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EN BANC [G.R. No. 127127. July 30, 1998] PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs.

EUFROCENIO LACESTE, CIPRIANO LACESTE, RIZALINO LACESTE, EDDIE BAUSON, ARTHUR BAUSON, BONIFACIO SORIANO, and JOHN DOE, accused, EUFROCENIO LACESTE, accused-appellant. DECISION DAVIDE, JR., J.: This case is before us for the automatic review of the judgment[1] of 28 June 1996 of the Regional Trial Court (RTC) of Dagupan City, Branch 41, in Criminal Case No. D-01053 convicting accused-appellant Eufrocenio Laceste (hereafter EUFROCENIO) of the crime of murder and sentencing him to suffer the penalty of death pursuant to Article 248 of the Revised Penal Code, as amended by R.A. No. 7659. On 9 August 1995, an information[2] was filed with the RTC of Dagupan City charging EUFROCENIO, Cipriano Laceste, Rizalino Laceste, Eddie Bauson, Arthur Bauson,[3] Bonifacio Soriano, and one John Doe with the crime of murder committed as follows: That on or about 9:30 oclock in the evening of April 9, 1995 at barangay Longos Parac-Parac, municipality of San Fabian, province of Pangasinan, Philippines and within the jurisdiction of this Honorable Court, the above-named accused armed with a fan-knife (29) with intent to kill, evident premeditation, treachery and taking advantage of superior strength, conspiring, confederating and mutually helping one another did, then and there wilfully, unlawfully and feloniously attack, hold and stab RUFO NARVAS, SR. inflicting upon him a stab wound which caused his instantaneous death to the damage and prejudice of his heirs. CONTRARY to Art. 248, Revised Penal Code as amended by R.A. 7659. It was Bonifacio Soriano who was first arrested; he was given a separate trial and found guilty of murder as an accessory.[4] EUFROCENIO and his brother Cipriano Laceste were arrested only on 1 May 1996; while accused Eddie Bauson, Arthur Bauson, and Rizalino Laceste have remained at large.[5] EUFROCENIO and Cipriano Laceste were tried jointly after each entered a plea of innocence. The witnesses presented by the prosecution were Orlando Dispo and Bernardo Raboy, who had earlier testified at the trial of Bonifacio Soriano. Counsel for EUFROCENIO and Cipriano Laceste agreed that the previous testimony of Bernardo Raboy on direct examination be deemed reproduced as Raboys direct testimony against the said accused, and that he would just cross-examine said witness. He had a different stand, however, as to the previous testimony of Orlando Dispo, who was therefore presented again for direct and cross-examination. The evidence for the prosecution as narrated by Orlando Dispo and Bernardo Raboy are as follows: At 9:30 p.m. of 9 April 1995, Orlando Dispo, Bernardo Raboy, Rufo Narvas, Sr., and Edwin Genese were having a drinking spree in front of the store of Marta Dispo in Longos, Parac-Parac, San Fabian, Pangasinan. After they had consumed one box of Gold Eagle beer, a tricycle driven by Bonifacio Soriano arrived and stopped near the store. Accused EUFROCENIO, Cipriano Laceste, Rizalino Laceste, Eddie Bauson, and Arthur Bauson immediately alighted from the tricycle and went toward Rufo Narvas, Sr. The last four accused held Rufo by the arms. EUFROCENIO forthwith stabbed Rufo at the abdomen with a 29 fan knife. Rufo then fell down. Fearing for his own life, Orlando ran away; but the Laceste brothers chased him until about twenty meters away. Bernardo Raboy also broke into a run, but Cipriano Laceste and Eddie Bauson chased him and boxed him. Thereafter, EUFROCENIO and his companions boarded the tricycle of Bonifacio Soriano and then sped away.[6] As to the civil liability, the prosecution manifested that it would prove that the expenses incurred by the heirs [of Rufo N arvas, Sr.] is [sic] P41,000 and moral damages; but if the defense would admit that, it would dispense with the presentation of the witnesses. Upon inquiry by the court, the defense admitted; thus: Court: In case of favorable judgment, you will admit that the deceased of the heirs here [sic] have [sic] been put to expense and also suffered loss in the amount of P60,000.00, total loss? Atty. Gabat: Yes, Your Honor.[7] On the other hand, the witnesses presented by the defense were EUFROCENIO; Cipriano Laceste; their mother, Elena Laceste; and Ciprianos wife, Mila Laceste. Their testimonies wove a different story. Between 9:00 and 9:30 p.m. of 9 April 1995, EUFROCENIO, Cipriano Laceste, Eddie Bauson, Arthur Bauson, and Rene Ramos were riding on a tricycle driven by Bonifacio Soriano. The tricycle stopped in front of the store of Marta Dispo because EUFROCENIOs house was just at the back of the store. As they were alighting, Orlando Dispo and Rufo Narvas, Sr., threw stones at them. After Eddie Bauson alighted, Rufo remarked to him: Vulva of your mother. A fist fight ensued between the two. Meanwhile, Orlando Dispo got a 2 x 2 piece of wood, and one Floro Dispo took hold of a chair. Sensing that they would be attacked, EUFROCENIO and his brother Cipriano ran toward the back of the store and eastward. Bernardo Raboy and Orlando Dispo chased them.[8] EUFROCENIO and Cipriano did not testify how Rufo was stabbed. It was their mother, Elena Laceste, who did. According to her, at around 9:30 p.m. of 9 April 1995, she was in the store of Marta Dispo to buy kerosene. Just then, a tricycle stopped. Rufo Narvas, Sr., and Orlando Dispo, who were in front of the store, stood up and threw stones toward the tricycle. When Eddie Bauson alighted from the tricycle, Rufo remarked, Vulva of your mother. Thereupon, Eddie and Rufo had a fist fight; while Orlando Dispo, Bernardo Raboy, Floro Dispo, and Rufo Narvas, Jr., chased the Laceste brothers. Rufo Narvas, Sr., saw a knife on the table, got it, and tried to stab Eddie Bauson; but the latter was able to grab the knife and stabbed Rufo.[9] To prove that it was indeed Eddie Bauson who stabbed Rufo, Mila Laceste testified that at around 9:45 p.m. of 9 April 1995, while she was at her restaurant in Cayanga, a tricycle stopped nearby. Bonifacio Soriano, Eddie Bauson, Arthur Bauson, and Rene Ramos alighted from the tricycle, entered her restaurant, and ordered one bottle of beer grande. She noticed that Eddie Bauzon was holding a knife and was wearing a bloodstained t-shirt. Eddie told her that he had stabbed Rufo Narvas, Sr.[10] The trial court found the witnesses for the prosecution to be more credible in that their testimonies were straightforward, firm and showed no signs of nervousness, fabrication or malice. It found, as well, no reason for them to testify falsely against the accused. As to the testimonies of the accused and their witnesses, the court considered the same unworthy of belief for being obviously biased and for lack of corroboration. Moreover, Elenas behavior during the alleged fight appeared patently unnatural and defied logic, reason and rationality because when the stabbing was in progress three meters distant from her, she just stood by unperturbed instead of running away as would any person of her sex under such circumstances. Even when her sons were allegedly chased, she never bothered to follow them and inquire why her sons were involved. Neither did she divulge to the policemen who came to the crime scene what she had witnessed.

The trial court also took note of the flight of EUFROCENIO and Cipriano Laceste. They left their place of residence immediately after the incident and were arrested by the police only on 1 May 1996 in La Trinidad, Benguet, where they went into hiding. Since they did not explain or give reason for their flight, the trial court concluded that they had a guilty conscience. In convicting EUFROCENIO for murder, the trial court took into consideration the qualifying circumstance of treachery since he stabbed Rufo Narvas, Sr., when the latter was helpless and with no means of defending himself. The trial court, however, acquitted accused Cipriano Laceste because his only participation was his act of holding or grappling with the deceased without any indication of conspiracy between him and EUFROCENIO. Accordingly, the trial court rendered judgment, thus: WHEREFORE, finding accused Eufrocenio Laceste guilty beyond reasonable doubt of the crime of murder defined and punished by Article 248 of the Revised Penal Code, he is hereby sentenced to suffer the penalty of death pursuant to Republic Act 7659. In the case of accused Cipriano Laceste, he is hereby acquitted for failure of the prosecution to prove his guilt beyond reasonable doubt. Both accused are hereby ordered to indemnify the heirs of the deceased in the amount of P100,000.00 as actual, moral, compensatory, and other consequential damages. SO ORDERED.[11] EUFROCENIO still filed a Notice of Appeal.[12] In his Appellants Brief he contends that the trial court erred in I GIVING FULL WEIGHT AND CREDENCE TO THE TESTIMONIES OF THE PROSECUTION WITNESSES AND IN DISREGARDING THE THEORY OF THE DEFENSE. II FINDING [HIM] GUILTY BEYOND REASONABLE DOUBT OF THE CRIME OF MURDER DESPITE THE INSUFFICIENCY OF THE PROSECUTIONS EVIDENCE. III APPRECIATING THE EXISTENCE OF THE AGGRAVATING CIRCUMSTANCE OF TREACHERY DESPITE THE INSUFFICIENCY OF EVIDENCE TO PROVE IT. EUFROCENIO argues that the testimonies of the witnesses for the prosecution were improbable, immaterial, contrary to human experience, and full of inconsistencies in material and major details. He characterizes as very surprising and very unusual the failure of said witnesses to prevent any of the accused from going near the victim. They did not throw to the accused the bottles on top of the table; neither did they push the table to the accused, nor did they smash the chairs on the latter. EUFROCENIO then concludes that the testimonies of the prosecution witnesses were integral parts of a well thought and pre-fabricated story. As to the finding of treachery, EUFROCENIO argues that the existence of only one stab wound corroborated by the fact that the victim and the assailant were facing each other negates the existence of treachery. The Office of the Solicitor General (OSG) is for the affirmance of the decision of the trial court. On the allegation that prosecution witnesses Bernardo Raboy and Orlando Dispo were not credible witnesses because of their failure to come to the aid of Narvas, it cites the suddenness of the attack as well as the fear the two felt upon the violence wrought by EUFROCENIO and his companions. As to the alleged contradictory statements made by the prosecution witnesses, the OSG quotes extensively their testimonies to prove congruence and credibility especially with regard to the suddenness of the attack on Narvas. Lastly, the OSG agrees with the trial courts finding that treachery attended the killing in that there was swift and unexpected attack by EUFROCENIO on the unarmed Narvas, who had not committed any slightest provocation and was totally unaware of EUFROCENIOs murderous design. EUFROCENIOs conviction for the crime of murder under Article 248 of t he Revised Penal Code, as amended by R.A. 7659, stands. We are however, modifying his sentence for reasons which we shall hereinafter discuss. Witnesses inaction is a common argument which has been received with reluctance. We have decreed that there is no standard form of human behavioral response when one is confronted with a strange, startling, or frightful experience. [13] In another case, we have ruled that the testimony of an eyewitness who, while the crime is taking place, made no outcry and exerted no effort in order to help the victim will not be rendered unbelievable by such fact alone. Witnessing a crime is an unusual experience which elicits different reactions from the witnesses and for which no clear-cut standard form of behavior can be drawn.[14] A statement of this Court in an earlier case seems apt although lifted from a different set of circumstances, that is, Not everyone who passes on the road to Jericho is a clone of the Good Samaritan. [15] In any event, the failure of Orlando Dispo and Bernardo Raboy to prevent the attack was due to their fear [16] and the suddenness of the attack.[17] EUFROCENIOs sweeping charges of bias and contradictory statements against the prosecution witnesses are not supported by instances demonstrating such. In any case, our review of their testimonies fails to bear out contradictory statements on material points. We must further reiterate that, ultimately, when the issue is one of credibility of witnesses, appellate courts will generally not disturb the finding of the trial court unless it has plainly overlooked certain facts of substance and value that, if considered, might affect the result of the case. This is so because the trial court is in a better position to decide the question, having heard the witnesses and observed their deportment and manner of testifying during the trial.[18] EUFROCENIO miserably failed to convince us that an application of such an exception is warranted. It is likewise important to note that no dubious motive was shown on the part of the prosecution witnesses to implicate EUFROCENIO.[19] The latter, however, asserts that motive on his part to kill Rufo Narvas, Sr., was never proved by the prosecution. It is settled that motive is not essential for conviction for a crime when there is no doubt as to the identity of the culprit, and that lack of motive for committing the crime does not preclude conviction for such crime when the crime and participation of the accused are definitely proved. [20] Finally, as correctly stressed by the trial court, EUFROCENIO and Cipriano Laceste fled from their residence immediately after the incident and went into hiding in La Trinidad, Benguet, where they were arrested only on 1 May 1996. The Old Testament says that the wicked man flees though no man pursueth, but the righteous are as bold as the lion. [21] Therefore, flight, when unexplained, is a circumstance from which the inference of guilt may be drawn.[22] Put in another way, unexplained flight evidences guilt or betrays the existence of a guilty conscience.[23] We agree with the trial court and the OSG that treachery attended the killing of Rufo Narvas, Sr. After alighting from the tricycle, EUFROCENIOs companions suddenly approached and held the unsuspecting and unarmed Rufo; and without much ado, EUFROCENIO stabbed Rufo. There is at all no doubt in our minds that they deliberately and consciously employed means and method in the execution of the

crime that tended directly and especially to insure its execution without risk to themselves arising from the defense which Rufo might make.[24] All the elements of treachery as defined in paragraph 16 of Article 14 of the Revised Penal Code are, therefore, present. Under Article 248 of the Revised Penal Code, as amended by R.A. No. 7659, [25] the penalty for murder is reclusion perpetua to death. Since no mitigating or generic aggravating circumstances had been proved, the lesser penalty -- reclusion perpetua -- shall be applied pursuant to the second paragraph of Article 63 of the Revised Penal Code. The trial court then erred in imposing upon EUFROCENIO the death penalty. We shall also modify the award of damages. It must be noted that the trial court awarded the heirs of the victim in the amount of P100,000 as actual, moral, compensatory, and other consequential damages. In the first place, actual damages are not different from compensatory damages. Under Chapter 2, Title XVIII, Book IV of the Civil Code, actual and compensatory damages are synonymous; hence the title of the Chapter as well as Article 2199 thereof refer to them as actual or compensatory damages. They are, as well, different from moral damages under Article 2217 of the Civil Code. In every case then, courts must specify the award for each item of damages and make a finding thereon in the body of the decision. In this case, apart from the indemnity for death under Article 2206 of the Civil Code, which current jurisprudence law has fixed at P50,000, the heirs of the victim are entitled to an award of actual damages in the amount of P60,000, which the defense had admitted during the trial. However, since they waived moral damages by agreeing to a limited and specific amount to be paid by accused-appellant, the award therefor was unwarranted. IN VIEW OF THE FOREGOING, the decision of the Regional Trial Court of Dagupan City, Branch 41, in Criminal Case No. D-01053 finding accused-appellant EUFROCENIO LACESTE guilty beyond reasonable doubt as principal of the crime of murder as defined and penalized under Article 248 of the Revised Penal Code, as amended by R.A. No. 7659, is AFFIRMED, subject to modifications as to the penalty imposed and the award of damages. As modified, the penalty is changed from death to reclusion perpetua, with all its accessories; and the award of P100,000 for actual, moral, compensatory, and other consequential damages is substituted with the awards of P50,000 as civil indemnity for the death of Rufo Narvas, Sr., and P60,000 as actual damages, which accused-appellant shall pay to the heirs of the victim. Costs against accused-appellant. SO ORDERED. Narvasa, C.J., Regalado, Romero, Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza, Panganiban, Martinez, Quisumbing, and Purisima, JJ., concur.

SECOND DIVISION [G.R. No. 115117. June 8, 2000] INTEGRATED PACKAGING CORP., petitioner, vs. COURT OF APPEALS and FIL-ANCHOR PAPER CO., INC. respondents. DECISION QUISUMBING, J.: This is a petition to review the decision of the Court of Appeals rendered on April 20, 1994 reversing the judgment of the Regional Trial Court of Caloocan City in an action for recovery of sum of money filed by private respondent against petitioner. In said decision, the appellate court decreed: "WHEREFORE, in view of all the foregoing, the appealed judgment is hereby REVERSED and SET ASIDE. Appellee [petitioner herein] is hereby ordered to pay appellant [private respondent herein] the sum of P763,101.70, with legal interest thereon, from the date of the filing of the Complaint, until fully paid. SO ORDERED."[1] The RTC judgment reversed by the Court of Appeals had disposed of the complaint as follows: "WHEREFORE, judgment is hereby rendered: Ordering plaintiff [herein private respondent] to pay defendant [herein petitioner] the sum of P27,222.60 as compensatory and actual damages after deducting P763,101.70 (value of materials received by defendant) from P790,324.30 representing compensatory damages as defendants unrealized profits; Ordering plaintiff to pay defendant the sum of P100,000.00 as moral damages; Ordering plaintiff to pay the sum of P30,000.00 for attorneys fees; and to pay the costs of suit. SO ORDERED."[2] The facts, as culled from the records, are as follows: Petitioner and private respondent executed on May 5, 1978, an order agreement whereby private respondent bound itself to deliver to petitioner 3,450 reams of printing paper, coated, 2 sides basis, 80 lbs., 38" x 23", short grain, worth P1,040,060.00 under the following schedule: May and June 1978450 reams at P290.00/ream; August and September 1978700 reams at P290/ream; January 1979575 reams at P307.20/ream; March 1979575 reams at P307.20/ream; July 1979575 reams at P307.20/ream; and October 1979575 reams at P307.20/ream. In accordance with the standard operating practice of the parties, the materials were to be paid within a minimum of thirty days and maximum of ninety days from delivery. Later, on June 7, 1978, petitioner entered into a contract with Philippine Appliance Corporation (Philacor) to print three volumes of "Philacor Cultural Books" for delivery on the following dates: Book VI, on or before November 1978; Book VII, on or before November 1979 and; Book VIII, on or before November 1980, with a minimum of 300,000 copies at a price of P10.00 per copy or a total cost of P3,000,000.00. As of July 30, 1979, private respondent had delivered to petitioner 1,097 reams of printing paper out of the total 3,450 reams stated in the agreement. Petitioner alleged it wrote private respondent to immediately deliver the balance because further delay would greatly prejudice petitioner. From June 5, 1980 and until July 23, 1981, private respondent delivered again to petitioner various quantities of printing paper amounting to P766,101.70. However, petitioner encountered difficulties paying private respondent said amount. Accordingly, private respondent made a formal demand upon petitioner to settle the outstanding account. On July 23 and 31, 1981 and August 27, 1981, petitioner made partial payments totalling P97,200.00 which was applied to its back accounts covered by delivery invoices dated September 29-30, 1980 and October 1-2, 1980.[3] Meanwhile, petitioner entered into an additional printing contract with Philacor. Unfortunately, petitioner failed to fully comply with its contract with Philacor for the printing of books VIII, IX, X and XI. Thus, Philacor demanded compensation from petitioner for the delay and damage it suffered on account of petitioners failure. On August 14, 1981, private respondent filed with the Regional Trial Court of Caloocan City a collection suit against petitioner for the sum of P766,101.70, representing the unpaid purchase price of printing paper bought by petitioner on credit. In its answer, petitioner denied the material allegations of the complaint. By way of counterclaim, petitioner alleged that private respondent was able to deliver only 1,097 reams of printing paper which was short of 2,875 reams, in total disregard of their agreement; that private respondent failed to deliver the balance of the printing paper despite demand therefor, hence, petitioner suffered actual damages and failed to realize expected profits; and that petitioners complaint was prematurely filed. After filing its reply and answer to the counterclaim, private respondent moved for admission of its supplemental complaint, which was granted. In said supplemental complaint, private respondent alleged that subsequent to the enumerated purchase invoices in the original complaint, petitioner made additional purchases of printing paper on credit amounting to P94,200.00. Private respondent also averred that petitioner failed and refused to pay its outstanding obligation although it made partial payments in the amount of P97,200.00 which was applied to back accounts, thus, reducing petitioners indebtedness to P763,101.70. On July 5, 1990, the trial court rendered judgment declaring that petitioner should pay private respondent the sum of P763,101.70 representing the value of printing paper delivered by private respondent from June 5, 1980 to July 23, 1981. However, the lower court also found petitioners counterclaim meritorious. It ruled that were it not for the failure or delay of private respondent to deliver printing paper, petitioner could have sold books to Philacor and realized profit of P790,324.30 from the sale. It further ruled that petitioner suffered a dislocation of business on account of loss of contracts and goodwill as a result of private respondents violation of its obligation, for which the award of moral damages was justified. On appeal, the respondent Court of Appeals reversed and set aside the judgment of the trial court. The appellate court ordered petitioner to pay private respondent the sum of P763,101.70 representing the amount of unpaid printing paper delivered by private respondent to petitioner, with legal interest thereon from the date of the filing of the complaint until fully paid.[4] However, the appellate court deleted the award of P790,324.30 as compensatory damages as well as the award of moral damages and attorneys fees, for lack of factual and legal basis. Expectedly, petitioner filed this instant petition contending that the appellate courts j udgment is based on erroneous conclusions of facts and law. In this recourse, petitioner assigns the following errors: [I] "THE COURT OF APPEALS ERRED IN CONCLUDING THAT PRIVATE RESPONDENT DID NOT VIOLATE THE ORDER AGREEMENT. [II]

THE COURT OF APPEALS ERRED IN CONCLUDING THAT RESPONDENT IS NOT LIABLE FOR PETITIONERS BREACH OF CONTRACT WITH PHILACOR. [III] THE COURT OF APPEALS ERRED IN CONCLUDING THAT PETITIONER IS NOT ENTITLED TO DAMAGES AGAINST PRIVATE RESPONDENT."[5] In our view, the crucial issues for resolution in this case are as follows: (1)....Whether or not private respondent violated the order agreement, and; (2)....Whether or not private respondent is liable for petitioners breach of contract with Philacor. Petitioners contention lacks factual and legal basis, hence, bereft of merit. Petitioner contends, firstly, that private respondent violated the order agreement when the latter failed to deliver the balance of the printing paper on the dates agreed upon. The transaction between the parties is a contract of sale whereby private respondent (seller) obligates itself to deliver printing paper to petitioner (buyer) which, in turn, binds itself to pay therefor a sum of money or its equivalent (price).[6] Both parties concede that the order agreement gives rise to a reciprocal obligations[7] such that the obligation of one is dependent upon the obligation of the other. Reciprocal obligations are to be performed simultaneously, so that the performance of one is conditioned upon the simultaneous fulfillment of the other.[8] Thus, private respondent undertakes to deliver printing paper of various quantities subject to petitioners corresponding obligation to pay, on a maximum 90day credit, for these materials. Note that in the contract, petitioner is not even required to make any deposit, down payment or advance payment, hence, the undertaking of private respondent to deliver the materials is conditional upon payment by petitioner within the prescribed period. Clearly, petitioner did not fulfill its side of the contract as its last payment in August 1981 could cover only materials covered by delivery invoices dated September and October 1980. There is no dispute that the agreement provides for the delivery of printing paper on different dates and a separate price has been agreed upon for each delivery. It is also admitted that it is the standard practice of the parties that the materials be paid within a minimum period of thirty (30) days and a maximum of ninety (90) days from each delivery.[9] Accordingly, the private respondents suspension of its deliveries to petitioner whenever the latter failed to pay on time, as in this case, is legally justified under the second paragraph of Article 1583 of the Civil Code which provides that: "When there is a contract of sale of goods to be delivered by stated installments, which are to be separately paid for, and the seller makes defective deliveries in respect of one or more installments, or the buyer neglects or refuses without just cause to take delivery of or pay for one or more installments, it depends in each case on the terms of the contract and the circumstances of the case, whether the breach of contract is so material as to justify the injured party in refusing to proceed further and suing for damages for breach of the entire contract, or whether the breach is severable, giving rise to a claim for compensation but not to a right to treat the whole contract as broken." (Emphasis supplied) In this case, as found a quo petitioners evidence failed to establish that it had paid for the printing paper covered by the delivery invoices on time. Consequently, private respondent has the right to cease making further delivery, hence the private respondent did not violate the order agreement. On the contrary, it was petitioner which breached the agreement as it failed to pay on time the materials delivered by private respondent. Respondent appellate court correctly ruled that private respondent did not violate the order agreement. On the second assigned error, petitioner contends that private respondent should be held liable for petitioners breach of contract with Philacor. This claim is manifestly devoid of merit. As correctly held by the appellate court, private respondent cannot be held liable under the contracts entered into by petitioner with Philacor. Private respondent is not a party to said agreements. It is also not a contract pour autrui. Aforesaid contracts could not affect third persons like private respondent because of the basic civil law principle of relativity of contracts which provides that contracts can only bind the parties who entered into it, and it cannot favor or prejudice a third person,[10] even if he is aware of such contract and has acted with knowledge thereof.[11] Indeed, the order agreement entered into by petitioner and private respondent has not been shown as having a direct bearing on the contracts of petitioner with Philacor. As pointed out by private respondent and not refuted by petitioner, the paper specified in the order agreement between petitioner and private respondent are markedly different from the paper involved in the contracts of petitioner with Philacor.[12] Furthermore, the demand made by Philacor upon petitioner for the latter to comply with its printing contract is dated February 15, 1984, which is clearly made long after private respondent had filed its complaint on August 14, 1981. This demand relates to contracts with Philacor dated April 12, 1983 and May 13, 1983, which were entered into by petitioner after private respondent filed the instant case. To recapitulate, private respondent did not violate the order agreement it had with petitioner. Likewise, private respondent could not be held liable for petitioners breach of contract with Philacor. It follows that there is no basis to hold private respondent liable for damages. Accordingly, the appellate court did not err in deleting the damages awarded by the trial court to petitioner. The rule on compensatory damages is well established. True, indemnification for damages comprehends not only the loss suffered, that is to say actual damages (damnum emergens), but also profits which the obligee failed to obtain, referred to as compensatory damages (lucrum cessans). However, to justify a grant of actual or compensatory damages, it is necessary to prove with a reasonable degree of certainty, premised upon competent proof and on the best evidence obtainable by the injured party, the actual amount of loss. [13] In the case at bar, the trial court erroneously concluded that petitioner could have sold books to Philacor at the quoted selling price of P1,850,750.55 and by deducting the production cost of P1,060,426.20, petitioner could have earned profit of P790,324.30. Admittedly, the evidence relied upon by the trial court in arriving at the amount are mere estimates prepared by petitioner.[14] Said evidence is highly speculative and manifestly hypothetical. It could not provide sufficient legal and factual basis for the award of P790,324.30 as compensatory damages representing petitioners self-serving claim of unrealized profit. Further, the deletion of the award of moral damages is proper, since private respondent could not be held liable for breach of contract. Moral damages may be awarded when in a breach of contract the defendant acted in bad faith, or was guilty of gross negligence amounting to bad faith, or in wanton disregard of his contractual obligation.[15] Finally, since the award of moral damages is eliminated, so must the award for attorneys fees be also deleted.[16] WHEREFORE, the instant petition is DENIED. The decision of the Court of Appeals is AFFIRMED. Costs against petitioner. SO ORDERED. Bellosillo, (Chairman), Mendoza, Buena, and De Leon, Jr., JJ., concur.

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-9973 November 6, 1914 W. E. HICKS, plaintiff-appellant, vs. MANILA HOTEL COMPANY, defendant-appellee. Southworth, Hargis, Adams and Jordain for appellant. Lawrence, Ross and Block for appellee. MORELAND, J.: This is an appeal from a judgment of the Court of First Instance of the city of Manila dismissing upon the merits after trial plaintiff's action to recover damages alleged to have been sustained through defendant's breach of a stipulation to renew for a second year a written contract for the exclusive five-passenger automobile privilege of the defendant hotel. It seems that, on the 9th of November 1912, plaintiff and defendant entered into a written contract by which the defendant ceded to the plaintiff the exclusive right to serve its patrons with five-passenger automobiles for a period of one year from the date thereof, with certain rights with respect to a renewal of the contract for a second year. Plaintiff entered on the performance of his duties under the contract and successfully discharged them during the first year. When about half of the first year had expired, and about June, 1913, the defendant company, disregarding, as plaintiff claims, the terms of its agreement with him, invited proposals from various garages for its five-passenger automobile privilege for the ensuing year, that is, from November, 1913, to November, 1914, the time covered by the second year of plaintiff's contract. Under these proposals various garages competed for the privilege, including that of George E. Brown, and, after certain negotiations with the latter, his offer was accepted by the defendant company and a written contract made with him for the exclusive right to the privilege during the year beginning November 9, 1913. This contract with Brown was executed some months prior to the termination of the first year of plaintiff's contract. Upon the termination of the first year of the contract the defendant company having, as we have seen, already entered into a contract with Brown relative to the matter included in plaintiff's contract for the period representing the second year thereof, refused, over plaintiff's objections and protests, to permit him to continue for the second year, deprived him of the privilege which the contract conferred, and evicted him from the hotel where, under the terms of the contract, he was entitled to have and did have an office. This action was brought to recover damages for breach of contract. The contract between the parties hereto contains a clause which forms the subject matter of this litigation. It is as follows: "This agreement to remain in effect for a period of one year from date, with preference over others of renewing for a further period of one year." There are two questions involved. The first one is whether that portion of the agreement just quoted gave the plaintiff an enforceable right to renew the contract for a second year. The second is whether the plaintiff, even though he had that right, did, by his acts and conduct, waive that right and thereby exempt the defendant from the liability, if any, which it incurred by its eviction of plaintiff and the refusal to permit him to enjoy the privilege for the second year. As to the first question: Counsel for the defendant company contended that the clause quoted gave the appellant no right to renew the contract sued upon for the second year. They assert that it did nothing more than give to plaintiff the right to compete with others in obtaining defendant's five-passenger automobile privilege for the said second year, with preference to him to be engaged over his competitors in case his offer was equally profitable to the defendant hotel. They further contend that the competition into which he was thus thrust did not relate exclusively to the contract in which the clause is found or to the terms and conditions of that contract; but that it referred to any contract which the defendant hotel offered to make or could make with any person, whatever its terms and conditions might be. On the other hand, plaintiff claims that the contract gave him a right to renew and that the stipulation for a renewal did not contemplate other or different terms than those embraced in the contract to be renewed and that by entering into the Brown contract and evicting the plaintiff from the premises the defendant violated its obligation to grant the plaintiff a renewal of his contract for a second year. We are constrained to agree with plaintiff's contention. It must be remembered that the contract relating to the five-passenger automobile privilege was complete contract, whereby the plaintiff was required to furnish a certain number of five-passenger automobile and to attend faithfully and fully to the requirements of the patrons of the hotel, for which he was to receive a stipulated compensation. The construction placed upon the clause by defendant deprives the plaintiff of any right or interest in that particular contract or any renewal thereof and relegates him to a scramble to obtain not the same contractfor a second year but an entirely different contract for one or more years. By this contention the clause in question is torn from the agreement in which it was placed by the parties and made to do service not with relation to the contract in which it is found but with relation to another contract different in every conceivable term. It would see, other things being equal, that a clause in a contract should be construed with reference to the contract in which it is found, and if it accords a privilege to one party or the other, it should be in connection with the contract to which it refers. The contract in which the clause is found was, generally speaking, one whereby the plaintiff was to furnish a certain number of five-passenger automobiles, attend faithfully to the needs of the patrons of the hotel, to continue his service for a period of one year and to receive as compensation all the proceeds of the business less, say, 10 per cent to be paid to the defendant for the privilege. This, with other details, is the contract in which the clause is found and to which it refers. That clause was, in our judgment, not intended to do duty with reference to a contract, such as the hotel company made with Brown, already referred to, by which the latter was to have the five-passenger automobile privilege of the hotel, as well as all other automobile and carriage privileges, upon the payment to the hotel of a flat sum of, say, P10,000 annually. According to the defendant, the clause in question simply concedes to plaintiff the privilege over Brown, if he desired it, of taking and accepting the contract which the hotel made with Brown. In other words, defendant here contends, and the court below found, that the clause in question did not confer a certain,

enforceable right upon the plaintiff with reference to the contract in which the clause was found, but simply gave him the preference over others to make with the defendant company any contract which the latter might be able to make with any other person. As stated in the brief of counsel in the trial court the stipulation for a renewal conferred upon the plaintiff only the right to make "as satisfactory an offer as any other person," and that since plaintiff failed to make as favorable an offer as did Mr. Brown, that is, since plaintiff would do no more than propose a renewal of the old contract, the hotel company had a right to contract with Brown. Manifestly the clause "with preference over others of renewing for a further period of one year" was inserted for a purpose. It was intended to confer a right either on the plaintiff or upon the defendant. That it was not intended to confer a right on the defendant is conceded. It must have been intended, therefore, to do something favorable to the plaintiff. What was it? While it is conceded that the clause quoted confers no right on the defendant company, the latter, nevertheless, contends that it conferred no right on the plaintiff. Even though the clause, as claimed by defendant, gave the plaintiff a preference over others with respect to some other contract, a contract which might be entirely distasteful to the plaintiff in every term and which, wit his limited resources, he would be unable to accept at all, such preference would not be a substantial right. In fact, it would be a right the effect of which would be not only problematical but as likely to be injurious as beneficial. If the clause conferred no right upon either the plaintiff or the defendant, then it has no meaning to which the law attaches importance. That this was intended we cannot believe. We are confident that it was placed in the contract for the purpose of conferring upon the plaintiff an enforceable right and one which related to the very contract in which it was placed. This clause sets out with sufficient clearness an agreement for a renewal of the contract for a second year. It cannot have any other significance in language. The grammatical construction of the stipulation precludes the legal construction given it by the court below. The clause "with preference over others of renewing for a further period of one year" does not modify anything preceding it. It must be construed as a separate and independent sentence whose subject is suppressed. Should we supply the words omitted by the draftsman, apparently with a view to brevity, the stipulation would be plain; it would clearly appear that it was intended to be a stipulation in favor of the plaintiff. Nor is the contention made by the defendant relative to the phrase "with preference over others" sufficient to destroy that construction. It is asserted that this phrase deprived the plaintiff of the right of renewing the existing contract and relegated him to the barren right of accepting at the end of the first year the bast terms that defendant might be able to secure from other persons for the exclusive concession to which the contract refers, thereby transforming the stipulation for renewal in favor of the plaintiff to one in favor of the defendant. As already pointed out, the grammatical structure of the stipulation shows both that the thing to be renewed was agreement in force the first year and that the party who possessed the right to renew was the plaintiff. The construction of the phrase "with preference over others" contended for by the defendant and found by the court below not only overthrows the grammatical structure of the stipulation, namely, the word "renew." The meaning of that word, wherever applied with respect to real or personal rights, is not a matter of discussion and, unless the stipulation to renew expressly provides for variations in the terms of the contract to the renewed, the clause of renewal always relates to the contract in which it is found. To attribute to the words "with preference over others" a meaning that nullifies an essential word of common usage and conventional signification is to vary an elementary rule of construction. While the use of the phrase "over others" after the noun "preference," which means the act of preference or the state of being preferred or chosen before others, is not altogether elegant English and is somewhat ambiguous with respect to that right, including the other party to the contract; and if the party conceding the right adds to the contract a phrase "with preference over others" with respect to that right, it adds nothing to the contract and those words may be stricken out without altering its natural or legal sense. Thus, in the contract before us, if the defendant company, by the clause in question, conceded to the plaintiff an enforceable right, then the plaintiff received preference over all others with respect to that right and the adding of the words "with preference over others" did not serve to deprive the plaintiff of the right thus conceded, and those words should not be so construed as to effect that end. They were useless and redundant and could have had no force or effect without destroying the very purpose for which the clause itself was inserted. If this construction were not followed, we would be obliged, as already intimated, to declare that the phrase "renewing for a further period of one year" would have no adequate significance. The construction contended for by the defendant wipes these words from the contracts and leaves it in that respect the same as if they had not been inserted. No such construction can be permitted, as it takes from the contract words of the most material signification. If, in the construction of a contract, one of two clauses must be eliminated, it must be that one the influence of which upon the essentials of the contract is the least. As we have shown, the words "with preference over others" are of no substantial significance. On the other hand, the phrase providing for a renewal is of very great materiality and importance and carries into the contract an idea which would not have there if it had not been used. As to the second question: What appears to be, perhaps, the main contention of the defendant in this case is that plaintiff never made a request for the renewal of the contract for the second year but, instead of so doing, sought to make other and different arrangements with the hotel and with Brown, to whom, as we have seen, the hotel conceded the privilege which is the subject of this action, thereby indicating an intention to abandon his right, if any he had, to a renewal of the contract for the second year. It is asserted by counsel for the defendant that in July plaintiff attempted to enter into a partnership agreement with the hotel relative to the privilege in question for the period covering the second year of plaintiff's contract, and that, filing in that, and believing that Brown would secure the privilege from the hotel, he thereupon sough to make a contract with Brown by which he could assist him in fulfilling his contract with the hotel. It is even contended by defendant that plaintiff actually did enter into an agreement with Brown relative to that matter. A careful reading of the testimony in this case leads us to differ with counsel for the appellee as to the real facts of the case and constrains us to differ materially from the conclusions drawn by counsel for the defendant from the acts of the plaintiff as se out in the record. As to the facts, we may say that the evidence does not sustain the contention that plaintiff entered into a contract with Brown. The proof discloses that the plaintiff sought to make arrangements with the hotel of a nature different from those contained in the contract under consideration and also that he had negotiations with Brown looking to an agreement with him whereby he might assist him in handling the fivepassenger automobile business under the privilege which it appeared the hotel would concede to him. No contract, however, was made with either and the plaintiff at no time found himself under any obligation to the defendant or Brown by reason of the acts which appellee makes the basis of its argument. To us the important fact is that before the plaintiff entered into negotiations or made any offers with respect to the five-passenger automobile privilege either with or to the defendant or Brown, the hotel had impliedly denied the plaintiff's rights with respect to the contract before us, had refused to recognize the clause for a renewal of the contract for a second year as binding upon it, and, as a result, as early as June, 1913, had, according to is brief in this court "invited proposals from various garages for its automobile service for the ensuing year." In

other words, the defendant had, prior to the negotiations and offers of plaintiff, repudiated its contract with him so far as it related to the renewal for the second year and was preparing itself to make a contract with any person with whom it might secure the most advantageous terms. Not only did the defendant advertise for bids or offers concerning its automobile privilege for the period embraced in the second year of the contract under consideration, but sometime before the first year of that contract had expired the defendant had actually made a contract with Brown by which it had conceded to him said privilege for the period embraced in the second year of the plaintiff's contract. Thus, when the first year of plaintiff's contract terminated, he found that the defendant had rejected its obligation under the renewal clause, had let the contract to another person, and when he sought, as he did seek, to continue in the performance of his contract for the second year, defendant evicted him from the premises and denied him the right which he sought to exercise. We are of the opinion that, when a person who is under an obligation to another to perform certain acts upon the demand of that person, repudiates that obligation prior to the time when the demand for its fulfillment is necessary, the person to whom that obligation runs is not required to sit down, fold his hands and calmly await the disaster which the violation of the obligation entails. We believe that, under such circumstances, he is entirely within his rights and, therefore, waives nothing, when he seeks other employment or the same or similar employment with others, or attempts to make other arrangement relative to the same subject matter even with the person or corporation which owed him the obligation repudiated. So long as it appears with fair clearness that his purpose is to protect himself against the result of the repudiation, his acts do not constitute a waiver of his rights under the obligation repudiated, nor do they estop him from making a claim by reason of its breach. The waiver will not be presumed; and, if the intention to waive or release is denied, such waiver or release must be proven by the party alleging it by a preponderance of the evidence. The legitimate object is to enable the party upon whom it is made to perform his contract and discharge his liability agreeable to the nature of it without a suit at law; and whenever such party wholly denies the right of the other to assert title in himself or unqualifiedly refuses performance of the obligation, a demand is made useless, and therefore unnecessary, since lex neminem cogit ad vana. For the same reason and upon the same principle the failure to make a demand before suit may be cured by proof that the defendant could not have complied with the demand if it had been made; as where a person contracts to assign his interest in certain lands to another within a specified time upon payment of consideration therefor, and the vendor prior to the stipulated time assigns his interest to a stranger. In such case a request by the vendee for the performance of the contract is unnecessary. The rule stated otherwise is to the effect that where a party bound to the future performance of a contract puts it out of his power to perform it, the other party may treat this as a breach and sue him at once, having thus an immediate right of action for breach of the contract by anticipation. It may not be amiss, perhaps, to note that the defendant company was in no way injured by the acts of the plaintiff complained of. There resulted no damage directly nor did the company change position to its disadvantage by reason of his affirmative acts or of his neglect, if there were such to demand a renewal prior to the termination of the first year under the agreement. It may be noted that the plaintiff was under no obligation to defendant with respect to a renewal of the contract. The obligation was wholly on the side of the defendant. Therefore, in doing whatever he did to obtain other employment, he was not violating any obligation which he owed to the defendant and, therefore, gave it no legal reason for complaint. The plaintiff had a right to look about for a better situation and to seek to improve his condition with respect to the period embraced within the second year referred to in the contract. We do not believe that the contract should be construed to deny plaintiff the ordinary opportunities which men have for the betterment of their condition, especially after the other party to the contract has repudiated it. Even though one is engaged in the performance of a contract which he has with another, that fact does not require him to stand still and refrain from all attempts to improve his condition, after the termination of the contract which he is engaged in performing, for fear that such activities will preclude him from enforcing obligations which the others owes him. At the time of the activities of the plaintiff complained of the time had not yet arrived when plaintiff was bound to exercise his option, if it may be called an option, with respect to the second year referred to in the contract. Defendant was in no way misled and in no way injured by plaintiff activities. The remaining question relates to plaintiff's damages. The plaintiff claims his damage to be P10,800, basing that claim upon the profits which he would have received if he had continued the business for the second year. The appellee makes no objection to this amount, the question of the amount of damages not having been referred to in its brief. It is the practice of this court, in case of reversal of a judgment dismissing the complaint on the merits, to examine the evidence and enter or order entered the judgment which the inferior court should have rendered; and, where the action is for a sum of money or damages, to find from the evidence the amount due or the damages suffered and to render or order the trial court to render judgment for the amount. We assume that the practice is thoroughly understood and that if appellee had any objection to urge as to the amount of damages which should be awarded to the plaintiff in case judgment should be found for him in this court, it would have presented it in its brief. The only damages claimed relate to profits. Article 1106 and 1107 of the Civil Code reads as follows: Indemnity for losses and damages includes not only the amount of the loss which may have suffered, but also that of the profits which the creditor many have failed to realize, reserving the provisions contained in the following articles. The losses and damages for which a debtor in good faith is liable, are those foreseen or which may have been foreseen, at the time of constituting the obligation, and which may be necessary consequence of its non-fulfillment. In case of fraud, the debtor shall be liable for all those which clearly may originate from the no-fulfillment of the obligation. Under these provisions we are required to determine the amount of profits which plaintiff failed to realize by reason of the refusal of defendant to permit him to continue under the contract for the second year and which were foreseen or which might have been foreseen at the time the contract was made and which were a necessary consequence of the breach. Plaintiff testified that he made P11,000 profit the first year and that he would unquestionably have made a net profit of P1,200 a month if he had been left to enjoy the second year of the contract. There is no evidence contradicting this, and while the estimation of speculation, it is inherent in the nature of the subject matter and not in its manner of treatment. As was said in the case of Ft. Smith & W.R. Co. vs. Williams (30 Okla., 726): This has ever been looked upon the treated by the courts as a vexed and difficult question. It has been, and will always be, impossible to law down any fixed and definite rule correctly applicable in all cases. There has never been a rule established which was decisive and universally followed by the courts in all cases, but the inclination of the earlier authorities to hold that contemplated profits per se were improper elements of damage has given way under the riper wisdom of jurisprudence, and, instead of holding to the earlier inclination, the weight of authorities in modern jurisprudence either holds or concedes that, where a loss of profits is not too remote or conjectural to be suspectible of computation with reasonable accuracy, they are proper elements of damage.

This rule is recognized with approval by each and all of the following authorities cited by counsel for plaintiff in error in support of his first proposition: Strawn vs. Cogswell (28 Ill., 461); Frazer vs. Smith (60 Ill., 145); Galveston H. and S. A. R. Co. vs. Jessee (2 Willson Civ. Cas. Ct. App., sec. 405), and authorities cited; People's Sav. Bank of Waterloo vs. C. F. Transit Co. (118 Iowa, 740, 92 N. W., 691); Bartow vs. Erie R. Co. (73 N. J. L., 12, 62 Atl., 489); H. and T. C. R. R. Co. vs. Hill (63 Tex., 381, 51 Am. Rep., 462);Western U. Teleg. Co. vs. Crall (39 Kan., 580, 18 Pac., 719); Moulthrop vs. Hyett (105 Ala., 493, 53 Am. St. Rep., 139, 17 So., 33); Williams vs. Island City Mercantile and Mill Co. (25 Ore. 573, 37 Pac., 51); Brigham and Co. vs. Carlisle (78 Ala., 244, 56 Am. Rep., 28); Gas Co.vs. Glass Co. (56 Kan., 622, 54 Am. St. Rep., 598, 44 Pac., 621); Cutting vs. Miner (30 App. Div., 457, 52 N. Y. Supp., 288); Griffin vs. Colver (16 N. Y., 489, 69 Am. Dec., 718); Western Gravel Road Co. vs. Cox (39 Ind., 263); Florida Northern R. Co. vs. Southern Supply Co. (112 Ga., 1, 37 S. E., 130); Bell vs. Reynolds (78 Ala., 511, 56 Am. Rep., 55); Pollock and Co. vs. Gantt (69 Ala., 373, 44 Am. Rep., 519); Witherbee vs. Meyer (115 N. Y., 446, 50 N. E., 58). xxx xxx xxx None of the above authorities have held against the justness of the rule of applying profits as a measure of damages, but have merely held it inapplicable to the cases decided. There is more or less inaccuracy in every action for damages for breach of contract, but in order to justify a recovery in any case, assuming that a breach has been committed, there are two necessary elements to be considered: One that a damage has been done; the other that such damage is the result of the breach. The amount of the one should be computed with reasonable accuracy. The fact of the other must be determined with reasonable certainty. A less degree of accuracy is required in the former than of certainty in the latter, but neither is required to be absolute or beyond conjectural possibilities. Where it reasonably appears that a party has been damaged, and that such damage is the direct result of the breach, then a recovery is justified. The next step is to ascertain how much will reasonably compensate the injured party. This should be computed by the plainest, easiest, and most accurate measure which will do justice in the premises, and if from the conditions in the contract, and the nature of the breach, it reasonably appears that the extent or amount of damages may be more readily, easily, correctly, and justly ascertained by applying the loss of profits as a measure, if it is evident that profits were lost and the amount thereof can be calculated with reasonable accuracy, then such profits are the true measure to be applied. In such cases, however, it should appear evident that profits were lost. The amount may be estimated with only reasonable accuracy; but the fact that profits were lost should require stricter proof. This doctrine is deduced from a vast weight of authorities, both American and English, including 2 Joyce on Damages, and authorities; 1 Sutherland on Damages (3 ed.) and notes and cases cited; 1 Sedgwick on Damages (8th ed.); 8 Am. and Eng. Enc. (2 ed. and authorities cited in notes, 13 Cyc. and cases cited Bryson vs. McCone (121 Cal., 153; 53 Pac., 637); Blagen vs. Thompson (23 Ore., 239; 18 L. R. A., 315; 31 Pac., 647); Dart vs. Laimbeer (107 N. Y., 664; 14 N. E., 291); Brown vs. Hadley (43 Kan., 267; 23 Pac., 492); Hoge vs. Norton (22 Kan., 374); Hadley vs. Baxendale(9 Exch., 341; 2 C. L. R., 517; 23 L. J. Exch. N. S., 179; 18 Jur., 358; 2 Week. Rep., 302; 26 Eng. L. and Eq. Rep., 398; 5 Eng. Rul. Cas., 502; a leading case both in England and American); Tootle vs. Kent (12 Okla., 674; 73 Pac., 310); Choctaw Ry. Co. vs. Jacobs (15 Okla., 493; 82 Pac., 502); Mace vs. Ramsey (74 N. C., 11); Butler vs. Manhattan R. R. Co. (143 N. Y., 417; 26 L. R. A., 46; 42 Am. St. Rep., 738; 38 N. E., 454);Bluegrass Cordage Co. vs. Luthy (98 Ky., 583; 33 S. W., 835); Simpson vs. Londen etc. R. Co. (I. Q. B. Div., 274; 45 L. J. Q. B. N. S., 182; 33 L. T. N. S., 805; 24 Week. Rep., 294). In the case before us there seems to be as little speculation in determining the profits which the plaintiff might have recovered as is usual in cases where the time for which the profits are to be recovered extends over a considerable period of time. It is undisputed that the business was a very profitable one the first year and that the second year would have been more profitable than the first. While the estimate of the amount of profits for the second year is an estimate of necessity, it is one which is based upon facts testified to by the plaintiff, which were within his knowledge and which appear to the court to sustain his contention. While the evidence is not as conclusive as in cases where the damages are certain and capable of accurate statement, we are satisfied with its sufficiency, particularly in view of the fact that all that courts may require of litigants is the production of the best evidence of which the case is susceptible. As to whether or not the plaintiff in an action of this character may recover only that portion of the profits which had accrued up to the time of bringing the action, or whether he may sue for all the damages resulting from the breach in a single action, even though that action is begun long before the period during which the profits will accrue has expired, we may say that, in our judgment, the weight of authority is to the effect that the plaintiff need bring but one action and that he may recover the damages sustained for the whole period even though it be by anticipation.lawph! The principle on which the case of Pierce vs. Tennessee Coal, Iron and Railroad Co. (173 U. S., 1) is decided is, in our judgment, applicable to the case at bar. That was a case in which the plaintiff, while employed as a machinist in the defendant's coal mine in Alabama, was seriously hurt under circumstances which the plaintiff claimed, and the defendant denied, rendered it liable to him in damages. The parties were desirous of settling and compromising plaintiff's claim for damages for the injuries and, after repeated negotiations, they made an agreement by which the defendant was to pay to the plaintiff regular wages while he was disabled, to furnish him with such supplies as he might choose to get from the commissary, to give him coal and wood for fuel at his dwelling house and the benefitof a garden belonging to the defendant. The agreement was carried out by the defendant for some time and then it discharged the plaintiff from its employ before his disability ceased. After discussing certain phases of the contract and declaring its nature and purpose, the court said: It apears to us to be equally clear that the Circuit Court of the United States erred in excluding the evidence offered by the plaintiff, in restricting his damages to the wages due and unpaid at the time of the trial, and in declining to instruct the jury as he requested. Upon this point the authorities are somewhat conflicting; and there is little to be found in the decision of this court, having any bearing upon it, beyond the affirmance of the general propositions that "in an action for a personal injury the plaintiff is entitled to recover compensation, so far as it is susceptible of an estimate in money, for the loss and damage caused to him by the defendant's negligence, including not only expenses incurred for medical attendance, and a reasonable sum for his pain and suffering, but also a fair recompense for the loss of what he would otherwise have earned in his trade or profession, and has been deprived of the capacity of earning by the wrongful act of the defendant," and, "in order to assist the jury in making such an estimate, standard life and annuity tables, showing at any age the probable duration of life, and the present value of a life annuity, are competent evidence" (Vicksburg and M. Railroad Co. vs. Putnam, 118 U. S., 554); and that in an action for breach of contract 'the amount which would have been received if the contract had been kept, is the measure of damages if the contract is broken' (Benjamin vs. Hilliard, 23 How., 149, 167).

But the recent tendency of judicial decisions in this country, in actions of contract, as well as in actions of tort, has been towards allowing entire damages to be recovered, once for all, in a single action, and thus avoiding the embarrassment and annoyance of repeated litigation. This especially appears by well considered opinions in cases of agreements to furnish support or to pay wages, a few only of which need be referred to. The court, after discussing Parker vs. Russell (133 Mass., 74), Schell vs. Staub (7 Lea, 397), holding the doctrine just quoted, further said: These cases appear to this court to rest upon sound principles, and to afford correct rules for the assessment of the plaintiff's damages in the case at bar. . . . If these facts were proved to the satisfaction of the jury, the case would stand thus: The defendant committed an absolute breach of the contract, at a time when the plaintiff was entitled to require performance. The plaintiff was not bound to wait to see if the defendant would change its decision, and take him back into its service; or to resort to successive actions for damages from time to time; or to leave the whole of his damages to be recovered by his personal representative after his death. But he had the right to elect to treat the contract as absolutely and finally broken by the defendant; to maintain this action, once for all, as for a total breach of the entire contract; and to recover all that he would have received in the future, as well as in the past, if the contract had been kept. In so doing, he would simply recover the value of the contract to him at the time of the breach, including all the damages, past or future, resulting from the total breach of the contract. The difficulty and uncertainty of estimating damages that the plaintiff may suffer in the future is no greater in this action of contract than they would have been if he had sued the defendant, in an action of tort, to recover damages for the personal injuries sustained in its service, instead of settling and releasing those damages by the contract now sued on. In assessing the plaintiff's damages, deduction should, of course, be made of any sum that the plaintiff might have earned in the past or might earn in the future, as well as the amount of any loss that the defendant had sustained by the loss of the plaintiff's services without the defendant's fault. From the amount of damages proved in the case at bar there would have been deducted, if there had been any proof to that effect, whatever profits plaintiff had gained up to the time of the action or might reasonably be expected to gain during the period sued for. No evidence, however, has been introduced on that subject and we do not find it necessary to go into that question. We are of the opinion that the great weight of authority is to the effect that the opportunity to earn wages or profits in reduction of the damages claimed will not be presumed but must be affirmatively shown by the defendant. (Van Winkle vs. Satterfield, 58 Ark., 617, 623, 25 S. W. Rep., 1113, 23 L. R. A., 853; Kelley vs. Louisville and N. R. Co., 49 Ill. App., 304; Fish vs. Glass, 54 Ill. App., 655; Hamilton vs.Love, 152 Ind., 641, 53 N. E. Rep., 181, 71 Am. St. Rep., 384; Pennsylvania Co. vs. Dolan, 6 Ind. App., 109, 32 N. E. Rep., 802, 51 Am. St. Rep., 289; Farrel vs. School District, 98 Mich., 43, 56 N. W. Rep., 1053; Allen vs. Whitlark, 99 Mich., 492, 58 N. W. Rep., 470; Chisholm vs. Preferred Bankers' L. Assur. Co., 112 Mich., 50, 70 N. W. Rep., 415; Boland vs. Glendale Quarry Co., 127 Mo., 520, 30 S. W. Rep., 151; Bassett vs. French, 10 N. Y. Misc., 672, 31 N. Y. Supp., 667; Heyer vs. Cunningham Piano Co., 6 Pa. Super. Ct., 504; Winkler vs. Racine Wagon and Carriage Co., 99 Wis., 184, 74 N. W. Rep., 793; Mathesius vs. Brooklyn Heights R. Co., 96 Fed. Rep., 792; Rosenberger vs. Pacific Coast Ry. Co., 111 Cal., 313, 43 Pac. Rep., 963; Pinet vs. Montague, 103 Mich., 516, 61 N. W. Rep., 876; Dearing vs. Pearson, 8 N. Y. Misc., 269, 276; 28 N. Y. Supp., 715, citing the text; Babcock vs.Appelton Manuf. Co., 93 Wis., 124, 67 N. W. Rep., 33; Dunn vs Daly, 78 Cal., 640, 21 Pac. Rep., 377; Brown vs.Board of Education, 29 Ill. App., 572; School Directors vs. Kimmel, 31 Ill. App., 537; Miller vs. Boot and Shoe Co., 26 Mo. App., 57; Koenigkraemer vs. Missouri Glass Co., 24 Mo. App., 124; Saxonia Mining and R. Co. vs. Cook, 7 Colo., 569, 4 Pac. Rep., 1111; Ansley vs. Jordan, 61 Ga., 482; Roberts vs. Crowley, 81 Ga., 429, 7 S. E. Rep., 740; Hinchliffe vs. Koontz, 121 Ind., 422, 23 N. E. Rep., 271; Larkin vs. Hecksher, 51 N. J. L., 133, 16 Atl. Rep., 703, 3 L. R. A., 137; Fee vs. Orient Fertilizing Co., 36 Fed. Rep., 509; Costigan vs. Mohawk, etc. R. Co., 2 Denio, 609; Howard vs, Daly, 61 N. Y., 362, 19 Am. Rep., 285; Gillis vs. Space, 63 Barb., 177; King vs. Sturer, 44 Pa., 99, 84 Am. Dec., 419; Griffin vs. Brooklyn Ball Club, 68 App. Div., 566, 73 N. Y. Supp., 864; Chamberlain vs. Morgan, 68 Pa., 168. See Gazette Printing Co. vs. Morss, 60 Ind., 153; Williams vs. Chicago Coal Co., 60 Ill., 149; Sedgwick on Damages, vol. 2, sec. 667; Labatt's Master and Servant, sec. 399.) The cause is returned to the Court of First Instance whence it came with instructions to enter a judgment in favor of the plaintiff and against the defendant for the sum of P10,800, with costs in that instance but without costs in this. Arellano, C. J., Torres and Araullo, JJ., concur. Separate Opinions CARSON, J., concurring and dissenting: While I agree with the majority in reversing the judgment in the court below and concur in the rulings upon which the reversal is founded, I think that the record should be remanded for a new trial, wherein evidence as to the amount of damages can be taken in the light of our rulings that plaintiff is entitled to recover in a single action for all the damages resulting from the breach of the contract, and that where the loss of profits in a case of this kind is not to remote or conjectural to be suspectible of computation with reasonable accuracy, it is proper element of damage. The trial judge was of opinion that plaintiff had gained up to the time of the action or might reasonably be expected to gain during the period sued for" notwithstanding the breach of the contract. The majority opinion admits that such profits if proven, should be deducted from the amount of damages allowed by the judgment. I think that the judgment of the trial court having been reversed on the ground that the trial judge erred in his rulings as to the right of plaintiff to recover any damages at all, and this court having recognize plaintiff's right to recover and at the same time announced the doctrine which should be applied as to the measure of the damages, and the form in which proceedings should be maintained for their recovery, the case should be remanded to the trial court and evidence taken as to the true damages which should be allowed in this action, so that judgment may be rendered on proof not only as to the amount of the anticipated profits under the contract, but also as o the amount, if any, which should be deducted therefrom because of "profits plaintiff had gained up to the time of the action or might reasonably be expected to gain during the period sued for" notwithstanding the breach of the contract.

G.R. No. L-33609 December 14, 1981 THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. JESUS G. RUIZ, defendant-appellant.

Republic of the Philippines SUPREME COURT Manila EN BANC

DE CASTRO, J.:P Automatic review of the decision of the Court of First Instance of Agusan imposing the death penalty on the appellant, Jesus G. Ruiz, for murder, aggravated by abuse of confidence, and sentencing him also to pay the heirs of the deceased, Atty. Jose Ong Oh, Jr. P12,000.00 as indemnity, P176,000.00 representing lost earnings of the deceased, P50,000.00 as moral damages, P25,000.00 as exemplary damages, and P10,000.00 as expenses of litigation, plus costs. The gun used in the killing, an unlicensed revolver (Exhibit "F") was ordered confiscated in favor of the Government. As to how the crime was committed, and the events immediately preceding and following the commission thereof, the prosecution's version is presented in the People's Brief as follows: At about 6:30 P.M. of May 30, 1968, while accused was downstairs. in the mezzanine of the store situated at the first floor of his house along Mabini Street, at Nasipit, Agusan del Norte, Raymundo Discipulo arrived thereat and after quite sometime asked the accused whether it was true that the loading of copra on the M/V Sweet Hope that day was given to Goring Gavero. Expressing his surprise as he could not believe then that it could happen because of his contract and good relation with the deceased, the accused was only able to answer: "Ha?" to Raymundo Discipulo's query (pp. 8-10, tsn, Aug. 26, 1969). At about 7 o'clock that same evening, the accused left the said store, took a tricycle and went to the office of the Oceanic Enterprises and inquired for the deceased (pp. 287-288, tsn, April 15, 1969). Upon being informed by Leoncio Njai Acido, a copra sample man of the said Oceanic Enterprises, that the deceased was at the wharf, accused left and rode on the waiting tricycle bound for the town (pp. 287, 289, tsn, Id.). At about 8:30 o'clock that same evening of May 30, 1968, while Carmelito Omboy was in his house fronting the plaza of the poblacion of Nasipit, Agusan del Norte, Dodong Ratilla, a nephew of the accused, arrived and told him (Carmelito Omboy) that the accused was requesting him to go to the latter's house (pp. 81, 82, tsn, Feb. 24, 1969). Soon thereafter, Carmelito Omboy went with Dodong Ratilla and proceeded to the accused's house located at a distance of only about 20 meters away and upon arrival thereat, accused who was then sitting by the door way beside a store (p. 82, tsn, Id.) stood up and commanded him ( Carmelito Omboy) to go to the wharf and to tell Joker (Atty. Jose Ong Oh, Jr., the deceased) to come to his (accused's) house because the latter wanted to talk to the former (pp. 83, 84, 86, tsn, Id.). Forthwith, Carmelito Omboy along with Dodong Ratilla took a tricycle and went to the wharf, a kilometer away, to look and fetch for the deceased (p. 87, tsn, Id.). Sometime after their arrival at the wharf, Carmelito Omboy was able to contact and convey the accused's message to the deceased who affirmatively said "Yes, I will be going there" and a little later rode in his jeep bound for the town followed by Carmelito Omboy in a tricycle (pp. 87-89, tsn, Id.). Meanwhile, and that was between 8:30 and 9:00 o'clock that same evening of May 30, 1968, a wharf-bound cargo truck loaded with copra of the deceased and driven by Jose Mendrez developed engine trouble at the comer of Roxas and Mabini Streets in the poblacion of Nasipit, Agusan del Norte (pp. 233, 234, tsn, April 14, 1969) and stopped along Roxas Street at a point more or less seven (7) meters from the place where accused was sitting (p. 242, tsn, Id.). A short while after the said cargo truck stopped, and while its driver Jose Mendrez was still behind its wheel, the latter was approached by one named Charlito Canon who said to him "Nong, you are caged by Jesus Ruiz", referring to the accused. Jose Mendrez went down. the cargo truck and proceeded to where accused was sitting outside his store (p. 235, tsn, Id.). Accused gave Mendrez a glass containing Tanduay wine, a little of which the latter drank (p. 236, tsn, Id.). Accused inquired from Mendrez as to the whereabouts then of the deceased. Mendrez answered that he does not know because when he left the bodega, the deceased was not there (p. 237, tsn, Id.). At this juncture then, and upon accused's instructions, Charlito Canon Nonoy Palabrica and another person unloaded from the stalled cargo truck three (3) sacks of copra which were then dropped along Roxas Street at the side of the said truck (p. 238, tsn, Id.). Thereafter, Charlito Canon stood at a corner fronting Roxas Street, while Nonoy Palabrica and the other person went behind the house of the accused (p. 239, tsn, Id.). Mendrez excused himself and went to the truck but upon reaching the same, Charlito Canon told him that accused was calling for him again (p. 239, tsn, Id.). So, he (Mendrez) went back to the accused who, while holding a glass of Tanduay on his left hand and with something protruding from his waist, told him not to go away, otherwise, he (accused) would shoot him (p. 240, tsn, Id.). While Mendrez was thus being threatened by the accused, the deceased arrived in the vicinity riding in his jeep, but before the latter could alight therefrom, he was approached by Charlito Canon and soon thereafter, the deceased got down from his jeep and went towards the parked cargo truck and looked over at the sacks of copra lying on the street. Then he proceeded to the place where accused was (p. 241, tsn, April 14, 1969; p. 94, tsn, Feb. 24, 1969). Taking advantage of this opportunity, Mendrez left and went towards his parked cargo truck. According to Carmelito Omboy who arrived at the vicinity almost at the same time that the deceased reached the place as the latter was followed by the former from the wharf, the devised greeted the accused "Jesse, Jesse" extending his arms to the accused who, however, slapped them and kicked the rattan stool and said, 'Sit down' to the deceased in a commanding manner (pp. 94, 95, tsn, Feb. 24, 1969); that the deceased picked up the rattan stool and placed it in front of the accused and sat on it (pp. 96, 97, tsn, Id.); that accused demanded, "Why did you load without asking permission?" (pp. 99, 100, tsn, Feb. 25, 1969); that the deceased answered "Jesse, easy, easy" ( Id.); that accused then splashed a glass of wine on the face of the deceased and throw the glass to the concrete pavement ( Id.); that the deceased stood up, wiped his face, removed his eyeglasses and wiped it with his T-shirt, wore his eyeglasses again and sat down anew, but accused with his right hand slapped him on the left cheek (pp. 99, 100, tsn, Feb. 25, 1969); that the deceased's face was turned to the right due to the impact of the slapping, only to be met by the shot from accused's black revolver (Exh. "F", p. 110, tsn, Id.) when the deceased turned his face to the front; that the accused got the revolver from his right waist and that only one shot was fired (pp. 101, 102, t.s.n., Id.); that the deceased jerked a little and fell to his left side, meanwhile the accused stood up still holding his revolver, raised it, turned its drum and tucked it on his right waist (p. 102, tsn, Id.); that thereafter, the accused turned to his right, and went upstairs of his house (p. 110, tsn, Id.) and threw his firearm (p. 45, tsn, Aug.

27, 1969); that after a while, accused came down from his house, passed by the body of the deceased, walked along Roxas Street and proceeded to the Municipal Building (pp. 111, 112, tsn, Feb. 25, 1969; p. 45, tsn, Aug. 27, 1969). Sometime, thereafter, that same evening, the Chief of Police of Nasipit, Agusan del Norte, Teodoro Luneta, arrived at the scene of the shooting incident to investigate at the instance of Mrs. Lourdes Ruiz, wife of the accused (pp. 22, 24, tsn, Aug. 27, 1968). Chief Luneta saw near the house of the accused the body of the deceased (p. 28, tsn, Id.) whom he had known for a good number of years (p. 24, tsn, Id.). He did not see any firearms with or within the immediate vicinity of the victim (p. 58, tsn, Feb. 24, 1969). He left the place for a while to call some of his policemen to assist him, but upon his arrival at the municipal building, he saw the accused already there, so he ordered the station guard to keep watch on the person of the accused. As most of his policemen turned out to be on patrol, he went back to the scene of the crime, supervised the taking of the picture of the deceased on the spot, as well as the scene of the crime by photographer David, and the drawing of a sketch of the place (Exh. "B") by Corporal Jalop (p. 31, tsn, Aug. 27, 1968). The body of the deceased was autopsied at the Raniel's Funeral Parlor at Butuan City by Dra. Lydia San Pedro, Municipal Health Officer of Nasipit, Agusan del Norte, at 2:00 o'clock in the morning of May 31, 1968 (pp. 140, 142-149, tsn, May 7, 1969), with the help of Dr. Teodoro Vesagas who did the actual incision (pp. 102, 149, tsn, May 7, 1969) and removed the slug which was lodged in the left medulla of the victim's brain (p. 116, tsn, Id.). The autopsy findings are reflected in the medical report (Exh. "T" and "T-3") submitted and testified to by Dra. Lydia San Pedro (p. 150, tsn, Id.) showing the following: Ext.finding: Transicted tongue medially; commuted fracture left maxilla; Upper and lower incissor teeth left upper premolar detached from socket; Hard and soft palate fractured on the left side with rugged edges. Internal Findings: Linear fracture from occipital extending to the base of the skull; lacerated left and right lobe of the medulla; bullet slug lodge in the left medulla. Course of bullet wound of entrance-left hard palate-left maxilla-base of the skull-left medulla. Description of wound entrance-Location-left angle of the mouth, has irregular surface with upward extension about 1-1/2 inches forming a triangle, two smaller linear wound triangular in size 1/2 inch. in length on both sides of the first wound described above, burned and roughened area about the wound of entrance. CAUSE OF DEATH: Laceration with hemorrhage medulla due to gunshot wound.(p. 39, Rec.) In the early morning of May 31, 1968, the recovered slug (Exh. "C") was handed by Dra. Lydia San Pedro to Chief of Police Luneta (pp- 36-39, tsn, Aug. 27, 1968; p. 152, tsn, May 7, 1969) who in turn gave it to his deputy, Police Lt. Amado Felias, with instructions to have it ballistically examined (tsn, pp. 36, 37, Aug. 27, 1968; p. 237, May 9, 1969), and to escort the accused to Camp Crame for the purpose of paraffin test, which mission he undertook together with Lt. Jose C. Edera of the Agusan PC Command that same morning of May 31, 1968 (tsn, pp. 30-34, May 5, 1969; pp- 239, 240, May 9, 1969). According to Capt. Constantino Y. Leva Chief of the Ballistics Branch, PC Central Laboratory, Camp Crame (pp. 148, 149, tsn, April 18, 1969) and who examined ballistically the recovered slug (Exh. "C"), the said slug was fired from a Cal. .357 Magnum firearm (pp. 150-155, tsn, Id.). The result of the paraffin test conducted on the accused also on May 31, 1968 by Lt. Col. Minardo B. Piones, Chief of the Chemistry Branch, PC Central Laboratory, Camp Crame (pp. 326, 327, tsn, April 1, 1969), showed that the right hand of the accused was positive for the presence of nitrates, while his left hand was negative (Exh. "K"; pp. 336, 337, 388, 389, tsn, Id.). On the same date, May 31, 1968, at Camp Crame, Quezon City, the accused executed an affidavit (Exh. "Z") stating therein that while he and the deceased were grappling for the possession of the deceased's revolver, somebody whom he did not see fired at the deceased. This affidavit, however, was not believed by Lt. Col. Pelayo Perez, CIS Deputy Executive Officer, when the said affidavit was presented to the latter on June 1, 1968 on account that it does not Identify who shot the deceased (pp. 174- 175, tsn, May 8, 1969), so that Lt. Col. Perez was constrained to, and did, interview, the accused (pp. 176, 179, tsn, Id.). After the interview, the accused, in the presence of Lt. Col. Perez, executed a second affidavit (Exh. "Z-1") giving a new version of the incident, in that it was the revolver of the deceased which killed the latter, and because of this new version, Lt. Col. Perez further interviewed the accused who finally admitted that he knew where the firearm was, and promised to surrender the same in Agusan if he (Perez) would go there. Forthwith, the accused was returned to Nasipit, Agusan, accompanied by Police Lt. Amado Felias and PC Lt. Edera (p. 240, tsn, May 9, 1969), while Lt. Col. Perez decided to follow them later together with CIS Agent Sofronio Sison (p. 182, tsn, May 8, 1969). In the meantime, on June 2, 1968, P.C. Sgt. Manuel Leva a paraffin technician, lifted paraffin casts on the left cheek and both hands of the deceased (pp. 303-307, tsn, April 16, 1969). On June 6, 1968, these paraffin casts were turned over by Sgt. Leva to Lt. Col. Minardo B. Pinones, the Chief Chemist, who examined the same and the result (Exh. "L", p. 349, tsn, April 17, 1969) showed that the paraffin cast lifted from the left cheek of the deceased was positive for the presence of nitrates (pp. 346, 347, tsn, Id.), while the paraffin casts lifted from both hands of the deceased were negative (p. 348, tsn,Id.). On June 4, 1968, Lt. Col. Perez arrived in Agusan and at the residence of the accused the latter surrendered to the former a Cal. .357 Magnum firearm with five have ammunitions and one spent shell (pp. 182-191, tsn, may 8, 1969; pp. 37-43, May 5, 1969), which firearm (Exh. "F") was found ballistically to be the firearm from which the recovered bullet or slug (Exh. "C") that killed Atty. Jose Ong Oh, Jr. (deceased) was fired (Exh. "P"; pp. 162-167, tsn, April 18, 1969). On June 5, 1968, the next day after the accused surrendered the aforesaid firearm (Exh. "F"), he executed a third affidavit Exh. "Y") consisting of six (6) pages, at the Headquarters of the Agusan PC Provincial Command at Butuan City (pp. 193, 194, tsn, May 8, 1969), in which affidavit, accused, among others, admitted that the surrendered firearm (Exh. "F") is his own unlicensed revolver that killed the deceased, but that the killing was accidental as the forefinger of the deceased's left hand was inserted into the trigger guard of said revolver causing it to fire and hitting the deceased himself. Upon the other hand, the version of self-defense as developed by appellant during the trial is as follows, quoting also from Appellant's Brief: On the same date, May 30, 1968, at 9:00 P.M. Ratilla who was sent to look for the deceased, Atty. Jose Ong Oh, Jr., arrived with one Carmelito Omboy. Ratilla told the herein accused-appellant that the deceased, Atty. Jose Ong Oh, Jr., was at that time at the Helen's Bakery, then said Ratilla after telling the herein accused-appellant the fact that Atty. Jose Ong Oh, Jr., was at the Helen's Bakery went upstairs their house and said accused-appellant keep on looking towards the direction of Helen's Bakery but could not see the deceased, so he went to the middle of Mabini Street where he saw the jeep of the deceased then parked. Then after seeing the parked jeep of the floor of their house. Then he saw that the deceased, Atty. Jose Ong Oh, Jr., was walking towards the cargo truck and look at its engine and upon seeing the three sacks

of copra being unloaded from the truck he (the deceased) pulled his hair and saying. "This is a delay of the loading." Then he went around the said truck and the herein accused-appellant could see from the face of the deceased, Atty. Jose Ong Oh, Jr. that he was angry over the unloading- of the three sacks of copra. That at the distance of about three to four meters the herein accused-appellant told the deceased, Atty. Jose Ong Oh, Jr.: "It is good that you are here," but the deceased did not answer, then he offered him a seat while he (the accused-appellant) 'was sitting on a rattan chair, telling the deceased to "sit down first" and pointing to a chair in front where he was then sitting, but the deceased, Atty. Jose Ong Oh, Jr., answered: "No. I am in hurry" then the accused-appellant stood up, placed his hands on the shoulder of the deceased and requested him again to sit down; then the deceased, Atty. Jose Ong Oh, Jr., inquired and said: "What shall we talk about, about the loading?", then the accused-appellant asked the deceased whether it was true that he gave the loading of his copra on M/V Sweet Hope to another labor union, Then the deceased, Atty. Jose Ong Oh, Jr., answered in a harsh voice and said: "It is true; this is our copra; you cannot tell me to whom I will give the loading of the copra." Then the herein accused-appellant in turn raised his voice and said: "What do you mean? I cannot interfere? Have you forgotten our contract? And that the last shipment was not handled by us, so this shipment should be ours", then the deceased replied and said: "It is none of your business. Litsi it is none of your business, why do you interfere with our loading?" That because the herein accused-appellant was hurt said to the deceased: "You are trampling on my right already. You are a traitor, you big Chinese communist, you rascal "Then he stood up to avoid the deceased, but the deceased said: "What do you mean by rascal? communist? traitor? at the same time stepping forward towards him (accused appellant) and pulling out his revolver from his (deceased) right hip pocket. However, before the deceased could put his finger on the trigger of his revolver, the accused-appellant splashed Tanduay wine contained in the glass he was holding on Ms right hand on the face of the deceased and with his left hand, he (the accused-appellant) gripped the drum of the deceased's revolver which the deceased held with his right hand. That the accused-appellant tightened his grip on the deceased's right hand so that he could wrestle the former's revolver. But the deceased placed his left hand over the accused-appellant's left hand trying to loosen his grip so that he (the deceased could shoot him. The accused-appellant began to feel afraid that he will be shot by the deceased if his left hand could be wrestled from its hold on the drum of the deceased's revolver. Then he (accused-appellant) threw the glass that he was then holding with his right hand and with his right hand he pulled deceased's left hand which was on top of his left hand, but he noticed the growing strength of deceased's left hand, and he remembered that he had a firearm at his waist, so he pulled it and struck deceased's face hitting lightly the deceased near his jaw with the end of the barrel of the revolver because the deceased parried his blow. Then the deceased struggled to point his gun at him, so he (accused-appellant) pistol whipped the deceased again but he was surprised why he could not, (sic) however, he found out that deceased's left forefinger was then inserted into the trigger guard of his revolver and both of them were then pulling his (accused appellant's) revolver, then he pushed forward with his revolver the deceased, however, the deceased met his forward push and his left finger still inserted into the trigger guard of his revolver, and after a while he heard a sunburst and it was his gun that fired and his left hand still holding the right hand of the deceased which was still holding his revolver. Then a little later, deceased's left hand and his. forefinger inside the trigger guard of accused-appellant's revolver loosened its grip then he saw the deceased slump to the ground on his right side. That it was the left forefinger of the deceased which pushed the trigger of the accused-appellant's revolver that caused it to fire. That after the deceased slumped to the ground he (the accused-appellant) released his grip on deceased's revolver and deceased's revolver dropped to the ground by the side of the deceased. Then the herein accused-appellant after taking a look at the deceased left and proceeded upstairs of his house and throw his gun. Then he went down again from his house and proceeded towards the Municipal Building of Nasipit. That the accused-appellant had six more bullets in his revolver, and that he did not fire them at the deceased because he had no intention to shoot the deceased, he did not care to find out where the deceased was hit and what occurred to his mind was to notify the police so that the police could bring the deceased to the hospital and for him to surrender and report the incident. Cf. decision Appendix "A", pp. 50 to 58.) The refusal of the trial court to give credence to appellant's version of self-defense is the basic and main assignment of error. We agree with the court a quo in rejecting the plea of selfdefense. It has found the prosecution witnesses more credible, and rightly so, because they all appear to be disinterested witnesses, specially the public officials among them, the Municipal Judge, the Chief of Police, and certain officers of the Philippine Constabulary, whose testimonies, touching on how the crime was committed, totally discredit the story of self-defense which fails to inspire belief. The finding of the trial court on the relative credibility of the witnesses in this case deserves full respect. To begin with the initial unlawful aggression imputed to the deceased by the defense, in order to erect the main prop of the defense invoked by appellant, is belied by the more natural and credible testimony of the State witnesses. Thus, the supposed aggression committed by the deceased according to appellant and his witnesses was in whipping out his gun and pointing it at appellant after a heated exchange of angry words. It is entirely belied by the fact that no gun was found near the fallen body of the deceased or in the immediate vicinity thereof, and that the slug (Exhibit "C") that caused the death and extracted from the brain of the deceased was fired from appellant's unlicensed gun (Exhibit "F"), as established by the ballistic examination conducted by an expert, Capt. Constantino Y. Leyva, Chief of the PC Central Laboratory, Camp Crame. If the appellant fired his unlicensed gun with his right hand, as the presence of nitrates thereon would prove, and there being no nitrate found on his left hand, when he was subjected to paraffin test the day following the shooting incident (Exhibit "K") also in Camp Crame, the defense theory that the deceased pulled out a gun which appellant tried to wrest from the deceased with his left hand, and that in the course of the struggle for the possession of the gun, it went off with the deceased's finger also pressed against the trigger, would be pure concoction. Under such theory, the left least, of the deceased that supposedly fired the gun. But paraffin test conducted on June 2, 1968 showed both hands of the deceased negative for nitrates (See Exhibit "L"). It was the left cheek of the deceased that was found positive for the presence of nitrates, which shows that the gun was close to the face when it was fired. If there was a struggle for the possession of the gun of the deceased as claimed by appellant, there is the much greater likelihood of the gun being held down on the level of the body during the struggle, not the level of the head. That the gun was fired close to the face is more indicative of a deliberate aim with complete freedom from any force that could distort its accuracy, as would happen in a hand-to-hand struggle for the possession of the gun. The entry of the slug through the mouth, likewise, renders appellant's version of how the gun went off while he and the deceased who allegedly pulled out his gun very improbable, as was his first version, as given in his statement (Exhibit "Z-1"). An these improbabilities and plain untrustworthiness in the testimony of the appellant, and the physical findings of experts, would make the version of the prosecution that it was appellant who drew his own gun from his right waist and fired at the deceased directly on the face, at close range, easily the more natural and thus the more credible of the diametrically conflicting versions of the defense and the prosecution. In the protective surrounding of appellant's residence where his confrontation with the deceased took place, and appellant having been quite justifiably angered by what he heard that the deceased had a rival union to load his copra, by which act he felt cheated and unjustly discriminated, together with the numerous members of his union, and his anger perhaps showing itself very visibly because he had been

drinking in celebration of his son's birthday, the deceased could not have assumed the aggressive stance portrayed of him. It was appellant, therefore, who deliberately fired at the deceased, infuriated by how he felt seriously aggrieved by the deceased's act in violating an agreement on the loading of the latter's copra by the two rival unions under some kind of rotation scheme. The deceased himself must have been angered on seeing three sacks of his copra unloaded from the truck that stopped near appellant's house, and taking on an attitude that was more hostile than friendly, the deceased added fuel to appellant's fury, igniting in the latter a violent temper, as to mark him as the real aggressor, not the deceased. The element of unlawful aggression not having been established, appellant's plea of self-defense, or even that of incomplete self-defense, must fall. The other requisite of self- defense which is that of the reasonable necessity of the means employed to prevent or repel the aggression must, likewise, have to be found wanting, once the basic requisite of unlawful aggression is shown to be non-existent. Neither could it be said, from how the evidence has been analyzed above, that the appellant gave no provocation, which is the third and last requisite of the justifying circumstance of self-defense. With the constant shifting of appellant's version from that of absolute denial that he shot at the deceased, pointing to an unknown person as the assailant, to that of accidental shooting, and finally to that of legitimate self-defense, the utter incredibility of each of the changing theory he gave from the time he first gave statement in custodial interrogation, to the time he testified in court, becomes so manifest for him to be deserving of any bit of credence as a witness in his own behalf. This is true with his witnesses who merely tried to give corroboration to his principal testimony. Finding, therefore, that appellant shot and killed the deceased not in lawful self- defense, his liability for the killing, authorship of which he admitted, is beyond doubt. The only question now is whether the shooting was attended with treachery as to raise the slaying to the category of murder as charged, and as found by the trial court, said court holding that there was treachery, even if the attack was frontal, because it was sudden and unexpected. To constitute treachery, the method, form or means adopted in killing the victim must be consciously and deliberately chosen to insure its execution without any risk to the offender arising from the defense which the victim might make. 1 In the case at bar, the resort of the appellant to the use of Ms firearm was, as he and his witnesses declared, the hostile and insulting manner the deceased responded to appellant's demand for explanation why, in violation of their existing agreement, deceased was loading his copra in the vessel with the employment of laborers, not of his union but of a rival labor union. There is no evidence that even before the arrival of the deceased at the residence of appellant when asked to see the latter, appellant had already formed an intent to kill the deceased. His business relationship with the victim was such that appellant would not gain from the death of the deceased who was giving livelihood to him and his union members, for appellant to desire to do away with the deceased. Appellant had sought the deceased at the Oceanic bodega of the latter upon hearing of the loading being done by rival union members. In doing so, he could not have had murder in his heart and commit it at the very stronghold of his intended victim. All appellant wanted was an explanation of, and rectification for, an act committed by the deceased considered by appellant as highly discriminatory and prejudicial to the interest of many laborers whose union he headed. If appellant drew his gun and fired at the deceased, it was clearly because of the unexpected turn of events that aroused the killer instinct in him, as shown by his having been previously indicted also for murder of a police sergeant, and convicted by the same trial court and sentenced to death (Decision, p. 100, p. 532, Rollo), which developed from the unfriendly, if not hostile and belligerent, manner with which the deceased dealt with appellant in their confrontation at the latter's place of residence. For in this respect, We are inclined to believed more the defense version that the killing was preceded by some discussion which grew heated, not as cold blooded as the prosecution would want to prove it was. In U.S. vs. Namit, 38 Phil. 926, it was held that the circumstance that the attack was sudden and unexpected to the person assaulted did not constitute treachery, where it did not appear that the aggressor had consciously and deliberately adopted a mode of attack intended to facilitate the perpetration of the killing without risk to himself. As already shown, appellant had not the time to reflect on the means or mode of attack for it to be said that he deliberately and consciously pulled out his gun and fired at the deceased to insure the commission of the crime without risk to himself. He fired only once. One shot would not be so certain to disable the deceased from making a defense. Before he was shot, the deceased was splashed on the face by appellant with liquor from a glass the latter was holding and then slapped on the left side of the face. The shooting was thus preceded not only by a heated discussion, but acts on the part of appellant that showed not mere hostility but such a heated temper that could break into a violent attack, to put the deceased on, his guard. The circumstances just mentioned negate the presence of treachery, as held in the case of People vs. Gonzales, 76 Phil. 473. For there to be treachery by reason of the suddenness and unexpectedness of the attack, it has been generally held that there must have been no warning of any sort to the deceased or offended party. 2 His act of going to the Municipal Building right after he had shot at the victim but once, can hardly suggest a strong and prior homicidal intent, a circumstance also not quite compatible with a conscious and deliberate choosing of the mode, form or means of assault to insure the execution of the crime without risk to himself. Unconvinced nor persuaded that treachery was present in the killing, We cannot find appellant guilty of murder. We neither could view the fact that both appellant and the deceased were friends as giving rise to the aggravating circumstance of abuse of confidence when appellant killed the deceased, as held by the trial court. We agree with the defense in invoking the ruling of People vs. Luchico, 49 Phil. 689, in that before the fatal shooting of the deceased, the latter, from the time he had hired other laborers for the loading of his copra, not the appellant's men, as he should have done under a supposed agreement with appellant, and even more after being sought for by appellant for the alleged breach of the agreement, and with the heated exchange of words between them when they finally came face to face, whatever feeling of confidence, deceased had of appellant had vanished. The sight of his truck parked near the residence of appellant, with three sacks of his copra unloaded therefrom, also helped to vanish whatever confidence he had in appellant, for that sight reflected the hostility of appellant towards him. The deceased himself naturally got mad at the appellant, a mood not quite compatible with the charitable feeling of confidence. The deceased then knew, beyond mere suspicion, that appellant was mad at him. It certainly cannot be said, therefore, that the commission of the crime was facilitated by the confidence deceased had in appellant, which alone would justify the appreciation of abuse of confidence as an aggravating circumstance. 3 Upon the other hand, appellant had been drinking while celebrating his son's birthday. He was told of the loading of the victim's copra by a rival union laborers, by which act of the deceased, he felt cheated and discriminated in alleged breach of a standing agreement. This fact aroused his passion, and caused obfuscation. However, after seeing the appellant fan from the single shot he fired, he went forthwith to the Municipal Building and placed himself at the disposal of the law and the authorities. We note from these facts the presence of the mitigating circumstances of (1) drunkenness which was not shown to be intentional nor habitual; (2) passion and obfuscation; and (3) voluntary surrender. With these three mitigating circumstances, and with no aggravating circumstance to offset them, the penalty to be imposed should be one degree lower

than that for simple homicide or reclusion temporal which is prision mayor, or from 6 years, 1 day to 12 years (Article 64(5), Revised Penal Code. Applying the indeterminate Sentence Law, the penalty should be from 6 years of prision correccional to 12 years of prision mayor. As to the amount of indemnity and damages awarded, the amount of actual and compensatory damages, represented by the loss of expected earnings, finds support in the case of Alcantara vs. Surro, et al., G.R. No. L-4555, July 23, 1953, 59 O.G. 2769. From the physical condition of the deceased, and his social standing when gunned down by appellant, his heirs are also entitled to moral damages as awarded by the court a quo, but the amount so awarded may be reasonably reduced from P50,000.00 to P20,000.00, there being no aggravating circumstance, but there are three mitigating ones. However, as held recently in the case of Nora Aguilar Matura vs. Hon. Alfredo C. Laya and People of the Philippines, G.R. Nos. L-44550-51 and L-44552-53, July 30, 1979 that there is no basis for awarding exemplary damages when not even one aggravating circumstance was established, no exemplary damages may be awarded. The amount of P10,000.00 for attorney's fees may likewise be reasonably reduced to P5,000.00, the private prosecutors that helped in the prosecution of the case being deemed to have rendered service for a fellow member of the bar more in the spirit of professional fraternity. WHEREFORE, with the modification as to the penalty which is a prison term as above indicated, instead of death, and as to the amount of damages awarded, also as above indicated, the judgment of the trial court is affirmed in all other respects, with costs. SO ORDERED. Fernando, C.J., Concepcion, Jr., Fernandez, Guerrero, Abad Santos and Melencio- Herrera, JJ., concur. Separate Opinions TEEHANKEE, J., concurring: I vote for affirmance of the death penalty. The accused's claims should not be given any credence, since he gave three conflicting statements and the victim was shot in cold blood in the head. BARREDO, J., concurring: I vote with Justice Aquino. Aquino, J., I concur in the opinion that the appellant committed homicide and not murder. He is entitled only to the mitigating circumstance of voluntary surrender to the authorities. The penalty imposable on him is twelve (12) years of prision mayor as minimum to fourteen (14) years of reclusion temporal as maximum. MAKASIAR, J., dissenting: Drunkenness could not mitigate the crime as there was no showing that the quantity of liquor that appellant imbibed shortly before the incident impaired his mental faculties and diminished his willpower. On the contrary, it can be reasonably expected that as a leader of a labor union of stevedores, appellant is not a stranger to hard liquor. However, I agree with the main opinion that passion or obfuscation mitigates the guilt of the appellant who, as head of a labor union of stevedores, was obfuscated by the victim's violation of his contract with appellant's labor union for the loading of the victim's copra. The records showed that about 6:30 in the evening of May 30, 1968, the accused was informed that the victim authorized the loading of his copra by a rival labor union and the incident occurred between 8:30 and 9:00 that same evening, barely three hours thereafter, an insufficient period of time for him to cool off. Separate Opinions TEEHANKEE, J., concurring: I vote for affirmance of the death penalty. The accused's claims should not be given any credence, since he gave three conflicting statements and the victim was shot in cold blood in the head. BARREDO, J., concurring: I vote with Justice Aquino. Aquino, J., I concur in the opinion that the appellant committed homicide and not murder. He is entitled only to the mitigating circumstance of voluntary surrender to the authorities. The penalty imposable on him is twelve (12) years of prision mayor as minimum to fourteen (14) years of reclusion temporal as maximum. MAKASIAR, J., dissenting: Drunkenness could not mitigate the crime as there was no showing that the quantity of liquor that appellant imbibed shortly before the incident impaired his mental faculties and diminished his willpower. On the contrary, it can be reasonably expected that as a leader of a labor union of stevedores, appellant is not a stranger to hard liquor. However, I agree with the main opinion that passion or obfuscation mitigates the guilt of the appellant who, as head of a labor union of stevedores, was obfuscated by the victim's violation of his contract with appellant's labor union for the loading of the victim's copra. The records showed that about 6:30 in the evening of May 30, 1968, the accused was informed that the victim authorized the loading of his copra by a rival labor union and the incident occurred between 8:30 and 9:00 that same evening, barely three hours thereafter, an insufficient period of time for him to cool off.

Republic of the Philippines SUPREME COURT Manila EN BANC DECISION October 22, 1918 G.R. No. L-12306 SIMONA MANZANARES, plaintiff-appelle, vs. RAFAEL MORETA, defendant-appellant. Sanz & Luzuriaga for appellant. Jose C. Zulueta for appellee. Torres, J.: In the case which is brought for the recovery of the damages resulting from the death of the child Salvador Bona, of from 8 to 9 years of age, who had been run over by an automobile driven and managed by the defendant on the morning of March 5, 1916, a judgment was rendered on August 3, 1916, whereby the said defendant was sentenced to pay the sum of P1,000 as indemnity child, and to pay the costs. From this judgment, an appeal was taken by the defendant after his motion for a new trial had been overruled, and the case is now before this court by bill of exceptions. The statement of facts is at once admitted, and we find no reason for disturbing the findings made by the trail judge in his judgement appealed from, wherein the defendant was found liable for the accident which occurred to the said child on Solana Street on the morning of said day, and consequently, the defendant, as the one who had cause the accident, is bound to indemnify the mother of the deceased child in the amount of P1,000, which was deemed by the trial judge to be the value of the damages occasioned to the mother for the loss and death of a member of her family. To the reasons given by the trail judge as grounds for his decision, we deem pertinent to add the following: If it were true that the defendant, in coming from the southern part of Solana Street, had to stop his auto before crossing Real Street, because he had met vehicles which were going along the latter street or were coming from the opposite direction along Solana street, it is to be believed that, when he against stated to run his auto across said Real Street and to continue its way along Solana Street northward, he should have adjusted the speed of the auto which he was operating until he had fully crossed Real Street and had completely reached a clear way on Solana Street. But, as the child was run over by the auto precisely at the entrance of Solana Street, this accident could not have occurred, if the auto had been running at a slow speed, aside form the fact that the defendant, at the moment of crossing Real Street and entering Solana Street, in a northward direction, could have seen the child in the act of crossing the latter street from the sidewalk on the right to that on the left; and if the accident had occurred in such a way that after the automobile had run over the body of the child, and the childs body had al ready been stretched out on the ground, the automobile still moved along a distance of about 2 meters, this circumstance shows the fact that the automobile entered Solana Street form Real Street, at a high speed without the defendant having blown the horn. If these precautions had been taken by the defendant, the deplorable accident which caused the death of the child would not have occurred. In view of the foregoing considerations as well as those contained in the judgment of the trial court, which, we believe that he errors assigned by the appellant are thereby refuted and that therefore the judgment appealed from, should be, as it hereby is, affirmed, with the costs against the appellant. So ordered. Arellano, C.J., Johnson, Araullo and Street, JJ., concur. Separate Opinions MALCOLM, J., concurring: The facts are few and simple. A male child, 8 or 9 years of age, was killed through the negligence of the defendant in driving his automobile. The mother of the dead boy is a widow, a poor washerwoman. She brings action against the defendant to recover damages for her loss in the amount of P5,000. Without there having been tendered any special proof of the amount of damages suffered, the trial court found the defendant responsible and condemned him to pay to plaintiff the sum of P1,000. The decision of this Court handed down by Justice Torres, affirms the judgment of the Court of First Instance. If necessary, the decision of the Supreme Court of Louisiana in the case of Burvant vs. Wolfe [1910], 126 La., 787), could be cited as corroborative authority. The principles of law which measure the pecuniary responsibility of the defendant, not discussed in the main opinion, are more difficult. Since the time of Grotius and even before, lawyers and publicists have speculated as to whether the loss of a human life should be compensated in money, and if so, as to the amount which should be allowed. At Common Law no civil action lies for damages caused by the death of a human being by the wrongful or negligent act of another. The maxim is actio personalis moritur cum persona. (Mobile Life Ins. Co. vs. Brame [1878], 95 U.S., 754; Baker vs. Bolton, 1 Campb., 493.) Two different modes of reasoning have arrived at this result. The first and older theory was the merger of the private right in the public wrong. (The E.B. Ward, Jr. [1883], 16 Fed., 255.) The second and younger theory was that the death of a human being cannot be complained of as a civil injury. under the latter doctrine, it has been repeatedly held that a civil action by a parent for the death of a minor child cannot be maintained. (Kramer vs. San Francisco market Street R. Co. [1864], 25 Cal., 434; Jackson vs. Pittsburg, C.C. & St. L. R. Co. [1894], 140 Ind., 241; Wilson vs. Bumstead [1881], 12 Neb., 1; Sullivan vs. Union P. R. Co. 1880], 2 Fed., 447; Osborn vs. Gillett [1873], L.R. 8 Exch., 88; Weems vs. Mathieson, 4 macq. H.L. Cas. 215; Gulf, C. & S.F. ry. Co. vs. Beall [1897], 91 Tex., 310. See 41 L.R.A., 807, Note.) By the Civil Law, particularly as existing in Spain, France, Porto Rico, and Louisiana, the true principle is somewhat beclouded. Thus, in Louisiana, a State favored by French and Spanish antecedents, the exact question of whether an action for damages caused by the homicide of a human being can be maintained, was presented by able counsel for the opinion of distinguished jurists. and it was held in a decision, later expressly affirmed, that, under the Civil Law, the action could not be maintained by the surviving wife or children. (Hubgh vs. new Orlenas & Carrollton R.R. Co. [1851], 6 La. Ann., 495; Hermann vs. New Orleans & Carrollton R.R. Co. [1856], 11 La Ann., 5; 24 Porthier Pandectes, p. 279; law 13; 7 Partida, title 15, law 3.) The same question has arisen in Porto Rico. It has there been held that by the civil law in force in Porto Rico a civil action lies for negligence resulting in death. (Borrero vs. cia. Anonyma dela Luz Electrica de Ponce [1903], 1 Porto Rico Fed., 144; Diaz vs. San Juan Light & Transit co.

[1911], 17 Porto Rico, 64.) The right to sue for death from negligence of a defendant, by persons entitled to support by the deceased has not been changed by the new civil Code of Porto Rico. (Torres vs. Ponce Railway & Light Co. [1903], 1 Porto Rico Fed., 476.) In Spain, from which both the Civil Law of Porto Rico and the Philippines were derived, it has been decided that such an action could be maintained. (Decision of the supreme court of Spain of December 14, 1894.) In France, the highest court has interpreted the Code Napoleon as sanctioning actions by those damaged by the death of another against persons by whose fault the death happened. (Chavoix vs. Enfants Duport [1853], 1 Journal du Palais 614; Rollonds case, 19 Sirey, 269.) That even in those jurisdictions in which the Common Law has force, the observance of the principle has been resisted, is disclosed by the action of Hawaii in holding that there can be a recovery for death by wrongful act. (The Schooner Robert Lewers Co. vs. Kekauoha [1902], 114 Fed., 849.) That the impropriety of the judge-made rule was early disclosed, is shown by the numerous statutes, beginning with Lord Campbells Act, which were enacted to cover the deficiency by permitting of a right by the Civil Law, because of a statute, an action will now lie for pecuniary and other damages caused by death. (McCubbin vs. Hastings [1875], 27 La. Ann., 713.) And finally, that eminent authorities recognize liability in case of death by negligence is disclosed by the mere mention of such names as Grotius, Puffendorf, and Domat,. For instance, Grotius in his Rights of War and Peace said: Exemplo haec sint. Homicida injustus, tenetur solvere impensas, si quae factae sunt in medicos, et iis quos occisus alere exofficio solebat, puta parentibus, uxoribus liberis dare tantum, quantum illa spes alimentorum, ratione habita aetatis occissi, valebat sicuti Hercules legitur Iphiti a se occissi leberis mulctam pependissi, quo facilius expiaretur. Michael Ephesius ad quintum Nocomachiorum Aristotillis; Alla kai o Phoenuthies elabe tropon tine O gare e gune e oi paides, e oi suggenies tou phoneuthentos elabe tropon tine ekeino dedotai. Sed et qui occisus est accipit aliquo modo. quae enim uxor ejus et liberi et cognati accipiunt, ipse quodommodo accipit. Loquimur de homicida injusto, id est, qui non habuit jus id faciendi unde mors sequitur. quare si quis jus haburit sed in caritatem peccavirit ut qui furgere nolout, non tenebitur. Vetae autem in libero homine aestimatio non fit, secus in servo qui vendi potuit. [11 La. Ann., 5.] The following may be for example: Any man slaying another, unjustly, is bound to discharge the expenses, if any are contracted, for physicians, and to give to those whom the slain was in duty accustomed to maintain-such as parents, wives, children-as much as that hope of maintenanceregard being had to the age of the deceased-was worth: thus, Hercules is said to have made reparation (paid a fine) to the Children of Iphitus, slain by him, in order that expiation might more easily be made. Michael, the Ephesian, says upon the 5th of the Nicomachii of Aristotle: but also the perso n slain receives, in some sort, for what the wife or children or relations of the person slain receive is, in some sort given him. We are speaking of an unjust manslayer: that i s, one who had not the right of doing that from whence death follows. Wherefore, if any one may have had the right, but has sinned against charity, as when one (being assaulted) has been unwilling to flee, he shall not be bound. but of life, in case of a free man, no valuation is made, otherwise, in case of a slave who can be sold. Both because of the civil origin of the applicable law in the Philippines, because we re not fettered b the harsh common law rule on the subject, because it is the modern and more equitable principle, and because reason and natural justice are eloquent advocates, we hold that an action for damages can be maintained in this jurisdiction for the death of a person by wrongful act. It can be admitted, since objection has not been made, that the primary right of action is in the parent. The second phase of our inquiry, pertaining to the amount of compensation for the loss of a human life, must now be settled. Damage has been defined by Escriche as the detriment, injury, or loss which are occasioned by reason of fault of another in the property or person. (Escriche, Diccionario Razonado de Legislacion y Jurisprudencia, vol. 2, p. 597.) Of whatsoever nature the damage be, and from whatsoever cause it may proceed, the person who has done the injury ought to repair it by an indemnity proportionate to his fault and to the loss caused thereby. (Cushing, Domats Civil Law, p. 741.) Damnum (dao or a loss) must be shown to sustain an action for damages. Philippine law as found in the well known article 1902 of the Civil Code, derived from Partida VII, Title V, is to this effect. In order to give rise to the obligation imposed by this article of the Civil Code, the coincidence of two distinct requisites is necessary, vis: (1) That there exist an injury or damage not originating in acts or omissions of the prejudiced person demanding indemnification therefore; (2) that said injury or damage be caused by the fault or negligence of a person other than the sufferer. (12 Manresa, Comentarios al Codigo Civil, p. 604.) Those seeking to recoup damages must ordinarily establish their pecuniary loss by satisfactory proof. (Decisions of the supreme court of Spain, December 14, 1894; November 13 and 26, 1895; December 7, 1896; September 30, 1898, and December 16, 1903; Sanz vs. Lavin [1906], 6 Phil., 299; to Guioc-Co vs. Del Rosario [1907], 8 Phil., 546; Diaz vs. San Juan Light and Transit Co. [1911], 17 Porto Rico, 64.) The customary elements of damages must be shown. But in certain cases, the law presumes a loss because of the impossibility of exact proof and computation in respect to the amount of the loss sustained. In other words, the loss can be proved either by evidence or by presumption. For instance, where the elation of husband and wife or parent and child exist, provided the child is shown to be a minor, the law presumes a pecuniary loss to the survivor from the fact of death, and it is not necessary to submit proof as to such loss. (Chicago vs. Scholten [1874], 75 III., 468; Rockford, etc. R. col. vs. Delaney [1876]; Atrops vs. Costello [1894], 8 Wash., 149; Mason vs. Southern R. Co [1900], 58 S. C. 70; McKechney vs. Redmond, 94 III. App., 470; Joliet vs. Weston, 22 III. Appl., 225; Kelly vs. Twenty-third St. R. Co., 14 N.Y. St., 699; Dunhene vs. Ohio L. Ins. etc. co., 1 Disn., 257; Diaz vs. San Juan Light & Transit Co. supra.) In one of the cited cases, (City of Chicago vs. Hesing) on an action to recover damages resulting to the parents, laboring people, by the death of their child four years old through negligence on the part of the City of Chicago, the court said: Only pecuniary damages can be recovered in such actions as this. Nothing can be given as solace or for bereavement suffered. Under instructions declaring the true rule for estimating the damages, the jury found for plaintiff, in the sum of $800, but one of the errors assigned is, the amount found is excessive. As a matter of law, we cannot so declare, and as a matter of fact, how can we know the amount is in excess of the pecuniary damages sustained? When proof is made of the age an relationship of the deceased to next of kin, the jury may estimate the pecuniary damages from the facts proven, in connection with their own knowledge and experiences in relation to matters of common observation. It is not indispensable there should be proof of actual services of pecuniary value rendered to next of kind, nor that any witness should express an opinion as to the value of services that may have been or might be rendered. Where the deceased was a minor, and left a father who would have been entitle dot his services had he lived, the law implies a pecuniary loss, for which compensation, under the statute, may be given. The discretion of a jury, where there is a jury, or of the trial court, where the court possesses such faculty, in fixing the amount of damages, will not be interfered with by the appellate court unless this discretion has been palpably abused. Since in the very nature of things the value of a human life cannot be exactly estimated in money, and since the elements which go to make up any value are personal to each case, much must

depend on the good sense and sound judgment of the jury or judge. The rule has been applied to the death of minor children where there was nothing to show passion, prejudice, or ignorance on the part of the jury. (See 13 Cyc., 375-377.) The right of action for death and the presumption in favor of compensation begin admitted, the difficulty of estimating in money the worth of a life should not keep a court from judicially compensating the injured party as nearly as may be possible for the wrong. True, man is incapable of measuring exactly in the delicate scales of justice the value of a human life. True, the feelings of a mother on seeing her little son torn and mangled expiring dead could never be assuaged with money. True, all the treasure in natures vaults could not being to compensate a parent for the loss of a beloved child. Nevertheless, within the bounds of human powers, the negligent should make reparation for the loss. Attempts at approximation in money for death have been made. Many American statutes have arbitrarily limited the amounts that could e recovered to five thousand dollars or ten thousand dollars. The federal Courst have intimated that these statutory limits should only be taken as a guide to the permissible amount of damages. (Cheatham vs. Red River Line [1893], 56 Fed., 248; The Oceanic [1894], 61 Fed., 338; Farmers L. & t. co. vs. Toledo A.A. & N.M. Ry. co. [1895], 67 Fed. 73.) In Louisiana, $2,500 & $3,000, $4,000, and $6,000 were allowed in the respective cases for the death of a child. In Porto Rico, $1,000 and $1,500 has been allowed for such a loss. In the Philippines, the rule has been in criminal cases to allow as a matter of course P1,000 as indemnity to the heirs of the deceased. The foregoing is believed to be a fair statement of the pertinent general principles. Before closing, notice should be taken of the leading decisions of the supreme court of Spain and the supreme court of Porto Rico. The first is the decision of the supreme court of Spain of December 14, 1894. Eulogio Santa Maria died in Madrid in 1891, in consequence of a fall from the wal l of the racket known as Jai-alai, which he was climbing for the purpose of placing the customary flags to announce the opening of the game. The facts were investigated through criminal proceedings which were discontinued, and then the widow of the deceased, in her own behalf and on behalf of her infant daughter, Teodora, instituted a civil action in the proper court, alleging that the cause of the fatal accident resided in the fault and omission of the owners of the racket, because, as they knew and saw, neither the place for the raising of the flags nor the road that had to be gone over to reach it were in a condition to insure safety; that at his death her husband had left two children, one named Anastasio, of 14 years, had by his first marriage, an d another named Teodora, of 3 years had by his second marriage with the plaintiff; that the damages caused and for which the defendants should be held responsible were of a twofold character that is, one having reference to affection and the other to the loss of the modest pay which, capitalized at 5 per cent and added to the sum demandable for the first mentioned consideration, amounted to 21,425 pesetas. The defendants alleged that the death of the plaintiffs husband could not be ascribed to any fault, omission, or negligence on their part, etc., and prayed that the complaint be dismissed. After hearing the case the court rendered judgment condemning the defendants to pay the sum of 5,000 pesetas to the heirs of the ceased as indemnification for the latters death. An appeal from said judgment having been taken by the plaintiff, the defendants joined in said appeal and the Audiencia territorial, in deciding the case, adjudged the defendants to pay the plaintiff in her own ri ght and as representative of her daughter, Teodora, 5,000 pesetas, as indemnification for the death of her husband, affirming in these terms, the judgment appealed form, and reserving to the other child of the deceased, who was not a party in this case, his right likewise to demand indemnification. The defendants then took an appeal for annulment of judgment to the supreme court, alleging that various laws had been violated and, among other particulars, that the judgment did not state the amount at which the court valued the life of Santa Maria nor was anything allowed the plaintiffs on the score of affection or for damages, nor was the principle mentioned upon which the court had acted to fix the sum of 5,000 pesetas. The supreme court of Spain affirmed the judgment appealed from in its opinion of December 14, 1894, the grounds whereof are the following: As to the ground the court had for concluding, in view of the evidence, that the death of the unfortunate Eulogio Santa Maria was due to the omission on the part of the appellants, owners, and managers of the racket (ball game) known as Jai-Alai, of such precautions as were called for to forestall the dangers attending the placing and removal of the streamers, which the deceased had been doing with their knowledge and consent, and for their benefit, we find that said court has correctly applied articles 1093, 1902, and 1903, and that it has not violated articles 1101, 1103, and 1104 of the Civil Code, because, according to the first-mentioned article, obligations arising from acts or omissions, in which faults or negligence, not punished by law, occur, are subject to the provisions of said articles 1902 and 1903, and, according to the latter, indemnification for the damage done lies whenever the act or omission has been the cause of the damage and all the diligence of a good father of a family has not been observed, either when the act or omission is personal with the party, or when it has reference to persons for whom he should be responsible; and because the provisions of articles 1101, 1103, and 1104 are of a general character and applicable to all kinds of obligations and do not come in conflict with the special provisions of articles 1902 and 1903; The indemnification corresponding to the damage caused by a guilty act or omission, not constituting a crime, should be declared, as are all indemnifications, in every suit, in accordance with the particular damage caused to the claimants, and as in the judgment this has been done with respect to Juana Alonzo Celada and her daughter, the only plaintiffs, by fixing the sum due them, said judgment does not violate article 1902 of the code, and much less does it violate article 360 of the Law of Civil Procedure; The amount of the indemnification adjudged is based on the evidence taken and on the facts admitted by both parties in their pleadings at the trial, wherefore there has been no violation of article 1214, though lack of proof, as alleged. As has heretofore been intimated, the Civil Las in Porto Rico, derived from the same source as that of the Philippines, can well be looked to for persuasive authority. Thus, as disclosed by the facts in the decision coming from the pen of Justice Del Toro, one Diaz brought a suit against the San Juan Light & Transit Co. to recover the sum of $6,000 as damages. The district court of San Juan rendered judgment declaring that the facts and the law were in favor of the plaintiff and against the defendant, and decreeing that the former should obtain from the latter the sum of $3,000 as damages. The supreme court of Porto Rico said the issue was, that inasmuch as plaintiff has failed to produce any evidence of the amount of damage sustained, judgment should not be rendered in this form. After setting forth the decision of the supreme court of Spain of December 14, 1894, hereinbefore described, and other authorities, the court said: Applying the foregoing principles and those contained in section 1804 of the Revised Civil Code to the specific case under consideration, we find that in the complaint it is alleged that the complainant sustained damages which he estimates of $6,000, and that the immediate and natural cause of said damages was the careless act of one of the employees of the defendant, who was in its service and while in the discharge of his duties. The evidence taken does not show that the complainant failed to earn, as a result of the injuries received, a stated sum of money, or that he had to pay the physician who attended him another stated sum, etc.; but it does show that the complainant, a man of 51 years of age, who worked as a farmer and hawked about his products, supporting himself and his family with his labor, while stepping out of one of the electric cars of the defendant, at Stop 71/2 of the San Juan-Rio Piedras line, fell to the ground owing to the carelessness and inattention of the motorman in

starting the car before it was time; that he received a severe blow which rendered him unconscious for some moments, fractured his lower jaw, and caused abrasions on his legs and other parts of his body; that he remained at the hospital, having his injuries nursed, for more or less one month, and that, on being examined at the trial-that is, one year and five months after his fall-he presented on the right side of his face, as a consequence of the fracture, a contraction which means paralysis, and could speak, but hardly masticate, and only with difficulty could open and close his mouth. It does not appear from the evidence that he complainant has been disabled, but it does appear that at the time the evidence was taken he was suffering from nervous illness, according to the opinion of Dr. Stahl, one of the experts who testified at the trial. Under these circumstances the judge, in accordance with the law and jurisprudence, had to estimate for himself the damage caused and determine the amount of indemnification which the defendant should pay the complainant. And is so doing the curt did not commit the errors attributed to it by the appellant. The question in the present case is not one of punitive or exemplary damages, but of compensation for damages sustained. In order to allow such compensation it is not necessary that the complainant should prove his loss in terms of dollars and cents, it being sufficient, in cases of this nature to prove that the plaintiff, through the fault or negligence of the defendant and not through his own fault and negligence, had sustained a real damage, consisting of physical pains, loss of work, confinement in a hospital, mental suffering, etc. The indemnification in this case was fixed by the lower court of $2,000, and although it could perhaps have been calculated at less, we do not find that it is immoderately inadequate, and this being so we should not alter it. (Diaz vs. San Juan Light & Transit co., supra.) In another case, that of Gonzalez vs. The San Juan Light & Transit co. [1911], Porto Rico, 115) recovery for damages was not permitted. In the latter case, it was said: This is an appeal from the first section of the district court of San Juan seeking to reverse a judgment therein rendered on December 1, 1909, in favor of the defendant. This suit was initiated in the district court of San Juan through a complaint presented by Ramon Gonzalez Soto, alleging therein that the defendant company, the San Juan Light and Transit Co., had negligently caused the death of Juan Cordova Soto, son of the plaintiff, in the ward of Santurce, between stops 21 and 22, on the trolley line of defendant, about December 2, 1904, the father of the deceased not appearing also as a complainant on account of his death having occurred after that of his son but previous to the filing of the complaint. We have stated said first ground alleged for reversal in the form in which it has been expressed by counsel for the defendant; but possibly it might also have been set forth more clearly as follows: Even supposing that the plaintiff had shown that the death of her son had been caused through the negligence of the defendant company, could damages be awarded her without showing by proof their existence and the amount thereof? Our Civil Code now in force, in section 1803, reads as follows: A person who by an act or omission causes damage to another, when there is fault or negligence, shall be obliged to repair the damage so done. So that the claim of the plaintiff herein is sustained by this precept of the law which establishes her right to be indemnified by the defendant for the damage caused her on account of the death of her son, if said death was brought about by any act or omission of said company, through its fault or negligence. This is our substantive law in the matter of damages and it is in accordance with its provisions, as interpreted by the ruling jurisprudence, that courts should decide questions submitted to them for decision, and therefore the plaintiff is entitled, in cases where there may exist fault or negligence on the part of the defendant company, to recover from the defendant company the damages that may have been actually caused to her, whatever they may be. xxxxxxxxx As may be seen, this jurisprudence (of Spain) is in accordance with the legal precept of the code that only those damages actually caused may be awarded, and, therefore, to enable the court to decide what damages have been caused, it is necessary to prove the real existence of the damages and the corresponding facts from which the court can deduce the amount thereof. Of course, the plaintiff makes a claim only for herself for pecuniary loss sustained by her on account of the death of her son, and the boy himself does not make any claim because he did not live to do so; hence the mother would never have been entitled to any other damages than those arising out of the loss of the services of her son, and never to those damages which he himself might have been entitled to claim had he not died, or arising from the injuries that he himself might have suffered on account of the accident. The damages which would give the plaintiff in this case a right to recovery against the defendant are only the loss of support, or contributions thereto, which the son was accustomed to make to his mother from his earnings and of which she may have been deprived by his death. But does the evidence introduced by the plaintiff support her claim to recover such damages? We are of the opinion that it does not, because she has not proven that her son was really earning the amount alleged in the complaint, nor any other sum whatever, no alleged in the complaint, nor any other sum whatever, nor alleged in the complaint, nor any other sum whatever, no how much money he was earning by his work either in Arecibo or in San Juan during the days immediately preceding his death or at any time. And we are of the opinion that this is a necessary requisite, because, as the Civil Code declares that recovery may be had for the damage caused, the damages accruing to the plaintiff must be shown so that the trial judge may have data on which to base his decision. In this action no evidence whatever has been produced in this respect. The only fact proven in regard to this point is that Juan Cordova Soto was killed by a collision with the trolley car; that he was earning something when he was previously in Arecibo. It is not shown what occupation he had, nor how much money he earned while he was there nor while he was in San Juan, nor is it shown that his mother derived any benefit from his wages; and from this evidence the court cannot consider as proven he amount of the damages, nor even their existence. It has not been show that the death of her son caused any material or pecuniary damages to his mother, the plaintiff herein, nor the amount thereof. Therefore, an essential requisite for a judgment against the defendant company is lacking, and even supposing that she had an action for damages through negligence of the company in the death of the boy, we could not find a judgment against the defendant company, for lack of evidence in regard to the existence of the pecuniary damages sustained and facts from which to infer the amount thereof. Therefore, the defendants motion for a judgment in its favor on this first ground was properly sustained. As will be readily perceived, having dug out the applicable authorities, and having set them before us, our task still is far from complete. On the one hand, the obvious conclusion would be that, inasmuch as plaintiff has failed to prove her pecuniary loss, she cannot recover, or, for the same reason, to return the case to the lower court for further evidence. This is the obvious way. To one trained in the Common Law, and inculcated with all the doctrines of the American law of damages, it is the logical way. Is it the just and natural way? The first reply would be that the civil law authorities are, like the common law cases, against recovery without proof of loss. If necessary, however, the three decisions just described, could be differentiated from the present facts. The decision of the supreme court of Spain, it is to be

remembered, involved an action for the death of a man of mature years. The first decision of the supreme court of Porto Rico recognizes the principle of presumptive recovery. The second decision of the supreme court of recovery. The second decision of the supreme court of Porto Rico concerned an action for the death of a son of sufficient age to have an earning capacity. None of these is our case. Here present is the case of a young child, whose death is caused by wrongful act, leaving a poor mother to be the loser. To answer in a different way, let us make a comparison. The facts before us, and the facts before the supreme court of Illinois in analogous cases, are substantially identical. We have proof of the age of the deceased, proof of the name of the next of kin, and proof that the mother is a laboring woman. Under both the Common Law and the Civil Law, plaintiffs damage, broadly speaking, is for the loss of the services of the deceased, or for support by the deceased. Plaintiff having shown that the deceased was her son and that he was 8 or 9 years of age at the time of death, it was neither necessary nor possible to prove loss of services or support, or to prove special damage as if the object of the loss had been a horse or other animal. No doubt the damage could be greatly enhanced by showing the personal characteristics of the deceased. Outside of this, however, the pecuniary loss may be estimated from the facts at hand with reference to the general knowledge which all possess. To force the plaintiff to prove her loss exactly would be to ask the impossible would be in effect to return to the old common law rule which prohibits a recovery. Physical and gross criteria, as the hewing of wood and carrying of water, are indeed no standards at all. Even if the case was to be reopened, the plaintiff could with extreme difficulty present any better evidence than that now before us. As we have the basis of satisfactory facts from which to infer the amount of damage, as the law presumes a pecuniary loss because of the death, and as the trial judge has made an intelligent computation, we should rest here, with knowledge that, within the ken of human wisdom, justice has been done. On a careful consideration of the entire field of the law on the subject of damages, we come to the conclusion that the amount, in the nature of an indemnity allowed by the trial court, is neither excessive nor immoderately inadequate, and should stand. Judgment, therefore, should be affirmed.

SECOND DIVISION [G.R. No. 125536. March 16, 2000] PRUDENTIAL BANK, petitioner, vs. COURT OF APPEALS and LETICIA TUPASI-VALENZUELA joined by husband Francisco Valenzuela, respondents. Ed-pm-is DECISION QUISUMBING, J.: This appeal by certiorari under Rule 45 of the Rules of Court seeks to annul and set aside the Decision dated January 31, 1996, and the Resolution dated July 2, 1997, of the Court of Appeals in CA G.R. CV No. 35532, which reversed the judgment of the Regional Trial Court of Valenzuela, Metro Manila, Branch 171, in Civil Case No. 2913-V-88, dismissing the private respondent's complaint for damages.[1] In setting aside the trial court's decision, the Court of Appeals disposed as follows: "WHEREFORE, the appealed decision is hereby REVERSED and SET ASIDE and, another rendered ordering the appellee bank to pay appellant the sum of P100,000.00 by way of moral damages; P50,000.00 by way of exemplary damages, P50,000.00 for and as attorney's fees; and to pay the costs. Jjs-c SO ORDERED."[2] The facts of the case on record are as follows: Private respondent Leticia Tupasi-Valenzuela opened Savings Account No. 5744 and Current Account No. 01016-3 in the Valenzuela Branch of petitioner Prudential Bank, with automatic transfer of funds from the savings account to the current account. On June 1, 1988, herein private respondent deposited in her savings account Check No. 666B (104561 of even date) the amount of P35,271.60, drawn against the Philippine Commercial International Bank (PCIB). Taking into account that deposit and a series of withdrawals, private respondent as of June 21, 1988 had a balance of P35,993.48 in her savings account and P776.93 in her current account, or total deposits of P36,770.41, with petitioner. Sc-jj Thereafter, private respondent issued Prudential Bank Check No. 983395 in the amount of P11,500.00 post-dated June 20, 1988, in favor of one Belen Legaspi. It was issued to Legaspi as payment for jewelry which private respondent had purchased. Legaspi, who was in jewelry trade, endorsed the check to one Philip Lhuillier, a businessman also in the jewelry business. When Lhuillier deposited the check in his account with the PCIB, Pasay Branch, it was dishonored for being drawn against insufficient funds. Lhuillier's secretary informed the secretary of Legaspi of the dishonor. The latter told the former to redeposit the check. Legaspi's secretary tried to contact private respondent but to no avail. Upon her return from the province, private respondent was surprised to learn of the dishonor of the check. She went to the Valenzuela Branch of Prudential Bank on July 4, 1988, to inquire why her check was dishonored. She approached one Albert Angeles Reyes, the officer in charge of current account, and requested him for the ledger of her current account. Private respondent discovered a debit of P300.00 penalty for the dishonor of her Prudential Check No. 983395. She asked why her check was dishonored when there were sufficient funds in her account as reflected in her passbook. Reyes told her that there was no need to review the passbook because the bank ledger was the best proof that she did not have sufficient funds. Then, he abruptly faced his typewriter and started typing. S-jcj Later, it was found out that the check in the amount of P35,271.60 deposited by private respondent on June 1, 1988, was credited in her savings account only on June 24, 1988, or after a period of 23 days. Thus the P11,500.00 check was redeposited by Lhuillier on June 24, 1988, and properly cleared on June 27, 1988. Because of this incident, the bank tried to mollify private respondent by explaining to Legaspi and Lhuillier that the bank was at fault. Since this was not the first incident private respondent had experienced with the bank, private respondent was unmoved by the bank's apologies and she commenced the present suit for damages before the RTC of Valenzuela. After trial, the court rendered a decision on August 30, 1991, dismissing the complaint of private respondent, as well as the counterclaim filed by the defendant, now petitioner. Undeterred, private respondent appealed to the Court of Appeals. On January 31, 1996, respondent appellate court rendered a decision in her favor, setting aside the trial court's decision and ordering herein petitioner to pay private respondent the sum of P100,000.00 by way of moral damages; P50,000.00 exemplary damages; P50,000.00 for and as attorney's fees; and to pay the costs. [3] Petitioner filed a timely motion for reconsideration but it was denied. Hence, this petition, raising the following issues: I. WHETHER OR NOT THE RESPONDENT COURT OF APPEALS ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN DEVIATING FROM ESTABLISHED JURISPRUDENCE IN REVERSING THE DISMISSAL JUDGMENT OF THE TRIAL COURT AND INSTEAD AWARDED MORAL DAMAGES, EXEMPLARY DAMAGES AND ATTORNEY'S FEES. Supr-eme II. WHETHER OR NOT THE RESPONDENT COURT OF APPEALS ACTED IN GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION WHERE, EVEN IN THE ABSENCE OF EVIDENCE AS FOUND BY THE TRIAL COURT, AWARDED MORAL DAMAGES IN THE AMOUNT OF P100,000.00. III. WHETHER OR NOT THE RESPONDENT COURT OF APPEALS ACTED IN GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION, WHERE, EVEN IN THE ABSENCE OF EVIDENCE AS FOUND BY THE TRIAL COURT, AWARDED P50,000.00 BY WAY OF EXEMPLARY DAMAGES. Co-urt IV. WHETHER OR NOT THE RESPONDENT COURT OF APPEALS ACTED WITH GRAVE ABUSE OF DISCRETION WHERE EVEN IN THE ABSENCE OF EVIDENCE, AWARDED ATTORNEY'S FEES. Simply stated, the issue is whether the respondent court erred and gravely abused its discretion in awarding moral and exemplary damages and attorney's fees to be paid by petitioner to private respondent. Petitioner claims that generally the factual findings of the lower courts are final and binding upon this Court. However, there are exceptions to this rule. One is where the trial court and the Court of Appeals had arrived at diverse factual findings. [4] Petitioner faults the respondent court from deviating from the basic rule that finding of facts by the trial court is entitled to great weight, because the trial court had the opportunity to observe the deportment of witness and the evaluation of evidence presented during the trial. Petitioner contends that the appellate court gravely abused its discretion when it awarded damages to the plaintiff, even in the face of lack of evidence to prove such damages, as found by the trial court. Firstly, petitioner questions the award of moral damages. It claims that private respondent did not suffer any damage upon the dishonor of the check. Petitioner avers it acted in good faith. It was an honest mistake on its part, according to petitioner, when misposting of private respondent's deposit on June 1, 1988, happened. Further, petitioner contends that private respondent may not "claim" damages because the

petitioner's manager and other employee had profusely apologized to private respondent for the error. They offered to make restitution and apology to the payee of the check, Legaspi, as well as the alleged endorsee, Lhuillier. Regrettably, it was private respondent who declined the offer and allegedly said, that there was nothing more to it, and that the matter had been put to rest. [5]Jle-xj Admittedly, as found by both the respondent appellate court and the trial court, petitioner bank had committed a mistake. It misposted private respondent's check deposit to another account and delayed the posting of the same to the proper account of the private respondent. The mistake resulted to the dishonor of the private respondent's check. The trial court found "that the misposting of plaintiffs check deposit to another account and the delayed posting of the same to the account of the plaintiff is a clear proof of lack of supervision on the part of the defendant bank."[6] Similarly, the appellate court also found that "while it may be true that the bank's negligence in dishonoring the properly funded check of appellant might not have been attended with malice and bad faith, as appellee [bank] submits, nevertheless, it is the result of lack of due care and caution expected of an employee of a firm engaged in so sensitive and accurately demanding task as banking."[7] In Simex International (Manila), Inc, vs. Court of Appeals, 183 SCRA 360, 367 (1990), and Bank of Philippine Islands vs. IAC, et al., 206 SCRA 408, 412-413 (1992), this Court had occasion to stress the fiduciary nature of the relationship between a bank and its depositors and the extent of diligence expected of the former in handling the accounts entrusted to its care, thus: Lex-juris "In every case, the depositor expects the bank to treat his account with the utmost fidelity, whether such account consists only of a few hundred pesos or of millions. The bank must record every single transaction accurately, down to the last centavo, and as promptly as possible. This has to be done if the account is to reflect at any given time the amount of money the depositor can dispose of as he sees fit, confident that the bank will deliver it as and to whomever he directs. A blunder on the part of bank, such as the dishonor of a check without good reason, can cause the depositor not a little embarrassment if not also financial loss and perhaps even civil and criminal litigation. The point is that as a business affected with public interest and because of the nature of its functions, the bank is under obligation to treat the account of its depositors with meticulous care, always having in mind the fiduciary nature of their relationship. x x x" In the recent case of Philippine National Bank vs. Court of Appeals,[8] we held that "a bank is under obligation to treat the accounts of its depositors with meticulous care whether such account consists only of a few hundred pesos or of millions of pesos. Responsibility arising from negligence in the performance of every kind of obligation is demandable. While petitioner's negligence in this case may not have been attended with malice and bad faith, nevertheless, it caused serious anxiety, embarrassment and humiliation". Hence we ruled that the offended party in said case was entitled to recover reasonable moral damages. Even if malice or bad faith was not sufficiently proved in the instant case, the fact remains that petitioner has committed a serious mistake. It dishonored the check issued by the private respondent who turned out to have sufficient funds with petitioner. The bank's negligence was the result of lack of due care and caution required of managers and employees of a firm engaged in so sensitive and demanding business as banking. Accordingly, the award of moral damages by the respondent Court of Appeals could not be said to be in error nor in grave abuse of its discretion. Juri-smis There is no hard-and-fast rule in the determination of what would be a fair amount of moral damages since each case must be governed by its own peculiar facts. The yardstick should be that it is not palpably and scandalously excessive. In our view, the award of P100,000.00 is reasonable, considering the reputation and social standing of private respondent Leticia T. Valenzuela. [9] The law allows the grant of exemplary damages by way of example for the public good.[10] The public relies on the banks' sworn profession of diligence and meticulousness in giving irreproachable service. The level of meticulousness must be maintained at all times by the banking sector. Hence, the Court of Appeals did not err in awarding exemplary damages. In our view, however, the reduced amount of P20,000.00 is more appropriate. Jj-juris The award of attorney's fees is also proper when exemplary damages are awarded and since private respondent was compelled to engage the services of a lawyer and incurred expenses to protect her interest.[11] The standards in fixing attorney's fees are: (1) the amount and the character of the services rendered; (2) labor, time and trouble involved; (3) the nature and importance of the litigation and business in which the services were rendered; (4) the responsibility imposed; (5) the amount of money and the value of the property affected by the controversy or involved in the employment; (6) the skill and the experience called for in the performance of the services; (7) the professional character and the social standing of the attorney; (8) the results secured, it being a recognized rule that an attorney may properly charge a much larger fee when it is contingent than when it is not.[12] In this case, all the aforementioned weighed, and considering that the amount involved in the controversy is only P36,770.41, the total deposit of private respondent which was misposted by the bank, we find the award of respondent court of P50,000.00 for attorney's fees, excessive and reduce the same to P30,000.00. WHEREFORE, the assailed DECISION of the Court of Appeals is hereby AFFIRMED, with MODIFICATION. The petitioner is ordered to pay P100,000.00 by way of moral damages in favor of private respondent Leticia T. Valenzuela. It is further ordered to pay her exemplary damages in the amount of P20,000.00 and P30,000.00, attorney's fees. Jksm Costs against petitioner. SO ORDERED. Bellosillo, (Chairman), Mendoza, Buena, and De Leon, Jr., JJ., concur.

SECOND DIVISION TEOFISTO I. VERCELES, Petitioner, - versus QUISUMBING, J., Chairperson, CARPIO, CARPIO MORALES, TINGA, and VELASCO, JR., JJ. Promulgated: April 27, 2007 G.R. No. 159785 Present:

MARIA CLARISSA POSADA, in her own behalf, and as mother of minor VERNA AIZA POSADA, CONSTANTINO POSADA and FRANCISCA POSADA, Respondents. x --------------------------------------------------x DECISION QUISUMBING, J.:

This petition for review seeks the reversal of the Decision[1] dated May 30, 2003 and the Resolution[2] dated August 27, 2003 of the Court of Appeals in CA-G.R. CV No. 50557. The appellate court had affirmed with modification the Judgment[3] dated January 4, 1995 of the Regional Trial Court (RTC) of Virac, Catanduanes, Branch 42, in Civil Case No. 1401. The RTC held petitioner liable to pay monthly support to Verna Aiza Posada since her birth on September 23, 1987 as well as moral and exemplary damages, attorneys fees and costs of suit. The facts in this case as found by the lower courts are as follows: Respondent Maria Clarissa Posada (Clarissa), a young lass from the barrio of Pandan, Catanduanes, sometime in 1986 met a close family friend, petitioner Teofisto I. Verceles, mayor of Pandan. He then called on the Posadas and at the end of the visit, offered Clarissa a job. Clarissa accepted petitioners offer and worked as a casual employee in the mayors office starting on September 1, 1986. From November 10 to 15 in 1986, with companions Aster de Quiros, Pat del Valle, Jaime and Jocelyn Vargas, she accompanied petitioner to Legaspi City to attend a seminar on town planning. They stayed at the Mayon Hotel. On November 11, 1986, at around 11:00 a.m., petitioner fetched Clarissa from My Brothers Place where the seminar was being held. Clarissa avers that he told her that they would have lunch at Mayon Hotel with their companions who had gone ahead. When they reached the place her companions were nowhere. After petitioner ordered food, he started making amorous advances on her. She panicked, ran and closeted herself inside a comfort room where she stayed until someone knocked. She said she hurriedly exited and left the hotel. Afraid of the mayor, she kept the incident to herself. She went on as casual employee. One of her tasks was following-up barangay road and maintenance projects. On December 22, 1986, on orders of petitioner, she went to Virac, Catanduanes, to follow up funds for barangay projects. At around 11:00 a.m. the same day, she went to Catanduanes Hotel on instructions of petitioner who asked to be briefed on the progress of her mission. They met at the lobby and he led her upstairs because he said he wanted the briefing done at the restaurant at the upper floor. Instead, however, petitioner opened a hotel room door, led her in, and suddenly embraced her, as he told her that he was unhappy with his wife and would divorce her anytime. He also claimed he could appoint her as a municipal development coordinator. She succumbed to his advances. But again she kept the incident to herself. Sometime in January 1987, when she missed her menstruation, she said she wrote petitioner that she feared she was pregnant. In another letter in February 1987, she told him she was pregnant. In a handwritten letter dated February 4, 1987, he replied: My darling Chris, Should you become pregnant even unexpectedly, I should have no regret, because I love you and you love me. Let us rejoice a common responsibility you and I shall take care of it and let him/her see the light of this beautiful world. We know what to do to protect our honor and integrity. Just relax and be happy, if true. With all my love, Ninoy 2/4/87[4] Clarissa explained petitioner used an alias Ninoy and addressed her as Chris, probably because of their twenty -five (25)-year age gap. In court, she identified petitioners penmanship which she claims she was familiar with as an employee in his office. Clarissa presented three other handwritten letters[5] sent to her by petitioner, two of which were in his letterhead as mayor of Pandan. She also presented the pictures[6] petitioner gave her of his youth and as a public servant, all bearing his handwritten notations at the back.

Clarissa avers that on March 3, 1987, petitioner, aware of her pregnancy, handed her a letter and P2,000 pocket money to go to Manila and to tell her parents that she would enroll in a CPA review course or look for a job. In June 1987, petitioner went to see her in Manila and gave her another P2,000 for her delivery. When her parents learned of her pregnancy, sometime in July, her father fetched her and brought her back to Pandan. On September 23, 1987,[7] she gave birth to a baby girl, Verna Aiza Posada. Clarissas mother, Francisca, corroborated Clarissas story. She said they learned of their daughters pregnancy through her husbands cousin. She added that she felt betrayed by petitioner and shamed by her daughters pregnancy. The Posadas filed a Complaint for Damages coupled with Support Pendente Lite before the RTC, Virac, Catanduanes against petitioner on October 23, 1987.[8] On January 4, 1995, the trial court issued a judgment in their favor, the dispositive portion of which reads as follows: WHEREFORE, in view of the foregoing, judgment is hereby rendered in favor of the [respondents] and against the [petitioner] and ordering the latter: 1. to pay a monthly support of P2,000.00 to Verna Aiza Posada since her birth on September 23, 1987 as he was proved to be the natural father of the above-named minor as shown by the exhibits and testimonies of the [respondents]; 2. to pay the amount of P30,000.00 as moral damages; 3. to pay the amount of P30,000.00 as exemplary damages; 4. to pay the sum of P10,000.00 as attorneys fees; and 5. to pay the costs of the suit. SO ORDERED.[9] Verceles appealed to the Court of Appeals which affirmed the judgment with modification, specifying the party to whom the damages was awarded. The dispositive portion of the Court of Appeals decision reads: WHEREFORE, the appealed judgment is AFFIRMED with modification by ordering [petitioner] Teofisto I. Verceles: 1. To pay a monthly support of P2,000.00 to Verna Aiza Posada from her birth on September 23, 1987. 2. To pay [respondent] Maria Clarissa Posada the sum of P15,000.00 as moral damages and [P]15,000.00 as exemplary damages. 3. To pay [respondents] spouses Constantino and Francisca Posada the sum of P15,000.00 as moral damages and P15,000.00 as exemplary damages. 4. To pay each of the said three [respondents] P10,000.00 as attorneys fees; and 5. To pay the costs of suit. SO ORDERED.[10] Hence, this petition. Petitioner now presents the following issues for resolution: I. WAS THERE ANY EVIDENCE ON RECORD TO PROVE THAT APPELLANT VERCELES WAS THE FATHER OF THE CHILD? II. WOULD THIS ACTION FOR DAMAGES PROSPER? III. WOULD THE RTC COURT HAVE ACQUIRED JURISDICTION OVER THIS ISSUE OF APPELLANTS PATERNITY OF THE CHILD, WHICH IS MADE COLLATERAL TO THIS ACTION FOR DAMAGES?[11] In sum, the pertinent issues in this case are: (1) whether or not paternity and filiation can be resolved in an action for damages with support pendente lite; (2) whether or not the filiation of Verna Aiza Posada as the illegitimate child of petitioner was proven; and (3) whether or not respondents are entitled to damages. In his Memorandum, petitioner asserts that the fact of paternity and filiation of Verna Aiza Posada has not been duly established or proved in the proceedings; that the award for damages and attorneys fees has no basis; and that the issue of filiation shoul d be resolved in a direct and not a collateral action. Petitioner argues he never signed the birth certificate of Verna Aiza Posada as father and that it was respondent Clarissa who placed his name on the birth certificate as father without his consent. He further contends the alleged love letters he sent to Clarissa are not admissions of paternity but mere expressions of concern and advice.[12] As to the award for damages, petitioner argues Clarissa could not have suffered moral damages because she was in pari delicto, being a willing participant in the consensual carnal act between them.[13] In support of his argument that the issue on filiation should have been resolved in a separate action, petitioner cited the case of Rosales v. Castillo Rosales[14] where we held that the legitimacy of a child which is controversial can only be resolved in a direct action.[15] On the other hand, respondents in their Memorandum maintain that the Court of Appeals committed no error in its decision. They reiterate that Clarissas clear narration of the circumstances on how she was deflowered by petitioner, the love letters an d pictures given by petitioner to Clarissa, the corroborating testimony of Clarissas mother, the fact that petitioner proff ered no countervailing evidence, are preponderant evidence of paternity. They cited the case of De Jesus v. Syquia[16] where we held that a conceived child can be acknowledged because this is an act favorable to the child.[17] They also argue that damages should be awarded because petitioner inveigled Clarissa to succumb to his sexual advances.[18]

Could paternity and filiation be resolved in an action for damages? On this score, we find petitioners stance unmeritorious. The caption is not determinative of the nature of a pleading. In a string of cases we made the following rulings. It is not the caption but the facts alleged which give meaning to a pleading. Courts are called upon to pierce the form and go into the substance thereof.[19] In determining the nature of an action, it is not the caption, but the averments in the petition and the character of the relief sought, that are controlling.[20] A perusal of the Complaint before the RTC shows that although its caption states Damages coupled with Support Pendente Lite, Clarissas averments therein, her meeting with petitioner, his offer of a job, his amorous advances, her seduction, their try sts, her pregnancy, birth of her child, his letters, her demand for support for her child, all clearly establish a case for recognition of paternity. We have held that the due recognition of an illegitimate child in a record of birth, a will, a statement before a court of record, or in any authentic writing is, in itself, a consummated act of acknowledgement of the child, and no further court action is required. In fact, any authentic writing is treated not just a ground for compulsory recognition; it is in itself a voluntary recognition that does not require a separate action for judicial approval.[21] The letters of petitioner marked as Exhibits A to D are declarations that lead nowhere but to the conclusion that he sire d Verna Aiza. Although petitioner used an alias in these letters, the similarity of the penmanship in these letters vis the annotation at the back of petitioners fading photograph as a youth is unmistakable. Even an inexperienced eye will come to the conclusion that they were all written by one and the same person, petitioner, as found by the courts a quo. We also note that in his Memorandum, petitioner admitted his affair with Clarissa, the exchange of love letters between them, and his giving her money during her pregnancy. [22] Articles 172 and 175 of the Family Code are the rules for establishing filiation. They are as follows: Art. 172. The filiation of legitimate children is established by any of the following: (1) The record of birth appearing in the civil register or a final judgment; or (2) An admission of legitimate filiation in a public document or a private handwritten instrument and signed by the parent concerned. In the absence of the foregoing evidence, the legitimate filiation shall be proved by: (1) The open and continuous possession of the status of a legitimate child; or (2) Any other means allowed by the Rules of Court and special laws. Art. 175. Illegitimate children may establish their illegitimate filiation in the same way and on the same evidence as legitimate children. The action must be brought within the same period specified in Article 173, except when the action is based on the second paragraph of Article 172, in which case the action may be brought during the lifetime of the alleged parent. The letters, one of which is quoted above, are private handwritten instruments of petitioner which establish Verna Aizas fil iation under Article 172 (2) of the Family Code. In addition, the array of evidence presented by respondents, the dates, letters, pictures and testimonies, to us, are convincing, and irrefutable evidence that Verna Aiza is, indeed, petitioners illegitimate child. Petitioner not only failed to rebut the evidence presented, he himself presented no evidence of his own. His bare denials are telling. Well-settled is the rule that denials, if unsubstantiated by clear and convincing evidence, are negative and self-serving which merit no weight in law and cannot be given greater evidentiary value over the testimony of credible witnesses who testify on affirmative matters.[23] We, however, cannot rule that respondents are entitled to damages. Article 2219[24]of the Civil Code which states moral damages may be recovered in cases of seduction is inapplicable in this case because Clarissa was already an adult at the time she had an affair with petitioner. Neither can her parents be entitled to damages. Besides, there is nothing in law or jurisprudence that entitles the parents of a consenting adult who begets a love child to damages. Respondents Constantino and Francisca Posada have not cited any law or jurisprudence to justify awarding damages to them. We, however, affirm the grant of attorneys fees in consonance with Article 2208 (2)[25] and (11)[26] of the New Civil Code. WHEREFORE, the assailed Decision dated May 30, 2003 and the Resolution dated August 27, 2003 of the Court of Appeals in CAG.R. CV No. 50557 are AFFIRMED, with the MODIFICATION that the award of moral damages and exemplary damages be DELETED. SO ORDERED.

THIRD DIVISION [G.R. No. 107518. October 8, 1998] PNOC SHIPPING AND TRANSPORT CORPORATION, petitioner, vs. HONORABLE COURT OF APPEALS and MARIA EFIGENIA FISHING CORPORATION,respondents. DECISION ROMERO, J.: A party is entitled to adequate compensation only for such pecuniary loss actually suffered and duly proved. [1] Indeed, basic is the rule that to recover actual damages, the amount of loss must not only be capable of proof but must actually be proven with a reasonable degree of certainty, premised upon competent proof or best evidence obtainable of the actual amount thereof. [2] The claimant is duty-bound to point out specific facts that afford a basis for measuring whatever compensatory damages are borne. [3] A court cannot merely rely on speculations, conjectures, or guesswork as to the fact and amount of damages[4] as well as hearsay[5] or uncorroborated testimony whose truth is suspect.[6] Such are the jurisprudential precepts that the Court now applies in resolving the instant petition. The records disclose that in the early morning of September 21, 1977, the M/V Maria Efigenia XV, owned by private respondent Maria Efigenia Fishing Corporation, was navigating the waters near Fortune Island in Nasugbu, Batangas on its way to Navotas, Metro Manila when it collided with the vessel Petroparcel which at the time was owned by the Luzon Stevedoring Corporation (LSC). After investigation was conducted by the Board of Marine Inquiry, Philippine Coast Guard Commandant Simeon N. Alejandro rendered a decision finding the Petroparcel at fault. Based on this finding by the Board and after unsuccessful demands on petitioner, [7] private respondent sued the LSC and the Petroparcel captain, Edgardo Doruelo, before the then Court of First Instance of Caloocan City, paying thereto the docket fee of one thousand two hundred fifty-two pesos (P1,252.00) and the legal research fee of two pesos (P2.00).[8] In particular, private respondent prayed for an award ofP692,680.00, allegedly representing the value of the fishing nets, boat equipment and cargoes of M/V Maria Efigenia XV, with interest at the legal rate plus 25% thereof as attorneys fees. Meanwhile, during the pendency of the case, petitioner PNOC Shipping and Transport Corporation sought to be substituted in place of LSC as it had already acquired ownership of the Petroparcel.[9] For its part, private respondent later sought the amendment of its complaint on the ground that the original complaint failed to plead for the recovery of the lost value of the hull of M/V Maria Efigenia XV.[10] Accordingly, in the amended complaint, private respondent averred that M/V Maria Efigenia XV had an actual value of P800,000.00 and that, after deducting the insurance payment of P200,000.00, the amount of P600,000.00 should likewise be claimed. The amended complaint also alleged that inflation resulting from the devaluation of the Philippine peso had affected the replacement value of the hull of the vessel, its equipment and its lost cargoes, such that there should be a reasonable determination thereof. Furthermore, on account of the sinking of the vessel, private respondent supposedly incurred unrealized profits and lost business opportunities that would thereafter be proven.[11] Subsequently, the complaint was further amended to include petitioner as a defendant[12] which the lower court granted in its order of September 16, 1985.[13] After petitioner had filed its answer to the second amended complaint, on February 5, 1987, the lower court issued a pre-trial order[14] containing, among other things, a stipulations of facts, to wit: 1. On 21 September 1977, while the fishing boat `M/V MARIA EFIGENIA owned by plaintiff was navigating in the vicini ty of Fortune Island in Nasugbu, Batangas, on its way to Navotas, Metro Manila, said fishing boat was hit by the LSCO tanker Petroparcel causing the former to sink. 2. The Board of Marine Inquiry conducted an investigation of this marine accident and on 21 November 1978, the Commandant of the Philippine Coast Guard, the Honorable Simeon N. Alejandro, rendered a decision finding the cause of the accident to be the reckless and imprudent manner in which Edgardo Doruelo navigated the LSCO Petroparcel and declared the latter vessel at fault. 3. On 2 April 1978, defendant Luzon Stevedoring Corporation (LUSTEVECO), executed in favor of PNOC Shipping and Transport Corporation a Deed of Transfer involving several tankers, tugboats, barges and pumping stations, among which was the LSCO Petroparcel. 4. On the same date on 2 April 1979 (sic), defendant PNOC STC again entered into an Agreement of Transfer with co-defendant Lusteveco whereby all the business properties and other assets appertaining to the tanker and bulk oil departments including the motor tanker LSCO Petroparcel of defendant Lusteveco were sold to PNOC STC. 5. The aforesaid agreement stipulates, among others, that PNOC-STC assumes, without qualifications, all obligations arising from and by virtue of all rights it obtained over the LSCO `Petroparcel. 6. On 6 July 1979, another agreement between defendant LUSTEVECO and PNOC-STC was executed wherein Board of Marine Inquiry Case No. 332 (involving the sea accident of 21 September 1977) was specifically identified and assumed by the latter. 7. On 23 June 1979, the decision of Board of Marine Inquiry was affirmed by the Ministry of National Defense, in its decision dismissing the appeal of Capt. Edgardo Doruelo and Chief mate Anthony Estenzo of LSCO `Petroparcel. 8. LSCO `Petroparcel is presently owned and operated by PNOC-STC and likewise Capt. Edgardo Doruelo is still in their employ. 9. As a result of the sinking of M/V Maria Efigenia caused by the reckless and imprudent manner in which LSCO Petroparcel was navigated by defendant Doruelo, plaintiff suffered actual damages by the loss of its fishing nets, boat equipments (sic) and cargoes, which went down with the ship when it sank the replacement value of which should be left to the sound discretion of this Honorable Court. After trial, the lower court[15] rendered on November 18, 1989 its decision disposing of Civil Case No. C-9457 as follows: WHEREFORE, and in view of the foregoing, judgment is hereby rendered in favor of the plaintiff and against the defendant PNOC Shipping & Transport Corporation, to pay the plaintiff: a. The sum of P6,438,048.00 representing the value of the fishing boat with interest from the date of the filing of the complaint at the rate of 6% per annum; b. The sum of P50,000.00 as and for attorneys fees; and c. The costs of suit. The counterclaim is hereby DISMISSED for lack of merit. Likewise, the case against defendant Edgardo Doruelo is hereby DISMISSED, for lack of jurisdiction. SO ORDERED. In arriving at the above disposition, the lower court cited the evidence presented by private respondent consisting of the testimony of its general manager and sole witness, Edilberto del Rosario. Private respondents witness testified that M/V Maria Efigenia XV was owned by

private respondent per Exhibit A, a certificate of ownership issued by the Philippine Coast Guard showing that M/V Maria Efigenia XV was a wooden motor boat constructed in 1965 with 128.23 gross tonnage. According to him, at the time the vessel sank, it was then carrying 1,060 tubs (baeras) of assorted fish the value of which was never recovered. Also lost with the vessel were two cummins engines (250 horsepower), radar, pathometer and compass. He further added that with the loss of his flagship vessel in his fishing fleet of fourteen (14) vessels, he was constrained to hire the services of counsel whom he paid P10,000 to handle the case at the Board of Marine Inquiry and P50,000.00 for commencing suit for damages in the lower court. As to the award of P6,438,048.00 in actual damages, the lower court took into account the following pieces of documentary evidence that private respondent proffered during trial: (a) Exhibit A certified xerox copy of the certificate of ownership of M/V Maria Efigenia XV; (b) Exhibit B a document titled Marine Protest executed by Delfin Villarosa, Jr. on September 22, 1977 stating that as a result of the collision, the M/V Maria Efigenia XV sustained a hole at its left side that caused it to sink with its cargo of 1,050 baeras valued at P170,000.00; (c) Exhibit C a quotation for the construction of a 95-footer trawler issued by Isidoro A. Magalong of I. A. Magalong Engineering and Construction on January 26, 1987 to Del Rosario showing that construction of such trawler would cost P2,250,000.00; (d) Exhibit D pro forma invoice No. PSPI-05/87-NAV issued by E.D. Daclan of Power Systems, Incorporated on January 20, 1987 to Del Rosario showing that two (2) units of CUMMINS Marine Engine model N855-M, 195 bhp. at 1800 rpm. would cost P1,160,000.00; (e) Exhibit E quotation of prices issued by Scan Marine Inc. on January 20, 1987 to Del Rosario showing that a unit of Furuno Compact Daylight Radar, Model FR-604D, would costP100,000.00 while a unit of Furuno Color Video Sounder, Model FCV-501 would cost P45,000.00 so that the two units would cost P145,000.00; (f) Exhibit F quotation of prices issued by Seafgear Sales, Inc. on January 21, 1987 to Del Rosario showing that two (2) rolls of nylon rope (5 cir. X 300fl.) would cost P140,000.00; two (2) rolls of nylon rope (3 cir. X 240fl.), P42,750.00; one (1) binocular (7 x 50), P1,400.00, one (1) compass (6), P4,000.00 and 50 pcs. of floats, P9,000.00 or a total of P197, 150.00; (g) Exhibit G retainer agreement between Del Rosario and F. Sumulong Associates Law Offices stipulating an acceptance fee of P5,000.00, per appearance fee of P400.00, monthly retainer of P500.00, contingent fee of 20% of the total amount recovered and that attorneys fee to be awarded by the court should be given to Del Rosario; and (h) Exhibit H price quotation issued by Seafgear Sales, Inc. dated April 10, 1987 to Del Rosario showing the cost of poly nettings as: 50 rolls of 400/18 3kts. 100md x 100mtrs., P70,000.00; 50 rolls of 400/18 5kts. 100md x 100mtrs., P81,500.00; 50 rolls of 400/18 8kts. 100md x 100mtrs., P116,000.00, and 50 rolls of 400/18 10kts. 100md x 100mtrs., P146,500 and banera(tub) at P65.00 per piece or a total of P414,065.00 The lower court held that the prevailing replacement value of P6,438,048.00 of the fishing boat and all its equipment would regularly increase at 30% every year from the date the quotations were given. On the other hand, the lower court noted that petitioner only presented Lorenzo Lazaro, senior estimator at PNOC Dockyard & Engineering Corporation, as sole witness and it did not bother at all to offer any documentary evidence to support its position. Lazaro testified that the price quotations submitted by private respondent were excessive and that as an expert witness, he used the quotati ons of his suppliers in making his estimates. However, he failed to present such quotations of prices from his suppliers, saying that he could not produce a breakdown of the costs of his estimates as it was a sort of secret scheme. For this reason, the lower court concluded: Evidently, the quotation of prices submitted by the plaintiff relative to the replacement value of the fishing boat and its equipments in the tune of P6,438,048.00 which were lost due to the recklessness and imprudence of the herein defendants were not rebutted by the latter with sufficient evidence. The defendants through their sole witness Lorenzo Lazaro relied heavily on said witness bare claim that the amount afore-said is excessive or bloated, but they did not bother at all to present any documentary evidence to substantiate such claim. Evidence to be believed, must not only proceed from the mouth of the credible witness, but it must be credible in itself. (Vda. de Bonifacio vs. B. L. T. Bus Co., Inc. L-26810, August 31, 1970). Aggrieved, petitioner filed a motion for the reconsideration of the lower courts decision contending that: (1) the lower court erred in holding it liable for damages; that the lower court did not acquire jurisdiction over the case by paying only P1,252.00 as docket fee; (2) assuming that plaintiff was entitled to damages, the lower court erred in awarding an amount greater than that prayed for in the second amended complaint; and (3) the lower court erred when it failed to resolve the issues it had raised in its memorandum. [16] Petitioner likewise filed a supplemental motion for reconsideration expounding on whether the lower court acquired jurisdiction over the subject matter of the case despite therein plaintiffs failure to pay the prescribed docket fee.[17] On January 25, 1990, the lower court declined reconsideration for lack of merit. [18] Apparently not having received the order denying its motion for reconsideration, petitioner still filed a motion for leave to file a reply to private respondents opposition to s aid motion.[19] Hence, on February 12, 1990, the lower court denied said motion for leave to file a reply on the ground that by the issuance of the order of January 25, 1990, said motion had become moot and academic.[20] Unsatisfied with the lower courts decision, petitioner elevated the matter to the Court of Appeals which, howe ver, affirmed the same in toto on October 14, 1992.[21] On petitioners assertion that the award of P6,438,048.00 was not convincingly proved by competent and admissible evidence, the Court of Appeals ruled that it was not necessary to qualify Del Rosario as an expert witness because as the owner of the lost vessel, it was well within his knowledge and competency to identify and determine the equipment installed and the cargoes loaded on the vessel. Considering the documentary evidence presented as in the nature of market reports or quotations, trade journals, trade circulars and price lists, the Court of Appeals held, thus: Consequently, until such time as the Supreme Court categorically rules on the admissibility or inadmissibility of this class of evidence, the reception of these documentary exhibits (price quotations) as evidence rests on the sound discretion of the trial court. In fact, where the lower court is confronted with evidence which appears to be of doubtful admissibility, the judge should declare in favor of admissibility rather than of non-admissibility (The Collector of Palakadhari, 124 [1899], p. 43, cited in Francisco, Revised Rules of Court, Evidence, Volume VII, Part I, 1990 Edition, p. 18). Trial courts are enjoined to observe the strict enforcement of the rules of evidence which crystallized through constant use and practice and are very useful and effective aids in

the search for truth and for the effective administration of justice. But in connection with evidence which may appear to be of doubtful relevancy or incompetency or admissibility, it is the safest policy to be liberal, not rejecting them on doubtful or technical grounds, but admitting them unless plainly irrelevant, immaterial or incompetent, for the reason that their rejection places them beyond the consideration of the court. If they are thereafter found relevant or competent, can easily be remedied by completely discarding or ignoring them. (Banaria vs. Banaria, et al., C.A. No. 4142, May 31, 1950; cited in Francisco, Supra). [Underscoring supplied]. Stressing that the alleged inadmissible documentary exhibits were never satisfactorily rebutted by appellants own sole witness in the person of Lorenzo Lazaro, the appellate court found that petitioner ironically situated itself in an inconsistent posture by the fact that its own witness, admittedly an expert one, heavily relies on the very same pieces of evidence (price quotations) appellant has so vigorously objected to as inadmissible evidence. Hence, it concluded: x x x. The amount of P6,438,048.00 was duly established at the trial on the basis of appellees documentary exhibits (price quotations) which stood uncontroverted, and which already included the amount by way of adjustment as prayed for in the amended complaint. There was therefore no need for appellee to amend the second amended complaint in so far as to the claim for damages is concerned to conform with the evidence presented at the trial. The amount of P6,438,048.00 awarded is clearly within the relief prayed for in appellees second amended complaint. On the issue of lack of jurisdiction, the respondent court held that following the ruling in Sun Insurance Ltd. v. Asuncion,[22] the additional docket fee that may later on be declared as still owing the court may be enforced as a lien on the judgment. Hence, the instant recourse. In assailing the Court of Appeals decision, petitioner posits the view that the award of P6,438,048 as actual damages should have been in light of these considerations, namely: (1) the trial court did not base such award on the actual value of the vessel and its equipment at the time of loss in 1977; (2) there was no evidence on extraordinary inflation that would warrant an adjustment of the replacement cost of the lost vessel, equipment and cargo; (3) the value of the lost cargo and th e prices quoted in respondents documentary evidence only amount to P4,336,215.00; (4) private respondents failure to adduce evidence to support its claim for unrealized profit and business opp ortunities; and (5) private respondents failure to prove the extent and actual value of damages sustained as a result of the 1977 collision of the vessels.[23] Under Article 2199 of the Civil Code, actual or compensatory damages are those awarded in satisfaction of, or in recompense for, loss or injury sustained. They proceed from a sense of natural justice and are designed to repair the wrong that has been done, to compensate for the injury inflicted and not to impose a penalty.[24] In actions based on torts or quasi-delicts, actual damages include all the natural and probable consequences of the act or omission complained of.[25] There are two kinds of actual or compensatory damages: one is the loss of what a person already possesses (dao emergente), and the other is the failure to receive as a benefit that which would have pertained to him (lucro cesante).[26] Thus: Where goods are destroyed by the wrongful act of the defendant the plaintiff is entitled to their value at the time of destruction, that is, normally, the sum of money which he would have to pay in the market for identical or essentially similar goods, plus in a proper case damages for the loss of use during the period before replacement. In other words, in the case of profit-earning chattels, what has to be assessed is the value of the chattel to its owner as a going concern at the time and place of the loss, and this means, at least in the case of ships, that regard must be had to existing and pending engagements.x x x. x x x. If the market value of the ship reflects the fact that it is in any case virtually certain of profitable employment, then nothing can be added to that value in respect of charters actually lost, for to do so would be pro tanto to compensate the plaintiff twice over. On the other hand, if the ship is valued without reference to its actual future engagements and only in the light of its profit-earning potentiality, then it may be necessary to add to the value thus assessed the anticipated profit on a charter or other engagement which it was unable to fulfill. What the court has to ascertain in each case is the `capitalised value of the vessel as a profit-earning machine not in the abstract but in view of the actual circumstances, without, of course, taking into account considerations which were too remote at the time of the loss.[27] [Underscoring supplied]. As stated at the outset, to enable an injured party to recover actual or compensatory damages, he is required to prove the actual amount of loss with reasonable degree of certainty premised upon competent proof and on the best evidence available. [28] The burden of proof is on the party who would be defeated if no evidence would be presented on either side. He must establish his case by a preponderance of evidence which means that the evidence, as a whole, adduced by one side is superior to that of the other. [29] In other words, damages cannot be presumed and courts, in making an award must point out specific facts that could afford a basis for measuring whatever compensatory or actual damages are borne.[30] In this case, actual damages were proven through the sole testimony of private respondents general manager and certain pieces of documentary evidence. Except for Exhibit B where the value of the 1,050 baeras of fish were pegged at their September 1977 value when the collision happened, the pieces of documentary evidence proffered by private respondent with respect to items and equipment lost show similar items and equipment with corresponding prices in early 1987 or approximately ten (10) years after the collision. Noticeably, petitioner did not object to the exhibits in terms of the time index for valuation of the lost goods and equipment. In objecting to the same pieces of evidence, petitioner commented that these were not duly authenticated and that the witness (Del Rosario) did not have personal knowledge on the contents of the writings and neither was he an expert on the subjects thereof. [31] Clearly ignoring petitioners objections to the exhibits, the lower court admitted these pieces of evidence and gave them due weight to arrive at the award of P6,438,048.00 as actual damages. The exhibits were presented ostensibly in the course of Del Rosarios testimony. Private respondent did not present any other witnesses especially those whose signatures appear in the price quotations that became the bases of the award. We hold, however, that the price quotations are ordinary private writings which under the Revised Rules of Court should have been proffered along with the testimony of the authors thereof. Del Rosario could not have testified on the veracity of the contents of the writings even though he was the seasoned owner of a fishing fleet because he was not the one who issued the price quotations. Section 36, Rule 130 of the Revised Rules of Court provides that a witness can testify only to those facts that he knows of his personal knowledge. For this reason, Del Rosarios claim that private respondent incurred losses in the total amount of P6,438,048.00 should be admitted with extreme caution considering that, because it was a bare assertion, it should be supported by independent evidence. Moreover, because he was the owner of private respondent corporation[32] whatever testimony he would give with regard to the value of the lost vessel, its equipment and cargoes should be viewed in the light of his self-interest therein. We agree with the Court of Appeals that his testimony as to the equipment installed and the cargoes loaded on the vessel should be given credence [33] considering his familiarity thereto. However, we do not subscribe to

the conclusion that his valuation of such equipment, cargo and the vessel itself should be accepted as gospel truth. [34] We must, therefore, examine the documentary evidence presented to support Del Rosarios claim as regards the amount of losses. The price quotations presented as exhibits partake of the nature of hearsay evidence considering that the persons who issued them were not presented as witnesses.[35] Any evidence, whether oral or documentary, is hearsay if its probative value is not based on the personal knowledge of the witness but on the knowledge of another person who is not on the witness stand. Hearsay evidence, whether objected to or not, has no probative value unless the proponent can show that the evidence falls within the exceptions to the hearsay evidence rule.[36] On this point, we believe that the exhibits do not fall under any of the exceptions provided under Sections 37 to 47 of Rule 130.[37] It is true that one of the exceptions to the hearsay rule pertains to commercial lists and the like under Section 45, Rule 130 of the Revised Rules on Evidence. In this respect, the Court of Appeals considered private respondents exhibits as commercial lists. It added, however, that these exhibits should be admitted in evidence until such time as the Supreme Court categorically rules on the admissibility or inadmissibility of this class of evidence because the reception of these documentary exhibits (price quotations) as evidenc e rests on the sound discretion of the trial court.[38] Reference to Section 45, Rule 130, however, would show that the conclusion of the Court of Appeals on the matter was arbitrarily arrived at. This rule states: Commercial lists and the like. Evidence of statements of matters of interest to persons engaged in an occupation contained in a list, register, periodical, or other published compilation is admissible as tending to prove the truth of any relevant matter so stated if that compilation is published for use by persons engaged in that occupation and is generally used and relied upon by them there. Under Section 45 of the aforesaid Rule, a document is a commercial list if: (1) it is a statement of matters of interest to persons engaged in an occupation; (2) such statement is contained in a list, register, periodical or other published compilation; (3) said compilation is published for the use of persons engaged in that occupation, and (4) it is generally used and relied upon by persons in the same occupation. Based on the above requisites, it is our considered view that Exhibits B, C, D, E, F and H [39] are not commercial lists for these do not belong to the category of other published compilations under Section 45 aforequoted. Under the principle of ejusdem generis, (w)here general words follow an enumeration of persons or things, by words of a particular and specific meaning, such general words are not to be construed in their widest extent, but are to be held as applying only to persons or things of the same kind or class as those specifically mentioned.[40] The exhibits mentioned are mere price quotations issued personally to Del Rosario who requested for them from dealers of equipment similar to the ones lost at the collision of the two vessels. These are not published in any list, register, periodical or other compilation on the relevant subject matter. Neither are these market reports or quotations within the purview of commercial lists as these are not standard handbooks or periodicals, containing data of everyday professional need and relied upon in the work of the occupation.[41] These are simply letters responding to the queries of Del Rosario. Thus, take for example Exhibit D which reads: January 20, 1987 PROFORMA INVOICE NO. PSPI-05/87-NAV MARIA EFIGINIA FISHING CORPORATION Navotas, Metro Manila Attention: MR. EDDIE DEL ROSARIO Gentlemen: In accordance to your request, we are pleased to quote our Cummins Marine Engine, to wit. Two (2) units CUMMINS Marine Engine model N855-M, 195 bhp. at 1800 rpm., 6-cylinder in-line, 4-stroke cycle, natural aspirated, 5 in. x 6 in. bore and stroke, 855 cu. In. displacement, keel-cooled, electric starting coupled with Twin-Disc Marine gearbox model MG-509, 4.5:1 reduction ratio, includes oil cooler, companion flange, manual and standard accessories as per attached sheet. Price FOB Manila - - - - - - - - - - - - - - - P 580,000.00/unit Total FOB Manila - - - - - - - - - - - - - - - P 1,160,000.00 vvvvvvvvv TERMS : CASH DELIVERY : 60-90 days from date of order. VALIDITY : Subject to our final confirmation. WARRANTY : One (1) full year against factory defect. Very truly yours, POWER SYSTEMS, INC. (Sgd.) E. D. Daclan To be sure, letters and telegrams are admissible in evidence but these are, however, subject to the general principles of evidence and to various rules relating to documentary evidence.[42] Hence, in one case, it was held that a letter from an automobile dealer offering an allowance for an automobile upon purchase of a new automobile after repairs had been completed, was not a price current or commercial list within the statute which made such items presumptive evidence of the value of the article specified therein. The letter was not admissible in evidence as a commercial list even though the clerk of the dealer testified that he had written the letter in due course of business upon i nstructions of the dealer.[43] But even on the theory that the Court of Appeals correctly ruled on the admissibility of those letters or communications when it held that unless plainly irrelevant, immaterial or incompetent, evidence should better be admitted rather than rejected on d oubtful or technical grounds,[44] the same pieces of evidence, however, should not have been given probative weight. This is a distinction we wish to point out. Admissibility of evidence refers to the question of whether or not the circumstance (or evidence) is to considered at all. [45] On the other hand, the probative value of evidence refers to the question of whether or not it proves an issue. [46] Thus, a letter may be offered in evidence and admitted as such but its evidentiary weight depends upon the observance of the rules on evidence. Accordingly, the author of the letter should be presented as witness to provide the other party to the litigation the opportunity to question him on the contents of the letter. Being mere hearsay evidence, failure to present the author of the letter renders its contents suspect. As earlier stated, hearsay evidence, whether objected to or not, has no probative value. Thus:

The courts differ as to the weight to be given to hearsay evidence admitted without objection. Some hold that when hearsay has been admitted without objection, the same may be considered as any other properly admitted testimony. Others maintain that it is entitled to no more consideration than if it had been excluded. The rule prevailing in this jurisdiction is the latter one. Our Supreme Court held that although the question of admissibility of evidence can not be raised for the first time on appeal, yet if the evidence is hearsay it has no probative value and should be disregarded whether objected to or not. `If no objection is made quoting Jones on Evidence - `it (hearsay) becomes evidence by reason of the want of such objection even though its admission does not confer upon it any new attribute in point of weight. Its nature and quality remain the same, so far as its intrinsic weakness and incompetency to satisfy the mind are concerned, and as opposed to direct primary evidence, the latter always prevails. The failure of the defense counsel to object to the presentation of incompetent evidence, like hearsay evidence or evidence that violates the rules of res inter alios acta, or his failure to ask for the striking out of the same does not give such evidence any probative value. But admissibility of evidence should not be equated with weight of evidence. Hearsay evidence whether objected to or not has no probative value.[47] Accordingly, as stated at the outset, damages may not be awarded on the basis of hearsay evidence.[48] Nonetheless, the non-admissibility of said exhibits does not mean that it totally deprives private respondent of any redress for the loss of its vessel. This is because in Lufthansa German Airlines v. Court of Appeals ,[49] the Court said: In the absence of competent proof on the actual damage suffered, private respondent is `entitled to nominal damages which, as the law says, is adjudicated in order that a right of the plaintiff, which has been violated or invaded by defendant, may be vindicated and recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered. [Underscoring supplied]. Nominal damages are awarded in every obligation arising from law, contracts, quasi-contracts, acts or omissions punished by law, and quasi-delicts, or in every case where property right has been invaded. [50] Under Article 2223 of the Civil Code, (t)he adjudication of nominal damages shall preclude further contest upon the right involved and all accessory questions, as between the parties to the suit, or their respective heirs and assigns. Actually, nominal damages are damages in name only and not in fact. Where these are allowed, they are not treated as an equivalent of a wrong inflicted but simply in recognition of the existence of a technical injury. [51] However, the amount to be awarded as nominal damages shall be equal or at least commensurate to the injury sustained by private respondent considering the concept and purpose of such damages.[52] The amount of nominal damages to be awarded may also depend on certain special reasons extant in the case. [53] Applying now such principles to the instant case, we have on record the fact that petitioners vessel Petroparcel was at fault as well as private respondents complaint claiming the amount ofP692,680.00 representing the fishing nets, boat equipment and cargoes that sunk with the M/V Maria Efigenia XV. In its amended complaint, private respondent alleged that the vessel had an actual value of P800,000.00 but it had been paid insurance in the amount of P200,000.00 and, therefore, it claimed only the amount of P600,000.00. Ordinarily, the receipt of insurance payments should diminish the total value of the vessel quoted by private respondent in his complaint considering that such payment is causally related to the loss for which it claimed compensation. This Court believes that such allegations in the original and amended complaints can be the basis for determination of a fair amount of nominal damages inasmuch as a complaint alleges the ultimate facts constituting the plaintiff's cause of action.[54] Private respondent should be bound by its allegations on the amount of its claims. With respect to petitioners contention that the lower court did not acquire jurisdiction over the amended complai nt increasing the amount of damages claimed to P600,000.00, we agree with the Court of Appeals that the lower court acquired jurisdiction over the case when private respondent paid the docket fee corresponding to its claim in its original complaint. Its failure to pay the docket fee corresponding to its increased claim for damages under the amended complaint should not be considered as having curtailed the lower courts jurisd iction. Pursuant to the ruling in Sun Insurance Office, Ltd. (SIOL) v. Asuncion ,[55] the unpaid docket fee should be considered as a lien on the judgment even though private respondent specified the amount of P600,000.00 as its claim for damages in its amended complaint. Moreover, we note that petitioner did not question at all the jurisdiction of the lower court on the ground of insufficient docket fees in its answers to both the amended complaint and the second amended complaint. It did so only in its motion for reconsideration of the decision of the lower court after it had received an adverse decision. As this Court held in Pantranco North Express, Inc. v. Court of Appeals,[56] participation in all stages of the case before the trial court, that included invoking its authority in asking for affirmative relief, effectively barred petitioner by estoppel from challenging the courts jurisdiction. Notably, from the time it filed its answer to the second amended complaint on April 16, 1985,[57] petitioner did not question the lower courts jurisdiction. It was only on December 29, 1989[58]when it filed its motion for reconsideration of the lower courts decision that petitioner raised the question of the lower courts lack of jurisdiction. Petitioner thus foreclosed its right to raise the issue of jurisdiction by its own inaction. WHEREFORE, the challenged decision of the Court of Appeals dated October 14, 1992 in CA-G. R. CV No. 26680 affirming that of the Regional Trial Court of Caloocan City, Branch 121, is hereby MODIFIED insofar as it awarded actual damages to private respondent Maria Efigenia Fishing Corporation in the amount of P6,438,048.00 for lack of evidentiary bases therefor. Considering the fact, however, that: (1) technically petitioner sustained injury but which, unfortunately, was not adequately and properly proved, and (2) this case has dragged on for almost two decades, we believe that an award of Two Million (P2,000,000.00)[59] in favor of private respondent as and for nominal damages is in order. No pronouncement as to costs. SO ORDERED. Kapunan, and Purisima, JJ., concur. Narvasa, C.J., (Chairman), on leave.

EN BANC [G.R. No. 135862. May 2, 2002] THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. RAFAEL PRINCIPE y MOLINA, accused-appellant. DECISION PER CURIAM: This case is here for review pursuant to Rule 122, Sec. 3, par. (d), and Sec. 10 of the Revised Rules of Criminal Procedure in view of the decision,[1] dated September 18, 1998, of the Regional Trial Court, Branch. 27, Cabanatuan City, imposing on accused-appellant Rafael Principe y Molina the penalty of death for the rape-slaying of a 6-year old child, Arlene Ipurong, in Cabanatuan City on August 9, 1998. The information against accused-appellant alleged: That on or about the 9th day of August, 1998, in the City of Cabanatuan, Republic of the Philippines and within the jurisdiction of this Honorable Court, the above-named accused, with lewd design and by means of force and intimidation, did then and there, willfully, unlawfully and feloniously have carnal knowledge of one ARLENE IPURONG y GONZALES, who was then 6 years of age and by reason of (or) on the occasion thereof, said ARLENE IPURONG y GONZALES was killed.[2] Upon arraignment, during which the information was read, interpreted, and explained to accused-appellant and the consequences of a plea of guilt explained to him, accused-appellant, assisted by counsel, pleaded guilty[3] to the charge, whereupon the trial court ordered the prosecution to present evidence to prove the guilt of accused-appellant and the precise degree of his culpability. Accordingly, the prosecution presented five witnesses, namely: Lerma Morales,[4] Frederick Agrigado,[5] Miguel Bernabe,[6] Alfredo Apan,[7] and Danilo Ipurong.[8] Their testimonies established the following facts: Accused-appellant, an elementary graduate and then 19 years old, had a drinking spree with eight friends at the birthday party of Freddie Saragpon, held in the latters house on Perigola Street, Valdefuente, Cabanatuan City on August 9, 1998, starting 9:00 a.m. At about 4:00 p.m., accused-appellant went to buy some pulutan at the Best-Line Eatery located along the national highway. Accused-appellant had only maroon shorts on and was wearing slippers. As it was raining, he brought an umbrella with him. On the way, he passed by the victim, 6-year old Arlene Ipurong, who asked if she could share his umbrella. Arlene was his niece, her paternal grandmother being the sister of accused-appellants mother. Accused-appellant carried Arlene on his back and went to Best-Line Eatery to buy the puIutan.[9] They were seen by witness Alfredo Apan as they passed by the church between 3:00 to 4:00 p.m. Apan was in the church attending an activity of the Singles for Christ.[10] At the restaurant, accused-appellant was served by witness Lerma Morales. Lerma noticed the child with him, whom accused-appellant introduced as his niece. After getting the pulutan, accused-appellant took the hand of Arlene, and the two went in the direction of an abandoned house, approximately 10 meters from the restaurant.[11] Accused-appellant took Arlene to the abandoned house, which was owned by a certain Jet Magno. There, accused-appellant ordered Arlene to undress. Although Arlene complied, she told him that she was going to tell somebody about it. This angered accused-appellant, who picked up a big rock and hit the child with it three times on the forehead. When Arlene fell unconscious, accused-appellant pulled down his shorts to his knees and raped her. Accused-appellant then brought her to the toilet and dumped her into the bowl.[12] At about 5:30 p.m., accused-appellant went back to Saragpons house. He was still without any shirt on. He was wet from the rain and was no longer wearing his slippers. As accused-appellant was gone for about one and a half hours, some of his drinking buddies got tired of waiting for him and already fell asleep. After giving the pulutan to his friends, accused-appellant left.[13] In the meantime, at about 5:00 p.m. of the same day, Arlenes father, Danilo Ipurong, a tricycle driver, arrived home from wo rk and, realizing that her daughter was not in their house, started searching for her. He came upon a group playing "tong-its but Arlene was not there.[14] Danilo continued his search, now joined by several people, including Alfredo Apan. Then Apan saw accused-appellant and asked him, Hindi ba ikaw ang may dala-dala noong bata sa balikat mo nang pagitan ng 3-4 ng hapon na iyon? (Wasnt it you who was carrying the child sometime between 3 and 4 oclock in the afternoon?) Accused-appellant denied he was with the child, saying Si kuya naman, hindi ko dinala ang bata. (No, I didnt bring the child with me.) Apan began to suspect that accused-appellant had something to do with the disappearance of Arlene. He informed the Chief of the Bantay Bayan, Miguel Bernabe, of his suspicions. [15] For this reason, Bernabe invited accused-appellant for questioning, but the latter denied having anything to do with the disappearance of the child.[16] At around 8:00 p.m., Alfredo Apan and Danilo Ipurong found the body of Arlene in the toilet bowl in the abandoned house. Danilo was shocked and he screamed.[17] On August 10, 1998, the body of Arlene was taken to the City Health Office of Cabanatuan City. Upon the request of PO2 Romeo Lopez, the investigating officer, Dr. Jun B. Concepcion, the medico-legal officer, conducted an autopsy. His findings are as follows: "HT: 100 cm. in length. (+) Abrasions, multiple, with hematoma and lacerated wounds, (2) linear on the midfrontal area. Abrasions measuring to 6-5 cms. in diameter extending down to (L) pen-orbital area. This involving the subconjunctival area, laterally. (+) Skull fractures, multiple, depressed, frontal area. (+) Hematomas, both upper arm, medially. GENITALIA: (+) Abrasions, opening of the vagina, 3 OCLOCK, with bleeding. (+) Abrasions, 12-oclock, fresh, vaginal canal (+) Vaginal discharges, creamy-white in character flowing out of the vagina. Extracted 0.5 ml for sperm analysis then submitted to PNP-CRIME LAB, CAPITOL COMPOUND, NE. on same day and place in a disposable syringe with marking of: X - I. CAUSE OF DEATH: INTRA-CRANIAL INJURIES, SEVERE, SECONDARY TO EXTRA-CRANIAL INJURIES, SEVERE.[18] Dr. Concepcion issued a death certificate indicating the cause of death as: Immediate cause: a. intracranial injuries severe Antecedent cause: b. Extra cranial injuries severe[19] Dr. Concepcion testified that Arlene sustained severe fractures on the forehead, which could have been caused by a hammer, a hollow block, or a hard piece of wood. Likewise, there were hematomas on her upper arms which were possibly caused by a strong grip from the assailant. In addition, Arlene also sustained abrasions on the external opening of her genital organ and an abrasion along the vaginal canal, which could have been caused by the penetration of a penis or some other object. There was fresh blood coming out of the abrasions. Dr.

Concepcion found secretions in the vagina, which could be vaginal secretions or semen from the assailant. From the vaginal bleeding, Dr. Concepcion concluded that the rape of Arlene occurred before she died. The victims death was caused by the severe injuries sustained on the head.[20] An investigation was conducted by the police in the evening of August 9, 1998. Several witnesses pointed to accused-appellant as the person who was last seen with the victim Arlene. Accused-appellant was subsequently taken into custody by the police, and an information was filed against him on August 10, 1998. [21] On August 17, 1998, accused-appellant was interrogated by the police, to whom, after reading his rights in Tagalog and in the presence of accusedappellants father and of his counsel Atty. Cesar Villar, he admitted hitting Arlene with a large rock until she was unconsci ous and subsequently raping her. Accused-appellant claimed that he was drunk at that time.[22] On September 18, 1998, the trial court rendered its decision, the dispositive part of which reads: WHEREFORE, premises considered, the Court hereby finds, and so holds, the accused GUILTY, beyond reasonable doubt, of the crime of Rape with Homicide, and hereby sentences him to suffer the penalty of DEATH. The accused is further ordered to indemnify the heirs of the deceased offended party in the sum of P50,000.00, and the additional sum of P21,307.00 representing funeral expenses. SO ORDERED.[23] Hence, this appeal. Accused-appellants sole assignment of error is thatTHE COURT A QUO MANIFESTLY ERRED IN CONVICTING THE ACCUSED OF THE CRIME CHARGED DESPITE HIS IMPROVIDENT PLEA OF GUILT. Accused-appellant contends that the trial court failed to ascertain whether accused-appellant was fully apprised of the legal consequences of his plea, considering that he finished only up to the sixth grade of the elementary school. Accused-appellant is correct. When an accused enters a plea of guilt to a capital offense, Section 3 of Rule 116 of the Rules of Criminal Procedure provides that it is the duty of the trial court to observe the following rules: (1) it must conduct a searching inquiry into the voluntariness and full comprehension of the consequences of his plea; (2) it must require the prosecution to present evidence to prove the guilt of the accused and the precise degree of his culpability; and (3) it must asks the accused if he desires to present evidence in his behalf and allow him to do so if he desires.[24] This is because a plea of guilt must be based on a free and informed judgment. Thus, the inquiry must focus on the voluntariness of the plea and the full comprehension of the consequences of the plea.[25] In this case, the trial court failed to comply fully with the requirement to conduct a searching inquiry to determine whether accusedappellants plea was voluntary and done with full comprehension of the consequences thereof. Before the hearing, the trial court asked accused-appellant: COURT: Are you still willing to present evidence for your defense or you want the prosecution (to) present evidence and you still insist on admitting what you did to Arlene Ipurong y Gonzales? R. PRINCIPE: I will now admit the same, I will not present any other evidence, sir. COURT: Do you know that because you admit the guilt, you may be sentenced to death like Echegaray? R. PRINCIPE: Yes, sir.[26] Thus, in determining whether accused-appellant was aware of the full consequences of his plea of guilt, the trial court simply asked him whether he knew that he may be sentenced to death, implying that it was possible that the death penalty might not be imposed on him. But Art. 266-B of the Revised Penal Code provides for the mandatory imposition of the death penalty if the crime of rape is committed against a child below seven years old. In fact, even if the victim is not a child below seven years of age but homicide is committed by reason of or on the occasion of the rape, the imposable penalty is death. Indeed, as noted in People vs. Nadera,[27] a mere warning that the accused faces the supreme penalty of death is insufficient. More often than not, an accused pleads guilty because he hopes for a lenient treatment or a lighter penalty. Thus, in the case at bar, when the trial court again asked accused-appellant his final plea, accused-appellant answered: COURT: Mr. Principe, for the last time, the court would like to ask you your final plea before the case is submitted for resolution. ACCUSED PRINCIPE: A As narrated. I have admitted my guilt, sir, in connection with this case. My only plea is, if possible, kindly give me the minimum penalty that the Court can impose. COURT: Q In other words, you admit your guilt because you did it. Only, what you want is leniency from the Court? A Yes, sir. Q I want to tell you that what you stated in open court are recorded and it is finally for the Supreme Court to give you leniency. A Yes, sir.[28] Although accused-appellant said he was admitting guilt because [he] did it, there is doubt whether that was his only reason for pleading guilty because he also said he wanted leniency from the court. This makes it doubtful whether his plea was voluntary. While accused-appellants improvident plea should be disregarded, nevertheless his conviction cannot be set aside as there is, in addition to his plea, other sufficient and credible evidence on which the judgment of the trial court rests. [29] This evidence consists of accused-appellants extrajudicial confession, his testimony in open court, and the testimony of the other witnesses. With respect to accused-appellants extrajudicial confession, the Constitution,[30] R.A. No. 7438,[31] and caselaw[32] lay down four fundamental requirements for the admissibility of extrajudicial confessions in general, to wit: (a) the confession must be voluntary; (b) it must be made with the assistance of competent and independent counsel; (c) the confession must be express; and (d) it must be in writing. In this case, after accused-appellant was read his rights in Tagalog, he signified his intention to confess his participation in the rape and killing of Arlene. He did this in the presence of his father and with the assistance of Atty. Cesar Villar, who had been chosen by his father for him. In his confession, he stated categorically that he took Arlene to an abandoned house near Best-Line Eatery, where he struck her on the head with a rock, raped

her, and afterwards dumped her body into the toilet bowl in order to hide it. Accused-appellants confession was placed in writing and it was signed by him, his counsel, and the administering officer. Accused-appellant acknowledged his extrajudicial confession in court. The court asked him if he executed the extrajudicial confession voluntarily and in the presence of counsel, and he answered in the affirmative. Accused-appellant testified with some relatives present in the courtroom, including his grandmother. In addition, he was assisted by his counsel de oficio, Atty. Victor Galang. Finally, the testimonies of witnesses for the prosecution confirm accused-appellants testimony that he committed the crime. One of his drinking companions, Frederick Agrigado, testified that accused-appellant left them at about 4 p.m. to buy pulutan from the Best-Line Eatery. Another witness, Alfredo Apan, said he saw accused-appellant with the victim Arlene on his back walking towards the highway at about the same time. After the disappearance of the victim, Alfredo Apan confronted accused-appellant, telling him that he was the last person seen with the child. Accused-appellants vehement denial aroused Apans suspicions as he was the one who saw accused -appellant with Arlene. At the restaurant, accused-appellant was served by Lerma Morales, who noticed that he was with a 6-year old child, whom accused-appellant introduced as his niece. After accused-appellant was given his order, he took the childs hand and led her to the abandoned house. When he returned to his drinking companions, they noted it was already about 5:30 p.m. and that he had been gone for one and a half hours. Arlenes body was found missing at past 5 p.m. of that same day. All the above witnesses placed accused-appellant at the scene of the crime at the time it took place. The conviction of an accused may be based on circumstantial evidence provided the following requisites must concur: (1) there is more than one circumstance; (2) the facts from which the inferences are derived are proven; and (3) the combination of all the circumstances is such as to produce a conviction beyond reasonable doubt.[33] Thus, while there is no eyewitness account as to who raped and killed Arlene, the above circumstances strongly point to no other person than accused-appellant as the perpetrator of the crime. This conclusion becomes all the more certain and inevitable when the circumstantial evidence is considered together with accused-appellants extrajudicial confession and his own testimony in open court. The trial court correctly imposed the penalty of death. Art. 266-B of the Revised Penal Code provides for the imposition of the death penalty when, by reason or on the occasion of the rape, homicide is committed. In this case, accused-appellant knocked Arlene unconscious to facilitate his dastardly design. The severity of the blows caused her death. Thus, the imposable penalty is death.[34] The fact that Arlene was below seven years old at the time of the rape cannot be taken into account against accused-appellant as, although her age was alleged in the information, it was not proven during the trial. The trial court erred, however, in fixing the civil indemnity at P50,000.00. In People vs. Robles, Jr.[35] and in subsequent cases,[36] this Court ruled that where homicide is committed by reason or on the occasion of the rape, the civil indemnity shall be not less than P100,000.00. The trial court likewise erred in granting the heirs of the deceased victim an additional amount of P21,307.00 representing funeral expenses. Under Art. 2199 of the Civil Code, a party is entitled to compensation only for such pecuniary loss suffered by him as proven.[37] The recovery thereof must be premised upon competent proof and the best evidence obtainable, such as receipts, by the injured party showing the actual expenses incurred in connection with the death, wake, or burial of the victim. The list of expenses incurred for the wake, funeral, and burial of the victim amounting to P21,307.00[38] submitted by Arlenes father is self-serving and not proved.[39] Thus, the trial courts award of P21,307.00 for funeral expenses cannot be affirmed. However, the reason Arlenes father was unable to present the receipt for the funeral parlor was because the latters represe ntative refused to issue a receipt until he had fully paid the entire amount, which he had not done at the time of the trial. Under Art. 2224 of the Civil Code, temperate damages may be recovered if it is shown that such party suffered some pecuniary loss but the amount cannot, from the nature of the case, be proved with certainty.[40] As there is no doubt the heirs of the victim incurred funeral expenses, although the amount thereof has not been proven, it is appropriate to award P15,000.00 by way of temperate damages to the heirs of the victim. In addition, the heirs are entitled to moral damages in the amount of P50,000.00 in accordance with Art. 2219 of the Civil Code for the physical suffering, mental anguish, serious anxiety, and moral shock caused by the manner by which Arlene was raped and killed.[41] WHEREFORE, the judgment of the Regional Trial Court, Branch 27, Cabanatuan City is AFFIRMED with the MODIFICATION that accused-appellant is ordered to pay the heirs of the victim, Arlene Ipurong, P100,000.00 as civil indemnity, P15,000.00 as temperate damages, and P50,000.00 as moral damages. Upon finality of this decision, let the Records of this case be forthwith forwarded to the Office of the President for the possible exercise of her pardoning power. SO ORDERED. Davide, Jr., C.J., Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza, Panganiban, Quisumbing, Ynares-Santiago, De Leon, Jr., SandovalGutierrez, Carpio, Austria-Martinez, and Corona, concur.

SECOND DIVISION [G.R. No. 133246. July 31, 2000] THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. ANTONIO DE LA TONGGA, accused-appellant. DECISION MENDOZA, J.: This is an appeal from the decision[1] of the Regional Trial Court, Branch 73, Antipolo, Rizal, finding accused-appellant Antonio de la Tongga guilty of murder and sentencing him to suffer the penalty of reclusion perpetua and to pay the heirs of the victim the amount of P50,000.00, as indemnity, as well as the sum of P30,000.00 as actual damages plus the costs of suit. The information against accused-appellant alleged -[2] That on or about the 7th day of January, 1990, in the Municipality of Cainta, Province of Rizal, Philippines, within the jurisdiction of this Honorable Court, the above-named accused, armed with a bladed weapon, with intent to kill, with treachery and evident premeditation, did then and there willfully, unlawfully and feloniously attack, assault and stab one, Pedro Bace y Clavillas on the vital part of his body, thereby inflicting upon the latter mortal wounds which directly caused his death. CONTRARY TO LAW. Upon arraignment, accused-appellant pleaded not guilty, whereupon trial on the merits proceeded. The prosecution presented four witnesses, namely, Maxima Bace, Jesus Crisanto, Danilo Veneracion, and Macario Semera. On the other hand, the defense presented accused-appellant and his sister Lydia Dula as its witnesses. The prosecution evidence shows that, on January 7, 1990, Jesus Crisanto, Danilo Veneracion and the victim Peter Bace went to the house of Paulino Reyes in Sapang Buli, Cainta, Rizal to attend a birthday party of one of the latters children. Jesus Crisan to and Peter Bace arrived in Paulinos house at around 1 p.m. They were followed by Danilo Venerac ion. While the group were having drinks outside the house, accused-appellant Antonio de la Tongga and two companions arrived. Crisanto offered them drinks. A few minutes after that, the group noticed that Peter Bace and accused-appellant were having an argument inside Paulinos house, about a meter away from where they were drinking. Crisanto testified that they could not understand why the two were having an altercation. The host tried to pacify them and was apparently able to do so because accused-appellant and the victim later shook hands. Accused-appellant stayed for a short while and then left at past 2 p.m. Bace, Crisanto, and Veneracion stayed behind. Then between 3 p.m. and 4 p.m., they decided to go home but not before they had consumed several bottles of beer and a bottle of rhum (Tanduay "lapad").[3] Paulino Reyes accompanied them, suggesting that they take another route, because accused-appellant, a known tough guy ("siga-siga") in the neighborhood, might be waiting for them along the way. The group walked until they reached Villarica Subdivision where they boarded a tricycle going to St. Joseph Subdivision. Crisanto sat on the right side of the tricycle, while the victim sat beside him. On the other hand, Veneracion took the seat inside the vehicle with Paulino Reyes sitting behind the driver.[4] As the tricycle was about to stop at St. Joseph Subdivision, accused-appellant appeared and suddenly stabbed the victim while the latter was still inside the tricycle. At the time, Crisanto was less than a meter away and saw the incident, while Veneracion saw accused-appellant when the latter was running away. Reyes and Veneracion, followed by Crisanto, immediately alighted from the said vehicle. The three then returned to the vehicle and rushed the victim to the hospital, but he was dead on arrival.[5] Macario Semera, the tricycle driver, recalled that at around 4:45 p.m. on January 7, 1990, four men boarded his tricycle and asked to be taken to St. Joseph Subdivision. When they reached St. Joseph Subdivision, a commotion arose inside his vehicle. Suddenly, all his passengers ran away leaving one bloodied person slumped on the seat of the tricycle.[6] Dr. Alberto Reyes of the National Bureau of Investigation testified on the fact and cause of death of the victim. He said that the victim sustained one (1) stab wound on the chest just above the heart which caused his immediate death. He added that a bolo could have been the weapon used by the assailant when he attacked the victim who was seated at the time.[7] The wound sustained by the victim was more described as follows:[8] Wound, stab, 4.0 cm. long, linear in shape, edges clean cut, oriented downwards and slightly laterally, with sharp infero-lateral and contused supero-medial extremities, directed backwards, downwards and laterally, involving the skin and underlying soft tissues, penetrating the pericardial sac and the right ventricle of the heart, with an approximate depth of 17.0 cm. Finally, the widow, Maxima Bace, testified that she incurred more than P20,000.00 for the funeral and hospital expenses of her husband.[9] Accusedappellant denied he killed Peter Bace. He claimed that at past 1 p.m. on January 7, 1990, he was going to his sisters (Lydia Dulas) house in Sapang Buli, Cainta, Rizal to ask his nephew to accompany him to Bulacan when he noticed several men outside his sisters house drinking. As he tried to pass by the group, one of them stopped him and offered him a drink which he refused. Embarrassed, the man who offered him a drink got angry and pushed him. When accused-appellants sister saw that her brother was having an altercation with the group, she took him away. Lydia added that she accompanied accused-appellant when he boarded a jeep in Celilu Compound. Accused-appellant said he arrived home twenty minutes later and did not return to his sisters place anymore. He added that he was arrested in December 1993 when he was in Marikina.[10] On February 4, 1998, the lower court rendered its decision, finding accused-appellant Antonio de la Tongga guilty of murder qualified by evident premeditation. The dispositive portion of its decision reads:[11] WHEREFORE, premises considered, this Court holds accused Antonio dela Tongga GUILTY of the crime of murder, defined and penalized under Article 248 of the Revised Penal Code, as the killing of his victim was made with the qualifying circumstance of evident premeditation. The killing was likewise with the presence of the generic aggravating circumstance of treachery as the stabbing was done in a sudden and unexpected manner while the deceased was sitting inside the sidecar of a tricycle, thus tended directly and specifically to ensure its execution without any risk to himself arising from the defense which the victim might make. There being no mitigating circumstance to even the same, he is hereby sentence to RECLUSION PERPETUA and to pay the heirs of his victim the sum of Fifty (P50,000.00) as indemnity, and the sum of Thirty Thousand Pesos (P30,000.00) as actual damages. Costs against him. SO ORDERED. Hence, this appeal. Accused-appellant argues that-

I.....THE COURT A QUO ERRED IN FINDING THAT THE GUILT OF THE ACCUSED HAD BEEN PROVEN BEYOND REASONABLE DOUBT II.....THE TRIAL COURT GRAVELY ERRED IN APPRECIATING THE EXISTENCE OF EVIDENT PREMEDITATION AS A QUALIFYING CIRCUMSTANCE III.....THE TRIAL COURT GRAVELY ERRED IN APPRECIATING THE EXISTENCE OF TREACHERY AS A GENERIC AGGRAVATING CIRCUMSTANCE IV.....THE TRIAL COURT GRAVELY ERRED IN AWARDING THE SUM OF THIRTY THOUSAND PESOS AS ACTUAL DAMAGES First. Accused-appellant argues that the prosecution failed to establish the identity of the assailant, because it was not shown that Crisanto and Veneracion actually saw accused-appellant stab the victim. This is not true. Crisanto testified:[12] Q:....Who was that companion of yours that was stabbed? A:....Peter Bace. Q:....Who was the person who stabbed him? A:....Antonio dela Tongga. Q:....You said you were riding on a tricycle at the time Peter Bace was stabbed, where was Peter Bace? A:....He was riding the tricycle. Q:....What part of his body was he stabbed? A:....On his chest. Q:....In relation to the person who stabbed him, where was Peter Bace facing? A:....He was in front of Peter Bace. Q:....What about at the time that Peter Bace was stabbed, where were you at that time? A:....I was with him. .... Q:....Before Peter Bace riding, who was his companion in the tricycle? A:....Me, sir. Q:....How many of you inside the tricycle together with Peter Bace before this Peter Bace riding? A:....We were three inside the tricycle. .... Q:....You are telling this Hon. Court that Peter Bace was inside the tricycle was already stabbed? A:....Yes, sir. .... Q:....Now, this Antonio dela Tonga as you said stabbed Peter Bace who was inside the tricycle, how far were you from Antonio dela Tongga? A:....I was less than one meter from Antonio dela Tongga. Q:....This Peter Bace who was stabbed by Antonio dela Tongga as you said, would you be able to identify him? A:....Yes, sir. Q:....Will you please look around this courtroom and tell the Hon. Court if this Antonio dela Tongga is present now? INTERPRETER: ....Witness pointing to a person who identified himself as Antonio dela Tongga. On cross-examination, Crisanto said:[13] Q:....You said that your companion Peter Bace was already stabbed and when he [was] stabbed you already to exit at the right side of the tricycle? A:....Yes, sir. Q:....You mean to say that you saw Peter Bace was being stabbed by the accused while he was already going outside and the tricycle at the right side? A:....Yes, sir. Q:....How did you able to see? A:....Because when I was able to alight from the tricycle, that was the time Peter Bace stabbed that is why I immediately alighted from the tricycle when I alighted from the tricycle, he has already a stab wound. Q:....How far was then Peter Bace from the driver when he was hit by the accused? A:....Around meter. .... Q:....You said that you were seated at the right side of the victim, and you were also hit by the stabbing of the accused? A:....No, sir. Q:....You mean to say that the thrust of the accused by passed you and hit the victim Peter Bace? A:....Yes, sir. Q:....Were the thrust passed at your front or your back? A:....In front of me. .... Q:....When the victim was being stabbed by the accused, was the victim still sitting at the right position of the tricycle? A:....Yes, sir. Q:....You mean to say that the victim was facing at the front side of the tricycle? A:....Yes, sir. .... Q:....You said that the accused stabbed the victim, how far was the feet of the accused to the right side of the victim where you were sitting? A:....One meter, sir.

Q:....After the accused stabbed the victim, what did the accused do? A:....He run away. Q:....And you rescued your companion Peter Bace when he stabbed by Antonio dela Tongga. A:....Yes, sir. Although Crisanto was a friend of the victim and took part in the incident between the accused-appellant and the victim, his testimony, as the trial court found, is reliable and credible. The general rule is that the findings of the trial court as to the credibility of the witnesses are to be given weight and a high degree of respect by appellate courts. Crisantos testimony was corroborated by Veneracion. The latter testified that he was inside the tricycle with the victim when the latter was stabbed. He admitted that he did not see accused-appellant until the latter was running away. However, knowing accused-appellant and having just seen him that afternoon, Veneracion could not have been mistaken as to the identity of accused-appellant. Accused-appellant further contends that it is doubtful whether these witnesses actually recognized the assailant, because they were drunk. This contention is likewise untenable. Crisanto admitted he was drunk, but the defense failed to establish that he and Veneracion were so drunk that they were completely deprived of their sense of perception. It has not been shown that it was impossible for them to know what was happening.[14] To the contrary, these witnesses gave detailed accounts of how the incident happened, and their testimonies were corroborated by the tricycle driver Macario Semera. As the trial court observed:[15] There is no reason to doubt the testimony of the prosecutions witness particularly Jesus Crisanto and Danilo Veneracion, the y positively identified the accused as the assailant it appearing that the incident happened at around 4:45 p.m. before the afternoon shade turn to dusk and the said witnesses were just (TSN, July 31, 1994, p. 25) beside the victim when the latter was stabbed to death by the assailant who was one meter away from the former. Second. The claim of accused-appellant that he went home after his altercation with the group and that he did not go back to his sisters house is a mere alibi which cannot prevail over the testimonies of Crisanto and Veneracion identifying him as the assailant. The defense of alibi may sometimes be considered exculpatory, as when the guilt of the accused is not established beyond cavil. However, for such defense to succeed, it must be shown not only that the accused was at some other place at the time of the crime but also that it was physically impossible for him to have been at the scene of the crime at the time of its commission. [16] Otherwise, as we have stressed time and again, the defense of alibi must always be received with caution. It should be proved by probable evidence which reasonably satisfies the court of the truth of such defense.[17] In the case at bar, accused-appellant failed to establish that it was physically impossible for him to be at the place where the crime occurred. As the trial court ruled: [18] Trite as it is, the court has to impress on the accused once again [that] the doctrine of alibi is the weakest defense [an] accused can concoct. In order to prosper, it must be so convincing as to preclude any doubt that the accused could not have been physically present at the place of the crime or its vicinity at the time of the commission. The record disclosed that no physical impossibility exists since the distance between the scene of the crime and the place where the accused allegedly was at the time could be negotiated by jeep or tricycle in twenty minutes (TSN, p. 14, July 18, 1995) and the places involved are only one and a half kilometers (TSN, p. 4, July 18, 1995) away from each which could be traversed by any means of transportation or even by walking in less than an hour. Considering the time element between the period of about 1:30 p.m. (TSN, p. 3, September 7, 1995) when the altercation happened and the time when the felony happened at around 4:45 p.m. (TSN, p. 5, December 27, 1995) the accused has enough time to return [to] the locus criminalis after he said to have gone home at about 1:30 p.m. Needless to say, the accuseds defense of alibi must fail, not only because of its inherent weakness but also because of its easy fabrication. The prosecutions account of the incident is therefore given credence. Third. Accused-appellant questions the trial courts finding that there was treachery in the killing of Peter Bace. Ac cused-appellant argues that the prosecution failed to prove that he deliberately or consciously adopted means to ensure the execution of the crime without risk to himself. He further asserts that the victim had sufficient opportunity to defend himself because he had been forewarned by Paulino Reyes that accused-appellant might ambush him on the way. This contention is untenable. Treachery was shown by the testimony of Crisanto, to wit: [19] Q....And the accused Antonio dela Tongga was on the ground standing beside the tricycle? A....I do not know where he came from. Q....When he stabbed Peter Bace, the accused was at the ground beside the tricycle? A....I do not know where he came from because when were to alight from the tricycle, he suddenly appeared. Q....He used the exit of the tricycle? A....The entrance, sir. Q....You mean to say, the right side of the tricycle? A....Yes, sir. .... Q....Before the accused thrust the bolo to the victim, were you able to see the accused a minute or seconds before? A....No, sir. Q....Why? A....I do not know where he came from, he suddenly appeared. Q....And that you were able to ride from the tricycle when the accused stabbed the victim, is that right? A....I was not able to go down. Q....You were able to little bit stand up or just move in the said motorcycle? A....I was just about to rise up. Q....And that your face was going to the direction of the exit of the tricycle? A....Yes, sir. Q....That was the place where the accused suddenly appeared and then stabbed the victim, is that what you mean? A....Yes, sir. The fact that the victim had been forewarned by Reyes against possible attack does not negate the presence of treachery. What is important is that the victim was attacked even before he and his companions could get out of the tricycle. The mode of attack ensured

the commission of the crime without risk to accused-appellant. As Crisanto said, accused-appellant suddenly appeared and stabbed the victim while they were still inside the tricycle. We said in one case:[20] The essence of treachery is swift and unexpected assault on an unarmed victim, which renders him unable to defend himself by reason of the suddenness and severity of the aggression. Here, the weapon used, the nature of the injury inflicted, and the defenseless stance of the victim when attacked confluently lead to the inevitable conclusion that appellant deliberately adopted the murderous mode of commission to ensure the consummation of the offense with impunity. For this reason, we find accused-appellant guilty beyond reasonable doubt of the crime of murder qualified by treachery. However, we find that the trial court erred in appreciating the qualifying circumstance of evident premeditation. There is no direct evidence to prove that accused-appellant planned the killing and that he clung to his decision to commit the crime despite the lapse of sufficient time from his determination to its commission. As this Court held in one case:[21] In order that evident premeditation may be appreciated, it is necessary to prove (a) the time when the offender determined to commit the crime, (b) an act manifestly indicating that the culprit had clung to his determination and (c) a sufficient interval of time between the determination or conception and the execution of the crime that would be sufficient to allow him to reflect upon the consequence of his act and to allow his conscience to overcome the resolution of his will if he desired to hearken to its warnings (U. S. vs. Gil, 13 Phil. 530; People vs. Fuentesuela, 73 Phil. 553). Such proof is lacking in this case. The mere fact that accused-appellant left Paulinos house at past 2 p.m. and sought the group at around 4:45 p.m. to kill the victim does not necessarily mean that there was evident premeditation. The evidence does not show the time when he decided to commit the crime and that he clung to his determination to kill the deceased.[22] Fourth. Accused-appellant questions the award of actual damages by the trial court in the amount of P30,000.00 because, other than the testimony of the victims wife, Maxima Bace, that she spent this amount for hospital and funeral expenses, no documentary evidence was presented by the prosecution to support this claim. We agree with this contention. To recover actual damages, it is necessary to prove the actual amount of loss with a reasonable degree of certainty, on the basis of competent proof and the best evidence obtainable by the injured party.[23] In this case, there was no such proof to sustain the trial courts award of actual damages. In lieu of actual damages, accused-appellant should pay the heirs of the deceased the amount of P15,000.00 as temperate damages. Art. 2224 of the Civil Code provides that temperate damages "may be recovered when the court finds that some pecuniary loss has been suffered but its amount cannot, from the nature of the case, be proved with certainty."[24] In addition, consistent with the prevailing doctrine, the heirs of the victim are entitled to the award of moral damages in the amount of P50,000.00 considering the mental anguish suffered by them on account of the victims death.[25] WHEREFORE, the decision of the Regional Trial Court, Branch 73, Antipolo, Rizal is AFFIRMED with the MODIFICATION that the award of actual damages in the amount of P30,000.00 is deleted and, in lieu thereof, accused-appellant is ordered to pay the heirs of the victim temperate damages in the amount of P15,000.00, and P50,000.00 as moral damages, in addition to the amount ofP50,000.00 awarded by the trial court as indemnity, and the costs of suit. SO ORDERED. Quisumbing, Buena, and De Leon, Jr., JJ., concur. Bellosillo, J., (Chairman), on leave.

FIRST DIVISION [G.R. No. 124354. December 29, 1999] ROGELIO E. RAMOS and ERLINDA RAMOS, in their own behalf and as natural guardians of the minors, ROMMEL RAMOS, ROY RODERICK RAMOS and RON RAYMOND RAMOS, petitioners, vs. COURT OF APPEALS, DELOS SANTOS MEDICAL CENTER, DR. ORLINO HOSAKA and DRA. PERFECTA GUTIERREZ, respondents. DECISION KAPUNAN, J.: The Hippocratic Oath mandates physicians to give primordial consideration to the health and welfare of their patients. If a doctor fails to live up to this precept, he is made accountable for his acts. A mistake, through gross negligence or incompetence or plain human error, may spell the difference between life and death. In this sense, the doctor plays God on his patients fate. [1] In the case at bar, the Court is called upon to rule whether a surgeon, an anesthesiologist and a hospital should be made liable for the unfortunate comatose condition of a patient scheduled for cholecystectomy.[2] Petitioners seek the reversal of the decision[3] of the Court of Appeals, dated 29 May 1995, which overturned the decision [4]of the Regional Trial Court, dated 30 January 1992, 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. The antecedent facts as summarized by the trial court are reproduced hereunder: Plaintiff Erlinda Ramos was, until the afternoon of June 17, 1985, a 47-year old (Exh. A) robust woman (TSN, October 19, 1989, p. 10). Except for occasional complaints of discomfort due to pains allegedly caused by the presence of a stone in her gall bladder (TSN, January 13, 1988, pp. 4-5), she was as normal as any other woman. Married to Rogelio E. Ramos, an executive of Philippine Long Distance Telephone Company, she has three children whose names are Rommel Ramos, Roy Roderick Ramos and Ron Raymond Ramos (TSN, October 19, 1989, pp. 5-6). Because the discomforts somehow interfered with her normal ways, she sought professional advice. She was advised to undergo an operation for the removal of a stone in her gall bladder (TSN, January 13, 1988, p. 5). She underwent a series of examinations which included blood and urine tests (Exhs. A and C) which indicated she was fit for surgery. Through the intercession of a mutual friend, Dr. Buenviaje (TSN, January 13, 1988, p. 7), she and her husband Rogelio met for the first time Dr. Orlino Hozaka (should be Hosaka; see TSN, February 20, 1990, p. 3), one of the defendants in this case, on June 10, 1985. They agreed that their date at the operating table at the DLSMC (another defendant), would be on June 17, 1985 at 9:00 A.M.. Dr. Hosaka decided that she should undergo a cholecystectomy operation after examining the documents (findings from the Capitol Medical Center, FEU Hospital and DLSMC) presented to him. Rogelio E. Ramos, however, asked Dr. Hosaka to look for a good anesthesiologist. Dr. Hosaka, in turn, assured Rogelio that he will get a good anesthesiologist. Dr. Hosaka charged a fee of P16,000.00, which was to include the anesthesiologists fee and which was to be paid after the operation (TSN, October 19, 1989, pp. 14-15, 22-23, 31-33; TSN, February 27, 1990, p. 13; and TSN, November 9, 1989, pp. 3-4, 10, 17). A day before the scheduled date of operation, she was admitted at one of the rooms of the DLSMC, located along E. Rodriguez Avenue, Quezon City (TSN, October 19, 1989, p. 11). At around 7:30 A.M. of June 17, 1985 and while still in her room, she was prepared for the operation by the hospital staff. Her sister-in-law, Herminda Cruz, who was the Dean of the College of Nursing at the Capitol Medical Center, was also there for moral support. She reiterated her previous request for Herminda to be with her even during the operation. After praying, she was given injections. Her hands were held by Herminda as they went down from her room to the operating room (TSN, January 13, 1988, pp. 9-11). Her husband, Rogelio, was also with her (TSN, October 19, 1989, p. 18). At the operating room, Herminda saw about two or three nurses and Dr. Perfecta Gutierrez, the other defendant, who was to administer anesthesia. Although not a member of the hospital staff, Herminda introduced herself as Dean of the College of Nursing at the Capitol Medical Center who was to provide moral support to the patient, to them. Herminda was allowed to stay inside the operating room. At around 9:30 A.M., Dr. Gutierrez reached a nearby phone to look for Dr. Hosaka who was not yet in (TSN, January 13, 1988, pp. 11-12). Dr. Gutierrez thereafter informed Herminda Cruz about the prospect of a delay in the arrival of Dr. Hosaka. Herminda then went back to the patient who asked, Mindy, wala pa ba ang Doctor? The former replied, Huwag kang mag-alaala, darating na iyon (ibid.). Thereafter, Herminda went out of the operating room and informed the patients husband, Rogelio, that the doctor was not yet around (id., p. 13). When she returned to the operating room, the patient told her, Mindy, inip na inip na ako, ikuha mo ako ng ibang Doctor. So, she went out again and told Rogelio about what the patient said (id., p. 15). Thereafter, she returned to the operating room. At around 10:00 A.M., Rogelio E. 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, October 19, 1989, pp. 19-20). He also thought of the feeling of his wife, who was inside the operating room waiting for the doctor to arrive (ibid.). At almost 12:00 noon, he met Dr. Garcia who remarked that he (Dr. Garcia) was also tired of waiting for Dr. Hosaka to arrive (id., p. 21). While talking to Dr. Garcia at around 12:10 P.M., he came to know that Dr. Hosaka arrived as a nurse remarked, Nandiyan na si Dr. Hosaka, dumating na raw. Upon hearing those words, he went down to the lobby and waited for the operation to be completed (id., pp. 16, 29-30). At about 12:15 P.M., Herminda Cruz, who was inside the operating room with the patient, heard somebody say that Dr. Hosaka is already here. She then saw people inside the operating room moving, doing this and that, [and] preparing the patient for the operation (T SN, January 13, 1988, p. 16). As she held the hand of Erlinda Ramos, she then saw Dr. Gutierrez intubating the hapless patient. She thereafter heard Dr. Gutierrez say, ang hirap ma-intubate nito, mali yata ang pagkakapasok. O lumalaki ang tiyan (id., p. 17). Because of the remarks of Dra. Gutierrez, she focused her attention on what Dr. Gutierrez was doing. She thereafter noticed bluish discoloration of the nailbeds of the left hand of the hapless Erlinda even as Dr. Hosaka approached her. She then heard Dr. Hosaka issue an order for someone to call Dr. Calderon, another anesthesiologist (id., p. 19). After Dr. Calderon arrived at the operating room, she saw this anesthesiologist trying to intubate the patient. The patients 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 patients bra in (Id., pp. 1920). Immediately thereafter, she went out of the operating room, and she told Rogelio E. Ramos that something wrong was x x x happening (Ibid.). Dr. Calderon was then able to intubate the patient (TSN, July 25, 1991, p. 9).

Meanwhile, Rogelio, who was outside the operating room, saw a respiratory machine being rushed towards the door of the operating room. He also saw several doctors rushing towards the operating room. When informed by Herminda Cruz that something wrong was happening, he told her (Herminda) to be back with the patient inside the operating room (TSN, October 19, 1989, pp. 25-28). Herminda Cruz immediately rushed back, and saw that the patient was still in trendelenburg position (TSN, January 13, 1988, p. 20). At almost 3:00 P.M. of that fateful day, she saw the patient taken to the Intensive Care Unit (ICU). About two days thereafter, Rogelio E. Ramos was able to talk to Dr. Hosaka. The latter informed the former that something went wrong during the intubation. Reacting to what was told to him, Rogelio reminded the doctor that the condition of his wife would not have happened, had he (Dr. Hosaka) looked for a good anesthesiologist (TSN, October 19, 1989, p. 31). Doctors Gutierrez and Hosaka were also asked by the hospital to explain what happened to the patient. The doctors explained that the patient had bronchospasm (TSN, November 15, 1990, pp. 26-27). Erlinda Ramos stayed at the ICU for a month. About four months thereafter or on November 15, 1985, the patient was released from the hospital. During the whole period of her confinement, she incurred hospital bills amounting to P93,542.25 which is the subject of a promissory note and affidavit of undertaking executed by Rogelio E. Ramos in favor of DLSMC. Since that fateful afternoon of June 17, 1985, she has been in a comatose condition. She cannot do anything. She cannot move any part of her body. She cannot see or hear. She is living on mechanical means. She suffered brain damage as a result of the absence of oxygen in her brain for four to five minutes (TSN, November 9, 1989, pp. 2122). After being discharged from the hospital, she has been staying in their residence, still needing constant medical attention, with her husband Rogelio incurring a monthly expense ranging from P8,000.00 to P10,000.00 (TSN, October 19, 1989, pp. 32-34). She was also diagnosed to be suffering from diffuse cerebral parenchymal damage (Exh. G; see also TSN, December 21, 1989, p. 6). [5] Thus, on 8 January 1986, petitioners filed a civil case[6] for damages with the Regional Trial Court of Quezon City against herein private respondents alleging negligence in the management and care of Erlinda Ramos. During the trial, both parties presented evidence as to the possible cause of Erlindas injury. Plaintiff presented the testimonies of Dean Herminda Cruz and Dr. Mariano Gavino to prove that the damage 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. On the other hand, private respondents primarily relied on the expert testimony of Dr. Eduardo Jamora, a pulmono logist, to the effect that the cause of brain damage was Erlindas allergic reaction to the anesthetic agent, Thiopental Sodium (Pentothal). After considering the evidence from both sides, the Regional Trial Court rendered judgment in favor of petitioners, to wit: After evaluating the evidence as shown in the finding of facts set forth earlier, and applying the aforecited provisions of law and jurisprudence to the case at bar, this Court finds and so holds that defendants are liable to plaintiffs for damages. The defendants were guilty of, at the very least, negligence in the performance of their duty to plaintiff-patient Erlinda Ramos. On the part of Dr. Perfecta Gutierrez, this Court finds that she omitted to exercise reasonable care in not only intubating the patient, but also in not repeating the administration of atropine (TSN, August 20, 1991, pp. 5-10), without due regard to the fact that the patient was inside the operating room for almost three (3) hours. For after she committed a mistake in intubating [the] patient, the patient's nailbed became bluish and the patient, thereafter, was placed in trendelenburg position, because of the decrease of blood supply to the patient's brain. 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, in turn, caused the patient to become comatose. On the part of Dr. Orlino Hosaka, this Court finds that he is liable for the acts of Dr. Perfecta Gutierrez whom he had chosen to administer anesthesia on the patient as part of his obligation to provide the patient a `good anesthesiologist', and for arriving for the scheduled operation almost three (3) hours late. On the part of DLSMC (the hospital), this Court finds that it is liable for the acts of negligence of the doctors in their `practice of medicine' in the operating room. Moreover, the hospital is liable for failing through its responsible officials, to cancel the scheduled operation after Dr. Hosaka inexcusably failed to arrive on time. In having held thus, this Court rejects the defense raised by defendants that they have acted with due care and prudence in rendering medical services to plaintiff-patient. For if the patient was properly intubated as claimed by them, the patient would not have become comatose. And, the fact that another anesthesiologist was called to try to intubate the patient after her (the patient's) nailbed turned bluish, belie their claim. Furthermore, the defendants should have rescheduled the operation to a later date. This, they should have done, if defendants acted with due care and prudence as the patient's case was an elective, not an emergency case. xxx WHEREFORE, and in view of the foregoing, judgment is rendered in favor of the plaintiffs and against the defendants. Accordingly, the latter are ordered to pay, jointly and severally, the former the following sums of money, to wit: 1) the sum of P8,000.00 as actual monthly expenses for the plaintiff Erlinda Ramos reckoned from November 15, 1985 or in the total sum of P632,000.00 as of April 15, 1992, subject to its being updated; 2) the sum of P100,000.00 as reasonable attorney's fees; 3) the sum of P800,000.00 by way of moral damages and the further sum of P200,000.00 by way of exemplary damages; and, 4) the costs of the suit. SO ORDERED.[7] Private respondents seasonably interposed an appeal to the Court of Appeals. The appellate court rendered a Decision, dated 29 May 1995, reversing the findings of the trial court. The decretal portion of the decision of the appellate court reads: WHEREFORE, for the foregoing premises the appealed decision is hereby REVERSED, and the complaint below against the appellants is hereby ordered DISMISSED. The counterclaim of appellant De Los Santos Medical Center is GRANTED but only insofar as appellees are hereby ordered to pay the unpaid hospital bills amounting to P93,542.25, plus legal interest for justice must be tempered with mercy. SO ORDERED.[8] The decision of the Court of Appeals was received on 9 June 1995 by petitioner Rogelio Ramos w ho was mistakenly addressed as Atty. Rogelio Ramos. No copy of the decision, however, was sent nor received by the Coronel Law Office, then counsel on record of petitioners. Rogelio referred the decision of the appellate court to a new lawyer, Atty. Ligsay, only on 20 June 1995, or four (4) days before the expiration of the reglementary period for filing a motion for reconsideration. On the same day, Atty. Ligsay, filed with the appellate court a motion for extension of time to file a motion for reconsideration. The motion for reconsideration was submitted on 4 July 1995. However, the

appellate court denied the motion for extension of time in its Resolution dated 25 July 1995. [9] Meanwhile petitioners engaged the services of another counsel, Atty. Sillano, to replace Atty. Ligsay. Atty. Sillano filed on 7 August 1995 a motion to admit the motion for reconsideration contending that the period to file the appropriate pleading on the assailed decision had not yet commenced to run as the Division Clerk of Court of the Court of Appeals had not yet served a copy thereof to the counsel on record. Despite this explanation, the appellate court still denied the motion to admit the motion for reconsideration of petitioners in its Resolution, dated 29 March 1996, primarily on the ground that the fifteen-day (15) period for filing a motion for reconsideration had already expired, to wit: We said in our Resolution on July 25, 1995, that the filing of a Motion for Reconsideration cannot be extended; precisely, the Motion for Extension (Rollo, p. 12) was denied. It is, on the other hand, admitted in the latter Motion that plaintiffs/appellees received a copy of the decision as early as June 9, 1995. Computation wise, the period to file a Motion for Reconsideration expired on June 24. The Motion for Reconsideration, in turn, was received by the Court of Appeals already on July 4, necessarily, the 15-day period already passed. For that alone, the latter should be denied. Even assuming admissibility of the Motion for Reconsideration, but after considering the Comment/Opposition, the former, for lack of merit, is hereby DENIED. SO ORDERED.[10] A copy of the above resolution was received by Atty. Sillano on 11 April 1996. The next day, or on 12 April 1996, Atty. Sillano filed before this Court a motion for extension of time to file the present petition for certiorari under Rule 45. The Court granted the motion for extension of time and gave petitioners additional thirty (30) days after the expiration of the fifteen-day (15) period counted from the receipt of the resolution of the Court of Appeals within which to submit the petition. The due date fell on 27 May 1996. The petition was filed on 9 May 1996, well within the extended period given by the Court. Petitioners assail the decision of the Court of Appeals on the following grounds: I IN PUTTING MUCH RELIANCE ON THE TESTIMONIES OF RESPONDENTS DRA. GUTIERREZ, DRA. CALDERON AND DR. JAMORA; II IN FINDING THAT THE NEGLIGENCE OF THE RESPONDENTS DID NOT CAUSE THE UNFORTUNATE COMATOSE CONDITION OF PETITIONER ERLINDA RAMOS; III IN NOT APPLYING THE DOCTRINE OF RES IPSA LOQUITUR. [11] Before we discuss the merits of the case, we shall first dispose of the procedural issue on the timeliness of the petition in relation to the motion for reconsideration filed by petitioners with the Court of Appeals. In their Comment,[12]private respondents contend that the petition should not be given due course since the motion for reconsideration of the petitioners on the decision of the Court of Appeals was validly dismissed by the appellate court for having been filed beyond the reglementary period. We do not agree. A careful review of the records reveals that the reason behind the delay in filing the motion for reconsideration is attributable to the fact that the decision of the Court of Appeals was not sent to then counsel on record of petitioners, the Coronel Law Office. In fact, a copy of the decision of the appellate court was instead sent to and received by petitioner Rogelio Ramos on 9 June 1995 wherein he was mistakenly addressed as Atty. Rogelio Ramos. Based on the other communications received by petitioner Rogelio Ramos, the appellate court apparently mistook him for the counsel on record. Thus, no copy of the decision of the appellate court was furnished to the counsel on record. Petitioner, not being a lawyer and unaware of the prescriptive period for filing a motion for reconsideration, referred the same to a legal counsel only on 20 June 1995. It is elementary that when a party is represented by counsel, all notices should be sent to the partys lawyer at his given a ddress. With a few exceptions, notice to a litigant without notice to his counsel on record is no notice at all. In the present case, since a copy of the decision of the appellate court was not sent to the counsel on record of petitioner, there can be no sufficient notice to speak of. Hence, the delay in the filing of the motion for reconsideration cannot be taken against petitioner. Moreover, since the Court of Appeals already issued a second Resolution, dated 29 March 1996, which superseded the earlier resolution issued on 25 July 1995, and denied the motion for reconsideration of petitioner, we believe that the receipt of the former should be considered in determining the timeliness of the filing of the present petition. Based on this, the petition before us was submitted on time. After resolving the foregoing procedural issue, we shall now look into the merits of the case. For a more logical presentation of the discussion we shall first consider the issue on the applicability of the doctrine of res ipsa loquiturto the instant case. Thereafter, the first two assigned errors shall be tackled in relation to the res ipsa loquitur doctrine. Res ipsa loquitur is a Latin phrase which literally means the thing or the transaction speaks for itself. The phrase res ipsa loquitur is a maxim for the rule that the fact of the occurrence of an injury, taken with the surrounding circumstances, may permit an inference or raise a presumption of negligence, or make out a plaintiffs prima facie case, and present a question of fact for defendant to meet with an explanation.[13] Where the thing which caused the injury complained of is shown to be under the management of the defendant or his servants and the accident is such as in ordinary course of things does not happen if those who have its management or control use proper care, it affords reasonable evidence, in the absence of explanation by the defendant, that the accident arose from or was caused by the defend ants want of care.[14] The doctrine of res ipsa loquitur is simply a recognition of the postulate that, as a matter of common knowledge and experience, the very nature of certain types of occurrences may justify an inference of negligence on the part of the person who controls the instrumentality causing the injury in the absence of some explanation by the defendant who is charged with negligence. [15] It is grounded in the superior logic of ordinary human experience and on the basis of such experience or common knowledge, negligence may be deduced from the mere occurrence of the accident itself.[16] Hence, res ipsa loquitur is applied in conjunction with the doctrine of common knowledge. However, much has been said that res ipsa loquitur is not a rule of substantive law and, as such, does not create or constitute an independent or separate ground of liability.[17] Instead, it is considered as merely evidentiary or in the nature of a procedural rule.[18] It is regarded as a mode of proof, or a mere procedural convenience since it furnishes a substitute for, and relieves a plaintiff of, the burden of producing specific proof of negligence.[19] In other words, mere invocation and application of the doctrine does not dispense with the requirement of proof of negligence. It is simply a step in the process of such proof, permitting the plaintiff to present along with the proof of the accident, enough of the attending circumstances to invoke the doctrine, creating an inference or presumption of negligence, and to thereby place on the

defendant the burden of going forward with the proof.[20] Still, before resort to the doctrine may be allowed, the following requisites must be satisfactorily shown: 1. The accident is of a kind which ordinarily does not occur in the absence of someones negligence; 2. It is caused by an instrumentality within the exclusive control of the defendant or defendants; and 3. The possibility of contributing conduct which would make the plaintiff responsible is eliminated.[21] In the above requisites, the fundamental element is the control of the instrumentality which caused the damage.[22] Such element of control must be shown to be within the dominion of the defendant. In order to have the benefit of the rule, a plaintiff, in addition to proving injury or damage, must show a situation where it is applicable, and must establish that the essential elements of the doctrine were present in a particular incident.[23] Medical malpractice[24]cases do not escape the application of this doctrine. Thus, res ipsa loquitur has been applied when the circumstances attendant upon the harm are themselves of such a character as to justify an inference of negligence as the cause of that harm.[25] The application of res ipsa loquitur in medical negligence cases presents a question of law since it is a judicial function to determine whether a certain set of circumstances does, as a matter of law, permit a given inference. [26] Although generally, expert medical testimony is relied upon in malpractice suits to prove that a physician has done a negligent act or that he has deviated from the standard medical procedure, when the doctrine of res ipsa loquituris availed by the plaintiff, the need for expert medical testimony is dispensed with because the injury itself provides the proof of negligence. [27] The reason is that the general rule on the necessity of expert testimony applies only to such matters clearly within the domain of medical science, and not to matters that are within the common knowledge of mankind which may be testified to by anyone familiar with the facts.[28] Ordinarily, only physicians and surgeons of skill and experience are competent to testify as to whether a patient has been treated or operated upon with a reasonable degree of skill and care. However, testimony as to the statements and acts of physicians and surgeons, external appearances, and manifest conditions which are observable by any one may be given by non-expert witnesses.[29] Hence, in cases where the res ipsa loquitur is applicable, the court is permitted to find a physician negligent upon proper proof of injury to the patient, without the aid of expert testimony, where the court from its fund of common knowledge can determine the proper standard of care. [30] Where common knowledge and experience teach that a resulting injury would not have occurred to the patient if due care had been exercised, an inference of negligence may be drawn giving rise to an application of the doctrine of res ipsa loquitur without medical evidence, which is ordinarily required to show not only what occurred but how and why it occurred.[31] When the doctrine is appropriate, all that the patient must do is prove a nexus between the particular act or omission complained of and the injury sustained while under the custody and management of the defendant without need to produce expert medical testimony to establish the standard of care. Resort to res ipsa loquitur is allowed because there is no other way, under usual and ordinary conditions, by which the patient can obtain redress for injury suffered by him. Thus, courts of other jurisdictions have applied the doctrine in the following situations: leaving of a foreign object in the body of the patient after an operation,[32] injuries sustained on a healthy part of the body which was not under, or in the area, of treatment, [33] removal of the wrong part of the body when another part was intended,[34] knocking out a tooth while a patients jaw was under anesthetic for the removal of his tonsils,[35] and loss of an eye while the patient plaintiff was under the influence of anesthetic, during or following an operation for appendicitis,[36] among others. Nevertheless, despite the fact that the scope of res ipsa loquitur has been measurably enlarged, it does not automatically apply to all cases of medical negligence as to mechanically shift the burden of proof to the defendant to show that he is not guilty of the ascribed negligence. Res ipsa loquitur is not a rigid or ordinary doctrine to be perfunctorily used but a rule to be cautiously applied, depending upon the circumstances of each case. It is generally restricted to situations in malpractice cases where a layman is able to say, as a matter of common knowledge and observation, that the consequences of professional care were not as such as would ordinarily have followed if due care had been exercised.[37] A distinction must be made between the failure to secure results, and the occurrence of something more unusual and not ordinarily found if the service or treatment rendered followed the usual procedure of those skilled in that particular practice. It must be conceded that the doctrine of res ipsa loquitur can have no application in a suit against a physician or surgeon which involves the merits of a diagnosis or of a scientific treatment.[38] The physician or surgeon is not required at his peril to explain why any particular diagnosis was not correct, or why any particular scientific treatment did not produce the desired result. [39] Thus, res ipsa loquitur is not available in a malpractice suit if the only showing is that the desired result of an operation or treatment was not accomplished. [40] The real question, therefore, is whether or not in the process of the operation any extraordinary incident or unusual event outside of the routine performance occurred which is beyond the regular scope of customary professional activity in such operations, which, if unexplained would themselves reasonably speak to the average man as the negligent cause or causes of the untoward consequence. [41] If there was such extraneous interventions, the doctrine of res ipsa loquitur may be utilized and the defendant is called upon to explain the matter, by evidence of exculpation, if he could. [42] We find the doctrine of res ipsa loquitur appropriate in the case at bar. As will hereinafter be explained, the damage sustained by Erlinda in her brain prior to a scheduled gall bladder operation presents a case for the application of res ipsa loquitur. A case strikingly similar to the one before us is Voss vs. Bridwell,[43] where the Kansas Supreme Court in applying the res ipsa loquitur stated: The plaintiff herein submitted himself for a mastoid operation and delivered his person over to the care, custody and control of his physician who had complete and exclusive control over him, but the operation was never performed. At the time of submission he was neurologically sound and physically fit in mind and body, but he suffered irreparable damage and injury rendering him decerebrate and totally incapacitated. The injury was one which does not ordinarily occur in the process of a mastoid operation or in the absence of negligence in the administration of an anesthetic, and in the use and employment of an endoctracheal tube. Ordinarily a person being put under anesthesia is not rendered decerebrate as a consequence of administering such anesthesia in the absence of negligence. Upon these facts and under these circumstances a layman would be able to say, as a matter of common knowledge and observation, that the consequences of professional treatment were not as such as would ordinarily have followed if due care had been exercised. Here the plaintiff could not have been guilty of contributory negligence because he was under the influence of anesthetics and unconscious, and the circumstances are such that the true explanation of event is more accessible to the defendants than to the plaintiff for they had the exclusive control of the instrumentalities of anesthesia. Upon all the facts, conditions and circumstances alleged in Count II it is held that a cause of action is stated under the doctrine of res ipsa loquitur.[44]

Indeed, the principles enunciated in the aforequoted case apply with equal force here. In the present case, Erlinda submitted herself for cholecystectomy and expected a routine general surgery to be performed on her gall bladder. On that fateful day she delivered her person over to the care, custody and control of private respondents who exercised complete and exclusive control over her. At the time of submission, Erlinda was neurologically sound and, except for a few minor discomforts, was likewise physically fit in mind and body. However, during the administration of anesthesia and prior to the performance of cholecystectomy she suffered irreparable damage to her brain. Thus, without undergoing surgery, she went out of the operating room already decerebrate and totally incapacitated. Obviously, brain damage, which Erlinda sustained, is an injury which does not normally occur in the process of a gall bladder operation. In fact, this kind of situation does not happen in the absence of negligence of someone in the administration of anesthesia and in the use of endotracheal tube. Normally, a person being put under anesthesia is not rendered decerebrate as a consequence of administering such anesthesia if the proper procedure was followed. Furthermore, the instruments used in the administration of anesthesia, including the endotracheal tube, were all under the exclusive control of private respondents, who are the physicians-in-charge. Likewise, petitioner Erlinda could not have been guilty of contributory negligence because she was under the influence of anesthetics which rendered her unconscious. Considering that a sound and unaffected member of the body (the brain) is injured or destroyed while the patient is unconscious and under the immediate and exclusive control of the physicians, we hold that a practical administration of justice dictates the application of res ipsa loquitur. Upon these facts and under these circumstances the Court would be able to say, as a matter of common knowledge and observation, if negligence attended the management and care of the patient. Moreover, the liability of the physicians and the hospital in this case is not predicated upon an alleged failure to secure the desired results of an operation nor on an alleged lack of skill in the diagnosis or treatment as in fact no operation or treatment was ever performed on Erlinda. Thus, upon all these initial determination a case is made out for the application of the doctrine of res ipsa loquitur. Nonetheless, in holding that res ipsa loquitur is available to the present case we are not saying that the doctrine is applicable in any and all cases where injury occurs to a patient while under anesthesia, or to any and all anesthesia cases. Each case must be viewed in its own light and scrutinized in order to be within the res ipsa loquitur coverage. Having in mind the applicability of the res ipsa loquitur doctrine and the presumption of negligence allowed therein, the Court now comes to the issue of whether the Court of Appeals erred in finding that private respondents were not negligent in the care of Erlinda during the anesthesia phase of the operation and, if in the affirmative, whether the alleged negligence was the proximate cause of Erlindas comatose condition. Corollary thereto, we shall also determine if the Court of Appeals erred in relying on the testimonies of the witnesses for the private respondents. In sustaining the position of private respondents, the Court of Appeals relied on the testimonies of Dra. Gutierrez, Dra. Calderon and Dr. Jamora. In giving weight to the testimony of Dra. Gutierrez, the Court of Appeals rationalized that she was candid enough to admit that she experienced some difficulty in the endotracheal intubation[45]of the patient and thus, cannot be said to be covering her negligence with falsehood. The appellate court likewise opined that private respondents were able to show that the brain damage sustained by Erlinda was not caused by the alleged faulty intubation but was due to the allergic reaction of the patient to the drug Thiopental Sodium (Pentothal), a shortacting barbiturate, as testified on by their expert witness, Dr. Jamora. On the other hand, the appellate court rejected the testimony of Dean Herminda Cruz offered in favor of petitioners that the cause of the brain injury was traceable to the wrongful insertion of the tube since the latter, being a nurse, was allegedly not knowledgeable in the process of intubation. In so holding, the appellate court returned a verdict in favor of respondents physicians and hospital and absolved them of any liability towards Erlinda and her family. We disagree with the findings of the Court of Appeals. We hold that private respondents were unable to disprove the presumption of negligence on their part in the care of Erlinda and their negligence was the proximate cause of her piteous condition. In the instant case, the records are helpful in furnishing not only the logical scientific evidence of the pathogenesis of the injury but also in providing the Court the legal nexus upon which liability is based. As will be shown hereinafter, private respondents own testimonies which are reflected in the transcript of stenographic notes are replete of signposts indicative of their negligence in the care and management of Erlinda. With regard to Dra. Gutierrez, we find her negligent in the care of Erlinda during the anesthesia phase. As borne by the records, respondent Dra. Gutierrez failed to properly intubate the patient. This fact was attested to by Prof. Herminda Cruz, Dean of the Capitol Medical Center School of Nursing and petitioner's sister-in-law, who was in the operating room right beside the patient when the tragic event occurred. Witness Cruz testified to this effect: ATTY. PAJARES: Q: In particular, what did Dra. Perfecta Gutierrez do, if any on the patient? A: In particular, I could see that she was intubating the patient. Q: Do you know what happened to that intubation process administered by Dra. Gutierrez? ATTY. ALCERA: She will be incompetent Your Honor. COURT: Witness may answer if she knows. A: As I have said, I was with the patient, I was beside the stretcher holding the left hand of the patient and all of a sudden I heard some remarks coming from Dra. Perfecta Gutierrez herself. She was saying Ang hirap ma-intubate nito, mali yata ang pagkakapasok. O lumalaki ang tiyan. xxx ATTY. PAJARES: Q: From whom did you hear those words lumalaki ang tiyan? A: From Dra. Perfecta Gutierrez. xxx After hearing the phrase lumalaki ang tiyan, what did you notice on the person of the patient? A: I notice (sic) some bluish discoloration on the nailbeds of the left hand where I was at. Q: Where was Dr. Orlino Ho[s]aka then at that particular time? A: I saw him approaching the patient during that time. Q: When he approached the patient, what did he do, if any? A: He made an order to call on the anesthesiologist in the person of Dr. Calderon.

Did Dr. Calderon, upon being called, arrive inside the operating room? Yes sir. What did [s]he do, if any? [S]he tried to intubate the patient. What happened to the patient? When Dr. Calderon try (sic) to intubate the patient, after a while the patients nailbed became bluish and I saw the patient was placed in trendelenburg position. xxx Q: Do you know the reason why the patient was placed in that trendelenburg position? A: As far as I know, when a patient is in that position, there is a decrease of blood supply to the brain. [46] xxx The appellate court, however, disbelieved Dean Cruz's testimony in the trial court by declaring that: A perusal of the standard nursing curriculum in our country will show that intubation is not taught as part of nursing procedures and techniques. Indeed, we take judicial notice of the fact that nurses do not, and cannot, intubate. Even on the assumption that she is fully capable of determining whether or not a patient is properly intubated, witness Herminda Cruz, admittedly, did not peep into the throat of the patient. (TSN, July 25, 1991, p. 13). More importantly, there is no evidence that she ever auscultated the patient or that she conducted any type of examination to check if the endotracheal tube was in its proper place, and to determine the condition of the heart, lungs, and other organs. Thus, witness Cruz's categorical statements that appellant Dra. Gutierrez failed to intubate the appellee Erlinda Ramos and that it was Dra. Calderon who succeeded in doing so clearly suffer from lack of sufficient factual bases.[47] In other words, what the Court of Appeals is trying to impress is that being a nurse, and considered a layman in the process of intubation, witness Cruz is not competent to testify on whether or not the intubation was a success. We do not agree with the above reasoning of the appellate court. Although witness Cruz is not an anesthesiologist, she can very well testify upon matters on which she is capable of observing such as, the statements and acts of the physician and surgeon, external appearances, and manifest conditions which are observable by any one. [48] This is precisely allowed under the doctrine of res ipsa loquitur where the testimony of expert witnesses is not required. It is the accepted rule that expert testimony is not necessary for the proof of negligence in nontechnical matters or those of which an ordinary person may be expected to have knowledge, or where the lack of skill or want of care is so obvious as to render expert testimony unnecessary.[49] We take judicial notice of the fact that anesthesia procedures have become so common, that even an ordinary person can tell if it was administered properly. As such, it would not be too difficult to tell if the tube was properly inserted. This kind of observation, we believe, does not require a medical degree to be acceptable. At any rate, without doubt, petitioner's witness, an experienced clinical nurse whose long experience and scholarship led to her appointment as Dean of the Capitol Medical Center School of Nursing, was fully capable of determining whether or not the intubation was a success. She had extensive clinical experience starting as a staff nurse in Chicago, Illinois; staff nurse and clinical instructor in a teaching hospital, the FEU-NRMF; Dean of the Laguna College of Nursing in San Pablo City; and then Dean of the Capitol Medical Center School of Nursing.[50]Reviewing witness Cruz' statements, we find that the same were delivered in a straightforward manner, with the kind of detail, clarity, consistency and spontaneity which would have been difficult to fabricate. With her clinical background as a nurse, the Court is satisfied that she was able to demonstrate through her testimony what truly transpired on that fateful day. Most of all, her testimony was affirmed by no less than respondent Dra. Gutierrez who admitted that she experienced difficulty in inserting the tube into Erlindas trachea, to wit: ATTY. LIGSAY: Q: In this particular case, Doctora, while you were intubating at your first attempt (sic), you did not immediately see the trachea? DRA. GUTIERREZ: A: Yes sir. Q: Did you pull away the tube immediately? A: You do not pull the ... Q: Did you or did you not? A: I did not pull the tube. Q: When you said mahirap yata ito, what were you referring to? A: Mahirap yata itong i-intubate, that was the patient. Q: So, you found some difficulty in inserting the tube? A: Yes, because of (sic) my first attempt, I did not see right away.[51] Curiously in the case at bar, respondent Dra. Gutierrez made the haphazard defense that she encountered hardship in the insertion of the tube in the trachea of Erlinda because it was positioned more anteriorly (slightly deviated from the normal anatomy of a person)[52] making it harder to locate and, since Erlinda is obese and has a short neck and protruding teeth, it made intubation even more difficult. The argument does not convince us. If this was indeed observed, private respondents adduced no evidence demonstrating that they proceeded to make a thorough assessment of Erlindas airway, prior to the induction of anesthesia, even if this would mean po stponing the procedure. From their testimonies, it appears that the observation was made only as an afterthought, as a means of defense. The pre-operative evaluation of a patient prior to the administration of anesthesia is universally observed to lessen the possibility of anesthetic accidents. Pre-operative evaluation and preparation for anesthesia begins when the anesthesiologist reviews the patients medical records and visits with the patient, traditionally, the day before elective surgery. [53] It includes taking the patients medical history, review of current drug therapy, physical examination and interpretation of laboratory data. [54] The physical examination performed by the anesthesiologist is directed primarily toward the central nervous system, cardiovascular system, lungs and upper airway.[55] A thorough analysis of the patient's airway normally involves investigating the following: cervical spine mobility, temporomandibular mobility, prominent central incisors, diseased or artificial teeth, ability to visualize uvula and the thyromental distance.[56] Thus, physical characteristics of the patients upper airway that could make tracheal intubation difficult should be studied.[57] Where the need arises, as when initial assessment indicates possible problems (such as the alleged short neck and protruding teeth of Erlinda) a thorough examinat ion of the patients airway would go a long way towards decreasing patient morbidity and mortality.

Q: A: Q: A: Q: A:

In the case at bar, respondent Dra. Gutierrez admitted that she saw Erlinda for the first time on the day of the operation itself, on 17 June 1985. Before this date, no prior consultations with, or pre-operative evaluation of Erlinda was done by her. Until the day of the operation, respondent Dra. Gutierrez was unaware of the physiological make-up and needs of Erlinda. She was likewise not properly informed of the possible difficulties she would face during the administration of anesthesia to Erlinda. Respondent Dra. Gutierrez act of seeing her patient for the first time only an hour before the scheduled operative procedure was, therefore, an act of exceptional negligence and professional irresponsibility. The measures cautioning prudence and vigilance in dealing with human lives lie at the core of the physicians centuries -old Hippocratic Oath. Her failure to follow this medical procedure is, therefore, a clear indicia of her negligence. Respondent Dra. Gutierrez, however, attempts to gloss over this omission by playing around with the trial court's ignorance of clinical procedure, hoping that she could get away with it. Respondent Dra. Gutierrez tried to muddle the difference between an elective surgery and an emergency surgery just so her failure to perform the required pre-operative evaluation would escape unnoticed. In her testimony she asserted: ATTY. LIGSAY: Q: Would you agree, Doctor, that it is good medical practice to see the patient a day before so you can introduce yourself to establish good doctor-patient relationship and gain the trust and confidence of the patient? DRA. GUTIERREZ: A: As I said in my previous statement, it depends on the operative procedure of the anesthesiologist and in my case, with elective cases and normal cardio-pulmonary clearance like that, I usually don't do it except on emergency and on cases that have an abnormalities (sic). [58] However, the exact opposite is true. In an emergency procedure, there is hardly enough time available for the fastidious demands of preoperative procedure so that an anesthesiologist is able to see the patient only a few minutes before surgery, if at all. Elective procedures, on the other hand, are operative procedures that can wait for days, weeks or even months. Hence, in these cases, the anesthesiologist possesses the luxury of time to make a proper assessment, including the time to be at the patient's bedside to do a proper interview and clinical evaluation. There is ample time to explain the method of anesthesia, the drugs to be used, and their possible hazards for purposes of informed consent. Usually, the pre-operative assessment is conducted at least one day before the intended surgery, when the patient is relaxed and cooperative. Erlindas case was elective and this was known to respondent Dra. Gutierrez. Thus, she had all the time to make a thorough evaluation of Erlindas case prior to the operation and prepare her for anesthesia. However, she never saw the patient at the bedside. She herself admitted that she had seen petitioner only in the operating room, and only on the actual date of the cholecystectomy. She negligently failed to take advantage of this important opportunity. As such, her attempt to exculpate herself must fail. Having established that respondent Dra. Gutierrez failed to perform pre-operative evaluation of the patient which, in turn, resulted to a wrongful intubation, we now determine if the faulty intubation is truly the proximate cause of Erlindas comatose condition. Private respondents repeatedly hammered the view that the cerebral anoxia which led to Erlindas c oma was due to bronchospasm[59] mediated by her allergic response to the drug, Thiopental Sodium, introduced into her system. Towards this end, they presented Dr. Jamora, a Fellow of the Philippine College of Physicians and Diplomate of the Philippine Specialty Board of Internal Medicine, who advanced private respondents' theory that the oxygen deprivation which led to anoxic encephalopathy, [60] was due to an unpredictable drug reaction to the short-acting barbiturate. We find the theory of private respondents unacceptable. First of all, Dr. Jamora cannot be considered an authority in the field of anesthesiology simply because he is not an anesthesiologist. Since Dr. Jamora is a pulmonologist, he could not have been capable of properly enlightening the court about anesthesia practice and procedure and their complications. Dr. Jamora is likewise not an allergologist and could not therefore properly advance expert opinion on allergic-mediated processes. Moreover, he is not a pharmacologist and, as such, could not have been capable, as an expert would, of explaining to the court the pharmacologic and toxic effects of the supposed culprit, Thiopental Sodium (Pentothal). The inappropriateness and absurdity of accepting Dr. Jamoras testimony as an expert witness in the anesthetic practice of Pe ntothal administration is further supported by his own admission that he formulated his opinions on the drug not from the practical experience gained by a specialist or expert in the administration and use of Sodium Pentothal on patients, but only from reading certain references, to wit: ATTY. LIGSAY: Q: In your line of expertise on pulmonology, did you have any occasion to use pentothal as a method of management? DR. JAMORA: A: We do it in conjunction with the anesthesiologist when they have to intubate our patient. Q: But not in particular when you practice pulmonology? A: No. Q: In other words, your knowledge about pentothal is based only on what you have read from books and not by your own personal application of the medicine pentothal? A: Based on my personal experience also on pentothal. Q: How many times have you used pentothal? A: They used it on me. I went into bronchospasm during my appendectomy. Q: And because they have used it on you and on account of your own personal experience you feel that you can testify on pentothal here with medical authority? A: No. That is why I used references to support my claims.[61] An anesthetic accident caused by a rare drug-induced bronchospasm properly falls within the fields of anesthesia, internal medicineallergy, and clinical pharmacology. The resulting anoxic encephalopathy belongs to the field of neurology. While admittedly, many bronchospastic-mediated pulmonary diseases are within the expertise of pulmonary medicine, Dr. Jamora's field, the anesthetic drug-induced, allergic mediated bronchospasm alleged in this case is within the disciplines of anesthesiology, allergology and pharmacology. On the basis of the foregoing transcript, in which the pulmonologist himself admitted that he could not testify about the drug with medical authority, it is clear that the appellate court erred in giving weight to Dr. Jamoras testimony as an expert in the administration of Thiopental Sodium. The provision in the rules of evidence[62]regarding expert witnesses states: Sec. 49. Opinion of expert witness. - The opinion of a witness on a matter requiring special knowledge, skill, experience or training which he is shown to possess, may be received in evidence. Generally, to qualify as an expert witness, one must have acquired special knowledge of the subject matter about which he or she is to testify, either by the study of recognized authorities on the subject or by practical experience. [63] Clearly, Dr. Jamora does not qualify as an

expert witness based on the above standard since he lacks the necessary knowledge, skill, and training in the field of anesthesiology. Oddly, apart from submitting testimony from a specialist in the wrong field, private respondents intentionally avoided providi ng testimony by competent and independent experts in the proper areas. Moreover, private respondents theory, that Thiopental Sodium may have produced Erlinda's coma by triggering an allergic medi ated response, has no support in evidence. No evidence of stridor, skin reactions, or wheezing - some of the more common accompanying signs of an allergic reaction - appears on record. No laboratory data were ever presented to the court. In any case, private respondents themselves admit that Thiopental induced, allergic-mediated bronchospasm happens only very rarely. If courts were to accept private respondents' hypothesis without supporting medical proof, and against the weight of available evidence, then every anesthetic accident would be an act of God. Evidently, the Thiopental-allergy theory vigorously asserted by private respondents was a mere afterthought. Such an explanation was advanced in order to absolve them of any and all responsibility for the patients condition. In view of the evidence at hand, we are inclined to believe petitioners stand that it was the faulty intubation which was the proximate cause of Erlindas comatose condition. Proximate cause has been defined as that which, in natural and continuous sequence, unbroken by any efficient intervening cause, produces injury, and without which the result would not have occurred.[64] An injury or damage is proximately caused by an act or a failure to act, whenever it appears from the evidence in the case, that the act or omission played a substantial part in bringing about or actually causing the injury or damage; and that the injury or damage was either a direct result or a reasonably probable consequence of the act or omission.[65] It is the dominant, moving or producing cause. Applying the above definition in relation to the evidence at hand, faulty intubation is undeniably the proximate cause which triggered the chain of events leading to Erlindas brain damage and, ultimately, her comatosed condition. Private respondents themselves admitted in their testimony that the first intubation was a failure. This fact was likewise observed by witness Cruz when she heard respondent Dra. Gutierrez remarked, Ang hirap ma -intubate nito, mali yata ang pagkakapasok. O lumalaki ang tiyan. Thereafter, witness Cruz noticed abdominal distention on the body of Erlinda. The development of abdominal distention, together with respiratory embarrassment indicates that the endotracheal tube entered the esophagus instead of the respiratory tree. In other words, instead of the intended endotracheal intubation what actually took place was an esophageal intubation. During intubation, such distention indicates that air has entered the gastrointestinal tract through the esophagus instead of the lungs through the trachea. Entry into the esophagus would certainly cause some delay in oxygen delivery into the lungs as the tube which carries oxygen is in the wrong place. That abdominal distention had been observed during the first intubation suggests that the length of time utilized in inserting the endotracheal tube (up to the time the tube was withdrawn for the second attempt) was fairly significant. Due to the delay in the delivery of oxygen in her lungs Erlinda showed signs of cyanosis.[66] As stated in the testimony of Dr. Hosaka, the lack of oxygen became apparent only after he noticed that the nailbeds of Erlinda were already blue.[67] However, private respondents contend that a second intubation was executed on Erlinda and this one was successfully done. We do not think so. No evidence exists on record, beyond private respondents' bare claims, which supports the contention that the second intubation was successful. Assuming that the endotracheal tube finally found its way into the proper orifice of the trachea, the same gave no guarantee of oxygen delivery, the hallmark of a successful intubation. In fact, cyanosis was again observed immediately after the second intubation. Proceeding from this event (cyanosis), it could not be claimed, as private respondents insist, that the second intubation was accomplished. Even granting that the tube was successfully inserted during the second attempt, it was obviously too late. As aptly explained by the trial court, Erlinda already suffered brain damage as a result of the inadequate oxygenation of her brain for about four to five minutes.[68] The above conclusion is not without basis. Scientific studies point out that intubation problems are responsible for one-third (1/3) of deaths and serious injuries associated with anesthesia.[69] Nevertheless, ninety-eight percent (98%) or the vast majority of difficult intubations may be anticipated by performing a thorough evaluation of the patients airway prior to th e operation.[70] As stated beforehand, respondent Dra. Gutierrez failed to observe the proper pre-operative protocol which could have prevented this unfortunate incident. Had appropriate diligence and reasonable care been used in the pre-operative evaluation, respondent physician could have been much more prepared to meet the contingency brought about by the perceived anatomic variations in the patients neck a nd oral area, defects which would have been easily overcome by a prior knowledge of those variations together with a change in technique. [71] In other words, an experienced anesthesiologist, adequately alerted by a thorough pre-operative evaluation, would have had little difficulty going around the short neck and protruding teeth.[72] Having failed to observe common medical standards in pre-operative management and intubation, respondent Dra. Gutierrez negligence resulted in cerebral anoxia and eventual coma of Erlinda. We now determine the responsibility of respondent Dr. Orlino Hosaka as the head of the surgical team. As the so-called captain of the ship,[73] it is the surgeons responsibility to see to it that those under him perform their task in the proper manner. Respondent Dr. Hosakas negligence can be found in his failure to exercise the proper authority (as the captain of the operative team) in not deter mining if his anesthesiologist observed proper anesthesia protocols. In fact, no evidence on record exists to show that respondent Dr. Hosaka verified if respondent Dra. Gutierrez properly intubated the patient. Furthermore, it does not escape us that respondent Dr. Hosaka had scheduled another procedure in a different hospital at the same time as Erlindas cholecystectomy, and was in fact over three hours late for the latters operation. Because of this, he had little or no time to confer with his anesthesiologist regarding the anesthesia delivery. This indicates that he was remiss in his professional duties towards his patient. Thus, he shares equal responsibility for the events which resulted in Erlindas condition. We now discuss the responsibility of the hospital in this particular incident. The unique practice (among private hospitals) of filling up specialist staff with attending and visiting consultants,[74] who are allegedly not hospital employees, presents problems in apportioning responsibility for negligence in medical malpractice cases. However, the difficulty is only more apparent than real. In the first place, hospitals exercise significant control in the hiring and firing of consultants and in the conduct of their work within the hospital premises. Doctors who apply for consultant slots, visiting or attending, are required to submit proof of completion of residency, the ir educational qualifications; generally, evidence of accreditation by the appropriate board (diplomate), evidence of fellowship in most cases, and references. These requirements are carefully scrutinized by members of the hospital administration or by a review committee set up by the hospital who either accept or reject the application.[75] This is particularly true with respondent hospital. After a physician is accepted, either as a visiting or attending consultant, he is normally required to attend clinico-pathological conferences, conduct bedside rounds for clerks, interns and residents, moderate grand rounds and patient audits and perform other tasks and responsibilities, for the privilege of being able to maintain a clinic in the hospital, and/or for the privilege of admitting patients into the hospital. In addition to these, the physicians performance as a specialist is generally evaluated by a peer review committee on the basis of mortality and

morbidity statistics, and feedback from patients, nurses, interns and residents. A consultant remiss in his duties, or a consultant who regularly falls short of the minimum standards acceptable to the hospital or its peer review committee, is normally politely terminated. In other words, private hospitals, hire, fire and exercise real control over their attending and visiting consultant staff. While consultants are not, technically employees, a point which respondent hospital asserts in denying all responsibility for the patients condition, the control exercised, the hiring, and the right to terminate consultants all fulfill the important hallmarks of an employer-employee relationship, with the exception of the payment of wages. In assessing whether such a relationship in fact exists, the control test is determining. Accordingly, on the basis of the foregoing, we rule that for the purpose of allocating responsibility in medical negligence cases, an employer-employee relationship in effect exists between hospitals and their attending and visiting physicians. This being the case, the question now arises as to whether or not respondent hospital is solidarily liable with respondent doctors for petitioners condition. [76] The basis for holding an employer solidarily responsible for the negligence of its employee is found in Article 2180 of the Civil Code which considers a person accountable not only for his own acts but also for those of oth ers based on the formers responsibility under a relationship of patria potestas.[77] Such responsibility ceases when the persons or entity concerned prove that they have observed the diligence of a good father of the family to prevent damage.[78]In other words, while the burden of proving negligence rests on the plaintiffs, once negligence is shown, the burden shifts to the respondents (parent, guardian, teacher or employer) who should prove that they observed the diligence of a good father of a family to prevent damage. In the instant case, respondent hospital, apart from a general denial of its responsibility over respondent physicians, failed to adduce evidence showing that it exercised the diligence of a good father of a family in the hiring and supervision of the latter. It failed to adduce evidence with regard to the degree of supervision which it exercised over its physicians. In neglecting to offer such proof, or proof of a similar nature, respondent hospital thereby failed to discharge its burden under the last paragraph of Article 2180. Having failed to do this, respondent hospital is consequently solidarily responsible with its physicians for Erlindas condition. Based on the foregoing, we hold that the Court of Appeals erred in accepting and relying on the testimonies of the witnesses for the private respondents. Indeed, as shown by the above discussions, private respondents were unable to rebut the presumption of negligence. Upon these disquisitions we hold that private respondents are solidarily liable for damages under Article 2176 [79] of the Civil Code. We now come to the amount of damages due petitioners. The trial court awarded a total of P632,000.00 pesos (should be P616,000.00) in compensatory damages to the plaintiff, subject to its being updated covering the period from 15 November 1985 up to 15 April 1992, based on monthly expenses for the care of the patient estimated at P8,000.00. At current levels, the P8000/monthly amount established by the trial court at the time of its decision would be grossly inadequate to cover the actual costs of home-based care for a comatose individual. The calculated amount was not even arrived at by looking at the actual cost of proper hospice care for the patient. What it reflected were the actual expenses incurred and proved by the petitioners after they were forced to bring home the patient to avoid mounting hospital bills. And yet ideally, a comatose patient should remain in a hospital or be transferred to a hospice specializing in the care of the chronically ill for the purpose of providing a proper milieu adequate to meet minimum standards of care. In the instant case for instance, Erlinda has to be constantly turned from side to side to prevent bedsores and hypostatic pneumonia. Feeding is done by nasogastric tube. Food preparation should be normally made by a dietitian to provide her with the correct daily caloric requirements and vitamin supplements. Furthermore, she has to be seen on a regular basis by a physical therapist to avoid muscle atrophy, and by a pulmonary therapist to prevent the accumulation of secretions which can lead to respiratory complications. Given these considerations, the amount of actual damages recoverable in suits arising from negligence should at least reflect the correct minimum cost of proper care, not the cost of the care the family is usually compelled to undertake at home to avoid bankruptcy. However, the provisions of the Civil Code on actual or compensatory damages present us with some difficulties. Well-settled is the rule that actual damages which may be claimed by the plaintiff are those suffered by him as he has duly proved. The Civil Code provides: Art. 2199. - Except as provided by law or by stipulation, one is entitled to an adequate compensation only for such pecuniary loss suffered by him as he has duly proved. Such compensation is referred to as actual or compensatory damages. Our rules on actual or compensatory damages generally assume that at the time of litigation, the injury suffered as a consequence of an act of negligence has been completed and that the cost can be liquidated. However, these provisions neglect to take into account those situations, as in this case, where the resulting injury might be continuing and possible future complications directly arising from the injury, while certain to occur, are difficult to predict. In these cases, the amount of damages which should be awarded, if they are to adequately and correctly respond to the injury caused, should be one which compensates for pecuniary loss incurred and proved, up to the time of trial; and one which would meet pecuniary loss certain to be suffered but which could not, from the nature of the case, be made with certainty. [80] In other words, temperate damages can and should be awarded on top of actual or compensatory damages in instances where the injury is chronic and continuing. And because of the unique nature of such cases, no incompatibility arises when both actual and temperate damages are provided for. The reason is that these damages cover two distinct phases. As it would not be equitable - and certainly not in the best interests of the administration of justice - for the victim in such cases to constantly come before the courts and invoke their aid in seeking adjustments to the compensatory damages previously awarded - temperate damages are appropriate. The amount given as temperate damages, though to a certain extent speculative, should take into account the cost of proper care. In the instant case, petitioners were able to provide only home-based nursing care for a comatose patient who has remained in that condition for over a decade. Having premised our award for compensatory damages on the amount provided by petitioners at the onset of litigation, it would be now much more in step with the interests of justice if the value awarded for temperate damages would allow petitioners to provide optimal care for their loved one in a facility which generally specializes in such care. They should not be compelled by dire circumstances to provide substandard care at home without the aid of professionals, for anything less would be grossly inadequate. Under the circumstances, an award of P1,500,000.00 in temperate damages would therefore be reasonable.[81] In Valenzuela vs. Court of Appeals,[82] this Court was confronted with a situation where the injury suffered by the plaintiff would have led to expenses which were difficult to estimate because while they would have been a direct result of the injury (amputation), and were certain to be incurred by the plaintiff, they were likely to arise only in the future. We awarded P1,000,000.00 in moral damages in that case. Describing the nature of the injury, the Court therein stated:

As a result of the accident, Ma. Lourdes Valenzuela underwent a traumatic amputation of her left lower extremity at the distal left thigh just above the knee. Because of this, Valenzuela will forever be deprived of the full ambulatory functions of her left extremity, even with the use of state of the art prosthetic technology. Well beyond the period of hospitalization (which was paid for by Li), she will be required to undergo adjustments in her prosthetic devise due to the shrinkage of the stump from the process of healing. These adjustments entail costs, prosthetic replacements and months of physical and occupational rehabilitation and therapy. During her lifetime, the prosthetic devise will have to be replaced and readjusted to changes in the size of her lower limb effected by the biological changes of middle-age, menopause and aging. Assuming she reaches menopause, for example, the prosthetic will have to be adjusted to respond to the changes in bone resulting from a precipitate decrease in calcium levels observed in the bones of all post-menopausal women. In other words, the damage done to her would not only be permanent and lasting, it would also be permanently changing and adjusting to the physiologic changes which her body would normally undergo through the years. The replacements, changes, and adjustments will require corresponding adjustive physical and occupational therapy. All of these adjustments, it has been documented, are painful. x x x. A prosthetic devise, however technologically advanced, will only allow a reasonable amount of functional restoration of the motor functions of the lower limb. The sensory functions are forever lost. The resultant anxiety, sleeplessness, psychological injury, mental and physical pain are inestimable.[83] The injury suffered by Erlinda as a consequence of private respondents negligence is certainly much more serious than the am putation in the Valenzuela case. Petitioner Erlinda Ramos was in her mid-forties when the incident occurred. She has been in a comatose state for over fourteen years now. The burden of care has so far been heroically shouldered by her husband and children, who, in the intervening years have been deprived of the love of a wife and a mother. Meanwhile, the actual physical, emotional and financial cost of the care of petitioner would be virtually impossible to quantify. Even the temperate damages herein awarded would be inadequate if petitioners condition remains unchanged for the next ten years. We recognized, in Valenzuela that a discussion of the victims actual injury would not even scratch the surface of the resulting moral damage because it would be highly speculative to estimate the amount of emotional and moral pain, psychological damage and injury suffered by the victim or those actually affected by the victims condition.[84] The husband and the children, all petitioners in this case, will have to live with the day to day uncertainty of the patients illness, knowing any hope of recovery is close to nil. They have fashioned their daily lives around the nursing care of petitioner, altering their long term goals to take into account their life with a comatose patient. They, not the respondents, are charged with the moral responsibility of the care of the victim. The familys moral injury and suffering in this case is clearly a real one. For the foregoing reasons, an award of P2,000,000.00 in moral damages would be appropriate. Finally, by way of example, exemplary damages in the amount of P100,000.00 are hereby awarded. Considering the length and nature of the instant suit we are of the opinion that attorneys fees valued at P100,000.00 are likewise proper. Our courts face unique difficulty in adjudicating medical negligence cases because physicians are not insurers of life and, they rarely set out to intentionally cause injury or death to their patients. However, intent is immaterial in negligence cases because where negligence exists and is proven, the same automatically gives the injured a right to reparation for the damage caused. Established medical procedures and practices, though in constant flux are devised for the purpose of preventing complications. A physicians experience with his patients would sometimes tempt him to deviate from established community practices, and he ma y end a distinguished career using unorthodox methods without incident. However, when failure to follow established procedure results in the evil precisely sought to be averted by observance of the procedure and a nexus is made between the deviation and the injury or damage, the physician would necessarily be called to account for it. In the case at bar, the failure to observe pre-operative assessment protocol which would have influenced the intubation in a salutary way was fatal to private respondents case. WHEREFORE, the decision and resolution of the appellate court appealed from are hereby modified so as to award in favor of petitioners, and solidarily against private respondents the following: 1) P1,352,000.00 as actual damages computed as of the date of promulgation of this decision plus a monthly payment of P8,000.00 up to the time that petitioner Erlinda Ramos expires or miraculously survives; 2) P2,000,000.00 as moral damages, 3)P1,500,000.00 as temperate damages; 4) P100,000.00 each as exemplary damages and attorneys fees; and, 5) the costs of the suit. SO ORDERED. Davide, Jr., C.J., (Chairman), Puno, Pardo and Ynares-Santiago, JJ., concur.

G.R. No. L-27033 October 31, 1969 POLYTRADE CORPORATION, plaintiff-appellee, vs. VICTORIANO BLANCO, defendant-appellant. Paredes, Poblador, Cruz and Nazareno for plaintiff-appellee. Isidro T. Almeda and Mario T. Banzuela for defendant-appellant. SANCHEZ, J.: Suit before the Court of First Instance of Bulacan on four causes of action to recover the purchase price of rawhide delivered by plaintiff to defendant.1 Plaintiff corporation has its principal office and place of business in Makati, Rizal. Defendant is a resident of Meycauayan, Bulacan. Defendant moved to dismiss upon the ground of improper venue. He claims that by contract suit may only be lodged in the courts of Manila. The Bulacan court overruled him. He did not answer the complaint. In consequence, a default judgment was rendered against him on September 21, 1966, thus: WHEREFORE, judgment is hereby rendered in favor of plaintiff and against defendant ordering defendant to pay plaintiff the following amounts: First Cause of Action Second Cause of Action Third Cause of Action Fourth Cause of Action P60,845.67, with interest thereon at 1% a month from May 9, 1965 until the full amount is paid. P51,952.55, with interest thereon at 1% a month from March 30, 1965 until the full amount is paid. P53,973.07, with interest thereon at 1% a month from July 3, 1965 until the full amount is paid. P41,075.22, with interest thereon at 1% a month2 until the full amount is paid.

Republic of the Philippines SUPREME COURT Manila EN BANC

In addition, defendant shall pay plaintiff attorney's fees amounting to 25% of the principal amount due in each cause of action, and the costs of the suit. The amount of P400.00 shall be deducted from the total amount due plaintiff in accordance with this judgment. Defendant appealed. 1. The forefront question is whether or not venue was properly laid in the province of Bulacan where defendant is a resident. Section 2 (b), Rule 4 of the Rules of Court on venue of personal actions triable by courts of first instance and this is one provides that such "actions may be commenced and tried where the defendant or any of the defendants resides or may be found, or where the plaintiff or any of the plaintiffs resides, at the election of the plaintiff." Qualifying this provision in Section 3 of the same Rule which states that venue may be stipulated by written agreement "By written agreement of the parties the venue of an action may be changed or transferred from one province to another." Defendant places his case upon Section 3 of Rule 4 just quoted. According to defendant, plaintiff and defendant, by written contracts covering the four causes of action, stipulated that: "The parties agree to sue and be sued in the Courts of Manila." This agreement is valid. 3 Defendant says that because of such covenant he can only be sued in the courts of Manila. We are thus called upon to shake meaning from the terms of the agreement just quoted. But first to the facts. No such stipulation appears in the contracts covering the first two causes of action. The general rule set forth in Section 2 (b), Rule 4, governs, and as to said two causes of action, venue was properly laid in Bulacan, the province of defendant's residence. The stipulation adverted to is only found in the agreements covering the third and fourth causes of action. An accurate reading, however, of the stipulation, "The parties agree to sue and be sued in the Courts of Manila," does not preclude the filing of suits in the residence of plaintiff or defendant. The plain meaning is that the parties merely consented to be sued in Manila. Qualifying or restrictive words which would indicate that Manila and Manila alone is the venue are totally absent therefrom. We cannot read into that clause that plaintiff and defendant bound themselves to file suits with respect to the last two transactions in question only or exclusively in Manila. For, that agreement did not change or transfer venue. It simply is permissive. The parties solely agreed to add the courts of Manila as tribunals to which they may resort. They did not waive their right to pursue remedy in the courts specifically mentioned in Section 2(b) of Rule 4. Renuntiatio non praesumitur. Illuminating on this point is Engel vs. Shubert Theatrical Co., 151 N.Y.S. 593, 594. And this, became there the stipulation as to venue is along lines similar to the present. Said stipulation reads: "In case of dispute, both contracting parties agree to submit to the jurisdiction of the Vienna courts." And the ruling is: "By the clause in question the parties do not agree to submit their disputes to the jurisdiction of the Viennese court, and to those courts only. There is nothing exclusive in the language used. They do agree to submit to the Viennese jurisdiction, but they say not a word in restriction of the jurisdiction of courts elsewhere; and whatever may be said on the subject of the legality of contracts to submit controversies to courts of certain jurisdictions exclusively, it is entirely plain that such agreements should be strictly construed, and should not be extended by implication." Venue here was properly laid. 2. Defendant next challenges the lower court's grant to plaintiff of interest at the rate of one per centum per month. Defendant says that no such stipulation as to right of interest appears in the sales confirmation orders which provided: "TERMS 60 days after delivery with interest accruing on postdated cheques beyond 30 days." The flaw in this argument lies in that the interest and the rate thereof are expressly covenanted in the covering trust receipts executed by defendant in favor of plaintiff, as follows: "All obligations of the undersigned under this agreement of trust shall bear interest at the rate of one per centum (1%) per month from the date due until paid." On this score, we find no error. 3. Defendant protests the award of attorneys' fees which totals P51,961.63, i.e., 25% of the total principal indebtedness of P207,846.51 (exclusive of interest). Defendant's thesis is that the foregoing sum is "exorbitant and unconscionable." To be borne in mind is that the attorneys' fees here provided is not, strictly speaking, the attorneys' fees recoverable as between attorney and client spoken of and regulated by the Rules of Court. Rather, the attorneys' fees here are in the nature of liquidated damages and the stipulation therefor is aptly called a penal clause.4 It has been said that so long as such stipulation does not contravene law, morals, or public order, it is

strictly binding upon defendant.5 The attorneys' fees so provided are awarded in favor of the litigant, not his counsel. It is the litigant, not counsel, who is the judgment creditor entitled to enforce the judgment by execution.6 The governing law then is Article 2227 of the Civil Code, viz.: "Liquidated damages, whether intended as an indemnity or a penalty, shall be equitably reduced if they are iniquitous or unconscionable." For this reason, we do not really have to strictly view the reasonableness of the attorneys' fees in the light of such factors as the amount and character of the services rendered, the nature and importance of the litigation, and the professional character and the social standing of the attorney. We do concede, however, that these factors may be an aid in the determination of the iniquity or unconscionableness of attorneys' fees as liquidated damages. May the attorneys' fees (P51,961.63) here granted be tagged as iniquitous or unconscionable? Upon the circumstances, our answer is in the negative. Plaintiff's lawyers concededly are of high standing. More important is that this case should not have gone to court. It could have been easily avoided had defendant been faithful in complying with his obligations. It is not denied that the rawhide was converted into leather and sold by defendant. He raises no defense. In fact, he did not even answer the complaint in the lower court, and was thus declared in default. Nor does he deny the principal liability. Add to all these the fact that the writ of attachment issued below upon defendant's properties yielded no more than P400 and the picture is complete. The continued maintenance by defendant of the suit is plainly intended for delay. The attorneys' fees awarded cannot be called iniquitous or unconscionable. In the very recent case of Universal Motors Corporation vs. Dy Hian Tat (1969), 28 SCRA 161, 170, we allowed attorneys' fees in the form of liquidated damages at the rate of 25% of the total amount of the indebtedness. Here, the trial court has already reduced the attorneys' fees from the stipulated 25% "of the total amount involved, principal and interest, then unpaid" to only 25% of the principal amount due. There is no reason why such judgment should be disturbed. FOR THE REASON GIVEN, the appealed judgment is hereby affirmed, except that interest granted, in reference to the fourth cause of action, should start from March 24, 1965. Costs against defendant-appellant. So ordered. Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Castro, Fernando, Teehankee and Barredo, JJ., concur.

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-25414 July 30, 1971 LEOPOLDO ARANETA, petitioner, vs. BANK of AMERICA, respondent. Gatchalian and Sison for petitioner. Lichauco, Picazo and Agcaoili for respondent. MAKALINTAL, J.: Petition for review by certiorari of the decision of Court of Appeals in CA-G.R. No. L-34508-R modifying that of the Court of First Instance of Manila in the Case No. 52442. Leopoldo Araneta, the petitioner herein, was a local merchant engaged in the import and export business. On June 30, 1961 he issued a check for $500 payable to cash and drawn against the San Francisco main office of the Bank of America, where he had been maintaining a dollar current account since 1948. At that time he had a credit balance of $523.81 in his account, confirmed by the bank's assistant cashier in a letter to Araneta dated September 7, 1961. However, when the check was received by the bank on September 8, 1961, a day after the date of the letter, it was dishonored and stamped with the notation "Account Closed." Upon inquiry by Araneta as to why his check had been dishonored, the Bank of America acknowledged that it was an error, explaining that for some reason the check had been encoded with wrong account number, and promising that "we shall make every effort to see that this does not reoccur." The bank sent a letter of apology to the payee of the check, a Mr. Harry Gregory of Hongkong, stating that "the check was returned through an error on our part and should not reflect adversely upon Mr. Araneta." In all probability the matter would have been considered closed, but another incident of a similar nature occurred later. On May 25, and 31, 1962 Araneta issued Check No. 110 for $500 and Check No. 111 for $150, respectively, both payable to cash and drawn against the Bank of America. These two checks were received by the bank on June 3, 1962. The first check appeared to have come into the hands of Rufina Saldana, who deposited it to her account the First National City Bank of New York, which in turn cleared it through the Federal Reserve Bank. The second check appeared to have been cleared through the Wells Fargo Bank. Despite the sufficiency of Araneta's deposit balance to cover both checks, they were again stamped with the notation "Account Closed" and returned to the respective clearing banks. In the particular case of Check No. 110, it was actually paid by the Bank of America to the First National City Bank. Subsequently, however, the Bank of America, claiming that the payment had been inadvertently made, returned the check to the First National City Bank with the request that the amount thereof be credited back to the Bank of America. In turn, the First National City Bank wrote to the depositor of the check, Rufina Saldana, informing her about its return with the notation "Account Closed" and asking her consent to the deduction of its amount from her deposit. However, before Mrs. Saldana's reply could be received, the Bank of America recalled the check from the First National City Bank and honored it. In view of the foregoing incidents, Araneta, through counsel, sent a letter to the Bank of America demanding damages in the sum of $20,000. While admitting responsibility for the inconvenience caused to Araneta, the bank claimed that the amount demanded was excessive, and offered to pay the sum of P2,000.00. The offer was rejected. On December 11, 1962 Araneta filed the complaint in this case against the Bank of America for the recovery of the following: 1. Actual or compensatory damages P30,000.00 2. Moral damages 20,000.00 3. Temperate damages 50,000.00 4. Exemplary damages 10,000.00 5. Attorney's fees 10,000.00 TOTAL P120,000.00 The judgment of the trial court awarded all the item prayed for, but on appeal by the defendant the Court of Appeals eliminated the award of compensatory and temperate damages and reduced the moral damages to P8,000.00, the exemplary damages to P1,000.00 and the attorney's fees to P1,000.00. Not satisfied with the decision of the appellate court the plaintiff filed the instant petition for review, alleging two reasons why it should be allowed, as follows: (1) The Court of Appeals erred in holding that temperate damages cannot be awarded without proof of actual pecuniary loss. There is absolutely no legal basis for this ruling; worse yet, it runs counter to the very provisions of ART. 2216 of the New Civil Code and to the established jurisprudence on the matter; (2) The Court of Appeals erred in not holding that moral damages may be recovered as an item separate and distinct from the damages recoverable for injury to business standing and commercial credit. This involves the application of paragraph (2) of Art. 2205 of the New Civil Code which up to now has not yet received an authoritative interpretation from the Supreme Court. ... . In his brief, however, the petitioner assigned five (5) errors committed by the appellate court, namely: (1) in concluding that the petitioner, on the basis of the evidence, had not sufficiently proven his claim for actual damages, where such evidence, both testimonial and documentary, stands uncontradicted on the record; (2) in holding that temperate damages cannot be awarded to the petitioner without proof of actual pecuniary loss; (3) in not granting moral damages for mental anguish, besmirched reputation, wounded feelings, social humiliation, etc., separate and distinct from the damages recoverable for injury to business reputation; (4) in reducing, without any ostensible reason, the award of exemplary damages granted by the lower court; and (5) in reducing, without special reason, the award of attorney's fees by the lower court. We consider the second and third errors, as they present the issues raised in the petition for review and on the basis of which it was given due course. In disallowing the award of temperate damages, the Court of Appeals ruled:

In view of all the foregoing considerations we hold that the plaintiff has not proven his claim that the two checks for $500 each were in partial payment of two orders for jewels worth P50,000 each. He has likewise not proven the actual damage which he claims he has suffered. And in view of the fact that he has not proven the existence of the supposed contract for himself to buy jewels at a profit there is not even an occasion for an award of temperate damages on this score. This ruling is now assailed as erroneous and without legal basis. The petitioner maintains that in an action by a depositor against a bank for damages resulting from the wrongful dishonor of the depositor's checks, temperate damages for injury to business standing or commercial credit may be recovered even in the absence of definite proof of direct pecuniary loss to the plaintiff, a finding as it was found by the Court of Appeals that the wrongful acts of the respondent had adversely affected his credit being sufficient for the purpose. The following provisions of the Civil Code are invoked: ART. 2205. Damages may be recovered: (1) For loss or impairment of earning capacity in cases of temporary or permanent personal injury; (2) For injury to the plaintiff's business standing or commercial credit. ART. 2216. No proof of pecuniary loss is necessary in order that moral, nominal, temperate, liquidated or exemplary damages may be adjudicated. The assessment of such damages, except liquidated ones, is left to the discretion of the court, according to the circumstances of each case. Also invoked by the petitioner is the case of Atlanta National Bank vs. Davis, 96 Ga 334, 23 SE 190; 1 and the following citations in American Jurisprudence: In some states what are called "temperate damages" are allowed in certain classes of cases, without proof of actual or special damages, where the wrong done must in fact have caused actual damage to the plaintiff, though from the nature of the case, he cannot furnish independent, distinct proof thereof. Temperate damages are more than nominal damages, and, rather, are such as would be a reasonable compensation for the injury sustained. ... . (15 Am. Jur. 400) ... . It has been generally, although not universally, held, in an action based upon the wrongful act of a bank dishonoring checks of a merchant or trader having sufficient funds on deposit with the bank, that substantial damages will be presumed to follow such act as a necessary and natural consequence, and accordingly, that special damages need not be shown. One of the reasons given for this rule is that the dishonor of a merchant's or trader's check is tantamount or analogous, to a slander of his trade or business, imputing to him insolvency or bad faith. ... . (10 Am. Jur. 2d. 545) On the other hand the respondent argues that since the petitioner invokes Article 2205 of the Civil Code, which speaks of actual or compensatory damages for injury to business standing or commercial credit, he may not claim them as temperate damages and thereby dispense with proof of pecuniary loss under Article 2216. The respondent cites Article 2224, which provides that "temperate or moderate damages, which are more than nominal but less than compensatory damages may be recovered when the court finds that some pecuniary loss has been suffered but its amount cannot, from the nature of the case, proved with certainty," and contends that the petitioner failed to show any such loss in this case. The question, therefore, is whether or not on the basis of the findings of the Court of Appeals, there is reason to conclude that the petitioner did sustain some pecuniary loss although no sufficient proof of the amount thereof has been adduced. In rejecting the claim for temperate damages the said Court referred specifically to the petitioner's failure to prove "the existence of a supposed contract for him to buy jewels at a profit," in connection with which he issued the two checks which were dishonored by the respondent. This may be true as far as it goes, that is, with particular reference to the alleged loss in that particular transaction. But it does not detract from the finding of the same Court that actual damages had been suffered, thus: ... Obviously, the check passed the hands of other banks since it was cleared in the United States. The adverse reflection against the credit of Araneta with said banks was not cured nor explained by the letter of apology to Mr. Gregory. xxx xxx xxx ... This incident obviously affected the credit of Araneta with Miss Saldana. xxx xxx xxx However, in so far as the credit of Araneta with the First National City Bank, with Miss Rufina Saldana and with any other persons who may have come to know about the refusal of the defendant to honor said checks, the harm was done ... The financial credit of a businessman is a prized and valuable asset, it being a significant part of the foundation of his business. Any adverse reflection thereon constitutes some material loss to him. As stated in the case Atlanta National Bank vs. Davis, supra, citing 2 Morse Banks, Sec. 458, "it can hardly be possible that a customer's check can be wrongfully refused payment without some impeachment of his credit, which must in fact be an actual injury, though he cannot, from the nature of the case, furnish independent, distinct proof thereof." The Code Commission, in explaining the concept of temperate damages under Article 2224, makes the following comment: In some States of the American Union, temperate damages are allowed. There are cases where from the nature of the case, definite proof of pecuniary loss cannot be offered, although the court is convinced that there has been such loss. For instance, injury to one's commercial credit or to the goodwill of a business firm is often hard to show with certainty in terms of money. Should damages be denied for that reason? The judge should be empowered to calculate moderate damages in such cases, rather than that the plaintiff should suffer, without redress from the defendant's wrongful act. The petitioner, as found by the Court of Appeals, is a merchant of long standing and good reputation in the Philippines. Some of his record is cited in the decision appealed from. We are of the opinion that his claim for temperate damages is legally justified. Considering all the circumstances, including the rather small size of the petitioner's account with the respondent, the amounts of the checks which were wrongfully dishonored, and the fact that the respondent tried to rectify the error soon after it was discovered, although the rectification came after the damage had been caused, we believe that an award of P5,000 by way of temperate damages is sufficient. Under the third error assigned by the petitioner in his brief, which is the second of the two reasons relieve upon in his petition for review, he contends that moral damages should have been granted for the injury to his business standing or commercial credit, separately from his wounded feelings and mental anguish. It is true that under Article 2217 of the Civil Code. "besmirched reputation" is a ground upon which moral damages may be claimed, but the Court of Appeals did take this element into consideration in adjudging the sum of P8,000 in his favor. We quote from the decision: ... the damages to his reputation as an established and well known international trader entitled himself to recover moral damages.

xxx xxx xxx ... It was likewise established that when plaintiff learned that his checks were not honored by the drawee Bank, his wounded feelings and the mental anguish suffered by him caused his blood pressure to rise beyond normal limits, thereby necessitating medical attendance for an extended period. The trial court awarded attorney's fees in the amount of P10,000. This was reduced by the Court of Appeals to only P1,000. Considering the nature and extent of the services rendered by the petitioner's counsel both in the trial and appellate courts, the amount should be increased to P4,000. This may be done motu propio by this Court under Article 2208 of the Civil Code, which provides that attorney's fees may be recovered in the instances therein enumerated and "in any other case where the Court deems, it first and equitable that attorney's fees ... should be recovered," provided the amount thereof be reasonable in all cases. We do not entertain the first and fourth errors assigned by the petitioner. Neither of them was raised and ruled upon as reasons for the allowance of his petition for review, as required by Section 2 of Rule 45. Besides, the first error involves a question of fact and calls for a review of the evidence and a reappraisal of its probative value a task not within the appellate jurisdiction of this case. And with respect to the fourth error, while there was gross negligence on the part of the respondent, the record shows, as hereinbefore observed, that it tried to rectify its error soon after the same was discovered, although not in time to prevent the damage to the petitioner. WHEREFORE, the judgment of the Court of Appeals is modified by awarding temperate damages to the petitioner in the sum of P5,000 and increasing the attorney's fees to P4,000; and is affirmed in all other respects. Costs against the respondent. Concepcion, C.J., Reyes, J.B.L., Zaldivar, Castro, Fernando, Teehankee, Barredo, Villamor and Makasiar, JJ., concur. Dizon, J., is on leave.

G.R. No. L-21151 June 26, 1968 LOURDES MUNSAYAC, petitioner, vs. BENEDICTA DE LARA and THE COURT OF APPEALS, respondents. Celso P. Mariano for petitioner. Ruben L. Roxas for respondents. MAKALINTAL, J.: As a result of injuries suffered by the plaintiff-appellee while riding as a passenger on a jeepney owned and operated by the defendantappellant, this action for recovery of damages was filed in the Court of First Instance of Rizal (Pasig Branch). The trial Judge found the driver recklessly negligent: he drove at an excessive speed, unmindful of the fact that the road was under repair and heedless of the passengers' pleas that he go more slowly. Besides the award of compensatory damages for actual expenses incurred and loss of income, the defendant was ordered to pay P1,000.00 as exemplary damages and P500.00 as attorney's fees. On these last two items the defendant appealed to the Court of Appeals, which rendered a judgment of affirmance, quoting the trial Court's justification for the award as follows: The defendant's admission that the accident happened and the plaintiff's extensive injuries as a result thereof, despite which the defendant failed, or even refused, to placate the sufferings of plaintiff, necessitating the filing of this action, entitled plaintiff to exemplary damages to set an example to others and attorney's fees. The case is new before us on review by certiorari. The Civil Code provides that "exemplary or corrective damages are imposed, by way of example or correction for the public good" (Act 2229); and that in contracts "the Court may award exemplary damages if the defendant acted in wanton, fraudulent, reckless, oppressive or malevolent manner" (Art. 2232). Appellant points out that the act referred to in Article 2232 must be one which is coetaneous with and characterizes the breach of the contract on which the suit is based, and not one which is subsequent to such breach and therefore has no causal relation thereto, such as the herein defendant's failure to placate the sufferings of the plaintiff. Appellant relies on the case of Rotea vs. Halili, G.R. No. L-12030, September 30, 1960, where this Court held: According to the rule adopted by many courts, a principal or master can be held liable for exemplary or punitive damages based upon the wrongful act of his agent or servant only where he participated in the doing of such wrongful act or has previously authorized or subsequently ratified it with full knowledge of the facts. Reasons given for this rule are that since damages are penal in character, the motive authorizing their infliction will not be imputed by presumption to the principal when the act is committed by an agent or servant, and that since they are awarded not by way of compensation, but as a warning to others, they can only be awarded against one who has participated in the offense, and the principal therefore cannot be held liable for them merely by reason of wanton, oppressive or malicious intent on the part of the agent (15 Art. Jur. 730). We believe the point of the appellant is well-taken. It is difficult to conceive how the defendant in a breach of contract case could be held to have acted in a wanton, fraudulent, reckless, oppressive or violent manner within the meaning of Article 2232 for something he did or did not do after the breach, which had no causal connection therewith. The law does not contemplate a vicarious liability on his part: the breach is his as party to the contract, and so if he is to be held liable at all for exemplary damages by reason of the wrongful act of his agent, it must be shown that he had previously authorized or knowingly ratified it thereafter, in effect making him a co-participant. From the decision under review, however, there is nothing to show previous authority or subsequent ratification by appellant insofar as the recklessness of the driver was concerned. The mere statement that the defendant failed, even refused, to placate the suffering of the plaintiff, necessitating the filing of the action, is too tenuous a basis to warrant the conclusion that the defendant approved of the wrongful act of his servant with full knowledge of the facts. It is not enough to say that an example should be made, or corrective measures employed, for the public good, especially in accident cases where public carriers are involved. For the causative negligence in such cases is personal to the employees actually in charge of the vehicles, and it is they who should be made to pay this kind of damages by way of example or correction, unless by the demonstrated tolerance or approval of the owners they themselves can be held at fault and their fault is of the character described in Article 2232 of the Civil Code. Otherwise there would be practically no difference between their liability for exemplary damages and their liability for compensatory damages, which needs no proof of their negligence since the suit is predicated on breach of contract and due diligence on their part does not constitute a defense. IN VIEW OF THE FOREGOING, the judgment appealed from is modified by eliminating the award for exemplary damages, and affirmed with respect to the attorney's fees. No pronouncement as to costs. Concepcion, C.J., Reyes, J.B.L., Dizon, Zaldivar, Sanchez, Castro, Angeles and Fernando, JJ., concur.

Republic of the Philippines SUPREME COURT Manila EN BANC

G.R. No. L-75428 December 14, 1988 SOCIAL SECURITY COMMISSION (For the Social Security System) petitioner, vs. PONCIANO L. ALMEDA and EUFEMIA P. ALMEDA, respondents. The Solicitor General for petitioner. Laurel Law Offices for respondents.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION

PARAS, J.: This is an appeal by way of petition for review of the decision * of the Court of Appeals (third Civil Cases Division) in AC-G.R. No. 06230 entitled "Ponciano L. Almeda, et al vs. Social Security Commission" promulgated on July 21, 1986 holding that the amount of attorney's fees equivalent to 15% of the amount of total indebtedness collected by petitioner Social Security System from respondent Ponciano Almeda and Eufemia Almeda is "excessive and unreasonable." (pp. 12-13, Rollo) The facts as summarized by the Solicitor General in his MEMORANDUM, are as follows: In 1965, Ponciano Almeda and his wife Eufemia Almeda applied for and obtained approval of a commercial loan in the amount of THREE MILLION (P3,000,000.00) PESOS from the Social Security System (SSS) payable in ten years (with interest) at the rate of 9% per annum and under the terms and conditions contained in the Deed of First Mortgage executed by and between the parties. (Exhibit "1", also Exhibit "A"; p. 5, Record) The proceeds of the loan were to be used for the construction of a 7-storey commercial building in Pasong Tamo, Makati, Rizal. As provided under paragraph 11 of the Deed of First Mortgage, no deviation whatsoever from the approved plans, specifications and bill of materials shall be made without the express and written consent of the MORTGAGEE. After receiving an initial release of EIGHT HUNDRED EIGHTY THOUSAND (P880,000.00) PESOS, Almeda however started construction of the proposed building on a different lot and on the basis of arevised plan without the prior written consent of SSS. This prompted SSS to inform Almeda to 'desist from continuing the construction based on the altered plans' and that 'should you, however, insist to proceed with the construction of the building in accordance with the revised plans ..., you are requested to remit to our office, Legal Department, SSS Building, East Avenue, Quezon City, the amount of P880,000.00 plus the accrued interest thereon. (p. 3, Exhibit 12, p. 264, Record) Thereupon, Almeda filed with the then Court of First Instance of Rizal a complaint for specific performance and damages, docketed as Civil Case No. 9967 entitled, "Ponciano Almeda, et al. v. Social Security Commission." The trial court ruled in favor of Almeda ordering SSS among other things to pay and release to Almeda the to balance of the approved loan. SSS appealed the adverse decision of the trial court to the Court of Appeals which ruled that Almeda committed 'substantial and fundamental breach of the loan (CA-G.R. No. 44009-R) thus sustaining SSS's act in declaring the whole amount of P880,000.00 including interest and other charges thereon due and demandable. (p. 8, Id; p. 269, Record). This Honorable Court under G.R. No. L-37628 denied Almeda's petition for review (Exhibit 13, p. 273, Record) Upon failure of Almeda to pay the total obligation, SSS initiated foreclosure proceedings against the mortgage offered as security for the loan. Before the date of the auction sale, Almeda negotiated for full settlement of the obligation and on March 21, 1974 paid the following amounts itemized, to wit: Principal P880,000.00 Interest from 1/7/66 to 3/21/74 956,603.55 Fire Insurance 32,149.16 Interest 9,298.13 Sheriffs fee & publication expenses 513.20 P1,878,564.04 15% Attorney's fees 281,784.61 Total P2,160,348.65 The charges for attorney's fees were in consonance with paragraph 18 of the Deed of First Mortgage providing as follows: 18. That should the MORTGAGORS be in default or should the MORTGAGEE in any manner and for any reason be involved in any litigation on account of the properties herein mortgaged, or should foreclosure proceedings be instituted in accordance with the provisions hereof, the MORTGAGEE shall be allowed a sum equivalent to twenty percent (20%) of all amounts due, but in no case less than TEN THOUSAND PESOS (P10,000.00) as attorney's fees, and reimbursement of all expenses in such litigation or foreclosure, said sum to be considered part of the principal secured by this Mortgagor. (Exhibit '5'; pp. 11-12, Record) Upon request of Almeda, the 20% attorney's fees provided under the contract was reduced to 1 5%. (Exhibit "16"; pp. 11-12, Record) On November 20, 1974 or exactly one (1) year and eight (8) months after he paid his obligation without any protest, Almeda instituted this action now subject of the present petition praying for the return of the attorney's fees he paid, on the ground that the collection of the same by SSS was unwarranted and erroneous, if not illegal, not only because the foreclosure proceedings were discontinued, but also because the provision of the real estate mortgage on the payment of attorney's fee is unconscionable, outrageous, and oppressive. (par. 10, Complaints; p. 3, Record) The action was instituted in Mamburao, Occidental Mindoro, docketed as Civil Case No. R-309, obviously to harass SSS and to put it to more expense. It is to be noted that the previous case (Civil Case No. 9967) was filed in Pasig, Rizal (now Metro Manila).

SSS's objection on the ground of improper venue was denied by the lower court. To assure expeditious resolution of the case, SSS opted not to elevate the incident for review. Just the same, the litigation below still took eleven (11) years, from 1974 when the complaint was filed to 1985 when the decision in question was rendered. In its decision, the lower court ruled that the amount of attorney's fees equivalent to 15% of the amount of total indebtedness collected by SSS 'was excessive and unreasonable' and ordered as follows: (a) Declaring the sum of P 281,784.61 collected as attorney's fees by defendant from plaintiffs to be excessive and unreasonable; (b) Reducing such attorney's fees from P281,784.61 to P93,938.20 which the Court finds to be the reasonable amount under the circumstances; (c) Ordering the defendant to return to plaintiffs the sum of P187,846.41 representing tile excess payment made by the latter to the former; and (d) Dismissing the parties' respective claim and counterclaim for damages. (p. 8, Annex 'B') (pp. 153-157, Rollo) Petitioner SSS appealed to the Intermediate Appellate Court, now Court of Appeals, imputing the following assignments of error: I THE LOWER COURT ERRED IN HOLDING THAT UNDER THE FACTS OBTAINING IN THE CASE, THE AMOUNT OF ATTORNEY'S FEES EQUIVALENT TO 15% OF THE TOTAL INDEBTEDNESS IS EXCESSIVE AND UNREASONABLE. II THE LOWER COURT ERRED IN HOLDING THAT APPELLEES WERE NOT IN ESTOPPEL. (p. 6, Memorandum for Respondents; p. 157, Rollo) The Court of Appeals affirmed the decision of the trial court. (Annex "A" of Petition) The following are the issues: I. Whether or not attorney's fees at the rate of 151% are excessive and unreasonable. II. Whether or not respondents are in estoppel. (p.158, Rollo) Respondents contend that since the petitioner initiated foreclosure proceedings extra-judicially the amount charged is excessive. They cited the case of Mamburao Lumber Co. vs. Philippine National Bank, et al. L-22973, 22 SCRA 359 where We ruled "In determining the compensation of an attorney, the following circumstances should be considered: the amount and character of the services rendered, the responsibility imposed, the amount of money or the value of the property affected by the controversy, or involved in the employment, the skill and experience called for in the performance of the services, the professional standing of the attorney, ... The agreement (in the mortgage providing attorney, fee) its perhaps fair enough in case the foreclosure proceeding is procecuted judicially but, surely, it is unreasonable when as in this case, the mortgage was foreclosed extra-judicially ... ." It is to be assumed though, that the said branch attorney of the PNB made a study of the case before deciding to file the petition for foreclosure, but even with this in mind, we believe the amount of P 5,821.34 is far too excessive a fee for such services. Considering the above circumstances, it is considered opinion that the amount of P1,000.00 would be more than sufficient to compensate the work aforementioned." Petitioner, however argues that the Mambulaw case is not applicable here. As stated by the Solicitor General in his memorandum, "petitioner was haled to court by respondents twice. Aside from the present case (which took eleven (11) years of litigation below) respondents had also engaged appellant in a protracted legal battle "on account of the properties herein mortgaged." (Exhibit "5"; p. 11, Record) Counting from the first action (Civil Case No. 9967) instituted by respondents, petitioner has been enmeshed in a protracted legal battle for a period of twenty (20) years now with respondents. It is relevant to note that the first action (Civil Case No. 9967) was brought about by respondents' own deliberate disregard of the terms and conditions of the loan agreement. As ruled in that case by the Court of Appeals in CA-G.R. No. 44009-R, respondents committed "substantial and fundamental breach of the loan agreement." This Court affirmed the Court of Appeals decision by dismissing Almeda's petition for review in G.R. No. L-37628. Clearly therefore, a violation of paragraph 18 has been committed, to wit: "18. That should the ... MORTGAGEE in any manner and for any reason be involved in any litigation on account of the properties herein mortgaged, ... the MORTGAGEE shall be allowed a sum equivalent to twenty (20%) percent of all amounts due, ... as attorney's fees." The case cited had no judicial proceeding prior to the extrajudicial foreclosure proceedings. The attorney's fees however in this case are not strictly the attorney's fees recoverable as between attorney and client spoken of and regulated by the Rules of Court. Rather the attorney's fees here are in the nature of liquidated damages and the stipulation therefor is aptly called a penal clause. It has been said that so long as such stipulation does not contravene law, good morals, good customs, public order or public policy, it is strictly binding upon respondents. (Polytrade Corporation v. Blanco, 30 SCRA 187) Article 2227 of the Civil Code provides: "Liquidated damages, whether intended as an indemnity or a penalty, shall be equitably reduced if they are iniquitous or unconscionable." But the liquidated damages provided for in said paragraph 18 is not unconscionable. It should be remembered that the actual charge was originally twenty (20%) percent. It was reduced to fifteen (15) percent upon request of the respondents. In addition, in the case ofPolytrade supra, the rate allowed was 25% in Santiago v. Dimayuga, 3 SCRA 919 (1961), 20%; in Cosmopolitan Insurance Co., Inc. v. Reyes 15 SCRA 258 (1965) 15% and in Vda. de Reyes v. Court of Appeals, 116 SCRA 607 (1982) 15%. Anent the first issue therefor, We hold that the attorney's fees at the rate of 15% are inexcessive and reasonable under the circumstances. With regard to the issue of whether or hot respondents were in estoppel, We believe they were in estoppel. As correctly found by the Solicitor General, "when respondents negotiated for the reduction of the attorney's fees, they acquiesced to the stipulation therefor and cannot now question its validity. It is undisputed that respondents requested merely for a reduction of the attorney's fees. (Exhibit 16; p. 276, Record) In a Resolution No. 286, SSS approved respondents' request and reduced the attorney's fees from 20% to 15% (id). Respondents thereafter paid without protest the total obligation including attorney's fees equivalent to 15%. The claim of respondent Ponciano Almeda that he verbally protested the collection of attorney's fees is belied by SSS Resolution No. 286 (supra) which shows that Almeda merely requested the reduction of attorney's fees. Between Almeda's testimony, which is obviously self-serving, and Resolution No. 286, which is a public document, the latter certainly carries greater probative value.

WHEREFORE, premises considered, the decision of the then Intermediate Appellate Court, now Court of Appeals is hereby SET ASIDE, and the complaint of the private respondents is hereby DISMISSED. SO ORDERED. Melencio-Herrera (Chairperson), Sarmiento and Regalado, JJ., concur. Padilla, J., took no part.

G.R. No. 79237 October 18, 1988 UNIVERSITY OF SAN CARLOS and VICTORIA A. SATORRE petitioners, vs. COURT OF APPEALS and JENNIFER C. LEE, respondents. J.P. Garcia & Associates for petitioners. Florido & Associates for private respondent.

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION

GANCAYCO, J.: The principal issue raised in this petition is whether or not mandamus is the proper remedy to compel a university to confer a degree with honors. The secondary question is whether or not the refusal of that university to confer honors would constitute bad faith so as to make it liable for damages. Private respondent Jennifer C. Lee filed an action for mandamus with damages against petitioners University of San Carlos and Victoria A. Satorre, docketed as Civil Case No. R22022 in the Regional Trial Court, Branch XVIII, Cebu, asking that petitioners be compelled to confer upon her the degree of Bachelor of Science in Commerce, major in Accounting, cum laude, retroactive to March 28, 1982, to execute and deliver to her all necessary credentials evidencing her graduation with honors, and to pay her moral damages in the amount of P300,000.00, exemplary damages in the amount of P50,000.00, and attorney's fees in the amount of P20,000.00. After trial, the lower court rendered its Decision dated January 29, 1986, 1 the dispositive portion of which reads as follows: WHEREFORE, judgment is hereby rendered in favor of plaintiff, and accordingly, defendants University of San Carlos and Dean Victoria A. Satorre are ordered to confer upon plaintiff, Jennifer C. Lee, the degree of Bachelor of Science in Commerce, major in accounting, with cum laude honors (sic), retroactive to March 28, 1982, and to execute and deliver to plaintiff all the necessary school credentials evidencing her graduation with such honors; and said defendants are ordered to pay plaintiff jointly and severally the sum of P75,000 as moral damages, the sum of P20,000 as exemplary damages, with interest thereon at 12% per annum beginning July 22, 1982, until said amounts are fully paid: and the sum of P15,000 as attorney's fees. The counterclaim is ordered dismissed. Costs against defendants. 2 Petitioners appealed to the respondent Court of Appeals where the case was docketed as CA-G.R. No. SP-09368. In a decision dated May 28, 1987, the appellate court affirmed in toto the decision of the trial court. 3 The motion for reconsideration filed by petitioners was denied in a Resolution of the appellate court dated July 7, 1987. 4 Hence, this petition where petitioners allege as grounds thereof(a) A university may not be compelled by mandamus to grant graduation honors to any student who, according to the university's standards, rules and regulations, does not qualify for such honors; and (b) The decision penalizing petitioners to pay excessive moral and exemplary damages and attorney's fees is not justified by the facts and circumstances of this case and disregards the many decisions of this Honorable Court setting reasonable standards and limits in the award of such damages. (P. 2, petition; p. 12, rollo) Private respondent enrolled in the College of Architecture, University of San Carlos (USC), during the first semester of school year 1978-79. At the end of the second semester of that school year, she obtained a grade of "I.C." (Incomplete) in Architecture 121, and grades of "5's" (failures) in Architecture 122 and Architecture 123. The following school year, 1979-1980, she shifted to the College of Commerce of the USC. Some of the units she had completed when she was still an architecture student were then carried over and credited in her new course. As a commerce student, she obtained good grades. However, she was aware of her earlier failing grades in the College of Architecture and that the same would be taken into consideration in the evaluation of her overall academic performance to determine if she could graduate with honors. So, on December 10, 1981, she wrote 5 the Council of Deans of the USC, requesting that her grades of 5s in Architecture 121 and Architecture 122 be disregarded in the computation of her grade average. She wrote a similar letter to the Ministry of Education, Culture and Sports MECS in Region VII on January 5, 1982 6 and this letter was referred to the President of the USC for comment and return to the MECS. In the 3rd Indorsement dated February 4, 1982, the President of the USC informed the MECS that the university policy was that any failing grade obtained by a student in any course would disqualify the student for honors; that to deviate from that policy would mean injustice to students similarly situated before who were not allowed to graduate with honors; that the bad grades given to her were justified and could not be deleted or removed because her subjects were not "dropped" as required; that she had two failures and one incomplete grade which became a failure upon her inaction to attend to the incomplete grade within one year; and that while her three failures did not affect her graduation from the College of Commerce, they nonetheless caused her disqualification from graduating with honors. She was furnished a copy of said indorsement but she did not ask for a reconsideration. On March 17, 1982, when the USC President was out of town, private respondent wrote to the USC Registrar' requesting that her failing grades be changed. The USC Registrar 7 referred her letter to the MECS and the request for change of grades was approved in a 4th indorsement of March 22, 1982. 8 Thus, her grade of IC in Architecture 121 was changed to "1.9" by Professor Victor Leves Jr. and the grades of "5" in Architecture 122 and Architecture 123 were changed to "W" (Withdrawn). On March 24, 1982, Mr. Marcelo Bacalso of MECS' Higher Education Division discovered that the change of the grade of private respondent from "IC" to "1.9" did not have the supporting class record required, so he wrote to MECS Supervisor Mr. Ortiz requesting the submission of the class record. 9 On March 28, 1982, the USC held its graduation exercises, and the private respondent graduated with the degree of Bachelor of Science in Commerce, major in Accounting, without honors. On March 31, 1982, the private respondent, assisted by counsel, demanded from Dean Victoria A. Satorre that she be allowed to graduate, cum laude. 10 Dean Satorre explained that the matter was held in abeyance pending compliance with certain requirements of the MECS through the memo of Mr. Bacalso. 11

On May 24, 1982, Arch. Leves Jr., the teacher required to produce the class records, reported he could not produce the same. 12 Thus, on May 27, 1982, Dean Satorre wrote to the MECS Regional Director Aurelio Tiro asking for the revocation of the change of grades of private respondent. 13 The request was denied as there was no positive proof of fraud. 14 It is an accepted principle that schools of teaming are given ample discretion to formulate rules and guidelines in the granting of honors for purposes of graduation. This is part of academic freedom. Within the parameters of these rules, it is within the competence of universities and colleges to determine who are entitled to the grant of honors among the graduating students. Its discretion on this academic matter may not be disturbed much less controlled by the courts unless there is grave abuse of discretion in its exercise. In this case, the petitioner's bulletin of information provides all students and all other interested parties advise on the University policies and rules on enrollment and academic achievements. Therein it is provided, among others, that a student may not officially withdraw from subjects in the curriculum if he does not have the written permission of his parents or guardian. 15 For an incomplete grade, there must be an application for completion or removal within the period announced by the school calendar and when not removed within one (1) year, it automatically becomes final. 16 A "DR" (Dropped) subject which is in the same category, as a "5" disqualifies a student from receiving honors. 17 A candidate for honors should have earned no less than 18 units per semester but a working student should earn no less that 12 units. A failure in any subject disqualifies a student from honors. 18 Good moral character and exemplary conduct are as important criteria for honors as academic achievements. 19 Private respondent should know and is presumed to know those University policies and is bound to comply therewith. It is precisely because she knew of these rules that she exerted all efforts to have her final grades of "5's" in Architecture 122 and Architecture 123 be disregarded in the computation of honors. When her request was denied by the university, she did not ask for a reconsideration thereof. Instead, in the middle part of March 1982 when the USC President was out of town, she wrote another letter to the USC registrar asking her failing grades be changed as above related. The matter was referred to the MECS and the request was approved on March 22,1982. However, when it was discovered thereafter that the change of private respondent's grades from "IC" TO "1.9" was not supported by the corresponding class records and its production was required the same could not be produced. There is thus no justification for said change of grade. Moreover, the request for the change of the grade of incomplete was not made by private respondent within one (1) year so that it became final according to the rules. By the same token, the change of the grades of private respondent from "5" to "W" (Withdrawn) in Architecture 122 and Architecture 123 was without the written permission of her parents or guardian. Indeed, it is unusual that a student who got a "5" in a subject, as in this case, should still be allowed to withdraw from such subject. Withdrawal from subjects is not ordinarily allowed after mid-term examination 20 much less after a failing grade in the subject has been received. The change of grades of private respondent is thus open to question. Obviously, private respondent employed undue and improper pressure on the MECS authorities to approve the change of her grades to remove all obstacle to her graduation with honors. Petitioners' claim that the change of grades of the private respondent was attended with fraud is not entirely misplaced. Petitioners cannot be faulted for refusing to vest the honors demanded of them by the private respondent. One failure would have been sufficient to disqualify her but she had one incomplete and two failures. Her only change was to reverse her failing grades. This she accomplished thru the back door. Nevertheless, even if she succeeded in removing her failing grades, it was still within the sound discretion of the petitioners to determine whether private respondent was entitled to graduate with honors. The Court finds that petitioners did not commit a grave abuse of discretion in denying the honors sought by private respondent under the circumstances. Indeed, the aforesaid change of grades did not automatically entitle her to the award of honors. Private respondent not having demonstrated that she has a clear legal right to the honors sought, her claim for damages must necessarily fail. WHEREFORE, the petition is GRANTED and the subject decision of the respondent court of May 28, 1987 and its resolution of July 7, 1987, are hereby REVERSED and SET ASIDE and another judgment is hereby rendered DISMISSING the complaint without pronouncement as to costs. SO ORDERED. Narvasa, Cruz, Grio-Aquino and Medialdea, JJ., concur.

G.R. No. L-18966 November 22, 1966 VICENTE BANTOTO, ET AL., plaintiffs-appellees, vs. SALVADOR BOBIS, ET AL., defendants. CRISPIN VALLEJO, defendant-appellant. Arturo M. Glaraga for plaintiffs-appellees. Casiano P. Laquihon for defendant-appellant. REYES, J.B.L., J.: Crispin Vallejo appeals from a decision rendered in Civil Case No. 5422 of the Court of First Instance of Occidental Negros, sentencing him to pay to Vicente Bantoto and Florita Lanceta, parents of the late Damiana Bantoto, civil indemnity in the sum of P3,000.00, plus P1,000.00 exemplary damages and the further sum of P500.00 attorneys' fees, without pronouncement as to costs. The basic facts are not controverted. Appellant Crispin Vallejo was the registered owner of a "jeepney" named "Jovil 11", with plate TPU-20948, that was operated by him in Bacolod City through driver Salvador Bobis. On 24 October 1948, through the driver's negligence, the "jeepney" struck a 3-year old girl, Damiana Bantoto, a daughter of appellees, inflicting serious injuries that led to her death a few days later. The City Fiscal of Bacolod filed an information charging Bobis with homicide through reckless imprudence, to which Bobis pleaded guilty. He was, accordingly, sentenced to 2 months and 1 day of arresto mayor and to indemnify the deceased girl's heirs (appellees herein) in the sum of P3,000.00. By amended complaint of 8 October 1959, appellees Vicente Bantoto and Florita Lanceta, for themselves and their other children, instituted the present action against Salvador Bobis, Juan Maceda (later absolved) and Crispin Vallejo in the court of first instance, pleading the foregoing facts and seeking to have the three defendants declared solidarily responsible for damages, consisting of the civil indemnity required of the driver Bobis in the judgment of conviction, plus moral and exemplary damages and attorneys' fees and costs. Vallejo moved to dismiss on the ground of failure to state a cause of action against him, for the reason that the amended complaint did not aver that the driver, Bobis, was insolvent. The court overruled the motion to dismiss, and on 20 February 1960 Vallejo answered the complaint, setting up denials and affirmative defenses, specifically averring that the brothers and sisters of the deceased were not real parties in interest; that the complaint stated no cause of action against Vallejo; that his liability was only subsidiary; that the action was barred by prior judgment; and that the liability had been satisfied. Bobis was declared in default. At the trial, the court of origin (overruling Vallejo's objections) admitted as Exhibit "A" for plaintiffs the writ of execution against the driver, Salvador Bobis, issued in the criminal case, and as Exhibit "B" the sheriff's returnnulla bona. Vallejo presented no evidence. Wherefore, the court absolved defendant Maceda and rendered judgment against Crispin Vallejo in the terms described at the start of this opinion. Vallejo appealed directly to this Supreme Court, assigning three errors: I The trial Court erred in not dismissing the complaint for lack of a cause of action. II The trial Court erred in admitting as evidence Exhibits "A" and "B" of the appellees. III The trial Court erred in condemning the defendant-appellant to pay to the appellees the sum of P3,000.00 as indemnity, P1,000.00 as moral damages, P1,000.00 as exemplary damages, and P500.00 as attorney's fee. The first alleged error, predicated upon the lack of allegation in the complaint that driver Bobis was insolvent, is without merit. The master's liability, under the Revised Penal Code, for the crimes committed by his servants and employees in the discharge of their duties, is not predicated upon the insolvency of the latter. Article 103 of the Penal Code prescribes that: ART. 103. Subsidiary civil liability of other persons. The subsidiary liability established in the next preceding article shall also apply to employees, teachers, persons, and corporations engaged in any kind of industry for felonies committed by their servants, pupils, workmen, apprentices, or employees in the discharge of their duties. The insolvency of the servant or employee is nowhere mentioned in said article as a condition precedent. In truth, such insolvency is required only when the liability of the master is being made effective by execution levy, but not for the rendition of judgment against the master. The subsidiary character of the employer's responsibility merely imports that the latter's property is not be seized without first exhausting that of the servant. And by analogy to a regular guarantor (who is the prototype of persons subsidiarily responsible), the master may not demand prior exhaustion of the servant's (principal obligor's) properties if he can not "point out to the creditor available property of the debtor within Philippine territory, sufficient to cover the amount of the debt" (Cf. Civil Code, Article 1060). This rule is logical, for as between the offended party (as creditor) and the culprit's master or employer, it is the latter who is in a better position to determine the resources and solvency of the servant or employee. Appellant invokes the following passage in our decision in Marquez vs. Castillo, 68 Phil. 571: The subsidiary liability of the master, according to the provisions of Article 103 of the Revised Penal Code, arises and takes place only when the servant, subordinate, or employee commits a punishable criminal act while in the actual performance of his ordinary duties and service, and he is insolvent thereby rendering him incapable of satisfying by himself his own civil liability. The underlined passage is, however, mere obiter because the part immediately preceding the quotation shows that the ratio decidendi of the case was that the accident involved, unlike in the case at bar, did not occur in the performance of the driver's assigned duties. It should be noted that in said stipulation, there is a provision appearing in paragraph 3 thereof, which reads as follows: "That the defendant Bernardo Castillo was not riding in the car at the time of the accident, and he did not know that his car was taken by the chauffeur Mariano Capulong." This fact decides the question because it clearly shows that the accident did not occur in the course of the performance of the duties or service for which said chauffeur Mariano Capulong had been hired. The defendant did not hire him to do as he pleased, using the defendant's car as if it were his own. His duties and service were confined to driving his master's car as the latter ordered him, and the accident did not take place under said circumstances. As to the second error assigned, the same is non-prejudicial, if at all committed. Supposing, in gratia argumenti, that Exhibits "A" and "B", the execution and the sheriff's return, in the criminal case were not admissible at the trial of the case against the master, they would certainly be

Republic of the Philippines SUPREME COURT Manila EN BANC

material and admissible when issuance of a writ of execution of the appealed judgment is demanded. It is well to move here that this Court has ruled that in the absence of collusion the judgment convicting and sentencing the servant to pay indemnity is conclusive in an action to enforce the subsidiary liability of the master or employer (Martinez vs. Barredo, 81 Phil. 1). Anyway, since Bobis, the driver, was also a defendant, the writ of execution issued in the criminal case to enforce the civil indemnity, and its return without satisfaction, are not irrelevant evidence in the action against him and his employer. Anent the third error, we agree with appellant, that, as the case was predicated upon the sentence of conviction in the criminal case, the award of exemplary damages was improper. No such damages were imposed on the driver, and the master, as person subsidiarily liable, can not incur greater civil liability than his convicted employee, any more than a guarantor can be held responsible for more than the principal debtor (Cf. Civil Code, Article 2064). But we do not agree that the award of attorney's fees should be disallowed. Appellant had reason to know that his driver could not pay the P3,000.00 indemnity imposed in the criminal case, because if he could, or if he had money or leviable property worth that much, Bobis would be operating his own jeepney instead of another's. In fact, Article 2208, paragraph 9, authorizes the award of counsel's fees "in a separate civil action to recover the civil liability arising from a crime." As in awarding only P500.00 attorney's fees the court below could envisage only the services of counsel up to the date of its judgment, and it could not know then that the decision would be appealed, we are of the opinion that counsel fees should now be at least doubled. For the foregoing reasons, the decision under appeal is modified by eliminating the award of P1,000.00 exemplary damages and doubling the award for counsel fees, with the result that appellant shall pay the indemnity of P3,000.00, with interest at 6% from the filing of the complaint, plus P1,000.00 attorney's fees. In all other respects, said decision is affirmed. No costs. Concepcion, C.J., Barrera, Dizon, Regala, Makalintal, Bengzon, J.P., Zaldivar, Sanchez and Castro, JJ., concur.

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 128690 January 21, 1999 ABS-CBN BROADCASTING CORPORATION, petitioner, vs. HONORABLE COURT OF APPEALS, REPUBLIC BROADCASTING CORP, VIVA PRODUCTION, INC., and VICENTE DEL ROSARIO, respondents. DAVIDE, JR., CJ.: In this petition for review on certiorari, petitioner ABS-CBN Broadcasting Corp. (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.R. CV No. 44125. The former affirmed with modification the decision 3 of 28 April 1993 of the Regional Trial Court (RTC) of Quezon City, Branch 80, in Civil Case No. Q-92-12309. The latter denied the motion to reconsider the decision of 31 October 1996. The antecedents, as found by the RTC and adopted by the Court of Appeals, are as follows: In 1990, ABS-CBN and Viva executed a Film Exhibition Agreement (Exh. "A") whereby Viva gave ABS-CBN an exclusive right to exhibit some Viva films. Sometime in December 1991, in accordance with paragraph 2.4 [sic] of said agreement stating that . 1.4 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, provided, however, that such right shall be exercised by ABS-CBN from the actual offer in writing. Viva, through defendant Del Rosario, offered ABS-CBN, through its vice-president Charo Santos-Concio, 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. "1" par, 2, "2," "2-A'' and "2-B"-Viva). ABS-CBN, however through Mrs. Concio, "can tick off only ten (10) titles" (from the list) "we can purchase" (Exh. "3" - Viva) and therefore did not accept said list (TSN, June 8, 1992, pp. 9-10). The titles ticked off by Mrs. Concio are not the subject of the case at bar except the film ''Maging Sino Ka Man." For further enlightenment, this rejection letter dated January 06, 1992 (Exh "3" - Viva) is hereby quoted: 6 January 1992 Dear Vic, 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. From among the three packages I can only tick off 10 titles we can purchase. Please see attached. I hope you will understand my position. Most of the action pictures in the list do not have big action stars in the cast. They are not for primetime. 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. As a film producer, I am sure you understand what I am trying to say as Viva produces only big action pictures. In fact, I would like to request two (2) additional runs for these movies as I can only schedule them in our non-primetime slots. 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. These are the unaired titles in the first contract. 1. Kontra Persa [sic]. 2. Raider Platoon. 3. Underground guerillas 4. Tiger Command 5. Boy de Sabog 6. Lady Commando 7. Batang Matadero 8. Rebelyon I hope you will consider this request of mine. 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.m. due to their very adult themes. As for the 10 titles I have choosen [sic] from the 3 packages please consider including all the other Viva movies produced last year. I have quite an attractive offer to make. Thanking you and with my warmest regards. (Signed) Charo Santos-Concio On February 27, 1992, defendant Del Rosario approached ABS-CBN's Ms. Concio, with a list consisting of 52 original movie titles (i.e. not yet aired on television) including the 14 titles subject of the present case, as well as 104 re-runs (previously aired on television) from which ABS-CBN may choose another 52 titles, as a total of 156 titles, proposing to sell to ABS-CBN airing rights over this package of 52 originals and 52 re-runs for P60,000,000.00 of which P30,000,000.00 will be in cash and P30,000,000.00 worth of television spots (Exh. "4" to "4-C" Viva; "9" -Viva). On April 2, 1992, defendant Del Rosario and ABS-CBN general manager, Eugenio Lopez III, met at the Tamarind Grill Restaurant in Quezon City to discuss the package proposal of Viva. What transpired in that lunch meeting is the subject of conflicting versions. Mr. Lopez testified that he and Mr. Del Rosario allegedly agreed that ABS-CRN was granted exclusive film rights to fourteen (14) films for a total consideration of P36 million; 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. Del Rosario (Exh. D; TSN, pp. 24-26, 77-78, June 8,

1992). On the other hand, Del Rosario denied having made any agreement with Lopez regarding the 14 Viva films; denied the existence of a napkin in which Lopez wrote something; 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. Mr. Lopez promising [sic]to make a counter proposal which came in the form of a proposal contract Annex "C" of the complaint (Exh. "1"- Viva; Exh. "C" - ABS-CBN). On April 06, 1992, Del Rosario and Mr. 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. On April 07, 1992, defendant Del Rosario received through his secretary, a handwritten note from Ms. Concio, (Exh. "5" Viva), which reads: "Here's the draft of the contract. I hope you find everything in order," to which was attached a draft exhibition agreement (Exh. "C''- ABS-CBN; Exh. "9" - Viva, p. 3) a counter-proposal covering 53 films, 52 of which came from the list sent by defendant Del Rosario and one film was added by Ms. Concio, for a consideration of P35 million. Exhibit "C" provides that ABS-CBN is granted films right to 53 films and contains a right of first refusal to "1992 Viva Films." The said counter proposal was however rejected by Viva's Board of Directors [in the] evening of the same day, April 7, 1992, as Viva would not sell anything less than the package of 104 films for P60 million pesos (Exh. "9" - Viva), and such rejection was relayed to Ms. Concio. On April 29, 1992, after the rejection of ABS-CBN and following several negotiations and meetings defendant Del Rosario and Viva's President Teresita Cruz, in consideration of P60 million, signed a letter of agreement dated April 24, 1992. granting RBS the exclusive right to air 104 Viva-produced and/or acquired films (Exh. "7-A" - RBS; Exh. "4" - RBS) including the fourteen (14) films subject of the present case. 4 On 27 May 1992, 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 ), Viva Production (hereafter VIVA), and Vicente Del Rosario. The complaint was docketed as Civil Case No. Q-92-12309. On 27 May 1992, RTC issued a temporary restraining order 6 enjoining private respondents from proceeding with the airing, broadcasting, and televising of the fourteen VIVA films subject of the controversy, starting with the film Maging Sino Ka Man, which was scheduled to be shown on private respondents RBS' channel 7 at seven o'clock in the evening of said date. On 17 June 1992, after appropriate proceedings, the RTC issued an order 7 directing the issuance of a writ of preliminary injunction upon ABS-CBN's posting of P35 million bond. ABS-CBN moved for the reduction of the bond, 8 while private respondents moved for reconsideration of the order and offered to put up a counterbound. 9 In the meantime, private respondents filed separate answers with counterclaim. 10 RBS also set up a cross-claim against VIVA.. On 3 August 1992, 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. However, 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. At the pre-trial 12 on 6 August 1992, the parties, upon suggestion of the court, agreed to explore the possibility of an amicable settlement. In the meantime, 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. As the parties failed to enter into an amicable settlement RBS posted on 1 October 1992 a counterbond, which the RTC approved in its Order of 15 October 1992. 13 On 19 October 1992, ABS-CBN filed a motion for reconsideration 14 of the 3 August and 15 October 1992 Orders, which RBS opposed. 15 On 29 October 1992, the RTC conducted a pre-trial. 16 Pending resolution of its motion for reconsideration, ABS-CBN filed with the Court of Appeals a petition 17challenging 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. The case was docketed as CA-G.R. SP No. 29300. On 3 November 1992, the Court of Appeals issued a temporary restraining order 18 to enjoin the airing, broadcasting, and televising of any or all of the films involved in the controversy. On 18 December 1992, the Court of Appeals promulgated a decision 19 dismissing the petition in CA -G.R. No. 29300 for being premature. ABSCBN challenged the dismissal in a petition for review filed with this Court on 19 January 1993, which was docketed as G.R. No. 108363. In the meantime the RTC received the evidence for the parties in Civil Case No. Q-192-1209. Thereafter, on 28 April 1993, it rendered a decision 20 in favor of RBS and VIVA and against ABS-CBN disposing as follows: WHEREFORE, under cool reflection and prescinding from the foregoing, judgments is rendered in favor of defendants and against the plaintiff. (1) The complaint is hereby dismissed; (2) Plaintiff ABS-CBN is ordered to pay defendant RBS the following: a) P107,727.00, the amount of premium paid by RBS to the surety which issued defendant RBS's bond to lift the injunction; b) P191,843.00 for the amount of print advertisement for "Maging Sino Ka Man" in various newspapers; c) Attorney's fees in the amount of P1 million; d) P5 million as and by way of moral damages; e) P5 million as and by way of exemplary damages; (3) For defendant VIVA, plaintiff ABS-CBN is ordered to pay P212,000.00 by way of reasonable attorney's fees. (4) The cross-claim of defendant RBS against defendant VIVA is dismissed. (5) Plaintiff to pay the costs. According to the RTC, there was no meeting of minds on the price and terms of the offer. The alleged agreement between Lopez III and Del Rosario was subject to the approval of the VIVA Board of Directors, and said agreement was disapproved during the meeting of the Board on 7 April 1992. Hence, there was no basis for ABS-CBN's demand that VIVA signed the 1992 Film Exhibition Agreement. Furthermore, the right of

first refusal under the 1990 Film Exhibition Agreement had previously been exercised per Ms. Concio's letter to Del Rosario ticking off ten titles acceptable to them, which would have made the 1992 agreement an entirely new contract. On 21 June 1993, this Court denied 21 ABS-CBN's petition for review in G.R. No. 108363, 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. Aggrieved by the RTC's decision, 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. Private respondents VIVA and Del Rosario also appealed seeking moral and exemplary damages and additional attorney's fees. In its decision of 31 October 1996, the Court of Appeals agreed with the RTC that the contract between ABS-CBN and VIVA had not been perfected, absent the approval by the VIVA Board of Directors of whatever Del Rosario, it's agent, might have agreed with Lopez III. The appellate court did not even believe ABS-CBN's evidence that Lopez III actually wrote down such an agreement on a "napkin," as the same was never produced in court. 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, it may be true that a Film Exhibition Agreement was entered into between Appellant ABS-CBN and appellant VIVA under Exhibit "A" in 1990, and that parag. 1.4 thereof provides: 1.4 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, provided, however, that such right shall be exercised by ABS-CBN within a period of fifteen (15) days from the actual offer in writing (Records, p. 14). [H]owever, 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, and that the said right shall be exercised by ABS-CBN within fifteen (15) days from the actual offer in writing. Said parag. 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, nor did it specify the terms thereof. The same are still left to be agreed upon by the parties. In the instant case, ABS-CBN's letter of rejection Exhibit 3 (Records, p. 89) stated that it can only tick off ten (10) films, and the draft contract Exhibit "C" accepted only fourteen (14) films, while parag. 1.4 of Exhibit "A'' speaks of the next twenty-four (24) films. The offer of V1VA was sometime in December 1991 (Exhibits 2, 2-A. 2-B; Records, pp. 86-88; Decision, p. 11, Records, p. 1150), when the first list of VIVA films was sent by Mr. Del Rosario to ABS-CBN. The Vice President of ABS-CBN, Ms. Charo Santos-Concio, sent a letter dated January 6, 1992 (Exhibit 3, Records, p. 89) where ABS-CBN exercised its right of refusal by rejecting the offer of VIVA.. As aptly observed by the trial court, with the said letter of Mrs. Concio of January 6, 1992, ABS-CBN had lost its right of first refusal. And even if We reckon the fifteen (15) day period from February 27, 1992 (Exhibit 4 to 4-C) when another list was sent to ABS-CBN after the letter of Mrs. Concio, still the fifteen (15) day period within which ABS-CBN shall exercise its right of first refusal has already expired. 22 Accordingly, respondent court sustained the award of actual damages consisting in the cost of print advertisements and the premium payments for the counterbond, there being adequate proof of the pecuniary loss which RBS had suffered as a result of the filing of the complaint by ABSCBN. As to the award of moral damages, the Court of Appeals found reasonable basis therefor, holding that RBS's reputation was debased by the filing of the complaint in Civil Case No. Q-92-12309 and by the non-showing of the film "Maging Sino Ka Man." 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, It also upheld the award of attorney's fees, reasoning that with ABSCBN's act of instituting Civil Case No, Q-92-1209, RBS was "unnecessarily forced to litigate." The appellate court, however, reduced the awards of moral damages to P2 million, exemplary damages to P2 million, and attorney's fees to P500, 000.00. On the other hand, 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." Its motion for reconsideration having been denied, ABS-CBN filed the petition in this case, contending that the Court of Appeals gravely erred in I . . . RULING THAT THERE WAS NO PERFECTED CONTRACT BETWEEN PETITIONER AND PRIVATE RESPONDENT VIVA NOTWITHSTANDING PREPONDERANCE OF EVIDENCE ADDUCED BY PETITIONER TO THE CONTRARY. II . . . IN AWARDING ACTUAL AND COMPENSATORY DAMAGES IN FAVOR OF PRIVATE RESPONDENT RBS. III . . . IN AWARDING MORAL AND EXEMPLARY DAMAGES IN FAVOR OF PRIVATE RESPONDENT RBS. IV . . . IN AWARDING ATTORNEY'S FEES IN FAVOR OF RBS. 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, as it had chosen only ten titles from the first list. It insists that we give credence to Lopez's testimony that he and Del Rosario met at the Tamarind Grill Restaurant, discussed the terms and conditions of the second list (the 1992 Film Exhibition Agreement) and upon agreement thereon, wrote the same on a paper napkin. It also asserts that the contract has already been effective, as the elements thereof, namely, consent, object, and consideration were established. It then concludes that the Court of Appeals' pronouncements were not supported by law and jurisprudence, as per our decision of 1 December 1995 in Limketkai Sons Milling, Inc. v. Court of Appeals, 23 which cited Toyota Shaw, Inc. v. Court of Appeals, 24 Ang Yu Asuncion v. Court of Appeals, 25 andVillonco Realty Company v. Bormaheco. Inc. 26 Anent the actual damages awarded to RBS, ABS-CBN disavows liability therefor. 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. The filing of the counterbond was an option available to RBS, but it can hardly be argued that ABS-CBN compelled RBS to incur such expense. Besides, RBS had another available option, i.e., move for the dissolution or the injunction; or if it was determined to put up a counterbond, it could have presented a cash bond. Furthermore under Article 2203 of the Civil Code, 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. As regards the cost of print advertisements, RBS had not convincingly established that this was a loss attributable to the non showing "Maging Sino Ka Man"; on the

contrary, it was brought out during trial that with or without the case or the injunction, RBS would have spent such an amount to generate interest in the film. ABS-CBN further contends that there was no clear basis for the awards of moral and exemplary damages. The controversy involving ABS-CBN and RBS did not in any way originate from business transaction between them. 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, fraudulent, or reckless; they arose by virtue only of the filing of the complaint, 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. 27 In any case, free resort to courts for redress of wrongs is a matter of public policy. 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, legal technicalities, or a different interpretation of the laws on the matter, the case would lose ground. 28 One who makes use of his own legal right does no injury. 29 If damage results front the filing of the complaint, it is damnum absque injuria. 30 Besides, moral damages are generally not awarded in favor of a juridical person, unless it enjoys a good reputation that was debased by the offending party resulting in social humiliation. 31 As regards the award of attorney's fees, ABS-CBN maintains that the same had no factual, legal, or equitable justification. In sustaining the trial court's award, the Court of Appeals acted in clear disregard of the doctrines laid down in Buan v. Camaganacan 32 that the text of the decision should state the reason why attorney's fees are being awarded; otherwise, the award should be disallowed. Besides, no bad faith has been imputed on, much less proved as having been committed by, ABS-CBN. 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, attorney's fees shall not be recovered as cost." 33 On the other hand, 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. It affirms that the ABS-CBN's claim of a right of first refusal was correctly rejected by the trial court. RBS insist the premium it had paid for the counterbond constituted a pecuniary loss upon which it may recover. It was obliged to put up the counterbound due to the injunction procured by ABS-CBN. Since the trial court found that ABS-CBN had no cause of action or valid claim against RBS and, therefore not entitled to the writ of injunction, RBS could recover from ABS-CBN the premium paid on the counterbond. Contrary to the claim of ABS-CBN, the cash bond would prove to be more expensive, 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. 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, i.e., in its entirety at one time, not a series to be shown on a periodic basis. Hence, the print advertisement were good and relevant for the particular date showing, and since the film could not be shown on that particular date and hour because of the injunction, the expenses for the advertisements had gone to waste. As regards moral and exemplary damages, RBS asserts that ABS-CBN filed the case and secured injunctions purely for the purpose of harassing and prejudicing RBS. Pursuant then to Article 19 and 21 of the Civil Code, ABS-CBN must be held liable for such damages. Citing Tolentino, 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. In support of its stand that a juridical entity can recover moral and exemplary damages, private respondents RBS cited People v. Manero, 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. it then ratiocinates; thus: There can be no doubt that RBS' reputation has been debased by ABS-CBN's acts in this case. 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), it suffered serious embarrassment and social humiliation. When the showing was canceled, late viewers called up RBS' offices and subjected RBS to verbal abuse ("Announce kayo nang announce, hindi ninyo naman ilalabas," "nanloloko yata kayo") (Exh. 3-RBS, par. 3). This alone was not something RBS brought upon itself. it was exactly what ABS-CBN had planned to happen. The amount of moral and exemplary damages cannot be said to be excessive. Two reasons justify the amount of the award. The first is that the humiliation suffered by RBS is national extent. RBS operations as a broadcasting company is [sic] nationwide. Its clientele, like that of ABS-CBN, consists of those who own and watch television. It is not an exaggeration to state, and it is a matter of judicial notice that almost every other person in the country watches television. 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, 1992 but did not see it owing to the cancellation. 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. The second is that it is a competitor that caused RBS to suffer the humiliation. 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. 36 For their part, VIVA and Vicente del Rosario contend that the findings of fact of the trial court and the Court of Appeals do not support ABSCBN's claim that there was a perfected contract. Such factual findings can no longer be disturbed in this petition for review under Rule 45, as only questions of law can be raised, not questions of fact. On the issue of damages and attorneys fees, they adopted the arguments of RBS. The key issues for our consideration are (1) whether there was a perfected contract between VIVA and ABS-CBN, and (2) whether RBS is entitled to damages and attorney's fees. It may be noted that the award of attorney's fees of P212,000 in favor of VIVA is not assigned as another error. I. The first issue should be resolved against ABS-CBN. 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. there is no contract unless the following requisites concur: (1) consent of the contracting parties; (2) object certain which is the subject of the contract; and (3) cause of the obligation, which is established. 38 A contract undergoes three stages: (a) preparation, conception, or generation, which is the period of negotiation and bargaining, ending at the moment of agreement of the parties; (b) perfection or birth of the contract, which is the moment when the parties come to agree on the terms of the contract; and

(c) consummation or death, which is the fulfillment or performance of the terms agreed upon in the contract. 39 Contracts that are consensual in nature are perfected upon mere meeting of the minds, Once there is concurrence between the offer and the acceptance upon the subject matter, consideration, and terms of payment a contract is produced. The offer must be certain. To convert the offer into a contract, the acceptance must be absolute and must not qualify the terms of the offer; it must be plain, unequivocal, unconditional, and without variance of any sort from the proposal. A qualified acceptance, or one that involves a new proposal, constitutes a counter-offer and is a rejection of the original offer. Consequently, when something is desired which is not exactly what is proposed in the offer, such acceptance is not sufficient to generate consent because any modification or variation from the terms of the offer annuls the offer. 40 When Mr. Del Rosario of VIVA met with Mr. Lopez of ABS-CBN at the Tamarind Grill on 2 April 1992 to discuss the package of films, said package of 104 VIVA films was VIVA's offer to ABS-CBN to enter into a new Film Exhibition Agreement. But ABS-CBN, sent, through Ms. Concio, a counter-proposal in the form of a draft contract proposing exhibition of 53 films for a consideration of P35 million. This counterproposal could be nothing less than the counter-offer of Mr. Lopez during his conference with Del Rosario at Tamarind Grill Restaurant. Clearly, there was no acceptance of VIVA's offer, for it was met by a counter-offer which substantially varied the terms of the offer. ABS-CBN's reliance in Limketkai Sons Milling, Inc. v. Court of Appeals 41 and Villonco Realty Company v. Bormaheco, Inc., 42 is misplaced. In these cases, 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, whether such request is granted or not." This ruling was, however, reversed in the resolution of 29 March 1996, 43which ruled that the acceptance of all offer must be unqualified and absolute, i.e., it "must be identical in all respects with that of the offer so as to produce consent or meeting of the minds." On the other hand, in Villonco, cited in Limketkai, the alleged changes in the revised counter-offer were not material but merely clarificatory of what had previously been agreed upon. It cited the statement in Stuart v.Franklin Life Insurance Co. 44 that "a vendor's change in a phrase of the offer to purchase, which change does not essentially change the terms of the offer, does not amount to a rejection of the offer and the tender of a counter-offer." 45 However, when any of the elements of the contract is modified upon acceptance, such alteration amounts to a counter-offer. In the case at bar, ABS-CBN made no unqualified acceptance of VIVA's offer. Hence, they underwent a period of bargaining. ABS-CBN then formalized its counter-proposals or counter-offer in a draft contract, VIVA through its Board of Directors, rejected such counter-offer, Even if it be conceded arguendo that Del Rosario had accepted the counter-offer, the acceptance did not bind VIVA, as there was no proof whatsoever that Del Rosario had the specific authority to do so. Under Corporation Code, 46 unless otherwise provided by said Code, corporate powers, such as the power; to enter into contracts; are exercised by the Board of Directors. However, the Board may delegate such powers to either an executive committee or officials or contracted managers. The delegation, except for the executive committee, must be for specific purposes, 47 Delegation to officers makes the latter agents of the corporation; accordingly, the general rules of agency as to the bindings effects of their acts would apply. 48 For such officers to be deemed fully clothed by the corporation to exercise a power of the Board, the latter must specially authorize them to do so. 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. In any event, there was between Del Rosario and Lopez III no meeting of minds. 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, 1992 at the Tamarind Grill. FIRST, Mr. Lopez claimed that what was agreed upon at the Tamarind Grill referred to the price and the number of films, which he wrote on a napkin. However, Exhibit "C" contains numerous provisions which, were not discussed at the Tamarind Grill, if Lopez testimony was to be believed nor could they have been physically written on a napkin. There was even doubt as to whether it was a paper napkin or a cloth napkin. In short what were written in Exhibit "C'' were not discussed, and therefore could not have been agreed upon, by the parties. How then could this court compel the parties to sign Exhibit "C" when the provisions thereof were not previously agreed upon? SECOND, Mr. Lopez claimed that what was agreed upon as the subject matter of the contract was 14 films. The complaint in fact prays for delivery of 14 films. But Exhibit "C" mentions 53 films as its subject matter. Which is which If Exhibits "C" reflected the true intent of the parties, then ABS-CBN's claim for 14 films in its complaint is false or if what it alleged in the complaint is true, then Exhibit "C" did not reflect what was agreed upon by the parties. This underscores the fact that there was no meeting of the minds as to the subject matter of the contracts, so as to preclude perfection thereof. For settled is the rule that there can be no contract where there is no object which is its subject matter (Art. 1318, NCC). THIRD, Mr. Lopez [sic] answer to question 29 of his affidavit testimony (Exh. "D") states: We were able to reach an agreement. VIVA gave us the exclusive license to show these fourteen (14) films, and we agreed to pay Viva the amount of P16,050,000.00 as well as grant Viva commercial slots worth P19,950,000.00. We had already earmarked this P16, 050,000.00. which gives a total consideration of P36 million (P19,950,000.00 plus P16,050,000.00. equals P36,000,000.00). On cross-examination Mr. Lopez testified: Q. What was written in this napkin? A. The total price, the breakdown the known Viva movies, the 7 blockbuster movies and the other 7 Viva movies because the price was broken down accordingly. 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. Now, which is which? P36 million or P35 million? This weakens ABS-CBN's claim. FOURTH. Mrs. Concio, testifying for ABS-CBN stated that she transmitted Exhibit "C" to Mr. Del Rosario with a handwritten note, describing said Exhibit "C" as a "draft." (Exh. "5" - Viva; tsn pp. 23-24 June 08, 1992). The said draft has a well defined meaning. Since Exhibit "C" is only a draft, or a tentative, provisional or preparatory writing prepared for discussion, 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, not having agreed thereto. In fact, Ms. 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," and there was no evidence whatsoever that Viva agreed to the terms and conditions thereof, said document cannot be a binding contract. The fact that Viva refused to sign Exhibit "C" reveals only two [sic] well that it did not agree on its terms and conditions, and this court has no authority to compel Viva to agree thereto. FIFTH. Mr. Lopez understand [sic] that what he and Mr. Del Rosario agreed upon at the Tamarind Grill was only provisional, in the sense that it was subject to approval by the Board of Directors of Viva. He testified: Q. Now, Mr. Witness, and after that Tamarind meeting ... the second meeting wherein you claimed that you have the meeting of the minds between you and Mr. Vic del Rosario, what happened? A. Vic Del Rosario was supposed to call us up and tell us specifically the result of the discussion with the Board of Directors. Q. And you are referring to the so-called agreement which you wrote in [sic] a piece of paper? A. Yes, sir. Q. So, he was going to forward that to the board of Directors for approval? A. Yes, sir. (Tsn, pp. 42-43, June 8, 1992) Q. Did Mr. Del Rosario tell you that he will submit it to his Board for approval? A. Yes, sir. (Tsn, p. 69, June 8, 1992). The above testimony of Mr. Lopez shows beyond doubt that he knew Mr. Del Rosario had no authority to bind Viva to a contract with ABS-CBN until and unless its Board of Directors approved it. The complaint, in fact, alleges that Mr. Del Rosario "is the Executive Producer of defendant Viva" which "is a corporation." (par. 2, complaint). As a mere agent of Viva, Del Rosario could not bind Viva unless what he did is ratified by its Board of Directors. (Vicente vs. Geraldez, 52 SCRA 210; Arnold vs. Willets and Paterson, 44 Phil. 634). As a mere agent, recognized as such by plaintiff, Del Rosario could not be held liable jointly and severally with Viva and his inclusion as party defendant has no legal basis. (Salonga vs. Warner Barner [sic] , COLTA , 88 Phil. 125; Salmon vs. Tan, 36 Phil. 556). The testimony of Mr. 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. Lopez and Del Rosario was not a binding agreement. It is as it should be because corporate power to enter into a contract is lodged in the Board of Directors. (Sec. 23, Corporation Code). Without such board approval by the Viva board, whatever agreement Lopez and Del Rosario arrived at could not ripen into a valid contract binding upon Viva (Yao Ka Sin Trading vs.Court of Appeals, 209 SCRA 763). 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. "7-1" Viva ). 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. As observed by the trial court, ABS-CBN right of first refusal had already been exercised when Ms. Concio wrote to VIVA ticking off ten films, Thus: [T]he subsequent negotiation with ABS-CBN two (2) months after this letter was sent, was for an entirely different package. Ms. Concio herself admitted on cross-examination to having used or exercised the right of first refusal. She stated that the list was not acceptable and was indeed not accepted by ABS-CBN, (TSN, June 8, 1992, pp. 8-10). Even Mr. Lopez himself admitted that the right of the first refusal may have been already exercised by Ms. Concio (as she had). (TSN, June 8, 1992, pp. 71-75). 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, June 9, 1992, pp. 10-11) 50 II However, we find for ABS-CBN on the issue of damages. We shall first take up actual damages. Chapter 2, Title XVIII, Book IV of the Civil Code is the specific law on actual or compensatory damages. Except as provided by law or by stipulation, one is entitled to compensation for actual damages only for such pecuniary loss suffered by him as he has duly proved. 51 The indemnification shall comprehend not only the value of the loss suffered, but also that of the profits that the obligee failed to obtain. 52 In contracts and quasi-contracts the damages which may be awarded are dependent on whether the obligor acted with good faith or otherwise, It case of good faith, the damages recoverable are those which are the natural and probable consequences of the breach of the obligation and which the parties have foreseen or could have reasonably foreseen at the time of the constitution of the obligation. If the obligor acted with fraud, bad faith, malice, or wanton attitude, he shall be responsible for all damages which may be reasonably attributed to the non-performance of the obligation. 53 In crimes and quasi-delicts, the defendant shall be liable for all damages which are the natural and probable consequences of the act or omission complained of, whether or not such damages has been foreseen or could have reasonably been foreseen by the defendant. 54 Actual damages may likewise be recovered for loss or impairment of earning capacity in cases of temporary or permanent personal injury, or for injury to the plaintiff's business standing or commercial credit. 55 The claim of RBS for actual damages did not arise from contract, quasi-contract, delict, or quasi-delict. It arose from the fact of filing of the complaint despite ABS-CBN's alleged knowledge of lack of cause of action. Thus paragraph 12 of RBS's Answer with Counterclaim and Crossclaim under the heading COUNTERCLAIM specifically alleges: 12. ABS-CBN filed the complaint knowing fully well that it has no cause of action RBS. As a result thereof, RBS suffered actual damages in the amount of P6,621,195.32. 56 Needless to state the award of actual damages cannot be comprehended under the above law on actual damages. RBS could only probably take refuge under Articles 19, 20, and 21 of the Civil Code, which read as follows: Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith. Art. 20. Every person who, contrary to law, wilfully or negligently causes damage to another, shall indemnify the latter for tile same. Art. 21. Any person who wilfully causes loss or injury to another in a manner that is contrary to morals, 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, the damages which the defendant may suffer by reason of the writ are recoverable from the injunctive bond. 57 In this case, ABS-CBN had not yet filed the required bond; as a matter of fact, it asked for

reduction of the bond and even went to the Court of Appeals to challenge the order on the matter, Clearly then, it was not necessary for RBS to file a counterbond. Hence, ABS-CBN cannot be held responsible for the premium RBS paid for the counterbond. Neither could ABS-CBN be liable for the print advertisements for "Maging Sino Ka Man" for lack of sufficient legal basis. The RTC issued a temporary restraining order and later, a writ of preliminary injunction on the basis of its determination that there existed sufficient ground for the issuance thereof. Notably, the RTC did not dissolve the injunction on the ground of lack of legal and factual basis, but because of the plea of RBS that it be allowed to put up a counterbond. As regards attorney's fees, the law is clear that in the absence of stipulation, 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. 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. 59 They are not to be awarded every time a party wins a suit. The power of the court to award attorney's fees under Article 2208 demands factual, legal, and equitable justification. 60 Even when claimant is compelled to litigate with third persons or to incur expenses to protect his rights, still attorney's fees may not be awarded where no sufficient showing of bad faith could be reflected in a party's persistence in a case other than erroneous conviction of the righteousness of his cause. 61 As to moral damages the law is Section 1, Chapter 3, Title XVIII, Book IV of the Civil Code. Article 2217 thereof defines what are included in moral damages, while Article 2219 enumerates the cases where they may be recovered, Article 2220 provides that moral damages may be recovered in breaches of contract where the defendant acted fraudulently or in bad faith. RBS's claim for moral damages could possibly fall only under item (10) of Article 2219, thereof which reads: (10) Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34, and 35. Moral damages are in the category of an award designed to compensate the claimant for actual injury suffered. and not to impose a penalty on the wrongdoer. 62 The award is not meant to enrich the complainant at the expense of the defendant, but to enable the injured party to obtain means, diversion, or amusements that will serve to obviate then moral suffering he has undergone. It is aimed at the restoration, within the limits of the possible, of the spiritual status quo ante, and should be proportionate to the suffering inflicted. 63 Trial courts must then guard against the award of exorbitant damages; they should exercise balanced restrained and measured objectivity to avoid suspicion that it was due to passion, prejudice, or corruption on the part of the trial court. 64 The award of moral damages cannot be granted in favor of a corporation because, being an artificial person and having existence only in legal contemplation, it has no feelings, no emotions, no senses, It cannot, therefore, experience physical suffering and mental anguish, which call be experienced only by one having a nervous system. 65 The statement in People v. Manero 66 and Mambulao Lumber Co. v. PNB 67 that a corporation may recover moral damages if it "has a good reputation that is debased, resulting in social humiliation" is an obiter dictum. On this score alone the award for damages must be set aside, since RBS is a corporation. The basic law on exemplary damages is Section 5, Chapter 3, Title XVIII, Book IV of the Civil Code. These are imposed by way of example or correction for the public good, in addition to moral, temperate, liquidated or compensatory damages. 68 They are recoverable in criminal cases as part of the civil liability when the crime was committed with one or more aggravating circumstances; 69 in quasi-contracts, if the defendant acted with gross negligence; 70 and in contracts and quasi-contracts, if the defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner. 71 It may be reiterated that the claim of RBS against ABS-CBN is not based on contract, quasi-contract, delict, or quasi-delict, Hence, the claims for moral and exemplary damages can only be based on Articles 19, 20, and 21 of the Civil Code. The elements of abuse of right under Article 19 are the following: (1) the existence of a legal right or duty, (2) which is exercised in bad faith, and (3) for the sole intent of prejudicing or injuring another. Article 20 speaks of the general sanction for all other provisions of law which do not especially provide for their own sanction; while Article 21 deals with acts contra bonus mores, and has the following elements; (1) there is an act which is legal, (2) but which is contrary to morals, good custom, public order, or public policy, and (3) and it is done with intent to injure. 72 Verily then, malice or bad faith is at the core of Articles 19, 20, and 21. Malice or bad faith implies a conscious and intentional design to do a wrongful act for a dishonest purpose or moral obliquity. 73 Such must be substantiated by evidence. 74 There is no adequate proof that ABS-CBN was inspired by malice or bad faith. 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. 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, for the law could not have meant to impose a penalty on the right to litigate. If damages result from a person's exercise of a right, it is damnum absque injuria. 75 WHEREFORE, the instant petition is GRANTED. The challenged decision of the Court of Appeals in CA-G.R. CV No, 44125 is hereby REVERSED except as to unappealed award of attorney's fees in favor of VIVA Productions, Inc. 1wphi1.nt No pronouncement as to costs. SO ORDERED.