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G.R. Nos. 86883-85 January 29, 1993 PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. NORBERTO MANERO, JR.

, EDILBERTO MANERO, ELPIDIO MANERO, SEVERINO LINES, RUDY LINES, EFREN PLEÑAGO, ROGER BEDAÑO, RODRIGO ESPIA, ARSENIO VILLAMOR, JR., JOHN DOE and PETER DOE, accused. SEVERINO LINES, RUDY LINES, EFREN PLEÑAGO and ROGER BENDAÑO, accused-appellants. The Solicitor General for plaintiff-appellee. Romeo P. Jorge for accused-appellants.

BELLOSILLO, J.: This was gruesome murder in a main thoroughfare an hour before sundown. A hapless foreign religious minister was riddled with bullets, his head shattered into bits and pieces amidst the revelling of his executioners as they danced and laughed around their quarry, chanting the tune "Mutya Ka Baleleng", a popular regional folk song, kicking and scoffing at his prostrate, miserable, spiritless figure that was gasping its last. Seemingly unsatiated with the ignominy of their manslaughter, their leader picked up pieces of the splattered brain and mockingly displayed them before horrified spectators. Some accounts swear that acts of cannibalism ensued, although they were not sufficiently demonstrated. However, for their outrageous feat, the gangleader already earned the monicker "cannibal priest-killer" But, what is indubitable is that Fr. Tulio Favali 1 was senselessly killed for no apparent reason than that he was one of the Italian Catholic missionaries laboring in heir vineyard in the hinterlands of Mindanao. 2 In the aftermath of the murder, police authorities launched a massive manhunt which resulted in the capture of the perpetrators except Arsenio Villamor, Jr., and two unidentified persons who eluded arrest and still remain at large. Informations for Murder, 3 Attempted Murder 4 and Arson 5 were accordingly filed against those responsible for the frenzied orgy of violence that fateful day of 11 April 1985. As these cases arose from the same occasion, they were all consolidated in Branch 17 of the Regional Trial Court of Kidapawan, Cotabato. 6 After trial, the court a quo held — WHEREFORE . . . the Court finds the accused Norberto Manero, Jr. alias Commander Bucay, Edilberto Manero alias Edil, Elpidio Manero, Severino Lines, Rudy Lines, Rodrigo Espia alias Rudy, Efren Pleñago and Roger Bedaño GUILTY beyond reasonable doubt of the offense of Murder, and with the aggravating circumstances of superior strength and treachery, hereby sentences each of them to a penalty of imprisonment of reclusion perpetua; to pay the Pontifical Institute of Foreign Mission (PIME) Brothers, the congregation to which Father Tulio Favali belonged, a civil indemnity of P12,000.00; attorney's fees in the sum of P50,000.00 for each of the eight

(8) accused or a total sum of P400,000.00; court appearance fee of P10,000.00 for every day the case was set for trial; moral damages in the sum of P100,000.00; and to pay proportionately the costs. Further, the Court finds the accused Norberto Manero, Jr. alias Commander Bucay GUILTY beyond reasonable doubt of the offense of Arson and with the application of the Indeterminate Sentence Law, hereby sentences him to an indeterminate penalty of imprisonment of not less than four (4) years, nine (9) months, one (1) day of prision correccional, as minimum, to six (6) years of prision correccional, as maximum, and to indemnify the Pontifical Institute of Foreign Mission (PIME) Brothers, the congregation to which Father Tulio Favali belonged, the sum of P19,000.00 representing the value of the motorcycle and to pay the costs. Finally, the Court finds the accused Norberto Manero, Jr., alias Commander Bucay, Edilberto Manero alias Edil, Elpidio Manero, Severino Lines, Rudy Lines, Rodrigo Espia alias Rudy, Efren Pleñago and Roger Bedaño GUILTY beyond reasonable doubt of the offense of Attempted Murder and with the application of the Indeterminate Sentence Law, hereby sentences each of them to an indeterminate penalty of imprisonment of not less than two (2) years, four (4) months and one (1) day of prision correccional, and minimum, to eight (8) years and twenty (20) days of prision mayor, as maximum, and to pay the complainant Rufino Robles the sum of P20,000.00 as attorney's fees and P2,000.00 as court appearance fee for every day of trial and to pay proportionately the costs.
The foregoing penalties shall be served by the said accused successively in the order of their respective severity in accordance with the provisions of Article 70 of the Revised Penal Code, as amended. 7

From this judgment of conviction only accused Severino Lines, Rudy Lines, Efren Pleñago and Roger Bedaño appealed with respect to the cases for Murder and Attempted Murder. The Manero brothers as well as Rodrigo Espia did not appeal; neither did Norberto Manero, Jr., in the Arson case. Consequently, the decision as against them already became final. Culled from the records, the facts are: On 11 April 1985, around 10:00 o'clock in the morning, the Manero brothers Norberto Jr., Edilberto and Elpidio, along with Rodrigo Espia, Severino Lines, Rudy Lines, Efren Pleñago and Roger Bedaño, were inside the eatery of one Reynaldo Diocades at Km. 125, La Esperanza, Tulunan, Cotabato. They were conferring with Arsenio Villamor, Jr., private secretary to the Municipal Mayor of Tulunan, Cotabato, and his two (2) unidentified bodyguards. Plans to liquidate a number of suspected communist sympathizers were discussed. Arsenio Villamor, Jr. scribbled on a cigarette wrapper the following "NPA v. NPA, starring Fr. Peter, Domingo Gomez, Bantil, Fred Gapate, Rene alias Tabagac and Villaning." "Fr. Peter" is Fr. Peter Geremias, an Italian priest suspected of having links with the communist movement; "Bantil" is Rufino Robles, a Catholic lay leader who is the complaining witness in the Attempted Murder; Domingo Gomez is another lay leader, while the others are simply "messengers". On the same occasion, the conspirators agreed to Edilberto Manero's proposal that should they fail to kill Fr. Peter Geremias, another Italian priest would be killed in his stead.8 At about 1:00 o'clock that afternoon, Elpidio Manero with two (2) unidentified companions nailed a placard on a street-post beside the eatery of Deocades. The placard bore the same inscriptions as those found on the cigarette wrapper except for the additional phrase "versus Bucay, Edil and Palo." Some two (2) hours later, Elpidio also posted a wooden placard bearing the same message on a street cross-sign close to the eatery. 9

Later, at 4:00 o'clock, the Manero brothers, together with Espia and the four (4) appellants, all with assorted firearms, proceeded to the house of "Bantil", their first intended victim, which was also in the vicinity of Deocades'carinderia. They were met by "Bantil" who confronted them why his name was included in the placards. Edilberto brushed aside the query; instead, he asked "Bantil" if he had any qualms about it, and without any provocation, Edilberto drew his revolver and fired at the forehead of "Bantil". "Bantil" was able to parry the gun, albeit his right finger and the lower portion of his right ear were hit. Then they grappled for its possession until "Bantil" was extricated by his wife from the fray. But, as he was running away, he was again fired upon by Edilberto. Only his trousers were hit. "Bantil" however managed to seek refuge in the house of a certain Domingo Gomez. 10Norberto, Jr., ordered his men to surround the house and not to allow any one to get out so that "Bantil" would die of hemorrhage. Then Edilberto went back to the restaurant of Deocades and pistol-whipped him on the face and accused him of being a communist coddler, while appellants and their cohorts relished the unfolding drama. 11 Moments later, while Deocades was feeding his swine, Edilberto strewed him with a burst of gunfire from his M-14 Armalite. Deocades cowered in fear as he knelt with both hands clenched at the back of his head. This again drew boisterous laughter and ridicule from the dreaded desperados. At 5:00 o'clock, Fr. Tulio Favali arrived at Km. 125 on board his motorcycle. He entered the house of Gomez. While inside, Norberto, Jr., and his co-accused Pleñago towed the motorcycle outside to the center of the highway. Norberto, Jr., opened the gasoline tank, spilled some fuel, lit a fire and burned the motorcycle. As the vehicle was ablaze, the felons raved and rejoiced. 12 Upon seeing his motorcycle on fire, Fr. Favali accosted Norberto, Jr. But the latter simply stepped backwards and executed a thumbs-down signal. At this point, Edilberto asked the priest: "Ano ang gusto mo, padre (What is it you want, Father)? Gusto mo, Father, bukon ko ang ulo mo (Do you want me, Father, to break your head)?" Thereafter, in a flash, Edilberto fired at the head of the priest. As Fr. Favali dropped to the ground, his hands clasped against his chest, Norberto, Jr., taunted Edilberto if that was the only way he knew to kill a priest. Slighted over the remark, Edilberto jumped over the prostrate body three (3) times, kicked it twice, and fired anew. The burst of gunfire virtually shattered the head of Fr. Favali, causing his brain to scatter on the road. As Norberto, Jr., flaunted the brain to the terrified onlookers, his brothers danced and sang "Mutya Ka Baleleng" to the delight of their comrades-in-arms who now took guarded positions to isolate the victim from possible assistance. 13 In seeking exculpation from criminal liability, appellants Severino Lines, Rudy Lines, Efren Pleñago and Roger Bedaño contend that the trial court erred in disregarding their respective defenses of alibi which, if properly appreciated, would tend to establish that there was no prior agreement to kill; that the intended victim was Fr. Peter Geremias, not Fr. Tulio Favali; that there was only one (1) gunman, Edilberto; and, that there was absolutely no showing that appellants cooperated in the shooting of the victim despite their proximity at the time to Edilberto. But the evidence on record does not agree with the arguments of accused-appellants. On their defense of alibi, accused brothers Severino and Rudy Lines claim that they were harvesting palay the whole day of 11 April 1985 some one kilometer away from the crime scene. Accused Roger Bedaño alleges that he was on an errand for the church to buy lumber and nipa in M'lang, Cotabato, that morning of 11 April 1985, taking along his wife and sick child for medical treatment and arrived in La Esperanza, Tulunan, past noontime. Interestingly, all appellants similarly contend that it was only after they heard gunshots that they rushed to the house of Norberto Manero, Sr., Barangay Captain of La Esperanza, where they were joined by

their fellow CHDF members and co-accused, and that it was only then that they proceeded together to where the crime took place at Km. 125. It is axiomatic that the accused interposing the defense of alibi must not only be at some other place but that it must also be physically impossible for him to be at the scene of the crime at the time of its commission. 14 Considering the failure of appellants to prove the required physical impossibility of being present at the crime scene, as can be readily deduced from the proximity between the places where accusedappellants were allegedly situated at the time of the commission of the offenses and the locus criminis, 15 the defense of alibi is definitely feeble. 16 After all, it has been the consistent ruling of this Court that no physical impossibility exists in instances where it would take the accused only fifteen to twenty minutes by jeep or tricycle, or some one-and-a-half hours by foot, to traverse the distance between the place where he allegedly was at the time of commission of the offense and the scene of the crime. 17 Recently, we ruled that there can be no physical impossibility even if the distance between two places is merely two (2) hours by bus. 18 More important, it is well-settled that the defense of alibi cannot prevail over the positive identification of the authors of the crime by the prosecution witnesses. 19 In the case before Us, two (2) eyewitnesses, Reynaldo Deocades and Manuel Bantolo, testified that they were both inside the eatery at about 10:00 o'clock in the morning of 11 April 1985 when the Manero brothers, together with appellants, first discussed their plan to kill some communist sympathizers. The witnesses also testified that they still saw the appellants in the company of the Manero brothers at 4:00 o'clock in the afternoon when Rufino Robles was shot. Further, at 5:00 o'clock that same afternoon, appellants were very much at the scene of the crime, along with the Manero brothers, when Fr. Favali was brutally murdered. 20 Indeed, in the face of such positive declarations that appellants were at the locus criminis from 10:00 o'clock in the morning up to about 5:00 o'clock in the afternoon, the alibi of appellants that they were somewhere else, which is negative in nature, cannot prevail. 21 The presence of appellants in the eatery at Km. 125 having been positively established, all doubts that they were not privy to the plot to liquidate alleged communist sympathizers are therefore removed. There was direct proof to link them to the conspiracy. There is conspiracy when two or more persons come to an agreement to commit a crime and decide to commit it.22 It is not essential that all the accused commit together each and every act constitutive of the offense. 23 It is enough that an accused participates in an act or deed where there is singularity of purpose, and unity in its execution is present. 24 The findings of the court a quo unmistakably show that there was indeed a community of design as evidenced by the concerted acts of all the accused. Thus —
The other six accused, 25 all armed with high powered firearms, were positively identified with Norberto Manero, Jr. and Edilberto Manero in the carinderia of Reynaldo Deocades in La Esperanza, Tulunan, Cotabato at 10:00 o'clock in the morning of 11 April 1985 morning . . . they were outside of the carinderia by the window near the table where Edilberto Manero, Norberto Manero, Jr., Jun Villamor, Elpidio Manero and unidentified members of the airborne from Cotabato were grouped together. Later that morning, they all went to the cockhouse nearby to finish their plan and drink tuba. They were seen again with Edilberto Manero and Norberto Manero, Jr., at 4:00 o'clock in the afternoon of that day near the house of Rufino Robles (Bantil) when Edilberto Manero shot Robles. They surrounded the house of Domingo Gomez where Robles fled and hid, but later left when Edilberto Manero told them to leave as Robles would die of hemorrhage. They followed Fr. Favali to Domingo Gomez' house, witnessed and enjoyed the burning of the motorcycle of Fr. Favali and later stood guard with their firearms ready on the road when Edilberto

Manero shot to death Fr. Favali. Finally, they joined Norberto Manero, Jr. and Edilberto Manero in their enjoyment and merriment on the death of the priest. 26

From the foregoing narration of the trial court, it is clear that appellants were not merely innocent bystanders but were in fact vital cogs in perpetrating the savage murder of Fr. Favali and the attempted murder of Rufino Robles by the Manero brothers and their militiamen. For sure, appellants all assumed a fighting stance to discourage if not prevent any attempt to provide assistance to the fallen priest. They surrounded the house of Domingo Gomez to stop Robles and the other occupants from leaving so that the wounded Robles may die of hemorrhage. 27Undoubtedly, these were overt acts to ensure success of the commission of the crimes and in furtherance of the aims of the conspiracy. The appellants acted in concert in the murder of Fr. Favali and in the attempted murder of Rufino Robles. While accused-appellants may not have delivered the fatal shots themselves, their collective action showed a common intent to commit the criminal acts. While it may be true that Fr. Favali was not originally the intended victim, as it was Fr. Peter Geremias whom the group targetted for the kill, nevertheless, Fr. Favali was deemed a good substitute in the murder as he was an Italian priest. On this, the conspirators expressly agreed. As witness Manuel Bantolo explained 28 — Q Aside from those persons listed in that paper to be killed, were there other persons who were to be liquidated? A There were some others. Q Who were they? A They said that if they could not kill those persons listed in that paper then they will (sic) kill anyone so long as he is (sic) an Italian and if they could not kill the persons they like to kill they will (sic) make Reynaldo Deocades as their sample. That appellants and their co-accused reached a common understanding to kill another Italian priest in the event that Fr. Peter Geremias could not be spotted was elucidated by Bantolo thus 29 — Q Who suggested that Fr. Peter be the first to be killed? A All of them in the group. Q What was the reaction of Norberto Manero with respect to the plan to kill Fr. Peter? A He laughed and even said, "amo ina" meaning "yes, we will kill him ahead." xxx xxx xxx Q What about Severino Lines? What was his reaction? A He also laughed and so conformed and agreed to it. Q Rudy Lines.

A He also said "yes". Q What do you mean "yes"? A He also agreed and he was happy and said "yes" we will kill him. xxx xxx xxx Q What about Efren Pleñago? A He also agreed and even commented laughing "go ahead". Q Roger Bedaño, what was his reaction to that suggestion that should they fail to kill Fr. Peter, they will (sic) kill anybody provided he is an Italian and if not, they will (sic) make Reynaldo Deocades an example? A He also agreed laughing. Conspiracy or action in concert to achieve a criminal design being sufficiently shown, the act of one is the act of all the other conspirators, and the precise extent or modality of participation of each of them becomes secondary. 30 The award of moral damages in the amount of P100,000.00 to the congregation, the Pontifical Institute of Foreign Mission (PIME) Brothers, is not proper. There is nothing on record which indicates that the deceased effectively severed his civil relations with his family, or that he disinherited any member thereof, when he joined his religious congregation. As a matter of fact, Fr. Peter Geremias of the same congregation, who was then a parish priest of Kidapawan, testified that "the religious family belongs to the natural family of origin." 31 Besides, as We already held, 32 a juridical person is not entitled to moral damages because, not being a natural person, it cannot experience physical suffering or such sentiments as wounded feelings, serious anxiety, mental anguish or moral shock. It is only when a juridical person has a good reputation that is debased, resulting in social humiliation, that moral damages may be awarded. Neither can We award moral damages to the heirs of the deceased who may otherwise be lawfully entitled thereto pursuant to par. (3), Art. 2206, of the Civil Code, 33 for the reason that the heirs never presented any evidence showing that they suffered mental anguish; much less did they take the witness stand. It has been held 34 that moral damages and their causal relation to the defendant's acts should be satisfactorily proved by the claimant. It is elementary that in order that moral damages may be awarded there must be proof of moral suffering. 35However, considering that the brutal slaying of Fr. Tulio Favali was attended with abuse of superior strength, cruelty and ignominy by deliberately and inhumanly augmenting the pain and anguish of the victim, outraging or scoffing at his person or corpse, exemplary damages may be awarded to the lawful heirs, 36 even though not proved nor expressly pleaded in the complaint, 37 and the amount of P100,000.00 is considered reasonable. With respect to the civil indemnity of P12,000.00 for the death of Fr. Tulio Favali, the amount is increased to P50,000.00 in accordance with existing jurisprudence, which should be paid to the lawful heirs, not the PIME as the trial court ruled. WHEREFORE, the judgment appealed from being in accord with law and the evidence is AFFIRMED with the modification that the civil indemnity which is increased from P12,000.00 to P50,000.00 is

awarded to the lawful heirs of the deceased plus exemplary damages of P100,000.00; however, the award of moral damages is deleted. Costs against accused-appellants. SO ORDERED. Cruz, Padilla and Griño-Aquino, JJ., concur. G.R. No. L-53401 November 6, 1989 THE ILOCOS NORTE ELECTRIC COMPANY, petitioner, vs. HONORABLE COURT OF APPEALS, (First Division) LILIAN JUAN LUIS, JANE JUAN YABES, VIRGINIA JUAN CID, GLORIA JUAN CARAG, and PURISIMA JUAN, respondents. Herman D. Coloma for petitioner. Glicerio S. Ferrer for private respondents.

PARAS, J.: Sought to be reversed in this petition is the Decision * of the respondent Court of Appeals' First Division, setting aside the judgment of the then Court of First Instance (CFI) of Ilocos Norte, with the following dispositive portion: WHEREFORE, the appealed judgment is hereby set aside and another rendered in its stead whereby defendant is hereby sentenced to pay plaintiffs actual damages of P30,229.45; compensatory damages of P50,000.00; exemplary damages of P10,000.00; attorney's fees of P3,000.00; plus the costs of suit in both instances. (p. 27 Rollo) Basically, this case involves a clash of evidence whereby both patties strive for the recognition of their respective versions of the scenario from which the disputed claims originate. The respondent Court of Appeals (CA) summarized the evidence of the parties as follows: From the evidence of plaintiffs it appears that in the evening of June 28 until the early morning of June 29, 1967 a strong typhoon by the code name "Gening" buffeted the province of Ilocos Norte, bringing heavy rains and consequent flooding in its wake. Between 5:30 and 6:00 A.M. on June 29, 1967, after the typhoon had abated and when the floodwaters were beginning to recede the deceased Isabel Lao Juan, fondly called Nana Belen, ventured out of the house of her son-in-law, Antonio Yabes, on No. 19 Guerrero Street, Laoag City, and proceeded northward towards the direction of the Five Sisters Emporium, of which she was the owner and proprietress, to look after the merchandise therein that might have been damaged. Wading in waist-deep flood on Guerrero, the deceased was followed by Aida Bulong, a Salesgirl at the Five Sisters Grocery, also owned by the deceased, and by Linda Alonzo Estavillo, a ticket seller at the YJ Cinema, which was partly owned by the deceased. Aida and Linda walked side by side at a distance of between 5 and 6 meters behind the deceased, Suddenly, the

deceased screamed "Ay" and quickly sank into the water. The two girls attempted to help, but fear dissuaded them from doing so because on the spot where the deceased sank they saw an electric wire dangling from a post and moving in snake-like fashion in the water. Upon their shouts for help, Ernesto dela Cruz came out of the house of Antonio Yabes. Ernesto tried to go to the deceased, but at four meters away from her he turned back shouting that the water was grounded. Aida and Linda prodded Ernesto to seek help from Antonio Yabes at the YJ Cinema building which was four or five blocks away. When Antonio Yabes was informed by Ernesto that his mother-in law had been electrocuted, he acted immediately. With his wife Jane, together with Ernesto and one Joe Ros, Yabes passed by the City Hall of Laoag to request the police to ask the people of defendant Ilocos Norte Electric Company or INELCO to cut off the electric current. Then the party waded to the house on Guerrero Street. The floodwater was receding and the lights inside the house were out indicating that the electric current had been cut off in Guerrero. Yabes instructed his boys to fish for the body of the deceased. The body was recovered about two meters from an electric post. In another place, at about 4:00 A.M. on that fateful date, June 29, 1967, Engineer Antonio Juan, Power Plant Engineer of the National Power Corporation at the Laoag Diesel-Electric Plant, noticed certain fluctuations in their electric meter which indicated such abnormalities as grounded or short-circuited lines. Between 6:00 and 6:30 A.M., he set out of the Laoag NPC Compound on an inspection. On the way, he saw grounded and disconnected lines. Electric lines were hanging from the posts to the ground. Since he could not see any INELCO lineman, he decided to go to the INELCO Office at the Life Theatre on Rizal Street by way of Guerrero. As he turned right at the intersection of Guerrero and Rizal, he saw an electric wire about 30 meters long strung across the street "and the other end was seeming to play with the current of the water." (p. 64, TSN, Oct. 24, 1972) Finding the Office of the INELCO still closed, and seeing no lineman therein, he returned to the NPC Compound. At about 8:10 A.M., Engr. Juan went out of the compound again on another inspection trip. Having learned of the death of Isabel Lao Juan, he passed by the house of the deceased at the corner of Guerrero and M.H. del Pilar streets to which the body had been taken. Using the resuscitator which was a standard equipment in his jeep and employing the skill he acquired from an in service training on resuscitation, he tried to revive the deceased. His efforts proved futile. Rigor mortis was setting in. On the left palm of the deceased, Engr. Juan noticed a hollow wound. Proceeding to the INELCO Office, he met two linemen on the way. He told them about the grounded lines of the INELCO In the afternoon of the same day, he went on a third inspection trip preparatory to the restoration of power. The dangling wire he saw on Guerrero early in the morning of June 29, 1967 was no longer there. Many people came to the house at the corner of Guerrero and M.H. del Pilar after learning that the deceased had been electrocuted. Among the sympathizers was Dr. Jovencio Castro, Municipal Health Officer of Sarrat, Ilocos Norte. Upon the request of the relatives of the deceased, Dr. Castro examined the body at about 8:00 A.M. on June 29, 1967. The skin was grayish or, in medical parlance, cyanotic, which indicated death by electrocution. On the left palm, the doctor found an "electrically charged wound" (Exh. C-1: p. 101, TSN, Nov. 28, 1972) or a first degree burn. About the base of the thumb on the left hand was a burned wound. (Exh. C-2, pp. 102-103, Ibid.) The

certificate of death prepared by Dr. Castro stated the cause of' death as ,'circulatory shock electrocution" (Exh. I; p. 103, Ibid.). In defense and exculpation, defendant presented the testimonies of its officers and employees, namely, Conrado Asis, electric engineer; Loreto Abijero, collectorinspector; Fabico Abijero, lineman; and Julio Agcaoili, president-manager of INELCO Through the testimonies of these witnesses, defendant sought to prove that on and even before June 29, 1967 the electric service system of the INELCO in the whole franchise area, including Area No. 9 which covered the residence of Antonio Yabes at No. 18 Guerrero Street, did not suffer from any defect that might constitute a hazard to life and property. The service lines, devices and other INELCO equipment in Area No. 9 had been newly-installed prior to the date in question. As a public service operator and in line with its business of supplying electric current to the public, defendant had installed safety devices to prevent and avoid injuries to persons and damage to property in case of natural calamities such as floods, typhoons, fire and others. Defendant had 12 linesmen charged with the duty of making a round-the-clock checkup of the areas respectively assigned to them. Defendant asserts that although a strong typhoon struck the province of Ilocos Norte on June 29, 1967, putting to streets of Laoag City under water, only a few known places in Laoag were reported to have suffered damaged electric lines, namely, at the southern approach of the Marcos Bridge which was washed away and where the INELCO lines and posts collapsed; in the eastern part near the residence of the late Governor Simeon Mandac; in the far north near the defendant's power plant at the corner of Segundo and Castro Streets, Laoag City and at the far northwest side, near the premises of the Ilocos Norte National High School. Fabico Abijero, testified that in the early morning before 6 o'clock on June 29, 1967 he passed by the intersection of Rizal and Guerrero Streets to switch off the street lights in Area No. 9. He did not see any cut or broken wires in or near the vicinity. What he saw were many people fishing out the body of Isabel Lao Juan. A witness in the person of Dr. Antonio Briones was presented by the defense to show that the deceased could not have died of electrocution Substantially, the testimony of the doctor is as follows: Without an autopsy on the cadaver of the victim, no doctor, not even a medicolegal expert, can speculate as to the real cause of death. Cyanosis could not have been found in the body of the deceased three hours after her death, because cyanosis which means lack of oxygen circulating in the blood and rendering the color of the skin purplish, appears only in a live person. The presence of the elongated burn in the left palm of the deceased (Exhibits C-1 and C-2) is not sufficient to establish her death by electrocution; since burns caused by electricity are more or less round in shape and with points of entry and exit. Had the deceased held the lethal wire for a long time, the laceration in her palm would have been bigger and the injury more massive. (CA Decision, pp. 18-21, Rollo) An action for damages in the aggregate amount of P250,000 was instituted by the heirs of the deceased with the aforesaid CFI on June 24, 1968. In its Answer (Vide, Record on Appeal, p. 55, Rollo), petitioner advanced the theory, as a special defense, that the deceased could have died simply either by drowning or by electrocution due to negligence attributable only to herself and not to petitioner. In this regard, it was pointed out that the deceased, without petitioner's knowledge, caused the installation of a burglar deterrent by connecting a wire from the main house to the iron gate and fence of steel matting, thus, charging the latter with electric current whenever the switch is on. Petitioner then conjectures that the switch to said burglar deterrent must have been left on, hence,

causing the deceased's electrocution when she tried to open her gate that early morning of June 29, 1967. After due trial, the CFI found the facts in favor of petitioner and dismissed the complaint but awarded to the latter P25,000 in moral damages and attorney's fees of P45,000. An appeal was filed with the CA which issued the controverted decision. In this petition for review the petitioner assigns the following errors committed by the respondent CA: 1. The respondent Court of Appeals committed grave abuse of discretion and error in considering the purely hearsay alleged declarations of Ernesto de la Cruz as part of theres gestae. 2. The respondent Court of Appeals committed grave abuse of discretion and error in holding that the strong typhoon "Gening" which struck Laoag City and Ilocos Norte on June 29, 1967 and the flood and deluge it brought in its wake were not fortuitous events and did not exonerate petitioner-company from liability for the death of Isabel Lao Juan. 3. The respondent Court of Appeals gravely abused its discretion and erred in not applying the legal principle of "assumption of risk" in the present case to bar private respondents from collecting damages from petitioner company. 4. That the respondent Court of Appeals gravely erred and abused its discretion in completely reversing the findings of fact of the trial court. 5. The findings of fact of the respondent Court of Appeals are reversible under the recognized exceptions. 6. The trial court did not err in awarding moral damages and attorney's fees to defendant corporation, now petitioner company. 7. Assuming arguendo that petitioner company may be held liable from the death of the late Isabel Lao Juan, the damages granted by respondent Court of Appeals are improper and exhorbitant. (Petitioners Memorandum, p. 133, Rollo) Basically, three main issues are apparent: (1) whether or not the deceased died of electrocution; (2) whether or not petitioner may be held liable for the deceased's death; and (3) whether or not the respondent CA's substitution of the trial court's factual findings for its own was proper. In considering the first issue, it is Our view that the same be resolved in the affirmative. By a preponderance of evidence, private respondents were able to show that the deceased died of electrocution, a conclusion which can be primarily derived from the photographed burnt wounds (Exhibits "C", "C-1", "C-2") on the left palm of the former. Such wounds undoubtedly point to the fact that the deceased had clutched a live wire of the petitioner. This was corroborated by the testimony of Dr. Jovencio Castro who actually examined the body of the deceased a few hours after the death and described the said burnt wounds as a "first degree burn" (p. 144, TSN, December 11, 1972) and that they were "electrically charged" (p. 102, TSN, November 28, 1972). Furthermore, witnesses Linda Alonzo Estavillo and Aida Bulong added that after the deceased screamed "Ay" and sank into the water, they tried to render some help but were overcome with fear by the sight of an electric wire

dangling from an electric post, moving in the water in a snake-like fashion (supra). The foregoing therefore justifies the respondent CA in concluding that "(t)he nature of the wounds as described by the witnesses who saw them can lead to no other conclusion than that they were "burns," and there was nothing else in the street where the victim was wading thru which could cause a burn except the dangling live wire of defendant company" (CA Decision, p. 22, Rollo). But in order to escape liability, petitioner ventures into the theory that the deceased was electrocuted, if such was really the case when she tried to open her steel gate, which was electrically charged by an electric wire she herself caused to install to serve as a burglar deterrent. Petitioner suggests that the switch to said burglar alarm was left on. But this is mere speculation, not backed up with evidence. As required by the Rules, "each party must prove his own affirmative allegations." (Rule 131, Sec. 1). Nevertheless, the CA significantly noted that "during the trial, this theory was abandoned" by the petitioner (CA Decision, p. 23, Rollo). Furthermore the CA properly applied the principle of res gestae. The CA said: Linda Alonzo Estavillo, a ticket seller, and Aida Bulong, a salesgirl, were with the deceased during that fateful morning of June 29, 1967. This Court has not been offered any sufficient reason to discredit the testimonies of these two young ladies. They were one in the affirmation that the deceased, while wading in the waist-deep flood on Guerrero Street five or six meters ahead of them, suddenly screamed "Ay" and quickly sank into the water. When they approached the deceased to help, they were stopped by the sight of an electric wire dangling from a post and moving in snake-like fashion in the water. Ernesto dela Cruz also tried to approach the deceased, but he turned back shouting that the water was grounded. These bits of evidence carry much weight. For the subject of the testimonies was a startling occurrence, and the declarations may be considered part of the res gestae. (CA Decision, p. 21, Rollo) For the admission of the res gestae in evidence, the following requisites must be present: (1) that the principal act, the res gestae, be a startling occurrence; (2) that the statements were made before the declarant had time to contrive or devise; (3) that the statements made must concern the occurrence in question and its immediately attending circumstances (People vs. Ner, 28 SCRA 1151; People vs. Balbas, 122 SCRA 959). We do not find any abuse of discretion on the CA' part in view of the satisfaction of said requisites in the case at bar. The statements made relative to the startling occurrence are admitted in evidence precisely as an exception to the hearsay rule on the grounds of trustworthiness and necessity. "Trustworthiness" because the statements are made instinctively (Wesley vs. State, 53 Ala. 182), and "necessity" because such natural and spontaneous utterances are more convincing than the testimony of the same person on the stand (Mobile vs. Ascraft 48 Ala. 31). Therefore, the fact that the declarant, Ernesto de la Cruz, was not presented to testify does not make the testimony of Linda Alonzo Estavillo and Aida Bulong hearsay since the said declaration is part of the res gestae. Similarly, We considered part of the res gestae a conversation between two accused immediately after commission of the crime as overheard by a prosecution witness (People vs. Reyes, 82 Phil. 563). While it may be true that, as petitioner argues (vide petitioner's Memorandum, p. 135, Rollo), Ernesto de la Cruz was not an actual witness to the instant when the deceased sank into the waist-deep water, he acted upon the call of help of Aida Bulong and Linda Alonzo Estavillo with the knowledge of, and immediately after, the sinking of the deceased. In fact the startling event had not yet ceased when Ernesto de la Cruz entered the scene considering that the victim remained submerged. Under such a circumstance, it is undeniable that a state of mind characterized by nervous excitement had been triggered in Ernesto de la Cruz's being as anybody under the same contingency could have

experienced. As such, We cannot honestly exclude his shouts that the water was grounded from the res gestae just because he did not actually see the sinking of the deceased nor hear her scream "Ay." Neither can We dismiss the said declaration as a mere opinion of Ernesto de la Cruz. While We concede to the submission that the statement must be one of facts rather than opinion, We cannot agree to the proposition that the one made by him was a mere opinion. On the contrary, his shout was a translation of an actuality as perceived by him through his sense of touch. Finally, We do not agree that the taking of Ernesto de la Cruz' testimony was suppressed by the private respondents, thus, is presumed to be adverse to them pursuant to Section 5(e), Rule 131. For the application of said Rule as against a party to a case, it is necessary that the evidence alleged to be suppressed is available only to said party (People vs. Tulale, L-7233, 18 May 1955, 97 Phil. 953). The presumption does not operate if the evidence in question is equally available to both parties (StaplesHowe Printing Co. vs. Bldg. and Loan Assn., 36 Phil. 421). It is clear from the records that petitioner could have called Ernesto de la Cruz to the witness stand. This, precisely, was Linda Alonzo Estavillo's suggestion to petitioner's counsel when she testified on cross examination: Q. And that Erning de la Cruz, how far did he reach from the gate of the house? A. Well, you can ask that matter from him sir because he is here. (TSN, p. 30, 26 Sept. 1972) The foregoing shows that petitioner had the opportunity to verify the declarations of Ernesto de la Cruz which, if truly adverse to private respondent, would have helped its case. However, due to reasons known only to petitioner, the opportunity was not taken. Coming now to the second issue, We tip the scales in the private respondents' favor. The respondent CA acted correctly in disposing the argument that petitioner be exonerated from liability since typhoons and floods are fortuitous events. While it is true that typhoons and floods are considered Acts of God for which no person may be held responsible, it was not said eventuality which directly caused the victim's death. It was through the intervention of petitioner's negligence that death took place. We subscribe to the conclusions of the respondent CA when it found: On the issue whether or not the defendant incurred liability for the electrocution and consequent death of the late Isabel Lao Juan, defendant called to the witness-stand its electrical engineer, chief lineman, and lineman to show exercise of extraordinary diligence and to negate the charge of negligence. The witnesses testified in a general way about their duties and the measures which defendant usually adopts to prevent hazards to life and limb. From these testimonies, the lower court found "that the electric lines and other equipment of defendant corporation were properly maintained by a well-trained team of lineman, technicians and engineers working around the clock to insure that these equipments were in excellent condition at all times." (P. 40, Record on Appeal) The finding of the lower court, however, was based on what the defendant's employees were supposed to do, not on what they actually did or failed to do on the date in question, and not on the occasion of theemergency situation brought about by the typhoon. The lower court made a mistake in assuming that defendant's employees worked around the clock during the occurrence of the typhoon on the night of June 28 and until the early morning of June 29, 1967, Engr. Antonio Juan of the National Power

Corporation affirmed that when he first set out on an inspection trip between 6:00 and 6:30 A.M. on June 29, 1967, he saw grounded and disconnected electric lines of the defendant but he saw no INELCO lineman. The INELCO Office at the Life theatre on Rizal Street was still closed. (pp. 63-64, TSN, Oct. 24, 1972) Even the witnesses of defendant contradict the finding of the lower court. Conrado Asis, defendant's electrical engineer, testified that he conducted a general inspection of the franchise area of the INELCO only on June 30, 1967, the day following the typhoon. The reason he gave for the delay was that all their vehicles were submerged. (p. 337, TSN, July 20, 1973) According to Asis, he arrived at his office at 8:00 A.M. onJune 30 and after briefing his men on what to do they started out. (p. 338, lbid) One or two days after the typhoon, the INELCO people heard "rumors that someone was electrocuted" so he sent one of his men to the place but his man reported back that there was no damaged wire. (p. 385, Id.) Loreto Abijero, chief lineman of defendant, corroborated Engr. Juan. He testified that at about 8:00 A.M. on June 29, 1967 Engr. Juan came to the INELCO plant and asked the INELCO people to inspect their lines. He went with Engr. Juan and their inspection lasted from 8:00 A.M. to 12:00 noon. (pp. 460, 465, TSN, Jan. 28, 1975) Fabico Abijero lineman of defendant, testified that at about 6:00 on June 29, 1967 the typhoon ceased. At that time, he was at the main building of the Divine Word College of Laoag where he had taken his family for refuge. (pp. 510-511, Ibid.) In times of calamities such as the one which occurred in Laoag City on the night of June 28 until the early hours of June 29, 1967, extraordinary diligence requires a supplier of electricity to be inconstant vigil to prevent or avoid any probable incident that might imperil life or limb. The evidence does not show that defendant did that. On the contrary, evidence discloses that there were no men (linemen or otherwise) policing the area, nor even manning its office. (CA Decision, pp. 24-25, Rollo) Indeed, under the circumstances of the case, petitioner was negligent in seeing to it that no harm is done to the general public"... considering that electricity is an agency, subtle and deadly, the measure of care required of electric companies must be commensurate with or proportionate to the danger. The duty of exercising this high degree of diligence and care extends to every place where persons have a right to be" (Astudillo vs. Manila Electric, 55 Phil. 427). The negligence of petitioner having been shown, it may not now absolve itself from liability by arguing that the victim's death was solely due to a fortuitous event. "When an act of God combines or concurs with the negligence of the defendant to produce an injury, the defendant is liable if the injury would not have resulted but for his own negligent conduct or omission" (38 Am. Jur., p. 649). Likewise, the maxim "volenti non fit injuria" relied upon by petitioner finds no application in the case at bar. It is imperative to note the surrounding circumstances which impelled the deceased to leave the comforts of a roof and brave the subsiding typhoon. As testified by Linda Alonzo Estavillo (see TSN, p. 5, 26 Sept. 1972) and Aida Bulong (see TSN, p. 43, 26 Sept. 1972), the deceased, accompanied by the former two, were on their way to the latter's grocery store "to see to it that the goods were not flooded." As such, shall We punish her for exercising her right to protect her property from the floods by imputing upon her the unfavorable presumption that she assumed the risk of personal injury? Definitely not. For it has been held that a person is excused from the force of the rule, that when he voluntarily assents to a known danger he must abide by the consequences, if an emergency is found to exist or if the life or property of another is in peril (65A C.S.C. Negligence(174(5), p. 301), or when he seeks to rescue his endangered property (Harper and James, "The Law of Torts." Little, Brown and Co., 1956, v. 2, p. 1167). Clearly, an emergency was at hand as the deceased's property, a source of her livelihood, was faced with an impending loss. Furthermore, the deceased, at the time the fatal incident occurred, was at a place where she had a right to be without regard to petitioner's consent as she was on her way to protect her merchandise. Hence, private respondents, as heirs, may not be

barred from recovering damages as a result of the death caused by petitioner's negligence (ibid., p. 1165, 1166). But petitioner assails the CA for having abused its discretion in completely reversing the trial court's findings of fact, pointing to the testimonies of three of its employees its electrical engineer, collectorinspector, lineman, and president-manager to the effect that it had exercised the degree of diligence required of it in keeping its electric lines free from defects that may imperil life and limb. Likewise, the said employees of petitioner categorically disowned the fatal wires as they appear in two photographs taken on the afternoon of June 29, 1967 (Exhs. "D" and "E"), suggesting that said wires were just hooked to the electric post (petitioner's Memorandum, p. 170, Rollo). However, as the CA properly held, "(t)he finding of the lower court ... was based on what the defendant's employees were supposed to do, not on what they actually did or failed to do on the date in question, and not on the occasion of the emergency situation brought about by the typhoon" (CA Decision, p. 25, Rollo). And as found by the CA, which We have already reiterated above, petitioner was in fact negligent. In a like manner, petitioner's denial of ownership of the several wires cannot stand the logical conclusion reached by the CA when it held that "(t)he nature of the wounds as described by the witnesses who saw them can lead to no other conclusion than that they were 'burns', and there was nothing else in the street where the victim was wading thru which could cause a burn except the dangling live wire of defendant company" (supra). "When a storm occurs that is liable to prostrate the wires, due care requires prompt efforts to discover and repair broken lines" (Cooley on Torts, 4th ed., v. 3, p. 474). The fact is that when Engineer Antonio Juan of the National Power Corporation set out in the early morning of June 29, 1967 on an inspection tour, he saw grounded and disconnected lines hanging from posts to the ground but did not see any INELCO lineman either in the streets or at the INELCO office (vide, CA Decision, supra). The foregoing shows that petitioner's duty to exercise extraordinary diligence under the circumstance was not observed, confirming the negligence of petitioner. To aggravate matters, the CA found: . . .even before June 28 the people in Laoag were already alerted about the impending typhoon, through radio announcements. Even the fire department of the city announced the coming of the big flood. (pp. 532-534, TSN, March 13, 1975) At the INELCO irregularities in the flow of electric current were noted because "amperes of the switch volts were moving". And yet, despite these danger signals, INELCO had to wait for Engr. Juan to request that defendant's switch be cut off but the harm was done. Asked why the delay, Loreto Abijero answered that he "was not the machine tender of the electric plant to switch off the current." (pp. 467-468, Ibid.) How very characteristic of gross inefficiency! (CA Decision, p. 26, Rollo) From the preceding, We find that the CA did not abuse its discretion in reversing the trial court's findings but tediously considered the factual circumstances at hand pursuant to its power to review questions of fact raised from the decision of the Regional Trial Court, formerly the Court of First Instance (see sec. 9, BP 129). In considering the liability of petitioner, the respondent CA awarded the following in private respondent's favor: P30,229.45 in actual damages (i.e., P12,000 for the victim's death and P18,229.45 for funeral expenses); P50,000 in compensatory damages, computed in accordance with the formula set in the Villa-Rey Transit case (31 SCRA 511) with the base of P15,000 as average annual income of the deceased; P10,000 in exemplary damages; P3,000 attorney's fees; and costs of suit. Except for the award of P12,000 as compensation for the victim's death, We affirm the respondent CA's award for damages and attorney's fees. Pusuant to recent jurisprudence (People vs. Mananquil, 132 SCRA 196; People vs. Traya, 147 SCRA 381), We increase the said award of P12,000 to P30,000, thus, increasing the total actual damages to P48,229.45.

The exclusion of moral damages and attorney's fees awarded by the lower court was properly made by the respondent CA, the charge of malice and bad faith on the part of respondents in instituting his case being a mere product of wishful thinking and speculation. Award of damages and attorney's fees is unwarranted where the action was filed in good faith; there should be no penalty on the right to litigate (Espiritu vs. CA, 137 SCRA 50). If damage results from a person's exercising his legal rights, it is damnum absque injuria (Auyong Hian vs. CTA, 59 SCRA 110). WHEREFORE, the questioned decision of the respondent, except for the slight modification that actual damages be increased to P48,229.45 is hereby AFFIRMED. SO ORDERED.

No. 118192. October 23, 1997]

PRO

LINE SPORTS CENTER, INC., and QUESTOR CORPORATION, petitioners, vs. COURT OF APPEALS, UNIVERSAL ATHLETICS INDUSTRIAL PRODUCTS, INC., and MONICO SEHWANI, respondents. DECISION

BELLOSILLO, J.:

This case calls for a revisit of the demesne of malicious prosecution and its implications. This petition stemmed from a criminal case for unfair competition filed by Pro Line Sports Center, Inc. (PRO LINE) and Questor Corporation (QUESTOR) against Monico Sehwani, president of Universal Athletics and Industrial Products, Inc. (UNIVERSAL). In that case Sehwani was exonerated. As a retaliatory move, Sehwani and UNIVERSAL filed a civil case for damages against PRO LINE and QUESTOR for what they perceived as the wrongful and malicious filing of the criminal action for unfair competition against them. But first, the dramatis personae. By virtue of its merger with A.G. Spalding Bros., Inc., on 31 December 1971, petitioner QUESTOR, a US-based corporation, became the owner of the trademark "Spalding" appearing in sporting goods, implements and apparatuses. Co-petitioner PRO LINE, a domestic corporation, is the exclusive distributor of "Spalding" sports products in the Philippines. Respondent UNIVERSAL, on the other hand, is a domestic corporation engaged in the sale and manufacture of sporting goods while corespondent Monico Sehwani is impleaded in his capacity as president of the corporation.
[1] [2]

On 11 February 1981, or sixteen years ago, Edwin Dy Buncio, General Manager of PRO LINE, sent a letter-complaint to the National Bureau of Investigation (NBI) regarding the alleged manufacture of fake "Spalding" balls by UNIVERSAL. On 23 February 1981 the NBI applied for a search warrant with the then Court of First Instance, Br. 23, Pasig, Rizal, then presided over by Judge Rizalina Bonifacio Vera. On that same day Judge Vera issued Search Warrant No. 2-81 authorizing the search of the premises of UNIVERSAL in Pasig. In the course of the search, some 1,200 basketballs and volleyballs marked "Spalding" were seized and confiscated by the NBI. Three (3) days later, on motion of the NBI, Judge Vera issued another order, this time to seal and padlock the molds, rubber mixer, boiler and other instruments at UNIVERSAL's factory. All these were used to manufacture the fake "Spalding" products, but were simply too heavy to be removed from the premises and brought under the actual physical custody of the court. However, on 28 April 1981, on motion of UNIVERSAL, Judge Vera ordered the lifting of the seal and padlock on the machineries, prompting the People of the Philippines, the NBI, together with PRO LINE and QUESTOR, to file with the Court of Appeals a joint petition for certiorari and prohibition with preliminary injunction (CA G.R. No. 12413) seeking the annulment of the order of 28 April 1981. On 18 May 1981, the appellate court issued a temporary restraining order enjoining Judge Vera from implementing her latest order. Meanwhile, on 26 February 1981, PRO LINE and QUESTOR filed a criminal complaint for unfair competition against respondent Monico Sehwani together with Robert, Kisnu, Arjan and Sawtri, all surnamed Sehwani, and Arcadio del los Reyes before the Provincial Fiscal of Rizal (I. S. No. 81-2040). The complaint was dropped on 24 June 1981 for the reason that it was doubtful whether QUESTOR had indeed acquired the registration rights over the mark "Spalding" from A. G. Spalding Bros., Inc., and complainants failed to adduce an actual receipt for the sale of "Spalding" balls by UNIVERSAL.
[3]

On 9 July 1981 a petition for review seeking reversal of the dismissal of the complaint was filed with the Ministry of Justice. While this was pending, the Court of Appeals rendered judgment on 4 August 1981 in CA G.R. No. 12413 affirming the order of Judge Vera which lifted the seal and padlock on the machineries of UNIVERSAL. The People, NBI, PRO LINE and QUESTOR challenged the decision of the appellate court before this Court in G.R. No. 57814. On 31 August 1981 we issued a temporary restraining order against the Court of Appeals vis-a-vis the aforesaid decision. In connection with the criminal complaint for unfair competition, the Minister of Justice issued on 10 September 1981 a Resolution overturning the earlier dismissal of the complaint and ordered the Provincial Fiscal of Rizal to file an

Information for unfair competition against Monico Sehwani. The Information was accordingly filed on 29 December 1981 with then Court of First Instance of Rizal, docketed as Crim. Case No. 45284, and raffled to Br. 21 presided over by Judge Gregorio Pineda. Sehwani pleaded not guilty to the charge. But, while he admitted to having manufactured "Spalding" basketballs and volleyballs, he nevertheless stressed that this was only for the purpose of complying with the requirement of trademark registration with the Philippine Patent Office. He cited Chapter 1, Rule 43, of the Rules of Practice on Trademark Cases, which requires that the mark applied for be used on applicant's goods for at least sixty (60) days prior to the filing of the trademark application and that the applicant must show substantial investment in the use of the mark. He also disclosed that UNIVERSAL applied for registration with the Patent Office on 20 February 1981. After the prosecution rested its case, Sehwani filed a demurrer to evidence arguing that the act of selling the manufactured goods was an essential and constitutive element of the crime of unfair competition under Art. 189 of the Revised Penal Code, and the prosecution was not able to prove that he sold the products. In its Order of 12 January 1981 the trial court granted the demurrer and dismissed the charge against Sehwani. PRO LINE and QUESTOR impugned before us in G.R. No. 63055 the dismissal of the criminal case. In our Resolution of 2 March 1983 we consolidated G.R. No. 63055 with G.R. No. 57814 earlier filed. On 20 April 1983 we dismissed the petition in G.R. No. 63055 finding that the dismissal by the trial court of Crim. Case No. 45284 was based on the merits of the case which amounted to an acquittal of Sehwani. Considering that the issue raised in G.R. No. 58714 had already been rendered moot and academic by the dismissal of Crim. Case No. 45284 and the fact that the petition in G.R. No. 63055 seeking a review of such dismissal had also been denied, the Court likewise dismissed the petition in G.R. No. 58714. The dismissal became final and executory with the entry of judgment made on 10 August 1983. Thereafter, UNIVERSAL and Sehwani filed a civil case for damages with the Regional Trial Court of Pasig charging that PRO LINE and QUESTOR maliciously and without legal basis committed the following acts to their damage and prejudice: (a) procuring the issuance by the Pasig trial court of Search Warrant No. 2-81 authorizing the NBI to raid the premises of UNIVERSAL; (b) procuring an order from the same court authorizing the sealing and padlocking of UNIVERSAL's machineries and equipment resulting in the paralyzation and virtual closure of its operations; (c) securing a temporary restraining order from
[4]

the Court of Appeals to prevent the implementation of the trial court's order of 28 April 1981 which authorized the lifting of the seal and padlock on the subject machineries and equipment to allow UNIVERSAL to resume operations; (d) securing a temporary restraining order from the High Tribunal against the Court of Appeals and charging the latter with grave abuse of discretion for holding that the order of 28 April 1981 was judiciously issued, thus prolonging the continued closure of UNIVERSAL's business; (e) initiating the criminal prosecution of Monico Sehwani for unfair competition under Art. 189 of the Penal Code; and, (g) appealing the order of acquittal in Crim. Case No. 45284 directly to the Supreme Court with no other purpose than to delay the proceedings of the case and prolong the wrongful invasion of UNIVERSAL's rights and interests. Defendants PRO LINE and QUESTOR denied all the allegations in the complaint and filed a counterclaim for damages based mainly on the unauthorized and illegal manufacture by UNIVERSAL of athletic balls bearing the trademark "Spalding." The trial court granted the claim of UNIVERSAL declaring that the series of acts complained of were "instituted with improper, malicious, capricious motives and without sufficient justification." It ordered PRO LINE and QUESTOR jointly and severally to pay UNIVERSAL and Sehwani P676,000.00 as actual and compensatory damages, P250,000.00 as moral damages,P250,000.00 as exemplary damages. and P50,000.00 as attorney's fees. The trial court at the same time dismissed the counterclaim of PRO LINE and QUESTOR.
[5]

The Court of Appeals affirmed the decision of the lower court but reduced the amount of moral damages to P150,000.00 and exemplary damages to P100,000.00. Two (2) issues are raised before us: (a) whether private respondents Sehwani and UNIVERSAL are entitled to recover damages for the alleged wrongful recourse to court proceedings by petitioners PRO LINE and QUESTOR; and, (b) whether petitioners' counterclaim should be sustained. PRO LINE and QUESTOR cannot be adjudged liable for damages for the alleged unfounded suit. The complainants were unable to prove two (2) essential elements of the crime of malicious prosecution, namely, absence of probable cause and legal malice on the part of petitioners. UNIVERSAL failed to show that the filing of Crim. Case No. 45284 was bereft of probable cause. Probable cause is the existence of such facts and circumstances as would excite the belief in a reasonable mind, acting on the facts within the knowledge of the prosecutor, that the person charged was guilty of the crime for which he was prosecuted. In the case before us, then Minister
[6]

of Justice Ricardo C. Puno found probable cause when he reversed the Provincial Fiscal who initially dismissed the complaint and directed him instead to file the corresponding Information for unfair competition against private respondents herein. The relevant portions of the directive are quoted hereunder:
[7]

The intent on the part of Universal Sports to deceive the public and to defraud a competitor by the use of the trademark "Spalding" on basketballs and volleyballs seems apparent. As President of Universal and as Vice President of the Association of Sporting Goods Manufacturers, Monico Sehwani should have known of the prior registration of the trademark "Spalding" on basketballs and volleyballs when he filed the application for registration of the same trademark on February 20, 1981, in behalf of Universal, with the Philippine Patent Office. He was even notified by the Patent Office through counsel on March 9, 1981, that "Spalding" was duly registered with said office in connection with sporting goods, implements and apparatus by A.G. Spalding & Bros., Inc. of the U.S.A. That Universal has been selling these allegedly misbranded "Spalding" balls has been controverted by the firms allegedly selling the goods. However, there is sufficient proof that Universal manufactured balls with the trademark "Spalding" as admitted by Monico himself and as shown by the goods confiscated by virtue of the search warrant. Jurisprudence abounds to the effect that either a seller or a manufacturer of imitation goods may be liable for violation of Section 29 of Rep. Act No. 166 (Alexander v. Sy Bok, 97 Phil. 57). This is substantially the same rule obtaining in statutes and judicial construction since 1903 when Act No. 666 was approved (Finlay Fleming vs. Ong Tan Chuan, 26 Phil. 579) x x x x
[8]

The existence of probable cause for unfair competition by UNIVERSAL is derivable from the facts and circumstances of the case. The affidavit of Graciano Lacanaria, a former employee of UNIVERSAL, attesting to the illegal sale and manufacture of "Spalding" balls and seized "Spalding" products and instruments from UNIVERSAL's factory was sufficient prima facie evidence to warrant the prosecution of private respondents. That a corporation other than the certified owner of the trademark is engaged in the unauthorized manufacture of products bearing the same trademark engenders a reasonable belief that a criminal offense for unfair competition is being committed. Petitioners PRO LINE and QUESTOR could not have been moved by legal malice in instituting the criminal complaint for unfair competition which led to the filing of the Information against Sehwani. Malice is an inexcusable intent to

injure, oppress, vex, annoy or humiliate. We cannot conclude that petitioners were impelled solely by a desire to inflict needless and unjustified vexation and injury on UNIVERSAL's business interests. A resort to judicial processes is not per se evidence of ill will upon which a claim for damages may be based. A contrary rule would discourage peaceful recourse to the courts of justice and induce resort to methods less than legal, and perhaps even violent.
[9]

We are more disposed, under the circumstances, to hold that PRO LINE as the authorized agent of QUESTOR exercised sound judgment in taking the necessary legal steps to safeguard the interest of its principal with respect to the trademark in question. If the process resulted in the closure and padlocking of UNIVERSAL's factory and the cessation of its business operations, these were unavoidable consequences of petitioners' valid and lawful exercise of their right. One who makes use of his own legal right does no injury. Qui jure suo utitur nullum damnum facit. If damage results from a person's exercising his legal rights, it is damnum absque injuria.
[10]

Admittedly, UNIVERSAL incurred expenses and other costs in defending itself from the accusation. But, as Chief Justice Fernando would put it, "the expenses and annoyance of litigation form part of the social burden of living in a society which seeks to attain social control through law." Thus we see no cogent reason for the award of damages, exorbitant as it may seem, in favor of UNIVERSAL. To do so would be to arbitrarily impose a penalty on petitioners' right to litigate.
[11]

The criminal complaint for unfair competition, including all other legal remedies incidental thereto, was initiated by petitioners in their honest belief that the charge was meritorious. For indeed it was. The law brands business practices which are unfair, unjust or deceitful not only as contrary to public policy but also as inimical to private interests. In the instant case, we find quite aberrant Sehwani's reason for the manufacture of 1,200 "Spalding" balls, i.e., the pending application for trademark registration of UNIVERSAL with the Patent Office, when viewed in the light of his admission that the application for registration with the Patent Office was filed on 20 February 1981, a good nine (9) days after the goods were confiscated by the NBI. This apparently was an afterthought but nonetheless too late a remedy. Be that as it may, what is essential for registrability is proof of actual use in commerce for at least sixty (60) days and not the capability to manufacture and distribute samples of the product to clients. Arguably, respondents' act may constitute unfair competition even if the element of selling has not been proved. To hold that the act of selling is an indispensable element of the crime of unfair competition is illogical because if

the law punishes the seller of imitation goods, then with more reason should the law penalize the manufacturer. In U. S. v. Manuel, the Court ruled that the test of unfair competition is whether certain goods have been intentionally clothed with an appearance which is likely to deceive the ordinary purchasers exercising ordinary care. In this case, it was observed by the Minister of Justice that the manufacture of the "Spalding" balls was obviously done to deceive would-be buyers. The projected sale would have pushed through were it not for the timely seizure of the goods made by the NBI. That there was intent to sell or distribute the product to the public cannot also be disputed given the number of goods manufactured and the nature of the machinery and other equipment installed in the factory.
[12]

We nonetheless affirm the dismissal of petitioners' counterclaim for damages. A counterclaim partakes of the nature of a complaint and/or a cause of action against the plaintiffs. It is in itself a distinct and independent cause of action, so that when properly stated as such, the defendant becomes, in respect to the matter stated by him, an actor, and there are two simultaneous actions pending between the same parties, where each is at the same time both a plaintiff and defendant. A counterclaim stands on the same footing and is to be tested by the same rules, as if it were an independent action.
[13] [14] [15]

Petitioners' counterclaim for damages based on the illegal and unauthorized manufacture of "Spalding" balls certainly constitutes an independent cause of action which can be the subject of a separate complaint for damages against UNIVERSAL. However, this separate civil action cannot anymore be pursued as it is already barred by res judicata, the judgment in the criminal case (against Sehwani) involving both the criminal and civil aspects of the case for unfair competition. To recall, petitioners PRO LINE and QUESTOR, upon whose initiative the criminal action for unfair competition against respondent UNIVERSAL was filed, did not institute a separate civil action for damages nor reserve their right to do so. Thus the civil aspect for damages was deemed instituted in the criminal case. No better manifestation of the intent of petitioners to recover damages in the criminal case can be expressed than their active participation in the prosecution of the civil aspect of the criminal case through the intervention of their private prosecutor. Obviously, such intervention could only be for the purpose of recovering damages or indemnity because the offended party is not entitled to represent the People of the Philippines in the prosecution of a public offense. Section 16, Rule 110, of the Rules of Court requires that the intervention of the offended party in the criminal action can be made only if he has not waived the civil action nor expressly reserved his right to institute it separately. In an acquittal on the ground that an essential element of the crime was not proved, it is fundamental that the
[16] [17] [18]

accused cannot be held criminally nor civilly liable for the offense. Although Art. 28 of the New Civil Code authorizes the filing of a civil action separate and distinct from the criminal proceedings, the right of petitioners to institute the same is not unfettered. Civil liability arising from the crime is deemed instituted and determined in the criminal proceedings where the offended party did not waive nor reserve his right to institute it separately. This is why we now hold that the final judgment rendered therein constitutes a bar to the present counterclaim for damages based upon the same cause.
[19] [20] [21]

WHEREFORE, the petition is partly GRANTED. The decision of respondent Court of Appeals is MODIFIED by deleting the award in favor of private respondents UNIVERSAL and Monico Sehwani of actual, moral and exemplary damages as well as attorney's fees. The dismissal of petitioners' pronouncement as to costs. SO ORDERED.
Saturday, February 12, 2011

counterclaim

is

AFFIRMED. No

Aberca vs. Ver Case Digest L-69866 April 15, 1988
FACTS: This case stems from alleged illegal searches and seizures and other violations of the rights and liberties of plaintiffs by various intelligence units of the Armed Forces of the Philippines, known as Task Force Makabansa (TFM) ordered by General Fabian Ver "to conduct pre-emptive strikes against known communist-terrorist (CT) underground houses in view of increasing reports about CT plans to sow disturbances in Metro Manila," Plaintiffs allege, among others, that complying with said order, elements of the TFM raided several places, employing in most cases defectively issued judicial search warrants; that during these raids, certain members of the raiding party confiscated a number of purely personal items belonging to plaintiffs; that plaintiffs were arrested without proper warrants issued by the courts; that for some period after their arrest, they were denied visits of relatives and lawyers; that plaintiffs were interrogated in violation of their rights to silence and counsel; that military men who interrogated them employed threats, tortures and other forms of violence on them in order to obtain incriminatory information or confessions and in order to punish them; that all violations of plaintiffs constitutional rights were part of a concerted and deliberate plan to forcibly extract information and incriminatory statements from plaintiffs and to terrorize, harass and punish them, said plans being previously known to and sanctioned by defendants. Seeking to justify the dismissal of plaintiffs' complaint, the respondents postulate the view that as public officers they are covered by the mantle of state immunity from suit for acts done in the performance of official duties or function ISSUE:whether the suspension of the privilege of the writ of habeas corpus bars a civil action for damages for illegal searches conducted by military personnel and other violations of rights and liberties guaranteed under the Constitution. If such action for damages may be maintained, who can be held liable for such violations: only the military personnel directly involved and/or their superiors as well.

RATIO DICIDENDI: SC: We find respondents' invocation of the doctrine of state immunity from suit totally misplaced. The cases invoked by respondents actually involved acts done by officers in the performance of official duties written the ambit of their powers. It may be that the respondents, as members of the Armed Forces of the Philippines, were merely responding to their duty, as they claim, "to prevent or suppress lawless violence, insurrection, rebellion and subversion" in accordance with Proclamation No. 2054 of President Marcos, despite the lifting of martial law on January 27, 1981, and in pursuance of such objective, to launch pre- emptive strikes against alleged communist terrorist underground houses. But this cannot be construed as a blanket license or a roving commission untramelled by any constitutional restraint, to disregard or transgress upon the rights and liberties of the individual citizen enshrined in and protected by the Constitution.The Constitution remains the supreme law of the land to which all officials, high or low, civilian or military, owe obedience and allegiance at all times. Article 32 of the Civil Code which renders any public officer or employee or any private individual liable in damages for violating the Constitutional rights and liberties of another, as enumerated therein, does not exempt the respondents from responsibility. Only judges are excluded from liability under the said article, provided their acts or omissions do not constitute a violation of the Penal Code or other penal statute. We do not agree. We find merit in petitioners' contention that the suspension of the privilege of the writ of habeas corpus does not destroy petitioners' right and cause of action for damages for illegal arrest and detention and other violations of their constitutional rights. The suspension does not render valid an otherwise illegal arrest or detention. What is suspended is merely the right of the individual to seek release from detention through the writ of habeas corpus as a speedy means of obtaining his liberty. Firstly, it is wrong to at the plaintiffs' action for damages 5 Section 1, Article 19. to 'acts of alleged physical violence" which constituted delict or wrong. Article 32 clearly specifies as actionable the act of violating or in any manner impeding or impairing any of the constitutional rights and liberties enumerated therein, among others — The complaint in this litigation alleges facts showing with abundant clarity and details, how plaintiffs' constitutional rights and liberties mentioned in Article 32 of the Civil Code were violated and impaired by defendants. The complaint speaks of, among others, searches made without search warrants or based on irregularly issued or substantially defective warrants; seizures and confiscation, without proper receipts, of cash and personal effects belonging to plaintiffs and other items of property which were not subversive and illegal nor covered by the search warrants; arrest and detention of plaintiffs without warrant or under irregular, improper and illegal circumstances; detention of plaintiffs at several undisclosed places of 'safehouses" where they were kept incommunicado and subjected to physical and psychological torture and other inhuman, degrading and brutal treatment for the purpose of extracting incriminatory statements. The complaint contains a detailed recital of abuses perpetrated upon the plaintiffs violative of their constitutional rights. Secondly, neither can it be said that only those shown to have participated "directly" should be held liable. Article 32 of the Civil Code encompasses within the ambit of its provisions those directly, as well as indirectly, responsible for its violation. The responsibility of the defendants, whether direct or indirect, is amply set forth in the complaint. It is well established in our law and jurisprudence that a motion to dismiss on the ground that the complaint states no cause of action must be based on what appears on the face of the complaint. 6 To determine the sufficiency of the cause of action, only the facts alleged in the complaint, and no others, should be considered. 7 For this purpose, the motion to dismiss must hypothetically admit the truth of the facts alleged in the complaint. 8

Posted by zZy at 10:24 AM

G.R. No. L-58028 April 18, 1989 CHIANG KAI SHEK SCHOOL, petitioner, vs. COURT OF APPEALS and FAUSTINA FRANCO OH, respondents.

CRUZ, J.: An unpleasant surprise awaited Fausta F. Oh when she reported for work at the Chiang Kai Shek School in Sorsogon on the first week of July, 1968. She was told she had no assignment for the next semester. Oh was shocked. She had been teaching in the school since 1932 for a continuous period of almost 33 years. And now, out of the blue, and for no apparent or given reason, this abrupt dismissal. Oh sued. She demanded separation pay, social security benefits, salary differentials, maternity benefits and moral and exemplary damages. 1 The original defendant was the Chiang Kai Shek School but when it filed a motion to dismiss on the ground that it could not be sued, the complaint was amended. 2 Certain officials of the school were also impleaded to make them solidarily liable with the school. The Court of First Instance of Sorsogon dismissed the complaint. 3 On appeal, its decision was set aside by the respondent court, which held the school suable and liable while absolving the other defendants. 4 The motion for reconsideration having been denied, 5 the school then came to this Court in this petition for review on certiorari. The issues raised in the petition are: 1. Whether or not a school that has not been incorporated may be sued by reason alone of its long continued existence and recognition by the government, 2. Whether or not a complaint filed against persons associated under a common name will justify a judgment against the association itself and not its individual members. 3. Whether or not the collection of tuition fees and book rentals will make a school profit-making and not charitable. 4. Whether or not the Termination Pay Law then in force was available to the private respondent who was employed on a year-to-year basis. 5. Whether or not the awards made by the respondent court were warranted. We hold against the petitioner on the first question. It is true that Rule 3, Section 1, of the Rules of Court clearly provides that "only natural or juridical persons may be parties in a civil action." It is also not denied that the school has not been incorporated. However, this omission should not prejudice the private respondent in the assertion of her claims against the school.

As a school, the petitioner was governed by Act No. 2706 as amended by C.A. No. 180, which provided as follows: Unless exempted for special reasons by the Secretary of Public Instruction, any private school or college recognized by the government shall be incorporated under the provisions of Act No. 1459 known as the Corporation Law, within 90 days after the date of recognition, and shall file with the Secretary of Public Instruction a copy of its incorporation papers and by-laws. Having been recognized by the government, it was under obligation to incorporate under the Corporation Law within 90 days from such recognition. It appears that it had not done so at the time the complaint was filed notwithstanding that it had been in existence even earlier than 1932. The petitioner cannot now invoke its own non-compliance with the law to immunize it from the private respondent's complaint. There should also be no question that having contracted with the private respondent every year for thirty two years and thus represented itself as possessed of juridical personality to do so, the petitioner is now estopped from denying such personality to defeat her claim against it. According to Article 1431 of the Civil Code, "through estoppel an admission or representation is rendered conclusive upon the person making it and cannot be denied or disproved as against the person relying on it." As the school itself may be sued in its own name, there is no need to apply Rule 3, Section 15, under which the persons joined in an association without any juridical personality may be sued with such association. Besides, it has been shown that the individual members of the board of trustees are not liable, having been appointed only after the private respondent's dismissal. 6 It is clear now that a charitable institution is covered by the labor laws 7 although the question was still unsettled when this case arose in 1968. At any rate, there was no law even then exempting such institutions from the operation of the labor laws (although they were exempted by the Constitution from ad valorem taxes). Hence, even assuming that the petitioner was a charitable institution as it claims, the private respondent was nonetheless still entitled to the protection of the Termination Pay Law, which was then in force. While it may be that the petitioner was engaged in charitable works, it would not necessarily follow that those in its employ were as generously motivated. Obviously, most of them would not have the means for such charity. The private respondent herself was only a humble school teacher receiving a meager salary of Pl80. 00 per month. At that, it has not been established that the petitioner is a charitable institution, considering especially that it charges tuition fees and collects book rentals from its students. 8 While this alone may not indicate that it is profit-making, it does weaken its claim that it is a non-profit entity. The petitioner says the private respondent had not been illegally dismissed because her teaching contract was on a yearly basis and the school was not required to rehire her in 1968. The argument is that her services were terminable at the end of each year at the discretion of the school. Significantly, no explanation was given by the petitioner, and no advance notice either, of her relief after teaching year in and year out for all of thirty-two years, the private respondent was simply told she could not teach any more. The Court holds, after considering the particular circumstance of Oh's employment, that she had become a permanent employee of the school and entitled to security of tenure at the time of her

dismissal. Since no cause was shown and established at an appropriate hearing, and the notice then required by law had not been given, such dismissal was invalid. The private respondent's position is no different from that of the rank-and-file employees involved in Gregorio Araneta University Foundation v. NLRC, 9 of whom the Court had the following to say: Undoubtedly, the private respondents' positions as deans and department heads of the petitioner university are necessary in its usual business. Moreover, all the private respondents have been serving the university from 18 to 28 years. All of them rose from the ranks starting as instructors until they became deans and department heads of the university. A person who has served the University for 28 years and who occupies a high administrative position in addition to teaching duties could not possibly be a temporary employee or a casual. The applicable law is the Termination Pay Law, which provided: SECTION 1. In cases of employment, without a definite period, in a commercial, industrial, or agricultural establishment or enterprise, the employer or the employee may terminate at any time the employment with just cause; or without just cause in the case of an employee by serving written notice on the employer at least one month in advance, or in the case of an employer, by serving such notice to the employee at least one month in advance or one-half month for every year of service of the employee, whichever, is longer, a fraction of at least six months being considered as one whole year. The employer, upon whom no such notice was served in case of termination of employment without just cause may hold the employee liable for damages. The employee, upon whom no such notice was served in case of termination of employment without just cause shall be entitled to compensation from the date of termination of his employment in an I amount equivalent to his salaries or wages correspond to the required period of notice. ... . The respondent court erred, however, in awarding her one month pay instead of only one-half month salary for every year of service. The law is quite clear on this matter. Accordingly, the separation pay should be computed at P90.00 times 32 months, for a total of P2,880.00. Parenthetically, R.A. No. 4670, otherwise known as the Magna Carta for Public School Teachers, confers security of tenure on the teacher upon appointment as long as he possesses the required qualification. 10 And under the present policy of the Department of Education, Culture and Sports, a teacher becomes permanent and automatically acquires security of tenure upon completion of three years in the service. 11 While admittedly not applicable to the case at bar, these I rules nevertheless reflect the attitude of the government on the protection of the worker's security of tenure, which is now guaranteed by no less than the Constitution itself.12 We find that the private respondent was arbitrarily treated by the petitioner, which has shown no cause for her removal nor had it given her the notice required by the Termination Pay Law. As the respondent court said, the contention that she could not report one week before the start of classes is a flimsy justification for replacing her.13 She had been in its employ for all of thirty-two years. Her record was

apparently unblemished. There is no showing of any previous strained relations between her and the petitioner. Oh had every reason to assume, as she had done in previous years, that she would continue teaching as usual. It is easy to imagine the astonishment and hurt she felt when she was flatly and without warning told she was dismissed. There was not even the amenity of a formal notice of her replacement, with perhaps a graceful expression of thanks for her past services. She was simply informed she was no longer in the teaching staff. To put it bluntly, she was fired. For the wrongful act of the petitioner, the private respondent is entitled to moral damages. 14 As a proximate result of her illegal dismissal, she suffered mental anguish, serious anxiety, wounded feelings and even besmirched reputation as an experienced teacher for more than three decades. We also find that the respondent court did not err in awarding her exemplary damages because the petitioner acted in a wanton and oppressive manner when it dismissed her. 15 The Court takes this opportunity to pay a sincere tribute to the grade school teachers, who are always at the forefront in the battle against illiteracy and ignorance. If only because it is they who open the minds of their pupils to an unexplored world awash with the magic of letters and numbers, which is an extraordinary feat indeed, these humble mentors deserve all our respect and appreciation. WHEREFORE, the petition is DENIED. The appealed decision is AFFIRMED except for the award of separation pay, which is reduced to P2,880.00. All the other awards are approved. Costs against the petitioner. This decision is immediately executory. SO ORDERED. Narvasa, Gancayco, Griño-Aquino and Medialdea, JJ., concur.
eptember 12, 1935 G.R. No. 42660 THE PEOPLE OF THE PHILIPPINE ISLANDS, plaintiff-appellee, vs. CRISPIN IMAN, defendant-appellant. Gullas, Lopez and Tua? for appellant. o Office of the Solicitor General Hilado for appellee. Recto, J.:

In June, 1932, Crispin Iman, the accused, began courting Corazon Arcadio, the complaining witness, a young girl 17 years of age. For two months his efforts had been unsuccessful. But in August of the same year, after persistent struggle and through promise of marriage, his efforts were reciprocated. On two occasions, the second being April, 1933, they were on the verge of separation, the girl being tired of his indecent proposals repeated time and again

during his visits. But every time the complainant intimidated to the accused her determination to sever their relations because of her importunities he renewed his protestations of love and the lovers' quarrel was thus patched up. One day in the month of May, 1933, Crispin went to the house of his finance, her parents then being absent, and availing himself of that opportunity, with a renewal of his promise to make her his wife, he succeeded in betraying her. Believing that she was already lost for having granted him that first favor, the complainant thereafter yielded without restraint to his desires and since then a carnal union replaced their platonic love. Beginning from the month of October following, upon becoming aware of her pregnancy, the complainant asked the accused if he was ready to fulfill his promise and while at the beginning he answered in the affirmative, in the end he told her that he was not, because he was engaged to another girl. In said month for a period of two weeks or more, the accused and the complainant lived together in the former's house. In view of such unbearable situation, her parents intervened and reported the matter to the chief of police of Plaridel. The officer sent for the accused who, on November 7th, renewed before the chief of police his promise to marry the complainant. In the end, however, the accused refused to fulfill his promise on the pretext that neither his confessor nor his parents approved of the marriage; that he never loved the complainant; and that he was a Catholic while the girl's parents were members of the Aglipayan Church. Their carnal relations culminated in the pregnancy of the girl who gave birth to a baby boy on March 9, 1934. The letters Exhibits C, C-1 and C-2, as to the genuineness of which we entertain no doubt, written by the accused to the complainant in September, 1933, corroborate the existence of amorous relations between them and that the accused had given to the complainant his promise to marry her. In one of said letters, Exhibit C-2, the accused calls "father" the father of the complainant. The facts above set out, disclosed by the complainant's testimony, her affidavit Exhibit 1 presented by the defense itself without any qualification or condition, as part of its evidence, and by Exhibits C, C-1 and C-2, their existence being, therefore, established by the record in this appeal, constitute, the crime of seduction, defined and punished in article 338 of the Revised Penal Code, to wit, carnal knowledge of a woman above 12 and less than 18 years of age, of chaste life and good reputation, accomplished by means of deceit, the usual form of which according to the doctrine of this court, being an unfulfilled promise of marriage (U.S. vs. Salud, 10 Phil. 302; U.S. vs. Lopez, 14 Phil. 593; Decisions of the Supreme Court of Spain of June 27, 1911; April 30, 1915; November 15, 1912; November 20, and December 12 and 26, 1914; October 14, 1871; December 24, 1887; October 7, 1874; October 19, 1898). The appellant contends that, assuming it to be true that in June, 1932, he promised to marry the complainant, inasmuch as the first carnal act took place in March, 1933, nearly one year thereafter, in the absence of proof that during said interval of time he reiterated such promise, it can not be said that the complainant consented to the act upon the faith that such promise would be fulfilled. In the first place it is not true that such promise was made by the appellant only in June, 1932, for it is a fact that it was reiterated shortly before the first sexual act took place between the accused and the complainant as shown by affidavit Exhibit 1, presented in evidence by the accused himself, and by the complainant's

answers to questions made to her on this point by the defense counsel. But even if it were true that said promise was made only once, namely, in June, 1932, the circumstance that it has been reiterated and that the sexual act took place eleven months thereafter does not detract from the existence of the offense. The weight of authorities on this question is against the appellant's theory. Promise of marriage is one of the essential elements, recognized by the courts, constituting deceit in the crime of seduction and, inasmuch as such fact is established in the decision of the trial court, the appellant's contention as to the necessity that said promise be reiterated under circumstances of strong probability, or that the same has been given before or after the woman has yielded to the importunities of the man carries no weight. (Decision of the Supreme Court of Spain of June 27, 1911.) Except where the rule may be otherwise by reason of the construction put upon the particular statute, the general rule is that it is not necessary that the promise be made or renewed at the time, it being sufficient that there was a previous promise through means of which the seduction was accomplished. (57 C.J., 50.) We do not think that the promise to marry must have been the immediate (in point of time) inducement to the coition; a yielding upon the faith of a previous promise would be sufficient. (State vs. Smith, 145 S.E., 287.) The second assignment of error is based upon the refusal of the trial judge to direct a verdict for the defendant upon the ground that the sexual intercourse between the parties was not had under promise of marriage. The prosecuting witness testified that she did not submit herself to the defendant's sexual embraces until after the promise was made in March, and the defendant himself fixes the first date of such intercourse in the June following. The theory upon which this assignment is rested by counsel, as we understand it, is that, in order to bring the case within the statute, the intercourse must take place either at the time when the promise is made or immediately following it. In our opinion no such limitation can be fairly implied from the words of the act. Its purpose is to protect every young woman of the class mentioned, who, confiding in the honesty of the promise, yields to the solicitations of him who, as she believes, will sooner or later be her husband, and permits him, as favor, to enjoy in advance of the marriage ceremony those privileges which after marriage become his of right. The fact that she does not surrender her body to the sexual embraces of her supposed future husband until by lapse of time she has become entirely accustomed to the idea that sooner or later she will become his wife, does not take her out of the protection of the statute. (State vs. Slattery, 74 New Jersey Law Reports, 241-243.) It is contended by appellant that there is no proof in this record to show that appellant referred to or repeated the marriage engagement between the parties when he obtained carnal intercourse with Addie Hardin, in the hotel at Van Alstyne; to state the proposition in a different form: that, to constitute seduction at the time the carnal knowledge was obtained, appellant must have then promised to marry the party seduced, or that he must have alluded to the contract of marriage; that it is not sufficient if the parties be engaged to

be married, but the engagement or promise must be used at the very time the carnal knowledge was obtained. We do not concur in this contention. The record shows that the appellant was engaged to be married to Addie Hardin; that he had requested her mother to permit him to marry her, to which she had agreed. The record shows that, when they went to the hotel, both claimed to be man and wife. Now, we hold that, if the promise to marry was the moving coast cause, ? that is, if the carnal intercourse was the consequence of a prior promise of marriage, ? it does not matter whether this promise was repeated or not at the time the parties had carnal intercourse with one another. This question arose in Armstrong vs. People (70 N.Y., 38). In that case the prosecutrix testified that the promise of marriage was made in the latter part of May, and that the illicit intercourse took place on August 5th thereafter, at the house of Doctor Kimball. The Supreme Court of New York held that, if the promise made in May (being before the seduction) was the cause of the illicit intercourse, that would be sufficient. If the rule were otherwise, in jurisdictions in which the prosecutrix is not permitted to testify, it would be almost impossible to convict; and it would be a rare case, indeed, that proof could be made that the promise of marriage was made at the time of the intercourse, and, even if such proof could be made, it might smack strongly of barter and sale. At any rate, in this state the prosecutrix was not a competent witness; and, under that state of the law, prosecutions have been sustained, all the necessary elements of the crime being established by circumstantial evidence. (Bailey vs. State, 38 Southwestern Reporter, 185, 186.) With respect to this particular question the court has met with some difficulty because the complainant, far from asserting directly and categorically that the first sexual act she had with the accused was due precisely to the deceitful promise of marriage made by him, stated that one day in the month of May, 1933, shortly after having reiterated to her such promise the accused made her drink a potion, causing her to believe that it would help her digestion, as a consequence of which she was overcome by a general ill feeling to the point of almost losing her consciousness, and while in such a state the accused succeeded in lying with her. Hence, the appellant contends that in the instant case one of the essential elements of seduction defined and punished in article 338 of the Revised Penal Code is wanting, to wit, that the act be accomplished be means of deceit The court holds that there is no sufficient evidence showing that the accused made his sweetheart drink a sleeping potion, and that it was not the means employed to accomplish his purpose. It may then be said that if such were the case, the accused employed no deceitful means, because barring the sleeping potion the offended person has mentioned no other means. The court believes, however, that in order to establish the existence of seduction, a positive and direct statement of the offended party that she yielded to the accused because she was induced and deceived by his promise of marriage, and not for the mere satisfaction of carnal desires, is not necessary, it being sufficient that the conduct of the offended person and the accused and the circumstances of the case, taken as a whole, show that her consent was secured by means of said promise, as in the instant case. For what other conclusion can be inferred from the fact that the accused and the complainant, having been engaged since June 1932, she attempted on two occasions to break their engagement simply because he had been annoying her with demands for sexual favor in advance? Had this woman's virtue of chastity not been built upon a strong foundation,

would she not have succumbed to the first attempts, without allowing almost one whole year of their engagement to elapse, before the accused succeeded in overcoming, through reiterated promises of marriage, the complainant's last line of resistance, erected against his stubborn importunities? As to her, therefore, it was not the frailties of the flesh which caused her to deviate from the path of virtue; it was no other than his repeated protestations that he would not leave her in disgrace would redeem in the near future his promise of marriage therefor made. Similar cases to the one at bar, upon substantially the same facts, have been decided by courts of last resort, wherein it was held that the essential elements of the offense of seduction were present. When the judgment admits as facts of record the amorous relations with a view to marriage between the accused and the offended party, and her abandonment after her pregnancy, the court having also held that those facts constitute the crime of seduction defined and punished in article 458, No. 3, of the Penal Code, it is evident that the intervention of the deceit in the offense is admitted and consequently, the appeal based on the lack of evidence showing that fraud intervened in the offense can not be sustained. (Decision of December 2, 1873, Gazette of March 1, 1874.) Considering that the promise of marriage given to a member of the opposite sex, above 12 years and less than 23 years of age, voluntarily unfulfilled and without justifiable cause to prevent it, for the wicked purpose of committing an unlawful act, constitutes the deceit referred to in article 458, paragraph 3, etc. (Decision of October 7, 1874.) The case of State vs. Horton (100 N.C. 443; 6 Am. St. Rep., 613; 6 S.E., 238), is authority for the position that the state is not required to show that the defendant, in so many words, promised to marry the woman if she would agree to submit to carnal intercourse with him, or, in other words, to show the causal relation between the promise of marriage and the seduction by any set form of words; but it is sufficient if the evidence is such as to convince the jury to the exclusion of all reasonable doubt that the woman is influenced by the promise and the main intended that she should be, or so purposely acted as to produce the impression on her mind that he would keep his promise if she would comply with his request. The jury are to draw their own seduction from the testimony, provided there is even inferentially any evidence of a purpose to violate the statute. (State vs. Ring, 115 Am. St. Rep., 759-761.) . . . The only serious question presented is whether the circumstances are such as to justify a finding that the seduction was effected with fraud or deceit. When we consider the relation in which these parties had been living in the house of Benedicto Lopez, to whom the girl was related, and who was the adopted father of the defendant, the evident serious nature of the promise to marry, as shown by the testimony of the girl, and the subsequent conduct of the defendant, it is apparent that under the authorities the court properly found that the deceit which is an essential element of the crime of estupro was present. . . . (U.S. vs. Lopez, 14 Phil. 593.) The fact that the accused and the young woman seduced lived for months, or during a great many days, in the same house in Tanauan, San Juan de Bacoor, and Lipa, gave opportunity

for the intimacy that sprung up between them, the man causing the girl to believe that after some time they would be wedded; so much so that, in response to a remark made by the mother, the girl replied that by reason of her love affairs with the accused her future was assured; undoubtedly trusting to the deceitful promises given by the defendant, a distant relative of hers, it is easily understood how she consented to be seduced by her lover who, willfully failing to comply with the promise so persistently given, has shown that he only made the same with the wicked purpose of committing an unlawful act. (U.S. vs. Salud, 10 Phil. 206.) . . . proof of circumstances warranting the inference that sexual intercourse would not have been accomplished in the absence or such promise, is sufficient, . . .. (57 C.J., 77; People vs. Wallace, 109 Cal., 611; 42 P., 159; People vs. Santos, 8 Puerto Rico, 348.) The defense of the accused consisted in denying everything except that the admission of which would not in his judgment to be prejudicial to him. He denies having had carnal relations with the complainant, or that he ever courted or wooed her. He denies having had carnal relations with her, or that he is the father of the child born of the complainant in March, 1934. When confronted with the fact that the boy resembles him, he gave two explanations both childish and nonsensical, namely, that during the complainant's pregnancy she must have taken a fancy for him, and that one Teopisto, who according to the accused, had love relations with the complainant, bears a great resemblance to him, only that Teopisto is shorter, thereby implying that the child who resembles him and therefore resembles Teopisto may be Teopisto's as well as his (defendant's) child. With respect to the nature and extent of his relations with the complainant, the accused only admits that they became friends because she often came to draw water from the well in his yard and that as outward expressions of such friendship, the complainant used to tickle the accused, who in turn kissed her or fondled her breast, and beyond that they dared not venture but discreetly restrained on time the impulses of the flesh. From the evidence of the defense it maybe inferred that the complainant's chastity literally was shattered to pieces by reason of her frequent visits to the well in the yard of the accused, and thus as far as he is concerned, the unavoidable fate of the earthern vessel taken to the spring once too often, was repeated in her case. When the accused appeared before the chief of police of Plaridel whose good offices were sought by the complainant's parents, he made, according to him, before said official, this statement: "If their purpose is that I marry their daughter, supposing that she really loves me, they should give me time because may parents are in Bohol and I want to consult them." When he returned from Bohol he did not fulfill his word and said that neither from his parents nor his confessor, before whom he presented his case, did he receive the necessary encouragement for him to marry the complainant. The accused surmises that this prosecution was instituted not by reason of the grave offense which he inflicted upon the complainant in seducing her and abandoning her afterward, but upon the instigation of the Aglipayanos of Plaridel (he being a Catholic), with whom he had a litigation. The trial judge acted correctly and in conformity with the truth in disregarding the whole story concocted by the accused were both truth and logic, ingenuity and common sense, are conspicuous by their absence.

Wherefore the court finds Crispin Iman guilty of seduction by means of the false promise of marriage under article 338 of the Revised Penal Code, committed against Corazon Arcadio, seventeen years of age, of chaste life and good reputation. As held in the case of State vs. Smith (145 S.E., 287): "The statute making seduction a crime is not to punish illicit intercourse, but to punish the seducer who by means of a promise of marriage, destroys the chastity of an unmarried female of previous chaste character, and who thus draws her aside from the path of virtue and rectitude, and then fails and refuses to fulfill his promise," a character despicable in the eyes of every decent, honorable man. Finding no error in the judgment appealed from, sentencing the accused to four months to arresto mayor, to indemnify Corazon Arcadio in the sum of P500, to acknowledge the child had by him with her and to give it monthly support in the sum of P15 until it arrives at the age of majority, the same is hereby affirmed with the costs of both instances to the appellant. So ordered PwWK4OB5Y1. Avance? C.J., Abad Santos, Vickers, and Diaz, JJ., concur. . a,

G.R. No. 83768 February 28, 1990 RADIO COMMUNICATIONS OF THE PHILIPPINES, INC. (RCPI) and GLOBE MACKAY AND RADIO CORPORATION, petitioners, vs. RUFUS B. RODRIGUEZ, respondent. Salalima, Ungos and David for petitioners. Maximo G. Rodriguez for private respondent.

GUTIERREZ, JR., J.: This petition for review on certiorari seeks to reverse the decision of the Court of Appeals which affirmed the decision of the then Court of First Instance of Rizal, Branch 17-B, Quezon City in Civil Case No. Q-26623 ordering petitioner Radio Communications of the Philippines, Inc. [RCPI] and their co-defendant Globe Mackay and Radio Corporation (Globe Mackay), jointly and severally to pay the plaintiff, private respondent herein, a total amount of Two Hundred Thirteen Thousand One Hundred Forty Eight Pesos (P213,148.00) broken down as follows: a) P100, 000.00 as moral damages; b) P50,000.00 as exemplary damages; c) P43,148.00 as actual damages; and d) P20,000.00 as attorney's fees by way of damages. This is the second time that this case has been brought to us. The first was when petitioner RCPI questioned the decision of the Court of Appeals which refused to set aside the orders of the lower court directing execution pending appeal of the money awards. In that case (G.R. No. 59311, 134 SCRA [1985]) we set aside the decision of the appellate court and entered a new order authorizing execution pending appeal of the award of actual damages but enjoining the execution of the award of

moral damages, exemplary damages and attorney's fees until after the resolution of the issues in the main case. We summarized the facts of the case as follows: On September 8, 1978, Rufus B. Rodriguez, as President of the World Association of Law Students (WALS), sent two cablegrams overseas through RCPI, one addressed to Mohamed Elsir Taha in Khartoum, Sudan Socialist Union, and the other to Diane Merger in Athens, Georgia, United States. The cablegram were, in turn, relayed to GLOBE for transmission to their foreign destination The telegram to Taha advised him of Rodriguez's pending arrival in Khartoum on September 18, 1978, while the telegram to Merger advised her of the scheduled WALS conference in Khartoum. Rodriguez left the Philippines on September 15, 1978. On September 18, 1978, he arrived in Khartoum, Sudan at 9:30 in the evening. Nobody was at the airport to meet him. Due to the lateness of the hour, he was forced to sleep at the airport. He lined up five (5) chairs together and lay down with his luggages near him. Because of the non-receipt of the cablegram, Taha was not able to meet him. Worse all preparations for the international conference had to be cancelled. Furthermore, Fernando Barros, the VicePresident, arrived the next day from Chile, followed by the other officers from other countries except Diane Merger, the organization's secretary. It turned out that the wire sent by Rodriguez to Merger was delivered to the address on the message but the person who delivered it was told that the address was no longer staying there. This fact was not accordingly reported to Rodriguez in Metro Manila. The undelivered cablegram was not returned by the correspondent abroad to Globe for disposition in the Philippines. On December 8, 1978, Rodriguez filed a complaint for compensatory damages in the amount of P45,147.00, moral damages in the amount of P200,000.00, and exemplary damages in the amount of P50,000.00 against RCPI and GLOBE. On March 17, 1980, the then Presiding Judge Lino L. Anover of the Court of First Instance of Rizal rendered a decision, the dispositive portion of which reads as follows: "WHEREFORE, judgment is hereby rendered ordering the defendants jointly and severally to pay the plaintiff the total sum of TWO HUNDRED THIRTEEN THOUSAND ONE HUNDRED FORTY EIGHT PESOS (P213,148.00) by way of damages and to pay the costs of this suit." The above amount is broken down as follows by the trial court: "Moral damages consequent to the humiliation and embarrassment that the plaintiff suffered under the two causes of action in the amount of P100,000.00 are adequate. Exemplary damages under both counts are fixed reasonably at P50,000.00. On the actual damages, the court accepts plaintiffs expenses for the preparation of the trip at P10,000.00; plane fare at P20,000.00; stay in transit in Pakistan at P5,000.00; his hotel bills in Khartoum at P4,000.00; his meals in Khartoum at P4,000.00 and the telegraphic toll at P78.00. The court refuses the sum spent for the dinner that he allegedly tendered as not established by sufficient proof. With respect to the telegram sent to Diane Merger, the court finds that the actual damages amount to P70.00 representing the cost of

cablegram. As for attorney's fees, the court finds that the amount of P20,000.00 including litigation expenses are reasonable. (at pp. 396398)" Upon appeal, the Court of Appeals affirmed the lower court's decision. A motion for reconsideration was denied. Hence, this petition filed by RCPI. The title of the case includes Globe Mackay but the petition proper and the name on counsel show that only RCPI comes to this Court through the petition. Globe Mackay did not join as petitioner and its counsel Atty. Romulo P. Atencia did not sign the petition. The issues raised by petitioner RCPI are two-fold — 1) whether or nor petitioner RCPI is responsible for the non-delivery of the two (2) telegrams notwithstanding the fact that RCPI relayed said telegrams to Globe Mackay and 2) whether or not under the attendant facts and circumstances petitioner RCPI is liable for moral damages in the amount of P100,000.00; exemplary damages in the amount of P50,000.00; actual damages in the amount of P43,148.00 and attorney's fees in the amount of P20,000.00. RCPI insists that its responsibility vis-a-vis the two (2) telegrams ceased after it relayed and transmitted the telegrams on the same day they were filed to Globe Mackay. It argues that it was not incumbent upon RCPI to advise respondent Rodriguez the status of his telegrams because Globe Mackay did not also inform RCPI what happened to the telegrams since the respective operating agency of the country of destination did not also inform Globe Mackay about the non-delivery of the telegrams. Moreover, RCPI blames respondent Rodriguez for the non-delivery of the two telegrams. Regarding the telegram addressed to Elsir Taha, RCPI avers that it has an incomplete address as it did not include P.O. Box 1850 per instruction of Taha in an earlier cable asking for respondent to reply via telex, to wit: ... send me a telegram immediately after receiving this one a telex number if any. Thanks. Mohammed Elsir Taha Regional Director WALS Africa Youth Committee SSU, Khartoum, P.O. Box 1850. (Exhibit D). (Rollo, p. 27) In regard to the telegram addressed to Diane Merger which she did not receive because she had moved, to another place RCPI avers that respondent Rodriguez was partly at fault for not verifying the address of Diane before sending the telegram and that Merger was negligent by not leaving her forwarding address with the present occupant of the apartment she vacated. Petitioner RCPI is a domestic corporation engaged in the business of receiving and transmitting messages. Mr. Alfredo Catolico, Jr., manager, Customer and Relations Office testified that RCPI does not have facilities for foreign countries, hence it has a contract to course all international communications thru Globe Mackay. On the other hand, Wenceslao Felix, the Traffic Operations Manager of Globe Mackay testified that Globe Mackay has an inter-connecting agreement with RCPI under which the latter's international messages are coursed thru Globe Mackay in the same way that local and domestic messages received by Globe Mackay are coursed thru RCPI. Respondent Rodriguez and RCPI entered into a contract whereby for a fee RCPI undertook to send the respondent's messages overseas. When, therefore, respondent Rodriguez paid RCPI to deliver his messages overseas by telegram, RCPI obligated itself to transmit the messages to the addressee. Clearly, RCPI reneged on its obligation when it failed to deliver the messages or to inform the sender

about the non-delivery, thus making it liable for damages. (Article 1170, Civil Code; Article 2176; see also Telefast Communication/Philippine Wireless, Inc. v. Castro, Sr., 158 SCRA 445 [1988]). Parenthetically, RCPI cannot escape liability for damages by passing off the blame for negligence to Globe Mackay. It has an inter-connecting agreement with Globe Mackay. RCPI receives messages for overseas destinations and conducts its business to transmit foreign messages only through Globe Mackay. To allow it to escape liability for damages by attributing sole negligence to Globe Mackay for the expedient reason that it had already delivered the messages to the latter would deprive the general public availing of the services of RCPI of an effective and adequate remedy. (See Radio Communications of the Philippines, Inc. (RCPI) v. Court of Appeals, 143 SCRA 657 [1986]). It cannot simply wash its hands of all responsibility. RCPI's similar attempt to pass the total blame for the non-delivery of the telegram intended for Taha to respondent Rodriguez is not supported by the records. The evidence clearly demonstrates that an earlier cablegram dated July 27, 1978 (Exhibit "E") similarly addressed to Taha, Africa, Youth Committee, Khartoum, SSU and without P.O. Box 1850 was received by Taha. This is conclusively shown by a cable (Exhibit "F") addressed by Taha to respondent Rodriguez acknowledging the receipt of the July 27 cablegram. Evidence was also introduced to show that the Africa Youth Committee is a very important office in Khartoum, Sudan and the building that houses it is a very popular building known to the people. We rule that the arguments about the alleged negligence on the part of respondent Rodriguez in not verifying the address of Diane Merger before sending the telegram and also the alleged negligence on the part of Merger for not leaving a forwarding address do not deserve much consideration. Considering the public utility nature of RCPI's business and its contractual obligation to transmit messages, it should exercise due diligence to ascertain that messages are delivered to the persons at the given address and should provide a system whereby in cases of undelivered messages the sender is given notice of non-delivery. Messages sent by cable or wireless means are usually more important and urgent than those which can wait for the mail. For recovery of damages, Article 2217 of the New Civil Code applies. It is provided therein that: "Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feeling, moral shock, social humiliation, and similar injury. Though incapable of pecuniary computation moral damages may be recovered if they are the proximate result of the defendant's wrongful act or omission." (Emphasis supplied) There is no doubt that RCPI's failure to deliver the two questioned telegrams resulted in the suffering that respondent Rodriguez, had to undergo. Respondent Rodriguez left Manila for Khartoum, Sudan believing that Taha received his telegram and would meet him at the airport. He related his experience at the airport of Khartoum, Sudan as follows: Q. All right, from 9:30 in the evening up to 12:00 midnight, was there any person or officer of the World Association of Law Students who met you? A. None. Q. Now, inform the Court what was your feeling during that time in a foreign country?

A. First of all, when I arrived at 9:30 A.M., I was thinking that Mr. Taha was first late in fetching me but when it was already 10:30 to 11:00 P.M., I was already afraid because there was no one there that I know and it was already late in the evening that I could not go to the address of Mr. Taha. (TSN pages 18 and 19, August 20, 1979). Q. What were you doing at that time from 9:30 in the evening until 6:00 in the morning? A. I was every tired and what I did was pulled five chairs together. I remember there were about ten (10) persons and some tourists in that restaurant. I got five chairs together and laid my baggage trying to sleep but which I was not able to do because of fear and anxiety. (TSN, pages 10 and 11, August 20, 1979). (Rollo, p. 15) We are convinced that respondent Rodriguez suffered a certain degree of mental anguish, fear and anxiety considering his experience at the airport of a foreign country. His suffering was caused by the non-appearance of Taha who did not receive the telegram sent by the respondent due to the gross negligence of RCPI. There is moreover, the dismay arising from the fact, that after so much preparation and travel on the part of Rodriguez, his pains were all for nothing. Hence, RCPI is liable for moral damages. Nevertheless, we find the award of P100,000.00 as moral damages in favor of respondent Rodriguez excessive and unconscionable. In the case of Prudenciado v. Alliance Transport System, Inc. (148 SCRA 440 [1987]) we said: ... [I]t is undisputed that the trial courts are given discretion to determine the amount of moral damages (Alcantara v. Surro, 93 Phil. 472) and that the Court of Appeals can only modify or change the amount awarded when they are palpably and scandalously excessive 'so as to indicate that it was the result of passion, prejudice or corruption on the part of the trial court' (Gellada v. Warner Barnes & Co., Inc., 57 O.G. [4] 7347, 7358; Sadie v. Bachrach Motors Co., Inc., 57 O.G. [4] 636 and Adone v. Bachrach Motor Co., Inc., 57 O.G. 656). But in more recent cases where the awards of moral and exemplary damages are far too excessive compared to the actual losses sustained by the aggrieved party, this Court ruled that they should be reduced to more reasonable amounts. Thus, in the case of San Andres v. Court of Appeals (116 SCRA 85 [1982]) the Supreme Court ruled that while the amount of moral damages is a matter left largely to the sound discretion of a court, the same when found excessive should be reduced to more reasonable amounts, considering the attendant facts and circumstances. 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. In a much later case (Siguenza v. Court of Appeals, 137 SCRA 578-579 [1985]), the Supreme Court, reiterating the above ruling, reduced the awards of moral and exemplary damages which were far too excessive compared to the actual losses sustained by the aggrieved parties and where the records show that the injury suffered was not serious or gross and, therefore, out of proportion to the amount of damages generously awarded by the trial court.

In any case the Court held that 'moral damages are emphatically not intended to enrich a complainant at the expense of a defendant. They are awarded only to enable the injured party to obtain means, diversion or amusements that will serve to alleviate the moral suffering he has undergone, by reason of the defendants' culpable action.' The award of moral damages must be proportionate to the suffering inflicted (R & B Surety & Insurance Co., Inc. v. Intermediate Appellate Court, 129 SCRA 745 [1984] citing Grand Union Supermarket, Inc. v. Espino, Jr., 94 SCRA 966). (Emphasis supplied) The respondent is not entirely blameless for the problems which befell him. Apart from the various arguments raised by RCPI in its petition, there are other factors to be considered in fixing the amount of damages. Anybody who has been involved in international conferences and meetings knows that a telegram is not adequate preparation. Considering the lackaidaisical attitude of public utility employees in the Philippines and presumably in Africa, the head of an international student organization cannot simply send a telegram and nonchalantly assume that every preparation will proceed as he anticipates it. The planning expertise and degree of thoroughness incumbent upon conference organizers is missing from the records. The trial court appears to have been influenced by the impressive title of World Association of Law Students. There is nothing in the records pointing to a certain degree of distinction earned by WALS which would warrant substantial damages because of a failed meeting. Be that as it may, damages are warranted. People depend on telecommunications companies in times of deep emotional stress or pressing financial needs. Knowing that messages about the illnesses or deaths of loved ones, births or marriages in a family, important business transactions, and notices of conferences or meetings as in this case, are coursed through the petitioner and similar corporations, it is incumbent upon them to exercise a greater amount of care and concern than that shown in this case. Every reasonable effort to inform senders of the non-delivery of messages should be undertaken. From the pleadings filed by counsel in this case, RCPI does not seem to be particularly concerned about its responsibility. We rule that the amount of P10,000.00 as moral damages in favor of the respondent would be reasonable considering the facts and circumstances surrounding the petitioner's liability. The award of exemplary damages is not proper considering that there is no showing that RCPI acted in "a wanton, fraudulent, reckless, oppressive, or malevolent manner." (Article 2232, New Civil Code). Respondent Rodriguez was awarded the total amount of P43,148.00 as actual or compensatory damages broken down as follows: (a) P10,000.00 for the preparation of the trip; (b) P20,000.00 for plane fare; (c) P5,000.00 for respondent's stay in transit in Pakistan; (d) P4,000.00 for hotel bills in Khartoum; (e) P78.00 for the telegraphic toll, and P70.00 for the cost of the cablegram sent to Diane Merger. The trial court rejected the expenses allegedly incurred by the respondent for a dinner he tendered for the officers, organizers and students at Khartoum for insufficiency of evidence. It is to be noted that the petitioner does not controvert the amounts. Instead, the petitioner concentrates its opposition to the award of actual damages on the argument that the respondent's expenses were actually paid by the organization and the Sudanese government. The petitioner, however, fails to substantiate its allegations with clear proof. On the other hand, what is evident on record is that due to the non-receipt of the telegram which would have confirmed the scheduled conference on September 20, 1978, Taha cancelled all preparations and stopped the soliciting of funds for the conference which would have included the expenses of the respondent. As a result of the cancellation of the conference, triggered by the non-delivery of the telegrams, the officers were constrained to schedule another meeting in Santiago, Chile in April 1979. Therefore, we see no reason to disturb these findings of the trial court affirmed by the appellate court as these were not sufficiently controverted by the petitioner (See Ganzon v. Court of Appeals, 161 SCRA 646 [1988]).

Finally, petitioner RCPI objects to the award of attorney's fees. Citing the case of Mirasol v. De la Cruz (84 SCRA 337 (1987]), RCPI contends that the award of attorney's fees was improper because there was no allegation in the complaint with respect to attorney's fees; respondent Rodriguez did not present any evidence to prove attorney's fees and the decision failed to explain why attorney's fees are being awarded. We agree. In the recent case of Stronghold Insurance Company, Inc. v. Court of Appeals, (G.R. No. 88376, May 29,1989), we ruled: In Abrogar v. Intermediate Appellate Court (G.R. No. 67970, January 15, 1988, 157 SCRA 57) the Court had occasion to state that '[t]he reason for the award of attorney's fees must be stated in the text of the court's decision, otherwise, if it is stated only in the dispositive portion of the decision, the same must be disallowed on appeal. (at p. 61 citing Mirasol v. dela Cruz, G.R. No. L-32552, July 31, 1978, 84 SCRA 337). A cursory reading of the trial court's decision shows that the award of attorney's fees was stated only once — "As for attorney's fees, the court finds that the amount of P20,000.00 including litigation expenses are reasonable" — just below the dispositive portion of the decision which reads: "WHEREFORE judgment is hereby rendered ordering the defendants jointly and severally liable to pay the plaintiff the total sum of TWO HUNDRED THIRTEEN THOUSAND ONE HUNDRED FORTY EIGHT PESOS (P213,148.00) by way of damages and to pay the costs of this suit." The trial court failed to justify the payment of attorney's by RCPI, therefore, the award of attorney's fees as part of its liability should be disallowed and deleted. WHEREFORE, the instant petition is PARTLY GRANTED. The questioned decision of the respondent court is MODIFIED. The award directing Radio Communications of the Philippines, Inc., to pay P100,000.00 moral damages is reduced to P10,000.00. The award ordering it to pay exemplary damages and attorney's fees is DELETED. In all other respects, the questioned decision is AFFIRMED. Costs against the petitioner. SO ORDERED. Fernan, C.J. (Chairman), Feliciano, Bidin and Cortes JJ., concur. . No. L-66274 September 30, 1984 BAGUMBAYAN CORPORATION, petitioner, vs. INTERMEDIATE APPELLATE COURT, LELISA SEÑA and ARTURO SEÑA respondents. De Santos, Balgos & Perez Law Office for petitioner. Quiason, Ermitano, Makalintal & Barot Law Office for respondents.

AQUINO, J.: This case is about the customer's claims for moral and exemplary damages due to the alleged negligence of a waiter. The spouses Lelisa Seña and Arturo Seña and their four children went to the Tropical Palace Hotel, Parañaque, Metro Manila in the evening of December 20, 1976 to see the

Reycard Duet Show they occupied a table and ordered drinks before the show the hall was crowded and as anyone who attended such show can attest, excitement and confusion prevailed (8, 40-41 tsn, January 19, 1978). Lelisa's version was that when a waiter named Baez was going to serve the tray containing the drinks was overturned and fell on her. She was drenched. Later, she felt some chill. The drinks and the splinters from the broken glasses allegedly destroyed her dress which, with her handbag and shoes, cost one thousand pesos (32-33 tsn November 29, 1977). She was shocked. She sensed that some persons were laughing at or pitying her. Lawyer Francisco Gatchalian, who was at the same table, commented that it was one of those unavoidable things (24 tsn November 29, 1977). A waitress took Lelisa to the ladies' room. She had to remove her dress and underwear which were wet She was not given any towel to cover herself. She remained standing as there was no chair (27-28 tsn). Two of her daughters followed her to the ladies' room (31 tsn). She returned to the hag after about thirty minutes later when the show had started (28, 5152 tsn). The lower court erred in concluding that she missed the show. Lelisa testified that she was claiming moral damages of P100,000 for herself and her husband due toembarrassment and the fact that the management did not even offer any apology on that night (3437 tsn). She was claiming exemplary damages in the same amount to teach the management a lesson. The husband, Arturo Seta, testified that the incident infuriated him. There was no apology from the management. Rudy Tanchanco, the food and beverage manager, was one of three persons in charge of the show. He testified that the admission was on a "first come, first served" basis. An the waiters were extras performing under twelve supervisors. In open court, Tanchanco apologized to the plaintiffs in behalf of the management for the inconvenience caused to them, meaning that the management was sorry for what happened to Mrs. Seta (38-39 February 27, 1978). The Señas sued the corporation, as employer of the waiter, for actual damages of P200,000 plus attorney's fees of P10,000 and such moral and exemplary damages as might be fixed by the court. The action involves a quasi-delict. It was based on articles 2176 and 2180 of the Civil Code. The corporation in its answer alleged that it came to know of the incident only when it was served with summons. Had the incident been brought to its attention on that same night, it would have apologized immediately to the plaintiffs, made appropriate amends and taken steps to discipline the waiter and his supervisor. In fact, in its answer it apologized to the plaintiffs. It labelled the incident as a fortuitous event. It alleged that it observed diligentissimi patris-familias to prevent the damage. It reiterated that it was sorry for what had happened. It manifested its desire to make the proper amends in any reasonable manner or form. After hearing, the trial court awarded the Señas P1,540 as actual damages consisting of the value of Mrs. Seña's outfit and P540, the cost of the six tickets used by the Seña family which was considered a loss because of their alleged failure to enjoy the show. It also awarded the Señas P50,000 as moral damages, P10,000 as exemplary damages and P5,000 as attorney's fees.

The corporation appealed. The Intermediate Appellate Court affirmed the judgment with the modification that the moral and exemplary damages were reduced to P15,000 and P5,000, respectively. Hence, this appeal. The trial court sensibly noted that court action could have been avoided had the matter been taken up directly with the corporation before the action was filed. No extrajudicial demand preceded the action. While the award for actual damages has some basis, the grant of moral and exemplary damages is devoid of legal justification because it was not predicated upon any of the cases enumerated in the Civil Code (Ventanina vs. Centeno, 110 Phil. 811, 816). The Civil Code provides: ART. 2217. Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury. Though incapable of pecuniary computation, moral damages may be recovered if they are the proximate result of the defendant's wrongful act or omission. ART. 2219. Moral damages may be recovered in the following and analogous cases: (1) A criminal offense resulting in physical injuries; (2) Quasi-delicts causing physical injuries; (3) Seduction, abduction, rape, or other lascivious acts; (4) Adultery or concubinage; (5) Illegal or arbitrary detention or arrest; (6) Illegal search; (7) Libel, slander or any other form of defamation; (8) Malicious prosecution; (9) Acts mentioned in article 309; (10) Acts and actions referred to in articles 21, 26, 27, 28, 29, 30, 32, 34, and 35. The parents of the female seduced, abducted, raped, or abused, referred to in No. 3 of this article, may also recover moral damages. The spouse descendants, ascendants, and brothers and sisters may bring the action mentioned in No. 9 of this article, in the order named. ART. 2220. Willful injury to property may be a legal ground for awarding moral damages if the court should find that, under the circumstances, such damages are justly due. The same rule applies to breaches of contract where the defendant acted fraudulently or in bad faith.

The instant case is not specifically mentioned in article 2219 which refers to quasi-delicts causing physical injuries. The Appellate Court erred in considering it as analogous to the cases mentioned therein without indicating what specific case the instant case resembles or is analogous to. For example, an unfounded complaint with a baseless imputation of forgery is analogous to defamation mentioned in article 2219 (7). It justified an award of P2,000 as moral damages (Justiva vs. Gustilo, 117 Phil. 71). Generally, there can be no recovery of moral damages if the case is not mentioned in articles 2219 and 2220 (Malonzo vs. Galang, 109 Phil. 16; Ventanilla vs. Centeno, 110 Phil. 811). What we call moral damages are treated in American jurisprudence as compensatory damages awarded for mental pain and suffering or mental anguish resulting from a wrong (25 C.J.S. 815). "Mental suffering means distress or serious pain as distinguished from annoyance, regret or vexation. Mental anguish is intense mental suffering" (Johnson vs. Western Union Telegraph Co., 81 S.C. 235, 238, 62 SE 244, Note 35, 17 C.J. 829.) "Generally, damages for mental anguish are limited to cases in which there has been a personal physical injury or where the defendant wilfully, wantonly, recklessly, or intentionally caused the mental anguish (22 Am Jur 2nd 275). "Nor will damages generally be awarded for mental anguish which is not accompanied by a physical injury, at least where maliciousness, wantonness, or intentional conduct is not involved" (22 Am Jur 2nd 276). "Damages for mental anguish and suffering have been held recoverable where the act complained of was done with such gross carelessness or recklessness as to show an utter indifference to the consequences" (25 C.J.S. 820). "Under Ohio law, damages for emotional distress consisting of embarrassment and mental suffering and dire threats, are not recoverable unless intentionally caused" (Parmelee vs. E.A. Ackerman 252 Fed. 2nd 721). In Chicago, R.I. & P. Ry Co. vs. Caple, 179 S.W. 2nd 151, it was held that where the act is wanton or willful there may be a recovery for humiliation and mental suffering without any physical injury. It was further held that in negligence cases, where there is no willful or wanton wrong, there can be no recovery for mental suffering unless there is also physical injury. We hold that the "embarrassment" to which Mrs. Seña was exposed by the incident is not the mental anguish contemplated in article 2217 for which moral damages can be recovered. Parenthetically, the case of People vs. Plaza, CA 52 OG 6609, 6612, a case decided by Justice Sanchez, may be cited. In that case, Genoveva de Soriano was a passenger in a riverboat which was bumped by another boat manned by Berchman Plaza and caused the first boat to capsize and sink but did not drown Genoveva. She did not know how to swim Her life was endangered. She suffered fright and mental anguish during those moments when her fate was uncertain. Her claim for P500 as moral damages was not allowed. In this case, it would not be just and proper to include moral damages in the corporation's vicarious liability as employer. The award of P5,000 as exemplary or corrective damages cannot also be sustained because there was no gross negligence in this case.

WHEREFORE, the decision of the Appellate Court is modified. The petitioner is ordered to pay Lelisa Seña the sum of P5,000 to cover her actual damages, litigation expenses and attorney's fees. The award of moral and exemplary damages is eliminated. No costs. SO ORDERED. Makasiar (Chairman), Escolin and Cuevas, JJ., concur. Concepcion, Jr., J., took no part. Guerrero, J., is on leave.

FIRST DIVISION

[G.R. No. 113558. April 18, 1997]

EDITHA M. MIJARES and GLICERIO T. MIJARES, petitioners, vs. COURT OF APPEALS and METRO DRUG, INC., respondents. DECISION
KAPUNAN, J.:

This petition for review on certiorari seeks the reversal of (1) the August 31, 1992 Decision of the Court of Appeals which set aside the decision of the Regional Trial Court of Manila, Branch 46, and (2) the January 10, 1994 Resolution of the Court of Appeals denying the Motion for Reconsideration of its decision.
[1] [2]

In its Complaint dated May 2, 1988 filed before the Manila Regional Trial Court, herein private respondent, Metro Drug, Inc., alleged that herein petitioners, spouses Editha Mijares and Glicerio T. Mijares, while doing business under the style "Aklan Drug," purchased and received from Metro Drug various products the total value of which amounted to P32,034.42. Despite Metro Drug's repeated demands however, petitioners have failed and have refused to pay said amount. Metro Drug thus prayed that the Regional Trial Court render judgment:
[3] [4]

(a) Ordering the defendants to pay, jointly and severally, the plaintiff the sum of P32,034.42 with interest thereon of 1% a month from February, 1986 until fully paid;

(b) Ordering the defendants to pay, jointly and severally, the plaintiff the sum equivalent to 25% of the amount claimed in this suit as and for attorney's fees; (c) Ordering the defendants to pay, jointly and severally, the costs of this suit.
[5]

In their "Answer With Compulsory Counterclaim," petitioners qualified Metro Drug's allegation that they were doing business under the style "Aklan Drug," claiming that the same "is a sole proprietorship in the name of defendant Editha M. Mijares." The petitioners denied the rest of Metro Drug's allegations. They likewise interposed a counterclaim for malicious prosecution and prayed that judgment be rendered:
[6]

A. B.

Dismissing the Complaint in toto for utter lack of merit; and Ordering plaintiff to pay defendants as follows:
1. The sum of P200,000.00 each, or such other sum as the Honorable Court may determine, as and by way of moral damages; 2. The sum of P25,000.00 as and by way of attorney's fees, plus all expenses of suit as may be proven in the course of trial.[7]

On March 8, 1991, the trial court rendered its Decision, the dispositive portion of which reads: WHEREFORE, premises considered, judgment is hereby rendered in favor of the defendants. The Complaint is ordered dismissed and the plaintiff is ordered to pay the defendants the sum of P30,000.00 for moral damages P10,000.00 as attorney's fees and to pay the costs of suit. SO ORDERED.
[8]

The factual findings of the trial court are as follows: Dioscoro Lamenta, salesman/collector of Metro Manila Drug Inc. visits plaintiff's customers once a week, book orders for pharmaceutical products and insure that orders are received by customers. He also collects the value of goods within 30 days after delivery to customers. The defendants as owners of Aklan Drug had been buying pharmaceutical products from Metro Drug since 1976. They (defendants) had

good record with the plaintiff. However, there were eight (8) charge/sales invoices (Exhs. A to H) which became a source of some misunderstanding between the parties. It appears that Editha Mijares, aside from being the operator of Aklan Drug, was also an officer of the Ospital Ng Maynila Consumers Cooperative, Inc. It was an employees' cooperative and she was its pharmacist and manager. Ospital ng Maynila Cooperative became a concessionaire of a small area right inside the hospital compound and it operated a drugstore under its Certificate of Registration dated November 15, 1985 (Exh. 13). Obviously, Ospital ng Maynila Cooperative had some transactions with the plaintiff as supplier of pharmaceutical products. Subsequently, the Board of Directors of the Cooperative decided to dissolve it and stopped its operations. Operations stopped in October 1986. In a letter dated October 23, 1986, Solomon Silverio, Jr. offered to lease from the City of Manila, thru the Mayor, the site previously occupied by the Cooperative. The offer having been accepted, a Contract of Lease (Exh. 1) was entered into between the City of Manila as Lessor and Solomon Silverio, Jr. as Lessee effective November 1, 1986. Thereafter, Solomon Silverio as the new lessee, put up a drugstore on the same area occupied by the Cooperative. On November 26, 1986, delivery of pharmaceutical products was made by plaintiff thru Dioscoro Lamenta, to the said store. It was covered by Exhibit A. In 1987, on seven other occasions, particularly on March 6, 1987 March 11, 1987 July 29, 1987 July 30, 1987 August 3, 1987 August 11, 1987 August 24, 1987 more deliveries of pharmaceutical products were made in the same place by the plaintiff. From the first to the seventh deliveries (Exhs. A to G) they were received by Luz Espares. The 8th delivery (Exh. H) was received by Hilda Rodrigona. These two were never the employees of the defendants. The total value of these eight (8) deliveries under charge invoices is in the sum of P32,034.42. In partial payment of these receivables, plaintiff received Check No. 264292 (Exh. J) dated November 27, 1987. It was paid to Lamenta, when the latter went to the store in

the compound of the Ospital ng Maynila to collect. It was drawn by Solomon Silverio, Jr. which check was under the account name Farmacia delos Remedios under Account No. 202-830126-2 in the amount of P14,180.46. Metro Drug deposited said check with the FEBTC in its account on December 3, 1987. On December 4, 1987, it received a notice from the bank that the check was returned to it on the ground of insufficient fund. On April 4, 1988, plaintiff filed a telegram (Exh. K) addressed to Aklan Drug at 1711 Zamora St., Pandacan Manila, demanding full redemption of the dishonored check and full payment of outstanding account forP27,938.06. About 4 to 5 days after the telegram was sent, Lamenta was able to talk to Editha Mijares who directed him to a certain Solomon Silverio to collect the amount. He asked why as she was the owner of Aklan Drug. But he was told by Editha that Silverio is the one managing the store. Lamenta felt that as salesman/collector of the plaintiff, he has limited duties. He felt he has no duty to check who is the owner of the drugstore to whom he delivers the drugs. Hence in this case, that he went to the store to collect and was given a check in that store is enough. He did not care whoever was in that store. So when he was told in his office that the check paid to him bounced, he went back to that drugstore, to inform them of the dishonor, without even recalling to whom he gave said information. Based on such limiting attitude, he has always perceived Editha Mijares as a debtor of the plaintiff. Editha Mijares and her husband do not acknowledged at all that they have any outstanding account with the plaintiff. Defendant Glicerio Mijares, as a doctor, never had anything to do with the drugstore of his wife. It was only Editha Mijares who operates and manages the Aklan Drug located at 1711 Zamora St., Pandacan, Manila (Exhs. 2 and 2-A.) And as far as Editha is concerned, she never ordered the drugs Lamenta brought to the Ospital ng Maynila on November 26, 1986 and in 1987 which are covered by the charge/sale invoices (Exh. A to H). Neither has she, nor her employees, received them. Luz Espares and Hilda Rodrigona who received the goods in question from Lamenta are not her employees. While Editha Mijares has dealt with the plaintiff, but it was always only thru Lamenta that they transacted business. And all her purchases were paid for. In fact, plaintiff acknowledges that defendants paid all accounts incurred except the claim herein. When Lamenta tried to collect from Editha Mijares for the disputed claim, Editha Mijares referred him to Mr. Silverio as the new operator and concessionaire of the drugstore. She informed him verbally that they have no more business inside the Ospital ng Maynila as the cooperative drugstore has already stopped operations. Despite said verbal notice, the demand telegram addressed to Aklan Drug

was still sent to Editha Mijares. On Lamenta's follow-up of said telegram, Editha Mijares again directed Lamenta to see Solomon Silverio, the new owner of the drugstore. In fact on a certain occasion, Lamenta told Mijares "nasabihan ko na, bahala na sila" obviously referring to the information he gave Metro Drug that Editha Mijares is no longer running the drugstore at the Ospital ng Maynila.
[9]

On the basis of the above findings, the trial court concluded that: x x x it is clear that the products covered by plaintiff's Exh. A to H inclusive, were not purchased by, nor delivered to, nor received by the defendants. As a consequence, defendants are not liable to plaintiff for the sums indicated in Exh. A to H inclusive
[10]

On appeal by Metro Drug, the Court of Appeals reversed the decision of the Regional Trial Court ratiocinating that: DEFENDANTS-APPELLEES, however, want to convince Us of certain details unknown to the plaintiff-appellant's representative Dioscoro Lamenta that the cooperative has already been dissolved or that the operation of the cooperative drugstore has already been terminated, and that there was a new lease which paved the way for the entry into the picture of a certain Solomon Silverio, Jr., in order to avoid liability. But the undeniable and unrebutted fact is that appellant's representative Dioscoro Lamenta had been delivering pharmaceuticals to the drugstore of the appellees from 1976-1986. There were no significant changes in operational or personnel scheme as well as the use of the old credit line. In fine, the delivery of the pharmaceuticals was with the consent of the defendants as owners of the drugstore. The defendants' contention that Luz Espares and Hilda Rodrigona were no longer employed with the cooperative drugstore owned by the defendants cannot absolve defendants from liability on appellant's claim. TO repeat the basic liability of the defendants-appellees, it should be made clear that this proceeds from the obligation arising from the purchase by the appellee and receipt of the pharmaceuticals delivered by the appellant. This delivery was precipitated by the appellees' order of the merchandise. The appellees' order of the merchandise and the appellant's agreement to deliver, as in fact it delivered said merchandise, constitutes a contract of sale which is perfected (Art. 1475, NCC; Warner vs. Inza, 43 Phil. 404).
[11]

Not satisfied with the decision of the Court of Appeals, petitioners came to this Court by way of petition for review, alleging that:
I. THE COURT OF APPEALS ERRED IN REVERSING AND SETTING ASIDE THE DECISION DATED MARCH 8, 1991 OF THE TRIAL COURT.

II.

THE COURT OF APPEALS ERRED IN CONCLUDING THAT THE MERCHANDISE COVERED BY EXHIBITS A TO H WERE PURCHASED BY, DELIVERED TO, AND RECEIVED BY PETITIONERS. THE COURT OF APPEALS ERRED IN ORDERING PETITIONERS TO PAY RESPONDENT THE SUM OF P32,034.43 WITH INTEREST THEREON OF 1% A MONTH FROM FEBRUARY 1986 UNTIL FULLY PAID; TO PAY SUM EQUIVALENT TO 25% OF THE AMOUNT CLAIMED AS ATTORNEY'S FEES; AND TO PAY THE COSTS OF SUIT. [12]

III.

We give due course to the petition. As a general rule, the findings of fact of the Court of Appeals are binding upon this Court. The rule, however, is not absolute, and jurisprudence has carved out several exceptions. Among these are when the findings of the Court of Appeals are contrary to those of the trial court.
[13]

In the case at bar, the evidence as found by the trial court conclusively shows that by October 1986, Editha Mijares was no longer involved in the operation of the drugstore. On November 1, 1986, a certain Solomon Silverio, Jr. put up an entirely distinct drugstore, as the new lessee of the area. It was this same Solomon Silverio, Jr. who drew the bouncing check in partial payment of the pharmaceutical products. The only evidence alluding to petitioners' ownership of the drugstore is Dioscoro Lamenta's testimony, to wit:
Q. A. Q. A. You stated that that drug store located at Ospital Ng Maynila has no sign [identifying the store as Aklan Drug]? I did not notice any sign, Sir. But you know for a fact that this drug-store is an extension owned and operating by the defendant? Yes, Sir.[14]

Lamenta, however, did not explain how he reached such a conclusion. On the other hand, petitioner Editha Mijares testified that the drugstore was currently owned by Solomon Silverio, not by petitioners:
Q. Plaintiff's witness, in the person of Mr. Lamenta, testified that the pharmaceutical products covered by Exhibits A to H were delivered to a drugstore situated at the Ospital ng Maynila Compound. Do you know if such or if there is such a drugstore in the Ospital Ng Maynila compound in November, 1986? Would you know if there was a drugstore inside the Ospital Ng Maynila Compound? I have a knowledge that there is a drugstore there but I don't have any knowledge of the delivery or the transaction between Metro Drug and the drugstore located in the compound of the Ospital ng Maynila.

A.

Q. A. Q. A. Q. A. Q. A.

Would you know the owner of the drugstore inside the compound of Ospital ng Maynila? Mr. Silverio. Can you please give us the full name of Mr. Silverio, if you know? Solomon Silverio. Was he the owner? He was the concessionaire of the new drugstore. What is the name of the new drugstore? Farmacia delos Remedios.[15]

To support Mrs. Mijares' testimony regarding the new concession operating in the Hospital, petitioners presented in evidence a "CONTRACT OF LEASE" involving a building "erected on the City lot occupied by the Hospital ng Maynila" which the lessee offered to lease "as site for a drugstore." Said contract was executed on the "1 th (sic) day of November, 1986" by the City of Manila, represented by then Acting Mayor Gemiliano C. Lopez, Jr., as Lessor, and Solomon G. Silverio, Jr., "who is doing business under the business name and style of FARMACIA DE LOS REMEDIOS," as Lessee.
[16]

Moreover, it may be noted that the check received by Metro Drug in partial payment of the pharmaceutical products was drawn by Solomon Silverio under the account name of Farmacia de los Remedios.
[17]

We find the above testimony and documents more than sufficient to overcome Dioscoro Lamenta's uncorroborated testimony that petitioners were the owners of the subject drugstore. The decision of the Court of Appeals holding petitioners liable to Metro Drug has therefore no leg to stand on. Private respondent nonetheless faults petitioners for failing to inform its "salesman/collector Dioscoro Lamenta about the alleged change of ownership or management of the drugstore inside the Ospital ng Maynila when the questioned deliveries were made." Private respondent also cites certain statements allegedly made by Mrs. Mijares assuring Lamenta that the amount claimed would be paid. These circumstances construed in relation to the parties' past transactions dating back to 1976, the use of the old credit line, and the continuity of the operational scheme -- the last two being attributed to petitioners -- supposedly led private respondent's salesman/collector to believe that petitioners were the owners of the subject drugstore. "If petitioners did not actively operate by themselves said drugstore," contends private respondent, "they at the very least represented themselves as such." In short, private respondent pleads estoppel on the part of the petitioners.

We are not persuaded. In Kalalo vs. Luz, we held that:
[18]

As related to the party claiming the estoppel, the essential elements are: (1) lack of knowledge and of the means of knowledge of the truth as to the facts in question; (2) reliance, in good faith, upon the conduct or statements of the party to be estopped; and (3) action or inaction based thereon of such character as to change the position or status of the party claiming the estoppel, to his injury, detriment or prejudice.
[19]

The first element, as related to the party claiming estoppel, is conspicuously absent in this case. Contrary to Metro Drug's allegations, Mrs. Mijares testified that she did inform Metro Drug salesman/collector Dioscoro Lamenta of the change of ownership or management of the drug store, thus:
Q. A. Q. A. Q. A. Q. Mr. Lamenta testified that he went to see you to follow up the letter of demand or telegram, what did you do? Were you able to meet with Dr. Lamenta? Yes, I did. What transpire during that meeting? He asked me to pay that account but I referred him to Solomon Silverio who is now the owner of the Farmacia delos Remedios. Did you tell him to collect from Mr. Silverio? Yes, I did tell him that we have no business anymore there as the cooperative drugstore stopped operation. You said that the Ospital ng Maynila Employees Cooperative who was the concessionaire of the drugstore in which you were the pharmacist and manager was dissolved sometime in September and October 1986 and considering that the drugstore ceased to operate, did you had the occasion to talk to Mr. Lamenta about the cessation of the business operation of the drugstore? I told him that we are no longer connected anymore with said drugstore and that any collectibles should be collected from Mr. Silverio because we are no longer transacting business there. And, in fact, if my memory serves me right, I told him already that . . . I object the answer. She is already narrating. COURT: Allowed. A. Somebody is already awarded the concession to that drugstore. I know that they have a knowledge of the discontinuance of the Cooperative's Drugstore and he told me that he has notified the office already.

A.

ATTY. BASCONCILLO:

COURT:

When you were quoting: "And he told me that he has notified the office already," to whom do you refer when you say "he"? A. Mr. Lamenta has notified the office and he stated further that: "Nasabihan ko na sila. Bahala na sila." When you say "sila" to whom are you referMetro Drug.[20]

ATTY. QUIMPO: Q. A.

Assuming that Mrs. Mijares never conveyed such information to Metro Drug's salesman/collector and that petitioners were indeed responsible for the acts attributed to them by private respondent, estoppel would still be unavailing against petitioners. The first element as related to the party claiming estoppel not only requires that there be lack of knowledge on the part of the party invoking estoppel but also "the means of knowledge of the truth as to the facts in question." One who claims the benefit of an estoppel on the ground that he has been misled by the representations of another must not have been misled through his own want of reasonable care and circumspection. A lack of diligence by a party claiming an estoppel is generally fatal. If the party conducts himself with careless indifference to means of information reasonably at hand, or ignores highly suspicious circumstances, he may not invoke the doctrine of estoppel. Good faith is generally regarded as requiring the exercise of reasonable diligence to learn the truth, and accordingly estoppel is denied where the party claiming it was put on inquiry as to the truth and had available means for ascertaining it, at least where actual fraud has not been practised on the party claiming the estoppel x x x
[21]

Private respondent's salesman/collector Dioscoro Lamenta testified thus:
COURT: Clarificatory question. Q. Mr. Witness, you tell the Court that after the telegram, was sent by Mijares, about four (4) or five (5) days thereafter, you saw Mijares, the question is, when were told by Mijares that the one managing the store is already a certain Solomon Silverio, and that you should collect the account from Solomon Silverio. When you were going still to her store within the compound of Ospital Ng Maynila, did it not occur to you to make some inquiries about this Solomon Silverio, who has handed this check and who is managing the drugstore? I made inquiries, Your Honor. In this check which marked Exhibit J, which was handed to you, the account name is very clear that it is Farmacia delos Remedios, in the course of the transaction that Metro Drugs have with Mijares, was there any occasion for the defendant to issue check in the name of Farmacia delos Remedios?

A. Q.

A. Q.

That check was issued within the drugstore. I am only asking, when you were still dealing with Editha Mijares from 1986, was there any occasion when Editha Mijares and husband issue a check in the account of Farmacia delos Remedios? None, Your Honor. Was this check drawn in your presence, this check marked Exhibit J? I cannot remember, Your Honor, when I went there they already handed to me Considering that Metro Drugs is in business, was there any occasion for Metro Drugs to check from the office of domestic and bureau . . . who is the owner of Farmacia delos Remedios, considering that Exhibit J is very clear? I cannot remember of the result of my inquiry. You testified to the Court that Editha Mijares told you explicitly that you have to collect from Solomon Silverio. Considering that Editha Mijares told you that you would collect the amount you are trying to collect from her to Solomon Silverio, and being already armed with the check marked Exhibit J, did it not occur to you or you company to verify, considering that it is already at least denial of liability, did you or your company? There was, we did something. What did you do? I went to the domestic to check who was the real owner. You did not check about Farmacia delos Remedios, which is the very check your company is claiming? I did some inquiries regarding Farmacia delos Remedios, but I cannot remember the result

A. Q. A. Q.

A. Q.

A. Q. A. Q. A.

FIRST DIVISION [G.R. No. 80791 : December 4, 1990.] 192 SCRA 34 PEOPLE'S FINANCING CORP. and ENRIQUE V. ARCENAS, Petitioners, vs. COURT OF APPEALS (Sixteenth Division), GAUDIOSO MANLIGUEZ and PURIFICACION MANLIGUEZ, Respondents. DECISION CRUZ, J.: On September 13, 1976, Kalmar Construction and Mining Exploration Co. purchased several pieces of heavy equipment from J.P. Enterprises for the total amount of

P787,000.00. The buyer made a 30% payment in the sum of P237,000.00, leaving a balance of P550,000.00, to be paid in 18 monthly installments of P41,217.00 beginning October 1976. To secure payment of this indebtedness, a promissory note and a chattel mortgage were signed by Nicolas Kalubiran, as general manager of Kalmar, Gaudioso Manliguez as operation manager, Adelaida Kalubiran as treasurer, Andrea Bihag as mining superintendent, and Alan Manliguez as comptroller. These instruments provided for a 14% interest per annum on each unpaid monthly installment, with a rebate for any installment paid on or before due date. On the same date, the promissory note and the chattel mortgage were assigned by the seller to People's Financing Corporation, the herein petitioner, of which Enrique V. Arcenas is the manager. On February 15, 1978, Gaudioso Manliguez and his wife, Purificacion Manliguez, executed a real estate mortgage on one-third of a parcel of land owned by them and located at Mandaue City "as additional security for the payment of an existing obligation in the sum of FIVE HUNDRED SIXTY FOUR THOUSAND ONE HUNDRED SEVENTY PESOS AND 70/100 (P564,170.70) re Promissory Note dated September 13, 1976." On February 26, 1979, the petitioners caused the extrajudicial foreclosure of this mortgage for non-payment of the promissory note. The subject property was sold to PFC as the highest bidder and the sale was registered in the Office of the Register of Deeds of Mandaue City on March 5, 1979.
:-cralaw

On February 6, 1980, the private respondents filed a complaint in the Regional Trial Court of Cebu for annulment of the real estate mortgage and the foreclosure sale and for damages. Judge Valeriano P. Tomol, Jr. issued a restraining order enjoining the issuance of a final certificate of sale and the consolidation of ownership of the mortgaged property in the name of PFC. On April 12, 1984, after trial, the complaint was dismissed; on the counterclaim, Enrique V. Arcenas was awarded P20,000.00 moral damages, P10,000.00 attorney's fees and P1,000.00 litigation expenses. On November 9, 1987, the decision was modified by the Court of Appeals, 1 which disposed as follows: WHEREFORE, the appealed decision is hereby modified as follows: 1) The grant of moral damages, counsel fees and litigation expenses are hereby set aside; 2) Defendants-appellees Enrique V. Arcenas and People's Financing Corporation are hereby ordered jointly and severally to pay or return to plaintiffs the sum of P191,906.00 with legal interest thereon from the date of this judgment until fully paid, and subject to the ruling granting plaintiffs-appellants the right to redeem the property with the right to offset the amount of P191,906.00 including interest out of the redemption price and costs, considering Sections 30 and 34, Rule 39, Rules of Court. In all other respects, the judgment appealed from is hereby Affirmed. No costs. SO ORDERED. The petitioners are now before this Court, contending that the respondent court erred in: (a) requiring them to return to the private respondents the sum of P191,906.00 as excessive finance charges not duly disclosed to them; (b) granting the private

respondents the right to redeem the mortgaged property; and (c) setting aside the award of moral damages, and attorney's fees. The decision shall be modified. On the first issue, we find that the private respondents have been sufficiently informed of the additional charges of P191,906.00, because the real estate mortgage specifically referred to the promissory note of September 13, 1976. This was the subject of the disclosure statement issued on the same date in which the amount was indicated as the "total finance charges." Gaudioso Manliguez could not have not known of such charges as he was one of the signatories to the promissory note as operation manager of Kalmar. We are not convinced that his wife was unaware of these charges as the natural presumption is that her husband would have told her about them, considering the amount of the indebtedness they were securing and the value of the property they were mortgaging. It is difficult to believe that they were all along ignorant of the said charges and that they would never have executed the mortgage had they been properly informed. The Court notes that private respondent Gaudioso Manliguez is an experienced businessman and presumably knowledgeable in business matters, including the contracting of substantial loans through financing arrangements. He was one of the key officials of Kalmar who signed the promissory note for more than half a million pesos. He would not have signed it with his eyes closed or without any idea of where the payment was coming from. It is more reasonable to suppose that he was fully cognizant of all the details of the transaction, including the financing charges that had to be paid as a condition for the extension of the loan. It might have been different if the borrowers were, say, an ordinary couple eager to buy their first car and beguiled into accepting onerous terms for the financing of the installment payments they have to make. Such borrowers are usually not conversant with the intricacies of financing arrangements and are likely to enter into such transactions without fully realizing the charges they will have to pay in addition to the actual purchase price of whatever it is they are buying. In such cases, the Court would be disposed to be stricter in the application of the Truth in Lending Act and insist on proof that the borrowers were fully informed of what they were getting into. But in the case at bar, considering the experience and familiarity of Manliguez with loan and financing transactions, we must hold, in light of the evidence before us, that he was duly informed of the financing charges and fully understood their implications and effects.
: rd

The contention that the charges are excessive and unlawful are also not acceptable. Section 5 of R.A. 5980 provides: Section 5. Limitation on purchase discount, fees, service and other charges. — In the case of assignments of credit or the buying of installment papers, accounts receivables and other evidence of indebtedness by financing companies, the purchase discount, exclusive of interest and other charges, shall be limited to fourteen (14%) per cent of the value of the credit assigned or the value of the installment papers, accounts receivable and other evidence of indebtedness by financing companies purchased based on a period of twelve (12) months or less, and to one and one sixth (1-1/6%) per cent for each additional month or fraction thereof in excess of twelve months, regardless of the terms and conditions of the assignment or purchase. As correctly observed in the petitioner's memorandum:

Private respondents' indebtedness covers an 18-month installment period. Accordingly, the legal purchase discount is 21%, broken down as follows: For the 1st 12 months — 14%; Excess 6 months — 7% Please note that this is exclusive of interest and other charges. Under CB Circular 494, non-banking institutions are allowed to charge 14% as interest/finance charges on loans. Therefore, the total Finance Charges applicable under Rep. Act No. 5980 and CB Circular No. 494 taken together is thirty five (35%) percent (21% and 14%) even higher than the 34.89% computed by J.P. Enterprises, seller of the accounts receivables to People's Financing Corporation. Moreover, in Central Bank Circular No. 905, Series of 1982, it is clearly provided that: SECTION 1. The rate of interest, including commissions, premiums, fees and other charges, on a loan or forbearance of any money, goods, or credits, regardless of maturity and whether secured or unsecured, that may be charged or collected by any person, whether natural or judicial, shall not be subject to any ceiling prescribed under or pursuant to the Usury Law, as amended. Thus, applying that provision in Liam Law v. Olympic Sawmill, 2 this Court said: Moreover, for sometime now, usury has been legally non-existent. Interest can now be charged as lender and borrower may agree upon. The Rules of Court in regards to allegations of usury, procedural in nature, should be considered repealed with retroactive effect. Statutes regulating the procedure of the courts will be construed as applicable to actions pending and undetermined at the time of their passage. Procedural laws are retrospective in that sense and to that extent. On the second issue, the respondent court said as follows: The one-year period of redemption provided for in Sec. 6 of Act No. 3135, as amended by Act No. 4118, has never commenced. The issuance of the Final Deed of Sale set for by the Sheriff on February 26, 1980 was stopped by the trial court on February 11, 1980. The mortgaged lot is covered by Transfer Certificate of Title No. T-13564. Appellants claim one-third portion thereof is now with a market value of P3,000,000.00. On registered lands, the one-year period of redemption starts not from the date of the sale but from the date when the certificate of sale issued by the sheriff is registered in the office of the register of deeds (Salazar vs. Maneses, 8 SCRA 495; Reyes vs. Fajardo, CA-G.R. No. 39588-R, Jan. 15, 1973, 69 OG No. 48, Nov. 26, 1973, 18 C.A.R. 2s p. 79).
: rd

The record shows, however, that the certificate of sale was duly registered by the petitioners in the Office of the Register of Deeds of Mandaue City on March 5, 1979. The one-year redemption period began to run from that date and expired on March 5, 1980, without any redemption having been effected by the private respondents. The consequence is that ownership was legally consolidated in PFC, which had a right to the issuance of a new certificate of title in its name.

It is not correct to say that the restraining order issued on February 11, 1980, by the trial court (which ultimately dismissed the complaint four years later) had the effect of suspending the running of the redemption period. As we held through Chief Justice Concepcion in Sumerariz v. Development Bank of the Philippines, 3 "there is no statute or decision which supports plaintiffs contention that the period of one year to redeem land sold at the sheriff's sale was suspended by the institution of an action to annul the foreclosure sale." On the third issue, we find for the private respondents. It has not been sufficiently established that the complaint they filed was intended merely to harass and place petitioner Arcenas in disrepute as they apparently were pursuing a cause of action they sincerely believed was meritorious. The fact that they have failed does not necessarily mean that they were acting in bad faith. The mere filing of a complaint against a person, while it may cause him some anxiety, is not per se evidence of ill will on which a claim for damages may be based. A contrary role would discourage peaceful recourse to the courts of justice and induce resort to methods less than legal, and perhaps even violent.
:-cralaw

WHEREFORE, the appealed decision is MODIFIED. The rulings of the respondent court requiring the petitioner to pay the private respondents the sum of P191,906.00 and allowing the latter to redeem the mortgaged property are SET ASIDE. The rest of the decision is AFFIRMED. SO ORDERED. Narvasa, Gancayco, Griño-Aquino and Medialdea, JJ., concur.

G.R. No. 78656 August 30, 1988 TRANS WORLD AIRLINES, petitioner, vs. COURT OF APPEALS and ROGELIO A. VINLUAN, respondents. Guerrero & Torres Law Offices for petitioner. Angara, Abello, Concepcion, Regala & Cruz for private respondent. The Solicitor General for public respondent.

GANCAYCO, J.: Rogelio A. Vinluan is a practicing lawyer who had to travel in April, 1979 to several cities in Europe and the U.S. to attend to some matters involving several clients. He entered into a contract for air carriage for valuable consideration with Japan Airlines first class from Manila to Tokyo, Moscow, Paris, Hamburg, Zurich, New York, Los Angeles, Honolulu and back to Manila thru the same airline and other airlines it represents for which he was issued the corresponding first class tickets for the entire trip. On April 18, 1979, while in Paris, he went to the office of Trans World Airlines (TWA) at the De Gaulle Airport and secured therefrom confirmed reservation for first class accommodation on board its Flight

No. 41 from New York to San Francisco which was scheduled to depart on April 20, 1979. A validated stub was attached to the New York-Los Angeles portion of his ticket evidencing his confirmed reservation for said flight with the mark "OK " 1 On April 20, 1979, at about 8:00 o'clock A.M., Vinluan reconfirrred his reservation for first class accommodation on board TWA Flight No. 41 with its New York office. He was advised that his reservation was confirmed. He was even requested to indicate his seat preference on said flight on said scheduled date of departure of TWA Flight No. 41. Vinluan presented his ticket for check-in at the counter of TWA at JFK International Airport at about 9:45 o'clock A.M., the scheduled time of the departure being 11:00 o'clock A.M. He was informed that there was no first class seat available for him on the flight. He asked for an explanation but TWA employees on duty declined to give any reason. When he began to protest, one of the TWA employees, a certain Mr. Braam, rudely threatened him with the words "Don't argue with me, I have a very bad temper." To be able to keep his schedule, Vinluan was compelled to take the economy seat offered to him and he was issued a refund application" as he was downgraded from first class to economy class. While waiting for the departure of Flight No. 41. Vinluan noticed that other passengers who were white Caucasians and who had checked-in later than him were given preference in some first class seats which became available due to "no show" passengers. On February 15, 1980, Vinluan filed an action for damages against the TWA in the Court of First Instance of Rizal alleging breach of contract and bad faith. After trial on the merits, a decision was rendered the dispositive part of which reads as follows: WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendant holding the latter liable to the for-mer for the amount representing the difference in fare between first class and economy class accommodations on board Flight No. 6041 from New York to San Francisco, the amount of P500,000.00 as moral damages, the amount of P300,000.00 as exemplary damages, and the amount of P100,000.00 as and for attorney's fees, all such amounts to earn interest at the rate of twelve (12%) percent per annum from February 15, 1980 when the complainant was filed until fully paid. Correspondingly, defendant's counterclaim is dismissed. Costs against the defendant. SO ORDERED. Not satisfied therewith, the TWA appealed to the Court of Appeals wherein in due course a decision was rendered on May 27, 1987, 2 the dispositive part of which reads as follows: WHEREFORE, the decision dated March 8, 1984 is hereby modified by (1) fixing the interest which appellant must pay on the awards of moral and exemplary damages at six per cent (6%) per annum from the date of the decision a quo, March 8, 1984 until date of full payment and (2) reducing the attorne's fees to P50,000.00 without interest, the rest of the decision is affirmed. Cost against appellant. SO ORDERED. Hence, the herein petition for review. The theory of the petitioner is that because of maintenance problems of the aircraft on the day of the flight, TWA Flight No. 41 was cancelled and a special Flight No. 6041 was organized to operate in lieu

of Flight No. 41. 3 Flight No. 41 was to have utilized a Lockheed 1011 with 34 first class seats, but instead, a smaller Boeing 707 with only 16 first class seats was substituted for use in Flight No. 6041. Hence, passengers who had first class reservations on Flight No. 41 had to be accommodated on Flight No. 6041 on a first-come, first-served basis. An announcement was allegedly made to all passengers in the entire terminal of the airport advising them to get boarding cards for Flight No. 6041 to San Francisco and that the first ones getting them would get first preference as to seats in the aircraft. It denied declining to give any explanation for the downgrading of private respondent as well as the discourteous attitude of Mr. Braam. On the other hand, private respondent asserts that he did not hear such announcement at the terminal and that he was among the early passengers to present his ticket for check-in only to be informed that there was no first class seat available for him and that he had to be downgraded. The petitioner contends that the respondent Court of Appeals committed a grave abuse of discretion in finding that petitioner acted maliciously and discriminatorily, and in granting excessive moral and exemplary damages and attorney's fees. The contention is devoid of merit. Private respondent had a first class ticket for Flight No. 41 of petitioner from New York to San Francisco on April 20, 1979. It was twice confirmed and yet respondent unceremoniously told him that there was no first class seat available for him and that he had to be downgraded to the economy class. As he protested, he was arrogantly threatened by one Mr. Braam. Worst still, while he was waiting for the flight, he saw that several Caucasians who arrived much later were accommodated in first class seats when the other passengers did not show up. The discrimination is obvious and the humiliation to which private respondent was subjected is undeniable. Consequently, the award of moral and exemplary damages by the respondent court is in order. 4 Indeed, private respondent had shown that the alleged switch of planes from a Lockheed 1011 to a smaller Boeing 707 was because there were only 138 confirmed economy class passengers who could very well be accommodated in the smaller plane and not because of maintenance problems. Petitioner sacrificed the comfort of its first class passengers including private respondent Vinluan for the sake of econonmy. Such inattention and lack of care for the interest of its passengers who are entitled to its utmost consideration, particularly as to their convenience, amount to bad faith which entitles the passenger to the award of moral damages. 5 More so in this case where instead of courteously informing private respondent of his being downgraded under the circumstances, he was angrily rebuffed by an employee of petitioner. At the time of this unfortunate incident, the private respondent was a practicing lawyer, a senior partner of a big law firm in Manila. He was a director of several companies and was active in civic and social organizations in the Philippines. Considering the circumstances of this case and the social standing of private respondent in the community, he is entitled to the award of moral and exemplary damages. However, the moral damages should be reduced to P300,000.00, and the exemplary damages should be reduced to P200,000.00. This award should be reasonably sufficient to indemnify private respondent for the humiliation and embarrassment that he suffered and to serve as an example to discourage the repetition of similar oppressive and discriminatory acts. WHEREFORE, with the above modification reducing the moral and exemplary damages as abovestated, the decision subject of the petition for review is AFFIRMED in all other respects, without pronouncement as to costs in this instance.

SO ORDERED. Republic of the Philippines SUPREME COURT Manila SECOND DIVISION

G.R. No. 104235 November 18, 1993 SPOUSES CESAR & SUTHIRA ZALAMEA and LIANA ZALAMEA, petitioners, vs. HONORABLE COURT OF APPEALS and TRANSWORLD AIRLINES, INC., respondents. Sycip, Salazar, Hernandez, Gatmaitan for petitioners. Quisumbing, Torres & Evangelista for private-respondent.

NOCON, J.: Disgruntled over TransWorld Airlines, Inc.'s refusal to accommodate them in TWA Flight 007 departing from New York to Los Angeles on June 6, 1984 despite possession of confirmed tickets, petitioners filed an action for damages before the Regional Trial Court of Makati, Metro Manila, Branch 145. Advocating petitioner's position, the trial court categorically ruled that respondent TransWorld Airlines (TWA) breached its contract of carriage with petitioners and that said breach was "characterized by bad faith." On appeal, however, the appellate court found that while there was a breach of contract on respondent TWA's part, there was neither fraud nor bad faith because under the Code of Federal Regulations by the Civil Aeronautics Board of the United States of America it is allowed to overbook flights. The factual backdrop of the case is as follows: Petitioners-spouses Cesar C. Zalamea and Suthira Zalamea, and their daughter, Liana Zalamea, purchased three (3) airline tickets from the Manila agent of respondent TransWorld Airlines, Inc. for a flight to New York to Los Angeles on June 6, 1984. The tickets of petitioners-spouses were purchased at a discount of 75% while that of their daughter was a full fare ticket. All three tickets represented confirmed reservations. While in New York, on June 4, 1984, petitioners received notice of the reconfirmation of their reservations for said flight. On the appointed date, however, petitioners checked in at 10:00 a.m., an hour earlier than the scheduled flight at 11:00 a.m. but were placed on the wait-list because the number of passengers who had checked in before them had already taken all the seats available on the flight. Liana Zalamea appeared as the No. 13 on the wait-list while the two other Zalameas were listed as "No. 34, showing a party of two." Out of the 42 names on the wait list, the first 22 names were eventually allowed to board the flight to Los Angeles, including petitioner Cesar Zalamea. The two others, on the other hand, at No. 34, being ranked lower than 22, were not able to fly. As it were, those holding full-fare tickets were given first priority among the wait-listed passengers. Mr. Zalamea, who

was holding the full-fare ticket of his daughter, was allowed to board the plane; while his wife and daughter, who presented the discounted tickets were denied boarding. According to Mr. Zalamea, it was only later when he discovered the he was holding his daughter's full-fare ticket. Even in the next TWA flight to Los Angeles Mrs. Zalamea and her daughter, could not be accommodated because it was also fully booked. Thus, they were constrained to book in another flight and purchased two tickets from American Airlines at a cost of Nine Hundred Eighteen ($918.00) Dollars. Upon their arrival in the Philippines, petitioners filed an action for damages based on breach of contract of air carriage before the Regional Trial Court of Makati, Metro Manila, Branch 145. As aforesaid, the lower court ruled in favor of petitioners in its decision 1 dated January 9, 1989 the dispositive portion of which states as follows: WHEREFORE, judgment is hereby rendered ordering the defendant to pay plaintiffs the following amounts: (1) US $918.00, or its peso equivalent at the time of payment representing the price of the tickets bought by Suthira and Liana Zalamea from American Airlines, to enable them to fly to Los Angeles from New York City; (2) US $159.49, or its peso equivalent at the time of payment, representing the price of Suthira Zalamea's ticket for TWA Flight 007; (3) Eight Thousand Nine Hundred Thirty-Four Pesos and Fifty Centavos (P8,934.50, Philippine Currency, representing the price of Liana Zalamea's ticket for TWA Flight 007, (4) Two Hundred Fifty Thousand Pesos (P250,000.00), Philippine Currency, as moral damages for all the plaintiffs' (5) One Hundred Thousand Pesos (P100,000.00), Philippine Currency, as and for attorney's fees; and (6) The costs of suit. SO ORDERED. 2 On appeal, the respondent Court of Appeals held that moral damages are recoverable in a damage suit predicated upon a breach of contract of carriage only where there is fraud or bad faith. Since it is a matter of record that overbooking of flights is a common and accepted practice of airlines in the United States and is specifically allowed under the Code of Federal Regulations by the Civil Aeronautics Board, no fraud nor bad faith could be imputed on respondent TransWorld Airlines. Moreover, while respondent TWA was remiss in not informing petitioners that the flight was overbooked and that even a person with a confirmed reservation may be denied accommodation on an overbooked flight, nevertheless it ruled that such omission or negligence cannot under the circumstances be considered to be so gross as to amount to bad faith.

Finally, it also held that there was no bad faith in placing petitioners in the wait-list along with fortyeight (48) other passengers where full-fare first class tickets were given priority over discounted tickets. The dispositive portion of the decision of respondent Court of Appeals 3 dated October 25, 1991 states as follows: WHEREFORE, in view of all the foregoing, the decision under review is hereby MODIFIED in that the award of moral and exemplary damages to the plaintiffs is eliminated, and the defendant-appellant is hereby ordered to pay the plaintiff the following amounts: (1) US$159.49, or its peso equivalent at the time of the payment, representing the price of Suthira Zalamea's ticket for TWA Flight 007; (2) US$159.49, or its peso equivalent at the time of the payment, representing the price of Cesar Zalamea's ticket for TWA Flight 007; (3) P50,000.00 as and for attorney's fees. (4) The costs of suit.
SO ORDERED. 4

Not satisfied with the decision, petitioners raised the case on petition for review on certiorari and alleged the following errors committed by the respondent Court of Appeals, to wit: I. . . . IN HOLDING THAT THERE WAS NO FRAUD OR BAD FAITH ON THE PART OF RESPONDENT TWA BECAUSE IT HAS A RIGHT TO OVERBOOK FLIGHTS. II. . . . IN ELIMINATING THE AWARD OF EXEMPLARY DAMAGES. III.
. . . IN NOT ORDERING THE REFUND OF LIANA ZALAMEA'S TWA TICKET AND PAYMENT FOR THE AMERICAN AIRLINES TICKETS. 5

That there was fraud or bad faith on the part of respondent airline when it did not allow petitioners to board their flight for Los Angeles in spite of confirmed tickets cannot be disputed. The U.S. law or regulation allegedly authorizing overbooking has never been proved. Foreign laws do not prove themselves nor can the courts take judicial notice of them. Like any other fact, they must be alleged and proved. 6 Written law may be evidenced by an official publication thereof or by a copy attested by the officer having the legal custody of the record, or by his deputy, and accompanied with a certificate that such officer has custody. The certificate may be made by a secretary of an embassy or legation, consul general, consul, vice-consul, or consular agent or by any officer in the foreign service of the

Philippines stationed in the foreign country in which the record is kept, and authenticated by the seal of his office. 7 Respondent TWA relied solely on the statement of Ms. Gwendolyn Lather, its customer service agent, in her deposition dated January 27, 1986 that the Code of Federal Regulations of the Civil Aeronautics Board allows overbooking. Aside from said statement, no official publication of said code was presented as evidence. Thus, respondent court's finding that overbooking is specifically allowed by the US Code of Federal Regulations has no basis in fact. Even if the claimed U.S. Code of Federal Regulations does exist, the same is not applicable to the case at bar in accordance with the principle of lex loci contractus which require that the law of the place where the airline ticket was issued should be applied by the court where the passengers are residents and nationals of the forum and the ticket is issued in such State by the defendant airline. 8 Since the tickets were sold and issued in the Philippines, the applicable law in this case would be Philippine law. Existing jurisprudence explicitly states that overbooking amounts to bad faith, entitling the passengers concerned to an award of moral damages. In Alitalia Airways v. Court of Appeals, 9 where passengers with confirmed bookings were refused carriage on the last minute, this Court held that when an airline issues a ticket to a passenger confirmed on a particular flight, on a certain date, a contract of carriage arises, and the passenger has every right to expect that he would fly on that flight and on that date. If he does not, then the carrier opens itself to a suit for breach of contract of carriage. Where an airline had deliberately overbooked, it took the risk of having to deprive some passengers of their seats in case all of them would show up for the check in. For the indignity and inconvenience of being refused a confirmed seat on the last minute, said passenger is entitled to an award of moral damages. Similarly, in Korean Airlines Co., Ltd. v. Court of Appeals, 10 where private respondent was not allowed to board the plane because her seat had already been given to another passenger even before the allowable period for passengers to check in had lapsed despite the fact that she had a confirmed ticket and she had arrived on time, this Court held that petitioner airline acted in bad faith in violating private respondent's rights under their contract of carriage and is therefore liable for the injuries she has sustained as a result. In fact, existing jurisprudence abounds with rulings where the breach of contract of carriage amounts to bad faith. In Pan American World Airways, Inc. v. Intermediate Appellate Court, 11 where a would-be passenger had the necessary ticket, baggage claim and clearance from immigration all clearly and unmistakably showing that she was, in fact, included in the passenger manifest of said flight, and yet was denied accommodation in said flight, this Court did not hesitate to affirm the lower court's finding awarding her damages. A contract to transport passengers is quite different in kind and degree from any other contractual relation. So ruled this Court in Zulueta v. Pan American World Airways, Inc. 12 This is so, for a contract of carriage generates a relation attended with public duty — a duty to provide public service and convenience to its passengers which must be paramount to self-interest or enrichment. Thus, it was also held that the switch of planes from Lockheed 1011 to a smaller Boeing 707 because there were only 138 confirmed economy class passengers who could very well be accommodated in the smaller planes, thereby sacrificing the comfort of its first class passengers for the sake of economy, amounts to bad faith. Such inattention and lack of care for the interest of its passengers who are entitled to its utmost consideration entitles the passenger to an award of moral damages. 13 Even on the assumption that overbooking is allowed, respondent TWA is still guilty of bad faith in not informing its passengers beforehand that it could breach the contract of carriage even if they have

confirmed tickets if there was overbooking. Respondent TWA should have incorporated stipulations on overbooking on the tickets issued or to properly inform its passengers about these policies so that the latter would be prepared for such eventuality or would have the choice to ride with another airline. Respondent TWA contends that Exhibit I, the detached flight coupon upon which were written the name of the passenger and the points of origin and destination, contained such a notice. An examination of Exhibit I does not bear this out. At any rate, said exhibit was not offered for the purpose of showing the existence of a notice of overbooking but to show that Exhibit I was used for flight 007 in first class of June 11, 1984 from New York to Los Angeles. Moreover, respondent TWA was also guilty of not informing its passengers of its alleged policy of giving less priority to discounted tickets. While the petitioners had checked in at the same time, and held confirmed tickets, yet, only one of them was allowed to board the plane ten minutes before departure time because the full-fare ticket he was holding was given priority over discounted tickets. The other two petitioners were left behind. It is respondent TWA's position that the practice of overbooking and the airline system of boarding priorities are reasonable policies, which when implemented do not amount to bad faith. But the issue raised in this case is not the reasonableness of said policies but whether or not said policies were incorporated or deemed written on petitioners' contracts of carriage. Respondent TWA failed to show that there are provisions to that effect. Neither did it present any argument of substance to show that petitioners were duly apprised of the overbooked condition of the flight or that there is a hierarchy of boarding priorities in booking passengers. It is evident that petitioners had the right to rely upon the assurance of respondent TWA, thru its agent in Manila, then in New York, that their tickets represented confirmed seats without any qualification. The failure of respondent TWA to so inform them when it could easily have done so thereby enabling respondent to hold on to them as passengers up to the last minute amounts to bad faith. Evidently, respondent TWA placed its self-interest over the rights of petitioners under their contracts of carriage. Such conscious disregard of petitioners' rights makes respondent TWA liable for moral damages. To deter breach of contracts by respondent TWA in similar fashion in the future, we adjudge respondent TWA liable for exemplary damages, as well. Petitioners also assail the respondent court's decision not to require the refund of Liana Zalamea's ticket because the ticket was used by her father. On this score, we uphold the respondent court. Petitioners had not shown with certainty that the act of respondent TWA in allowing Mr. Zalamea to use the ticket of her daughter was due to inadvertence or deliberate act. Petitioners had also failed to establish that they did not accede to said agreement. The logical conclusion, therefore, is that both petitioners and respondent TWA agreed, albeit impliedly, to the course of action taken. The respondent court erred, however, in not ordering the refund of the American Airlines tickets purchased and used by petitioners Suthira and Liana. The evidence shows that petitioners Suthira and Liana were constrained to take the American Airlines flight to Los Angeles not because they "opted not to use their TWA tickets on another TWA flight" but because respondent TWA could not accommodate them either on the next TWA flight which was also fully booked. 14 The purchase of the American Airlines tickets by petitioners Suthira and Liana was the consequence of respondent TWA's unjustifiable breach of its contracts of carriage with petitioners. In accordance with Article 2201, New Civil Code, respondent TWA should, therefore, be responsible for all damages which may be reasonably attributed to the non-performance of its obligation. In the previously cited case of Alitalia Airways v. Court of Appeals, 15 this Court explicitly held that a passenger is entitled to be reimbursed for the cost of the tickets he had to buy for a flight to another airline. Thus, instead of simply being refunded for the cost of the unused TWA tickets, petitioners should be awarded the actual cost of their flight from New York to Los Angeles. On this score, we differ from the trial court's ruling which ordered not only the reimbursement of the American Airlines tickets but also the refund of the unused TWA

tickets. To require both prestations would have enabled petitioners to fly from New York to Los Angeles without any fare being paid. The award to petitioners of attorney's fees is also justified under Article 2208(2) of the Civil Code which allows recovery when the defendant's act or omission has compelled plaintiff to litigate or to incur expenses to protect his interest. However, the award for moral damages and exemplary damages by the trial court is excessive in the light of the fact that only Suthira and Liana Zalamea were actually "bumped off." An award of P50,000.00 moral damages and another P50,000.00 exemplary damages would suffice under the circumstances obtaining in the instant case. WHEREFORE, the petition is hereby GRANTED and the decision of the respondent Court of Appeals is hereby MODIFIED to the extent of adjudging respondent TransWorld Airlines to pay damages to petitioners in the following amounts, to wit: (1) US$918.00 or its peso equivalent at the time of payment representing the price of the tickets bought by Suthira and Liana Zalamea from American Airlines, to enable them to fly to Los Angeles from New York City; (2) P50,000.00 as moral damages; (3) P50,000.00 as exemplary damages; (4) P50,000.00 as attorney's fees; and (5) Costs of suit. SO ORDERED. Narvasa, C.J., Padilla, Regalado and Puno, JJ., concur. G.R. No. 114061 August 23, 1995 KOREAN AIRLINES CO., LTD., petitioner, vs. COURT OF APPEALS and JUANITO C. LAPUZ, respondents. G.R. No. 113842 August 23, 1995 JUANITO C. LAPUZ, petitioner, vs. COURT OF APPEALS and KOREAN AIRLINES CO., LTD., respondents. RESOLUTION

FRANCISCO, J.:

The case is of 1980 vintage. It originated from the Regional Trial Court, appealed to the Court of Appeals, then finally elevated to this Court. From the Court's disposition of the case stemmed incidents which are now the subjects for resolution. To elaborate: In an action for breach of contract of carriage, Korean Airlines, Co., Ltd., (KAL) was ordered by the trial court to pay actual/compensatory damages, with legal interest, attorney's fees and costs of suit in favor of plaintiff Juanito C. Lapuz. 1 Both parties appealed to the Court of Appeals, but the trial court's judgment was merely modified: the award of compensatory damages reduced, an award for moral and exemplary damages added, with 6% interestper annum from the date of filing of the complaint, and the attorney's fees and costs deleted. The parties subsequently elevated the case to this Court, docketed as G.R. No. 114061 and G.R. No. 113842. On August 3, 1994, the Court in a consolidated decision affirmed the decision of the Court of Appeals, modified only as to the commencement date of the award of legal interest, i.e., from the date of the decision of the trial court and not from the date of filing of the complaint. 2 The parties filed their respective motions for reconsideration with KAL, for the first time, assailing the Court's lack of jurisdiction to impose legal interest as the complaint allegedly failed to pray for its award. In a resolution dated September 21, 1994, the Court resolved to deny both motions for reconsideration with finality. Notwithstanding, KAL filed subsequent pleadings asking for reconsideration of the Court's consolidated decision and again impugning the award of legal interest. Lapuz, meanwhile, filed a motion for early resolution of the case followed by a motion for execution dated March 14, 1995, praying for the issuance of a writ of execution. KAL, in response, filed its Opposition and Supplemental Argument in Support of the Opposition dated March 28, 1995, and March 30, 1995, respectively. Additionally, on May 3, 1995, Lapuz filed another Urgent Motion for Early Resolution stating that the case has been pending for fifteen years which KAL admitted in its Comment filed two days later, albeit stressing that its pleadings were not intended for delay. 3 KAL's asseveration that the Court lacks jurisdiction to award legal interest is devoid of merit. Both the complaint and amended complaint against KAL dated November 27, 1980, and January 5, 1981, respectively, prayed for reliefs and remedies to which Lapuz may be entitled in law and equity. The award of legal interest is one such relief, as it is based on equitable grounds duly sanctioned by Article 2210 of the Civil Code which provides that: "[i]nterest may, in the discretion of the Court, be allowed upon damages awarded for breach of contract". 4 Furthermore, in its petition for review before the Court of Appeals, KAL did not question the trial court's imposition of legal interest. Likewise, in its appeal before the Court, KAL never bewailed the award of legal interest. In fact, KAL took exception only with respect to the date when legal interest should commence to run. 5 Indeed, it was only in its motion for reconsideration when suddenly its imposition was assailed for having been rendered without jurisdiction. To strengthen its languid position, KAL's subsequent pleadings clothed its attack with constitutional import for alleged violation of its right to due process. There is no cogent reason and none appears on record that could sustain KAL's scheme as KAL was amply given, in the courts below and in this Court, occasion to ventilate its case. What is repugnant to due process is the denial of opportunity to be heard 6 which opportunity KAL was extensively afforded. While it is a rule that jurisdictional question may be raised at any time, this, however, admits of an exception where, as in this case, estoppel has supervened. 7 This court has time and again frowned upon the undesirable practice of a party submitting his case for decision and then accepting the judgment, only if favorable, and attacking it for lack of jurisdiction when adverse. 8 The Court shall not countenance KAL's undesirable moves. What attenuates KAL's unmeritorious importuning is that the assailed decision has long acquired finality. It is a settled rule that a judgment which has acquired finality becomes immutable and unalterable, hence may no longer be modified in any respect except only to correct clerical errors or mistake. 9Once a judgment becomes final, all the issues between the parties are deemed resolved and laid to rest.

KAL's filing of numerous pleadings delayed the disposition of the case which for fifteen years remained pending. This practice may constitute abuse of the Court's processes for it tends to impede, obstruct and degrade the administration of justice. In Li Kim Tho v. Go Siu Ko, et al., 10 the Court gave this reminder to litigants and lawyers' alike:
Litigation must end and terminate sometime and somewhere, and it is essential to an effective and efficient administration of justice that, once a judgment has become final, the winning party be not, through a mere subterfuge, deprived of the fruits of the verdict. Courts must therefore guard against any scheme calculated to bring about the result. Constituted as they are to put an end to controversies, courts should frown upon any attempt to prolong them. 11

Likewise, in Banogan v. Zerna 12 the Court reminded lawyers of their responsibility as officers of the court in this manner:
As officers of the court, lawyers have a responsibility to assist in the proper administration of justice. They do not discharge this duty by filing pointless petitions that only add to the workload of the judiciary, especially this Court, which is burdened enough as it is. A judicious study of the facts and the law should advise them when a case, such as this, should not de permitted to be filed to merely clutter the already congested judicial dockets. They do not advance the cause of law or their clients by commencing litigations that for sheer lack of merit do not deserve the attention of the courts. 13

A lawyer owes fidelity to the cause of his client, but not at the expense of truth and the administration of justice. 14Counsel for KAL is reminded that it is his duty not to unduly delay a case, impede the execution of a judgment or misuse Court processes. 15 With respect to Lapuz' motion for execution, suffice to state that the application for a writ of execution should be addressed to the court of origin and not to this Court. As the judgment has become final and executory then all that is left of the trial court is the ministerial act of ordering the execution thereof. ACCORDINGLY, KAL's motion for reconsideration is DENlED. Counsel for KAL is hereby warned that repetition of his undesirable practice shall be dealt with severely. Regalado, Puno and Mendoza, JJ., concur. LBC EXPRESS, INC., petitioner, vs. THE COURT OF APPEALS, ADOLFO M. CARLOTO, and RURAL BANK OF LABASON, INC., respondents. Emmanuel D. Agustin for petitioner. Bernardo P. Concha for private respondents.

PUNO, J.: In this Petition for Review on Certiorari, petitioner LBC questions the decision 1 of respondent Court of Appeals affirming the judgment of the Regional Trial Court of Dipolog City, Branch 8, awarding moral

and exemplary damages, reimbursement of P32,000.00, and costs of suit; but deleting the amount of attorney's fees. Private respondent Adolfo Carloto, incumbent President-Manager of private respondent Rural Bank of Labason, alleged that on November 12, 1984, he was in Cebu City transacting business with the Central Bank Regional Office. He was instructed to proceed to Manila on or before November 21, 1984 to follow-up the Rural Bank's plan of payment of rediscounting obligations with Central Bank's main office in Manila. 2 He then purchased a round trip plane ticket to Manila. He also phoned his sister Elsie Carloto-Concha to send him ONE THOUSAND PESOS (P1,000.00) for his pocket money in going to Manila and some rediscounting papers thru petitioner's LBC Office at Dipolog City. 3 On November 16, 1984, Mrs. Concha thru her clerk, Adelina Antigo consigned thru LBC Dipolog Branch the pertinent documents and the sum of ONE THOUSAND PESOS (P1,000.00) to respondent Carloto at No. 2 Greyhound Subdivision, Kinasangan, Pardo, Cebu City. This was evidenced by LBC Air Cargo, Inc., Cashpack Delivery Receipt No. 34805. On November 17, 1984, the documents arrived without the cashpack. Respondent Carloto made personal follow-ups on that same day, and also on November 19 and 20, 1984 at LBC's office in Cebu but petitioner failed to deliver to him the cashpack. Consequently, respondent Carloto said he was compelled to go to Dipolog City on November 24, 1984 to claim the money at LBC's office. His effort was once more in vain. On November 27, 1984, he went back to Cebu City at LBC's office. He was, however, advised that the money has been returned to LBC's office in Dipolog City upon shipper's request. Again, he demanded for the ONE THOUSAND PESOS (P1,000.00) and refund of FORTY-NINE PESOS (P49.00) LBC revenue charges. He received the money only on December 15, 1984 less the revenue charges. Respondent Carloto claimed that because of the delay in the transmittal of the cashpack, he failed to submit the rediscounting documents to Central Bank on time. As a consequence, his rural bank was made to pay the Central Bank THIRTY-TWO THOUSAND PESOS (P32,000.00) as penalty interest. 4 He allegedly suffered embarrassment and humiliation. Petitioner LBC, on the other hand, alleged that the cashpack was forwarded via PAL to LBC Cebu City branch on November 22, 1984. 5 On the same day, it was delivered at respondent Carloto's residence at No. 2 Greyhound Subdivision, Kinasangan, Pardo, Cebu City. However, he was not around to receive it. The delivery man served instead a claim notice to insure he would personally receive the money. This was annotated on Cashpack Delivery Receipt No. 342805. Notwithstanding the said notice, respondent Carloto did not claim the cashpack at LBC Cebu. On November 23, 1984, it was returned to the shipper, Elsie Carloto-Concha at Dipolog City. Claiming that petitioner LBC wantonly and recklessly disregarded its obligation, respondent Carloto instituted an action for Damages Arising from Non-performance of Obligation docketed as Civil Case No. 3679 before the Regional Trial Court of Dipolog City on January 4, 1985. On June 25, 1988, an amended complaint was filed where respondent rural bank joined as one of the plaintiffs and prayed for the reimbursement of THIRTY-TWO THOUSAND PESOS (P32,000.00). After hearing, the trial court rendered its decision, the dispositive portion of which reads: WHEREFORE, judgment is hereby rendered:

1. Ordering the defendant LBC Air Cargo, Inc. to pay unto plaintiff Adolfo M. Carloto and Rural Bank of Labason, Inc., moral damages in the amount of P10,000.00; exemplary damages in the amount of P5,000.00; attorney's fees in the amount of P3,000.00 and litigation expenses of P1,000.00; 2. Sentencing defendant LBC Air Cargo, Inc., to reimburse plaintiff Rural Bank of Labason, Inc. the sum of P32,000.00 which the latter paid as penalty interest to the Central Bank of the Philippines as penalty interest for failure to rediscount its due bills on time arising from the defendant's failure to deliver the cashpack, with legal interest computed from the date of filing of this case; and 3. Ordering defendant to pay the costs of these proceedings.
SO ORDERED. 6

On appeal, respondent court modified the judgment by deleting the award of attorney's fees. Petitioner's Motion for Reconsideration was denied in a Resolution dated January 11, 1993. Hence, this petition raising the following questions, to wit: 1. Whether or not respondent Rural Bank of Labason Inc., being an artificial person should be awarded moral damages. 2. Whether or not the award of THIRTY-TWO THOUSAND PESOS (P32,000.00) was made with grave abuse of discretion. 3. Whether or not the respondent Court of Appeals gravely abused its discretion in affirming the trial court's decision ordering petitioner LBC to pay moral and exemplary damages despite performance of its obligation. We find merit in the petition. The respondent court erred in awarding moral damages to the Rural Bank of Labason, Inc., an artificial person. Moral damages are granted in recompense for physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury. 7 A corporation, being an artificial person and having existence only in legal contemplation, has no feelings, no emotions, no senses; therefore, it cannot experience physical suffering and mental anguish. 8 Mental suffering can be experienced only by one having a nervous system and it flows from real ills, sorrows, and griefs of life 9 — all of which cannot be suffered by respondent bank as an artificial person. We can neither sustain the award of moral damages in favor of the private respondents. The right to recover moral damages is based on equity. Moral damages are recoverable only if the case falls under Article 2219 of the Civil Code in relation to Article 21. 10 Part of conventional wisdom is that he who comes to court to demand equity, must come with clean hands. In the case at bench, respondent Carloto is not without fault. He was fully aware that his rural bank's obligation would mature on November 21, 1984 and his bank has set aside cash for these bills payable. 11 He was all set to go to Manila to settle this obligation. He has received the documents

necessary for the approval of their rediscounting application with the Central Bank. He has also received the plane ticket to go to Manila. Nevertheless, he did not immediately proceed to Manila but instead tarried for days allegedly claiming his ONE THOUSAND PESOS (P1,000.00) pocket money. Due to his delayed trip, he failed to submit the rediscounting papers to the Central Bank on time and his bank was penalized THIRTY-TWO THOUSAND PESOS (P32,000.00) for failure to pay its obligation on its due date. The undue importance given by respondent Carloto to his ONE THOUSAND PESOS (P1,000.00) pocket money is inexplicable for it was not indispensable for him to follow up his bank's rediscounting application with Central Bank. According to said respondent, he needed the money to "invite people for a snack or dinner." 12 The attitude of said respondent speaks ill of his ways of business dealings and cannot be countenanced by this Court. Verily, it will be revolting to our sense of ethics to use it as basis for awarding damages in favor of private respondent Carloto and the Rural Bank of Labason, Inc. We also hold that respondents failed to show that petitioner LBC's late delivery of the cashpack was motivated by personal malice or bad faith, whether intentional or thru gross negligence. In fact, it was proved during the trial that the cashpack was consigned on November 16, 1984, a Friday. It was sent to Cebu on November 19, 1984, the next business day. Considering this circumstance, petitioner cannot be charged with gross neglect of duty. Bad faith under the law can not be presumed; it must be established by clearer and convincing evidence. 13 Again, the unbroken jurisprudence is that in breach of contract cases where the defendant is not shown to have acted fraudulently or in bad faith, liability for damages is limited to the natural and probable consequences of the branch of the obligation which the parties had foreseen or could reasonable have foreseen. The damages, however, will not include liability for moral damages. 14 Prescinding from these premises, the award of exemplary damages made by the respondent court would have no legal leg to support itself. Under Article 2232 of the Civil Code, in a contractual or quasicontractual relationship, exemplary damages may be awarded only if the defendant had acted in "a wanton, fraudulent, reckless, oppressive, or malevolent manner." The established facts of not so warrant the characterization of the action of petitioner LBC. IN VIEW WHEREOF, the Decision of the respondent court dated September 30, 1992 is REVERSED and SET ASIDE; and the Complaint in Civil Case No. 3679 is ordered DISMISSED. No costs. SO ORDERED. G.R. No. 105410 July 25, 1994 PILIPINAS BANK, petitioner, vs. HON. COURT OF APPEALS AND FLORENCIO REYES, respondents. Gella Reyes Danguilan & Associates for petitioner. Santos V. Pampolina, Jr. for private respondent.

PUNO, J.:

This is a petition for review of the Decision of the respondent court 1 in CA-G.R. CV No. 29524 dated May 13, 1992 which ordered petitioner to pay the private respondent the sum of P50,000.00 as moral damages, P25,000.00 as attorney's fees and cost of suit. The facts as found both by the trial court 2 and the respondent court are: As payments for the purchased shoe materials and rubber shoes, Florencio Reyes issued postdated checks to Winner Industrial Corporation for P20,927.00 and Vicente Tui, for P11,419.50, with due dates on October 10 and 12, 1979, respectively. To cover the face value of the checks, plaintiff, on October 10, 1979, requested PCIB Money Shop's manager Mike Potenciano to effect the withdrawal of P32,000.00 from his savings account therein and have it deposited with his current account with Pilipinas Bank (then Filman Bank), Biñan Branch. Roberto Santos was requested to make the deposit. In depositing in the name of FLORENCIO REYES, he inquired from the teller the current account number of Florencio Reyes to complete the deposit slip he was accomplishing. He was informed that it was "815" and so this was the same current account number he placed on the deposit slip below the depositor's name FLORENCIO REYES. Nothing that the account number coincided with the name Florencio, Efren Alagasi, then Current Account Bookkeeper of Pilipinas Bank, thought it was for Florencio Amador who owned the listed account number. He, thus, posted the deposted in the latter's account not noticing that the depositor's surname in the deposit slip was REYES. On October 11, 1979, the October 10, check in favor of Winner Industrial Corporation was presented for payment. Since the ledger of Florencio Reyes indicated that his account had only a balance of P4,078.43, it was dishonored and the payee was advised to try it for next clearing. On October 15, 1979, the October 10, 1979 check was redeposited but was again dishonored. Likewise, the October 12, 1979 check in favor of Vicente Tui when presented for payment on that same date met the same fate but was advised to try the next clearing. Two days after the October 10 check was again dishonored, the payee returned the same to Florencio Reyes and demanded a cash payment of its face value which he did if only to save his name. The October 12, 1979 check was redeposited on October 18, 1979, but again dishonored for the reason that the check was drawn against insufficient fund. Furious over the incident, he immediately proceeded to the bank and urged an immediate verification of his account. Upon verification, the bank noticed the error. The P32,000.00 deposit posted in the account of Florencio Amador was immediately transferred to the account of Reyes upon being cleared by Florencio Amador that he did not effect a deposit in the amount of P32,000.00. The transfer having been effected, the bank then honored the October 12, 1979, check (Exh. "C").

On the basis of these facts, the trial court ordered petitioner to pay to the private respondent: (1) P200,000.00 as compensatory damages; (2) P100,000.00 as moral damages; (3) P25,000.00 as attorney's fees, and (4) the costs of suit. On appeal to the respondent court, the judgment was modified as aforestated. In this petition for review, petitioner argues: I. Respondent Court of Appeals erred on a matter of law, in not applying the first sentence of Article 2179, New Civil Code, in view of its own finding that respondent Reyes' own representative committed the mistake in writing down the correct account number; II. Respondent Court of Appeals erred, on a matter of law, in holding that respondent Reyes has the right to recover moral damages and in awarding the amount of P50,000.00, when there is no legal nor factual basis for it; III. The Honorable Court of Appeals erred, on a matter of law, in holding petitioner liable for attorney's fees in the amount of P20,000.00, when there is no legal nor factual basis for it. We find no merit in the petition. First. For Article 2179 3 of the Civil Code to apply, it must be established that private respondent's own negligence was the immediate and proximate cause of his injury. The concept of proximate cause is well defined in our corpus of jurisprudence as "any cause which, in natural and continuous sequence, unbroken by any efficient intervening cause, produces the result complained of and without which would not have occurred and from which it ought to have been forseen or reasonably anticipated by a person of ordinary case that the injury complained of or some similar injury, would result therefrom as a natural and probable consequence." 4 In the case at bench, the proximate cause of the injury is the negligence of petitioner's employee in erroneously posting the cash deposit of private respondent in the name of another depositor who had a similar first name. As held by the trial court: xxx xxx xxx Applying the test, the bank employee is, on that basis, deemed to have failed to exercise the degree of care required in the performance of his duties. As earlier stated, the bank employee posted the cash deposit in the account of Florencio Amador from his assumption that the name Florencio appearing on the ledger without, however, going through the full name, is the same Florencio stated in the deposit slip. He should have continuously gone beyond mere assumption, which was proven to be erroneous, and proceeded with clear certainty, considering the amount involved and the repercussions it would create on the totality of the person notable of which is the credit standing of the person involved should a mistake happen. The checks issued by the plaintiff in the course of his business were dishonored by the bank because the ledger of Florencio Reyes indicated a balance insufficient to cover the face value of checks. Second. In light of this negligence, the liability of petitioner for moral damages cannot be impugned. So we held inBank of the Philippine Islands vs. IAC, et al. 5 The bank is not expected to be infallible but, as correctly observed by respondent Appellate Court, in this instance, it must bear the blame for not discovering the mistake

of its teller despite the established procedure requiring the papers and bank books to pass through a battery of bank personnel whose duty it is to check and countercheck them for possible errors. Apparently, the officials and employees tasked to do that did not perform their duties with due care, as may be gathered from the testimony of the bank's lone witness, Antonio Enciso, who casually declared that "the approving officer does not have to see the account numbers and all those things. Those are very petty things for the approving manager to look into" (p. 78, Record on Appeal). Unfortunately, it was a "petty thing," like the incorrect account number that the bank teller wrote on the initial deposit slip for the newly-opened joint current account of the Canlas spouses, that sparked this half-a-million-peso damage suit against the bank. While the bank's negligence may not have been attended with malice and bad faith, nevertheless, it caused serious anxiety, embarrassment and humiliation to the private respondents for which they are entitled to recover reasonable moral damages (American Express International, Inc. IAC, 167 SCRA 209). The award of reasonable attorney's fees is proper for the private respondent's were compelled to litigate to protect their interest (Art. 2208, Civil Code). However, the absence of malice and bad faith renders the award of exemplary damages improper (Globe Mackay Cable and Radio Corp. vs. Court of Appeals, 176 SCRA 778). IN VIEW WHEREOF, the petition is denied there being no reversible error in the Decision of the respondent court. Cost against petitioner. SO ORDERED. Narvasa, C.J., Padilla, Regalado and Mendoza, JJ., concur.

THIRD DIVISION

[G.R. No. 99301. March 13, 1997]

VICTOR KIERULF, LUCILA H. KIERULF and PORFIRIO LEGASPI, petitioners, vs. THE COURT OF APPEALS and PANTRANCO NORTH EXPRESS, INCORPORATED, respondents.

[G.R. No. 99343. March 13, 1997]

PANTRANCO NORTH EXPRESS, INCORPORATED, petitioner, vs. VICTOR KIERULF, LUCILA H. KIERULF and PORFIRIO LEGASPI, respondents.

DECISION
PANGANIBAN, J.:

How much moral, exemplary and actual damages are victims of vehicular accidents entitled to? In G.R. No. 99301, the victims of the vehicular mishap pray for an increase in the award of damages, over and above those granted by the appellate court. In this case, the husband of the victim of the vehicular accident claims compensation/damages for the loss of his right to marital consortium which, according to him, has been diminished due to the disfigurement suffered by his wife. In G.R. No. 99343, the transport company, which owned the bus that collided with the victims' pickup truck, asks for exoneration by invoking an alleged fortuitous event as the cause of the mishap. Petitioners in both cases assail the Decision, dated March 13, 1991, in CA-GR CV No. 23361 of the Court of Appeals, Sixth Division ordering the following:
[1] [2] [3]

"For reasons indicated and in the light of the law and jurisprudence applicable to the case at bar, the judgment of the trial court is hereby modified as follows: Under the first cause of action, the defendant is hereby ordered to pay Lucila H. Kierulf the following: (1) For actual damages incurred for hospitalization, medical case (sic) and doctor's fees, the sum of P241,861.81; (2) For moral damages the sum of P200,000.00; (3) For exemplary damages the amount of P100,000.00. Under the second cause of action, to pay Victor Kierulf, by way of indemnification damage to the Isuzu Carry All with plate No. UV PGS 798, the amount of P96,825.15. Under the third cause of action, to pay Porfirio Legaspi the following: (1) (2) For moral damages in the amount of P25,000.00; To reimburse the plaintiff the amount of P6,328.19 for actual damages incurred in the treatment and hospitalization of the driver Porfirio Legaspi.

The defendant is further ordered to pay the amount of P50,000.00 as fair and reasonable attorney's fees.

And to pay the costs of suit."
Respondent Court of Appeals modified the decision of the Regional Trial Court of Quezon City, Branch 92, rendered on May 24, 1989 in Civil Case No. Q-50732 for damages. The dispositive portion of the said decision is quoted below:
[4] [5]

"WHEREFORE, in view of the foregoing, judgment is hereby rendered against the defendant, ordering Pantranco to pay: Under the First Cause of Action 1. In favor of plaintiff Lucila H. Kierulf actual damages in the amount on ONE HUNDRED SEVENTY FOUR THOUSAND ONE HUNDRED and 77/100 (P174,100.77) PESOS; 2. To pay said plaintiff moral damages in the amount of ONE HUNDRED THOUSAND and 00/100 (P100,000.00) PESOS; 3. To pay exemplary damages in the amount of TEN THOUSAND and 00/100 (P10,000.00) PESOS. Under the Second Cause of Action 1. To pay plaintiff Victor Kierulf the amount of NINETY SIX THOUSAND EIGHT HUNDRED TWENTY FIVE and 15/100 (P96,825.15) PESOS by way of indemnification for the damages to the Isuzu Carry All with plate No. UV PGS 796 registered in his name. Under the Third Cause of Action 1. To pay the plaintiff spouses by way of reimbursement for actual damages incurred for the treatment of injuries sustained by their driver Porfirio Legaspi in the amount of SIX THOUSAND THREE HUNDRED TWENTY EIGHT and 19/100 (P6,328.19) PESOS; and 2. To pay plaintiff Porfirio Legaspi moral damages in the amount of TEN THOUSAND and 00/100 (P10,000.00) PESOS. Defendant is further ordered to pay the amount of P25,000.00 for and as attorney's fees, and to pay costs. All other claims and counterclaims are dismissed."
The Facts

The following may be culled from the undisputed factual findings of the trial court and Respondent Court of Appeals:

The initial investigation conducted by Pfc. D.O. Cornelio disclosed that at about 7:45 p.m. of 28 February 1987, the Pantranco bus, bearing plate number AVE-845 (TB PIL 86), was traveling along Epifanio de los Santos Avenue (EDSA) from Congressional Avenue towards Clover Leaf, Balintawak. Before it reached the corner of Oliveros Drive, the driver lost control of the bus, causing it to swerve to the left, and then to fly over the center island occupying the east-bound lane of EDSA. The front of the bus bumped the front portion of an Isuzu pickup driven by Legaspi, which was moving along Congressional Avenue heading towards Roosevelt Avenue. As a result, the points of contact of both vehicles were damaged and physical injuries were inflicted on Legaspi and his passenger Lucila Kierulf, both of whom were treated at the Quezon City General Hospital. The bus also hit and injured a pedestrian who was then crossing EDSA. Despite the impact, said bus continued to move forward and its front portion rammed against a Caltex gasoline station, damaging its building and gasoline dispensing equipment. As a consequence of the incident, Lucila suffered injuries, as stated in the medical report of the examining physician, Dr. Pedro P. Solis of the Quezon City General Hospital. The injuries sustained by Lucila required major surgeries like "tracheotomy, open reduction, mandibular fracture, intermaxillary repair of multiple laceration" and prolonged treatment by specialists. Per medical report of Dr. Alex L. Castillo, Legaspi also suffered injuries.
[6] [7]

The front portion of the pickup truck, owned by Spouses Kierulf, bearing plate number UV PGS 798, was smashed to pieces. The cost of repair was estimated at P107,583.50.
Pantranco, in its petition, adds that on said day, the abovementioned bus was driven by Jose Malanum. While cruising along EDSA, a used engine differential accidentally and suddenly dropped from a junk truck in front of the bus. Said differential hit the underchassis of the bus, throwing Malanum off his seat and making him lose control of said bus. The bus swerved to the left, hit the center island, and bumped the pickup of the spouses.
[8]

The Issues Spouses Kierulf and their driver Legaspi raise the following assignment of errors in this appeal:
[9]

"A

The respondent court of appeals erred in awarding only P200,000.00 and P25,000.00 as and for moral damages for the petitioners Kierulf and Legaspi respectively when it should at least have beenP1,000,000.00 and P100,000.00 respectively.
B

The respondent court of appeals erred in awarding only P100,000.00 to the petitioners Kierulf and nothing to petitioner Legaspi as and for exemplary damages when it should have at least been P500,000.00 andP50,000.00 respectively.
C

The respondent court of appeals erred in not awarding any amount for the lost income due to the petitioner Lucila H. Kierulf.
D

The respondent court of appeals erred in not awarding the amount of P107,583.50 for the damages sustained by the Isuzu carry-all pick-up truck.
E

The respondent court of appeals erred in not awarding any legal interest on the sums awarded."
On the other hand, Pantranco raises the following assignment of errors:
[10]

“4.1 The Honorable Court of Appeals erred in holding that the driver of Pantranco was negligent; 4.2 The Honorable Court of Appeals erred in holding that the proximate cause of the accident was the negligence of Pantranco and not a fortuitous event; and 4.2 (sic) The Honorable Court of Appeals erred in awarding excessive damages."
In sum, Spouses Kierulf and Legaspi argue that the damages awarded were inadequate while Pantranco counters that they were astronomical, bloated and not duly proved.
[11]

The Court's Ruling First Issue: Negligence and Proximate Cause Are Factual Issues

Even on appeal, Pantranco insists that its driver was not negligent and that the mishap was due to a fortuitous event. February 28, 1987, the date of the incident, was a Saturday; hence, driving at the speed of 40-50 kilometers per hour (kph) was prudent. It contends that the proximate cause was the accidental dropping of a used engine differential by a junk truck immediately ahead of the bus.
[12]

As to what really caused the bus to careen to the opposite lane of EDSA and collide with the pickup truck driven by Legaspi is a factual issue which this Court cannot pass upon. As a rule, the jurisdiction of this Court is limited to the review of errors of law allegedly committed by the appellate court. This Court is not bound to analyze and weigh all over again the evidence already considered in the proceedings below.
[13]

Although the Court may review factual issues in some instances, the case at bar does not fall under any one of them. The fact that there is no conflict between the findings of the trial court and respondent Court bolsters our position that a review of the facts found by respondent Court is not necessary. There being no conflict between the findings of the Court of Appeals and the trial court that gross negligence was the real cause of the collision, we see no reason to digress from the standard rule.
[14] [15]

We quote with concurrence the factual findings of the appellate and trial courts, showing that the accident was, contrary to the belief of Pantranco, the result of the gross negligence of its driver. To wit:
[16]

"The vehicular accident was certainly not due to a fortuitous event. We agree with the trial court's findings that the proximate cause was the negligence of the defendant's driver, such as: (1) Driving at that part of EDSA at 7:45 P.M. from Congressional Avenue towards Clover Leaf overpass in the direction of Balintawak at 40-50 kph is certainly not a manifestation of good driving habit of a careful and prudent man exercising the extraordinary diligence required by law. Traffic in that place and at that time of the day is always heavy. (2) Losing control of the wheel in such a place crowded with moving vehicles, jumping over the island which separates the East bound from the West bound lane of EDSA indicate that the defendant's bus was traveling at a speed limit beyond what a prudent and careful driver is expected of, if such driver were exercising due diligence required by law. (3) Finally, crossing over the island and traversing the opposite lane and hitting an oncoming vehicle with such force as to smash the front of such vehicle and finally being forced to stop by bumping against a Caltex service station -- all show not only negligence, but recklessness of the defendant's driver. (4) If defendant's driver was not driving fast, was not recklessly negligent and had exercised due care and prudence, with due respect to human life and to others travelling in the same place, the driver could have stopped the bus the moment it crossed the island, and avoided crossing over to the other lane and bumping against vehicles travelling in opposite direction. The defendant's driver did not take any evasive action and utterly failed to adopt any measure to avoid injuries and

damage to others because he 'lost control of the bus', which was like a juggernaut, let loose in a big crowd, smashing everything on its path."
Second Issue: Moral Damages Complainants aver that the moral damages awarded by Respondent Court are "clearly and woefully not enough." The established guideline in awarding moral damages takes into consideration several factors, some of which are the social and financial standing of the injured parties and their wounded moral feelings and personal pride. The Kierulf spouses add that the Respondent Court should have considered another factor: the loss of their conjugal fellowship and the impairment or destruction of their sexual life.
[17] [18] [19]

The spouses aver that the disfigurement of Lucila's physical appearance cannot but affect their marital right to "consortium" which would have remained normal were it not for the accident. Thus the moral damages awarded in favor of Lucila should be increased to P1,000,000.00, not only for Lucila but also for her husband Victor who also suffered "psychologically." A California case, Rodriguez vs. Bethlehem Steel Corporation, is cited as authority for the claim of damages by reason of loss of marital consortium, i.e. loss of conjugal fellowship and sexual relations.
[20] [21]

Pantranco rebuts that Victor's claim of moral damages on alleged loss of consortium is without legal basis. Article 2219 of the Civil Code provides that only the person suffering the injury may claim moral damages. Additionally, no evidence was adduced to show that the consortium had indeed been impaired and the Court cannot presume that marital relations disappeared with the accident.
[22]

The Courts notes that the Rodriguez case clearly reversed the original common law view first enunciated in the case of Deshotel vs. Atchison, that a wife could not recover for the loss of her husband's services by the act of a third party. Rodriguez ruled that when a person is injured to the extent that he/she is no longer capable of giving love, affection, comfort and sexual relations to his or her spouse, that spouse has suffered a direct and real personal loss. The loss is immediate and consequential rather than remote and unforeseeable; it is personal to the spouse and separate and distinct from that of the injured person.
[23]

Rodriguez involved a couple in their early 20s, who were married for only 16 months and full of dreams of building a family of their own, when the husband was struck and almost paralyzed by a falling 600-pound pipe. The wife testified how her life had deteriorated because her husband became a lifelong invalid, confined to the home, bedridden and in constant need of assistance for his bodily functions; and how her social, recreational and sexual life had been severely restricted. It also deprived her of the chance to bear their children. As a constant witness to her husband's pain, mental anguish and frustration, she was always nervous, tense, depressed and had trouble sleeping, eating and concentrating. Thus, the California court awarded her damages for loss of consortium.

Whether Rodriguez may be cited as authority to support the award of moral damages to Victor and/or Lucila Kierulf for "loss of consortium," however, cannot be properly considered in this case. Victor's claim for deprivation of his right to consortium, although argued before Respondent Court, is not supported by the evidence on record. His wife might have been badly disfigured, but he had not testified that, in consequence thereof, his right to marital consortium was affected. Clearly, Victor (and for that matter, Lucila) had failed to make out a case for loss of consortium, unlike the Rodriguez spouse. Again, we emphasize that this claim is factual in origin and must find basis not only in the evidence presented but also in the findings of the Respondent Court. For lack of factual basis, such claim cannot be ruled upon by this Court at this time. Third Issue: No Consideration of Social and Financial Standing in this Case The social and financial standing of Lucila cannot be considered in awarding moral damages. The factual circumstances prior to the accident show that no "rude and rough" reception, no "menacing attitude," no "supercilious manner," no "abusive language and highly scornful reference" was given her. The social and financial standing of a claimant of moral damages may be considered in awarding moral damages only if he or she was subjected to contemptuous conduct despite the offender's knowledge of his or her social and financial standing.
[24]

Be that as it may, it is still proper to award moral damages to Petitioner Lucila for her physical sufferings, mental anguish, fright, serious anxiety and wounded feelings. She sustained multiple injuries on the scalp, limbs and ribs. She lost all her teeth. She had to undergo several corrective operations and treatments. Despite treatment and surgery, her chin was still numb and thick. She felt that she has not fully recovered from her injuries. She even had to undergo a second operation on her gums for her dentures to fit. She suffered sleepless nights and shock as a consequence of the vehicular accident. In this light and considering further the length of time spent in prosecuting the complaint and this appeal, we find the sum of P400,000.00 as moral damages for Petitioner Lucila to be fair and just under the circumstances.
[25]

Fourth Issue: Exemplary Damages Complainants also pray for an increase of exemplary damages to P500,000.00 and P50,000.00 for Spouses Kierulf and Legaspi, respectively. This prayer is based on the pronouncement of this Court in Batangas Transportation Company vs. Caguimbal that "it is high time to impress effectively upon public utility operators the nature and extent of their responsibility in respect of the safety of their passengers and their duty to exercise greater care in the selection of drivers and conductors x x x."
[26]

Pantranco opposes this, for under Article 2231 of the Civil Code, "exemplary damages may be granted if the defendant acted with gross negligence." And allegedly, gross negligence is sorely lacking in the instant case. Exemplary damages are designed to permit the courts to mould behavior that has socially deleterious consequences, and its imposition is required by public policy to suppress the wanton acts of an offender. However, it cannot be recovered as a matter of right. It is based entirely on the discretion of the court. Jurisprudence sets certain requirements before exemplary damages may be awarded, to wit:
[27] [28] [29]

"(1) (T)hey may be imposed by way of example or correction only in addition, among others, 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; (2) the claimant must first establish his right to moral, temporate, liquidated or compensatory damages; and (3) 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."
The claim of Lucila has been favorably considered in view of the finding of gross negligence by Respondent Court on the part of Pantranco. This is made clear by Respondent Court in granting Lucila's claim of exemplary damages:
[30]

"(P)ublic utility operators like the defendant, have made a mockery of our laws, rules and regulations governing operations of motor vehicles and have ignored either deliberately or through negligent disregard of their duties to exercise extraordinary degree of diligence for the safety of the travelling public and their passengers. x x x ."
To give teeth to this warning, the exemplary damages awarded to Petitioner Lucila is increased to P200,000.00. The fact of gross negligence duly proven, we believe that Legaspi, being also a victim of gross negligence, should also receive exemplary damages. Under the facts proven, the Court awards him P25,000 as exemplary damages. Fifth Issue: Loss of Earnings as a Component of Damages Lost income in the amount of P16,500.00 is also claimed by Legaspi stating that his "whole future has been jeopardized." This, in turn, is not rebutted by Pantranco.
[31]

It should be noted that Respondent Court already considered this when it stated that the award of P25,000.00 included compensation for "mental anguish and emotional strain of not earning anything with a family to support." Moral damages, though incapable of pecuniary estimation, are in the category of an award designed to

compensate the claimant for actual injury and are not meant to enrich complainant at the expense of defendant.
[32]

We find, however, the claim of Legaspi to be duly substantiated. Pantranco failed to rebut the claim of Porfirio that he had been incapacitated for ten (10) months and that during said period he did not have any income. Considering that, prior to the accident, he was employed as a driver and was earning P1,650.00 a month, his claim for P16,500.00 as compensation for loss of earning capacity for said period is amply supported by the records and is demandable under Article 2205 of the Civil Code.
[33] [34]

Complainants contend that Lucila is also entitled to damages for "loss or impairment of earning capacity in cases of temporary or permanent personal injury" under Article 2205 of the Civil Code. Notably, both the trial court and public respondent denied this prayer because of her failure to produce her income tax returns for the years 1985 and 1986, notwithstanding the production of her 1983 and 1984 income tax returns. Pantranco opposes the above claim for loss of earning capacity on the ground that there is no proof "that for the two years immediately preceding the accident Lucila was indeed deriving income from some source which was cut off by the accident."
[35]

We agree with the findings of Respondent Court that Lucila's claim of loss of earning capacity has not been duly proven. The alleged loss must be established by factual evidence for it partakes of actual damages. A party is entitled to adequate compensation for such pecuniary loss actually suffered and duly proved. Such damages, to be recoverable, must not only be capable of proof, but must actually be shown with a reasonable degree of certainty. We have emphasized that these damages cannot be presumed, and courts in making an award must point out specific facts which can serve as basis for measuring whatever compensatory or actual damages are borne. Mere proof of Lucila's earnings consisting of her 1983 and 1984 income tax returns would not suffice to prove earnings for the years 1985 and 1986. The incident happened on February 28, 1987. If indeed Lucila had been earning P50,000.00 every month prior to the accident, as she alleged, there are evidentiary proofs for such earnings other than income tax returns such as, but not limited to, payroll receipts, payments to the SSS, or withholding tax paid every month. Sad to say, these other proofs have not been presented, and we cannot presume that they exist on the strength of the word of Lucila alone.
[36]

Sixth Issue: Reduction of Actual Damages on the Pickup Based on an Estimate Complainants contend that the reduction of 10% from the written estimate of the cost of repairs by the trial court is pure speculation. Pantranco opposes this by pointing out that judicial notice is made by respondent Court of the propensity of motor repair shops to exaggerate their estimates.
[37] [38]

An estimate, as it is categorized, is not an actual expense incurred or to be incurred in the repair. The reduction made by respondent court is reasonable considering that in this instance such estimate was secured by the complainants themselves.

Epilogue This Court cannot remind the bench and the bar often enough that in order that moral damages may be awarded, there must be pleading and proof of moral suffering, mental anguish, fright and the like. 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, it is nevertheless essential that the claimant should satisfactorily show the existence of the factual basis of damages and its causal connection 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. In Francisco vs. GSIS, the Court held that there must be clear testimony on the anguish and other forms of mental suffering. Thus, if the plaintiff fails to take the witness stand and testify as to his/her social humiliation, wounded feelings and anxiety, moral damages cannot be awarded. In Cocoland Development Corporation vs. National Labor Relations Commission, the Court held that "additional facts must be pleaded and proven to warrant the grant of moral damages under the Civil Code, these being, x x x social humiliation, wounded feelings, grave anxiety, etc., that resulted therefrom."
[39] [40] [41] [42] [43]

Moral damages are awarded to enable the injured party to obtain means, diversions or amusements that will serve to alleviate the moral suffering he/she has undergone, by reason of the defendant's culpable action. Its award is aimed at restoration, as much as possible, of the spiritual status quo ante; thus, it must be proportionate to the suffering inflicted. Since each case must be governed by its own peculiar circumstances, there is no hard and fast rule in determining the proper amount. The yardstick should be that the amount awarded should not be so palpably and scandalously excessive as to indicate that it was the result of passion, prejudice or corruption on the part of the trial judge. Neither should it be so little or so paltry that it rubs salt to the injury already inflicted on plaintiffs.
[44] [45] [46]

WHEREFORE, premises considered, the petition for review in G.R. No. 99301 is PARTIALLY GRANTED, while that of Pantranco North Express, Inc., in G.R. No. 99343 is DISMISSED. The Decision appealed from is AFFIRMED with MODIFICATION. The award of moral damages to Lucila and Legaspi is hereby INCREASED to P400,000.00 and P50,000.00 respectively; exemplary damages to Lucila is INCREASED to P200,000.00. Legaspi is awarded exemplary damages of P50,000.00. The amount of P16,500.00 as actual or compensatory damages is alsoGRANTED to Legaspi. All other awards of Respondent Court of Appeals are AFFIRMED. Pantranco shall also PAY legal interest of 6% per annum on all sums awarded from the date of promulgation of the decision of the trial court, May 24, 1989, until actual payment. SO ORDERED. Narvasa, C.J. (Chairman), Davide, Jr., Melo, and Francisco, JJ., concur.

[1]

Rollo, G.R. No. 99301, pp. 44-56; Rollo, G.R. No. 99343, pp. 16-28. Composed of J. Jose C. Campos, Jr., ponente, and JJ. Venancio D. Aldecoa, Jr. and Filemon H. Mendoza. Rollo, G.R. No. 99301, pp. 55-56. Presided by Judge Pacita Canizares-Nye, now Associate Justice of the Court of Appeals. Rollo, G.R. No. 99301, pp. 44-45. Rollo, G.R. No. 99301, p. 49.

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“FINDINGS: Wound, lacerated, 10.0 cm., running forwards and upwards, located at the temporal region, scalp, right side; 10.0 cm., from the median line; C-shaped 13.0 cm., located at the parietal region, scalp, right side; 4.0 cm., from the median line; 2.0 cm., located at the angle of themmouth (sic), left and right side. Abrasion, extensive, involving the anterolateral aspect of the neck and supraclavicular region, left side; extensive involving the medial aspect, distal third of the forearm; extensive involving the anterior aspect of the kneesand (sic) lateral aspect of the upper half, left side, 0.5 cm., numbering in two, anterior aspect, knee, right side; 1.0 cm., numbering in two, located at the medial aspect, knee right side; multilinear ranging from 1.0 to 4.0 cm., running horizontally located at the lateral aspect, proximal third, leg, right side; 5.0 cm., located at the mid clavicular line at the level of the second rib, left side. Contusion, involving the posterior aspect, hand, left side; s.0 (sic) cm., in diameter, located at the antero-medial aspect, proximal third leg, right side. SKULL CHEST FOR RIBS CERVICAL #227609 (3-1-87) No demonstrable skull fracture.

There is a complete transverse fracture of the left third posterior rib with mild subpleural hematoma. Incidental note of normal cardiopulmonary findings. BOTH Limited view of the cervical vertebrae with C6 and C7 not visualized in the lateral view, show no evident CLAVICLES fracture nor dislocation. WRIST No demonstrable fracture in both clavicles and wrist. There is a double fracture of the mandible with some separation and displacement. Suggest panorex view. CONCLUSIONS: 1. 2. The above described physical injuries are found in the body of the subject, the age of which is compatible to the alleged date of infliction. Under normal conditions, without subsequent complication and/or deeper involvement present, but not clinically apparent at the time of the examination, the above-described physical injuries will require medical attendance or will incapacitate the victim for a period not less than 31 (thirty one) days." (Annex "B")."

[7]

G.R. No. 99301, Rollo, p. 51.

"DIAGNOSIS: — Fracture open, comminuted inferior pole, patalla (R) — Wound lacerated, sutured 2.5 cm. pariental (sic) (L)

— Wound, lacerated, sutured 1.5 cm. parietal (R) OPERATION PERFORMED: Partial pallectomy PROBABLE DISABILITY/PERIOD OF HEARING: Not less that 30 days. (Annex "D")."
[8]

Rollo, G.R. No. 99343, pp. 8-9. Rollo, G.R. No. 99301, pp. 19-20. Rollo, G.R No. 99343 pp. 9-10. Rollo, G.R. No. 99343, p. 69. Rollo, G.R. No. 99343, pp. 10-12. Gaw vs. IAC, 220 SCRA 405, March 24, 1993. Maximo Fuentes vs. Court of Appeals, et. al., G.R. No. 109849, February 26, 1997. Co vs. Court of Appeals, 247 SCRA 195, 200, August 11, 1995; Meneses vs. Court of Appeals, 246 SCRA 162, 171, July 14, 1995; Consolidated Bank and Trust Corporation (Solidbank) vs. Court of Appeals, 246 SCRA 193, 198-199, July 14, 1995; Sulpicio Lines, Inc. vs. Court of Appeals, 246 SCRA 376, 380, July 14, 1995; and Gobonseng, Jr. vs. Court of Appeals, 246 SCRA 472, 474-475, July 17, 1995. Rollo, G.R. No. 99301, pp. 51-52. Lopez vs. Pan American World Airways, 16 SCRA 431, 444, March 30, 1966. Yutuk vs. Manila Electric Co., 2 SCRA 337, 346, May 31, 1961. Petitioners cite the following American jurisprudence: Togstad vs. Vesely, 291 NW 2d 686, Minn 1980; Guevin

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G.R. No. 81262 August 25, 1989 GLOBE MACKAY CABLE AND RADIO CORP., and HERBERT C. HENDRY, petitioners, vs. THE HONORABLE COURT OF APPEALS and RESTITUTO M. TOBIAS, respondents. Atencia & Arias Law Offices for petitioners. Romulo C. Felizmena for private respondent.

CORTES, J.: Private respondent Restituto M. Tobias was employed by petitioner Globe Mackay Cable and Radio Corporation (GLOBE MACKAY) in a dual capacity as a purchasing agent and administrative assistant to the engineering operations manager. In 1972, GLOBE MACKAY discovered fictitious purchases and other fraudulent transactions for which it lost several thousands of pesos. According to private respondent it was he who actually discovered the anomalies and reported them on November 10, 1972 to his immediate superior Eduardo T. Ferraren and to petitioner Herbert C. Hendry who was then the Executive Vice-President and General Manager of GLOBE MACKAY.

On November 11, 1972, one day after private respondent Tobias made the report, petitioner Hendry confronted him by stating that he was the number one suspect, and ordered him to take a one week forced leave, not to communicate with the office, to leave his table drawers open, and to leave the office keys. On November 20, 1972, when private respondent Tobias returned to work after the forced leave, petitioner Hendry went up to him and called him a "crook" and a "swindler." Tobias was then ordered to take a lie detector test. He was also instructed to submit specimen of his handwriting, signature, and initials for examination by the police investigators to determine his complicity in the anomalies. On December 6,1972, the Manila police investigators submitted a laboratory crime report (Exh. "A") clearing private respondent of participation in the anomalies. Not satisfied with the police report, petitioners hired a private investigator, retired Col. Jose G. Fernandez, who on December 10, 1972, submitted a report (Exh. "2") finding Tobias guilty. This report however expressly stated that further investigation was still to be conducted. Nevertheless, on December 12, 1972, petitioner Hendry issued a memorandum suspending Tobias from work preparatory to the filing of criminal charges against him. On December 19,1972, Lt. Dioscoro V. Tagle, Metro Manila Police Chief Document Examiner, after investigating other documents pertaining to the alleged anomalous transactions, submitted a second laboratory crime report (Exh. "B") reiterating his previous finding that the handwritings, signatures, and initials appearing in the checks and other documents involved in the fraudulent transactions were not those of Tobias. The lie detector tests conducted on Tobias also yielded negative results. Notwithstanding the two police reports exculpating Tobias from the anomalies and the fact that the report of the private investigator, was, by its own terms, not yet complete, petitioners filed with the City Fiscal of Manila a complaint for estafa through falsification of commercial documents, later amended to just estafa. Subsequently five other criminal complaints were filed against Tobias, four of which were for estafa through Falsification of commercial document while the fifth was for of Article 290 of' the Revised Penal Code (Discovering Secrets Through Seizure of Correspondence). Two of these complaints were refiled with the Judge Advocate General's Office, which however, remanded them to the fiscal's office. All of the six criminal complaints were dismissed by the fiscal. Petitioners appealed four of the fiscal's resolutions dismissing the criminal complaints with the Secretary of Justice, who, however, affirmed their dismissal.
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In the meantime, on January 17, 1973, Tobias received a notice (Exh. "F") from petitioners that his employment has been terminated effective December 13, 1972. Whereupon, Tobias filed a complaint for illegal dismissal. The labor arbiter dismissed the complaint. On appeal, the National Labor Relations Commission (NLRC) reversed the labor arbiter's decision. However, the Secretary of Labor, acting on petitioners' appeal from the NLRC ruling, reinstated the labor arbiter's decision. Tobias appealed the Secretary of Labor's order with the Office of the President. During the pendency of the appeal with said office, petitioners and private respondent Tobias entered into a compromise agreement regarding the latter's complaint for illegal dismissal. Unemployed, Tobias sought employment with the Republic Telephone Company (RETELCO). However, petitioner Hendry, without being asked by RETELCO, wrote a letter to the latter stating that Tobias was dismissed by GLOBE MACKAY due to dishonesty. Private respondent Tobias filed a civil case for damages anchored on alleged unlawful, malicious, oppressive, and abusive acts of petitioners. Petitioner Hendry, claiming illness, did not testify during

the hearings. The Regional Trial Court (RTC) of Manila, Branch IX, through Judge Manuel T. Reyes rendered judgment in favor of private respondent by ordering petitioners to pay him eighty thousand pesos (P80,000.00) as actual damages, two hundred thousand pesos (P200,000.00) as moral damages, twenty thousand pesos (P20,000.00) as exemplary damages, thirty thousand pesos (P30,000.00) as attorney's fees, and costs. Petitioners appealed the RTC decision to the Court of Appeals. On the other hand, Tobias appealed as to the amount of damages. However, the Court of Appeals, an a decision dated August 31, 1987 affirmed the RTC decision in toto. Petitioners' motion for reconsideration having been denied, the instant petition for review on certiorari was filed. The main issue in this case is whether or not petitioners are liable for damages to private respondent. Petitioners contend that they could not be made liable for damages in the lawful exercise of their right to dismiss private respondent. On the other hand, private respondent contends that because of petitioners' abusive manner in dismissing him as well as for the inhuman treatment he got from them, the Petitioners must indemnify him for the damage that he had suffered. One of the more notable innovations of the New Civil Code is the codification of "some basic principles that are to be observed for the rightful relationship between human beings and for the stability of the social order." [REPORT ON THE CODE COMMISSION ON THE PROPOSED CIVIL CODE OF THE PHILIPPINES, p. 39]. The framers of the Code, seeking to remedy the defect of the old Code which merely stated the effects of the law, but failed to draw out its spirit, incorporated certain fundamental precepts which were "designed to indicate certain norms that spring from the fountain of good conscience" and which were also meant to serve as "guides for human conduct [that] should run as golden threads through society, to the end that law may approach its supreme ideal, which is the sway and dominance of justice" (Id.) Foremost among these principles is that pronounced in Article 19 which provides: Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith. This article, known to contain what is commonly referred to as the principle of abuse of rights, sets certain standards which must be observed not only in the exercise of one's rights but also in the performance of one's duties. These standards are the following: to act with justice; to give everyone his due; and to observe honesty and good faith. The law, therefore, recognizes a primordial limitation on all rights; that in their exercise, the norms of human conduct set forth in Article 19 must be observed. A right, though by itself legal because recognized or granted by law as such, may nevertheless become the source of some illegality. When a right is exercised in a manner which does not conform with the norms enshrined in Article 19 and results in damage to another, a legal wrong is thereby committed for which the wrongdoer must be held responsible. But while Article 19 lays down a rule of conduct for the government of human relations and for the maintenance of social order, it does not provide a remedy for its violation. Generally, an action for damages under either Article 20 or Article 21 would be proper. Article 20, which pertains to damage arising from a violation of law, provides that: Art. 20. Every person who contrary to law, wilfully or negligently causes damage to another, shall indemnify the latter for the same.

However, in the case at bar, petitioners claim that they did not violate any provision of law since they were merely exercising their legal right to dismiss private respondent. This does not, however, leave private respondent with no relief because Article 21 of the Civil Code provides that: 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. This article, adopted to remedy the "countless gaps in the statutes, which leave so many victims of moral wrongs helpless, even though they have actually suffered material and moral injury" [Id.] should "vouchsafe adequate legal remedy for that untold number of moral wrongs which it is impossible for human foresight to provide for specifically in the statutes" [Id. it p. 40; See also PNB v. CA, G.R. No. L27155, May 18,1978, 83 SCRA 237, 247]. In determining whether or not the principle of abuse of rights may be invoked, there is no rigid test which can be applied. While the Court has not hesitated to apply Article 19 whether the legal and factual circumstances called for its application [See for e.g., Velayo v. Shell Co. of the Phil., Ltd., 100 Phil. 186 (1956); PNB v. CA, supra;Grand Union Supermarket, Inc. v. Espino, Jr., G.R. No. L-48250, December 28, 1979, 94 SCRA 953; PAL v. CA, G.R. No. L-46558, July 31,1981,106 SCRA 391; United General Industries, Inc, v. Paler G.R. No. L-30205, March 15,1982,112 SCRA 404; Rubio v. CA, G.R. No. 50911, August 21, 1987, 153 SCRA 183] the question of whether or not the principle of abuse of rights has been violated resulting in damages under Article 20 or Article 21 or other applicable provision of law, depends on the circumstances of each case. And in the instant case, the Court, after examining the record and considering certain significant circumstances, finds that all petitioners have indeed abused the right that they invoke, causing damage to private respondent and for which the latter must now be indemnified. The trial court made a finding that notwithstanding the fact that it was private respondent Tobias who reported the possible existence of anomalous transactions, petitioner Hendry "showed belligerence and told plaintiff (private respondent herein) that he was the number one suspect and to take a one week vacation leave, not to communicate with the office, to leave his table drawers open, and to leave his keys to said defendant (petitioner Hendry)" [RTC Decision, p. 2; Rollo, p. 232]. This, petitioners do not dispute. But regardless of whether or not it was private respondent Tobias who reported the anomalies to petitioners, the latter's reaction towards the former upon uncovering the anomalies was less than civil. An employer who harbors suspicions that an employee has committed dishonesty might be justified in taking the appropriate action such as ordering an investigation and directing the employee to go on a leave. Firmness and the resolve to uncover the truth would also be expected from such employer. But the high-handed treatment accorded Tobias by petitioners was certainly uncalled for. And this reprehensible attitude of petitioners was to continue when private respondent returned to work on November 20, 1972 after his one week forced leave. Upon reporting for work, Tobias was confronted by Hendry who said. "Tobby, you are the crook and swindler in this company." Considering that the first report made by the police investigators was submitted only on December 10, 1972 [See Exh. A] the statement made by petitioner Hendry was baseless. The imputation of guilt without basis and the pattern of harassment during the investigations of Tobias transgress the standards of human conduct set forth in Article 19 of the Civil Code. The Court has already ruled that the right of the employer to dismiss an employee should not be confused with the manner in which the right is exercised and the effects flowing therefrom. If the dismissal is done abusively, then the employer is liable for damages to the employee [Quisaba v. Sta. Ines-Melale Veneer and Plywood Inc., G.R. No. L38088, August 30, 1974, 58 SCRA 771; See also Philippine Refining Co., Inc. v. Garcia, G.R. No. L21871, September 27,1966, 18 SCRA 107] Under the circumstances of the instant case, the petitioners clearly failed to exercise in a legitimate manner their right to dismiss Tobias, giving the latter the right to recover damages under Article 19 in relation to Article 21 of the Civil Code.

But petitioners were not content with just dismissing Tobias. Several other tortious acts were committed by petitioners against Tobias after the latter's termination from work. Towards the latter part of January, 1973, after the filing of the first of six criminal complaints against Tobias, the latter talked to Hendry to protest the actions taken against him. In response, Hendry cut short Tobias' protestations by telling him to just confess or else the company would file a hundred more cases against him until he landed in jail. Hendry added that, "You Filipinos cannot be trusted." The threat unmasked petitioner's bad faith in the various actions taken against Tobias. On the other hand, the scornful remark about Filipinos as well as Hendry's earlier statements about Tobias being a "crook" and "swindler" are clear violations of 'Tobias' personal dignity [See Article 26, Civil Code]. The next tortious act committed by petitioners was the writing of a letter to RETELCO sometime in October 1974, stating that Tobias had been dismissed by GLOBE MACKAY due to dishonesty. Because of the letter, Tobias failed to gain employment with RETELCO and as a result of which, Tobias remained unemployed for a longer period of time. For this further damage suffered by Tobias, petitioners must likewise be held liable for damages consistent with Article 2176 of the Civil Code. Petitioners, however, contend that they have a "moral, if not legal, duty to forewarn other employers of the kind of employee the plaintiff (private respondent herein) was." [Petition, p. 14; Rollo, p. 15]. Petitioners further claim that "it is the accepted moral and societal obligation of every man to advise or warn his fellowmen of any threat or danger to the latter's life, honor or property. And this includes warning one's brethren of the possible dangers involved in dealing with, or accepting into confidence, a man whose honesty and integrity is suspect" [Id.]. These arguments, rather than justify petitioners' act, reveal a seeming obsession to prevent Tobias from getting a job, even after almost two years from the time Tobias was dismissed. Finally, there is the matter of the filing by petitioners of six criminal complaints against Tobias. Petitioners contend that there is no case against them for malicious prosecution and that they cannot be "penalized for exercising their right and prerogative of seeking justice by filing criminal complaints against an employee who was their principal suspect in the commission of forgeries and in the perpetration of anomalous transactions which defrauded them of substantial sums of money" [Petition, p. 10, Rollo, p. 11]. While sound principles of justice and public policy dictate that persons shall have free resort to the courts for redress of wrongs and vindication of their rights [Buenaventura v. Sto. Domingo, 103 Phil. 239 (1958)], the right to institute criminal prosecutions can not be exercised maliciously and in bad faith [Ventura v. Bernabe, G.R. No. L-26760, April 30, 1971, 38 SCRA 5871.] Hence, in Yutuk V. Manila Electric Co., G.R. No. L-13016, May 31, 1961, 2 SCRA 337, the Court held that the right to file criminal complaints should not be used as a weapon to force an alleged debtor to pay an indebtedness. To do so would be a clear perversion of the function of the criminal processes and of the courts of justice. And in Hawpia CA, G.R. No. L-20047, June 30, 1967. 20 SCRA 536 the Court upheld the judgment against the petitioner for actual and moral damages and attorney's fees after making a finding that petitioner, with persistence, filed at least six criminal complaints against respondent, all of which were dismissed. To constitute malicious prosecution, there must be proof that the prosecution was prompted by a design to vex and humiliate a person and that it was initiated deliberately by the defendant knowing that the charges were false and groundless [Manila Gas Corporation v. CA, G.R. No. L-44190, October 30,1980, 100 SCRA 602]. Concededly, the filing of a suit by itself, does not render a person liable for malicious prosecution [Inhelder Corporation v. CA, G.R. No. 52358, May 301983122 SCRA 576]. The mere dismissal by the fiscal of the criminal complaint is not a ground for an award of damages for malicious prosecution if there is no competent evidence to show that the complainant had acted in bad faith [Sison v. David, G.R. No. L-11268, January 28,1961, 1 SCRA 60].

In the instant case, however, the trial court made a finding that petitioners acted in bad faith in filing the criminal complaints against Tobias, observing that: xxx Defendants (petitioners herein) filed with the Fiscal's Office of Manila a total of six (6) criminal cases, five (5) of which were for estafa thru falsification of commercial document and one for violation of Art. 290 of the Revised Penal Code "discovering secrets thru seizure of correspondence," and all were dismissed for insufficiency or lack of evidence." The dismissal of four (4) of the cases was appealed to the Ministry of Justice, but said Ministry invariably sustained the dismissal of the cases. As above adverted to, two of these cases were refiled with the Judge Advocate General's Office of the Armed Forces of the Philippines to railroad plaintiffs arrest and detention in the military stockade, but this was frustrated by a presidential decree transferring criminal cases involving civilians to the civil courts. xxx To be sure, when despite the two (2) police reports embodying the findings of Lt. Dioscoro Tagle, Chief Document Examiner of the Manila Police Department, clearing plaintiff of participation or involvement in the fraudulent transactions complained of, despite the negative results of the lie detector tests which defendants compelled plaintiff to undergo, and although the police investigation was "still under follow-up and a supplementary report will be submitted after all the evidence has been gathered," defendants hastily filed six (6) criminal cases with the city Fiscal's Office of Manila, five (5) for estafa thru falsification of commercial document and one (1) for violation of Art. 290 of the Revised Penal Code, so much so that as was to be expected, all six (6) cases were dismissed, with one of the investigating fiscals, Asst. Fiscal de Guia, commenting in one case that, "Indeed, the haphazard way this case was investigated is evident. Evident likewise is the flurry and haste in the filing of this case against respondent Tobias," there can be no mistaking that defendants would not but be motivated by malicious and unlawful intent to harass, oppress, and cause damage to plaintiff. xxx [RTC Decision, pp. 5-6; Rollo, pp. 235-236]. In addition to the observations made by the trial court, the Court finds it significant that the criminal complaints were filed during the pendency of the illegal dismissal case filed by Tobias against petitioners. This explains the haste in which the complaints were filed, which the trial court earlier noted. But petitioners, to prove their good faith, point to the fact that only six complaints were filed against Tobias when they could have allegedly filed one hundred cases, considering the number of anomalous transactions committed against GLOBE MACKAY. However, petitioners' good faith is belied by the threat made by Hendry after the filing of the first complaint that one hundred more cases would be filed against Tobias. In effect, the possible filing of one hundred more cases was made to hang like the sword of Damocles over the head of Tobias. In fine, considering the haste in which the criminal complaints were filed, the fact that they were filed during the pendency of the illegal dismissal case against petitioners, the threat made by Hendry, the fact that the cases were filed notwithstanding the two police reports exculpating Tobias from involvement in the anomalies committed against GLOBE MACKAY, coupled by the eventual dismissal of all the cases, the Court is led into no other

conclusion than that petitioners were motivated by malicious intent in filing the six criminal complaints against Tobias. Petitioners next contend that the award of damages was excessive. In the complaint filed against petitioners, Tobias prayed for the following: one hundred thousand pesos (P100,000.00) as actual damages; fifty thousand pesos (P50,000.00) as exemplary damages; eight hundred thousand pesos (P800,000.00) as moral damages; fifty thousand pesos (P50,000.00) as attorney's fees; and costs. The trial court, after making a computation of the damages incurred by Tobias [See RTC Decision, pp. 7-8; Rollo, pp. 154-1551, awarded him the following: eighty thousand pesos (P80,000.00) as actual damages; two hundred thousand pesos (P200,000.00) as moral damages; twenty thousand pesos (P20,000.00) as exemplary damages; thirty thousand pesos (P30,000.00) as attorney's fees; and, costs. It must be underscored that petitioners have been guilty of committing several actionable tortious acts, i.e., the abusive manner in which they dismissed Tobias from work including the baseless imputation of guilt and the harassment during the investigations; the defamatory language heaped on Tobias as well as the scornful remark on Filipinos; the poison letter sent to RETELCO which resulted in Tobias' loss of possible employment; and, the malicious filing of the criminal complaints. Considering the extent of the damage wrought on Tobias, the Court finds that, contrary to petitioners' contention, the amount of damages awarded to Tobias was reasonable under the circumstances. Yet, petitioners still insist that the award of damages was improper, invoking the principle of damnum absqueinjuria. It is argued that "[t]he only probable actual damage that plaintiff (private respondent herein) could have suffered was a direct result of his having been dismissed from his employment, which was a valid and legal act of the defendants-appellants (petitioners herein). " [Petition, p. 17; Rollo, p. 18].
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According to the principle of damnum absque injuria, damage or loss which does not constitute a violation of a legal right or amount to a legal wrong is not actionable [Escano v. CA, G.R. No. L-47207, September 25, 1980, 100 SCRA 197; See also Gilchrist v. Cuddy 29 Phil, 542 (1915); The Board of Liquidators v. Kalaw, G.R. No. L-18805, August 14, 1967, 20 SCRA 987]. This principle finds no application in this case. It bears repeating that even granting that petitioners might have had the right to dismiss Tobias from work, the abusive manner in which that right was exercised amounted to a legal wrong for which petitioners must now be held liable. Moreover, the damage incurred by Tobias was not only in connection with the abusive manner in which he was dismissed but was also the result of several other quasi-delictual acts committed by petitioners. Petitioners next question the award of moral damages. However, the Court has already ruled in Wassmer v. Velez, G.R. No. L-20089, December 26, 1964, 12 SCRA 648, 653, that [p]er express provision of Article 2219 (10) of the New Civil Code, moral damages are recoverable in the cases mentioned in Article 21 of said Code." Hence, the Court of Appeals committed no error in awarding moral damages to Tobias. Lastly, the award of exemplary damages is impugned by petitioners. Although Article 2231 of the Civil Code provides that "[i]n quasi-delicts, exemplary damages may be granted if the defendant acted with gross negligence," the Court, in Zulueta v. Pan American World Airways, Inc., G.R. No. L- 28589, January 8, 1973, 49 SCRA 1, ruled that if gross negligence warrants the award of exemplary damages, with more reason is its imposition justified when the act performed is deliberate, malicious and tainted with bad faith. As in the Zuluetacase, the nature of the wrongful acts shown to have been committed by petitioners against Tobias is sufficient basis for the award of exemplary damages to the latter. WHEREFORE, the petition is hereby DENIED and the decision of the Court of Appeals in CA-G.R. CV No. 09055 is AFFIRMED.

SO ORDERED. Fernan, C.J., Gutierrez, Jr. and Bidin, JJ., concur. Feliciano, J., took no part.

G.R. No. 108253 February 23, 1994 LYDIA L. GERALDEZ, petitioner, vs. HON. COURT OF APPEALS and KENSTAR TRAVEL CORPORATION, respondents. Natividad T. Perez for petitioner. Bito, Lozada, Ortega & Castillo for private respondent.

REGALADO, J.: Our tourism industry is not only big business; it is a revenue support of the nation's economy. It has become a matter of public interest as to call for its promotion and regulation on a cabinet level. We have special laws and policies for visiting tourists, but such protective concern has not been equally extended to Filipino tourists going abroad. Thus, with the limited judicial relief available within the ambit of present laws, our tourists often prefer who fail to deliver on their undertakings. This case illustrates the recourse of one such tourist who refused to forget. An action for damages by reason of contractual breach was filed by petitioner Lydia L. Geraldez against private respondent Kenstar Travel Corporation, docketed as Civil Case No. Q-90-4649 of the Regional Trial Court of Quezon City, Branch 80. 1 After the parties failed to arrive at an amicable settlement, trial on the merits ensued. Culling from the records thereof, we find that sometime in October, 1989, Petitioner came to know about private respondent from numerous advertisements in newspapers of general circulation regarding tours in Europe. She then contacted private respondent by phone and the latter sent its representative, Alberto Vito Cruz, who gave her the brochure for the tour and later discussed its highlights. The European tours offered were classified into four, and petitioner chose the classification denominated as "VOLARE 3" covering a 22-day tour of Europe for $2,990.00. She paid the total equivalent amount of P190,000.00 charged by private respondent for her and her sister, Dolores. Petitioner claimed that, during the tour, she was very uneasy and disappointed when it turned out that, contrary to what was stated in the brochure, there was no European tour manager for their group of tourists, the hotels in which she and the group were bullited were not first-class, the UGC Leather Factory which was specifically added as a highlight of the tour was not visited, and the Filipino lady tour guide by private respondent was a first timer, that is, she was performing her duties and responsibilities as such for the first time. 2 In said action before the Regional Trial Court of Quezon City, petitioner likewise moved for the issuance of a writ of preliminary attachment against private respondent on the ground that it committed

fraud in contracting an obligation, as contemplated in Section 1(d), Rule 57 of the Rules of Court, to which no opposition by the latter appears on the record. This was granted by the court a quo 3 but the preliminary attachment was subsequently lifted upon the filing by private respondent of a counterbond amounting to P990,000.00. 4 During the pendency of said civil case for damages, petitioner also filed other complaints before the Department of Tourism in DOT Case No. 90-121 and the Securities and Exchange Commission in PED Case No. 90-3738, 5wherein, according to petitioner, herein private respondent was meted out a fine of P10,000.00 by the Commission and P5,000.00 by the Department, 6 which facts are not disputed by private respondent in its comment on the present petition. On July 9, 1991, the court a quo rendered its decision 7 ordering private respondent to pay petitioner P500.000.00 as moral damages, P200,000.00 as nominal damages, P300,000.00 as exemplary damages, P50,000.00 as and for attorney's fees, and the costs of the suit. 8 On appeal, respondent court 9 deleted the award for moral and exemplary damages, and reduced the awards for nominal damages and attorney's fees to P30,000.00 and P10,000.00, respectively. 10 Hence, the instant petition from which, after sifting through the blades of contentions alternately thrust and parried in the exchanges of the parties, the pivotal issue that emerges is whether or not private respondent acted in bad faith or with gross negligence in discharging its obligations under the contract. Both the respondent court and the court a quo agree that private respondent failed to comply faithfully with its commitments under the Volare 3 tour program, more particularly in not providing the members of the tour group with a European tour manger whose duty, inter alia, was to explain the points of interest of and familiarize the tour group with the places they would visit in Europe, and in assigning instead a first timer Filipino tour guide, in the person of Rowena Zapanta, 11 to perform that role which definitely requires experience and knowledge of such places. It is likewise undisputed that while the group was able to pay a visit to the site of the UGC Leather Factory, they were brought there at a very late hour such that the factory was already closed and they were unable to make purchases at supposedly discounted prices. 12 As to the first-class hotels, however, while the court a quofound that the hotels were not fist-class, respondent court believed otherwise, or that, at least, there was substantial compliance with such a representation. While clearly there was therefore a violation of the rights of petitioner under the aforementioned circumstances, respondent court, contrary to the findings of the trial court, ruled that no malice or bad faith could be imputed to private respondent, hence there is no justification for the award of moral and exemplary damages. Furthermore, it held that while petitioner is entitled to nominal damages, the amount awarded by the trial court was unconscionable since petitioner did not suffer actual or substantial damage from the breach of contract, 13 hence its reduction of such award as hereinbefore stated. After thorough and painstaking scrutiny of the case records of both the trial and appellate courts, we are satisfactorily convinced, and so hold, that private respondent did commit fraudulent misrepresentations amounting to bad faith, to the prejudice of petitioner and the members of the tour group. By providing the Volare 3 tourist group, of which petitioner was a member, with an inexperienced and a first timer tour escort, private respondent manifested its indifference to the convenience, satisfaction and peace of mind of its clients during the trip, despite its express commitment to provide such facilities under the Volare 3 Tour Program which had the grandiose slogan "Let your heart sing. 14

Evidently, an inexperienced tour escort, who admittedly had not even theretofore been to Europe, 15 cannot effectively acquaint the tourists with the interesting areas in the cities and places included in the program, or to promptly render necessary assistance, especially where the latter are complete strangers thereto, like witnesses Luz Sui Haw and her husband who went to Europe for their honeymoon. 16 We agree with petitioner that the selection of Zapanta as the group's tour guide was deliberate and conscious choice on the part of private respondent in order to afford her an on-the-job training and equip her with the proper opportunities so as to later qualify her as an "experienced" tour guide and eventually be an asset of respondent corporation. 17 Unfortunately, this resulted in a virtual project experimentation with petitioner and the members of the tour as the unwitting participants. We are, therefore, one with respondent court in faulting private respondent's choice of Zapanta as a qualified tour guide for the Volare 3 tour package. It brooks no argument that to be true to its undertakings, private respondent should have selected an experienced European tour guide, or it could have allowed Zapanta to go merely as an understudy under the guidance, control and supervision of an experienced and competent European or Filipino tour guide, 18 who could give her the desired training. Moreover, a tour guide is supposed to attend to the routinary needs of the tourists, not only when the latter ask for assistance but at the moment such need becomes apparent. In other words, the tour guide, especially by reason of her experience in previous tours, must be able to anticipate the possible needs and problems of the tourists instead of waiting for them to bring it to her attention. While this is stating the obvious, it is her duty to see to it that basic personal necessities such as soap, towels and other daily amenities are provided by the hotels. It is also expected of her to see to it that the tourists are provided with sanitary surroundings and to actively arrange for medical attention in case of accidents, as what befell petitioner's sister and wherein the siblings had to practically fend for themselves since, after merely calling for an ambulance, Zapanta left with the other tour participants. 19 Zapanta fell far short of the performance expected by the tour group, her testimony in open court being revelatory of her inexperience even on the basic function of a tour guide, to wit: Q Now, are you aware that there were times that the tourists under the "Volare 3" were not provided with soap and towels?
A They did not tell me that but I was able to ask them later on but then nobody is complaining.20 . . . .

The inability of the group to visit the leather factory is likewise reflective of the neglect and ineptness of Zapanta in attentively following the itinerary of the day. This incompetence must necessarily be traced to the lack of due diligence on the part of private respondent in the selection of its employees. It is true that among the thirty-two destinations, which included twenty-three cities and special visits to nine tourist spots, this was the only place that was not visited. 21 It must be noted, however, that the visit to the UGC Leather Factory was one of the highlights22 of the Volare 3 program which even had to be specifically inserted in the itinerary, hence it was incumbent upon the organizers of the tour to take special efforts to ensure the same. Besides, petitioner did expect much from the visit to that factory since it was represented by private respondent that quality leather goods could be bought there at lower prices. 23 Private respondent represents Zapanta's act of making daily overseas calls to Manila as an exercise of prudence and diligence on the latter's part as a tour guide. 24 It further claims that these calls were needed so that it could monitor the progress of the tour and respond to any problem

immediately. 25 We are not persuaded. The truth of the matter is that Zapanta, as an inexperienced trainee-on-the-job, was required to make these calls to private respondent for the latter to gauge her ability in coping with her first assignment and to provide instructions to her.26 Clearly, therefore, private respondent's choice of Zapanta as the tour guide is a manifest disregard of its specific assurances to the tour group, resulting in agitation and anxiety on their part, and which deliberate omission is contrary to the elementary rules of good faith and fair play. It is extremely doubtful if any group of Filipino tourists would knowingly agree to be used in effect as guinea pigs in an employees' training program of a travel agency, to be conducted in unfamiliar European countries with their diverse cultures, lifestyles and languages. On the matter of the European tour manager, private respondent's advertisement in its tour contract declares and represents as follows: FILIPINO TOUR ESCORT! He will accompany you throughout Europe. He speaks your language, shares your culture and feels your excitement. He won't be alone because you will also be accompanied by a . . . EUROPEAN TOUR MANAGER!
You get the best of both worlds. Having done so may tours in the past with people like you, he knows your sentiments, too. So knowledgeable about Europe, there is hardly a question he can't answer. 27

Private respondent contends that the term "European Tour Manager" does not refer to an individual but to an organization, allegedly the Kuoni Travel of Switzerland which supposedly prepared the itinerary for its "Volare Europe Tour," negotiated with all the hotels in Europe, selected tourist spots and historical places to visit, and appointed experienced local tour guides for the tour group. 28 We regret this unseemly quibbling which perforce cannot be allowed to pass judicial muster. A cursory reading of said advertisement will readily reveal the express representation that the contemplated European tour manager is a natural person, and not a juridical one as private respondent asserts. A corporate entity could not possibly accompany the members of the tour group to places in Europe; neither can it answer questions from the tourists during the tour. Of course, it is absurd that if a tourist would want to know how he could possibly go to the nearest store or supermarket, he would still have to call Kuoni Travel of Switzerland. Furthermore, both lower courts observed, and we uphold their observations, that indeed private respondent had the obligation to provide the tour group not only with a European tour manger, but also with local European tour guides. The latter, parenthetically, were likewise never made available. 29 Zapanta claims that she was accompanied by a European local tour guide in most of the major cities in Europe. We entertain serious doubts on, and accordingly reject, this pretension for she could not even remember the name of said European tour guide. 30 If such a guide really existed, it is incredible why she could not even identify the former when she testified a year later, despite the length of their sojourn and the duration of their association.

As to why the word "he" was used in the aforequoted advertisement, private respondent maintains that the pronoun "he" also includes the word "it," as where it is used as a "nominative case form in general statements (as in statutes) to include females, fictitious persons (as corporations)." 31 We are constrained to reject this submission as patently strained and untenable. As already demonstrated, it is incredible that the word "he" was used by private respondent to denote an artificial or corporate being. From its advertisement, it is beyond cavil that the import of the word "he" is a natural and not a juridical person. There is no need for further interpretation when the wordings are clear. The meaning that will determine the legal effect of a contract is that which is arrived at by objective standards; one is bound, not by what he subjectively intends, but by what he leads others reasonably to think he intends. 32 In an obvious but hopeless attempt to arrive at a possible justification, private respondent further contends that it explained the concept of a European tour manager to its clients at the pre-departure briefing, which petitioner did not attend. 33 Significantly, however, private respondent failed to present even one member of the tour group to substantiate its claim. It is a basic rule of evidence that a party must prove his own affirmative allegations. 34Besides, if it was really its intention to provide a juridical European tour manager, it could not have kept on promising its tourists during the tour that a European tour manager would come, 35 supposedly to join and assist them. Veering to another line of defense, private respondent seeks sanctuary in the delimitation of its responsibility as printed on the face of its brochure on the Volare 3 program, to wit:
RESPONSIBILITIES: KENSTAR TRAVEL CORPORATION, YOUR TRAVEL AGENT, THEIR EMPLOYEES OR SUB-AGENTS SHALL BE RESPONSIBLE ONLY FOR BOOKING AND MAKING ARRANGEMENTS AS YOUR AGENTS. Kenstar Travel Corporation, your travel Agent, their employees or sub-agents assume no responsibility or liability arising out of or in connection with the services or lack of services, of any train, vessel, other conveyance or station whatsoever in the performance of their duty to the passengers or guests, neither will they be responsible for any act, error or omission, or of any damages, injury, loss, accident, delay or irregularity which may be occasioned by reason (of) or any defect in . . . lodging place or any facilities . . . .(Emphasis by private respondent.) 36

While, generally, the terms of a contract result from the mutual formulation thereof by the parties thereto, it is of common knowledge that there are certain contracts almost all the provisions of which have been drafted by only one party, usually a corporation. Such contracts are called contracts of adhesion, because the only participation of the party is the affixing of his signature or his "adhesion" thereto. 37 In situations like these, when a party imposes upon another a ready-made form of contract, 38 and the other is reduced to the alternative of taking it or leaving it, giving no room for negotiation and depriving the latter of the opportunity to bargain on equal footing, a contract of adhesion results. While it is true that an adhesion contract is not necessarily void, it must nevertheless be construed strictly against the one who drafted the same. 39 This is especially true where the stipulations are printed in fine letters and are hardly legible as is the case of the tour contract 40 involved in the present controversy. Yet, even assuming arguendo that the contractual limitation aforequoted is enforceable, private respondent still cannot be exculpated for the reason that responsibility arising from fraudulent acts, as in the instant case, cannot be stipulated against by reason of public policy. Consequently, for the foregoing reasons, private respondent cannot rely on its defense of "substantial compliance" with the contract. Private respondent submits likewise that the tour was satisfactory, considering that only petitioner, out of eighteen participants in the Volare 3 Tour Program, actually complained. 41 We cannot accept this argument. Section 28, Rule 130 of the Rules of Court declares that the rights of a party cannot be

prejudiced by an act, declaration, oromission of another, a statutory adaptation of the first branch of the hornbook rule of res inter alios acta 42 which we do not have to belabor here. Besides, it is a commonly known fact that there are tourists who, although the tour was far from what the tour operator undertook under the contract, choose to remain silent and forego recourse to a suit just to avoid the expenses, hassle and rancor of litigation, and not because the tour was in accord with was promised. One does not relish adding to the bitter memory of a misadventure the unpleasantness of another extended confrontation. Furthermore, contrary to private respondent's assertion, not only petitioner but two other members of the tour group, Luz Sui Haw and Ercilla Ampil, confirmed petitioner's complaints when they testified as witnesses for her as plaintiff in the court below. 43 Private respondent likewise committed a grave misrepresentation when it assured in its Volare 3 tour package that the hotels it had chosen would provide the tourists complete amenities and were conveniently located along the way for the daily itineraries. 44 It turned out that some of the hotels were not sufficiently equipped with even the basic facilities and were at a distance from the cities covered by the projected tour. Petitioner testified on her disgust with the conditions and locations of the hotels, thus: Q And that these bathrooms ha(ve) bath tub(s) and hot and cold shower(s)? A Not all, sir. Q Did they also provide soap and towels?
A Not all, sir, some (had) no toilet paper. 45

Q Which one? A The 2 stars, the 3 stars and some 4 stars (sic) hotels. Q What I am saying . . . A You are asking a question? I am answering you. 2 stars, 3 stars and some 4 stars (sic) hotels, no soap, toilet paper and (the) bowl stinks. . . . xxx xxx xxx Q And that except for the fact that some of these four star hotels were outside the city they provided you with the comfort? A Not all, sir. Q Can you mention some which did not provide you that comfort?
A For example, if Ramada Hotel Venezia is in Quezon City, our hotel is in Meycauayan. And if Florence or Ferenze is in manila, our hotel is in Muntinlupa. 46

xxx xxx xxx

A One more hotel, sir, in Barcelona, Hotel Saint Jacques is also outside the city. Suppose Barcelona is in Quezon City, our hotel is in Marilao. We looked for this hotel inside the city of Barcelona for three (3) hours. We wasted our time looking for almost all the hotels and places where to eat. That is the kind of tour that you have. 47

Luz Sui Haw, who availed of the Volare 3 tour package with her husband for their honeymoon, shared the sentiments of petitioner and testified as follows: Q . . . Will you kindly tell us why the hotels where you stayed are not considered first class hotels?
A Because the hotels where we went, sir, (are) far from the City and the materials used are not first class and at times there were no towels and soap. And the two (2) hotels in Nevers and Florence the conditions (are) very worse (sic). 48

Q Considering that you are honeymooners together with your husband, what (were) your feelings when you found out that the condition were not fulfilled by the defendant?
A I would like to be very honest. I got sick when I reached Florence and half of my body got itch (sic). I think for a honeymooner I would like to emphasize that we should enjoy that day of our life and it seems my feet kept on itching because of the condition of the hotel. And I was so dissatisfied because the European Tour Manager was not around there (were) beautiful promises. They kept on telling us that a European Tour Manager will come over; until our Paris tour was ended there was no European tour manager. 49

xxx xxx xxx Q You will file an action against the defendant because there was a disruption of your happiness, in your honeymoon, is that correct?
A That is one of my causes of (sic) coming up here. Secondly, i was very dissatisfied (with) the condition. Thirdly, that Volare 89 it says it will let your heart sing. That is not true. There was no European tour (manager) and the highlights of the tour (were) very poor. The hotels were worse (sic) hotels. 50

Q All the conditions of the hotels as you . . .
A Not all but as stated in the brochure that it is first class hotel. The first class hotels state that all things are beautiful and it is neat and clean with complete amenities and I encountered the Luxembourg hotel which is quite very dilapidated because of the flooring when you step on the side "kumikiring" and the cabinets (are) antiques and as honeymooners we don't want to be disturbed or seen. 51

xxx xxx xxx Q None of these are first class hotels?

A Yes, sir. Q So, for example Ramada Hotel Venezia which according to Miss Geraldez is first class hotel is not first class hotel? A Yes, sir. Q You share the opinion of Miss Geraldez? A Yes, sir. Q The same is true with Grand Hotel Palatino which is not a first class hotel? A Yes, sir. Q And Hotel Delta Florence is not first class hotel? A That is how I got my itch, sir. Seven (7) days of itch. Q How about Hotel Saint-Jacquez, Paris? A It is far from the city. It is not first class hotel. Q So with Hotel Le Prieure Du Coeur de Jesus neither a first class hotel? A Yes, sir. Q Hotel De Nevers is not a first class hotel? A Yes, sir. Q Hotel Roc Blanc Andorra is not a first class hotel? A Yes, sir. Q Saint Just Hotel, Barcelona is not a first class hotel? A Yes, sir. Q Hotel Pullman Nice neither is not a first class hotel? A Yes, sir. Q Hotel Prinz Eugen and Austrotel are not first class hotels?
A Yes, sir. 52

Private respondent cannot escape responsibility by seeking refuge under the listing of first-class hotels in publications like the "Official Hotel and Resort Guide" and Worldwide Hotel Guide." 53 Kuoni Travel, its tour operator, 54 which prepared the hotel listings, is a European-based travel agency 55 and, as such, could have easily verified the matter of first-class accommodations. Nor can it logically claim that the first-class hotels in Europe may not necessarily be the first-class hotels here in the Philippines. 56 It is reasonable for petitioner to assume that the promised first-class hotels are equivalent to what are considered first-class hotels in Manila. Even assuming arguendo that there is indeed a difference in classifications, it cannot be gainsaid that a first-class hotel could at the very least provide basic necessities and sanitary accommodations. We are accordingly not at all impressed by private respondent's attempts to trivialize the complaints thereon by petitioner and her companions. In a last ditch effort to justify its choice of the hotels, private respondent contends that it merely provided such "first class" hotels which are commensurate to the tourists budget, or which were, under the given circumstances, the "best for their money." It postulated that it could not have offered better hostelry when the consideration paid for hotel accommodations by the tour participants was only so much, 57 and the tour price of $2,990.00 covers a European tour for 22 days inclusive of lower room rates and meals. 58 this is implausible, self-serving and borders on sophistry. The fact that the tourists were to pay a supposedly lower amount, such that private respondent allegedly retained hardly enough as reasonable profit, 59 does not justify a substandard form of service in return. It was private respondent, in the first place, which fixed the charges for the package tour and determined the services that could be availed of corresponding to such price. Hence, it cannot now be heard to complain that it only made a putative marginal profit out of the transaction. if it could not provide the tour participants with first-class lodgings on the basis of the amount that they paid, it could and should have instead increased the price to enable it to arrange for the promised first-class accommodations. On the foregoing considerations, respondent court erred in deleting the award for moral and exemplary damages. Moral damages may be awarded in breaches of contract where the obligor acted fraudulently or in bad faith. 60From the facts earlier narrated, private respondent can be faulted with fraud in the inducement, which is employed by a party to a contract in securing the consent of the other. This fraud or dolo which is present or employed at the time of birth or perfection of a contract may either be dolocausante or dolo incidente. The first, or causal fraud referred to in Article 1338, are those deceptions or misrepresentations of a serious character employed by one party and without which the other party would not have entered into the contract. Dolo incidente, or incidental fraud which is referred to in Article 1344, are those which are not serious in character and without which the other party would still have entered into the contract. 61Dolo causante determines or is the essential cause of the consent, while dolo incidente refers only to some particular or accident of the obligations. 62 The effects of dolo causante are the nullity of the contract and the indemnification of damages, 63and dolo incidente also obliges the person employing it to pay damages. 64 In either case, whether private respondent has committed dolo causante or dolo incidente by making misrepresentations in its contracts with petitioner and other members of the tour group, which deceptions became patent in the light of after-events when, contrary to its representations, it employed an inexperienced tour guide, housed the tourist group in substandard hotels, and reneged on its promise of a European tour manager and the visit to the leather factory, it is indubitably liable for damages to petitioner. In the belief that an experienced tour escort and a European tour manager would accompany them, with the concomitant reassuring and comforting thought of having security and assistance readily at

hand, petitioner was induced to join the Volare 3 tourists, instead of travelling alone 65 She likewise suffered serious anxiety and distress when the group was unable to visit the leather factory and when she did not receive first-class accommodations in their lodgings which were misrepresented as firstclass hotels. These, to our mind, justify the award for moral damages, which are in the category of an award designed to compensate the claimant for that injury which she had suffered, and not as a penalty on the wrongdoer, 66 we believe that an award of P100,000.00 is sufficient and reasonable. When moral damages are awarded, especially for fraudulent conduct, exemplary damages may also be decreed. Exemplary damages are imposed by way of example or correction for the public good, in addition to moral, temperate, liquidated or compensatory damages. According to the code Commission, exemplary damages are required by public policy, for wanton acts must be suppressed. 67 An award, therefore, of P50,000.00 is called for to deter travel agencies from resorting to advertisements and enticements with the intention of realizing considerable profit at the expense of the public, without ensuring compliance with their express commitments. While, under the present state of the law, extraordinary diligence is not required in travel or tour contracts, such as that in the case at bar, the travel agency acting as tour operator must nevertheless be held to strict accounting for contracted services, considering the public interest in tourism, whether in the local or in the international scene. Consequently, we have to likewise reject the theory of private respondent that the promise it made in the tour brochure may be regarded only as "commendatory trade talk." 68 With regard to the honorarium for counsel as an item of damages, since we are awarding moral and exemplary damages, 69 and considering the legal importance of the instant litigation and the efforts of counsel evident from the records of three levels of the judicial hierarchy, we favorably consider the amount of P20,000.00 therefor. WHEREFORE, premises considered, the decision of respondent Court of Appeals is hereby SET ASIDE, and another one rendered, ordering private respondent Kenstar Travel Corporation to pay petitioner Lydia L. Geraldez the sums of P100,000.00 by way of moral damages, P50,000.00 as exemplary damages, and P20,000.00 as and for attorney's fees, with costs against private respondent. The award for nominal damages is hereby deleted. Padilla, Nocon and Puno, JJ., concur. Narvasa, C.J., took no part.