FLORDELIS v.

MAR
May 22, 1982 | Aquino, J. | Moral Damages
PETITIONER: Guillerma Flordelis, Edgar Flordelis, Rosario Casia, Editha Chatto,
Evelyn Flordelis, Lily Flordelis (heris of late Gotardo Flordelis)
RESPONDENT: Fermin Mar, Graciano M. Ligan, Court of Appeals
SUMMARY: Flordelis suspended schoolteachers Mar and Ligan and refused to pay
their salaries because they filed an administrative complaint against him. The SC
ruled that the CA was right in reinstating Mar and Ligan to their positions and giving
them back salaries. However, the SC said that since Mar and Ligan's case does not
show any justification for the award of moral damages under Arts. 2219 and 2220 of
the Civil Code, they are not entitled to such. Justice Abad-Santos dissented, stating
that clearly Mar and Ligan were victims of harrassment by a vindictive superior,
contrary to good customs. There is no doubt they suffered the anguish, shock, fright,
anxiety, wounded feelings and social humiliation required to demand for moral
damages
under
Art.
2217
of
the
Civil
Code.
DOCTRINE: If the circumstances of a case does not fall under those illustrated in
Art. 2219 of the Civil Code, the plaintiffs are not entitled to such.
FACTS:
1) Respondents Fermin Mar and
Graciano Ligan were appointed as
teachers in the Bohol School of Arts and
Trades by the Secretary of Education.
2) Mar and Ligan filed an administrative
complaint against Petitioner (deceased,
substituted by his heirs) Gotardo
Flordelis,
who
was
the
school
administrator.
3) Flordelis was absolved of the
complaint, the complaint was dismissed,
and Flordelis was warned that if he
repeated the act, he would be dealt with
severely.
4) The City Fiscal of Tagbilaran filed, on
Flordelis' instance, an information for
perjury against Mar, Ligan and other
accused. The city court convicted them,
while the CA reversed the conviction and
acquitted
Mar
and
Ligan.
5) Mar and Ligan were not paid their
salaries after, although they held classes.
Flordelis suspended them and even
prevented them from entering the school
by ordering the security guards to bar
them
from
entering.
6) The lawyer of Mar and Ligan made a

demand upon Flordelis to reinstate them

as teachers. Flordelis still suspended
Mar and Ligan, on ground that they
refused
to
accept
new
teaching
assignments. Hence Flordelis stopped
giving
their
salaries.
7)
However,
the
Department
of
Education and Culture (DEC) Secretary
directed that Mar and Ligan should be
reinstated.
8) Before the DEC decision was
rendered, the CFI of Bohol compelled
Flordelis to reinstate Mar and Ligan with
back salaries as teachers, to give them
their subject loads, and to pay them
P100k as moral damages, P10k as
exemplary damages, and P2k as
litigation expenses.
9) Flordelis appealed to the CA. The CA
affirmed
the
CFI's
decision.
ISSUE/S

RATIO:

[RELEVANT TO OUR LESSON]

ISSUE #1: WON Flordelis is personally
liable for moral and exemplary damages
to Mar et al.? NO.

-Mar and Ligan did not show any

justification for the award of moral
damages under Arts. 2219 and 2220 of
the Civil Code.
-There is no showing by the lower court
and the Appellate
Court and by Mar and Ligan that this
case falls within any of the cases
enumerated in articles 2219 and 2220.
The same is true with respect to the
exemplary damages. No justification has
been shown by the appellees for the
award of exemplary damages.
-But under Art. 2208 of the Civil Code,
Mar and Ligan are entitled to attorney's
fees and litigation expenses for having
been compelled to litigate and incur
expenses to secure relief against their
illegal suspension by Flordelis who acted
in gross and evident bad faith in refusing
to reinstate them. It is just and equitable
that his estate should pay attorney's fees
and litigation expenses to Mar and Ligan
in the sum of five thousand pesos or
P2,500 for each of them.
RULING: WHEREFORE, the judgment
of the Court of Appeals is affirmed with
the modification that, in lieu of the
damages of P30,000, the estate of the
late Gotardo Flordelis is ordered to pay
attorney's fees and litigation expenses of
P5,000 to be divided equally between
Fermin Mar and Graciano M, Ligan.
DISSENT OF JUSTICE ABAD
SANTOS:
-Mar and Ligan are entitled to moral
damages because Clearly, Mar and Ligan
were the victims of harassment and
vendetta perpetrated by a vindictive
superior contrary to morals and good
customs. There is no doubt that they
suffered mental anguish, fright, serious
anxiety, wounded feelings, moral shock,
and social humiliation because a petty
school off cial had delusions of grandeur
and omnipotence. The Civil Code defines
moral damages as follows:

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
According to Art. 2219 of the same
Code, "Moral damages may be
recovered in the following and
analogous cases: ...
(10) Acts and actions referred to in
articles 21, 26, 27, 28, 29, 30, 32, 34,
and 35.
He also cited Art. 21 of the Civil Code,
and said he cannot think of a better case
where to apply said article: "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."
OTHER ISSUE: WON the CA erred in
using the decision of the DEC Secretary
as the basis to reinstate Mar and Ligan?
NO. CA was correct.
-The Secretary found "the actuations of
Mr. Flordelis to be highly irregular,
unlawful, unjust and revolting to clear
conscience, because without an
administrative case" he relieved
Dominguez, Mar and Ligan of their
teaching loads and denied the payment
of their salaries, which actions were
tantamount to suspension. The Secretary
observed that as a mere school
administrator Flordelis was not clothed
with the authority to suspend his
subordinates and that he could not
deprive them of their teaching loads and
suspend the payment of their salaries.
The Secretary held that Dominguez, Mar
and Ligan should be given their regular
teaching assignments and paid their

back salaries. Under Secs. 38 and 41 of

the Civil Service Decree of the
Philippines, Presidential Decree No. 807,
which took effect on October 6, 1975,
the power of suspension is vested in the
"proper disciplining authority" who may
be "the head of department or office of
equivalent rank, or head of local
government, or chiefs of agencies, or
regional directors. "

the ladies' room. She

returned to the hall after
about thirty minutes later
when the show had started.

BAGUMBAYAN v IAC (1984)

Sept. 30, 1984 | Aquino, J. | 2nd Division |
Moral Damages

o They also sued PET, as

employer of the waiter, for
P200,000 actual damages,
P10,000 attys fees, plus
moral and exemplary
damages to be fixed by the
Court. They brought an
action as a quasi-delict
based on Art. 2176 and
2180, NCC,

Petitioners: Bagumbayan Corporation

Respondents: IAC, Lelisa and Arturo
Sena
FACTS:
On Dec 20, 1976, Sps Sena went to
Tropical Hut in Paranaque to see
the Reycard Duet Show. They
occupied a table and ordered
drinks before the show started.

[INCIDENT] According to Lelisa,

a waiter named Baez was going to
serve the tray containing the
drinks which 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 P1000. She also
felt humiliated.
o A waitress then 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. Two of her
daughters followed her to

Lelisa claimed P100,000 for

herself and her husband as
moral damages for the
humiliation experienced. She also
claimed exemplary damages to
teach the management a
lesson, as the management never
even apologized.

In Court, the Food and Beverage

manager apologized for the
convenience caused to RESPs. The
Corporation also alleged that it
came to know of the incident only
when the summons was served.
They would have been able to act
on it immediately had they been
notified. Also, they labelled the
incident as a fortuitous event. It
alleged that it
observed diligentissimi patrisfamilias 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

TC:

o P1,450 actual damages

(P1,000 for the dress, P540
for the tickets)

distinguished from
annoyance, regret or
vexation. Mental
anguish is intense
mental suffering"
(Johnson v Western
Telegraph Co)

o P50,000 moral damages

o P10,000 exemplary damages
o P5,000 attys fees

"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)

In Chicago, R.I. & P. Ry

Co. vs. Caple, 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,

On appeal, the IAC affirmed with

modification: reduced moral and
exemplary damages to P15,000
and P5,000, respectively.

ISSUE/S:

WON the award for moral and

exemplary damages was
warranted NO
o The award is devoid of legal
basis.
o Art. 2219 (2), NCC pertains
to quasi-delicts causing
physical injuries. The IAC
was incorrect in ruling that
the case was analogous to
the cases argued by RESPs.
o Generally, there can be no
recovery of moral damages if
the case is not mentioned in
Art. 2219 and 2220, NCC.
o Moral damages, in American
jurisprudence, are treated as
compensatory damages
for the mental pain and
suffering or mental
anguish resulting from a
wrong.

"Mental suffering
means distress or
serious pain as

where there is no
willful or wanton
wrong, there can be
no recovery for
mental suffering
unless there is also
physical injury
o

Citing the case of People vs.

Plaza, where the 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 the passenger. She
did not know how to swim
and her life was endangered.
She suffered fright and
mental anguish during those
moments when her fate was
uncertain. Yet even there her
claim for P500 as moral
damages was not allowed.

o The "embarrassment" to
which Mrs. Sea was
exposed by the incident is
not the mental anguish
contemplated in article 2217
for which moral damages
can be recovered. Absent
any showing of gross
negligence, moral and
exemplary damages
cannot be awarded.

UCPB v CA Moral Damages

- Dec 22 83 and Mar 84, UCPB
loaned P2.8m to Zamboanga
Development Corp with Venicio,
Sps. Teofilo & wife Amelita Ramos
as sureties. Teofilo was the
Executive Officer of Iglesia ni

Cristo.
-

However, ZDC failed to pay. A

collection case was filed in RTC
Makati, which ruled ZDC & the
Ramoses liable to UPCB for
P3.15m, P20k attorneys fees, and
costs of suit. This became final.

Dec 90, a motion for execution

was issued ordering Deputy Sheriff
Villapaa to levy & attach all real
and personal properties belonging
to the Ramoses to satisfy the
judgment.
o Thus, UCPB appraiser
Eduardo Reniva found that
Teofilo C. Ramos (A
DIFFERENT TEOFILO) &
wife Rebecca Ramos owned
a P900k lot in Don Jose
Subdivision, QC. Teofilo C.
Ramos was the President &
GM of the Board of Directors
of Ramdustrial Industries.
o The sheriff prepared a notice
of levy on the property
stating that Teofilo Ramos
Sr. and wife Amelita Ramos
owned the property. This was
annotated on the title.

Aug 93, Ramdustrial, through C.

Ramos, applied for a loan with
UCPB, intending to use the QC
property as collateral. The
proceeds were to be used as
additional capital so that RC could
participate in a bidding project of
San Miguel Corp. UCPB informed
him that due to the annotation on
his title, his loan had to be held in
abeyance.

C. Ramos was shocked by this,

so much so that his blood pressure
rose that he had to go to St Lukes
for cardio-vascular & hypertensive

treatment. He executed an
affidavit of denial, declaring he
and Ramos Sr. were not the same
person and demanded cancellation
of the annotation.
-

Oct 21 93, Ramdustrials P2m

credit line was approved, but by
this time, SMC bidding project had
already elapsed. Ramdustrial
found it difficult to pay back the
loan, so it applied for a new loan
with Planters Development Bank to
pay its credit line w/ UCPB,
offering its property once again as
collateral.
PDB agreed, but withheld the loan
upon discovering the notice of levy
annotated on the title had not yet
been cancelled. Once again, Teofilo
went to UCPB to cancel it, and
finally went to the court upon the
banks assurance that they would
not oppose his motion to cancel it,
who granted his motion on Apr 12
94.
Despite this, C. Ramos filed a
complaint for damages against
UCPB & Sheriff Villapea before
the Makati RTC, claiming that the
annotation had cost him a business
opportunity, and that as a result he
had suffered moral shock,
sleepless nights, mental anguish,
and almost a heart attack. He
demanded P3m moral, P300k
exemplary, P200k actual, and
P200k attorneys fees.
UCPB admitted the error, but
denied it was motivated by bad
faith or malice, evidenced by their
assurance that they would not
oppose his motion. UCPB claims
any damages incurred by C. Ramos
were incurred due to his own delay
in filing the motion.

The RTC ruled for C. Ramos

(although dismissed the case
against the Sheriff, ruling he was
just doing his duty), holding that
UCPB acted negligently, not taking
into consideration the differences
in their names or their spouses,
and held them liable for P800k
moral, P100k exemplary, and
P100k attorneys.
o It further held that the
property levied upon was
residential, thus the thought
of losing it due to forces
beyond his control gave rise
to an entitlement for moral
damages. The CA affirmed.
Hence petition.

Issues:
1. Was UCPB negligent? YES. As a
bank, they are affected w/ public
interest and should have been
more careful.
a. The test for negligence is:
Did they, in doing the
negligent act, use reasonable
care and caution which an
ordinary prudent person
would have used in the same
situation?
i. The bank has more
access to facilities to
confirm the identities
of their debtors.
ii. There was clear
differences in the name
and the name of the
spouses.
2. Is Teofilo not a real party in
interest, it being Ramdustrial who
applied for the loan? HE IS. He
suffered!
a. Teofilo clearly stated he
suffered sleepless nights &

moral shock and almost a

heart attack.
b. He could not mortgage or
dispose of his property while
it was levied upon.
3. Was the award of damages proper?
SOME. Moral & attorneys fees
yes, exemplary no.
a. For moral damages, P800k
damages were proper.
i. There must be:
1. An injury clearly
sustained by the
claimant, either
physical, mental
or psychological.
2. A culpable act or
omission
factually
established.
3. That act must be
the proximate
cause of the
injury of the
claimant; and
4. The award is
predicated on
any of the cases
stated in A2219
of the CC.
ii. (1) his physical health
& cardio-vascular
ailment was
aggravated and his
fear of his residential
property would be
foreclosed hounded
him, (2) the annotation
was wrongful, due to
negligence, (3) the
annotation was the
proximate cause of the

damages, (4) CC
A2219(10).
b. For exemplary damages, it
was not shown that UCPB
acted in malice/bad faith.
c. For attorneys fees, P100k is
reasonable since it was the
fault of UCPB that Ramos
was compelled to engage the
services of counsel for a
protracted period of time (it
was settled in 2003).
Zulueta v. Pan American World
Facts
Spouses
Rafael
Zulueta
(petitioner)
and
Telly
Albert
Zulueta
and
their
daughter
Carolinda
Zulueta
were
passengers aboard a PANAM plane
from Honolulu to Manila, the first
leg of which was Wake Island.
As the plane landed on the island,
the passengers were advised that
they could disembark for a
stopover of about 30 minutes.
Zulueta went to the mens comfort
room to relieve himself.
The flight was called and when the
passengers had boarded the plane,
Zuluetas absence was noticed.
The take-off was delayed and a
search for him was conducted by
his wife and daughter and other
persons.
Minutes later, Zulueta was seen
walking back from the beach
towards the terminal.
The Zuluetas were on their way to
the plane to board but PANAMs
employees stopped them at the
gate.
An employee asked them to turn
over their baggage claim checks.
They handed him four claim
checks, but only three bags were

located and segregated from the

rest of the luggage.
Mr.
Sitton,
PANAMs
airport
manager, demanded that they open
the bags and allow the employees
to insepct them. Zulueta refused
and warned that PANAM could
open the bags only by force and at
its peril of a law suit.
Mr. Sitton told Zulueta that he
would not be allowed to proceed to
Manila on board the plane due to
the fact that he refused to open his
checked baggage for inspection.
Though the three of them were
originally
offloaded,
Zulueta
requested that his wife and
daughter be permitted to continue
with the flight. This was allowed
but they were required to leave
the three bags behind. The plane
did fly with the fourth bag.
Upon arrival at Manila, Mrs.
Zulueta demanded of PANAMs
Manila office that it re-route Mr.
Zulueta but they refused. The
Zuluetas were forced to pay Mr.
Zuluetas ticket.
Zulueta finally arrived at Manila,
after spending two nights at Wake,
going back to Honolulu, and from
Honolulu flying thru Tokyo to
Manila.
The Zuluetas demanded that
PANAM reimburse them in the
sum of P1,505,502.85 for damages
but defendants refused to do so;
hence this action.

Issues
1. WoN the reason why Zulueta went
to the beach was to remain in
Wake Island because he had
quarreled with his wife, as
contended by PANAM's counsel
NO (only to relieve himself)
Zuluetas testimony about what he
did upon reaching the beach is
uncontradicted.

Other portions of his testimony

(e.g. flight was rough, no. of
soldiers in the plain) are borne out
by the very evidence for the
defense.
PANAM's efforts to show that he
had decided to remain in the
Island because he had quarreled
with
Mrs.
Zuluetamerely
underscores the artificious nature
of PANAM's contention.
There is absolutely no direct
evidence
about
said
alleged
quarrel. Nobody testified about it.

2. WoN Zulueta can recover moral

damages
YES
The
following
circumstances
justified
an award for moral
damages resulting from mental
anguish, serious anxiety, wounded
feelings, moral shock, and social
humiliation
o Rude and rough reception
Zulueta received at the
hands
of
PANAMs
employees
o Menacing attitude of Zentner
or
Sitton
and
the
supercilious manner in which
he had asked him to open his
bags
o The abusive language and
highly scornful reference to
plaintiffs as monkeys by one
of PANAM's employees (who
turning to Mrs. Zulueta and
Miss Zulueta remarked, "will
you pull these three monkeys
out of here?")
o The unfriendly attitude, the
ugly stares and unkind
remarks to which plaintiffs
were subjected, and their
being cordoned by men in
uniform as if they were
criminals, while plaintiff was
arguing with Sitton

o Airline officials' refusal to

allow plaintiff to board the
plane on the pretext that he
was hiding a bomb in his
luggage and their arbitrary
and high-handed decision to
leave him in Wake
o Mrs.
Zulueta's
having
suffered
a
nervous
breakdown for which she
was hospitalized as a result
of
the
embarrassment,
insults and humiliations to
which
plaintiffs
were
exposed by the conduct of
PANAM's employees
o The
daughters
having
suffered shame, humiliation
and embarrassment for the
treatment received by her
parents at the airport
Panay Electric v. CA (1982)
Petitioner: Panay Electric Co., Inc.
Respondents: The Honorable Court of
Appeals, Florentino Sarabia and Luzon
Surety Co., Inc.
Moral Damages
FACTS:
Florentino Sarabia, was employed
by Panay Electric as a bill
collector. An auditing report
presented by the accounting firm
of Sycip, Gorres and Velayo
showed that Sarabia had incurred
a shortage in his collections for a
period of 7 1/2 years in the sum of
P12,155.68. Hence, Panay Electric
filed against him a suit for
reimbursement.

The Trial Court found the shortage

to be only in the amount of P41.85;
that the case was the product of
"either a willful frame-up or a
mistake in accounting"; and
ordered Sarabia's reinstatement
with back wages, the payment to

him of moral damages of

P20,00.00, exemplary damages of
P10,000.00, attorney's fees of
P5,000.00, and expenses of
litigation of P1,000.00, and costs.

The CA affirmed the amount of the

shortage and the reinstatement
ordered, but modified the
judgment and awarded P10,000.00
as moral damages, P5,000.00 as
exemplary damages, P2,000.00 for
attorney's fees and expenses of
litigation, and costs.

ISSUE/S:
WoN the award of damages is
proper
o NO. THE AWARD OF MORAL
DAMAGES IS UNCALLED
FOR. In filing the present
case, Panay Electric had not
acted with malice, fraud, or
in bad faith. It relied solely
on the letter of the
accounting firm of Sycip,
Gorres & Velayo. However,
such reliance was misplaced,
for, as found by the CA, that
letter was "only a brief letter
mentioning some
summarized findings which
are unverified and
undetailed. It even stressed
the fact that there are
unascertained differences
'due to unavailable records
and/or customer's credit
balances due to
overpayment."
o Neither are exemplary
damages proper. Panay
Electric had not acted in a
"wanton, fraudulent,

reckless, oppressive, or
malevolent manner". Based
on the accounting findings,
incomplete though they may
have been, Panay Electric
cannot be blamed for trying
to protect itself.
o However, the grant of
attorney's fees and expenses
of litigation of P2,000.00 was
found to be just and
equitable.

States.

Upon returning to the Philippines,

he sent a letter through counsel to
RESP demanding an apology for
the inconvenience, humiliation,
and embarrassment he and his
family suffered for the refusal to
provide credit authorization for
the purchases.

RESP defense was that the delay

was due to the large amount,
which was out of the usual charge
purchase pattern of PET, which
required the credit authorizer to
carefully review Pantaleons credit
history and bank references.

As a result, he filed an action with

the RTC for damages. The RTC
ruled in favour of PET:

PANTALEON v AMERICAN EXPRESS

INTERNATIONAL INC (2009)
May 8, 2009 | Tinga, J. | 2nd Division |
Moral Damages
Petitioners: Polo Pantaleon
Respondents: American Express
International Inc
FACTS:
Polo Pantaleon went on a trip to
Western Europe with his wife and
2 children. During one of the tours,
they caused the delay of the whole
tour when Mrs. Pantaleons
jewelry purchases at Coster worth
$13, 826 took a long time to
process (78 minutes). The
transaction, where he used his
American Express card, took a
long time to complete (not quickly
approved because of the large
amount) which led to the delay of
their trip (to the prejudice of
other people in the tour with
them). Mrs Pantaleon ended up
weeping and Mr. Pantaleon had to
take a tranquilizer to calm his
nerves. The incident of delays in
their transactions also happened
twice (US$1,475 golf equipment
and US$87 children shoes) in their
subsequent trip to the United

o P500,000 moral damages

(original demand was P5M,
reduced by the RTC)
o P300,000 exemplary
damages
o P100,000 attorneys fees
o P85,233.01 expenses of
litigation

CA reversed, holding that there

was no breach of obligation on the
part of RESP.

ISSUE/S:

WON AEI breached its obligation

to Pantaleon YES
o The Court ruled that RESP
was in mora solvendi, for
failing to act on the

purchases with timely

dispatch (shorter than it
would have taken for the
cardholder to just withdraw
money from a bank then pay
instead of using a card). In
general, transactions to
approve only take a few
seconds to complete.
o While the RESP has the right
to verify whether the credit
it is extending was indeed
contracted by the cardholder
and that it was within the
means of the cardholder, the
tardiness of RESP in acting
on the purchase constitutes
culpable delay on its part in
complying with its obligation
to act promptly on its
customers purchase
request, whether such action
is favourable or
unfavourable.
o RESP should have also
promptly informed PET of
the reason for the delay, so
that PET had an informed
basis as to whether or not to
continue with the
transaction.

WON award of moral damages is

proper YES. Restored RTC
awards for damages.
o Moral damages avail in cases
of breach of contract where
the defendant acted
fraudulently or in bad faith,
and the court should find
that under the
circumstances, such

damages are due.

o The findings of the trial court
are ample in establishing the
bad faith and unjustified
neglect of respondent,
attributable in particular to
the "dilly-dallying" of
respondents Manila
credit authorizer, Edgardo
Jaurique.
o The reason why PET is
entitled to damages is not
simply because respondent
incurred delay, but because
the delay, for which
culpability lies under
Article 1170, led to the
particular injuries under
Article 2217 of the Civil
Code for which moral
damages are remunerative.
o Moral damages do not avail
to soothe the plaints of the
simply impatient, so this
decision should not be cause
for relief for those who time
the length of their credit
card transactions with a
stopwatch. The somewhat
unusual attending
circumstances to the
purchase at Coster that
there was a deadline for
the completion of that
purchase by petitioner
before any delay would
redound to the injury of
his several traveling
companions gave rise to
the moral shock, mental
anguish, serious anxiety,
wounded feelings and social

humiliation sustained by the

petitioner, as concluded by
the RTC. Those
circumstances are fairly
unusual, and should not give
rise to a general entitlement
for damages under a more
mundane set of facts
(meaning not every delay in
a credit card transaction
should give rise to damages).
On the MR (2010), the Court
affirmed the CA decision and
dismissed PETs complaint.
- Credit card issuer and
cardholder relationship is a
contractual agreement, similar
to a contract of adhesion
-

Citing Paragraph 10 of the Card

Membership agreement,
RESP reserve[s] the right to
deny authorization for any
requested Charge. RESP
made its position clear that it
has no obligation to approve
any and all charge requests
made by its card holders
RESP not guilty of culpable
delay, as it has no obligation to
act on all cardholder purchase
requests within a specifically
defined period of time

RESP acts consistent with fair

and sound consumer credit
practices

RESP acted in good faith

Pantaleon, knowing the

possibility of delay (already
9:40am), still waited for the
transaction to be processed.

Pantaleon v AmEx International Inc

(MR)
FACTS:

In its motion for reconsideration,

AMEX argues that this Court erred
when it found AMEX guilty of
culpable delay in complying with
its obligation to act with timely
dispatch on Pantaleons purchases.

While AMEX admits that it

normally takes seconds to approve
charge purchases, it emphasizes
that Pantaleon experienced delay
in Amsterdam because his
transaction was not a normal
one. To recall, Pantaleon sought to
charge in a single transaction
jewelry items purchased from
Coster in the total amount of
US$13,826.00 or P383,746.16.

While the total amount of

Pantaleons previous purchases
using his AMEX credit card did
exceed US$13,826.00, AMEX
points out that these purchases
were made in a span of more than
10 years, not in a single
transaction.

Because this was the biggest

single transaction that Pantaleon
ever made using his AMEX credit
card, AMEX argues that the
transaction necessarily required
the credit authorizer to carefully
review Pantaleons credit history
and bank references. AMEX
maintains that it did this not only
to ensure Pantaleons protection
(to minimize the possibility that a
third party was fraudulently using

his credit card), but also to protect

itself from the risk that Pantaleon
might not be able to pay for his
purchases on credit.

This careful review, according to

AMEX, is also in keeping with the
extraordinary degree of diligence
required of banks in handling its
transactions. AMEX concluded that
in these lights, the thorough
review of Pantaleons credit
record was motivated by
legitimate concerns and could
not be evidence of any ill will,
fraud, or negligence by AMEX.
Plus they said that the proximate
cause of his humiliation is his own
decision to continue with the
purchase despite knowing that it
was causing the delay of the tour.

ISSUE: W/N AmEx committed a

breach of obligation to Pantaleon
NO. The Court reversed its decision.

Every credit card transaction

involves three contracts, namely:
(a) the sales contract between the
credit card holder and the
merchant or the business
establishment which accepted the
credit card; (b) the loan agreement
between the credit card issuer and
the credit card holder; and lastly,
(c) the promise to pay between the
credit card issuer and the
merchant or business
establishment.

The relationship between the

credit card issuer and the credit
card holder is a contractual one.
The use of a credit card is a mere
offer to enter into loan

agreements.

AmEx is not guilty of culpable

delay they have no obligation to
approve the purchase request of
its credit cardholders. Therefore,
AmEx acted in good faith in their
act to carefully review Pantaleons
credit record first before
approving the transaction.

The Court added that Pantaleons

embarrassment was caused by his
own decision to continue with the
sale. (A person who knowingly and
voluntarily exposes himself to
danger cannot claim damages for
the resulting injury.) Therefore,
he is not entitled to damages.

Robles-Francisco Realty and

Development Corp V CFI
Facts:
RF agreed to sell to Lolita Millan
for P3864 payable in installments
276sqm land in Caloocan
o LM paid all installments
Full payment on December
22, 1971
o Total payment = P5193.63
including interests
o LM demanded execution of
final deed of sale and
issuance of TCT 73 DOS
done
RF issues TCT to LM
within 6 months of
date of full payment
If RF does not issue
title, it shall bear OB to
refund LM total
amount paid for with
4% interest rate
RF did not issue TCT within 6
months LM filed complaint for
specific performance against RF
o Reformation of DOS

o Deliver TCT free from lien or

pay P27K value of lot
o AD of P15K
RF did not issue TCT because
parcel of land conveyed to Millan
was included in mortgage to GSIS
to secure P10M OB

Issues:
W/N P20K ND proper? NO P10K only
RF guilty of delay guilty for
damages under A170 CC
RF says prov = penal clause AKA
subs indemnity for damages? NO
o Worded for advantage of RF
Clause has no penalty, for
even without it, LM entitled
to 4% interest
LM did not present evidence for
AD But right to title was
violated, shes entitled to ND
o Recoverable when some
injury has been done
o Small sums fixed by court
o Recognition of a technical
injury
Northwest Airlines v Cuenca
o ND of P20K because he was
forced to move to Coach
when he had a 1st class ticket
P20K to LM is too much
o No showing of bad faith on
RF
o RF expected that
arrangement were possible
that GSIS would release
props partially
unfortunate that GSIS didnt
o P10K proper ND
Francisco v Ferrer (2001)
Petitioners: Erlinda Francisco (Cebu
Fountainhead Bakeshop)
Respondents: Ricardo Ferrer, Annette
Ferrer, Ernesto Lo, Rebecca Lo
Other Kinds of Damages Nominal
Damages
Pardo, J.

FACTS:
Nov 19, 1992: Rebecca Lo and her
daughter ordered a three layered
cake from Fountainhead Bakeshop,
Mango Avenue Branch. It was
agreed that it would be delivered
at 5:00pm at the Cebu Country
Club, Cebu City stated clearly
that the wedding is on Dec. 14,
1992.

Plaintiffs made the first deposit of

P1k and made full payment two
weeks after for the remaining
balance.

On the day of the wedding, the

plaintiffs arrived at the country
club at 6pm but noticed that the
cake was not there. They made a
follow up call to the bakeshop an
hour later and was informed that it
was late due to the traffic.

After being informed that the cake

would not be delivered due to their
order slip having been lost, they
were forced to buy a sans rival
cake at the country club. The cake
arrived late at 10pm but they
would not accept it as it was also a
different one from what they
specified.

Defendant Francisco sent a letter

of apology with a P5k check but it
was rejected by the plaintiffs.
Another attempt to do so was also
not successful.

Respondents filed with the RTC for

breach of contract with damages.
RTC ruled for respondents:
o The cost of the wedding cake
in the amount of P3,175.00;

o Moral damages in the

amount of P30,000.00;

the proximate cayse was the

unlawful act or omission of
the petitioners.

o Attorneys fees in the amount

of P10,000.00;

o Instances when moral

damages awarded:

o Cost of litigation

CA: increased moral damages to

P250k and awarded exemplary
damages worth P100k

ISSUE/S:
WoN increase in moral damages
proper: NO

(1) first, there must be

an injury, whether
physical, mental or
psychological, clearly
sustained by the
claimant;

(2) second, there must

be culpable act or
omission factually
established; (3) third,
the wrongful act or
omission of the
defendant is the
proximate cause of the
injury sustained by the
claimant;

(4) fourth, the award of

damages is predicated
on any of the cases
stated in Article 2219
of the Civil Code.

o Moral damages only

warranted in cases where
the breach was palpably
wanton, reckless, malicious,
in bad faith, and abusive
o Furthermore, it may be
recovered when the
defendant acted in bad faith
or was guilty of gross
negligence or in wanton
disregard of his contractual
obligation or when the act of
breach is constitutive f tort
resulting in physical injuries
o Bad faith = imports a
dishonest purpose or some
moral obliquity and
conscious doing of a wrong,
a breach of known duty
through some motive or
interest or ill will that
partakes the nature of fraud
o It must be proven by clear
and convincing evidence for
the law always presumes
good faith. Mere allegations
are insufficient to warrant an
award. It must be shown that

WoN award of nominal damages

proper: YES
o The facts show that when
confronted with their failure
to deliver the cake, the
petitioners gave the excuse
that it was delayed by traffic
when it fact, the order slip
gotm lost. For such action,
they must be held to be
liable for nominal damages
for insensitivity,
inadvertence or inattention
to their customers especially

at their time of need.

o Nominal damages:
recoverable when a legal
right is technically violated
and must be vindicated
against an invasion that has
produced no actual present
loss of any kind or where
there has been a breach of
contract and no substantial
injury or actual damages
whatsoever have been or can
be shown.
o May awarded to a plaintiff
whose right has been
violated or invaded by the
defendant for purpose of
recognizing the right.
HELD: CA decision REVERSED.
Petitioners to pay:
The cost of the wedding cake in
the amount of P3, 175.00;
2. Nominal
damages
in
amount of P10,000.00;

the

3. Attorneys fees in the amount of

P10,000.00; and
4. Costs of litigation.
Gonzales vs. People
G.R. No. 159950
Feb. 12,
2007
Quisimbing, J.
Facts:
- On June 26, 1997, a two-storey
residential building in La Loma,
Quezon City was burned to the
ground. Said building, which was
partitioned into dwellings and
rented out to tenants, was owned

by Carlos Canlas. The fire took out

the building as well as other
properties therein.
o Prosecution: eyewitness
Canlas stated that on that
fateful night, at around 9 pm,
he was watching TV in his
room when his daughter
urged him to check the
commotion in an adjacent
room. When he went to
check, he smelled gas and
soon after saw the accused
Joel Garcia ignite a flame
and throw it on a pile of
clothes in the middle of a
living room where an LPG
was also placed.
o They also presented the
account of witnesses Andres
Villaflor and Francis Simpao,
both tenants of the building.
Villaflor testified that he
heard the accused and the
aunt of the accused quarrel,
with the former declaring
that Susunugin koi tong
bahay na ito. Simpao, on
the other hand, testified that
he saw the fire originating
from Gonzales room, and
that the accused was
laughing while the building
was burning. After the fire
was extinguished, the aunt of
the accused also told Simpao
that her nephew was to
blame.
o The accounts were
corroborated by Police
Officer Alejandro Mendoza,
who testified that when he

arrived at the scene,

Gonzales admitted
responsibility to the crime.
o Defense: fire was caused by
faulty electrical wiring, and
that a Physical Science
Report revealed the ashes of
the burned place were
negative of any flammable
substance.
-

RTC Convicted the accused.

o Only awarded nominal
damages to the amount of
P10,000.00 each to private
complainants.

CA Affirmed.

Issues/Held:
- The SC affirmed that the accused
is guilty of the crime of Arson of
an Inhabited Building
o Positively identified by
witnesses; rules over
negative evidence
o With the inaccuracies
between affidavit and
testimony of the witness, the
SC held that such cannot
overcome the evidence
against the accused.
-

The accused is liable for

nominal, temperate and
exemplary damages
o No actual damages can be
awarded; private
complainants failed to
substantiate their claims.
However, they can be given
nominal damages.

o Nominal damages left to the

discretion of the Court;
generally by their nature are
small sums fixed by Court
without regard to the extent
of the hurt to the victim.
However, it is held that
nominal damage is a
substantial claim, if based
upon the violation of a legal
right; in such a case, the law
presumes damage although
actual or compensatory
damages are not proven.

Nominal damage is not

factualrather, it is
simply in recognition
of the existence of a
technical injury.

o Temperate damages can be

charged, as well as
exemplary.
Affirmed with modifications; P100K
to each private complainant as
temperate damages (except for
P500K to be given to Canlas) and
P50K each for exemplary damages.
MCC V SSANGYONG
Lesson: Nominal Damages
Facts:
Petitioner MCC Industrial Sales
(MCC), a domestic corporation
with office at Binondo, Manila, is
engaged in the business of
importing
and
wholesaling
stainless steel products. One of its
suppliers
is
the
Ssangyong
Corporation
(Ssangyong),
an
international
trading
company
with head office in Seoul, South
Korea and regional headquarters
in Makati City, Philippines.

The two corporations conducted

business through telephone calls
and facsimile or telecopy
transmissions.
o Ssangyong would send
the pro forma invoices
containing the details of the
steel product order to MCC;
if the latter conforms
thereto, its representative
affixes his signature on the
faxed copy and sends it back
to Ssangyong, again by fax.

In 2000, Ssangyong Manila Office

sent, by fax, a letter addressed to
Gregory Chan, MCC Manager [also
the President of Sanyo Seiki
Stainless Steel Corporation], to
confirm MCC's and Sanyo Seiki's
order of 220 metric tons of hot
rolled stainless steel under a
preferential
rate
of
US$1,860.00 per MT.
Chan,
on
behalf
of
the
corporations, assented and affixed
his
signature
on
the conforme portion of the letter.
Ssangyong forwarded to MCC Pro
Forma Invoice
No. ST2POSTSO401 containing the terms
and conditions of the transaction.
MCC sent back by fax to
Ssangyong the invoice bearing the
conformity signature of Chan.
o As
stated
in
the pro
forma invoice, payment for
the ordered steel products
would be made through an
irrevocable letter of credit
(L/C) at sight in favor of
Ssangyong.
o Following
their
usual
practice, delivery of the
goods was to be made after
the L/C had been opened.
After a series of exchanges
through fax, MCC failed to open a
letter of credit.

Consequently, on August 15, 2000,

Ssangyong, through counsel, wrote
Sanyo Seiki that if the L/C's were
not opened, Ssangyong would be
compelled to cancel the contract
and hold MCC liable for damages
for breach thereof.

Later, Pro Forma Invoice Nos. ST2POSTS080-1 and ST2-POSTS080-2

dated August 16, 2000 were issued
by Ssangyong and sent via fax to
MCC.

The invoices slightly varied the

terms of the earlier pro
forma invoices (ST2POSTSO401, ST2-POSTS0401-1
and ST2-POSTS0401-2), in that
the quantity was now
officially 100MT per invoice and
the price was reduced
to US$1,700.00 per MT. As can be
gleaned from the photocopies of
the said August 16, 2000 invoices
submitted to the court, they both
bear the conformity signature of
MCC Manager Chan.

On August 17, 2000, MCC finally

opened an L/C with PCI Bank for
US$170,000.00 covering payment
for 100MT of stainless steel coil
under Pro
Forma Invoice
No. ST2-POSTS080-2.
The goods covered by the said
invoice were then shipped to and
received by MCC
MCC then faxed to Ssangyong a
letter dated August 22, 2000
signed by Chan, requesting for a
price adjustment of the order
stated in Pro Forma Invoice No.
ST2-POSTS080-1, considering that
the prevailing price of steel at that
time was US$1,500.00/MT, and
that MCC lost a lot of money due
to a recent strike.
Ssangyong rejected the request,
and, on August 23, 2000, sent a

demand letter to Chan for the

opening of the second and last L/C
of US$170,000.00 with a warning
that, if the said L/C was not
opened by MCC on August 26,
2000,
Ssangyong
would
be
constrained to cancel the contract
and
hold
MCC
liable
for
US$64,066.99
Ssangyong through counsel wrote
a letter to MCC, on September 11,
2000, canceling the sales contract
under ST2-POSTS0401-1 /ST2POSTS0401-2, and demanding
payment of US$97,317.37.
Ssangyong
then
filed,
on
November 16, 2001, a civil action
for damages due to breach of
contract against defendants MCC.
Ssangyong alleged that defendants
breached their contract when they
refused to open the L/C in the
amount of US$170,000.00 for the
remaining
100MT
of
steel
under Pro Forma InvoiceNos. ST2POSTS0401-1 and ST2POSTS0401-2.

PETITIONER
The Pro-forma invoices
with reference nos. ST2POSTSO401-1 AND ST2POSTSO401-2
were
inadmissible
because
they
were
mere
photocopies of facsimile
printouts.
The
photocopies of the pro
forma invoices presented
by
respondent
Ssangyong to prove the
perfection
of
their
supposed contract of sale
are
inadmissible
in
evidence and do not fall
within the ambit of R.A.
No. 8792, because the
law merely admits as the

best
evidence
the original fax
transmittal

Issue:
WON
the
print-out
and/or
photocopies
of
facsimile
transmissions
are
electronic
evidence and admissible as such- NO

The
Court
determined
first
whether the said fax transmissions
are indeed within the coverage of
R.A. No. 8792 before ruling on
whether the photocopies thereof
are covered by the law.
R.A. No. 8792, otherwise known as
the Electronic Commerce Act of
2000, considers an electronic data
message
or
an
electronic
document
as
the
functional
equivalent of a written document
for evidentiary purposes.
The Rules on Electronic Evidence
regards an electronic document as
admissible in evidence if it
complies with the rules on
admissibility prescribed by the
Rules of Court and related laws,
and is authenticated in the manner
prescribed by the said Rules.
RESPONDENT
An electronic document is also the
The printout copies and/or
equivalent of an original document
photocopies of facsimileunder
or
the Best Evidence Rule, if it
telecopy
transmissions
is a printout or output readable by
were properly admittedsight
by
or other means, shown to
the trial court because
reflect the data accurately. Thus,
they
are
considered
to be admissible in evidence as an
original documents under
data message or to be
R.A. No. 8792. Fromelectronic
a
considered
as
the
functional
reading of the law and the
equivalent of an original document
Rules
on
Electronic
under the Best Evidence Rule,
Evidence,
the
original
facsimile transmittal the
of writing must foremost be an
the pro forma
"electronic data message" or an
admissible in evidence
"electronic document."
since it is an electronic
document and, therefore,
The Electronic Commerce Act of
the best evidence under
the law and the Rules. 2000 defines electronic data

message and electronic document

as follows:

commerce." This term then, while

maintaining part of the UNCITRAL
Model Law's terminology of "data
message," has assumed a different
context, this time, consonant with
the term "electronic record" in the
law of Canada. It accounts for the
addition of the word "electronic"
and the deletion of the phrase "but
not limited to, electronic data
interchange (EDI), electronic mail,
telegram, telex or telecopy."

o Electronic Data Message"

refers to information
generated, sent, received or
stored by electronic, optical
or similar means.
o f. "Electronic Document"
refers to information or the
representation of
information, data, figures,
symbols or other modes of
written expression,
described or however
represented, by which a
right is established or an
obligation extinguished, or
by which a fact may be
proved and affirmed, which
is received, recorded,
transmitted, stored,
processed, retrieved or
produced electronically

The phrase "but not limited to,

electronic data interchange (EDI),
electronic mail, telegram, telex or
telecopy" in the IRR's definition of
"electronic data message" is
copied from the Model Law on
Electronic Commerce adopted by
the United Nations Commission on
International Trade Law
(UNCITRAL).
o While Congress deleted this
phrase in the Electronic
Commerce Act of 2000, the
drafters of the IRR
reinstated it. The deletion by
Congress of the said phrase
is significant and pivotal.

Thus, when the Senate

consequently voted to adopt the
term "electronic data message,", it
would not apply "to telexes
or faxes, except computergenerated faxes, unlike the United
Nations model law on electronic

There is no question then that

when Congress formulated the
term "electronic data message," it
intended the same meaning as the
term "electronic record" in the
Canada law. This construction of
the term "electronic data
message," which excludes telexes
or faxes, except computergenerated faxes, is in harmony
with the Electronic Commerce
Law's focus on "paperless"
communications and the
"functional equivalent approach.

Facsimile transmissions are not, in

this sense, "paperless," but verily
are paper-based.

A facsimile machine scanner

converts the content of a physical
document into a digital image, the
modem sends the image data over
a phone line, and the printer at the
other end makes a duplicate of the
original document.

Accordingly, in an ordinary facsimile

transmission, there exists an
original paper-based information or
data that is scanned, sent through a
phone line, and re-printed at the
receiving end. Be it noted that in
enacting the Electronic Commerce
Act of 2000, Congress
intended virtual or paperless writings
to be the functional equivalent and to

have the same legal function as

paper-based documents.

x---------------------------------------------------------x
G.R. No. L-10606

Since a facsimile transmission is

not an "electronic data message"
or an "electronic document," and
cannot be considered as electronic
evidence by the Court, with
greater reason is a photocopy of
such a fax transmission not
electronic evidence. In the present
case, therefore, Pro Forma Invoice
Nos. ST2-POSTS0401-1 and ST2POSTS0401-2 (Exhibits "E" and
"F"), which are mere
photocopies of the original fax
transmittals, are not electronic
evidence, contrary to the position
of both the trial and the appellate
courts.

GERMAN NECESITO, ET AL., plaintiffsappellants,

vs.
NATIVIDAD PARAS, ET AL., defendantsappellees.
REYES, J. B. L., J.:
Severina Garces and her one-year
old son, Precillano Necesito,
boarded passenger auto truck,
driven by Francisco Bandonell or
bus No. 199 of the Philippine
Rabbit Bus Lines at Agno,
Pangasinan on the way to Manila
o After passing Mangatarem:
entered a wooden bridge,
but the front wheels swerved
to the right; the driver lost
control, and after wrecking
the bridge's wooden rails,
the truck fell on its right side
into a creek where water
was breast deep

DAMAGES:

NO Actual Damages: Ssangyong

did not adequately prove that the
items resold at a loss were the
same items ordered by the
petitioner.

Nominal Damages: for breach of

contract and purposely not paying
despite
repeated
demands.
Petitioner
asked
for
several
extensions which the respondent
accommodated.
200k
for
respondent.

Attys fees: for petitioners unjust

refusal to pay which in effect
compelled respondent to litigate in
order to protect his rights.

o Mother was drowned, son

had abrasions and fractured
his left femur

Son was brought to the

hospital

o Money, wrist watch and

cargo of vegetables were lost

Two actions for damages and

attorney's fees totalling over
P85,000 having been filed in the
CFI-Tarlac against the carrier

Defense: engine or mechanical

trouble independent or beyond the
control of the defendants or of the
driver Bandonell.

NECESITO V PARAS
PRECILLANO NECESITO, ETC., plaintiffappellant,
vs.
NATIVIDAD PARAS, ET AL., defendantsappellees.

June 30, 1958

passenger has no remedy

against him, while the
carrier usually has

CFI : accident was a fortuitous

event. Cases were dismissed

WN the carrier is liable for the

manufacturing defect of the steering
knuckle, and WN the evidence discloses
that in regard thereto the carrier
exercised the diligence required by law
proximate cause of the accident
was the reduced strength of the
steering knuckle of the vehicle
caused by defects in casting it

o the accident was not because

bus No. 199 of the Philippine
Rabbit Lines was driven over
the deeply rutted road
leading to the bridge at a
speed of 50 miles per hour,
as testified for the plaintiffs

o Lasam v Smith: the

periodical visual inspection
of the steering knuckle as
practiced by the carrier's
agents did not measure up to
the required legal standard
of "utmost diligence of very
cautious persons" "as far
as human care and foresight
can provide", and therefore
that the knuckle's failure can
not be considered a
fortuitous event that
exempts the carrier from
responsibility

Carrier is not an insurer of

passengers safety but should
nevertheless be held to answer for
the flaws of his equipment if such
flaws were at all discoverable
o ART. 1755. A common carrier
is bound to carry the
passengers safely as far as
human care and foresight
can provide, using the
utmost diligence of very
cautious persons, with a due
regard for the all the
circumstances.
o Liability rests upon
negligence/ failure to
exercise the "utmost" degree
of diligence that the law
requires
o RD: Having no privity
whatever with the
manufacturer or vendor of
the defective equipment, the

only test applied to the steering

knuckle in question was a purely
visual inspection every thirty days,
to see if any cracks developed. It
nowhere appears that either the
manufacturer or the carrier at any
time tested the steering knuckle to
ascertain whether its strength was
up to standard, or that it had no
hidden flaws would impair that
strength

Impracticable to require periodical

tests of each and every part but
carrier obligations demands so

DAMAGES
(*will be discussed again in the MR)
Indemnity of 5000 to Precilliano
for the abrasions and fracture of
the femur, including medical and
hospitalization expenses*

For death of Severina Garces, 33

yo, mother to 7 : P15,000 to her
heirs because

o Incidental loses of property

worth P394 that she carried
at the time of the accident

and English decisions, not because

it felt bound to follow the same,
but merely in approval of the
rationale of the rule as expressed
therein

o Burial expenses of P490

o Loss of earnings of
120/month
o deprivation of her
protection, guidance and
company*

(2)the damages awarded, that

appellees argue to be excessive;

Just and equitable award of

P3,500 attorneys fees because of
the low income of the plaintiffsappellants

Under Art 2220 CC, no moral

damages as moral damages are
recoverable only where the
defendant acted fraudulently or in
bad faith. None present in case at
bar*

No exemplary damages as the

carrier has not acted in a "wanton,
fraudulent, reckless, oppressive or
malevolent manner" to warrant
their award

o The judge should be

empowered to calculate
moderate damages in
such cases where definite
proof of pecuniary loss
cannot be offered, rather
than that the plaintiff
should suffer, without
redress, from the
defendant's wrongful act.

Defendants-appellees submitted a
motion for reconsideration with
regard to:
(1)its holding the carrier liable for the
breakage of the steering knuckle
that caused the autobus No. 199 to
overturn, whereby the passengers
riding in it were injured

Prevailing law: Lasam v Smith

the accident was caused either

by defects in the automobile or
else through the negligence of
its driver. That is not caso
fortuito.
Court has quoted from American

full effect of the Precillianos injury

is not ascertainable immediately
thus incapable of pecuniary
estimation

Deprivation of Garces protection,

guidance and company is a moral
damage and moral damages are
for breach of contract are only
awarded when there is fraud,
malice or bad faith, BUT
o the case of a passenger who
dies in the course of an
accident, due to the carrier's
negligence constitutes an
exception to the
aforementioned general rule

(3)the award of attorneys' fees

plaintiffs' original claims can not

be deemed a priori wholly
unreasonable, since they had a
right to indemnity for moral

damages besides compensatory

ones, and moral damages are not
determined by set and invariable
bounds.

PNR v. Brunty 043 GR No. 169891, 2

November 2006, Callejo, Sr., J. Digested
by AMS Law 102 Property Topic:
Temperate or Moderate Damages
FACTS
Bruntys daughter was involved in a
car accident the car driven by
Mercelita (70kph) collided with a PNR
train. The accident occurred at around 2
AM, and the view of the railroad track
was blocked (unaware of the
approaching train)
Mercelita was instantly killed. The
passengers sustained serious physical
injuries. o Rhonda was pronounced DOA
at the hospital o Garcia suffered head
injuries
Brunty and Garcia filed a complaint for
damages with the Manila RTC.
o Claim: the deaths of Rhonda and
Mercelita, and the physical injuries
suffered by Garcia, were the
direct and proximate result of the
gross and reckless negligence of
PNR in not providing the
necessary safety devices at the
railroad crossing particularly
because there was no flagbar or
red light to warn motorists of
oncoming trains, and that the PNR
failed to supervise its employees in
the performance of their duties.
PNRs defense: it exercised the
diligence of a good father of a family not
only in the selection but also in the
supervision of its employees.
RTC ruled in favor of Brunty and

Garcia. CA affirmed.
ISSUES & HOLDING WON PNRs
negligence resulted in the collision?
YES.
RATIO Negligence the omission to do
something which a reasonable man,
guided by those considerations which
ordinarily regulate the conduct of human
affairs, would do, or the doing of
something which a prudent and
reasonable man would not do. o It is the
want of care required by the
circumstances, and its application
depends upon the situation of the parties
and the degree of care and vigilance
which the circumstances reasonably
require.
Test of Negligence: Did defendant, in
doing the alleged negligent act, use that
reasonable care and caution which an
ordinarily prudent person would have
used in the same situation? If not, the
person is guilty of negligence.
Applied to the case o RTC and CA
arrived at this conclusion and the SC
finds no reason to disturb such factual
finding. o PNR is found negligent
because of its failure to provide
adequate safety measures that satisfy
well-settled safety standards in
transportation - absence of flagbars or
safety railroad bars, inadequacy of the
installed warning signals and lack of
proper lighting within the area
o Railroad companies owe to the
public a duty of exercising a
reasonable degree of care to avoid
injury to persons and property at
railroad crossings, which duties
pertain both in the operation of
trains and in the maintenance of
the crossings. o PNR is liable for
damages including an award for
death indemnity, temperate
damages of P25k and moral
damages of P500k.

PETITIONER:
Republic
of
the
Philippines
RESPONDENT: Juan C. Tuvera, Victor
P. Tuvera, Twin Peaks Development
Corporation
SUMMARY: Respondent Juan Tuvera
was the Presidential Executive Assistant
of Pres. Marcos. Marcos granted a
Timber License Agreement in favor of
Twin Peaks Corp. to operate logging
operations in the Philippines. Tuvera's
son
Victor
was
an
incorporating
stockholder in Twin Peaks Corp. The
Republic of the Philippines filed a case
against the ill-gotten wealth of the
Marcoses and Tuvera, and accused
Tuvera of cronyism to unjustly enrich
himself. The SC essentially ruled for the
Republic, citing evidence that Juan
Tuvera did use his connection and close
proximity to Marcos to have the Timber
License Agreement approved without
any bidding or negotiation. In terms of
damages, however, the SC did not
award actual damages due to the
failure of the Republic's lawyers in
proving the actual amount it cost the
Republic and the damages the Republic
is entitled to as a result of Tuvera's acts.
The SC also did not award moral
damages, as the general rule is that a
juridical person (such as the State in this
case) is not entitled to moral damages.
However, the SC awarded temperate
damages and exemplary damages.
[SEE
DOCTRINE]
DOCTRINE: The allowance of
temperate damages when actual
damages were not adequately proven is
ultimately a rule drawn from equity, the
principle affording relief to those
definitely injured who are unable to
prove how definite the injury. | Even as
exemplary damages cannot be
recovered as a matter of right, the
courts are empowered to decide whether
or not they should be adjudicated. Illgotten wealth cases are hornbook

demonstrations where damages by way

of example or correction for the public
good should be awarded. Fewer causes
of action deserve the stigma left by
exemplary damages, which "serve as a
deterrent against or as a negative
incentive to curb socially deleterious
actions.
FACTS:
1) Former President Ferdinand Marcos
granted the award of a Timber License
Agreement (TLA) in favor of Respondent
Twin Peaks Development Corp. (Twin
Peaks) to operate on 26,000 hectares of
forest land with an annual allowable cut
of 60,000 cubic meteres of timber and to
export
10,000
cubic
meters
of
mahogany. As a result, Twin Peaks was
able to engage in logging operations.
2)
Twin
Peaks'
incorporating
stockholders inculde respondent Victor
Tuvera (Victor), who owned 48% of the
shares, and his father, Juan Tuvera, who
was the Presidential Executive Assistant
of President Marcos.
3) When Pres. Marcos was ousted from
power, Pres. Cory Aquino established the
Phil. Commission on Good Governance
(PCGG). The PCGG issued a Writ of
Sequestration on all assets, properties,
records, documents and shares of stock
of Twin peaks on the ground that all the
assets of the corporation are ill-gottehn
wealth for having been acquired directly
or indirectly through fraudulent and
illegal
means.
4) The PCGG also filed a complaint
against the respondents and Pres.
Marcos, seeking to recovery the funds
allegedly acquired by the parties in
flagrant breach of trust and fiduciary
obligations with grave abuse of right and
power in violation of the Constitution
and the laws of the Philippines.
In particular, the complaint alleged
that Juan Tuvera, as Presidential
Executive Assistant of President
Marcos, took advantage of his
relationship to influence upon and
connection with the President by

engaging in a scheme to unjustly

enrich himself at the expense of
the Republic and of the Filipino
People.
The Complaint, on the grounds of
relief, gross abuse of official
position and authority, breach of
public
trust
and
fiduciary
obligations, brazen abuse of right
and power, unjust enrichment and
violation
of
the
Constitution
prayed that:
o (1) The TLA be reverted to
the State or cancelled
o (2)
Respondents
to
be
solidarily ordered to pay
P48M as actual damages
o (3) Respondents to pay
moral,
temperate
and
exemplary
damages,
litigation
expenses
and
judicial costs
5) The Tuveras' arguments were:
(1) Twin Peaks was awarded the
TLA only after its articles of
incorporation had been amended
enabling it to engage in logging
operations
(2) The Republic's reference to
Chinese operations and revenue of
approximately P45M were merely
imaginary
(3) The PCGG has no statutory to
institute the action
(4) The Director of Forest Dev't.
acted within the scope of his
authority and the courts have no
supervising
power
ofver
the
actions of the Director and the
Secretary
of
the
DENR
in
performance of their official duties
(5) Juan Tuvera acted within the
confines of his duties and merely
transmitted communications of
approval in the course of his duties
and had nothing to do with the
decisions of Pres. Marcos. He
denied being involved with Twin
Peaks
They then asked for moral

damages,
attorney's
expenses.
ISSUE/S

exemplary
fees and
+

damages,
litigation
RATIO:

[RELEVANT TO OUR LESSON]

ISSUE #1: WON the Republic of the
Philippines may claim:
a. ACTUAL damages - NO
- The SC highkey blamed the
prosecution for failing to prove the
actual damages in this case. Actual
damages must be proven, not presumed.
In this case, the Republic failed to prove
damages. It is not enough or the
Republic to have established, as it did,
the legal travesty that led to the
wrongful obtention by Twin Peaks of the
TLA. It should have established the
degree of injury sustained by the State
by reason of such wrongful act.
-The SC doesn't get why the Republic
failed to present any proof of actual
damages. Was it the inability to obtain
the necessary financial documents that
would establish the income earned by
Twin Peaks during the period it utilized
the TLA, despite the presence of the
discovery processes? Was it mere
indolence or sheer incompetence? Here
is the SC giving out shade to the
prosecution: Whatever the reason, the
lapse is inexcusable, and the injury
ultimately conduces to the pain of the
Filipino people. If the litigation of this
case is indicative of the mindset in the
prosecution of illgotten wealth cases, it
is guaranteed to ensure that those who
stole from the people will be laughing on
their way to the bank.
b. MORAL damages - NO
-GENERAL RULE: A juridical person is
generally not entitled to moral damages
because it cannot experience phsyical
suffering or such sentiments as wounded
feelings, serious anxiety, mental anguish,
or
moral
shock.

-EXCEPTION: Art. 2219 of the Civil Code

authorizes the recovery of moral
damages in cases of libel, slander or any
other form of defamation. The article
does not qualify whether the plaintiff is a
natural or a juridical person. Hence a
juridical person such as a corporation
can validly complain for libel or any
other form of defamation and claim for
moral damages.
-IN THIS CASE: Since the Republic does
not fall under the exception, it cannot be
granted moral damages.
c. TEMPERATE damages - YES
-Temperate or moderate damages avail
when "the court finds that some
pecuniary loss has been suffered but its
amount can not from the nature of the
case, be proved with certainty." The
textual language might betray an intent
that temperate damages do not avail
when the case, by its nature, is
susceptible to proof of pecuniary loss;
and certainly the Republic could have
proved pecuniary loss herein. Still,
jurisprudence applying Article 2224 is
clear that temperate damages may be
awarded even in instances where
pecuniary loss could theoretically have
been proved with certainty.
-In a host of criminal cases, the Court
has awarded temperate damages to the
heirs of the victim in cases where the
amount of actual damages was not
proven due to the inadequacy of the
evidence presented by the prosecution.
-The SC relied on common law to justify
the award of temperate damages.
Notwithstanding the language of Article
2224, a line of jurisprudence has
emerged authorizing the award of
temperate damages even in cases where
the amount of pecuniary loss could have
been proven with certainty, if no such
adequate proof was presented. The
allowance of temperate damages when
actual damages were not adequately
proven is ultimately a rule drawn from

equity, the principle affording relief to

those definitely injured who are unable
to prove how definite the injury. There is
no impediment to apply this doctrine to
the case at bar, which involves one of the
most daunting and noble undertakings of
our young democracythe recovery of ill
gotten wealth salted away during the
Marcos years. If the doctrine can be
justified to answer for the unlawful
damage to a cargo truck (cited in a
previous case), it is a compounded wrath
if it cannot answer for the unlawful
exploitation of our forests, to the injury
of the Filipino people. The amount of
P1,000,000.00 as temperate damages is
proper.
d. EXEMPLARY damages - YES
-The allowance of temperate damages
also paves the way for the award of
exemplary damages. Under Article 2234
of the Civil Code, a showing that the
plaintiff is entitled to temperate
damages allows for the award of
exemplary damages. Even as exemplary
damages cannot be recovered as a
matter of right, the courts are
empowered to decide whether or not
they should be adjudicated.
-Illgotten wealth cases are hornbook
demonstrations where damages by way
of example or correction for the public
good should be awarded. Fewer causes
of action deserve the stigma left by
exemplary damages, which "serve as a
deterrent against or as a negative
incentive to curb socially deleterious
actions."The obtention of the timber
license agreement by Twin Peaks
through fraudulent and illegal means
was highlighted by Juan Tuveras abuse
of his position as Presidential Executive
Assistant. The consequent exploitation of
26 hectares of forest land benefiting all
respondents is a grave case of unjust
enrichment at the expense of the Filipino
people and of the environment which
should never be countenanced.
Considering the expanse of forest land

exploited by respondents, the volume of

timber that was necessarily cut by virtue
of their abuse and the estimated wealth
acquired by respondents through grave
abuse of trust and public office, it is only
reasonable that petitioner be granted
the amount of P1,000,000.00 as
exemplary damages.
-The imposition of exemplary damages is
a means by which the State, through its
judicial arm, can send the clear and
unequivocal signal best expressed in the
pithy but immutable phrase, "never
again." It is severely unfortunate that
the Republic did not exert its best efforts
in the full recovery of the actual
damages caused by the illegal grant of
the Twin Peaks TLA. To the best of our
ability, through the appropriate vehicle
of exemplary damages, the Court will try
to fill in that deficiency. For if there is a
lesson that should be learned from the
national trauma of the rule of Marcos, it
is that kleptocracy cannot pay. As those
dark years fade into the backburner of
the collective memory, and a new
generation emerges without proximate
knowledge of how bad it was then, it is
useful that the Court serves a reminder
here and now.
[MAIN POINT OF THE CASE] ISSUE
#2: WON defendant Juan Tuvera who
was a Presidential Executive Assistant at
the time material to this case, by himself
and in concert with his co-defendants
Ferdinand Marcos and Victor Tuvera,
took advantage of his relation and
connection with the later Marcos,
secured a timber concession for Twin
Peaks Development Corporation and
engaged in a scheme to unjustly enrich
himself at the expense of the Republic
and the Filipino people? - YES. The
grant of the TLA to Twin Peaks was
illegal.
-A timber license agreement authorizes a
person to utilize forest resources within

any forest land with the right

possession and exclusion of others.

of

-The Forestry Reform Code prohibits any

person
from
utilizing,
exploiting,
occupying, possessing or conducting any
activity within any forest land unless he
had been authorized to do so under a
license agreement, lease, license or
permit. The Code also mandates that no
timber license agreement shall be issued
unless the applicant satisfactorily proves
that he has the financial resources and
technical capability not only to minimize
utilization, but also to practice forest
protection,
conservation
and
development measures to insure the
perpetuation of said forest in productive
condition. However, the Code is silent as
to the procedure in the acquisition of
such timber license agreement. Such
procedure is more particularly defined
under FAO No. 11, dated 1 September
1970, which - provides for the "revised
forestry license regulations."
FAO No. 11 establishes that it is the
Director of Forestry who has the power
"to grant timber licenses and permits." It
also provides as a general policy that
timber license agreements shall be
granted through no other mode than
public bidding. However, Section 24 of
FAO No. 11 does admit that a timber
license agreement may be granted
through "negotiation," as well as
through "public bidding:
26. When license may be issued.A
license under this Regulations may be
issued or granted only after an
application and an award either through
bidding or by negotiation has been
made and the Director of Forestry is
satisfied that the issuance of such
license shall not be inconsistent with
existing laws and regulations or
prejudicial to public interest, and that
the necessary license fee, bond deposit
and other requirements of the Bureau of
Forestry have been paid and complied

with.
-However, even a person who is granted
a TLA through "negotiation" is still
required to submit the same
requirements and supporting papers as
required for public bidding.
-The rationale underlying the very
elaborate procedure that entails prior to
the grant of a timber license agreement
is to avert the haphazard exploitation of
the State's forest resources as it
provides that only the most qualified
applicants will be allowed to engage in
timber activities within the strict
limitations of the grant and that cleared
forest areas will have to be renewed
through reforestation. Since timber is
not a readily renewable natural
resource, it is essential and appropriate
that the State serve and act as a jealous
and zealous guardian of our forest lands,
with the layers of bureaucracy that
encumber the grant of timber license
agreements effectively serving as a
defensive wall against the thoughtless
ravage of our forest resources.
-There is no doubt that no public bidding
occurred in this case. Certainly,
respondents did not raise the defense in
their respective answers. The absence of
such bidding was testified on by
prosecution witness Arcangel. Yet even if
we consider that Twin Peaks could have
acquired the TLA through "negotiation,"
the prescribed requirements for
"negotiation" under the law were still
not complied with.
-It is evident that Twin Peaks was of the
frame of mind that it could simply walk
up to President Marcos and ask for a
timber license agreement without having
to comply with the elaborate application
procedure under the law. This is
indicated by the letter dated 31 May
1984 signed by Twin Peaks Vice
President and Treasurer Evelyn
Fontanilla, addressed directly to then
President Marcos, wherein Twin Peaks

expressed that "we would like to request

a permit to export 20,000 cubic meters
of logs and to cut and process 10,000
cubic meters of the narra species in the
same area."A marginal note therein
signed by Marcos indicates an approval
thereof. Neither the Forestry Reform
Code nor FAO No. 11 provide for the
submission of an application directly to
the Office of the President as a proper
mode for the issuance of a TLA. Without
discounting the breadth and scope of the
Presidents powers as Chief Executive,
the authority of the President with
respect to timber licenses is, by the
express terms of the Revised Forestry
Code, limited to the amendment,
modification, replacement or rescission
of any contract, concession, permit,
license or any other form of privilege
granted by said Code.
-What could have made Twin Peaks feel
emboldened to directly request
President Marcos for the grant of Timber
License Agreement despite the obvious
problems relating to its capacity to
engage in timber activities? The
reasonable assumption is that the official
and personal proximity of Juan Tuvera to
President Marcos was a key factor,
considering that he was the father of
Twin Peaks' most substantial
stockholder.
-The Memorandum signed by Juan
Tuvera can be taken as proof that he
"persuaded, induced or influenced" the
Director of Forestry to accommodate a
timber license agreement in favor of
Twin Peaks, despite the failure to
undergo public bidding, or to comply
with the requisites for the grant of such
agreement by negotiation, and in favor
of a corporation that did not appear
legally capacitated to be granted such
agreement. The fact that the principal
stockholder of Twin Peaks was his own
son establishes his indirect pecuniary
interest in the transaction he appears to
have intervened in. It may have been

possible on the part of Juan Tuvera to

prove that he did not persuade, induce
or influence the Director of Forestry or
any other official in behalf of the timber
license agreement of Twin Peaks, but
then again, he waived his right to
present evidence to acquit himself of
such suspicion.
-In sum, the backdoor recourse for a
hugely priced favor from the government
by itself, and more in tandem with other
brazen relevant damning circumstances,
indicates the impudent abuse of power
and the detestable misuse of influence
that homologously made the acquisition
of illgotten wealth a reality. Upon the
facts borne out by the evidence for the
Republic and guideposts supplied by the
governing laws, the Republic has a clear
right to the reliefs it seeks.

Bao v Bachelor Express Inc

- Nov 6 93, early afternoon,
Wenifredo Salvaa was driving a
bus owned by BEI along the
national highway at Magdum,
Tagum City bound for Davao.
-

At around 1:20 pm, he overtook a

jeepney along a descending road
while negotiating a blind curve,
causing him to counter-flow and
hit Crescenio Baos 10-wheeler
dump truck. This resulted in
damage to both vehicles, the death
of the truck driver & injuries for
Wenifredo.

Mar 11 94, Bao and the heirs of

Amancio Asumrado (the truck
driver) filed a complaint for
damages on the basis of tort
against BEI.

BEI alleges that prior to the

collision, Bus 4042 was running
out of control due to a problem in
the steering wheel system that

they could not have avoided

despite maintenance efforts. Also,
they argue that Asumbrado had
the last clear chance, since he was
travelling slowly (kapal!).
-

RTC ruled for plaintiffs, holding

that Wenifredo was negligent in
trying to overtake while
negotiating a blind curve, and
issued damages as follows. The CA
affirmed but modified.

TABLE INCLUDES SC EVENTUAL

DECISION FOR EZ COMPARISON
RTC
1. P700k for his
wrecked truck
2. P296.6k/month loss of
truck earnings, to be
Bao
paid from Nov 6 93
until P700k is fully
paid.
3. P100k moral and
P50k exemplary

Heirs of
Asumbra
do

To both
plaintiffs

CA
1. Redu
2. Modi
temp
basis
P296
3. Delet
proof
malic
negli

1. P50k death indemnity

and P20.2k
reimbursement for
hospital & funeral
bills
2. P576k for loss of
earning capacity
3. P100k moral and
P50k exemplary

1. P50k
reduc
reimb
bills
2. Redu
3. Redu
and d
exem
proof
negli

1. P25k for litigation

expenses & other
costs
2. 25% of the total claim
as attys fees and
P14.5k appearance
fees.

1. Delet
expe
2. Redu
attys

Hence appeal to the SC by

plaintiffs. SC AFFIRMED CA BUT
MODIFIED.

Issues:
1. Was Wenifredo grossly negligent?
YES. Downhill, blind curve,
overtake a jeepney? Jesus.
NAPOCOR v. National Merchandising
Corporation
Facts:
National Power Corporation (NPC)
and
National
Merchandising
Corporation
(Namerco),
as
representative of International
Commodities Corporation (ICC) in
New York, executed in Manila a
contract for the purchase by NPC
from the New York firm of 4,000
long tons of crude sulphur for its
Maria Cristina Fertilizer Plant
in Iligan City at a total price of
P450,716.
o A performance bond of
P90,143.20 was executed by
the
Domestic
Insurance
Company in favor of the NPC
to guarantee the seller's
obligations.
Stipulations under the contract of
sale:
o The seller would deliver the
sulfur
at Iligan City
within sixty days from notice
of the establishment in its
favor of a letter of credit for
$212,120
o Failure to effect delivery
would subject the seller and
its surety to the payment of
liquidated damages at the
rate of two-fifth of one
percent of the full contract
price for the first thirty days
of default and four-fifth of
one percent for every day
thereafter until complete
delivery is made

Through a letter, the NPC advised

John
Z. Sycip
(president
of Namerco) of the opening of
letter of credit for $212,120 in
favor of ICC.
Notice of the letter of credit was
received by cable by the New
York firm
on November
15,
1956 (Exh. 80-Wallick). Thus, the
deadline for the delivery of the
sulfur was January 15, 1957.
The New York firm was not able to
deliver the sulfur due to its
inability to secure shipping space.
o Because of this, from January
20 to 26, 1957 there was a
shutdown
of
the NPC's fertilizer
plant
because
there
was
no
sulfur.
The
Government
Corporate
Counsel rescinded the contract of
sale due to the New York firms
nonperformance of its obligations.
He
also
demanded
from Namerco the
payment
of
P360,572.80
as
liquidated
damages. Demand was made upon
the surety.
o Basis of computation of
liquidated damages 115day period between January
15,
1957
(deadline
for
delivery of sulphur) and May
9, 1957 (Namerco was
notified of the rescission)
(Civil Case No. 33114) NPC sued
the New York firm, Namerco and
the Domestic Insurance Company
for the recovery of damages. TC
dismissed the case as to the New
York firm for lack of jurisdiction as
it was not doing business in the
Philippines.
(Civil Case No. 37019) On the
other hand, Melvin Wallick, as the
assignee of the New York firm,
sued Namerco for damages in
connection with the same sulfur
transaction).

The two cases, both filed in the

Court of First Instance of Manila,
were consolidated. A joint trial
was
held. The
lower
court
rendered separate decisions in the
two cases on the same date.
o CC 33114: although the
records on appeal were
approved
in 1967,
inexplicably,
they
were
elevated
to
this
Court
in 1971. That
anomaly
initially contributed to the
delay in the adjudication of
this case.
o CC
37019:
TC
dismissed Wallick's action for
damages
against Namerco because
the assignment in favor
of Wallick was champertous i
n character.

Issues:
(Defendants appeal, L-33819)
1. WoN the delivery of the sulfur was
conditioned on the availability of a
vessel to carry the shipment
NO
The documentary evidence belies
these contentions. The invitation
to bid issued by the NPC provides
that non-availability of a steamer
to transport the sulfur is not a
ground for nonpayment of the
liquidated damages in case of
nonperformance by the seller.
Namerco's bid
or
offer
is
explicit. It provides that it was
"responsible for the availability of
bottom or vessel" and that it
"guarantees the availability of
bottom or vessel to ship the
quantity of sulfur within the time
specified in this bid".
2. WoN Namerco acted within the
scope of its authority as agent in
signing the contract of sale
NO

Even before the contract of sale

was signed, Namerco was already
aware that its principal was having
difficulties in booking shipping
space.
o One day before the contract
of sale was signed, the New
York
supplier
advised Namerco that
the
latter should not sign the
contract unless Namerco
wished
to
assume
sole
responsibility
for
the
shipment.
Sycip
(Namerco's president)
replied in his letter to the seller
that he had no choice but to
finalize the contract of sale
because
the
NPC
would
forfeit Namerco's bidder's bond if
the contract was not formalized.
In its letters, the New York firm
informed
Namerco
that
it
disclaimed responsibility for the
contract and that the responsibility
for the sale rested on Namerco.
Therefore, Namerco is liable for
damages because under A1897 of
the Civil Code.
o The agent who exceeds the
limits
of
his
authority
without giving the party with
whom he contracts sufficient
notice
of
his
powers
is personally liable to such
party.
Since
Namerco,
as
agent,
exceeded its authority, in effect, it
acted in its own name.

3. WoN the contract was enforceable

YES
Namerco: A1403 CC provides that
a contract entered into in the
name of another person by one
who has acted beyond his powers
is unenforceable. Therefore, the
stipulation for liquidated damages
was allegedly unenforceable.

A1403
refers
to
the
unenforceability of the contract
against the principal. In this case,
the
contract
containing
the
stipulation for liquidated damages
is not being enforced against its
principal but against the agent and
its surety.
It is being enforced against the
agent because A1897 implies that
the agent who acts in excess of his
authority is personally liable to the
party with whom he contracted.
Therefore, Namerco is bound by
the stipulation for liquidated
damages in the contract.

4. WoN NPC is entitled to liquidated

damages
YES
The contention that only nominal
damages should be adjudged is
contrary to the intention of the
parties
(NPC, Namerco and
its
surety) because it is clearly provided that liquidated damages are
recoverable for delay in the
delivery of the sulfur and, with
more reason, for non-delivery.
No proof of pecuniary loss is
required for the recovery of
liquidated
damages. The
stipulation for liquidated damages
is intended to obviate controversy
on the amount of damages.
There can be no question that the
NPC suffered damages because its
production
of
fertilizer
was
disrupted or diminished by reason
of the non-delivery of the sulfur.
The parties foresaw that it might
be difficult to ascertain the exact
amount of damages for nondelivery of the sulfur. So, they
fixed the liquidated damages to be
paid as indemnity to the NPC.
NPCs appeal, L-33897 The contentions
of the parties have already been
resolved in the preceding discussion.

The Court finds no sanction or

justification for NPCs claim that it is
entitled to the full payment of the
liquidated damages computed by its
official.
Amount of damages: P45,100 bidders
bond or to about 10% of the selling price
of the sulfur

Titan v. Uni-Field (1982)

Petitioner: Titan Construction
Corporation
Respondent: Uni-Field Enterprises, Inc.
Liquidated Damages
FACTS:
Titan Construction purchased on
credit various construction
supplies and materials from UniField. The purchases amounted
to P7,620,433.12 but Titan was
only able to pay P6,215,795.70,
leaving a balance
of P1,404,637.42.

Uni-Field filed with the trial court

a complaint for collection of sum
of money with damages against
Titan. The TC rendered judgment
in favor of Uni-Field, and ordered
Titan to pay Uni-Field the
following:
1. The principal amount
of P1,404,114.00;
2. Interest Charges in the
amount of P504,114.00 plus
accrued interest charges at
24% per annum
compounded yearly
reckoned from July, 1995 up
to the time of full payment;
3. Liquidated Damages in the

amount of P324,147.94;

stipulated, they are deemed

admitted when not specifically
denied. Appellant cannot question
the interest rate on overdue
accounts as the same was
provided for in the delivery
receipts and sales invoices, which
have not been denied by
it. Therefore, the terms and
conditions therein have become
the law between the parties, and
both are bound by said
conditions.

4. Attorneys Fees equivalent to

25% of whatever amount is
due and payable and
accumulated appearance
fees at P1,000.00 per
hearing; and
5. Costs of suits.

The CA affirmed the ruling, noting

that the sales invoices and
delivery receipts contained the
provision that: Interest of 24% per
annum will be charged on overdue
accounts, compounded with the
outstanding principal obligation as
they accrue.
Should Unifield Enterprises,
Inc. be constrained to effect
collection through Court action
and proceedings before
the Fiscals [sic], said customer
agrees to pay the following
additional sums:
1. 25% liquidated damages
based on the outstanding
total obligation;
2. 25% attorneys fees based on
the total claim including
said liquidated damages;
3. Appearance fees of counsel
at P500.00 per hearing in
addition to all other court
costs and expenses.

The CA also held that the

existence of the delivery receipts
and invoices were not denied by
appellant, rather, it admitted the
transactions subject of the instant
case. Clearly, if the damages
alleged are liquidated or

Petitioner insists that there was

no legal basis to award interest,
liquidated damages, and attorneys
fees because the delivery receipts
and sales invoices were not
formally offered as evidence by
respondent. Petitioner also alleges
that the delivery receipts and
sales invoices were in the nature
of contracts of adhesion.

ISSUE/S:
WoN the award of interests,
liquidated damages, and attorneys
fees was proper
o YES, EXCEPT FOR THE
ATTORNEYS FEES.
o While the delivery receipts
and sales invoices did not
form part of respondents
formal offer of evidence,
records show that the
delivery receipts and sales
invoices formed part of
petitioners formal offer of
evidence. Since petitioner
freely entered into the
contract, the stipulations in
the contract are binding on
petitioner.

o Contracts of adhesion are as

binding as ordinary
contracts. Those who adhere
to the contract are in reality
free to reject it entirely and
if they adhere, they give
their consent. It is true that
on some occasions the Court
struck down such contract as
void when the weaker party
is imposed upon in dealing
with the dominant party and
is reduced to the alternative
of accepting the contract or
leaving it, completely
deprived of the opportunity
to bargain on equal footing.
But considering that the
parties have been doing
business from 1990 to 1993
and that petitioner is not a
small time construction
company, petitioner is
presumed to have full
knowledge and to have acted
with due care or, at the very
least, to have been aware of
the terms and conditions of
the contract. Petitioner was
free to contract the services
of another supplier if
respondents terms were not
acceptable. Moreover,
petitioner failed to show that
in its transactions with
respondent it was the
weaker party or that it was
compelled to accept the
terms imposed by the
respondent. In fact,
petitioner only questioned
the terms of the contract
after the trial court issued its
decision.

o However, the Court will

reduce the amount of
attorneys fees awarded. The
law allows a party to recover
attorneys fees under a
written agreement. In
Barons Marketing Corp. v.
CA, the Court ruled that:

[T]he attorneys fees

here are in the nature
of liquidated damages
and the
stipulation therefor is
aptly called a penal
clause. It has been said
that so long as such
stipulation does not
contravene law,
morals, or public order,
it is strictly binding
upon defendant.

o The law also allows parties

to a contract to stipulate on
liquidated damages to be
paid in case of breach. A
stipulation on liquidated
damages is a penalty clause
where the obligor assumes a
greater liability in case of
breach of an obligation. The
obligor is bound to pay the
stipulated amount without
need for proof on the
existence and on the
measure of damages caused
by the breach.
o Articles 1229 and 2227 of
the Civil Code empower the
courts to reduce the penalty
if it is iniquitous or
unconscionable. The
determination of whether the

penalty is iniquitous or
unconscionable is addressed
to the sound discretion of the
court and depends on
several factors such as the
type, extent, and purpose of
the penalty, the nature of the
obligation, the mode of
breach and its consequences.
o The Court notes that
respondent had more than
adequately protected itself
from a possible breach of
contract because of the
stipulations on the payment
of interest, liquidated
damages, and attorneys
fees. The Court finds the
award of attorneys fees
equivalent to 25% of
whatever amount is due and
payable to be exorbitant
because it includes (1) the
principal of P1,404,114.00;
(2) the interest charges
of P504,114.00 plus accrued
interest charges at 24% per
annum compounded yearly
reckoned from July 1995 up
to the time of full payment;
and (3) liquidated damages
of P324,147.94. Moreover,
the liquidated damages and
the attorneys fees serve the
same purpose, that is, as
penalty for breach of the
contract. Therefore, we
reduce the award of
attorneys fees to 25% of
the principal obligation, or
P351,028.50.

LAO v STANDARD INSURANCE CO

(2003)
August 14, 2003 | Quisumbing, J. | 2nd
Division | Exemplary or Corrective
Damages
Petitioners: Rudy Lao
Respondents: Standard Insurance Co,
Inc
FACTS:
Lao is the owner of a Fuso truck
that was insured with RESP under
an insurance policy for P200,000
and P50,00 for any damages to his
goods.

While the policy was in effect, an

accident occurred where the
insured truck was bumped from
the rear by another truck which he
also owned. The truck sustained
damages estimated to be around
P110,692, while the damage to the
other truck and to properties in
the vicinity of the accident were
placed at around P35,000.

Lao filed a claim with the

insurance company but was
DENIED.
o Driver of the insured truck
did NOT possess a proper
drivers license at the time of
the accident, violating the
authorized deriver clause in
the policy. This was
confirmed in the police
blotter of the PNP.
o Laos position was that the
driver was different and
possessed the necessary
license, and presented the
Motor Vehicle Accident
report to support his claim.
Said report was made three

days after the accident.

employment of underhanded
means.

Lao filed a claim for damages for

the refusal to approve his claim.

o Also, it was an error for the

court to award exemplary
damages in the absence of
any award for moral,
temperate, or compensatory
damages.

RTC ruled in favour of RESP for

lack of a sufficient cause of action
and ordered Lao to pay:
o P20,000 attys fees + P500
appearance fee

o (Attys fees also deleted,

since there was no showing
that the claim was done
maliciously)

o P50,000 exemplary fees

On appeal, CA affirmed.

ISSUE/S:

WON the CA erred in admitting

the blotter as evidence NO
o The police blotter was
properly admitted to the
records in accordance with
Rule 130, Section 44, Rules
of Court and could be
properly used as evidence.

WON the award for exemplary

damages was warranted NO
o There was an award as RESP
argued that Lao schemed to
procure dubious documents
(motor vehicle accident
report) and lied through his
teeth to establish his version
of the facts.
o The documents adduced by
Lao were inadmissible, and
its contents were dubious.
However, no proof was
adduced to sufficiently
establish that it came to his
hands through his

Sociedad Europea De Financiacion

SA v CA
FACTS:
1949: Julio Ramonet Munoz
(representing NY business firm
Carum Trading Inc.) gave Antonio
Rocha US $400 000 to open an
insurance company in the PH. With
this, Rocha organized Capital
Insurance and Surety Co. Inc. A
sister corporation was set up
Capital Life Assurance Corp.
In 1958, Rocha transferred all the
shares of Capital Insurance &
Surety Co., Inc. to Carum Trading,
Inc. Joaquin G. Garrido replaced
Rocha
in
the
insurance
corporation. Then it passed to the
hands of Sociedad which came to
own 89.75% of the former's stock,
and 34.05% of the outstanding
shares of Capital Life Assurance
Corp.

Control was exercised by Garrido,

who was named General Manager
of the insurance firms. He also
served
as
director
of
the
companies, together with Julio
Ramonet Muoz, Jaime Amat, J.
Amado
Araneta,
and
Angel
Gamboa (since deceased).

In 1966, Garrido and Araneta

proposed to the board of directors
that CAPITAL INSURANCE obtain
a loan of P600,000.00 from
Progressive
Commercial
Bank.
This, according to them, in order
that a better financial position
could be projected when renewal
was sought of the license of its
sister corporation, CAPITAL LIFE.
Security for the loan would consist
of the SEF shares in CAPITAL
INSURANCEconstituting,
as
above mentioned, 89.75% of the
outstanding stock.
The
board
approved
the
arrangement.
The
loan
of
P600,000.00, with maturity of 90
days and interest at 11% per
annum, was obtained from PCB
with the SEF shares as collateral.
On
October
19,
1966,
PROGRESSIVE issued a cashier's
check
in
the
amount
of
P600,000.00 in favor of SEF. The
check was endorsed to said bank
for "deposit to the account of
Capital
Life
Assurance
Corporation," and a certificate of
time deposit (No. 1189) was issued
in favor of CAPITAL LIFE.
A day earlier, on October 18, 1966
and, of course, before the
cashier's check was drawn and
deposited, and the certificate of
time deposit delivered to CAPITAL
LIFE,
as
above
recounted
Garrido, as president of CAPITAL
LIFE, executed a deed assigning to
PROGRESSIVE all the rights, title
to and interests of CAPITAL LIFE
in said time deposit certificate (No.
1189);
and
granting
PROGRESSIVE full control of the
deposit of P600,000.00 and the
right to retain it until the loan was
repaid
together
with
corresponding
interest
and
charges, as well as all obligations

in connection therewith, and the

right, if the loan were not repaid at
maturity, to charge CAPITAL
LIFE'S saving account for the full
amount of the outstanding balance
thereof, without further notice to
it.

The loan was unpaid. Progressive

foreclosed the shares and sold it in
a
public
action.
They
then
scheduled a meeting of Capital
Insurance
to
effect
a
reorganization.

SEF, Muoz, and Amat forthwith

instituted a derivative suit and
prayed for the annulment of the
loan on the ground of breach of
trust against Garrido, Araneta and
PROGRESSIVE in the Court of
First Instance of Manila.

TC sided with SEF and gave 100k

as exemplary damages.

ISSUE: W/N the P100 000 award for

exemplary damage is adequate No

The Court finds it inexplicable, not

to say ludicrous, unjust and
inequitable, to hold the petitioners
liable to Progressive Bank for
anything on account of the latter's
so-called "accommodation loan" of
P600,000.00, considering that the
proceeds
of
the
loan
were
immediately
placed
on
time
deposit with the same lending
institution,
a
day
after
its
placement, the time deposit was
assigned to the same Bank,
together with all rights to the
interest thereon, full control of the
deposit being given to said Bank
until the accommodation loan was
fully paid, the Bank was at no time
under any risk whatsoever, for an
"accommodation" that it could
recall at its pleasure because it

retained total control of the loan

proceeds under time deposit with
it, while retaining full disposition
of the amount fictitiously loaned,
said Bank reserved, and did in
fact, exercise rights proper and
appropriate only to the lender
under a genuine forbearance, such
as charging interests and, later,
even foreclosing on the security
for alleged nonpayment; there is
no evidence that it ever set off
interests on the loan with interests
that the time deposit should justly
have
earned,
only
a
fair
arrangement in the circumstances,
as found by the trial court and
affirmed by the Court of Appeals,
the loan and accompanying pledge
were simulated and the Bank was
a party to the simulation.

The Court finds the award of P

100,000.00 in exemplary or
corrective damages lets the
private respondents off too
lightly for the part they played
in this sorry affair. Both the
Trial Court and the Court of
Appeals
found
that
the
defendants had concocted a
scheme "to divest plaintiff SEF
of its interests in Capital
Insurance and for themselves
to own the controlling interest
therein," and carried out that
illicit objective. Said award of
damages should be increased to
P600,000.00.

MUNSAYAC v DE LARA (1968)

June 26, 1968 | Makalintal, J. | En Banc |
Exemplary or Corrective Damages
Petitioners: Lourdes Munsayac
Respondents: Benedicta de Lara and
the Court of Appeals
FACTS:
Munsayac suffered injuries while

riding as a passenger of a jeepney

and sought to recover damages
against the owner, De Lara.

CFI Rizal found the driver

recklessly negligent: he drove at
an excessive speed, unmindful of
the fact that the road was under
repair and heedless of the
passengers' pleas that he go more
slowly. CFI awarded compensatory
damages for actual expenses
incurred and loss of income,
P1,000.00 as exemplary damages
and P500.00 as attorney's fees.

CA affirmed ruling that the award

was warranted as De Lara failed,
or even refused, to placate the
sufferings of Munsayac despite
the admission that the accident
happened.

ISSUE/S:

WON the award for exemplary

damages was warranted NO
o The Civil Code provides that
"exemplary or corrective
damages are imposed, by
way of example or correction
for the public good" (Act
2229); and that in contracts
"the Court may award
exemplary damages if the
defendant acted in
wanton, fraudulent,
reckless, oppressive or
malevolent manner" (Art.
2232)
o De Lara argues that the
wanton, fraudulent, reckelss
act described in the Code is

for acts causing or related

to the breach of contract,
not one which is subsequent
to the act (in this case, the
refusal to placate the
sufferings of Munsayac)
o De Lara also cites Rotea vs.
Halili (1960), where the
Court ruled that principal or
master can be held liable for
exemplary or punitive
damages based upon the
wrongful act of his agent or
servant only where he
participated in the doing
of such wrongful act or
has previously authorized
or subsequently ratified it
with full knowledge of the
facts.
o The Court agrees with De
Lara and affirms the ruling
in Rotea.

The law does not

contemplate a
vicarious liability on
his part: the breach is
his as party to the
contract, and so if he is
to be held liable at all
for exemplary damages
by reason of the
wrongful act of his
agent, it must be
shown that he had
previously authorized
or knowingly ratified it
thereafter, in effect
making him a coparticipant.
There is nothing to
show previous

authority or
subsequent
ratification by De
Lara insofar as the
recklessness of the
driver was concerned.
The mere statement
that the De Lara
failed, even refused,
to placate the
suffering of the
Munsayac,
necessitating the filing
of the action, is too
tenuous a basis to
warrant the conclusion
that the De Lara
approved of the
wrongful act of his
servant with full
knowledge of the facts.
o The ruling is important as
otherwise there would be
practically no difference
between an employers
liability for exemplary
damages and their liability
for compensatory damages,
which needs no proof of their
negligence since the suit is
predicated on breach of
contract and due diligence
on their part does not
constitute a defense.

Cathay Pacific Airways v Spouses

Vazquez (2003)
Petitioners: Cathay Pacific Airways LTD
Respondents: Spouses Daniel Vazquez
and Maria Luisa Madrigal Vazquez
Other Kinds of Damages Exemplary or
Corrective Damages
Davide, Jr., C.J.

FACTS:
Cathay is a common carrier
engaged in the business of
transporting passengers and goods
by air. One of its marketing
strategies is it accords frequent
flyer membership in its Marco Polo
Club members enjoy several
privileges such as priority for
upgrading of booking without any
extra charge whenever an
opportunity arises.

through a letter that they be

indemnified in the amount of P1M
for the humiliation and
embarrassment caused by its
employees; also demanded a
written apology.

Cathay promised to investigate but

after none took place, the
Vazquezes instituted before the
RTC an action for damages against
Cathay.

Resondents Dr. Daniel Earnshaw

Vazquez and Mari Luisa Madrigal
Vazquez are frequent flyers of
Cathay and are Gold Card
members. On Sept 24, 1996,
together with their maid and two
friends, they went to Hongkong for
pleasure and business.

o Alleged that Chiu responded

in a loud, discourteous and
harsh voice when they
refused her offer.

Upon return, they were on

Buisness Class while their maid
was in Economy. However, upon
their presentment of their
boarding pass, the ground
attendant Clara Chiu saw a
message that their seats had been
upgraded from Business to First
Class.

o The lack of service by the

stewardess when he was
putting up his luggage, his
bilateral carpal tunnel
syndrome was aggravated

Vazquez refused, saying that it

would not look good for them as
hosts and that they needed to
discuss business matters. Several
attempts to convince them to avail
of the privilege occurred and in
the end, Chu told them that they
would not be allowed to take the
flight if they refused.
Eventually, they gave in after
talking to their friends. After
landing in Manila, they demanded

o They were embarrassed and

humiliated since the other
passengers witnessed the
incident.

Cathay alleged that it is a practice

among commercial airlines to
upgrade passengers to the next
better class of accommodation
whenever the opportunity arises
such as when a certain section is
fully booked.
o It was Vazquez who was
unruly, blocking the queue of
passengers from boarding
the plane, shouting that it
was impossible for him to be
upgraded while his friends
stayed in that section.
o Employees acted in good
faith with none committing

any act of disrespect against

Vazquez, negating any basis
for their claim for temperate,
moral, and exemplary
damages and attorneys fees.

o As members of the Marco

Polo Club, the Vazquezes
knew that that had priority
for upgrading their seat
accommodation at no extra
cost when the opportunity
arises. But just like any other
privilege, they had every
right to waive this for
whatever reason.

o Reliance on United Airlines

Inc v CA: overbooking that
does not exceed 10 percent
cannot be considered
deliberate and done in bad
faith deleted awards for
moral and exemplary
damages

RTC: ruled for Vazquezes Cathay

employed deceit, gross negligence
and bad faith entitling Vazquezes
to damages.

o By asking that other

passengers be given the
upgrade, they clearly waived
their priority or preference
and Cathays insistence on
the upgrade constituted a
breach of its contract of
carriage.

a) Nominal damages in the

amount of P100,000.00 for
each plaintiff;
b) Moral damages in the
amount of P2,000,000.00 for
each plaintiff;

o However, this breach was

not attended by fraud or bad
faith. The Vazquezes were
not induced to agree to the
upgrading through insidious
words or deceitful
machination or through
willful concealment of
material facts.

c) Exemplary damages in the

amount of P5,000,000.00 for
each plaintiff;
d) Attorneys
fees
and
expenses of litigation in the
amount of P1,000,000.00 for
each plaintiff; and

o The transfer was not for

some devious purpose as an
upgrading of seats is for the
better condition and benefit
of the passenger in regular
circumstances.

e) Costs of suit.

CA: by upgrading Vazquez t First

Class, Cathay novated the contract
without the consent of the former;
deleted award for exemplary
damages, reduced for nominal and
moral and attorneys fees and
litigation expenses as well.

ISSUE/S:

WoN upgrading of the seat

accommodation of the Vaquezes
constitute a breach of contract:
YES

WoN CA erred in awarding moral

damages: YES
o Moral damages predicated

upon a breach of contract of

carriage may only be
recoverable in instances
where the carrier is guilty of
fraud or bad faith or where it
resulted in the death of a
passenger. Absent this, the
liability for damages is
limited to the natural and
probable consequences of
the breach which the parties
had foreseen or could have
reasonably foreseen. Since
the breach in this case was
not attended by fraud or bad
faith, the CA erred in
awarding moral damages.

WoN CA was correct in deletion of

the award for exemplary damages:
YES
o It is a requisite in the grant
of exemplary damages that
the act must be accompanied
by bad faith or done in
wanton, fraudulent or
malevolent manner under
Art. 2232 of the Civil Code.
In the case at bar, that is
absent.
o Since the Vazquezes must
also establish their right to
moral, temperate or
compensatory damages
under Art. 2234, the lack of
any of these in this case
gives the award for
exemplary damages no legal
basis.

HELD: Petitioned GRANTED. CA

decision modified, awards for moral
damages and attorneys fees are SET
ASIDE AND DELETED, and award for
nominal damages REDUCED.

Pan Pacific Company (Phil) vs. Phil.

Advertising Corporation
No. L-22050
June
13, 1968
Concepcion, J.
Facts: (medyo di ko gets yung facts
pero try ko)
- Defendant Philippine Advertising
Corporation (hereinafter
defendant) had payments coming
to them from the War Damage
Commission; plaintiff Pan Pacific
Company Phil (hereinafter
plaintiff), through its then VP
Wilfred Hurst, managed to
convince the defendant company,
through its president John Mears,
to re-invest its war payments to
bowling alleys. Plaintiff then was
the distributor of Brunswick-BalkeCollender Company of the US,
which is a manufacturer of bowling
alleys.
-

The agreement between plaintiff

and defendant is encapsulated in a
letter dated Aug. 28, 1950, which
was addressed to the latter from
the former. Pertinent parts are:
o Firm quotation1 of
P85,948.42 to cover the cost
of installing 12 Brunswick
Bowling Alleys; quotation

1 Firm quotation = quoted price and conditions

which remain unchanged for a specified expiration
date. (businessdictionary.com)

includes the cost of alleys,

additional equipment and
installation cost but does not
include freight charges for
accessories that will have to
be ordered from the US (will
be charged to defendant
upon arrival of the
shipment).

1. The sum representing the

aggregate amount of inland
freight, ocean freight,
arrastre and sales tax should
be deemed included in the
price agreed upon,
considering that none of the
goods supplied by plaintiff
are accessories;
2 8 of the bowling alleys
were second-hand,
contrary to the contract;

o Price payable at 50% upon

signing of the agreement,
and the rest at installments
for a period of six months.

3 The bowling alleys were

of lower quality than
agreed upon;

o One year guaranty against

the materials and faulty
workmanship.
-

Defendant ordered for 6 more

Brunswick bowling alleys, and said
agreement for this was embodied
in another letter dated October 2,
1950.

Outside the downpayment

required, however, defendant had
absolutely refused to pay the
subsequent installments,
prompting the plaintiff to file a
case to the CFI.
o Initially, defendant asked for
deferment of payments until
the completion of the
installments (which the
plaintiff acceded to in good
faith). Come completion,
however, defendant refused
to pay, thus the court action.
o CFI Manila found for the
plaintiff. Hence, this petition.

Issues/Held:
- Defendants contention:

4 The installations were

defective.
-

Accessories according to plaintiff:

includes all the parts thereof (the
alleys itself, the pinballs, the pins,
etc.) Hence (I think) the logic of
the defendant that since theyre
necessary parts of the bowling
alley, they cant be considered as
accessories.
o SC: affirmed the
interpretation of the plaintiff.
The term bowling alley does
not apply except to one
already installed. Prior
thereto, the materials
necessary to install and
operate a bowling alley do
not constitute an alley.
They are merely parts of,
and in this sense,
accessories to the
principal, namely, the
bowling alley once said
parts or accessories have
been duly assembled. If
none of these goods were
accessories then the

proviso under consideration

would be meaningless.
-

SC also did not give credence to

the contention of the defendant
that 8 alleys were second-hand as
defendant never made an official
or written complaint to plaintiff.

there was poor maintenance on

the part of the defendants.
-

o Under A. 2232 of the CC: In

contracts and quasicontracts, the court may
award exemplary damages if
the defendant acted in a
wanton, fraudulent, reckless,
oppressive, or malevolent
manner.

o Also, there was positive

declaration from the export
manager J.E. Whitaker that
said bowling alleys were new
but were unfortunately not
properly maintained by
defendant.
-

o The records of the case

(defendants absolute refusal
to pay the installments +
abuse of plaintiffs good
faith) clearly show that the
defendants, in utter
disregard of the rights of
plaintiff, had refused
deliberately and wantonly to
pay plaintiff what is justly
due.

Defendant maintains that what it

ordered was the centennial type of
bowling alleys but what was
installed was the liberty type,
which was inferior.
o There was no mention in
their agreement as to what
kind of bowling alley would
be installed.
o

o The business of defendant

since its opening in 1951 had
brought it lucrative income,
and yet it still refused to pay
plaintiff.

Also, the aforementioned

J.E. Whitaker mentioned that
there was technically no
difference between the
centennial type and the
liberty type.

Plaintiff managed to rebut what

the defendants termed as the
defective installation made by the
former. Sufficient evidence show
that the installments were made in
accordance with the standard
requirements, and that what
defendant experienced as
defective was just normal for all
new bowling installations and also
was also minor in character. Also,

SC: defendant liable for

exemplary damages

o Not only that, but the

defendants actuations with
plaintiff was characterized as
unsavory and that the letters
sent to plaintiff were replete
with discourteous remarks.
-

Actual damages and attorneys

fees also awarded.

Judgment Affirmed.

PEOPLE V DOMINGO
Lesson: Exemplary or Correctional
Damges
FACTS
AAA 10 years old was sleeping on
the sofa of their living room when
she was awakened by Geronimo
Domingo, the son of AAAs
housemaid. He told her to transfer
to the bed and she did
She was asked to remove his
shorts, she did. And he inserted his
penis into her private organ
He threatened her not to tell
anybody and the rape incident
repeated again sometime 1998
BBB, AAAs mother noticed her
daughter was crying and noticed
that there was a stain on her
panty. Brought her to the medicolegal office for examination
AAA admitted she was raped by
appellant
He was charged with two counts of
rape
Appelant denied charges and said
that AAA was inlove w him.
Evidence their relationship with
letters
Appellants mother testified that
the rape could not have happened
because she was with her son 24
hours a day
RTC convicted him of rape.
Awarded 50,000php as indemnity
and another 50,000 for moral
damages and the cost of their suit
Trial court acquitted him for the
first count of rape because of
defect in the information, and the
second count, the court did not
give credence to the sweetheart
theory and even if they did, he
would still be charged with
statutory rape

CA affirmed. Hence this appeal.

ISSUE/S && RATIO

WON there was a defect in the
information charging appellant with
the second count of rape- NO

Appellant argues that he was

wrongly charged for the
information failed to state the
precise date and time of the
incident
The information is valid for as long
as it is able to state the elemnts of
the offense and the acts or
omissions . precise date and time
need not be alleged unless it is an
essential element of the offense.
IN RAPE IT IS NOT
The precise time when the rape
takes place has no substantial
bearing. As such, the time and
date need not be stated
The lower courts correctly
sentenced him with the
punishment of reclusion perpetua
for statutory rape
50k indemnity
50k for moral
25k for exemplary (the court
overturned the decision in people
v malones. In this case, they did
not award exemplary damages
because statutory rape was not
something new)

Mercury Drug v Baking

Sebastian Baking went to Dr.
Cesar Sys clinic for a medical
check-up. The next day, after
undergoing several tests, Dr. Sy
found that Bakings blood sugar
and triglyceride levels were above

normal, so he gave him 2 medical

prescriptionsDiamicron (blood
sugar) and Benalize (triglyceride).
Baking went to Mercury Drug
Alabang branch to buy the
medicines. However, the saleslady
misread the prescription as
Dormicum, a potent sleeping
tablet, so that was what was sold
to Baking. Unaware that he was
given the wrong medicine, Baking
took one Dormicum pill for three
consecutive days.

On the 3rd day of taking the

medicine, Baking figured in a
vehicular accident, as his car
collided with Josie Peraltas car.
Baking fell asleep while driving,
and he could not remember
anything about the collision nor
felt its impact.

Suspecting that the tablet he took

may have a bearing on his state at
the time of the collision, he
returned to Dr. Sy, who was
shocked to find that what was sold
to Baking was Dormicum.

Baking filed a complaint for

damages against Mercury Drug.
RTC rendered its decision in favor
of Baking. CA affirmed RTC.

Court found Mercury Drugs employee

negligent. The care required must be
commensurate with the danger involved.
DAMAGES:
Moral damages may be awarded
whenever the defendants wrongful
act or omission is the proximate
cause of the plaintiffs physical
suffering, mental anguish, fright,
serious anxiety, besmirched
reputation, wounded feelings,

moral shock, social humiliation,

and similar injury in the cases
specified or analogous to those
provided in Article 2219 of the
Civil Code.

Respondent has adequately

established the factual basis for
the award of moral damages -- he
suffered mental anguish and
anxiety as a result of the accident
caused by the negligence of
petitioners employee.

There is no hard-and-fast rule in

determining what would be a
fair and reasonable amount of
moral damages, since each case
must be governed by its own
peculiar facts. However, it must
be commensurate to the loss or
injury suffered. Taking into
consideration the attending
circumstances here, we are
convinced that the amount
awarded by the trial court is
exorbitant.

Moral damages reduced. From

250k to 50k.

Exemplary: 25k.

PETITIONER: Philippine Airlines, Inc.

RESPONDENT: Vicente Lopez, Jr.
SUMMARY: Lopez's PAL business class
return flight to Manila was downgraded
to
economy
class
without
any
explanation from PAL. Lopez sued PAL
and won in the RTC, CA and SC. The SC
says that the moral damages awarded to
Lopez are not excessive, contrary to
PAL's
petition.
DOCTRINE: In the awarding of moral

damages, there is no hardandfast rule in

determining what would be a fair and
reasonable amount of moral damages,
since each case must be governed by its
own peculiar facts. However, it must be
commensurate to the loss or injury
suffered.

FACTS:
1) Respondent Lopez purchased a MNLHK-MNL PAL business class ticket and
PAL confirmed that his return flight to
Manila was confirmed by PAL's booking
personnel.
2) Lopez was surprised to learn that
during his check-in for the return flight
to Manila, his status as a business class
passenger was downgraded to econnomy
class. PAL did not offer any valid
explanation for the change when he
protested
this.
3) Although Lopez was aggrieved, he
took the flight as an economy class
passenger because he had important
appointments
in
Manila.
4) PAL denied any liability and claimed
that the damage suffered by Lopez was
due to his own fault because:
The terms and conditions of the
contract of carriage required
Lopez to reconfirm his booking
He didn't protest the economy
seat given to him when the change
was read to him by the person
who
received
his
phone
reconfirmation,
Lopez didn't complain during the
check-in, and only did so after the
flight
was
over.
5) RTC ruled in favor of Lopez, and held
PAL liable ofr damages. PAL's employees
were negligent in Lopez's booking and
travel accommodations through the ff.
acts:
(a) The admission of PALs booking

personnel that she affixed the validation

sticker on Lopezs ticket on the basis of
the passengers name list showing that
his reservation was for an economy class
seat without examining or checking the
latters ticket during his booking
validation; and
(b) The admission of PALs checkin
clerk at the Bangkok Airport that when
Lopez checkedin for his return trip to
Manila, she similarly gave Lopez an
economy boarding pass based on the
information found in the coupon of the
ticket and the passenger manifest
without checking the latters ticket.
6) The RTC said that had PALs
employees examined his ticket in those
instances, the error or oversight which
might have resulted from the phonedin
booking could have been easily rectified.
7) RTC cited Arts. 1733 and 2220 of the
Civil Code and the case of Ortigas v.
Lufthansa German Airlines. The RTC
held that the inattention and lack of care
on the part of the common carrier, in
this case PAL, resulting in the failure of
the passenger to be accommodated in
the class contracted for amounts to bad
faith or fraud, making it liable for
damages. The trial court likewise
awarded attorneys fees in favor of Lopez
after noting that Lopez was forced to
litigate in order to assert his rights.

RTC awarded Lopez P100k for

moral damages, P20k for
exemplary damages and P30k for
attorney's fees and costs of the
suit. All amounts awarded are to
bear legal interest from the date of
the decision.

8) The CA affirmed the RTC. PAL moved

for reconsideration but was denied.
Hence this case.
ISSUE/S

RATIO:

[RELEVANT TO OUR LESSON]

ISSUE: WON the amount for moral
damages was excessive? NO.
-The SC does not agree with PAL that the
amount of moral damages awarded by
the trial court, as affirmed by the Court
of Appeals, was excessive.
- In Mercury Drug Corporation v.
Baking, SC stated that there is no hardandfast rule in determining what would
be a fair and reasonable amount of
moral damages, since each case must be
governed by its own peculiar facts.
-However, it must be commensurate to
the loss or injury suffered. Taking into
account the attending circumstances
here, SC believes that the amount of
P100,000 awarded as moral damages is
appropriate.
RULING: CA ruling affirmed. Costs
against PAL.
Japan Airlines v Simangan
- 91, Jesus Simangan decided to
donate a kidney to his ailing
cousin, Loreto, in UCLA, California
USA. Upon UCLAs request, he
delivered tissue samples and was
confirmed to be a match.
-

In order to go to the US, UCLA

wrote a letter to the American
Consulate in Manila to facilitate
his emergency US Visa, which
was granted in due time.

Jesus bought a round trip plane

ticket from JAL for $1,485, and
was scheduled to leave on July 29
92. It was to pass through Narita,
Japan, before ultimately landing in
LA.

While inside the plane, JALs crew

suspected him of having a falsified
travel document and thought the
trip was a pretence for him to
merely stay and work in Japan. He
was asked to show his documents,

and shortly thereafter haughtily

ordered to leave the plane, despite
his protests.
-

Jesus went to JALs ground office

and waited for 3 hours. In the
meanwhile, the plane took off.
Afterwards, he was informed that
his travel documents were in
order, was refunded his plane
ticket less $500 (deducted by JAL),
and his visa was cancelled shortly
thereafter.

Jesus filed an action for damages

against JAL in RTC Valenzuela,
claiming terrible embarrassment &
mental anguish in not being able
to donate his kidney. He prayed for
P3m moral P1.5m exemplary and
P500k attys fees.

JAL denied the allegations, arguing

there was a need to authenticate
his travel documents since no one
had seen a parole visa before. JAL
alleged that Jesus agreed to be
rebooked on the next day, July 30
92. JAL filed a counterclaim for
damages as well as for costs.

RTC ruled for Jesus, ordering P1m

moral P500k exemplary and P250k
attys fees, ruling that JAL violated
its contract of carriage, which
caused genuine damages to Jesus.

CA affirmed RTC, agreeing that the

ticket bought by Jesus showed a
perfected contract between them.
It also held that any attempt to
rebook the next day was too late
and did not relieve liability, since
the damage was done (and it was
also just raised on appeal). The CA
lowered moral to P500k and
exemplary to P250k, and deleted
attys fees, since no other proof of
damage was presented, & to avoid
unjust enrichment. Hence appeal.

Issues:
1 Did JAL breach their contract of
carriage? YES.
a First off, SC not a trier of
facts, no exception to that
rule shown (conflicting
rulings, misapprehension of
facts, etc.), so it upholds the
findings of the CA/RTC.
b Breach of contract of
carriage occurred. Jesus was
not allowed to fly, hence JAL
failed to comply with their
obligation. Despite the flight
the day after, damage
already done.
i Also, under A1755,
common carriers are
bound to carry
passengers as far as
human care and
foresight can provide,
using the utmost
diligence of very
cautious persons with
a due regard for all
circumstances. JALs
verification defence
is then untenable.
2 Is JAL liable for moral
damages/exemplary
damages/attys fees? YES.
a Moral damages: P500k
i Generally, breach of
contract is not
recoverable for moral
damages, it not being
one of the items
enumerated under
A2219. However,
damages are
recoverable for breach
of contract in 2 cases:
1 A1764 when

breach of
contract of
carriage results
in death of the
passenger
2 A2220 when
breach is
attended by
fraud or bad
faith.
ii Acts of JAL amount to
bad faith haughtily
ejected, shouted at by
crew, and made to wait
for many hours only to
be told he has valid
travel documents.
b Exemplary damages: P100k
i Recoverable when
ones acts constitute
wanton, oppressive,
and malevolent acts
against others, as it
seeks to correct this
behaviour for the
common good. Same
acts as above count
here.
c Attys Fees: P200k
i Two concepts of attys
fees, ordinary &
extraordinary:
1 Ordinary:
reasonable
compensation
paid by a client
to his lawyer for
services
rendered.
2 Extraordinary: an
indemnity for
damages
ordered by the
court to be paid

by the losing
party in
litigation,
payable to the
client unless he
agreed that the
award shall
pertain to the
lawyer as
additional
compensation.
ii It was thus erroneous
for the CA to delete
attys fees on the basis
of lack of evidence
showing the cost of the
services of counsel
the amount is
discretionary upon
the court as long as
it passes the test of
reasonableness.
3 Is JAL liable to receive

counterclaim? NO.
a The filing of a case was a
valid exercise of Jesus right
to litigate. When damages
accrue from lawful exercises
of a right, it is damnum
absque injuria, and gives rise
to no injury.
b Besides, the basis for JALs
damages, that Jesus caused
the publication of his
complaint, is not valid. This
is merely an exercise of his
constitutional right to free
expression, especially since
the case is imbued with
public interest, JAL being a
common carrier. Hence,
privileged communication
cannot apply.
Held: CA affirmed w modification, P800k
@ 6% from RTC decision (Sept 21, 2000)
and @ 12% from SC decision.