may be lawfully stipulated that the legal expenses involved in the collection of a debt shall be defrayed by the debtor does not imply that such stipulations must be enforced in accordance with the terms. it would not have been enforced against him had he seen fit to oppose it. we have the following illustration in support of this conclusion: A.500. the fees should be subject to judicial control. the amount of money or the value of the property affected by the controversy.00 would be more than sufficient to compensate the work aforementioned. or involved in the employment. 2. considering that all that the branch attorney of the said bank did in connection with the foreclosure sale of the real property was to file a petition with the provincial sheriff of Camarines Norte requesting the latter to sell the same in accordance with the provisions of Act 3135. Had the plaintiff herein made an express contract to pay his attorney an uncontingent fee of P2. 21. but even with this in mind. The agreement is perhaps fair enough in case the foreclosure proceedings is prosecuted judicially but. This is a very different rule from that announced in section 1091 of the Civil Code with reference to the obligation of contracts in general. inserted in a mortgage contract. we find merit in this claim. surely. no matter how injurious or oppressive they may be. and not between attorney and client. 1956 P27.25 for the services to be rendered in reducing the note here in suit to judgment. that it is contrary to morality or public policy (Art. The next issue raised deals with the claim that the proceeds of the sale of the real properties alone together with the amount it remitted to the PNB later was more than sufficient to liquidate its total obligation to herein appellee bank. 6 In determining the compensation of an attorney. 21.00 III. It should not be permitted for him to convert such a stipulation into a source of speculative profit at the expense of the debtor.751.000.734.821. By express provision of section 29 of the Code of Civil Procedure. it is our considered opinion that the amount of P1. 1956 to Nov. an attorney is not entitled in the absence of express contract to recover more than a reasonable compensation for his services. the following circumstances should be considered: the amount and character of the services rendered. the mortgage was foreclosed extra-judicially. that the said branch attorney of the PNB made a study of the case before deciding to file the petition for foreclosure. 1961 P57. it must necessarily have the right to say whether a stipulation like this. 1961 4.821. 1255. I. or unreasonable.35 in favor of the PNB as attorney's fees is unconscionable and unreasonable.00 Total obligation as of Nov. Attorney's fee 1. whenever they appear to be a source of speculative profit at the expense of the debtor or mortgagor. At any rate. because a lawyer is primarily a court officer charged with the duty of assisting the court in administering impartial justice between the parties. is valid. Thus.78 (b) Promissory note dated October 19. it appears that the agreed fee is 10% of the total indebtedness. we believe the amount of P5. unconscionable.000. The principle that courts should reduce stipulated attorney's fees whenever it is found under the circumstances of the case that the same is unreasonable. and all that the attorney did was to file a petition for foreclosure with the sheriff concerned. Sheriff's fees [for two (2) day's work] 10.

495. Camarines Norte for the reasons therein stated that: (1) it had settled in full its total obligation to the PNB by the sale of the real estate and its subsequent remittance of the amount of P738. 1961 Deduct: Total obligation to the PNB P57. and such waiver is valid and legally effective. as amended. as amended.00 738. however.B. the PNB had three places from which to select. 18. reiterated its objection to the scheduled sale of its chattels on December 21. when herein mortgagor and mortgagee agreed in the mortgage contract that in cases of both judicial and extra-judicial foreclosure under Act 1508. Camarines Norte and not in the City of Manila as agreed upon.59. are personal to them. exclusive of all costs and fees allowed by law and of other expenses incurred in connection with the said foreclosure. Proceeds of the foreclosure sale of the real estate mortgage on Nov.73 ======== From the foregoing illustration or computation. Camarines Norte.59 P56. in no uncertain terms. Considering that Section 14 of Act No. a sale is properly conducted in that place. I. 11 On the other hand. 10 By said agreement the parties waived the legal venue. Indeed. 1961. it cannot be rightly said that mortgagee still retained the power and authority to select from among the places provided for in the law and the place designated in their agreement over the objection of the mortgagor. as shown not only by its letter to the PNB on November 19. and that the Mortgagor shall pay attorney's fees hereby fixed at ten per cent (10%) of the total indebtedness then unpaid but in no case shall it be less than P100. and (3) the place stipulated in the contract. That appellant vigorously objected to the foreclosure of its chattel mortgage after the foreclosure of its real estate mortgage on November 21. in the case under consideration. they do not affect either public policy or the rights of third persons. they waived their corresponding rights under the law. 1961. illegal and void. but also in its letter to the provincial sheriff of Camarines Norte on the same date. however. In providing that the mortgaged chattel may be sold at the place of residence of the mortgagor or the place where it is situated. It is a general principle that a person may renounce any right which the law gives unless such renunciation is expressly prohibited or the right conferred is of such nature that its renunciation would be against public policy. any way. which is not contrary. the effect thereof was merely to provide another place where the mortgage chattel could be sold in addition to those specified in the Chattel Mortgage Law. 8 this Court has held that the sale of a mortgaged chattel may be made in a place other than that where it is found. was merely a personal privilege they waived. hence. as the case may be. 9 But when. and on this ground alone. namely: (1) the place of residence of the mortgagor. 1961. The correlative obligation arising from that agreement have the force of law between them and should be complied with in good faith. 21. if a place of sale is specified in the mortgage and statutory requirements in regard thereto are complied with. Indeed. we still find the subsequent sale of herein appellant's chattels illegal and objectionable on other grounds. the foreclosure sale held in Jose Panganiban. in the absence of a statute to the 121 . While the law grants power and authority to the mortgagee to sell the mortgaged property at a public place in the municipality where the mortgagor resides or where the property is situated. to public policy or to the prejudice of third persons. the PNB proceeded with the foreclosure sale of said chattels. (2) the place of the mortgaged chattels were situated.86 Excess Payment to the PNB P 150. is the residence of the mortgagor. 1961. Their right arising thereunder. a stipulation in a contract cannot abrogate much less impliedly repeal a specific provision of the statute. because it. 1508 vests in the mortgagee the choice where the foreclosure sale should be held. justified said action of the PNB in the decision appealed from in the following rationale: While it is true that it was stipulated in the chattel mortgage contract that a petition for the extra-judicial foreclosure thereof should be filed with the Sheriff of the City of Manila. 1961 at Jose Panganiban. [Emphasis supplied] Notwithstanding the abovequoted agreement in the chattel mortgage contract. 1961 P57. They may validly be waived. the law clearly contemplated benefits not only to the mortgagor but to the mortgagee as well. accordingly. Be that as it may. we may declare the sale of appellant's chattels on the said date. the parties agreed to have the sale of the mortgaged chattels in the City of Manila. We disagree. provided that the owner thereof consents thereto. it is clear that there was no further necessity to foreclose the mortgage of herein appellant's chattels on December 21. at the option of the mortgagee. and in accordance with such belief. II. the corresponding complaint for foreclosure or the petition for sale should be filed with the courts or the Sheriff of Manila. nevertheless. which. or that there is an agreement to this effect between the mortgagor and the mortgagee. To the foregoing conclusion. as the case may be.646. the parties hereto agree that the corresponding complaint for foreclosure or the petition for sale should be filed with the courts or the sheriff of the City of Manila.59 Total amount of Payment made to PNB as of Dec. These letters were followed by another letter to the appellee bank on December 14. So. 18. wherein herein appellant. was legal and valid. 1961 Additional amount remitted to the PNB on Dec.908. But we take into consideration the fact that the PNB must have been led to believe that the stipulated 10% of the unpaid loan for attorney's fees in the real estate mortgage was legally maintainable. and (2) that the contemplated sale at Jose Panganiban would violate their agreement embodied under paragraph (i) in the Chattel Mortgage which provides as follows: (i) In case of both judicial and extra-judicial foreclosure under Act 1508.00. however. The PNB selected the second and. can not be doubted. herein appellee bank insisted that the proceeds of the sale of appellant's real property was deficient to liquidate the latter's total indebtedness. and in utter disregard of the objection of herein appellant to the sale of its chattels at Jose Panganiban. as in this case. The trial court.

in our opinion to make the plaintiff liable to the defendant for the full value of the truck at the time the plaintiff thus carried it off to be sold. . It is said that the mortgagee is guilty of conversion when he sells under the mortgage but not in accordance with its terms.000. the full value of the chattels in question at the time they were illegally sold by them. which may be used as a guide to ascertain their value.700.contrary. We find enough evidence of record. herein appellant submitted a list of the chattels together with its application for the loan with a stated value of P107. the burden is on the defendant to prove the damage to which he was thus subjected. herein appellee bank insisted. however. unless the mortgagor consents to such sale. it is clear that the law requires that sale be made article by article. or where the proceedings as to the sale of foreclosure do not comply with the statute.00 which.00. The record shows that at the time herein appellant applied for its loan with the PNB in 1956.00 and a market value of P48. We may also safely conclude that the amount of P4. testified that its caterpillar (tractor) alone is worth P35. improve its position. 19 The said official of the PNB who made the foregoing reports of inspection and re-inspections testified in court that in giving the values appearing in the reports. We have to declare that herein appellant is entitled to collect from them. according to him. who is not a party to this case.00.00.000. 17 The same chattels with some additional equipment acquired by herein appellant with part of the proceeds of the loan were reappraised in a re-inspection conducted by the same official in 1958. as amended. 16 The effect of this irregularity was. just a few months before the foreclosure sale. Neither would its claim that it afterwards gave a chance to herein appellant to repurchase or redeem the chattels.00.00 in the market. he did not give them anymore any value in his reports. he found the chattels no longer in use with some of the heavier equipments dismantled with parts thereof kept in the bodega. Camarines Norte. although depreciated after several years of 122 . and that the real value thereof. as earlier shown. and Sawmill equipment consisting of a 150 HP Murphy Engine. it would be impossible for him to state the amount received for each item. . and bearing in mind the current cost of equipments these days which he alleged to have increased by about five (5) times. From this. in the report of which he gave all the chattels an appraised value of P26. could safely be estimated at P120. and the said deputy sheriff sold all the chattels (among which were a skagit with caterpillar engine. This brings us to the problem of determining the value of the mortgaged chattels at the time of their sale in 1961. as shown by the circumstance that they had to take along PC soldiers and municipal policemen of Jose Panganiban who placed the chief security officer of the premises in jail to deprive herein appellant of its possession thereof. 14 This rule applies squarely to the facts of this case where. He likewise appraised the worth of its Murphy engine at P16. and that the value of its two trucks acquired by it with part of the proceeds of the loan and included as additional items in the mortgaged chattels were worth no less than P14. and of course. And in the absence of any evidence to show that the mortgagor had agreed or consented to such sale in gross. and the appellee deputy sheriff of Camarines Norte proceeded with the sale of the mortgaged chattels at Jose Panganiban. is to be expected of an official of the appellee bank. We have no doubt that the value of chattels was depreciated after all those years of inoperation.115.00 and a market value of P85. To this effect was the holding of this Court in a similar situation. the same inspector of the PNB reported that the heavy equipment of herein appellant were "lying idle and rusty" but were "with a shed free from rains" 20 showing that although they were no longer in use at the time.00 originally given by the PNB official were admittedly conservative. Noteworthy is the fact. Considering. although from the evidence aforementioned. The trial court did not make any finding on the value of the chattels in the decision appealed from and denied altogether the right of the appellant to recover the same.400. The President of the appellant company. provides that the officer making the sale should make a return of his doings which shall particularly describe the articles sold and the amount received from each article. a Herring Hall Safe. Section 14 of Act 1508. knowing that the equipments of herein appellant had been idle and unused since it stopped operating its sawmill in 1958 up to the time of the sale of the chattels in 1961. And it appears that the values were considerably reduced in all the re-inspection reports for the reason that when he went to herein appellant's premises at the time.200. three GMC 6 x 6 trucks. on the other hand.00 and the market value at P25. but assuming this to be so. however. the PNB would want us to believe that it was the subsequent buyer alone. in utter disregard of the valid objection of the mortgagor thereto for the reason that it is not the place of sale agreed upon in the mortgage contract.000.00 and the market value of P85. the facts that the appraised value of P42. but We are not inclined to accept such testimony at its par value.85. for the mortgagor is not under obligation to take affirmative steps to repossess the chattels that were converted by the mortgagee. when taken together with the heavy equipments he mentioned. still the PNB cannot escape liability for the conversion of the mortgaged chattels by parting with its interest in the property. they were kept in a proper place and not exposed to the elements. otherwise. large circular saws etc. This testimony. 15 As a consequence of the said wrongful acts of the PNB and the Deputy Sheriff of Camarines Norte.00. except for the appraised and market values appearing in the inspection and re-inspection reports of the PNB official earlier mentioned. however. he used a conservative method of appraisal which. An official of the PNB made an inspection of the chattels in the same year giving it an appraised value of P42. that in the last re-inspection report he made of the chattels in 1961. of course. for which the chattels in question were mortgaged as part of the security therefore. plainer. jointly and severally.00 for which the chattels were sold in the foreclosure sale in question was grossly unfair to the mortgagor. a sale conducted at a place other than that stipulated for in the mortgage is invalid. that two 6 x 6 trucks subsequently bought by the appellant company had thereafter been added to the chattels.700.850. This requirement was totally disregarded by the Deputy Sheriff of Camarines Norte when he sold the chattels in question in bulk. The PNB has resold the chattels to another buyer with whom it appears to have actively cooperated in subsequently taking possession of and removing the chattels from appellant compound by force. the same should be set aside. To exonerate itself of any liability for the breach of peace thus committed. .850. stand uncontroverted in the record. the sawmill itself and all other equipment forming part of the chattels under consideration. that was responsible for the forcible taking of the property.200. 13 This makes the sale of the chattels manifestly objectionable. and finding it difficult to ascertain the value of the dismantled chattels in such condition.000.) as a single lot in violation of the requirement of the law to sell the same article by article.850.600. 18 Another re-inspection report in 1959 gave the appraised value as P19. therefore. notwithstanding the fact that the said chattels consisted of no less than twenty different items as shown in the bill of sale. 12 Moreover.

From among the three packages I can only tick off 10 titles we can purchase. to which their attentions were timely called by herein appellant. Herein appellant's claim for moral damages. until fully paid. Sometime in December 1991.R. however.200. however. 128690 January 21. In line with this I wish to mention that I have not scheduled for telecast several action pictures in out very first contract because of the cheap production value of these movies as well as the lack of big action stars. 1999 ABS-CBN BROADCASTING CORPORATION. HONORABLE COURT OF APPEALS. offered ABS-CBN. Q-92-12309.Viva) and therefore did not accept said list (TSN. The circumstances of the case also warrant the award of P3. CJ. a list of three(3) film packages (36 title) from which ABS-CBN may exercise its right of first refusal under the afore-said agreement (Exhs. it is set aside.4 ABS-CBN shall have the right of first refusal to the next twenty-four (24) Viva films for TV telecast under such terms as may be agreed upon by the parties hereto.000. "3" . and VICENTE DEL ROSARIO. 2.: In this petition for review on certiorari. VIVA PRODUCTION. WHEREFORE AND CONSIDERING ALL THE FOREGOING. 1992. Concio. REPUBLIC BROADCASTING CORP. The latter denied the motion to reconsider the decision of 31 October 1996. serious anxiety. Concio are not the subject of the case at bar except the film ''Maging Sino Ka Man. as hereby.inoperation.00. this rejection letter dated January 06. not only because it is admitted that herein appellant had already ceased in its business operation at the time of the foreclosure sale of the chattels.000. 123 . "A") whereby Viva gave ABS-CBN an exclusive right to exhibit some Viva films. I hope you will understand my position. if besmirched.00 the value of the chattels at the time of the sale with interest at the rate of 6% per annum from December 21. ABS-CBN and Viva executed a Film Exhibition Agreement (Exh. was in a way maintained because the depreciation is off-set by the marked increase in the cost of heavy equipment in the market. and in disposing of the chattels in gross for the miserable amount of P4. but also for the reason that whatever adverse effects of the foreclosure sale of the chattels could have upon its reputation or business standing would undoubtedly be the same whether the sale was conducted at Jose Panganiban. however. P10. Costs against both appellees.000. through its vice-president Charo Santos-Concio. Most of the action pictures in the list do not have big action stars in the cast. The Philippine National Bank and the Deputy Sheriff of the province of Camarines Norte are ordered to pay. The same cannot be considered under the facts of this case. P42. 44125. provided.850.73. They are not for primetime.00. to Mambulao Lumber Company the total amount of P56. INC. Please see attached. 1992 (Exh "3" . it is our opinion that the market value of the chattels at the time of the sale should be fixed at the original appraised value of P42. Camarines Norte. mental anguish. jointly and severally. however through Mrs. pp. DAVIDE. 21 A corporation may have a good reputation which.00 as attorney's fees for herein appellant.00 as attorney's fees." For further enlightenment. in Civil Case No. As a film producer.R. JR. the decision appealed from should be. through defendant Del Rosario. or in Manila which is the place agreed upon by the parties in the mortgage contract. "2. fright. petitioner ABS-CBN Broadcasting Corp. But for the wrongful acts of herein appellee bank and the deputy sheriff of Camarines Norte in proceeding with the sale in utter disregard of the agreement to have the chattels sold in Manila as provided for in the mortgage contract. 9-10). wounded feelings. The titles ticked off by Mrs. broken as follows: P150. petitioner. Compare with G.850. I am sure you understand what I am trying to say as Viva produces only big action pictures. This is not a very formal business letter I am writing to you as I would like to express my difficulty in recommending the purchase of the three film packages you are offering ABS-CBN. June 8.Viva) is hereby quoted: 6 January 1992 Dear Vic. herein appellant should be awarded exemplary damages in the sum of P10..000.73 overpaid by the latter to the PNB. (hereafter ABS-CBN) seeks to reverse and set aside the decision 1 of 31 October 1996 and the resolution 2 of 10 March 1997 of the Court of Appeals in CA-G. Branch 80. 1. in accordance with paragraph 2. seems to have no legal or factual basis. "can tick off only ten (10) titles" (from the list) "we can purchase" (Exh. CV No. The antecedents.. an artificial person like herein appellant corporation cannot experience physical sufferings. are as follows: In 1990. respondents. and P3.4 [sic] of said agreement stating that —. moral shock or social humiliation which are basis of moral damages.000.00. 1961. ABS-CBN. Viva. Obviously. vs. that such right shall be exercised by ABS-CBN from the actual offer in writing. The former affirmed with modification the decision 3 of 28 April 1993 of the Regional Trial Court (RTC) of Quezon City." "2-A'' and "2-B"-Viva). No. "1" par. as found by the RTC and adopted by the Court of Appeals.00 in exemplary damages. may also be a ground for the award of moral damages.

m. 1992. as a total of 156 titles.000." to which was attached a draft exhibition agreement (Exh. denied the existence of a napkin in which Lopez wrote something." The said counter proposal was however rejected by Viva's Board of Directors [in the] evening of the same day. We have to cover the amount that was paid for these movies because as you very well know that non-primetime advertising rates are very low. June 8.Viva. 1992. 1. "7A" . 1992. signed a letter of agreement dated April 24. defendant Del Rosario approached ABS-CBN's Ms. 1992. 2. which reads: "Here's the draft of the contract. 124 . Lopez testified that he and Mr. On April 07. Batang Matadero 8. granting RBS the exclusive right to air 104 Viva-produced and/or acquired films (Exh. TSN. after the rejection of ABS-CBN and following several negotiations and meetings defendant Del Rosario and Viva's President Teresita Cruz.ABS-CBN). defendant Del Rosario and ABS-CBN general manager. a handwritten note from Ms. Exh. Viva Production (hereafter VIVA). Exh. 4 On 27 May 1992.000. pp.000. Mr.00 of which P30. with a list consisting of 52 original movie titles (i. 1992. Del Rosario (Exh. as Viva would not sell anything less than the package of 104 films for P60 million pesos (Exh.e. D. "9" . proposing to sell to ABS-CBN airing rights over this package of 52 originals and 52 re-runs for P60. On April 29.In fact. Concio. The other dramatic films have been offered to us before and have been rejected because of the ruling of MTRCB to have them aired at 9:00 p. Tiger Command 5. for a consideration of P35 million. April 7. I hope you find everything in order. Del Rosario and Mr. not yet aired on television) including the 14 titles subject of the present case. 24-26.000. "9" . Del Rosario denied having made any agreement with Lopez regarding the 14 Viva films. Boy de Sabog 6. 1992. Lady Commando 7. that he allegedly put this agreement as to the price and number of films in a "napkin'' and signed it and gave it to Mr. "5" .00 worth of television spots (Exh. 1992). Graciano Gozon of RBS Senior vice-president for Finance discussed the terms and conditions of Viva's offer to sell the 104 films. after the rejection of the same package by ABS-CBN. ABS-CBN filed before the RTC a complaint for specific performance with a prayer for a writ of preliminary injunction and/or temporary restraining order against private respondents Republic Broadcasting Corporation 5 (hereafter RBS ). p.000. Rebelyon I hope you will consider this request of mine. Raider Platoon. 3. Concio. 1992. On April 06. in consideration of P60 million. "1"·. "9" -Viva). These are the unaired titles in the first contract. The complaint was docketed as Civil Case No. Mr. due to their very adult themes. Exh. defendant Del Rosario received through his secretary. (Exh. "4" to "4-C" Viva. (Signed) Charo Santos-Concio On February 27.RBS. Kontra Persa [sic].ABS-CBN.00 will be in cash and P30.Viva). What transpired in that lunch meeting is the subject of conflicting versions. and such rejection was relayed to Ms. as well as 104 re-runs (previously aired on television) from which ABS-CBN may choose another 52 titles. "4" . Thanking you and with my warmest regards. 77-78.RBS) including the fourteen (14) films subject of the present case. and insisted that what he and Lopez discussed at the lunch meeting was Viva's film package offer of 104 films (52 originals and 52 re-runs) for a total price of P60 million. 3) a counter-proposal covering 53 films. and Vicente Del Rosario.Viva. "C" . On the other hand. "C''. 52 of which came from the list sent by defendant Del Rosario and one film was added by Ms. As for the 10 titles I have choosen [sic] from the 3 packages please consider including all the other Viva movies produced last year. Exhibit "C" provides that ABS-CBN is granted films right to 53 films and contains a right of first refusal to "1992 Viva Films. Underground guerillas 4.Viva).000. Concio. Eugenio Lopez III. Del Rosario allegedly agreed that ABSCRN was granted exclusive film rights to fourteen (14) films for a total consideration of P36 million. Q-92-12309. I have quite an attractive offer to make. I would like to request two (2) additional runs for these movies as I can only schedule them in our nonprimetime slots. On April 2. met at the Tamarind Grill Restaurant in Quezon City to discuss the package proposal of Viva. Lopez promising [sic]to make a counter proposal which came in the form of a proposal contract Annex "C" of the complaint (Exh. Concio.

plaintiff ABS-CBN is ordered to pay P212. On 18 December 1992. RBS prayed for and was granted reasonable time within which to put up a P30 million counterbond in the event that no settlement would be reached. broadcasting. the right of first refusal under the 1990 Film Exhibition Agreement had previously been exercised per Ms. On 3 November 1992. However.843. after appropriate proceedings. there was no basis for ABS-CBN's demand that VIVA signed the 1992 Film Exhibition Agreement. upon suggestion of the court. As the parties failed to enter into an amicable settlement RBS posted on 1 October 1992 a counterbond. which was scheduled to be shown on private respondents RBS' channel 7 at seven o'clock in the evening of said date. ABS-CBN filed with the Court of Appeals a petition 17 challenging the RTC's Orders of 3 August and 15 October 1992 and praying for the issuance of a writ of preliminary injunction to enjoin the RTC from enforcing said orders. 29300.727. the Court of Appeals issued a temporary restraining order 18 to enjoin the airing. SP No. RTC issued a temporary restraining order 6 enjoining private respondents from proceeding with the airing.R. (4) The cross-claim of defendant RBS against defendant VIVA is dismissed.R. (3) For defendant VIVA. on 28 April 1993.000. the RTC issued an order 11 dissolving the writ of preliminary injunction upon the posting by RBS of a P30 million counterbond to answer for whatever damages ABS-CBN might suffer by virtue of such dissolution. Hence.On 27 May 1992. Concio's letter to Del Rosario ticking off ten titles acceptable to them. the amount of premium paid by RBS to the surety which issued defendant RBS's bond to lift the injunction. broadcasting. 13 On 19 October 1992. the parties. ABS-CBN filed a motion for reconsideration 14 of the 3 August and 15 October 1992 Orders. agreed to explore the possibility of an amicable settlement. e) P5 million as and by way of exemplary damages. the RTC conducted a pre-trial. No. No. Thereafter. which would have made the 1992 agreement an entirely new contract. 9 In the meantime. which was docketed as G. 125 .00. On 17 June 1992. which the RTC approved in its Order of 15 October 1992. b) P191. it reduced petitioner's injunction bond to P15 million as a condition precedent for the reinstatement of the writ of preliminary injunction should private respondents be unable to post a counterbond. (1) The complaint is hereby dismissed. 108363. which RBS opposed. private respondents filed separate answers with counterclaim. ABS-CBN moved for the reduction of the bond. and televising of the fourteen VIVA films subject of the controversy. On 3 August 1992. and said agreement was disapproved during the meeting of the Board on 7 April 1992. c) Attorney's fees in the amount of P1 million. 15 On 29 October 1992. Q-192-1209. The alleged agreement between Lopez III and Del Rosario was subject to the approval of the VIVA Board of Directors. According to the RTC. it rendered a decision 20 in favor of RBS and VIVA and against ABS-CBN disposing as follows: WHEREFORE. In the meantime the RTC received the evidence for the parties in Civil Case No. 8 while private respondents moved for reconsideration of the order and offered to put up a counterbound. the Court of Appeals promulgated a decision 19 dismissing the petition in CA -G. 29300 for being premature. At the pre-trial 12 on 6 August 1992. (5) Plaintiff to pay the costs. judgments is rendered in favor of defendants and against the plaintiff.00 for the amount of print advertisement for "Maging Sino Ka Man" in various newspapers. 16 Pending resolution of its motion for reconsideration. ABS-CBN challenged the dismissal in a petition for review filed with this Court on 19 January 1993.. Furthermore. (2) Plaintiff ABS-CBN is ordered to pay defendant RBS the following: a) P107. there was no meeting of minds on the price and terms of the offer.00 by way of reasonable attorney's fees. The case was docketed as CA-G. under cool reflection and prescinding from the foregoing. starting with the film Maging Sino Ka Man. d) P5 million as and by way of moral damages.R. and televising of any or all of the films involved in the controversy. the RTC issued an order 7 directing the issuance of a writ of preliminary injunction upon ABS-CBN's posting of P35 million bond. 10 RBS also set up a crossclaim against VIVA. In the meantime.

Charo Santos-Concio. reduced the awards of moral damages to P2 million. . Private respondents VIVA and Del Rosario also appealed seeking moral and exemplary damages and additional attorney's fees. p. [H]owever. IN AWARDING MORAL AND EXEMPLARY DAMAGES IN FAVOR OF PRIVATE RESPONDENT RBS. Q-92-12309 and by the non-showing of the film "Maging Sino Ka Man." as the same was never produced in court. p. however. The offer of V1VA was sometime in December 1991 (Exhibits 2. 1. and that parag. 1992. absent the approval by the VIVA Board of Directors of whatever Del Rosario. . ABS-CBN filed the petition in this case. might have agreed with Lopez III. Decision.R. . it's agent. . IV . It likewise rejected ABS-CBN's insistence on its right of first refusal and ratiocinated as follows: As regards the matter of right of first refusal. 22 Accordingly. It also upheld the award of attorney's fees. contending that the Court of Appeals gravely erred in I . Records. The appellate court did not even believe ABS-CBN's evidence that Lopez III actually wrote down such an agreement on a "napkin. Concio. No. p. when the first list of VIVA films was sent by Mr.4 thereof provides: 1. reasoning that with ABSCBN's act of instituting Civil Case No. and attorney's fees to P500. ABS-CBN claims that it had yet to fully exercise its right of first refusal over twenty-four titles under the 1990 Film Exhibition Agreement. respondent Court of Appeals denied VIVA and Del Rosario's appeal because it was "RBS and not VIVA which was actually prejudiced when the complaint was filed by ABS-CBN. As to the award of moral damages. exemplary damages to P2 million. as no reversible error was committed by the Court of Appeals in its challenged decision and the case had "become moot and academic in view of the dismissal of the main action by the court a quo in its decision" of 28 April 1993. wrote the 126 . IN AWARDING ACTUAL AND COMPENSATORY DAMAGES IN FAVOR OF PRIVATE RESPONDENT RBS. nor did it specify the terms thereof. with the said letter of Mrs. provided. As aptly observed by the trial court. there being adequate proof of the pecuniary loss which RBS had suffered as a result of the filing of the complaint by ABS-CBN. 89) where ABS-CBN exercised its right of refusal by rejecting the offer of VIVA." Its motion for reconsideration having been denied. this Court denied 21 ABS-CBN's petition for review in G. . it may be true that a Film Exhibition Agreement was entered into between Appellant ABS-CBN and appellant VIVA under Exhibit "A" in 1990. ABS-CBN had lost its right of first refusal. Ms. 1.4 of the agreement Exhibit "A" on the right of first refusal did not fix the price of the film right to the twenty-four (24) films. Q-92-1209. 2-B. 86-88. discussed the terms and conditions of the second list (the 1992 Film Exhibition Agreement) and upon agreement thereon. Records. II .On 21 June 1993. holding that RBS's reputation was debased by the filing of the complaint in Civil Case No. 1992 (Exhibit 3. pp. 1992 (Exhibit 4 to 4-C) when another list was sent to ABSCBN after the letter of Mrs. . the Court of Appeals found reasonable basis therefor.. still the fifteen (15) day period within which ABS-CBN shall exercise its right of first refusal has already expired." The appellate court.00. it is very clear that said right of first refusal in favor of ABS-CBN shall still be subject to such terms as may be agreed upon by the parties thereto. In the instant case. sent a letter dated January 6. that such right shall be exercised by ABS-CBN within a period of fifteen (15) days from the actual offer in writing (Records. IN AWARDING ATTORNEY'S FEES IN FAVOR OF RBS. Records. the Court of Appeals agreed with the RTC that the contract between ABSCBN and VIVA had not been perfected. p. and that the said right shall be exercised by ABS-CBN within fifteen (15) days from the actual offer in writing. Said parag. Concio of January 6. p.4 of Exhibit "A'' speaks of the next twenty-four (24) films. . 14). On the other hand. while parag. In its decision of 31 October 1996. 89) stated that it can only tick off ten (10) films. 1. It insists that we give credence to Lopez's testimony that he and Del Rosario met at the Tamarind Grill Restaurant. as it had chosen only ten titles from the first list. 108363. . 1150). 11. RULING THAT THERE WAS NO PERFECTED CONTRACT BETWEEN PETITIONER AND PRIVATE RESPONDENT VIVA NOTWITHSTANDING PREPONDERANCE OF EVIDENCE ADDUCED BY PETITIONER TO THE CONTRARY. 2-A." Respondent court also held that exemplary damages were correctly imposed by way of example or correction for the public good in view of the filing of the complaint despite petitioner's knowledge that the contract with VIVA had not been perfected. and the draft contract Exhibit "C" accepted only fourteen (14) films. Aggrieved by the RTC's decision.4 ABS-CBN shall have the right of first refusal to the next twenty-four (24) VIVA films for TV telecast under such terms as may be agreed upon by the parties hereto. The same are still left to be agreed upon by the parties. And even if We reckon the fifteen (15) day period from February 27. 000. ABS-CBN appealed to the Court of Appeals claiming that there was a perfected contract between ABS-CBN and VIVA granting ABS-CBN the exclusive right to exhibit the subject films. III . The Vice President of ABS-CBN. ABS-CBN's letter of rejection Exhibit 3 (Records. respondent court sustained the award of actual damages consisting in the cost of print advertisements and the premium payments for the counterbond. RBS was "unnecessarily forced to litigate. however. Del Rosario to ABS-CBN.

they arose by virtue only of the filing of the complaint. namely. no bad faith has been imputed on. 27 In any case. 24 Ang Yu Asuncion v. RBS spent for the premium on the counterbond of its own volition in order to negate the injunction issued by the trial court after the parties had ventilated their respective positions during the hearings for the purpose. As regards moral and exemplary damages. Furthermore under Article 2203 of the Civil Code. moral damages are generally not awarded in favor of a juridical person. 23 which cited Toyota Shaw.. The filing of the counterbond was an option available to RBS. RBS would have spent such an amount to generate interest in the film. 3)." "nanloloko yata kayo") (Exh. Two reasons justify the amount of the award. i. consent. Pursuant then to Article 19 and 21 of the Civil Code. it could have presented a cash bond. it then ratiocinates. hindi ninyo naman ilalabas. par. v. RBS had another available option. RBS asserts that there was no perfected contract between ABS-CBN and VIVA absent any meeting of minds between them regarding the object and consideration of the alleged contract. the expenses for the advertisements had gone to waste. Camaganacan 32 that the text of the decision should state the reason why attorney's fees are being awarded. 3-RBS. the Court of Appeals acted in clear disregard of the doctrines laid down in Buan v. legal. not a series to be shown on a periodic basis.same on a paper napkin. on the contrary. 29 If damage results front the filing of the complaint. 30 Besides. object. As regards the cost of print advertisements. 34 damages may be awarded in cases of abuse of rights even if the act done is not illicit and there is abuse of rights were plaintiff institutes and action purely for the purpose of harassing or prejudicing the defendant. or reckless. RBS asserts that ABS-CBN filed the case and secured injunctions purely for the purpose of harassing and prejudicing RBS. This alone was not something RBS brought upon itself. move for the dissolution or the injunction. or if it was determined to put up a counterbond. Manero. RBS likewise asserts that it was entitled to the cost of advertisements for the cancelled showing of the film "Maging Sino Ka Man" because the print advertisements were put out to announce the showing on a particular day and hour on Channel 7. it was brought out during trial that with or without the case or the injunction.e. ABS-CBN further contends that there was no clear basis for the awards of moral and exemplary damages. 31 As regards the award of attorney's fees. the award should be disallowed. ABS-CBN. Inc. it is damnum absque injuria. Inc. ABS-CBN disavows liability therefor. and consideration were established. as the loss would be equivalent to the cost of money RBS would forego in case the P30 million came from its funds or was borrowed from banks. v. but it can hardly be argued that ABS-CBN compelled RBS to incur such expense. It was obliged to put up the counterbound due to the injunction procured by ABS-CBN. Court of Appeals. 28 One who makes use of his own legal right does no injury. unless it enjoys a good reputation that was debased by the offending party resulting in social humiliation. The controversy involving ABS-CBN and RBS did not in any way originate from business transaction between them. Court of Appeals. Besides. 127 . late viewers called up RBS' offices and subjected RBS to verbal abuse ("Announce kayo nang announce. Contrary to the claim of ABS-CBN. It then concludes that the Court of Appeals' pronouncements were not supported by law and jurisprudence. as the elements thereof. the cash bond would prove to be more expensive. much less proved as having been committed by. Court of Appeals. Since the trial court found that ABS-CBN had no cause of action or valid claim against RBS and. 26 Anent the actual damages awarded to RBS. ABS-CBN must be held liable for such damages. it was exactly what ABS-CBN had planned to happen. In support of its stand that a juridical entity can recover moral and exemplary damages. An award of moral and exemplary damages is not warranted where the record is bereft of any proof that a party acted maliciously or in bad faith in filing an action. otherwise. the case would lose ground. It affirms that the ABS-CBN's claim of a right of first refusal was correctly rejected by the trial court. When the showing was canceled. It also asserts that the contract has already been effective. it suffered serious embarrassment and social humiliation. ABS-CBN maintains that the same had no factual. RBS had not convincingly established that this was a loss attributable to the non showing "Maging Sino Ka Man". or a different interpretation of the laws on the matter. and since the film could not be shown on that particular date and hour because of the injunction.. 35 where it was stated that such entity may recover moral and exemplary damages if it has a good reputation that is debased resulting in social humiliation. Hence. legal technicalities. Besides. The claims for such damages did not arise from any contractual dealings or from specific acts committed by ABS-CBN against RBS that may be characterized as wanton. When RBS was not able to fulfill its commitment to the viewing public to show the film "Maging Sino Ka Man" on the scheduled dates and times (and on two occasions that RBS advertised). Citing Tolentino. RBS insist the premium it had paid for the counterbond constituted a pecuniary loss upon which it may recover." 33 On the other hand. attorney's fees shall not be recovered as cost. RBS could recover from ABS-CBN the premium paid on the counterbond. thus: There can be no doubt that RBS' reputation has been debased by ABS-CBN's acts in this case. as per our decision of 1 December 1995 in Limketkai Sons Milling. 25 and Villonco Realty Company v. It has been held that "where no sufficient showing of bad faith would be reflected in a party' s persistence in a case other than an erroneous conviction of the righteousness of his cause.e. free resort to courts for redress of wrongs is a matter of public policy. The amount of moral and exemplary damages cannot be said to be excessive. private respondents RBS cited People v. fraudulent. or equitable justification. therefore not entitled to the writ of injunction. the print advertisement were good and relevant for the particular date showing. Inc. In sustaining the trial court's award. i. in its entirety at one time. the party suffering loss or injury is also required to exercise the diligence of a good father of a family to minimize the damages resulting from the act or omission. The law recognizes the right of every one to sue for that which he honestly believes to be his right without fear of standing trial for damages where by lack of sufficient evidence. Bormaheco.

Lopez of ABS-CBN at the Tamarind Grill on 2 April 1992 to discuss the package of films. Clearly. and terms of payment a contract is produced. Franklin Life Insurance Co. when something is desired which is not exactly what is proposed in the offer. not questions of fact. there was no acceptance of VIVA's offer. such acceptance is not sufficient to generate consent because any modification or variation from the terms of the offer annuls the offer. The humiliation and injury are far greater in degree when caused by an entity whose ultimate business objective is to lure customers (viewers in this case) away from the competition. ABS-CBN's reliance in Limketkai Sons Milling. for it was met by a counter-offer which substantially varied the terms of the offer. cited in Limketkai. 44 that "a vendor's change in a phrase of the offer to purchase. Once there is concurrence between the offer and the acceptance upon the subject matter. it "must be identical in all respects with that of the offer so as to produce consent or meeting of the minds. such as the power.e. and (3) cause of the obligation. Its clientele. This counter-proposal could be nothing less than the counter-offer of Mr. or generation. corporate powers. (2) object certain which is the subject of the contract. the Board may delegate such powers to 128 . 38 A contract undergoes three stages: (a) preparation. 43 which ruled that the acceptance of all offer must be unqualified and absolute. (b) perfection or birth of the contract. 36 For their part. they underwent a period of bargaining. the acceptance must be absolute and must not qualify the terms of the offer. consideration. Inc. I. the alleged changes in the revised counter-offer were not material but merely clarificatory of what had previously been agreed upon. sent. and (c) consummation or death. 46 unless otherwise provided by said Code. 40 When Mr. To convert the offer into a contract. and (2) whether RBS is entitled to damages and attorney's fees." On the other hand. as there was no proof whatsoever that Del Rosario had the specific authority to do so. 39 Contracts that are consensual in nature are perfected upon mere meeting of the minds. Consequently. Inc. Such factual findings can no longer be disturbed in this petition for review under Rule 45. 1992 but did not see it owing to the cancellation. It cited the statement in Stuart v.The first is that the humiliation suffered by RBS is national extent. VIVA and Vicente del Rosario contend that the findings of fact of the trial court and the Court of Appeals do not support ABS-CBN's claim that there was a perfected contract. RBS operations as a broadcasting company is [sic] nationwide. and it is a matter of judicial notice that almost every other person in the country watches television. like that of ABS-CBN. On the issue of damages and attorneys fees. through Ms. does not amount to a rejection of the offer and the tender of a counter-offer. v. Hence. The key issues for our consideration are (1) whether there was a perfected contract between VIVA and ABSCBN. unconditional. ABS-CBN then formalized its counter-proposals or counter-offer in a draft contract. It may be noted that the award of attorney's fees of P212. In the case at bar. a counter-proposal in the form of a draft contract proposing exhibition of 53 films for a consideration of P35 million. when any of the elements of the contract is modified upon acceptance. A contract is a meeting of minds between two persons whereby one binds himself to give something or to render some service to another 37 for a consideration. Lopez during his conference with Del Rosario at Tamarind Grill Restaurant. and without variance of any sort from the proposal. it must be plain. ABS-CBN made no unqualified acceptance of VIVA's offer. The humiliation suffered by RBS is multiplied by the number of televiewers who had anticipated the showing of the film "Maging Sino Ka Man" on May 28 and November 3. ending at the moment of agreement of the parties. said package of 104 VIVA films was VIVA's offer to ABS-CBN to enter into a new Film Exhibition Agreement. The second is that it is a competitor that caused RBS to suffer the humiliation. such alteration amounts to a counter-offer. in Villonco. consists of those who own and watch television. which is established. unequivocal. A qualified acceptance. to enter into contracts. Concio. In these cases. 42 is misplaced. the acceptance did not bind VIVA. VIVA through its Board of Directors. conception. i.. which is the fulfillment or performance of the terms agreed upon in the contract. which is the moment when the parties come to agree on the terms of the contract. Del Rosario of VIVA met with Mr.000 in favor of VIVA is not assigned as another error. it was held that an acceptance may contain a request for certain changes in the terms of the offer and yet be a binding acceptance as long as "it is clear that the meaning of the acceptance is positively and unequivocally to accept the offer. Under Corporation Code. constitutes a counter-offer and is a rejection of the original offer. Even if it be conceded arguendo that Del Rosario had accepted the counter-offer.. are exercised by the Board of Directors. However. The offer must be certain. Bormaheco. But ABS-CBN. which is the period of negotiation and bargaining. they adopted the arguments of RBS." 45 However. there is no contract unless the following requisites concur: (1) consent of the contracting parties. Added to this are the advertisers who had placed commercial spots for the telecast and to whom RBS had a commitment in consideration of the placement to show the film in the dates and times specified. which change does not essentially change the terms of the offer. or one that involves a new proposal. rejected such counter-offer. as only questions of law can be raised." This ruling was. The first issue should be resolved against ABS-CBN. however. Court of Appeals 41 and Villonco Realty Company v. It is not an exaggeration to state. reversed in the resolution of 29 March 1996. whether such request is granted or not.

The following findings of the trial court are instructive: A number of considerations militate against ABS-CBN's claim that a contract was perfected at that lunch meeting on April 02.000. not having agreed thereto. The total price. sir. Q. Mr. 23-24 June 08. which is which? P36 million or P35 million? This weakens ABS-CBN's claim. The complaint in fact prays for delivery of 14 films. if Lopez testimony was to be believed nor could they have been physically written on a napkin. and after that Tamarind meeting . Concio. Now. "D") states: We were able to reach an agreement. 1992) 129 . so as to preclude perfection thereof.000. he was going to forward that to the board of Directors for approval? A. by the parties. Yes. We had already earmarked this P16. and this court has no authority to compel Viva to agree thereto.. So.00. Concio admitted that the terms and conditions embodied in Exhibit "C" were prepared by ABS-CBN's lawyers and there was no discussion on said terms and conditions. As the parties had not yet discussed the proposed terms and conditions in Exhibit "C. 1992). VIVA gave us the exclusive license to show these fourteen (14) films. Mrs.000. there was between Del Rosario and Lopez III no meeting of minds. the breakdown the known Viva movies. Mr. the general rules of agency as to the bindings effects of their acts would apply. FOURTH. This underscores the fact that there was no meeting of the minds as to the subject matter of the contracts. except for the executive committee. the second meeting wherein you claimed that you have the meeting of the minds between you and Mr. which gives a total consideration of P36 million (P19. Lopez [sic] answer to question 29 of his affidavit testimony (Exh. NCC).00). For settled is the rule that there can be no contract where there is no object which is its subject matter (Art.00. FIFTH.050. the terms and conditions thereof could not have been previously agreed upon by ABS-CBN and Viva Exhibit "C'' could not therefore legally bind Viva.950. However. Mr. and we agreed to pay Viva the amount of P16. FIRST. Del Rosario with a handwritten note. Witness. And you are referring to the so-called agreement which you wrote in [sic] a piece of paper? A. then Exhibit "C" did not reflect what was agreed upon by the parties.either an executive committee or officials or contracted managers. June 8.000. THIRD. provisional or preparatory writing prepared for discussion.00. Mr. On cross-examination Mr. then ABS-CBN's claim for 14 films in its complaint is false or if what it alleged in the complaint is true. The delegation. must be for specific purposes." (Exh. Exhibit "C" contains numerous provisions which.000. Lopez claimed that what was agreed upon as the subject matter of the contract was 14 films. . or a tentative.00 plus P16." and there was no evidence whatsoever that Viva agreed to the terms and conditions thereof. The none [sic] Viva and the seven other Viva movies and the sharing between the cash portion and the concerned spot portion in the total amount of P35 million pesos. the 7 blockbuster movies and the other 7 Viva movies because the price was broken down accordingly. Now. Lopez testified: Q. "5" .950.. Since Exhibit "C" is only a draft. were not discussed at the Tamarind Grill. accordingly. There was even doubt as to whether it was a paper napkin or a cloth napkin. . Del Rosario agreed upon at the Tamarind Grill was only provisional. Which is which If Exhibits "C" reflected the true intent of the parties. what happened? A. 1992 at the Tamarind Grill. Mr. pp. equals P36.000. Vic Del Rosario was supposed to call us up and tell us specifically the result of the discussion with the Board of Directors.00 as well as grant Viva commercial slots worth P19. The fact that Viva refused to sign Exhibit "C" reveals only two [sic] well that it did not agree on its terms and conditions. That Del Rosario did not have the authority to accept ABS-CBN's counter-offer was best evidenced by his submission of the draft contract to VIVA's Board of Directors for the latter's approval. How then could this court compel the parties to sign Exhibit "C" when the provisions thereof were not previously agreed upon? SECOND. 47 Delegation to officers makes the latter agents of the corporation. Ms. In any event. 050. Lopez understand [sic] that what he and Mr. Lopez claimed that what was agreed upon at the Tamarind Grill referred to the price and the number of films. 1318. in the sense that it was subject to approval by the Board of Directors of Viva. 42-43. In fact. He testified: Q. What was written in this napkin? A.050. sir. Yes. describing said Exhibit "C" as a "draft. which he wrote on a napkin. and therefore could not have been agreed upon.Viva. testifying for ABS-CBN stated that she transmitted Exhibit "C" to Mr. . the latter must specially authorize them to do so. said document cannot be a binding contract. Q. But Exhibit "C" mentions 53 films as its subject matter. tsn pp.000. 48 For such officers to be deemed fully clothed by the corporation to exercise a power of the Board. (Tsn. The said draft has a well defined meaning. In short what were written in Exhibit "C'' were not discussed. Vic del Rosario.

The complaint. Arnold vs. Lopez himself admitted that the right of the first refusal may have been already exercised by Ms. Concio wrote to VIVA ticking off ten films.621. Salmon vs. give everyone his due. Lopez shows beyond doubt that he knew Mr. ABS-CBN filed the complaint knowing fully well that it has no cause of action RBS. Every person who. p. Del Rosario "is the Executive Producer of defendant Viva" which "is a corporation. Concio herself admitted on cross-examination to having used or exercised the right of first refusal. Del Rosario could not be held liable jointly and severally with Viva and his inclusion as party defendant has no legal basis. pp. It is as it should be because corporate power to enter into a contract is lodged in the Board of Directors. Thus: [T]he subsequent negotiation with ABS-CBN two (2) months after this letter was sent. Title XVIII. 23. 52 In contracts and quasi-contracts the damages which may be awarded are dependent on whether the obligor acted with good faith or otherwise. 88 Phil. RBS suffered actual damages in the amount of P6. act with justice. alleges that Mr. RBS could only probably take refuge under Articles 19. delict. (Tsn. we find for ABS-CBN on the issue of damages. and observe honesty and good faith. Concio (as she had). It case of good faith. Tan. 56 Needless to state the award of actual damages cannot be comprehended under the above law on actual damages. Even Mr. The evidence adduced shows that the Board of Directors of Viva rejected Exhibit "C" and insisted that the film package for 140 films be maintained (Exh. Lopez and Del Rosario was not a binding agreement. 556). complaint). malice. ABS-CBN had not yet filed the required bond. 634). 209 SCRA 763). Willets and Paterson. the defendant shall be liable for all damages which are the natural and probable consequences of the act or omission complained of. the damages which the defendant may suffer by reason of the writ are recoverable from the injunctive bond. 57 In this case. the damages recoverable are those which are the natural and probable consequences of the breach of the obligation and which the parties have foreseen or could have reasonably foreseen at the time of the constitution of the obligation. 1992.195. Yes. Court of Appeals. as a matter of fact.Q. in fact. 1992). Geraldez. Art. 52 SCRA 210. contrary to law. The above testimony of Mr. and 21 of the Civil Code. 2. 36 Phil. shall indemnify the latter for tile same. he shall be responsible for all damages which may be reasonably attributed to the non-performance of the obligation. 69.Viva ). The testimony of Mr. As a mere agent of Viva. As a mere agent. Del Rosario tell you that he will submit it to his Board for approval? A. 21. in the exercise of his rights and in the performance of his duties. 1992. (Sec. 20. As a result thereof. 8-10). (TSN. Chapter 2. quasi-contract. Del Rosario had no authority to bind Viva to a contract with ABS-CBN until and unless its Board of Directors approved it. Lopez and the allegations in the complaint are clear admissions that what was supposed to have been agreed upon at the Tamarind Grill between Mr. Did Mr. whatever agreement Lopez and Del Rosario arrived at could not ripen into a valid contract binding upon Viva (Yao Ka Sin Trading vs. (Salonga vs. pp. or for injury to the plaintiff's business standing or commercial credit. We shall first take up actual damages. Thus paragraph 12 of RBS's Answer with Counterclaim and Cross-claim under the heading COUNTERCLAIM specifically alleges: 12. 54 Actual damages may likewise be recovered for loss or impairment of earning capacity in cases of temporary or permanent personal injury. It arose from the fact of filing of the complaint despite ABS-CBN's alleged knowledge of lack of cause of action. sir. ABS-CBN right of first refusal had already been exercised when Ms. but also that of the profits that the obligee failed to obtain. or wanton attitude. Any person who wilfully causes loss or injury to another in a manner that is contrary to morals. pp. it asked for reduction of the bond and even went to the 130 . one is entitled to compensation for actual damages only for such pecuniary loss suffered by him as he has duly proved. June 8. Except as provided by law or by stipulation. bad faith. (Vicente vs. 20. If the obligor acted with fraud. Warner Barner [sic] . Art. June 8. Ms. Book IV of the Civil Code is the specific law on actual or compensatory damages. Del Rosario could not bind Viva unless what he did is ratified by its Board of Directors. She stated that the list was not acceptable and was indeed not accepted by ABS-CBN. June 9. was for an entirely different package. Every person must. good customs or public policy shall compensate the latter for the damage. It may further be observed that in cases where a writ of preliminary injunction is issued. Corporation Code). Without such board approval by the Viva board. wilfully or negligently causes damage to another. 71-75)." (par. "7-1" . 44 Phil. 1992. or quasi-delict. As observed by the trial court. (TSN. 10-11) 50 II However. Del Rosario himself knew and understand [sic] that ABS-CBN has lost its rights of the first refusal when his list of 36 titles were rejected (Tsn. recognized as such by plaintiff. 53 In crimes and quasi-delicts. whether or not such damages has been foreseen or could have reasonably been foreseen by the defendant.32. June 8. 55 The claim of RBS for actual damages did not arise from contract. 19. 49 The contention that ABS-CBN had yet to fully exercise its right of first refusal over twenty-four films under the 1990 Film Exhibition Agreement and that the meeting between Lopez and Del Rosario was a continuation of said previous contract is untenable. 125. which read as follows: Art. COLTA . 51 The indemnification shall comprehend not only the value of the loss suffered.

28. temperate. and 21. or public policy. or malevolent manner. and 21 of the Civil Code. legal. As regards attorney's fees. which call be experienced only by one having a nervous system. 74 There is no adequate proof that ABS-CBN was inspired by malice or bad faith. fraudulent. the RTC did not dissolve the injunction on the ground of lack of legal and factual basis. Hence.R. 62 The award is not meant to enrich the complainant at the expense of the defendant. and (3) for the sole intent of prejudicing or injuring another. Neither could ABS-CBN be liable for the print advertisements for "Maging Sino Ka Man" for lack of sufficient legal basis. 32. 73 Such must be substantiated by evidence. since RBS is a corporation. The basic law on exemplary damages is Section 5. oppressive. RBS's claim for moral damages could possibly fall only under item (10) of Article 2219. Clearly then. but to enable the injured party to obtain means. attorney's fees may be recovered as actual or compensatory damages under any of the circumstances provided for in Article 2208 of the Civil Code. Article 2217 thereof defines what are included in moral damages. The challenged decision of the Court of Appeals in CA-G. it was not necessary for RBS to file a counterbond. Malice or bad faith implies a conscious and intentional design to do a wrongful act for a dishonest purpose or moral obliquity. (2) which is exercised in bad faith. while Article 21 deals with acts contra bonus mores. 20. 64 The award of moral damages cannot be granted in favor of a corporation because. Chapter 3. 61 As to moral damages the law is Section 1. Title XVIII. The elements of abuse of right under Article 19 are the following: (1) the existence of a legal right or duty. 63 Trial courts must then guard against the award of exorbitant damages. These are imposed by way of example or correction for the public good. and not to impose a penalty on the wrongdoer. 27. 44125 is hereby REVERSED except as to unappealed award of attorney's fees in favor of VIVA Productions. Article 20 speaks of the general sanction for all other provisions of law which do not especially provide for their own sanction. 59 They are not to be awarded every time a party wins a suit. no senses. On this score alone the award for damages must be set aside. resulting in social humiliation" is an obiter dictum. Manero 66 and Mambulao Lumber Co. Settled is the rule that the adverse result of an action does not per se make the action wrongful and subject the actor to damages. quasi-contract. therefore. 69 in quasi-contracts. Article 2220 provides that moral damages may be recovered in breaches of contract where the defendant acted fraudulently or in bad faith. Compare with 131 . Book IV of the Civil Code. prejudice. but because of the plea of RBS that it be allowed to put up a counterbond. 58 The general rule is that attorney's fees cannot be recovered as part of damages because of the policy that no premium should be placed on the right to litigate. within the limits of the possible. being an artificial person and having existence only in legal contemplation. good custom. No pronouncement as to costs. the law is clear that in the absence of stipulation. reckless. Hence. a writ of preliminary injunction on the basis of its determination that there existed sufficient ground for the issuance thereof. for the law could not have meant to impose a penalty on the right to litigate. public order. 71 It may be reiterated that the claim of RBS against ABS-CBN is not based on contract. 60 Even when claimant is compelled to litigate with third persons or to incur expenses to protect his rights. It was honestly convinced of the merits of its cause after it had undergone serious negotiations culminating in its formal submission of a draft contract. malice or bad faith is at the core of Articles 19. Title XVIII. thereof which reads: (10) Acts and actions referred to in Articles 21. still attorney's fees may not be awarded where no sufficient showing of bad faith could be reflected in a party's persistence in a case other than erroneous conviction of the righteousness of his cause. CV No. it is damnum absque injuria. if the defendant acted with gross negligence. in addition to moral. and 35. 68 They are recoverable in criminal cases as part of the civil liability when the crime was committed with one or more aggravating circumstances. and equitable justification. SO ORDERED. or quasi-delict. (1) there is an act which is legal. Moral damages are in the category of an award designed to compensate the claimant for actual injury suffered. If damages result from a person's exercise of a right. 75 WHEREFORE.Court of Appeals to challenge the order on the matter. 72 Verily then. Book IV of the Civil Code. It cannot. or corruption on the part of the trial court. no emotions. The RTC issued a temporary restraining order and later. Notably. the claims for moral and exemplary damages can only be based on Articles 19. 20. and has the following elements. of the spiritual status quo ante. The power of the court to award attorney's fees under Article 2208 demands factual. (2) but which is contrary to morals. It is aimed at the restoration. ABS-CBN cannot be held responsible for the premium RBS paid for the counterbond. diversion. 26. liquidated or compensatory damages. experience physical suffering and mental anguish. the instant petition is GRANTED. it has no feelings. 34. 30. Inc. or amusements that will serve to obviate then moral suffering he has undergone. delict. and should be proportionate to the suffering inflicted. 70 and in contracts and quasi-contracts. 65 The statement in People v. they should exercise balanced restrained and measured objectivity to avoid suspicion that it was due to passion. PNB 67 that a corporation may recover moral damages if it "has a good reputation that is debased. 29. while Article 2219 enumerates the cases where they may be recovered. if the defendant acted in a wanton. Chapter 3. and (3) and it is done with intent to injure. v.

1987. as agreed upon by the parties in the July contract. even assuming that the strikes were still ongoing. Before us is a petition for review of the Decision2 dated August 27. After the public bidding was conducted. PHILIPP BROTHERS OCEANIC.The "Bidding Terms and Specifications"4 provide for the manner of shipment of coals. NAPOCOR claimed for actual damages in the amount of P12.185. SANDOVAL-GUTIERREZ. 1987. Instead of delivering the coal on or before the thirtieth day after receipt of the Letter of Credit. On November 24.10 % July 20. Furthermore. NAPOCOR refused.10% September 4. 1992. PHIBRO found that the real reason for the disapproval was its purported failure to satisfy NAPOCOR's demand for damages due to the delay in the delivery of the first coal shipment. 1987. Philippines as follows: 60.: Where a person merely uses a right pertaining to him. On January 16. The facts are: On May 14. No.10 Thereafter. PHIBRO proposed to NAPOCOR that they equally share the burden of a "strike-free" clause.00 as litigation expenses. and a claim of P500. 1987. J. 126204 November 20. the fact that damages are thereby suffered by another will not make him liable. trial on the merits ensued. 1992 of the Regional Trial Court. petitioner. PHIBRO should have shouldered the burden of a "strike-free" clause because their contract was "C and F Calaca. Philippines. Branch 57. in October 1987. Makati City. 1987. 2001 NATIONAL POWER CORPORATION. 1987. 1996 of the Court of Appeals affirming in toto the Decision3 dated January 16. This prompted PHIBRO to file an action for damages with application for injunction against NAPOCOR with the Regional Trial Court.7 In order to hasten the transfer of coal. PHIBRO sent word to NAPOCOR that industrial disputes might soon plague Australia. PHIBRO received from NAPOCOR a confirmed and workable letter of credit. which could seriously hamper PHIBRO's ability to supply the needed coal.8 Upon further inquiry. 1987. The Philipp Brothers Oceanic." meaning. 1987 60.G.. PHIBRO prayed for actual.000 +/ . vs. Batangas. PHIBRO effected its first shipment only on November 17.R. Branch 57. moral and exemplary damages and attorney's fees. Consequently. NAPOCOR averred that the strikes in Australia could not be invoked as reason for the delay in the delivery of coal because PHIBRO itself admitted that as of July 28.6 From July 23 to July 31. PHIBRO's bid was accepted. the cost and freight from the point of origin until the point of destination would be for the account of PHIBRO. the shipment's point of origin. Makati City.9 In its complaint. On August 6. In its answer. particularly informing the latter that the ship owners therein are not willing to load cargo unless a "strike-free" clause is incorporated in the charter party or the contract of carriage. 1987 those strikes had already ceased. without bad faith or intent to injure.000. which was received by PHIBRO on July 15. judgment is hereby rendered in favor of plaintiff Philipp Brothers Oceanic Inc. 1987. NAPOCOR's acceptance was conveyed in a letter dated July 8. PHIBRO again apprised NAPOCOR of the situation in Australia. PHIBRO participated anew in this subsequent bidding. Batangas. 1987"5 On July 10. NAPOCOR once more advertised for the delivery of coal to its Calaca thermal plant. INC. NAPOCOR claimed that due to PHIBRO's failure to deliver the coal on time. Inc. the National Power Corporation (NAPOCOR) issued invitations to bid for the supply and delivery of 120.73. Batangas.436. it was compelled to purchase coal from ASEA at a higher price. the trial court rendered a decision in favor of PHIBRO.000 metric tons of imported coal for its Batangas Coal-Fired Thermal Power Plant in Calaca. (PHIBRO) and against the defendant National Power Corporation (NAPOCOR) ordering the said defendant NAPOCOR: 132 . And. respondent. NAPOCOR disapproved PHIBRO's application for pre-qualification to bid for not meeting the minimum requirements. the dispositive portion of which reads: "WHEREFORE.1 This principle finds useful application to the present case. thus: "SECTION V SHIPMENT The winning TENDERER who then becomes the SELLER shall arrange and provide gearless bulk carrier for the shipment of coal to arrive at discharging port on or before thirty (30) calendar days after receipt of the Letter of Credit by the SELLER or its nominee as per Section XIV hereof to meet the vessel arrival schedules at Calaca.000 +/ . representing the increase in the price of coal. PHIBRO alleged that NAPOCOR's act of disqualifying it in the October 1987 bidding and in all subsequent biddings was tainted with malice and bad faith. (PHIBRO) prequalified and was allowed to participate as one of the bidders.

The renowned civilist.000 as actual damages. fires. broadly speaking. mine stoppages. Napocor was only able to do so on August 6." (Civil Code of the Philippines. The origin. "Strikes" are undoubtedly included in the force majeure clause of the Bidding Terms and Specifications (supra). Phibro was informed of the acceptance of its bid on July 8. cost of litigation and attorney's fees. the Court of Appeals rendered a Decision affirming in toto the Decision of the Regional Trial Court. may constitute fortuitous event. an employee of Phibro and member of the Export Committee of the Australian Coal Association during the time these events transpired. Volume IV. He cites a parallel example in the case of Philippine National Bank v. 4. Inc. floods. to natural accidents."13 II "Respondent Court of Appeals gravely and seriously erred in concluding and so holding that NAPOCOR acted maliciously and unjustifiably in disqualifying PHIBRO from participating in the December 8.000 as exemplary damages."11 Unsatisfied. In order that acts of man such as a strike.1. Prof. d. Strikes are included in the definition of force majeure in Section XVII of the Bidding Terms and Specifications.91 as reimbursement for expenses. and b) the strikes which plaqued the Australian coal industry from the first week of July to the third week of September 1987. epidemics. To pay Philipp Brothers Oceanic. The peso equivalent at the time of payment of $73. Inc. exempted Phibro from the effects of delay of the delivery of the shipment of coal. SO ORDERED. Delivery of coal was to be effected thirty (30) days from Napocor's opening of a confirmed and workable letter of credit. To reinstate Philipp Brothers Oceanic. 3. and not to PHIBRO's own deliberate acts and faults. such as earthquakes.000 as moral damages. Napocor did not forthwith open the letter of credit in order to avoid delay which might be caused by the strikes and their after-effects. [1991]) He further states: "Fortuitous events may be produced by two general causes: (1) by Nature. NAPOCOR comes to us via a petition for review ascribing to the Court of Appeals the following errors: I "Respondent Court of Appeals gravely and seriously erred in concluding and so holding that PHIBRO's delay in the delivery of imported coal was due to NAPOCOR's alleged delay in opening a letter of credit and to force majeure. Court of Appeals.. the delay was in fact caused by a) Napocor's own delay in opening a workable letter of credit. etc. the scope and the effects of this industrial unrest are lucidly described in the uncontroverted testimony of James Archibald. elevated the case to the Court of Appeals. c. etc. 1987. The counterclaims of defendant NAPOCOR are dismissed for lack of merit.231. the strikes which took place in Australia from the first week of July to the third week of September. NAPOCOR. overtime bans. Australia's coal industry was in the middle of a seething controversy and unrest. it is necessary that they have the force of an imposition which the debtor could not have resisted. such as an armed invasion. 94 SCRA 357 (1979). 126. 2. The peso equivalent at the time of payment of $50. xxx xxx xxx The records also attest that Phibro periodically informed Napocor of these developments as early as July 1. robbery. Hence. and (2) by the act of man. (PHIBRO) in the defendant National Power Corporation's list of accredited bidders and allow PHIBRO to participate in any and all future tenders of National Power Corporation for the supply and delivery of imported steam coal. 1996. storms. b. By that time. Obligations and Contracts. even before the bid was approved. wherein the Supreme Court said that the outbreak of war which prevents performance exempts a party from liability. (PHIBRO). Arturo Tolentino."12 Twice thwarted. To pay the costs of suit. It ratiocinated that: "There is ample evidence to show that although PHIBRO's delivery of the shipment of coal was delayed. by law and by stipulation of the parties. occasioned by strikes. (supra). attack by bandits. On August 27. Yet. defines force majeure as "an event which takes place by accident and could not have been foreseen." Tolentino adds that the term generally applies. The peso equivalent at the time of payment of $100. The peso equivalent at the time of payment of $864. 1987. 1987 and future 133 . through the Solicitor General. a. 1987. so Phibro is not liable for any delay caused thereby. 1987. governmental prohibitions.

However. The Court of Appeals is justified in sustaining the Regional Trial Court's decision exonerating PHIBRO from any liability for damages to NAPOCOR as it was clearly established from the evidence. In fact. floods. epidemics and quarantine restrictions.Appeals. acts of the Government in either its sovereign or contractual capacity."15 IV "Respondent Court of Appeals gravely and seriously erred in absolving PHIBRO from any liability for damages to NAPOCOR for its unjustified and deliberate refusal and/or failure to deliver the contracted imported coal within the stipulated period. are almost beyond the power of review by this Court.biddings for the supply of imported coal despite the existence of valid grounds therefor such as serious impairment of its track record." The law is clear and so is the contract between NAPOCOR and PHIBRO. thus: "IB-17 RESERVATION OF NAPOCOR TO REJECT BIDS NAPOCOR reserves the right to reject any or all bids. Let us consider the case in its proper perspective.20 Stated differently.23 In addition to the above legal precept. NAPOCOR had expressly reserved its right to reject bids."26 (Emphasis supplied) This Court has held that where the right to reject is so reserved. not questions of fact. it is worthy to note that PHIBRO and NAPOCOR explicitly agreed in Section XVII of the "Bidding Terms and Specifications"24 that "neither seller (PHIBRO) nor buyer (NAPOCOR) shall be liable for any delay in or failure of the performance of its obligations. we have no reason to rule otherwise. to actual or compensatory.' In the case of A. paragraph 15 of the Instructions to Bidders states that 'the Government hereby reserves the right to reject any or all bids submitted. storms. Therefore.18 The findings of facts of the Court of Appeals are conclusive and binding on this Court19 and they carry even more weight when the said court affirms the factual findings of the trial court. we held: 134 . he cannot be held liable for damages for non-performance. fires. though foreseen. a bidder has no ground of action to compel the Government to award the contract in his favor.22 This means that when an obligor is unable to fulfill his obligation because of a fortuitous event or force majeure. or which. by itself.27 And where the government as advertiser. does it necessarily follow that NAPOCOR acted unjustly. the losing bidder has no cause to complain nor right to dispute that choice unless an unfairness or injustice is shown. makes its choice in rejecting any or all bids. Aytona. Extant in our Civil Code is the rule that no person shall be responsible for those events which could not be foreseen. it must be stressed that NAPOCOR was not bound under any contract to approve PHIBRO's prequalification requirements. if any such delay or failure is due to Force Majeure. which causes may include but are not restricted to Acts of God or of the public enemy. we find it pointless to delve lengthily on the factual issues raised by petitioner."17 It is axiomatic that only questions of law. Accordingly. The Instruction to Bidders found in the "Post-Qualification Documents/Specifications for the Supply and Delivery of Coal for the Batangas Coal-Fired Thermal Power Plant I at Calaca. wars."25 is explicit. nor to compel it to accept his bid. Batangas Philippines." Specifically. testimonial and documentary. moral and exemplary damages. Court of Appeals. The right is also reserved to reject the bids of any bidder who has previously failed to properly perform or complete on time any and all contracts for delivery of coal or any supply undertaken by a bidder. strikes.29 we had the occasion to rule: "Moreover. attorney's fees and litigation expenses despite the clear absence of legal and factual bases for such award. the findings of the Court of . other than the payment of money due. they defined force majeure as "any disabling cause beyond the control of and without fault or negligence of the party. which are supported by substantial evidence."14 III "Respondent Court of Appeals gravely and seriously erred in concluding and so holding that PHIBRO was entitled to injunctive relief. were inevitable. Even the lowest bid or any bid may be rejected. the lowest bid or any bid for that matter may be rejected on a mere technicality. capriciously."16 V "Respondent Court of Appeals gravely and seriously erred in dismissing NAPOCOR's counterclaims for damages and litigation expenses.28 In Celeste v. we are left only with the burden of determining whether or not NAPOCOR acted wrongfully or with bad faith in disqualifying PHIBRO from participating in the subsequent public bidding.C.21 With the foregoing settled jurisprudence. Esguerra and Sons v. governmental restrictions. to waive any minor informality in the bids received. 1249 (1962). proceeding from the premise that PHIBRO was prevented by force majeure from complying with its obligation. typhoons. may be raised before this Court in a petition for review under Rule 45 of the Rules of Court. availing itself of that right. that what prevented PHIBRO from complying with its obligation under the July 1987 contract was the industrial disputes which besieged Australia during that time. and unfairly in disapproving PHIBRO's application for pre-qualification to bid? First. 4 SCRA 1245. The existence of strikes in Australia having been duly established in the lower courts.

"36 Faced with the above circumstance. not by the Courts. is that "the concurrence must be such as to render it impossible for the debtor to fulfill his obligation in a normal manner. We cannot fault NAPOCOR if it mistook PHIBRO's unexpected offer a mere attempt on the latter's part to undercut ASEA or an indication of PHIBRO's inconsistency. when he acts with prudence and in good faith. Office of the President. otherwise it would be constrained to take legal action." (Emphasis supplied) Owing to the discretionary character of the right involved in this case. Correspondingly. that is. (Jalandoni v. The role of the Courts is to ascertain whether a branch or instrumentality of the Government has transgresses its constitutional boundaries. i. NAPOCOR is justified in entertaining doubts on PHIBRO's qualification or capability to assume an obligation under a new contract. the forefront provision of which is Article 19 of the Civil Code which provides that "every person must. the propriety of NAPOCOR's act should therefore be judged on the basis of the general principles regulating human relations. That NAPOCOR believed all along that PHIBRO's failure to deliver on time was unfounded is manifest from its letters37 reminding PHIBRO that it was bound to deliver the coal within 30 days from its (PHIBRO's) receipt of the Letter of Credit. and observe honesty and good faith. may not be reviewed by the court. But the Courts will not interfere with executive or legislative discretion exercised within those boundaries. there was really no fortuitous event or force majeure which could render it impossible for PHIBRO to effect the delivery of coal. Here the government has made its choice. a person will be protected only when he acts in the legitimate exercise of his right. The measure of the damages will be limited to actual and compensatory damages. comparison. generally vests in the authorities a wide discretion as to who is the best and most advantageous bidder. comparison. act with justice. in the sound exercise of their discretion. investigation. At this juncture. in the exercise of his rights and in the performance of his duties. considering that the reasons invoked were not valid. there is a condition imposed upon the bidders to the effect that the bidders shall be subject to the right of the government to reject any and all bids subject to its discretion. one characteristic of a fortuitous event.000 metric tons of coal from the same source to arrive at Calaca not later than September 20/21. thus: "On the legal aspect. and when honestly exercised. which was due on or before September 5." (Emphasis supplied) Verily. may be.' Since there is no evidence to prove bad faith and arbitrariness on the part of the petitioners in evaluating the bids. 1987. 108 Phil. thereafter. In practice. unless it is apparent that it is used as a shield to a fraudulent award. courts.34 We went over the record of the case with painstaking solicitude and we are convinced that NAPOCOR's act of disapproving PHIBRO's application for pre-qualification to bid was without any intent to injure or a purposive motive to perpetrate damage. Batangas on September 20-21. will have to determine under all the facts and circumstances when the exercise of a right is unjust. it was reported that Philipp Brothers advised they would like to have continuous business relation with NPC so they are willing to sit down or even proposed that the case be submitted to the Department of Justice as to avoid a court action or arbitration. or when there has been an abuse of right. a reservation of the government of its right to reject any bid. it strays into the realm of policy decision-making. The exercise of this discretion is a policy decision that necessitates prior inquiry. the yardstick is the frame of mind of the actor at the time he committed the act. The discretion given to the authorities on this matter is of such wide latitude that the Courts will not interfere therewith. It appears from the records that when NAPOCOR was constrained to consider an offer from another coal supplier (ASEA) at a price of US$33.e. The same honest belief can be deduced from NAPOCOR's Board Resolution. and consequently in relations to contracts."35 Of course. 1987. which are quasi-judicial functions. The circumstances warrant such contemplation. NAPOCOR had reason to ponder — how come PHIBRO could assure the immediate delivery of 60. evaluation. However. NAPOCOR is justified in assuming that.30 In Bureau Veritas v."32 Accordingly.33 Did NAPOCOR abuse its right or act unjustly in disqualifying PHIBRO from the public bidding? We rule in the negative.44 per metric ton. PHIBRO unexpectedly offered the immediate delivery of 60. the losing bidders have no cause to complain. Otherwise. 135 . nor right to dispute that choice. The exercise of such discretion involves inquiry. disregarding actualities or facts outside his knowledge. Management stressed that failure of PBO to deliver under the contract makes them liable for damages. October 1987. 1987 but it could not deliver the coal it had undertaken under its contract? Significantly. investigation.'x x x [I]n the invitation to bid.000 metric tons of Ulan steam coal at US$31. give everyone his due. found PHIBRO's unexpected offer actually a result of its desire to minimize losses on the part of NAPOCOR is inconsequential. NAPOCOR acted on the strong conviction that PHIBRO had a "seriously-impaired" track record. NAPOCOR cannot be faulted from believing so. and deliberation. NARRA. In determining the existence of good faith. it is also justified in treating PHIBRO's failure to deliver a serious impairment of its track record.00 per metric ton for arrival at Calaca.31 we decreed: "The discretion to accept or reject a bid and award contracts is vested in the Government agencies entrusted with that function. 486 [1960]) x x x. x x x. PHIBRO's actuation in 1987 raised doubts as to the real situation of the coal industry in Australia. deliberation and decision. Moreover. This task can best be discharged by the Government agencies concerned. and unless an unfairness or injustice is shown. That the trial court.. Naturally. it is worth mentioning that at the time NAPOCOR issued its subsequent Invitation to Bid. PHIBRO had not yet delivered the first shipment of coal under the July 1987 contract. Apparently. in a legal sense. we rule that the private respondents are not entitled to damages representing lost profits. but not when he acts with negligence or abuse.

50 per metric ton (Exh.43 it is imperative that the basis of the alleged unearned profits is not too speculative and conjectural as to show the actual damages which may be suffered on a future period. "J-3") and US$38. and trustworthiness of the bidder is to be considered.000 metric tons of coal out of at least 1. thus: "As to the alleged contract he was about to negotiate with Minister Hipolito. if the awarding body bona fide believes that a bidder has seriously impaired its track record because of a particular conduct. for the supply and delivery of imported coal with a total volume of about 1. As understood in law. the integrity. in November 1988 at US$39." We find this to be erroneous. An awarding official is justified in considering a bidder not qualified or not responsible if he has previously defrauded the public in such contracts or if. therefore finds that as a result of its disqualification. premised upon competent proof or best evidence obtainable of the actual amount thereof.40 While confined in the realm of thought. reliability is decreased. v. If PBO reacts to any legal action and fails to deliver. . Court of Appeals. PHIBRO suffered damages equivalent to its standard 3% margin in 960. but also that of the profits which the obligee failed to obtain.200. was not a certainty. Basic is the rule that to recover actual damages.000 or P16. considering the price of the latest purchase with ASEA. If Tandoc was about to negotiate a contract with Minister Hipolito. or guesswork as to the fact and amount of damages. Consequently.44 this Court denied the plaintiff's claim for actual damages which was premised on a contract he was about to negotiate on the ground that there was still the requisite public bidding to be complied with. The first option will result in a 75 MW derating and oil will be needed as supplement.00 to US$48. It is that corrupt motive that operates in the mind.25 per metric ton in September 1990 (Exh.35 per metric ton (Exh. Thus. conjectures.200.200. thus: ".00.000.00 for being highly speculative.95 per metric ton (Exh. We quote the trial court's ruling. it is justified in disqualifying the bidder. on the evidence before him. there is no showing that the same has been awarded to him." This Court went further saying that 136 . but also by the "responsibility" of the bidder. The only unearned income to which Tandoc is entitled to from the evidence presented is that for the one-month period."38 The very purpose of requiring a bidder to furnish the awarding authority its pre-qualification documents is to ensure that only those "responsible" and "qualified" bidders could bid and be awarded with government contracts. We will stand to lose around P30 M. despite the fact that there is yet no judicial determination to that effect. the Regional Trial Court computed what could have been the profits of PHIBRO had NAPOCOR allowed it to participate in the subsequent public bidding.42 A court cannot merely rely on speculations. to use 100% Semirara and second. It ruled that "PHIBRO would have won the tenders for the supply of about 960. The price of imported coal for delivery in 1988 was quoted in June 1988 by bidders at US$41.35 to US$47.00 to US$48.39 Otherwise stated.11 M. there was no assurance that the former would get it or that the latter would award the contract to him since there was the requisite public bidding. at US$44.000 which PHIBRO would have earned had it been allowed to participate in biddings in which it was disqualified and in subsequent tenders for supply and delivery of imported coal. It bears stressing that the award of a contract is measured not solely by the smallest amount of bid for its performance. .000 per metric ton. the official bona fide believes the bidder has committed such fraud. Tandoc's claim that he could have earned P2 million in profits is highly speculative and no concrete evidence was presented to prove the same.45 this Court likewise disallowed the trial court's award of actual damages for unrealized profits in the amount of US$75.35 to US$43.500. in September 1988 at US$41. The claimed loss of profit arising out of that alleged contract which was still to be negotiated is a mere expectancy. In Pantranco North Express. Corollarily. foremost of which was his ability to invite investors and to win the bid. Bad faith has always been a question of intention. Inc. its presence may be ascertained through the party's actuation or through circumstantial evidence. The measure it adopted was one of self-protection. or the total of US$864.41 The circumstances under which NAPOCOR disapproved PHIBRO's pre-qualification to bid do not show an intention to cause damage to the latter. PHIBRO would have won the tenders for the supply and delivery of about 960.000 metric tons" from the public bidding of December 1987 to 1990. .50 per metric ton (Exh." "AA-1-1. there are some advantages.xxx xxx xxx On the technical-economic aspect.000 metric tons valued at no less than US$32 Million." to "AA-2"). which is P6. (Exhs. moral and exemplary damages. NAPOCOR cannot be made liable for actual. On both points. PHIBRO was unjustly excluded from participating in at least five (5) tenders beginning December 1987 to 1990. "J-1"). if NPC goes into an urgent coal order. the amount of loss must not only be capable of proof but must actually be proven with reasonable degree of certainty.000.50 to US$49. in awarding to PHIBRO actual damages in the amount of $864. but depended on a number of factors. This policy is necessary to protect the interest of the awarding body against irresponsible bidders. there will be an additional expense of $786. Consequently. during which his business was interrupted." In Lufthansa German Airlines v. It was held that "the realization of profits by respondent . honesty.000 metric tons awarded during said period based on its proven track record of 80%. to go into urgent coal order. we cannot penalize NAPOCOR for the course of action it took. Management claims that if PBO delivers in November 1987 and January 1988. it contemplates a state of mind affirmatively operating with furtive design or with some motive of self-interest or ill-will or for ulterior purpose. "JJ"). .00. The Court. while indemnification for damages shall comprehend not only the value of the loss suffered. the options are: one. Thus.000 metric tons of coal at the most conservative price of US$30. On the other hand.125. "JJ-6" and "JJ-7"). "J-2") and for the 1989 deliveries. one who acted pursuant to the sincere belief that another willfully committed an act prejudicial to the interest of the government cannot be considered to have acted in bad faith.000 metric tons out of at least 1. considering that his annual net income was P73. Court of Appeals. "AA.

fright. Mental suffering can be experienced only by one having a nervous system and it flows from real ills. This Court has laid down the rule that in the absence of stipulation. With the deleterious possible consequences that may result from failure to deliver the needed coal. 8236.231. The Antecedents 137 . of actual.. v. in Civil Case No. or compensatory damages. Court of Appeals. We agree with NAPOCOR. and its broadcasters Hermogenes Alegre and Carmelo Rima liable for libel and ordered them to solidarily pay Ago Medical and Educational Center-Bicol Christian College of Medicine moral damages. Inc. 126204 dated August 27. Before the court may consider the question of whether or not exemplary damages should be awarded.: The Case This petition for review1 assails the 4 January 1999 Decision2 and 26 January 2000 Resolution of the Court of Appeals in CA-G. these admissions cannot prevail over the rules and regulations governing the bidding for NAPOCOR contracts.50 This cannot be said of the case at bar. J. serious anxiety. cost of litigation and attorney's fees. (AMEC-BCCM) and ANGELITA F. The Court of Appeals affirmed with modification the 14 December 1992 Decision3 of the Regional Trial Court of Legazpi City. granted to a corporation. reimbursement for expenses. for a corporation has no reputation in the sense that an individual has. being an artificial person and having existence only in legal contemplation. public interest demands that one who offers to deliver coal at an appointed time must give a reasonable assurance that it can carry through. 40151. moral shock.46 the Court.R. ruled that even if NAPOCOR does not deny its (bidder's) claims for unrealized commissions. was compelled to incur said expenditures. 1996 is hereby MODIFIED. vs. The award of moral damages is likewise improper. the plaintiff must show that he is entitled to moral.49 we ruled: "Moral damages are granted in recompense for physical suffering. which necessarily and inherently include the reservation by the NAPOCOR of its right to reject any or all bids. But before we dispose of this case. for it may amount to imposing a premium on the right to redress grievances in court. we believe that.R. the delay on its part was due to a fortuitous event. we believe there is greater strain of commitment in this kind of obligation. by reason of plaintiff's clearly unjustifiable claims or defendant's unreasonable refusal to his demands. CV No. we partially grant the prayer of NAPOCOR as we find that it did not act in bad faith in disapproving PHIBRO's pre-qualification to bid. besmirched reputation. unlike in the case of a natural person. likewise contests the judgment of the lower courts awarding PHIBRO the amount of $73. as a general rule. 141994 January 17. temperate. mental anguish. G. therefore.91 as reimbursement for expenses.R. The Court of Appeals held Filipinas Broadcasting Network. and similar injury. 2005 FILIPINAS BROADCASTING NETWORK." Neither can we award exemplary damages under Article 2234 of the Civil Code. NAPOCOR. Indeed. And in National Power Corporation v. is DELETED. Evidently.47 While it is true that besmirched reputation is included in moral damages. As a matter of fact. As earlier mentioned. and that these claims have been transmuted into judicial admissions. A corporation. CARPIO. no emotions. sorrows. in favor of PHIBRO. has no feelings. To reiterate. NAPOCOR did not act in bad faith. wounded feelings. A winning party may be entitled to expenses of litigation only where he. we take this occasion to remind PHIBRO of the indispensability of coal to a coal-fired thermal plant. moral damages are not.48 In LBC Express. the decision of the Court of Appeals in CA-G. Branch 10. and costs of suit. At this point. NAPOCOR is justified in resisting PHIBRO's claim for damages. a winning party may be awarded attorney's fees only in case plaintiff's action or defendant's stand is so untenable as to amount to gross and evident bad faith. We adopt the same policy with respect to the expenses of litigation. With households and businesses being entirely dependent on the electricity supplied by NAPOCOR. but must be duly proved. it is inherently impossible for a corporation to suffer mental anguish. SO ORDERED. AGO MEDICAL AND EDUCATIONAL CENTER-BICOL CHRISTIAN COLLEGE OF MEDICINE. attorney’s fees and costs of suit. the delivery of coal cannot be venturesome. Trial courts must be reminded that attorney's fees may not be awarded to a party simply because the judgment is favorable to him. NAPOCOR should give PHIBRO another opportunity to participate in future public bidding. social humiliation. and besides. the facts of this case do not warrant the granting of such litigation expenses to PHIBRO. in the interest of fairness. AGO. Moreover. Court of Appeals. and griefs of life — all of which cannot be suffered by respondent bank as an artificial person. it cannot cause mental anguish to a corporation. The award. it cannot experience physical suffering and mental anguish. moral and exemplary damages. INC. respondents. in denying the bidder's claim for unrealized commissions. and proved with reasonable degree of certainty. petitioner. WHEREFORE. in this petition. Inc. cost of litigation and attorney's fees.actual or compensatory damages cannot be presumed. no senses. CV No. No.

If [there] is no such regulation why is AMEC doing the same? xxx Second: Earlier AMEC students in Physical Therapy had complained that the course is not recognized by DECS."Exposé" is a radio documentary4 program hosted by Carmelo ‘Mel’ Rima ("Rima") and Hermogenes ‘Jun’ Alegre ("Alegre"). The truth is this. and chairman of the scholarship committee at that. teachers and parents against Ago Medical and Educational Center-Bicol Christian College of Medicine ("AMEC") and its administrators. The elderly can get by – that’s why she (Lola) was taken in as Dean. Quoted are portions of the allegedly libelous broadcasts: JUN ALEGRE: Let us begin with the less burdensome: if you have children taking medical course at AMEC-BCCM. What does this mean? Immoral and physically misfits as teachers. it would be very easy for detractors and enemies of the Ago family to stop the flow of support of foreign foundations who assist the medical school on the basis of the latter’s purpose. If you will take a look at the AMEC premises you’ll find out that the names of the buildings there are foreign soundings. Dean Justita Lola is also the chairman of the committee on scholarship in AMEC. Is the AMEC administration exploiting the very [e]nterprising or compromising and undemanding Lola? Could it be that AMEC is just patiently making use of Dean Justita Lola were if she is very old. that AMEC is a dumping ground. xxx Why did AMEC still absorb her as a teacher. "Exposé" is heard over Legazpi City. taking up all subjects including those they have passed already. the administrators of AMEC-BCCM. filed a complaint for damages7 against FBNI. May I say I’m sorry to Dean Justita Lola. as the family name implies. xxx Third: Students are required to take and pay for the subject even if the subject does not have an instructor such greed for money on the part of AMEC’s administration.5 Exposé is aired every morning over DZRC-AM which is owned by Filipinas Broadcasting Network. xxx xxx On our end our task is to attend to the interests of students. garbage. She is too old to work. not merely of moral and physical misfits. Don’t insist. xxx MEL RIMA: xxx My friends based on the expose. What do you expect from a doctor who while studying at AMEC is so much burdened with unreasonable imposition? What do you expect from a student who aside from peculiar problems – because not all students 138 . The reason is practical cost saving in salaries. Students would be informed that course would be moved to a later date because the school is still searching for the appropriate instructor. meaning she is very old. ("FBNI"). It is likely that the students would be influenced by evil. Rima and Alegre on 27 February 1990.8 xxx On the other hand. Take the subject Anatomy: students would pay for the subject upon enrolment because it is offered by the school.6 In the morning of 14 and 15 December 1989. so long as she has money to buy the ingredient of beetle juice. your case is zero visibility. a dean. She had retired from Bicol University a long time ago but AMEC has patiently made use of her. However there would be no instructor for such subject. There is a McDonald Hall. But this is the truth. the Albay municipalities and other Bicol areas. When they become members of society outside of campus will be liabilities rather than assets. being an old woman. I will prove to you my friends. Inc. AMEC and Angelita Ago ("Ago"). Why not Jose Rizal or Bonifacio Hall? That is a very concrete and undeniable evidence that the support of foreign foundations for AMEC is substantial. xxx It is a public knowledge that the Ago Medical and Educational Center has survived and has been surviving for the past few years since its inception because of funds support from foreign foundations. Claiming that the broadcasts were defamatory. that your are no longer fit to teach. AMEC Science High School and the AMEC-Institute of Mass Communication in their effort to minimize expenses in terms of salary are absorbing or continues to accept "rejects". as Dean of AMEC’s College of Medicine. As in atmospheric situation – zero visibility – the plane cannot land. low pay follows. Rima and Alegre exposed various alleged complaints from students. By the way. advise them to pass all subjects because if they fail in any subject they will repeat their year level. For example how many teachers in AMEC are former teachers of Aquinas University but were removed because of immorality? Does it mean that the present administration of AMEC have the total definite moral foundation from catholic administrator of Aquinas University. The Dean of Student Affairs of AMEC is Justita Lola. Probably they only qualify in terms of intellect. AMEC is a dumping ground for moral and physically misfit people. Several students had approached me stating that they had consulted with the DECS which told them that there is no such regulation. because an old person is not fastidious. But if the purpose of the institution (AMEC) is to deceive students at cross purpose with its reason for being it is possible for these foreign foundations to lift or suspend their donations temporarily. As an aviation. isn’t it? With the report which is the basis of the expose in DZRC today. You are too old.

namely. The broadcasters did not even verify their reports before airing them to show good faith. In holding FBNI liable for libel. In absolving Rima from the charge. FBNI. and as such. and of the press. destroyed plaintiffs’ (AMEC and Ago) reputation. With the supposed exposés. and (3) undergo an apprenticeship and training program after passing the interview. Atty." Thereafter. collaborating counsel of Atty. FBNI. (2) be interviewed. Finding no factual basis for the imputations against AMEC’s administrators. SO ORDERED. the Court of Appeals ruled that the broadcasts were made "with reckless disregard as to whether they were true or false. According to the Court of Appeals. Lozares. trial ensued. Rima and Alegre failed to present in court any of the students who allegedly complained against AMEC. premises considered. xxx9 (Emphasis supplied) The complaint further alleged that AMEC is a reputable learning institution. The trial court denied the motion to dismiss. On 14 December 1992. FBNI. FBNI filed this petition.00 reimbursement of attorney’s fees. Edmundo Cea.14 FBNI. The Court of Appeals found Rima and Alegre’s claim that they were actuated by their moral and social duty to inform the public of the students’ gripes as insufficient to justify the utterance of the defamatory remarks. and Filipinas Broadcasting Network (owner of the radio station DZRC)." The appellate court pointed out that FBNI. appealed the decision to the Court of Appeals. and there being no showing that indeed the enrollment of plaintiff school dropped. the decision appealed from is hereby AFFIRMED. filed a Motion to Dismiss11 on FBNI’s behalf." The dispositive portion of the decision reads: WHEREFORE. Rima and Alegre "transmitted malicious imputations. fairness and objectivity in their broadcasts and to refrain from using libelous and indecent language. The appellate court made Rima solidarily liable with FBNI and Alegre." Moreover. FBNI requires all broadcasters to pass the Kapisanan ng mga Brodkaster sa Pilipinas ("KBP") accreditation test and to secure a KBP permit.000. The trial court rejected the broadcasters’ claim that their utterances were the result of straight reporting because it had no factual basis. defendants Hermogenes "Jun" Alegre. The trial court found Rima’s statement within the "bounds of freedom of speech. FBNI claimed that before hiring a broadcaster. the broadcaster should (1) file an application. and (3) AMEC burdened the students with unreasonable imposition and false regulations. these circumstances cast doubt on the veracity of the broadcasters’ claim that they were "impelled by their moral and social duty to inform the public about the students’ gripes." The Court of Appeals found Rima also liable for libel since he remarked that "(1) AMEC-BCCM is a dumping ground for morally and physically misfit teachers. On 18 June 1990." AMEC and Ago included FBNI as defendant for allegedly failing to exercise due diligence in the selection and supervision of its employees. (2) AMEC obtained the services of Dean Justita Lola to minimize expenses on its employees’ salaries.000. Considering the degree of damages caused by the controversial utterances. and AMEC and Ago. [which is] an institution imbued with public interest. are hereby jointly and severally ordered to pay plaintiff Ago Medical and Educational Center-Bicol Christian College of Medicine (AMEC-BCCM) the amount of P300. this court finds for the plaintiff. During the presentation of the evidence for the defense. Rima and Alegre. on the other. through Atty.are rich – in their struggle to improve their social status are even more burdened with false regulations. 13 (Emphasis supplied) Both parties. The appellate court denied Ago’s claim for damages and attorney’s fees because the broadcasts were directed against AMEC. Rozil Lozares. subject to the modification that broadcaster Mel Rima is SOLIDARILY ADJUDGED liable with FBN[I] and Hermo[g]enes Alegre. The trial court held that the broadcasts are libelous per se. expression. filed an Answer10 alleging that the broadcasts against AMEC were fair and true. The dispositive portion of the Court of Appeals’ decision reads: WHEREFORE. plus P30. Rima and Alegre merely gave a single name when asked to identify the students. SO ORDERED. on one hand. Hence. Jr."16 139 . which are not found by this court to be really very serious and damaging.00 moral damages. the trial court ruled that Rima’s only participation was when he agreed with Alegre’s exposé. FBNI.15 The Ruling of the Court of Appeals The Court of Appeals upheld the trial court’s ruling that the questioned broadcasts are libelous per se and that FBNI. the trial court rendered a Decision12 finding FBNI and Alegre liable for libel except Rima. FBNI filed a separate Answer claiming that it exercised due diligence in the selection and supervision of Rima and Alegre. Rima and Alegre filed a motion for reconsideration which the Court of Appeals denied in its 26 January 2000 Resolution. the trial court found that FBNI failed to exercise diligence in the selection and supervision of its employees. Rima and Alegre. Rima and Alegre failed to overcome the legal presumption of malice. particularly Rima and Alegre. and not against her. The Court of Appeals affirmed the trial court’s judgment with modification. and to pay the costs of suit. Rima and Alegre claimed that they were plainly impelled by a sense of public duty to report the "goings-on in AMEC. FBNI likewise claimed that it always reminds its broadcasters to "observe truth. Consequently.

FBNI’s contentions are untenable. real or imaginary. Rima and Alegre should have presented the public issues "free from inaccurate and misleading information. This is a civil action for damages as a result of the allegedly defamatory remarks of Rima and Alegre against AMEC.29 Rima and Alegre cannot invoke the privilege of neutral reportage because unfounded comments abound in the broadcasts. garbage of xxx moral and physical misfits". Neither did they inquire about nor confirm the purported irregularities in AMEC from the Department of Education. AMEC also invokes Article 1920 of the Civil Code to justify its claim for damages. The Court of Appeals denied Ago’s claim for damages and attorney’s fees because the libelous remarks were directed against AMEC. condition. WHETHER THE AWARD OF ATTORNEY’S FEES IS PROPER. On the other hand.30 140 .The Court of Appeals held that FBNI failed to exercise due diligence in the selection and supervision of its employees for allowing Rima and Alegre to make the radio broadcasts without the proper KBP accreditation. a reading of the complaint reveals that AMEC’s cause of action is based on Articles 30 and 33 of the Civil Code. ATTORNEY’S FEES AND COSTS OF SUIT. Alegre simply relied on the words of the students "because they were many and not because there is proof that what they are saying is true. "AMEC is a dumping ground. WHETHER FBNI IS SOLIDARILY LIABLE WITH RIMA AND ALEGRE FOR PAYMENT OF MORAL DAMAGES. discredit. WHETHER THE BROADCASTS ARE LIBELOUS. and not against her. Rima and Alegre hardly made a thorough investigation of the students’ alleged gripes. and a party to that controversy makes the defamatory statement.27 they had sufficient time to verify their sources and information. there is no libel. FBNI alleges that there is no evidence that ill will or spite motivated Rima and Alegre in making the broadcasts. or to blacken the memory of one who is dead. discredit and contempt. the broadcasts suggest that AMEC is a money-making institution where physically and morally unfit teachers abound. FBNI claims that Rima and Alegre were plainly impelled by their civic duty to air the students’ gripes. Every defamatory imputation is presumed malicious. Contrary to FBNI’s claim. and AMEC students who graduate "will be liabilities rather than assets" of the society are libelous per se.nét Issues FBNI raises the following issues for resolution: I."26 Hearing the students’ alleged complaints a month before the exposé. the broadcasts were not "the result of straight reporting. I. However. The Court of Appeals adjudged FBNI. FBNI concludes that since there is no malice. Alegre testified that he merely went to AMEC to verify his report from an alleged AMEC official who refused to disclose any information. or circumstance tending to cause the dishonor. WHETHER AMEC IS ENTITLED TO MORAL DAMAGES.24 There is no question that the broadcasts were made public and imputed to AMEC defects or circumstances tending to cause it dishonor. However. status. some courts in the United States apply the privilege of "neutral reportage" in libel cases involving matters of public interest or public figures. Rima and Alegre’s remarks such as "greed for money on the part of AMEC’s administrators"."28 This plainly shows Rima and Alegre’s reckless disregard of whether their report was true or not." Significantly. FBNI contends that the broadcasts are not malicious. or any act or omission. regardless of the republisher’s subjective awareness of the truth or falsity of the accusation. a republisher who accurately and disinterestedly reports certain defamatory statements made against public figures is shielded from liability. AMEC cites Articles 217621 and 218022 of the Civil Code to hold FBNI solidarily liable with Rima and Alegre. Taken as a whole. Rima and Alegre solidarily liable to pay AMEC moral damages. II. Culture and Sports.1awphi1. fraud.17 While AMEC did not point out clearly the legal basis for its complaint. Moreover. Article 3319 particularly provides that the injured party may bring a separate civil action for damages in cases of defamation. The Court’s Ruling We deny the petition. FBNI further points out that Rima and Alegre exerted efforts to obtain AMEC’s side and gave Ago the opportunity to defend AMEC and its administrators. The privilege of neutral reportage applies where the defamed person is a public figure who is involved in an existing controversy.25 Rima and Alegre failed to show adequately their good intention and justifiable motive in airing the supposed gripes of the students. there is no existing controversy involving AMEC when the broadcasts were made. or contempt of a natural or juridical person. Whether the broadcasts are libelous A libel23 is a public and malicious imputation of a crime. III. Under this privilege. As hosts of a documentary or public affairs program. Article 3018 authorizes a separate civil action to recover civil liability arising from a criminal offense. and physical injuries. or of a vice or defect. attorney’s fees and costs of suit. and IV.

the questioned broadcasts are not based on established facts." thus: [F]air commentaries on matters of public interest are privileged and constitute a valid defense in an action for libel or slander. the broadcasts are not privileged and remain libelous per se.net So is plaintiffs’ counsel. at least in order to give semblance of good faith.31 FBNI contends that the broadcasts "fall within the coverage of qualifiedly privileged communications" for being commentaries on matters of public interest. 21. there is no libel. In order that such discreditable imputation to a public official may be actionable. The record supports the following findings of the trial court: xxx Although defendants claim that they were motivated by consistent reports of students and parents against plaintiff. yet. based on established facts.l^vvphi1. To accept this defense of defendants is too dangerous because it could easily give license to the media to malign people and establishments based on flimsy excuses that there were reports to them although they could not satisfactorily establish it. it must either be a false allegation of fact or a comment based on a false supposition. nor even gave name of a single student who made the complaint to them. but is still alert and docile. If the comment is an expression of opinion. Alegre contended that plaintiff school had no permit and is not accredited to offer Physical Therapy courses. Although a big building of plaintiff school was given the name Mcdonald building. and every false imputation is deemed malicious. Ink. Court of Appeals. PUBLIC ISSUES AND COMMENTARIES 141 . nor their claim that the school charges laboratory fees even if there are no laboratories in the school. The truth is there is no Mcdonald Foundation existing. and immoral teachers." The welfare of the youth in general and AMEC’s students in particular is a matter which the public has the right to know. Defendants did not even also bother to prove their claim. And yet.34 However. The contention that plaintiffs’ graduates become liabilities rather than assets of our society is a mere conclusion. Item I(B) of the Radio Code provides: B.33 Had the comments been an expression of opinion based on established facts. accreditation to offer Physical Therapy course had already been given the plaintiff. Dean Lola testified in court last Jan. In Borjal. nor mentally infirmed. AMEC should prove malice in fact or actual malice. xxx Even older people prove to be effective teachers like Supreme Court Justices who are still very much in demand as law professors in their late years. that when medical students fail in one subject. Lola was observed by this court not to be physically decrepit yet. though denied by Dra. Defendants could have easily known this were they careful enough to verify. as explained by Dr. defendants were very categorical and sounded too positive when they made the erroneous report that plaintiff had no permit to offer Physical Therapy courses which they were offering. and was found to be 75 years old. it is not necessarily actionable. Such being the case. Contrary to the claim of defendants over the air. 22. Secondly. Dr. C-rebuttal). No evidence was presented to prove the bases for these claims. it is immaterial that the opinion happens to be mistaken. Lourdes R. The broadcasts also violate the Radio Code35 of the Kapisanan ng mga Brodkaster sa Pilipinas. Counsel for defendants is past 75 but is found by this court to be still very sharp and effective. defendants have not presented in court. contrary to the mandates of their duties. they are made to repeat all the other subject[s]. Thus. Ago. PUBLIC AFFAIRS. not a single centavo appears to be received by plaintiff school from the aforementioned McDonald Foundation which does not exist. in order to prove that they are in good faith. the comments of Rima and Alegre were not backed up by facts. nevertheless. which certificate is signed by no less than the Secretary of Education and Culture herself. ("Radio Code"). FBNI’s reliance on Borjal is misplaced. 1991.However. 1987 or more than 2 years before the controversial broadcast. when the discreditable imputation is directed against a public person in his public capacity. then it is immaterial that the opinion happens to be mistaken. because every man is presumed innocent until his guilt is judicially proved. much less present written complaint or petition to that effect. the subject broadcasts dealt with matters of public interest. did not verify and analyze the truth of the reports before they aired it. plaintiff produced a certificate coming from DECS that as of Sept. that was only in order to honor the first missionary in Bicol of plaintiffs’ religion. FBNI argues vigorously that malice in law does not apply to this case. The doctrine of fair comment means that while in general every discreditable imputation publicly made is deemed false.32 (Emphasis supplied) True. Lita Ago. this court is aware that majority of the medical graduates of plaintiffs pass the board examination easily and become prosperous and responsible professionals. As for the allegation that plaintiff is the dumping ground for misfits. AMEC is a private learning institution whose business of educating students is "genuinely imbued with public interest. defendant[s] singled out Dean Justita Lola who is said to be so old. as long as it might reasonably be inferred from the facts. Since AMEC allegedly failed to prove actual malice. Being from the place himself. The allegation that plaintiff was getting tremendous aids from foreign foundations like Mcdonald Foundation prove not to be true also. Citing Borjal v. even those they have already passed. However. Yet. Such laxity would encourage careless and irresponsible broadcasting which is inimical to public interests. the Court elucidated on the "doctrine of fair comment. unlike in Borjal. there is reason to believe that defendant radio broadcasters. Therefore. as long as it might reasonably be inferred from the facts. similar to the newspaper articles in Borjal. with zero visibility already. Quisumbing (Exh.

1. x x x 4. Public affairs program shall present public issues free from personal bias, prejudice and inaccurate and misleading information. x x x Furthermore, the station shall strive to present balanced discussion of issues. x x x. xxx 7. The station shall be responsible at all times in the supervision of public affairs, public issues and commentary programs so that they conform to the provisions and standards of this code. 8. It shall be the responsibility of the newscaster, commentator, host and announcer to protect public interest, general welfare and good order in the presentation of public affairs and public issues.36 (Emphasis supplied) The broadcasts fail to meet the standards prescribed in the Radio Code, which lays down the code of ethical conduct governing practitioners in the radio broadcast industry. The Radio Code is a voluntary code of conduct imposed by the radio broadcast industry on its own members. The Radio Code is a public warranty by the radio broadcast industry that radio broadcast practitioners are subject to a code by which their conduct are measured for lapses, liability and sanctions. The public has a right to expect and demand that radio broadcast practitioners live up to the code of conduct of their profession, just like other professionals. A professional code of conduct provides the standards for determining whether a person has acted justly, honestly and with good faith in the exercise of his rights and performance of his duties as required by Article 1937 of the Civil Code. A professional code of conduct also provides the standards for determining whether a person who willfully causes loss or injury to another has acted in a manner contrary to morals or good customs under Article 2138 of the Civil Code. II. Whether AMEC is entitled to moral damages FBNI contends that AMEC is not entitled to moral damages because it is a corporation.39 A juridical person is generally not entitled to moral damages because, unlike a natural person, it cannot experience physical suffering or such sentiments as wounded feelings, serious anxiety, mental anguish or moral shock.40 The Court of Appeals cites Mambulao Lumber Co. v. PNB, et al.41 to justify the award of moral damages. However, the Court’s statement in Mambulao that "a corporation may have a good reputation which, if besmirched, may also be a ground for the award of moral damages" is an obiter dictum.42 Nevertheless, AMEC’s claim for moral damages falls under item 7 of Article 221943 of the Civil Code. This provision expressly authorizes the recovery of moral damages in cases of libel, slander or any other form of defamation. Article 2219(7) does not qualify whether the plaintiff is a natural or juridical person. Therefore, a juridical person such as a corporation can validly complain for libel or any other form of defamation and claim for moral damages.44 Moreover, where the broadcast is libelous per se, the law implies damages.45 In such a case, evidence of an honest mistake or the want of character or reputation of the party libeled goes only in mitigation of damages.46 Neither in such a case is the plaintiff required to introduce evidence of actual damages as a condition precedent to the recovery of some damages.47 In this case, the broadcasts are libelous per se. Thus, AMEC is entitled to moral damages. However, we find the award of P300,000 moral damages unreasonable. The record shows that even though the broadcasts were libelous per se, AMEC has not suffered any substantial or material damage to its reputation. Therefore, we reduce the award of moral damages from P300,000 to P150,000. III. Whether the award of attorney’s fees is proper FBNI contends that since AMEC is not entitled to moral damages, there is no basis for the award of attorney’s fees. FBNI adds that the instant case does not fall under the enumeration in Article 220848 of the Civil Code. The award of attorney’s fees is not proper because AMEC failed to justify satisfactorily its claim for attorney’s fees. AMEC did not adduce evidence to warrant the award of attorney’s fees. Moreover, both the trial and appellate courts failed to explicitly state in their respective decisions the rationale for the award of attorney’s fees.49 In Inter-Asia Investment Industries, Inc. v. Court of Appeals ,50 we held that: [I]t is an accepted doctrine that the award thereof as an item of damages is the exception rather than the rule, and counsel’s fees are not to be awarded every time a party wins a suit. The power of the court to award attorney’s fees under Article 2208 of the Civil Code demands factual, legal and equitable justification, without which the award is a conclusion without a premise, its basis being improperly left to speculation and conjecture. In all events, the court must explicitly state in the text of the decision, and not only in the decretal portion thereof, the legal reason for the award of attorney’s fees.51 (Emphasis supplied) While it mentioned about the award of attorney’s fees by stating that it "lies within the discretion of the court and depends upon the circumstances of each case," the Court of Appeals failed to point out any circumstance to justify the award. 142

IV. Whether FBNI is solidarily liable with Rima and Alegre for moral damages, attorney’s fees and costs of suit FBNI contends that it is not solidarily liable with Rima and Alegre for the payment of damages and attorney’s fees because it exercised due diligence in the selection and supervision of its employees, particularly Rima and Alegre. FBNI maintains that its broadcasters, including Rima and Alegre, undergo a "very regimented process" before they are allowed to go on air. "Those who apply for broadcaster are subjected to interviews, examinations and an apprenticeship program." FBNI further argues that Alegre’s age and lack of training are irrelevant to his competence as a broadcaster. FBNI points out that the "minor deficiencies in the KBP accreditation of Rima and Alegre do not in any way prove that FBNI did not exercise the diligence of a good father of a family in selecting and supervising them." Rima’s accreditation lapsed due to his non-payment of the KBP annual fees while Alegre’s accreditation card was delayed allegedly for reasons attributable to the KBP Manila Office. FBNI claims that membership in the KBP is merely voluntary and not required by any law or government regulation. FBNI’s arguments do not persuade us. The basis of the present action is a tort. Joint tort feasors are jointly and severally liable for the tort which they commit.52 Joint tort feasors are all the persons who command, instigate, promote, encourage, advise, countenance, cooperate in, aid or abet the commission of a tort, or who approve of it after it is done, if done for their benefit.53 Thus, AMEC correctly anchored its cause of action against FBNI on Articles 2176 and 2180 of the Civil Code.1a\^/phi1.net As operator of DZRC-AM and employer of Rima and Alegre, FBNI is solidarily liable to pay for damages arising from the libelous broadcasts. As stated by the Court of Appeals, "recovery for defamatory statements published by radio or television may be had from the owner of the station, a licensee, the operator of the station, or a person who procures, or participates in, the making of the defamatory statements."54 An employer and employee are solidarily liable for a defamatory statement by the employee within the course and scope of his or her employment, at least when the employer authorizes or ratifies the defamation.55 In this case, Rima and Alegre were clearly performing their official duties as hosts of FBNI’s radio program Exposé when they aired the broadcasts. FBNI neither alleged nor proved that Rima and Alegre went beyond the scope of their work at that time. There was likewise no showing that FBNI did not authorize and ratify the defamatory broadcasts. Moreover, there is insufficient evidence on record that FBNI exercised due diligence in the selection and supervision of its employees, particularly Rima and Alegre. FBNI merely showed that it exercised diligence in the selection of its broadcasters without introducing any evidence to prove that it observed the same diligence in the supervision of Rima and Alegre. FBNI did not show how it exercised diligence in supervising its broadcasters. FBNI’s alleged constant reminder to its broadcasters to "observe truth, fairness and objectivity and to refrain from using libelous and indecent language" is not enough to prove due diligence in the supervision of its broadcasters. Adequate training of the broadcasters on the industry’s code of conduct, sufficient information on libel laws, and continuous evaluation of the broadcasters’ performance are but a few of the many ways of showing diligence in the supervision of broadcasters. FBNI claims that it "has taken all the precaution in the selection of Rima and Alegre as broadcasters, bearing in mind their qualifications." However, no clear and convincing evidence shows that Rima and Alegre underwent FBNI’s "regimented process" of application. Furthermore, FBNI admits that Rima and Alegre had deficiencies in their KBP accreditation,56 which is one of FBNI’s requirements before it hires a broadcaster. Significantly, membership in the KBP, while voluntary, indicates the broadcaster’s strong commitment to observe the broadcast industry’s rules and regulations. Clearly, these circumstances show FBNI’s lack of diligence in selecting and supervising Rima and Alegre. Hence, FBNI is solidarily liable to pay damages together with Rima and Alegre. WHEREFORE, we DENY the instant petition. We AFFIRM the Decision of 4 January 1999 and Resolution of 26 January 2000 of the Court of Appeals in CA-G.R. CV No. 40151 with the MODIFICATION that the award of moral damages is reduced from P300,000 to P150,000 and the award of attorney’s fees is deleted. Costs against petitioner. SO ORDERED. G.R. No. 148246 February 16, 2007

REPUBLIC OF THE PHILIPPINES, Petitioner, vs. JUAN C. TUVERA, VICTOR P. TUVERA and TWIN PEAKS DEVELOPMENT CORPORATION, Respondents. TINGA, J.: The long-term campaign for the recovery of ill-gotten wealth of former President Ferdinand E. Marcos, his wife Imelda, and their associates, has been met with many impediments, some of which are featured in this case, that have led to doubts whether there is still promise in that enterprise. Yet even as the prosecution of those cases have drudged on and on, the era of their final reckoning is just beginning before this Court. The heavy hammer of the law is just starting to fall. The instant action originated from a civil complaint for restitution and damages filed by the Republic of the Philippines against Marcos and his longtime aide Juan Tuvera, as well as Tuvera's son Victor and a corporation the younger Tuvera had controlled. Trial on the case against the Tuveras proceeded separately before the Sandiganbayan. After the Republic had presented its evidence, the Tuveras successfully moved for the 143

dismissal of the case on demurrer to evidence. The demurrer was sustained, and it falls upon this Court to ascertain the absence or existence of sufficient proof to support the relief sought by the Republic against the Tuveras. I. We begin with the facts. Twin Peaks Development Corporation (Twin Peaks) was organized on 5 March 1984 as a corporation with a principal purpose of engaging in the real estate business. There were five incorporating stockholders, including respondent Victor Tuvera (Victor)1 who owned 48% of the shares of the fledgling corporation. Victor was the son of respondent Juan Tuvera, who was then Presidential Executive Assistant of President Marcos. Acting on a letter dated 31 May 1984 of Twin Peaks’ Vice-President and Treasurer Evelyn Fontanilla in behalf of the corporation, President Marcos granted the award of a Timber License Agreement (TLA), more specifically TLA No. 356, in favor of Twin Peaks to operate on 26,000 hectares of forest land with an annual allowable cut of 60,000 cubic meters of timber and to export 10,000 cubic meters of mahogany of the narra species.2 As a result, Twin Peaks was able to engage in logging operations. On 25 February 1986, President Marcos was ousted, and Corazon C. Aquino assumed the presidency. Among her first acts as President was to establish the Philippine Commission on Good Government (PCGG), tasked with tracking down the ill-gotten wealth procured by Marcos, his family, and associates during his 20-year rule. Among the powers granted to the PCGG was the power to issue writs of sequestration.3 On 13 June 1988, the PCGG issued a Writ of Sequestration on all assets, properties, records, documents, and shares of stock of Twin Peaks on the ground that all the assets of the corporation are ill-gotten wealth for having been acquired directly or indirectly through fraudulent and illegal means.4 This was followed two days later by Mission Order No. MER-88 (Mission Order), also issued by the PCGG, implementing the aforementioned Writ of Sequestration.5 On 9 December 1988, the PCGG, in behalf of the Republic, filed the Complaint now subject of this Petition.6 Impleaded as defendants in the Complaint7 were Juan and Victor Tuvera, as well as the then-exiled President Marcos. Through the Complaint, the Republic sought to recover funds allegedly acquired by said parties in flagrant breach of trust and fiduciary obligations with grave abuse of right and power in violation of the Constitution and the laws of the Republic of the Philippines.8 In particular, the Complaint alleged that Juan Tuvera, as Presidential Executive Assistant of President Marcos, took advantage of his relationship to influence upon and connection with the President by engaging in a scheme to unjustly enrich himself at the expense of the Republic and of the Filipino people. This was allegedly accomplished on his part by securing TLA No. 356 on behalf of Twin Peaks despite existing laws expressly prohibiting the exportation of mahogany of the narra species9 and Twin Peaks’ lack of qualification to be a grantee thereof for lack of sufficient logging equipment to engage in the logging business.10 The Complaint further alleged that Twin Peaks exploited the country’s natural resources by engaging in large-scale logging and the export of its produce through its Chinese operators whereby respondents obtained a revenue of approximately P45 million. The Complaint prayed that (1) TLA No. 356 be reverted to the State or cancelled; (2) respondents be jointly and severally ordered to pay P48 million11 as actual damages; and (3) respondents pay moral, temperate and exemplary damages, litigation expenses, and treble judicial costs.12 It cited as grounds for relief, gross abuse of official position and authority, breach of public trust and fiduciary obligations, brazen abuse of right and power, unjust enrichment, and violation of the Constitution.13 In their Answer,14 respondents Victor Tuvera and Twin Peaks claimed that Twin Peaks was awarded TLA No. 356 only after its articles of incorporation had been amended enabling it to engage in logging operations,15 that the Republic’s reference to Chinese operations and revenue of approximately P45 million were merely imagined,16 and that the PCGG has no statutory authority to institute the action.17 By way of counterclaim, respondents asked that the Republic be ordered to pay Victor Tuvera moral damages and to pay both Victor Tuvera and Twin Peaks exemplary damages, and to reimburse their attorney’s fees.18 Anent the allegation that Twin Peaks sold about P3 million worth of lumber despite the Writ of Sequestration issued by the PCGG, respondents stressed that the Director of Forest Development acted within the scope of his authority and the courts have no supervising power over the actions of the Director of Forest Development and the Secretary of the Department of Environment and Natural Resources (DENR) in the performance of their official duties.19 As an affirmative and special defense, respondents Victor Tuvera and Twin Peaks alleged that after Twin Peaks was granted TLA No. 356 in 24 August 1984, Felipe Ysmael, Jr. and Co., Inc. had filed a motion for the cancellation of the same with the DENR Secretary. When respondents submitted their Answer, the denial by the DENR of the Ysmael motion was under review before the Court.20 Juan Tuvera, who was abroad when the case was filed on 9 December 1988, later submitted his own Answer on 6 December 1989.21 He also denied the allegations of the Republic and alleged that as Presidential Executive Assistant of then President Marcos, he acted within the confines of his duties and had perpetrated no unlawful acts. He merely transmitted communications of approval in the course of his duties and had nothing to do with the decisions of then President Marcos.22 He denied having anything to do with Twin Peaks. 144

Juan Tuvera filed a compulsory counterclaim on the ground that the instant action had besmirched his reputation and caused serious anxiety and mental anguish thus entitling him to moral and exemplary damages and litigation expenses.23 On 3 May 1989, respondents filed an Omnibus Motion to Nullify Writ of Sequestration and/or the Mission Order.24 The Sandiganbayan issued a Temporary Restraining Order against the PCGG requiring it to cease, refrain and desist from further implementing the Writ of Sequestration and the Mission Order.25 Subsequently, on motion of respondents, the Sandiganbayan granted a Writ of Preliminary Injunction covering the Mission Order. The Sandiganbayan deferred its resolution on the Motion to Lift the Writ of Sequestration.26 From 1988 to 1993, the proceedings before the Sandiganbayan were delayed owing to the difficulty of acquiring jurisdiction over the person of President Marcos, who was by then already in exile. Thus, upon motion by respondents, the Sandiganbayan granted them a separate pre-trial/trial from President Marcos.27 Respondents submitted their documentary evidence in the Pre-Trial Conference while the Republic reserved to present the same during trial. After the pre-trial conference, the Sandiganbayan issued a Pre-Trial Order28 dated 3 November 1993, which presented the issues for litigation as follows: Whether or not defendant Juan C. Tuvera who was a Presidential Executive Assistant at the time material to this case, by himself and in concert with his co-defendants Ferdinand E. Marcos and Victor Tuvera, took advantage of his relation and connection with the late Marcos, secure (sic) a timber concession for Twin Peaks Development Corporation and, engage (sic) in a scheme to unjustly enrich himself at the expense of the Republic and the Filipino People.29 The Pre-Trial Order also indicated that the Republic admitted the exhibits by respondents, subject to the presentation of certified true copies thereof. Respondents’ exhibits were as follows:30 Exhibit Nos. Description 1 Amended Articles of Incorporation dated 31 July 1984 2 TLA No. 356 3 Order, Minister Ernesto M. Maceda, 22 July 1986 3-A Order, Minister Ernesto M. Maceda, 10 October 1986 3-B Order, Minister Ernesto M. Maceda, 26 November 1986, O.P. Case No. 3521 3-C Resolution, Office of the President, 6 July 1987, O.P. Case No. 3521 3-D Order, Office of the President, 14 August 1987, I.S. No. 66 3-E Complaint, PCGG, dated 20 July 1988 3-E-1, 3-E-2, 3-E-3 I.S. No. 66 Affidavit, PCGG, Almario F. Mendoza, Ltv. Ramon F. Mendoza and Affidavit, Isidro Santiago 3-F Counter-Affidavit, Juan C. Tuvera, 17 August 1989 3-F-1 PCGG, Motion to Withdraw, Jose Restituto F. Mendoza, 10 May 1989 3-F-2 Decision, Supreme Court, 18 October 1990 3-G Resolution, Supreme Court, 5 June 1991 4 Complaint, DENR, Almario F, Mendoza, 9 March 1990 4-A Answer/Comment, DENR, Almario F. Mendoza, dated 20 April 1990 4-B Decision, DENR, dated 28 August 1990 5 Complaint, Ombudsman, etc., Case No. 0-90-0708, 9 March 1990 6, 6-A Answer/Counter-Affidavit, etc. 6-B Decision, Ombudsman Case No. 0-90-0708, dated 8 August 1990 The Republic presented three (3) witnesses during the trial. The first witness was Joveniana M. Galicia, Chief of the National Forest Management Division of the Forest Management Bureau. She identified TLA No. 356 of Twin Peaks dated 20 August 1984 and a Memorandum dated 18 July 1984. She testified that TLA No. 356 covers 26,000 hectares of forest land located in the Municipality of Isabela, Province of Quirino.31 The Memorandum dated 18 July 1984 addressed to Director Edmundo Cortez recited then President Marcos’ grant of the timber concession to Twin Peaks. Identified and marked in the same memorandum were the name and signature of Juan Tuvera.32 Upon cross-examination, Galicia stated that she was not yet the chief of the Division when the documents she identified were submitted to the Bureau. She further stated it was her first time to see the aforementioned documents when she was asked to bring the same before the trial court.33 The next witness was Fortunato S. Arcangel, Regional Technical Director III of the DENR. He testified that he is a Technical Director under the Forest Management Services of the DENR.34 He identified Forestry Administration Order (FAO) No. 11 dated 1 September 1970. He said he was aware of TLA No. 356 of Twin Peaks35 because at the time it was issued, he was the chief of the Forestry Second Division and his duties included the evaluation and processing of applications for licenses and permits for the disposition and distribution of timber and other forest products.36 Consequently, he was aware of the process by which TLA No. 356 was issued to Twin Peaks.37 According to him, they processed the application insofar as they evaluated the location of the area concerned and its present vegetative state, examined the records, and determined the annual allowable land. After the examination, the license agreement was prepared and submitted for approval.38 He continued that under FAO No. 11, a public bidding is required before any license agreement or permit for the utilization of timber within the forestry land is issued39 but no public bidding was conducted for TLA No. 356.40 He explained that no such bidding was conducted because of a Presidential Instruction not to accept any application for timber licensing as a consequence of which bidding procedures were stopped.41 Upon cross-examination, Arcangel said that at the time TLA No. 356 was issued, the Revised Forestry Code of the Philippines42 was already in effect but there were still provisions in FAO No. 11 that remained applicable such as the terms and conditions of granting a license. He also stated that the issuance of the license to Twin Peaks emanated from the President of the Philippines.43 145

employee of the Bureau of Internal Revenue. Respondents subsequently submitted certified true copies of the exhibits they had presented during the pretrial conference. A demurrer may be granted if. Section 1. in resolving this motion. The Republic now questions the correctness of the Sandiganbayan’s decision to grant the demurrer to evidence because it was not based solely on the insufficiency of its evidence but also on the evidence of respondent mentioned during the pre-trial conference. after the presentation of plaintiff’s evidence. the Republic rested its case after its formal offer of evidence. In essence. Preliminarily. Further. The Anti-Graft Court also did not give credence to the Republic’s allegations concerning respondents’ abuse of power and/or public trust and consequent liability for damages in view of its failure to establish any violation of Arts. Sec. respondents filed a Demurrer to Evidence. it is bound by its own admission. respondents’ demurrer contends that the memorandum (Exh. Jr. the Sandiganbayan justified the grant of demurrer with res judicata as rationale.49 The Republic filed a Manifestation. 11 (Revised) To prove that Twin Peaks Realty Development Corp. was organized to engage in the real estate business and not in the logging industry. of Environment and Natural Resources. 5 of said law clearly provides that all applications for a timber license agreement must be filed before the Bureau of Forest Development and that respondents still have to prove compliance with the requirements for service contracts.. dated 20 August 1984 To prove that the Timber License Agreement was executed prior to the amendment of the Articles of Incorporation of Twin Peaks Realty Development Corp. Respondents argued that the Republic failed to present sufficient legal affirmative evidence to prove its claim. Respondents also claim that income tax returns are not sufficient to show one’s holding in a corporation. Tuvera in the grant of the timber concession of Twin Peaks Realty Development Corp.] consigned to Scala Sawmill46 To show that Twin Peaks Realty Development Corp. She identified the 1986 Income Tax Returns of Victor P. E Income Tax Return of Evelyn Fontanilla To prove that Evelyn Fontanilla was not a legitimate stockholder of Twin Peaks Realty Development Corp. following Rule 33. we observe that respondents had filed before the Sandiganbayan a pleading captioned Motion to Dismiss or Demurrer to Evidence. Zuñiga. Respondents also cited the factual antecedents culminating with the Court’s decision in Felipe Ysmael. stockholders of Twin Peaks. as follows:45 Exhibits Documents Purpose A Timber License Agreement No. the Sandiganbayan. v. which had become final and executory with the failure of the aggrieved party to seek a review thereof. lacks equipment to process logs. Section 1 of the Rules of Court. B Memorandum dated 18 July 1984 of Juan C. D Income Tax Return of Victor Tuvera To prove that Victor Tuvera was not a legitimate stockholder of Twin Peaks Realty Development Corp. 20 and 21 of the Civil Code. However. 19. 356 of Twin Peaks Realty Development Corp. referred to it as Motion to Dismiss on Demurrer to Evidence. H Timber Manifestation Report of [Twin Peaks Realty Development Corp. 356 was already fully adjudicated in a Resolution/Order issued by the Office of the President on 14 August 1987. contending that the demurrer is not based on the insufficiency of its evidence but on the strength of the evidence of respondents as shown by their own exhibits. Inc.48 With leave of court. 356 are not "legal evidence" because "legal evidence" is not meant to raise a mere suspicion or doubt. Salvana. it appears 146 .The Republic’s third and last witness was Teresita M. rather than a motion to dismiss under Rule 16. the Republic is barred from questioning the validity of TLA No. G Articles of Incorporation of Twin Peaks Realty Development Corp. F Income Tax Return of Feliciano Salvana To prove that Feliciano Salvana was not a legitimate stockholder of Twin Peaks Realty Development Corp. Still. a close reading of the Sandiganbayan Resolution reveals clearly that the Sandiganbayan was treating the motion as a demurrer.44 On 24 June 1994. Presidential Executive Secretary To prove the participation of Juan C. B) and TLA No. I Timber Manifestation Report of Twin Peaks consigned to La Peña Sawmill47 To show that Twin Peaks Realty Development Corp. even as it stands as a proper ground for a motion to dismiss. (original) To prove that Twin Peaks Realty Development Corp. Evelyn Fontanilla and Feliciano O. C Forestry Administrative Order No. The Republic also challenges the applicability of res judicata.51 In its Resolution dated 23 May 2001. & Corp. Consequently. The Sandiganbayan continued that the above pronouncement is supported by this Court in Ysmael.50 Respondents opposed the Manifestation. This notwithstanding. Res judicata is an inappropriate ground for sustaining a demurrer to evidence. The Republic claimed that the Revised Forestry Code of the Philippines does not dispense with the requirement of public bidding. the Sandiganbayan concluded. the Sandiganbayan held that the validity of TLA No. these same exhibits contain uncontroverted facts and laws that only magnify the conclusion that the Republic has no right to relief. was granted a timber license agreement without following the procedure outlined in the forestry rules and regulation and in violation of law. a pleading of markedly different character from a Motion to Dismiss or Demurrer to Evidence. lacks equipment to process logs. II. Tuvera. In particular.52 the Sandiganbayan sustained the demurrer to evidence and referred to the decision of this Court in Ysmael in holding that res judicata applies. Tuvera. 356 in consonance with the principle of res judicata. maintaining that since the Republic admitted the exhibits of respondents during the pre-trial. The Republic added that Sec. thus evincing that they were seeking the alternative reliefs of either a motion to dismiss or a demurrer to evidence.

356. the Sandiganbayan did not dismiss the case on the insufficiency of the Republic’s evidence nor on the strength of respondents’ evidence.. was a grantee of a timber license agreement. 87 was re-awarded to Twin Peaks under TLA No. and it should be at that stage that defense of res judicata should be invoked as a ground for dismissal.58 When there is only identity of issues with no identity of causes of action. Consequently. et al. While a motion to dismiss under Rule 16 is based on preliminary objections which can be ventilated before the beginning of the trial. the judgment of the court. to wit: The fundamental principle upon which the doctrine of res judicata rests is that parties ought not to be permitted to litigate the same issue more than once. and of causes of action. therefore. Both offices denied the relief prayed for. there exists res judicata in the concept of conclusiveness of judgment. sent separate letters to the Office of the President and the Ministry of Natural Resources primarily seeking the reinstatement of TLA No. Secretary of Agriculture and Natural Resources. (2) the judgment or order must be on the merits. are conclusive upon the rights of the affected parties as though the same had been rendered by a court of general jurisdiction. of subject matter. and (4) there must be between the first and second actions.. Felipe Ysmael. a motion to dismiss under Rule 33 is in the nature of a demurrer to evidence on the ground of insufficiency of evidence and is presented only after the plaintiff has rested his case. The first is governed by Rule 16. res the for the In Domondon v. Since the decision of the Bureau has become final. held that Ysmael’s letters to the Office of the President and to the Ministry of Natural Resources in 1986 sought the reconsideration of a memorandum order by the Bureau of Forest Development canceling their timber license agreement in 1983 and the revocation of TLA No. that. Jr. identity of parties. The Court also denied the petition of Ysmael because it failed to file the special civil action for certiorari under Rule 65 within a reasonable time. 356. should be conclusive upon the parties and those in privity with them in law or estate. Properly speaking. as well as in due regard for public policy considerations and the principle of non-interference by the courts in matters which are addressed to the sound discretion of government agencies entrusted with the regulation of activities coming under the special technical knowledge and training of such agencies. In other words. Barely one year thereafter. The first does not concern itself with the truth and falsity of the allegations while the second arises precisely because the judge has determined the truth and falsity of the allegations and has found the evidence wanting. Felipe Ysmael. 87 despite the company’s letter for the reconsideration of the revocation. was the Sandiganbayan correct in applying res judicata to the case at bar? To determine whether or not res judicata indeed applies in the instant case. so long as it remains unreversed.. the movants demurral who wish to rely on a controlling value of a settled case as a ground for demurrer should invoke ground of stare decisis in lieu of res judicata.53 we distinguished a motion to dismiss for failure of the complainant to state a cause of action from a motion to dismiss based on lack of cause of action. Ysmael did not attack the administrative actions until after 1986. In contrast. Jr. We shall first discuss the question of whether or not a demurrer to evidence may be granted based on the evidence presented by the opposing parties. filed a petition for review before this Court. a motion to dismiss based on lack of cause of action is filed by the defendant after the plaintiff has presented his evidence on the ground that the latter has shown no right to the relief sought.57 the Court discussed the underlying principle for res judicata. one-half (or 26. For res judicata to serve as an absolute bar to a subsequent action. it has the force and effect of a final judgment within the purview of the doctrine of res judicata. These decisions and orders. the following requisites must concur: (1) the former judgment or order must be final. & Co.54 while the second by Rule 3355 of the Rules of Court. An examination of the Sandiganbayan’s Resolution shows that dismissal of the case on demurrer to evidence was principally anchored on the Republic’s failure to show its right to relief because of the existence of a prior judgment which consequently barred the relitigation of the same issue. through the late Justice Irene Cortes. Section 1(g). Inc. the grounds for judicata present themselves even before the presentation of evidence.. Rather. Inc. a review of Ysmael is proper. when a right or fact has been judicially tried and determined by a court of competent jurisdiction. 356 subsequently issued by the Bureau in 1984. In Sarabia and Leido v. & Co. Felipe Ysmael. Prescinding from this procedural miscue. would render the case barred by res judicata. or an opportunity for such trial has been given. TLA No.upon the facts and the law that the plaintiff has shown no right to relief. In brief. 87 and the revocation of TLA No. Hence. the Bureau of Forest Development cancelled TLA No. 87. Jr. The Court. Inc. (3) it must have been rendered by a court having jurisdiction over the subject matter and parties. The second [situation where the evidence does not sustain the cause of action alleged] is raised in a demurrer to evidence under Rule 33 after the plaintiff has rested his case and can be resolved only on the basis of the evidence he has presented in support of his claim. Sometime in August 1983.59 147 .56 [Emphasis supplied] III. according to it. to wit: x x x The first [situation where the complaint does not alleged cause of action] is raised in a motion to dismiss under Rule 16 before a responsive pleading is filed and can be determined only from the allegations in the initiatory pleading and not from evidentiary or other matter aliunde.000 hectares) of the area formerly covered by TLA No. In 1986. & Co. it based its dismissal on the existence of the Ysmael case which. Lopez.

1. agents and nominees. in case of appeal. The present case. Sec. sought the revocation of TLA No. Inc. subordinates. imposes the condition by the same token that if his demurrer is granted by the trial court. The general rule is that upon the dismissal of the demurrer in the appellate court. Jr. In the first place. Imelda R. and avoiding the need of remanding the case for retrial or reception of improperly excluded evidence.62 The Court finds no basis to declare the Republic as having substantial interest as that of Felipe Ysmael. Sandiganbayan. 1 reads: Sec. the Republic’s cause of action lies in the alleged abuse of power on respondents’ part in violation of R. If the motion is granted but on appeal the order of dismissal is reversed he shall have be deemed to have waived the right to present evidence. and without need to consider whatever evidence the Tuveras have. & Co. reparation of damages. dummies. res judicata nevertheless applies on the basis of the supposed sufficiency of the "substantial identity" between the Republic of the Philippines and Felipe Ysmael. may proceed independently of any criminal proceedings and may be proved by a preponderance of evidence. Effect of judgment on demurrer to evidence. demur to the plaintiff’s evidence) on the ground that upon the facts as thus established and the applicable law. the appellate court which reverses the order of dismissal shall proceed to render judgment on the merits on the basis of plaintiff’s evidence. & Co. i. subordinates. the plaintiff has shown no right to relief. however. – After the plaintiff has completed the presentation of his evidence. v. they having waived their right to present evidence in their behalf. 14-A66 establishes that the degree of proof required in cases such as this instant case is preponderance of evidence. Section 3 thereof reads: SEC. on the other hand. close relatives. finds that plaintiff’s evidence is sufficient for an award of judgment in the absence of contrary evidence. Executive Order No... as between their successors in interest by title60 or where an additional party was simply included in the subsequent case61 or where one of the parties to a previous case was not impleaded in the succeeding case.. What now is the course of action to take since we cannot affirm the Sandiganbayan’s grant of the demurrer to evidence? Rule 33. The Sandiganbayan held that despite the difference of parties.67 that in establishing the quantum of evidence required for civil cases involving the Marcos wealth held by their immediate family. the Court recently held in Yuchengco v.. Marcos. which in turn warrants its claim for restitution and damages. Nothing is lost. If his motion is denied. In such event. to move for a dismissal (i. The doctrine is but in line with the established procedural precepts in the conduct of trials that the trial court liberally receive all proffered evidence at the trial to enable it to render its decision with all possibly relevant proofs in the record. without waiving his right to offer evidence in the event that his motion is not granted. Ysmael. Inc. was initiated by the Republic of the Philippines represented by the Office of the Solicitor General. close relatives. 356 and the reinstatement of its own timber license agreement... 301963 and breach of public trust. The rule. close and/or business associates. Co. V. or indemnification for consequential and other damages or any other civil actions under the Civil Code or other existing laws filed with the Sandiganbayan against Ferdinand E. the case still remains before the trial court which should then proceed to hear and receive the defendant’s evidence so that all the facts and evidence of the contending parties may be properly placed before it for adjudication as well as before the appellate courts. The Court in a number of cases considered the substantial identity of parties in the application of res judicata in instances where there is privity between the two parties. Inc. the Secretary of Environment and Natural Resources. [Emphasis supplied. IV. close and/or business associates.e. & Co. Marcos. members of their immediate family.A.65 It thus becomes the Court's duty to rule on the merits of the complaint. 148 . No amount of imagination could let us believe that there was an identity of parties between this case and the one formerly filed by Felipe Ysmael Jr. thus assuring that the appellate courts upon appeal have all the material before them necessary to make a correct judgment. the Director of the Bureau of Forest Development and Twin Peaks Development and Realty Corporation. We disagree. and the Deputy Executive Secretary. duly taking into account the evidence presented by the Republic. No.In Ysmael.e. The civil suits to recover unlawfully acquired property under Republic Act No. Inc. dummies. Indeed. there is no identity of parties and no identity of causes of action between the two cases. the case was between Felipe Ysmael Jr. the movant loses his right to present evidence in his behalf and he shall have been deemed to have elected to stand on the insufficiency of plaintiff’s case and evidence. The defendant is permitted. the defendant may move for dismissal on the ground that upon the facts and the law the plaintiff has shown no right to relief. and the order of dismissal is reversed on appeal.. 3. Javellana:64 The rationale behind the rule and doctrine is simple and logical. on the other hand. with the possibility thereafter of still another appeal. the defendant loses the right to present his evidence and the appellate court shall then proceed to render judgment on the merits on the basis of plaintiff’s evidence. 1379 or for restitution. with all the concomitant delays. he shall have the right to present evidence. Inc. If the trial court denies the dismissal motion.] Thus. Jr. As the Court explained in Generoso Villanueva Transit Co.

in light of common human experience.—Evidence of ownership or capacity to acquire the requisite machinery or equipment shall accompany the bid application. the applicant bidder may be asked to submit an affidavit signifying his readiness. which of the theories proffered by the parties is more worthy of credence.70 However. occupying. and encumbrances if any. Such procedure is more particularly defined under FAO No. x x x was not to look for proof beyond reasonable doubt. to convert within a specified time any specified unencumbered and titled real estate into cash for use in operating and developing the area. With the illegality of the grant established as fact. otherwise known as the Anti-Graft and Corrupt Practices Act.72 However. dated 1 September 1970. bond deposit and other requirements of the Bureau of Forestry have been paid and complied with. title number. latest land tax declaration. that "the Sandiganbayan. possessing or conducting any activity within any forest land unless he had been authorized to do so under a license agreement. license or permit. With bid application: The applicant shall support his bid application with the required application fee duly paid and proofs of the following: (1) Capitalization. exploiting. conservation and development measures to insure the perpetuation of said forest in productive condition." 26. Requirements and supporting papers to be submitted. which provides for the "revised forestry license regulations. the major stockholder of Twin Peaks. and that the necessary license fee." FAO No. should the area be awarded to him.00 per cubic meter based on the allowable annual cut are required. 149 . assessed value of land and improvements (stating kind of improvements). Additional capitalization. his own participation in the illegal grant should also be substantiated.] However. 20 and 21 of the Civil Code. lease. liable in this case should be the ineluctable course.73 [Emphasis supplied." as well as through "public bidding. In that regard. Presentation of real estate should show location by municipality and province. Real Estate. based on the evidence presented. 11 state: 18. The capacity or ability to acquire machineries and equipments shall be determined by the committee on award. the Republic argues that the absence of a bidding process is patent proof of the irregularity of the issuance of the TLA in favor of Twin Peaks. The pertinent provisions of FAO No.A. The bank certificate shall be accompanied by a written consent by the applicant-depositor for the Director of Forestry or his authorized representative to verify such cash deposit with bank authorities. finding Victor Tuvera.—Cash deposits and established credit line by applicant in domestic bank certified to by the bank President or any of its authorized officials. 11 does admit that a timber license agreement may be granted through "negotiation.— In the event that the capitalization of the applicant is less than the minimum or less than that set by the Director of Forestry for the area. Financial statements certified by the independent and reputable certified public accountants must accompany the application as proof of the necessary capitalization. (2) Logging machinery and equipment. Still.68 The Forestry Reform Code prohibits any person from utilizing. 11. No. duly attested by depositor as his own to be used exclusively in logging and wood processing operations if awarded the area.agents and nominees filed before the Sandiganbayan.— A minimum capitalization of P20. Leased equipment or machineries may be considered in the determination by the Committee if expressly authorized in writing by the Director of Forestry. These include R." In order that restitution may be proper in this case. When license may be issued. In order that Juan Tuvera may be held answerable as well.–A license under this Regulations may be issued or granted only after an application and an award either through bidding or by negotiation has been made and the Director of Forestry is satisfied that the issuance of such license shall not be inconsistent with existing laws and regulations or prejudicial to public interest. Regarding the first line of inquiry. and Articles 19."71 It also provides as a general policy that timber license agreements shall be granted through no other mode than public bidding. Capitalization and financial statements.69 The Code also mandates that no timber license agreement shall be issued unless the applicant satisfactorily proves that he has the financial resources and technical capability not only to minimize utilization. it must be first established that the grant of the TLA to Twin Peaks was illegal. the Complaint adverted to several provisions of law which ostensibly were violated by the grant of the TLA in favor of Twin Peaks. the most organic laws that determine the validity or invalidity of the TLA are those that governed the issuance of timber license agreements in 1984. A timber license agreement authorizes a person to utilize forest resources within any forest land with the right of possession and exclusion of others. even a person who is granted a TLA through "negotiation" is still required to submit the same requirements and supporting papers as required for public bidding. hectarage.—The following requirements with accompanying supporting papers or documents shall be submitted in addition to the requirements of Section 12: a. Section 24 of FAO No. 11 establishes that it is the Director of Forestry who has the power "to grant timber licenses and permits. but to determine.00 per cubit meter in cash and an established credit line of P150. 3019. but also to practice forest protection. the Code is silent as to the procedure in the acquisition of such timber license agreement.

and to abide with all existing forestry laws. xxxx d) With applications for areas to be negotiated.000 cubic meters of logs and to cut and process 10. (7) Statement on sustained yield operations.74 The rationale underlying the very elaborate procedure that entails prior to the grant of a timber license agreement is to avert the haphazard exploitation of the State's forest resources as it provides that only the most qualified applicants will be allowed to engage in timber activities within the strict limitations of the grant and that cleared forest areas will have to be renewed through reforestation. etc. Since timber is not a readily renewable natural resource. concession. This is indicated by the letter dated 31 May 198475 signed by Twin Peaks’ Vice President and Treasurer Evelyn Fontanilla. Section 6(a) hereinabove.—To assure efficient operation of the area or concession. modification. (6) Forestry Department. we cannot consider such allegation as proven.— An appropriate plan of operation and development of the forest area applied for shall be submitted. The plant should be capable of processing at least 60% of the allowable annual cut. The absence of such bidding was testified on by prosecution witness Arcangel." the prescribed requirements for "negotiation" under the law were still not complied with.— The bidder or applicant shall submit a sworn statement of his agreement and willingness to operate the area under sustained yield to reforest cleared areas and protect the concession or licensed area and under the approved management plan. respondents did not raise the defense in their respective answers. In this connection. There is no doubt that no public bidding occurred in this case. permit. In no case shall an area exceeding 100. and of his agreement that any violation of these conditions shall be sufficient cause for the cancellation of the licenses.(3) Technical know-how. planting of denuded or logged-over areas within the concessions as specified by the Director of Forestry and establish a forest nursery for the purpose. This plan must be in general agreement with the working unit plan for the area as contained in Chapter III. (10) Such other inducements or considerations to the award as will serve public interest may also be required from time to time.77 There are several factors that taint this backdoor application for a timber license agreement by Twin Peaks. Certainly."76 A marginal note therein signed by Marcos indicates an approval thereof. the applicant shall submit a sworn statement to the effect no alien shall be employed without prior approval of proper authorities. 150 . The forest area covered by the TLA was already the subject of a pre-existing TLA in favor of Ysmael. rules and regulations and those that may hereafter be promulgated. (5) Processing plant. (4) Operation or development plan. with the layers of bureaucracy that encumber the grant of timber license agreements effectively serving as a defensive wall against the thoughtless ravage of our forest resources. (8) Organization plan.—The applicant shall submit assurance under oath that he shall put a forestry department composed of trained or experienced foresters to carry out forest management activities such as selective logging. such as the submission among others. wherein Twin Peaks expressed that "we would like to request a permit to export 20.—The applicant shall give his assurance that he shall not introduce into his area additional heave equipment and machinery without approval of the Director of Forestry. yet since respondents have waived their right to present evidence by reason of their resort to demurrer. addressed directly to then President Marcos. 11 provide for the submission of an application directly to the Office of the President as a proper mode for the issuance of a TLA. and protection under management plans. Without discounting the breadth and scope of the President’s powers as Chief Executive. or negotiation to acquire. of the organizational plan and employment of concession guards.—The bidder or applicant shall show evidence of ownership of. such as plywood.–Other important statement connected with sound management and operation of the area. replacement or rescission of any contract. It is evident that Twin Peaks was of the frame of mind that it could simply walk up to President Marcos and ask for a timber license agreement without having to comply with the elaborate application procedure under the law. license or any other form of privilege granted by said Code. the applicant shall submit proof of technical competence and know-how and/or his ability to provide hired services of competent personnel. by the express terms of the Revised Forestry Code. The Articles of Incorporation of Twin Peaks does not even stipulate that logging was either a principal or secondary purpose of the corporation. (9) Unauthorized use of heave equipment. consistent with selective logging methods and the sustained yield policy of the Bureau of Forestry.—All the foregoing requirements and supporting papers required for bidding under Section 18(a) hereinabove and of Section 20(b) hereinbelow shall also apply to all areas that may be granted through negotiation. reforestation. Respondents do allege that the Articles was amended prior to the grant in order to accommodate logging as a corporate purpose. The kind and type of plant. a wood processing plant.000 hectares be granted thru negotiation. it is essential and appropriate that the State serve and act as a jealous and zealous guardian of our forest lands. shall be submitted. veneer.000 cubic meters of the narra species in the same area. the authority of the President with respect to timber licenses is. limited to the amendment. including phasing plans and the fund requirements therefor. Yet even if we consider that Twin Peaks could have acquired the TLA through "negotiation. Neither the Forestry Reform Code nor FAO No. shall be specified. bandmill.

Sec. 18(a)(1) of FAO No. 11 requires that an applicant must have a minimum capitalization of P20.00 per cubic meter in cash and an established credit line of P150.00 per cubic meter based on the allowable annual cut. TLA No. 356 allowed Twin Peaks to operate on 26,000 hectares of forest land with an annual allowable cut of 60,000 cubic meters of timber. With such annual allowable cut, Twin Peaks, therefore, must have at least P1,200,000.00 in cash as its minimum capitalization, following FAO No. 11. An examination of Twin Peaks’ Articles of Incorporation shows that its paid-up capital was only P312,500.00.78 Clearly, Twin Peaks’ paid-up capital is way below the minimum capitalization requirement. Moreover, Sec. 18(5) provides that the bidder or applicant shall show evidence of ownership of, or negotiation to acquire, a wood processing plant. However, although TLA No. 356 was issued to Twin Peaks in 1984, it continued to engage the services of at least two sawmills79 as late as 1988. Four (4) years from the issuance of the license, Twin Peaks remained incapable of processing logs. What could have made Twin Peaks feel emboldened to directly request President Marcos for the grant of Timber License Agreement despite the obvious problems relating to its capacity to engage in timber activities? The reasonable assumption is that the official and personal proximity of Juan Tuvera to President Marcos was a key factor, considering that he was the father of Twin Peaks' most substantial stockholder. The causes of action against respondents allegedly arose from Juan Tuvera’s abuse of his relationship, influence and connection as Presidential Executive Assistant of then President Marcos. Through Juan Tuvera’s position, the Republic claims that Twin Peaks was able to secure a Timber License Agreement despite its lack of qualification and the absence of a public bidding. On account of the unlawful issuance of a timber license agreement, the natural resources of the country were unlawfully exploited at the expense of the Filipino people. Victor Tuvera, as son of Juan Tuvera and a major stockholder of Twin Peaks, was included as respondent for having substantially benefited from this breach of trust. The circumstance of kinship alone may not be enough to disqualify Victor Tuvera from seeking a timber license agreement. Yet the basic ethical principle of delicadeza should have dissuaded Juan Tuvera from any official or unofficial participation or intervention in behalf of the "request" of Twin Peaks for a timber license. Did Juan Tuvera do the honorable thing and keep his distance from Twin Peaks' "request"? Apparently not. Instead, he penned a Memorandum dated 18 July 1984 in his capacity as Presidential Executive Assistant, directed at the Director of Forestry, the official who, under the law, possessed the legal authority to decide whether to grant the timber license agreements after deliberating on the application and its supporting documents. The Memorandum reads in full: Office of the President of the Philippines Malacanang 18 July 1984 74-84 MEMORANDUM to Director Edmundo Cortes Bureau of Forest Development I wish to inform you that the President has granted the award to the Twin Peaks Realty Development Corporation, of the concession to manage, operate and develop in accordance with existing policies and regulations half of the timber area in the Province of Quirino covered by TLA No. 87, formerly belonging to the Felipe Ysmael, Jr. & Company and comprising 54,920 hectares, and to export half of the requested 20,000 cubic meters of logs to be gathered from the area. Herewith is a copy of the letter concering (sic) this matter of Ms. Evelyn F. Fontanilla, Vice-President and Treasurer of the Twin Peaks Realty Development Corporation, on which the President indicated such approval in his own hand, which I am furnishing you for your information and appropriate action. (signed) JUAN C. TUVERA Presidential Executive Assistant80 The Memorandum establishes at the very least that Tuvera knew about the Twin Peaks "request," and of President Marcos's favorable action on such "request." The Memorandum also indicates that Tuvera was willing to convey those facts to the Director of Forestry, the ostensible authority in deciding whether the Twin Peaks "request" should have been granted. If Juan Tuvera were truly interested in preventing any misconception that his own position had nothing to do with the favorable action on the "request" lodged by the company controlled by his son, he would not have prepared or signed the Memorandum at all. Certainly, there were other officials in Malacañang who could have performed that role had the intent of the Memorandum been merely to inform the Director of Forestry of such Presidential action. Delicadeza is not merely a stentorian term evincing a bygone ethic. It is a legal principle as embodied by certain provisions of the Anti-Graft and Corrupt Practices Act. Section 3 of R.A. No. 3019 states in part: Sec. 3. Corrupt practices of public officers.—In addition to acts or omissions of public officers already penalized by existing law, the following shall constitute corrupt practices of any public officer and are hereby declared to be unlawful:

151

(a) Persuading, inducing or influencing another public officer to perform an act constituting a violation of rules and regulations duly promulgated by competent authority or an offense in connection with the official duties of the latter, or allowing himself to be persuaded, induced or influenced to commit such violation or offense. xxxx (h) Directly or indirectly having financial or pecuniary interest in any business, contract or transaction in connection with which he intervenes or takes part in his official capacity, or in which he is prohibited by the Constitution or by any law from having any interest. The Memorandum signed by Juan Tuvera can be taken as proof that he "persuaded, induced or influenced" the Director of Forestry to accommodate a timber license agreement in favor of Twin Peaks, despite the failure to undergo public bidding, or to comply with the requisites for the grant of such agreement by negotiation, and in favor of a corporation that did not appear legally capacitated to be granted such agreement. The fact that the principal stockholder of Twin Peaks was his own son establishes his indirect pecuniary interest in the transaction he appears to have intervened in. It may have been possible on the part of Juan Tuvera to prove that he did not persuade, induce or influence the Director of Forestry or any other official in behalf of the timber license agreement of Twin Peaks, but then again, he waived his right to present evidence to acquit himself of such suspicion. Certainly, the circumstances presented by the evidence of the prosecution are sufficient to shift the burden of evidence to Tuvera in establishing that he did not violate the provisions of the Anti-Graft and Corrupt Practices Act in relation to the Twin Peaks "request." Unfortunately, having waived his right to present evidence, Juan Tuvera failed to disprove that he failed to act in consonance with his obligations under the AntiGraft and Corrupt Practices Act. In sum, the backdoor recourse for a hugely priced favor from the government by itself, and more in tandem with other brazen relevant damning circumstances, indicates the impudent abuse of power and the detestable misuse of influence that homologously made the acquisition of ill-gotten wealth a reality. Upon the facts borne out by the evidence for the Republic and guideposts supplied by the governing laws, the Republic has a clear right to the reliefs it seeks. VI. If only the Court's outrage were quantifiable in sums of money, respondents are due for significant pecuniary hurt. Instead, the Court is forced to explain in the next few paragraphs why respondents could not be forced to recompensate the Filipino people in appropriate financial terms. The fault lies with those engaged by the government to litigate this case in behalf of the State. It bears to the most primitive of reasons that an action for recovery of sum of money must prove the amount sought to be recovered. In the case at bar, the Republic rested its case without presenting any evidence, documentary or testimonial, to establish the amount that should be restituted to the State by reason of the illegal acts committed by the respondents. There is the bare allegation in the complaint that the State is entitled to P48 million by way of actual damages, but no single proof presented as to why the State is entitled to such amount. Actual damages must be proven, not presumed.81 The Republic failed to prove damages. It is not enough for the Republic to have established, as it did, the legal travesty that led to the wrongful obtention by Twin Peaks of the TLA. It should have established the degree of injury sustained by the State by reason of such wrongful act. We fail to comprehend why the Republic failed to present any proof of actual damages. Was it the inability to obtain the necessary financial documents that would establish the income earned by Twin Peaks during the period it utilized the TLA, despite the presence of the discovery processes? Was it mere indolence or sheer incompetence? Whatever the reason, the lapse is inexcusable, and the injury ultimately conduces to the pain of the Filipino people. If the litigation of this case is indicative of the mindset in the prosecution of ill-gotten wealth cases, it is guaranteed to ensure that those who stole from the people will be laughing on their way to the bank. The claim for moral damages deserves short shrift. The claimant in this case is the Republic of the Philippines, a juridical person. We explained in Filipinas Broadcasting v. Ago Medical & Educational Center-Bicol Christian College of Medicine (AMEC-BCCM):82 A juridical person is generally not entitled to moral damages because, unlike a natural person, it cannot experience physical suffering or such sentiments as wounded feelings, serious anxiety, mental anguish or moral shock. The Court of Appeals cites Mambulao Lumber Co. v. PNB, et al. to justify the award of moral damages. However, the Court's statement in Mambulao that "a corporation may have a good reputation which, if besmirched, may also be a ground for the award of moral damages" is an obiter dictum. Nevertheless, AMEC's claim for moral damages falls under item 7 of Article 2219 of the Civil Code. This provision expressly authorizes the recovery of moral damages in cases of libel, slander or any other form of defamation. Article 2219(7) does not qualify whether the plaintiff is a natural or juridical person. Therefore, a juridical person such as a corporation can validly complain for libel or any other form of defamation and claim for moral damages.83 As explained, a juridical person is not entitled to moral damages under Article 2217 of the Civil Code. It may avail of moral damages under the analogous cases listed in Article 2219, such as for libel, slander or any other form of defamation. Suffice it to say that the action at bar does not involve any of the analogous cases under Article 2219, and indeed upon an intelligent reading of Article 2219, it is difficult to see how the Republic could sustain any of the injuries contemplated therein. Any lawyer for the Republic who poses a claim for moral damages in behalf of the State stands in risk of serious ridicule. 152

However, there is sufficient basis for an award of temperate damages, also sought by the Republic notwithstanding the fact that a claim for both actual and temperate damages is internally inconsistent. Temperate or moderate damages avail when "the court finds that some pecuniary loss has been suffered but its amount can not from the nature of the case, be proved with certainty."84 The textual language might betray an intent that temperate damages do not avail when the case, by its nature, is susceptible to proof of pecuniary loss; and certainly the Republic could have proved pecuniary loss herein.85 Still, jurisprudence applying Article 2224 is clear that temperate damages may be awarded even in instances where pecuniary loss could theoretically have been proved with certainty.1awphi1.net In a host of criminal cases, the Court has awarded temperate damages to the heirs of the victim in cases where the amount of actual damages was not proven due to the inadequacy of the evidence presented by the prosecution. These cases include People v. Oliano,86 People v. Suplito,87 People v. De la Tongga,[88] People v. Briones,89 and People v. Plazo.90 In Viron Transportation Co., Inc. v. Delos Santos,91 a civil action for damages involving a vehicular collision, temperate damages were awarded for the resulting damage sustained by a cargo truck, after the plaintiff had failed to submit competent proof of actual damages. We cannot discount the heavy influence of common law, and its reliance on judicial precedents, in our law on tort and damages. Notwithstanding the language of Article 2224, a line of jurisprudence has emerged authorizing the award of temperate damages even in cases where the amount of pecuniary loss could have been proven with certainty, if no such adequate proof was presented. The allowance of temperate damages when actual damages were not adequately proven is ultimately a rule drawn from equity, the principle affording relief to those definitely injured who are unable to prove how definite the injury. There is no impediment to apply this doctrine to the case at bar, which involves one of the most daunting and noble undertakings of our young democracy–the recovery of ill-gotten wealth salted away during the Marcos years. If the doctrine can be justified to answer for the unlawful damage to a cargo truck, it is a compounded wrath if it cannot answer for the unlawful exploitation of our forests, to the injury of the Filipino people. The amount of P1,000,000.00 as temperate damages is proper. The allowance of temperate damages also paves the way for the award of exemplary damages. Under Article 2234 of the Civil Code, a showing that the plaintiff is entitled to temperate damages allows for the award of exemplary damages. Even as exemplary damages cannot be recovered as a matter of right, the courts are empowered to decide whether or not they should be adjudicated. Ill-gotten wealth cases are hornbook demonstrations where damages by way of example or correction for the public good should be awarded. Fewer causes of action deserve the stigma left by exemplary damages, which "serve as a deterrent against or as a negative incentive to curb socially deleterious actions."92 The obtention of the timber license agreement by Twin Peaks through fraudulent and illegal means was highlighted by Juan Tuvera’s abuse of his position as Presidential Executive Assistant. The consequent exploitation of 26 hectares of forest land benefiting all respondents is a grave case of unjust enrichment at the expense of the Filipino people and of the environment which should never be countenanced. Considering the expanse of forest land exploited by respondents, the volume of timber that was necessarily cut by virtue of their abuse and the estimated wealth acquired by respondents through grave abuse of trust and public office, it is only reasonable that petitioner be granted the amount of P1,000,000.00 as exemplary damages. The imposition of exemplary damages is a means by which the State, through its judicial arm, can send the clear and unequivocal signal best expressed in the pithy but immutable phrase, "never again." It is severely unfortunate that the Republic did not exert its best efforts in the full recovery of the actual damages caused by the illegal grant of the Twin Peaks TLA. To the best of our ability, through the appropriate vehicle of exemplary damages, the Court will try to fill in that deficiency. For if there is a lesson that should be learned from the national trauma of the rule of Marcos, it is that kleptocracy cannot pay. As those dark years fade into the backburner of the collective memory, and a new generation emerges without proximate knowledge of how bad it was then, it is useful that the Court serves a reminder here and now. WHEREFORE, the petition is GRANTED. The Resolution of the Sandiganbayan dated 23 May 2001 is REVERSED. Respondents Juan C. Tuvera, Victor P. Tuvera and Twin Peaks Development Corporation are hereby ordered to jointly and severally pay to the Republic of the Philippines One Million (P1,000,000.00) Pesos, as and for temperate damages, and One Million (P1,000,000.00) Pesos, as and for exemplary damages, plus costs of suit. SO ORDERED. IV. NOMINAL DAMAGES G.R. No. L-68138 May 13, 1991 AGUSTIN Y. GO and THE CONSOLIDATED BANK AND TRUST CORPORATION (Solidbank), petitioners, vs. HONORABLE INTERMEDIATE APPELLATE COURT and FLOVERTO JAZMIN, respondents. C.M. De los Reyes & Associates for petitioners. Millora & Maningding Law Offices for private respondent. FERNAN, C. J.:p The instant petition for review on certiorari questions the propriety of the respondent appellate court's award of nominal damages and attorney's fees to private respondent whose name was used by a syndicate in encashing two U.S. treasury checks at petitioner bank. 153

Floverto Jazmin is an American citizen and retired employee of the United States Federal Government. He had been a visitor in the Philippines since 1972 residing at 34 Maravilla Street, Mangatarem, Pangasinan. As pensionado of the U.S. government, he received annuity checks in the amounts of $ 67.00 for disability and $ 620.00 for retirement through the Mangatarem post office. He used to encash the checks at the Prudential Bank branch at Clark Air Base, Pampanga. In January, 1975, Jazmin failed to receive one of the checks on time thus prompting him to inquire from the post offices at Mangatarem and Dagupan City. As the result of his inquiries proved unsatisfactory, on March 4, 1975, Jazmin wrote the U.S. Civil Service Commission, Bureau of Retirement at Washington, D.C. complaining about the delay in receiving his check. Thereafter, he received a substitute check which he encashed at the Prudential Bank at Clark Air Base. Meanwhile, on April 22, 1975, Agustin Go, in his capacity as branch manager of the then Solidbank (which later became the Consolidated Bank and Trust Corporation) in Baguio City, allowed a person named "Floverto Jazmin" to open Savings Account No. BG 5206 by depositing two (2) U. S. treasury checks Nos. 5-449-076 and 5-448-890 in the respective amounts of $1810.00 and $913.40 1 equivalent to the total amount of P 20,565.69, both payable to the order of Floverto Jasmin of Maranilla St., Mangatarem, Pangasinan and drawn on the First National City Bank, Manila. The savings account was opened in the ordinary course of business. Thus, the bank, through its manager Go, required the depositor to fill up the information sheet for new accounts to reflect his personal circumstances. The depositor indicated therein that he was Floverto Jazmin with mailing address at Mangatarem, Pangasinan and home address at Maravilla St., Mangatarem, Pangasinan; that he was a Filipino citizen and a security officer of the US Army with the rank of a sergeant bearing AFUS Car No. H-2711659; that he was married to Milagros Bautista; and that his initial deposit was P3,565.35. He wrote CSA No. 138134 under remarks or instructions and left blank the spaces under telephone number, residence certificate/alien certificate of registration/passport, bank and trade performance and as to who introduced him to the bank. 2 The depositor's signature specimens were also taken. Thereafter, the deposited checks were sent to the drawee bank for clearance. Inasmuch as Solidbank did not receive any word from the drawee bank, after three (3) weeks, it allowed the depositor to withdraw the amount indicated in the checks. On June 29, 1976 or more than a year later, the two dollar cheeks were returned to Solidbank with the notation that the amounts were altered. 3 Consequently, Go reported the matter to the Philippine Constabulary in Baguio City. On August 3, 1976, Jazmin received radio messages requiring him to appear before the Philippine Constabulary headquarters in Benguet on September 7, 1976 for investigation regarding the complaint filed by Go against him for estafa by passing altered dollar checks. Initially, Jazmin was investigated by constabulary officers in Lingayen, Pangasinan and later, at Camp Holmes, La Trinidad, Benguet. He was shown xerox copies of U.S. Government checks Nos. 5-449-076 and 5-448-890 payable to the order of Floverto Jasmin in the respective amounts of $1,810.00 and $913.40. The latter amount was actually for only $13.40; while the records do not show the unaltered amount of the other treasury check. Jazmin denied that he was the person whose name appeared on the checks; that he received the same and that the signature on the indorsement was his. He likewise denied that he opened an account with Solidbank or that he deposited and encashed therein the said checks. Eventually, the investigators found that the person named "Floverto Jazmin" who made the deposit and withdrawal with Solidbank was an impostor. On September 24, 1976, Jazmin filed with the then Court of First Instance of Pangasinan, Branch II at Lingayen a complaint against Agustin Y. Go and the Consolidated Bank and Trust Corporation for moral and exemplary damages in the total amount of P90,000 plus attorney's fees of P5,000. He alleged therein that Go allowed the deposit of the dollar checks and the withdrawal of their peso equivalent "without ascertaining the identity of the depositor considering the highly suspicious circumstances under which said deposit was made; that instead of taking steps to establish the correct identity of the depositor, Go "immediately and recklessly filed (the) complaint for estafa through alteration of dollar check" against him; that Go's complaint was "an act of vicious and wanton recklessness and clearly intended for no other purpose than to harass and coerce the plaintiff into paying the peso equivalent of said dollar checks to the CBTC branch office in Baguio City" so that Go would not be "disciplined by his employer;" that by reason of said complaint, he was "compelled to present and submit himself" to investigations by the constabulary authorities; and that he suffered humiliation and embarrassment as a result of the filing of the complaint against him as well as "great inconvenience" on account of his age (he was a septuagenarian) and the distance between his residence and the constabulary headquarters. He averred that his peace of mind and mental and emotional tranquility as a respected citizen of the community would not have suffered had Go exercised "a little prudence" in ascertaining the identity of the depositor and, for the "grossly negligent and reckless act" of its employee, the defendant CBTC should also be held responsible. 4 In their answer, the defendants contended that the plaintiff had no cause of action against them because they acted in good faith in seeking the "investigative assistance" of the Philippine Constabulary on the swindling operations against banks by a syndicate which specialized in the theft, alteration and encashment of dollar checks. They contended that contrary to plaintiff s allegations, they verified the signature of the depositor and their tellers conducted an Identity check. As counterclaim, they prayed for the award of P100,000 as compensatory and moral damages; P20,000 as exemplary damages; P20,000 as attorney's fees and P5,000 as litigation, incidental expenses and costs. 5 In its decision of March 27, 1978 6 the lower court found that Go was negligent in failing to exercise "more care, caution and vigilance" in accepting the checks for deposit and encashment. It noted that the checks were payable to the order of Floverto Jasmin, Maranilla St., Mangatarem, Pangasinan and not to Floverto Jazmin, 154

September 30. 2217 and 2219 (10) in conjunction with Article 21 of the Civil Code. And. disallowed the award of moral and exemplary damages and granted nominal damages instead. Finding that the plaintiff had sufficiently shown that prejudice had been caused to him in the form of mental anguish. Pangasinan and that the differences in name and address should have put Go on guard. The court also noted that instead of complying with the Central Bank Circular Letter of January 17.000. invoking Articles 2176. because he suffered damages due to the negligence of Go.000. 8 The facts of this case reveal that damages in the form of mental anguish. 1975). Go in addition thereto in his sole and personal capacity to pay the plaintiff the amount of THREE THOUSAND PESOS (P3. No. January 28. New Civil Code). and that he was constrained to file the instant case.Maravilla St. Go and the bank interposed the instant petition for review on certiorari arguing primarily that the employer bank may not be held "co-equally liable" to pay nominal damages in the absence of proof that it was negligent in the selection of and supervision over its employee. Consequently. 284). 1961). They are not intended for indemnification of loss suffered but for the vindication or recognition of a right violated or invaded (Ventanilla vs." the award of nominal damages is unjustified as they did not violate or invade Jazmin's rights. It considered as "reckless" the defendants' filing of the complaint with the Philippine Constabulary noting that since the article on a fake dollar check ring appeared on July 18. It explained thus: While it is true that denouncing a crime is not negligence under which a claim for moral damages is available.00.00) as exemplary damages. the herein appellee has established a cause of action. however. It held that more care should have been exercised by Go in the encashment of the U. L-14503. On January 24. jointly and severally.00) as attorney's fees and costs of litigation and to pay the costs and defendant AGUSTIN Y. or where there has been a breach of contract and no substantial injury or actual damages whatsoever have been or can be shown (Elgara vs. this Court finds for plaintiff and that he is entitled to the reliefs prayed for in the following manner: Defendant Agustin Y. The appellate court. The fact that appellee did not suffer from any loss is of no moment for nominal damages are adjudicated in order that a right of the plaintiff. Go and the bank filed a motion for the reconsideration of said decision contending that in view of the finding of the appellate court that "denouncing a crime is not negligence under which a claim for moral damages is available. Corollarily. treasury checks as there was no time limit for returning them for clearing unlike in ordinary checks wherein a two to three-week limit is allowed. under Article 2180 of the Civil Code.000. SO ORDERED. 1973 requesting all banking institutions to report to the Central Bank all crimes involving their property within 48 hours from knowledge of the crime.S.. Co and the CONSOLIDATED BANK AND TRUST CORPORATION are hereby ordered to pay. the bank shall be held liable for its manager's negligence. April 21. The motion for reconsideration having been denied. 1984. moral shock and social humiliation on account of the defendants' gross negligence. it had sufficient time to ascertain the identity of the depositor. there being no negligence on the part of Go. his employer may not be held liable for nominal damages. 1960). L-14333.00) as moral damages. concluded that Go's negligence in the performance of his duties was "the proximate cause why appellant bank was swindled" and that denouncing the crime to the constabulary authorities "merely aggravated the situation. Sandijas. Accordingly. which has been violated or invaded by the defendant. then he may not likewise be entitled to exemplary damages (Estopa vs. still appellants are liable under the law for nominal damages. since appellee has no right to claim for moral damages. but was not able to adduce evidence showing actual damages then nominal damages may be recovered (Sia vs. said court (then named Intermediate Appellate Court) rendered a decision 7 finding as evident negligence Go's failure to notice the substantial difference in the identity of the depositor and the payee in the check.R. ruled in favor of the plaintiff.000. 1976 or more than a month after the bank had learned of the altered checks that it filed the complaint and therefore. These are damages recoverable where a legal right is technically violated and must be vindicated against an invasion that has produced no actual present loss of any kind. The defendants appealed to the Court of Appeals. 1976 in the Baguio Midland Courier.00) with interest at six (6%) percent per annum until fully paid and One Thousand Pesos (P 1. to the plaintiff the amount of SIX THOUSAND PESOS (P6. 45200-45201-R. ONE THOUSAND PESOS (P1. it was only on August 24. 27 Phil. where the plaintiff as in the case at bar." It ruled that there was a cause of action against the defendants although Jazmin had nothing to do with the alteration of the checks. Considering that he had to defend himself in the criminal charges filed against him. the appellate court ordered Go and Consolidated Bank and Trust Corporation to pay jointly and severally Floverto Jazmin only NOMINAL DAMAGES in the sum of Three Thousand Pesos (P 3. Piansay. Nos. the court. maybe vindicated or recognized and not for the purpose of indemnifying the plaintiff for any loss suffered by him (Article 2221.000.00) as attorney's fees and costs of litigation. The dispositive portion of the decision states: WHEREFORE. Espenilla CA-G. the bank reported the matter to the Philippine Constabulary. Emphasizing that the main thrust of the complaint was "the failure of the defendants to take steps to ascertain the identity of the depositor. moral shock and social humiliation were suffered by private respondent only after the filing of the petitioners' complaint with the Philippine 155 . the attorney's fees to be amended (sic) to plaintiff should be increased to P3. Centeno. Hence. Mangatarem. all with interest at six (6) percent per annum until fully paid." the court noted that the depositor was allegedly a security officer while the plaintiff was a retiree-pensioner.000.

10 As Go's negligence was the root cause of the complained inconvenience." Although this Court has consistently held that there should be no penalty on the right to litigate and that error alone in the filing of a case be it before the courts or the proper police authorities.B. chan roblesvirtualawlibraryand rendered judgment against him. 11 Hence. jointly and severally with the driver Brigido Avorque. chan roblesvirtualawlibrarythat the jeepney had been repeatedly sold by one buyer after another. disclaiming liability on the ground that he had sold the jeepney in question on October 14. 22775 of the Court of First Instance of Manila). July 11.000. the bank is responsible for the acts of its employee unless there is proof that it exercised the diligence of a good father of a family to prevent the damage. Anent petitioner bank's claim that it is not "co-equally liable" with Go for damages. jointly and severally with his co-Defendant Brigido Avorque.Constabulary. reserved their right to file a separate action for damages. TPU-2232 (Manila). ET AL.. J. knowing that its viability depended on the confidence reposed upon it by the public.000 attorneys’ fees. Defendants. and on June 16. Again. it would be unjust to overlook the fact that petitioners' negligence was the root of all the inconvenience and embarrassment experienced by the private respondent albeit they happened after the filing of the complaint with the constabulary authorities.R. while the latter was the owner thereof at the time of the accident. 1950 to one Maria A. the burden of proof lies upon the bank and it cannot now disclaim liability in view of its own failure to prove not only that it exercised due diligence to prevent damage but that it was not negligent in the selection and supervision of its employees. as between the two. chan roblesvirtualawlibrarywhile Defendant Cresencia answered. Vda. 156 .: Appeal by Defendant Guillermo Cresencia from the judgment of the Court of First Instance of Manila in its civil case No. Had Go exercised the diligence expected of him as a bank officer and employee. sentencing Appellant. for P6. the bank through its employees should have exercised the caution expected of it. Plaintiffs filed leave. 19890. Defendant Brigido Avorque did not file any answer. It was only then that he had to bear the inconvenience of travelling to Benguet and Lingayen for the investigations as it was only then that he was subjected to embarrassment for being a suspect in the unauthorized alteration of the treasury checks. Appellant. . Plaintiffs-Appellees. L-8194. during which. until the vehicle was purchased on January 29. resulting in the death of Vicente Medina. smashed into a Meralco post on Azcarraga Street. acting within the scope of their assigned tasks. No. admitted having purchased the aforesaid jeepney on May 31. The situation would have been different if the treasury checks were tampered with only as to their amounts because the alteration would have been unnoticeable and hard to detect as the herein altered check bearing the amount of $ 913. "(E)mployers shall be liable for the damages caused by their employees . In crimes and quasi-delicts. J. to which he pleaded guilty on September 9. 1953. the absolute owner thereof at the time of the accident. The lower court. private respondent is entitled to an award of damages. to pay Plaintiffs Emerencia M. 1953. vs. Costs against the petitioners. 1953 by Rosario Avorque. In view of Cresencia’s answer. it is understandable why petitioners appear to have overlooked the facts antecedent to the filing of the complaint to the constabulary authorities and to have put undue emphasis on the appellate court's statement that "denouncing a crime is not negligence. to amend their complaint making Rosario Avorque a co-Defendant. But the error in the name and address of the payee was very patent and could not have escaped the trained eyes of bank officers and employees. and was allowed. Indeed. passenger jeepney bearing plate No.000 compensatory damages. by Judge Jose Zulueta. Go is liable to private respondents for damages.L.40 shows. GUILLERMO CRESENCIA. chan roblesvirtualawlibraryand submitted the case for the decision on the question of who.] EMERENCIANA M. chan roblesvirtualawlibraryand the latter. Defendants Guillermo Cresencia and Rosario Avorque made manifestations admitting that the former was still the registered operator of the jeepney in question in the records of the Motor Vehicles Office and the Public Service Commission. by way of answer. P5. is not a ground for moral damages. 1953. REYES. [G. he would have noticed the glaring disparity between the payee's name and address on the treasury checks involved and the name and address of the depositor appearing in the bank's records. de Medina and her minor children damages in the total amount of P56. it definitely was the start of his consequent involvement as his name was illegally used in the illicit transaction. driven by Brigido Avorque. after the Plaintiffs had presented their evidence. SO ORDERED. A criminal case for homicide through reckless imprudence was filed against Avorque (criminal case No." Pursuant to this provision. one of its passengers. The heirs of the deceased. It is not necessary that such damages have been foreseen or could have reasonably been foreseen by the defendant. Hence. under the fifth paragraph of Article 2180 of the Civil Code. should be held liable to Plaintiffs for damages. WHEREFORE. ET AL. but alleged in defense that she was never the public utility operator thereof. VDA. 9 we hold that under the peculiar circumstances of this case.. Petitioner Go's negligence in fact led to the swindling of his employer. Defendant Cresencia. 1953. While at that stage of events private respondent was still out of the picture. brought suit against the driver Brigido Avorque and Appellant Guillermo Cresencia. GUILLERMO CRESENCIA. . the defendant shall be liable for all damages which are the natural and probable consequences of the act or omission complained of. continued to be the legal owner of the jeepney in question. It appears that on May 31. held that as far as the public is concerned. in the eyes of the law. 1956. humiliation and embarrassment. The case then proceeded to trial. no other conclusion than that the bank through its employees (including the tellers who allegedly conducted an identification check on the depositor) was grossly negligent in handling the business transaction herein involved. the decision of the respondent appellate court is hereby affirmed.. There is therefore. the registered owner and operator of the jeepney in question. DE MEDINA. and costs. however. Cudiamat.

18833. 2063. Appellant herein. Anyway. in order that the Commission may determine if there are good and reasonable grounds justifying the transfer or lease of the property covered by the franchise. P10. From this judgment. who is the registered owner and operator thereof.000 exemplary damages. Malibay Transit Inc. Alejandrino. November 18. attorney's fees and costs (civil No. Centeno on July 25. and stating that he was 157 . 1955. The defendant did not appeal. responsible for the damages sustained by Plaintiff by reason of the death of Vicente Medina resulting from the reckless negligence of the jeepney’s driver.. since nominal damages cannot co-exist with compensatory damages. Exhibit A. Court of First Instance of Nueva Ecija).) Since the court below has already awarded compensatory and exemplary damages that are in themselves a judicial recognition that Plaintiff’s right was violated. April 30. which the court below cited. entitled Oscar Ventanilla vs. not on the employer’s subsidiary liability under the Revised Penal Code. We have already held in the case of Montoya vs.: This is an action to recover damages claimed to have been suffered by the plaintiff due to the defendant's neglect in perfecting within the reglementary period his appeal from an adverse judgment rendered by the Court of First Instance of Manila in civil case No. continued to be liable to the Commission and the public for the consequences incident to its operation. the grantee of record continues to be responsible under the franchise in relation to the Commission and to the public. 1955.00 together with damages. it is patent upon the record that the award of P10. 1955. Guillermo Cresencia.000. 1756. while Defendant Rosario Avorque was absolved from liability. are: In Civil Case No. ten thousand pesos cannot.R. G.000 attorneys fees. before the approval is granted. As the sale of the jeepney here in question was admittedly without the approval of the Public Service Commission. for in culpa contractual. the decision appealed from is affirmed. chan roblesvirtualawlibraryand in contemplation of law. Pascual for defendant-appellee. Gregorio Centeno to represent him and prosecute the case. The propriety of the damages awarded has not been questioned. chan roblesvirtualawlibrary“and not for the purpose of indemnifying the Plaintiff for any loss suffered by him” (Articles 2221. is the employer of the negligent driver Brigido Avorque. PADILLA. 19833 was an action for the recovery of P4. No. With the modification that the award of P10. GREGORIO CENTENO. plaintiff retained the service of Atty. which certified the case to this Court on the ground that only questions of law are raised.000 nominal damages” be eliminated. P5. in common sense. A.8561. 1953). new Civil Code. ordering the latter to pay the former the sum of P200 as nominal damages and the costs. and not the buyer Rosario Avorque. Brigido Avorque. in order to preclude further contest thereon. and costs. or any privilege pertaining thereto. but direct and immediate (Articles 1755.” The above ruling was later reiterated in the cases of Timbol vs. The argument is untenable. the law requires that. No. chan roblesvirtualawlibraryand that if property covered by the franchise is transferred or leased without this requisite approval. and 1759. 18833 of the Court of First Instance of Manila. Artemio R. and not Appellant. that the law (section 20 [g]. 1955. J. the Court rendered judgment in favor of the plaintiff and against the defendant. After trial. The facts. And it is also for this reason that there is no need of first proving the insolvency of the driver Brigido Avorque before damages can be recovered from the carrier. 94 Phil. as found by the trial court. Wherefore. Decision unfavorable to the plaintiff was received by Atty.000 by way of nominal damages is untenable as a matter of law. 1961 OSCAR VENTANILLA. On July 30. and a notice of appeal was filed by Atty. since she admits that she. Appellant also argues that the basis of Plaintiffs’ action being the employer’s subsidiary liability under the Revised Penal Code for damages arising from his employee’s criminal acts. may be sold or leased without infringing the certificate issued to the grantee.000 moral damages. Espinosa and Ventanilla for plaintiff-appellant. it is Defendant Rosario Avorque who should answer subsidiarily for the damages sustained by Plaintiffs. L. In fact. with notice to all interested parties. 2223. L-7547. the lower court did not err in holding him. plaintiff-appellant. Edilberto Alejandrino and Aida G. the transfer is not binding against the public or the Service Commission.. Civil Case No. 1955 and Roque vs. or if the sale or lease is detrimental to public interest cralaw . L-14333 January 28. because Plaintiffs’ action for damages is independent of the criminal case filed against Brigido Avorque. Centeno wrote to the plaintiff the letter. There we gave the reason for this rule to be as follows:chanroblesvirtuallawlibrary “ cralaw Since a franchise is personal in nature any transfer or lease thereof should be notified to the Public Service Commission so that the latter may take proper safeguards to protect the interest of the public. The plaintiff appealed to the Court of Appeals. New Civil Code).P30. Nevertheless. but on a breach of the carrier’s contractual obligation to carry his passengers safely to their destination (culpa contractual). 146 as amended) requires the approval of the Public Service Commission in order that a franchise. P10.000 nominal damages. the award of nominal damages is unnecessary and improper. Costs against Appellant. The purpose of nominal damages is to vindicate or recognize a right that has been violated. Gregorio Centeno on July 21. defendant-appellee. be deemed “nominal”. there should be a public hearing. Atty. Ignacio. 182 (December 29. SO ORDERED. Defendant Cresencia appealed. and based. enclosing copies of the decision and that notice of appeal. the liability of the carrier is not merely subsidiary or secondary. C. vs. Osias.

. Atty. Article 2199 of the new Civil Code provides: Except as provided by law or by stipulation. Centeno. social humiliation. (7) Libel. 18833. Centeno wrote a letter to the plaintiff enclosing therein forms for an appeal bond. Plaintiff then issued the check Exhibit 1. He who claims actual or compensatory damages must establish and prove by competent evidence actual pecuniary loss. Plaintiff Oscar Ventanilla after receiving the letter and copy of the decision went to see Atty. He went to the office of Atty. Centeno it was not accepted because the period of appeal had already expired. slander or any other form of defamation. . Centeno at about 4 o'clock on August 18. (5) Illegal or arbitrary detention or arrest. besmirched reputation. Leonardo Sanchez. Such compensation is referred to as actual or compensatory damages. Centeno returned to Manila and went to his office at about 10 o'clock in the morning of August 22.) The appellant claims that the trial court erred in not ordering the appellee to pay him actual or compensatory. moral shocks. rape.000 and moral and actual damages. instead of executing an appeal bond. serious anxiety upon learning that his adversary had won by a mere technicality. for P60. . . 1955. serious anxiety. Atty. besmirched reputation for losing the opportunity to substantiate his claim made while testifying in open court that he was entitled to collect the sum of P4. Centeno. 1955. decided to file a cash appeal bond of P60. mental anguish. The fact that the record on appeal was admitted for filing is the best evidence that Atty. Centeno. however. and if he were in Manila. Centeno had not in fact filed any appeal bond. 1955. by not paying the appeal bond of P60. (8) Malicious prosecution . 33-36. and in not ordering the appellee to pay the appellant the sum of P500 as attorney's fee. The plaintiff Ventanilla. Leonardo Sanchez had informed the plaintiff that Atty. . for it is not in his power to determine whether or not the appeal bond has been filed within the time prescribed by law. About the middle of Aug. . Neither the Clerk of Court. Centeno informed him that he intended to appeal and plaintiff agreed. (3) Seduction. The provisions of the new Civil Code on moral damages state: Art. one is entitled to an adequate compensation only for such pecuniary loss suffered by him as he has duly proved. Centeno was in Laguna campaigning for his candidacy as member of the Provincial Board. but was informed by the clerk. or any of the employees had the right to refuse an appeal bond that is being filed. moral damages may be recovered if they are the proximate result of the defendant's wrongful act or omission. did not leave with Atty. Though incapable of pecuniary computation. and exemplary or corrective damages. . (2) Quasi-delicts causing physical injuries.00 as appeal bond and delivered the same to Leonardo Sanchez with instruction to give the same to Atty. The court does not likewise believe the testimony of Atty.000 and damages from the defendants in civil No. wounded feelings.1 The appellant's bare allegation that by reason of the appellee's indifference. and because use of his reluctance to pay the premium on the appeal bond. Atty.1955. Centeno by telephone and that he issued the cheek upon instruction of Atty.00. and similar injury. and that it was only at that time he came to know that the period of appeal had expired. Centeno that afternoon. and wounded feelings for the appellee's failure to remain faithful to his client and worthy of his trust and confidence. abduction. He cash the check. rec. which was filed only on August 20. In fact the record on appeal was accepted and filed on September 5. Art. 2219. Centeno at that time the amount for the appeal bond. with the Marvel Building Corporation and then went to the office of the Clerk of Court to file the appeal bond.000 as nominal damages.not conformable to the decision and had not hesitated to file the notice of appeal. (4) Adultery or concubinage. . but no appeal bond has been filed by Atty. According to Atty. on app. 2217. The appellant claims that he suffered mental anguish upon learning that his appeal had not been perfected within the reglementary period due to the appellee's negligence. Centeno in his office in Manila about August 5. Sanchez could not have known the whereabouts of Atty. moral. Moral damages include physical suffering. negligence and failure to perfect within the reglementary period his appeal from an adverse judgment rendered in civil case No. Exhibit D. Atty. 158 . Plaintiff. 1955. Centeno. It was therefore improbable that he could contact Atty. Moral damages may be recovered in the following and analogous cases: (1) A criminal offense resulting in physical injuries. 18833. The Court does not believe plaintiff's testimony that Sanchez had contacted Atty. he lost his chance to recover from the defendants therein the sum of P4. On August 17. The record on appeal was disapproved because it was filed out of time and no appeal bond had been filed by the plaintiff. indicates that his claim for actual or compensatory damages is highly speculative. (9) Acts mentioned in article 309. or other lascivious acts. Centeno upon his arrival. Hence he is not entitled to such damages. Centeno prepared the motion for extension of time to file the record on appeal. that Atty. which he could have recovered if the appeal had duly been perfected. Centeno was in Laguna. fright. and not P2. (pp. however. Exhibit 1. (6) Illegal search. temperate or moderate. in ordering the appellee to pay the appellant only the sum of P200.

disrespect for the dead or wrongful interference with funerals. the amount awarded to the appellant for nominal damages should not be disturbed. 2220. ascendants. vs.6 the trial court has judiciously. such damages are justly due. and FLORANTE DE LUNA respondents. 27. petitioner. besmirched reputation. and brothers and sister may bring action mentioned in No. which brought about the refusal by the trial court to allow the record on appeal. Cacanindin & Orbos Law Office for respondents. THE HONORABLE COURT OF APPEALS. abduction. Figueras. 18833 had been duly perfected. of course. 2219 specifically mentions "quasi-delicts causing physical injuries. PHILIPPINE PAPER PRODUCTS. G. The spouse. moral shocks. wisely and correctly exercised its discretion in not awarding them to the appellant. 34 and 35 on the chapter on human relations (par. and not for the purpose of indemnifying the plaintiff for any loss suffered by him. 26.000 the appellant seeks to recover as nominal damages is excessive. social humiliation. L-56505 May 9. 34. the special torts referred to in Art. Poblador. 26. Tomacruz. No. The judgment appealed from is affirmed. fraudulent. fright.2 In Malonzo vs.R. TEMPERATE OR MODERATE G.7 Considering the circumstances." as an instance when moral damages may be allowed. since the appellant's claim does not fall under any of those enumerated in article 2208. the amount of P200 awarded by the trial court to the appellant as nominal damages may seem exiguous. illegal search. Galang. Moral damages are recoverable only when physical suffering. 30.5 if the defendant acted in a wanton. as found by the trial court. As regards attorney's fees. As regards exemplary or corrective damages also claimed by the appellant. INC. raped. descendants. Willful injury to property may be legal ground for awarding moral damages if the court should find that. 9. To this we may add that where a mishap occurs resulting in the death of a passenger being transported by a common carrier. Art. new Civil Code. and 35. and similar injury are the proximate result of a criminal offense resulting in physical injuries. . 309 (par.(10) Acts and actions referred to in articles 21. Oben. the spouse.R. 28. 10. descendants and ascendants of the deceased passenger are entitled to demand moral damages for mental anguish by reason of the passenger's death. 1988 MAXIMO PLENO. illegal or arbitrary detention or arrest. The parents of the female seduced. supra. V. abducted. may also recover moral damages. may be vindicated or recognized. without special pronouncement as to costs. L-4722. The same rule applies to breaches of contract where the defendant acted fraudulently or in bad faith. and that even if the appeal in civil case No. such award precludes the recovery of temperate or moderate damages. thereby implying that all other quasi-delicts not resulting in physical injuries are excluded (Strebel vs. excepting. according to the circumstances of the case. . Art.4 and so the trial court did not err in refusing to award temperate or moderate damages to the appellant . Dec. since it cannot be recovered as a matter of right and the court will decide whether or not they should be adjudicated. rape or other lascivious acts. Nevertheless. 3 of this article. Relative to the sufficiency of the sum of P200 as nominal damages awarded by the trial court to the appellant. oppressive or malevolent manner. 29. referred to in No. 28. or abused. under the circumstances. mental anguish.Art. Azada. 32. which has been violated or invaded by the defendant. the amount of P2. article 2221 of the new Civil Code provides: Nominal damages are adjudicated in order that a right of the plaintiff. serious anxiety. considering that nominal damages are not for indemnification of loss suffered but for the vindication or recognition of a right violated or invaded. 2219). 9 of this article. The assessment of nominal damages is left to the discretion of the court. 1954). and the degree of negligence committed by the appellee. adultery or concubinage. wounded feelings. Art. the appellee may not be compelled to satisfy it. in not depositing on time the appeal bond and filing the record on appeal within the extension period granted by the court. violation of specific provisions of the Civil Code on human relations. considering that he is not entitled to actual or compensatory damages but has been awarded nominal damages by the trial court. 21. 2219) and in Arts. 29. the trial court did not err in declining to award moral damages to him. 27. seduction. 30. a lawyer. malicious prosecution. and willful injury to property. Concerning temperate or moderate damages claimed by the appellant. After weighing carefully all the considerations. libel.. it was not an assurance that the appellant would succeed in recovering the amount he had claimed in his complaint. slander or any other form of defamation. this Court categorically stated that — .3 Since the appellant's cause of action for recovery of moral damages is not predicated upon any of those specifically enumerated. 32. in the order named. quasi-delicts causing physical injuries. 29. 159 . Oben & Fruto Law Office for petitioner. reckless.

serious anxiety besides forcing himself to retain the services of counsel. that as a result of the vehicular accident.000. No..00 for suffering from bodily pain.244.08 and exemplary damages in the amount of P50.. As counterclaim. JR.000. and attorney's fees from a total of P430.00.000.00. (3) moral damages of P200. Inc.GUTTIERREZ. plaintiff filed his answer to defendant Florante de Luna's counterclaim by denying the substantial allegations of said counterclaim with the averment that the complaint was initiated and filed for a just cause.000.: This is a petition for review on certiorari of the decision of the Court of Appeals in CA-G. He prays for the dismiss of the complaint in addition for payment for moral damages and attorney's fees and costs of suit. filed its answer with counterclaim. as well as the sum of P100. as related by the trial court and as borne out by the records. he denies the substantial allegations of the same and.000.00 were affirmed. on December 21. Inc.000.00 for actual and compensatory damages. Inc. plaintiff suffered various serious injuries..000. The awards for actual damages in the amount of P48. On May 25. 1977.00. was hospitalized. and on the counterclaim. Plaintiff prays that defendants be jointly and severally ordered to pay him P100. Rizal. driven by said plaintiff causing the Volkswagen Delivery Van to swerve to the right that it rammed into the rear part of a truck with Plate No. After due trial. Rizal in a reckless and imprudent manner by operating and driving said kombi delivery van at a speed very much more than reasonable without taking the precautions to prevent injury to persons and damage to property and without considering the traffic condition at the place and time that as a consequence the delivery van titled to its left side of the road following its travel direction that somewhere in the front part of the vehicle being driven by him made a slight contact with the rear left side of the vehicle driven by plaintiff and despite the same. by driving the vehicle at a speed greater than what is reasonable and proper at the time without taking necessary precaution to avoid accident to persons and damage to property. avers that plaintiff without proper license to drive a Volkswagen Kombi delivery van drove said vehicle along a portion of the east service road of the South Super Highway in Taguig. he acted beyond normalcy at times.00 as exemplary damages.000.00 are fully paid and the costs of suit. plaintiff commenced an action for damages in the Court of First Instance of Rizal (Pasig) against defendants Philippine Paper Products. and that plaintiff is the one grossly negligent.00..244. On May 19.000.000. Manila '71. defendant Florante de Luna filed his answer with counterclaim.000. moral damages. mental anguish. the Id defendant denies the substantial allegations of the complaint and alleges as defenses that it exercises and continues to exercise the requisite diligence in the employment and supervision of its employees and laborers as well as in keeping in constant repair and in good condition all its vehicles. 2 and 3 of the complaint. The facts. moral damages of P500..000. and because he suffered injuries affecting his brain. It prays that plaintiffs complaint be dismissed with cost against him. P300. in a careless. careless and imprudent in driving and operating his vehicle who has neither the license nor the permit to drive the said vehicle. The material allegations of the complaint are to the following effect. on August 30. for moral damages P500. said vehicle of the defendant Philippine Paper Products. for attorney's fees P100. That the Philippine Paper Products. J. 30-51 Y/Y T-Rizal '71. interest at the rate of 6% on the actual and moral damage ages and loss of earnings computed from the filing of the complaint until the P100.08 actual damages: (2) temperate or moderate damage of P200. are as follows: 160 . 64497 which modified the decision of the Court of First Instance of Rizal in a vehicular accident case and reduced by one-half the award for temperate damages.00 and the P500. that plaintiff be ordered to pay to the herein defendant actual damages and other expenses of litigation as shall be proved in the course of the proceedings as well as exemplary damages sufficient for the purposes sought to be attained thereby apart from reasonable attorney's fees.00 to P215. The facts of the case are summarized as follows: On April 11.000.M. 1972.R. is the owner of a delivery truck (Ford Stake) with Plate No. While it admits the allegation of paragraph 1 of the complaint pertaining to it. serious anxiety for Florante de Luna's wanton and brazen disregard of traffic laws and regulations aggravated by his running away from the scene of the accident.00 as an example to all.00.000. bumped and sideswiped plaintiffs Volkswagen Delivery Van. that as a consequence he suffered actual and compensatory damages of approximately P100. 52-50 Y/Y. operators and drivers of motor vehicles and in the interest of public safety and welfare. was in charge of and driving said delivery truck (Ford Stake) on the right lane of the South Super Highway in Taguig.00 for the payment of attorney's fees. one of them being Florante de Luna who. plaintiff did not bother to put to a stop his vehicle instead and continued to drive that his vehicle smashed against another vehicle driven by a certain Ruben Rivera and that in view of the circumstance plaintiff is not entitled from defendant even if only attorney's fees. While he admits the allegations of paragraphs 1..00. 1971. plaintiff filed his Answer to Counterclaim denying the allegations of the counterclaim of defendant. and (6) costs of suit.00. as affirmative and/or special defenses. 1972. 1972. defendant Philippine Paper Products. (5) attorney's fees of P30. reckless and imprudent manner. he avers that as a result of the filing of the unwarranted complaint he suffered mental anguish. hit. that as a consequence of the said driver's reckless and imprudent driving. with Plate No. Inc. 1972.. having in its regular employ in conducting business several motor vehicle drivers. plaintiff should be adjudged as exemplary or corrective damages of P 300. On June 1. the Court a quo rendered its decision sentencing jointly and severally defendants to pay plaintiff (1) P 48.00. without rendering aid to the victim. 1972. (4) exemplary damages of P50.000.000. owners. On May 24. 8157W T-Manila '71 parked at the shoulder of the road. and Florante de Luna.000. at about 12:45 P.

51 Taguig. Pleno on the front seat. Inc. Pat. Witness to all these was Diego Orca. a snub-nosed volkswagen kombi with plate No. the incident which is the basis of this complaint involves a three vehicle collision which happened about past noon of December 21. who is connected with the Philippine Paper Products. Rizal inquiring why one of the Taguig's Police Traffic Officers at the service road of the South Super Highway stopped and investigated Florante de Luna. 81-87. admitted to him the involvement of the company truck in the incident and that was the reason why a representative or adjuster of the insurance company was with them so that they can settle the case. Florante de Luna and the adjuster. an incident transpired as testified by Pat. T-Manila '71 and was painted red all over. South Super Highway. at the time of the incident on December 21. or barely 25 minutes before the incident. the driver of the volkswagen was crushed in the driver's seat since the kombi's front portion offered no protection. 52-50. de Guzman. they met Atty. de Guzman and his team proceeded to the compound of the Philippine Paper Products. The volkswagen was blue colored. de Guzman aside and revealed to him that it was only sometime that their driver. His legs were trapped in the wreckage. 1972. Pleno. left the compound of the company on December 21. de Guzman) 161 .. he brought with him Dr. 1971. The parked truck was also moved forward when it was hit on its back by the Volkswagen and the driver of the parked truck. and the fault in the collision was on the part of Mr. with the motor at the back. Eusebio. driver of the said company. with the help of a few persons nearby. the driver of the parked truck. Diego Orca. they discovered that the suspect vehicle exmbited plate No. 1972. 1971 at 12:00 p. Thereafter. Rizal. Pat. At about 12:45 in the afternoon of said date. After receiving such information. Orca positively Identified the vehicle of the defendant corporation as the one involved in the incident. 1972. Atty. son of plaintiff Maximo Pleno. Thereafter. De Guzman claimed that the braked track was no longer parked at the time of the collision but that it was already moving. Inc. Manila '71. canvass at the top.As brought out in the trial. Paranaque. who was seated on that side. T-Manila '71. the same distance from the ground to the depressed portion of the volkswagen on its left rear portion. The volkswagen was suddenly and without warning hit on its left rear corner by a red colored cargo truck.m. The distance from the ground to the 'denied' or 'depressed' portion of the truck was three feet and 3 inches. a certain Atty. The hit and run incident was reported to the Taguig Police Department several hours later or about 3:15 in the afternoon of the same day by Manuel Pleno. Tagumpay Eusebio. Ruben Rivera. de Guzman was also able to look into the logbook of the Philippine Paper Products. de Guzman told Atty. A team to investigate this hit and run incident was formed thereafter by Patrolman Maximo de Guzman of the Taguig Police Department. being the snub-nosed type. at Sun Valley Subdivision.2"). and. Inc. Pleno because while a truck was moving on its way to the main road. Maximo Pleno who was at the wheel. Pleno suffered extensive injuries on his head and legs and affected his eyesight and stayed in the hospital for almost five (5) months. In other words. went to De Guzman's precinct where De Luna executed a written statement (Exhibits "G" and "G-l"). Bernardo Beduya who took photographs of the suspect vehicle (Exhibits "D-l" to "D.<äre||anº•1àw> Pat. Eusebio invited Pat.. de Guzman's precinct at Taguig. the volkswagen accelerated and went out of control veering further towards the right and hitting the truck which was then moving towards the direction of the highway. together with Atty. The red cargo truck stopped for a while and then spead away. Maximo Pleno. Days later or on January 8. Atty. which showed that the suspect vehicle with Florante de Luna driving it. At impact. Inc. James Arthur Longley. while Patrolman de Guzman and his team were in the compound of the Philippine Paper Products. Eusebio then took Pat. Rizal on the same day. A photograph of the log book with a finger pointing at the above entry was taken by photographer Beduya (Exh. who was sitting beside Mr. Pat. Ruben Rivera who was at that time standing in front of his parked truck urinating was bumped by his own truck. the right front portion of the volkswagen on the driver's side was reduced to a pulp. The paint was scratched off and there were blue colored stains. was tending to his plants in front of the National Manpower Corporation and who witnessed the 3 vehicle collision. De Guzman: WITNESS (Pat. An investigator was sent by the Taguig Police Department at the scene of the incident where an initial report was submitted containing a description of the suspect vehicle as a delivery truck colored red all over with yellow. Having been hit from behind by the red colored cargo truck and having smashed into the rear portion of the parked truck. who at such time. the gardener who. 1971.1971 at the South Super Highway in the portion of Taguig. extricated Pleno from the volkswagen after pushing the truck away and thereafter took him to the Makati Medical Center. 3. Atty.. Pat. although admitting that the delivery truck of the company was involved in the incident.m. a New Zealander. Rizal. parked along the shoulder of the road in front of the National Manpower Building. The team also discovered a'dented'or'depressed'portion of the right front portion of the vehicle. however. Due to the impact.. was watering his plants in front of the National Manpower Building. January 8. the volkswagen moved faster veering to the right and smashing unto the right rear portion of a truck with plate No. de Guzman in Ms office and asked him about the progress of the investigation to which de Guzman informed him that 99% of the evidence in their hands pointed to the delivery truck of the defendant company as the vehicle involved in the accident. de Guzman. Eusebio with two companions who later turned out to be Florante de Luna and an insurance adjuster. Eusebio that De Luna was stopped and investigated because the delivery truck he was driving matched the description of the delivery truck in a hit and run incident which occured at about 12:45 p. was brought by a passing jeepney to the hospital. "F-a"). Before the written statement of Pleno was sub-scribed before the mayor of Taguig. The kombi had two passengers. claimed that the fault lay in Mr. On one of the visits by Pat. was cruising towards Manila along the asphalt pavement of the service road of the South Super Highway. of December 21. Rizal. De Luna's statement. Pleno who was driving the volkswagen applied his brakes and his left rear portion veered towards the right and came in contact with the delivery truck being driven by De Luna. Also brought along the team in one of their visits was a photographer. Eusebio promised to bring De Luna to the police precinct. On January 12. Florante de Luna. the front door on the right side burst open and Langley. de Guzman and his team made further visits at said compound and during these visits. went to Pat. was thrown out of the vehicle and landed on a ditch. a gardener. Langley who was thrown out of the volkswagen but was not seriously hurt.

Pleno complained that his left eye suffers from double vision so that whenever he looks to the left. 5-9). It is also unbelievable that the driver did not feel or notice any contact between his cargo truck and the Kombi delivery panel. Inc. 162 . (witness pointing to Atty. Atty. Efforts of appellants to discredit Rivera notwithstanding. in all probability upon contact there would have emitted an impact sound similar to a sound of a hard object hit by another hard object. it may be seen from the exhibits shown particularly the photographs of the volkswagen that it is the driver's side which was severely damaged considering that the vehicle is the snub-nosed type with its motor at the back. As regards his eyesight. testified that his truck was parked and was not about to move out of the showder. Therefore. it has been established and admitted after police investigation that the protruding front right edge of the loading platform of the cargo truck. 30-39. Eusebio who is seated in the courtroom). Considering the accelerated speed of the cargo truck of the driver in attempting to overtake the Kombi delivery panel. Pleno was brought to the Makati Medical Center in the afternoon of December 21. Naturally. We likewise refuse to behave the driver's claim that the Kombi delivery panel swerved to the left towards his (driver's) lane to avoid the cargo truck with chairs then moving out of the shoulder of the road. (pp. It is a fact that the driver appellant was about to overtake the Kombi delivery panel momentt before the accident. He told me in vernacular. therefore. We fully agree that the Kombi delivery panel was hit by the cargo truck driven by the driver at the left rear corner when the cargo truck of the driver was overtaking it. he sees two objects of the same thing The injuries above mentioned affected his social and business life for he could not longer attend social gatherings nor could he concentrate on his business ventures. It took several persons to extricate him therefrom. After all. (TSN. pp.' And I answered: Ano ang ibig mong sabihin ng pagusapan? Q. iyon pala naman ay hindi pa nalalaman ng pamilya ng victim ang pagkakadeskobre ninyo nito tungkol sa involvement ni De Luna sa kasong ito. he still finds it difficult to stand up even with the aid of crutches or a cane. the Court of Appeals affirmed the factual findings of the lower court. Rizal. Panted Amended Joint Record on Appeal). OBEN: Q. we are convinced that the driver hitting the left rear corner of the Kombi delivery panel in the manner to overtake it was the proximate cause of the accident. Tsip. 1972. as it happened in this case it accelerated towards the parked cargo truck with chairs. Eusebio with a certain adjuster of the insurance company approached me and offered me something. Due to the impact. in this case. Witness Diego Orca corroborated Ruben Rivera. he must have been only about 2 to 5 meters to the left behind the Kombi delivery panel. There was evidence of head injury. Q.. He walks with a limp and his left is shorter than the right. At this position and distance. to wit . He told me that if you will not divulge this incident to the family of the victim.A. Rivera testified that he was standing in front of his truck. A table re-enactment of the incident convinces us that the claim of the driver that he saw a cargo truck moving out from the curve into the road a moment before the collision is false. all the expenses that may be incurred by the Philippine Paper Products. As regards the injuries suffered by Maximo Pleno. driver of the cargo truck with chairs. The impact caused the Kombi delivery panel upon being hit to swerve to the light at the same time due to the force and suddenness of impact Pleno lost control of his vehicle. The orthopedic surgeon who treated Pleno at the emergency room of the Makati Medical Hospital testified that Pleno sustained multiple fractures of both thigh bones and the left shin bone or tibia He sustained multiple lacerations in his forehead and left thigh. hit the left rear corner of the Kombi delivery panel. Nov. Eusebio is in the courtroom. Pleno was incoherent in pain and disabled. 1972. persuaded by the pretense of the driver. Before you went to the Municipal Building of Taguig. 21. for the subscription of the statement of Mr. can you point to him up in the courtroom? A.. This kind of sound one cannot miss to feel or notice. Eusebio tell you? A. we will just give you the amount. establishrd by the telltale marks and measurement. while I was along inside your investigation room. de Luna. He is in the middle.'(at pp. What is that something? A. We are not. 39-47) Upon appeal. it is impossible for the driver to see the cargo truck with chairs he claimed to be moving out of the curve as his vision or view to the right is covered by the Kombi delivery panel which he was about to overtake. What did Atty. ATTY. Pleno had to undergo about five surgical operations of his thighs one of which involving the insertion of these many operations. according to the surgeon. Kung maari ay pag-usapan na lang natin ito. Pleno's head was dashed and he lost consciousness with his legs trapped in the wreckage. Ruben Rivera. If Atty. 1971 and he left the hospital almost five (5) months later or on May 9. And they have to push the parked truck away before they could do so. when one overtakes another vehicle the overtaking vehicle must run faster than the vehicle to be overtaken. to wit: We find the findings of the lower court after hearing the parties to be more in consonance to the truth and what actually occurred.

His pretense is contrary to human and factual experience. Appellant Corporation asserts that it exercised due diligence in the selection and supervision of its employees. In the case at bar. and. third. the front door on the right side burst open and Langley. had been driving for five years before his employment with the Corporation in 1970. Neither do we find any contributory negligence attributable to plaintiff-appellee. Printed Record on Appeal). was brought by a passing jeepney to the hospital. 31-32. One of the overriding circumstances considered by the court a quo in disregarding the defense of exercise of due diligence interposed by appellant Corporation is the record of defendant driver De Luna that he was once accused of serious physical injuries thru reckless imprudence. The lower court. Pleno suffered extensive injuries on his head and legs and affected his eyesight and stayed in the hospital for almost five (5) months. defendantappellant Corporation should not have hired De Luna had it exercised the due diligence it is required by law in hiring the driver. and fifth errors assigned by appellant driver. So much so that the front right edge of his loading platform hit the left rear corner of the Kombi delivery panel Causing the Kombi delivery panel to swerve to the right forcing it to run smack into the parked cargo truck with chairs. Contending that at the time of the accident its employee driver De Luna. likewise to pay attorney's fees. 1972 and not until January 8. Proof of this is that the accident happened on December 21. The immediately preceding discussion disposes of the second.We are in full accord with the Court a quo when it said: Having been hit from behind by the red colored cargo truck and having smashed unto the rear portion of the parked car the right front portion of the volkswagen on the driver's truck side was reduced to a pulp. How much more with the contact and impact which have been established beyond doubt and ultimately admitted by driver De Luna that his truck. manual of procedures to be followed strictly by employers before hiring its employees. with the help of a few persons nearby. aside from dealing merely on generalities and mere observations on defendant driver De Luna's driving were not thorough. with the motor at the back. It is not enough that defendant Corporation hold high and waves driver's acquittal of that charge but Corporation should have presented evidence that in the trial on the merits his employed defendant driver was declared innocent. the accident would not have occurred in the manner it happened and would have been avoided. it would have known of the involvement of its driver De Luna in the accident in question. particularly its drivers. was thrown out of the vehicle and landed on a ditch. upon seeing the extensiveness of the resulting damage and the seriousness of the injury. we consider the established fact that it is beyond dispute. came to know that one of its vehicles was involved in an accident. 1972 when the defendantappellant Corporation. as we are. left the scene of the accident and kept quiet all about it until discovered thru police investigation — thus making it a hit and run case. a duly licensed professional driver. Therefore. (at pp. which negligence resulted to serious injuries. Appellant chiver De Luna's seventh. the driver of the parked truck. moral. Otherwise. after all. Appellant Corporation argued that in that case driver De Luna was acquitted. Indeed. A diligent and thorough inquiry of the background of driver De Luna was not undertaken. that he did not attempt to evade responsibility. Langley who was thrown out of the volkswagen but was not seriously hurt. But the records did not show that his acquittal was in a trial on the merits. pure and simple. Ruben Rivera. Having been found negligent. Even a slight nudge becomes discernible. temperate and exemplary damages. both employees of appellant Corporation. Tagumpay Eusebio. his innocence was not therefore proven. despite driver's protestation that he did not hit the Kombi delivery panel at the left rear corner. That even De Luna himself did not realize that the truck he was driving came in contact with the plaintiffs Kombi delivery panel. evidence has it that there was unexcusable laxity in the supervision of its driver by the Corporation. hit the Kombi at its rear left corner which sent the Kombi delivery panel careening 163 . The proximate cause as hereintofore discussed above was the recklessness of the driver De Luna in miscalculate his distance to and from the Kombi delivery panel on overtaking. that he was assigned to drive small vehicles before being assigned to drive cargo trucks for two months and after being tested for his driving ability. True. From the reconstruction of the incident. that he was given examination in driving and found fit. At impact. it claimed it was error for the trial court not to so hold and further claimed that it erred in holding the Corporation able to plaintiff appellee. There are steps. he merely stopped a while (which we doubt if he did). To justify these awards. They should have declared on the different company procedures in hiring its employees. fourth. who was seated on that side. eight and ninth errors will be treated together with the errors assigned by appellant corporation. As it was lax in its supervision. the lower court did not err in sentencing defendant driver De Luna to pay actual. the driver of the volkswagen was crushed in the driver's seat since the Kombi's front portion offered no protection being the snub-nosed type. A carefull driver can even detect a small pebble hitting his vehicle. we find the driver the one negligent and not the plaintiff-appellee as assailed by the appellants. Pleno. Their testimonies. even knowingly realizing that he caused the accident. if there was close supervision exercised by the defendant-appellant Corporation on its employees and proper care of its equipments. It war. The case may have been dismissed and he was acquitted for failure of the prosecution to prosecute thru desistance of the aggrieved party. appellant Corporation professes that it had exercised the due diligence of a good father of a family in the selection and supervision of its employee driver De Luna. thru Atty. We have discarded driver De Luna's pretense that he did not realize that his truck came in contact with the Kombi delivery panel of plaintiff. extricated Pleno from the volkswagen after pushing the truck away and thereafter took him to the Makati Medical Center. The red cargo truck stopped for a while and then sped away. was not satisfied with the testimonies of Manuel Zurbano and Benjamin Francisco. it did not know until confronted that its cargo truck met an accident and caused the damage and injury in question. His legs were trapped in the wreckage. not enough. It is very difficult for us to believe the claim of the appellant that it did not report the accident because no one in its company knew about the accident.

despite the surgery (ibid. 23 and 24). Pleno was incoherent when he first saw him (ibid.' meaning the bone was broken up into several fragments. et al. Lanuzo v. 56511 was denied.08. execution may issue immediately by the court a quo upon receipt of this resolution. is inserted throughout the whole canal of the thigh bone to obtain adequate alignment and in the case of Mr. however. July 13.000. According to Dr. and at the time of the accident was a director. v. an eye specialist. 56505 questioning the reduction of the damages awarded to him and the court's ruling that the ability of Philippine Paper Products. we have ruled in a long line of cases. et al. This. 1974." (p. sought the reversal of the factual findings of the appellate court as regards their lialibility The case was docketed as G. 93 SCRA 20. 56505. The issues raised in this petition are two-fold.000.00 exemplary damages. 19). 15). a topnotcher. P100. 10 and 11).R. this time what he described to be an open surgery on the left thigh bone. we declared "that with respect to the affirmed judgment of the Court of Appeals ordering respondents to pay jointly and severally the petitioner P48. Dr. M-1. but we are convinced by the conclusion arrived at by the trial court that defendant-appellant Corporation thru its representative and counsel. he became an invalid. 73 Phil. Prudenciado v. Pleno.000. 79. multiple fragments which naturally would prolong the healing period (ibid. On May 20.1973. Borromeo conducted another operation. (pp. 55 SCRA 202. 13 and 14). moral damages were reduced from P200. 56511. Rollo) The resolution became final and executory on September 7.00. He was confined from the date of the accident up to May. de Guzman). Atty. necessitated another surgery. which according to Dr. G. 11). Borromeo testified that definitely there is shortening of oneleg of Mr. to relieved swelling and spasm of the muscles (ibid. L-110296. Not only did the defendant-appellant corporation not report the accident to the authorities. Borromeo conducted a series of operations. Pleno was suffering from horizontal deplopia 164 .R.. Maximo Pleno filed G.s. 49-54. P. v.00 temperate or moderate damages.. and.000. again. Dr. In short. Garcia and Almario. Pleno. No.R.000. Eusebio. Maximo Pleno is a mechanical engineer. Reynaldo Bordador testified that Mr. Appellant Corporation claims that damages were not alleged in the complaint nor competent evidence adduced to prove the damages awarded. All the parties assailed the decision by filing two separate petitions before us. 1981. Dr. p. p. Gamboa. and (2) whether or not the appellant court was correct in reducing the amount of damages awarded to the petitioner. and the costs of suit. evidence of head injury (t. Borromeo. 11-12). p.. Fabros. borne by the records and remained unrefuted as follows: Dr. Mr. Then.000. (See Bachrach Motor Co.R. as employer is only subsidiary. was given due course and it is the petition which we now resolve.244. Pleno had to use crutches because the fracture was not just an ordinary fracture.000. (with reduction of a total of P215. the appliance was inserted on both thigh bones (ibid. plaintiff-appellee Maximo Pleno sustained multiple fractures involving both thigh bones and the left shin bone or tibia and there is evidence of head imjury.000. 607. Mr. Borromeo. Ramon Borromeo. He sustained serious wounds on his forehead and legs. Pleno had complained of defective eyesight (t.to the right smack against the parked cargo truck with chairs. Mr. Pleno underwent.. Court of Appeals. 100 SCRA 205. "the questions raised being factual and for insufficient showing that findings of facts by respondent court are unsupported by substantial evidence. In order to be more detailed. actual damages.00) wherein the petition for review in G. Pleno developed foreign body reaction. it was what the doctor called 'comminute fractures. modified the award on damages such that temperate damages were reduced from P200. Alliance Transport System. Pleno sustained multiple fractures involving both thigh bones and the left shin bone or tibia multiple laceration involving wound in his forehead and left thigh. We sustain the view of the petitioner that the ability of an employer in quasi-delict is primary and solidary and not subsidiary.n. He could not work immediately. and P15. we issued a resolution in both petitions.00 attorney's fees. the surgeon explained.R. Tan. We find on record sufficient evidence supporting the adjudication of damages in favor of the plaintiff-appellee. 148 SCRA 440) The Court of Appeals affirmed the awards of damages based on its findings. A year later. Inc. After Identifying the various x-ray Films presented (Exhibits M. Anuran. Borromeo performed still another operation three weeks thereafter.s.00 to Pl00. 16). Inc. as follows: Both appellants assailed the awards of damages. Pleno and saw him at the emergency room of the Makati Medical Center on the day of the accident. 17). P50. I) on both thighs (ibid. attempted to cover up the involvement of its driver and truck in the accident from the victim's family (Testimony of Pat. 28 and 29). et al. This is a sweeping statement. Philippine Paper Products. pp. Malipol v. 1957. P100. No. pp. They are: (1) whether or not the employer's liability in quasidelict is subsidiary. we quote from the brief of the appellee the condition of the plaintiff-appellee Mr. vice-president and general manager of Mayon Ceramics Corporation. On the other hand. pp. No. On the witness stand.00 to P15. p.00 moral damages. May 21.00..00 to P100. No. this time on the right thigh bone (ibid. 56511 has been herein DENIED. February 22. the orthopedic surgeon who treated Mr. On that same day." G.000. 16 SCRA 742. pp.00. Ramon Borromeo. Pleno.n. In this same resolution. 17 SCRA 224. Dr. M-2 and M-4). Pleno's wound in the thighs were cleaned followed by skeletal traction to both legs by which a wire is inserted to the bone to obtain more or less sittisfactory ent a temporary procedure. p. Barredo v. 1981 and an entry of judgment was made. Poblete v. Inc. 16). several months later he developed rejection of the metallic appliance with secondary infection of the bones which required another operation (ibid. the left leg. No. Pleno. testified that Mr. Buno. Rollo) The court. this time the action of the metallic appliance (Exh. He was in pain (ibid). Vinluan v. the purpose of which was to obtain an accurate alignment of the fractures (ibid. Mr. 18). p. Borromeo explained.000. 1972.000. It further ruled that the employer's ability is subsidiary. Dr. Two weeks thereafter. Mr. p. Ping. and attorney's fees were reduced from P30. limited in leg motion because of the fractures and disabled (ibid.. This was not to be the last of the operations Mr.<äre||anº•1àw> The metallic appliance. Dr.

124 SCRA 588. the actual losses sustained by the aggrieved parties and the gravity of the injuries must be considered in arriving at reasonable levels (Siquenza v. prejudice or corruption on the part of the trial court (Gerada v. (at pp. fight. In similar cases as in Borromeo v. Alliance Transport System. 1971. 1972. as stated earlier.n. Sarkies Tours Phil.. In arriving at a reasonable level of temperate damages to be awarded. Court of Appeals. 9. cited in Prudenciado v.000. (See Magbanua v. et al.. Pleno's eye condition as one which resulted from paralysis of one of the occular musde (ibid. Court of Appeals.G. Pleno was driving homeward with geologist Langley after an ocular inspection of the site of the Mayon Ceramics Corporation. Inc. an award of temperate or moderate damages may still be made on loss or impairment of earning capacity.G.. supra. 9). Court of Appeals. 44 Phil 165.). there is no doubt that Pleno is an enterpreneur and the founder of his own corporation. et al. subject to the condition that the award for damages is not excessive under the attendant facts and circumstance of the case. p. Inc. L11037. It specifically mentions the findings of the trial court which were affirmed by the appellate court regarding the gravity of the injuries suffered by the petitioner. Bordador described Mr. (4) 7347. Inc. the doctor concluded (ibid. supra. the Mayon Ceramics Corporation. 7358. supra. a deformity still resulted and that his left leg is shorter than the right. the outcome is not guaranteed there will also be double vision no matter how good the surgery is. Adone v..08 may be awarded. pp. Prolonged reading Will result in headache (ibid). trial courts are guided by our ruling that: . without redress from the defendant's wrongful act. There are cases where from the nature of the case. The petitioner now assails the reduction of the damages as without justification. Bachrach Motor Co. it reduced the amount of damages. The trial court based the amounts of damages awarded to the petitioner on the following circumstances: Coming now to the damages suffered by plaintiff Maximo Pleno. As previously stated. Intermediate Appellate Court. actual expenses of P48.or double vision of the left eye which can be caused by injury resulting from a blunt instrument hitting the forehead or any part of the head (t. This being the case. defenite proof of pecuniary loss cannot be offered.. The medical expenses. and in Araneta. 54-57.<äre||anº•1àw> Moreover. While in the hospital. While surgery could be performed. There is also no doubt that due to the incident. he underwent several major operations on his legs and in spite of Id operations.. 29. Alliance Transport System. His actual income however has not been sufficiently established so that this Court cannot award actual damages. Siquenza v. For instance. manufacturer of the now famous Crown Lynn ceramic wares. 1958..s. The gravity of the injuries Mr. 57 O. the employer's liability in quasi-delict is primary and solidary. Court of Appeals. The award was reduced to P100.. Sadie v.145) In the case of moral damages.. L-11394. Manila Electric Railroad Co. up to May 9. and exemplary damages as well as attorney's fees lies upon the discretion of the court based on the facts and circumstances of each case.The award of temperate damages was reduced by the appellate court on the ground that the amount of P200.00. Should damages be denied for that reason? The judge should be empowered to calculate moderate damages in such cases. Temperate damages are included within the context of compensatory damages (Radio Communications of the Philippines.. supra.). As to the loss or impairment of earning capacity. 8). might have pushed them through. et al.). He is a mechanical engineer and the topnotcher of the professional examination for mechanical engineering in 1938. Dr. v. 9). the appellate court reduced the amount of temperate and moral damages as well as the amount of attorney's fees on the ground that the awards were "too high" . although the court is convinced that there has been such loss. it is not controverted that Pleno was hospitalized for about five months beginning December 21. moral. p. Intermediate Appellate Court. Pleno underwent physical suffering. (RCPI) v. Inc. Dec. v. Rollo) Nevertheless. On the day of the incident. San Andres v. 165 . 40 SCRA 144.1960..). et al. Inc. Bank of America. (Araneta v. Sept. and his business as well as his standing in society. the yardstick shaould be that the "amount awarded should not be palpably and scandalously excessive" so as to indicate that it was the result of passion. April looks to the left. the proper award of damages were given. Inc. The court's discretion is. he would be seeing two objects (ibid. of course. Bordador. Arreglado. injury to one's commercial credit or to the goodwill of a business firm is often hard to show certainty in terms of money.. Bachrach Motor Co. most if not all of his children excelled in academic studies here and abroad. Prudenciado v. 656 cited in Prudenciado v. Because of this. The award of temperate.. p. rather than that the plaintiff should suffer. It appears also that he is an industrious and resourceful person with several projects in line and were it not for the incident. 57 O. severe arudety and that he also underwent several major operations. Pleno is the founder of Mayon Ceramics Corporation.. As stated earlier.000. From the record.00 is rather "too high" especially considering the fact that the driver De Luna is a mere driver and defendant-appellant Corporation is only subsidiarily liable thereof. And yet. supra. but.244. Alliance Transport System. 14-17) There is clear and convinced evidence establishing actual and compensatory damages. v.. mental anguish. Inc. Cordage. 137 SCRA 570. (4) 636. LTB Co. That Pleno sustained a permanent deformity due to a shortened left leg and that he also suffers from double vision in his left eye is also established.. he suffers from some inferiority complex and is no longer active in business as well as in social life. the effect of the injuries upon him as a person. 137 SCRA 328. Pleno received and the result pain and mental suffer is very much evident from the medical diaganosis and prognosis initated above. Warner Barnes & Co. The suffering. Inc. the day of the incident. hospital bills and doctor's fees were properly exhibited and not rebutted by defendants. 116 SCRA 81.

for another thirty days at 19% interest to mature on January 11.518.000.G.00. The Court of Appeals has shown no sufficient reasons for altering factual findings which appear correct. representing a single money market placement. 1980. 1980. CARREON.59 in money market placement with a maturity term of thirty two days. 1979. 16024 is AFFIRMED in all respects. the instant petition is GRANTED. which is the exact amount to mature on December 17. Commercial Corporation was a client of petitioner and started its money market placements in September. there are no substantial reasons and no references to any misimpressions of facts in the appellate decision. BPI Investments claimed that roll overs were subsequently made from 166 .00 that matured on April 16. 1979." was engaged in money market operations. for a term of one hundred twenty days at 19% interest maturing on April 15. On November 15. and the second on December 17. Celso Abrantes. As regards de Luna. so as to serve as an example that in cases of accidents of this kind.81. The individual respondents. G. No. A sales order slip and a confirmation slip were executed dated December 12. for brevity) placed with BPI Investments P318. As a result of this.000. A sales order slip for straight sale and a confirmation slip were executed. BPI Investments paid D. therefore. Also. Amended Joint Record on Appeal) We rule that the lower court's awards of damages are more consonant with the factual circumstances of the instant case. petitioner. Carreon did not make any money placement maturing on December 12. Hence. 1979. 1980.G. their bookkeeper made an error in posting "12-17" on the sales order slip for "12-12. Carreon twice in interest of the amount of P323. 1979.22 for another thirty days. The trial court's findings of facts are clear and well-developed. Makati.518. According to petitioner. formerly known as "Ayala Investment and Development Corporation.22.22.22. 1979. Pleno is also entitled to exemplary damages since it appears that gross negligence was committed in the hiring of driver de Luna. (pp. 1979. and again rolled over for another thirty days at 18% interest. 1979. Id corporation is able to pay exemplary damages. CARREON. SO ORDERED. The money placement in the amount of P319. Carreon with another P323. He is therefore entitled to moral damages." BPI Investments claimed that the same placement was also booked as maturing on December 12. 1980. J.443.518. 126524 November 29.00. or up to December 17. the drivers involved should not leave their victims behind but should stop to assist the victims or if this is not possible. That the corporation did not also report the matter to the authorities and that their lawyer would attempt to bribe the police officers in order that the incident would be kept a secret shows that the corporation ratified the act of their employees and such act also shows bad faith. The award of attorney's fees is also proper in this case considering the circumstances and that it took more than five years of trial to finish this case. D. D. AURORA J. BPI Investments issued the corresponding sales order slip for straight sale and confirmation slip. 1979.518.518. 1980 was again rolled over for a term of sixty one days at 19% interest maturing on June 16. spouses Daniel and Aurora Carreon and Josefa M.G. to report the matter immediately to the authorities. we modify the award of attorney's fees to P20.981. DANIEL G. with a maturity value of P329.000. On the other hand.000.22 via roll over of P300. The decision of the Court of First Instance of Rizal (Pasig) in Civil Case No.22. However. at a maturity value of P323.518. WHEREFORE.518. Carreon. The questioned decision is REVERSED and SET ASIDE. and P23. he was still hired by the corporation. The Facts Petitioner BPI Investment Corporation (BPI Investments). affirm the lower court's awards of damages and hold that the appellate court's reduction of the amounts of temperate and moral damages is not justified. which he experienced. 1980. at 19% interest. 2001 BPI INVESTMENT CORPORATION. 1979. Mr.G. BPI Investments paid the money placement on April 16. BPI Investments credited D. Carreon an amount of P323. paid out in cash. respondents. 1980. 1979. or up to January 11.G. Aurora Carreon instructed Abrantes to roll over the amount of P323. 1978. On December 17. PARDO. Aurora Carreon instructed BPI Investments to roll over the whole amount of P323.G. plaintiffs counsel prepared lengthy and exhausive memorandum. Jeceil also placed with BPI Investments their personal money in money market placements. an officer of BPI Investments called up Aurora Carreon about the money market placement supposedly maturing on December 12. Each item of damages is adequately supported by evidence on record. 1979.48-50. AND JOSEFA M. the first on December 12. there appeared in BPI Investments ledger due D.R. except for the award of attorney's fees which is reduced to P20. dismissing petitioner's complaint for recovery of a sum of money alleged as overpayment of money market placements. The amount was again rolled over for a term of thirty days at 18% interest maturing on July 16.22. Carreon Commercial Corporation (D.00 which we deem to be just and equitable under the circumstances of the case. vs. On December 12. the anxiety and fright that he underwent are sufficiently proved. if not patent. D. JECIEL.G. In spite of his past record.G. Respondent D.both mental and physical. the very fact that he left the scene of the incident without assisting the victims and without reporting to the authorities entitles an award of exemplary damages. We. CARREON COMMERCIAL CORPORATION.: Before the Court is a petition for review on certiorari of the decision1 of the Court of Appeals reversing the ruling of the Regional Trial Court.

"3 On May 10. because of sleepless nights and mental anguish. as follows: April 14.000.G. and payment of her money market placement of P73.657. On July 30. Carreon asked for compensatory damages in an amount to be proven during the trial.09. with counterclaim.G.00 because of the humiliation.937. Again.371. 2-B up to 11B) duly verified and signed by at least two (2) authorized high ranking officers of plaintiff's corporation." "The court agrees with defendants' counsel's observation that plaintiff did not prove by clear and convincing evidence that defendants indeed received money in excess of what is due them as it utterly failed to show and present any proof what was actually due defendants. 1981 P220. sleepless nights and deterioration of health due to the filing of the complaint and indiscriminate and wrongful attachment of their property. the spouses Daniel and Aurora Carreon sent to BPI Investments a proposed memorandum of agreement. it is incumbent upon plaintiff corporation to provide for competent employees possessed with adequate skills in implementing effective safeguards and measures that ensure the non-occurrence of errors of this nature.000. the Company has a fiveyear option to determine if the said placement referred to as funded. Accordingly. "It appearing that plaintiff was not motivated by malice in filing this case.937.88 October 19. 1982.00 March 19.000. D. but the trial court denied the motion after finding the absence of double payment to the defendants. Branch 36. the case is hereby DISMISSED with cost against plaintiff. as correctly stated by defendants. Josefa Jeceil asked for moral damages of P500.648. all defendants claimed for exemplary damages and attorney's fees of P100. on October 8. "Lastly. the pertinent portions of which read as follows: "Plaintiff's case is unmeritorious. On April 21. The respondents asserted that there was no overpayment and asked for time to look for the papers. Upon the request of BPI Investments. Makati.000.00. 1985.09 All the above payments were evidenced by checks issued by BPI Investments to respondents.38 August 12.857.maturing payments on which BPI Investments had made over payments at a total amount of P410."8 167 . great mental anguish. and if so. the parties herein agree as follows: "1. In the spirit of goodwill the company hereby agrees to temporarily reimburse AIDC the amount of FOUR HUNDRED TEN THOUSAND NINE HUNDRED THIRTY SEVEN and 9/100 PESOS (P410. 1982.74 June 18.6 On October 28.00. 1980 P14. spouses Daniel and Aurora Carreon asked for moral damages of P1. stating that: "NOW. the counterclaim is likewise DISMISSED. On May 25.937. plaintiff having thus clearly stated in several documents duly signed by its responsible officers cannot now vary their contents and claim that they were received without value having been received for the same. And if such documents support the funding of side placement. 1981 P66.000. the trial court issued an order5 for preliminary attachment after submission of affidavit of merit to support the petition. 1982. especially their residential house and payment of their money market placement of P109. Because of the age and retrieval difficulty of the transactions on this placement.09) representing the full amount of the claim of AIDC as mentioned above. and for (sic) in consideration of the foregoing. Carreon with preliminary attachment. pp.57. and the posting of a bond in the amount of P200. "In view of the foregoing.a. a complaint4 for recovery of a sum of money against D. 1982. the alleged payments in the complaint were admitted by plaintiff itself to be withdrawals from validly issued commercial papers (TSN of August 12. the summary of the money market placement submitted as evidence by plaintiff (Exh. On May 14. to submit to AIDC (Now BPI Investments) documents to this effect. respondents D. without responding to the memorandum and proposal of D. A) is at best self-serving as it was admittedly prepared by plaintiff's own accounting department without any participation of defendants. As pointed out by the same counsel.00. 1986. p. demanding the return of the overpayment of P410. 1982. (TSN of October 15. Carreon filed with the trial court an answer7 to the complaint.09. BPI Investments moved for reconsideration.259. 4) "Moreover. it would be gross negligence on the part of plaintiff if it fails to provide for the same considering that it is primarily engaged in the solicitation of money market placements.75. 1982.G.937. 3-5) for value received (Exhs. 1980 P100. BPI Investments. 1431 of the New Civil Code provides that through estoppel an admission or representation is rendered conclusive upon the person making it. Art. However. the trial court rendered a decision.G. and cannot be denied or disapproved as against the person relying thereon. 1980 P9. the trial court lifted the writ of attachment. 1982.283. The attachment previously issued is likewise lifted. 1993. dated May 7. AIDC (BPI Investments) shall pay the company the stated amount being temporarily reimbursed by the Company with a 12% p. BPI Investments wrote respondents Daniel Carreon and Aurora Carreon. Carreon filed with the Court of First Instance of Rizal. THEREFORE. "SO ORDERED.64 TOTAL P410.2 They discussed the matter with BPI Investments.000. interest. 1-B.

BPI Investments did not have a hand in its implementation. Jeceil.00 to the late Daniel G. Whether petitioner was obliged to pay the estate of Josefa Jeceil the amount of her money market placement. represented by Aurora J.00 to Aurora J. this appeal. on July 19.11 Petitioner BPI Investments raises the following issues: 1.16 168 . and 4. P500.000. Whether there was an over payment of respondents' money market placements. Carreon.000.75 with 12% interest per annum from June 3.000. "SO ORDERED"10 Hence. And as soon as petitioner discovered the wrong posting. Ordering plaintiff BPI to pay to the estate of Daniel G.G. Ordering plaintiff BPI to pay the following amounts of damages: "Moral Damages — "a) P1.000. "b) P1. Carreon to inform the latter of the error in the posting of the maturity dates on its money market placements. Carreon.12 Petitioner's Submissions First. 1979. the appealed judgment of the trial court dismissing the plaintiff's complaint is hereby AFFIRMED while its dismissal of the counterclaim of defendants is REVERSED and SET ASIDE and judgment is hereby rendered as follows: "1. Carreon. 1982 until fully paid. Ordering plaintiff BPI to pay for the costs of the suit. Whether petitioner abused its right in implementing the writ of preliminary attachment. "Compensatory Damages — "P1.14 Second.Both parties appealed the above decision to the Court of Appeals. represented by Aurora J. a mistake caused the overpayment in the posting of the maturity date of "12-12" instead of "12-17.000.09 since the December 12. the manner of execution of the writ of attachment is not the fault of BPI Investments. 1979 and December 17.G. that is. BPI Investments discovered that respondent corporation has overpaid P410. BPI Investments submits that the summary of the money market placements and the checks issued to D. Carreon.00 to all defendants "2. the money market placement of P109. the Court of Appeals promulgated a decision. 1979 placement was unsupported by any fund. The sheriff of the trial court implemented the writ. 3. 1996. Carreon are sufficient to show that one renewal or "roll over" of the money market placement dated November 15. 1979. The December 12. Jeceil or her estate represented by Aurora J. Whether the Court of Appeals awarded excessive moral and exemplary damages as well as attorney's fees to respondents. the money market placement in the amount of P73.238.9 After due proceedings. "Exemplary Damages — P1.00 to D.G. "Attorney's Fees P500. Carreon Commercial Corporation. Ordering plaintiff BPI to pay to the estate of Josefa M.857. BPI Investments stressed that in a money market transaction an official receipt must support maturing placements. the dispositive portion of which reads as follows: "WHEREFORE. "4.57 at 12% interest per annum from maturity on July 12. December 12. 1979 placement was not funded.G." The mistake in the posting of the maturity date benefited D. Carreon.00 to all defendants. for a period of thirty-two days gave rise to two placements maturing on two dates.500.000.00 to the late Josefa M.000. Carreon or his estate represented by Aurora J. Carreon. 2.15 Third. 1982 until fully paid.000. Carreon. Carreon.G. "3. it immediately wrote D. The only participation BPI Investments had in the process was the application for a writ of preliminary attachment.13 After several roll overs and withdrawals by D.937.000.

There was no proof adduced that the credit standing of the respondent corporation was affected by the filing of the case. As to the moral damages awarded to Daniel G. Whereas Josefa Jeceil died from various heart ailments in 1987. we consider the petition partly meritorious. The amount of P73. malice and gross negligence in the management of respondent's money market placements. Each of them suffered mental anguish.19 Fifth.857. petitioner's contention that respondent failed to withdraw the amount deposited with the sheriff is not correct.18 The award of damages in favor of the respondent corporation was also without basis. (8) when the findings of fact are conclusions without citation of specific evidence on 169 . in making its findings.00. consignation was not proper. First. Carreon and Aurora J. unjust. the deposit does not amount to payment. went beyond the issues of the case and the same is contrary to the admissions of both appellant and appellee. According to respondents. may be raised in a petition for review on certiorari. the Court of Appeals blamed BPI Investments for the deterioration of the health of two respondents who died pendente lite.000.000. the awards are reasonable and supported by evidence. (3) where there is a grave abuse of discretion. this is not a mere case of "misreading" "12-17" as "1212. It was proved that D. such as (1) when the conclusion is a finding grounded entirely on speculation. The attorney's fees in the amount of P500. The Court of Appeals ruling that the filing of the case aggravated and caused the death of respondents Daniel Carreon and Josefa Jeceil is completely unfounded and farfetched. This constitutes an abuse that justifies the award of damages to the respondents. Notwithstanding the fact that petitioner's claim amounted only up to P410. and to Josefa M. (2) when the inference made is manifestly mistaken. (5) when the findings of fact are conflicting.09. over fifteen years. Carreon is a reputable corporation with good credit standing in the business community and this reputation was damaged due to the malicious charges filed by petitioner.000. Carreon. was suffering from nasopharyngeal cancer from which he died in 1984. 1979 placement was different from the December 17. The case at bar does not fall within any of the exceptions. in a harsh.00.22 The Court of Appeals correctly ruled that petitioner abused its right in executing the writ of attachment against respondents.21 BPI Investments was guilty of bad faith. The award of moral and exemplary damages and attorney's fees in favor of respondents is bereft of factual and legal bases. (7) when the findings are contrary to those of the trial court.17 Petitioner filed the case below to recover the overpayment arising from an unfunded placement.G. the order of the Court of Appeals for BPI Investments to pay the money market placement of Josefa Jeceil was also without basis.24 As to the award of exemplary damages. both in the amount of P1. It must be stressed that the amount of P1. hence. 1979 placement. Daniel Carreon. respondents submit that the same is supported by proofs. Jeceil in the amount of P500. petitioner caused the levy on property of respondents valued at more than P40. the same is not excessive. distinctly set forth. surmises and conjectures.26 The Court's Ruling After a careful consideration of the facts and the evidence presented by both parties. indeed. the same is proper. absurd or impossible.00. The respondents failed to show proof that the December 12. Only questions of law. considering the fiduciary nature of their relationship.000. 20 and 21 of the Civil Code constitute the legal basis for the award of damages to respondents. No causal relation whatsoever was established between the health of the respondents and the filing of the case. the Court of Appeals directed the petitioner to pay the matured money market placement of the late Josefa Jeceil.000. embarrassment and humiliation due to the case filed by petitioner and two of them deteriorated in their health and died during the pendency of the case.57 was placed and deposited by BPI Investments with the sheriff of the Court of First Instance of Rizal in compliance with the order of the court. Josefa Jeceil had no right to withdraw such deposit because of the pending litigation.000.000. There was no proof of bad faith or malice on the part of BPI Investments.25 As to the order to pay the long overdue money market placement of the late Josefa Jeceil. As to the compensatory damages awarded to the corporation.00 is not excessive considering that the case dragged on from 1981 up to the present. subject to clearly settled exceptions in case law. All the respondents are persons of high reputation in the community. What happened was an honest mistake. Respondent Jeceil knew of this fact but she failed to withdraw the amount in the custody of the trial court. (4) when the judgment is based on a misapprehension of facts. not reviewable in this case.23 As to the alleged excessive award of moral and exemplary damages as well as attorney's fees." The sloppy accounting and recording of the ledger was a clear case of gross negligence in the exercise of petitioner's primary business of accepting money market placements. prior to the filing of the case. BPI Investments was remiss in its duty to treat respondents' money market placements with the highest degree of care.Fourth.00 was awarded to four respondents.20 Respondents' Position Respondents submit that the issues raised are factual. (6) when the Court of Appeals. As a consequence.000. inhuman and oppressive manner. almost five years since the case was filed.937. "There are instances when the findings of fact of the trial court and/or Court of Appeals may be reviewed by the Supreme Court. Articles 19.

fraudulent.: The petitioner in the case is the Government Service Insurance System (hereafter. Carreon indeed received money in excess of what was due them. petitioner. Title XVIII. the Court of Appeals committed errors in the apprehension of the facts of the case. 1982. Having lost the case in the trial court and the Court of Appeals. No costs. G. we review its findings of facts.00. Hence. however. It evinces a thoughtless disregard of consequences without exerting any effort to avoid them. and to the estate of Aurora J.00. we agree with the petitioner that such correlation is bereft of basis and is far fetched. It was just exercising a legal option. Book IV of the Civil Code. with legal interest of twelve (12%) percent per annum from June 3. BPI Investments is not to be blamed for the excessive and wrongful attachment. short of gross negligence.238. be proved with certainty. Temperate or moderate damages may be recovered when the court finds that some pecuniary loss has been suffered but its amount cannot. whether or not GSIS may be liable to pay damages to respondent spouses given the applicable law and the circumstances of the case. Chapter 3. that the damages sustained by respondents were due to petitioner's fault or negligence. until fully paid. We find petitioner not guilty of gross negligence in the handling of the money market placement of respondents.00.which they are based. or was guilty of gross negligence amounting to bad faith. or malevolent manner.57 to petitioner as the consignation was not proper or warranted. if the defendant acted in a wanton. The award of moral. or in wanton disregard of his contractual obligation. we state that the issue is not "suability" or whether GSIS may be sued despite the doctrine of state immunity from suit.1 The Case The case is a petition2 for review on certiorari of the decision of the Court of Appeals3 affirming the decision of the Regional Trial Court. or malevolent manner. "GSIS"). respondents. BPI Investments is likewise ordered to pay temperate damages to the estate of the late Daniel G. BPI Investments is ordered to pay to the estate of Daniel G. As to the finding of the appellate court that the filing of the case aggravated and eventually caused the death of two of the respondents. Jeceil in the amount of P150. in addition to moral.57. or the entire absence of care.000. 2001 GOVERNMENT SERVICE INSURANCE SYSTEM. They are recoverable in criminal cases as part of the civil liability when the crime was committed with one or more aggravating circumstances. with legal interest at twelve (12%) percent per annum from maturity on July 12. from the nature of the case. in quasi-delicts.000. to pay the estate of Josefa M. with the elimination of award of moral damages. Carreon the money market placement of P109. hence. Carreon in the amount of P300. until fully paid.32 The Court deems it prudent to award reasonable temperate damages to respondents under the circumstances. Carreon in the amount of P300. "Gross negligence implies a want or absence of or failure to exercise slight care or diligence. the trial court may release the deposited amount of P73. SO ORDERED. compensatory and exemplary damages and attorney's fees are deleted.000.857. Jeceil. vs. Moral damages may be awarded in a breach of contract when the defendant acted in bad faith. oppressive. it now comes to this Court for redress. 1982.857. the money market placement in the amount of P73. fraudulent."29 The law on exemplary damages is found in Section 5. oppressive. when it asked for preliminary attachment. These are imposed by way of example or correction for the public good."28 However.G. if the defendant acted with gross negligence.33 As to the claim for payment of the money market placement of Josefa Jeceil. temperate. The sheriff of the issuing court did the execution and the attachment. while petitioner BPI Investments may not be guilty of gross negligence. and in contracts and quasi-contracts. reckless. J. SPOUSES GONZALO and MATILDE LABUNG-DEANG. Finally."31 There is no doubt. Angeles City4 ordering GSIS to pay respondents Gonzalo (now deceased)5 and Matilde 170 . reckless. No. the decision of the Court of Appeals is hereby AFFIRMED with MODIFICATION. The Fallo IN VIEW WHEREOF."27 In the case at bar. and to the estate of Josefa M. The petitioner may withdraw its deposit from the lower court at its peril. At the onset. duly verified and signed by at least two authorized high-ranking officers of BPI Investments.75. (9) when the facts set forth in the petition as well as in the petitioners' main and reply briefs are not disputed by the respondents. but liability. it failed to prove by clear and convincing evidence that D. 135644 September 17. PARDO. and (10) the findings of fact of the Court of Appeals are premised on the supposed absence of evidence and contradicted by the evidence on record. Carreon and Aurora J. or compensatory damages.R. The award of moral damages and attorney's fees is also not in keeping with existing jurisprudence. "The alleged payments in the complaint were admitted by plaintiff itself to be withdrawals from validly issued commercial papers. liquidated.30 BPI Investments did not act in a wanton. so must the award of attorney's fees be deleted.

GSIS appealed the decision to the Court of Appeals. "d) To pay cost of the suit. the spouses Deang filed with the Court of First Instance. "SO ORDERED.000. The Facts Sometime in December 1969. 14926-R issued by the Register of Deeds of Pampanga.21 On September 21. they were unable to secure a loan from Milagros Runes. 1979. finding no reversible error in the appealed judgment. GSIS is not covered by Article 218022 of the Civil Code. Pampanga.12 As stated earlier. since government owned and controlled corporations (hereafter. this appeal." making GSIS liable for damages.000. ruling: First. "c) To pay legal interest on the award in paragraphs a) and b) from the filing of the complaint." Hence. 1998.11 However. without justifiable cause constitutes negligence on the part of the employee of GSIS who lost it. 1995.15 On June 26. claiming that as result of the delay in releasing the duplicate copy of the owner's title.14 On June 22. the trial court rendered a decision ruling for the spouses Deang. eleven (11) months before the maturity of the loan. is liable for a negligent act of its employee acting within the scope of his assigned tasks.. "GOCCs") whose charters provide that they can sue and be sued have a legal personality separate and distinct from the government. "SO ORDERED. "b) To pay plaintiffs-spouses the amount of P15.16 On July 6.00 as temperate damages. the Court of Appeals promulgated a decision affirming the appealed judgment.00). the proceeds of which could have been used in defraying the estimated cost of the renovation of their residential house and which could have been invested in some profitable business undertaking. 1979.6 As required by the mortgage deed. the spouses Daeng deposited the owner's duplicate copy of the title with the GSIS. the GSIS is liable to pay a reasonable amount of damages and attorney's fees. 1979. the spouses Deang settled their debt with the GSIS8 and requested for the release of the owner's duplicate copy of the title since they intended to secure a loan from a private lender and use the land covered by it as collateral security for the loan of fifty thousand pesos (P50. the spouses Deang obtained a housing loan from the GSIS in the amount of eight thousand five hundred pesos (P8. the spouses as mortgagors deposited the owner's duplicate copy of the title with the GSIS located at its office in San Fernando. which the appellate court will not disturb. as a GOCC primarily performing governmental functions. in 1979.25 The Court's Ruling 171 . 1979. We quote the dispositive portion:23 "WHEREFORE. 14926-R to the spouses Deang. The loan was secured by a real estate mortgage constituted over the spouses' property covered by Transfer Certificate of Title No.500.18 On July 31. The trial court reasoned that the loss of the owner's duplicate copy of the title "in the possession of GSIS as security for the mortgage. the Court renders judgment ordering the GSIS: "a) To pay the plaintiffs-spouses the amount of P20. the loan was to mature on December 23.7 On January 19. legal interests and costs of suit for the loss of their title to real property mortgaged to the GSIS.24 The Issue Whether the GSIS. after the completion of judicial proceedings. and it is liable for damages caused by their employees acting within the scope of their assigned tasks. GSIS commenced the reconstitution proceedings with the Court of First Instance of Pampanga for the issuance of a new owner's copy of the same.13 Satisfied that the owner's duplicate copy of the title was really lost. 1995. Second.00 as attorney's fees. "spouses Deang") temperate damages." On August 30. 1979.17 In its defense.19 We quote the dispositive portion of the decision:20 "IN VIEW OF THE FOREGOING.000..Labung-Deang (hereafter. personnel of the GSIS were not able to release the owner's duplicate of the title as it could not be found despite diligent search. Angeles City a complaint against GSIS for damages. attorney's fees. GSIS issued a certificate of release of mortgage. GSIS finally secured and released the reconstituted copy of the owner's duplicate of Transfer Certificate of Title No. the same is hereby AFFIRMED.10 They would use the proceeds of the loan applied for the renovation of the spouses' residential house and for business. and.00)9 which they applied for with one Milagros Runes. GSIS explained that the owners' duplicate copy of the title was released within a reasonable time since it had to conduct standard pre-audit and post-audit procedures to verify if the spouses Deang's account had been fully settled. Under the agreement.

The cited provision of the Civil Code is not applicable to the case at bar. there was a pre-existing contract between the parties. or delay and those who in any manner contravene the tenor thereof are liable for damages. is obliged to pay for the damage done. the attorney's fees. but also for those of persons for whom one is responsible. As an obligor in good faith. "Article 2224. the judge is empowered to calculate moderate damages. We come now to the amount of damages. The duty to return the owner's duplicate copy of title arose as soon as the mortgage was released. may be recovered when the court finds that some pecuniary loss has been suffered but its amount cannot. The award of attorney's fees demands factual. Actual damages to be compensable must be proven by clear evidence. In contracts and quasi-contracts. if there is no pre-existing contractual relation between the parties.37 172 . the conclusion is the same. definite proof of pecuniary loss cannot be offered.00) in temperate damages is reasonable considering that GSIS spent for the reconstitution of the owners' duplicate copy of the title. As heretofore stated. There is likewise no factual basis for an award of actual damages. The obligation imposed by Article 2176 is demandable not only for one's own acts or omissions. Negligence is obvious as the owners' duplicate copy could not be returned to the owners. which are more than nominal but less than compensatory damages." Under the facts.000. rather than let the complainant suffer without redress from the defendant's wrongful act.30 The fact that the complainant suffered economic hardship31 or worries and mental anxiety32 is not enough. moral damages are not awarded if the defendant is not shown to have acted fraudulently or with malice or bad faith.28 GSIS insists that it was under no obligation to return the owner's duplicate copy of the title immediately. xxx (italics ours)" The argument is untenable. When the court is convinced that there has been such loss. Temperate damages may be granted. but must depend on actual proof." Since good faith is presumed and bad faith is a matter of fact which should be proved. Attorney's fees which are granted as an item of damages are generally not recoverable.27 We do not agree. from the nature of the case. Next. the damages for which the obligor who acted in good faith is liable shall be those that are the natural and probable consequences of the breach of the obligation. it is also apparent that the spouses Deang suffered financial damage because of the loss of the owners' duplicate copy of the title.26 "Article 2180. Those who in the performance of their obligations are guilty of fraud.We rule that the GSIS is liable for damages. the trial court and the Court of Appeals erred in citing it as the applicable law. Such fault or negligence. even though the former are not engaged in any business of industry. GSIS." GSIS submits that there must be proof of pecuniary loss.34 However. be proved with certainty. Temperate or moderate damages. This insistence is not warranted. is called a quasi-delict and is governed by the provisions of this Chapter (italics ours). in which case what is provided in Article 2176 shall be applicable. we find that GSIS is liable for damages. The trial court and the Court of Appeals treated the obligation of GSIS as one springing from quasi-delict. This is untenable.35 The award of twenty thousand pesos (P20. its basis cannot be left to speculation or conjecture.33 A court can not rely on "speculation. it falls within the term "State" and cannot be held vicariously liable for negligence committed by its employee acting within his functions. citing the sixth paragraph of Article 2180 of the Civil Code argues that as a GOCC. The rationale behind temperate damages is precisely that from the nature of the case. the more applicable provisions of the Civil Code are: "Article 1170. GSIS and the spouses Deang had a loan agreement secured by a real estate mortgage. "The State is responsible in like manner when it acts though a special agent. negligence.36 The award of attorney's fees is the exception rather than the rule and counsel's fees are not to be awarded every time a party wins a suit." "Article 2201. However. there being fault or negligence. Nonetheless. conjecture or guess work" as to the fact and amount of damages. Article 2176 of the Civil Code defines quasi-delict as follows: "Whoever by act or omission causes damages to another. We deny the petition for lack of merit. In a breach of contract. but not when the damage has been caused by the official to whom the task was done properly pertains.29 we shall treat GSIS as a party who defaulted in its obligation to return the owners' duplicate copy of the title. legal and equitable justification. and which the parties have foreseen or could have reasonably foreseen at the time the obligation was constituted x x x." The inability of the spouses Deang to secure another loan and the damages they suffered thereby has its roots in the failure of the GSIS to return the owners' duplicate copy of the title. Thus. GSIS is liable for all the "natural and probable consequences of the breach of the obligation. xxx "Employers shall be liable for the damages caused by their employees and household helpers acting within the scope of their assigned tasks.

appellant Yrat pointed his pistol and fired. at about 6:45 o'clock in the evening. Benjamin did not alight from the motorcycle. He warned Virginia not to report to the authorities. Benjamin fell down. thereby inflicting upon the latter fatal gunshot wounds which caused his immediate death. accused Jimena presented Nercua. 51240 with the MODIFICATION that award of attorney's fees is DELETED. at the level of the 7th intercostals space. assisted by counsel. Misamis Occidental. Gunshot wound. Benjamin returned to Barbajo's house and joined appellant and accused Jimena. confederating and helping one another.4 Between five and six o'clock in the evening.) the three bade their host goodbye and proceeded to the video house operated by Violeta and Virginia Singcay. victim's wife. entered a plea of not guilty. At that instance.2 who proceeded to the videoke bar. 1996. 1 ¼ inch in diameter lacerated in character. For his defense. vs. with the presence of the qualifying circumstance of treachery and generic aggravating circumstance of abuse of superior strength. left."3 Thereafter.R. We delete the same. No. Lopez Jaena. unlawfully and feloniously attack. Later. He went back to the videoke bar and ordered beer and cigarettes. SO ORDERED. eyewitnesses Virginia and Violeta Singcay. Simultaneously. Benjamin and accused Jimena had an altercation regarding the local game masiao. accused Raul stopped the former and talked to him. G. plaintiff-appellee. Henry Yabo and Emma Jimena. province of Misamis Occidental. she proceeded home. accused Jimena. on September 6. 2001 PEOPLE OF THE PHILIPPINES. both testimonial and documentary. Upon arraignment. ½ inch. back. On September 3. municipality of Lopez Jaena.We find no circumstance to justify the award of attorney's fees. appellant Yrat was arrested. the two left the place. The Fallo WHEREFORE. with the assistance of counsel. CV No. accused Jimena and his wife Emma arrived. appellant proceeded towards the two men at the same time pulling out a pistol. Philippines.7 After the incident. BUENA. did then and there willfully. appellant hit him at the right side of the neck with the butt of his gun. Walking behind Benjamin. exit. He was likewise utilized by accused Jimena as witness.: For the death of Benjamin Aca-ac. appellant. appellant returned to the videoke bar and ordered a bottle of beer. together with his wife. everted.R. In the course of their conversation. Emma approached appellant and told the latter that Benjamin was following them. entrance. and nearly engaged in a fistfight were it not for the timely intervention of Barbajo. the case with respect to accused Jimena proceeded to trial with the prosecution presenting Dr. Julia and one Father Naron. along the left sternal line. (As Father Naron had another appointment. Roger Rebosura."1 Arraigned on May 21. No costs. 130415 October 11. conspiring. Alarmed by the threats of appellant. with treachery and with abuse of their superior strength. approached her and told her that Benjamin is ill-mannered. and within the jurisdiction of this Honorable Court. the above-named accused. "3. At around 2 o'clock. Gunshot wound. Allan Garganera. presented by accused Jimena. While accused Raul Jimena was looking for a place to park his motorcycle. "CONTRARY TO LAW.5 When Benjamin arrived. Not having seen him. 1996. oval. we DENY the petition. J. Benjamin Aca-ac. ALVIN YRAT y BUGAHOD and RAUL JIMENA y POLLESCAS Alias "Bobong". For his part.8 The body of Benjamin Aca-ac was examined by Dr. As accused Alvin Yrat was then still at large. 1995. 1996. hit. Rachel Micarandayo and was found to have sustained the following wounds: "1. 1995. Micarandayo. He then went in front of Benjamin and fired two more shots hitting him on the middle portion of his breast and on the face. The prosecution's case established that on December 27. he also pleaded not guilty. accused Jimena and his wife Emma arrived. Julia left the videoke bar to warn her husband. "2. left cheek. entrance. appellants Alvin Yrat and Raul Jimena were charged with the crime of murder based on an Information which reads: "That on or about the 27th day of December. Gunshot wound. spouses Jimena left the place while appellant threw the gun towards the bushes and camote plantation. accused-appellant. on the eve of the town fiesta of Biasong. appellant adopted all the evidence. They saw Julia Aca-ac talking to Violeta Singcay. We AFFIRM the decision of the Court of Appeals in CA-G. with intent to kill.6 Upon seeing Benjamin. at the level of the 5th intercostal space. Appellant likewise said that "you tell your husband that he will not reach the morning. but the gun did not explode. box and shot one BENJAMIN ACA-AC. and was pinned by his motorcycle."9 173 . were in the house of Avelino "Boy" Barbajo. Julia Aca-ac and rebuttal witness Avelino Barbajo. At about 1 o'clock that afternoon. accused Jimena hit Benjamin on the cheek causing the latter to tilt a little backward. or jai-alai. Appellant was heard saying to Benjamin." To avoid trouble in his house. in barangay Biasong. ¾ inch diameter. Rachel T. Barbajo requested the group to leave. assault. "you cannot even reach this New Year.

appellant made a lone assignment of error "THAT THE TRIAL COURT ERRED IN NOT FINDING ACCUSED-APPELLANT GUILTY ONLY OF HOMICIDE. He took his firearm and returned to Lopez Jaena. Treachery exists — even if the attack is frontal — if it is sudden and unexpected. 1995.00. it is necessary to show the amount of actual loss with the best evidence obtainable. At about 5 o'clock. together with his wife. P50. The suddenness of the attack made it impossible for him to defend himself.000. It bears stressing that compensation for loss of income is in the nature of damages and as such requires due proof of the damages suffered. While Benjamin was assaulted frontally. an ex-barangay captain of Barangay Dampalan. methods. made it impossible for the victim to defend himself or to retaliate. where is the man whom you wanted to be killed. allegedly drunk. on the other hand. knowing that Benjamin will pass by that place.Appellant Yrat admitted shooting Benjamin but claims that he only acted in self-defense. Accused Raul Jimena. He argues that the deceased Benjamin Aca-ac was shot by him frontally.000.00 for funeral expenses. unreliable statement is not enough. and accused Raul Jimena to suffer an indeterminate penalty of imprisonment from SIX (6) YEARS and ONE (1) DAY of prision mayor as its minimum to FOURTEEN (14) YEARS. he was invited to the house of Boy Barbajo. hence. for treachery to be considered. He proceeded to the videoke bar operated by Violeta Singcay. We find no cogent reason to reverse the decision of the trial court. he. there must be unbiased proof of the deceased's average income. 1995 at about 3 o'clock in the afternoon. Emma went inside while accused Jimena looked for a place to park his motorcycle. and Raul Jimena." Appellant argues that he cannot be sentenced to murder because of the absence of the qualifying circumstance of treachery. Under this situation. Benjamin allegedly pulled out a gun so he stepped back. The latter has not yet recovered from such sudden attack when appellant went in front of Benjamin and shot him face to face. he left the house and headed for his house in Barangay Canubay. Self-serving.16 Appellant employed means of execution which gave Benjamin no opportunity at all to defend himself and that the manner of execution was deliberately and consciously adapted. drew his firearm and shot Benjamin twice. On June 10. Accused Jimena looked for his wife and then left the place.13 In his appeal.000. they heard a gun explosion. instead.17 Going now to the trial court's award of damages. we find the award of loss of earning capacity not in order. the Court thereby sentences accused Alvin Yrat to suffer the penalty of RECLUSION PERPETUA. this does not make such attack less treacherous. left the place together with a certain Father Naron and returned shortly thereafter on a motorcycle with a policeman. they went home. While talking.00 for the wake and burial of her 174 . As the latter was not yet ready to serve them food.000.00 for funeral expenses should likewise be deleted in the absence of evidence to prove the same. What was presented in evidence was only the testimony of the wife that the deceased. While the remains of the deceased was brought to his house. committed without an aggravating or mitigating circumstance present and applying the provisions of the Indeterminate Sentence Law as regards Raul Jimena. EIGHT (8) MONTHS and ONE (1) DAY of reclusion temporal as maximum. and (2) the means of execution were deliberately or consciously adopted. With the butt of his gun. Benjamin slapped him.00 for the loss of earning capacity of the deceased and P60. 1999. To justify a grant of actual damages. "Bong. He was unarmed and totally defenseless when appellant shot him. went to Boy Barbajo's house in Biasong. He saw Santos. as principal.000. or forms in the execution of the crime which tend directly and especially to insure its execution without risk to himself arising from any defensive or retaliatory act which the victim might make. giving the victim no opportunity to repel it or defend himself. he saw Benjamin.00 as death indemnity. From the house of Boy Barbajo.20 The testimony of Julia Aca-ac that she spent P20. 1998."11 After weighing the evidence presented by the parties. returned later in the afternoon to Bulawin's house. The trial court correctly appreciated aleviosa as having qualified the killing of the victim to murder."19 The award of P20.000.000. they proceeded to the residence of Boy Bulawin."12 Both accused appealed the decision to this Court. to wit: (1) the employment of means of execution that gives the person attacked no opportunity to defend himself or retaliate. appellant hit Benjamin from behind. claimed that on December 27. Oroquieta City. "SO ORDERED.10 He approached the latter and asked why he slapped him. as an accomplice. 14 Thus. finding accused Alvin Yrat. Lopez Jaena. He did not retaliate.was earning P50. Without any provocation on his part. Benjamin was not given any time at all to react. accused Jimena boxed Benjamin on the face. both to indemnify jointly and severally the heirs of Benjamin Aca-ac P50. Treachery is present when the offender employs means. without the slightest provocation from the victim who was unarmed. who was with them. Almost simultaneously. two (2) elements must concur. the trial court rendered a decision the decretal portion of which reads: "WHEREFORE.00 for moral damages and to pay the costs. P20. Benjamin Aca-ac. guilty beyond reasonable doubt of the crime of Murder. they left the house and passed by the videoke bar owned by Virginia Singcay. After waiting for about two hours.15 Benjamin Aca-ac was talking to accused Jimena when appellant approached him from behind. accused Raul Jimena filed a motion to withdraw the appeal which was granted by this Court per Resolution dated September 20.18 The prosecution failed to present evidence to show the deceased's monthly earnings. We have held that "for lost income due to death. Julia Aca-ac shouted to accused Jimena who resides nearby. He narrated that on December 27. What is decisive is that the execution of the attack.

however is subject to the annotation of our mortgage lien on the said property and final verification that said title is free from any other lien or encumbrance other than that of your company and IBA Finance Corporation. which is presently mortgaged with your bank. On October 5. but its amount cannot. without presenting any receipts. 49507 dated October 2. The undisputed facts show that on or about October 1994. 159352 April 14 .1 million with Premiere Development Bank. Iba-Finance sent a letter to Ms. Panacor applied for a loan of P4. informing her of the approved loan in favor of Panacor and Arizona.4 As suggested. PANACOR MARKETING CORPORATION. Panacor negotiated for a take-out loan with Iba Finance Corporation (hereinafter referred to as IbaFinance) in the sum of P10 million. affixed her signature of conformity thereto and sent the original copy to Premiere Bank’s legal office. the same cannot be allowed. Panacor Marketing Corporation (Panacor for brevity). Bo.00 as temperate damages pursuant to Article 2224 of the Civil Code which provides that temperate damages may be recovered when the court finds that some pecuniary loss has been suffered. acquired an exclusive distributorship of products manufactured by Colgate Palmolive Philippines. P7. Arizona. T-3475 as per Entry No. 3475.000. Branch 12. Martillano. current tax declaration. applied for and was granted a loan of P6. since no receipt was presented to support the claim for funeral expenses.2004 PREMIERE DEVELOPMENT BANK. Arlene R. Eventually. and PANACOR MARKETING CORPORATION. PANALIGAN (hereinafter the BORROWERS) in the principal amount of PESOS: SEVEN MILLION FIVE HUNDRED THOUSAND ONLY (P7. COURT OF APPEALS.5 million.23 We.00 as civil indemnity (ex delicto) which requires no proof other than the fact of death of the victim and assailant's responsibility therefor. YNARES-SANTIAGO. a newly formed corporation. Mandaluyong City.5 million (to complete the needed capital of P4. is hereby AFFIRMED with the MODIFICATION that the awards of P50. The borrowers have authorized IBA FINANCE CORP. T-3475. 1995.1 million credit line which was previously approved.3 should instead apply for the loan on condition that the proceeds thereof shall be made available to Panacor.1 million. Martillano. 2003 of the Court of Appeals1 which affirmed the Decision of the Regional Trial Court2 in Civil Case No. from the nature of the case.4 million of which would be used to pay-off its existing loan accounts and the remaining P2. the heirs of the deceased Benjamin Aca-ac should be awarded the amount of P15. Metro Manila covered by TCT No.000.500. In order to register the mortgage.7 million as credit line of Panacor. In the present case. No. and evidence of its actual amount. vs. P3. G. represented by its Chief Executive Officer Pedro Panaligan and spouses Pedro and Marietta Panaligan in their personal capacities. T-3475. Inc. respondents. petitioner. Iba-Finance was authorized to pay Premiere Bank the prior existing loan obligations of Arizona in an amount not to exceed P6 million. 1995. which was an existing loan client.00) Philippine Currency. 175 . please entrust to us the owner’s duplicate copy of TCT No. officer-in-charge of Premiere Bank’s San Juan Branch.5 million of which will be released outright in order to take-out the loan from Premiere Bank and the balance of P2. PEDRO P. Panacor was granted a P4. To meet the capital requirements of the exclusive distributorship.husband. As security for the P6.R. the heirs of the deceased are entitled to be indemnified for the death of the victim without need of any evidence or proof thereof.00 for loss of earning capacity of the deceased. is not sufficient to support the claim for funeral expenses. Inc. The loan shall be secured by a Real Estate Mortgage over a parcel of land located at #777 Nueve de Pebrero St. SO ORDERED. the decision of the Regional Trial Court of Oroquieta City. Arizona Transport Corporation (Arizona for short).1 million credit line as evidenced by a Credit Line Agreement. We have consistently ruled that only expenses supported by receipts and which appear to have been actually incurred shall be allowed. realty tax receipts for the current year and other documents necessary to affect annotation thereof.00 for funeral expenses. which required an initial inventory level of P7. Mauway. The full text of the letter reads:6 Please be informed that we have approved the loan application of ARIZONA TRANSPORT CORP. Premiere Bank rejected the loan application and suggested that its affiliate company.7 million released by Premiere Bank fell short of the P4.5 Since the P2. Arizona.000. to pay Premiere Bank from the proceeds of their loan. The disbursement of the loan. executed a Real Estate Mortgage against a parcel of land covered by TCT No. J.: CORPORATION and ARIZONA TRANSPORT This is a petition for review under Rule 45 of the 1997 Rules on Civil Procedure seeking the annulment of the Decision dated June 18.1 million loan.000. After an extensive study of Panacor’s creditworthiness.000. 65577. Both represented by MR. Pursuant to the said take-out agreement.1 million with Colgate) to be released after the cancellation by Premiere of the collateral mortgage on the property covered by TCT No. WHEREFORE. however. be proved with certainty. 3475 and registered under the name of Arizona Haulers. after reading the letter. (Colgate for short). The award of moral damages in the amount of P60. sustain the award of P50.22 In lieu of the aforesaid damages. and requesting for the release of TCT No. and P20.00 should also be sustained taking into consideration the pain and anguish of the victim's family. be deleted.24 Article 2206 of the Civil Code provides that when death occurs as a result of the crime.000.21 It is a settled rule that there must be proof that actual or compensatory damages have been suffered.

namely: 1) Ordering defendant Premiere Bank to release to plaintiff-intervenor IBA-Finance Corporation the owner’s duplicate copy of Transfer Certificate of Title No. that the processing of the P2. 1996. 1996. On October 19.5 million. 2) Ordering the defendant Premiere Bank to pay to Intervenor IBA-Finance. the compromise agreement was approved.79 representing the full outstanding loan account of Arizona. the dispositive portion of which reads: 176 . ordering the latter to pay the former the following sums. 3475 and the cancellation by Premiere Bank of Arizona’s mortgage. the counterclaim of defendant Premiere Bank is DISMISSED.00) and any amount in excess of the aforestated shall be for the account of the borrowers. Premiere Bank sent a letter-reply7 to Iba-Finance.000. among others. Premiere Bank still refused to release the requested mortgage documents specifically. the owner’s duplicate copy of TCT No. you will release to us the corresponding cancellation of your mortgage within five (5) banking days therefrom. the trial court rendered a decision in favor of Panacor and Iba-Finance. On March 11.000. Thereafter.00 as and by way of exemplary damages. On June 11. 1995. 1995. Similarly. including the deed of cancellation of the mortgage constituted thereon.00 as and for reasonable attorney’s fees.79 which Iba-Finance earlier remitted to Premiere Bank to pay off the unpaid loans of Arizona. Panacor and Arizona filed a complaint for specific performance and damages against Premiere Bank before the Regional Trial Court of Pasig City. On October 12. that it had maliciously downgraded the credit-line of Panacor from P4. Panacor failed to generate the required capital to meet its distribution and sales targets. 1999. 1998. 65577. 3) P100.Upon registration of our mortgage.5 million loan application was conditioned.9 On November 2. Iba-Finance filed a complaint-in-intervention praying that judgment be rendered ordering Premiere Bank to pay damages in its favor. to wit: 3) P1. we undertake to remit directly to you or your authorized representative the amount equivalent to the Borrower’s outstanding indebtedness to Premiere Bank as duly certified by your goodselves provided such an amount shall not exceed PESOS: SIX MILLION ONLY (P6. Colgate informed Panacor of its decision to terminate their distribution agreement. Thereafter.1 million to P2. Inc.000.00 in addition to legal interest from the time of filing of the complaint until full payment. the following sums. Premiere Bank appealed to the Court of Appeals contending that the trial court erred in finding. Panacor and Arizona executed in favor of Iba-Finance a promissory note in the amount of 7. please affix your signature provided below and furnish us a copy of the Statement of Account of said borrowers. inter alia. On March 13. Premiere Bank issued to Iba-Finance a Final Statement of Account8 showing Arizona’s total loan indebtedness. and 4) Costs of suit. as follows. 1995. On December 7. SO ORDERED.5 million loan to meet the required monthly purchases from Colgate. Panacor requested Iba-Finance for the immediate approval and release of the remaining P2. In the meantime.754. namely: 1) P4. On May 26. If the foregoing terms and conditions are acceptable to you. docketed as Civil Case No.520. informing the latter of its refusal to turn over the requested documents on the ground that Arizona had existing unpaid loan obligations and that it was the bank’s policy to require full payment of all outstanding loan obligations prior to the release of mortgage documents. Iba-Finance explained however.00 as and for reasonable attorney’s fees. a compromise agreement was entered into between Iba-Finance and Premiere Bank whereby the latter agreed to return without interest the amount of P6.235. and 5) Costs of suit. For lack of sufficient legal and factual basis. 3475 registered in the name of Arizona Haulers.000. the decretal portion of which reads: WHEREFORE. It is understood that upon receipt of payment.235.000.000. Despite such payment. a decision was rendered by the Court of Appeals which affirmed with modification the decision of the trial court. T-3475. judgment is hereby rendered in favor of plaintiff-in-intervention IBA-Finance Corporation as against defendant Premiere bank. Occasioned by Premiere Bank’s adamant refusal to release the mortgage cancellation document.000. and 4) P100.7 million.000. Iba-Finance paid to Premiere Bank the amount of P6. 2003.000.00 as and for exemplary damages. judgment is hereby rendered in favor of the plaintiff Panacor Marketing Corporation and against the defendant Premiere Bank. 2) P1.754. 1995. on the submission of the owner’s duplicate copy of TCT No. On June 18.

We are not persuaded.7 million.754. Iba-Finance remitted P6.000. which raises the following issues:11 I WHETHER OR NOT THE DECISION OF HONORABLE COURT OF APPEALS EXCEEDED AND WENT BEYOND THE FACTS. SO ORDERED. Firstly. With costs against the defendant-appellant. As a consequence. 177 . For the foregoing reasons.235. It cites the decision of the trial court which. the not-so-forthright conduct of Premiere Bank in its dealings with respondent corporations caused damage to Panacor and Iba-Finance. T-3475 in order to register its mortgage.10 Hence the present petition for review.5 million loan it earlier pledged to Panacor.000. Iba-Finance informed Premiere Bank of its approval of Panacor’s loan application in the amount of P10 million to be secured by a real estate mortgage over a parcel of land covered by TCT No. suffered damages due to the fault of Premiere Bank.520. the present appeal is hereby DISMISSED. T-3475. we find that the Court of Appeals did not err in discussing in the assailed decision the abortive take-out and the refusal by Premiere Bank to release the cancellation of the mortgage document. 65577 is hereby AFFIRMED with MODIFICATION in that the award of exemplary damages in favor of the appellees is hereby reduced to P500. premises considered. after which Iba-Finance shall pay off Arizona’s outstanding indebtedness. and the decision appealed from in Civil Case No. The unjustified refusal by Premiere Bank to release the mortgage document prompted Iba-Finance to withhold the release of the P2. We agree with the Court of Appeals that the "present appeal is only with respect to the liability of appellant Premiere Bank to the plaintiffs-appellees (Panacor and Arizona)"13 taking into account the compromise agreement. In a letter-agreement12 dated October 5.000. 3475. Premiere Bank argues that considering the compromise agreement it entered with Iba-Finance. expressly recognized that the downgrading of the loan was not the proximate cause of the damages suffered by respondents. Secondly.00.00. It is error for Premiere Bank to assume that the compromise agreement it entered with Iba-Finance extinguished all direct and collateral incidents to the aborted take-out such that it also cancelled its obligations to Panacor. albeit inconsistent with its final disposition. Accordingly. which finally led to the revocation of its distributorship agreement with Colgate. Both Iba-Finance and Panacor.1 million to P2. Hence. 1999. IS LIMITED TO THE ISSUE OF ALLEGED BAD FAITH OF PETITIONER BANK IN THE DOWNGRADING OF THE LOAN AND SHOULD NOT INCLUDE THE RENDITION OF AN ADVERSE PRONOUNCEMENT TO AN ALREADY FAIT ACCOMPLI. Undeniably.ISSUE ON THE REFUSAL OF THE BANK TO RECOGNIZE THE TAKE-OUT OF THE LOAN AND THE RELEASE OF TCT NO. Needless to add. While the compromise agreement may have resulted in the satisfaction of Iba-Finance’s legal claims. in view of the Compromise Agreement plaintiff-intervenor IBA-Finance and defendant-appellant PREMIERE between plaintiff-intervenor IBA-Finance and defendant-appellant PREMIERE as approved by this Court per Resolution dated March 11. the Court of Appeals should have ruled only on the issue of its alleged bad faith in downgrading Panacor’s credit line. 1995. Premiere Bank refused to deliver the mortgage document. THE ISSUES AND EVIDENCE PRESENTED IN THE APPEAL TAKING INTO CONSIDERATION THE ARGUMENT OF PETITIONER BANK AND ADVENT OF THE DULY APPROVED COMPROMISE AGREEMENT BETWEEN THE PETITIONER BANK AND IBA FINANCE CORPORATION.00.5 million earmarked for Panacor which eventually terminated the distributorship agreement. Premiere Bank’s liability to Panacor remains.WHEREFORE. BY REASON OF THE EXISTENCE OF THE COMPROMISE AGREEMENT. it should be held liable to each of them. Premiere Bank asserts that it acted in good faith when it downgraded the credit line of Panacor from P4. II WHETHER OR NOT THE ISSUES THAT SHOULD HAVE BEEN RESOLVED BY THE HONORABLE COURT OF APPEALS. Iba-Finance failed to release the remaining P2. It further contends that the Court of Appeals should have refrained from making any adverse pronouncement on the refusal of Premiere Bank to recognize the take-out and its subsequent failure to release the cancellation of the mortgage because they were rendered fait accompli by the compromise agreement. III WHETHER OR NOT PETITIONER ACTED IN BAD FAITH IN THE DOWNGRADING OF THE LOAN OF RESPONDENTS TO SUPPORT AN AWARD OF ACTUAL AND EXEMPLARY DAMAGES NOW REDUCED TO P500. which are two separate and distinct juridical entities. Our dispositive of the present appeal is only with respect to the liability of appellant PREMIERE to the plaintiffappellees. It was agreed that Premiere Bank shall entrust to Iba-Finance the owner’s duplicate copy of TCT No. IV WHETHER OR NOT THERE IS BASIS OR COMPETENT PIECE OF EVIDENCE PRESENTED DURING THE TRIAL TO SUPPORT AN AWARD OF ACTUAL DAMAGES OF P4.79 to Premiere Bank on the understanding that said amount represented the full payment of Arizona’s loan obligations. Despite performance by Iba-Finance of its end of the bargain.

It was she who provided Iba-Finance with the Final Statement of Account and accepted its payment without objection or qualification. 1995 showing in no uncertain terms Arizona’s outstanding indebtedness. ratification will be implied or else it will be estopped to deny ratification.7 million. Premiere Bank avers that the appellate court’s reliance on the credit line agreement as the basis of bad faith on its part was inadmissible or self-serving for not being duly notarized. Panacor. which was subsequently paid by Iba-Finance. If a private corporation intentionally or negligently clothes its officers or agents with apparent power to perform acts for it. it is imperative that the parties should honor and adhere to their respective rights and obligations thereunder.00 is without basis. Law and jurisprudence dictate that obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith.16 Premiere Bank cannot justify its arbitrary act of downgrading the credit line on the alleged finding by its project analyst that the distributorship was not financially feasible. actual or compensatory damages are those awarded in satisfaction of. 178 . He must establish his case by a preponderance of evidence which means that the evidence. This indubitably indicates that Premiere Bank had deliberately and voluntarily granted the said loan despite its claim that the distributorship contract was not viable. Premiere Bank argues that the finding by the appellate court that it was liable for actual damages in the amount of P4.18 Finally.19 The burden of proof is on the party who will be defeated if no evidence is presented on either side. that: Appellant’s actuations. To justify an award for actual damages. or fails to disaffirm. That time is of the essence in the requested release of the mortgage cancellation and delivery of the subject title was only too well-known to appellant. as a whole. Premiere Bank failed to disaffirm the contract. was the full payment of Arizona’s loan obligations. Premiere Bank’s posture deserves scant consideration.7 million as credit line of Panacor. Premiere Bank agreed to extend a loan of P4. the corporation will be estopped to deny that the apparent authority is real as to innocent third persons dealing in good faith with such officers or agents.4 million of which was allotted for the payment of Arizona’s existing loan obligations and P2.Under the Credit Line Agreement14 dated September 1995. which are duly supported by receipts. and we agree. the irregularities in the execution of the credit line agreement bolsters the theory that the same was the product of manipulation orchestrated by respondent corporations through undue influence and pressure exerted by its officers on Martillano.7 million was made available to Panacor. must promptly disaffirm the contract or act and allow the other party or third persons to act in the belief that it was authorized or has been ratified. It contends that the evidence presented by Panacor in support of its claim for actual damages are not official receipts but self-serving declarations. P3.15 The appellate court correctly observed. Premiere Bank still extended Arizona the loan of P6. Thirdly. were truly marked by bad faith and lack of due regard to the urgency of its compliance by immediately releasing the mortgage cancellation document and delivery of the title to IBA Finance. Despite its knowledge. Credence can be given only to claims. They proceed from a sense of natural justice and are designed to repair the wrong that has been done. Notwithstanding the alleged forewarning. after she received a copy of the credit line agreement and affixed her signature in conformity thereto. albeit in contravention of the credit line agreement. the corporation. In her testimony. According to Premiere Bank.1 million to Arizona to be used by its affiliate. the Final Statement of Account dated October 17. Eventually. adduced by one side is superior to that of the other. in relation to the "bail-out" efforts of IBA Finance.1 million. Premiere approved in favor of Arizona a loan equivalent to P6. with knowledge of the facts. she forwarded the same to the legal department of the Bank at its Head Office. which. instead of P4. It is clear that Premiere Bank deviated from the terms of the credit line agreement when it unilaterally and arbitrarily downgraded the credit line of Panacor from P4. whose payment of the outstanding loan account of appellee ARIZONA with appellant was readily accepted by the appellant. Equity demands that a party cannot disown it previous declaration to the prejudice of the other party who relied reasonably and justifiably on such declaration. Having entered into a welldefined contractual relationship. and undated. If it acquiesces. when it has knowledge thereof. to compensate for the injury inflicted and not to impose a penalty.1 million to P2. was not released because of Premiere Bank’s refusal to issue the mortgage cancellation. loss or injury sustained. These acts show that she was vested by Premiere Bank with sufficient authority to enter into the said transactions. in making an award. being unsigned in all of its left margins. Panacor applied for a P2. there are sufficient indicia that demonstrate that the alleged unjust pressure exerted on Martillano was more imagined than real. In other words.000.5 loan from Iba-Finance. Since only P2. damages cannot be presumed and courts. As found by the lower court. When the officers or agents of a corporation exceed their powers in entering into contracts or doing other acts. Needless to say. Martillano claims that she was persuaded and coaxed by Caday of Iba-Finance and Panaligan of Panacor to sign the letter.520. considering the actual knowledge of its officers of the tight financial situation of appellee PANACOR brought about primarily by the appellant bank’s considerable reduction of the credit line portion of the loan. must point out specific facts that can afford a basis for measuring whatever compensatory or actual damages are borne. there must be competent proof of the actual amount of loss. or in recompense for.17 As testified to by Martillano. having only belatedly invoked the cross-default provision in the Real Estate Mortgage executed in its favor by appellee ARIZONA to resist the plain valid and just demand of IBA Finance for such compliance by appellant bank.1 million as previously approved. Under Article 2199 of the Civil Code. in its operations. Neither can Premiere Bank rely on the puerile excuse that it was the bank’s policy not to release the mortgage cancellation prior to the settlement of outstanding loan obligations. as earlier mentioned.1 million.

A mistake. DR. If a doctor fails to live up to this precept. DELOS SANTOS MEDICAL CENTER. speculations. Premiere’s failure to prove actual expenditure consequently conduces to a failure of its claim. In lieu thereof. PERFECTA GUTIERREZ. it failed to show how and in what manner the same were substantiated by the claimant with reasonable certainty.00 as the total expenditures incurred by Panacor. ROY RODERICK RAMOS and RON RAYMOND RAMOS. 1999 ROGELIO E. In determining actual damages. from the nature of the case. KAPUNAN. vs. definite proof of pecuniary loss cannot be adduced. No.: The Hippocratic Oath mandates physicians to give primordial consideration to the health and welfare of their patients. The antecedent facts as summarized by the trial court are reproduced hereunder: 179 . Article 2216 of the Civil Code: No proof of pecuniary loss is necessary in order that moral. 124354 December 29.00 as exemplary damages.R. the witness affirmed that Panacor incurred losses. with the MODIFICATION that the award of P4. makes the following comment:21 In some States of the American Union. greatly contributed to. although the court is convinced that the aggrieved party suffered some pecuniary loss. The Code Commission. if not. RAMOS and ERLINDA RAMOS.000. is left to the discretion of the Court. however. Hence.520.00 as temperate damages is reasonable. leasehold acquisition. specifically. which overturned the decision 4 of the Regional Trial Court. procurement of vehicles and office equipment without. injury to ones commercial credit or to the goodwill of a business firm is often hard to show with certainty in terms of money. in explaining the concept of temperate damages under Article 2224. he is made accountable for his acts. temperate damages may be awarded.000. the petition is DENIED. Should damages be denied for that reason? The judge should be empowered to calculate moderate damages in such cases.20 Even if not recoverable as compensatory damages. When the court finds that some pecuniary loss has been suffered but the amount cannot.00 as attorney’s fees. ordering Premiere Bank to pay Panacor Marketing Corporation P500. the actual damages were proven through the sole testimony of Themistocles Ruguero. Since these losses are not susceptible to pecuniary estimation.000. It is obvious that the wrongful acts of Premiere Bank adversely affected. be proved with certainty. an anesthesiologist and a hospital should be made liable for the unfortunate comatose condition of a patient scheduled for cholecystectomy.520. the doctor plays God on his patient's fate.000. SO ORDERED. may spell the difference between life and death. nominal. WHEREFORE. temperate damages may be recovered. temperate damages are allowed. ORLINO HOSAKA and DRA. 60750. ROMMEL RAMOS. temperate. Panacor may still be awarded damages in the concept of temperate or moderate damages. the sum of P200. P100. in terms of training and seminars.000. except liquidated ones.In the instant case. according to the circumstances of each case. G. the court cannot rely on mere assertions. There are cases where from the nature of the case. dated 29 May 1995. Under the circumstances. For instance. 2003 of the Court of Appeals in CA-G.00 as actual damages is DELETED for lack of factual basis. J. the vice president for administration of Panacor. finding private respondents liable for damages arising from negligence in the performance of their professional duties towards petitioner Erlinda Ramos resulting in her comatose condition. was not testified to by any witness to ascertain the veracity of its contents. The Decision dated June 18. through gross negligence or incompetence or plain human error. Premiere Bank is ordered to pay Panacor P200. rather than that the plaintiff should suffer. liquidated or exemplary damages may be adjudicated. decisively caused the premature stoppage of its business operations and the consequent loss of business opportunity. in their own behalf and as natural guardians of the minors. respondents. adducing receipts to substantiate the same.000. The assessment of such damages. The documentary evidence marked as exhibit "W". 2 Petitioners seek the reversal of the decision 3 of the Court of Appeals. Temperate damages may be allowed in cases where from the nature of the case. the Court is called upon to rule whether a surgeon. petitioners. the commercial credit22 of Panacor. COURT OF APPEALS. In this sense. dated 30 January 1992. although the court is convinced that there has been such loss. and costs. which was an ordinary private writing allegedly itemizing the capital expenditures and losses from the failed operation of Panacor. In his testimony. in one way or another. without redress from the defendant's wrongful act.R. conjectures or guesswork but must depend on competent proof and on the best evidence obtainable regarding the actual amount of loss. CV No. the claim for actual damages should be admitted with extreme caution since it is only based on bare assertion without support from independent evidence. Although the lower court fixed the sum of P4. is AFFIRMED. definite proof of pecuniary loss cannot be offered.00 as temperate damages. 1 In the case at bar.

ikuha mo ako ng ibang Doctor. Gutierrez intubating the hapless patient. "Mindy. dumating na raw. She was advised to undergo an operation for the removal of a stone in her gall bladder (TSN. Gutierrez. Roy Roderick Ramos and Ron Raymond Ramos (TSN. who was the Dean of the College of Nursing at the Capitol Medical Center. 10. Hosaka who was not yet in (TSN. inip na inip na ako. until the afternoon of June 17. heard somebody say that "Dr. Thereafter. She thereafter heard Dr. she then saw Dr.M. Hosaka to look for a good anesthesiologist. Rogelio. an executive of Philippine Long Distance Telephone Company. another anesthesiologist (id. 31-33. p." So. she sought professional advice. Hosaka. He also thought of the feeling of his wife. January 13. Her sister-in-law. pp. Hosaka approached her. At almost 12:00 noon.M. 10). Because the discomforts somehow interfered with her normal ways. Rogelio. Because of the remarks of Dra. the other defendant. 5). November 9. Through the intercession of a mutual friend. Calderon. October 19. Herminda Cruz. Rogelio E. p. she was as normal as any other woman. At around 10:00 A. p. 1985 at 9:00 A. Hosaka charged a fee of P16. Garcia) was also tired of waiting for Dr. p. however. Hosaka issue an order for someone to call Dr. As she held the hand of Erlinda Ramos. Perfecta Gutierrez. Garcia who remarked that he (Dr. "A" and "C") which indicated she was fit for surgery. While talking to Dr. 1988. doing this and that. O lumalaki ang tiyan" (id. She underwent a series of examinations which included blood and urine tests (Exhs. Ramos was "already dying [and] waiting for the arrival of the doctor" even as he did his best to find somebody who will allow him to pull out his wife from the operating room (TSN. p.. At about 12:15 P.. to them. 14-15. located along E. The patient's 180 . 1985 and while still in her room.. 17). 19). that the doctor was not yet around (id. Ramos. Herminda then went back to the patient who asked. 15).... Dr. Orlino Hozaka (should be Hosaka. Herminda was allowed to stay inside the operating room. October 19.. was also with her (TSN." Upon hearing those words. wala pa ba ang Doctor"? The former replied. 1985. 16. Herminda went out of the operating room and informed the patient's husband. she focused her attention on what Dr.). 1989. Except for occasional complaints of discomfort due to pains allegedly caused by the presence of a stone in her gall bladder (TSN. 1988. p. After praying. p. Thereafter. Hosaka. October 19. pp. she saw this anesthesiologist trying to intubate the patient. 29-30). 11-12). 5-6). Herminda introduced herself as Dean of the College of Nursing at the Capitol Medical Center who was to provide moral support to the patient. and TSN. mali yata ang pagkakapasok. Rogelio E. 21). [and] preparing the patient for the operation" (TSN. 1989. January 13. February 20. Gutierrez was doing. FEU Hospital and DLSMC) presented to him. p. At the operating room. October 19. 13. who was to administer anesthesia. She reiterated her previous request for Herminda to be with her even during the operation.). Married to Rogelio E. January 13. October 19. Quezon City (TSN. she and her husband Rogelio met for the first time Dr. 19-20). She thereafter noticed bluish discoloration of the nailbeds of the left hand of the hapless Erlinda even as Dr. When she returned to the operating room. 11). Her hands were held by Herminda as they went down from her room to the operating room (TSN.M. pp. 17). 7). 3-4. She then heard Dr. 1989. 1989. she went out again and told Rogelio about what the patient said (id. Herminda Cruz. she was admitted at one of the rooms of the DLSMC.. pp. 1990. At around 7:30 A.00. January 13. darating na iyon" (Ibid. Hosaka is already here.. 22-23. "ang hirap ma-intubate nito. "Nandiyan na si Dr. 1988. 1988. a 47-year old (Exh. Although not a member of the hospital staff. 9-11). the patient told her. Dr. Garcia at around 12:10 P. 1989. A day before the scheduled date of operation. she was prepared for the operation by the hospital staff. see TSN. one of the defendants in this case. p. 1988. p. Gutierrez reached a nearby phone to look for Dr. Gutierrez say.M. was also there for moral support. Hosaka. p. 1989. Rodriguez Avenue. who was inside the operating room with the patient. Dr. on June 10. Buenviaje (TSN.1989. pp. January 13.. Hosaka to arrive (id. They agreed that their date at the operating table at the DLSMC (another defendant). 13). January 13. 1990. she returned to the operating room. Calderon arrived at the operating room. she has three children whose names are Rommel Ramos. Hosaka arrived as a nurse remarked. who was inside the operating room waiting for the doctor to arrive (ibid. 4-5). "A") robust woman (TSN. 1985. pp. she was given injections. At around 9:30 A.. Herminda saw about two or three nurses and Dr. 3).000." She then saw people inside the operating room "moving. Dr. October 19. assured Rogelio that he will get a good anesthesiologist. 1988. TSN. After Dr. p. pp. "Huwag kang mag-alaala. p.Plaintiff Erlinda Ramos was.M. he came to know that Dr. would be on June 17. 18). pp. which was to include the anesthesiologist's fee and which was to be paid after the operation (TSN. February 27. he went down to the lobby and waited for the operation to be completed (id. 16). Her husband. Hosaka decided that she should undergo a "cholecystectomy" operation after examining the documents (findings from the Capitol Medical Center. Gutierrez thereafter informed Herminda Cruz about the prospect of a delay in the arrival of Dr. "Mindy. Dr. of June 17. asked Dr. Dr. Ramos. he met Dr. in turn.M.

p. August 20. with her husband Rogelio incurring a monthly expense ranging from P8. At almost 3:00 P. Plaintiff presented the testimonies of Dean Herminda Cruz and Dr. 1991. On the part of Dr. 1989. on 8 January 1986.00 to P10. 5 Thus. Rogelio E. she incurred hospital bills amounting to P93. 1990. negligence in the performance of their duty to plaintiff-patient Erlinda Ramos. he told her (Herminda) to be back with the patient inside the operating room (TSN. Thiopental Sodium (Pentothal). pp. December 21. 9).nailbed became bluish and the patient was placed in a trendelenburg position — a position where the head of the patient is placed in a position lower than her feet which is an indication that there is a decrease of blood supply to the patient's brain (Id. Since that fateful afternoon of June 17. During the trial. pp. happening" (Ibid.25 which is the subject of a promissory note and affidavit of undertaking executed by Rogelio E. She is living on mechanical means. 26-27). 19-20). she saw the patient taken to the Intensive Care Unit (ICU). Hosaka. this Court finds and so holds that defendants are liable to plaintiffs for damages. For after she committed a mistake in intubating [the] patient. October 19. She cannot do anything. July 25. p.. 6).00 (TSN.M. was placed in trendelenburg position. 25-28). She suffered brain damage as a result of the absence of oxygen in her brain for four to five minutes (TSN. Herminda Cruz immediately rushed back. After being discharged from the hospital. The latter informed the former that something went wrong during the intubation. January 13. Calderon was then able to intubate the patient (TSN. Perfecta Gutierrez. who was outside the operating room. p. saw a respiratory machine being rushed towards the door of the operating room. The evidence further shows that the hapless patient suffered brain damage because of the absence of oxygen in her (patient's) brain for approximately four to five minutes which. a pulmonologist. About two days thereafter. Ramos was able to talk to Dr. She was also diagnosed to be suffering from "diffuse cerebral parenchymal damage" (Exh. Rogelio. Eduardo Jamora. both parties presented evidence as to the possible cause of Erlinda's injury. Erlinda Ramos stayed at the ICU for a month. About four months thereafter or on November 15. she has been in a comatose condition. 1988. the patient was released from the hospital. Ramos "that something wrong was . October 19. 1989. pp. 31). see also TSN. thereafter. Dr. p. without due regard to the fact that the patient was inside the operating room for almost three (3) hours. private respondents primarily relied on the expert testimony of Dr. but also in not repeating the administration of atropine (TSN. caused the patient to become comatose. 32-34). 5-10). and saw that the patient was still in trendelenburg position (TSN. Mariano Gavino to prove that the sustained by Erlinda was due to lack of oxygen in her brain caused by the faulty management of her airway by private respondents during the anesthesia phase. 1989.000. 1985. On the other hand. 1985. and she told Rogelio E. pp. still needing constant medical attention. the patient's nailbed became bluish and the patient. 1991. The doctors explained that the patient had bronchospasm (TSN. Immediately