G.R. No.

188072               October 19, 2011
EMERITA M. DE GUZMAN, Petitioner, vs. ANTONIO M.
TUMOLVA, Respondent.
This is a petition for review on certiorari under Rule 45 of the Revised Rules of Court
assailing the February 24, 2009 Decision1 of the Court of Appeals (CA) and its May
26, 2009 Resolution2 in CA-G.R. SP. No. 104945 entitled "Antonio M. Tumolva v.
Emerita M. De Guzman."
The Facts
On September 6, 2004, petitioner Emerita M. De Guzman (De Guzman),
represented by her attorneys-in-fact, Lourdes Rivera and Dhonna Chan, and
respondent Antonio Tumolva, doing business under the name and style A.M.
Tumolva Engineering Works (the Contractor), entered into a Construction
Agreement3 (Agreement) for the construction of an orphanage consisting of an
administration building, directors/guests house, dining and service building,
children’s dormitory, male staff house, and covered walkways in Brgy. Pulong
Bunga, Purok 4, Silang, Cavite, for a contract price of ₱ 15,982,150.39.
Incorporated in the Agreement was the plan and specifications of the perimeter
fence. The Contractor, however, made deviations from the agreed plan 4 with respect
to the perimeter fence of the orphanage.
In his Answer with Counterclaim, the Contractor denied liability for the damaged
fence claiming, among others, that its destruction was an act of God. He admitted
making deviations from the plan, but pointed out that the same were made with the
knowledge and consent of De Guzman through her representatives, Architect Quin
Baterna and Project Engineer Rodello Santos (Engineer Santos), who were present
during the construction of the fence. He further argued that pursuant to the
Agreement, the claim for damages was already barred by the 12-month period from
the issuance of the Certificate of Acceptance of the project within which to file the
claim. He, thus, prayed for the dismissal of the action and interposed a counterclaim
for actual and compensatory damages for the additional work/change orders made
on the project in the amount of ₱ 2,046,500.00, attorney’s fees and litigation
expenses.
After due proceedings, the CIAC issued the Award dated July 17, 2008 in favor of
De Guzman, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered and AWARD is made on the monetary
claims of Claimant EMERITA M. DE GUZMAN, directing Respondent
Contractor ANTONIO M. TUMOLVA, to pay her the following amounts:
₱ 187,509.00 as actual damages for reconstructing the collapsed and damaged
perimeter fence.

On September 6, 2005, after the completion of the project, De Guzman issued a
Certificate of Acceptance. For his part, the Contractor issued a quitclaim
acknowledging the termination of the contract and the full compliance therewith by
De Guzman.
In November 2006, during typhoon "Milenyo," a portion of the perimeter fence
collapsed and other portions tilted. In her Letter dated December 5, 2006, De
Guzman, through counsel, demanded the repair of the fence in accordance with the
plan. In response, the Contractor claimed that the destruction of the fence was an
act of God and expressed willingness to discuss the matter to avoid unnecessary
litigation. De Guzman, however, reiterated her demand for the restoration of the
wall without additional cost on her part, or in the alternative, for the Contractor to
make an offer of a certain amount by way of compensation for the damages she
sustained. Her demand was not heeded.
On February 14, 2008, De Guzman filed a Request for Arbitration 5 of the dispute
before the Construction Industry Arbitration Commission (CIAC). She alleged that
the Contractor deliberately defrauded her in the construction of the perimeter fence
by "under sizing the required column rebars from 12mm. based on the plan to only
10mm., the required concrete hollow blocks from #6 to #5, and the distance
between columns from 3.0m to 4.3m."6 Further, the Contractor neither anchored
the lenten beams to the columns nor placed drains or weepholes along the lower
walls. She prayed for an award of actual, moral and exemplary damages, as well as
attorney’s fees and expenses of litigation, and for the inspection and technical
assessment of the construction project and the rectification of any defect.
Interest is awarded on the foregoing amount at the legal rate of 6% per
annum computed from the date of this Award. After finality thereof, interest at the
rate of 12% per annum shall be paid thereon until full payment of the awarded
amount shall have been made, "this interim period being deemed to be at that time
already a forbearance of credit" (Eastern Shipping Lines, Inc. v. Court of
Appeals (243 SCRA 78 [1994])
₱ 100,000.00 as moral damages.
₱ 100,000.00 as exemplary damages.
₱ 50,000.00 for attorney’s fees and expenses of litigation.
₱ 437,509.00 – TOTAL AMOUNT DUE THE CLAIMANT
The CIAC staff is hereby directed to make the necessary computation of how much
has been paid by Claimant as its proportionate share of the arbitration costs
totaling ₱ 110,910.44, which computed amount shall be reimbursed by
Respondent to the Claimant.
SO ORDERED.7
Aggrieved, the Contractor filed before the CA a Petition for Review with prayer for
the issuance of a temporary restraining order, challenging the CIAC’s award of
damages in favor of De Guzman.
On February 24, 2009, the CA modified the Award rendered by CIAC. The
dispositive portion of the decision states:

1|Torts Finals
WHEREFORE, the instant petition is partly GRANTED. The assailed Award dated
July 17, 2008 rendered by the CIAC in CIAC Case No. 03-2008 is
hereby MODIFIED, deleting the award of actual, moral and exemplary damages,
but awarding temperate damages in the amount of ₱ 100,000.00 for reconstructing
the collapsed and damaged perimeter fence. The rest of the Award stands.
SO ORDERED.8
The CA held that although the Contractor deviated from the plan, CIAC’s award of
actual damages was not proper inasmuch as De Guzman failed to establish its
extent with reasonable certainty. The CA, however, found it appropriate to award
temperate damages considering that De Guzman suffered pecuniary loss as a result
of the collapse of the perimeter fence due to the Contractor’s negligence and
violation of his undertakings in the Agreement. It further ruled that there was no
basis for awarding moral damages reasoning out that De Guzman’s worry for the
safety of the children in the orphanage was insufficient to justify the award.
Likewise, it could not sustain the award of exemplary damages as there was no
showing that the Contractor acted in wanton, reckless, fraudulent, oppressive, or
malevolent manner.
De Guzman filed a motion for reconsideration of the said decision, but it was denied
for lack of merit by the CA in its Resolution dated May 26, 2009.
Hence, De Guzman interposed the present petition before this Court anchored on
the following
GROUNDS
(I) THE COURT OF APPEALS ERRED IN RULING THAT THE EVIDENCE ON
RECORD FAILED TO SUFFICIENTLY ESTABLISH THE AMOUNT OF ACTUAL
DAMAGES THAT PETITIONER DE GUZMAN CAN RECOVER FROM THE
RESPONDENT.
(II) THE COURT OF APPEALS ERRED IN RULING THAT PETITIONER DE
GUZMAN IS NOT ENTITLED TO AWARDS OF MORAL AND EXEMPLARY
DAMAGES.9
De Guzman argues inter alia that the Contractor is liable for the actual damages
that she suffered from the collapse of the perimeter fence. He failed to put weep
holes on the collapsed portion of the said fence, which could have relieved the
pressure from the wet soil of the adjoining higher ground.
De Guzman adds that the computation of the cost of rebuilding the collapsed portion
of the perimeter fence by Engineer Santos constituted substantial evidence
warranting an award of actual damages. His affidavit served as his direct testimony
in the case even if he did not appear during the hearing. Having been notarized, it
must be admissible in evidence without further proof of authenticity.
Further, De Guzman questions the CA’s deletion of the award for moral and
exemplary damages. She insists that her anxiety and suffering over the safety of
the children in the orphanage entitled her to an award of moral damages. It is
likewise her position that the Contractor’s wanton acts of deliberately cheating the
benefactors of the orphanage by making deviations on the approved plan through
the use of construction materials of inferior quality warranted the imposition of
exemplary damages against the Contractor.
The Court’s ruling
There is no doubt that De Guzman incurred damages as a result of the collapse of
the perimeter fence. The Contractor is clearly guilty of negligence and, therefore,
liable for the damages caused. As correctly found by the CA:
Nonetheless, the Court sustains the CIAC’s conclusion that the CONTRACTOR was
negligent in failing to place weepholes on the collapsed portion of the perimeter
fence. Fault or negligence of the obligor consists in his failure to exercise due care
and prudence in the performance of the obligation as the nature of the obligation so
demands, taking into account the particulars of each case. It should be emphasized
that even if not provided for in the plan, the CONTRACTOR himself admitted the
necessity of putting weepholes and claimed to have actually placed them in view of
the higher ground elevation of the adjacent lot vis-à-vis the level ground of the
construction site. Since he was the one who levelled the ground and was, thus,
aware that the lowest portion of the adjoining land was nearest the perimeter fence,
he should have ensured that sufficient weepholes were placed because water would
naturally flow towards the fence.
However, the CONTRACTOR failed to refute Mr. Ramos’ claim that the collapsed
portion of the perimeter fence lacked weepholes. Records also show that the
omission of such weepholes and/or their being plastered over resulted from his
failure to exercise the requisite degree of supervision over the work, which is the
same reason he was unable to discover the deviations from the plan until the fence
collapsed. Hence, the CONTRACTOR cannot be relieved from liability therefor. 10
The Court finds no compelling reason to deviate from this factual finding by the
CIAC, as affirmed by the CA. It is settled that findings of fact of quasi-judicial
bodies, which have acquired expertise because their jurisdiction is confined to
specific matters, are generally accorded not only respect, but also finality, especially
when affirmed by the CA. In particular, factual findings of construction arbitrators
are final and conclusive and not reviewable by this Court on appeal. 11
CIAC’s award of actual damages, however, is indeed not proper under the
circumstances as there is no concrete evidence to support the plea. In determining
actual damages, one cannot rely on mere assertions, speculations, conjectures or
guesswork, but must depend on competent proof and on the best evidence
obtainable regarding specific facts that could afford some basis for measuring
compensatory or actual damages.12 Article 2199 of the New Civil Code defines actual
or compensatory damages as follows:
2|Torts Finals
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.
Unfortunately, De Guzman failed to adduce evidence to satisfactorily prove the
amount of actual damage incurred. Contrary to her assertion, the handwritten
calculation of reconstruction costs made by Engineer Santos and attached to his
affidavit cannot be given any probative value because he never took the witness
stand to affirm the veracity of his allegations in his affidavit and be cross-examined
on them. In this regard, it is well to quote the ruling of the Court in the case
of Tating v. Marcella,13 to wit:
There is no issue on the admissibility of the subject sworn statement. However, the
admissibility of evidence should not be equated with weight of evidence. The
admissibility of evidence depends on its relevance and competence while the weight
of evidence pertains to evidence already admitted and its tendency to convince and
persuade. Thus, a particular item of evidence may be admissible, but its evidentiary
weight depends on judicial evaluation within the guidelines provided by the rules of
evidence. It is settled that affidavits are classified as hearsay evidence since they
are not generally prepared by the affiant but by another who uses his own language
in writing the affiant’s statements, which may thus be either omitted or
misunderstood by the one writing them. Moreover, the adverse party is deprived of
the opportunity to cross-examine the affiant. For this reason, affidavits are
generally rejected for being hearsay, unless the affiants themselves are placed on
the witness stand to testify thereon.
Neither is there any evidence presented to substantiate Engineer Santos’
computation of the reconstruction costs. For such computation to be considered,
there must be some other relevant evidence to corroborate the same. 14 Thus, the
CA was correct in disregarding the affidavit of Engineer Santos for being hearsay
and in not giving probative weight to it. There being no tangible document or
concrete evidence to support the award of actual damages, the same cannot be
sustained.
Nevertheless, De Guzman is indeed entitled to temperate damages as provided
under Article 2224 of the Civil Code for the loss she suffered. When pecuniary loss
has been suffered but the amount cannot, from the nature of the case, be proven
with certainty, temperate damages may be recovered. Temperate damages may be
allowed in cases where from the nature of the case, definite proof of pecuniary loss
cannot be adduced, although the court is convinced that the aggrieved party
suffered some pecuniary loss.15 Undoubtedly, De Guzman suffered pecuniary loss
brought about by the collapse of the perimeter fence by reason of the Contractor’s
negligence and failure to comply with the specifications. As she failed to prove the
exact amount of damage with certainty as required by law, the CA was correct in
awarding temperate damages, in lieu of actual damages. However, after weighing
carefully the attendant circumstances and taking into account the cost of rebuilding
the damaged portions of the perimeter fence, the amount of ₱ 100,000.00 awarded
to De Guzman should be increased. This Court, in recognition of the pecuniary loss
suffered, finds the award of ₱ 150,000.00 by way of temperate damages as
reasonable and just under the premises.
As to the CIAC’s award of ₱ 100,000.00 as moral damages, this Court is one with
the CA that De Guzman is not entitled to such an award. The record is bereft of any
proof that she actually suffered moral damages as contemplated in Article 2217 of
the Code, which provides:
Art. 2217. Moral damages include physical suffering, mental anguish, fright, serious
anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation,
and similar injury. Though incapable of pecuniary computation, moral damages may
be recovered if they are the proximate result of the defendant’s wrongful act or
omission.
Certainly, the award of moral damages must be anchored on a clear showing that
she actually experienced mental anguish, besmirched reputation, sleepless nights,
wounded feelings, or similar injury. There could not have been a better witness to
this experience than De Guzman herself. 16 Her testimony, however, did not provide
specific details of the suffering she allegedly went through after the fence collapsed
while she was miles away in the United States. As the CA aptly observed, "the
testimony of the OWNER as to her worry for the safety of the children in the
orphanage is insufficient to establish entitlement thereto." 17 Since an award of moral
damages is predicated on a categorical showing by the claimant that she actually
experienced emotional and mental sufferings, it must be disallowed absent any
evidence thereon.18
Moreover, under the aforequoted provision, moral damages cannot be recovered as
the perimeter fence collapsed in the midst of the strong typhoon "Milenyo." It was
not clearly established that the destruction was the proximate result of the
Contractor’s act of making deviation from the plan. As correctly concluded by the
CA, viz:
However, while it cannot be denied that the Contractor deviated from the plan,
there was no clear showing whether the same caused or contributed to the
collapse/tilting of the subject perimeter fence. No competent evidence was
presented to establish such fact. As the CIAC itself acknowledged, "(t)here is no
way by which to accurately resolve this issue by the evidence submitted by the
parties." The statement of Edwin B. Ramos, Engineering Aide at the Office of the
Municipal Engineer of Silang, Cavite, who conducted an ocular inspection of the
collapsed perimeter fence, that the observed deviations from the plan "affected the
strength of the fence and made it weaker, such that its chance of withstanding the
pressure of water from the other side thereof was greatly diminished or affected"
was merely an expression of opinion. As he himself admitted, he is not qualified to
render an expert opinion.19
Further, De Guzman was not able to show that her situation fell within any of the
cases enumerated in Article 221920 of the Civil Code upon which to base her demand
for the award of moral damages.
Neither does the breach of contract committed by the Contractor, not being
fraudulent or made in bad faith, warrant the grant of moral damages under Article
2220 which provides that:
3|Torts Finals
Art. 2220. Willful injury to property may be a legal ground for awarding moral
damages if the court should find that, under the circumstances, such damages are
justly due. The same rule applies to breaches of contract where the defendant acted
fraudulently or in bad faith.
De Guzman cannot be awarded exemplary damages either, in the absence of any
evidence showing that the Contractor acted in a wanton, fraudulent, reckless,
oppressive, or malevolent manner as provided in Article 2232 of the Civil Code. The
ruling in the case of Nakpil and Sons v. Court of Appeals,21 relied upon by De
Guzman, where it was emphasized that the wanton negligence in effecting the
plans, designs, specifications, and construction of a building is equivalent to bad
faith in the performance of the assigned task, finds no application in the case at
bench. As already pointed out, there is negligence on the part of Contractor, but it
is neither wanton, fraudulent, reckless, oppressive, nor malevolent.
The award of exemplary damages cannot be made merely on the allegation of De
Guzman that the Contractor’s deviations from the plans and specifications without
her written consent was deplorable and condemnable. The Court regards the
deviations as excusable due to the unavailability of the approved construction
materials. Besides, these were made known to De Guzman’s project manager who
was present all the time during the construction. Indeed, no deliberate intent on the
part of the Contractor to defraud the orphanage’s benefactors was ever shown,
much less proved. As may be gleaned from his testimony:
xxx
2.2.0 : What can you say to the claim that the column rebars were reduced in size
from 12mm to 10mm?
A : That is untrue.
2.2.1 : Why did you say that it was untrue?
A : Because the column rebars that we used is 12mm and not 10mm contrary to the
claim of the claimant. The column rebars that claimant and his engineers claimed to
have been undersized [were] those already subjected to stretching. Due to the
lateral load on the perimeter fence coming from the water that accumulated
thereon, the strength of the column bars was subjected to such kind of force
beyond its capacity thereby resulting them to yield or "mapatid." As a result of such
stretching, the column rebars were deformed thereby causing it [to] change its
width but the length was extended. You can compare it to a candy like "tira-tira"
which if you stretch it becomes longer but its width is reduced. The other column
rebars on the perimeter fence which [were] not subjected to stretching will prove
what I am stating.
2.2.2 : Also, in the said request for arbitration, it was claimed that the required
hollow blocks (CHB) was reduced also from #6 to #5, how would you explain this?
A : It is true but such deviation was known to them in view of the fact that there
was no available CHB #6 in Silang, Cavite and so to save on the travel cost in
bringing materials from Manila to the site, it was agreed that such CHB #5 shall be
used instead.
2.2.3 : What was the effect of such deviation in using CHB #5 instead of CHB #6?
A : No effect, madam.
2.2.4 : Why did you state so, Mr. Witness?
A : Because the entire area of the land which is being secured by the perimeter
fence was fully covered with the fence which is made of CHB. This simply implies
that even though we used a much lesser size of CHB, but we increased the
compressive strength of the mortar and filler used in the premises. This has really
no effect because we cover the entire place with fence.
2.2.5 : It was also claimed that the distance between columns was deviated from
3.0 m. to 4.0 m, will you please explain this matter.
A : The computation of the distance between the columns of the perimeter fence as
appearing on the plan was 3.0 m inside to inside. However, the computation made
by the engineer of the claimant as alleged in their Request for Arbitration was 4.0
m. outside to outside which should be 3.6 m. outside to outside as correct distance.
2.2.6 : It now appears from your statement that there was a deviation as between
the 3.0 m. inside to inside computation in the plan and the actual 3.6 m. outside to
outside computation made by the engineers of the claimant. My question Mr.
Witness is, what would be the effect of such deviation on the columns?
A : It is true that there was such a deviation on the distance of the column but it
will have no effect because still the factor of safety was well provided for. Even the
existing law on building construction supports this matter. I even sought Engineer
Rommel Amante on the matter and his report supports my allegation.
2.2.7 : Was such deviation approved by the claimant or the representatives of the
claimant?
A : Yes because during all the time the construction of the perimeter fence was
done, the project manager of the claimant was present and observing the works.
Further, they have executed a Certificate of Final Acceptance of the project. 22
xxx
As regards the award of attorney’s fees, the Court upholds De Guzman’s entitlement
to reasonable attorney’s fees, although it recognizes that it is a sound policy not to
set a premium on the right to litigate.23 It must be recalled that De Guzman’s
4|Torts Finals
repeated demands for the repair of the fence or the payment of damages by way of
compensation, were not heeded by the Contractor. The latter’s unjust refusal to
satisfy De Guzman’s valid, just and demandable claim constrained her to litigate
and incur expenses to protect her interest. Article 2208 of the Civil Code, thus,
provides:
Art. 2208. In the absence of stipulation, attorney’s fees and expenses of litigation,
other than judicial costs, cannot be recovered, except:
xxx
(2) When the defendant’s act or omission has compelled the plaintiff to litigate with
third persons or to incur expenses to protect his interest;
xxx
Finally, the dismissal of the Contractor’s counterclaim is sustained for lack of
merit.1avvphi1 In his Comment24 and Memorandum,25 the Contractor pleaded that
damages should have been awarded to him. This deserves scant consideration. A
perusal of the record reveals that the matter as regards the return of what he had
donated by reason of De Guzman’s ingratitude was not among the issues raised in
this petition. Thus, the same cannot be taken cognizance by the Court.
WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals dated
February 24, 2009 and its Resolution dated May 26, 2009 are AFFIRMED with
the MODIFICATION that the award of ₱ 100,000.00 as temperate damages is
increased to ₱ 150,000.00. The award shall earn interest at the rate of 12% per
annum reckoned from the finality of this judgment until fully paid.
SO ORDERED.
G.R. No. 133803 September 16, 2005
BIENVENIDO M. CASIÑO, JR., Petitioners,
vs. THE COURT OF APPEALS and OCTAGON REALTY DEVELOPMENT
CORPORATION, Respondent.
Via this petition for review on certiorari under Rule 45 of the 1997 Rules of Court,
petitioner Bienvenido M. Casiño, Jr. seeks the annulment and setting aside of the
following issuances of the Court of Appeals (CA) in C.A. - G.R. CV No. 47702, to wit:
1. Decision dated January 21, 1997,1 affirming an earlier decision of the
Regional Trial Court at Pasig which upheld private respondent’s rescission of its
contract with petitioner; and
2. Resolution dated May 20, 1998,2 denying petitioner’s motion for
reconsideration.
On October 2, 1991 in the Regional Trial Court at Pasig City, respondent Octagon
Realty Development Corporation, a corporation duly organized and existing under
Philippine laws, filed a complaint for rescission of contract with damages against
petitioner Bienvenido M. Casiño, Jr., owner and proprietor of the Casiño Wood
Parquet and Sanding Services, relative to the parties’ agreement for the supply and
installation by petitioner of narra wood parquet ordered by respondent.
As recited by the Court of Appeals in the decision under review, the parties’
principal pleadings in the Regional Trial Court disclose the following:
In its complaint, [respondent] alleges that on December 22, 1989, it entered into a
contract with [petitioner] for the supply and installation by the latter of narra wood
parquet (kiln dried) to the Manila Luxury Condominium Project, of which
[respondent] is the developer, covering a total area of 60,973 sq. ft. for a total price
of P1,158,487.00; that the contract stipulated that full delivery by [petitioner] of
labor and materials was in May 1990; that in accordance with the terms of payment
in the contract, [respondent] paid to [petitioner] the amount P463,394.50,
representing 40% of the total contract price; that after delivering only 26,727.02
sq. ft. of wood parquet materials, [petitioner] incurred in delay in the delivery of the
remainder of 34,245.98 sq. ft.; that [petitioner] misrepresented to [respondent]
that he is qualified to do the work contracted when in truth and in fact he was not
and, furthermore, he lacked the necessary funds to execute the work as he was
totally dependent on the funds advanced to him by [respondent]; that due to
[petitioner’s] unlawful and malicious refusal to comply with its obligations,
[respondent] incurred actual damages in the amount of P912,452.39 representing
estimated loss on the new price, unliquidated damages and cost of money; that in
order to minimize losses, the [respondent] contracted the services of Hilvano
Quality Parquet and Sanding Services to complete the [petitioner’s] unfinished
work, [respondent] thereby agreeing to pay the latter P1,198,609.30.
The [respondent] in its complaint prays for rescission of contract, actual damages of
P912,452.39, reimbursement in the amount of P1,198,609.30, moral damages of
P200,000.00, and attorney’s fees of P50,000.00 plus a fee of P1,000.00 per
appearance and other expenses of the suit.
In his answer to the complaint, the [petitioner] admits the execution of the
December 22, 1989 contract with the [respondent], the terms thereof relating to
total price and scope of work, as well as the payment by the [respondent] of the
40% downpayment. He, however, avers that the manner of payment, period of
delivery and completion of work and/or full delivery of labor and materials were
modified; that the delivery and completion of the work could not be done upon the
request and/or representations by the [respondent] because he failed to make
available and/or to prepare the area in a suitable manner for the work contracted,
preventing the [petitioner] from complying with the delivery schedule under the
contract; that [petitioner] delivered the required materials and performed the work
despite these constraints; that the [petitioner] delivered a total of 29,209.82 sq. ft.
of wood parquet; that the [respondent] failed to provide for a safe and secure area
for the materials and work in process or worked performed, thus exposing them to
the elements and destroying the materials and/or work; that the [respondent] failed
to pay the [petitioner’s] second and third billings for deliveries and work performed
5|Torts Finals
in the sum of P105,425.68, which amount the [petitioner] demanded from the
[respondent] with the warning of suspension of deliveries or rescission for contract
for non-payment; that the [petitioner] was fully qualified and had the experience of
at least nine years to perform the work; and that it was the [respondent], after
failing to prepare the area suitable for the delivery and installation of the wood
parquet, [respondent] xxx who advised or issued orders to the [petitioner] to
suspend the delivery and installation of the wood parquet, which created a storage
problem for the [petitioner].
Set up by the [petitioner] as special and affirmative defenses, are that the filing of
the case is premature; that the [respondent] has no cause of action; that the
obligation has been waived/extinguished; that the [respondent’s] failure to accept
deliveries compelled the [petitioner] to store the materials in his warehouse/s and
to use valuable space in his premises, which he could have utilized for the storage
of materials for other customers, and also prevented him from accepting new orders
from other customer causing him actual and potential losses of income; that the
[respondent’s] extrajudicial rescission of contract is void since there is no breach or
violation thereof by the [petitioner]; and that it was [respondent] which violated the
terms/conditions of the contract, entitling [petitioner] to have the same judicially
rescinded.
The [petitioner] pleaded counterclaims of rescission of contract and payment by the
[respondent] of P597,392.90 with legal interest from the filing of the complaint until
fully paid or, in the alternative payment of the cost of the billings in the sum of
P105,425.68 plus legal interest; actual and compensatory damages of P600,000.00
and P30,000.00, respectively; moral damages of P100,000.00, attorney’s fees of
P40,000.00; and litigation expenses and costs of the suit. 3 (Words in bracket ours).
In a decision dated June 2, 1994, the trial court, upon a finding that petitioner is the
one who breached the parties’ agreement, rendered judgment for respondent, to
wit:
WHEREFORE, based on the foregoing, this Court finds and so holds that the
rescission of contract effected by [respondent] is valid, and [petitioner]t is thereby
ordered to pay the[respondent] the following:
1. ₱2,111,061.69 by way of actual and compensatory damages; and,
2. ₱50,000.00, as attorney’s fees.
No pronouncement as to cost.
SO ORDERED.4
Explains the trial court in its decision:
xxx [T]he contract clearly and categorically stipulates that full delivery by
[petitioner] of labor and materials was to be in May 1990. However, as of January
30, 1991, no deliveries have been made by [petitioner] necessitating the sending by
[respondent] of a demand letter xxx. Thereafter, while [petitioner] started
mobilization, the workers assigned were insufficient resulting in the very slow
progress of the works for which reason Engr. Alcain sent a letter to [petitioner]
instructing [petitioner] to make ‘full-blast delivery’ of the materials. This,
incidentally, effectively negates [petitioner’s] contention that [respondent] had
requested for the suspension of deliveries.
Finally, it was established that out of the total 60,973 sq. ft. of wood parquet,
[petitioner] was able to deliver only 26,727.02 sq. ft.. In this connection [petitioner]
denied this and insisted that he was actually able to deliver 29,109.82 sq. ft.
Whichever of the two figures is correct, the fact remains that [petitioner] was
unable to deliver the full quantity contracted by [respondent]. For purposes of the
record, however, this Court believes the figure given by [respondent], which is
supported by [petitioner’s] own statements of account where the total amount of
deliveries jibes with [respondent’s] alleged figure.
On the basis of the foregoing findings, this Court hereby finds that [respondent] has
established its right to rescind the contract dated December 22, 1989, on the
strength of Art. 1191 of the Civil Code.
In this case, [respondent], after [petitioner’s] breach of his contractual obligations,
considered the contract as rescinded and proceeded to contract with Hilvano Quality
Parquet & Sanding Services, in order to minimize losses in view of the delay in the
completion schedule of its condominium project.5 (Words in bracket ours).
On petitioner’s appeal to the Court of Appeals in CA-G.R. CV No. 47702, the
appellate court, in the herein assailed Decision 6 dated January 21, 1997, affirmed
that of the trial court but modified the same by reducing the amount of damages
awarded, thus:
WHEREFORE, the decision appealed from is AFFIRMED with the MODIFICATION that
the [petitioner] be made to pay the [respondent] as actual and compensatory
damages, the amount of P1,662,003.80, with interest thereon at the legal rate from
the finality of this judgment until fully paid.
SO ORDERED. (Words in bracket ours).
In time, petitioner and respondent filed their respective Motion for
Reconsideration and Motion for Partial Reconsideration. In its Resolution dated May
20, 1998,7 the appellate court denied petitioner’s motion for lack of merit but found
that of respondent as well-grounded. Accordingly, and noting that "the amount of
P97,699.67 xxx had already been factored in, in the computation of the amount of
P912,452.39, under the decision of the court a quo", the Court of Appeals amended
its original Decision by affirming in toto the decision of the trial court, as follows:
WHEREFORE, [petitioner’s] appeal is dismissed. The Decision appealed from is
AFFIRMED IN TOTO. With costs against the [petitioner]. SO ORDERED. (Words in
bracket ours).
Undaunted, petitioner is now with us via the present recourse on his submissions
that:
6|Torts Finals
A. THE SUBJECT DECISION DECLARING THE RESCISSION OF THE QUESTIONED
CONTRACT BY PRIVATE RESPONDENT AS VALID AND HOLDING THE PETITIONER
LIABLE FOR BREACH OF CONTRACT IS CONTRARY TO OR IN VIOLATION OF ART.
1191, NEW CIVIL CODE;
B. THE AWARD TO PRIVATE RESPONDENT OF ACTUAL AND COMPENSATORY
DAMAGES OF P1,662,003.80 WITH LEGAL INTEREST WAS NOT LEGALLY JUSTIFIED,
OR PROVEN WITH REASONABLE DEGREE OF CERTAINTY; and
This is, as it should be. For, in petitions for review on certiorari as a mode of appeal
under Rule 45, only questions of law12 may be raised. This Court is not the proper
venue to consider factual issues as it is not a trier of facts. 13
With the reality that petitioner has failed to comply with his prestations under his
contract with respondent, the latter is vested by law with the right to rescind the
parties’ agreement, conformably with Article 1191 of the Civil Code, which partly
reads:

C. THE SAME WAS ISSUED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO Art. 1191. The power to rescind obligations is implied in reciprocal ones, in case one
LACK OF OR IN EXCESS OF JURISDICTION, AND/OR CONTRARY TO THE FACTS, of the obligors should not comply with what is incumbent upon him.
EVIDENCE, JURISPRUDENCE AND LAW.8
The injured party may choose between the fulfillment and the rescission of the
The petition lacks merit. obligation, with the payment of damages in either case. He may also seek rescission
even after he has chosen fulfillment, if the latter should become impossible.
It is undisputed that under their contract, petitioner and respondent had respective
obligations, i.e., the former to supply and deliver the contracted volume of narra xxx xxx xxx
wood parquet materials and install the same at respondent’s condominium project
by May, 1990, and the latter, to pay for said materials in accordance with the terms
Explicit it is from the foregoing that "in reciprocal obligations", or those which arise
of payment set out under the parties’ agreement. But while respondent was able to
from the same cause, and in which each party is a debtor and a creditor of the
fulfill that which is incumbent upon it by making a downpayment representing 40%
other, in the sense that the obligation of one is dependent upon the obligation of
of the agreed price upon the signing of the contract and even paid the first billing of
the other,14 the right to rescind is implied such that "absent any provision providing
petitioner,9 the latter failed to comply with his contractual commitment. For, after
for a right to rescind, the parties may nevertheless rescind the contract should the
delivering only less than one-half of the contracted materials, petitioner failed, by
other obligor fail to comply with its obligations".15
the end of the agreed period, to deliver and install the remainder despite demands
for him to do so. Doubtless, it is petitioner who breached the contract.
It must be stressed, though, that the right to rescind a contract for non-
performance of its stipulations is not absolute. The general rule is that rescission of
Petitioner asserts that while he was ready to comply with his obligation to deliver
a contract will not be permitted for a slight or casual breach, but only for such
and install the remaining wood parquet, yet respondent was not ready to accept
substantial and fundamental violations as would defeat the very object of the
deliveries due to the unsuitability of the work premises for the installation of the
parties in making the agreement.16
materials. Petitioner’s contention flies in the light of the following observations of
the appellate court, to which we are in full accord:
Here, contrary to petitioner’s asseveration, the breach he committed cannot, by any
measure, be considered as "slight or casual". For sure, petitioner’s failure to make
xxx no sufficient proof was presented by the [petitioner] to substantiate his
complete delivery and installation way beyond the time stipulated despite
allegation. On the other hand, the [respondent] was able to prove by substantial
respondent’s demands, is doubtless a substantial and fundamental breach, more so
evidence that as of May, 1990, the time when the [petitioner] was supposed to
when viewed in the light of the large amount of money respondent had to pay
make complete delivery ‘there was already available in the condominium building
another contractor to complete petitioner’s unfinished work. Again, to quote from
any space from the basement to the fourteenth floor’, and the [petitioner] could
the challenged decision of the appellate court:
have chosen from any of those. (Words in bracket ours).

The [petitioner] also asserts that the breach was merely casual that does not
Indeed, there can be denying of petitioner’s breach of his contractual obligation,
warrant a rescission. While apparently, the [petitioner] agreed to complete delivery
more so when, as here, the two courts below were one in holding so. This brings to
and installation of the narra wood parquet to the [respondent’s] condominium
mind the settled rule of jurisprudence that factual findings of the Court of Appeals,
project by May, 1990, yet on three occasions the [respondent’s] counsel sent letters
particularly when affirmatory of those of the trial court, are binding upon this
demanding compliance with the [petitioner’s] obligation. At that time, only
Court.10 Unless the evidence on record clearly do not support such findings or that
26,727.02 sq. ft. of parquet out of a total of 60, 973 sq. ft., or less than one half of
the same were arrived at based on a patent misunderstanding of facts, 11 situations
the contracted volume, had been delivered. Hence, the [respondent] was finally
which do not obtain in this case, this Court is not at liberty to disturb what has been
forced to contract the services of another company and had to pay the sum of
found below and supplant them with its own.
P1,198,609.30 for the completion of the unfinished work. The large cost of

7|Torts Finals
completion of the [petitioner’s] unfinished work can only evidence the gravity of the
[petitioner’s] failure to comply with the terms of the contract. 17 (Words in bracket
ours).
Likewise, contrary to petitioner’s claim, it cannot be said that he had no inkling
whatsoever of respondent’s recourse to rescission. True, "the act of a party in
treating a contract as cancelled or resolved on account of infractions by the other
party must be made known to the other". 18 In this case, however, petitioner cannot
feign ignorance of respondent’s intention to rescind, fully aware, as he was, of his
non-compliance with what was incumbent upon him, not to mention the several
letters19 respondent sent to him demanding compliance with his obligation.
In fine, we thus rule and so hold that respondent acted well within its rights in
unilaterally terminating its contract with petitioner and in entering into a new one
with a third person in order to minimize its losses, without prior need of resorting to
judicial action. As we once said in University of the Philippines v. De los
Angeles,20 involving the question of whether the injured party may consider the
contract as rescinded even before any judicial pronouncement has been made to
that effect:
xxx the party who deems the contract violated may consider it resolved or
rescinded, and act accordingly, without previous court action, but it proceeds at its
own risk. For it is only the final judgment of the corresponding court that will
conclusively and finally settle whether the action taken was or was not correct in
law. But the law definitely does not require that the contracting party who believes
itself injured must first file suit and wait for a judgment before taking extrajudicial
steps to protect its interest. Otherwise, the party injured by the other’s breach will
have to passively sit and watch its damages accumulate during the pendency of the
suit until the final judgment of rescission is rendered when the law itself requires
that he should exercise due diligence to minimize its own damages xxx.
We see no conflict between this ruling and the previous jurisprudence of this Court
invoked by respondent declaring that judicial action is necessary for the resolution
of a reciprocal obligation; (Ocejo, Perez & Co. v. International Banking Corp., 37
Phil. 631; Republic v. Hospital de San Juan de Dios, et al., 84 Phil. 820) since in
every case where the extrajudicial resolution is contested only the final award of the
court of competent jurisdiction can conclusively settle whether the resolution was
proper or not. It is in this sense that judicial action will be necessary, as without it,
the extrajudicial resolution will remain contestable and subject to judicial
invalidation, unless attack thereon should become barred by acquiescence, estoppel
or prescription.
This brings us to the propriety of the award for actual or compensatory damages,
attorney's fees and litigation expenses.
Under Articles 2199 and 2200 of the Civil Code,21 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.
Citing Producers Bank of the Philippines vs. CA,22 this Court, in the subsequent case
of Terminal Facilities and Services Corporation vs Philippine Ports Authority 23 ruled:
There are two kinds of actual or compensatory damages: one is the loss of what a
person already possesses, and the other is the failure to receive as a benefit that
which would have pertained to him x x x. In the latter instance, the familiar rule is
that damages consisting of unrealized profits, frequently referred as ‘ganacias
frustradas’ or ‘lucrum cessans,’ are not to be granted on the basis of mere
speculation, conjecture, or surmise, but rather by reference to some reasonably
definite standard such as market value, established experience, or direct inference
from known circumstances.
Absolute certainty, however, is not necessary to establish the amount of "ganacias
frustradas" or "lucrum cessans". As we have said in Producers Bank of the
Philippines, supra:
When the existence of a loss is established, absolute certainty as to its amount is
not required. The benefit to be derived from a contract which one of the parties has
absolutely failed to perform is of necessity to some extent, a matter of speculation,
but the injured party is not to be denied for this reason alone. He must produce the
best evidence of which his case is susceptible and if that evidence warrants the
inference that he has been damaged by the loss of profits which he might with
reasonable certainty have anticipated but for the defendant’s wrongful act, he is
entitled to recover.
Gauged by the aforequoted test, the evidence adduced by respondent is sufficient
enough to substantiate its claim for actual or compensatory damages in the amount
of P 2,111,061. 69. As found by the trial court and affirmed by the Court of
Appeals:
Clearly, [respondent] must be indemnified for the following damages it sustained by
reason of [petitioner’s] breach of contract. Finding [respondent’s] claim justified,
this court awards the following: P912, 452.39, representing [respondent’s]
estimated losses on new price, unliquidated damages and cost of money, as
substantiated by Exibit ‘Q’; and P 1,198,609.30, representing the cost incurred by
[respondent] in engaging the services of Hilvano Quality Parquet and Sanding
Services for the completion of the work unfinished by [petitioner] (Exibit ‘C-4’, par.
24) xxx.24 (Words in bracket ours).
Finally, on the matter of attorney’s fees, respondent’s entitlement thereto is beyond
cavil, what with the fact that respondent was compelled to litigate and incurred
expenses relative thereto by reason of petitioner’s breach of his contractual
obligations.
WHEREFORE, the instant petition is DENIED and the assailed Decision and
Resolution of the appellate court AFFIRMED.
G.R. No. L-25414 July 30, 1971
8|Torts Finals
LEOPOLDO ARANETA, petitioner, vs. BANK of AMERICA, respondent.
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:
9|Torts Finals
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.
... This incident obviously affected the credit of Araneta with Miss Saldana.
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
10 | T o r t s F i n a l s
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:
Footnotes 1 In this case the plaintiff, whose check was wrongfully dishonored by
the bank, was not required to prove special damages in order to recover substantial
damages since, the court observed, such damages would naturally follow the
dishonor of a check by a bank, although they were probably not susceptible of
independent distinct proof. The plaintiff was awarded $200 as temperate damages.
G.R. No. 166869               February 16, 2010
PHILIPPINE HAWK CORPORATION, Petitioner, vs. VIVIAN TAN
LEE, Respondent.
This is a Petition for Review on Certiorari 1 of the Decision of the Court of Appeals in
CA-G.R. CV No. 70860, promulgated on August 17, 2004, affirming with
modification the Decision of the Regional Trial Court (RTC) of Quezon City, Branch
102, dated March 16, 2001, in Civil Case No. Q-91-9191, ordering petitioner
Philippine Hawk Corporation and Margarito Avila to jointly and severally pay
respondent Vivian Tan Lee damages as a result of a vehicular accident.

... the damages to his reputation as an established and well known international
The facts are as follows:
trader entitled himself to recover moral damages.

On March 15, 2005, respondent Vivian Tan Lee filed before the RTC of Quezon City
... It was likewise established that when plaintiff learned that his checks were not
a Complaint2 against petitioner Philippine Hawk Corporation and defendant
honored by the drawee Bank, his wounded feelings and the mental anguish suffered
Margarito Avila for damages based on quasi-delict, arising from a vehicular accident
by him caused his blood pressure to rise beyond normal limits, thereby
that occurred on March 17, 1991 in Barangay Buensoceso, Gumaca, Quezon. The
necessitating medical attendance for an extended period.
accident resulted in the death of respondent’s husband, Silvino Tan, and caused
respondent physical injuries.
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
On June 18, 1992, respondent filed an Amended Complaint,3 in her own behalf and
services rendered by the petitioner's counsel both in the trial and appellate courts,
in behalf of her children, in the civil case for damages against petitioner.
the amount should be increased to P4,000. This may be done motu propio by this
Respondent sought the payment of indemnity for the death of Silvino Tan, moral
Court under Article 2208 of the Civil Code, which provides that attorney's fees may
and exemplary damages, funeral and interment expenses, medical and
be recovered in the instances therein enumerated and "in any other case where the
hospitalization expenses, the cost of the motorcycle’s repair, attorney’s fees, and
Court deems, it first and equitable that attorney's fees ... should be recovered,"
other just and equitable reliefs.
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.
The accident involved a motorcycle, a passenger jeep, and a bus with Body No. 119.
The bus was owned by petitioner Philippine Hawk Corporation, and was then being
driven by Margarito Avila.
In its Answer,4 petitioner denied liability for the vehicular accident, alleging that the
immediate and proximate cause of the accident was the recklessness or lack of
caution of Silvino Tan. Petitioner asserted that it exercised the diligence of a good
father of the family in the selection and supervision of its employees, including
Margarito Avila.

WHEREFORE, the judgment of the Court of Appeals is modified by awarding On March 25, 1993, the trial court issued a Pre-trial Order5 stating that the parties
temperate damages to the petitioner in the sum of P5,000 and increasing the manifested that there was no possibility of amicable settlement between them.
attorney's fees to P4,000; and is affirmed in all other respects. Costs against the However, they agreed to stipulate on the following facts:
respondent.

11 | T o r t s F i n a l s
1. On March 17, 1991, in Bgy. Buensoceso, Gumaca, Quezon, plaintiff Vivian Lee
Tan and her husband Silvino Tan, while on board a motorcycle with [P]late No. DA-
5480 driven by the latter, and a Metro Bus with [P]late No. NXR-262 driven by
Margarito Avila, were involved in an accident;
2. As a result of the accident, Silvino Tan died on the spot while plaintiff Vivian Lee
Tan suffered physical injuries which necessitated medical attention and
hospitalization;
3. The deceased Silvino Tan is survived by his wife, plaintiff Vivian Lee Tan and four
children, three of whom are now residents of the United States; and
4. Defendant Margarito Avila is an employee of defendant Philippine Hawk. 6
The parties also agreed on the following issues:
1. Whether or not the proximate cause of the accident causing physical injuries
upon the plaintiff Vivian Lee Tan and resulting in the death of the latter’s husband
was the recklessness and negligence of Margarito Avila or the deceased Silvino Tan;
and
2. Whether or not defendant Philippine Hawk Transport Corporation exercised the
diligence of a good father of the family in the selection and supervision of its driver
Margarito Avila.7
Respondent testified that on March 17, 1991, she was riding on their motorcycle in
tandem with her husband, who was on the wheel, at a place after a Caltex gasoline
station in Barangay Buensoceso, Gumaca, Quezon on the way to Lopez, Quezon.
They came from the Pasumbal Machine Shop, where they inquired about the repair
of their tanker. They were on a stop position at the side of the highway; and when
they were about to make a turn, she saw a bus running at fast speed coming
toward them, and then the bus hit a jeep parked on the roadside, and their
motorcycle as well. She lost consciousness and was brought to the hospital in
Gumaca, Quezon, where she was confined for a week. She was later transferred to
St. Luke’s Hospital in Quezon City, Manila. She suffered a fracture on her left chest,
her left arm became swollen, she felt pain in her bones, and had high blood
pressure.8
Respondent’s husband died due to the vehicular accident. The immediate cause of
his death was massive cerebral hemorrhage.9
Respondent further testified that her husband was leasing 10 and operating a Caltex
gasoline station in Gumaca, Quezon that yielded one million pesos a year in
revenue. They also had a copra business, which gave them an income of ₱3,000.00
a month or ₱36,000.00 a year.11
Ernest Ovial, the driver of the passenger jeep involved in the accident, testified that
in the afternoon of March 17, 1991, his jeep was parked on the left side of the
highway near the Pasumbal Machine Shop. He did not notice the motorcycle before
the accident. But he saw the bus dragging the motorcycle along the highway, and
then the bus bumped his jeep and sped away. 12
For the defense, Margarito Avila, the driver of petitioner’s bus, testified that on
March 17, 1999, at about 4:30 p.m., he was driving his bus at 60 kilometers per
hour on the Maharlika Highway. When they were at Barangay Buensoceso, Gumaca,
Quezon, a motorcycle ran from his left side of the highway, and as the bus came
near, the motorcycle crossed the path of the bus, and so he turned the bus to the
right. He heard a loud banging sound. From his side mirror, he saw that the
motorcycle turned turtle ("bumaliktad"). He did not stop to help out of fear for his
life, but drove on and surrendered to the police. He denied that he bumped the
motorcycle.13
Avila further testified that he had previously been involved in sideswiping incidents,
but he forgot how many times.14
Rodolfo Ilagan, the bus conductor, testified that the motorcycle bumped the left side
of the bus that was running at 40 kilometers per hour. 15
Domingo S. Sisperes, operations officer of petitioner, testified that, like their other
drivers, Avila was subjected to and passed the following requirements:
(1) Submission of NBI clearance;
(2) Certification from his previous employer that he had no bad record;
(3) Physical examination to determine his fitness to drive;
(4) Test of his driving ability, particularly his defensive skill; and
(5) Review of his driving skill every six months.16
Efren Delantar, a Barangay Kagawad in Buensoceso, Gumaca, Quezon, testified that
the bus was running on the highway on a straight path when a motorcycle, with a
woman behind its driver, suddenly emerged from the left side of the road from a
machine shop. The motorcycle crossed the highway in a zigzag manner and bumped
the side of the bus.17
In its Decision dated March 16, 2001, the trial court rendered judgment against
petitioner and defendant Margarito Avila, the dispositive portion of which reads:
ACCORDINGLY, MARGARITO AVILA is adjudged guilty of simple negligence, and
judgment is hereby rendered in favor of the plaintiff Vivian Lee Tan and h[er]
husband’s heirs ordering the defendants Philippine Hawk Corporation and Margarito
Avila to pay them jointly and solidarily the sum of ₱745,575.00 representing loss of
earnings and actual damages plus ₱50,000.00 as moral damages. 18
The trial court found that before the collision, the motorcycle was on the left side of
the road, just as the passenger jeep was. Prior to the accident, the motorcycle was
in a running position moving toward the right side of the highway. The trial court
agreed with the bus driver that the motorcycle was moving ahead of the bus from
12 | T o r t s F i n a l s
the left side of the road toward the right side of the road, but disagreed that the
motorcycle crossed the path of the bus while the bus was running on the right side
of the road.19
The trial court held that if the bus were on the right side of the highway, and
Margarito Avila turned his bus to the right in an attempt to avoid hitting the
motorcyle, then the bus would not have hit the passenger jeep, which was then
parked on the left side of the road. The fact that the bus also hit the passenger jeep
showed that the bus must have been running from the right lane to the left lane of
the highway, which caused the collision with the motorcycle and the passenger jeep
parked on the left side of the road. The trial court stated that since Avila saw the
motorcycle before the collision, he should have stepped on the brakes and slowed
down, but he just maintained his speed and veered to the left. 20 The trial court
found Margarito Avila guilty of simple negligence.
The trial court held petitioner bus company liable for failing to exercise the diligence
of a good father of the family in the selection and supervision of Avila, having failed
to sufficiently inculcate in him discipline and correct behavior on the road. 21
On appeal, the Court of Appeals affirmed the decision of the trial court with
modification in the award of damages. The dispositive portion of the decision reads:
WHEREFORE, foregoing premises considered, the appeal is DENIED. The assailed
decision dated March 16, 2001 is hereby AFFIRMED with MODIFICATION. Appellants
Philippine Hawk and Avila are hereby ordered to pay jointly and severally appellee
the following amount: (a) ₱168,019.55 as actual damages; (b) ₱10,000.00 as
temperate damages; (c) ₱100,000.00 as moral damages; (d) ₱590,000.00 as
unearned income; and (e) ₱50,000.00 as civil indemnity. 22
Petitioner filed this petition, raising the following issues:
1) The Court of Appeals committed grave abuse of discretion amounting to lack of
jurisdiction in passing upon an issue, which had not been raised on appeal, and
which had, therefore, attained finality, in total disregard of the doctrine laid down
by this Court in Abubakar v. Abubakar, G.R. No. 134622, October 22, 1999.
2) The Court of Appeals committed reversible error in its finding that the petitioner’s
bus driver saw the motorcycle of private respondent executing a U-turn on the
highway "about fifteen (15) meters away" and thereafter held that the Doctrine of
Last Clear was applicable to the instant case. This was a palpable error for the
simple reason that the aforesaid distance was the distance of the witness to the bus
and not the distance of the bus to the respondent’s motorcycle, as clearly borne out
by the records.
3) The Court of Appeals committed reversible error in awarding damages in total
disregard of the established doctrine laid down in Danao v. Court of Appeals, 154
SCRA 447 and Viron Transportation Co., Inc. v. Delos Santos, G.R. No. 138296,
November 22, 2000.23
In short, the issues raised by petitioner are: (1) whether or not negligence may be
attributed to petitioner’s driver, and whether negligence on his part was the
proximate cause of the accident, resulting in the death of Silvino Tan and causing
physical injuries to respondent; (2) whether or not petitioner is liable to respondent
for damages; and (3) whether or not the damages awarded by respondent Court of
Appeals are proper.
Petitioner seeks a review of the factual findings of the trial court, which were
sustained by the Court of Appeals, that petitioner’s driver was negligent in driving
the bus, which caused physical injuries to respondent and the death of respondent’s
husband.
The rule is settled that the findings of the trial court, especially when affirmed by
the Court of Appeals, are conclusive on this Court when supported by the evidence
on record.24 The Court has carefully reviewed the records of this case, and found no
cogent reason to disturb the findings of the trial court, thus:
The Court agree[s] with the bus driver Margarito that the motorcycle was moving
ahead of the bus towards the right side from the left side of the road, but disagrees
with him that it crossed the path of the bus while the bus was running on the right
side of the highway.
If the bus were on the right side of the highway and Margarito turned his bus to the
right in an attempt to avoid hitting it, then the bus would not have hit the
passenger jeep vehicle which was then parked on the left side of the road. The fact
that the bus hit the jeep too, shows that the bus must have been running to the left
lane of the highway from right to the left, that the collision between it and the
parked jeep and the moving rightways cycle became inevitable. Besides, Margarito
said he saw the motorcycle before the collision ahead of the bus; that being so, an
extra-cautious public utility driver should have stepped on his brakes and slowed
down. Here, the bus never slowed down, it simply maintained its highway speed
and veered to the left. This is negligence indeed.25
Petitioner contends that the Court of Appeals was mistaken in stating that the bus
driver saw respondent’s motorcycle "about 15 meters away" before the collision,
because the said distance, as testified to by its witness Efren Delantar Ong, was
Ong’s distance from the bus, and not the distance of the bus from the motorcycle.
Petitioner asserts that this mistaken assumption of the Court of Appeals made it
conclude that the bus driver, Margarito Avila, had the last clear chance to avoid the
accident, which was the basis for the conclusion that Avila was guilty of simple
negligence.
A review of the records showed that it was petitioner’s witness, Efren Delantar Ong,
who was about 15 meters away from the bus when he saw the vehicular
accident.26 Nevertheless, this fact does not affect the finding of the trial court that
petitioner’s bus driver, Margarito Avila, was guilty of simple negligence as affirmed
by the appellate court. Foreseeability is the fundamental test of negligence. 27 To be
negligent, a defendant must have acted or failed to act in such a way that an
13 | T o r t s F i n a l s
ordinary reasonable man would have realized that certain interests of certain
persons were unreasonably subjected to a general but definite class of risks. 28
In this case, the bus driver, who was driving on the right side of the road, already
saw the motorcycle on the left side of the road before the collision. However, he did
not take the necessary precaution to slow down, but drove on and bumped the
motorcycle, and also the passenger jeep parked on the left side of the road,
showing that the bus was negligent in veering to the left lane, causing it to hit the
motorcycle and the passenger jeep.
Whenever an employee’s negligence causes damage or injury to another, there
instantly arises a presumption that the employer failed to exercise the due diligence
of a good father of the family in the selection or supervision of its employees. 29 To
avoid liability for a quasi-delict committed by his employee, an employer must
overcome the presumption by presenting convincing proof that he exercised the
care and diligence of a good father of a family in the selection and supervision of his
employee.30
The Court upholds the finding of the trial court and the Court of Appeals that
petitioner is liable to respondent, since it failed to exercise the diligence of a good
father of the family in the selection and supervision of its bus driver, Margarito
Avila, for having failed to sufficiently inculcate in him discipline and correct behavior
on the road. Indeed, petitioner’s tests were concentrated on the ability to drive and
physical fitness to do so. It also did not know that Avila had been previously
involved in sideswiping incidents.
As regards the issue on the damages awarded, petitioner contends that it was the
only one that appealed the decision of the trial court with respect to the award of
actual and moral damages; hence, the Court of Appeals erred in awarding other
kinds of damages in favor of respondent, who did not appeal from the trial court’s
decision.
Petitioner’s contention is unmeritorious.
Section 8, Rule 51 of the 1997 Rules of Civil Procedure provides:
SEC. 8. Questions that may be decided. -- No error which does not affect the
jurisdiction over the subject matter or the validity of the judgment appealed from or
the proceedings therein will be considered unless stated in the assignment of errors,
or closely related to or dependent on an assigned error and properly argued in the
brief, save as the court pass upon plain errors and clerical errors.
Philippine National Bank v. Rabat31 cited the book32 of Justice Florenz D. Regalado to
explain the section above, thus:
In his book, Mr. Justice Florenz D. Regalado commented on this section, thus:
1. Sec. 8, which is an amendment of the former Sec. 7 of this Rule, now includes
some substantial changes in the rules on assignment of errors. The basic procedural
rule is that only errors claimed and assigned by a party will be considered by the
court, except errors affecting its jurisdiction over the subject matter. To this
exception has now been added errors affecting the validity of the judgment
appealed from or the proceedings therein.
Also, even if the error complained of by a party is not expressly stated in his
assignment of errors but the same is closely related to or dependent on an assigned
error and properly argued in his brief, such error may now be considered by the
court. These changes are of jurisprudential origin.
2. The procedure in the Supreme Court being generally the same as that in the
Court of Appeals, unless otherwise indicated (see Secs. 2 and 4, Rule 56), it has
been held that the latter is clothed with ample authority to review matters, even if
they are not assigned as errors on appeal, if it finds that their consideration is
necessary in arriving at a just decision of the case. Also, an unassigned error closely
related to an error properly assigned (PCIB vs. CA, et al., L-34931, Mar. 18, 1988),
or upon which the determination of the question raised by error properly assigned is
dependent, will be considered by the appellate court notwithstanding the failure to
assign it as error (Ortigas, Jr. vs. Lufthansa German Airlines, L-28773, June 30,
1975; Soco vs. Militante, et al., G.R. No. 58961, June 28, 1983).
It may also be observed that under Sec. 8 of this Rule, the appellate court is
authorized to consider a plain error, although it was not specifically assigned by the
appellant (Dilag vs. Heirs of Resurreccion, 76 Phil. 649), otherwise it would be
sacrificing substance for technicalities.33
In this case for damages based on quasi-delict, the trial court awarded respondent
the sum of ₱745,575.00, representing loss of earning capacity (₱590,000.00) and
actual damages (₱155,575.00 for funeral expenses), plus ₱50,000.00 as moral
damages. On appeal to the Court of Appeals, petitioner assigned as error the award
of damages by the trial court on the ground that it was based merely on
suppositions and surmises, not the admissions made by respondent during the trial.
In its Decision, the Court of Appeals sustained the award by the trial court for loss
of earning capacity of the deceased Silvino Tan, moral damages for his death, and
actual damages, although the amount of the latter award was modified.
The indemnity for loss of earning capacity of the deceased is provided for by Article
2206 of the Civil Code.34 Compensation of this nature is awarded not for loss of
earnings, but for loss of capacity to earn money. 35
As a rule, documentary evidence should be presented to substantiate the claim for
damages for loss of earning capacity.36 By way of exception, damages for loss of
earning capacity may be awarded despite the absence of documentary evidence
when: (1) the deceased is self-employed and earning less than the minimum wage
under current labor laws, in which case, judicial notice may be taken of the fact that
in the deceased's line of work no documentary evidence is available; or (2) the
14 | T o r t s F i n a l s
deceased is employed as a daily wage worker earning less than the minimum wage physical injuries sustained by the victim. A review of the valid receipts submitted in
under current labor laws.37 evidence showed that the funeral and related expenses amounted only to
₱114,948.60, while the medical expenses of respondent amounted only to
₱12,244.25, yielding a total of ₱127,192.85 in actual damages.
In this case, the records show that respondent’s husband was leasing and operating
a Caltex gasoline station in Gumaca, Quezon. Respondent testified that her husband
earned an annual income of one million pesos. Respondent presented in evidence a Moreover, the Court of Appeals correctly sustained the award of moral damages in
Certificate of Creditable Income Tax Withheld at Source for the Year 1990, 38 which the amount of ₱50,000.00 for the death of respondent’s husband. Moral damages
showed that respondent’s husband earned a gross income of P950,988.43 in 1990. are not intended to enrich a plaintiff at the expense of the defendant. 41 They are
It is reasonable to use the Certificate and respondent’s testimony as bases for fixing awarded to allow the plaintiff to obtain means, diversions or amusements that will
the gross annual income of the deceased at one million pesos before respondent’s serve to alleviate the moral suffering he/she has undergone due to the defendant’s
husband died on March 17, 1999. However, no documentary evidence was culpable action and must, perforce, be proportional to the suffering inflicted. 42
presented regarding the income derived from their copra business; hence, the
testimony of respondent as regards such income cannot be considered.
In addition, the Court of Appeals correctly awarded temperate damages in the
amount of ₱10,000.00 for the damage caused on respondent’s motorcycle. Under
In the computation of loss of earning capacity, only net earnings, not gross Art. 2224 of the Civil Code, temperate damages "may be recovered when the court
earnings, are to be considered; that is, the total of the earnings less expenses finds that some pecuniary loss has been suffered but its amount cannot, from the
necessary for the creation of such earnings or income, less living and other nature of the case, be proved with certainty." The cost of the repair of the
incidental expenses.39 In the absence of documentary evidence, it is reasonable to motorcycle was prayed for by respondent in her Complaint. However, the evidence
peg necessary expenses for the lease and operation of the gasoline station at 80 presented was merely a job estimate43 of the cost of the motorcycle’s repair
percent of the gross income, and peg living expenses at 50 percent of the net amounting to ₱17, 829.00. The Court of Appeals aptly held that there was no doubt
income (gross income less necessary expenses). that the damage caused on the motorcycle was due to the negligence of petitioner’s
driver. In the absence of competent proof of the actual damage caused on the
motorcycle or the actual cost of its repair, the award of temperate damages by the
In this case, the computation for loss of earning capacity is as follows:
appellate court in the amount of ₱10,000.00 was reasonable under the
circumstances.44
Life
Reasonable and
Net Expectancy The Court of Appeals also correctly awarded respondent moral damages for the
Gross Annual Necessary
Earning = [2/3 (80-age x – physical injuries she sustained due to the vehicular accident. Under Art. 2219 of the
Income (GAI) Expenses
Capacity at the time of Civil Code,45 moral damages may be recovered in quasi-delicts causing physical
(80% of GAI)
death)] injuries. However, the award of ₱50,000.00 should be reduced to ₱30,000.00 in
accordance with prevailing jurisprudence.46
X = [2/3 (80-65)] x ₱1,000,000.0 - ₱800,000.00
0
Further, the Court of Appeals correctly awarded respondent civil indemnity for the
X = 2/3 (15) x ₱200,000.00 - ₱100,000.00(Living death of her husband, which has been fixed by current jurisprudence at
Expenses) ₱50,000.00.47 The award is proper under Art. 2206 of the Civil Code.48

X = 30/3 x ₱100,000.00
In fine, the Court of Appeals correctly awarded civil indemnity for the death of
X = 10 x ₱100,000.00 respondent’s husband, temperate damages, and moral damages for the physical
injuries sustained by respondent in addition to the damages granted by the trial
X = ₱1,000,000.0 court to respondent. The trial court overlooked awarding the additional damages,
0 which were prayed for by respondent in her Amended Complaint. The appellate
court is clothed with ample authority to review matters, even if they are not
assigned as errors in the appeal, if it finds that their consideration is necessary in
The Court of Appeals also awarded actual damages for the expenses incurred in arriving at a just decision of the case.49
connection with the death, wake, and interment of respondent’s husband in the
amount of ₱154,575.30, and the medical expenses of respondent in the amount of
₱168,019.55. WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals dated
August 17, 2004 in CA-G.R. CV No. 70860 is hereby AFFIRMED with
MODIFICATION. Petitioner Philippine Hawk Corporation and Margarito Avila are
Actual damages must be substantiated by documentary evidence, such as receipts, hereby ordered to pay jointly and severally respondent Vivian Lee Tan: (a) civil
in order to prove expenses incurred as a result of the death of the victim 40 or the

15 | T o r t s F i n a l s
indemnity in the amount of Fifty Thousand Pesos (₱50,000.00); (b) actual damages
in the amount of One Hundred Twenty-Seven Thousand One Hundred Ninety-Two
Pesos and Eighty-Five Centavos ( ₱127,192.85); (c) moral damages in the amount
of Eighty Thousand Pesos (₱80,000.00); (d) indemnity for loss of earning capacity
in the amount of One Million Pesos (₱1,000,000.00); and (e) temperate damages in
the amount of Ten Thousand Pesos (₱10,000.00).
Costs against petitioner.
G.R. No. L-48250 December 28, 1979
GRAND UNION SUPERMARKET, INC. and NELIA SANTOS
FANDINO, petitioners,
vs. JOSE J. ESPINO JR., and THE HONORABLE COURT OF
APPEALS, respondents.
This is a petition tor certiorari by way of appeal from the decision of the Court of
Appeals 1 dated September 26, 1977 rendered in CA-G.R. No. 55186-R entitled
"Jose J. Espino, Jr., plaintiff-appellant. versus Grand Union Supermarket, Inc. and
Nelia Santos-Fandino, defendants-appellees," the dispositive portion of which
states;
WHEREFORE, the appealed judgment is hereby reversed and set aside. Defendants
are ordered to pay plaintiff-jointly and severally, the sum of Seventy-Five Thousand
Pesos (P75,000.00) by way of moral damages. Twenty-Five Thousand Pesos
(P25,000.00) as exemplary damages, and Five Thousand Pesos (P5,000.00) as
attorney's fee, Costs of both instances shall be taxed against the defendant
defendants.
The facts of the case are as stated in the decision of the respondent court to wit:
"Upon the evidence, and from the findings of the lower court, it appears that in the
morning of August 22, 1970, plaintiff Jose J. Espino. Jr., a civil engineer and an
executive of Procter and Gamble Philippines, Inc., and his wife and their two
daughters went to shop at the defendants' South Supermarket in Makati. While his
wife was shopping at the groceries section, plaintiff browsed around the other parts
of the market. Finding a cylindrical "rat tail" file which he needed in his hobby and
had been wanting to buy, plaintiff picked up that item from one of the shelves. He
held it in his hand thinking that it might be lost, because of its tiny size, if he put it
in his wife's grocery cart. In the course of their shopping, plaintiff and his wife saw
the maid of plaintiff's aunt. While talking to this maid, plaintiff stuck the file into the
front breast pocket of his shirt with a good part of the merchandise exposed.
"At the check-out counter, the plaintiff paid for his wife's purchases which amounted
to P77.00, but he forgot to pay for the file. As he was leaving by the exit of the
supermarket on his way to his car, carrying two bags of groceries and accompanied
by his wife and two daughter, plaintiff was approached by a uniformed guard of the
supermarket who said: "Excuse me, Mr., I think you have something in your pocket
which you have not paid for." (p. 5, tsn, Aug. 13, 1971), pointing to his left front
breast pocket. Suddenly reminded of the file, plaintiff apologized thus: "I am sorry,"
and he turned back toward the cashier to pay for the file. But the guard stopped
him and led him instead toward the rear of the supermarket. The plaintiff protested
but the guard was firm saying: "No, Mr., please come with me. It is the procedure
of the supermarket to bring people that we apprehend to the back of the
supermarket" (p. 8, Ibid). The time was between 9 and 10 o'clock. A crowd of
customers on their way into the supermarket saw the plaintiff being stopped and led
by a uniformed guard toward the rear of the supermarket. Plaintiff acquiesced and
signaled to his wife and daughters to wait.
"Into a cubicle which was immediately adjacent to the area where deliveries to the
supermarket were being made, the plaintiff was ushered. The guard directed him to
a table and gave the file to the man seated at the desk. Another man stood beside
the plaintiff. The man at the desk looked at the plaintiff and the latter immediately
explained the circumstances that led to the finding of the file in his possession. The
man at the desk pulled out a sheet of paper and began to ask plaintiff's name, age,
residence and other personal data. Plaintiff was asked to make a brief statement,
and on the sheet of paper or "Incident Report" he wrote down the following: "While
talking to my aunt's maid with my wife, I put this item in my shirt pocket. I forgot
to check it out with my wife's items" (Exhibit A). Meanwhile, the plaintiff's wife
joined him and asked what had taken him so long.
"The guard who had accosted plaintiff took him back inside the supermarket in the
company of his wife. Plaintiff and his wife were directed across the main entrance to
the shopping area, down the line of check-out counters, to a desk beside the first
checkout counter. To the woman seated at the desk, who turned out to be
defendant Nelia Santos-Fandino, the guard presented the incident report and the
file, Exhibit B. Defendant Fandino read the report and addressing the guard
remarked: "Ano, nakaw na naman ito" (p. 22, Id.). Plaintiff explained and narrated
the incident that led to the finding of the file in his pocket, telling Fandino that he
was going to pay for the file because he needed it. But this defendant replied: "That
is all they say, the people whom we cause not paying for the goods say... They all
intended to pay for the things that are found to them." (p. 23, Id). Plaintiff objected
and said that he was a regular customer of the supermarket.
"Extracting a P5.00 bill from his pocket, plaintiff told Fandino that he was paying for
the file whose cost was P3.85. Fandino reached over and took the P5.00 bill from
plaintiff with these words: "We are fining you P5.00. That is your the fine." Plaintiff
was shocked. He and his wife objected vigorously that he was not a common
criminal, and they wanted to get back the P5.00. But Fandino told them that the
money would be given as an incentive to the guards who apprehend pilferers.
People were milling around them and staring at the plaintiff. Plaintiff gave up the
discussion. He drew a P50.00 bill and took back the file. Fandino directed him to the
nearest check-out counter where he had to fall in line. The people who heard the
exchange of words between Fandino and plaintiff continued to stare at him. At the
trial, plaintiff expressed his embarrassment and humiliation thus: " I felt as though I
wanted to disappear into a hole on the ground" (p. 34, Id.). After paying for the file,
plaintiff and his wife walked as fast as they could out of the supermarket. His first
impulse was to go back to the supermarket that night to throw rocks at its glass
windows. But reason prevailed over passion and he thought that justice should take
its due course.
16 | T o r t s F i n a l s
"Plaintiff was certain during the trial that when he signed the incident report, Exhibit
A, inside the cubicle at the back of the supermarket only his brief statement of the
facts (Exhibit A-2), aside from his name and personal circumstances, was written
thereon. He swore that the following were not in the incident report at, the time he
signed it:
Exhibit A-I which says opposite the stenciled word SUBJECT "Shoplifting"
Exhibit A-3 which says opposite the stenciled words Action Taken: Released by Mrs.
Fandino after paying the item.
Exhibit A-4 which says opposite the stenciled words Remarks Noted: "Grd. Ebreo
requested Grd. Paunil to apprehend subject shoplifter.
Private respondent's complaint filed on October 8, 1970 is founded on Article 21 in
relation to Article 2219 of the New Civil Code and prays for moral damages,
exemplary damages, attorney s fees and 'expenses of litigation, costs of the suit
and the return of the P5.00 fine. After trial, the Court of First Instance of Pasig,
Rizal, Branch XIX dismissed the complaint, Interposing the appeal to the Court of
Appeals, the latter reversed and set aside the appealed judgment, granting and
damages as earlier stated.
Not satisfied with the decision of the respondent court, petitioners instituted the
present petition and submits the following grounds and/or assignment of errors, to
wit:
I car who told him, "Excuse me, Mr., I think you have something in your pocket which
Respondent Court of Appeals erred in awarding moral and exemplary damages to
the respondent Espino under Articles 19 and 21 in relation to Article 2219 of the
Civil Code, considering that —
A. Respondent Espino was guilty of theft;
B. Petitioners legitimately exercised their right of defense of property within the
context of Article 429 of the Civil Code negating the application of Articles 19 and 21
of the same Code;
C. Petitioners acted upon probable cause in stopping and investigating respondent
Espino for shoplifting and as held in various decisions in the United States on
shoplifting, a merchant who acts upon probable cause should not be held liable in
damages by the suspected shoplifter;
D. Petitioners did not exercise their right maliciously, wilfully or in bad faith; and/or
E. The proximate cause of respondent Espino's alleged injury or suffering was his
own negligence or forgetfulness; petitioners acted in good faith.
II Assuming arguendo that petitioners are hable for moral and exemplary damages,
the award of P75,000.00 for moral damages and P25,000.00 for exemplary
damages by the respondent Court of Appeals is not legally justified and/or is grossly
excessive in the premises.
III The award of P5,000.00 for attorney's fees by the respondent Court of Appeals is
unjustified and unwarranted under Article 2199 of the Civil Code.
We agree with the holding of the respondent appellate court that "the evidence
sustains the court's finding that the plaintiff had absolutely no intention to steal the
file." The totality of the facts and circumstances as found by the Court of Appeals
unerringly points to the conclusion that private respondent did not intend to steal
the file and that is act of picking up the file from the open shelf was not criminal nor
done with malice or criminal intent for on the contrary, he took the item with the
intention of buying and paying for it.
This Court needs only to stress the following undisputed facts which strongly and
convincingly uphold the conclusion that private respondent was not "shoplifting."
Thus, the facts that private respondent after picking the cylindrical "rat-tail" file
costing P3.85 had placed it inside his left front breast pocket with a good portion of
the item exposed to view and that he did not conceal it in his person or hid it from
sight as well as the fact that he paid the purchases of his wife amounting to P77.00
at the checkout counter of the Supermarket, owed that he was not acting
suspiciously or furtively. And the circumstance that he was with his family consisting
of his wife Mrs. Caridad Jayme Espino, and their two daughters at the time negated
any criminal intent on his part to steal. Moreover, when private respondent was
approached by the guard of the Supermarket as he was leaving by the exit to his
you have not paid for," Espino, immediately apologized and answered, "I am sorry,"
which indicated his sincere apology or regrets. He turned back towards the cashier
to pay for the file which proved his honesty sincerity and good faith in buying the
item, and not to shoplift the same. His brief statement on the sheet of paper called
the Incident Report where private respondent wrote the following: "While talking to
my aunt's maid with my wife, I put this item in in my shirt pocket. I forgot to check
it out with my wife's item," was an instant and contemporaneous explanation of the
incident.
Considering further the personal circumstances of the private respondent. his
education, position and character showing that he is a graduate Mechanical
Engineer from U.P. Class 1950, employed as an executive of Proctor & Gamble
Phils., Inc., a corporate manager incharge of motoring and warehousing therein;
honorably discharged from the Philippine Army in 1946; a Philippine government
pensionado of the United States for six months; member of the Philippine veterans
Legion; author of articles published in the Manila Sunday Times and Philippines Free
Press; member of the Knights of Columbus, Council No. 3713; son of the late Jose
Maria Espino, retired Minister, Department of Foreign Affairs at the Philippine
Embassy Washington, We are fully convinced, as the trial and appellate courts were,
that private respondent did not intend to steal the article costing P3.85. Nothing in
the records intimates or hints whatsoever that private respondent has had any
police record of any sort much less suspicion of stealing or shoplifting.
17 | T o r t s F i n a l s
We do not lay down here any hard-and-fast rule as to what act or combination of
acts constitute the crime of shoplifting for it must be stressed that each case must
be considered and adjudged on a case-to-case basis and that in the determination
of whether a person suspected of shoplifting has in truth and in fact committed the
same, all the attendant facts and circumstances should be considered in their
entirety and not from any single fact or circumstance from which to impute the
stigma of shoplifting on any person suspected and apprehended therefor.
We likewise concur with the Court of Appeals that "(u)pon the facts and under the
law, plaintiff has clearly made the cause of action for damages against the
defendants. Defendants wilfully caused loss or injury to plaintiff in a manner that
was contrary to morals, good customs or public policy, making them amenable to
damages under Articles 19 and 21 in relation to Article 2219 of the Civil Code." 2
That private respondent was falsely accused of shoplifting is evident. The Incident
Report (Exhibit A) with the entries thereon under Exhibit A-1 which says opposite
the stenciled word SUBJECT: "Shoplifting," Exhibit A-3 which says opposite the
stenciled words Action Taken: Relesed by Mrs. Fandino after paying the item,"
Exhibit A-4 which says opposite the stenciled words Remarks Noted: Grd. Ebreo
requested Grd. Paunil to apprehend subject shoplifter," established the opinion,
judgment or thinking of the management of petitioner's supermarket upon private
respondent's act of picking up the file. ln plain words, private respondent was
regarded and pronounced a shoplifter and had committed "shoplifting."
We also affirm the Court of Appeals' finding that petitioner Nelia Santos Fandino,
after reading the incident report, remarked the following: "Ano, nakaw na naman
ito". Such a remark made in the presence of private respondent and with reference
to the incident report with its entries, was offensive to private respondent's dignity
and defamatory to his character and honesty. When Espino explained that he was
going to pay the file but simply forgot to do so, Fandino doubted the explanation.
saying: "That is all what they say, the people whom we caught not paying for the
goods say... they all intended to pay for the things that are found to them." Private
respondent objected and said that he was a regular customer of the Supermarket.
The admission of Fandino that she required private respondent to pay a fine of
P5.00 and did in fact take the P5.00 bill of private respondent tendered by the latter
to pay for the file, as a fine which would be given as an incentive to the guards who
apprehend pilferers clearly proved that Fandino branded private respondent as a
thief which was not right nor justified.
The testimony of the guard that management instructed them to bring the
suspected customers to the public area for the people to see those kind of
customers in order that they may be embarassed (p. 26, tsn, Sept. 30, 1971); that
management wanted "the customers to be embarrassed in public so that they will
not repeat the stealing again" (p. 2, tsn, Dec. 10, 1971); that the management
asked the guards "to bring these customers to different cashiers in order that they
will know that they are pilferers" (p. 2, Ibid.) may indicate the manner or pattern
whereby a confirmed or self-confessed shoplifter is treated by the Supermarket
management but in the case at bar, there is no showing that such procedure was
taken in the case of the private respondent who denied strongly and vehemently the
charge of shoplifting.
Nonetheless, the false accusation charged against the private respondent after
detaining and interrogating him by the uniformed guards and the mode and manner
in which he was subjected, shouting at him, imposing upon him a fine, threatening
to call the police and in the presence and hearing of many people at the
Supermarket which brought and caused him humiliation and embarrassment,
sufficiently rendered the petitioners liable for damages under Articles 19 and 21 in
relation to Article 2219 of the Civil Code. We rule that under the facts of the case at
bar, petitioners wilfully caused loss or injury to private respondent in a manner that
was contrary to morals, good customs or public policy. It is against morals, good
customs and public policy to humiliate, embarrass and degrade the dignity of a
person. Everyone must respect the dignity, personality, privacy and peace of mind
of his neighbors and other persons (Article 26, Civil Code). And one must act with
justice, give everyone his due and observe honesty and good faith (Article 19, Civil
Code).
Private respondent is entitled to damages but We hold that the award of Seventy-
Five Thousand Pesos (P75,000.00) for moral damages and Twenty-Five Thousand
Pesos (P25,000.00, for exemplary damages is unconscionable and excessive.
While 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 (Art. 2216, New Civil Code). In the
case at bar, there is no question that the whole incident that befell respondent had
arisen in such a manner that was created unwittingly by his own act of forgetting to
pay for the file. It was his forgetfullness in checking out the item and paying for it
that started the chain of events which led to his embarassment and humiliation
thereby causing him mental anguish, wounded feelings and serious anxiety. Yet,
private respondent's act of omission contributed to the occurrence of his injury or
loss and such contributory negligence is a factor which may reduce the damages
that private respondent may recover (Art. 2214, New Civil Code). Moreover, that
many people were present and they saw and heard the ensuing interrogation and
altercation appears to be simply a matter of coincidence in a supermarket which is a
public place and the crowd of onlookers, hearers or bystanders was not deliberately
sought or called by management to witness private respondent's predicament. We
do not believe that private respondent was intentionally paraded in order to
humiliate or embarrass him because petitioner's business depended for its success
and patronage the good will of the buying public which can only be preserved and
promoted by good public relations.
As succinctly expressed by Mr. Justice J. B. L. Reyes in his concurring and dissenting
opinion in Pangasinan Transportation Company, Inc, vs. Legaspi, 12 SCRA 598, the
purpose of moral damages is essentially indemnity or reparation, both punishment
or correction. Moral damages are emphatically not intended to enrich a complainant
at the expense of a defendant; they are awarded only to enable the injured party to
obtain means, diversion or amusements that will serve to alleviate the moral
suffering he has undergone, by reason of the defendant's culpable action. In other
18 | T o r t s F i n a l s
words, the award of moral damages is aimed at a restoration, within the limits of
the possible, of the spiritual status quo ante and, it must be proportionate to the
suffering inflicted.
In Our considered estimation and assessment, moral damages in the amount of Five
Thousand Pesos (P5,000.00) is reasonable and just to award to private respondent.
The grant of Twenty-Five Thousand Pesos (P25,000.00) as exemplary damages is
unjustified. Exemplary or corrective damages are imposed by way of example or
correction for the public good, in addition to the moral, temperate, liquidated or
compensatory damages (Art. 2229, New Civil Code). Exemplary damages cannot be
recovered as a matter of right; the court will decide whether or not they could be
adjudicated (Art. 2223, New Civil Code). Considering that exemplary damages are
awarded for wanton acts, that they are penal in character granted not by way of
compensation but as a punishment to the offender and as a warning to others as a
sort of deterrent, We hold that the facts and circumstances of the case at bar do not
warrant the grant of exemplary damages.
Petitioners acted in good faith in trying to protect and recover their property, a right
which the law accords to them. Under Article 429, New Civil Code, the owner or
lawful possessor of a thing has a right to exclude any person from the enjoyment
and disposal thereof and for this purpose, he may use such force as may be
reasonably necessary to repel or prevent an actual or threatened unlawful physical
invasion or usurpation of his property. And since a person who acts in the fulfillment
of a duty or in the lawful exercise of a right or office exempts him from civil or
criminal liability, petitioner may not be punished by imposing exemplary damages
against him. We agree that petitioners acted upon probable cause in stopping and
investigating private respondent for taking the file without paying for it, hence, the
imposition of exemplary damages as a warning to others by way of a deterrent is
without legal basis. We, therefore, eliminate the grant of exemplary damages to the
private respondent.
In the light of the reduction of the damages, We hereby likewise reduce the original
award of Five Thousand Pesos (P5,000.00) as attorney's fees to Two Thousand
Pesos (P2,000.00).
WHEREFORE, IN VIEW OF THE FOREGOING, the judgment of the Court of Appeals is
hereby modified. Petitioners are hereby ordered to pay, jointly and severally, to
private respondent moral damages in the sum of Five Thousand Pesos (P5,000.00)
and the amount of Two Thousand Pesos (P2,000.00) as and for attorney's fees; and
further, to return the P5.00 fine to private respondent. No costs
G.R. No. 184315               November 28, 2011
ALFONSO T. YUCHENGCO, Petitioner,
vs.
THE MANILA CHRONICLE PUBLISHING CORPORATION, NOEL CABRERA,
GERRY ZARAGOZA, DONNA GATDULA, RODNEY P. DIOLA, RAUL VALINO,
THELMA SAN JUAN and ROBERT COYIUTO, JR., Respondents.
For resolution is the Motion for Reconsideration 1 dated January 15, 2010, filed by
the respondents, and the Supplemental Motion for Reconsideration 2 of respondent
Robert Coyiuto, Jr., dated March 17, 2010, from the Decision rendered in favor of
petitioner Alfonso T. Yuchengco, dated November 25, 2009.
At the outset, a brief narration of the factual and procedural antecedents that
transpired and led to the filing of the motions is in order.
The present controversy arose when in the last quarter of 1993, several allegedly
defamatory articles against petitioner were published in The Manila Chronicle by
Chronicle Publishing Corporation. Consequently, petitioner filed a complaint against
respondents before the Regional Trial Court (RTC) of Makati City, Branch 136,
docketed as Civil Case No. 94-1114, under three separate causes of action, namely:
(1) for damages due to libelous publication against Neal H. Cruz, Ernesto Tolentino,
Noel Cabrera, Thelma San Juan, Gerry Zaragoza, Donna Gatdula, Raul Valino,
Rodney P. Diola, all members of the editorial staff and writers of The Manila
Chronicle, and Chronicle Publishing; (2) for damages due to abuse of right against
Robert Coyiuto, Jr. and Chronicle Publishing; and (3) for attorney’s fees and costs
against all the respondents.
On November 8, 2002, the trial court rendered a Decision 3 in favor of petitioner.
Aggrieved, respondents sought recourse before the Court of Appeals (CA). On March
18, 2008, the CA rendered a Decision4 affirming in toto the decision of the RTC.
Respondents then filed a Motion for Reconsideration 5 praying that the CA reconsider
its earlier decision and reverse the decision of the trial court. On August 28, 2008,
the CA rendered an Amended Decision6 reversing the earlier Decision.
Subsequently, petitioner filed the present recourse before this Court which puts
forth the following assignment of errors:
A. THE HONORABLE COURT OF APPEALS COMMITTED GRAVE REVERSIBLE ERROR
IN RULING THAT THE CASE OF ARTURO BORJAL, ET AL. V. COURT OF APPEALS, ET
AL., CITED BY RESPONDENTS IN THEIR MOTION FOR RECONSIDERATION,
WARRANTED THE REVERSAL OF THE CA DECISION DATED MARCH 18, 2008.
B. THE HONORABLE COURT OF APPEALS COMMITTED GRAVE REVERSIBLE ERROR
IN RULING THAT THE SUBJECT ARTICLES IN THE COMPLAINT FALL WITHIN THE
CONCEPT OF PRIVILEGED COMMUNICATION.
C. THE HONORABLE COURT OF APPEALS COMMITTED GRAVE REVERSIBLE ERROR
IN RULING THAT PETITIONER IS A PUBLIC OFFICIAL OR PUBLIC FIGURE. 7
On November 25, 2009, this Court rendered a Decision partially granting the
petition.
19 | T o r t s F i n a l s
Respondents later filed a Motion for Reconsideration dated January 15, 2010, which
the Court denied in the Resolution8 dated March 3, 2010.
Meanwhile, respondent Coyiuto, Jr. also filed a Motion for Leave to File
Supplemental Motion for Reconsideration with Attached Supplemental Motion, both
dated March 17, 2010.
On April 21, 2010, this Court issued a Resolution9 resolving to recall the Resolution
dated March 3, 2010; grant Coyiuto, Jr.’s motion for leave to file supplemental
motion for reconsideration; note the supplemental motion for reconsideration; and
require petitioner to comment on the motion for reconsideration and supplemental
motion for reconsideration.
On June 22, 2010, petitioner filed his Comment on the Motion for
Reconsideration10 dated January 15, 2010 and Comment on respondent Coyiuto,
Jr.’s Supplemental Motion for Reconsideration11 dated 17 March 2010.
In the Motion for Reconsideration, respondents moved for a reconsideration of the
earlier decision on the following grounds:
1. MALICE-IN-FACT HAS NOT BEEN PROVEN.
2. PETITIONER IS A "PUBLIC FIGURE."
3. THE SUBJECT OF THE PUBLICATIONS CONSTITUTES FAIR COMMENTS, ON
PUBLIC ISSUES, ON MATTERS OF PUBLIC INTEREST AND NATIONAL CONCERN.
4. RESPONDENTS DID NOT ACT IN A RECKLESS MANNER OR IN COMPLETE
DISREGARD OF THE TRUTH OF THE MATTERS COVERED BY THE SUBJECT
PUBLICATIONS.
5. THE PROTECTIVE MANTLE OF QUALIFIED PRIVILEGED COMMUNICATIONS
PROTECTS THE SUBJECT PUBLICATIONS.
6. THERE IS NO LEGAL OR EVIDENTIARY BASIS TO HOLD DONNA GATDULA,
JOINTLY AND SEVERALLY, LIABLE FOR THE SUBJECT PUBLICATIONS, TOGETHER
WITH THE EDITORS AND STAFF OF THE NEWSPAPER.
7. THERE IS NO EVIDENCE TO HOLD THELMA SAN JUAN RESPONSIBLE FOR THE
SUBJECT PUBLICATIONS.
8. THE "QUICK NOTES" COLUMN OF MR. RAUL VALINO ARE BASED ON FACTS;
THUS, NOT LIBELOUS.
9. ROBERT COYIUTO, JR. IS NOT IMPLEADED WITH THE EDITORS AND STAFF
MEMBERS OF THE MANILA CHRONICLE, BUT IS SUED IN "HIS PERSONAL
CAPACITY" FOR AN "ABUSE OF RIGHT" AND NO EVIDENCE LINKS HIM TO THE
SUBJECT PUBLICATIONS.
10. THE AWARDED DAMAGES ARE EXCESSIVE, EQUITABLE AND UNJUSTIFIED.12
In his Supplemental Motion for Reconsideration, Coyiuto, Jr. raises the following
arguments:
I. WITH ALL DUE RESPECT, THIS HONORABLE COURT OBVIOUSLY
OVERLOOKED THE FACT THAT IN PETITIONER’S AMENDED COMPLAINT
(DATED OCTOBER 17, 1994), RESPONDENT ROBERT COYIUTO, JR. WAS
NOT SUED FOR DAMAGES ALLEGEDLY DUE TO "LIBELOUS PUBLICATIONS"
(FIRST CAUSE OF ACTION). HE WAS SUED, HOWEVER, IN HIS PERSONAL
CAPACITY FOR "ABUSE OF RIGHT" (SECOND CAUSE OF ACTION)
ALLEGEDLY, AS "CHAIRMAN" OF THE BOARD, "OFFICER," "PRINCIPAL
OWNER," OF THE MANILA CHRONICLE PUBLISHING CORPORATION UNDER
ARTICLES 19 AND 20 OF THE CIVIL CODE. AS SUCH, THE IMPOSITION OF
MORAL (₱25 MILLION PESOS) AND EXEMPLARY (₱10 MILLION PESOS)
DAMAGES AGAINST RESPONDENT COYIUTO, JR. HAS NO BASIS IN LAW
AND CONTRARY TO THE SPECIFIC PROVISIONS OF ARTICLES 2219 AND
2229, IN RELATION TO ARTICLE 2233, RESPECTIVELY, OF THE CIVIL CODE
AS WILL BE ELUCIDATED HEREUNDER.
II. WITH ALL DUE RESPECT, APART FROM THE SELF-SERVING/UNILATERAL
ALLEGATION IN PARAGRAPH 3.11 OF THE AMENDED COMPLAINT (ANNEX
"C" OF PETITION FOR REVIEW), NO IOTA OF EVIDENCE WAS ADDUCED ON
TRIAL IN SUPPORT OF THE ALLEGATION THAT RESPONDENT COYIUTO, JR.
WAS "CHAIRMAN", "PRINCIPAL OWNER" AND "OFFICER" OF RESPONDENT
MANILA CHRONICLE PUBLISHING CORPORATION. SEC DOCUMENTS SHOW
THE CONTRARY, AS WILL BE DISCUSSED HEREUNDER. SO HOW COULD
RESPONDENT COYIUTO, JR. BE IMPLEADED TO HAVE "ABUSED HIS RIGHT
AS A NON-CHAIRMAN, NON-STOCKHOLDER, NON-OFFICER OF
RESPONDENT MANILA CHRONICLE PUBLISHING CORPORATION? IT IS
FUNDAMENTAL THAT THE BURDEN OF PROOF RESTS ON THE PARTY
ASSERTING A FACT OR ESTABLISHING A CLAIM (RULE 131, REVISED
RULES OF COURT).13
From the foregoing, it is apparent that the motion for reconsideration generally
restates and reiterates the arguments, which were previously advanced by
respondents and does not present any substantial reasons, which were not formerly
invoked and passed upon by the Court.
However, from the supplemental motion for reconsideration, it is apparent that
Coyiuto, Jr. raises a new matter which has not been raised in the proceedings
below. This notwithstanding, basic equity dictates that Coyiuto, Jr. should be given
all the opportunity to ventilate his arguments in the present action, but more
importantly, in order to write finis to the present controversy. It should be noted
that the Resolution denying the Motion for Reconsideration was later recalled by this
Court in the Resolution dated March 3, 2010, and therein, petitioner was given the
20 | T o r t s F i n a l s
opportunity to refute Coyiuto, Jr.’s arguments by filing his comment on the motion
for reconsideration and the supplemental motion for reconsideration, which
petitioner complied with.
From these Comments and contrary to Coyiuto, Jr.’s contention, it was substantially
established that he was the Chairman of Manila Chronicle Publishing Corporation
when the subject articles were published. Coyiuto, Jr. even admitted this fact in his
Reply and Comment on Request for Admission,14 to wit:
4. Defendant Robert Coyiuto Jr. ADMITS that he was the Chairman of the Board but
not President of the Manila Chronicle during the period Novemeber (sic) to
December 1993.
5. Defendant Robert Coyiuto Jr. DENIES paragraph 11. He has already conveyed
such denial to plaintiff in the course of the pre-trial. It was The Manila Chronicle, a
newspaper of general circulation, of which he is, admittedly Chairman of the Board,
that published the items marked as plaintiff’s Exhibits A, B, C, D, E, F, and G.
12. This case, based on plaintiff’s Amended Complaint, is limited to the publications
in The Manila Chronicle marked plaintiff’s Exhibits "A" to "G", consecutively,
published by defendant Manila Chronicle. Thus, only the question of whether Mr.
Robert Coyiuto, Jr. was Chairman and President of defendant Manila Chronicle,
during these publications and whether he caused these publications, among all of
plaintiffs’ queries, are relevant and material to this case. And defendant Robert
Coyiuto, Jr. has answered that: "Yes", he was Chairman of the Board. "No", he was
never President of The Manila Chronicle. "No", he did not cause the publications in
The Manila Chronicle: it was the Manila Chronicle that published the news items
adverted to.15
Both the trial court and the CA affirmed this fact. We reiterate that factual findings
of the trial court, when adopted and confirmed by the CA, are binding and
conclusive on this Court and will generally not be reviewed on appeal. While this
Court has recognized several exceptions16 to this rule, none of these exceptions
exists in the present case. Accordingly, this Court finds no reason to depart from the
findings of fact of the trial court and the CA.
More importantly and contrary again to Coyiuto, Jr.’s contention, the cause of action
of petitioner based on "abuse of rights," or Article 19, in relation to Article 20 of the
Civil Code, warrants the award of damages.
The principle of abuse of rights as enshrined in Article 19 of the Civil Code provides:
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.
This provision of law sets standards which must be observed in the exercise of one’s
rights as well as in the performance of its duties, to wit: to act with justice; give
everyone his due; and observe honesty and good faith.17
In Globe Mackay Cable and Radio Corporation v. Court of Appeals,18 it was
elucidated that while Article 19 "lays down a rule of conduct for the government of
human relations and for the maintenance of social order, it does not provide a
remedy for its violation. Generally, an action for damages under either Article 20 or
Article 21 would be proper." The Court said:
One of the more notable innovations of the New Civil Code is the codification of
"some basic principles that are to be observed for the rightful relationship between
human beings and for the stability of the social order." [REPORT ON THE CODE
COMMISSION ON THE PROPOSED CIVIL CODE OF THE PHILIPPINES, p. 39]. The
framers of the Code, seeking to remedy the defect of the old Code which merely
stated the effects of the law, but failed to draw out its spirit, incorporated certain
fundamental precepts which were "designed to indicate certain norms that spring
from the fountain of good conscience" and which were also meant to serve as
"guides for human conduct [that] should run as golden threads through society, to
the end that law may approach its supreme ideal, which is the sway and dominance
of justice." (Id.) Foremost among these principles is that pronounced in Article 19
which provides:
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.
This article, known to contain what is commonly referred to as the principle of
abuse of rights, sets certain standards which must be observed not only in the
exercise of one's rights, but also in the performance of one's duties. These
standards are the following: to act with justice; to give everyone his due; and to
observe honesty and good faith. The law, therefore, recognizes a primordial
limitation on all rights; that in their exercise, the norms of human conduct set forth
in Article 19 must be observed. A right, though by itself legal because recognized or
granted by law as such, may nevertheless become the source of some illegality.
When a right is exercised in a manner which does not conform with the norms
enshrined in Article 19 and results in damage to another, a legal wrong is thereby
committed for which the wrongdoer must be held responsible. But while Article 19
lays down a rule of conduct for the government of human relations and for the
maintenance of social order, it does not provide a remedy for its violation.
Generally, an action for damages under either Article 20 or Article 21 would be
proper.19
Corollarilly, Article 20 provides that "every person who, contrary to law, willfully or
negligently causes damage to another shall indemnify the latter for the same." It
speaks of the general sanctions of all other provisions of law which do not especially
provide for its own sanction. When a right is exercised in a manner which does not
conform to the standards set forth in the said provision and results in damage to
another, a legal wrong is thereby committed for which the wrongdoer must be
responsible.20 Thus, if the provision does not provide a remedy for its violation, an
21 | T o r t s F i n a l s
action for damages under either Article 20 or Article 21 of the Civil Code would be
proper.
The question of whether or not the principle of abuse of rights has been violated
resulting in damages under Article 20 or other applicable provision of law, depends
on the circumstances of each case. In the present case, it was found that Coyiuto,
Jr. indeed abused his rights as Chairman of The Manila Chronicle, which led to the
publication of the libelous articles in the said newspaper, thus, entitling petitioner to
damages under Article 19, in relation to Article 20.
Consequently, the trial court and the CA correctly awarded moral damages to
petitioner. Such damages may be awarded when the transgression is the cause of
petitioner’s anguish.21 Further, converse to Coyiuto, Jr.’s argument, although
petitioner is claiming damages for violation of Articles 19 and 20 of the Civil Code,
still such violations directly resulted in the publication of the libelous articles in the
newspaper, which, by analogy, is one of the ground for the recovery of moral
damages under (7) of Article 2219.22
However, despite the foregoing, the damages awarded to petitioner appear to be
too excessive and warrants a second hard look by the Court.
While there is no hard-and-fast rule in determining what would be a fair and
reasonable amount of moral damages, the same should not be palpably and
scandalously excessive. Moral damages are not intended to impose a penalty to the
wrongdoer, neither to enrich the claimant at the expense of the defendant. 23
Even petitioner, in his Comment24 dated June 21, 2010, agree that moral damages
"are not awarded in order to punish the respondents or to make the petitioner any
richer than he already is, but to enable the latter to find some cure for the moral
anguish and distress he has undergone by reason of the defamatory and damaging
articles which the respondents wrote and published." 25 Further, petitioner cites as
sufficient basis for the award of damages the plain reason that he had to "go
through the ordeal of defending himself everytime someone approached him to ask
whether or not the statements in the defamatory article are true."
In Philippine Journalists, Inc. (People’s Journal) v. Thoenen, 26 citing Guevarra v.
Almario,27 We noted that the damages in a libel case must depend upon the facts of
the particular case and the sound discretion of the court, although appellate courts
were "more likely to reduce damages for libel than to increase them." So it must be
in this case.
Moral damages are not a bonanza. They are given to ease the defendant’s grief and
suffering. Moral damages should be reasonably approximate to the extent of the
hurt caused and the gravity of the wrong done.28 The Court, therefore, finds the
award of moral damages in the first and second cause of action in the amount of
₱2,000,000.00 and ₱25,000,000.00, respectively, to be too excessive and holds that
an award of ₱1,000,000.00 and ₱10,000,000.00, respectively, as moral damages
are more reasonable.
As for exemplary damages, Article 2229 provides that exemplary damages may be
imposed by way of example or correction for the public good. Nonetheless,
exemplary damages are imposed not to enrich one party or impoverish another, but
to serve as a deterrent against or as a negative incentive to curb socially deleterious
actions.29 On this basis, the award of exemplary damages in the first and second
cause of action in the amount of ₱500,000.00 and ₱10,000,000.00, respectively, is
reduced to ₱200,000.00 and ₱1,000,000.00, respectively.
On the matter of attorney’s fees and costs of suit, Article 2208 of the same Code
provides, among others, that attorney’s fees and expenses of litigation may be
recovered in cases when exemplary damages are awarded and where the court
deems it just and equitable that attorney’s fees and expenses of litigation should be
recovered. In any event, however, such award must be reasonable, just and
equitable.30 Thus, the award of attorney’s fees and costs is reduced from
₱1,000,000.00 to ₱200,000.00.
One final note, the case against respondent was one for damages based on the
publication of libelous articles against petitioner; hence, only civil in nature. The rule
is that a party who has the burden of proof in a civil case must establish his cause
of action by a preponderance of evidence. Thus, respondents’ liability was proven
only on the basis of preponderance of evidence, which is quite different from a
criminal case for libel where proof beyond reasonable doubt must be established.
Corollarilly, under Article 360 of the Revised Penal Code, the person who "caused
the publication" of a defamatory article shall be responsible for the same. Hence,
Coyiuto, Jr. should have been held jointly and solidarily liable with the other
respondents in the first cause of action under this article and not on the basis of
violation of the principle of abuse of rights founded on Articles 19 and 20 of the Civil
Code. Because of the exclusion of Coyiuto, Jr. in the first cause of action for libel, he
cannot be held solidarily liable with the other respondents in the first cause of
action. Nonetheless, since damage to petitioner was in fact established warranting
the award of moral and exemplary damages, the same could only be awarded based
on petitioner’s second cause of action impleading Coyiuto, Jr. for violation of the
principle of abuse of right.
It did not escape the attention of the Court that in filing two different causes of
action based on the same published articles, petitioner intended the liability of
Coyiuto, Jr. to be different from the other respondents. It can be inferred that if
Coyiuto, Jr. was impleaded in the first cause of action for recovery of the civil
liability in libel, petitioner could not have prayed for higher damages, considering
that the other respondents, who are jointly and severally liable with one another,
are not in the same financial standing as Coyiuto, Jr. Petitioner, in effect, had
spared the other respondents from paying such steep amount of damages, while at
the same time prayed that Coyiuto, Jr. pay millions of pesos by way of moral and
exemplary damages in the second cause of action.
WHEREFORE, the Motion for Reconsideration and Supplemental Motion for
Reconsideration are PARTIALLY GRANTED.1âwphi1 The Decision of this Court, dated
November 25, 2009, is MODIFIED to read as follows:
22 | T o r t s F i n a l s
WHEREFORE, in view of the foregoing, judgment is hereby rendered as follows:
1. On the First Cause of Action, ordering defendants Chronicle Publishing,
Neil H. Cruz, Ernesto Tolentino, Noel Cabrera, Thelma San Juan, Gerry
Zaragoza, Donna Gatdula, Raul Valino and Rodney Diola, to pay plaintiff
Yuchengco, jointly and severally:
a. the amount of One Million Pesos (₱1,000,000.00) as moral
damages; and
b. the amount of Two Hundred Thousand Pesos (₱200,000.00) as
exemplary damages;
2. On the Second Cause of Action, ordering defendants Robert Coyiuto, Jr.
and Chronicle Publishing to pay plaintiff Yuchengco, jointly and severally:
a. the amount of Ten Million Pesos (₱10,000,000.00) as moral
damages; and
b. the amount of One Million Pesos (₱1,000,000.00) as exemplary
damages;
3. On the Third Cause of Action, ordering all defendants to pay plaintiff
Yuchengco, jointly and severally, the amount of Two Hundred Thousand
Pesos (₱200,000.00) as attorney’s fee and legal costs.
Costs against respondents.
G.R. No. 193914               November 26, 2014
SEVEN BROTHERS SHIPPING CORPORATION, Petitioner,
vs. DMC-CONSTRUCTION RESOURCES, INC., Respondent.
This is a Rule 45 appeal1 dated 18 November 2010 assailing the Decision 2 and
Resolution3 of the Court of Appeals (CA) in CA-G.R. CV No. 69819, which affirmed
with modifications the Decision4 of the Regional Trial Court (RTC), Branch 132,
Makati City in Civil Case No. 98-699, finding petitioner liable to respondent for
damages.
Petitioner Seven Brothers Shipping Corporation is the owner of the cargo ship M/V
"Diamond Rabbit," (vessel), while respondent DMC Construction Resource, Inc. is
the owner of coal-conveyor facility, which was destroyed when the vessel became
uncontrollable and unmanueverable during a storm.5
We reproduce the narration of facts culled by the CA, 6 as follows:
On 23 February 1996, the cargo ship M/V "Diamond Rabbit" (the Vessel) owned and
operated by defendant Seven Brothers Shipping Corporation (Seven Brothers),was
at the PICOP Pier in Mangagoy, Bislig, Surigao del Sur to dock there. According to
the record, the weather that day was windy with a wind force of 10 to 20 knots, and
the sea condition was rough, with waves 6 to 8 feet high. However, the parties also
stipulated during pre-trial that prior to the occurrence of the incident, the vessel
was anchored at the cause way of the port of Bislig, where it was safe from
inclement weather.
According to the report of the Master, it heaved its anchor and left the causeway in
order to dock at the PICOP Pier. A lifeboat pulled the vessel towards the Pier with a
heaving line attached to the vessel’s astern mooring rope, when suddenly, the
heaving line broke loose, causing the astern mooring rope to drift freely. The
mooring rope got entangled in the vessel’s propeller, thereby choking and disabling
it, and preventing the further use of its main engine for maneuvering.
In order to stop the vessel from further drifting and swinging, its Master dropped
her starboard anchor. To help secure the vessel, its forward mooring rope was sent
ashoreand secured at the mooring fender. However, because of the strong winds
and rough seas, the vessel’s anchor and the mooring rope could not hold the vessel.
Under the influence of the wind and current, the dead weight of the vessel caused it
to swung from side to side until the fender, where the mooring rope was attached,
collapsed. The uncontrollable and unmaneuverable vessel drifted and dragged its
anchor until it hit several structures at the Pier, including the coal conveyor facility
owned by DMC Construction Equipment Resources, Inc. (DMC). (Emphasis in the
original)
On 5 March 1996, respondent sent a formal demand letter to petitioner, claiming
the amount above-stated for the damages sustained by their vessel. 7
When petitioner failed to pay, respondent filed with the RTC a Complaint for
damages against respondent on 23 March 1998. Based on the pieces of evidence
presented by both parties, the RTC ruled that as a result of the incident, the loading
conveyor and related structures of respondent were indeed damaged. 8 In the course
of the destruction, the RTC found that no force majeure existed, considering that
petitioner’s captain was well aware of the bad weather, and yet proceeded against
the strong wind and rough seas, instead of staying at the causeway and waiting out
the passage of the typhoon.9 It further concluded that "there was negligence on the
part of the captain; hence, defendant [petitioner] as his employer and owner of the
vessel shall be liable for damages caused thereby." 10
Regarding liability, the RTC awarded respondent actual damages in the amount of
₱3,523,175.92 plus legal interest of 6%, based on the testimony of respondent’s
engineer, Loreto Dalangin (Engr. Dalangin). The value represented 50% of the
₱7,046,351.84 claimed by the respondent as the fair and reasonable valuation of
the structure at the time of the loss,11 because as manifested by Engr. Dalangin at
the time of the incident, the loading conveyor and related structures were almost
five years old, with a normal useful life of 10 years.12
Thus, on 18 January 2001, the RTC issued a Decision13 to wit:
23 | T o r t s F i n a l s
WHEREFORE, judgment is hereby rendered ordering defendant to pay plaintiff:
(a) Actual damages in the amount of ₱3,523,175.92 plus legal interest of 6% per
annum from the date of the filing of this complaint until the same is fully paid; and
(b) Costs of suit.
Aggrieved, petitioner appealed via a Notice of Appeal on 5 February 2001. 14 The
appeal was dismissed by the CA in a Decision dated 30 April 2010, 15 the dispositive
portion of which is quoted herein:
WHEREFORE, the appeal is DISMISSED, and the Decision dated 18 January 2001 of
the Regional Trial Court, Branch 132, Makati City in Civil Case No. 98-699, is
AFFIRMED with modification in that Seven Brothers Shipping Corporation is found
liable to DMC Construction Equipment Resources, Inc. for nominal damages in the
amount of 3,523,175.92 due to the destruction of the latter’s coal conveyor post
and terminal by the cargo ship M/V "Diamond Rabbit." (Emphasis in the original)
The CA affirmed the RTC’s Decision with respect to the finding of negligence on the
part of the vessel’s captain. However, the appellate court modified the nature of
damages awarded (from actual to nominal), on the premise that actual damages
had not been proved. Respondent merely relied on estimates to prove the cost of
replacing the structures destroyed by the vessel, as no actual receipt was
presented.16
On 19 May 2010, petitioner filed a Motion for Partial Reconsideration. 17 Respondent
filed a Commenton the Motion on 22 June 2010, 18 and the former, a Reply on 29
June 2010.19 In a Resolution promulgated on 24 September 2010,20 the CA denied
petitioner’s Motion. Hence, the instant Petition.
This Court noted respondent’s Comment dated 27 April 2011;  respondent’s
21
Manifestation dated 4 May 2011;22 and petitioner’s Reply dated 2 June 2011.23
ISSUE :From the foregoing, the sole issue proffered to us by petitioner is whether or
not the CA erred in awarding nominal damages to respondent after having ruled
that the actual damages awarded by the RTC was unfounded.
THE COURT’S RULING
Petitioner argues that under Articles 2221 and 2223 of the Civil Code, 24 nominal
damages are only awarded to vindicate or recognize a right that has been violated,
and not to indemnify a party for any loss suffered by the latter. They are not
awarded as a simple replacement for actual damages that were not duly proven
during trial.25 Assuming further that nominal damages were properly awarded by
the CA, petitioner is of the belief that the amount thereof must be equal or at least
commensurate to the injury sustained by the claimant, as ruled in PNOC Shipping
and Transportation Corp. v. Court of Appeals (PNOC). 26 Considering that respondent
allegedly failed to substantiate its actual loss, it was therefore improper for the CA
to award nominal damages of ₱3,523,175.92, which was based on respondent’s
"highly speculative claims."27
Respondent, on the other hand, alleges that nominal damages were rightly
assessed, since there was a categorical finding that its "property right was
indubitably invaded and violated when damage to its conveyor and port equipment
due to petitioner’s negligence,"28 was inflicted. Nominal damages are recoverable
where some injury has been done, but the evidence fails to show the corresponding
amount thereof. Accordingly, the assessment of damages is left to the discretion of
the court.29 Respondent asserts that the CA’s award of ₱3,523,175.92 is not
unreasonable, following the amounts awarded in PNOC.
We rule that temperate, and not nominal, damages should be awarded to
respondent in the amount of ₱3,523,175.92.
Factual findings of appellate and trial courts are entitled to great weight and respect
on appeal, especially when established by unrebutted testimonial and documentary
evidence.
To resolve the issue at hand, we must first determine whether there was indeed a
violation of petitioner’s right. In this light, we are inclined to adopt the factual
findings of the RTC and the CA as "[t]his Court has repeatedly held that petitions for
review under Rule 45 of the Rules of Court may be brought only on questions of
law, not on questions of fact. Moreover, the factual findings of trial courts are
entitled to great weight and respect on appeal, especially when established by
unrebutted testimonial and documentary evidence. And the findings of facts of the
Court of Appeals are conclusive and binding on the Supreme Court except when
they conflict with the findings of the trial court." 30
In this case, two facts have been established by the appellate and trial courts: that
respondent suffered a loss caused by petitioner; and that respondent failed to
sufficiently establish the amount due to him, as no actual receipt was presented.
Temperate or moderate 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 provided with certainty.
Under the Civil Code, when an injury has been sustained, actual damages may be
awarded under the following condition:
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.
(Emphasis ours)
As we have stated in Dee Hua Liong Electrical Equipment Corp., v. Reyes, 31 "[a]ctual
or compensatory damages cannot be presumed, but must be duly proved, and
proved with a reasonable degree of certainty. A court cannot rely on speculation,
24 | T o r t s F i n a l s
conjecture or guess work as to the fact and amount of damages, but must depend
upon competent proof that they have suffered and on evidence of the actual
amount thereof. If the proof is flimsy and unsubstantial, no damages will be
awarded."
Jurisprudence has consistently heldthat "[t]o justify an award of actual damages x x
x credence can be given only to claims which are duly supported by receipts." 32 We
take this to mean by credible evidence. Otherwise, the law mandates that other
forms of damages must be awarded, to wit:
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 suchdamages, except liquidated ones, is left to the discretion of the court,
according to the circumstances of each case.
Under Article 2221 of the Civil Code, nominal damages may be awarded in order
that the plaintiff’s right, which has been violated or invaded by the defendant, may
be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for
any loss suffered. We have laid down the concept of nominal damages in the
following wise:
Nominal damages are ‘recoverable where a legal right is technically violated and
must be vindicated against an invasion that has produced no actual present loss of
any kind or where there has been a breach of contract and no substantial injury or
actual damages whatsoever have been or can be shown.’33
Thus, in Saludo v. Court of Appeals,34 nominal damages were granted because while
petitioner suffered no substantial injury, his right to be treated with due courtesy
was violated by the respondent, Transworld Airlines, Inc. Nominal damages were
likewise awarded in Northwestern Airlines v. Cuenca,35 Francisco v. Ferrer,36 and
Areola v. Court of Appeals,37 where a right was violated, but produced no injury or
loss to the aggrieved party. In contrast, under Article 2224, temperate or moderate
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 provided with
certainty. This principle was thoroughly explained in Araneta v. Bank of
America,38 which cited the Code Commission, to wit:
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. (Emphasis ours)
Thus, in Tan v. OMC Carriers, Inc.,39 temperate damages were rightly awarded
because plaintiff suffered a loss, although definitive proof of its amount cannot be
presented as the photographs produced as evidence were deemed insufficient.
Established in that case, however, was the fact that respondent’s truck was
responsible for the damage to petitioner’s property and that petitioner suffered
some form of pecuniary loss. In Canada v. All Commodities Marketing
Corporation,40 temperate damages were also awarded wherein respondent’s goods
did not reach the Pepsi Cola Plant at Muntinlupa City as a result of the negligence of
petitioner in conducting its trucking and hauling services, even ifthe amount of the
pecuniary loss had not been proven. In Philtranco Services Enterprises, Inc. v.
Paras,41 the respondent was likewise awarded temperate damages in an action for
breach of contract of carriage, even if his medical expenses had not been
established with certainty. In People v. Briones,42 in which the accused was found
guilty of murder, temperate damages were given even if the funeral expenses for
the victim had not been sufficiently proven.
Given these findings, we are of the belief that temperate and not nominal damages
should have been awarded, considering that it has been established that respondent
herein suffered a loss, even if the amount thereof cannot be proven with certainty.
The amount of temperate damages to be awarded is usually left to the discretion of
the courts, but such amount must be reasonable.
Consequently, in computing the amount of temperate or moderate damages, it is
usually left to the discretion of the courts, but the amount must be reasonable,
bearing in mind that temperate damages should be more than nominal but less than
compensatory.43
Here, we are convinced that respondent sustained damages to its conveyor facility
due to petitioner's negligence. Nonetheless, for failure of respondent to establish by
competent evidence the exact amount of damages it suffered, we are constrained to
award temperate damages. Considering that the lower courts have factually
established that the conveyor facility had a remaining life of only five of its
estimated total life of ten years during the time of the collision, then the
replacement cost of ₱7,046,351.84 should rightly be reduced to 50% or ₱3,523,
175.92. This is a fair and reasonable valuation, having taking into account the
remaining useful life of the facility.
WHEREFORE, the Petition for Review on Certiorari is hereby DISMISSED. The
assailed Decision and Resolution of the Court of Appeals in CA-G.R. CV No. 69819,
are hereby MODIFIED, in that temperate damages in the amount of ₱3,523,175.92
are awarded, in lieu of nominal damages.
G.R. No. 165679               October 5, 2009
ENGR. APOLINARIO DUEÑAS, Petitioner, vs. ALICE GUCE-AFRICA, Respondent.
Time and again, we have held that in a petition for review on certiorari filed under
Rule 45 of the Rules of Court, we cannot review or pass upon factual matters, save
under exceptional circumstances, none of which obtains in the present case.
25 | T o r t s F i n a l s
Petitioner endeavors in vain to convince us that the trial court and the Court of
Appeals erred in finding him negligent in the construction of respondent’s house and
holding him liable for breach of contract.
This is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Court
seeking to reverse and set aside the April 29, 2004 Decision 2 of the Court Appeals in
CA-G.R. CV No. 70757, which affirmed the December 21, 2000 Decision 3 of the
Regional Trial Court, Branch 157, Pasig City, in an action for breach of contract with
damages4 filed by respondent against petitioner.
THE FACTS
In his Answer with Counterclaim,7 petitioner asserted that it was respondent who
undertook to secure the necessary government permits.8 With regard to the alleged
overpayment, petitioner claimed that the amount of ₱50,000.00 was in payment for
the additional works which respondent requested while the construction was still on
going. In fact, the estimated cost for the additional works amounted to
₱133,960.00, over and above the ₱500,000.00 contract price.
Petitioner likewise alleged that the delay in the construction of the house was due to
circumstances beyond his control, namely: heavy rains, observance of Holy Week,
and celebration of barangay fiesta. Ultimately, he was not able to complete the
project because on May 27, 1998, respondent went to his house and told him to
stop the work.

For respondent and her family, April 18, 1998 was supposed to be a special
He maintained that he cannot be held liable for the amounts claimed by the
occasion and a time for family reunion. It was the wedding date of her sister Sally
respondent in her complaint considering that he had faithfully complied with the
Guce, and respondent’s other siblings from the United States of America, as well as
her mother, were expected to return to the country. The wedding ceremony was set
to be held at the family’s ancestral house at San Vicente, Banay-banay, Lipa City, terms and conditions of the Construction Contract.
where respondent’s relatives planned to stay while in the Philippines.
On February 19, 1999, pre-trial conference was conducted. Thereafter, trial ensued.
Respondent found the occasion an opportune time to renovate their ancestral
house. Thus, in January 1998 she entered into a Construction Contract 5 with
Respondent testified on the material points alleged in her complaint. She also
petitioner for the demolition of the ancestral house and the construction of a new
presented the testimony of her brother Romeo Guce, who declared on the witness
four-bedroom residential house. The parties agreed that respondent would pay
stand that petitioner confided to him that he had to stop the construction because
₱500,000.00 to the petitioner, who obliged himself to furnish all the necessary
he could no longer pay his workers. He also testified that petitioner asked for
materials and labor for the completion of the project. Petitioner likewise undertook
additional amount of about ₱20,000.00 to finish the house. He relayed this to the
to finish all interior portions of the house on or before March 31, 1998, or more than
respondent who refused to release any additional amount because of petitioner’s
two weeks before Sally’s wedding.
unsatisfactory and substandard work. But later on, respondent acceded and gave
petitioner ₱20,000.00.
On April 18, 1998, however, the house remained unfinished. The wedding ceremony
was thus held at the Club Victorina and respondent’s relatives were forced to stay in
To establish the status of the project and determine the amount necessary for the
a hotel. Her mother lived with her children, transferring from one place to another.
repair and completion of the house, respondent presented Romeo Dela Cruz, a
licensed realtor and a graduate of an engineering course at the Technological
On July 27, 1998, respondent filed a Complaint6 for breach of contract and damages Institute of the Philippines. Dela Cruz testified that he conducted an ocular
against petitioner before the Regional Trial Court of Pasig City. She alleged, among inspection on the construction site in November 1998 and found that only about
others, that petitioner started the project without securing the necessary permit 60% of the project had been accomplished. Some parts of the project, according to
from the City Engineer’s Office of Lipa City. Respondent likewise alleged that, all in the witness, were even poorly done. He likewise testified that in order to repair the
all, she gave petitioner ₱550,000.00 (which is ₱50,000.00 more than the contract poorly constructed portion of the house, respondent would need to spend about
price). However, and despite knowledge that the construction of the house was ₱100,000.00 and another ₱200,000.00 to complete it.
intended for the forthcoming marriage of respondent’s sister, petitioner unjustly and
fraudulently abandoned the project leaving it substantially unfinished and
Petitioner also took the witness stand and testified on matters relative to the
incomplete. Several demands were made, but petitioner obstinately refused to
defenses he raised in his answer.
make good his contractual obligations. Worse, petitioner’s workmanship on the
incomplete residential house was substandard.
On December 21, 2000, the RTC rendered a Decision 9 in favor of the
Respondent prayed for the return of the ₱50,000.00 overpayment. She also prayed
for an award of ₱100,000.00 for the purpose of repairing what had been poorly respondent and against the petitioner. The RTC gave more credence to respondent’s
constructed and at least ₱200,000.00 to complete the project. version of the facts, finding that-

26 | T o r t s F i n a l s
Clearly, Dueñas [herein petitioner] failed to tender performance in accordance with
the terms and conditions of the construction contract he executed with Africa
[herein respondent]. He failed to construct a four-bedroom residential house
suitable and ready for occupancy on a stipulated date. Dueñas was fully aware that
Africa needed the new house for a long scheduled family event precisely a
completion date was included and specified in the transaction. Despite knowledge
and receipt of payment from Africa, Dueñas failed to deliver what was incumbent
upon him under the undertaking. He unjustifiably incurred delay in the construction
of the new building and wrongfully deprived Africa and her family of the use and
enjoyment of the subject property. Bad weather, observance of the Holy Week and
barangay fiesta are insufficient excuses. As a building contractor Dueñas should
have provided for such contingencies. Mere inconvenience or unexpected
impediments will not relieve a party of his obligation. Granting that he was not yet
fully paid for the additional work by Africa, provisions or arrangements should have
been made to ensure completion of the project within the agreed period.
Moreover, Dueñas negligently abandoned the unfinished structure shortly after a
confrontation with Africa and family. Rain water sipped[sic] into the house because
Dueñas failed to secure the roofing and wall flushing. The house remained
[un]habitable because fixtures and devises were yet to be installed. Dueñas failed to
exercise the required diligence as a contractor and is guilty of negligence and delay.
He must be made responsible for the foreseen effect of the exposure of the new
structure to the elements.
Significantly, the poor construction performance manifested in the structure after
Dueñas in bad faith abandoned it. Indeed, the newly constructed edifice needs
significant repairs if only to make it habitable for its occupants. 10
Consequently, the fallo of the RTC decision reads:
WHEREFORE, judgment is hereby rendered in favor of plaintiff Alice G. Africa and
against defendant Apolinario Dueñas who is hereby directed to pay plaintiff:
- ₱100,000.00 for the necessary repair of the structure;
- 200,000.00 for the completion of the construction;
- 50,000.00 as and for attorney’s fees;
- and costs of suit.
Plaintiff’s claim for moral, nominal and exemplary damages are hereby denied for
lack of sufficient basis.
SO ORDERED.11
Both parties were unsatisfied. They thus brought the matter to the Court of Appeals
assailing the Decision of the RTC. The appellate court, however, found no cogent
reason to depart from the trial court’s conclusion. Thus, on April 29, 2004, it
rendered the herein assailed Decision12 affirming with modification the RTC’s ruling,
viz:
WHEREFORE, in view of the foregoing, the Decision of the Regional Trial Court of
Pasig City, Branch 157, dated 21 December 2000, is hereby AFFIRMED WITH
MODIFICATION that the award of attorney’s fees is hereby DELETED.
SO ORDERED.13
ISSUES
Feeling aggrieved but still undeterred, petitioner interposes the present recourse
anchored on the following grounds:
I. THE COSTS OF ACTUAL DAMAGES AWARDED ARE BASED ON MERE
SPECULATIONS AND CONJECTURES.14
II. THE RULINGS THAT DUEÑAS ABANDONED THE WORK AND INCURRED DELAY
ARE CONTRARY TO THE EVIDENCE.15
III. THE DAMAGES CAUSED BY RAIN WATER WERE NOT DUE TO APOLINARIO
DUEÑAS’ FAULT OR NEGLIGENCE.16
OUR RULING
For purposes of clarity, we shall tackle simultaneously the second and third
arguments raised by the petitioner.
Instant petition not available to determine whether petitioner violated the contract
or abandoned the construction of the house
Petitioner contends that he neither abandoned the project nor violated the contract.
He maintains that continuous rains caused the delay in the construction of the
house and that he was not able to finish the project because respondent ordered
him to stop the work. In fact, there was no reason for him to stop the project
because he still had available workers and materials at that time, as well as
collectibles from the respondent. Petitioner likewise contends that the Court of
Appeals erred in upholding the trial court’s finding that he was guilty of negligence.
The contentions lack merit.
Petitioner endeavors to convince us to determine, yet again, the weight, credence,
and probative value of the evidence presented. This cannot be done in this petition
for review on certiorari under Rule 45 of the Rules of Court where only questions of
law may be raised by the parties and passed upon by us. In Fong v. Velayo, 17 we
defined a question of law as distinguished from a question of fact, viz:
A question of law arises when there is doubt as to what the law is on a certain state
of facts, while there is a question of fact when the doubt arises as to the truth or
27 | T o r t s F i n a l s
falsity of the alleged facts. For a question to be one of law, the same must not
involve an examination of the probative value of the evidence presented by the
litigants or any of them. The resolution of the issue must rest solely on what the law
provides on the given set of circumstances. Once it is clear that the issue invites a
review of the evidence presented, the questioned posed is one of fact. Thus, the
test of whether a question is one of law or of fact is not the appellation given to
such question by the party raising the same; rather, it is whether the appellate
court can determine the issue raised without reviewing or evaluating the evidence,
in which case, it is a question of law; otherwise, it is a question of fact.
It has already been held that the determination of the existence of a breach of
contract is a factual matter not usually reviewable in a petition filed under Rule
45.18 We will not review, much less reverse, the factual findings of the Court of
Appeals especially where, as in this case, such findings coincide with those of the
trial court, since we are not a trier of facts.19 The established rule is that the factual
findings of the Court of Appeals affirming those of the RTC are conclusive and
binding on us. We are not wont to review them, save under exceptional
circumstances as: (1) when the inference made is manifestly mistaken, absurd or
impossible; (2) when there is grave abuse of discretion; (3) when the findings are
grounded entirely on speculations, surmises or conjectures; (4) when the judgment
of the Court of Appeals is based on misapprehension of facts; (5) when the Court of
Appeals, in making its findings, went beyond the issues of the case and the same is
contrary to the admissions of both appellant and appellee; (6) when the findings of
fact are conclusions without citation of specific evidence on which they are based;
(7) when the Court of Appeals manifestly overlooked certain relevant facts not
disputed by the parties and which, if properly considered, would justify a different
conclusion; and (8) when the findings of fact of the Court of Appeals are premised
on the absence of evidence and are contradicted by the evidence on record. 20
Except with respect to the first ground advanced by the petitioner which will be
discussed later, none of the above exceptions obtain in this case. Hence, we find no
cogent reason to disturb the findings of the RTC and affirmed by the Court of
Appeals that petitioner was negligent in the construction of respondent’s house and
thus liable for breach of contract.
Respondent not entitled to actual damages for want of evidentiary proof
Petitioner further argues that the appellate court erred in affirming the RTC’s award
of actual damages for want of evidentiary foundation. He maintains that actual
damages must be proved with reasonable degree of certainty. In the case at bench,
petitioner argues that the trial and the appellate courts awarded the amounts of
₱100,000.00 and ₱200,000.00 as actual damages based merely on the testimonies
of respondent and her witness.
We agree. Article 2199 of the Civil Code provides that "one is entitled to an
adequate compensation only for such pecuniary loss suffered by him as he has duly
proved." In Ong v. Court of Appeals,21 we held that "(a)ctual damages are such
compensation or damages for an injury that will put the injured party in the position
in which he had been before he was injured. They pertain to such injuries or losses
that are actually sustained and susceptible of measurement." To be recoverable,
actual damages must not only be capable of proof, but must actually be proved with
reasonable degree of certainty. We cannot simply rely on speculation, conjecture or
guesswork in determining the amount of damages. Thus, it was held that before
actual damages can be awarded, there must be competent proof of the actual
amount of loss, and credence can be given only to claims which are duly supported
by receipts.22
Here, as correctly pointed out by petitioner, respondent did not present
documentary proof to support the claimed necessary expenses for the repair and
completion of the house. In awarding the amounts of ₱100,000.00 and
₱200,000.00, the RTC and the Court of Appeals merely relied on the testimonies of
the respondent and her witness. Thus:
As to the award of ₱100,000.00 as cost of repair and ₱200,000.00 as the amount
necessary to complete the house, the Court finds the same to be in the nature of
actual damages. It is settled that actual damages must be supported by best
evidence available x x x. In the case at bar, the Court finds that the testimony of
the plaintiff-appellant in this regard is supported by the testimony of Romeo dela
Cruz, a realtor, who inspected the structure after it remained unfinished. Said
testimonies are sufficient to establish the claim. x x x
Respondent entitled to temperate damages in lieu of actual damages
Nonetheless, in the absence of competent proof on the amount of actual damages
suffered, a party is entitled to temperate damages. Articles 2216, 2224 and 2225 of
the Civil Code provide:
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.
Art. 2224. 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 can not, from the nature of the
case, be proved with certainty.
Art. 2225. Temperate damages must be reasonable under the circumstances.
Temperate or moderate damages may be recovered when some pecuniary loss has
been suffered but its amount cannot, from the nature of the case, be proved with
certainty.23 The amount thereof is usually left to the discretion of the courts but the
same should be reasonable, bearing in mind that temperate damages should be
more than nominal but less than compensatory. 24
There is no doubt that respondent sustained damages due to the breach committed
by the petitioner. The transfer of the venue of the wedding, the repair of the
substandard work, and the completion of the house necessarily entailed expenses.
28 | T o r t s F i n a l s
However, as earlier discussed, respondent failed to present competent proof of the
exact amount of such pecuniary loss. To our mind, and in view of the circumstances
obtaining in this case, an award of temperate damages equivalent to 20% of the
original contract price of ₱500,000.00, or ₱100,000.00 (which, incidentally, is
equivalent to 1/3 of the total amount claimed as actual damages), is just and
reasonable.
WHEREFORE, the instant petition is PARTIALLY GRANTED. The Decision of the
Court of Appeals dated April 29, 2004 in CA-G.R. CV No. 70757
is AFFIRMED with modification that the award of actual damages is deleted and,
in lieu thereof, petitioner is ordered to pay respondent temperate damages in the
amount of ₱100,000.00.
G.R. No. 165622              October 17, 2008
MERCURY DRUG CORPORATION and AURMELA GANZON, petitioners, vs.
RAUL DE LEON, respondents.
IN REALITY, for the druggist, mistake is negligence and care is no defense. 1 Sa
isang parmasyutika, ang pagkakamali ay kapabayaan at ang pagkalinga ay
hindi angkop na dipensa.
This is a petition for review on certiorari  of two Resolutions  of the Court of Appeals
2 3
(CA). The first Resolution granted respondent’s motion to dismiss while the second
denied petitioner’s motion for reconsideration.
The Facts
Respondent Raul T. De Leon was the presiding judge of Branch 258, Regional Trial
Court (RTC) in Parañaque.4 On October 17, 1999, he noticed that his left eye was
reddish. He also had difficulty reading.5 On the same evening, he met a friend for
dinner at the Foohyui Restaurant. The same friend happened to be a doctor, Dr.
Charles Milla, and had just arrived from abroad.6
Aside from exchanging pleasantries, De Leon consulted Dr. Milla about his irritated
left eye.7 The latter prescribed the drugs "Cortisporin Opthalmic" and "Ceftin" to
relieve his eye problems.8 Before heading to work the following morning, De Leon
went to the Betterliving, Parañaque, branch of Mercury Drug Store Corporation to
buy the prescribed medicines.9 He showed his prescription to petitioner Aurmela
Ganzon, a pharmacist assistant.10 Subsequently, he paid for and took the medicine
handed over by Ganzon.11
At his chambers, De Leon requested his sheriff to assist him in using the eye
drops.12 As instructed, the sheriff applied 2-3 drops on respondent’s left
eye.13 Instead of relieving his irritation, respondent felt searing pain. 14 He
immediately rinsed the affected eye with water, but the pain did not subside. 15 Only
then did he discover that he was given the wrong medicine, "Cortisporin Otic
Solution."16
De Leon returned to the same Mercury Drug branch, with his left eye still red and
teary.17 When he confronted Ganzon why he was given ear drops, instead of the
prescribed eye drops,18 she did not apologize and instead brazenly replied that she
was unable to fully read the prescription.19 In fact, it was her supervisor who
apologized and informed De Leon that they do not have stock of the needed
Cortisporin Opthalmic.20
De Leon wrote Mercury Drug, through its president, Ms. Vivian K. Askuna, about the
day’s incident.21 It did not merit any response.22 Instead, two sales persons went to
his office and informed him that their supervisor was busy with other
matters.23 Having been denied his simple desire for a written apology and
explanation,24 De Leon filed a complaint for damages against Mercury Drug.25
Mercury Drug denied that it was negligent and therefore liable for damages. 26 It
pointed out that the proximate cause of De Leon’s unfortunate experience was his
own negligence.27 He should have first read and checked to see if he had the right
eye solution before he used any on his eye.28 He could have also requested his
sheriff to do the same before the latter applied the medicine on such a delicate part
of his body.29
Also, Mercury Drug explained that there is no available medicine known as
"Cortisporin Opthalmic" in the Philippine market. 30 Furthermore, what was written
on the piece of paper De Leon presented to Ganzon was "Cortisporin
Solution."31 Accordingly, she gave him the only available "Cortisporin Solution" in
the market.
Moreover, even the piece of paper De Leon presented upon buying the medicine can
not be considered as proper prescription.32 It lacked the required information
concerning the attending doctor’s name and license number. 33 According to Ganzon,
she entertained De Leon’s purchase request only because he was a regular
customer of their branch.34
RTC Disposition
On April 30, 2003, the RTC rendered judgment in favor of respondent, the
dispositive portion of which reads:
WHEREFORE, the court finds for the plaintiff.
For pecuniary loss suffered, Mercury Drug Store is to pay ONE HUNDRED FIFTY-
THREE PESOS AND TWENTY-FIVE CENTAVOS (Php 153.25), the value of the
medicine.
As moral damages defendants is (sic) ordered to pay ONE HUNDRED THOUSAND
PESOS (Php 100,000.00).
To serve as a warning to those in the field of dispensing medicinal drugs discretion
of the highest degree is expected of them, Mercury Drug Store and defendant
29 | T o r t s F i n a l s
Aurmila (sic) Ganzon are ordered to pay plaintiff the amount of THREE HUNDRED
THOUSAND PESOS (Php 300,000.00) as exemplary damages.
Due to defendants callous reaction to the mistake done by their employee which
forced plaintiff to litigate, Defendant (sic) Mercury Drug Store is to pay plaintiff
attorney’s fees of ₱50,000.00 plus litigation expenses.
SO ORDERED.35
In ruling in favor of De Leon, the RTC ratiocinated:
The proximate cause of the ill fate of plaintiff was defendant Aurmila (sic) Ganzon’s
negligent exercise of said discretion. She gave a prescription drug to a customer
who did not have the proper form of prescription, she did not take a good look at
said prescription, she merely presumed plaintiff was looking for Cortisporin Otic
Solution because it was the only one available in the market and she further
presumed that by merely putting the drug by the counter wherein plaintiff looked at
it, paid and took the drug without any objection meant he understood what he was
buying.36
The RTC ruled that although De Leon may have been negligent by failing to read the
medicine’s label or to instruct his sheriff to do so, Mercury Drug was first to be
negligent.37 Ganzon dispensed a drug without the requisite prescription. 38 Moreover,
she did so without fully reading what medicine was exactly being bought. 39 In fact,
she presumed that since what was available was the drug Cortisporin Otic Solution,
it was what De Leon was attempting to buy.40 Said the court:
When the injury is caused by the negligence of a servant or employee, there
instantly arises a presumption of law that there was negligence on the part of the
employer or employer either in the selection of the servant or employee, or in the
supervision over him after the selection or both.
The theory bases the responsibility of the master ultimately on his own negligence
and not on that of his servant.41
Dissatisfied with the RTC ruling, Mercury Drug and Ganzon elevated the matter to
the CA. Accordingly, they filed their respective briefs. Raising technical grounds, De
Leon moved for the appeal’s dismissal.
CA Disposition
On July 4, 2008, the CA issued a resolution which granted De Leon’s motion and
dismissed the appeal. Said the appellate court:
As pointed out by the plaintiff-appellee, the Statement of Facts, Statement of the
Case, Assignment of Errors/issues, Arguments/ Discussions in the Brief make no
references to the pages of the records. We find this procedural lapse justify the
dismissal of the appeal, pursuant to Section 1(f), Rule 50 of the 1997 Rules of Civil
Procedure x x x.42
"The premise that underlies all appeals is that they are merely rights which arise
form a statute; therefore, they must be exercised in the manner prescribed by law.
It is to this end that rules governing pleadings and practice before the appellate
court were imposed. These rules were designed to assist the appellate court in the
accomplishment of its tasks, and overall, to enhance the orderly administration of
justice."
x x x If the statement of fact is unaccompanied by a page reference to the record, it
may be stricken or disregarded all together. 43
On October 5, 2004, the CA denied Mercury Drug’s and Ganzon’s joint motion for
reconsideration. Although mindful that litigation is not a game of technicalities, 44 the
CA found no persuasive reasons to relax procedural rules in favor of Mercury Drug
and Ganzon.45 The CA opined:
In the case under consideration, We find no faithful compliance on the part of the
movants that will call for the liberal application of the Rules. Section 1(f) of Rule 50
of the 1997 Rules of Civil Procedure explicitly provides that an appeal may be
dismissed by the Court of Appeals, on its own motion or on that of the appellee, for
want of page references to the records as required in Section 13 of Rule 44 of the
same rules46
Issues
Petitioner has resorted to the present recourse and assigns to the CA the following
errors:
I. THE HONORABLE COURT OF APPEALS ERRED IN DISMISSING PETITIONER’S
APPEAL BASED ON THE CASES OF DE LIANA VS. CA  (370 SCRA 349) AND HEIRS
OF PALOMINIQUE VS. CA (134 SCRA 331).
II. THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF
DISCRETION IN DISMISSING PETITIONER’S APPEAL DESPITE SUBSTANTIAL
COMPLIANCE WITH SECTION 1(F), RULE 60 AND SECTION 13, RULE 44 OF THE
RULES OF COURT.
III. THE HONORABLE COURT OF APPEALS ERRED WHEN IT FAVORED MERE
TECHNICALITY OVER SUBSTANTIAL JUSTICE WHICH WILL CERTAINLY CAUSE
GRAVE INJUSTICE AND GREAT PREJUDICE TO PETITIONER CONSIDERING THAT
THE ASSAILED DECISION ON APPEAL IS CLUSTERED WITH ERRORS AND IN
CONTRAST with the DECISIONS OF THIS HONORABLE SUPREME
COURT.47 (Underscoring supplied)
Our Ruling
30 | T o r t s F i n a l s
The appeal succeeds in part. It is true that in De Liano v. Court of Appeals,61 this Court held that a statement of
facts unaccompanied by a page reference to the record may be presumed to be
without support in the record and may be stricken or disregarded altogether.
Dismissal of an appeal under Rule 50 is discretionary.
However, the instant case is not on all fours with De Liano.

In several cases,48 this Court stressed that the grounds for dismissal of an appeal
In De Liano, the appellant’s brief lacked a Subject Index and a Table of Cases and
under Section 1 of Rule 5049 are discretionary upon the appellate court. The very
Authorities.62 Moreover, the Statement of the Case, Statements of Facts, and
wording of the rule uses the word "may" instead of "shall." This indicates that it is
Statements of Arguments had no page references to the record. 63 When notified of
only directory and not mandatory.50 Sound discretion must be exercised in
such defects, defendants-appellants failed to amend their brief to conform to the
consonance with the tenets of justice and fair play, keeping in mind the
rules.64 Instead, they continued to argue that their errors were harmless. 65 All these
circumstances obtaining in each case.51
omissions and non-compliance justified the dismissal of the appeal by the CA. 66

The importance of an appellant’s brief cannot be gainsaid. Its purpose is two-fold:

In the case under review, although there were no page references to the records,
(1) to present to the court in coherent and concise form the point and questions in
Mercury Drug and Ganzon referred to the exhibits, TSN, and attachments of the
controversy; and (2) to assist the court in arriving at a just and proper
case. Despite its deficiencies, the brief is sufficient in form and substance as to
conclusion.52 It is considered a vehicle of counsel to convey to the court the
apprise the appellate court of the essential facts, nature of the case, the issues
essential facts of a client’s case, a statement of the questions of law involved, the
raised, and the laws necessary for the disposition of the same.
law to be applied, and the application one desires of it by the court. 53

Reliance on Heirs of Palomique v. Court of Appeals67 is likewise misplaced. In Heirs

The absence of page reference to the record is a ground for dismissal. It is a
of Palomique, the appellant’s brief did not at all contain a separate statement of
requirement intended to ultimately aid the appellate court in arriving at a just and
facts.68 This critical omission, together with the failure to make page references to
proper conclusion of the case.54 However, as earlier discussed, such dismissal is not
the record to support the factual allegations, justified the dismissal of the appeal. 69
mandatory, but discretionary on the part of the appellate court.

Rules of procedure are intended to promote, not to defeat, substantial justice. They
This Court has held that the failure to properly cite reference to the original
should not be applied in a very rigid and technical sense. 70 For reasons of justice
records is not a fatal procedural lapse.55 When citations found in the
and equity, this Court has allowed exceptions to the stringent rules governing
appellant’s brief enable the court to expeditiously locate the portions of the
appeals.71 It has, in the past, refused to sacrifice justice for technicality. 72
record referred to, there is substantial compliance with the requirements of
Section 13(c), (d), and (f) of Rule 44.56
However, brushing aside technicalities, petitioners are still liable. Mercury
Drug and Ganzon failed to exercise the highest degree of diligence
In De Leon v. CA,  this Court ruled that the citations contained in the appellant’s
57
expected of them.
brief sufficiently enabled the appellate court to expeditiously locate the portions of
the record referred to. They were in substantial compliance with the rules. The
Court said: Denying that they were negligent, Mercury Drug and Ganzon pointed out that De
Leon’s own negligence was the proximate cause of his injury. They argued that any
injury would have been averted had De Leon exercised due diligence before
Nothing in the records indicate that it was exercised capriciously, whimsically, or
applying the medicine on his eye. Had he cautiously read the medicine bottle label,
with a view of permitting injury upon a party litigant. For the same reasons, we hold
he would have known that he had the wrong medicine.
that the respondent Court of Appeals did not err when it did not dismiss the appeal
based on the allegation that appellant’s brief failed to comply with the internal rules
of said court.58 Mercury Drug and Ganzon can not exculpate themselves from any liability. As active
players in the field of dispensing medicines to the public, the highest degree of care
and diligence is expected of them.73 Likewise, numerous decisions, both here and
Similar to the instant case, the appellant’s brief in Yuchengco v. Court of
abroad, have laid salutary rules for the protection of human life and human
Appeals59 contained references to Exhibits and Transcript of Stenographic Notes and
health.74 In the United States case of Tombari v. Conners,75 it was ruled that the
attachments. These were found to have substantially complied with the
profession of pharmacy demands care and skill, and druggists must exercise care of
requirements of Section 13(c) and (d) of Rule 44.
a specially high degree, the highest degree of care known to practical men. In other
words, druggists must exercise the highest practicable degree of prudence and
x x x The Appellant’s brief may not have referred to the exact pages of the records, vigilance, and the most exact and reliable safeguards consistent with the reasonable
however, the same is not fatal to their cause since the references they made conduct of the business, so that human life may not constantly be exposed to the
enabled the appellate court to expeditiously locate the portions referred to. x x x 60 danger flowing from the substitution of deadly poisons for harmless medicines. 76

31 | T o r t s F i n a l s
In Fleet v. Hollenkemp,77 the US Supreme Court ruled that a druggist that sells to a
purchaser or sends to a patient one drug for another or even one innocent drug,
calculated to produce a certain effect, in place of another sent for and designed to
produce a different effect, cannot escape responsibility, upon the alleged pretext
that it was an accidental or innocent mistake. His mistake, under the most favorable
aspect for himself, is negligence. And such mistake cannot be countenanced or
tolerated, as it is a mistake of the gravest kind and of the most disastrous effect. 78
Smith’s Admrx v. Middelton79 teaches Us that one holding himself out as competent
to handle drugs, having rightful access to them, and relied upon by those dealing
with him to exercise that high degree of caution and care called for by the peculiarly
dangerous nature of the business, cannot be heard to say that his mistake by which
he furnishes a customer the most deadly of drugs for those comparatively harmless,
is not in itself gross negligence.80
In our own jurisdiction, United States v. Pineda81 and Mercury Drug Corporation v.
Baking are illustrative.82 In Pineda, the potassium chlorate demanded by
complainant had been intended for his race horses. When complainant mixed with
water what he thought and believed was potassium chlorate, but which turned out
to be the potently deadly barium chlorate, his race horses died of poisoning only a
few hours after.
The wisdom of such a decision is unquestionable. If the victims had been human
beings instead of horses, the damage and loss would have been irreparable. 83
In the more recent Mercury Drug, involving no less than the same petitioner
corporation, Sebastian Baking went to the Alabang branch of Mercury Drug 84 and
presented his prescription for Diamicron, which the pharmacist misread as
Dormicum.85 Baking was given a potent sleeping tablet, instead of medicines to
stabilize his blood sugar.86 On the third day of taking the wrong medicine, Baking
figured in a vehicular accident.87 He fell asleep while driving.88
This Court held that the proximate cause of the accident was the gross negligence
of the pharmacist who gave the wrong medicine to Baking. The Court said:
x x x Considering that a fatal mistake could be a matter of life and death for a
buying patient, the said employee should have been very cautious in dispensing
medicines. She should have verified whether the medicine she gave respondent was
indeed the one prescribed by his physician. The care required must be
commensurate with the danger involved, and the skill employed must correspond
with the superior knowledge of the business which the law demands. 89
This Court once more reiterated that the profession of pharmacy demands great
care and skill. It reminded druggists to exercise the highest degree of care known to
practical men.
In cases where an injury is caused by the negligence of an employee, there
instantly arises a presumption of law that there has been negligence on the
part of the employer, either in the selection or supervision of one’s
employees. This presumption may be rebutted by a clear showing that the
employer has exercised the care and diligence of a good father of the
family.90 Mercury Drug failed to overcome such presumption.91
Petitioners Mercury Drug and Ganzon have similarly failed to live up to high
standard of diligence expected of them as pharmacy professionals. They were
grossly negligent in dispensing ear drops instead of the prescribed eye drops to De
Leon. Worse, they have once again attempted to shift the blame to their victim by
underscoring his own failure to read the label.
As a buyer, De Leon relied on the expertise and experience of Mercury Drug and its
employees in dispensing to him the right medicine. 92 This Court has ruled that in the
purchase and sale of drugs, the buyer and seller do not stand at arms
length.93 There exists an imperative duty on the seller or the druggist to take
precaution to prevent death or injury to any person who relies on one’s absolute
honesty and peculiar learning.94 The Court emphasized:
x x x The nature of drugs is such that examination would not avail the purchaser
anything. It would be idle mockery for the customer to make an examination of a
compound of which he can know nothing. Consequently, it must be that the
druggist warrants that he will deliver the drug called for.95
Mercury Drug and Ganzon’s defense that the latter gave the only available
Cortisporin solution in the market deserves scant consideration. Ganzon could have
easily verified whether the medicine she gave De Leon was, indeed, the prescribed
one or, at the very least, consulted her supervisor. Absent the required certainty in
the dispensation of the medicine, she could have refused De Leon’s purchase of the
drug.
The award of damages is proper and shall only be reduced considering the
peculiar facts of the case. Moral damages include physical suffering, mental
anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral
shock, social humiliation, and similar injury. Though incapable of pecuniary
computation, moral damages may be recovered if they are the proximate result of
defendant’s wrongful act or omission.96
Moral damages are not intended to impose a penalty to the wrongdoer or to enrich
the claimant at the expense of defendant.97 There is no hard and fast rule in
determining what would be a fair and reasonable amount of moral damages since
each case must be governed by its peculiar circumstances. 98 However, the award of
damages must be commensurate to the loss or injury suffered. 99
Taking into consideration the attending facts of the case under review, We find the
amount awarded by the trial court to be excessive. Following the precedent case
of Mercury Drug, We reduce the amount from ₱100,000.00 to ₱50,000.00 only.100 In
addition, We also deem it necessary to reduce the award of exemplary damages
from the exorbitant amount of ₱300,000.00 to ₱25,000.00 only.
32 | T o r t s F i n a l s
This Court explained the propriety of awarding exemplary damages in the
earlier Mercury Drug case:
x x x Article 2229 allows the grant of exemplary damages by way of example or
correction for the public good. As mentioned earlier, the drugstore business is
affected by public interest. Petitioner should have exerted utmost diligence in the
selection and supervision of its employees. On the part of the employee concerned,
she should have been extremely cautious in dispensing pharmaceutical
products. Due to the sensitive nature of its business, petitioner must at all times
maintain a high level of meticulousness. Therefore, an award of exemplary damages
in the amount of ₱25,000.00 is in order.101 (Emphasis supplied)
It is generally recognized that the drugstore business is imbued with public interest.
This can not be more real for Mercury Drug, the country’s biggest drugstore chain.
This Court can not tolerate any form of negligence which can jeopardize the health
and safety of its loyal patrons. Moreover, this Court will not countenance the
cavalier manner it treated De Leon. Not only does a pharmacy owe a customer the
duty of reasonable care, but it is also duty-bound to accord one with respect.
WHEREFORE, the petition is PARTIALLY GRANTED. The Decisions of the CA and
the RTC in Parañaque City are AFFIRMED WITH MODIFICATION, in that the
award of moral and exemplary damages is reduced to ₱50,000.00 and ₱25,000.00,
respectively.
G.R. No. 114791 May 29, 1997
NANCY GO AND ALEX GO, petitioners,
vs. THE HONORABLE COURT OF APPEALS, HERMOGENES ONG and JANE C.
ONG, respondents.
No less than the Constitution commands us to protect marriage as an inviolable
social institution and the foundation of the family. 1 In our society, the importance
of a wedding ceremony cannot be underestimated as it is the matrix of the family
and, therefore, an occasion worth reliving in the succeeding years.
It is in this light that we narrate the following undisputed facts:
Private respondents spouses Hermogenes and Jane Ong were married on June 7,
1981, in Dumaguete City. The video coverage of the wedding was provided by
petitioners at a contract price of P1,650.00. Three times thereafter, the newlyweds
tried to claim the video tape of their wedding, which they planned to show to their
relatives in the United States where they were to spend their honeymoon, and
thrice they failed because the tape was apparently not yet processed. The parties
then agreed that the tape would be ready upon private respondents' return.
When private respondents came home from their honeymoon, however, they found
out that the tape had been erased by petitioners and therefore, could no longer be
delivered.
Furious at the loss of the tape which was supposed to be the only record of their
wedding, private respondents filed on September 23, 1981 a complaint for specific
performance and damages against petitioners before the Regional Trial Court, 7th
Judicial District, Branch 33, Dumaguete City. After a protracted trial, the court a
quo rendered a decision, to wit:
WHEREFORE, judgment is hereby granted:
1. Ordering the rescission of the agreement entered into between plaintiff
Hermogenes Ong and defendant Nancy Go;
2. Declaring defendants Alex Go and Nancy Go jointly and severally liable to
plaintiffs Hermogenes Ong and Jane C. Ong for the following sums:
a) P450.00 , the down payment made at contract time;
b) P75,000.00, as moral damages;
c) P20,000.00, as exemplary damages;
d) P5,000.00, as attorney's fees; and
e) P2,000.00, as litigation expenses;
Defendants are also ordered to pay the costs.
SO ORDERED.
Dissatisfied with the decision, petitioners elevated the case to the Court of Appeals
which, on September 14, 1993, dismissed the appeal and affirmed the trial court's
decision.
Hence, this petition.
Petitioners contend that the Court of Appeals erred in not appreciating the evidence
they presented to prove that they acted only as agents of a certain Pablo Lim and,
as such, should not have been held liable. In addition, they aver that there is no
evidence to show that the erasure of the tape was done in bad faith so as to justify
the award of damages. 2
The petition is not meritorious.
Petitioners claim that for the video coverage, the cameraman was employed by
Pablo Lim who also owned the video equipment used. They further assert that they
merely get a commission for all customers solicited for their principal. 3
This contention is primarily premised on Article 1883 of the Civil Code which states
thus:
Art. 1883. If an agent acts in his own name, the principal has no right of action
against the persons with whom the agent has contracted; neither have such
persons against the principal.
In such case the agent is the one directly bound in favor of the person with whom
he has contracted, as if the transaction were his own, except when the contract
involves things belonging to the principal.
33 | T o r t s F i n a l s
Petitioners' argument that since the video equipment used belonged to Lim and thus violates the contract may also constitute a quasi-delict. 7 Consequently, moral
the contract was actually entered into between private respondents and Lim is not damages are recoverable for the breach of contract
deserving of any serious consideration. In the instant case, the contract entered which was palpably wanton, reckless, malicious or in bad faith, oppressive or
into is one of service, that is, for the video coverage of the wedding. Consequently, abusive. 8
it can hardly be said that the object of the contract was the video equipment used.
The use by petitioners of the video equipment of another person is of no
Petitioners' act or omission in recklessly erasing the video coverage of private
consequence.
respondents' wedding was precisely the cause of the suffering private respondents
had to undergo.
It must also be noted that in the course of the protracted trial below, petitioners did
not even present Lim to corroborate their contention that they were mere agents of
As the appellate court aptly observed:
the latter. It would not be unwarranted to assume that their failure to present such
a vital witness would have had an adverse result on the case. 4
Considering the sentimental value of the tapes and the fact that the event therein
recorded — a wedding which in our culture is a significant milestone to be cherished
As regards the award of damages, petitioners would impress upon this Court their
and remembered — could no longer be reenacted and was lost forever, the trial
lack of malice or fraudulent intent in the erasure of the tape. They insist that since
court was correct in awarding the appellees moral damages albeit in the amount of
private respondents did not claim the tape after the lapse of thirty days, as agreed
P75,000.00, which was a great reduction from plaintiffs' demand in the complaint in
upon in their contract, the erasure was done in consonance with consistent business
compensation for the mental anguish, tortured feelings, sleepless nights and
practice to minimize losses. 5
humiliation that the appellees suffered and which under the circumstances could be
awarded as allowed under Articles 2217 and 2218 of the Civil Code. 9
We are not persuaded.
Considering the attendant wanton negligence committed by petitioners in the case
As correctly observed by the Court of Appeals, it is contrary to human nature for at bar, the award of exemplary damages by the trial court is justified 10 to serve as
any newlywed couple to neglect to claim the video coverage of their wedding; the a warning to all entities engaged in the same business to observe due diligence in
fact that private respondents filed a case against petitioners belies such assertion. the conduct of their affairs.
Clearly, petitioners are guilty of actionable delay for having failed to process the
video tape. Considering that private respondents were about to leave for the United
The award of attorney' s fees and litigation expenses are likewise proper, consistent
States, they took care to inform petitioners that they would just claim the tape upon
with Article 2208 11 of the Civil Code.
their return two months later. Thus, the erasure of the tape after the lapse of thirty
days was unjustified.
Finally, petitioner Alex Go questions the finding of the trial and appellate courts
holding him jointly and severally liable with his wife Nancy regarding the pecuniary
In this regard, Article 1170 of the Civil Code provides that "those who in the
liabilities imposed. He argues that when his wife entered into the contract with
performance of their obligations are guilty of fraud, negligence or delay, and those
private respondent, she was acting alone for her sole interest. 12
who is any manner contravene the tenor thereof, are liable for damages."

We find merit in this contention. Under Article 117 of the Civil Code (now Article 73
In the instant case, petitioners and private respondents entered into a contract
of the Family Code), the wife may exercise any profession, occupation or engage in
whereby, for a fee, the former undertook to cover the latter's wedding and deliver
business without the consent of the husband. In the instant case, we are convinced
to them a video copy of said event. For whatever reason, petitioners failed to
that it was only petitioner Nancy Go who entered into the contract with private
provide private respondents with their tape. Clearly, petitioners are guilty of
respondent. Consequently, we rule that she is solely liable to private respondents
contravening their obligation to said private respondents and are thus liable for
for the damages awarded below, pursuant to the principle that contracts produce
damages.
effect only as between the parties who execute them. 13

The grant of actual or compensatory damages in the amount of P450.00 is justified,

WHEREFORE, the assailed decision dated September 14, 1993 is hereby AFFIRMED
as reimbursement of the downpayment paid by private respondents to petitioners. 6
with the MODIFICATION that petitioner Alex Go is absolved from any liability to
private respondents and that petitioner Nancy Go is solely liable to said private
Generally, moral damages cannot be recovered in an action for breach of contract respondents for the judgment award. Costs against petitioners.
because this case is not among those enumerated in Article 2219 of the Civil Code.
However, it is also accepted in this jurisdiction that liability for a quasi-delict may
still exist despite the presence of contractual relations, that is, the act which

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