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Contents
DeeHua Liong Electrical Equipment vs Reyes............................................................................1
Visayan Sawmill vs CA........................................................................................................................5
Expert travel and tours vs ca.........................................................................................................21
Strebel vs Figueras.............................................................................................................................23
ABS-CBN vs ca.....................................................................................................................................35
People vs Wahiman............................................................................................................................57
Medelo vs Gorospe.............................................................................................................................62

DeeHua Liong Electrical Equipment vs Reyes

G.R. No. 72182 November 25, 1986

DEE HUA LIONG ELECTRICAL EQUIPMENT CORPORATION, petitioner,

vs.
ROMEO REYES, ET AL., respondents.

Juanitas, Perez, Gonzales and Associates for petitioner.

Romeo P. Pineda for respondents.

NARVASA, J.:p

The Court of First Instance 1 sentenced petitioner to pay to private

respondents P50,000.00 as actual damages; P50,000.00 as moral damages;
P50,000.00 as exemplary damages; and P10,000.00 as attomey's fees, as
well as to pay treble Cost. 2 The Intermediate Appellate Court, on
appeal, 3 affirmed petitioner's liability but reduced the award for moral and
ex-emplary damages to P10,000.00 and P5,000.00, respectively. Petitioner
seasonably appealed to this Court, impugning the award of damages and
claiming that it had been denied due process in the proceedings before the
Trial Court.

Following submission of the private respondents' comment on the petition

for review, the Court issued a Resolution denying the petition for lack of
 Page 2 of 67

merit. 4 Petitioner then filed a motion for reconsideration, which was

likewise denied. 5 A second motion for reconsideration 6 was, however,
admitted 7 and the private respondents were required to comment thereon,
which they did. The Court now decides the appeal on the merits.

The Intermediate Appellate Court found that private respondent Romeo

Reyes operated "the once thriving and prosperous Excelite Electronic Center
in San Miguel, Bulacan;" 8 that long prior to September,1981, he began
"receiving complaints of irate and dissatisfied customers who complained
over the defective repairs done on their television and stereo units; 9 that
he repeated the repair jobs over and over but despite his best efforts, and
despite losing "man hours for over a month," 'he lost the patronage of many
customers (and) (h)is once thriving business was on the verge of
uin;" 10 that he finany discovered that "the root cause of all these troubles"
was the "low grade electronic filter capacitor(s) ... (h)e had been buying
from ... (petitioner) for the past years;" that he "opened one of the
capacitors ... (and found) that the actual label of 22 micro farad was
superimposed by a fake label making it appear to be 2200 micro farad;" that
although the "actual price of one capacitor with 22 micro farad is only
P2.00 ... he had been paying the amount of P6.40 to P7.40 per piece of the
supposed 2200 micro farad capacitor;" 11 that what private respondent
thereafter did was to buy three (3) capacitors on September 14, 1981; that
although the corresponding invoice (Exhibit A) stated the capacitors to be
"with strength of 2200 ... , in truth and in fact it was discovered as shown by
Exhs. B and C to be only of 22 micro farad." 12 It was "this massive
fraudulent scheme employed by ...(Petitioner) in short selling to plaintiff the
capacitors" that allegedly caused damages to private respondent. 13

These findings of fact were based solely on the testimony of private

respondent and his wife. No evidence was presented in behalf of petitioner
because it was declared in default for failure of its counsel or other
representative to appear at tile pre-trial scheduled by the Trial Court,
despite notice. 14

On being served with notice of the judgment by default petitioner moved for
new trial alleging that it had good cause to seek postponement of the pre-
trial; and claiming moreover, to have a meritorious defense to the
complaint, adverting to a "Component Test Report" of the National Institute
of Science and Technology" attesting to the correctness of the represented
capacity of the capacitors in question, and a certification from the Japanese
manufacturer to the effect that there was "merely a misprint" in the
labels. 15 The Trial Court denied the motion. On appeal, the Intermediate
Appellate Court sustained that denial of the motion for new trial in view of
the demonstrated falsity of the ground rehed upon for the requested
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postponement of the pre-trial, to wit: that Atty. Marquinez, the petitioner's

counsel had personally to appear and represent another client at an earlier
scheduled hearing of a case before the Municipal Court of Pasig, when in
truth, as certified by the Clerk of the latter Court and as shown by the
minutes of its proceedings, it was another lawyer who appeared, not Atty.
Marquinez. 16

It is axiomatic that the findings of fact of the Intermediate Appellate Court

are conclusive and may not be reviewed by this Court. There is no
compelling reason to deviate from this well-known rule in this case. Upon
those factual findings, this Court declares that the Trial Court was justified in
declaring petitioner in default and rendering judgment by default against it,
for failure to appear at the pre-trial despite notice. 17

However, the adjudgment of damages appears to be quite excessive in the

premises. The grant of P50,000.00 as actual damages is made to rest on
nothing more substantial than the sworn declarations of the private
respondents (plaintiff and his wife) that one (1) of the capacitors used in
repairing an appliance was of 22 micro farad capacity instead of 2200 micro
farad, and that three (3) other capacitors, subsequently purchased, had
"superimposed" labels. There is no proof whatever that defective capacitors
were used in the other numerous repair jobs done by private respondent, or
that the repairs did indeed entail the use of capacitors. There is moreover no
evidence of a-defiberate intent on petitioner's part to foist a fraud on the
general public, including private respondents, in the sale of capacitors. On
the contrary, there are indications that there was merely a "misprint" in the
labels. The award of damages to private respondent must, therefore, be
struck down for want of adequate foundation. Actual or compensatory
damages cannot be presumed, but must be duly proved, ind proved with a
reasonable degree of certainty. A court cannot rely on speculation,
conjecture or guesswork 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
lamages wiu be awarded. 18

Proof of equivalent character is also necessary to support an award of moral

damages, and it does not appear that any such evidence, was offered here.
The decision of the Trial Court, which summarizes the testimony of the only
two witnesses for the private respondent, said respondent himself and his
wife, 19 makes no mention of any testimony being given concerning moral
damages, such as of wounded feelings, social humiliation, anxiety and the
like, and to all appearances merely assumes the existence of moral injury
from what proof of actual loss was adduced. More importantly, and as
already pointed out, there is also no evidence that petitioner, in selling
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allegedly mislabelled capacitors, acted maliciously and with deliberate intent

to defraud the private respondent and the general public.

Furthermore, while no proof of pecuniary loss is necessary in

order that moral damages may be awarded, the amount of
indemnity being left to the discretion of the Court (Art. 2216), it
is, nevertheless, essential that the claimant satisfactorily prove
the existence of the factual basis of the damages (Art. 2217) and
its causal relation to defendant's acts. This is so because moral
damages though incapable of pecuniary estimation, are in the
category of an award designed to compensate the claimant for
actual injury suffered and not to impose a penalty on the
wrongdoer (Algara vs. Sandejas, 27 Phil. 284). The trial court
and the Court of Appeals both seem to be of the opinion that the
mere fact that respondents were sued without any legal
foundation entitled them to an award of moral damages, hence
they made no definite finding as to what the supposed moral
damages suffered consist of. Such a conclusion would make of
moral damages a penalty, which they are not, rather than a
compensation for actual injury suffered, which they are intended
to be. Moral damages, in other words, are not corrective or
exemplary damages. 20

Nor was there error in the appealed decision in denying moral

damages, not only on account of the plaintiff's failure to take the
witness stand and testify to her social humiliation, wounded
feelings, anxiety, etc., as the decision holds, but primarily
because a breach of contract like that of defendant, not being
malicious or fraudulent, does not warrant the award of moral
damages under Article 2220 of the Civil Code.
... 21

Neither may private respondent recover exemplary damages since he is not

entitled to moral or compensatory damages, and again because the
petitioner is not shown to have acted in a wanton, fraudulent, reckless or
oppressive manner. 22

Upon the same consideration, and absent any proof that petitioner refused
in gross and evident bad faith to satisfy the private respondent's claim. no
counsel fees should be awarded. 23

The Court is of the opinion that an award of nominal damages to private

respondent in the amount of P5,000.00 is sufficient in the premises. 24
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WHEREFORE, the appealed Decision is modified an dthe liability of petitioner

is hereby declared limited solely and exclusively to the payment of P5,
000.00 as nominal damages. No pronouncement as to costs.

SO ORDERED.

Visayan Sawmill vs CA

G.R. No. 83851. March 3, 1993.

VISAYAN SAWMILL COMPANY, INC., and ANG TAY, petitioners, vs. THE
HONORABLE COURT OF APPEALS and RJH TRADING, represented by RAMON
J. HIBIONADA, proprietor, respondents.

Saleto J. Erames and Edilberto V. Logronio for petitioners.

Eugenio O. Original for private respondent.

SYLLABUS

1. CIVIL LAW; CONTRACT TO SELL; EFFECT OF VENDEE'S FAILURE TO

COMPLY WITH POSITIVE SUSPENSIVE CONDITION; CASE AT BAR. — The
petitioner corporation's obligation to sell is unequivocally subject to a
positive suspensive condition, i.e., the private respondent's opening, making
or indorsing of an irrevocable and unconditional letter of credit. The former
agreed to deliver the scrap iron only upon payment of the purchase price by
means of an irrevocable and unconditional letter of credit. Otherwise stated,
the contract is not one of sale where the buyer acquired ownership over the
property subject to the resolutory condition that the purchase price would be
paid after delivery. Thus, there was to be no actual sale until the opening,
making or indorsing of the irrevocable and unconditional letter of credit.
Since what obtains in the case at bar is a mere promise to sell, the failure of
the private respondent to comply with the positive suspensive condition
cannot even be considered a breach — casual or serious — but simply an
event that prevented the obligation of petitioner corporation to convey title
from acquiring binding force. In Luzon Brokerage Co., Inc. vs. Maritime
Building Co., Inc., this Court stated: ". . . The upshot of all these stipulations
is that in seeking the ouster of Maritime for failure to pay the price as agreed
upon, Myers was not rescinding (or more properly, resolving) the contract,
but precisely enforcing it according to its express terms. In its suit Myers
was not seeking restitution to it of the ownership of the thing sold (since it
 Page 6 of 67

was never disposed of), such restoration being the logical consequence of
the fulfillment of a resolutory condition, express or implied (Article 1190);
neither was it seeking a declaration that its obligation to sell was
extinguished. What it sought was a judicial declaration that because the
suspensive condition (full and punctual payment) had not been fulfilled, its
obligation to sell to Maritime never arose or never became effective and,
therefore, it (Myers) was entitled to repossess the property object of the
contract, possession being a mere incident to its right of ownership. It is
elementary that, as stated by Castan, -- 'b) Si la condicion suspensiva llega
a faltar, la obligacion se tiene por no existente, y el acreedor pierde todo
derecho, incluso el de utilizar las medidas conservativas.'(3 Castan, Derecho
Civil, 7a Ed., p. 107). (Also Puig Peña, Der. Civ., T. IV (1), p. 113).'"

2. ID.; ID.; ID.; RESCISSION. — The obligation of the petitioner corporation

to sell did not arise; it therefore cannot be compelled by specific
performance to comply with its prestation. In short, Article 1191 of the Civil
Code does not apply; on the contrary, pursuant to Article 1597 of the Civil
Code, the petitioner corporation may totally rescind, as it did in this case,
the contract. Said Article provides: "ART. 1597. Where the goods have not
been delivered to the buyer, and the buyer has repudiated the contract of
sale, or has manifested his inability to perform his obligations, thereunder,
or has committed a breach thereof, the seller may totally rescind the
contract of sale by giving notice of his election so to do to the buyer."

3. ID.; ID.; IN CASE AT BAR, VENDOR'S CONSENT TO DIGGING UP AND

GATHERING OF SCRAP IRON NOT CONSTRUED AS DELIVERY THEREOF;
REASONS THEREFOR. — Paragraph 6 of the Complaint reads: "6. That on
May 17, 1983 Plaintiff with the consent of defendant Ang Tay sent his men
to the stockyard of Visayan Sawmill Co., Inc. at Cawitan, Sta. Catalina,
Negros Oriental to dig and gather the scrap iron and stock the same for
weighing." This permission or consent can, by no stretch of the imagination,
be construed as delivery of the scrap iron in the sense that, as held by the
public respondent, citing Article 1497 of the Civil Code, petitioners placed
the private respondent in control and possession thereof. In the first place,
said Article 1497 falls under the Chapter Obligations of the Vendor, which is
found in Title VI (Sales), Book IV of the Civil Code. As such, therefore, the
obligation imposed therein is premised on an existing obligation to deliver
the subject of the contract. In the instant case, in view of the private
respondent's failure to comply with the positive suspensive condition earlier
discussed, such an obligation had not yet arisen. In the second place, it was
a mere accommodation to expedite the weighing and hauling of the iron in
the event that the sale would materialize. The private respondent was not
thereby placed in possession of and control over the scrap iron. Thirdly, We
cannot even assume the conversion of the initial contract or promise to sell
 Page 7 of 67

into a contract of sale by the petitioner corporation's alleged implied delivery

of the scrap iron because its action and conduct in the premises do not
support this conclusion. Indeed, petitioners demanded the fulfillment of the
suspensive condition and eventually cancelled the contract.

4. ID.; CONTRACTS; DAMAGES; MORAL DAMAGES; PURPOSE OF AWARD

THEREOF; EXEMPLARY DAMAGES. — In contracts, such as in the instant
case, moral damages may be recovered if defendants acted fraudulently and
in bad faith, while exemplary damages may only be awarded if defendants
acted in a wanton, fraudulent, reckless, oppressive or malevolent manner. In
the instant case, the refusal of the petitioners to deliver the scrap iron was
founded on the non-fulfillment by the private respondent of a suspensive
condition. It cannot, therefore, be said that the herein petitioners had acted
fraudulently and in bad faith or in a wanton, reckless, oppressive or
malevolent manner. What this Court stated in Inhelder Corp. vs. Court of
Appeals needs to be stressed anew: "At this juncture, it may not be amiss to
remind Trial Courts to guard against the award of exhorbitant (sic) damages
that are way out of proportion to the environmental circumstances of a case
and which, time and again, this Court has reduced or eliminated. Judicial
discretion granted to the Courts in the assessment of damages must always
be exercised with balanced restraint and measured objectivity." For, indeed,
moral damages are emphatically not intended to enrich a complainant at the
expense of the defendant. They are awarded only to enable the injured party
to obtain means, diversion or amusements that will serve to obviate the
moral suffering he has undergone, by reason of the defendant's culpable
action. Its award is aimed at the restoration, within the limits of the
possible, of the spiritual status quo ante, and it must be proportional to the
suffering inflicted.

ROMERO, J., dissenting:

1. CIVIL LAW; CONTRACT OF SALE; DEFINED; WHEN PERFECTED; CASE AT

BAR. — Article 1458 of the Civil Code has this definition: "By a contract of
sale, one of the contracting parties obligates himself to transfer the
ownership of and to deliver a determinate thing and the other to pay
therefor a price certain in money or its equivalent." Article 1475 gives the
significance of this mutual undertaking of the parties, thus: "The contract of
sale is perfected at the moment there is a meeting of minds upon the thing
which is the object of the contract and upon the price. From that moment,
the parties may reciprocally demand performance, subject to the provisions
of the law governing the form of contracts." Thus, when the parties entered
into the contract entitled "Purchase and Sale of Scrap Iron" on May 1, 1983,
the contract reached the stage of perfection, there being a meeting of the'
minds upon the object which is the subject matter of the contract and the
 Page 8 of 67

price which is the consideration. Applying Article 1475 of the Civil Code,
from that moment, the parties may reciprocally demand performance of the
obligations incumbent upon them, i.e., delivery by the vendor and payment
by the vendee.

2. ID.; ID.; DELIVERY; HOW ACCOMPLISHED; CASE AT BAR. — From the

time the seller gave access to the buyer to enter his premises, manifesting
no objection thereto but even sending 18 or 20 people to start the operation,
he has placed the goods in the control and possession of the vendee and
delivery is effected. For according to Article 1497, "The thing sold shall be
understood as delivered when it is placed in the control and possession of
the vendee." Such action or real delivery (traditio) is the act that transfers
ownership. Under Article 1496 of the Civil Code, "The ownership of the thing
sold is acquired by the vendee from the moment it is delivered to him in any
of the ways specified in Articles 1497 to 1501, or in any other manner
signifying an agreement that the possession is transferred from the vendor
to the vendee."

3. ID.; ID.; PROVISION IN CONTRACT REGARDING MODE OF PAYMENT NOT

ESSENTIAL REQUISITE THEREOF; WHEN PROVISION CONSIDERED A
SUSPENSIVE CONDITION. — a provision in the contract regarding the mode
of payment, like the requirement for the opening of the Letter of Credit in
this case, is not among the essential requirements of a contract of sale
enumerated in Articles 1305 and 1474, the absence of any of which will
prevent the perfection of the contract from happening. Likewise, it must be
emphasized that not every provision regarding payment should
automatically be classified as a suspensive condition. To do so would change
the nature of most contracts of sale into contracts to sell. For a provision in
the contract regarding the payment of the price to be considered a
suspensive condition, the parties must have made this clear in certain and
unambiguous terms, such as for instance, by reserving or withholding title to
the goods until full payment by the buyer. This was a pivotal circumstance in
the Luzon Brokerage case where the contract in question was replete with
very explicit provisions such as the following: "Title to the properties subject
of this contract remains with the Vendor and shall pass to, and be
transferred in the name of the Vendee only upon complete payment of the
full price . . .;" 10 the Vendor (Myers) will execute and deliver to the Vendee
a definite and absolute Deed of Sale upon full payment of the Vendee . . .;
and "should the Vendee fail to pay any of the monthly installments, when
due, or otherwise fail to comply with any of the terms and conditions herein
stipulated, then this Deed of Conditional Sale shall automatically and without
any further formality, become null and void." It is apparent from a careful
reading of Luzon Brokerage, as well as the cases which preceded it and the
subsequent ones applying its doctrines, that the mere insertion of the price
 Page 9 of 67

and the mode of payment among the terms and conditions of the agreement
will not necessarily make it a contract to sell. The phrase in the contract "on
the following terms and conditions" is standard form which is not to be
construed as imposing a condition, whether suspensive or resolutory, in the
sense of the happening of a future and uncertain event upon which an
obligation is made to depend. There must be a manifest understanding that
the agreement is in what may be referred to as "suspended animation"
pending compliance with provisions regarding payment. The reservation of
title to the object of the contract in the seller is one such manifestation.
Hence, it has been decided in the case of Dignos v. Court of Appeals that,
absent a proviso in the contract that the title to the property is reserved in
the vendor until full payment of the purchase price or a stipulation giving the
vendor the right to unilaterally rescind the contract the moment the vendee
fails to pay within the fixed period, the transaction is an absolute contract of
sale and not a contract to sell.

4. ID.; ID.; CONTRACT OF SALE DISTINGUISHED FROM CONTRACT TO

SELL; EFFECT OF NON-PAYMENT OF PURCHASE PRICE; EFFECT OF
DELIVERY ON OWNERSHIP OF OBJECT OF CONTRACT. — In a contract of
sale, the non-payment of the price is a resolutory condition which
extinguishes the transaction that, for a time, existed and discharges the
obligations created thereunder. On the other hand, "the parties may
stipulate that ownership in the thing shall not pass to the purchaser until he
has fully paid the price." In such a contract to sell, the full payment of the
price is a positive suspensive condition, such that in the event of non-
payment, the obligation of the seller to deliver and transfer ownership never
arises. Stated differently, in a contract to sell, ownership is not transferred
upon delivery of property but upon full payment of the purchase price.
Consequently, in a contract of sale, after delivery of the object of the
contract has been made, the seller loses ownership and cannot recover the
same unless the contract is rescinded. But in the contract to sell, the seller
retains ownership and the buyer's failure to pay cannot even be considered a
breach, whether casual or substantial, but an event that prevented the
seller's duty to transfer title to the object of the contract.

5. ID.; ID.; CASE OF SYCIP V. NATIONAL COCONUT CORPORATION, ET AL.,

G.R. NO. L-6618, APRIL 28, 1956, DISTINGUISHED FROM CASE AT BAR. —
Worthy of mention before concluding is Sycip v. National Coconut
Corporation, et al. since, like this case, it involves a failure to open on time
the Letter of Credit required by the seller. In Sycip, after the buyer offered
to buy 2,000 tons of copra, the seller sent a telegram dated December 19,
1946 to the buyer accepting the offer but on condition that the latter opens
a Letter of Credit within 48 hours. It was not until December 26, 1946,
however, that the Letter of Credit was opened. The Court, speaking through
 Page 10 of 67

Justice Bengzon, held that because of the delay in the opening of the Letter
of Credit; the seller was not obliged to deliver the goods. Two factors
distinguish Sycip from the case at bar. First, while there has already been a
perfected contract of sale in the instant case, the parties in Sycip were still
undergoing the negotiation process. The seller's qualified acceptance in
Sycip served as a counter offer which prevented the contract from being
perfected. Only an absolute and unqualified acceptance of a definite offer
manifests the consent necessary to perfect a contract. Second, the Court
found in Sycip that time was of the essence for the seller who was anxious
to sell to other buyers should the offeror fail to open the Letter of Credit
within the stipulated time. In contrast, there are no indicia in this case that
can lead one to conclude that time was of the essence for petitioner as
would make the eleven-day delay a fundamental breach of the contract.

6. ID.; OBLIGATIONS AND CONTRACTS; RESCISSION UNDER ARTICLE 1191

OF THE CIVIL CODE; WHEN PROPER; DELAY IN PAYMENT FOR TWENTY
DAYS NOT CONSIDERED A SUBSTANTIAL BREACH OF CONTRACT; CASE AT
BAR. — The right to rescind pursuant to Article 1191 is not absolute.
Rescission will not be permitted for slight or casual breach of the contract.
Here, petitioners claim that the breach is so substantial as to justify
rescission . . . I am not convinced that the circumstances may be
characterized as so substantial and fundamental as to defeat the object of
the parties in making the agreement. None of the alleged defects in the
Letter of Credit would serve to defeat the object of the parties. It is to be
stressed that the purpose of the opening of a Letter of Credit is to effect
payment. The above-mentioned factors could not have prevented such
payment. It is also significant to note that petitioners sent a telegram to
private respondents on May 23, 1983 cancelling the contract. This was
before they had even received on May 26, 1983 the notice from the bank
about the opening of the Letter of Credit. How could they have made a
judgment on the materiality of the provisions of the Letter of Credit for
purposes of rescinding the contract even before setting eyes on said
document? To be sure, in the contract, the private respondents were
supposed to open the Letter of Credit on May 15, 1983 but, it was not until
May 26, 1983 or eleven (11) days later that they did so. Is the eleven-day
delay a substantial breach of the contract as could justify the rescission of
the contract? In Song Fo and Co. v. Hawaiian-Philippine Co., it was held that
a delay in payment for twenty (20) days was not a violation of an essential
condition of the contract which would warrant rescission for non-
performance. In the instant case, the contract is bereft of any suggestion
that time was of the essence. On the contrary, it is noted that petitioners
allowed private respondents' men to dig and remove the scrap iron located
in petitioners' premises between May 17, 1983 until May 30, 1983 or beyond
the May 15, 1983 deadline for the opening of the Letter of Credit. Hence, in
 Page 11 of 67

the absence of any indication that the time was of the essence, the eleven-
day delay must be deemed a casual breach which cannot justify a rescission.

DECISION

DAVIDE, JR., J p:

By this petition for review under Rule 45 of the Rules of Court, petitioners
urge this Court to set aside the decision of public respondent Court of
Appeals in C.A.-G.R. CV No. 08807, 1 promulgated on 16 March 1988, which
affirmed with modification, in respect to the moral damages, the decision of
the Regional Trial Court (RTC) of Iloilo in Civil Case No. 15128, an action for
specific performance and damages, filed by the herein private respondent
against the petitioners. The dispositive portion of the trial court's decision
reads as follows:

"IN VIEW OF THE ABOVE FINDINGS, judgment is hereby rendered in favor of

plaintiff and against the defendants ordering the latter to pay jointly and
severally plaintiff, to wit:

1) The sum of Thirty-Four Thousand Five Hundred Eighty Three and 16/100
(P34,583.16), as actual damages;

2) The sum of One Hundred Thousand (P100,000.00) Pesos, as moral

damages;

3) The sum of Ten Thousand (P10,000.00) Pesos, as exemplary damages;

4) The sum of TWENTY Five Thousand (P25,000.00) Pesos, as attorney's

fees; and

5) The sum of Five Thousand (P5,000.00) Pesos as actual litis expenses." 2

The public respondent reduced the amount of moral damages to P25,000.00.

The antecedent facts, summarized by the public respondent, are as follows:

"On May 1, 1983, herein plaintiff-appellee and defendants-appellants

entered into a sale involving scrap iron located at the stockyard of
defendant-appellant corporation at Cawitan, Sta. Catalina, Negros Oriental,
subject to the condition that plaintiff-appellee will open a letter of credit in
the amount of P250,000.00 in favor of defendant-appellant corporation on or
before May 15, 1983. This is evidenced by a contract entitled `Purchase and
Sale of Scrap Iron' duly signed by both parties.
 Page 12 of 67

On May 17, 1983, plaintiff-appellee through his man (sic), started to dig and
gather and (sic) scrap iron at the defendant-appellant's (sic) premises,
proceeding with such endeavor until May 30 when defendants-appellants
allegedly directed plaintiff-appellee's men to desist from pursuing the work
in view of an alleged case filed against plaintiff-appellee by a certain Alberto
Pursuelo. This, however, is denied by defendants-appellants who allege that
on May 23, 1983, they sent a telegram to plaintiff-appellee cancelling the
contract of sale because of failure of the latter to comply with the conditions
thereof.

On May 24, 1983, plaintiff-appellee informed defendants-appellants by

telegram that the letter of credit was opened May 12, 1983 at the Bank of
the Philippine Islands main office in Ayala, but then (sic) the transmittal was
delayed.

On May 26, 1983, defendants-appellants received a letter advice from the

Dumaguete City Branch of the Bank of the Philippine Islands dated May 26,
1983, the content of which is quited (sic) as follows:

'Please be advised that we have received today cable advise from our Head
Office which reads as follows:

'Open today our irrevocable Domestic Letter of Credit No. 01456-d fot (sic)
P250,000.00 favor ANG TAY c/o Visayan Sawmill Co., Inc. Dumaguete City,
Negros Oriental Account of ARMACO-MARSTEEL ALLOY CORPORATION 2nd
Floor Alpap 1 Bldg., 140 Alfaro stp (sic) Salcedo Village, Makati, Metro
Manila Shipments of about 500 MT of assorted steel scrap marine/heavy
equipment expiring on July 24, 1983 without recourse at sight draft drawn
on Armaco Marsteel Alloy Corporation accompanied by the following
documents: Certificate of Acceptance by Armaco-Marsteel Alloy Corporation
shipment from Dumaguete City to buyer's warehouse partial shipment
allowed/transhipment (sic) not allowed'.

For your information'.

On July 19, 1983, plaintiff-appellee sent a series of telegrams stating that

the case filed against him by Pursuelo had been dismissed and demanding
that defendants-appellants comply with the deed of sale, otherwise a case
will be filed against them.

In reply to those telegrams, defendants-appellants' lawyer, on July 20, 1983

informed plaintiff-appellee's lawyer that defendant-appellant corporation is
unwilling to continue with the sale due to plaintiff-appellee's failure to
comply with essential pre-conditions of the contract.
 Page 13 of 67

On July 29, 1983, plaintiff-appellee filed the complaint below with a petition
for preliminary attachment. The writ of attachment was returned unserved
because the defendant-appellant corporation was no longer in operation and
also because the scrap iron as well as other pieces of machinery can no
longer be found on the premises of the corporation." 3

In his complaint, private respondent prayed for judgment ordering the

petitioner corporation to comply with the contract by delivering to him the
scrap iron subject thereof; he further sought an award of actual, moral and
exemplary damages, attorney's fees and the costs of the suit. 4

In their Answer with Counterclaim, 5 petitioners insisted that the

cancellation of the contract was justified because of private respondent's
non-compliance with essential pre-conditions, among which is the opening of
an irrevocable and unconditional letter of credit not later than 15 May 1983.

During the pre-trial of the case on 30 April 1984, the parties defined the
issues to be resolved; these issues were subsequently embodied in the pre-
trial order, to wit:

"1. Was the contract entitled Purchase and Sale of Scrap Iron, dated May 1,
1983 executed by the parties cancelled and terminated before the Complaint
was filed by anyone of the parties; if so, what are the grounds and reasons
relied upon by the cancelling parties; and were the reasons or grounds for
cancelling valid and justified?

2. Are the parties entitled to damages they respectively claim under the
pleadings?" 6

On 29 November 1985, the trial court rendered its judgment, the dispositive
portion of which was quoted earlier.

Petitioners appealed from said decision to the Court of Appeals which

docketed the same as C.A.-G.R. CV No. 08807. In their Brief, petitioners, by
way of assigned errors, alleged that the trial court erred:

"1. In finding that there was delivery of the scrap iron subject of the sale;

2. In not finding that plaintiff had not complied with the conditions in the
contract of sale;

3. In finding that defendants-appellants were not justified in cancelling the

sale;
 Page 14 of 67

4. In awarding damages to the plaintiff as against the defendants-

appellants;

5. In not awarding damages to defendants-appellants." 7

Public respondent disposed of these assigned errors in this wise:

"On the first error assigned, defendants-appellants argue that there was no
delivery because the purchase document states that the seller agreed to sell
and the buyer agreed to buy 'an undetermined quantity of scrap iron and
junk which the seller will identify and designate.' Thus, it is contended, since
no identification and designation was made, there could be no delivery. In
addition, defendants-appellants maintain that their obligation to deliver
cannot be completed until they furnish the cargo trucks to haul the weighed
materials to the wharf.

The arguments are untenable. Article 1497 of the Civil Code states:

'The thing sold shall be understood as delivered when it is placed in the

control and possession of the vendee.'

In the case at bar, control and possession over the subject matter of the
contract was given to plaintiff-appellee, the buyer, when the defendants-
appellants as the sellers allowed the buyer and his men to enter the
corporation's premises and to dig-up the scrap iron. The pieces of scrap iron
then (sic) placed at the disposal of the buyer. Delivery was therefore
complete. The identification and designation by the seller does not complete
delivery.

On the second and third assignments of error, defendants-appellants argue

that under Articles 1593 and 1597 of the Civil Code, automatic rescission
may take place by a mere notice to the buyer if the latter committed a
breach of the contract of sale.

Even if one were to grant that there was a breach of the contract by the
buyer, automatic rescission cannot take place because, as already (sic)
stated, delivery had already been made. And, in cases where there has
already been delivery, the intervention of the court is necessary to annul the
contract.

As the lower court aptly stated:

'Respecting these allegations of the contending parties, while it is true that

Article 1593 of the New Civil Code provides that with respect to movable
 Page 15 of 67

property, the rescission of the sale shall of right take place in the interest of
the vendor, if the vendee fails to tender the price at the time or period fixed
or agreed, however, automatic rescission is not allowed if the object sold has
been delivered to the buyer (Guevarra vs. Pascual, 13 Phil. 311; Escueta vs.
Pando, 76 Phil 256), the action being one to rescind judicially and where
(sic) Article 1191, supra, thereby applies. There being already an implied
delivery of the items, subject matter of the contract between the parties in
this case, the defendant having surrendered the premises where the scraps
(sic) were found for plaintiff's men to dig and gather, as in fact they had dug
and gathered, this Court finds the mere notice of resolution by the
defendants untenable and not conclusive on the rights of the plaintiff (Ocejo
Perez vs. Int. Bank, 37 Phi. 631). Likewise, as early as in the case of Song
Fo vs. Hawaiian Philippine Company, it has been ruled that rescission cannot
be sanctioned for a slight or casual breach (47 Phil. 821).'

In the case of Angeles vs. Calasanz (135 (1935) SCRA 323), the Supreme
Court ruled:

'Article 1191 is explicit. In reciprocal obligations, either party has the right to
rescind the contract upon failure of the other to perform the obligation
assumed thereunder.

Of course, it must be understood that the right of a party in treating a

contract as cancelled or resolved on account of infractions by the other
contracting party must be made known to the other and is always
provisional, being ever subject to scrutiny and review by the proper court.'

Thus, rescission in cases falling under Article 1191 of the Civil Code is always
subject to review by the courts and cannot be considered final.

In the case at bar, the trial court ruled that rescission is improper because
the breach was very slight and the delay in opening the letter of credit was
only 11 days.

'Where time is not of the essence of the agreement, a slight delay by one
party in the performance of his obligation is not a sufficient ground for
rescission of the agreement. Equity and justice mandates (sic) that the
vendor be given additional (sic) period to complete payment of the purchase
price.' (Taguda vs. Vda. de Leon, 132 SCRA (1984), 722).'

There is no need to discuss the fourth and fifth assigned errors since these
are merely corollary to the first three assigned errors." 8
 Page 16 of 67

Their motion to reconsider the said decision having been denied by public
respondent in its Resolution of 4 May 1988, 9 petitioners filed this petition
reiterating the abovementioned assignment of errors.

There is merit in the instant petition.

Both the trial court and the public respondent erred in the appreciation of
the nature of the transaction between the petitioner corporation and the
private respondent. To this Court's mind, what obtains in the case at bar is a
mere contract to sell or promise to sell, and not a contract of sale.

The trial court assumed that the transaction is a contract of sale and,
influenced by its view that there was an "implied delivery" of the object of
the agreement, concluded that Article 1593 of the Civil Code was
inapplicable; citing Guevarra vs. Pascual 10 and Escueta vs. Pando, 11 it
ruled that rescission under Article 1191 of the Civil Code could only be done
judicially. The trial court further classified the breach committed by the
private respondent as slight or casual, foreclosing, thereby, petitioners' right
to rescind the agreement.

Article 1593 of the Civil Code provides:

"ARTICLE 1593. With respect to movable property, the rescission of the sale
shall of right take place in the interest of the vendor, if the vendee, upon the
expiration of the period fixed for the delivery of the thing, should not have
appeared to receive it, or, having appeared, he should not have tendered
the price at the same time, unless a longer period has been stipulated for its
payment."

Article 1191 provides:

"ARTICLE 1191. The power to rescind obligations is implied in reciprocal

ones, in case one of the obligors should not comply with what is incumbent
upon him.

The injured party may choose between the fulfillment and the rescission of
the 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.

The court shall decree the rescission claimed, unless there be just cause
authorizing the fixing of a period."

xxx xxx xxx

 Page 17 of 67

Sustaining the trial court on the issue of delivery, public respondent cites
Article 1497 of the Civil Code which provides:

"ARTICLE 1497. The thing sold shall be understood as delivered, when it is

placed in the control and possession of the vendee."

In the agreement in question, entitled PURCHASE AND SALE OF SCRAP

IRON, 12 the seller bound and promised itself to sell the scrap iron upon the
fulfillment by the private respondent of his obligation to make or indorse an
irrevocable and unconditional letter of credit in payment of the purchase
price. Its principal stipulation reads, to wit:

xxx xxx xxx

"Witnesseth:

That the SELLER agrees to sell, and the BUYER agrees to buy, an
undetermined quantity of scrap iron and junk which the SELLER will identify
and designate now at Cawitan, Sta. Catalina, Negros Oriental, at the price of
FIFTY CENTAVOS (P0.50) per kilo on the following terms and conditions:

1. Weighing shall be done in the premises of the SELLER at Cawitan, Sta.

Catalina, Neg. Oriental.

2. To cover payment of the purchase price, BUYER will open, make or

indorse an irrevocable and unconditional letter of credit not later than May
15, 1983 at the Consolidated Bank and Trust Company, Dumaguete City,
Branch, in favor of the SELLER in the sum of TWO HUNDRED AND FIFTY
THOUSAND PESOS (P250,000.00), Philippine Currency.

3. The SELLER will furnish the BUYER free of charge at least three (3) cargo
trucks with drivers, to haul the weighed materials from Cawitan to the TSMC
wharf at Sta. Catalina for loading on BUYER's barge. All expenses for labor,
loading and unloading shall be for the account of the BUYER.

4. SELLER shall be entitled to a deduction of three percent (3%) per ton as

rust allowance." (Emphasis supplied).

The petitioner corporation's obligation to sell is unequivocally subject to a

positive suspensive condition, i.e., the private respondent's opening, making
or indorsing of an irrevocable and unconditional letter of credit. The former
agreed to deliver the scrap iron only upon payment of the purchase price by
means of an irrevocable and unconditional letter of credit. Otherwise stated,
the contract is not one of sale where the buyer acquired ownership over the
 Page 18 of 67

property subject to the resolutory condition that the purchase price would be
paid after delivery. Thus, there was to be no actual sale until the opening,
making or indorsing of the irrevocable and unconditional letter of credit.
Since what obtains in the case at bar is a mere promise to sell, the failure of
the private respondent to comply with the positive suspensive condition
cannot even be considered a breach — casual or serious — but simply an
event that prevented the obligation of petitioner corporation to convey title
from acquiring binding force. In Luzon Brokerage Co., Inc. vs. Maritime
Building Co., Inc., 13 this Court stated:

" . . . The upshot of all these stipulations is that in seeking the ouster of
Maritime for failure to pay the price as agreed upon, Myers was not
rescinding (or more properly, resolving) the contract, but precisely enforcing
it according to its express terms. In its suit Myers was not seeking restitution
to it of the ownership of the thing sold (since it was never disposed of), such
restoration being the logical consequence of the fulfillment of a resolutory
condition, express or implied (article 1190); neither was it seeking a
declaration that its obligation to sell was extinguished. What it sought was a
judicial declaration that because the suspensive condition (full and punctual
payment) had not been fulfilled, its obligation to sell to Maritime never arose
or never became effective and, therefore, it (Myers) was entitled to
repossess the property object of the contract, possession being a mere
incident to its right of ownership. It is elementary that, as stated by Castan,
—

'b) Si la condicion suspensiva llega a faltar, la obligacion se tiene por no

existente, y el acreedor pierde todo derecho, incluso el de utilizar las
medidas conservativas.' (3 Cast n, Derecho Civil, 7a Ed., p. 107). (Also Puig
Peña, Der. Civ., T. IV (1), p. 113)'."

In the instant case, not only did the private respondent fail to open, make or
indorse an irrevocable and unconditional letter of credit on or before 15 May
1983 despite his earlier representation in his 24 May 1983 telegram that he
had opened one on 12 May 1983, the letter of advice received by the
petitioner corporation on 26 May 1983 from the Bank of the Philippine
Islands Dumaguete City branch explicitly makes reference to the opening on
that date of a letter of credit in favor of petitioner Ang Tay c/o Visayan
Sawmill Co. Inc., drawn without recourse on ARMACO-MARSTEEL ALLOY
CORPORATION and set to expire on 24 July 1983, which is indisputably not
in accordance with the stipulation in the contract signed by the parties on at
least three (3) counts: (1) it was not opened, made or indorsed by the
private respondent, but by a corporation which is not a party to the contract;
(2) it was not opened with the bank agreed upon; and (3) it is not
irrevocable and unconditional, for it is without recourse, it is set to expire on
 Page 19 of 67

a specific date and it stipulates certain conditions with respect to shipment.

In all probability, private respondent may have sold the subject scrap iron to
ARMACO-MARSTEEL ALLOY CORPORATION, or otherwise assigned to it the
contract with the petitioners. Private respondent's complaint fails to disclose
the sudden entry into the picture of this corporation.

Consequently, the obligation of the petitioner corporation to sell did not

arise; it therefore cannot be compelled by specific performance to comply
with its prestation. In short, Article 1191 of the Civil Code does not apply; on
the contrary, pursuant to Article 1597 of the Civil Code, the petitioner
corporation may totally rescind, as it did in this case, the contract. Said
Article provides:

"ARTICLE 1597. Where the goods have not been delivered to the buyer, and
the buyer has repudiated the contract of sale, or has manifested his inability
to perform his obligations, thereunder, or has committed a breach thereof,
the seller may totally rescind the contract of sale by giving notice of his
election so to do to the buyer."

The trial court ruled, however, and the public respondent was in agreement,
that there had been an implied delivery in this case of the subject scrap iron
because on 17 May 1983, private respondent's men started digging up and
gathering scrap iron within the petitioner's premises. The entry of these men
was upon the private respondent's request. Paragraph 6 of the Complaint
reads:

"6. That on May 17, 1983 Plaintiff with the consent of defendant Ang Tay
sent his men to the stockyard of Visayan Sawmill Co., Inc. at Cawitan, Sta.
Catalina, Negros Oriental to dig and gather the scrap iron and stock the
same for weighing." 14

This permission or consent can, by no stretch of the imagination, be

construed as delivery of the scrap iron in the sense that, as held by the
public respondent, citing Article 1497 of the Civil Code, petitioners placed
the private respondent in control and possession thereof. In the first place,
said Article 1497 falls under the Chapter 15 Obligations of the Vendor, which
is found in Title VI (Sales), Book IV of the Civil Code. As such, therefore, the
obligation imposed therein is premised on an existing obligation to deliver
the subject of the contract. In the instant case, in view of the private
respondent's failure to comply with the positive suspensive condition earlier
discussed, such an obligation had not yet arisen. In the second place, it was
a mere accommodation to expedite the weighing and hauling of the iron in
the event that the sale would materialize. The private respondent was not
thereby placed in possession of and control over the scrap iron. Thirdly, We
 Page 20 of 67

cannot even assume the conversion of the initial contract or promise to sell
into a contract of sale by the petitioner corporation's alleged implied delivery
of the scrap iron because its action and conduct in the premises do not
support this conclusion. Indeed, petitioners demanded the fulfillment of the
suspensive condition and eventually cancelled the contract.

All told, Civil Case No. 15128 filed before the trial court was nothing more
than the private respondent's preemptive action to beat the petitioners to
the draw.

One last point. This Court notes the palpably excessive and unconscionable
moral and exemplary damages awarded by the trial court to the private
respondent despite a clear absence of any legal and factual basis therefor. In
contracts, such as in the instant case, moral damages may be recovered if
defendants acted fraudulently and in bad faith, 16 while exemplary damages
may only be awarded if defendants acted in a wanton, fraudulent, reckless,
oppressive or malevolent manner. 17 In the instant case, the refusal of the
petitioners to deliver the scrap iron was founded on the non-fulfillment by
the private respondent of a suspensive condition. It cannot, therefore, be
said that the herein petitioners had acted fraudulently and in bad faith or in
a wanton, reckless, oppressive or malevolent manner. What this Court
stated in Inhelder Corp. vs. Court of Appeals 18 needs to be stressed anew:

"At this juncture, it may not be amiss to remind Trial Courts to guard against
the award of exhorbitant (sic) damages that are way out of proportion to the
environmental circumstances of a case and which, time and again, this Court
has reduced or eliminated. Judicial discretion granted to the Courts in the
assessment of damages must always be exercised with balanced restraint
and measured objectivity."

For, indeed, moral damages are emphatically not intended to enrich a

complainant at the expense of the defendant. They are awarded only to
enable the injured party to obtain means, diversion or amusements that will
serve to obviate the moral suffering he has undergone, by reason of the
defendant's culpable action. Its award is aimed at the restoration, within the
limits of the possible, of the spiritual status quo ante, and it must be
proportional to the suffering inflicted. 19

WHEREFORE, the instant petition is GRANTED. The decision of public

respondent Court of Appeals in C.A.-G.R. CV No. 08807 is REVERSED and
Civil Case No. 15128 of the Regional Trial Court of Iloilo is ordered
DISMISSED.

Costs against the private respondent.

 Page 21 of 67

SO ORDERED.

Expert travel and tours vs ca

[G.R. No. 130030. June 25, 1999]

EXPERTRAVEL & TOURS, INC., petitioner, vs. THE HON. COURT OF

APPEALS and RICARDO LO, respondents.

DECISION
VITUG, J.:

Petitioner, Expertravel and Tours, Inc., seeks in the instant petition for
review on certiorari a modification of the decision, dated 20 March 1997, of
the Court of Appeals affirming in toto the 07th November 1994 judgment of
the Regional Trial Court (Branch 5) of Manila, the dispositive portion of
which reads:

"WHEREFORE, in view of all the foregoing, judgment is rendered declaring

the instant suit DISMISSED, and hereby orders the plaintiff to pay defendant
Ricardo Lo moral damages in the amount of P30,000.00; attorney's fees in
the amount of P10,000.00, and to pay the costs of the suit.

"No pronouncement as to other damages for lack of evidence to warrant the

same."[1]

The factual and case settings of the controversy are culled from the
pleadings on record and the assailed decision of the appellate court and that
of the court a quo.
On 07 October 1987, Expertravel & Tours, Inc., ("Expertravel"), a
domestic corporation engaged in the travel agency business, issued to
private respondent Ricardo Lo four round-trip plane tickets for Hongkong,
together with hotel accommodations and transfers, for a total cost of
P39,677.20. Alleging that Lo had failed to pay the amount due, Expertravel
caused several demands to be made. Since the demands were ignored by
Lo, Expertravel filed a court complaint for recovery of the amount claimed
plus damages.
 Page 22 of 67

Respondent Lo explained, in his answer, that his account with

Expertravel had already been fully paid. The outstanding account was
remitted to Expertravel through its then Chairperson, Ms. Ma. Rocio de
Vega, who was theretofore authorized to deal with the clients of
Expertravel. The payment was evidenced by a Monte de Piedad Check No.
291559, dated 06 October 1987, for P42,175.20 for which Ms. de Vega, in
turn, issued City Trust Check No. 417920 in favor of Expertravel for the
amount of P50,000.00, with the notation "placement advance for Ricardo Lo,
etc." Per its own invoice, Expertravel received the sum on 10 October 1987.
The trial court, affirmed by the appellate court, held that the payment
made by Lo was valid and binding on petitioner Expertravel. Even on the
assumption that Ms. de Vega had not been specifically authorized by
Expertravel, both courts said, the fact that the amount "delivered to the
latter remain(ed) in its possession up to the present, mean(t) that the
amount redounded to the benefit of petitioner Expertravel, in view of the
second paragraph of Article 1241 of the Civil Code to the effect that payment
made to a third person shall also be valid in so far as it has redounded to the
benefit of the creditor.
In this recourse, petitioner confines itself to the following related legal
issues; viz:

"I. Can moral damages be recovered in a clearly unfounded suit?

"II. Can moral damages be awarded for negligence or quasi-delict that did
not result to physical injury to the offended party?"[2]

There is merit in the petition.

Moral damages are not punitive in nature but are designed to
compensate[3] and alleviate in some way the physical suffering, mental
anguish, fright, serious anxiety, besmirched reputation, wounded feelings,
moral shock, social humiliation, and similar injury unjustly caused to a
person.Although incapable of pecuniary computation, moral damages,
nevertheless, must somehow be proportional to and in approximation of the
suffering inflicted.[4] Such damages, to be recoverable, must be the
proximate result of a wrongful act or omission the factual basis for which is
satisfactorily established by the aggrieved party. [5] An award of moral
damages would require certain conditions to be met; to wit: (1) First, there
must be an injury, whether physical, mental or psychological, clearly
sustained by the claimant; (2) second, there must be a culpable act or
omission factually established; (3) third, the wrongful act or omission of the
defendant is the proximate cause of the injury sustained by the claimant;
and (4) fourth, the award of damages is predicated on any of the cases
stated in Article 2219.[6] Under the provisions of this law, in culpa
 Page 23 of 67

contractual or breach of contract, moral damages may be recovered when

the defendant acted in bad faith or was guilty of gross negligence
(amounting to bad faith) or in wanton disregard of his contractual obligation
and, exceptionally, when the act of breach of contract itself is constitutive of
tort resulting in physical injuries.[7] By special rule in Article 1764, in relation
to Article 2206, of the Civil Code, moral damages may also be awarded in
case the death of a passenger results from a breach of carriage. In culpa
aquiliana, or quasi-delict, (a) when an act or omission causes physical
injuries, or (b) where the defendant is guilty of intentional tort,[8] moral
damages may aptly be recovered. This rule also applies, as aforestated, to
contracts when breached by tort. In culpa criminal, moral damages could be
lawfully due when the accused is found guilty of physical injuries, lascivious
acts, adultery or concubinage, illegal or arbitrary detention, illegal arrest,
illegal search, or defamation. Malicious prosecution can also give rise to a
claim for moral damages. The term "analogous cases," referred to in Article
2219, following the ejusdem generis rule, must be held similar to those
expressly enumerated by the law.[9]
Although the institution of a clearly unfounded civil suit can at times be a
legal justification for an award of attorney's fees, [10] such filing, however, has
almost invariably been held not to be a ground for an award of moral
damages.[11] The rationale for the rule is that the law could not have meant
to impose a penalty on the right to litigate. The anguish suffered by a person
for having been made a defendant in a civil suit would be no different from
the usual worry and anxiety suffered by anyone who is haled to court, a
situation that cannot by itself be a cogent reason for the award of moral
damages.[12] If the rule were otherwise, then moral damages must every
time be awarded in favor of the prevailing defendant against an unsuccessful
plaintiff.[13]
The Court confirms, once again, the foregoing rules.
WHEREFORE, the petition is GRANTED and the award of moral damages
to respondent Ricardo Lo under the assailed decision is DELETED. In its
other aspects, the appealed decision shall remain undisturbed. No costs.
SO ORDERED.

Strebel vs Figueras

G.R. No. L-4722 December 29, 1954

EMILIO STREBEL, plaintiff-appellant,

vs.
 Page 24 of 67

JOSE FIGUERAS, Acting Secretary of Labor, FELIPE E. JOSE, Director

of Labor and CORNELIO S. RUPERTO, Assistant City Fiscal of
Manila, defendants-appellees.

Rosendo Tansinsin and Claro R. Santos, for appellant.

Vicente J. Francisco for appellees.

CONCEPCION, J.:

This is an appeal, taken by plaintiff, Emilio Strebel, from an order of the

Court of First Instance of Manila granting a motion to dismisss filed by the
defendants herein, Jose Figueras, Felipe E. Jose and Cornelio S. Ruperto,
and, consequently, dismissing plaintiff's com plaint, without special
pronouncement as to costs, upon the ground that the facts alleged in said
pleading do not constitute a cause of action.

The complaint purports to set forth three causes ofaction. The alleged acts
upon which plaintiff's first causeof action is predicated may be divided into
four (4) groups, namely:

1. That, as lessee of a lot situated at Nos. 735-737 SantaMesa, Manila,

plaintiff Strebel subleased part thereof tothe Standard Vacuum Oil Company;
that the latterconstructed thereon a Mobilgas Station which was operated by
Eustaquio & Co., a partnership organized by said plaintiff and one Primo
Eustaquio, that, "out of spite and with a view to the eventual acquisition of
the said property for himself and his men," defendant Jose Figueras "tried all
he could to built a drainage through" the aforementioned property; that, in
order to accomplish this purpose, and, using his official and political
influence defendant Figueras, then Under-Secretary of Labor, caused his co-
defendant Cornelio S. Ruperto, an Assistant City Fiscal of Manila, to prepare
an opinion, dated June 18, 1949, wich was signed by the City Fiscal, holding
that the City of Manila has a right to construct said drainage, and, to this
effect, make the necessary excavation, of about 70 centimeters in width, at
the boundary line of said lot leased to Strebel and the lot belonging to
Figueras; that, said opinion induced the city engineer of Manila to write to
plaintiff Strebel the letter Exhibit B, dated June 22, 1949, reading:

Republic of the Philippines

City of Manila

DEPARTMENT OF ENGINEERING AND PUBLIC WORKS

 Page 25 of 67

JUNE 22, 1949

Mr. Emilio Strebel

Manila
Sir: .

In connection with the drainage of a certain dominant estate

on Buenos Aires which flows across a certain servient estate
on Sta. Mesa Boulevard and which was closed by the
construction of a gasoline station by the Standard Vacuum
Oil Company on Santa Mesa Boulevard, I have the honor to
inform you that our men will make an excavation on the strip
of land lying between the lot of Mr. Jose Figueras on Buenos
Aires and the gasoline station of the Standard Vacuum Oil
Company on Sta. Mesa Boulevard for the purpose of laying a
pipe across the said strip of land to connect the drainage of
the dominant estate with the drainage of the servient estate
occupied by the gasoline station towards the storm sewers
on the Sta. Mesa Boulevard. The excavation will be backfilled
and the ground restored to its original condition by our men
after the pipe had been laid.

The ownership of the strip of land across which the

excavation will be made and a pipe will be laid by our men
is, according to our information, under litigation between you
and Mr. Antonio Isaac. This letter is being addressed to you
as one of the litigating parties.

Respectfully,

s/ALEJO AQUINO
t/ALEJO AQUINO

and that plaintiff and his partner Primo Eustaquio, protested against the
aforementioned proposed excavation and drainage, which, accordingly, was
not made or construed;

2. That on September 14, 1949, defendant Figueras "by making use of his
official and political connections," was able to induce the Secretary of Justice
to transfer temporarily, from the Bureau of Immigration to the Bureau of
Prisons, one Dr. Manuel Hernandez, the husband of plaintiff's step daughter;
that , thereafter, Figueras, "and/or is adviser," caused to be prepared the
following letter, Exhibit E:
 Page 26 of 67

December 9, 1949

(CONFIDENTIAL)

Hon. Primitivo Lovina

Secretary of Labor
Manila

Dear Sir:

The undersigned have approached Secretary of Justice

Ricardo Nepomuceno with the idea of requesting him to
intervene between us and Under-Secetary of Labor Jose
Figueras with the end in view of settling family
misunderstandings. Secretary Nepumoceno advised us to
appeal to you. The origin and cause of these cases were
previous personal affairs which led to serious family troubles
and squabbles. In addition, there were the party differences
between us and Undersecretary Figueras.

As the election are now over and as we would like to be in

peace with Mr. Figueras, we desire to ask your good self,
knowing your interest in the welfare of common people like
us, to intercede for us with Mr, Figueras so that he may
forget our differences. We also desire to ask you to use your
good offices looking towards the return of Dr. Manuel
Hernandez from the Bureau of Prisons to the Bureau of
Immigration where he is a regular Medical Officer. We are
confident that, with your influence and friendship with Mr.
Figueras, he would consent to forget the past and let
bygones be bygones between us. On prt, we promise to treat
and the members of his family as real friends and I hope that
his feelings towards us will be the same.

Should you be as kind as to effect. This reconciliation, we will

be ever grateful to you.

Yours truly,

EMILIO STREBEL
LEONOR TIANGCO DE STREBEL
MANUEL HERNANDEZ .
 Page 27 of 67

Conforme:

JOSE FIGUERAS

which is said to be conceive in nature and derogatory not only to Dr. Manuel
Hernadez but also the herein plaintiff and his wife," that upon failure to
secure plaintiff's signature on said letter, "another one" — copy of which is
atached to the complaint as Exhibit F — "was prepared and submitted at the
instigation of defendant Figueras and at the behest of the then Secetary of
Justice, for the signature of the herein plaintiff, his wife and Dr. Manuel
Hernandez;" that said Exhibit F is of the following tenor:

AGREEMENT

We, JOSE FIGUERAS and MANUEL A. HERNANDEZ, OUT OF

RESPECT AND CONSIDERATION for our superior officers, the
Honorable Secretary of Justice and the Honorable Secretary
of Labor, have this date mutually agreed to bury whatever
personal differences we may or might have.

I, MANUEL A. HERNANDEZ, hereby promise to do all I can to

inform my in-laws E. Strebel and Leonor Tiangco of this
mutual agreement and to convince them that JOSE
FIGUERAS IS amendable to the return of their friendly
relation and to ask them to follow the same spirit and forget
the past differences so that they can live together again as
one harmonious family. It is understood that if Leonor S
Tiangco and or E. Strebel have heretofore filed any complaint
in the Fiscal's office or elsewhere against Jose Figueras, they
will from now on withdraw said complaints;lawphil.net

TO THIS END, WE HAVE SIGNED SIGNED THIS AGREEMENT.

Manila, December 11th, 1949.

s/MANUEL A. HERNANDEZ
t/MANUEL A. HERNANDEZ
s/LEONOR S. TIANGCO
t/LEONOR S. TIANGCO
s/E. STREBEL
t/E, STREBEL
 Page 28 of 67

WITH MY CONFORMITY:

s/JOSE FIGUERAS
t/JOSE FIGUERAS
s/OK.

Nepomuceno

that after the foregoing "agreement" had been signed by plantiff "just to
please defendant Figueras," said Dr. Manuel A. Hernandez was, upon
instructions of the Secretary of Justice, returned to his former assignment in
the Bureau of Prisons;

3. That, on or about, September 15, 1949, "making use of his official and
political influence," and with the cooperation of his former secretary,
defendant Cornelo S. Ruperto, an Asssitant City Fiscal of Manila, as well as
"in connivance with the Director of Labor" which office was then held by
defendant Felipe E. Jose, "and other empoyees in the Department and
Bureau of Labor," defendant Figueras suceeded in securing the institution,
against plantiff Strebel, and his partner, Primo Eustaquio, of Criminal Case
No. 11005 of the Court of First Instance of Manila, for allegedly compelling
several employees to work more than eight (8) hours a day, in violation of
Commonwalth Act No. 444, in relation to Commonwealth Act No. 303,
although before the filing of the information "the defendants collectively and
singly knew that the allegations therein are false;" that said criminal case
was subsequently dismissed by the Court of First Instance of Manila for
failure of the prosecution "to establish even a prima facie case against the
accused"; and

4. That prior thereto, defendant Cornelio Ruperto, in connivance with his co-
defendant Jose Figueras, had secured the dismissal of two criminal cases
against the "bodyguards and cohorts" of the latter, "altho the information in
both cases were filed after careful investigation of fiscals of proven integrity.
"

It is further alleged in the complaint that, through the foregoing series of

acts, the defendants have "caused moral and mental suffering to the . . .
plaintiff, his wife, and his entire family, and damage to his business in the
amount of P15,000 besides actual damages in the amount of P1,500 paid to
his attorney in defending himself from the malicious charge," which sums
plaintiff prays that the defendants be sentenced to pay jointly and severally.
 Page 29 of 67

With the reference to the first group, it should be noted, that, according to
the very allegations of the complaint, defendant Figueras went no further
than to secure the opinion of the city Fiscal favorable to the construction of a
drainage between his (Figueras) lot and that of Strebel, and a letter of the
City Engineer informing Strebel of said proposed construction, which was not
undertaken, or even began, in view of Strebel's opposition thereto. In other
words, the plan to built said drainage was seemingly abandoned before
plaintiff's property rights could be violated. There was nothing wrong, either
legally or morally, in the desire of Figueras to seek an outlet for the water
coming from his property. On the contrary, it is required by the elementary
principles of health and sanitation. Besides, there is no allegation that any
lot other than that of plaintiff Strebel was better suited for the purpose.
Hence, we do not see how plaintiff could have a cause of action on this
count.

Neither could he have any arising from the assignment of his wife's son-in-
law from the Bureau of Prisons- to which he had been previously assigned
temporarily, pursuant to Section 79 (D) of the Revised Administrative Code
— to the Bureau of Immigration, for

1. The authority of the Secretary of Justice to make the assignment in

question and the validity thereof, under said legal provison, are submitted.
Hence, it is not claimed that said officer may be held civilly liable for the
aforementioned assignment. This being the case, how can such responsibility
be exacted from Figueras who, it is urged, merely instigated said
assignment?

2. Even if we assumed the act complained of to be wrong or to have caused

injury, the right of action hypothetically resulting therefrom, if any — on
which we need not, and do not, express any opinion- would have accrued in
favor of Dr. Hernandez — who is not a party in the present action
— not plaintiff herein.

As a general rule, the right of recovery for mental suffering resulting

from bodily injuries is restricted to the person who has suffered the
bodily hurt, and there can be no recovery for distress caused by
sympathy for another's suffering, or for fright due to a wrong against a
third person. So the anguish of mind arising as to the safety of others
who may be in personal peril from the same cause cannot be taken
into consideration

. . . damages are not recoverable for fright or shock even when

sustained as a result of wilful act, unless such act was directed toward
person or property or person seeking recovery; hence plaintiff is not
 Page 30 of 67

entitled to recover against administratrix of sister's murderer for fright

or shock caused by viewing mutilated body of murdered sister.
(Koontz v. Keller, 3 N.E., 2d 694, 52 Ohio App., 265) (25 C.J.S. s 67
and footnote p. 554.)

The rule on this point, as stated in the American Jurisprudence, is:

Injury or Wrong to Another. — In law mental anguish is restricted as a

rule, to such mental pain or suffering as arises from an injury or
wrong to the person himself, as distinguished from that form of mental
suffering which is the accompaniment of sympathy or sorrow for
another's suffering or which arises from a contemplation of wrongs
committed on the person of another. Pursuant to the rule stated, a
husband or wife cannot recover for mental suffering caused by his or
her sympathy for the other's suffering. (15 Am. Jur., pp. 597-598)
(emphasis supplied.)

In this connection, it should be noted that plaintiff is not even related to Dr.
Hernandez. The latter's wife is a daughter of Mrs. Strebel by
a previous marriage. Hence Dr. Hernandez is merely related by affinity, not
to Strebel, but to a relative by affinity of said plaintiff. It would be extremely
dangerous, apart from unjust, to sanction a recovery, by the plaintiff, of
moral damages for the temporary transfer of Dr. Hernandez. If the mental
anguish allegedly suffered by plaintiff in consequence thereof were sufficient
to give him a cause of action therefor, there would be no valid legal reason
to deny the same relief to any other person who might have thus been
inconvenienced, such as the friends of Dr. Hernandez, and public officials
similarly situated, as well as those who may have been adversely affected by
the deterioration, if any, in the service of the office or bureau which had
been temporarily deprived of the services of said physician.

For the rest, we find in the letter, Exhibit E, and the "Agreement", Exhibit F,
both of which are transcribed in the foregoing pages, nothing "coercive" or
"derogatory" to plaintiff herein, or which may give occasion for any material,
mental or moral anguish or damage whatsoever. As regards the acts
pertaining to the third group, the allegations pertinent thereto purport to
establish that the defendants are guilty of the crime formerly known as false
or malicious prosecution, defined and punished in Article 326 of the Penal
Code of spain, which reads:

The crime of false accusation or complaint is committed by any person

who falsely charges another with acts which, if committed, would
constitute an offense upon which a prosecution might be instituted by
the Government on its own motion, if such charge be made to any
 Page 31 of 67

executive or judicial officer whose duty it is to investigate or punish

such felony.

Nevertheless, no action shall be taken against the person making the

accusation or complaint except by virtue of a final judgment or order
of dismissal by the court before which the offense charged shall have
been tried.

The court shall order the prosecution of the person making the
accusation or complaint whenever the principal case discloses facts
sufficient to justify such prosecution.

It is noteworthy, however, that, pursuant to the said Article 326, as

construed by the Court (U.S. vs. Rubal, 37 Phil., 577; U.S. vs. Barrera, 4
Phil., 461), an action for malicious prosecution may not be instituted unless
the court, in dismissing the first case, explicitly orders the prosecuting
attorney to proceed against the complainant for violation of said provision,
and that no such directive has been made in the order dismissing Case No.
11005 of the Court of First Instance of Manila. Furthermore, in People vs.
Rivera (59 Phil., 236, 240) the decision of a lower court dismissing a case for
malicious prosecutionwas affirmed upon the ground that "article 326 of the
Codigo Penal does not appear in the Revised Penal Code which contains no
offense denominated `acusacion o denuncia falsa' or its equivalent."

In order to circumvent this feature of the case, plaintiff says in his brief:

Plaintiff is evidently suing the defendant not on the ground of

malicious prosecution arising from a criminal act but for misconduct or
malfeasance arising from an action ex delicto or a tortious act. (p. 21,
Brief for the Plaintiff-Appellant.)

By specific mandate of Article 2219 of the Civil Code of the Philippines,

however, moral damages may not be recovered in cases of crime or tort,
unless either results or causes "physical injuries," which are lacking in the
case at bar. Although the same article permits recovery of said damages in
cases of malicious prosecution, this feature of said provision may not be
availed of by the plaintiff herein, inasmuch as the acts set forth in the
complaint took place in 1949, or before said Code became effective, and
Article 4 and 2257 thereof declare:

ART. 4. — Laws shall have no retroactive effect, unless the contrary is

provided.
 Page 32 of 67

ART. 2257. Provisions of this Code which attach a civil sanction or

penalty or a deprivation of rights to acts or omissions which were not
penalized by the former laws, are not applicable to those who, when
said laws were in force, may have executed the act or incurred in the
omission forbidden or condemned by this Code.

If the fault is also punished by the previous legislation, the less severe
sanction shall be applied.

If a continuous or repeated act or omission was commenced before the

beginning of the effectivity of this Code, and the same subsists or is
maintained or repeated after this body of laws has become opeative,
the sanction or penalty prescribed in this Code shall be applied, even
though the pevious laws may not have provided any sanction or
penalty therefore. (Emphasis supplied.)

Little need be said relative to the acts falling under the fourth group. The
allegation in the complaint to the effect that the informations in the case
against "the bodyguards and cohorts" of Figueras "were filed after careful
investigation of fiscal of proven integrity," is not enough to render the
dismissal of said cases either illegal or improper, for additional facts or
evidence may have been found or secured by the prosecution, after the
institution of said cases, to show that the same are devoid of merit. Apart
from this, there is no allegation that plaintiff was the complainant or had any
particular interest in said cases. Hence, even if the dismissal hereof were
unlawful or wrongful, plaintiff would have no cause of action by reason
thereof.

It is clear, therefore, that the avernments made in the so-called first cause
of action of plaintiff herein do not entitle him to the relief prayed for
thereunder.

In support of his second cause of action, plaintiff alleges that, "with a view
to further injuring" him "and besmirching his good name in the community
and waging a cleavage in the harmonious relation beteen Eustaquio & Co.
and its laborers," defendatns Felipe E. Jose and Cornelio S. Ruperto issued a
press statement to the effect that plaintifff Strebel and his partner,
Eustaquio had flagantly violated the provisions of the Eight-Hour Law and
that said Criminal Case no. 11005 had been dismissed by the court on a
flimsy ground; and that this statement had "caused moral and mental
suffering to the herein plaintiff and damage to his business in the amount of
P5,000.00," which he prays "that the defendants, particularly Felipe Jose and
Cornelio S. Ruperto be condemned jointly and severally to pay" to him. The
aforementioned statement is allegedly contained in the following news item,
 Page 33 of 67

marked Exhibit L, and published in the Evening news of September 10,

1950:

JOSE FISCAL RAP DECISION

Director of Labor Felipe E. Jose branded this noon as highly prejudicial

to the interest of labor the decision of the court of first instance
dismissing the case filed by five laborers against two owners of
gasoline stations, who according to the director flagrantly violated the
provisons of the eight-hour labor law.

The director announced that he and the city fiscal will appeal the case
to the supreme court "until the two violators are punished
accordingly."

Cornelio S. Ruperto, asssistant city fscal, charged that, without taking

into consideration the pertinent portions of Commonwealth Act 444,
the court dismissed the case on the flimsy argument of the counsel for
the defendants that affdavits of the laborers showed the latter never
complained against the action of the owners, Emilio Strebel and Primo
Eustaquio to anybody, including the department of labor.

Ruperto declared that the argument which cause the dismissal of the
case "is impertinent and immaterial in the instant case", because he
said the provisions of the law on the matter is clear implicit.

Section 6 of the law says that "any agreement or contract between the
employer and the laborer or employee contrary to the provisions of
this Act shall be null and void ab initio." Therefore, Ruperto said, the
agreement between the five laborers and the owners is illegal and that
the action of the latter is subject to the penal provisions of the said
law.

According to the case, Eduardo Gonzales, Emilio Samson, Rodolfo

Quintos, Pedro Bensira, and Silversio Trinidad were compelled to work
more than the required eight hours not secured from the department
of labor which requires overtime payment for work rendered in excess
of eight hours.

It is recalled that in the celebrated Cuevo-Barredo case the adverse

decision of the judge who handled the case was appealed to the
supreme court which accordingly reversed the decision in favor of the
laborer. The action of the judge aroused the ire of the late President
 Page 34 of 67

Quezon who ordered the immediate dismissal of the judge. (Record on

Appeal, pp. 131-133)

This news item mentions, neither the number of the case referred to, nor the
names of the persons accused therein. Moreover, it merely contains a
criticism of the action taken by the court. The reference, therein imputed to
the Director of Labor, to the flagrant violation of the eight-hour labor law by
the accused, was a mere reiteration of the theory of the Bureau of Labor,
which the prosecution had adopted by filing the information in said case.
Being a matter of court record, which had been taken up at the hearing held
publicly, and settled in a decision already promulgated, said theory was open
for public consumption, and, hence, an allusion thereto or statement thereof,
in order to justify said criticism, is not actionable.

Again, said allusion was not made by defendant Ruperto, who, the news
item shows, said nothing against the plaintiff. It is apparent, therefore, that
as a whole, the allegations made in support of the second cause of action do
not establish a right of action against him. Moreover, there is absolutely no
allegation under said cause of action connecting defendant Figueras with the
statement already referred to or rendering him liable therefor.

The so-called third cause of action is premised upon allegations to the effect
that, acting in cooperation and confabulation with Assistant City Fiscal,
Andres Reyes, and one Antonio P. Isaac, defendant Jose Figueras had filed,
on December 30, 1949, Criminal Case No. B-53033-A of the Municipal Court
of Manila against plaintiff Strebel, his wife Eleonor S. Tiangco and Primo
Eustaquio for unjust vexation, although there was no evidence in suppor
thereof, for which reason the case was dismissed on March 18, 1950; and
that said unjust, malicious and frivolous acts had "caused moral and mental
suffering damage of P500." Apart from seeking judgment for these sums,
plaintiffs pray:

(d) That all the defendants be condemned jointly and severally to pay
the plaintiff exemplary damages;

(e) That an order be issued directing the proper authorities to

prosecute all of them for malicious prosecution and libel or such other
crime as this Honorable Court may deem proper in filing and pressing
the false information and in issuing slanderous and libelous language
after his acqittal;

(f) That thereafter proper recommendation be made to the proper

authorities for their immediate suspension and/or dismissal from the
service; and
 Page 35 of 67

(g) That plaintiff be granted such other and further relief as this
Honorable Court may deem just and equitable in the premises.
(Record on Appeal, p. 23.)

It is not alleged in the complaint that defendants Felipe Jose and Cornelio
Ruperto had any participation whatsoever in the filing of the information for
unjust vexation. Obviously, they are exempt from liability in
connectiontherewith. Upon the other hand, the assistant city fiscal who
signed said information and Antonio Isaac, the offended party therein, have
not been included as defendants in the case at bar. At any rate, insofar as
regards the third cause of action is substantially identical to that obtaining
under the third set of facts alleged in support of the first cause of action.
What has been said above in relation to the aforementioned set of facts is
equally applicable, therefore, to the third cause of action and suffices to
demonstrate that the allegations thereunder do not establish the existence
of a right of action in favor of plaintiff herein.

Wherefore, the order appealed from is hereby affirmed, with the costs of this
instance against plaintiff-appellant. It is so ordered.

ABS-CBN vs ca

G.R. No. 128690 January 21, 1999

ABS-CBN BROADCASTING CORPORATION, petitioner,

vs.
HONORABLE COURT OF APPEALS, REPUBLIC BROADCASTING CORP,
VIVA PRODUCTION, INC., and VICENTE DEL ROSARIO, respondents.

DAVIDE, JR., CJ.:

In this petition for review on certiorari, petitioner ABS-CBN Broadcasting

Corp. (hereafter ABS-CBN) seeks to reverse and set aside the decision 1 of
31 October 1996 and the resolution 2 of 10 March 1997 of the Court of
Appeals in CA-G.R. CV No. 44125. The former affirmed with modification the
decision 3 of 28 April 1993 of the Regional Trial Court (RTC) of Quezon City,
Branch 80, in Civil Case No. Q-92-12309. The latter denied the motion to
reconsider the decision of 31 October 1996.
 Page 36 of 67

The antecedents, as found by the RTC and adopted by the Court of Appeals,
are as follows:

In 1990, ABS-CBN and Viva executed a Film Exhibition

Agreement (Exh. "A") whereby Viva gave ABS-CBN an exclusive
right to exhibit some Viva films. Sometime in December 1991, in
accordance with paragraph 2.4 [sic] of said agreement stating
that —.

1.4 ABS-CBN shall have the right of first refusal to the next
twenty-four (24) Viva films for TV telecast under such terms as
may be agreed upon by the parties hereto, provided, however,
that such right shall be exercised by ABS-CBN from the actual
offer in writing.

Viva, through defendant Del Rosario, offered ABS-CBN, through

its vice-president Charo Santos-Concio, a list of three(3) film
packages (36 title) from which ABS-CBN may exercise its right of
first refusal under the afore-said agreement (Exhs. "1" par, 2,
"2," "2-A'' and "2-B"-Viva). ABS-CBN, however through Mrs.
Concio, "can tick off only ten (10) titles" (from the list) "we can
purchase" (Exh. "3" - Viva) and therefore did not accept said list
(TSN, June 8, 1992, pp. 9-10). The titles ticked off by Mrs.
Concio are not the subject of the case at bar except the film
''Maging Sino Ka Man."

For further enlightenment, this rejection letter dated January 06,

1992 (Exh "3" - Viva) is hereby quoted:

6 January 1992

Dear Vic,

This is not a very formal business letter I am writing to you as I

would like to express my difficulty in recommending the
purchase of the three film packages you are offering ABS-CBN.

From among the three packages I can only tick off 10 titles we
can purchase. Please see attached. I hope you will understand
my position. Most of the action pictures in the list do not have
big action stars in the cast. They are not for primetime. In line
with this I wish to mention that I have not scheduled for telecast
several action pictures in out very first contract because of the
cheap production value of these movies as well as the lack of big
 Page 37 of 67

action stars. As a film producer, I am sure you understand what

I am trying to say as Viva produces only big action pictures.

In fact, I would like to request two (2) additional runs for these
movies as I can only schedule them in our non-primetime slots.
We have to cover the amount that was paid for these movies
because as you very well know that non-primetime advertising
rates are very low. These are the unaired titles in the first
contract.

1. Kontra Persa [sic].

2. Raider Platoon.

3. Underground guerillas

4. Tiger Command

5. Boy de Sabog

6. Lady Commando

7. Batang Matadero

8. Rebelyon

I hope you will consider this request of mine.

The other dramatic films have been offered to us before and

have been rejected because of the ruling of MTRCB to have them
aired at 9:00 p.m. due to their very adult themes.

As for the 10 titles I have choosen [sic] from the 3 packages

please consider including all the other Viva movies produced last
year. I have quite an attractive offer to make.

Thanking you and with my warmest regards.

(Sign
ed)

Charo
Santo
s-
 Page 38 of 67

Conci
o

On February 27, 1992, defendant Del Rosario approached ABS-

CBN's Ms. Concio, with a list consisting of 52 original movie titles
(i.e. not yet aired on television) including the 14 titles subject of
the present case, as well as 104 re-runs (previously aired on
television) from which ABS-CBN may choose another 52 titles, as
a total of 156 titles, proposing to sell to ABS-CBN airing rights
over this package of 52 originals and 52 re-runs for
P60,000,000.00 of which P30,000,000.00 will be in cash and
P30,000,000.00 worth of television spots (Exh. "4" to "4-C"
Viva; "9" -Viva).

On April 2, 1992, defendant Del Rosario and ABS-CBN general

manager, Eugenio Lopez III, met at the Tamarind Grill
Restaurant in Quezon City to discuss the package proposal of
Viva. What transpired in that lunch meeting is the subject of
conflicting versions. Mr. Lopez testified that he and Mr. Del
Rosario allegedly agreed that ABS-CRN was granted exclusive
film rights to fourteen (14) films for a total consideration of P36
million; that he allegedly put this agreement as to the price and
number of films in a "napkin'' and signed it and gave it to Mr.
Del Rosario (Exh. D; TSN, pp. 24-26, 77-78, June 8, 1992). On
the other hand, Del Rosario denied having made any agreement
with Lopez regarding the 14 Viva films; denied the existence of a
napkin in which Lopez wrote something; and insisted that what
he and Lopez discussed at the lunch meeting was Viva's film
package offer of 104 films (52 originals and 52 re-runs) for a
total price of P60 million. Mr. Lopez promising [sic]to make a
counter proposal which came in the form of a proposal contract
Annex "C" of the complaint (Exh. "1"·- Viva; Exh. "C" - ABS-
CBN).

On April 06, 1992, Del Rosario and Mr. Graciano Gozon of RBS
Senior vice-president for Finance discussed the terms and
conditions of Viva's offer to sell the 104 films, after the rejection
of the same package by ABS-CBN.

On April 07, 1992, defendant Del Rosario received through his

secretary, a handwritten note from Ms. Concio, (Exh. "5" - Viva),
which reads: "Here's the draft of the contract. I hope you find
everything in order," to which was attached a draft exhibition
agreement (Exh. "C''- ABS-CBN; Exh. "9" - Viva, p. 3) a counter-
 Page 39 of 67

proposal covering 53 films, 52 of which came from the list sent

by defendant Del Rosario and one film was added by Ms. Concio,
for a consideration of P35 million. Exhibit "C" provides that ABS-
CBN is granted films right to 53 films and contains a right of first
refusal to "1992 Viva Films." The said counter proposal was
however rejected by Viva's Board of Directors [in the] evening of
the same day, April 7, 1992, as Viva would not sell anything less
than the package of 104 films for P60 million pesos (Exh. "9" -
Viva), and such rejection was relayed to Ms. Concio.

On April 29, 1992, after the rejection of ABS-CBN and following

several negotiations and meetings defendant Del Rosario and
Viva's President Teresita Cruz, in consideration of P60 million,
signed a letter of agreement dated April 24, 1992. granting RBS
the exclusive right to air 104 Viva-produced and/or acquired
films (Exh. "7-A" - RBS; Exh. "4" - RBS) including the fourteen
(14) films subject of the present case. 4

On 27 May 1992, ABS-CBN filed before the RTC a complaint for specific
performance with a prayer for a writ of preliminary injunction and/or
temporary restraining order against private respondents Republic
Broadcasting Corporation 5 (hereafter RBS ), Viva Production (hereafter
VIVA), and Vicente Del Rosario. The complaint was docketed as Civil Case
No. Q-92-12309.

On 27 May 1992, RTC issued a temporary restraining order 6 enjoining

private respondents from proceeding with the airing, broadcasting, and
televising of the fourteen VIVA films subject of the controversy, starting with
the film Maging Sino Ka Man, which was scheduled to be shown on private
respondents RBS' channel 7 at seven o'clock in the evening of said date.

On 17 June 1992, after appropriate proceedings, the RTC issued an

order 7 directing the issuance of a writ of preliminary injunction upon ABS-
CBN's posting of P35 million bond. ABS-CBN moved for the reduction of the
bond, 8 while private respondents moved for reconsideration of the order
and offered to put up a counterbound. 9

In the meantime, private respondents filed separate answers with

counterclaim. 10 RBS also set up a cross-claim against VIVA..

On 3 August 1992, the RTC issued an order 11 dissolving the writ of

preliminary injunction upon the posting by RBS of a P30 million counterbond
to answer for whatever damages ABS-CBN might suffer by virtue of such
dissolution. However, it reduced petitioner's injunction bond to P15 million
 Page 40 of 67

as a condition precedent for the reinstatement of the writ of preliminary

injunction should private respondents be unable to post a counterbond.

At the pre-trial 12 on 6 August 1992, the parties, upon suggestion of the

court, agreed to explore the possibility of an amicable settlement. In the
meantime, RBS prayed for and was granted reasonable time within which to
put up a P30 million counterbond in the event that no settlement would be
reached.

As the parties failed to enter into an amicable settlement RBS posted on 1

October 1992 a counterbond, which the RTC approved in its Order of 15
October 1992. 13
14
On 19 October 1992, ABS-CBN filed a motion for reconsideration of the 3
August and 15 October 1992 Orders, which RBS opposed. 15
16
On 29 October 1992, the RTC conducted a pre-trial.

Pending resolution of its motion for reconsideration, ABS-CBN filed with the
Court of Appeals a petition 17challenging the RTC's Orders of 3 August and 15
October 1992 and praying for the issuance of a writ of preliminary injunction
to enjoin the RTC from enforcing said orders. The case was docketed as CA-
G.R. SP No. 29300.

On 3 November 1992, the Court of Appeals issued a temporary restraining

order 18 to enjoin the airing, broadcasting, and televising of any or all of the
films involved in the controversy.

On 18 December 1992, the Court of Appeals promulgated a

decision 19 dismissing the petition in CA -G.R. No. 29300 for being
premature. ABS-CBN challenged the dismissal in a petition for review filed
with this Court on 19 January 1993, which was docketed as G.R. No.
108363.

In the meantime the RTC received the evidence for the parties in Civil Case
No. Q-192-1209. Thereafter, on 28 April 1993, it rendered a decision 20 in
favor of RBS and VIVA and against ABS-CBN disposing as follows:

WHEREFORE, under cool reflection and prescinding from the

foregoing, judgments is rendered in favor of defendants and
against the plaintiff.

(1) The complaint is hereby dismissed;

 Page 41 of 67

(2) Plaintiff ABS-CBN is ordered to pay defendant

RBS the following:

a) P107,727.00, the amount of premium

paid by RBS to the surety which issued
defendant RBS's bond to lift the
injunction;

b) P191,843.00 for the amount of print

advertisement for "Maging Sino Ka Man"
in various newspapers;

c) Attorney's fees in the amount of P1

million;

d) P5 million as and by way of moral

damages;

e) P5 million as and by way of exemplary

damages;

(3) For defendant VIVA, plaintiff ABS-CBN is ordered

to pay P212,000.00 by way of reasonable attorney's
fees.

(4) The cross-claim of defendant RBS against

defendant VIVA is dismissed.

(5) Plaintiff to pay the costs.

According to the RTC, there was no meeting of minds on the price and terms
of the offer. The alleged agreement between Lopez III and Del Rosario was
subject to the approval of the VIVA Board of Directors, and said agreement
was disapproved during the meeting of the Board on 7 April 1992. Hence,
there was no basis for ABS-CBN's demand that VIVA signed the 1992 Film
Exhibition Agreement. Furthermore, the right of first refusal under the 1990
Film Exhibition Agreement had previously been exercised per Ms. Concio's
letter to Del Rosario ticking off ten titles acceptable to them, which would
have made the 1992 agreement an entirely new contract.

On 21 June 1993, this Court denied 21 ABS-CBN's petition for review in G.R.
No. 108363, as no reversible error was committed by the Court of Appeals in
its challenged decision and the case had "become moot and academic in
 Page 42 of 67

view of the dismissal of the main action by the court a quo in its decision" of
28 April 1993.

Aggrieved by the RTC's decision, ABS-CBN appealed to the Court of Appeals

claiming that there was a perfected contract between ABS-CBN and VIVA
granting ABS-CBN the exclusive right to exhibit the subject films. Private
respondents VIVA and Del Rosario also appealed seeking moral and
exemplary damages and additional attorney's fees.

In its decision of 31 October 1996, the Court of Appeals agreed with the RTC
that the contract between ABS-CBN and VIVA had not been perfected,
absent the approval by the VIVA Board of Directors of whatever Del Rosario,
it's agent, might have agreed with Lopez III. The appellate court did not
even believe ABS-CBN's evidence that Lopez III actually wrote down such an
agreement on a "napkin," as the same was never produced in court. It
likewise rejected ABS-CBN's insistence on its right of first refusal and
ratiocinated as follows:

As regards the matter of right of first refusal, it may be true that

a Film Exhibition Agreement was entered into between Appellant
ABS-CBN and appellant VIVA under Exhibit "A" in 1990, and that
parag. 1.4 thereof provides:

1.4 ABS-CBN shall have the right of first refusal to

the next twenty-four (24) VIVA films for TV telecast
under such terms as may be agreed upon by the
parties hereto, provided, however, that such right
shall be exercised by ABS-CBN within a period of
fifteen (15) days from the actual offer in writing
(Records, p. 14).

[H]owever, it is very clear that said right of first refusal in favor

of ABS-CBN shall still be subject to such terms as may be agreed
upon by the parties thereto, and that the said right shall be
exercised by ABS-CBN within fifteen (15) days from the actual
offer in writing.

Said parag. 1.4 of the agreement Exhibit "A" on the right of first
refusal did not fix the price of the film right to the twenty-four
(24) films, nor did it specify the terms thereof. The same are still
left to be agreed upon by the parties.

In the instant case, ABS-CBN's letter of rejection Exhibit 3

(Records, p. 89) stated that it can only tick off ten (10) films,
 Page 43 of 67

and the draft contract Exhibit "C" accepted only fourteen (14)
films, while parag. 1.4 of Exhibit "A'' speaks of the next twenty-
four (24) films.

The offer of V1VA was sometime in December 1991 (Exhibits 2,

2-A. 2-B; Records, pp. 86-88; Decision, p. 11, Records, p.
1150), when the first list of VIVA films was sent by Mr. Del
Rosario to ABS-CBN. The Vice President of ABS-CBN, Ms. Charo
Santos-Concio, sent a letter dated January 6, 1992 (Exhibit 3,
Records, p. 89) where ABS-CBN exercised its right of refusal by
rejecting the offer of VIVA.. As aptly observed by the trial court,
with the said letter of Mrs. Concio of January 6, 1992, ABS-CBN
had lost its right of first refusal. And even if We reckon the
fifteen (15) day period from February 27, 1992 (Exhibit 4 to 4-C)
when another list was sent to ABS-CBN after the letter of Mrs.
Concio, still the fifteen (15) day period within which ABS-CBN
shall exercise its right of first refusal has already expired. 22

Accordingly, respondent court sustained the award of actual damages

consisting in the cost of print advertisements and the premium payments for
the counterbond, there being adequate proof of the pecuniary loss which
RBS had suffered as a result of the filing of the complaint by ABS-CBN. As to
the award of moral damages, the Court of Appeals found reasonable basis
therefor, holding that RBS's reputation was debased by the filing of the
complaint in Civil Case No. Q-92-12309 and by the non-showing of the film
"Maging Sino Ka Man." Respondent court also held that exemplary damages
were correctly imposed by way of example or correction for the public good
in view of the filing of the complaint despite petitioner's knowledge that the
contract with VIVA had not been perfected, It also upheld the award of
attorney's fees, reasoning that with ABS-CBN's act of instituting Civil Case
No, Q-92-1209, RBS was "unnecessarily forced to litigate." The appellate
court, however, reduced the awards of moral damages to P2 million,
exemplary damages to P2 million, and attorney's fees to P500, 000.00.

On the other hand, respondent Court of Appeals denied VIVA and Del
Rosario's appeal because it was "RBS and not VIVA which was actually
prejudiced when the complaint was filed by ABS-CBN."

Its motion for reconsideration having been denied, ABS-CBN filed the
petition in this case, contending that the Court of Appeals gravely erred in

I
 Page 44 of 67

. . . RULING THAT THERE WAS NO PERFECTED CONTRACT

BETWEEN PETITIONER AND PRIVATE RESPONDENT VIVA
NOTWITHSTANDING PREPONDERANCE OF EVIDENCE ADDUCED
BY PETITIONER TO THE CONTRARY.

II

. . . IN AWARDING ACTUAL AND COMPENSATORY DAMAGES IN

FAVOR OF PRIVATE RESPONDENT RBS.

III

. . . IN AWARDING MORAL AND EXEMPLARY DAMAGES IN FAVOR

OF PRIVATE RESPONDENT RBS.

IV

. . . IN AWARDING ATTORNEY'S FEES IN FAVOR OF RBS.

ABS-CBN claims that it had yet to fully exercise its right of first refusal over
twenty-four titles under the 1990 Film Exhibition Agreement, as it had
chosen only ten titles from the first list. It insists that we give credence to
Lopez's testimony that he and Del Rosario met at the Tamarind Grill
Restaurant, discussed the terms and conditions of the second list (the 1992
Film Exhibition Agreement) and upon agreement thereon, wrote the same on
a paper napkin. It also asserts that the contract has already been effective,
as the elements thereof, namely, consent, object, and consideration were
established. It then concludes that the Court of Appeals' pronouncements
were not supported by law and jurisprudence, as per our decision of 1
December 1995 in Limketkai Sons Milling, Inc. v. Court of Appeals, 23 which
cited Toyota Shaw, Inc. v. Court of Appeals, 24 Ang Yu Asuncion v. Court of
Appeals, 25 and Villonco Realty Company v. Bormaheco. Inc. 26

Anent the actual damages awarded to RBS, ABS-CBN disavows liability

therefor. RBS spent for the premium on the counterbond of its own volition
in order to negate the injunction issued by the trial court after the parties
had ventilated their respective positions during the hearings for the purpose.
The filing of the counterbond was an option available to RBS, but it can
hardly be argued that ABS-CBN compelled RBS to incur such expense.
Besides, RBS had another available option, i.e., move for the dissolution or
the injunction; or if it was determined to put up a counterbond, it could have
presented a cash bond. Furthermore under Article 2203 of the Civil Code,
the party suffering loss or injury is also required to exercise the diligence of
a good father of a family to minimize the damages resulting from the act or
 Page 45 of 67

omission. As regards the cost of print advertisements, RBS had not

convincingly established that this was a loss attributable to the non showing
"Maging Sino Ka Man"; on the contrary, it was brought out during trial that
with or without the case or the injunction, RBS would have spent such an
amount to generate interest in the film.

ABS-CBN further contends that there was no clear basis for the awards of
moral and exemplary damages. The controversy involving ABS-CBN and RBS
did not in any way originate from business transaction between them. The
claims for such damages did not arise from any contractual dealings or from
specific acts committed by ABS-CBN against RBS that may be characterized
as wanton, fraudulent, or reckless; they arose by virtue only of the filing of
the complaint, An award of moral and exemplary damages is not warranted
where the record is bereft of any proof that a party acted maliciously or in
bad faith in filing an action. 27 In any case, free resort to courts for redress
of wrongs is a matter of public policy. The law recognizes the right of every
one to sue for that which he honestly believes to be his right without fear of
standing trial for damages where by lack of sufficient evidence, legal
technicalities, or a different interpretation of the laws on the matter, the
case would lose ground. 28 One who makes use of his own legal right does
no injury. 29 If damage results front the filing of the complaint, it is damnum
absque injuria. 30 Besides, moral damages are generally not awarded in
favor of a juridical person, unless it enjoys a good reputation that was
debased by the offending party resulting in social humiliation. 31

As regards the award of attorney's fees, ABS-CBN maintains that the same
had no factual, legal, or equitable justification. In sustaining the trial court's
award, the Court of Appeals acted in clear disregard of the doctrines laid
down in Buan v. Camaganacan 32 that the text of the decision should state
the reason why attorney's fees are being awarded; otherwise, the award
should be disallowed. Besides, no bad faith has been imputed on, much less
proved as having been committed by, ABS-CBN. It has been held that
"where no sufficient showing of bad faith would be reflected in a party' s
persistence in a case other than an erroneous conviction of the
righteousness of his cause, attorney's fees shall not be recovered as cost." 33

On the other hand, RBS asserts that there was no perfected contract
between ABS-CBN and VIVA absent any meeting of minds between them
regarding the object and consideration of the alleged contract. It affirms that
the ABS-CBN's claim of a right of first refusal was correctly rejected by the
trial court. RBS insist the premium it had paid for the counterbond
constituted a pecuniary loss upon which it may recover. It was obliged to put
up the counterbound due to the injunction procured by ABS-CBN. Since the
trial court found that ABS-CBN had no cause of action or valid claim against
 Page 46 of 67

RBS and, therefore not entitled to the writ of injunction, RBS could recover
from ABS-CBN the premium paid on the counterbond. Contrary to the claim
of ABS-CBN, the cash bond would prove to be more expensive, as the loss
would be equivalent to the cost of money RBS would forego in case the P30
million came from its funds or was borrowed from banks.

RBS likewise asserts that it was entitled to the cost of advertisements for the
cancelled showing of the film "Maging Sino Ka Man" because the print
advertisements were put out to announce the showing on a particular day
and hour on Channel 7, i.e., in its entirety at one time, not a series to be
shown on a periodic basis. Hence, the print advertisement were good and
relevant for the particular date showing, and since the film could not be
shown on that particular date and hour because of the injunction, the
expenses for the advertisements had gone to waste.

As regards moral and exemplary damages, RBS asserts that ABS-CBN filed
the case and secured injunctions purely for the purpose of harassing and
prejudicing RBS. Pursuant then to Article 19 and 21 of the Civil Code, ABS-
CBN must be held liable for such damages. Citing Tolentino, 34 damages may
be awarded in cases of abuse of rights even if the act done is not illicit and
there is abuse of rights were plaintiff institutes and action purely for the
purpose of harassing or prejudicing the defendant.

In support of its stand that a juridical entity can recover moral and
exemplary damages, private respondents RBS cited People
v. Manero, 35 where it was stated that such entity may recover moral and
exemplary damages if it has a good reputation that is debased resulting in
social humiliation. it then ratiocinates; thus:

There can be no doubt that RBS' reputation has been debased by

ABS-CBN's acts in this case. When RBS was not able to fulfill its
commitment to the viewing public to show the film "Maging Sino
Ka Man" on the scheduled dates and times (and on two
occasions that RBS advertised), it suffered serious
embarrassment and social humiliation. When the showing was
canceled, late viewers called up RBS' offices and subjected RBS
to verbal abuse ("Announce kayo nang announce, hindi ninyo
naman ilalabas," "nanloloko yata kayo") (Exh. 3-RBS, par. 3).
This alone was not something RBS brought upon itself. it was
exactly what ABS-CBN had planned to happen.

The amount of moral and exemplary damages cannot be said to

be excessive. Two reasons justify the amount of the award.
 Page 47 of 67

The first is that the humiliation suffered by RBS is national

extent. RBS operations as a broadcasting company is [sic]
nationwide. Its clientele, like that of ABS-CBN, consists of those
who own and watch television. It is not an exaggeration to state,
and it is a matter of judicial notice that almost every other
person in the country watches television. The humiliation
suffered by RBS is multiplied by the number of televiewers who
had anticipated the showing of the film "Maging Sino Ka Man" on
May 28 and November 3, 1992 but did not see it owing to the
cancellation. Added to this are the advertisers who had placed
commercial spots for the telecast and to whom RBS had a
commitment in consideration of the placement to show the film
in the dates and times specified.

The second is that it is a competitor that caused RBS to suffer

the humiliation. The humiliation and injury are far greater in
degree when caused by an entity whose ultimate business
objective is to lure customers (viewers in this case) away from
the competition. 36

For their part, VIVA and Vicente del Rosario contend that the findings of fact
of the trial court and the Court of Appeals do not support ABS-CBN's claim
that there was a perfected contract. Such factual findings can no longer be
disturbed in this petition for review under Rule 45, as only questions of law
can be raised, not questions of fact. On the issue of damages and attorneys
fees, they adopted the arguments of RBS.

The key issues for our consideration are (1) whether there was a perfected
contract between VIVA and ABS-CBN, and (2) whether RBS is entitled to
damages and attorney's fees. It may be noted that the award of attorney's
fees of P212,000 in favor of VIVA is not assigned as another error.

I.

The first issue should be resolved against ABS-CBN. A contract is a meeting

of minds between two persons whereby one binds himself to give something
or to render some service to another 37 for a consideration. there is no
contract unless the following requisites concur: (1) consent of the
contracting parties; (2) object certain which is the subject of the contract;
and (3) cause of the obligation, which is established. 38 A contract undergoes
three stages:
 Page 48 of 67

(a) preparation, conception, or generation, which is the period of

negotiation and bargaining, ending at the moment of agreement
of the parties;

(b) perfection or birth of the contract, which is the moment when

the parties come to agree on the terms of the contract; and

(c) consummation or death, which is the fulfillment or

performance of the terms agreed upon in the contract. 39

Contracts that are consensual in nature are perfected upon mere meeting of
the minds, Once there is concurrence between the offer and the acceptance
upon the subject matter, consideration, and terms of payment a contract is
produced. The offer must be certain. To convert the offer into a contract, the
acceptance must be absolute and must not qualify the terms of the offer; it
must be plain, unequivocal, unconditional, and without variance of any sort
from the proposal. A qualified acceptance, or one that involves a new
proposal, constitutes a counter-offer and is a rejection of the original offer.
Consequently, when something is desired which is not exactly what is
proposed in the offer, such acceptance is not sufficient to generate consent
because any modification or variation from the terms of the offer annuls the
offer. 40

When Mr. Del Rosario of VIVA met with Mr. Lopez of ABS-CBN at the
Tamarind Grill on 2 April 1992 to discuss the package of films, said package
of 104 VIVA films was VIVA's offer to ABS-CBN to enter into a new Film
Exhibition Agreement. But ABS-CBN, sent, through Ms. Concio, a counter-
proposal in the form of a draft contract proposing exhibition of 53 films for a
consideration of P35 million. This counter-proposal could be nothing less
than the counter-offer of Mr. Lopez during his conference with Del Rosario at
Tamarind Grill Restaurant. Clearly, there was no acceptance of VIVA's offer,
for it was met by a counter-offer which substantially varied the terms of the
offer.

ABS-CBN's reliance in Limketkai Sons Milling, Inc. v. Court of

41 42
Appeals and Villonco Realty Company v. Bormaheco, Inc., is misplaced.
In these cases, it was held that an acceptance may contain a request for
certain changes in the terms of the offer and yet be a binding acceptance as
long as "it is clear that the meaning of the acceptance is positively and
unequivocally to accept the offer, whether such request is granted or not."
This ruling was, however, reversed in the resolution of 29 March
1996, 43 which ruled that the acceptance of all offer must be unqualified and
absolute, i.e., it "must be identical in all respects with that of the offer so as
to produce consent or meeting of the minds."
 Page 49 of 67

On the other hand, in Villonco, cited in Limketkai, the alleged changes in the
revised counter-offer were not material but merely clarificatory of what had
previously been agreed upon. It cited the statement in Stuart v. Franklin Life
Insurance Co. 44 that "a vendor's change in a phrase of the offer to purchase,
which change does not essentially change the terms of the offer, does not
amount to a rejection of the offer and the tender of a counter-
offer." 45However, when any of the elements of the contract is modified upon
acceptance, such alteration amounts to a counter-offer.

In the case at bar, ABS-CBN made no unqualified acceptance of VIVA's offer.

Hence, they underwent a period of bargaining. ABS-CBN then formalized its
counter-proposals or counter-offer in a draft contract, VIVA through its
Board of Directors, rejected such counter-offer, Even if it be
conceded arguendo that Del Rosario had accepted the counter-offer, the
acceptance did not bind VIVA, as there was no proof whatsoever that Del
Rosario had the specific authority to do so.

Under Corporation Code, 46 unless otherwise provided by said Code,

corporate powers, such as the power; to enter into contracts; are exercised
by the Board of Directors. However, the Board may delegate such powers to
either an executive committee or officials or contracted managers. The
delegation, except for the executive committee, must be for specific
purposes, 47 Delegation to officers makes the latter agents of the
corporation; accordingly, the general rules of agency as to the bindings
effects of their acts would
apply. 48 For such officers to be deemed fully clothed by the corporation to
exercise a power of the Board, the latter must specially authorize them to do
so. That Del Rosario did not have the authority to accept ABS-CBN's
counter-offer was best evidenced by his submission of the draft contract to
VIVA's Board of Directors for the latter's approval. In any event, there was
between Del Rosario and Lopez III no meeting of minds. The following
findings of the trial court are instructive:

A number of considerations militate against ABS-CBN's claim

that a contract was perfected at that lunch meeting on April 02,
1992 at the Tamarind Grill.

FIRST, Mr. Lopez claimed that what was agreed upon at the
Tamarind Grill referred to the price and the number of films,
which he wrote on a napkin. However, Exhibit "C"
contains numerous provisions which, were not discussed at the
Tamarind Grill, if Lopez testimony was to be believed nor could
they have been physically written on a napkin. There was even
doubt as to whether it was a paper napkin or a cloth napkin. In
 Page 50 of 67

short what were written in Exhibit "C'' were not discussed, and
therefore could not have been agreed upon, by the parties. How
then could this court compel the parties to sign Exhibit "C" when
the provisions thereof were not previously agreed upon?

SECOND, Mr. Lopez claimed that what was agreed upon as the
subject matter of the contract was 14 films. The complaint in
fact prays for delivery of 14 films. But Exhibit "C" mentions 53
films as its subject matter. Which is which If Exhibits "C"
reflected the true intent of the parties, then ABS-CBN's claim for
14 films in its complaint is false or if what it alleged in the
complaint is true, then Exhibit "C" did not reflect what was
agreed upon by the parties. This underscores the fact that there
was no meeting of the minds as to the subject matter of the
contracts, so as to preclude perfection thereof. For settled is the
rule that there can be no contract where there is no object which
is its subject matter (Art. 1318, NCC).

THIRD, Mr. Lopez [sic] answer to question 29 of his affidavit

testimony (Exh. "D") states:

We were able to reach an agreement. VIVA gave us

the exclusive license to show these fourteen (14)
films, and we agreed to pay Viva the amount of
P16,050,000.00 as well as grant Viva commercial
slots worth P19,950,000.00. We had already
earmarked this P16, 050,000.00.

which gives a total consideration of P36 million (P19,950,000.00

plus P16,050,000.00. equals P36,000,000.00).

On cross-examination Mr. Lopez testified:

Q. What was written in this napkin?

A. The total price, the breakdown the known Viva

movies, the 7 blockbuster movies and the other 7
Viva movies because the price was broken down
accordingly. The none [sic] Viva and the seven other
Viva movies and the sharing between the cash
portion and the concerned spot portion in the total
amount of P35 million pesos.
 Page 51 of 67

Now, which is which? P36 million or P35 million? This weakens

ABS-CBN's claim.

FOURTH. Mrs. Concio, testifying for ABS-CBN stated that she

transmitted Exhibit "C" to Mr. Del Rosario with a handwritten
note, describing said Exhibit "C" as a "draft." (Exh. "5" - Viva;
tsn pp. 23-24 June 08, 1992). The said draft has a well defined
meaning.

Since Exhibit "C" is only a draft, or a tentative, provisional or

preparatory writing prepared for discussion, the terms and
conditions thereof could not have been previously agreed upon
by ABS-CBN and Viva Exhibit "C'' could not therefore legally bind
Viva, not having agreed thereto. In fact, Ms. Concio admitted
that the terms and conditions embodied in Exhibit "C" were
prepared by ABS-CBN's lawyers and there was no discussion on
said terms and conditions. . . .

As the parties had not yet discussed the proposed terms and
conditions in Exhibit "C," and there was no evidence whatsoever
that Viva agreed to the terms and conditions thereof, said
document cannot be a binding contract. The fact that Viva
refused to sign Exhibit "C" reveals only two [sic] well that it did
not agree on its terms and conditions, and this court has no
authority to compel Viva to agree thereto.

FIFTH. Mr. Lopez understand [sic] that what he and Mr. Del
Rosario agreed upon at the Tamarind Grill was only provisional,
in the sense that it was subject to approval by the Board of
Directors of Viva. He testified:

Q. Now, Mr. Witness, and after that Tamarind

meeting ... the second meeting wherein you claimed
that you have the meeting of the minds between you
and Mr. Vic del Rosario, what happened?

A. Vic Del Rosario was supposed to call us up and tell

us specifically the result of the discussion with the
Board of Directors.

Q. And you are referring to the so-called agreement

which you wrote in [sic] a piece of paper?

A. Yes, sir.
 Page 52 of 67

Q. So, he was going to forward that to the board of

Directors for approval?

A. Yes, sir. (Tsn, pp. 42-43, June 8, 1992)

Q. Did Mr. Del Rosario tell you that he will submit it

to his Board for approval?

A. Yes, sir. (Tsn, p. 69, June 8, 1992).

The above testimony of Mr. Lopez shows beyond doubt that he

knew Mr. Del Rosario had no authority to bind Viva to a contract
with ABS-CBN until and unless its Board of Directors approved it.
The complaint, in fact, alleges that Mr. Del Rosario "is the
Executive Producer of defendant Viva" which "is a corporation."
(par. 2, complaint). As a mere agent of Viva, Del Rosario could
not bind Viva unless what he did is ratified by its Board of
Directors. (Vicente vs. Geraldez, 52 SCRA 210; Arnold
vs. Willets and Paterson, 44 Phil. 634). As a mere agent,
recognized as such by plaintiff, Del Rosario could not be held
liable jointly and severally with Viva and his inclusion as party
defendant has no legal basis. (Salonga vs. Warner Barner [sic] ,
COLTA , 88 Phil. 125; Salmon vs. Tan, 36 Phil. 556).

The testimony of Mr. Lopez and the allegations in the complaint

are clear admissions that what was supposed to have been
agreed upon at the Tamarind Grill between Mr. Lopez and Del
Rosario was not a binding agreement. It is as it should be
because corporate power to enter into a contract is lodged in the
Board of Directors. (Sec. 23, Corporation Code). Without such
board approval by the Viva board, whatever agreement Lopez
and Del Rosario arrived at could not ripen into a valid contract
binding upon Viva (Yao Ka Sin Trading vs. Court of Appeals, 209
SCRA 763). The evidence adduced shows that the Board of
Directors of Viva rejected Exhibit "C" and insisted that the film
package for 140 films be maintained (Exh. "7-1" - Viva ). 49

The contention that ABS-CBN had yet to fully exercise its right of first refusal
over twenty-four films under the 1990 Film Exhibition Agreement and that
the meeting between Lopez and Del Rosario was a continuation of said
previous contract is untenable. As observed by the trial court, ABS-CBN right
of first refusal had already been exercised when Ms. Concio wrote to VIVA
ticking off ten films, Thus:
 Page 53 of 67

[T]he subsequent negotiation with ABS-CBN two (2) months

after this letter was sent, was for an entirely different package.
Ms. Concio herself admitted on cross-examination to having used
or exercised the right of first refusal. She stated that the list was
not acceptable and was indeed not accepted by ABS-CBN, (TSN,
June 8, 1992, pp. 8-10). Even Mr. Lopez himself admitted that
the right of the first refusal may have been already exercised by
Ms. Concio (as she had). (TSN, June 8, 1992, pp. 71-75). Del
Rosario himself knew and understand [sic] that ABS-CBN has
lost its rights of the first refusal when his list of 36 titles were
rejected (Tsn, June 9, 1992, pp. 10-11) 50

II

However, we find for ABS-CBN on the issue of damages. We shall first take
up actual damages. Chapter 2, Title XVIII, Book IV of the Civil Code is the
specific law on actual or compensatory damages. Except as provided by law
or by stipulation, one is entitled to compensation for actual damages only for
such pecuniary loss suffered by him as he has duly proved. 51 The
indemnification shall comprehend not only the value of the loss suffered, but
also that of the profits that the obligee failed to obtain. 52 In contracts and
quasi-contracts the damages which may be awarded are dependent on
whether the obligor acted with good faith or otherwise, It case of good faith,
the damages recoverable are those which are the natural and probable
consequences of the breach of the obligation and which the parties have
foreseen or could have reasonably foreseen at the time of the constitution of
the obligation. If the obligor acted with fraud, bad faith, malice, or wanton
attitude, he shall be responsible for all damages which may be reasonably
attributed to the non-performance of the obligation. 53 In crimes and quasi-
delicts, the defendant shall be liable for all damages which are the natural
and probable consequences of the act or omission complained of, whether or
not such damages has been foreseen or could have reasonably been
foreseen by the defendant. 54

Actual damages may likewise be recovered for loss or impairment of earning

capacity in cases of temporary or permanent personal injury, or for injury to
the plaintiff's business standing or commercial credit. 55

The claim of RBS for actual damages did not arise from contract, quasi-
contract, delict, or quasi-delict. It arose from the fact of filing of the
complaint despite ABS-CBN's alleged knowledge of lack of cause of action.
Thus paragraph 12 of RBS's Answer with Counterclaim and Cross-claim
under the heading COUNTERCLAIM specifically alleges:
 Page 54 of 67

12. ABS-CBN filed the complaint knowing fully well that it has no
cause of action RBS. As a result thereof, RBS suffered actual
damages in the amount of P6,621,195.32. 56

Needless to state the award of actual damages cannot be comprehended

under the above law on actual damages. RBS could only probably take
refuge under Articles 19, 20, and 21 of the Civil Code, which read as follows:

Art. 19. Every person must, in the exercise of his rights and in
the performance of his duties, act with justice, give everyone his
due, and observe honesty and good faith.

Art. 20. Every person who, contrary to law, wilfully or negligently

causes damage to another, shall indemnify the latter for tile
same.

Art. 21. Any person who wilfully causes loss or injury to another
in a manner that is contrary to morals, good customs or public
policy shall compensate the latter for the damage.

It may further be observed that in cases where a writ of preliminary

injunction is issued, the damages which the defendant may suffer by reason
of the writ are recoverable from the injunctive bond. 57 In this case, ABS-
CBN had not yet filed the required bond; as a matter of fact, it asked for
reduction of the bond and even went to the Court of Appeals to challenge
the order on the matter, Clearly then, it was not necessary for RBS to file a
counterbond. Hence, ABS-CBN cannot be held responsible for the premium
RBS paid for the counterbond.

Neither could ABS-CBN be liable for the print advertisements for "Maging
Sino Ka Man" for lack of sufficient legal basis. The RTC issued a temporary
restraining order and later, a writ of preliminary injunction on the basis of its
determination that there existed sufficient ground for the issuance thereof.
Notably, the RTC did not dissolve the injunction on the ground of lack of
legal and factual basis, but because of the plea of RBS that it be allowed to
put up a counterbond.

As regards attorney's fees, the law is clear that in the absence of stipulation,
attorney's fees may be recovered as actual or compensatory damages under
any of the circumstances provided for in Article 2208 of the Civil Code. 58

The general rule is that attorney's fees cannot be recovered as part of

damages because of the policy that no premium should be placed on the
right to litigate. 59 They are not to be awarded every time a party wins a suit.
 Page 55 of 67

The power of the court to award attorney's fees under Article 2208 demands
factual, legal, and equitable justification. 60 Even when claimant is compelled
to litigate with third persons or to incur expenses to protect his rights, still
attorney's fees may not be awarded where no sufficient showing of bad faith
could be reflected in a party's persistence in a case other than erroneous
conviction of the righteousness of his cause. 61

As to moral damages the law is Section 1, Chapter 3, Title XVIII, Book IV of

the Civil Code. Article 2217 thereof defines what are included in moral
damages, while Article 2219 enumerates the cases where they may be
recovered, Article 2220 provides that moral damages may be recovered in
breaches of contract where the defendant acted fraudulently or in bad faith.
RBS's claim for moral damages could possibly fall only under item (10) of
Article 2219, thereof which reads:

(10) Acts and actions referred to in Articles 21, 26, 27, 28, 29,
30, 32, 34, and 35.

Moral damages are in the category of an award designed to compensate the

claimant for actual injury suffered. and not to impose a penalty on the
wrongdoer. 62 The award is not meant to enrich the complainant at the
expense of the defendant, but to enable the injured party to obtain means,
diversion, or amusements that will serve to obviate then moral suffering he
has undergone. It is aimed at the restoration, within the limits of the
possible, of the spiritual status quo ante, and should be proportionate to the
suffering inflicted. 63 Trial courts must then guard against the award of
exorbitant damages; they should exercise balanced restrained and measured
objectivity to avoid suspicion that it was due to passion, prejudice, or
corruption on the part of the trial court. 64

The award of moral damages cannot be granted in favor of a corporation

because, being an artificial person and having existence only in legal
contemplation, it has no feelings, no emotions, no senses, It cannot,
therefore, experience physical suffering and mental anguish, which call be
experienced only by one having a nervous system. 65 The statement
in People v. Manero 66 and Mambulao Lumber Co. v. PNB 67 that a
corporation may recover moral damages if it "has a good reputation that is
debased, resulting in social humiliation" is an obiter dictum. On this score
alone the award for damages must be set aside, since RBS is a corporation.

The basic law on exemplary damages is Section 5, Chapter 3, Title XVIII,

Book IV of the Civil Code. These are imposed by way of example or
correction for the public good, in addition to moral, temperate, liquidated or
compensatory damages. 68 They are recoverable in criminal cases as part of
 Page 56 of 67

the civil liability when the crime was committed with one or more
aggravating circumstances; 69 in quasi-contracts, if the defendant acted with
gross negligence; 70 and in contracts and quasi-contracts, if the defendant
acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner. 71

It may be reiterated that the claim of RBS against ABS-CBN is not based on
contract, quasi-contract, delict, or quasi-delict, Hence, the claims for moral
and exemplary damages can only be based on Articles 19, 20, and 21 of the
Civil Code.

The elements of abuse of right under Article 19 are the following: (1) the
existence of a legal right or duty, (2) which is exercised in bad faith, and (3)
for the sole intent of prejudicing or injuring another. Article 20 speaks of the
general sanction for all other provisions of law which do not especially
provide for their own sanction; while Article 21 deals with acts contra bonus
mores, and has the following elements; (1) there is an act which is legal, (2)
but which is contrary to morals, good custom, public order, or public policy,
and (3) and it is done with intent to injure. 72

Verily then, malice or bad faith is at the core of Articles 19, 20, and 21.
Malice or bad faith implies a conscious and intentional design to do a
wrongful act for a dishonest purpose or moral obliquity. 73 Such must be
substantiated by evidence. 74

There is no adequate proof that ABS-CBN was inspired by malice or bad

faith. It was honestly convinced of the merits of its cause after it had
undergone serious negotiations culminating in its formal submission of a
draft contract. Settled is the rule that the adverse result of an action does
not per se make the action wrongful and subject the actor to damages, for
the law could not have meant to impose a penalty on the right to litigate. If
damages result from a person's exercise of a right, it is damnum absque
injuria. 75

WHEREFORE, the instant petition is GRANTED. The challenged decision of

the Court of Appeals in CA-G.R. CV No, 44125 is hereby REVERSED except
as to unappealed award of attorney's fees in favor of VIVA Productions,
Inc.1âwphi1.nêt

No pronouncement as to costs.

SO ORDERED.
 Page 57 of 67

People vs Wahiman

G.R. No. 200942 June 16, 2015

PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee,

vs.
JORIE WAHIMAN y RAYOS, Accused-Appellant.

RESOLUTION

DEL CASTILLO, J.:

Appellant Jorie Wahiman y Rayos (appellant) was charged with the crime of
murder for the death of Jose Buensuceso (Buensuceso). During his
arraignment, appellant pleaded not guilty.1 Trial on the merits ensued.

The prosecution established that on April 2, 2003, at around 10 o'clock in

the evening, Buensuceso, the manager of Stanfilco-Dole, Phils. in
Malaybalay City, was on his way back to the company staff house on board
his Isuzu pick-up after attending a despedida for one of his employees.

While he was about to enter the gate of the staff house, he was gunned
down by persons riding in tandem on a black motorcycle. The guard on duty,
David Azucena (Azucena), who was then opening the gate, identified one of
the assailants as herein appellant.

During trial, the prosecution submitted in evidence the extrajudicial

confession of appellant taken during the preliminary investigation of the
case, admitting to the killing of Buensuceso. However, when it was
appellant’s turn to testify, he narrated that at the time of the killing, he was
at Landing Casisang, Malaybalay City attending the birthday celebration of
his brother-in-law. Ruling of the Regional Trial Court (RTC)

On February 16, 2009, the RTC rendered its Decision 2 finding appellant
guilty as charged, viz.:

WHEREFORE, Judgment is issued finding the accused Jorie Wahiman y Rayos

guilty beyond reasonable doubt of the crime of murder and imposes upon
him the penalty of Reclusion Perpetua and directing him to pay the heirs of
the victim the sum of P75,000.00 as moral damages, P75,000.00 [as] civil
indemnity and actual damages as follows:

P59,280,000.00 lost earning capacity of the deceased;

 Page 58 of 67

[P]25,000.00 actual damages; no receipt was presented for P220,000[;]

P1,500.00 Appearance fee; and

P50,000.00 Attorney’s fee.

He shall serve his penalty in the National Penitentiary of Davao Penal

[C]olony.

SO ORDERED.3

Ruling of the Court of Appeals (CA)

In his appeal, appellant argued that when his supposed extrajudicial

confession was being taken, Atty. Michael Florentino Dumlao (Atty. Dumlao),
the lawyer who supposedly assisted him, was not around. He arrived only
when appellant was about to sign the extrajudicial confession.

Appellant also insisted that Azucena, the prosecution’s alleged eyewitness,

did not actually see him shooting the victim.

Appellant’s contentions were, however, disregarded by the CA.

In its Decision4 dated October 13, 2011, the CA found no reason to depart
from the trial court’s findings. It held that appellant’s contention that he
lacked legal intervention and assistance during the taking of his extrajudicial
confession was totally belied by the testimony of Atty. Dumlao that he
rendered assistance to the appellant throughout the entire proceedings and
carefully explained to the latter the consequences of his admission. Besides,
the voluntariness of the execution of the extrajudicial confession was
apparent considering that it is replete with details that only appellant would
know. The appellate court brushed aside appellant’s assertion of torture, the
same being unsupported by medical certificate or marks of physical abuse.
In any case, he never bothered to narrate how he was tortured or to identify
his alleged tormentors. Moreover, the ballistic examination proved that the
slugs used in killing Buensuceso were fired from the firearm earlier
confiscated from appellant. The CA also found no merit in appellant’s claim
that Azucena did not actually see him shoot the victim. The CA opined that
although Azucena did not see appellant actually shoot the victim, he
nonetheless saw appellant within seconds from hearing the gunshots fleeing
from the immediate vicinity of the crime scene aboard a motorcycle with a
gun in hand. Based on the foregoing, the appellate court found appellant’s
denial and alibi undeserving of credence.
 Page 59 of 67

The dispositive portion of the CA’s Decision reads:

WHEREFORE, premises considered, the February 16, [2009] decision

rendered by Branch [8], Regional Trial Court, 9th Judicial Region, Malaybalay
City, is hereby AFFIRMED in toto.

SO ORDERED.5

Hence, this appeal.

Our Ruling

We totally agree with the RTC and the CA in finding that the guilt of
appellant for the crime of murder was proved beyond reasonable doubt.
There is no doubt that on April 2, 2003, at around 10 o’clock in the evening,
appellant shot Buensuceso while the latter was about to enter the gate of
the staff house of Stanfilco-Dole in Malaybalay City, Bukidnon. Moreover, we
agree with the findings of the RTC and the CA that appellant’s extrajudicial
confession6 was voluntarily and duly executed and replete with details that
only appellant could supply, viz.:

x x x But before proceeding in questioning you, I am informing you that

under our new constitution, you have the right to the following:

A. You have the right to remain silent and not answer x x x my questions; it
might be that I might use your answers as evidence against you or favorable
to you.

01. QUESTION: Do you understand your right?

ANSWER: Yes[,] Sir.

02. QUESTION: Are you going to use your right?

ANSWER: I would rather not[,] sir[,] because I would tell the truth as
to what had happened.

B. You have the right to avail [of] the services of a counsel of your
choice to help you in this investigation, and if you can’t afford to hire
the services of a lawyer, the government will provide you with free
legal services of a lawyer from the Integrated Bar of the Philippines
(IBP).

03. QUESTION: Do you understand your right?

 Page 60 of 67

ANSWER: Yes[,] sir.

04: QUESTION: Are you going to use your right?

ANSWER: I have my own lawyer, he is Atty. Michael Florentino Dumlao

III, we already had a talk and he made me understand x x x my
rights, and he also made me understand about this investigation
where I will voluntarily narrate what I x x x [know].

05. QUESTION: Did anybody give you money or promised to give you
a reward, or did anybody intimidate you in giving this affidavit?

ANSWER: Nobody[,] sir.

06. QUESTION: Did you understand your rights that I told you?

ANSWER: Yes[,] sir.7

Appellant then proceeded to narrate that he was hired by Alex Laranjo

(Laranjo) and Kid Canadilla (Canadilla), for and in behalf of a certain Alonzo
who owns a quarry in San Isidro, Valencia, to kill the victim for a fee.
According to appellant, Alonzo wanted the victim killed because the latter
withheld the release of his collectibles from Stanfilco-Dole. Appellant then
narrated how he met with Laranjo, Canadilla and Alonzo; how he received
payments and instructions; how he planned the killing; and how he executed
the plan. Appellant signed his extrajudicial confession, with the assistance of
Atty. Dumlao, and subscribed the same before Atty. Dennis B. Caayupan at
the Office of the Clerk of Court.8

Moreover, Atty. Dumlao testified that he ably provided legal assistance to

appellant all throughout the proceedings and carefully explained to him the
ramifications of his admission. He informed appellant of his rights and that
anything he says may be used in evidence against him. Notwithstanding,
appellant insisted on giving his extrajudicial confession.9

In any event, it must be stressed that appellant’s conviction was not based
solely on his extrajudicial confession. The prosecution likewise presented the
eyewitness account of Azucena who testified that immediately after hearing
gunshots, he saw appellant about 5 meters away from the Isuzu pick-up of
the victim. Appellant was riding in tandem aboard a black motorcycle and
was holding a gun. The ballistic report also confirmed that the slugs found at
the crime scene were fired from the firearm earlier confiscated from the
appellant. Moreover, appellant was not able to establish that it was
 Page 61 of 67

physically impossible for him to be present at the crime scene at the time of
its commission.

The RTC and the CA thus properly found appellant guilty of murder and
sentenced him to suffer the penalty of reclusion perpetua. However, it must
be stated that appellant is not eligible for parole pursuant to Section 3 of
Republic Act No. 9346 or the Act Prohibiting the Imposition of Death Penalty
in the Philippines.

Anent the damages awarded, we find that modification is in order.1âwphi1

Regarding the award for lost earnings, the general rule is that there must be
documentary proof to support indemnity for loss of earning capacity.
Admittedly, there are exceptions to this rule, viz.:

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 earning less than the minimum wage under current labor laws,
and judicial notice may be taken of the fact that in the deceased’s line of
work no documentary evidence is available; or (2) the deceased is employed
as a daily wage worker earning less than the minimum wage under current
labor laws.10 Notably, this case does not fall under any of the exceptions.
The deceased victim could not be considered as a self-employed earning less
than the minimum wage; neither could he be considered employed as a daily
wage worker. However, we are inclined to award lost earnings considering
that the deceased, as testified by his widow, was the manager of Stanfilco-
Dole, Phils. in Malaybalay City and was receiving a monthly salary
of P95,000.00. He was 54 years of age when gunned down by appellant.
This testimony was not objected to by appellant or questioned during cross-
examination or on appeal. Clearly, the existence of factual basis of the
award has been satisfactorily established. However, the amount of the
award for lost earnings must be modified following the formula [2/3 x 80 –
age] x [gross annual income - necessary expenses equivalent to 50% of the
gross annual income]. Thus: [2/3 x (80-54)] [(P95,000 x 12) – 50%
(P95,000 x 12)] = P9,878,100.00.

In addition, the awards of actual damages in the amount of P25,000.00

must be deleted for lack of proof; in lieu thereof, temperate damages in the
amount of P25,000.00 is awarded. The awards of civil indemnity in the
amount of P75,000.00, and moral damages in the amount of P75,000.00,
are in line with prevailing jurisprudence. In addition, the heirs of the victim
are entitled to exemplary damages in the amount of P30,000.00. Finally, all
damages awarded shall earn interest at the rate of 6% per annum from date
of finality of this resolution until full payment. WHEREFORE, the assailed
 Page 62 of 67

October 13, 2011 Decision of the Court of Appeals in CA-G.R. CR H.C. No.
00830-MIN finding appellant Jorie Wahiman y Rayos guilty beyond
reasonable doubt of the crime of murder is AFFIRMED with MODIFICATIONS
in that appellant is not eligible for parole; the award for lost earnings is
reduced to P9,878,100.00; the award of actual damages is deleted; in lieu
thereof, appellant is ordered to pay the heirs of the victim P25,000.00 as
temperate damages; he is likewise ordered to pay the heirs of the victim
exemplary damages in the amount of P30,000.00; and all damages awarded
shall earn interest at the rate of 6% per annum from date of finality of this
resolution until full payment.

SO ORDERED.

Medelo vs Gorospe

G.R. No. L-41970 March 25, 1988

CENON MEDELO, petitioner,

vs.
THE HON. NATHANAEL M. GOROSPE, Judge of the Court of First
Instance of Lanao del Norte, Branch II, City of Iligan, PEDRO ERMAC,
and his children ELENA, CARLOS, ANTONIO, LUCIANO, HILARIO,
INADALECIO and FRANCISCA, all surnamed ERMAC, respondents.

GANCAYCO, J.:

This is a petition for mandamus with damages seeking the issuance of an

order directing the respondent judge to immediately order the execution of
the lower court's order dated June 25, 1970.

The deceased spouses Potenciano Ermac and Anastacia Mariquit left as the
only property to be inherited by their heirs a parcel of land, Lot No. 1827,
Iligan Cadastre No. 292, covered by OCT No. RP-355 (262) of the Register of
Deeds of Iligan, with an assessed value of P590.00. Herein petitioner Cenon
Medelo, one of the grandchildren of the said spouses (being one of the
children of their pre-deceased daughter Digna Ermac filed on September 18,
1969 a petition for summary settlement of the said estate. Since no
opposition thereto was flied and all requirements were complied with, the
Honorable Judge Hernando Pineda, then the presiding judge of the Court of
 Page 63 of 67

First Instance of Lanao del Norte, Branch II, City of Iligan, issued on January
21, 1970 an order summarily settling the estate of the deceased spouses,
enumerating all the heirs entitled to participate in the inheritance and
ordering petitioner to present the project of partition of said lot.

Consequently, petitioner submitted on February 5, 1970 a project of

partition. After the filing of the said project of partition, private respondent
Pedro Ermac one of the children of the deceased spouses filed a motion for
reconsideration of the order of settlement, asking that an order be issued
eliminating Lot 1327 from the estate on the ground that it belonged to him
and his wife. The lower court denied the motion and ruled that the proper
remedy was a separate suit. Thus, Pedro Ermac together with his children,
filed Civil Case No. 1564 for Quieting of Title with the Court of First instance
(CFI) of Lanao del Norte involving the same Lot 1327, Cad. 292.

On June 25, 1970, the above-mentioned project of partition was approved.

The private respondents Ermac family members (the other private
respondents), filed a motion for reconsideration of the order approving the
project of partition. The said motion was, however, denied on July 15, 1970.

On July 20, 1970, the private respondents filed before this Court a Petition
for Review alleging excess of jurisdiction or grave abuse of discretion on the
part of the lower court in approving the project of partition notwithstanding
the fact that it was being claimed by the respondents in a separate civil
action.

On June 19, 1975, this court rendered a decision which in part states:

The policy of the law is to terminate proceedings for the

settlement of the estate of deceased persons with the least loss
of time. This is specially true with small estates for which the
rules provide precisely a summary procedure dispensing with the
appointment of an administrator together with the other involved
and cumbersome steps ordinarily required in the determination
of the assets of the deceased and the persons entitled to inherit
therefrom and the payment of his obligations. Definitely, the
probate court is not the beat forum for the resolution of adverse
claims of ownership of any property ostensibly belonging to the
decedent's estate. While there are settled exceptions to this rule
as applied to regular administration proceedings, it is not proper
to delay the summary settlement of the estate of a deceased
person just because an heir or a third person claims that certain
properties do not belong to the estate but to him. Such claim
must be ventilated in an independent action, and the probate
 Page 64 of 67

court should proceed to the distribution of the estate, if there are

no other legal obstacles to it, for after all, such distribution must
always be subject to the results of the suit. For the protection of
the claimant, the appropriate step is to have the proper
annotation of lis pendens entered.

Accordingly, the instant petition is dismissed without prejudice to

petitioner having the proper annotation of lis pendens regarding
Civil Case No. 1564 made on the title covering Lot 1327.
1
Costs against petitioner.

On August 20, 1975, petitioner Cenon Medelo filed a motion for execution of
the lower court's order approving the project of partition dated June 25,
1970 based upon this Court's decision of June 19, 1975. The private
respondents filed their opposition to said motion on August 28, 1975.

On October 7, 1975, the respondent judge denied the said motion, stating in
an order the following:

Acting on the Motion for Execution filed by Atty. Irene Jurado,

representing the petitioner and the Opposition filed by Atty.
Teddy Rodriguez on behalf of the oppositors, and considering
that the decision of the Supreme Court itself referred to in the
Motion for Execution states that the distribution of the estate
involved in this instant case is 'subject to the results of the suit'
(referring to Civil Case No. 1564 which is still pending trial
before this Court), in the meantime, therefore, that the said Civil
Case has not been terminated and decided, the Motion for
Execution is hereby DENIED. 2

Petitioner Cenon Medelo filed a motion for reconsideration of said order to

which the private respondents also flied their opposition. Respondent-judge
denied the said motion for reconsideration. Hence, the present petition for
mandamus with damages.

Petitioner Cenon Medelo argues in his memorandum that this Court's

decision dismissing the petition for review filed by respondents has long
become final and executory by operation of law and as such it is the lower
court's ministerial duty to issue a writ of execution.

The private respondents contend that this Court's previous decision was
subject to a condition as stated in the phrase... Such claim must be
ventilated in an independent action, and the probate court should proceed to
 Page 65 of 67

the distribution of the estate, if there are no legal obstacles to it... ."
(Emphasis supplied.) Respondents further allege that the filing of the
separate civil case (Civil Case No. 1564) is the condition or legal obstacle to
the outcome of which the distribution of the estate is subject to.
Furthermore, since the decision sought to be executed is conditional,
respondents argue that mandamus will not prosper to enforce a right which
is conditional or incomplete. 3

Respondents also state that "justice and equality" can best be served by the
stay of the execution until Civil Case No. 1564 is terminated since the land in
question had already been titled in the name of respondents since 1956 and
that they had introduced improvements, paid taxes and exercised dominion
thereto. The present petition is impressed with merit. Rule 39, Section 1 of
the Rules of Court states:

Execution upon final judgment or orders. — Execution shall issue

only upon a judgment or order that finally disposes of the action
or proceeding. Such execution shall issue as a matter of right
upon the expiration of the period to appeal therefrom if no
appeal has been duly perfected.

If the judgment has been duly appealed, execution may issue as

a matter of right from the date of the service of the notice
provided in Sec. 11 of Rule 51.

This Court's decision of June 19, 1975 has long become final and executory
due to the fact that respondents did not seasonably question said decision. A
judgment becomes final and executory by operation of law and not by
judicial declaration. 4 Furthermore, the prevailing party is entitled to have
the judgment executed as a matter of right when the defeated party has not
availed of his right to appeal. 5 The issuance of an order of execution is,
therefore, in order and is compellable by mandamus.

The private respondents also maintain that this Court's previous ruling is
conditional and will stay execution as embodied in the phrase 'if there are no
legal obstacles to it.' They allege that the pending civil suit is sufficient to
stay execution.

The previous statement of this Court as appearing in the body of the

decision is not controlling since:

The only portion of the decision that becomes the subject of

execution is that ordained or decreed in the dispositive part.
Whatever may be found in the body of the decision can only be
 Page 66 of 67

considered as part of the reasons or conclusion of the court and

while they may serve as guide or enlightenment to determine
the ratio decidendi what is controlling is what appears in the
dispositive part of the decision. 6

The dispositive portion of this Court's previous decision states:

Accordingly, the instant petition is dismissed, without prejudice

to petitioner having the proper annotation of lis pendens
regarding Civil Case No. 1564 made on the title covering Lot
1327. "Costs against petitioners."

It is, therefore, clear that it is the dispositive portion that is subject to

execution and not the body of the decision. Furthermore, said dispositive
portion is unequivocal as to what is to be performed leaving no further doubt
as to the nature of its execution. The doctrine that the final judgment as
rendered is the judgment of the court irrespective of all seemingly contrary
statements in the decision is well-recognized in this jurisdiction. 7

... At the root of the doctrine that the premises must yield to the
conclusion is perhaps, side by side with the needs of writing his
to litigations, the recognition of the truth that the trained
intuition of the judge continually leads him to right results for
which he is puzzled to give unimpeachable legal reasons. ... 8

We previously held in this case that the appropriate remedy was to have the
proper annotation of lis pendens entered. The annotation of lis pendens is
sufficient to protect the rights of the private respondents for once a notice
of lis pendens has been duly entered, any cancellation or issuance of title of
the land involved as well as any subsequent transaction affecting the same,
would have to be subject to the outcome of the litigation. The rights of the
private respondents are sufficiently protected since upon the termination of
the litigation there can be no risk of losing the property or any part of it as a
result of any conveyance of the land or any encumbrance that may be made
thereon posterior to the filing of the notice of lis pendens. 9

Petitioner requests for P1,000.00 as actual damages. Unfortunately, this

Court cannot award it in the absence of proof of the amount thereof. 10

Petitioner likewise requests the award of P20,000.00 as exemplary damages

to "set as an example and warning that decisions of the Supreme Court, final
and executory, cannot be trifled with." The award cannot be granted. It has
been held that exemplary damages are not generally recoverable in a special
civil action for mandamus unless the defendant patently acted with
 Page 67 of 67

vindictiveness or wantonness and not in the exercise of honest

judgment. 11 The preceding elements do not exist in the present case.
Furthermore, the following requisites for award of exemplary damages are
not satisfied.

First. They may be imposed by way of example or correction only in addition

to compensatory damages and cannot be recovered as a matter of right,
their determination depending upon the amount of compensatory damages
that may be awarded to the claimant.

Second: The claimant must first establish his right to moral, temperate,
liquidated or compensatory damages. Third: The wrongful act must be
accompanied by bad faith, and the award would be allowed only if the guilty
party acted in a wanton, fraudulent, reckless, oppressive or malevolent
manner. 12

WHEREFORE, the instant petition for mandamus is hereby GRANTED and the
respondent judge is directed to issue a writ of execution of the lower court's
order of June 25, 1970 approving the project of partition. The orders of the
respondent judge of October 4, 1975 and October 7, 1975 denying the
motion for execution are reversed and set aside. No pronouncement as to
costs. This decision is immediately executory.

SO ORDERED.