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G.R. No.

108670 September 21, 1994 Petitioner LBC, on the other hand, alleged that the cashpack was forwarded via PAL
LBC EXPRESS, INC., petitioner, to LBC Cebu City branch on November 22, 1984. 5 On the same day, it was delivered
vs. at respondent Carloto's residence at No. 2 Greyhound Subdivision, Kinasangan,
THE COURT OF APPEALS, ADOLFO M. CARLOTO, and RURAL BANK OF LABASON, Pardo, Cebu City. However, he was not around to receive it. The delivery man
INC., respondents. served instead a claim notice to insure he would personally receive the money. This
Emmanuel D. Agustin for petitioner. was annotated on Cashpack Delivery Receipt No. 342805. Notwithstanding the said
Bernardo P. Concha for private respondents. notice, respondent Carloto did not claim the cashpack at LBC Cebu. On November
23, 1984, it was returned to the shipper, Elsie Carloto-Concha at Dipolog City.
PUNO, J.: Claiming that petitioner LBC wantonly and recklessly disregarded its obligation,
In this Petition for Review on Certiorari, petitioner LBC questions the decision 1 of respondent Carloto instituted an action for Damages Arising from Non-performance
respondent Court of Appeals affirming the judgment of the Regional Trial Court of of Obligation docketed as Civil Case No. 3679 before the Regional Trial Court of
Dipolog City, Branch 8, awarding moral and exemplary damages, reimbursement of Dipolog City on January 4, 1985. On June 25, 1988, an amended complaint was filed
P32,000.00, and costs of suit; but deleting the amount of attorney's fees. where respondent rural bank joined as one of the plaintiffs and prayed for the
Private respondent Adolfo Carloto, incumbent President-Manager of private reimbursement of THIRTY-TWO THOUSAND PESOS (P32,000.00).
respondent Rural Bank of Labason, alleged that on November 12, 1984, he was in After hearing, the trial court rendered its decision, the dispositive portion of which
Cebu City transacting business with the Central Bank Regional Office. He was reads:
instructed to proceed to Manila on or before November 21, 1984 to follow-up the WHEREFORE, judgment is hereby rendered:
Rural Bank's plan of payment of rediscounting obligations with Central Bank's main 1. Ordering the defendant LBC Air Cargo, Inc. to pay unto plaintiff
office in Manila. 2 He then purchased a round trip plane ticket to Manila. He also Adolfo M. Carloto and Rural Bank of Labason, Inc., moral damages
phoned his sister Elsie Carloto-Concha to send him ONE THOUSAND PESOS in the amount of P10,000.00; exemplary damages in the amount
(P1,000.00) for his pocket money in going to Manila and some rediscounting papers of P5,000.00; attorney's fees in the amount of P3,000.00 and
thru petitioner's LBC Office at Dipolog City. 3 litigation expenses of P1,000.00;
On November 16, 1984, Mrs. Concha thru her clerk, Adelina Antigo consigned thru 2. Sentencing defendant LBC Air Cargo, Inc., to reimburse plaintiff
LBC Dipolog Branch the pertinent documents and the sum of ONE THOUSAND Rural Bank of Labason, Inc. the sum of P32,000.00 which the latter
PESOS (P1,000.00) to respondent Carloto at No. 2 Greyhound Subdivision, paid as penalty interest to the Central Bank of the Philippines as
Kinasangan, Pardo, Cebu City. This was evidenced by LBC Air Cargo, Inc., Cashpack penalty interest for failure to rediscount its due bills on time
Delivery Receipt No. 34805. arising from the defendant's failure to deliver the cashpack, with
On November 17, 1984, the documents arrived without the cashpack. Respondent legal interest computed from the date of filing of this case; and
Carloto made personal follow-ups on that same day, and also on November 19 and 3. Ordering defendant to pay the costs of these proceedings.
20, 1984 at LBC's office in Cebu but petitioner failed to deliver to him the cashpack. SO ORDERED. 6
Consequently, respondent Carloto said he was compelled to go to Dipolog City on On appeal, respondent court modified the judgment by deleting the award of
November 24, 1984 to claim the money at LBC's office. His effort was once more in attorney's fees. Petitioner's Motion for Reconsideration was denied in a Resolution
vain. On November 27, 1984, he went back to Cebu City at LBC's office. He was, dated January 11, 1993.
however, advised that the money has been returned to LBC's office in Dipolog City Hence, this petition raising the following questions, to wit:
upon shipper's request. Again, he demanded for the ONE THOUSAND PESOS 1. Whether or not respondent Rural Bank of Labason Inc., being an artificial person
(P1,000.00) and refund of FORTY-NINE PESOS (P49.00) LBC revenue charges. He should be awarded moral damages.
received the money only on December 15, 1984 less the revenue charges. 2. Whether or not the award of THIRTY-TWO THOUSAND PESOS (P32,000.00) was
Respondent Carloto claimed that because of the delay in the transmittal of the made with grave abuse of discretion.
cashpack, he failed to submit the rediscounting documents to Central Bank on time. 3. Whether or not the respondent Court of Appeals gravely abused its discretion in
As a consequence, his rural bank was made to pay the Central Bank THIRTY-TWO affirming the trial court's decision ordering petitioner LBC to pay moral and
THOUSAND PESOS (P32,000.00) as penalty interest. 4 He allegedly suffered exemplary damages despite performance of its obligation.
embarrassment and humiliation. We find merit in the petition.
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The respondent court erred in awarding moral damages to the Rural Bank of natural and probable consequences of the branch of the obligation which the
Labason, Inc., an artificial person. parties had foreseen or could reasonable have foreseen. The damages, however,
Moral damages are granted in recompense for physical suffering, mental anguish, will not include liability for moral damages. 14
fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, Prescinding from these premises, the award of exemplary damages made by the
social humiliation, and similar injury. 7 A corporation, being an artificial person and respondent court would have no legal leg to support itself. Under Article 2232 of
having existence only in legal contemplation, has no feelings, no emotions, no the Civil Code, in a contractual or quasi-contractual relationship, exemplary
senses; therefore, it cannot experience physical suffering and mental damages may be awarded only if the defendant had acted in "a wanton, fraudulent,
anguish. 8 Mental suffering can be experienced only by one having a nervous system reckless, oppressive, or malevolent manner." The established facts of not so
and it flows from real ills, sorrows, and griefs of life 9 — all of which cannot be warrant the characterization of the action of petitioner LBC.
suffered by respondent bank as an artificial person. IN VIEW WHEREOF, the Decision of the respondent court dated September 30, 1992
We can neither sustain the award of moral damages in favor of the private is REVERSED and SET ASIDE; and the Complaint in Civil Case No. 3679 is ordered
respondents. The right to recover moral damages is based on equity. Moral DISMISSED. No costs.
damages are recoverable only if the case falls under Article 2219 of the Civil Code in SO ORDERED.
relation to Article 21. 10 Part of conventional wisdom is that he who comes to court Narvasa, C.J., Padilla, Regalado and Mendoza, JJ., concur.
to demand equity, must come with clean hands.
#Footnotes
In the case at bench, respondent Carloto is not without fault. He was fully aware
that his rural bank's obligation would mature on November 21, 1984 and his bank 1 Herrera, Manuel, J., Ponente; Torres, Justo, and Gutierrez,
has set aside cash for these bills payable. 11 He was all set to go to Manila to settle Angelina, JJ., concurring.
this obligation. He has received the documents necessary for the approval of their 2 Rollo, Court of Appeals Decision, p. 78.
rediscounting application with the Central Bank. He has also received the plane 3 Ibid.
ticket to go to Manila. Nevertheless, he did not immediately proceed to Manila but 4 Ibid., p. 79.
instead tarried for days allegedly claiming his ONE THOUSAND PESOS (P1,000.00) 5 Ibid.
pocket money. Due to his delayed trip, he failed to submit the rediscounting papers 6 Rollo, pp. 127-128, penned by Regional Trial Court Judge Pelagio
to the Central Bank on time and his bank was penalized THIRTY-TWO THOUSAND R. Lachica.
PESOS (P32,000.00) for failure to pay its obligation on its due date. The undue 7 Civil Code, Article 2217.
importance given by respondent Carloto to his ONE THOUSAND PESOS (P1,000.00) 8 Tamayo vs. University of Negros Occidental, 58 OG No. 37, p.
pocket money is inexplicable for it was not indispensable for him to follow up his 6023, September 10, 1962.
bank's rediscounting application with Central Bank. According to said respondent, 9 Supra., at p. 6032.
he needed the money to "invite people for a snack or dinner." 12The attitude of said 10 Garciano vs. Court of Appeals, G.R. No. 96126, August 10,
respondent speaks ill of his ways of business dealings and cannot be countenanced 1992, 212 SCRA 436.
by this Court. Verily, it will be revolting to our sense of ethics to use it as basis for 11 Rollo, p. 214.
awarding damages in favor of private respondent Carloto and the Rural Bank of 12 Id., p. 216.
Labason, Inc. 13 See People's Bank and Trust Co. vs. Syvel's Inc., No. L-29280,
We also hold that respondents failed to show that petitioner LBC's late delivery of August 11, 1988, 164 SCRA 247.
the cashpack was motivated by personal malice or bad faith, whether intentional or 14 See China Airlines Limited vs. Court of Appeals, G.R. No. 94590,
thru gross negligence. In fact, it was proved during the trial that the cashpack was July 29, 1992, 211 SCRA 897.
consigned on November 16, 1984, a Friday. It was sent to Cebu on November 19,
1984, the next business day. Considering this circumstance, petitioner cannot be
charged with gross neglect of duty. Bad faith under the law can not be presumed; it
must be established by clearer and convincing evidence. 13 Again, the unbroken
jurisprudence is that in breach of contract cases where the defendant is not shown
to have acted fraudulently or in bad faith, liability for damages is limited to the
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[G.R. No. 141994. January 17, 2005] moved to a later date because the school is still searching for the appropriate
FILIPINAS BROADCASTING NETWORK, INC., petitioner, vs. AGO MEDICAL instructor.
AND EDUCATIONAL CENTER-BICOL CHRISTIAN COLLEGE OF MEDICINE, (AMEC- xxx
BCCM) and ANGELITA F. AGO, respondents. It is a public knowledge that the Ago Medical and Educational Center has
DECISION survived and has been surviving for the past few years since its inception because of
CARPIO, J.: funds support from foreign foundations. If you will take a look at the AMEC
The Case premises youll find out that the names of the buildings there are foreign soundings.
This petition for review[1] assails the 4 January 1999 Decision[2] and 26 There is a McDonald Hall. Why not Jose Rizal or Bonifacio Hall? That is a very
January 2000 Resolution of the Court of Appeals in CA-G.R. CV No. 40151. The Court concrete and undeniable evidence that the support of foreign foundations for
of Appeals affirmed with modification the 14 December 1992 Decision[3] of the AMEC is substantial, isnt it? With the report which is the basis of the expose in
Regional Trial Court of Legazpi City, Branch 10, in Civil Case No. 8236. The Court of DZRC today, it would be very easy for detractors and enemies of the Ago family to
Appeals held Filipinas Broadcasting Network, Inc. and its broadcasters Hermogenes stop the flow of support of foreign foundations who assist the medical school on
Alegre and Carmelo Rima liable for libel and ordered them to solidarily pay Ago the basis of the latters purpose. But if the purpose of the institution (AMEC) is to
Medical and Educational Center-Bicol Christian College of Medicine moral damages, deceive students at cross purpose with its reason for being it is possible for these
attorneys fees and costs of suit. foreign foundations to lift or suspend their donations temporarily. [8]
The Antecedents xxx
Expos is a radio documentary[4] program hosted by Carmelo Mel Rima On the other hand, the administrators of AMEC-BCCM, AMEC Science
(Rima) and Hermogenes Jun Alegre (Alegre).[5] Expos is aired every morning over High School and the AMEC-Institute of Mass Communication in their effort to
DZRC-AM which is owned by Filipinas Broadcasting Network, Inc. (FBNI). Expos is minimize expenses in terms of salary are absorbing or continues to accept
heard over Legazpi City, the Albay municipalities and other Bicol areas. [6] rejects. For example how many teachers in AMEC are former teachers of Aquinas
In the morning of 14 and 15 December 1989, Rima and Alegre exposed University but were removed because of immorality? Does it mean that the present
various alleged complaints from students, teachers and parents against Ago administration of AMEC have the total definite moral foundation from catholic
Medical and Educational Center-Bicol Christian College of Medicine (AMEC) and its administrator of Aquinas University. I will prove to you my friends, that AMEC is a
administrators. Claiming that the broadcasts were defamatory, AMEC and Angelita dumping ground, garbage, not merely of moral and physical misfits. Probably they
Ago (Ago), as Dean of AMECs College of Medicine, filed a complaint for only qualify in terms of intellect. The Dean of Student Affairs of AMEC is Justita Lola,
damages[7] against FBNI, Rima and Alegre on 27 February 1990. Quoted are portions as the family name implies. She is too old to work, being an old woman. Is the
of the allegedly libelous broadcasts: AMEC administration exploiting the very [e]nterprising or compromising and
JUN ALEGRE: undemanding Lola? Could it be that AMEC is just patiently making use of Dean
Let us begin with the less burdensome: if you have children taking medical Justita Lola were if she is very old. As in atmospheric situation zero visibility the
course at AMEC-BCCM, advise them to pass all subjects because if they fail in any plane cannot land, meaning she is very old, low pay follows. By the way, Dean
subject they will repeat their year level, taking up all subjects including those they Justita Lola is also the chairman of the committee on scholarship in AMEC. She had
have passed already. Several students had approached me stating that they had retired from Bicol University a long time ago but AMEC has patiently made use of
consulted with the DECS which told them that there is no such regulation. If [there] her.
is no such regulation why is AMEC doing the same? xxx
xxx MEL RIMA:
Second: Earlier AMEC students in Physical Therapy had complained that xxx My friends based on the expose, AMEC is a dumping ground for moral
the course is not recognized by DECS. xxx and physically misfit people. What does this mean? Immoral and physically misfits
Third: Students are required to take and pay for the subject even if the as teachers.
subject does not have an instructor - such greed for money on the part of AMECs May I say Im sorry to Dean Justita Lola. But this is the truth. The truth is
administration. Take the subject Anatomy: students would pay for the subject upon this, that your are no longer fit to teach. You are too old. As an aviation, your case is
enrolment because it is offered by the school. However there would be no zero visibility. Dont insist.
instructor for such subject. Students would be informed that course would be
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xxx Why did AMEC still absorb her as a teacher, a dean, and chairman of In absolving Rima from the charge, the trial court ruled that Rimas only
the scholarship committee at that. The reason is practical cost saving in salaries, participation was when he agreed with Alegres expos. The trial court found Rimas
because an old person is not fastidious, so long as she has money to buy the statement within the bounds of freedom of speech, expression, and of the press.
ingredient of beetle juice. The elderly can get by thats why she (Lola) was taken in The dispositive portion of the decision reads:
as Dean. WHEREFORE, premises considered, this court finds for the
xxx plaintiff. Considering the degree of damages caused by the controversial
xxx On our end our task is to attend to the interests of students. It is likely utterances, which are not found by this court to be really very serious and
that the students would be influenced by evil. When they become members of damaging, and there being no showing that indeed the enrollment of plaintiff
society outside of campus will be liabilities rather than assets. What do you expect school dropped, defendants Hermogenes Jun Alegre, Jr. and Filipinas Broadcasting
from a doctor who while studying at AMEC is so much burdened with unreasonable Network (owner of the radio station DZRC), are hereby jointly and severally ordered
imposition? What do you expect from a student who aside from peculiar problems to pay plaintiff Ago Medical and Educational Center-Bicol Christian College of
because not all students are rich in their struggle to improve their social status are Medicine (AMEC-BCCM) the amount of P300,000.00 moral damages,
even more burdened with false regulations. xxx[9] (Emphasis supplied) plus P30,000.00 reimbursement of attorneys fees, and to pay the costs of suit.
The complaint further alleged that AMEC is a reputable learning institution. SO ORDERED. [13] (Emphasis supplied)
With the supposed exposs, FBNI, Rima and Alegre transmitted malicious Both parties, namely, FBNI, Rima and Alegre, on one hand, and AMEC and
imputations, and as such, destroyed plaintiffs (AMEC and Ago) reputation. AMEC Ago, on the other, appealed the decision to the Court of Appeals. The Court of
and Ago included FBNI as defendant for allegedly failing to exercise due diligence in Appeals affirmed the trial courts judgment with modification. The appellate court
the selection and supervision of its employees, particularly Rima and Alegre. made Rima solidarily liable with FBNI and Alegre. The appellate court denied Agos
On 18 June 1990, FBNI, Rima and Alegre, through Atty. Rozil Lozares, filed claim for damages and attorneys fees because the broadcasts were directed against
an Answer[10] alleging that the broadcasts against AMEC were fair and true. FBNI, AMEC, and not against her. The dispositive portion of the Court of Appeals decision
Rima and Alegre claimed that they were plainly impelled by a sense of public duty reads:
to report the goings-on in AMEC, [which is] an institution imbued with public WHEREFORE, the decision appealed from is hereby AFFIRMED, subject to
interest. the modification that broadcaster Mel Rima is SOLIDARILY ADJUDGED liable with
Thereafter, trial ensued. During the presentation of the evidence for the FBN[I] and Hermo[g]enes Alegre.
defense, Atty. Edmundo Cea, collaborating counsel of Atty. Lozares, filed a Motion SO ORDERED.[14]
to Dismiss[11] on FBNIs behalf. The trial court denied the motion to dismiss. FBNI, Rima and Alegre filed a motion for reconsideration which the Court
Consequently, FBNI filed a separate Answer claiming that it exercised due diligence of Appeals denied in its 26 January 2000 Resolution.
in the selection and supervision of Rima and Alegre. FBNI claimed that before hiring Hence, FBNI filed this petition.[15]
a broadcaster, the broadcaster should (1) file an application; (2) be interviewed; The Ruling of the Court of Appeals
and (3) undergo an apprenticeship and training program after passing the The Court of Appeals upheld the trial courts ruling that the questioned
interview. FBNI likewise claimed that it always reminds its broadcasters to observe broadcasts are libelous per se and that FBNI, Rima and Alegre failed to overcome
truth, fairness and objectivity in their broadcasts and to refrain from using libelous the legal presumption of malice. The Court of Appeals found Rima and Alegres claim
and indecent language. Moreover, FBNI requires all broadcasters to pass that they were actuated by their moral and social duty to inform the public of the
the Kapisanan ng mga Brodkaster sa Pilipinas (KBP) accreditation test and to secure students gripes as insufficient to justify the utterance of the defamatory remarks.
a KBP permit. Finding no factual basis for the imputations against AMECs administrators,
On 14 December 1992, the trial court rendered a Decision [12] finding FBNI the Court of Appeals ruled that the broadcasts were made with reckless disregard
and Alegre liable for libel except Rima. The trial court held that the broadcasts are as to whether they were true or false. The appellate court pointed out that FBNI,
libelous per se. The trial court rejected the broadcasters claim that their utterances Rima and Alegre failed to present in court any of the students who allegedly
were the result of straight reporting because it had no factual basis. The complained against AMEC. Rima and Alegre merely gave a single name when asked
broadcasters did not even verify their reports before airing them to show good to identify the students. According to the Court of Appeals, these circumstances
faith. In holding FBNI liable for libel, the trial court found that FBNI failed to exercise cast doubt on the veracity of the broadcasters claim that they were impelled by
diligence in the selection and supervision of its employees. their moral and social duty to inform the public about the students gripes.
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The Court of Appeals found Rima also liable for libel since he remarked society are libelous per se. Taken as a whole, the broadcasts suggest that AMEC is a
that (1) AMEC-BCCM is a dumping ground for morally and physically misfit teachers; money-making institution where physically and morally unfit teachers abound.
(2) AMEC obtained the services of Dean Justita Lola to minimize expenses on its However, FBNI contends that the broadcasts are not malicious. FBNI claims
employees salaries; and (3) AMEC burdened the students with unreasonable that Rima and Alegre were plainly impelled by their civic duty to air the students
imposition and false regulations.[16] gripes. FBNI alleges that there is no evidence that ill will or spite motivated Rima
The Court of Appeals held that FBNI failed to exercise due diligence in the and Alegre in making the broadcasts. FBNI further points out that Rima and Alegre
selection and supervision of its employees for allowing Rima and Alegre to make exerted efforts to obtain AMECs side and gave Ago the opportunity to defend AMEC
the radio broadcasts without the proper KBP accreditation. The Court of Appeals and its administrators. FBNI concludes that since there is no malice, there is no libel.
denied Agos claim for damages and attorneys fees because the libelous remarks FBNIs contentions are untenable.
were directed against AMEC, and not against her. The Court of Appeals adjudged Every defamatory imputation is presumed malicious.[25] Rima and Alegre
FBNI, Rima and Alegre solidarily liable to pay AMEC moral damages, attorneys fees failed to show adequately their good intention and justifiable motive in airing the
and costs of suit. supposed gripes of the students. As hosts of a documentary or public affairs
Issues program, Rima and Alegre should have presented the public issues free
FBNI raises the following issues for resolution: from inaccurate and misleading information.[26] Hearing the students alleged
I. WHETHER THE BROADCASTS ARE LIBELOUS; complaints a month before the expos,[27] they had sufficient time to verify their
II. WHETHER AMEC IS ENTITLED TO MORAL DAMAGES; sources and information. However, Rima and Alegre hardly made a thorough
III. WHETHER THE AWARD OF ATTORNEYS FEES IS PROPER; and investigation of the students alleged gripes. Neither did they inquire about nor
IV. WHETHER FBNI IS SOLIDARILY LIABLE WITH RIMA AND ALEGRE FOR confirm the purported irregularities in AMEC from the Department of Education,
PAYMENT OF MORAL DAMAGES, ATTORNEYS FEES AND COSTS OF SUIT. Culture and Sports. Alegre testified that he merely went to AMEC to verify his
The Courts Ruling report from an alleged AMEC official who refused to disclose any information.
We deny the petition. Alegre simply relied on the words of the students because they were many and not
This is a civil action for damages as a result of the allegedly defamatory because there is proof that what they are saying is true.[28]This plainly shows Rima
remarks of Rima and Alegre against AMEC.[17] While AMEC did not point out clearly and Alegres reckless disregard of whether their report was true or not.
the legal basis for its complaint, a reading of the complaint reveals that AMECs Contrary to FBNIs claim, the broadcasts were not the result of straight
cause of action is based on Articles 30 and 33 of the Civil Code. Article reporting. Significantly, some courts in the United States apply the privilege of
30[18] authorizes a separate civil action to recover civil liability arising from a neutral reportage in libel cases involving matters of public interest or public figures.
criminal offense. On the other hand, Article 33[19] particularly provides that the Under this privilege, a republisher who accurately and disinterestedly reports
injured party may bring a separate civil action for damages in cases of defamation, certain defamatory statements made against public figures is shielded from liability,
fraud, and physical injuries. AMEC also invokes Article 19[20] of the Civil Code to regardless of the republishers subjective awareness of the truth or falsity of the
justify its claim for damages. AMEC cites Articles 2176[21]and 2180[22] of the Civil accusation.[29]Rima and Alegre cannot invoke the privilege of neutral reportage
Code to hold FBNI solidarily liable with Rima and Alegre. because unfounded comments abound in the broadcasts. Moreover, there is no
I. existing controversy involving AMEC when the broadcasts were made. The privilege
Whether the broadcasts are libelous of neutral reportage applies where the defamed person is a public figure who is
A libel[23] is a public and malicious imputation of a crime, or of a vice or involved in an existing controversy, and a party to that controversy makes the
defect, real or imaginary, or any act or omission, condition, status, or circumstance defamatory statement.[30]
tending to cause the dishonor, discredit, or contempt of a natural or juridical However, FBNI argues vigorously that malice in law does not apply to this
person, or to blacken the memory of one who is dead. [24] case. Citing Borjal v. Court of Appeals,[31] FBNI contends that the broadcasts fall
There is no question that the broadcasts were made public and imputed to within the coverage of qualifiedly privileged communications for being
AMEC defects or circumstances tending to cause it dishonor, discredit and commentaries on matters of public interest. Such being the case, AMEC should
contempt. Rima and Alegres remarks such as greed for money on the part of AMECs prove malice in fact or actual malice. Since AMEC allegedly failed to prove actual
administrators; AMEC is a dumping ground, garbage of xxx moral and physical malice, there is no libel.
misfits; and AMEC students who graduate will be liabilities rather than assets of the
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FBNIs reliance on Borjal is misplaced. In Borjal, the Court elucidated on the report that plaintiff had no permit to offer Physical Therapy courses which they
doctrine of fair comment, thus: were offering.
[F]air commentaries on matters of public interest are privileged and The allegation that plaintiff was getting tremendous aids from foreign
constitute a valid defense in an action for libel or slander. The doctrine of fair foundations like Mcdonald Foundation prove not to be true also. The truth is there
comment means that while in general every discreditable imputation publicly made is no Mcdonald Foundation existing. Although a big building of plaintiff school was
is deemed false, because every man is presumed innocent until his guilt is judicially given the name Mcdonald building, that was only in order to honor the first
proved, and every false imputation is deemed malicious, nevertheless, when the missionary in Bicol of plaintiffs religion, as explained by Dr. Lita Ago. Contrary to the
discreditable imputation is directed against a public person in his public capacity, it claim of defendants over the air, not a single centavo appears to be received by
is not necessarily actionable. In order that such discreditable imputation to a plaintiff school from the aforementioned McDonald Foundation which does not
public official may be actionable, it must either be a false allegation of fact or a exist.
comment based on a false supposition. If the comment is an expression of Defendants did not even also bother to prove their claim, though denied
opinion, based on established facts, then it is immaterial that the opinion happens by Dra. Ago, that when medical students fail in one subject, they are made to
to be mistaken, as long as it might reasonably be inferred from the repeat all the other subject[s], even those they have already passed, nor their claim
facts.[32] (Emphasis supplied) that the school charges laboratory fees even if there are no laboratories in the
True, AMEC is a private learning institution whose business of educating school. No evidence was presented to prove the bases for these claims, at least in
students is genuinely imbued with public interest. The welfare of the youth in order to give semblance of good faith.
general and AMECs students in particular is a matter which the public has the right As for the allegation that plaintiff is the dumping ground for misfits, and
to know. Thus, similar to the newspaper articles in Borjal, the subject broadcasts immoral teachers, defendant[s] singled out Dean Justita Lola who is said to be so
dealt with matters of public interest. However, unlike in Borjal, the questioned old, with zero visibility already. Dean Lola testified in court last Jan. 21, 1991, and
broadcasts are not based on established facts. The record supports the following was found to be 75 years old. xxx Even older people prove to be effective teachers
findings of the trial court: like Supreme Court Justices who are still very much in demand as law professors in
xxx Although defendants claim that they were motivated by consistent their late years. Counsel for defendants is past 75 but is found by this court to be
reports of students and parents against plaintiff, yet, defendants have not still very sharp and effective. So is plaintiffs counsel.
presented in court, nor even gave name of a single student who made the Dr. Lola was observed by this court not to be physically decrepit yet, nor
complaint to them, much less present written complaint or petition to that effect. mentally infirmed, but is still alert and docile.
To accept this defense of defendants is too dangerous because it could easily give The contention that plaintiffs graduates become liabilities rather than
license to the media to malign people and establishments based on flimsy excuses assets of our society is a mere conclusion. Being from the place himself, this court is
that there were reports to them although they could not satisfactorily establish it. aware that majority of the medical graduates of plaintiffs pass the board
Such laxity would encourage careless and irresponsible broadcasting which is examination easily and become prosperous and responsible professionals.[33]
inimical to public interests. Had the comments been an expression of opinion based on established
Secondly, there is reason to believe that defendant radio broadcasters, facts, it is immaterial that the opinion happens to be mistaken, as long as it might
contrary to the mandates of their duties, did not verify and analyze the truth of the reasonably be inferred from the facts.[34]However, the comments of Rima and
reports before they aired it, in order to prove that they are in good faith. Alegre were not backed up by facts. Therefore, the broadcasts are not privileged
Alegre contended that plaintiff school had no permit and is not accredited and remain libelous per se.
to offer Physical Therapy courses. Yet, plaintiff produced a certificate coming from The broadcasts also violate the Radio Code[35] of the Kapisanan ng mga
DECS that as of Sept. 22, 1987 or more than 2 years before the controversial Brodkaster sa Pilipinas, Ink. (Radio Code). Item I(B) of the Radio Code provides:
broadcast, accreditation to offer Physical Therapy course had already been given B. PUBLIC AFFAIRS, PUBLIC ISSUES AND COMMENTARIES
the plaintiff, which certificate is signed by no less than the Secretary of Education 1. x x x
and Culture herself, Lourdes R. Quisumbing (Exh. C-rebuttal). Defendants could 4. Public affairs program shall present public issues free from personal
have easily known this were they careful enough to verify. And yet, defendants bias, prejudice and inaccurate and misleading information. x x x Furthermore, the
were very categorical and sounded too positive when they made the erroneous station shall strive to present balanced discussion of issues. x x x.
xxx
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7. The station shall be responsible at all times in the supervision of public condition precedent to the recovery of some damages.[47] In this case, the
affairs, public issues and commentary programs so that they conform to the broadcasts are libelous per se. Thus, AMEC is entitled to moral damages.
provisions and standards of this code. However, we find the award of P300,000 moral damages unreasonable.
8. It shall be the responsibility of the newscaster, commentator, host and The record shows that even though the broadcasts were libelous per se, AMEC has
announcer to protect public interest, general welfare and good order in the not suffered any substantial or material damage to its reputation. Therefore, we
presentation of public affairs and public issues.[36](Emphasis supplied) reduce the award of moral damages from P300,000 to P150,000.
The broadcasts fail to meet the standards prescribed in the Radio Code, III.
which lays down the code of ethical conduct governing practitioners in the radio Whether the award of attorneys fees is proper
broadcast industry. The Radio Code is a voluntary code of conduct imposed by the FBNI contends that since AMEC is not entitled to moral damages, there is
radio broadcast industry on its own members. The Radio Code is a public warranty no basis for the award of attorneys fees. FBNI adds that the instant case does not
by the radio broadcast industry that radio broadcast practitioners are subject to a fall under the enumeration in Article 2208[48] of the Civil Code.
code by which their conduct are measured for lapses, liability and sanctions. The award of attorneys fees is not proper because AMEC failed to justify
The public has a right to expect and demand that radio broadcast satisfactorily its claim for attorneys fees. AMEC did not adduce evidence to warrant
practitioners live up to the code of conduct of their profession, just like other the award of attorneys fees. Moreover, both the trial and appellate courts failed to
professionals. A professional code of conduct provides the standards for explicitly state in their respective decisions the rationale for the award of attorneys
determining whether a person has acted justly, honestly and with good faith in the fees.[49] In Inter-Asia Investment Industries, Inc. v. Court of Appeals,[50] we held
exercise of his rights and performance of his duties as required by Article 19 [37] of that:
the Civil Code. A professional code of conduct also provides the standards for [I]t is an accepted doctrine that the award thereof as an item of damages is
determining whether a person who willfully causes loss or injury to another has the exception rather than the rule, and counsels fees are not to be awarded every
acted in a manner contrary to morals or good customs under Article 21[38] of the time a party wins a suit. The power of the court to award attorneys fees under
Civil Code. Article 2208 of the Civil Code demands factual, legal and equitable justification,
II. without which the award is a conclusion without a premise, its basis being
Whether AMEC is entitled to moral damages improperly left to speculation and conjecture. In all events, the court must
FBNI contends that AMEC is not entitled to moral damages because it is a explicitly state in the text of the decision, and not only in the decretal portion
corporation.[39] thereof, the legal reason for the award of attorneys fees.[51] (Emphasis supplied)
A juridical person is generally not entitled to moral damages because, While it mentioned about the award of attorneys fees by stating that it lies
unlike a natural person, it cannot experience physical suffering or such sentiments within the discretion of the court and depends upon the circumstances of each
as wounded feelings, serious anxiety, mental anguish or moral shock. [40] The Court case, the Court of Appeals failed to point out any circumstance to justify the award.
of Appeals cites Mambulao Lumber Co. v. PNB, et al.[41] to justify the award of IV.
moral damages. However, the Courts statement in Mambulao that a corporation Whether FBNI is solidarily liable with Rima and Alegre
may have a good reputation which, if besmirched, may also be a ground for the for moral damages, attorneys fees
award of moral damages is an obiter dictum.[42] and costs of suit
Nevertheless, AMECs claim for moral damages falls under item 7 of Article FBNI contends that it is not solidarily liable with Rima and Alegre for the
2219[43] of the Civil Code. This provision expressly authorizes the recovery of moral payment of damages and attorneys fees because it exercised due diligence in the
damages in cases of libel, slander or any other form of defamation. Article 2219(7) selection and supervision of its employees, particularly Rima and Alegre. FBNI
does not qualify whether the plaintiff is a natural or juridical person. Therefore, a maintains that its broadcasters, including Rima and Alegre, undergo a very
juridical person such as a corporation can validly complain for libel or any other regimented process before they are allowed to go on air. Those who apply for
form of defamation and claim for moral damages.[44] broadcaster are subjected to interviews, examinations and an apprenticeship
Moreover, where the broadcast is libelous per se, the law implies program.
damages.[45] In such a case, evidence of an honest mistake or the want of character FBNI further argues that Alegres age and lack of training are irrelevant to
or reputation of the party libeled goes only in mitigation of damages. [46] Neither in his competence as a broadcaster. FBNI points out that the minor deficiencies in the
such a case is the plaintiff required to introduce evidence of actual damages as a KBP accreditation of Rima and Alegre do not in any way prove that FBNI did not
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exercise the diligence of a good father of a family in selecting and supervising them. it hires a broadcaster. Significantly, membership in the KBP, while voluntary,
Rimas accreditation lapsed due to his non-payment of the KBP annual fees while indicates the broadcasters strong commitment to observe the broadcast industrys
Alegres accreditation card was delayed allegedly for reasons attributable to the KBP rules and regulations. Clearly, these circumstances show FBNIs lack of diligence in
Manila Office. FBNI claims that membership in the KBP is merely voluntary and not selecting and supervising Rima and Alegre. Hence, FBNI is solidarily liable to pay
required by any law or government regulation. damages together with Rima and Alegre.
FBNIs arguments do not persuade us. WHEREFORE, we DENY the instant petition. We AFFIRM the Decision of 4
The basis of the present action is a tort. Joint tort feasors are jointly and January 1999 and Resolution of 26 January 2000 of the Court of Appeals in CA-G.R.
severally liable for the tort which they commit.[52] Joint tort feasors are all the CV No. 40151 with the MODIFICATION that the award of moral damages is reduced
persons who command, instigate, promote, encourage, advise, countenance, from P300,000 to P150,000 and the award of attorneys fees is deleted. Costs
cooperate in, aid or abet the commission of a tort, or who approve of it after it is against petitioner.
done, if done for their benefit.[53] Thus, AMEC correctly anchored its cause of action SO ORDERED.
against FBNI on Articles 2176 and 2180 of the Civil Code. Davide, Jr., C.J., (Chairman), Quisumbing, Ynares-Santiago, and Azcuna,
As operator of DZRC-AM and employer of Rima and Alegre, FBNI is JJ., concur.
solidarily liable to pay for damages arising from the libelous broadcasts. As stated
by the Court of Appeals, recovery for defamatory statements published by radio or
television may be had from the owner of the station, a licensee, the operator of
the station, or a person who procures, or participates in, the making of the
defamatory statements.[54] An employer and employee are solidarily liable for a
defamatory statement by the employee within the course and scope of his or her
employment, at least when the employer authorizes or ratifies the
defamation.[55] In this case, Rima and Alegre were clearly performing their official
duties as hosts of FBNIs radio program Expos when they aired the broadcasts. FBNI
neither alleged nor proved that Rima and Alegre went beyond the scope of their
work at that time. There was likewise no showing that FBNI did not authorize and
ratify the defamatory broadcasts.
Moreover, there is insufficient evidence on record that FBNI exercised due
diligence in the selection and supervision of its employees, particularly Rima and
Alegre. FBNI merely showed that it exercised diligence in the selection of its
broadcasters without introducing any evidence to prove that it observed the same
diligence in the supervision of Rima and Alegre. FBNI did not show how it exercised
diligence in supervising its broadcasters. FBNIs alleged constant reminder to its
broadcasters to observe truth, fairness and objectivity and to refrain from using
libelous and indecent language is not enough to prove due diligence in the
supervision of its broadcasters. Adequate training of the broadcasters on the
industrys code of conduct, sufficient information on libel laws, and continuous
evaluation of the broadcasters performance are but a few of the many ways of
showing diligence in the supervision of broadcasters.
FBNI claims that it has taken all the precaution in the selection of Rima and
Alegre as broadcasters, bearing in mind their qualifications. However, no clear and
convincing evidence shows that Rima and Alegre underwent FBNIs regimented
process of application. Furthermore, FBNI admits that Rima and Alegre had
deficiencies in their KBP accreditation,[56] which is one of FBNIs requirements before
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Surcharge therein 2,399.77
G.R. No. L-12719 May 31, 1962
THE COLLECTOR OF INTERNAL REVENUE, petitioner, vs. As fixed tax for the years 1946 to 1952 70.00
THE CLUB FILIPINO, INC. DE CEBU, respondent.
Office of the Solicitor General for petitioner. Compromise penalty 500.00
V. Jaime and L. E. Petilla for respondent. The Club wrote the Collector, requesting for the cancellation of the
PAREDES, J.: assessment. The request having been denied, the Club filed the instant petition for
This is a petition to review the decision of the Court of Tax Appeals, review.
reversing the decision of the Collector of Internal Revenue, assessing against and The dominant issues involved in this case are twofold:
demanding from the "Club Filipino, Inc. de Cebu", the sum of P12,068.84 as fixed 1. Whether the respondent Club is liable for the payment of the sum of
and percentage taxes, surcharge and compromise penalty, allegedly due from it as a 12,068.84, as fixed and percentage taxes and surcharges prescribed in sections 182,
keeper of bar and restaurant. 183 and 191 of the Tax Code, under which the assessment was made, in connection
As found by the Court of Tax Appeals, the "Club Filipino, Inc. de Cebu," with the operation of its bar and restaurant, during the periods mentioned above;
(Club, for short), is a civic corporation organized under the laws of the Philippines and
with an original authorized capital stock of P22,000.00, which was subsequently 2. Whether it is liable for the payment of the sum of P500.00 as
increased to P200,000.00, among others, to it "proporcionar, operar, y mantener un compromise penalty.
campo de golf, tenis, gimnesio (gymnasiums), juego de bolos (bowling alleys), Section 182, of the Tax Code states, "Unless otherwise provided, every
mesas de billar y pool, y toda clase de juegos no prohibidos por leyes generales y person engaging in a business on which the percentage tax is imposed shall pay in
ordenanzas generales; y desarollar y cultivar deportes de toda clase y denominacion full a fixed annual tax of ten pesos for each calendar year or fraction thereof in
cualquiera para el recreo y entrenamiento saludable de sus miembros y accionistas" which such person shall engage in said business." Section 183 provides in general
(sec. 2, Escritura de Incorporacion del Club Filipino, Inc. Exh. A). Neither in the that "the percentage taxes on business shall be payable at the end of each calendar
articles or by-laws is there a provision relative to dividends and their distribution, quarter in the amount lawfully due on the business transacted during each quarter;
although it is covenanted that upon its dissolution, the Club's remaining assets, etc." And section 191, same Tax Code, provides "Percentage tax . . . Keepers of
after paying debts, shall be donated to a charitable Philippine Institution in Cebu restaurants, refreshment parlors and other eating places shall pay a tax three per
(Art. 27, Estatutos del Club, Exh. A-a.). centum, and keepers of bar and cafes where wines or liquors are served five per
The Club owns and operates a club house, a bowling alley, a golf course (on centum of their gross receipts . . .". It has been held that the liability for fixed and
a lot leased from the government), and a bar-restaurant where it sells wines and percentage taxes, as provided by these sections, does not ipso facto attach by mere
liquors, soft drinks, meals and short orders to its members and their guests. reason of the operation of a bar and restaurant. For the liability to attach, the
The bar-restaurant was a necessary incident to the operation of the club and its operator thereof must be engaged in the business as a barkeeper and restaurateur.
golf-course. The club is operated mainly with funds derived from membership fees The plain and ordinary meaning of business is restricted to activities or affairs where
and dues. Whatever profits it had, were used to defray its overhead expenses and profit is the purpose or livelihood is the motive, and the term business when used
to improve its golf-course. In 1951. as a result of a capital surplus, arising from the without qualification, should be construed in its plain and ordinary meaning,
re-valuation of its real properties, the value or price of which increased, the Club restricted to activities for profit or livelihood (The Coll. of Int. Rev. v. Manila Lodge
declared stock dividends; but no actual cash dividends were distributed to the No. 761 of the BPOE [Manila Elks Club] & Court of Tax Appeals, G.R. No. L-11176,
stockholders. In 1952, a BIR agent discovered that the Club has never paid June 29, 1959, giving full definitions of the word "business"; Coll. of Int. Rev. v.
percentage tax on the gross receipts of its bar and restaurant, although it secured Sweeney, et al. [International Club of Iloilo, Inc.], G.R. No. L-12178, Aug. 21, 1959,
B-4, B-9(a) and B-7 licenses. In a letter dated December 22, 1852, the Collector of the facts of which are similar to the ones at bar; Manila Polo Club v. B. L. Meer, etc.,
Internal Revenue assessed against and demanded from the Club, the following No. L-10854, Jan. 27, 1960).
sums: — Having found as a fact that the Club was organized to develop and cultivate
As percentage tax on its gross receipts sports of all class and denomination, for the healthful recreation and entertainment
during the tax years 1946 to 1951 P9,599.07 of its stockholders and members; that upon its dissolution, its remaining assets,

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after paying debts, shall be donated to a charitable Philippine Institution in Cebu; Having arrived at the conclusion that respondent Club is not engaged in
that it is operated mainly with funds derived from membership fees and dues; that the business as an operator of a bar and restaurant, and therefore, not liable for
the Club's bar and restaurant catered only to its members and their guests; that fixed and percentage taxes, it follows that it is not liable for any penalty, much less
there was in fact no cash dividend distribution to its stockholders and that whatever of a compromise penalty.
was derived on retail from its bar and restaurant was used to defray its overall WHEREFORE, the decision appealed from is affirmed without costs.
overhead expenses and to improve its golf-course (cost-plus-expenses-basis), it Padilla, Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Barrera and
stands to reason that the Club is not engaged in the business of an operator of bar Dizon, JJ., concur.
and restaurant (same authorities, cited above). Bengzon, C.J., is on leave.
It is conceded that the Club derived profit from the operation of its bar and
restaurant, but such fact does not necessarily convert it into a profit-making
enterprise. The bar and restaurant are necessary adjuncts of the Club to foster its
purposes and the profits derived therefrom are necessarily incidental to the
primary object of developing and cultivating sports for the healthful recreation and
entertainment of the stockholders and members. That a Club makes some profit,
does not make it a profit-making Club. As has been remarked a club should always
strive, whenever possible, to have surplus (Jesus Sacred Heart College v. Collector
of Int. Rev., G.R. No. L-6807, May 24, 1954; Collector of Int. Rev. v. Sinco
Educational Corp., G.R. No. L-9276, Oct. 23, 1956).1äwphï1.ñët
It is claimed that unlike the two cases just cited (supra), which are non-
stock, the appellee Club is a stock corporation. This is unmeritorious. The facts that
the capital stock of the respondent Club is divided into shares, does not detract
from the finding of the trial court that it is not engaged in the business of operator
of bar and restaurant. What is determinative of whether or not the Club is engaged
in such business is its object or purpose, as stated in its articles and by-laws. It is a
familiar rule that the actual purpose is not controlled by the corporate form or by
the commercial aspect of the business prosecuted, but may be shown by extrinsic
evidence, including the by-laws and the method of operation. From the extrinsic
evidence adduced, the Tax Court concluded that the Club is not engaged in the
business as a barkeeper and restaurateur.
Moreover, for a stock corporation to exist, two requisites must be
complied with, to wit: (1) a capital stock divided into shares and (2) an authority to
distribute to the holders of such shares, dividends or allotments of the surplus
profits on the basis of the shares held (sec. 3, Act No. 1459). In the case at bar,
nowhere in its articles of incorporation or by-laws could be found an authority for
the distribution of its dividends or surplus profits. Strictly speaking, it cannot,
therefore, be considered a stock corporation, within the contemplation of the
corporation law.
A tax is a burden, and, as such, it should not be deemed imposed upon
fraternal, civic, non-profit, nonstock organizations, unless the intent to the contrary
is manifest and patent" (Collector v. BPOE Elks Club, et al., supra), which is not the
case in the present appeal.

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