128 ) 1. On March 17, 1991, in Bgy.

Buensoceso,
Gumaca, Quezon, plaintiff Vivian Lee Tan and her
Republic of the Philippines husband Silvino Tan, while on board a motorcycle
SUPREME COURT with [P]late No. DA-5480 driven by the latter,
Manila and a Metro Bus with [P]late No. NXR-262 driven
THIRD DIVISION by Margarito Avila, were involved in an accident;

G.R. No. 166869 February 16, 2010 2. As a result of the accident, Silvino Tan died on
the spot while plaintiff Vivian Lee Tan suffered
PHILIPPINE HAWK CORPORATION, Petitioner, physical injuries which necessitated medical
vs. attention and hospitalization;
VIVIAN TAN LEE, Respondent.
3. The deceased Silvino Tan is survived by his
DECISION wife, plaintiff Vivian Lee Tan and four children,
three of whom are now residents of the United
PERALTA, J.:
States; and
This is a Petition for Review on Certiorari 1 of the
4. Defendant Margarito Avila is an employee of
Decision of the Court of Appeals in CA-G.R. CV
defendant Philippine Hawk.6
No. 70860, promulgated on August 17, 2004,
affirming with modification the Decision of the The parties also agreed on the following issues:
Regional Trial Court (RTC) of Quezon City, Branch
102, dated March 16, 2001, in Civil Case No. Q- 1. Whether or not the proximate cause of the
91-9191, ordering petitioner Philippine Hawk accident causing physical injuries upon the
Corporation and Margarito Avila to jointly and plaintiff Vivian Lee Tan and resulting in the death
severally pay respondent Vivian Tan Lee of the latters husband was the recklessness and
damages as a result of a vehicular accident. negligence of Margarito Avila or the deceased
Silvino Tan; and
The facts are as follows:
2. Whether or not defendant Philippine Hawk
On March 15, 2005, respondent Vivian Tan Lee Transport Corporation exercised the diligence of
filed before the RTC of Quezon City a a good father of the family in the selection and
Complaint2 against petitioner Philippine Hawk supervision of its driver Margarito Avila.7
Corporation and defendant Margarito Avila for
damages based on quasi-delict, arising from a Respondent testified that on March 17, 1991, she
vehicular accident that occurred on March 17, was riding on their motorcycle in tandem with
1991 in Barangay Buensoceso, Gumaca, Quezon. her husband, who was on the wheel, at a place
The accident resulted in the death of after a Caltex gasoline station in Barangay
respondents husband, Silvino Tan, and caused Buensoceso, Gumaca, Quezon on the way to
respondent physical injuries. Lopez, Quezon. They came from the Pasumbal
Machine Shop, where they inquired about the
On June 18, 1992, respondent filed an Amended repair of their tanker. They were on a stop
Complaint,3 in her own behalf and in behalf of position at the side of the highway; and when
her children, in the civil case for damages they were about to make a turn, she saw a bus
against petitioner. Respondent sought the running at fast speed coming toward them, and
payment of indemnity for the death of Silvino then the bus hit a jeep parked on the roadside,
Tan, moral and exemplary damages, funeral and and their motorcycle as well. She lost
interment expenses, medical and hospitalization consciousness and was brought to the hospital in
expenses, the cost of the motorcycles repair, Gumaca, Quezon, where she was confined for a
attorneys fees, and other just and equitable week. She was later transferred to St. Lukes
reliefs. Hospital in Quezon City, Manila. She suffered a
fracture on her left chest, her left arm became
The accident involved a motorcycle, a passenger
swollen, she felt pain in her bones, and had high
jeep, and a bus with Body No. 119. The bus was
blood pressure.8
owned by petitioner Philippine Hawk
Corporation, and was then being driven by Respondents husband died due to the vehicular
Margarito Avila. accident. The immediate cause of his death was
massive cerebral hemorrhage.9
In its Answer,4 petitioner denied liability for the
vehicular accident, alleging that the immediate Respondent further testified that her husband
and proximate cause of the accident was the was leasing10 and operating a Caltex gasoline
recklessness or lack of caution of Silvino Tan. station in Gumaca, Quezon that yielded one
Petitioner asserted that it exercised the diligence million pesos a year in revenue. They also had a
of a good father of the family in the selection copra business, which gave them an income
and supervision of its employees, including of P3,000.00 a month or P36,000.00 a year.11
Margarito Avila.
Ernest Ovial, the driver of the passenger jeep
On March 25, 1993, the trial court issued a Pre- involved in the accident, testified that in the
trial Order5 stating that the parties manifested afternoon of March 17, 1991, his jeep was
that there was no possibility of amicable parked on the left side of the highway near the
settlement between them. However, they agreed Pasumbal Machine Shop. He did not notice the
to stipulate on the following facts: motorcycle before the accident. But he saw the
bus dragging the motorcycle along the highway,
and then the bus bumped his jeep and sped court agreed with the bus driver that the
away.12 motorcycle was moving ahead of the bus from
the left side of the road toward the right side of
For the defense, Margarito Avila, the driver of the road, but disagreed that the motorcycle
petitioners bus, testified that on March 17, crossed the path of the bus while the bus was
1999, at about 4:30 p.m., he was driving his bus running on the right side of the road.19
at 60 kilometers per hour on the Maharlika
Highway. When they were at Barangay The trial court held that if the bus were on the
Buensoceso, Gumaca, Quezon, a motorcycle ran right side of the highway, and Margarito Avila
from his left side of the highway, and as the bus turned his bus to the right in an attempt to avoid
came near, the motorcycle crossed the path of hitting the motorcyle, then the bus would not
the bus, and so he turned the bus to the right. have hit the passenger jeep, which was then
He heard a loud banging sound. From his side parked on the left side of the road. The fact that
mirror, he saw that the motorcycle turned turtle the bus also hit the passenger jeep showed that
("bumaliktad"). He did not stop to help out of the bus must have been running from the right
fear for his life, but drove on and surrendered to lane to the left lane of the highway, which
the police. He denied that he bumped the caused the collision with the motorcycle and the
motorcycle.13 passenger jeep parked on the left side of the
road. The trial court stated that since Avila saw
Avila further testified that he had previously the motorcycle before the collision, he should
been involved in sideswiping incidents, but he have stepped on the brakes and slowed down,
forgot how many times.14 but he just maintained his speed and veered to
Rodolfo Ilagan, the bus conductor, testified that the left. The trial court found Margarito Avila
20

the motorcycle bumped the left side of the bus guilty of simple negligence.
that was running at 40 kilometers per hour. 15 The trial court held petitioner bus company liable
Domingo S. Sisperes, operations officer of for failing to exercise the diligence of a good
petitioner, testified that, like their other drivers, father of the family in the selection and
Avila was subjected to and passed the following supervision of Avila, having failed to sufficiently
requirements: inculcate in him discipline and correct behavior
on the road.21
(1) Submission of NBI clearance;
On appeal, the Court of Appeals affirmed the
(2) Certification from his previous employer that decision of the trial court with modification in the
he had no bad record; award of damages. The dispositive portion of the
decision reads:
(3) Physical examination to determine his fitness
to drive; WHEREFORE, foregoing premises considered, the
appeal is DENIED. The assailed decision dated
(4) Test of his driving ability, particularly his
March 16, 2001 is hereby AFFIRMED with
defensive skill; and
MODIFICATION. Appellants Philippine Hawk and
(5) Review of his driving skill every six months. 16 Avila are hereby ordered to pay jointly and
severally appellee the following amount:
Efren Delantar, a Barangay Kagawad in (a) P168,019.55 as actual damages;
Buensoceso, Gumaca, Quezon, testified that the (b) P10,000.00 as temperate damages;
bus was running on the highway on a straight (c) P100,000.00 as moral damages;
path when a motorcycle, with a woman behind (d) P590,000.00 as unearned income; and
its driver, suddenly emerged from the left side of (e) P50,000.00 as civil indemnity.22
the road from a machine shop. The motorcycle
crossed the highway in a zigzag manner and Petitioner filed this petition, raising the following
bumped the side of the bus.17 issues:

In its Decision dated March 16, 2001, the trial 1) The Court of Appeals committed grave abuse
court rendered judgment against petitioner and of discretion amounting to lack of jurisdiction in
defendant Margarito Avila, the dispositive portion passing upon an issue, which had not been
of which reads: raised on appeal, and which had, therefore,
attained finality, in total disregard of the doctrine
ACCORDINGLY, MARGARITO AVILA is adjudged laid down by this Court in Abubakar v. Abubakar,
guilty of simple negligence, and judgment is G.R. No. 134622, October 22, 1999.
hereby rendered in favor of the plaintiff Vivian
Lee Tan and h[er] husbands heirs ordering the 2) The Court of Appeals committed reversible
defendants Philippine Hawk Corporation and error in its finding that the petitioners bus driver
Margarito Avila to pay them jointly and solidarily saw the motorcycle of private respondent
the sum of P745,575.00 representing loss of executing a U-turn on the highway "about fifteen
earnings and actual damages plus P50,000.00 as (15) meters away" and thereafter held that the
moral damages.18 Doctrine of Last Clear was applicable to the
instant case. This was a palpable error for the
The trial court found that before the collision, the simple reason that the aforesaid distance was
motorcycle was on the left side of the road, just the distance of the witness to the bus and not
as the passenger jeep was. Prior to the accident, the distance of the bus to the respondents
the motorcycle was in a running position moving motorcycle, as clearly borne out by the records.
toward the right side of the highway. The trial
3) The Court of Appeals committed reversible A review of the records showed that it was
error in awarding damages in total disregard of petitioners witness, Efren Delantar Ong, who
the established doctrine laid down in Danao v. was about 15 meters away from the bus when
Court of Appeals, 154 SCRA 447 and Viron he saw the vehicular accident.26 Nevertheless,
Transportation Co., Inc. v. Delos Santos, G.R. No. this fact does not affect the finding of the trial
138296, November 22, 2000.23 court that petitioners bus driver, Margarito Avila,
was guilty of simple negligence as affirmed by
In short, the issues raised by petitioner are: (1) the appellate court. Foreseeability is the
whether or not negligence may be attributed to fundamental test of negligence.27 To be
petitioners driver, and whether negligence on negligent, a defendant must have acted or failed
his part was the proximate cause of the accident, to act in such a way that an ordinary reasonable
resulting in the death of Silvino Tan and causing man would have realized that certain interests of
physical injuries to respondent; (2) whether or certain persons were unreasonably subjected to
not petitioner is liable to respondent for a general but definite class of risks.28
damages; and (3) whether or not the damages
awarded by respondent Court of Appeals are In this case, the bus driver, who was driving on
proper. the right side of the road, already saw the
motorcycle on the left side of the road before the
Petitioner seeks a review of the factual findings collision. However, he did not take the necessary
of the trial court, which were sustained by the precaution to slow down, but drove on and
Court of Appeals, that petitioners driver was bumped the motorcycle, and also the passenger
negligent in driving the bus, which caused jeep parked on the left side of the road, showing
physical injuries to respondent and the death of that the bus was negligent in veering to the left
respondents husband. lane, causing it to hit the motorcycle and the
The rule is settled that the findings of the trial passenger jeep.
court, especially when affirmed by the Court of Whenever an employees negligence causes
Appeals, are conclusive on this Court when damage or injury to another, there instantly
supported by the evidence on record. 24 The arises a presumption that the employer failed to
Court has carefully reviewed the records of this exercise the due diligence of a good father of the
case, and found no cogent reason to disturb the family in the selection or supervision of its
findings of the trial court, thus: employees.29 To avoid liability for a quasi-delict
The Court agree[s] with the bus driver Margarito committed by his employee, an employer must
that the motorcycle was moving ahead of the overcome the presumption by presenting
bus towards the right side from the left side of convincing proof that he exercised the care and
the road, but disagrees with him that it crossed diligence of a good father of a family in the
the path of the bus while the bus was running on selection and supervision of his employee.30
the right side of the highway. The Court upholds the finding of the trial court
If the bus were on the right side of the highway and the Court of Appeals that petitioner is liable
and Margarito turned his bus to the right in an to respondent, since it failed to exercise the
attempt to avoid hitting it, then the bus would diligence of a good father of the family in the
not have hit the passenger jeep vehicle which selection and supervision of its bus driver,
was then parked on the left side of the road. The Margarito Avila, for having failed to sufficiently
fact that the bus hit the jeep too, shows that the inculcate in him discipline and correct behavior
bus must have been running to the left lane of on the road. Indeed, petitioners tests were
the highway from right to the left, that the concentrated on the ability to drive and physical
collision between it and the parked jeep and the fitness to do so. It also did not know that Avila
moving rightways cycle became inevitable. had been previously involved in sideswiping
Besides, Margarito said he saw the motorcycle incidents.
before the collision ahead of the bus; that being As regards the issue on the damages awarded,
so, an extra-cautious public utility driver shouldpetitioner contends that it was the only one that
have stepped on his brakes and slowed down. appealed the decision of the trial court with
Here, the bus never slowed down, it simply respect to the award of actual and moral
maintained its highway speed and veered to the damages; hence, the Court of Appeals erred in
left. This is negligence indeed.25 awarding other kinds of damages in favor of
Petitioner contends that the Court of Appeals respondent, who did not appeal from the trial
was mistaken in stating that the bus driver saw courts decision.
respondents motorcycle "about 15 meters Petitioners contention is unmeritorious.
away" before the collision, because the said
distance, as testified to by its witness Efren Section 8, Rule 51 of the 1997 Rules of Civil
Delantar Ong, was Ongs distance from the bus, Procedure provides:
and not the distance of the bus from the
motorcycle. Petitioner asserts that this mistaken SEC. 8. Questions that may be decided. -- No
assumption of the Court of Appeals made it error which does not affect the jurisdiction over
conclude that the bus driver, Margarito Avila, the subject matter or the validity of the
had the last clear chance to avoid the accident, judgment appealed from or the proceedings
which was the basis for the conclusion that Avila therein will be considered unless stated in the
was guilty of simple negligence. assignment of errors, or closely related to or
dependent on an assigned error and properly considered by the appellate court
argued in the brief, save as the court pass upon notwithstanding the failure to assign it as error
plain errors and clerical errors. (Ortigas, Jr. vs. Lufthansa German Airlines, L-
28773, June 30, 1975; Soco vs. Militante, et al.,
Philippine National Bank v. Rabat31 cited the G.R. No. 58961, June 28, 1983).
book32 of Justice Florenz D. Regalado to explain
the section above, thus: It may also be observed that under Sec. 8 of this
Rule, the appellate court is authorized to
In his book, Mr. Justice Florenz D. Regalado consider a plain error, although it was not
commented on this section, thus: specifically assigned by the appellant (Dilag vs.
1. Sec. 8, which is an amendment of the former Heirs of Resurreccion, 76 Phil. 649), otherwise it
Sec. 7 of this Rule, now includes some would be sacrificing substance for
technicalities.33
Life
Expecta Reasonabl In this case for damages based on quasi-delict,
Net the trial court awarded respondent the sum
ncy Gross e and
Earn of P745,575.00, representing loss of earning
[2/3 Annual Necessary
ing = x capacity (P590,000.00) and actual damages
(80-age Income Expenses
Cap (P155,575.00 for funeral expenses),
at the (GAI) (80% of
acity plus P50,000.00 as moral damages. On appeal to
time of GAI)
death)] the Court of Appeals, petitioner assigned as error
the award of damages by the trial court on the
ground that it was based merely on suppositions
X = [2/3 x P1,000, - P800,000.
and surmises, not the admissions made by
(80- 000.00 00
respondent during the trial.
65)]
In its Decision, the Court of Appeals sustained
X = 2/3 (15) x P200,0 - P100,000. the award by the trial court for loss of earning
00.00 00(Living capacity of the deceased Silvino Tan, moral
Expenses) damages for his death, and actual damages,
although the amount of the latter award was
X = 30/3 x P100,0 modified.
00.00
The indemnity for loss of earning capacity of the
deceased is provided for by Article 2206 of the
X = 10 x P100,0 Civil Code.34Compensation of this nature is
00.00 awarded not for loss of earnings, but for loss of
capacity to earn money.35
X = P1,000,
000.00 As a rule, documentary evidence should be
presented to substantiate the claim for damages
substantial changes in the rules on assignment for loss of earning capacity. By way of
36

of errors. The basic procedural rule is that only exception, damages for loss of earning capacity
errors claimed and assigned by a party will be may be awarded despite the absence of
considered by the court, except errors affecting documentary evidence when: (1) the deceased is
its jurisdiction over the subject matter. To this self-employed and earning less than the
exception has now been added errors affecting minimum wage under current labor laws, in
the validity of the judgment appealed from or which case, judicial notice may be taken of the
the proceedings therein. fact that in the deceased's line of work no
documentary evidence is available; or (2) the
Also, even if the error complained of by a party is deceased is employed as a daily wage worker
not expressly stated in his assignment of errors earning less than the minimum wage under
but the same is closely related to or dependent current labor laws.37
on an assigned error and properly argued in his
brief, such error may now be considered by the In this case, the records show that respondents
court. These changes are of jurisprudential husband was leasing and operating a Caltex
origin. gasoline station in Gumaca, Quezon. Respondent
testified that her husband earned an annual
2. The procedure in the Supreme Court being income of one million pesos. Respondent
generally the same as that in the Court of presented in evidence a Certificate of Creditable
Appeals, unless otherwise indicated (see Secs. 2 Income Tax Withheld at Source for the Year
and 4, Rule 56), it has been held that the latter is 1990,38which showed that respondents husband
clothed with ample authority to review matters, earned a gross income of P950,988.43 in 1990. It
even if they are not assigned as errors on is reasonable to use the Certificate and
appeal, if it finds that their consideration is respondents testimony as bases for fixing the
necessary in arriving at a just decision of the gross annual income of the deceased at one
case. Also, an unassigned error closely related to million pesos before respondents husband died
an error properly assigned (PCIB vs. CA, et al., L- on March 17, 1999. However, no documentary
34931, Mar. 18, 1988), or upon which the evidence was presented regarding the income
determination of the question raised by error derived from their copra business; hence, the
properly assigned is dependent, will be
testimony of respondent as regards such income court in the amount of P10,000.00 was
cannot be considered. reasonable under the circumstances.44

In the computation of loss of earning capacity, The Court of Appeals also correctly awarded
only net earnings, not gross earnings, are to be respondent moral damages for the physical
considered; that is, the total of the earnings less injuries she sustained due to the vehicular
expenses necessary for the creation of such accident. Under Art. 2219 of the Civil
earnings or income, less living and other Code,45 moral damages may be recovered in
incidental expenses.39 In the absence of quasi-delicts causing physical injuries. However,
documentary evidence, it is reasonable to peg the award of P50,000.00 should be reduced
necessary expenses for the lease and operation to P30,000.00 in accordance with prevailing
of the gasoline station at 80 percent of the gross jurisprudence.46
income, and peg living expenses at 50 percent of
the net income (gross income less necessary Further, the Court of Appeals correctly awarded
expenses). respondent civil indemnity for the death of her
husband, which has been fixed by current
In this case, the computation for loss of earning jurisprudence at P50,000.00.47 The award is
capacity is as follows: proper under Art. 2206 of the Civil Code.48

The Court of Appeals also awarded actual In fine, the Court of Appeals correctly awarded
damages for the expenses incurred in connection civil indemnity for the death of respondents
with the death, wake, and interment of husband, temperate damages, and moral
respondents husband in the amount damages for the physical injuries sustained by
of P154,575.30, and the medical expenses of respondent in addition to the damages granted
respondent in the amount of P168,019.55. by the trial court to respondent. The trial court
overlooked awarding the additional damages,
Actual damages must be substantiated by which were prayed for by respondent in her
documentary evidence, such as receipts, in order Amended Complaint. The appellate court is
to prove expenses incurred as a result of the clothed with ample authority to review matters,
death of the victim40 or the physical injuries even if they are not assigned as errors in the
sustained by the victim. A review of the valid appeal, if it finds that their consideration is
receipts submitted in evidence showed that the necessary in arriving at a just decision of the
funeral and related expenses amounted only case.49
to P114,948.60, while the medical expenses of
respondent amounted only to P12,244.25, WHEREFORE, the petition is DENIED. The
yielding a total of P127,192.85 in actual Decision of the Court of Appeals dated August
damages. 17, 2004 in CA-G.R. CV No. 70860 is hereby
AFFIRMED with MODIFICATION. Petitioner
Moreover, the Court of Appeals correctly Philippine Hawk Corporation and Margarito Avila
sustained the award of moral damages in the are hereby ordered to pay jointly and severally
amount of P50,000.00 for the death of respondent Vivian Lee Tan: (a) civil indemnity in
respondents husband. Moral damages are not the amount of Fifty Thousand Pesos
intended to enrich a plaintiff at the expense of (P50,000.00); (b) actual damages in the amount
the defendant.41 They are awarded to allow the of One Hundred Twenty-Seven Thousand One
plaintiff to obtain means, diversions or Hundred Ninety-Two Pesos and Eighty-Five
amusements that will serve to alleviate the Centavos ( P127,192.85); (c) moral damages in
moral suffering he/she has undergone due to the the amount of Eighty Thousand Pesos
defendants culpable action and must, perforce, (P80,000.00); (d) indemnity for loss of earning
be proportional to the suffering inflicted.42 capacity in the amount of One Million Pesos
In addition, the Court of Appeals correctly (P1,000,000.00); and (e) temperate damages in
awarded temperate damages in the amount the amount of Ten Thousand Pesos (P10,000.00).
of P10,000.00 for the damage caused on Costs against petitioner.
respondents motorcycle. Under Art. 2224 of the
Civil Code, temperate damages "may be SO ORDERED.
recovered when the court finds that some
pecuniary loss has been suffered but its amount
cannot, from the nature of the case, be proved
with certainty." The cost of the repair of the
motorcycle was prayed for by respondent in her
Complaint. However, the evidence presented
was merely a job estimate43 of the cost of the
motorcycles repair amounting to P17, 829.00.
The Court of Appeals aptly held that there was
no doubt that the damage caused on the
motorcycle was due to the negligence of
petitioners driver. In the absence of competent
proof of the actual damage caused on the
motorcycle or the actual cost of its repair, the
award of temperate damages by the appellate
147)

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 99301 March 13, 1997

VICTOR KIERULF, LUCILA H. KIERULF and

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

G.R. No. 99343 March 13, 1997

PANTRANCO NORTH EXPRESS,

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

PANGANIBAN, J.:

How much moral, exemplary and actual

damages are victims of vehicular accidents
entitled to?

In G.R. No. 99301, the victims of the vehicular

mishap pray for an increase in the award of
damages, over and above those granted by the
appellate court. In this case, the husband of the
victim of the vehicular accident claims
compensation/damages for the loss of his right
to marital consortium which, according to him,
has been diminished due to the disfigurement
suffered by his wife. In G.R. No. 99343, the
transport company which owned the bus that
collided with the victims' pickup truck, asks for
exoneration by invoking an alleged fortuitous
event as the cause of the mishap.

Petitioners in both cases assail the

Decision, 1 dated March 13, 1991, in CA-GR CV
No. 23361 of the Court of Appeals, Sixth
Division 2 ordering the following: 3

For reasons indicated and in the light of the law

and jurisprudence applicable to the case at bar,
the judgment of the trial court is hereby modified
as follows:
Under the first cause of action, the defendant is THOUSAND THREE HUNDRED TWENTY EIGHT
hereby ordered to pay Lucila H. Kierulf the and 19/100 (P6,328.19) PESOS; and
following:
2. To pay plaintiff Porfirio Legaspi moral damages
(1) For actual damages incurred for in the amount of TEN THOUSAND and 00/100
hospitalization, medical case (sic) and doctor's (P10,000.00) PESOS.
fees, the sum of P241,861.81;
Defendant is further ordered to pay the amount
(2) For moral damages the sum of P200,000.00; of P25,000.00 for and as attorney's fees, and to
pay costs.
(3) For exemplary damages the amount of
P100,000.00. All other claims and counterclaims are
dismissed.
Under the second cause of action, to pay Victor
Kierulf, by way of indemnification damage to the The Facts
Isuzu Carry All with plate No. UV PGS 798, the
amount of P96,825.15. The following may be culled from the undisputed
factual findings of the trial court and Respondent
Under the third cause of action, to pay Porfirio Court of Appeals:
Legaspi the following:
The initial investigation conducted by Pfc. D.O.
(1) For moral damages in the amount of Cornelio disclosed that at about 7:45 p.m. of 28
P25,000.00; February 1987, the Pantranco bus, bearing plate
number AVE-845 (TB PIL 86), was traveling along
(2) To reimburse the plaintiff the amount of Epifanio de los Santos Avenue (EDSA) from
P6,328.19 for actual damages incurred in the Congressional Avenue towards Clover Leaf,
treatment and hospitalization of the driver Balintawak. Before it reached the corner of
Porfirio Legaspi. Oliveros Drive, the driver lost control of the bus,
The defendant is further ordered to pay the causing it to swerve to the left, and then to fly
amount of P50,000.00 as fair and reasonable over the center island occupying the east-bound
attorney's fees. lane of EDSA. The front of the bus bumped the
front portion of an Isuzu pickup driven by
And to pay the costs of suit. Legaspi, which was moving along Congressional
Avenue heading towards Roosevelt Avenue. As a
Respondent Court of Appeals modified the
result, the points of contact of both vehicles
decision of the Regional Trial Court of Quezon
were damaged and physical injuries were
City, Branch 92, 4rendered on May 24, 1989 in
inflicted on Legaspi and his passenger Lucila
Civil Case No. Q-50732 for damages. The
Kierulf, both of whom were treated at the
dispositive portion of the said decision is quoted
Quezon City General Hospital. The bus also hit
below: 5
and injured a pedestrian who was then crossing
WHEREFORE, in view of the foregoing, judgment EDSA.
is hereby rendered against the defendant,
Despite the impact, said bus continued to move
ordering Pantranco to pay:
forward and its front portion rammed against a
Under the First Cause of Action Caltex gasoline station, damaging its building
and gasoline dispensing equipment.
1. In favor of plaintiff Lucia H. Kierulf actual
damages in the amount on ONE HUNDRED As a consequence of the incident, Lucila suffered
SEVENTY FOUR THOUSAND ONE HUNDRED and injuries, as stated in the medical report of the
6

77/100 (P174,100.77) PESOS; examining physician, Dr. Pedro P. Solis of the

Quezon City General Hospital. The injuries
2. To pay said plaintiff moral damages in the sustained by Lucila required major surgeries like
amount of ONE HUNDRED THOUSAND and "tracheotomy, open reduction, mandibular
00/100 (P100,000.00) PESOS; fracture, intermaxillary repair of multiple
laceration" and prolonged treatment by
3. To pay exemplary damages in the amount of
specialists. Per medical report of Dr. Alex L.
TEN THOUSAND and 00/100 (P10,000.00) PESOS.
Castillo, Legaspi also suffered injuries. 7
Under the Second Cause of Action
The front portion of the pickup truck, owned by
1. To pay plaintiff Victor Kierulf the amount of Spouses Kierulf, bearing plate number UV PGS
NINETY SIX THOUSAND EIGHT HUNDRED 798, was smashed to pieces. The cost of repair
TWENTY FIVE and 15/100 (P96,825.15) PESOS by was estimated at P107,583.50.
way of indemnification for the damages to the
Pantranco, in its petition, 8 adds that on said day,
Isuzu Carry All with plate No. UV PGS 796
the above-mentioned bus was driven by Jose
registered in his name.
Malanum. While cruising along EDSA, a used
Under the Third Cause of Action engine differential accidentally and suddenly
dropped from a junk truck in front of the bus.
1. To pay the plaintiff spouses by way of Said differential hit the under chassis of the bus,
reimbursement for actual damages incurred for throwing Malanum off his seat and making him
the treatment of injuries sustained by their lose control of said bus. The bus swerved to the
driver Porfirio Legaspi in the amount of SIX left, hit the center island, and bumped the
pickup of the spouses.
The Issues As to what really caused the bus to careen to the
opposite lane of EDSA and collide with the
Spouses Kierulf and their driver Legaspi raise the pickup truck driven by Legaspi is a factual
following assignment of errors in this appeal: 9 issue which this Court cannot pass upon. As a
A rule, the jurisdiction of this Court is limited to the
review of errors of law allegedly committed by
The respondent court of appeals erred in the appellate court. This Court is not bound to
awarding only P200,000.00 and P25,000.00 as analyze and weigh all over again the evidence
and for moral damages for the petitioners Kierulf already considered in the proceedings below. 13
and Legaspi respectively when it should at least
have been P1,000,000.00 and P100,000.00 Although the Court may review factual issues in
respectively. some instances, 14
the case at bar does not fall
under any one of them. The fact that there is no
B conflict between the findings of the trial court
and respondent Court bolsters our position that a
The respondent court of appeals erred in
review of the facts found by respondent Court is
awarding only P100,000.00 to the petitioners
not necessary. 15 There being no conflict
Kierulf and nothing to petitioner Legaspi as and
between the findings of the Court of Appeals and
for exemplary damages when it should have at
the trial court that gross negligence was the real
least been P500,000.00 and P50,000.00
cause of the collision, we see no reason to
respectively.
digress from the standard rule.
C
We quote with concurrence the factual findings
The respondent court of appeals erred in not of the appellate and trial courts, showing that
awarding any amount for the lost income due to the accident was, contrary to the belief of
the petitioner Lucila H. Kierulf. Pantranco, the result of the gross negligence of
its driver. To wit: 16
D
The vehicular accident was certainly not due to a
The respondent court of appeals erred in not fortuitous event. We agree with the trial court's
awarding the amount of P107,583.50 for the findings that the proximate cause was the
damages sustained by the Isuzu carry-all pick-up negligence of the defendant's driver, such as: (1)
truck. Driving at that part of EDSA at 7:45 P.M. from
Congressional Avenue towards Clover Leaf
E
overpass in the direction of Balintawak at 40-50
The respondent court of appeals erred in not kph is certainly not a manifestation of good
awarding any legal interest on the sums driving habit of a careful and prudent man
awarded. exercising the extraordinary diligence required
by law. Traffic in that place and at that time of
On the other hand, Pantranco raises the the day is always heavy. (2) Losing control of the
following assignment of errors: 10 wheel in such a place crowded with moving
vehicles, jumping over the island which
4.1 The Honorable Court of Appeals erred in
separates the East bound from the West bound
holding that the driver of Pantranco was
lane of EDSA indicate that the defendant's bus
negligent.
was traveling at a speed limit beyond what a
4.2 The Honorable Court of Appeals erred in prudent and careful driver is expected of, if such
holding that the proximate cause of the accident driver were exercising due diligence required by
was the negligence of Pantranco and not a law. (3) Finally, crossing over the island and
fortuitous event; and traversing the opposite lane and hitting an
oncoming vehicle with such force as to smash
4.2 (sic) The Honorable Court of Appeals erred in the front of such vehicle and finally being forced
awarding excessive damages. to stop by bumping against a Caltex service
In sum, Spouses Kierulf and Legaspi argue that station all show not only negligence, but
the damages awarded were inadequate while recklessness of the defendant's driver. (4) If
Pantranco counters that they were astronomical, defendant's driver was not driving fast, was not
bloated and not duly proved. 11 recklessly negligent and had exercised due care
and prudence, with due respect to human life
The Court's Ruling and to others travelling in the same place, the
driver could have stopped the bus the moment it
First Issue: Negligence and Proximate crossed the island, and avoided crossing over to
Cause Are Factual Issues the other lane and bumping against vehicles
Even on appeal, Pantranco insists that its driver travelling in opposite direction. The defendant's
was not negligent and that the mishap was due driver did not take any evasive action and utterly
to a fortuitous event. February 28, 1987, the failed to adopt any measure to avoid injuries and
date of the incident, was a Saturday; hence, damage to others because he "lost control of the
driving at the speed of 40-50 kilometers per hour bus", which was like a juggernaut, let loose in a
(kph) was prudent. It contends that the big crowd, smashing everything on its path.
proximate cause was the accidental dropping of Second Issue: Moral Damages
a used engine differential by a junk truck
immediately ahead of the bus. 12
Complainants aver that the moral damages
awarded by Respondent Court are "clearly and
woefully not enough." The established guideline
in awarding moral damages takes into
consideration several factors, some of which are
the social and financial standing of the injured
parties and 17 their wounded moral feelings and
personal pride. 18 The Kierulf spouses add that
the Respondent Court should have considered
another factor: the loss of their conjugal
fellowship and the impairment or destruction of
their sexual life. 19
The spouses aver that the disfigurement of
Lucila's physical appearance cannot but affect
their marital right to "consortium" which would
have remained normal were it not for the
accident. Thus, the moral damages awarded in
favor of Lucila should be increased to
P1,000,000.00, not only for Lucila but also for
her husband Victor who also suffered
"psychologically." A California case, Rodriguez
vs. Bethlehem Steel Corporation, 20 is cited as
authority for the claim of damages by reason of
loss or marital consortium, i.e. loss of conjugal
fellowship and sexual relations. 21
Pantranco rebuts that Victor's claim of moral
damages on alleged loss of consortium is
without legal basis. Article 2219 of the Civil Code
provides that only the person suffering the injury
may claim moral damages. Additionally, no
evidence was adduced to show that the
consortium had indeed been impaired and the
Court cannot presume that marital relations
disappeared with the accident. 22
The Courts notes that the Rodriguez case clearly
reversed the original common law view first
enunciated in the case of Deshotel
vs. Atchison, 23 that a wife could not recover for
the loss of her husband's services by the act of a
third party. Rodriguez ruled that when a person
is injured to the extent that he/she is no longer
capable of giving love, affection, comfort and
sexual relations to his or her spouse, that spouse
has suffered a direct and real personal loss. The
loss is immediate and consequential rather than
remote and unforeseeable; it is personal to the
spouse and separate and distinct from that of
the injured person.
Rodriguez involved a couple in their early 20s,
who were married for only 16 months and full of
dreams of building a family of their own, when
the husband was struck and almost paralyzed by
a falling 600-pound pipe. The wife testified how
her life had deteriorated because her husband
became a lifelong invalid, confined to the home,
bedridden and in constant need of assistance for
his bodily functions; and how her social,
recreational and sexual life had been severely
restricted. It also deprived her of the chance to
bear their children. As a constant witness to her
husband's pain, mental anguish and frustration,
she was always nervous, tense, depressed and
had trouble sleeping, eating and concentrating.
Thus, the California court awarded her damages
for loss of consortium.
Whether Rodriguez may be cited as authority to
support the award of moral damages to Victor
and/or Lucila Kierulf for "loss of consortium,"
however, cannot be properly considered in this
case.
Victor's claim for deprivation of his right to
consortium, although argued before Respondent
Court, is not supported by the evidence on
record. His wife might have been badly
disfigured, but he had not testified that, in
consequence thereof, his right to marital
consortium was affected. Clearly, Victor (and for
that matter, Lucila) had failed to make out a
case for loss of consortium, unlike the Rodriguez
spouse. Again, we emphasize that this claim is
factual in origin and must find basis not only in
the evidence presented but also in the findings
of the Respondent Court. For lack of factual
basis, such claim cannot be ruled upon by this
Court at this time.
Third Issue: No Consideration of Social and
Financial Standing in this Case
The social and financial standing of Lucila cannot
be considered in awarding moral damages. The
factual circumstances prior to the accident show
that no "rude and rough" reception, no
"menacing attitude," no "supercilious manner,"
no "abusive language and highly scornful
reference" was given her. The social and
financial standing of a claimant of moral
damages may be considered in awarding moral
damages only if he or she was subjected to
contemptuous conduct despite the offender's
knowledge of his or her social and financial
standing. 24
Be that as it may, it is still proper to award moral
damages to Petitioner Lucila for her physical
sufferings, mental anguish, fright, serious
anxiety and wounded feelings. She sustained
multiple injuries on the scalp, limbs and ribs. She
lost all her teeth. She had to undergo several
corrective operations and treatments. Despite
treatment and surgery, her chin was still numb
and thick. She felt that she has not fully
recovered from her injuries. She even had to
undergo a second operation on her gums for her
dentures to fit. She suffered sleepless nights and
shock as a consequence of the vehicular
accident. 25 In this light and considering further
the length of time spent in prosecuting the
complaint and this appeal, we find the sum of
P400,000.00 as moral damages for Petitioner
Lucila to be fair and just under the
circumstances.
Fourth Issue: Exemplary Damages
Complainants also pray for an increase of
exemplary damages to P500,000.00 and P50,000
for Spouses Kierulf and Legaspi, respectively.
This prayer is based on the pronouncement of
this Court in Batangas Transportation Company
vs. Caguimbal 26 that "it is high time to impress
effectively upon public utility operators the
nature and extent of their responsibility in
respect of the safety of their passengers and
their duty to exercise greater care in the "mental anguish and emotional strain of not
selection of drivers and conductors . . . ." earning anything with a family to support." Moral
damages, though incapable of pecuniary
Pantranco opposes this, for under Article 2231 of estimation, are in the category of an award
the Civil Code, "exemplary damages may be designed to compensate the claimant for actual
granted if the defendant acted with gross injury and are not meant to enrich complainant
negligence." And allegedly, gross negligence is at the expense of defendant. 32
sorely lacking in the instant case.
We find, however, the claim of Legaspi to be duly
Exemplary damages are designed to permit the substantiated. Pantranco failed to rebut the
courts to mould behavior that has socially claim of Porfirio that he had been incapacitated
deleterious consequences, and its imposition is for ten (10) months and that during said period
required by public policy to suppress the wanton he did not have any income. Considering that,
acts of an offender. 27However, it cannot be prior to the accident, he was employed as a
recovered as a matter of right. It is based driver and was earning P1,650.00 a month, his
entirely on the discretion of the claim for P16,500.00 as compensation for loss of
Court. 28 Jurisprudence sets certain requirements earning capacity for said period is amply
before exemplary damages may be awarded, to supported by the records 33 and is demandable
wit: 29 under Article 2205 of the Civil Code. 34
(1) (T)hey may be imposed by way of example or Complainants contend that Lucila is also entitled
correction only in addition, among others, to to damages for "loss or impairment of earning
compensatory damages, and cannot be capacity in cases of temporary or permanent
recovered as a matter of right, their personal injury" under Article 2205 of the Civil
determination depending upon the amount of Code. Notably, both the trial court and public
compensatory damages that may be awarded to respondent denied this prayer because of her
the claimant; failure to produce her income tax returns for the
(2) the claimant must first establish his right to years 1985 and 1986, notwithstanding the
moral, temperate, liquidated or compensatory production of her 1983 and 1984 income tax
damages; and returns.

(3) the wrongful act must be accompanied by Pantranco opposes the above claim for loss of
bad faith, and the award would be allowed only if earning capacity on the ground that there is no
the guilty party acted in a wanton, fraudulent, proof "that for the two years immediately
reckless, oppressive or malevolent manner. preceding the accident Lucila was indeed
deriving income from some source which was cut
The claim of Lucila has been favorably off by the accident. 35
considered in view of the finding of gross
negligence by Respondent Court on the part of We agree with the findings of Respondent Court
Pantranco. This is made clear by Respondent that Lucila's claim of loss of earning capacity has
Court in granting Lucila's claim of exemplary not been duly proven. The alleged loss must be
damages: 30 established by factual evidence for it partakes of
actual damages. A party is entitled to adequate
(P)ublic utility operators like the defendant, have compensation for such pecuniary loss actually
made a mockery of our laws, rules and suffered and duly proved. Such damages, to be
regulations governing operations of motor recoverable, must not only be capable of proof,
vehicles and have ignored either deliberately or but must actually be shown with a reasonable
through negligent disregard of their duties to degree of certainty. We have emphasized that
exercise extraordinary degree of diligence for the these damages cannot be presumed, and courts
safety of the travelling public and their in making an award must point out specific facts
passengers. . . . . which can serve as basis for measuring whatever
compensatory or actual damages are
To give teeth to this warning, the exemplary
borne. 36 Mere proof of Lucila's earnings
damages awarded to Petitioner Lucila is
consisting of her 1983 and 1984 income tax
increased to P200,000.00. The fact of gross
returns would not suffice to prove earnings for
negligence duly proven, we believe that Legaspi,
the years 1985 and 1986. The incident happened
being also a victim of gross negligence, should
on February 28, 1987. If indeed Lucila had been
also receive exemplary damages. Under the
earning P50,000.00 every month prior to the
facts proven, the Court awards him P25,000 as
accident, as she alleged, there are evidentiary
exemplary damages.
proofs for such earnings other than income tax
Fifth Issue: Loss of Earnings as a Component of returns such as, bur not limited to, payroll
Damages receipts, payments to the SSS, or withholding
tax paid every month. Sad to say, these other
Lost income in the amount of P16,500.00 is also proofs have not been presented, and we cannot
claimed by Legaspi stating that his "whole future presume that they exist on the strength of the
has been jeopardized." 31 This, in turn, is not word of Lucila alone.
rebutted by Pantranco.
Sixth Issue: Reduction of Actual Damages on
It should be noted that Respondent Court the Pickup Based on an Estimate
already considered this when it stated that the
award of P25,000.00 included compensation for
Complainants contend that the reduction of 10% Decision appealed from is AFFIRMED with
from the written estimate of the cost of repairs MODIFICATION. The award of moral damages to
by the trial court is pure Lucila and Legaspi is hereby INCREASED to
speculation. 37 Pantranco opposes this by P400,000.00 and P50,000.00 respectively;
pointing out that judicial notice is made by exemplary damages to Lucila is INCREASED to
respondent Court of the propensity of motor P200,000.00. Legaspi is awarded exemplary
repair shops to exaggerate their estimates. 38 damages of P50,000.00. The amount of P
16,500.00 as actual or compensatory damages is
An estimate, as it is categorized, is not an actual also GRANTED to Legaspi. All other awards of
expense incurred or to be incurred in the repair. Respondent Court of Appeals are AFFIRMED.
The reduction made by respondent Court is Pantranco shall also PAY legal interest of 6% per
reasonable considering that in this instance such annum on all sums awarded from the date of
estimate was secured by the complainants promulgation of the decision of the trial court,
themselves. May 24, 1989, until actual payment.
Epilogue SO ORDERED.
This Court cannot remind the bench and the bar Narvasa, C.J., Davide, Jr., Melo and Francisco, JJ.,
often enough that in order that moral damages concur.
may be awarded, there must be pleading and
proof of moral suffering, mental anguish, fright
and the like. While no proof of pecuniary loss is
necessary in order that moral damages may be
awarded, the amount of indemnity being left to
the discretion of the court, 39 it is nevertheless
essential that the claimant should satisfactorily
show the existence of the factual basis of
damages 40 and its causal connection to
defendant's acts. This is so because moral
damages, though incapable of pecuniary
estimation, are in the category of an award
designed to compensate the claimant for actual
injury suffered and not to impose a penalty on
the wrongdoer. 41 In Francisco vs. GSIS, 42 the
Court held that there must be clear testimony on
the anguish and other forms of mental suffering.
Thus, if the plaintiff fails to take the witness
stand and testify as to his/her social humiliation,
wounded feelings and anxiety, moral damages
cannot be awarded. In Cocoland Development
Corporation vs. National Labor Relations
Commission, 43 the Court held that "additional
facts must be pleaded and proven to warrant the
grant of moral damages under the Civil Code,
these being, . . . social humiliation, wounded
feelings, grave anxiety, etc., that resulted
therefrom."

Moral damages are awarded to enable the

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

WHEREFORE, premises considered, the petition

for review in G.R. No. 99301 is PARTIALLY
GRANTED, while that of Pantranco North Express,
Inc., in G.R. No. 99343 is DISMISSED. The
 a) That in morning of March 18, 1993 near the
house of Demetrio Cleopas, father of the
accused Teodorico Cleopas and Epifanio Cleopas
at Barangay Tubog, Ubay, Bohol, the eye-witness
Cipriano Supero saw the victim in the instant
case Pedro Torrenueva while being held by the
accused Florencio Perame (sic) the accused
Epifanio Cleopas struck him with an iron pipe
and by the accused Teodorico Cleopas with a
piece of wood, hitting the aforementioned victim
Pedro Torrenueva on the forehead, which, as a
consequence, fell on the ground dead;

b) That to cover the discovery of the commission

of the crime the dead body of the victim Pedro
Torrenueva was buried in the well near the house
of Demetrio Cleopas father of the accused
Epifanio Cleopas who is still at large and the
accused Teodorico Cleopas;

c) That the testimony of the other witnesses for

the prosecution SPO2 Sabeniano Atopan,
Candida Cosip, Evelyn Torrenueva and Pedro
Acquiat viewed in their totality with the
testimony of the eye-witness Cipriano Supero
points to the accused Teodorico Cleopas,
Epifanio Cleopas and Florencio Pirame as the
perepetrators (sic) of the crime as charged. 2

On May 13, 1993, the three accused, Teodorico

Cleopas, Epifanio Cleopas and Florencio Pirame,
were charged with the crime of murder under
the following information:

That on or about the 18th day of March, 1993, in

the municipality of Ubay, province of Bohol,
Philippines, and within the jurisdiction of this
Honorable Court, the abovenamed accused
conspiring, confederating and mutually helping
one another, with intent to kill, armed with
stainless pipe and a piece of wood, with
treachery, evident premeditation and abuse of
superior strength, did then and there willfully,
unlawfully and feloniously, attack, assault and
Republic of the Philippines strike one Pedro Torrenueva who was unarmed
SUPREME COURT and unaware thereof with the said stainless pipe
Manila and piece of wood thereby inflicting fatal injuries
on the different parts of the victim's body which
SECOND DIVISION resulted to his immediate death; to the damage
and prejudice of the heirs of the deceased to be
G.R. No. 121998 March 9, 2000
proved during the trial of the case.1wphi1.nt
PEOPLE OF THE PHILIPPINES, plaintiff-
Acts committed contrary to the provisions of Art.
appellee,
248 of the Revised Penal Code.3
vs.
TEODORICO CLEOPAS and FLORENCIO Upon arraignment, Florencio Pirame and
PIRAME, accused, FLORENCIO Teodorico Cleopas entered a plea of not guilty.
PIRAME, accused-appellant. Epifanio Cleopas was not arraigned, being at
large.4 Thereafter, trial on the merits ensued.
QUISUMBING, J.:
The prosecution presented the following
On appeal is the decision dated January 5, 1995,
witnesses: (1) SPO2 Sabiniano Atupan, who led
of the Regional Trial Court of Tagbilaran City,
the police team that conducted the investigation
Branch 1, in Criminal Case No. 8343 finding the
of the killing: (2) Dr. Arnold Cagulada, the
accused Teodorico Cleopas and Florencio Pirame
Municipal Health Officer of Ubay, Bohol, who
guilty of murder beyond reasonable doubt.1
examined the cavader of the victim; (3) Candida
The facts of the case, as found by the trial court, Cusip,5 an aunt of the victim ventured towards
are as follows: the house of accused Teodorico Cleopas on the
day of the incident; (4) Evelyn Torrenueva, the
The factual findings of the Court based on the wife of the victim, who corroborated the
testimony of the witnesses for the prosecution testimony of Cusip and testified as to the
and the defense are, as follows, to wit:
damages incurred by her due to her husband's AND CANDIDA CUCIP IMPLICATING ACCUSED-
death; (5) Pedro Acquiat, who joined the police in APPELLANT FLORENCIO PIRAME IN THE CRIME OF
the search for the victim's body; and (6) Cipriano MURDER DESPITE THEIR MANIFEST
Supero, the alleged eyewitness to the killing who UNBELIEVABLE, IMPROBABLE AND UNRELIABLE
identified all the three accused as the victim's TESTIMONY.7
assailants.
In his brief, appellant alleges that the declaration
In turn, the defense presented accused Teodorico of Demetrio Cleopas, both in the course of police
Cleopas and appellant Florencio Pirame, who investigation and in a sworn statement, to the
both testified on their behalf. effect that his two sons were responsible for the
killing did not make any mention of him, hence,
On January 5, 1995, the Regional Trial Court of he should not have been implicated. Such
Tagbilaran City, Branch I, rendered its decision declaration, appellant contends, as made in the
finding Teodorico Cleopas and Florencio Pirame sworn statement, should have been considered
guilty of the crime of murder. It disposed: by the trial court as part of the res gestae. In
PREMISES, CONSIDERED, the Court finds the addition, he urges that the trial court should
accused Teodorico Cleopas and Florencio Pirame have considered the testimony of accused
guilty of the crime of Murder punished under Teodorico Cleopas, who testified that he did not
Article 248 of the Revised Penal Code and hereby see appellant on the date of the incident. He also
sentences each one of them to suffer an contends that contrary to the trial court's view,
imprisonment of RECLUSION PERPETUA, with the there was no "uniting point" or corroboration
accessories of the law and to pay the cost. between the testimonies of Cipriano Supero, the
alleged eyewitness to the incident, and that of
The accused Teodorico Cleopas and Florencio the other prosecution witnesses. Supero's
Pirame are further ordered to indemnify the testimony, he further claims, should not have
surviving spouse of the deceased victim Pedro been considered by the trial court as this witness
Torrenueva in the amount of Fifty Thousand was a coached and rehearsed witness, who
Pesos (P50,000.00) each and the amount of testified only two months after the incident, and
Twenty Three Thousand Fourteen (sic) Pesos whose testimony is allegedly not worthy of
(23,214.00) representing burial and incidental belief. Appellant also asserts that while he
expenses and Fifty Thousand Pesos each invokes the weak defense of alibi, the evidence
(P50,000) representing moral and exemplary against him is likewise weak, and did not prove
damages and in all instances without subsidiary his guilt beyond reasonable doubt. Lastly,
imprisonment in case of insolvency. appellant contends that the trial court erred in
finding him to be a co-conspirator of the other
It appearing that the accused in the instant case
two accused.
Teodorico Cleopas and Florencio Pirame have
undergone preventive imprisonment they are In its brief, the Office of the Solicitor General
entitled to the full time of their preventive contends that the positive identification by
imprisonment to be deducted from their term of prosecution witness Cipriano Supero of appellant
sentence if they have not executed a waiver at the scene of the crime should prevail over
otherwise they will only be entitled to 4/5 of the appellant's denial and alibi. It further argues that
time have undergone preventive imprisonment a conspiracy to kill the victim was present.
to be deducted from their term of sentence if
they have not executed a waiver. Taken together, these contentions of appellant
and the appellee point to one, issue, which is the
The foregoing separate Decision does not affect credibility of witnesses in this case. We find that
the accused Epifanio Cleopas who is still at large credibility preponderates in favor of the
who will be tried separately as soon as he shall prosecution, and against the appellant.
have been arrested.
Appellant makes much of the testimony of
SO ORDERED.6 prosecution witness SPO2 Atupan. This witness
testified that in the course of police
Only Florencio Pirame appealed from the
investigation, Demetrio Cleopas, father of
decision of the trial court. He assigns the
accused Teodorico and Epifanio Cleopas, said
following errors in his brief:
that his two sons were responsible for the killing,
I Demetrio reiterated the same allegation in a
sworn statement made before the Ubay Police on
THE TRIAL COURT COMMITTED GRAVE ERROR IN March 24, 1993, 8 which appellant also relies
RELYING ON THE WEAKNESS OF THE DEFENSE upon to support his claim of innocence. This
EVIDENCE RATHER THAN ON THE STRENGTH OF particular allegation in the sworn statement,
THE EVIDENCE FOR THE PROSECUTION IN appellant urges, should be considered as part of
FINDING THE ACCUSED-APPELLANT PIRAME the res gestae, as it "grew out of the main fact,
GUILTY OF MURDER BEYOND REASONABLE shed light upon it, and which are (sic)
DOUBT. unpremeditated, spontaneous, and made at a
time so near, subsequent to the main act, as to
II
exclude the idea of deliberation and fabrication.9
THE TRIAL COURT COMMITTED GRAVE ERROR IN
This assertion made by Demetrio Cleopas in his
GIVING CREDENCE TO THE TESTIMONY OF
sworn statement is not part of the res
PROSECUTION WITNESSES CIPRIANO SUPERO
gestae. Res gestae refers to those exclamations
and statements made by either the participants,
victims, or spectators immediately before,
during, or immediately after the commission of
the crime, when the circumstances are such that
the statements were made as a spontaneous
reaction or utterance inspired by the excitement
of the occasion and there was no opportunity for
the declarant to deliberate and to fabricate a
false statement. 10 The allegations made by
Demetrio Cleopas in his sworn statement were
not made immediately after the killing of the
victim. They were made on March 24, 1993, or
six days after the killing of the victim on March
18. As we have held that a statement given a
day after the incident in answer to questions
propounded in an investigation cannot be
considered part of the res gestae, 11 so too with
the declarations of Demetrio Cleopas in his
sworn statement.
Moreover, resort to the very sworn statement
invoked by appellant would reveal that Demetrio
Cleopas himself was in no position to identify all
the perpetrators of the crime. The pertinent
portion of the statement reads as follows:
the arms of the victim while the other two
accused hit him on the head with a stick and a
not steel pipe. This, he asserts, was not
corroborated by any other prosecution witness,
hence there was no "unifying point" in their
testimonies.
That the testimony of Supero was not
corroborated by any other witness is no moment.
It is axiomatic that the testimonies of witnesses
are weighed, not numbered, and the testimony
of a single witness may suffice for conviction if
found trustworthy and reliable. That the
prosecution had only one eyewitness to
implicate appellant hardly negates its cause.
There is no law, which requires that the
testimony of a single witness needs
corroboration except where the law expressly
mandates such corroboration. 15 Indeed, the
testimony of a single witness, when positive and
credible, is sufficient to support a conviction
even of murder. Hence, a finding of guilt may be
based on the uncorroborated testimony of a
single witness when the trial court finds such
testimony positive and credible. 16

Q: Do you remember where were you on March On this score, appellant that the testimony of
18, 1993? Cipriano Supero should not have been
considered by the trial court, as Supero is
A: Yes, I was in our nipa hut near our house. allegedly a coached and rehearsed witness. In
Q: What were (sic) the unusual incident that you effect, appellant assails Supero's credibility. He
have witness (sic) on that day; (sic) points out that on direct examination, Supero
initially stated that the killing took place "inside
A: On March 18, 1993 at 10:00 o'clock in the the house of Demetrio Cleopas", but later on
morning more or less. I heard a shout from my modified his answer to clarify that the victim was
wife that's why I went near to her and what I killed "outside the house." 17 In addition,
have seen was a man lying on the ground which appellant emphasizes that it took Supero two
in my belief was already dead. months after the death of the victim to come out
and volunteer to two testify as to what he had
Q: What was the cause of death of that person?
seen transpire on the morning of March 18,
A: When I asked my son Epifanio 1993. Appellant asserts that this delay further
Cleopas alias "Paning" what was that incident proves that Supero was a rehearsed witness.
and he answered that they mutually struck him
These contentions are without merit. The initial
because he boxed one on (sic) my son named
lapse in Supero's testimony as to whether the
Teodorico Cleopas @ "Tidoy". 12
crime was committed inside or outside of the
It is clear that Demetrio Cleopas did not see the house of Demetrio Cleopas was eventually
actual killing of the victim. He only learned of the settled by the trial court when it asked
details of the killing from his son Epifanio. Thus, clarificatory questions. Supero was nonetheless
SPO2 Atupan's testimony that Demetrio Cleopas able to testify on the actual killing of the victim,
named his sons as the perpetrators of the crime, as well as identify all the perpetrators of the
without mention of appellant Florencio Pirame, crime. The earlier inconsistency in his testimony,
and which declaration was based on Epifanio slight as it is, cannot suffice to impeach this
Cleopas' admission of guilt for the killing, is in witness. Settled is the rule that inconsistencies
effect hearsay twice removed. It cannot be used in the testimonies of witnesses when referring
to absolve appellant of his participation in the only to minor details and collateral matters do
crime. Further still, the testimony of used not affect either the substance of their
Teodorico Cleopas that he never saw appellant declaration, their veracity, or the weight of their
on the date of the incident, 13 does not support testimony. Although there may be
the declarations of Demetrio Cleopas, as inconsistencies on minor details, the same do
Teodorico's testimony cannot be expected to not impair the credibility of the witnesses where
implicate a co-accused, being self-serving as it there is consistency in relating the principal
is. occurrence and positive identification of the
assailants. Slight contradictions in fact even
Appellant next assails the trial court's dictum to serve to strengthen the sincerity of the witness
the effect that the testimonies of the prosecution and prove that his testimony is not rehearsed.
witnesses, viewed in their totality, point to the They are safeguards against memorized
guilt of all three accused, including perjury. 18
14
appellant. He claims that it was only Cipriano
Supero who testified that he saw appellant hold
Further still, the delay of Supero in volunteering order to exist, does not require an agreement for
to testify on the incident is of little consequence. an appreciable period prior to the commission of
At the time Supero witnessed the killing, all he the crime; it exists if, at the time of the
saw was the striking of the victim by the commission of the offense, the accused had the
assailants while appellant held the victim's arms. same purpose and was united in its
The victim then fell to the ground, motionless. execution. 28 The fact that appellant conspired in
Thereafter, Supero left, fearful of what he had the commission of the crime charged was
seen. 19 He did not divulge this to anyone else sufficiently and convincingly shown by his active
except his mother, for they were afraid of being participation in holding the victim to render him
involved in that matter. 20 immobile, thus enabling the other two accused
to consummate their dastardly act of killing the
At the time he witnessed the incident, Supero victim. 29
was not aware that the victim had died as a
result of the assault. He came to know that the We note, however, that the trial court in its
victim died only two months after, when word decision did not make any definitive finding on
spread that the body of the victim was the circumstances which qualified the crime to
discovered in the well of Demetrio murder. While the information charging appellant
Cleopas. 21 Upon learning of the victim's fate, he and the other accused alleged that the
came forward to reveal what he had seen when commission of the crime was attended by
he testified in open court. Hence, appellant treachery, evident premeditation and abuse of
cannot claim that Supero's report and testimony superior strength, the court did not expound
on the incident was belatedly made. Thus, the upon or point to the existence of these
two-month delay in reporting the account of the aggravating circumstances in the case at bar. In
eyewitness in this case does not give rise to any other words, it did not state its basis for
doubt on the veracity thereof. As we have held, qualifying the crime to murder. We are thus
the belated report and the reluctance of required to determine if the crime at bar could
witnesses to testify in criminal actions is a be qualified to murder, to resolve this appeal. It
matter of judicial notice. 22 is axiomatic that an appeal, once accepted by
this Court, throws the entire case open to review,
Against Supero's positive identification of and that this Court has the authority to review
appellant as the person who held the hands of matters, not specifically raised or assigned as
the victim while accused Teodorico and Epifanio errors by the parties, if their consideration is
Cleopas struck him, appellant advanced the necessary in arriving at a just resolution of the
defense of alibi. He testified that he was case. 30
harvesting palay the whole day at Barangay
Corazon, San Miguel, Bohol on March 18, In the present case, the prosecution alleged the
1993. 23 The distance of the house of Demetrio attendance of treachery in the commission of the
Cleopas from his house, which is located at the crime. The requisites for treachery to be a
center of Barangay Corazon, 24 was estimated by qualifying circumstance are: (1) the employment
him to be seven kilometers. 25 We find this means, method, or manner of execution which
distance of seven kilometers to be less than will ensure the safety of the malefactor from
sufficient for purposes of an air-tight alibi. Alibi is defensive or retaliating acts on the part of the
an affirmative defense and, considering that it is victim, no opportunity being given to the latter
easy to conduct, when an accused relies to defend himself or to retaliate; and (2)
thereon, he has the burden of proving it, i.e., deliberate or conscious adoption of such means,
that he could not have been at the scene of the method, or manner of execution. 31
crime at the time of its commission. For alibi to
prosper, an accused must prove that not only Cipriano Supero testified that appellant Florencio
was he absent at the scene of the crime at the Pirame held the arms of the victim while Epifanio
time of its commission, but also that it was and Teodorico Cleopas struck the victim on the
physically impossible for him to be so situated at head, causing his death. The victim was
said instance. 26 This, appellant failed to do, defenseless during the attack as his hands were
more so when his claim that he was harvesting restrained by appellant, facilitating the beating
palay on the day the killing took place was not of the victim by the other perpetrators. Clearly,
corroborated by anyone else. the manner by which the victim was restrained
and assaulted was deliberately and consciously
Appellant asserts that the trial erred in finding adopted by his assailants to ensure. Thus, there
appellant a conspirator, hence guilty of murder was treachery in the killing of the victim, as the
beyond reasonable doubt. We find the trial offenders employed means, methods or forms in
court's finding of the existence of a conspiracy to the execution thereof which tended directly and
kill the victim well-taken. Cipriano Supero's specially to insure its execution, without risk to
testimony discloses that appellant held the themselves arising from the defense which the
victim's arms in a cross-wise manner while victim might take. 32
Epifanio and Teodorico Cleopas struck the victim
on the forehead with a steel pipe and a long The attendance of evident premeditation in the
piece of wood, respectively. Thereafter, the commission of the crime, though alleged in the
victim fell to the ground. 27 These concurrent information, is not supported by the evidence, as
actions of appellant and his co-accused reveal a there is no showing as to when appellant and his
mutual intention and determination to kill the co-accused determined to kill the victim.
victim, an indicator of conspiracy. Conspiracy, in Likewise, abuse of superior strength, being
absorbed by treachery, 33 cannot be considered
as an aggravating circumstance in this case.

As treachery was resent when the victim as

killed, we find that the crime of murder was
committed by appellant and his co-accused. At
the time of the commission of the crime, the
imposable penalty for murder was reclusion
temporal in its maximum period to death. There
being no aggravating or mitigating
circumstances attending the killing, the
applicable penalty would thus be the medium
period of the imposable penalty, which
is reclusion perpetua. 34

We concur with the trial court's award of

P50,000.00 each from appellant Florencio Pirame
and co-accused Teodorico Cleopas as death
indemnity to the victim's heirs, which is in line
with current jurisprudence. We also find the
amount of P23,214.00 awarded by the trial court
as "burial and incidental expenses" supported by
the records. 35 The award of P50,000.00 from
each accused as moral and exemplary damages,
however, is unsupported. The widow of the
victim did not testify on any mental anguish or
emotional distress, which she suffered as a result
of her husband's death. The absence of any
generic aggravating circumstance attending the
crime likewise precludes the award of exemplary
damages.

WHEREFORE, the instant appeal is DENIED. The

decision of the Regional Trial Court convicting
appellant Florencio Pirame of the crime of
murder and sentencing him to reclusion
perpetua, and to pay the widow of the victim
P50,000.00 as civil indemnity and P23,214.00 as
actual damages, as well as the costs is
AFFIRMED, but the award of P50,000.00 as moral
and exemplary damages is hereby DELETED,
there being no legal and factual basis
therefor.1wphi1.nt

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 134784 December 9, 2002

CARLOS ARCONA y MOBAN, petitioner,

vs.
THE COURT OF APPEALS and PEOPLE OF
THE PHILIPPINES, respondents.

DECISION

YNARES-SANTIAGO, J.:
Petitioner Carlos Arcona y Moban 1 and his Napoleons body, certified that the cause of
brother Benito Arcona y Moban were charged death was the stab wound sustained at the
with Murder and Frustrated Murder2 in separate stomach area just above the waistline.
information which read:
Petitioner voluntarily surrendered to T/Sgt.
Criminal Case No. 6408 (Murder) Romeo Laging at the PC Detachment Command
in Barangay Lugod.
That on or about the 27th day of June, 1986 at
Barangay Labog, Municipality of Brookes Point, In his defense, petitioner alleged that in the
Province of Palawan, Philippines, and within the evening of June 27, 1986, he was walking alone
jurisdiction of this Honorable Court the above- when he met Napoleon Ong and Edgardo
named accused conspiring, confederating Talanquines. Without any provocation, Napoleon
together and mutually helping one another, with suddenly drew his bolo and shouted, "Caloy, I
intent to kill and with evident premeditation and will kill you!"3 Napoleon swung the bolo at him
treachery, did then and there willfully, unlawfully twice but missed him. Petitioner then drew out
and feloniously attack, assault and stab one his knife and stabbed Napoleon. When he saw
NAPOLEON ONG with a bladed weapon to wit; a Edgardo Talanquines rushing towards him, he
knife hitting him in vital part of his body and grabbed a piece of bamboo from the newly
inflicting upon him injury which was the direct constructed culvert and hit the former on the left
and immediate cause of his death shortly arm. Talanquines ran away. Petitioner also left
thereafter. the premises and went home. On the way, he
met his brother, Benito, and together they
Criminal Case No. 6409 (Frustrated Murder) proceeded to their house.4
That on or about the 27th day of June 1986 at After trial, the court a quo rendered judgment in
Barangay Labog, Municipality of Brookes Point, Criminal Case No. 6408 convicting petitioner of
Province of Palawan, Philippines, and within the Homicide and acquitting Benito Arcona. In
jurisdiction of this Honorable Court the above- Criminal Case No. 6409, the trial court convicted
named accused conspiring, confederating Benito Arcona of Slight Physical Injuries and
together and mutually helping one another, with acquitted petitioner. The dispositive portion of
evident premeditation and treachery and with the decision5 reads:
intent to kill did then and there willfully,
unlawfully and feloniously attack, assault, strike WHEREFORE, premises considered, the Court
and beat with a bamboo pole one EDGARDO renders judgment in Criminal Case No. 6408
TALANQUINES hitting him on different parts of finding Carlos Arcona y Moban GUILTY beyond
his body and inflicting upon him injuries which reasonable doubt of the crime of Homicide under
would have caused his death thru performing all Art. 249 of the Revised Penal Code, with the
the acts of execution which would have mitigating circumstance of voluntary surrender
produced the crime of murder as a consequence to authorities and no aggravating circumstances.
but nevertheless did not produce it by reason of He is hereby sentenced to suffer the
causes independent of the will of the accused indeterminate penalty of SIX (6) YEARS and ONE
that is EDGARDO TALANQUINES have parried the (1) DAY of PRISION MAYOR as MINIMUM to
blows, escape away from his assailant and by FOURTEEN (14) YEARS and ONE (1) DAY OF
the timely and able medical assistance rendered RECLUSION TEMPORAL as MAXIMUM, and to
to said Edgardo Talanquines which prevented his indemnify the heirs of Napoleon Ong the sum of
death. THIRTY THOUSAND PESOS (P30,000.00) for his
death, TEN THOUSAND PESOS (P10,000.00) as
On arraignment both accused pleaded "not actual damages and TEN THOUSAND PESOS
guilty". Thereafter, the cases were jointly tried. (P10,000.00) as moral damages. Benito Arcona is
It appears that at around 7:30 in the evening of acquitted of the crime charged, for failure of
June 27, 1986, Napoleon Ong and Edgardo Prosecution to prove his guilt beyond reasonable
Talanquines were walking along the national doubt.
highway at Barangay Labog, Brookes Point, In Criminal Case No. 6409, Benito Arcona is
Palawan, on their way home after coming from a found GUILTY beyond reasonable doubt of the
birthday party. When they were near the house crime of Slight Physical injuries and is sentenced
of Jerry Boston, Edgardo heard a loud thud. He to suffer imprisonment of TWENTY (20) DAYS of
turned around saw Napoleon slump to the ARRESTO MENOR and to indemnify Edgardo
ground. Suddenly, someone hit Edgardo from Talanquines the sum of TEN THOUSAND PESOS
behind with a piece of bamboo, causing him to (P 10,000.00) as actual damages. Carlos Arcona
fall. He saw no one in the immediate premises is ACQUITTED of the crime charged for failure of
except petitioner. Edgardo then stood up and ran Prosecution to prove his guilt beyond reasonable
towards the house of Cesar Umapas to ask for doubt.
help.
Only petitioner appealed to the Court of Appeals,
Prosecution witness Leo Zaragoza testified that assailing his conviction for Homicide in Criminal
he was standing in front of Jerry Boston house, Case No. 6408. On January 28, 1997, the Court
about seven (7) meters away, when he saw of Appeals affirmed the findings of the trial court
petitioner stab Napoleon. but increased the civil indemnity to P50,000.00,
Napoleon expired on the way to the hospital. Dr. thus:
Joaquin Fabellon, who conducted the autopsy on
WHEREFORE, for all the foregoing, the decision crime scene and the scattered bamboo sticks
of the trial court finding appellant Carlos Arcona suggest a number of scenarios. While the
guilty of Homicide mitigated by his voluntary physical evidence may suggest that Napoleon
surrender to the authorities is hereby AFFIRMED, drew the bolo from its scabbard, such fact alone
with the sole modification that the civil would not in any way satisfactorily support the
indemnity Carlos Arcona shall pay to the heirs of conclusion that, indeed, Napoleon was the
Napoleon Ong is hereby increased to Fifty unlawful aggressor.
Thousand Pesos (P50,000.00).6
Likewise, the trial court was correct in refusing to
Petitioner filed the instant petition for review. He give any weight to the shout, "Caloy, I will kill
maintains that he acted in self-defense when he you!" which Jerry Boston allegedly heard
stabbed Napoleon and hit Edgardo with a immediately prior to the actual stabbing
bamboo stick. He contends that Napoleon incident. Indeed, Jerry Boston testified that
committed unlawful aggression when drew an "somebody" shouted those words. He did not
unsheathed bolo and attempted to hack him categorically say that it was Napoleon. Even
with it twice. Moreover, petitioner invokes the granting that Napoleon uttered those words, it
testimony of Jerry Boston, to the effect that was still possible that he said it while being
before the stabbing incident he heard somebody assaulted by petitioner.
shout, "Caloy, patayon kita." (Caloy, I will kill
you!)7 Significantly, Jerry only heard the shouted words
but never saw the sequence of events preceding
We are not persuaded. It is settled jurisprudence the stabbing incident, thereby rendering doubtful
that when an accused invokes self-defense, the the contention that Napoleon was the unlawful
onus probandi to show that the killing was aggressor. Simply, these circumstances are
justified shifts to him. Even if the prosecution insufficient to conclusively establish that
evidence was weak, it could not be readily Napoleon was the unlawful
dismissed considering that the accused had aggressor.lavvphil.net
openly admitted his responsibility for the killing. 8
Parenthetically, the Court of Appeals concurred
To prove self-defense, the accused must show with the findings of the trial court and even
with clear and convincing evidence that: (1) he is concluded that the physical evidence only made
not the unlawful aggressor; (2) there was lack of petitioners claim improbable, thus:
sufficient provocation on his part; and (3) he
employed reasonable means to prevent or repel Accused-appellant miserably failed to convince
the aggression. Self-defense, like alibi, is a the trial court that the stabbing was indeed in
defense easy to concoct. It is axiomatic that self-defense. Accused-appellants version that he
once an accused had admitted that he inflicted was waylaid by Edgardo Talanquines and the
fatal injuries on the deceased, it is incumbent deceased Napoleon Ong is highly improbable
upon him, in order to avoid criminal liability, to because he escaped the alleged ambush without
prove the justifying circumstance claimed by him a single scratch considering that there were
with clear, satisfactory and convincing allegedly two (2) attackers and one was even
evidence.9 armed with a bolo (TSN, March 27, 1990, pp. 3, 7
and 9). Moreover, accused-appellants claim that
The question whether accused-appellant acted in Edgardo Talanquines rushed him is also
self-defense is essentially a question of fact. In questionable because appellant who was then
self-defense, unlawful aggression is a primordial already armed with a knife was purportedly
element.10 attacked by Mr. Talanquines who was not at all
armed (Ibid, p. 10).12
In the case at bar, the trial court was evidently
not satisfied and convinced with petitioners In fine, the plea of self-defense cannot be
claim that Napoleon was the unlawful aggressor, justifiably entertained where it is not only
thus: uncorroborated by any separate competent
evidence but also extremely doubtful in itself.
It has been established that a bolo identified as Accused-appellant having failed to discharge the
belonging to Napoleon Ong was found at the burden proving his defense, his conviction shall
scene of the crime. The Court is also convinced of necessity follow, on the basis of his admission
that the stabbing incident was preceded by the to the killing.13
sounds of a scuffle or fight because it was these
unusual noises which led Leo Zaragosa and We have consistently ruled that the trial judge is
Benito Arcona to go out of the house of Jerry the best person to evaluate the veracity of a
Boston in order to investigate what had witnesss testimony as he is in the most ideal
happened. However, the presence of the bolo of position to see the demeanor, actuation and
Napoleon Ong, and the shout of "Caloy, I will kill countenance of a witness. Hence, we do not
you" allegedly uttered by the deceased are generally disturb the findings of the trial court
circumstantial evidence and not sufficient to except in cases where the judge acted
conclude that the deceased had committed acts arbitrarily.14 In the case at bar, petitioner failed
of unlawful aggression which justified the to point out any arbitrariness on the part of the
stabbing by accused Carlos Arcona.11 trial court.

We agree with the findings of the trial court. The Thus, we find that the court a quo was correct in
presence of Napoleons unsheathed bolo at the convicting petitioner of Homicide attended by
the mitigating circumstance of voluntary SO ORDERED.
surrender and no aggravating circumstance. The
penalty prescribed by law for Homicide, reclusion
temporal, shall be imposed in its minimum
period, pursuant to Article 64 (2) of the Revised
Penal Code. Under the Indeterminate Sentence
Law, petitioner shall be entitled to a minimum
term of imprisonment to be taken from the
penalty next lower in degree, prision mayor.
Therefore, the indeterminate sentence imposed
on him by the trial court, ranging from six (6)
years and one (1) day of prision mayor, as
minimum, to fourteen (14) years and one (1) day
of reclusion temporal, as maximum, is affirmed.

Likewise, the Court of Appeals was correct in

increasing the amount of civil indemnity to
P50,000.00, in line with existing
jurisprudence.15 In cases of murder, homicide,
parricide and rape, civil indemnity in the amount
of P50,000.00 is automatically granted to the
offended party or his heirs in case of his death,
without need of further evidence other than the
fact of the commission of the crime.16

On the other hand, the award of moral damages

in the sum of P 10,000.00 must be increased to
P50,000.00. As borne out by human nature and
experience, a violent death invariably and
necessarily brings about emotional pain and
anguish on the part of the victims family. It is
inherently human to suffer sorrow, torment, pain
and anger when a loved one becomes the victim
of a violent or brutal killing. Such violent death
or brutal killing not only steals from the family of
the deceased his precious life, deprives them
forever of his love, affection and support, but
often leaves them with the gnawing feeling that
an injustice has been done to them. For this
reason, moral damages must be awarded even
in the absence of any allegation and proof of the
heirs emotional suffering.17

Finally, the award of actual damages in the

amount of P10,000.00 does not appear to have
been substantiated. Only those expenses which
are duly proven, or those that appear to have
been genuinely incurred in connection with the
death, wake or burial of the victim, will be
recognized in court.18 Hence, the same must be
deleted.1awph!l.net

WHEREFORE, in view of the foregoing, the

petition for review is DENIED. The decision of the
Court of Appeals, finding petitioner Carlos
Arvuna y Morban guilty beyond reasonable doubt
of Homicide, attended by the mitigating
circumstance of voluntary surrender, and
sentencing him to suffer the indeterminate
penalty of six (6) years and one (1) day of prision
mayor, as minimum, to fourteen (14) years and
one (1) day of reclusion temporal, as maximum,
and to pay the heirs of the deceased Napoleon
Ong the sum of P50,000.00 as civil indemnity, is
AFFIRMED with MODIFICATION. As modified,
petitioner is further ordered to pay the heirs of
the deceased moral damages in the increased
amount of P50,000.00. The award of actual
damages is deleted for lack of factual and legal
basis.
 That on or about the 13th day of March, 2000 in
the City of Mandaue, Philippines, and within the
jurisdiction of this Honorable Court, the above-
named accused, conspiring, confederating
together and mutually helping one another, with
deliberate intent to kill and with treachery and
evident premeditation, did then and there
willfully, unlawfully and feloniously stab one
Arnaldo Diez y Dadang with a bladed instrument,
thereby inflicting upon the latter mortal wounds
at his vital portion which caused his death soon
thereafter.

CONTRARY TO LAW.3

Since the original Information 4 only charged

appellant, the Amended Information included the
following other co-accused: Jonathan Labora,
Ronnie Obatay, Florie Aplece and Marlon
Canlom. Appellant and Canlom were detained
and entered a plea of Not Guilty upon
arraignment. The other co-accused remain at-
large.

The following facts were admitted by appellant

during the pre-trial conference:

1. A few minutes after the incident, the accused

was arrested at his place of work at J. King
Construction. Accused however claimed that he
did not flee.

2. The co-accused of Basilio Villarmea are his co-

workers at J. King Construction.

Republic of the Philippines 3. Jaime Candelada, a prosecution witness, saw

SUPREME COURT accused at the police station immediately after
Manila the incident.

FIRST DIVISION 4. The Death Certificate, as well as the fact and

cause of death of the victim, is Hemorrhage due
G.R. No. 200029 November 13, to multiple stab wounds on the trunk and lower
2013 extremities.5
PEOPLE OF THE PHILIPPINES, Plaintiff- The prosecution presented the testimonies of the
Appellee, following witnesses:
vs.
BASILIO VILLARMEA y ECHAVEZ, Accused- Jingle Diez, the wife of the victim, testified that
Appellant. her husband died from stab wounds on March
13, 2000. At around 9:00 p.m. of that day, she
DECISION was informed by Candelada that her husband
VILLARAMA, JR., J.: was ganged up. She and her stepfather then
proceeded to the crime scene and brought the
Before this Court is an appeal from the May 25, victim to Don Vicente Sotto Memorial Medical
2006 Decision1 of the Court of Appeals (CA) in Center but he was declared dead on arrival. They
CA-G.R. CR-H.C. No. 00021 affirming the later brought the body to St. Annes Funeral
judgment2 of the Regional Trial Court (RTC) of Parlor.6
Mandaue City, Branch 28, finding appellant
The witness proceeded to Police Station 2 at
Basilio Villarmea y Echavez (Villarmea) guilty
beyond reasonable doubt for the murder of Wireless, Mandaue City where she met appellant
Amaldo Diez (Diez). The victim was stabbed towho told her that her husband had mauled a
death along a street in Mandaue City during acertain Christopher Alfante (Alfante). Appellant
fistfight that involved several persons who also told the witness that her husband was
allegedly assaulted and ganged up against thestabbed because the latter allegedly mauled
victim and his uncle, Jaime Candelada someone from appellants group. Appellant
(Candelada). further enumerated to her the names of his
companions: Marlon Canlom, Ronnie Aplece,
Appellant was charged before the RTC of Jonathan Obatay and Annie Aplece. While
Mandaue City, Branch 28, under the following appellant denied to the witness that he was
Amended Information, docketed as Criminal involved in the killing of her husband, she saw
Case No. DU-7540 and dated July 10 2000: blood on appellants foot. Lastly, the witness
testified that she spent the following amounts
upon her husbands death:
P20,000 for the wake and burial; P5,000 for the Dr. Nestor Sator testified on the results of the
shipment of her husbands body; and P8,000 for autopsy conducted on the victim on March 14,
funeral services.7 2000. According to Medico-Legal Report No. M-
65-00,12 the victim was found to have suffered
Jaime Candelada, the victims companion during 12 stab wounds and several abrasions on various
the incident, testified that he knew the victim parts of the body. The wounds numbered as 1, 2,
because he is the husband of his niece, Jingle 6, 7, 8 and 9 were fatal wounds as they were
Diez. He also stayed at Semense Compound in penetrating wounds that involved internal and
Tipolo, Mandaue City where the victim resided. vital organs such as the heart and lung. The fatal
He testified that on the night of the killing, he wound on the left chest could have also caused
and the victim were buying something from a instantaneous death because it involved the
store which is located around 30 meters from the heart. Another fatal wound was found on the left
place of the incident. When they walked out of hypochondriac region which perforated the
the store, seven persons followed them. stomach.13
Candelada testified that he was first boxed by
appellant. He fell down with the victim since they Dr. Sator also testified on the location of the
had their arms around each others shoulders. wounds found on the different parts of the
Candelada was again hit several times at the victims body: a lacerated wound on the left foot;
back and was too dazed to get up. When he was eight wounds on the trunk; and, three wounds on
finally able to regain his composure, he saw the the left thigh. He stated that the wounds on the
group ganging up on and stabbing the victim. He anterior portion of the victims body could
ran away after he saw the victim being stabbed indicate that the victim must have been possibly
by the assailants. He recognized appellant as on a lying position, facing his assailant. The
one of the members of the group who stabbed abrasions on the other parts of his body could
the victim. He knew that appellant was working have been sustained when he fell down on the
at J. King Construction located about 40 meters ground. He believed that more than one person
from the place of the incident. He had also seen attacked the victim because there were
appellant in the area several times in the past.8 numerous wounds, abrasions and lacerations on
his left foot.14
Candelada informed the wife of the victim about
the incident. She then proceeded to the scene of The defense presented the testimonies of the
the crime while he remained in the house. Three following witnesses:
policemen later arrived and he accompanied
them to Police Precinct 2. In the precinct, he Appellant Basilio Villarmea denied that he
identified appellant as the one who boxed him. participated in the assault. He testified that at
He also identified appellant in court. He admitted around 9:00 p.m. on the night of the incident, he
that he did not know Canlom, the other co- went out of the premises of the construction site
accused.9 where he was a live-in construction worker. He
was going to fetch water from the artesian well
PO2 Rico Cabatingan, the third witness for the located across the site. On his way to the well,
prosecution, testified that on the night of the he saw co-accused Labora and Obatay who are
incident, at around 9:50 p.m., he happened to be still at-large, and also his fellow live-in
passing by the area near J. King Construction at construction workers at J. King Construction,
Hernan Cortes Street, Subangdaku, Mandaue playing computer games at a store near the
City. While he did not see the actual stabbing, he artesian well. At around 10:00 p.m., while he was
saw people swarming around a bloodied person still at the artesian well, he saw co-accused
lying on the ground. He took a cab and brought Labora get into a fight with the victim and
the unconscious person the victim in this case Candelada. He claimed that it was Candelada
to the hospital. Upon investigation, he later who allegedly kicked Labora. A fight immediately
found out from Candelada that the persons ensued without any heated argument or
responsible for the stabbing were workers of J. discussion. At first, the melee only involved the
King Construction.10 victim, Candelada, Labora and Obatay. The fight
ended with Labora and Alfante stabbing the
PO2 Cabatingan, together with PO2 Fuentes, PO3 victim while Candelada ran away. The witness
Amal and Candelada, proceeded to the recounted that Alfante allegedly joined in the
construction site. Cabatingan directed the fight as they were grappling for a knife that
workers to come out of the bunkhouse. When Candelada pulled out but dropped.15
asked to identify who among the workers were
involved, Candelada identified appellant who Appellant maintained that it was Labora and
was then placed under arrest by PO2 Alfante who stabbed the victim to death. He also
Cabatingan. The following observations with insisted that Candelada was not able to point out
respect to the appellant were also made by PO2 the person responsible for the crime when he
Cabatingan: his right hand was swollen; there went to the construction site with the police
was a fresh wound or laceration on his knuckle; officers. Besides, at the time that Candelada was
and there was fresh blood on his slippers. PO2 asked to identify the alleged perpetrators, the
Cabatingan asked appellant to explain the witness stated that co-accused Labora, Aplece
presence of such blood but he did not answer. and Obatay had already escaped through the
Appellant, the only one identified and arrested at back portion of the construction site.
that time, was immediately brought to the police Nevertheless, he was brought to the police
station.11 station for investigation where he informed the
police that the fight ensued because Candelada Murder. Accordingly, the accused Basilio
kicked Labora, and that Candelada himself was Villarmea is hereby sentenced to the penalty of
the owner of the knife that Labora used in imprisonment of Reclusion Perpetua together
stabbing the victim. It was this statement made with the accessories imposed under the law.
by appellant that allegedly angered Candelada Accused is also hereby ordered to pay to the
who retaliated by implicating him in the killing. heirs of Arnaldo Diez, the amounts
When the police asked about the swelling on his of: P50,000.00 as damages ex
hand, appellant answered that his right small delicto; P25,000.00 as actual
finger was swollen because a hollow block fell on damages; P10,000.00 as moral damages
his hand. Appellant also denied knowledge and and P10,000.00 as exemplary damages.
ownership of the pair of bloodied slippers that
the police asked him to identify on the day For lack of evidence, the accused Marlon Canlom
following the incident.16 is hereby acquitted. The Court hereby orders the
immediate release of Marlon Canlom from
Co-accused Marlon Canlom corroborated the detention unless he is being held for some other
testimony of appellant that at around 9:00 p.m. lawful cause.
of March 13, 2000, he was at the gate of the
construction site waiting for appellant while the IT IS SO ORDERED.
21

latter was fetching water from the artesian well The trial court gave full faith and credence to the
located across the guardhouse. He also narrated testimony of eyewitness Candelada who
the same sequence of events as can be gleaned positively identified appellant as one of the
from appellants testimony from the time that assailants who attacked and stabbed the victim.
Candelada allegedly kicked Labora until the It held that at the time the victim was stabbed,
police arrested and brought appellant to the he was unarmed, taken by surprise and had no
police station. He stated that it was his first time opportunity to resist or put up any form of
to see the victim during the said incident.17 defense against the numerical superiority of
Remegias Umayao, the last witness for the appellant and his companions. It also held that
defense, testified that at the time of the incident, the results of the medico-legal examination
he was eating at a restaurant near the place pertaining to the various locations and number
where the fight took place. He said that he knew of the wounds supported Candeladas testimony,
appellant and co-accused Canlom because they proved that the victim was defenseless at the
used to be co-workers at V and S Construction. time of the attack, and showed that the killing
He testified that the fight occurred near the was attended with treachery thus qualifying the
place where there were computer games. He crime to murder. The trial court also found that
corroborated the allegation of appellant that it conspiracy was proven by positive and
was Alfante who first stabbed the victim, while conclusive evidence "when the attackers
Labora followed to deliver blows as the victim numbering around seven ganged up and
was slumped down. He admitted not seeing what stabbed Arnaldo"22 and the twelve stab wounds
weapon was exactly used and whether the corroborated the account of the eyewitness that
victim had a companion.18 there were several men who perpetrated the
assault with the same criminal intent to
On rebuttal, PO2 Cabatingan refuted the kill.23 The trial court however ruled that the
testimony of appellant denying knowledge and events that transpired before the stabbing did
ownership of the bloodied pair of slippers that not establish that the persons who attacked the
were recovered from him. PO2 Cabatingan victim had resolved to kill him. Hence the killing
identified the bloodied slippers which he had could not have been attended by evident
marked as "BV" the initials for Basilio Villarmea premeditation.24
to have been recovered from appellant. He
stated that appellant was wearing the bloodied Appellant sought to reverse his conviction before
pair when he was arrested at the compound of J. the CA. He raised the following errors:
King Construction. The right slipper was blue I. THAT THE LOWER COURT ERRED IN FINDING
with the "Islander" mark, while the left slipper THAT THE GUILT OF THE ACCUSED-APPELLANT
was black without any mark.19 HAD BEEN PROVEN BEYOND REASONABLE
On sur-rebuttal, appellant stated that he was DOUBT; and
wearing "Spartan" slippers when he was arrested II. THAT THE LOWER COURT ERRED IN GIVING
and brought to the police station on the night of CREDENCE TO THE TESTIMONY OF
March 13, 2000. He alleged that the evidence PROSECUTION WITNESS JAIME CANDELADA.25
was planted as it was his first time to see the
bloodied pair of slippers the following day when The appellate court found no reversible error in
PO2 Cabatingan brought the pair to the police the lower courts finding that appellant was
station.20 guilty beyond reasonable doubt as principal in
the murder of the victim, but ordered that the
On September 17, 2002, the RTC found appellant amount of moral and exemplary damages
guilty beyond reasonable doubt of the crime of awarded to his heirs be increased to P50,000
murder, as follows: and P25,000, respectively.26 The CA upheld the
WHEREFORE, this Judgment is hereby rendered finding that treachery attended the killing for the
finding the accused Basilio Villarmea y Echavez, following reasons: the victim was not armed; the
guilty beyond reasonable doubt of the crime of attack was sudden and unexpected leaving the
victim no opportunity to retaliate; and, the
numerical superiority of the assailants left the
victim with no means to resist the attack. 27 The
appellate court also affirmed the finding of the
trial court that appellant conspired with six other
persons in ganging up on the victim and taking
turns in stabbing and mauling him which caused
his instantaneous death. It found that the 12
stab wounds and the nature of the abrasions
sustained by the victim supported the claim of
the prosecution that the assailants were
animated with the same purpose and criminal
intent to kill the victim. It did not consider the
absence of an appreciable time that the
assailants should have spent, prior to the
incident, to agree on a common criminal
resolution, as a factor negating conspiracy. It
considered each assailants act of stabbing the
victim as concerted, and not as individual acts
geared towards the consummation of the same
end to attack and kill the victim.28
After a careful review of the evidence on record,
we affirm the ruling of the appellate court and
sustain that the award of moral damages be
increased to P50,000. We, however, modify the
award of civil indemnity to be increased
from P50,000 to P75,000, and the amount of
exemplary damages to be increased
from P25,000 to P30,000, to conform with
prevailing jurisprudence. Under Article 248 of the
Revised Penal Code, murder is committed by any
person who, not falling within the provisions of
Article 246, shall kill another with any of the
enumerated qualifying circumstances including
treachery and conspiracy. In a litany of cases,
this Court has consistently explained that there
is treachery when the offender commits any of
the crimes against persons, employing means,
methods or forms in the execution thereof, which
tend directly and specially to ensure its
execution without risk to himself arising from the
defense that the offended party might make. 29 In
People v. Barde,30 we stated that the essence of
treachery is that the attack is deliberate and
without warning, done swiftly and unexpectedly,
affording the hapless, unarmed and
unsuspecting victim no chance to resist or
escape.
Clearly, there was treachery in the case at bar.
The victim was utterly defenseless, unarmed and
taken by surprise by the sudden and unexpected
attack from his assailants. The numerical
superiority of the assailants also gave him no
opportunity to retaliate.31 As succinctly explained
by the trial court:
Based on the testimonies of the eyewitness and
the medico-legal officer, treachery attended the
killing of the victim. The victim, Arnaldo Diez,
was stabbed without warning. There was no
showing that the victim was armed. The attack
was unexpected and sudden, giving the
unarmed victim no opportunity to resist the
assault. The numerical superiority of the seven
persons who attacked Arnaldo Diez left him with
zero means of resistance or defense. Before he
could fight back or run away, his attackers
pounced on him like some prized animal. A total
number of twelve wounds, six of which were
fatal and penetrating wounds, penetrated the
vital organs of the victim. The varying locations
of the wounds on the trunk and their number
corroborate the testimony of eyewitness Jaime
Candelada that more than one person ganged up
and stabbed the helpless victim. The wounds
located in the trunk are too many to disregard or
negate treachery. x x x32
We also sustain the finding that appellant
conspired with his co-accused in killing the
victim.1wphi1 They ganged up on the victim
and took turns in stabbing and mauling him
animated by the same purpose and criminal
intent to kill. Such unity of mind and purpose is
shown by the twelve stab wounds and several
abrasions found on different parts of the body of
the victim that led to his instantaneous death.
We agree with the trial court that while there
may be no "evidence of an appreciable time that
these persons agreed on the criminal resolution
prior to the incident, x x x the stabbings were
not separate but were geared towards the
consummation of the same end to attack and
kill the victim."33 Appellants positive
identification by Candelada as one of those
persons who stabbed the victim makes him
criminally responsible as principal by
indispensable cooperation. There is nothing in
the evidence on record that can make this Court
doubt the credibility of Candelada in his positive
identification of appellant as the person who first
boxed him, as the one who stabbed the victim,
and as one of the persons who attacked him and
the victim.
The defense of denial interposed by appellant
cannot overcome the positive identification
made by Candelada, an eyewitness in the case
at bar, that he and his co-accused conspired in
mauling and stabbing the victim. The attempt of
appellant to impute an ulterior motive on the
part of Candelada to testify against him was not
supported by any concrete evidence.34 To be
sure, Candeladas positive identification was
further corroborated by the testimony of PO2
Cabatingan who stated that he saw appellants
swollen right hand, wounded knuckles and
bloodied slippers during the investigation
conducted at the construction site right after the
stabbing incident. Lastly, the fact that appellant
did not escape from the scene of the crime does
not negate his guilt. As correctly observed by the
appellate court, it does not lessen the evidence
on record that sufficiently proves appellants
guilt beyond reasonable doubt.35
In sum, the Court finds no cogent reason to
disturb the decision of the CA when it affirmed
the factual findings of the trial court. We have
consistently held that in criminal cases, the
evaluation of the credibility of witnesses is
addressed to the sound discretion of the trial
judge whose conclusion thereon deserves much
weight and respect because the judge had the
direct opportunity to observe them on the stand
and ascertain if they were telling the truth or
not. This deference to the trial courts
appreciation of the facts and of the credibility of
witnesses is consistent with the principle that
when the testimony of a witness meets the test
of credibility, that alone is sufficient to convict
the accused. This is especially true when the
factual findings of the trial court were affirmed
by the appellate court.36 Thus, absent any
showing that the trial court in this case had
overlooked substantial facts and circumstances,
which if considered would change the result of
the case,37 this Court gives deference to the trial
courts appreciation of the facts and of the
credibility of witnesses.

As to the award of damages, we make the

following modifications to conform with
prevailing jurisprudence. The award by the trial
court of P50,000 as civil indemnity for the death
of the victim is increased to P75,000 which is
mandatory and is granted without need of
evidence other than the commission of the crime
which caused the victims death. 38 We agree with
the appellate court that the award of moral
damages by the trial court should be increased
from P10,000 to P50,000. This amount is
awarded despite the absence of proof of mental
and emotional suffering of the victims heirs as a
violent death necessarily brings about emotional
pain and anguish on the part of the victims
family.39 As to the award of exemplary damages,
we increase the award made by the appellate
court from P25,000 to P30,000.40 The actual
damages amounting to P25,000 as awarded by
the trial court is sustained.

WHEREFORE, the Decision dated May 25, 2006

of the Court of Appeals in CA-G.R. CR-H.C. No.
00021 affirming the conviction of appellant
Basilio Villarmea y Echavez is AFFIRMED with
MODIFICATION. The award of civil indemnity is
increased to P75,000 and the award of
exemplary damages is increased to P30,000.
Interest at the rate of six percent (6%) per
annum on all the damages awarded in this case
from the date of finality of this judgment until
fully paid shall likewise be paid by appellant to
the heirs of Arnaldo Diez.

With costs against the appellant.

SO ORDERED. Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 170813 April 16, 2008

B.F. METAL (CORPORATION), petitioners,

vs.
SPS. ROLANDO M. LOMOTAN and LINAFLOR
LOMOTAN and RICO UMUYON, respondents.

DECISION

TINGA, J.:

Before the Court is a petition for review on

certiorari under Rule 45 of the 1997 Rules of Civil
Procedure, assailing the award of damages
against petitioner in the Decision1 and
2
Resolution of the Court of Appeals in CA-G.R. CV
No. 58655. The Court of Appeals affirmed with
modification the Decision of the Regional Trial For its part, petitioner presented at the hearing
Court (RTC), Branch 72, Antipolo, Rizal in Civil Rivera himself and Habner Revarez, petitioners
Case No. 1567-A, which found petitioner production control superintendent. Included in its
corporation and its driver, Onofre V. Rivera, documentary evidence were written guidelines in
solidarily liable to respondents for damages. preventive maintenance of vehicles and safety
driving rules for drivers.
The following factual antecedents are not
disputed. On 21 April 1997, the trial court rendered its
Decision, the dispositive portion of which reads:
In the morning of 03 May 1989, respondent Rico
Umuyon ("Umuyon") was driving the owner-type WHEREFORE, premises considered, judgment is
jeep owned by respondents, Spouses Rolando hereby rendered ordering defendants to pay
and Linaflor Lomotan ("Spouses Lomotan"). The jointly and severally to herein plaintiffs the
jeep was cruising along Felix Avenue in Cainta, following sums:
Rizal at a moderate speed of 20 to 30 kilometers
per hour. Suddenly, at the opposite lane, the (a) Actual --- i. P96,700.00 for cost of
speeding ten-wheeler truck driven by Onofre Damages the owner-type jeep
Rivera overtook a car by invading the lane being
traversed by the jeep and rammed into the jeep. ii. P15,000.00 medical
The jeep was a total wreck while Umuyon expenses
suffered "blunt thoracic injury with multiple rib
fracture, fractured scapula (L), with iii. P50,000.00 for loss of
pneumohemothorax," which entailed his earnings
hospitalization for 19 days. Also in view of the
(b) Moral --- P100,000.00
injuries he sustained, Umuyon could no longer
Damages
drive, reducing his daily income from P150.00
to P100.00.
(c) --- P100,000.00
On 27 October 1989, respondents instituted a Exemplary
separate and independent civil action for Damages
damages against petitioner BF Metal Corporation
("petitioner") and Rivera before the Regional Trial (d) --- P25,000.00
Court (RTC) of Antipolo, Rizal. The complaint Attorneys plus P1,000.00 for every
essentially alleged that defendant Riveras gross Fees Court appearance
negligence and recklessness was the immediate
Costs of Suit.
and proximate cause of the vehicular accident
and that petitioner failed to exercise the required SO ORDERED.5
diligence in the selection and supervision of
Rivera. The complaint prayed for the award of The trial court declared Rivera negligent when
actual, exemplary and moral damages and he failed to determine with certainty that the
attorneys fees in favor of respondents. opposite lane was clear before overtaking the
vehicle in front of the truck he was driving. It
In the Answer, petitioner and Rivera denied the also found petitioner negligent in the selection
allegations in the complaint and averred that and supervision of its employees when it failed
respondents were not the proper parties-in- to prove the proper dissemination of safety
interest to prosecute the action, not being the driving instructions to its drivers.
registered owner of the jeep; that the sole and
proximate cause of the accident was the fault Petitioner and Rivera appealed the decision to
and negligence of Umuyon; and that petitioner the Court of Appeals.
exercised due diligence in the selection and
On 13 April 2005, the Court of Appeals rendered
supervision of its employees.
the assailed Decision. It affirmed the trial courts
During the trial, respondents offered the finding that Riveras negligence was the
testimonies of Umuyon, SPO1 Rico Canaria, proximate cause of the accident and that
SPO4 Theodore Cadaweg and Nicanor Fajardo, petitioner was liable under Article 2180 of the
6

the auto-repair shop owner who gave a cost Civil Code for its negligence in the selection and
estimate for the repair of the wrecked jeep. supervision of its employees. However, the
Among the documentary evidence presented appellate court modified the amount of damages
were the 1989 cost estimate of Pagawaan awarded to respondents. The dispositive portion
Motors, Inc.,3 which pegged the repair cost of the of the Decision reads:
jeep at P96,000.00, and the cost estimate of
WHEREFORE, the decision appealed from is
Fajardo Motor Works4 done in 1993, which
AFFIRMED with MODIFICATION to read as follows:
reflected an increased repair cost
at P130,655.00. They also presented in evidence "WHEREFORE, premises considered, judgment is
a copy of the Decision of the RTC, Assisting hereby rendered ordering defendants to pay
Branch 74, Cainta, Rizal in Criminal Case No. jointly and severally to herein plaintiffs the
4742, entitled People of the Philippines v. Onofre following sums:
V. Rivera, finding Rivera guilty of reckless
imprudence resulting in damage to property with
physical injuries.
(a) Actual -- i. P130,655.00, for cost Costs pegged at P130,655.00 has not been incurred
Damages - of repairing the owner- of but is only a job estimate or a sum total of the
type jeep. suit." expenses yet to be incurred for its repair. It
argues that the best evidence obtainable to
ii. P10,167.99 in medical SO prove with a reasonable degree of certainty the
expenses. value of the jeep is the acquisition cost or the
purchase price of the jeep minus depreciation for
iii. P2,850.00 for lost one year of use equivalent to 10% of the
earnings during medical purchase price.
treatment.
Petitioners argument is partly meritorious.
(b) Moral -- P100,000.00 Except as provided by law or by stipulation, one
Damages - is entitled to an adequate compensation only for
such pecuniary loss suffered by him as he has
(c) -- P100,000.00
duly proved. Such compensation is referred to as
Exemplary -
actual or compensatory damages.10 Actual
Damages
damages are such compensation or damages for
an injury that will put the injured party in the
(d) -- P25,000.00
position in which he had been before he was
Attorneys -
injured. They pertain to such injuries or losses
Fees
that are actually sustained and susceptible of
ORDERED. 7 measurement. To justify an award of actual
damages, there must be competent proof of the
On 12 December 2005, the Court of Appeals actual amount of loss. Credence can be given
denied the motion for reconsideration of its only to claims which are duly supported by
Decision. Only petitioner filed the instant receipts.11
petition, expressly stating that it is assailing only
the damages awarded by the appellate court. In People v. Gopio,12 the Court allowed the
reimbursement of only the laboratory fee that
The instant petition raises the following issues: was duly receipted as "the rest of the
(1) whether the amount of actual damages documents, which the prosecution presented to
based only on a job estimate should be lowered; prove the actual expenses incurred by the
(2) whether Spouses Lomotan are also entitled to victim, were merely a doctors prescription and a
moral damages; and (3) whether the award of handwritten list of food expenses."13 In Viron
exemplary damages and attorneys is warranted. Transportation Co., Inc. v. Delos Santos,14 the
For their part, respondents contend that the Court particularly disallowed the award of actual
aforementioned issues are factual in nature and damages, considering that the actual damages
therefore beyond the province of a petitioner for suffered by private respondents therein were
review under Rule 45. based only on a job estimate and a photo
showing the damage to the truck and no
This is not the first instance where the Court has
competent proof on the specific amounts of
given due course to a Rule 45 petition seeking
actual damages suffered was presented.
solely the review of the award of damages. 8 A
partys entitlement to damages is ultimately a In the instant case, no evidence was submitted
question of law because not only must it be to show the amount actually spent for the repair
proved factually but also its legal justification or replacement of the wrecked jeep. Spouses
must be shown. In any case, the trial court and Lomotan presented two different cost estimates
the appellate court have different findings as to to prove the alleged actual damage of the
the amount of damages to which respondents wrecked jeep. Exhibit "B," is a job estimate by
are entitled. When the factual findings of the trial Pagawaan Motors, Inc., which pegged the repair
and appellate courts are conflicting, the Court is cost of the jeep at P96,000.00, while Exhibit "M,"
constrained to look into the evidence presented estimated the cost of repair at P130,655.00.
before the trial court so as to resolve the herein Following Viron, neither estimate is competent to
appeal.9 prove actual damages. Courts cannot simply rely
on speculation, conjecture or guesswork in
The trial court split the award of actual damages
determining the fact and amount of damages.15
into three items, namely, the cost of the wrecked
jeep, the medical expenses incurred by As correctly pointed out by petitioner, the best
respondent Umuyon and the monetary value of evidence to prove the value of the wrecked jeep
his earning capacity. On appeal, the Court of is reflected in Exhibit "I," the Deed of Sale
Appeals reduced the amount of medical showing the jeeps acquisition cost
expenses and loss of earning capacity to which at P72,000.00. However, the depreciation value
respondent Umuyon is entitled but increased of equivalent to 10% of the acquisition cost
from P96,700.00 to P130,655.00 the award in cannot be deducted from it in the absence of
favor of Spouses Lomotan for the cost of proof in support thereof.
repairing the wrecked jeep.
Petitioner also questions the award of moral and
The instant petition assails only the modified exemplary damages in favor of Spouses
valuation of the wrecked jeep. Petitioner points Lomotan. It argues that the award of moral
out that the alleged cost of repairing the jeep damages was premised on the resulting physical
injuries arising from the quasi-delict; since only
respondent Umuyon suffered physical injuries,
the award should pertain solely to him.
Correspondingly, the award of exemplary
damages should pertain only to respondent
Umuyon since only the latter is entitled to moral
damages, petitioner adds.
In the case of moral damages, recovery is more
an exception rather than the rule. Moral
damages are not punitive in nature but are
designed to compensate and alleviate the
physical suffering, mental anguish, fright, serious
anxiety, besmirched reputation, wounded
feelings, moral shock, social humiliation, and
similar harm unjustly caused to a person. In
order that an award of moral damages can be
aptly justified, the claimant must be able to
satisfactorily prove that he has suffered such
damages and that the injury causing it has
sprung from any of the cases listed in Articles
221916 and 222017 of the Civil Code. Then, too,
the damages must be shown to be the proximate
result of a wrongful act or omission. The claimant
must establish the factual basis of the damages
and its causal tie with the acts of the defendant.
In fine, an award of moral damages would
require, firstly, evidence of besmirched
reputation or physical, mental or psychological
suffering sustained by the claimant; secondly, a
culpable act or omission factually established;
thirdly, proof that the wrongful act or omission of
the defendant is the proximate cause of the
damages sustained by the claimant; and
fourthly, that the case is predicated on any of
the instances expressed or envisioned by Article
2219 and Article 2220 of the Civil Code.18
In culpa aquiliana, or quasi-delict, (a) when an
act or omission causes physical injuries, or (b)
where the defendant is guilty of intentional tort,
moral damages may aptly be recovered. This
rule also applies, as aforestated, to breaches of
contract where the defendant acted fraudulently
or in bad faith. In culpa criminal, moral damages
could be lawfully due when the accused is found
guilty of physical injuries, lascivious acts,
adultery or concubinage, illegal or arbitrary
detention, illegal arrest, illegal search, or
defamation.19
Undoubtedly, petitioner is liable for the moral
damages suffered by respondent Umuyon. Its
liability is based on a quasi-delict or on its
negligence in the supervision and selection of its
driver, causing the vehicular accident and
physical injuries to respondent Umuyon. Rivera
is also liable for moral damages to respondent
Umuyon based on either culpa criminal or quasi-
delict. Since the decision in the criminal case,
which found Rivera guilty of criminal negligence,
did not award moral damages, the same may be
awarded in the instant civil action for damages.
Jurisprudence show that in criminal offenses
resulting to the death of the victim, an award
within the range of P50,000.00 to P100,000.00
as moral damages has become the
trend.20 Under the circumstances, because
respondent Umuyon did not die but had become SO ORDERED.
permanently incapacitated to drive as a result of
the accident, the award of P30,000.00 for moral
damages in his favor is justified.21
However, there is no legal basis in awarding
moral damages to Spouses Lomotan whether
arising from the criminal negligence committed
by Rivera or based on the negligence of
petitioner under Article 2180. 22 Article
23
2219 speaks of recovery of moral damages in
case of a criminal offense resulting in physical
injuries or quasi-delicts causing physical injuries,
the two instances where Rivera and petitioner
are liable for moral damages to respondent
Umuyon. Article 222024 does speak of awarding
moral damages where there is injury to property,
but the injury must be willful and the
circumstances show that such damages are
justly due. There being no proof that the
accident was willful, Article 2220 does not apply.
Exemplary or corrective damages are imposed,
by way of example or correction for the public
good, in addition to moral, temperate, liquidated
or compensatory damages.25 Exemplary
damages cannot be recovered as a matter of
right; the court will decide whether or not they
should be adjudicated.26 In quasi-delicts,
exemplary damages may be granted if the
defendant acted with gross negligence.27 While
the amount of the exemplary damages need not
be proved, the plaintiff must show that he is
entitled to moral, temperate or compensatory
damages before the court may consider the
question of whether or not exemplary damages
should be awarded.28
As correctly pointed out by the Court of Appeals,
Spouses Lomotan have shown that they are
entitled to compensatory damages while
respondent Umuyon can recover both
compensatory and moral damages. To serve as
an example for the public good, the Court affirms
the award of exemplary damages in the amount
of P100,000.00 to respondents. Because
exemplary damages are awarded, attorneys
fees may also be awarded in consonance with
Article 2208 (1).29 The Court affirms the
appellate courts award of attorneys fees in the
amount of P25,000.00.
WHEREFORE, the instant petition for certiorari
is PARTIALLY GRANTED. The Decision of the
Court of Appeals in CA-G.R. CV No. 58655
is AFFIRMED with MODIFICATION. The award
of actual damages for the cost of repairing the
owner-type jeep is
hereby REDUCED to P72,000.00 while the moral
damages of P30,000.00 is awarded solely to
respondent Umuyon. All other awards of the
Court of Appeals are AFFIRMED. Following
jurisprudence,30petitioner is ordered to PAY legal
interest of 6% per annum from the date of
promulgation of the Decision dated 21 April 1997
of the Regional Trial Court, Branch 72, Antipolo,
Rizal and 12% per annum from the time the
Decision of this Court attains finality, on all sums
awarded until their full satisfaction.

Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 174470 April 27, 2007
[Formerly G. R. Nos. 159844-46]
PEOPLE OF THE PHILIPPINES, Appellee,
vs.
FILOMINO LIZANO y MARVILLA Appellant.
DECISION
TINGA, J.:
For consideration is an appeal by Filomino Lizano
y Marvilla1 (appellant) from the Decision2 dated
28 April 2006 of the Court of Appeals in CA-G.R.
CR-H.C. No. 01659, affirming the 30 May 2003
Decision3 of the Regional Trial Court (RTC) of
Calauag, Quezon, which found him guilty beyond
reasonable doubt of the crime of rape.
On 20 February 1997, appellant was charged
with three (3) counts of rape in three (3) Appellant testified on his behalf, raising denial
separate Informations, which, except for the and alibi as defenses. Appellant denied raping
date, similarly read as follow:
That on or about the month of January 1996, at the whole day and got home 11 a.m. the next
Sitio San Jose Ilaya, Barangay Sta. Cecilia, in the day. He however recalled an incident where he
Municipality of Tagkawayan, Province of Quezon,
Philippines and within the jurisdiction of this
Honorable Court, the above-named accused,
who is the uncle of the offended party, with lewd
design, by means of force, violence and
intimidation, did then and there willfully,
unlawfully and feloniously have carnal
knowledge of one [AAA],4 a minor, 11 years of
age, against her will.
Contrary to law.5
The two (2) other Informations6 alleged that
appellant had raped AAA on 18 and 19 January
1997, respectively.
Appellant pleaded not guilty on all three charges.
Trial then proceeded.
The victim, AAA, testified that she had been
staying in her grandmothers house in Barangay
Sta. Cecilia, Tagkawayan, Quezon, together with
appellant and his wife, BBB who is AAAs aunt.
Sometime in January 1996, AAA, who was then
only 11 years old, was sleeping inside the house
when appellant lay down beside her and began
undressing her while threatening to kill her, her
grandmother and aunt should she reveal his acts
to anybody. Afterwards, appellant also took off
his clothes. He then went on top of AAA and
inserted his penis into her vagina, causing her to
feel pain.7 A year later, on 18 January 1997,
appellant raped AAA again. The following day, at
around 10:30 a.m., appellant raped her for the
third time. She, however, declared during direct-
examination that there were only slight
penetrations in these two occasions. 8 AAA was
only forced to disclose the incident to an uncle, a
brother of her mother, upon the prodding of BBB,
who chanced upon AAA while inside the room of
appellant.9
The prosecution also presented CCC to testify on
the age of her daughter, AAA. CCC stated in
court that AAA was born on 14 May
1985.10 AAAs birth certificate11 attesting to the
same data was likewise presented in court.
The third witness for the prosecution was Delia
Mayuga Ayuda, a Medical Clerk at the
Tagkawayan District Hospital, whose duty was to
keep all the files of the patients in the hospital.
She identified the signature of Dr. Juvy Paz
Purino in the Medico-Legal Certificate which
contained the following findings:
- superficial lacerations at 6 oclock and 8 oclock
positions, hymen
NOI- Allegedly raped by someone
DOI- January 18, 1997
TOI- P.M.
POI- San Jose Tagkawayan, Quezon12
AAA sometime January 1996.13 He averred that
on 19 January 1997, he was driving his tricycle
asked AAA to get a spare part of a tricycle in the recounted the rape incident and positively
living room. Unable to follow his orders, identified appellant as the perpetrator, thus:
appellant followed AAA inside the house. It was
at that moment when his wife, BBB, arrived and Q: Do you know this Filomino Lizano?
accused him of raping AAA.14 Appellant A: Yes, sir.
maintained that BBB had induced AAA to charge
him with rape because of their frequent Q: Why do you know him?
quarrels.15
A: He is the husband of my auntie, sir.
The trial court found the first incident of rape as
xxxx
credible and found appellant guilty in Criminal
Case No. 2857-C. However, he was acquitted in Q: If this Filomino Lizano is in Court, will you be
Criminal Case Nos. 2858-C and 2859-C for able to point to him?
insufficiency of evidence.16
A: Yes, sir.
From the decision in Criminal Case No. 2857-C,
appellant directly appealed to this Court. Q: Please do so. (Witness pointing to a man who
Conformably with our ruling in People v. identified himself to be Filomino Lizano).
Mateo,17 the appeal was remanded to the Court
Q: Now, in January, 1996, how old were you
of Appeals for intermediate review.
then?
On 28 April 2006, the Court of Appeals
A: 11 years old, sir.
promulgated a Decision dismissing the appeal
and affirming in toto the decision of the RTC. Q: And on that month, do you remember any
unusual incident that happened to you?
Both parties opted not to file Supplemental
Briefs and instead adopted their Briefs before A: Yes, sir.
the appellate court.18
Q: And what was that unusual incident?
In this appeal, appellant contends that the
prosecutions evidence is insufficient to sustain A: I was raped by Filomino Lizano, sir.
his conviction, especially taking into account the
Q: Where?
alleged delay on the part of the victim in
reporting the rape. Thus, the resolution of this A: In the house of my grandmother, sir.
case hinges on the straightforward issue of
whether the prosecution was able to establish Q: Where is that house of your Lola located?
appellants guilt beyond reasonable doubt based A: In Brgy. Sta. Cecilia, Tagkawayan, Quezon.
on the complainants testimony.
Q: Will you tell or relay to this Court that
In the prosecution of rape cases, conviction or particular incident that you are referring to that
acquittal depends on the credence to be you were raped by Filomino Lizano?
accorded to the complainants testimony
because of the fact that usually the participants A: He slept beside me, sir.
are the only witnesses to the
occurrences.19 Thus, the issue boils down to Q: And after sleeping beside you, what did he do
credibility. Significantly, findings of fact of the if he did anything?
trial court should not be disturbed on appeal A: He undressed me, sir.
since conclusions as to the credibility of
witnesses in rape cases hinge heavily on the Q: After undressing you, did he do anything
sound judgment of the trial court which is in a more?
better position to decide the question, having
A: He told me not to tell anybody.
heard the witnesses and observed their
deportment and manner of testifying. 20
Q: And did he tell you what will happen if you will
tell anyone about that incident?
In the case at bar, the trial court aptly observed:
xxxx
In the first incident, the private complainant AAA
then an 11 years old [sic] girl in a clear, WITNESS:
convincing and straightforward manner testified
how the accused Filomino Lizano undressed her Because if I inform [sic] about the incident, he
and then afterwards, he undressed also, put will kill us, sir.
himself on top of her and inserted his penis to
FISCAL BONIFACIO
her private part. AAA clearly stated that the
accuseds penis was able to fully penetrate her Q: When you say "us," whom was he referring
vagina and it was painful. . . Her clear account of to?
the first incident of rape unequivocally show that
she was indeed raped by the accused Filomino A: My grandmother, auntie, and myself, sir.
Lizano.21
Q: After he undressed you, is there anything
We find no cogent reason to depart from these more he did?
findings. During the direct examination, AAA
A: He undressed himself also, sir.
Q: Then anything more? Under Article 335 of the Revised Penal Code,
rape, which is punishable by reclusion
A: He put himself on top of me, sir. perpetua is committed by having carnal
Q: And when he put himself on top of you, did he knowledge of a woman under any of the
do anything more? following circumstances:

A: He entered his penis to my private part, sir. 1. By using force or intimidation;

Q: Do you know if he was able to fully penetrate 2. When the woman is deprived of reason or
his penis on your private part? otherwise unconscious;

A: Yes, sir. 3. When the woman is under twelve years of age

or is demented.
Q: What did you feel when he was doing that?
Hence, the trial court correctly imposed the
A: It was painful, sir.22 penalty of reclusion perpetua for the rape of
AAA, who was then under 12 years old, as
In her sworn statement23 taken before the Police
proven by the prosecution through the testimony
Station in Tagkawayan Quezon, AAA narrated the
of her mother and the presentation of AAAs
same details contained in her testimony before
birth certificate. We affirm the trial courts award
the trial court.
of civil indemnity and moral damages each in
These positive declarations bolster the inevitable the amounts of P50,000.00 in line with current
conclusion that appellant had indeed raped AAA. jurisprudence.31 Civil indemnity is automatically
The trial court correctly lent credence to the imposed upon the accused without need of proof
straightforward version of the victim as against other than the fact of the commission of rape.
the bare denial by appellant. It has been an oft- Moral damages is also automatically granted in
repeated rule that mere denial, if rape cases without need of further proof other
unsubstantiated by clear and convincing than the commission of the crime because it is
evidence, has no weight in law and cannot be assumed that a rape victim had actually suffered
given greater evidentiary value than the positive moral injuries entitling her to such award.32
testimony of a rape victim.24 As between a
WHEREFORE, in view of the foregoing, the
categorical testimony that rings of truth on one
Decision of the Court of Appeals dated 28 April
hand, and a bare denial on the other, the former
2006 is AFFIRMED. Appellant FILOMINO LIZANO y
is generally held to prevail. 25
MARVILLA is hereby found guilty beyond
Appellants main argument, however, is reasonable doubt of statutory rape and is
premised on the delay incurred by the victim in sentenced to suffer the penalty of reclusion
reporting the crime. Appellant underscores the perpetua, and is ordered to pay the victim the
failure of the victim to report the alleged rape amounts of P50,000.00 as civil indemnity
which occurred in January 1996 even when there and P50,000.00 as moral damages.
was no showing that appellant was continuously
SO ORDERED.
threatening her after the said incident. 26

His does not persuade.

The Solicitor General correctly points out that

delay in reporting a rape incident does not
impair the credibility of the victim in the face of
threats of death or physical violence.27 Indeed,
delay in revealing the commission of rape is not
an indication of a fabricated charge. Such
intimidation must be viewed in light of the
victim's perception and judgment at the time of
the commission of the crime and not by any hard
and fast rule. It is enough that the intimidation
produces a fear that if the victim does not yield
to the perverse impulses of the accused,
something would happen to her at the moment,
or even thereafter, as when she is threatened
with death if she would report the incident.28

AAA satisfactorily explained the delay. Appellant

threatened to kill her, her grandmother and aunt
should she report the incident to anybody. 29 This
immediate threat directed at AAA, who was then
only eleven (11) years old, engendered fear on
her part to reveal the unpleasant incident. A
rape victim cannot, after all, be expected to
summon the courage to report a sexual assault
committed against her person, where the act
was accompanied by a death threat.30
Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 179570 February 4, 2010

EGAP MADSALI, SAJIRON LAJIM and MARON

LAJIM, Petitioner,
vs.
PEOPLE OF THE PHILIPPINES, Respondent.

DECISION

PERALTA, J.:

This is an appeal from the Decision 1of the Court

of Appeals (CA) in CA-G.R. CR-HC No. 00475,
affirming the Decision of the Regional Trial Court
(RTC) of Palawan, Puerto Princesa City, Branch
50, finding accused Sajiron Lajim and Maron
Lajim2 guilty beyond reasonable doubt of the
crime of abduction with rape in Criminal Case
No. 12281 and finding accused Egap Madsali and
Sajiron Lajim guilty beyond reasonable doubt of
the crime of serious illegal detention in Criminal
Case No. 12309.

In view of our decision in People v.

Cabalquinto,3 the real name and identity of the
rape victim, as well as the members of her
immediate family, are withheld. In this regard,
the rape victim is herein referred to as AAA; her
mother, BBB; and her father, CCC.

In Criminal Case No. 12281, Sajiron Lajim

(Sajiron) and Maron Lajim (Maron) were charged
with the crime of abduction with rape in an
Information4 dated March 17, 1995, which reads:

That on or about the 1st day of July, 1994, in

Barangay Malitub, Municipality of Bataraza,
Province of Palawan, Philippines, and within the
jurisdiction of this Honorable Court, the above-
named accused conspiring, confederating
together and helping one another and by means
of force, threat, violence and intimidation, while
armed with a bladed weapon known as
"Badong", did then and there willfully, unlawfully
and feloniously take and carry away one AAA, a
girl of 16 years of age, against her will and
consent and brought to the forest and on the
occasion thereof the said accused by means of
force, threat, violence and intimidation, and
while armed with a knife, accused Sahiron Lajim,
with lewd design, did then and there willfully,
unlawfully and feloniously have carnal
knowledge with said AAA, against her will and
consent, to her damage and prejudice.

That on the occasion of the said Rape, accused

Maron Lajim helped Sahiron Lajim by acting as
look-out during the commission of the said
crime.

CONTRARY TO LAW.

In Criminal Case No. 12309, Egap Madsali (Egap)

and Sajiron Lajim (Sajiron) were charged with the
crime of serious illegal detention in an Amended
Information5 dated August 28, 1995, which Sajiron held her breast, touched her private parts
reads: and inserted his sex organ inside her vagina.
AAA resisted, but to no avail. She felt pain and
That on or about the 2nd day of July, 1994 in the she noticed blood on her private parts. She was
morning up to December 15, 1994, at Barangay sexually abused three times on the ground,
Malitub, Municipality of Bataraza, Province of where she was made to lie down on a bed of
Palawan, Philippines, and within the jurisdiction leaves. During the entire time that AAA was
of this Honorable Court, the above-named being abused by Sajiron, Maron stood guard and
accused conspiring, confederating together and watched them. They left the forest at around
mutually helping one another, with the use of 10:00 o'clock in the morning of the following day
force, violence and intimidation, did then and and brought AAA to the house of Egap, where
there willfully, unlawfully and feloniously take she was detained in a room. Sajiron instructed
and detain AAA, an unmarried woman under 15 Egap to guard AAA and to shoot her if she would
years of age in the house of Egap Madsali attempt to escape.
thereby depriving said AAA of her liberty all
against her will and as a result of that illegal On July 2, 1994, AAAs mother came to get AAA,
detention, said AAA was not able to go home to but Egap refused and threatened to kill her
her mother for a period of more than five (5) daughter if she would report the matter to the
months. authorities. Out of fear of losing her daughter,
she went home and did not report the incident to
CONTRARY TO LAW. the police authorities.6 Egap asked AAA if she
Upon motion of the private prosecutor and with wanted to marry Sajiron, but she refused. AAA
the conformity of the Provincial Prosecutor's was then forced to sign an unknown document,
Office, Criminal Case No. 12309 was which she was not able to read.
consolidated with Criminal Case No. 12281, Nine days after the abduction, or on July 11,
pending before the RTC of Palawan, Puerto 1994, upon instruction of Egap, AAA and Sajiron
Princesa City, Branch 50. were married by Imam Musli Muhammad. The
Sajiron was arraigned on April 21, 1995 in marriage was solemnized against AAA's will and
Criminal Case No. 12281 and on September 21, without the presence of her parents. After the
1995 in Criminal Case No. 12309. He pleaded not marriage, AAA and Sajiron lived in the house of
guilty to both charges. Egap was arrested and, Egap, together with the latter's wife, children
thereafter, arraigned on March 8, 1996. He and mother-in-law. AAA stayed in one room with
pleaded not guilty in Criminal Case No. 12309. Sajiron. While detained, AAA did not try to
Maron was arrested and, later, arraigned on escape, because her house was very far from the
March 11, 1996. He pleaded not guilty in place where she was held captive, and her
Criminal Case No. 12281. A joint trial ensued. captors threatened to kill her and her family if
However, in July 1996, Egap escaped while under she would attempt to escape. During her
the custody of prison guards. detention, Sajiron abused her twice every night.
She was free to roam within the vicinity of the
The evidence presented by the prosecution are house but she was usually accompanied by
as follows: Egap's wife who served as her guard. She was
also guarded and threatened by Egap's sons.
On July 1, 1994, around 3:30 o'clock in the
She got pregnant after some time.
afternoon, fifteen-year-old AAA and her aunt Inon
Dama were fetching water in a cave in Barangay On November 24, 1994, BBB and Inon Dama
(Brgy.) Malitub, Bataraza, Palawan. Suddenly, went to Puerto Princesa City to report AAA's
Sajiron arrived, running towards them and abduction to the proper authorities. AAA was
carrying a badong (bolo). They tried to run away, detained at the house of Egap from July 2, 1994
but Sajiron overtook them. He held the hair of until December 15, 1994. On December 16,
AAA and told her, "Sara, you go with me. If you 1994, Sajiron and Egap were arrested by the
will not go with me, I will kill you." Inon Dama police.
came to AAA's rescue, but Sajiron tried to hack
her. Luckily, she was able to shield herself with a The defense, on the other hand, denied having
plastic container. AAA was crying while she held committed the crimes charged. Sajiron claimed
her aunt's hand. Sajiron then drew his gun, that he and AAA were engaged for three years
which was tucked in his waist, pointed it at Inon prior to their elopement. During the period of
Dama and said, "If you will not go, I will shoot their engagement, Sajiron lived with AAA in her
you." Inon Dama went home and reported the mother's house. AAA married Sajiron voluntarily
incident to AAA's mother. When Inon Dama left and out of her own free will. The sexual
the place, Maron, Sajiron's father, suddenly intercourse between AAA and Sajiron was
appeared with a gun and told AAA to come with consensual. The defense further claimed that
them. When AAA refused, Sajiron and Maron tied AAA merely filed criminal charges against Sajiron
her hands behind her back, covered her mouth because he did not pay the dowry (dower) in the
with a piece of cloth, and brought her to the amount of P10,000.00 to AAA's parents. Sajiron
forest. There, AAA was untied and undressed, asserted that he did not pay the dowry because
leaving only her bra on. While Sajiron was he had already rendered services to AAA's family
undressing AAA, she pleaded with him not to for about three years prior to his marriage with
abuse her, but Sajiron told her that if she would AAA. After the marriage, Sajiron and AAA were
submit to his desire, her life would be spared. brought by the latter's father to his house in
Balabac, Palawan. They stayed there for about
four months. Then they went to Brgy. Malitub,
Bataraza, Palawan and stayed at the house of
Egap for about two weeks. Sajiron was thereafter
arrested by the authorities. He only learned that
a case for abduction with rape was filed against
him by AAA when he was being interrogated by
the Bataraza Police.
On July 25, 2002, the RTC rendered a
Decision7 finding Sajiron and Maron guilty
beyond reasonable doubt of the crime of
abduction with rape. Egap and Sajiron were also
found guilty beyond reasonable doubt of the
crime of serious illegal detention. The dispositive
portion of the Decision is as follows:
The charge of rape is rendered doubtful only if
the delay was unreasonable and
unexplained.9 BBB explained that she did not
immediately report the abduction, rape and
detention of her daughter to the authorities,
because Egap threatened to kill AAA, 10 who was
then in his custody.
Further, BBB testified that, on another occasion,
Egap threatened to kill her if she dared to report
the matter to the authorities. True enough, when
Egap learned that she did what he forbade her to
do, he made good his threat and shot her at the
back.11 Thus, BBB's delay in reporting the
incident for five months should not be taken
against her.

WHEREFORE, premises considered, this Court Anent the second assignment of error,
finds the accused guilty beyond reasonable petitioners argue that the unrebutted
doubt of the crime charged, to suffer testimonies of CCC and Imam Musli Muhammad
imprisonment as follows: cast a reasonable doubt on the charge against
them. CCC testified that Sajiron courted his
1. In Criminal Case No. 12281, the accused daughter and proposed marriage after their
Sa[j]iron Lajim and Maron Lajim are hereby three-year courtship. He claimed that he gave
sentenced to suffer the penalty of Reclusion his consent to the marriage of his daughter to
Perpetua or forty (years) and each of the Sajiron. Prior to the marriage, CCC said that he
accused are ordered to indemnify the was even able to talk to his daughter and his
complainant AAA the same amount wife, and both were amenable to the marriage.
of P50,000.00 as and for civil indemnity; AAA never mentioned to him anything about
2. In Criminal Case No. 12309, the accused Egap having been kidnapped or raped. Neither did his
Madsali and Sa[j]iron Lajim are hereby sentenced wife tell him of their daughter's alleged
to suffer the penalty of Reclusion Perpetua and harrowing experience. He and his wife were
both accused are ordered to separately present during the marriage celebration.
indemnify the complainant AAA the amount Again, the testimony of CCC fails to persuade Us.
of P50,000.00 as and for civil indemnity. AAA testified that she had never seen her father
SO ORDERED. since she was a child, as her father had
abandoned them.12 BBB testified that she and
Petitioners filed a Notice of Appeal, and the her husband had been separated for a long time,
records of the case were forwarded to this Court. and she did not know his whereabouts. She
However, pursuant to this Courts ruling in further said that CCC left their place in March
People v. Mateo,8 the case was transferred to the 1983 to go to Malaysia, and that was the last
CA. The CA rendered a Decision dated July 31, time she saw him.13 CCC's allegation that his
2007 affirming the decision of the trial court in wife was present during the marriage celebration
Criminal Case Nos. 12281 and 12309. was also controverted by the testimonies of AAA,
her mother, and Imam Musli Muhammad. Thus,
Hence, this petition assigning the following
save for CCC's self-serving allegations, he could
errors:
not muster any sufficient evidence to beef up
THE HONORABLE COURT OF APPEALS ERRED IN those allegations. It is also very surprising that
IGNORING THE IMPLICATION OF THE 5-MONTH CCC, after his long absence, suddenly appeared
INACTION BY THE PRIVATE COMPLAINANT'S and testified for the defense. CCC would like to
MOTHER IN REPORTING THE ALLEGED impress upon this Court that he has maintained
ADBUCTION AND ILLEGAL DETENTION OF HER constant communication with his family;
DAUGHTER; AND however, no single witness was presented to
corroborate this claim.
THE HONORABLE COURT OF APPEALS ERRED IN
IGNORING THE UNREBUTTED TESTIMONY OF THE Furthermore, CCC, in his Malayang Sinumpaang
PRIVATE COMPLAINANT'S OWN FATHER. Salaysay14 dated December 28, 1995, alleged
that in 1991, his wife wrote and informed him
With respect to the first assigned error, that Sajiron asked for their daughter's hand in
petitioners allege that the five-month inaction of marriage. CCC replied that he was giving his
BBB through his failure to report the alleged permission for their daughter to marry. In the
abduction and illegal detention of her daughter same salaysay, he also said that Egap wrote him
is totally inconsistent with AAA's claim that she a letter on July 4, 1994 and instructed him to
was abducted and illegally detained. proceed to Malitub, Bataraza to discuss the
intended marriage of AAA and Sajiron. However,
We are not persuaded.
records are bereft of proof of the existence of
Delay in reporting an incident of rape due to these letters. Clearly, these allegations, being
death threats does not affect the credibility of unsupported by evidence, are self-serving and
the complainant, nor can it be taken against her. cannot be given any probative value.
Moreover, Imam Musli Mohammad, while been to cover up for the man she supposedly
testifying as prosecution witness, attested that loved. On the contrary, AAA lost no time in
the parents of AAA and Sajiron were not present reporting the incident to the National Bureau of
during the marriage,15 thus controverting CCC's Investigation,21 right after she was rescued by
allegation that he was present and gave consent the authorities.
to the marriage. Although Imam Musli
Muhammad, when presented as an accused Moreover, the "sweetheart theory" proffered by
witness, recanted his earlier testimony that CCC the accused is effectively an admission of carnal
was not present at the wedding, the same knowledge of the victim, which consequently
cannot be given credit. Recantations are frowned places on him the burden of proving the
upon by the courts. A recantation of a testimony supposed relationship by substantial
is exceedingly unreliable, for there is always the evidence.22 The "sweetheart theory" hardly
probability that such recantation may later on be deserves any attention when an accused does
itself repudiated. Courts look with disfavor upon not present any evidence, such as love letters,
retractions, because they can easily be obtained gifts, pictures, and the like to show that, indeed,
from witnesses through intimidation or for he and the victim were sweethearts. 23 In the
monetary considerations. Hence, a retraction case at bar, Sajiron was unable to present any
does not necessarily negate an earlier evidence to prove their relationship. Clearly, the
declaration. They are generally unreliable and "sweetheart theory" is a self-serving defense and
looked upon with considerable disfavor by the mere fabrication of the accused to exculpate
courts.16 Moreover, it would be a dangerous rule himself and his cohorts from the charges filed
to reject the testimony taken before a court of against them. It bears stressing that during her
justice, simply because the witness who has testimony before the trial court, AAA vehemently
given it later on changes his mind for one reason denied that she and Sajiron were sweethearts
or another.17 and firmly declared that the latter never lived in
their house.24
As to the defense of denial, the same is
inherently weak. Denial is a self-serving negative More importantly, in rape cases, the credibility of
evidence, which cannot be given greater weight the victim's testimony is almost always the
than that of the declaration of a credible witness single most important factor. When the victim's
who testifies on affirmative matters. Like alibi, testimony is credible, it may be the sole basis for
denial is an inherently weak defense, which the accused's conviction.25 This is so because,
cannot prevail over the positive and credible owing to the nature of the offense, in many
testimonies of the prosecution witnesses. Denial cases, the only evidence that can be given
cannot prevail over the positive testimonies of regarding the matter is the testimony of the
prosecution witnesses who were not shown to offended party.26
have any ill motive to testify against petitioner.18 In the case at bar, the trial court found AAA's
The assertion of the accused that the reason testimony credible. The trial court held that
why a criminal case was filed against him was AAA's testimony was clear, categorical and
his failure to pay the P10,000.00 dowry is too consistent. She remained steadfast in her
lame to be accepted as true. No young Filipina of assertions and unfaltering in her testimony given
decent repute would publicly admit she has been in court on the unfortunate incident. 27 The trial
raped unless that is the truth. Even in these court found that AAA positively identified Sajiron
modern times, this principle holds true. 19 When and Maron as her abductors and narrated how
the offended parties are young and immature she was taken and thrice raped by Sajiron in the
girls from 12 to 16, as in this case, courts are forest. AAA recounted her sordid experience as
inclined to lend credence to their version of what follows:
transpired, considering not only their relative AAA on Direct-Examination by Private Prosecutor
vulnerability, but also the public humiliation to Narrazid.
which they would be exposed by a court trial, if
their accusation were not true.20 Q: On July 1, 1994 more or less at 3:30 p.m. do
you remember where you were?
It is highly improbable that a young girl, such as
AAA, would concoct a horrid story and impute to A: Yes maam.
the accused a crime so grave and subject herself
Q: Where were you?
and her family to the humiliation and invasive
ordeal of a public trial just to avenge the alleged A: We fetched water on July 1, 1994.
non-payment of the dowry, unless she be
impelled by a genuine desire to expose the truth, Q: Where?
vindicate her honor and seek justice she so
A: In a cave, maam.
greatly deserves.
Q: Was there anything unusual that happened
Neither is the Court convinced of
during that time?
the "sweetheart theory," the defense of the
accused, by alleging that AAA and Sajiron were A: Yes maam.
engaged for three years prior to their elopement
and marriage. If there were indeed romantic Q: What was that incident?
relationship between AAA and Sajiron, as the
A: I noticed that Sahiron Lajim run towards me
latter claims, her normal reaction would have
and held me by my hair. He was carrying a
Barong and he was forcing me to go with him but A: He inserted his organ to my vagina. Then after
I refused maam. raping me he required me to wear my blouse. He
repeated the act again for two times up to the
Q: And what did you do if any when he forced following day, maam.
you to go with him?
Q: How long was the private part of Sahiron
A: He threatened me to kill me if I will not go Lajim inside your private part?
with him. What I did was to hold the hair of Inon
Dama who came to my rescue, maam. A: A little bit long. Nearing one (1) hour.

Q: What did Sahiron Lajim do if any? Q: That was the first time his organ entered your
private part?
A: He hacked Inon Dama but was not hit and it
was the container that was hit, maam. And A: Yes maam.
Sahiron Lajim left and I was forced to go with
him telling me, "go with me if you do not want to Q: Did you notice anything in your private part?
die." A: I have seen blood. I was even pushing him
Q: When this Inon Dama left what happened away.
next and you were left alone with Sahiron Lajim?
Q: How did you feel at that time when his organ
A: His father suddenly appeared who was also was inside your private part?
carrying a gun. A: It was painful, maam.
Q: What happened next? Q: And you stated that his organ entered your
A: The father of Sahiron Lajim told me to go with private part again for the second time, how long?
them but I refused. What they did was to tie my A I did not notice anymore how long was it,
hands behind my back and my mouth was maam.
covered by them by a piece of cloth, maam.
Q: And you stated Madam Witness that you were
Q: And after that what happened next? repeatedly raped that night, is that correct?
A: Then they brought me to the forest maam. A: Yes maam.
Q: And when you were in the forest what Q: Up to what time?
happened next?
A: The first time that he raped me was about
A: Sahiron Lajim raped me while his father was 7:00 oclock in the evening, the second was
watching maam. midnight. And the third was 3:00 oclock in the
Q: And how did Sahiron Lajim raped you? morning.

A: When we reached the forest my hands were Q: Were you able to sleep that night?
untied and my dress were removed and only my A: No maam.
bra was left maam.
Q: At the time when you were raped for the first
Q: Who removed your dress? time where was the father of Sahiron Lajim?
A: Sahiron Lajim maam. A: He was guarding maam.
Q: And you stated that it was only your bra that Q: How far was his father?
was left in your body how about your panty?
A: He was near a tree which was 10 meters away
A: It was already removed. from us.
Q: While Sahiron Lajim was undressing you what Q: Now, the place where you were brought by
did you do, if any? Sahiron Lajim is a forest?
A: I pleaded to him not to pursue his intention A: Yes maam.
and Sahiron Lajim threatened me that if I will
allow him to do such thing to me he will not kill Q: Was there a hut in that forest?
me, maam.
A: None maam, we were at a place where there
Q: And did he hold the private parts of your were big trees, maam.
body?
Q: So, you mean to say you were raped on the
A: Yes maam. (witness pointing to her bust, and ground?
the lower part of her body)
A: Yes maam.
Q: What other part did Sahiron Lajim touch in
Q: Without any blanket?
your body?
A: He got some leaves of trees, maam.
A: My private part, my vagina, maam.
Q: What did he do with that leaves of trees?
Q: What else did he do to you?
A: He secured some leaves and placed it on the
ground, which served as mat, maam.
Q: Now, the second and the third time that The accusatory portion of the information alleges
Sahiron Lajim raped you where was his father? that AAA was taken and carried away by Sajiron
and Maron against her will and brought to the
A: He was also there, maam.28 (Emphasis forest; and, on the occasion thereof, Sajiron -- by
supplied) means of force, threat, violence and intimidation
xxxx -- had carnal knowledge of AAA.
As a rule, this Court gives great weight to the
trial courts evaluation of the testimony of a
witness, because the trial court had the
opportunity to observe the facial expression,
gesture, and tone of voice of a witness while
testifying, thus, putting it in a better position to
determine whether a witness was lying or telling
the truth.29
However, the Court does not agree with the
findings of the CA affirming the trial court's
judgment finding Sajiron and Maron guilty of
abduction and rape in Criminal Case No. 12281.
An appeal in a criminal case opens the entire
case for review on any question, including one
not raised by the parties30 Article 342 of the
Revised Penal Code spells out the elements of
the crime of forcible abduction, thus: (a) that the
person abducted is a woman, regardless of her
age, civil status, or reputation; (b) that the
abduction is against her will; and (c) that the
abduction is with lewd designs.
A reading of the Information in Criminal Case No.
12281, for abduction with rape, would readily
show that the allegations therein do not charge
the accused with forcible abduction, because the
taking, as alleged, was not with lewd designs.
The only act that was alleged to have been
attended with lewd design was the act of rape.
Upon further perusal of the allegations in the
information, it appears that the crime charged
was actually the special complex crime of
kidnapping and serious illegal detention and
rape, defined and penalized under Article 267 of
the Revised Penal Code.
Although the information does not specifically
allege the term "kidnap or detain," the
information specifically used the
terms "take" and "carry away." To "kidnap" is to
carry away by unlawful force or fraud or to seize
and detain for the purpose of so carrying
away.31 Whereas, to "take" is to get into one's
hand or into one's possession, power, or control
by force or strategem.32 Thus, the
word take, plus the accompanying phrase carry
away, as alleged in the information, was
sufficient to inform the accused that they were
charged with unlawfully taking and detaining
AAA.
Further, the real nature of the criminal charge is
determined not from the caption or preamble of
the information or from the specification of the
provision of law alleged to have been violated,
they being conclusions of law which in no way
affect the legal aspects of the information, but
from the actual recital of facts as alleged in the
body of the information.33 Simply put, the crime
charged is determined by the information's
accusatory portion and not by its denomination.
The elements of kidnapping and serious illegal
detention under
Article 267 of the Revised Penal Code 34 are: (1)
the offender is a private individual; (2) he
kidnaps or detains another or in any other
manner deprives the latter of his liberty; (3) the
act of detention or kidnapping is illegal; and (4)
in the commission of the offense, any of the
following circumstances are present: (a) the
kidnapping or detention lasts for more than 3
days; or (b) it is committed by simulating public
authority; or (c) any serious physical injuries are
inflicted upon the person kidnapped or detained
or threats to kill him are made; or (d) the person
kidnapped or detained is a minor, female, or a
public officer.35
In the case at bar, Sajiron and Maron, who are
private individuals, forcibly took and dragged
AAA, a minor, to the forest and held her captive
against her will. The crime of serious illegal
detention consists not only of placing a person in
an enclosure, but also of detaining him or
depriving him in any manner of his liberty.36 For
there to be kidnapping, it is enough that the
victim is restrained from going home.37 Its
essence is the actual deprivation of the victim's
liberty, coupled with indubitable proof of the
intent of the accused to effect such
deprivation.38 In the present case, although AAA
was not actually confined in an enclosed place,
she was clearly restrained and deprived of her
liberty, because she was tied up and her mouth
stuffed with a piece of cloth, thus, making it very
easy to physically drag her to the forest away
from her home.
The crime of rape was also proven beyond
reasonable doubt in this case. Sajiron succeeded
in having carnal knowledge of AAA through the
use of force and intimidation. For fear of losing
her life, AAA had no choice but to give in to
Sajiron's beastly and lustful assault.
Clearly, conspiracy between Sajiron and Maron
attended the commission of forcible abduction
and the subsequent rape of AAA. Conspiracy
exists when two or more persons come to an
agreement concerning a felony and decide to
commit it.39 It may be inferred from the acts of
the accused before, during or after the
commission of the crime which, when taken
together, would be enough to reveal a
community of criminal design, as the proof of
conspiracy is frequently made by evidence of a
chain of circumstances. Once established, all the
conspirators are criminally liable as co-principals
regardless of the degree of participation of each
of them, for in the contemplation of the law, the
act of one is the act of all.40 In the case at bar, it
was proven that Sajiron and Maron cooperated to
prevent AAA from resisting her abduction by
tying her hands behind her back and putting a
piece of cloth in her mouth. Maron watched and and forced to cohabit with Sajiron. From the very
stood guard to make sure that no one would start of her detention on July 2, 1994, Egap
interrupt or prevent the bestial act perpetrated directed Sajiron to guard her, and shoot her if
by his son against AAA. Maron did not endeavor she attempted to escape.42 She did not dare to
to prevent his son from raping AAA thrice. The escape because the accused threatened to kill
next morning, Sajiron and Maron brought AAA to her and her family if she attempted to flee.43
the house of Egap to detain her there.
AAA was also guarded by Egap's wife. 44 Even the
The last paragraph of Art. 267 of the Revised two sons of Egap, upon the latter's instruction,
Penal Code provides that if the victim is killed or constantly guarded and threatened her to keep
dies as a consequence of the detention, or her from leaving.45 In fine, the accused had
is raped or subjected to torture or dehumanizing successfully instilled fear in AAA's mind that
acts, the maximum penalty shall be imposed. escaping would cause her not only her own life,
In People v. Larraaga,41 the Court explained that but also the lives of her loved ones.
this provision gives rise to a special complex
crime: To give a color of legitimacy to AAA's detention,
Sajiron married AAA. However, the marriage
This amendment introduced in our criminal between her and Sajiron is considered irregular
statutes, the concept of 'special complex crime' under the Code of Muslim Personal Laws
of kidnapping with murder or homicide. It (Presidential Decree No. 1083). Art. 15 (b) of said
effectively eliminated the distinction drawn by the law provides that no marriage contract shall
the courts between those cases where the killing be perfected unless the essential requisite of
of the kidnapped victim was purposely sought by mutual consent of the parties be freely given.
the accused, and those where the killing of the And under Art. 32 of the same law, if the consent
victim was not deliberately resorted to but was of either party is vitiated by violence,
merely an afterthought. Consequently, the rule intimidation, fraud, deceit or misrepresentation,
now is: Where the person kidnapped is killed in the marriage is considered irregular (fasid) from
the course of the detention, regardless of the time of its celebration.
whether the killing was purposely sought or was
merely an afterthought, the kidnapping and AAA did46 not give her consent to the
murder or homicide can no longer be complexed wedding. The marriage was solemnized only
under Art. 48, nor be treated as separate crimes, upon the instruction of Egap. 47
She was also
but shall be punished as a special complex crime forced to sign the marriage contract without the
under the last paragraph of Art. 267, as presence of her parents or any of her
amended by R.A. No. 7659." relatives.48 She did not want to marry Sajiron
because she did not love him. 49 The Imam who
Where the law provides a single penalty for two solemnized their marriage did not even ask for
or more component offenses, the resulting crime the consent of the parties.50 He was merely
is called a special complex crime. Some of the compelled to solemnize the marriage because he
special complex crimes under the Revised Penal was afraid of Egap, and the latter threatened
Code are (1) robbery with homicide, (2) robbery him.51 Clearly, the marriage ceremony was a
with rape, (3) kidnapping with serious physical farce, and was only orchestrated by the accused
injuries, (4) kidnapping with murder or homicide, in an attempt to exculpate themselves from
and (5) rape with homicide. In a special complex criminal responsibility.
crime, the prosecution must necessarily prove
each of the component offenses with the same Anent Criminal Case No. 12309, the prescribed
precision that would be necessary if they were penalty for serious illegal detention under Art.
made the subject of separate complaints. As 267 of the Revised Penal Code, as amended by
earlier mentioned, R.A. No. 7659 amended Republic Act (R. A.) No. 7659, is reclusion
Article 267 of the Revised Penal Code by adding perpetua to death. There being no aggravating
thereto this provision: "When the victim is killed or modifying circumstance in the commission of
or dies as a consequence of the detention, or is the offense, the proper penalty to be imposed
raped, or is subjected to torture or dehumanizing is reclusion perpetua, pursuant to Art. 63 of the
acts, the maximum penalty shall be imposed; Revised Penal Code.
and that this provision gives rise to a special As to Criminal Case No. 12281, the penalty for
complex crime. (Italics in the original) the special complex crime of kidnapping and
Thus, we hold that Sajiron and Maron are guilty serious illegal detention and rape is death.
beyond reasonable doubt of the special complex However, R.A. No. 9346, entitled "An Act
crime of kidnapping and serious illegal detentionProhibiting the Imposition of Death Penalty in
with rape in Criminal Case No. 12281. the Philippines," which was approved on June 24,
2006, prohibits the imposition of the death
In Criminal Case No. 12309, we also find Sajiron penalty. Thus, the penalty of death is reduced to
guilty beyond reasonable doubt of the crime of reclusion perpetua,52 without eligibility for
serious illegal detention. parole.53

All the elements of the crime of serious illegal
detention are present in the instant case: AAA, a
female and a minor, testified that on July 2,
1994, after she was raped in the forest, she was
brought to and detained at the house of Egap
As to accused Egap, his act of escaping from his
police escort during the pendency of his case
and his subsequent unexplained absence during
the promulgation of the decision convicting him
of the crime charged has divested him of the
right to avail himself of any remedy that may be
available to him, including his right to appeal. In
a recent case, this Court held that once an
accused jumps bail or flees to a foreign country,
or escapes from prison or confinement, he loses
his standing in court; and unless he surrenders
or submits to the jurisdiction of the court, he is
deemed to have waived any right to seek relief
from it.54 Hence, insofar as accused Egap is
concerned, the judgment against him became
final and executory upon the lapse of fifteen (15)
days from promulgation of the judgment.
As to the award of damages.
logically deduced that Sajiron is the father of the
child. Under Art. 345 of the Revised Penal
Code,65 he is civilly liable for the support of his
offspring. Hence, he is directed to provide
support to the victim's child born out of the rape,
subject to the amount and conditions to be
determined by the trial court, after due notice
and hearing, in accordance with Art. 201 of the
Family Code.66
WHEREFORE, the appeal is DENIED. The Decision
of the Court of Appeals in CA-G.R. CR-HC No.
00475 is AFFIRMED with MODIFICATIONS as
follows:

In Criminal Case No. 12281, AAA is entitled to (a) In Criminal Case No. 12281, accused Sajiron
civil indemnity in line with prevailing Lajim and Maron Lajim are found guilty beyond
jurisprudence that civil indemnification is reasonable doubt of the special complex crime of
mandatory upon the finding of rape.55 kidnapping and serious illegal detention with
rape under Article 267 of the Revised Penal
In People v. Quiachon,56 even if the penalty of Code, as amended by Republic Act No. 7659, and
death is not to be imposed because of the are sentenced to suffer the penalty of reclusion
prohibition in R.A. No. 9346, the civil indemnity perpetua, without eligibility for parole, and to
of P75,000.00 is proper, because it is not pay jointly and severally, the offended party
dependent on the actual imposition of the death AAA, the amounts of P75,000.00 as civil
penalty but on the fact that qualifying indemnity and P75,000.00 as moral damages.
circumstances warranting the imposition of the Accused Sajiron Lajim is further ordered to
death penalty attended the commission of the support the offspring born as a consequence of
offense. As explained in People v. the rape. The amount of support shall be
Salome,57 while R.A. No. 9346 prohibits the determined by the trial court after due notice
imposition of the death penalty, the fact remains and hearing, with support in arrears to be
that the penalty provided for by the law for a reckoned from the date the appealed decision
heinous offense is still death, and the offense is was promulgated by the trial court; and
still heinous. Accordingly, the civil indemnity for
AAA is P75,000.00. (b) In Criminal Case No. 12309, accused Sajiron
Lajim is found guilty beyond reasonable doubt of
In addition, AAA is entitled to moral damages the crime of kidnapping and serious illegal
pursuant to Art. 2219 of the Civil Code, 58 without detention under Article 267 of the Revised Penal
the necessity of additional pleadings or proof Code, as amended by Republic Act No. 7659, and
other than the fact of rape.59 Moral damages is is sentenced to suffer the penalty of reclusion
granted in recognition of the victim's injury perpetua and to pay the amounts of P50,000.00
necessarily resulting from the odious crime of as civil indemnity and P50,000.00 as moral
rape.60 Such award is separate and distinct from damages.
the civil indemnity.61 Therefore, the Court awards
the amount of P75,000.00 as moral SO ORDERED.
damages.1avvphi1

In Criminal Case No. 12309, for serious illegal

detention, the trial court's award of P50,000 civil
indemnity to AAA was proper, in line with
prevailing jurisprudence.62

We also find that AAA is entitled to moral

damages pursuant to Art. 2219 of the Civil Code,
which provides that moral damages may be
recovered in cases of illegal detention.63 This is
predicated on AAA's having suffered serious
anxiety and fright when she was detained for
more than five months. Thus, the Court awards
the amount of P50,000.00 as moral damages.64

Finally, AAA was sexually abused on July 1, 1994

and gave birth on April 8, 1995. There was no
showing that AAA had previously been sexually
abused or had sexual relations with other men.
Further, Dr. Ma. Rebethia Alcala, a Municipal
Health Officer of Bataraza, Palawan, testified
that since AAA gave birth on April 8, 1995, the
baby must have been conceived sometime in
July 1994, which was at or about the time of the
commission of the rape. Therefore, it can be
 G.R. No. 82146 January 22, 1990

EULOGIO OCCENA, petitioner,

vs.
HON. PEDRO M. ICAMINA, Presiding Judge,
Branch X of the Regional Trial Court Sixth
Judicial Region, San Jose, Antique; THE
PEOPLE OF THE PHILIPPINES, represented
by the Honorable Provincial Fiscal of
Antique; and CRISTINA
VEGAFRIA, respondents.

Comelec Legal Assistance Office for petitioner.

Comelec Legal Assistance Officer for private

respondent.

FERNAN, C.J.:

On May 31, 1979, herein petitioner Eulogio

Occena instituted before the Second Municipal
Circuit Trial Court of Sibalom, San Remigio
Belison, Province of Antique, Criminal Case No.
1717, a criminal complaint for Grave Oral
Defamation against herein private respondent
Cristina Vegafria for allegedly openly, publicly
and maliciously uttering the following insulting
words and statements: "Gago ikaw nga Barangay
Captain, montisco, traidor, malugus, Hudas,"
which, freely translated, mean: "You are a foolish
Barangay Captain, ignoramus, traitor, tyrant,
Judas" and other words and statements of similar
import which caused great and irreparable
damage and injury to his person and honor.

Private respondent as accused therein entered a

plea of not guilty. Trial thereafter ensued, at
which petitioner, without reserving his right to
file a separate civil action for damages actively
intervened thru a private prosecutor.

After trial, private respondent was convicted of

the offense of Slight Oral Defamation and was
sentenced to pay a fine of Fifty Pesos (P50.00)
with subsidiary imprisonment in case of
insolvency and to pay the costs. No damages
were awarded to petitioner in view of the trial
court's opinion that "the facts and circumstances
of the case as adduced by the evidence do not
warrant the awarding of moral damages." 1

Disagreeing, petitioner sought relief from the

Regional Trial Court, which in a decision dated
March 16, 1987 disposed of petitioner's appeal
as follows:

IN VIEW OF ALL THE FOREGOING, the civil aspect

of the lower court's decision of April 20, 1981
subject of this appeal, for lack of merit, is hereby
DENIED.

After the decision shall have become final,

remand the records of this case to the court of
origin, Second Municipal Circuit Trial Court of
Republic of the Philippines
Sibalom, San Remigio-Belison, Antique, for the
SUPREME COURT
execution of its decision on the criminal aspect.
Manila
SO ORDERED. 2
THIRD DIVISION
Petitioner is now before us by way of a petition
for review on certiorari seeking to annul the RTC
decision for being contrary to Article 100 of the
Revised Penal Code providing that every person
criminally liable for a felony is also civilly liable,
and Article 2219 of the New Civil Code providing
that moral damages may be recovered in libel,
slander or any other form of defamation. He
submits that public respondent RTC erred in
relying on the cases of Roa vs. de la Cruz, 107
Phil. 10 and Tan vs. Standard Vacuum Oil Co., et
al., 91 Phil. 672 cited therein. He differentiates
said cases from the case at bar by saying that in
the case of Roa, the decision of the trial court
had become final before Maria C. Roa instituted
a civil action for damages; whereas in the instant
case, the decision of the trial court has not yet
become final by reason of the timely appeal
interposed by him and no civil action for
damages has been instituted by petitioner
against private respondent for the same
cause. Tan, on the other hand, contemplates of
two actions, one criminal and one civil, and the
prosecution of the criminal case had resulted in
the acquittal of the accused, which is not the
situation here where the civil aspect was
impliedly instituted with the criminal action in
accordance with Section 1, Rule 111, of the Rules
of Court.
Private respondent for her part argues that the
decision of the trial court carries with it the final
adjudication of her civil liability. Since petitioner
chose to actively intervene in the criminal action
without reserving his right to file a separate civil
action for damages, he assumed the risk that in
the event he failed to recover damages he
cannot appeal from the decision of the lower
court.
We find merit in the petition.
The issues confronting us in the instant petition
is whether or not the decision of the Second
Municipal Trial Court of Sibalom, San-Remigio-
Belison, Province of Antique constitutes the final
adjudication on the merits of private
respondent's civil liability; and whether or not
petitioner is entitled to an award of damages
arising from the remarks uttered by private
respondent and found by the trial court to be
defamatory.
The decision of the Municipal Circuit Trial Court
as affirmed by the Regional Trial Court in
Criminal Case No. 1709 cannot be considered as
a final adjudication on the civil liability of private
respondent simply because said decision has not
yet become final due to the timely appeal filed
by petitioner with respect to the civil liability of
the accused in said case. It was only the
unappealed criminal aspect of the case which
has become final.
In the case of People vs. Coloma, 105 Phil. 1287,
we categorically stated that from a judgment
convicting the accused, two (2) appeals may,
accordingly, be taken. The accused may seek a
review of said judgment, as regards both civil
and criminal actions; while the complainant may
appeal with respect only to the civil action,
either because the lower court has refused to
award damages or because the award made is
unsatisfactory to him. The right of either to
appeal or not to appeal in the event of conviction
of the accused is not dependent upon the other.
Thus, private respondent's theory that in actively
intervening in the criminal action, petitioner
waived his right to appeal from the decision that
may be rendered therein, is incorrect and
inaccurate. Petitioner may, as he did, appeal
from the decision on the civil aspect which is
deemed instituted with the criminal action and
such appeal, timely taken, prevents the decision
on the civil liability from attaining finality.
We tackle the second issue by determining the
basis of civil liability arising from crime. Civil
obligations arising from criminal offenses are
governed by Article 100 of the Revised Penal
Code which provides that "(E)very person
criminally liable for a felony is also civilly liable,"
in relation to Article 2177 of the Civil Code on
quasi-delict, the provisions for independent civil
actions in the Chapter on Human Relations and
the provisions regulating damages, also found in
the Civil Code.
Underlying the legal principle that a person who
is criminally liable is also civilly liable is the view
that from the standpoint of its effects, a crime
has dual character: (1) as an offense against the
state because of the disturbance of the social
order; and (2) as an offense against the private
person injured by the crime unless it involves the
crime of treason, rebellion, espionage, contempt
and others wherein no civil liability arises on the
part of the offender either because there are no
damages to be compensated or there is no
private person injured by the crime. 3 In the
ultimate analysis, what gives rise to the civil
liability is really the obligation of everyone to
repair or to make whole the damage caused to
another by reason of his act or omission,
whether done intentional or negligently and
whether or not punishable by law. 4
In the case at bar, private respondent was found
guilty of slight oral defamation and sentenced to
a fine of P50.00 with subsidiary imprisonment in
case of insolvency, but no civil liability arising
from the felonious act of the accused was
adjudged. This is erroneous. As a general rule, a
person who is found to be criminally liable
offends two (2) entities: the state or society in
which he lives and the individual member of the
society or private person who was injured or
damaged by the punishable act or omission. The
offense of which private respondent was found
guilty is not one of those felonies where no civil
liability results because either there is no
offended party or no damage was caused to a
private person. There is here an offended party,
whose main contention precisely is that he
suffered damages in view of the defamatory
words and statements uttered by private
respondent, in the amount of Ten Thousand
Pesos (P10,000.00) as moral damages and the
further sum of Ten Thousand Pesos (P10,000) as
exemplary damages.
Article 2219, par. (7) of the Civil Code allows the
recovery of moral damages in case of libel,
slander or any other form of defamation This
provision of law establishes the right of an
offended party in a case for oral defamation to
recover from the guilty party damages for injury
to his feelings and reputation. The offended
party is likewise allowed to recover punitive or
exemplary damages.

It must be remembered that every defamatory

imputation is presumed to be malicious, even if
it be true, if no good intention and justifiable
motive for making it is shown. And malice may
be inferred from the style and tone of
publication 5 subject to certain exceptions which
are not present in the case at bar.

Calling petitioner who was a barangay captain

an ignoramus, traitor, tyrant and Judas is clearly
an imputation of defects in petitioner's character
sufficient to cause him embarrassment and
social humiliation. Petitioner testified to the
feelings of shame and anguish he suffered as a
result of the incident complained of. 6 It is
patently error for the trial court to overlook this
vital piece of evidence and to conclude that the Republic of the Philippines
"facts and circumstances of the case as adduced SUPREME COURT
by the evidence do not warrant the awarding of Manila
moral damages." Having misapprehended the
facts, the trial court's findings with respect THIRD DIVISION
thereto is not conclusive upon us.

From the evidence presented, we rule that for

G.R. No. 130030 June 25, 1999
the injury to his feelings and reputation, being a
barangay captain, petitioner is entitled to moral EXPERTRAVEL & TOURS, INC., petitioner,
damages in the sum of P5,000.00 and a further vs.
sum of P5,000.00 as exemplary damages. THE HON. COURT OF APPEALS and RICARDO
WHEREFORE, the petition is hereby GRANTED. LO, respondents.
The decision of the Regional Trial Court is hereby
MODIFIED and private respondent is ordered to
pay petitioner the amount of P5,000.00 as moral VITUG, J.:
damages and another P5,000.00 as exemplary
Petitioner, Expertravel and Tours, Inc., seeks in
damages. Costs against private respondent.
the instant petition for review on certiorari a
SO ORDERED. modification of the decision, dated 20 March
1997, of the Court of Appeals affirming in
toto the 07th November 1994 judgment of the
Regional Trial Court (Branch 5) of Manila, the
dispositive portion of which reads:

WHEREFORE, in view of all the foregoing,

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

No pronouncement as to other damages for lack

of evidence to warrant the same. 1

The factual and case settings of the controversy

are culled from the pleadings on record and the
assailed decision of the appellate court and that
of the court a quo.

On 07 October 1987, Expertravel & Tours, Inc.,

("Expertravel"), a domestic corporation engaged
in the travel agency business, issued to private
respondent Ricardo Lo four round-trip plane
tickets for Hongkong, together with hotel
accommodations and transfers, for a total cost of
P39,677.20. Alleging that Lo had failed to pay
the amount due, Expertravel caused several
demands to be made. Since the demands were
ignored by Lo, Expertravel filed a court
complaint for recovery of the amount claimed
plus damages.
Respondent Lo explained, in his answer, that his
account with Expertravel had already been fully
paid. The outstanding account was remitted to
Expertravel through its then Chairperson, Ms.
Ma. Rocio de Vega, who was theretofore
authorized to deal with the clients of
Expertravel. The payment was evidenced by a
Monte de Piedad Check No. 291559, dated 06
October 1987, for P42,175.20 for which Ms. de
Vega, in turn, issued City Trust Check No. 417920
in favor of Expertravel for the amount of
P50,000.00, with the notation "placement
advance for Ricardo Lo, etc." Per its own invoice,
Expertravel received the sum on 10 October
1987.
The trial court, affirmed by the appellate court,
held that the payment made by Lo was valid and
bidding on petitioner Expertravel. Even on the
assumption that Ms. de Vera had not been
specifically authorized by Expertravel, both
courts said, the fact that the amount "delivered
to the latter remain(ed) in its possession up to
the present, mean(t) that the amount redounded
to the benefit of petitioner Expertravel, in view
of the second paragraph of Article 1241 of the
Civil Code to the effect that payment made to a
third person shall also be valid in so far as it has
rebounded to the benefit of the creditor."
In this recourse, petitioner confines itself to the
following related legal issues; viz.:
I. Can moral damages be recovered in a clearly
unfounded suit?
II. Can moral damages be awarded for
negligence or quasi-delict that did not result to
physical injury to the offended party? 2
There is merit in the petition.
Moral damages are not punitive in nature but are
designed to
compensate 3 and alleviate in some way the
physical suffering, mental anguish, fright, serious
anxiety, besmirched reputation, wounded
feelings, moral shock, social humiliation, and
similar injury unjustly caused to a person.
Although incapable of pecuniary computation,
moral damages, nevertheless, must somehow be
proportional to and in approximation of the
suffering inflicted. 4 Such damages, to be
recoverable, must be the proximate result of a
wrongful act or omission the factual basis for
which is satisfactorily established by the
aggrieved party. 5 An award of moral damages
would require certain conditions to be met; to
wit: (1) First, there must be an injury, whether
physical, mental or psychological, clearly
sustained by the claimant; (2) second, there
must be a culpable act or omission factually
established; (3) third, the wrongful act or
omission of the defendant is the proximate
cause of the injury sustained by the claimant;
and (4) fourth, the award of damages is
predicated on any of the cases stated in Article
2219. 6 Under the provisions of this law, in culpa
contractual or breach of contract, moral
damages may be recovered when the defendant
acted in bad faith or was guilty of gross
negligence (amounting to bad faith) or in wanton
disregard of his contractual obligation and,
exceptionally, when the act of breach of contract
itself is constitutive of tort resulting in physical
injuries. 7 By special rule in Article 1764, in
relation to Article 2206, of the Civil Code, moral
damages may also be awarded in case the death
of a passenger results from a breach of carriage.
In culpa aquiliana, or quasi-delict, (a) when an
act or omission causes physical injuries, or (b)
where the defendant is guilty of intentional
tort, 8 moral damages may aptly be recovered.
This rule also applies, as aforestated, to
contracts when breached by tort. In culpa
criminal, moral damages could be lawfully due
when the accused is found guilty of physical
injuries, lascivious acts, adultery or concubinage,
illegal or arbitrary detention, illegal arrest, illegal
search, or defamation. Malicious prosecution can
also give rise to a claim for moral damages. The
term "analogous cases," referred to in Article
2219, following the ejusdem generis rule, must
be held similar to those expressly enumerated
by the law. 9
Although the institution of a clearly unfounded
civil suit can at times be a legal justification for
an award of attorney's fees, 10 such filing,
however, has almost invariably been held not to
be a ground for an award of moral
damages. 11 The rationale for the rule is that the
law could not have meant to impose a penalty
on the right to litigate. The anguish suffered by a
person for having been made a defendant in a
civil suit would be no different from the usual
worry and anxiety suffered by anyone who is
haled to court, a situation that cannot by itself
be a cogent reason for the award of moral
damages. 12 If the rule were otherwise, then
moral damages must every time be awarded in
favor of the prevailing defendant against an
unsuccessful plaintiff. 13
The Court confirms, once again, the foregoing
rules.
WHEREFORE, the petition is GRANTED and the
award of moral damages to respondent Ricardo
Lo under the assailed decision is DELETED. In its
other aspects, the appealed decision shall
remain undisturbed. No costs.1wphi1.nt
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 136722 April 12, 2000

INDUSTRIAL INSURANCE COMPANY,

Inc., petitioner,
vs.
PABLO BONDAD and LIGORIO
BONDAD, respondents.

PANGANIBAN, J.:

No person should be penalized for the exercise

of the right to litigate. This right, however, must
be exercised in good faith. Absence of good faith
in the present case is shown by the fact that
petitioner clearly has no cause of action against
respondents but it recklessly filed suit anyway
and wantonly pursued pointless appeals, thereby
causing the latter to spend valuable time, money
and effort in unnecessarily defending
themselves, incurring damages in the process.
The Case (d) the counterclaim interposed by the
defendants except that of the Bondads.
Before us is a Petition for Review under Rule 45
assailing the July 29, 1998 Decision1 of the Court 5. The claim made by plaintiff Grace Ladaw
of Appeals2(CA), as well as its December 4, 1998 Morales is likewise dismissed for lack of evidence
Resolution in CA-GR CR CV No. 50573. In its in support thereof. She is not held liable in favor
Decision, the CA ruled:3 of Pablo Bondad and Ligorio Bondad for lack of
proof that she authorized the filing of this suit.5
WHEREFORE, the Decision appealed from is
AFFIRMED with the MODIFICATION that the The December 4, 1998 CA Resolution denied
award for attending hearings in the amount of petitioner's Motion for Reconsideration.
P10,500.00 is deleted; and the award for moral
and exemplary damages is reduced to The Facts
P50,000.00 and P10,000.00, respectively. The present Petition finds its roots in an incident
The trial court ruling modified by the CA reads which involved three vehicles: a Galant Sigma
4

as follows: car driven by Grace Ladaw Morales, a packed

passenger jeepney originally driven by Ligorio
WHEREFORE, from all the foregoing findings, the Bondad, and a DM Transit Bus driven by Eduardo
Court hereby renders judgment as follows: Mendoza.

1. Ordering the defendants D.M. Transit Pfc. Agapito L. Domingo of the Southern Police
Corporation, D.M. Consortium Inc. and Eduardo District investigated the accident and filed the
Diaz y Mendoza jointly and severally, to pay following report:
plaintiff Industrial Insurance Co., Inc.:
Investigation disclosed that shortly before the
(a) The sum of P29,800.00 representing the accident took place, V-3 (D.M. Transit Bus) was
amount it had to pay to Grace Ladaw Morales traveling along South Expressway coming from
under its Insurance Policy No. 00857, with Alabang towards the general direction of Makati.
interest thereon at the legal rate from April 12, When upon reaching a place at KM Post 14 [in
1985 until fully paid; front] of Merville Subd., said V-3 hit and bumped
the rear left side portion of V-1 [Bondads'
(b) The sum of P2,000 as litigation and jeepney] which was then at [stop] position due
adjustment expenses; and to flat tire[;] due to the severe impact cause by
(c) The sum of P15,000.00 as and for attorney's V-3 it swerved to the left and collided with the
fees; right side portion of V-2 [Morales' car] which was
travelling [in] the same direction taking the
2. Ordering the plaintiff Industrial Insurance Co., innermost lane[;] V-2 was dragged to its left side
Inc., to pay to the defendants-counterclaimants and hit the concrete wall. All vehicles incurred
Pablo Bondad and Ligorio Bondad jointly and damages and sustaining injuries to the occupant
severally: of V-1 and the passengers of V-3. Victims were
brought to the hospital for treatment.6
(a) The sum of P15,000.00 representing their
attorney's fees, and P6,300.00 as appearance Before the Regional Trial Court of Makati on April
fees; 12, 1985, Petitioner Industrial Insurance
Company, Inc. and Grace Ladaw Morales filed a
(b) The sum of P10,500.00 representing their
Complaint for damages7 against DM Transit
expenses for the twenty-one hearings consisting
Corporation, Eduardo Diaz, Pablo Bondad and
of jeepney hire and meals;
Ligorio Bondad. Petitioner contended that it had
(c) The sum of P75,000.00 in the concept of paid Morales P29,800 for the damages to her
moral damages for their having been recklessly insured car. It also asserted that the December
and without basis being impleaded by the 17, 1984 accident had been caused "solely and
plaintiff inspite of the clear language in the proximately" by the "joint gross and wanton
Traffic Investigation Report (Exhibit "1-A") negligence, carelessness and imprudence of
submitted by Pfc. Agapito Domingo; and both defendant drivers Eduardo Diaz y Mendoza
and Ligorio Bondad y Hernandez, who failed to
(d) The sum of P25,000.00 by way of exemplary exercise and observe the diligence required by
damages. law in the management and operation of their
respective vehicles and by their defendant
3. Ordering the cross-defendants jointly and
employers; D.M. Transit Corporation and Pablo
severally to pay the cross-claimants Bondads the
Bondad, respectively, for their failure to exercise
sum of P8,000.00 representing the cost of
the diligence required of them by law in the
repairs of the jeepney, with interest at the legal
selection and supervision of their employees
rate from April 2, 1985 until fully paid.
including their aforementioned involved drivers.8
4. Dismissed for lack of merit are:
On June 6, 1985, Respondents Pablo and Ligorio
(a) the cross-claim against the Bondads; Bondad filed their Answer9 denying any
responsibility or liability to petitioner and
(b) the third party complaint against the GSIS; Morales. They asserted that their vehicle was on
full stop because of a flat tire. Thus, it was the
(c) the cross-claims against the GSIS; and
bus which hit Morales' car. 10 In their
Counterclaim, they contended that petitioner
had acted in bad faith in impleading them and formal demand been made by the plaintiffs on
that, contrary to its allegation, no prior demand the Bondads, matters could have been clarified.
had been made upon them. 11 As it were, the Bondads had to come to Makati
from Alaminos every time this case was set for
In its October 14, 1991 Decision, the trial court hearing and not only suffered inconvenience but
exculpated the Bondads and ordered petitioner incurred expenses, particularly for attorney's
to pay them actual, moral and exemplary fees.
damages, as well as attorney's fees.
We, however, believe that the expenses for
Petitioner appealed to the Court of Appeals, attending the hearings should be deleted, the
which affirmed the ruling of the trial court with same not having been sufficiently proven.
modification. Likewise, moral and exemplary damages should
Hence, this Petition for Review. 12 be reduced to the more reasonable amounts of
P50,000.00 and P10,000.00, respectively.
The CA Ruling
Issues
The appellate court debunked petitioner's
assertion that it had a cause of action against In its Memorandum, petitioner presents the
13

the Bondads, whose negligence was allegedly following issues for resolution:
the proximate cause of the damage to the A) Whether or not the assailed decision and
insured vehicle. resolution of the Honorable Court of Appeals
The records are clear, however, that soon after were scrutinized closely with the legal aspect of
the D.M. Transit Bus hit the jeepney of the law, Articles 2202, 2203, 2219 and 2220 of the
defendant Bondad, the bus swerved to the left Civil Code, in light of the evidence presented in
hitting the car of plaintiff Morales. This fact was making its decision and its resolution.
supported by the investigation report made by B) Whether or not the Honorable Court of
Pfc. Agapito L. Domingo of the Southern Police Appeals with due respect, went out of the "path
District (Exh. "A") as well as the testimony of of law" and disregarded past precedents
defendant Ligorio Bondad which was supported applicable to the case at bar.
by photographs of defendant Bondad's jeepney
which were taken immediately after the incident. In the main, the core issue is the propriety of the
(Exh. "3") It was shown that the jeepney award of moral and exemplary damages, as well
remained at the right shoulder of the expressway as attorney's fees, to the respondents. We shall
(northbound) even after it had been hit forward also discuss a preliminary matter: the cause of
from its position as a result of the impact. the accident.
According to Ligorio Bondad, when he noticed
that his tire was flat, he slowed down and drove The Court's Ruling
towards the rightmost lane of the expressway The Petition is not meritorious.
with great difficulty until he was able to stop at
the right shoulder of the road. (TSN, pp. 55-62, Preliminary Issue:
March 21, 1989) This was consistent with the
Cause of Accident
affidavit he had made at the Traffic Bureau
Station in Fort Bonifacio on the same day of the Petitioner insists that the negligence of Ligorio
accident, December 17, 1984. (Exh. "2-A") and Pablo Bondad was the proximate cause of
the accident that damaged the insured vehicle of
Proximate cause is that which, in natural and
Grace Ladaw Morales.
continuous sequence, unbroken by an efficient
intervening cause, produces injury without which This argument deserves scant consideration.
the result would not have occurred. (Sabena Questions regarding the cause of the accident
Belgian World Airline, 255 SCRA 38; Pilipinas and the persons responsible for it are factual
Bank vs. Court of Appeals, 234 SCRA 435) As issues which we cannot pass upon. It is
borne out by the evidence in this case, the jurisprudentially settled that, as a rule, the
proximate cause of the damage to the car of jurisdiction of this Court is limited to a review of
plaintiff Morales was the negligence of the driver errors of law allegedly committed by the
of the DM Transit bus. Plaintiff-appellant had no appellate court. It is not bound to analyze and
valid cause of action against defendants Bondad. weigh all over again the evidence already
considered in the proceedings below. 14
The CA, however, reduced the lower court's
award of damages to the Bondads, ratiocinating True, there are instances when this Court may
as follows: review factual issues, 15 but petitioner has failed
to demonstrate why his case falls under any of
We agree with the trial court when it granted the
them. There is no contrariety between the
counter-claim of defendants Bondad. The
findings of the trial court and those of the CA as
plaintiff-appellant insurance company did not
to what and who had caused the December 17,
verify the facts before impleading the Bondads in
1984 accident. We find no reason to modify or
this action for damages. The trial court noted
reverse both courts' finding that the mishap was
that plaintiff-appellant failed to even make a
caused by the negligence of Eduardo Diaz, the
formal demand from the defendants Bondad
bus driver.
before it filed the present case. As stated by the
trial court in the aforequoted decision, had a Main Issue:
Award of Damages and Attorney's Fees It is further the Court's finding that the plaintiffs
have absolutely no cause of action against the
In justifying the award of attorney's fees and Bondads.1wphi1 The latter's jeepney never got
other litigation expenses, the appellate court into contact with Ms. Morales' car. While it is true
held that respondents were compelled to litigate that before the D.M. Transit Bus hit Ms. Morales
an unfounded suit because of petitioner's car, it had gotten involved in an accident with
negligence and lack of prudence in not verifying the Bondad jeepney[;] it is equally true that at
the facts before filing this action. In affirming the the time of the accident the Bondad jeepney was
award of moral damages, it accepted the trial at an emergency stop. This fact was obvious not
court's justification that respondents had "been only from the scene of the accident but also from
recklessly and without basis . . . impleaded by the police investigation report. There was no
the plaintiff in spite of the clear language in the need to implead the Bondads as defendants, and
Traffic Investigation Report . . . submitted by Pfc. if the jeepney had in any way caused, or
Agapito Domingo." 16 contributed to, the accident, it could very well be
We agree. impleaded by the D.M. Transit Bus operator.
Worse, no demand for payment was ever made
Attorney's fees may be awarded by a court if one by the plaintiffs on the Bondads. Had a formal
who claims it is compelled to litigate with third demand been made by the plaintiffs on the
persons or to incur expenses to protect one's Bondads, the latter's role could have been
interests by reason of an unjustified act or clarified. As it is, they had to face a lawsuit and
omission on the part of the party from whom it is were constrained to come all the way to Makati
sought. 17 from Alaminos for not to do so could place them
in a situation where judgment may be rendered
In this case, the records show that petitioner's
against them. 18
suit against respondents was manifestly
unjustified. In the first place, the contact In impleading respondents, petitioner clearly
between the vehicles of respondents and of acted in wanton disregard of facts that were as
Morales was completely due to the impact of the obvious then as they are now. To repeat, even a
onrushing bus. This fact is manifest in the police cursory examination of the police investigation
investigation report and, significantly, in the report and other pertinent data at the time
findings of facts of both lower courts. would show that there was no reason to implead
respondents. The carelessness and lack of
Moreover, even a cursory examination of the
diligence of petitioner destroy its claim of good
events would show that respondents were not
faith. Accordingly, the award of attorney's fees
even remotely the cause of the accident. Their
should be sustained.
vehicle was on the shoulder of the road because
of a flat tire. In view of their emergency In the same vein, we affirm the award of moral
situation, they could not have done anything to damages. To sustain this award, it must be
avoid getting hit by the bus. Verily, an ordinary shown that (1) the claimant suffered injury, and
person has no reason to think that respondents (2) such injury sprung from any of the cases
could have caused the accident. It is difficult to listed in Articles 2219 and 2220 of the Civil Code.
imagine how petitioner could have thought so. It is not enough that the claimant alleges mental
anguish, serious anxiety, wounded feelings,
More significantly, petitioner knew that
social humiliation, and the like as a result of the
respondents were not the cause of the accident.
acts of the other party. It is necessary that such
This is evident from its failure to even make a
acts be shown to have been tainted with bad
prior formal demand on them before initiating
faith or ill motive. 19
the suit. Indeed, the cause of the accident was
the negligence of the DM Transit bus driver. In In the case at bar, it has been shown that the
this light, we agree with the following findings of petitioner acted in bad faith in compelling
the trial court: respondents to litigate an unfounded claim. As a
result, Respondent Ligorio Bondad "could no
It is the Court's findings that the D.M. Transit Bus
longer concentrate on his job." Moreover, Pablo
in question was recklessly engaged in a race
Bondad became sick and even suffered a mild
with a Baliuag Transit Bus and tried to outrun the
stroke. Indeed, respondents' anxiety is not
former by using the shoulder of the road, a tactic
difficult to understand. They were innocently
that is very common along the South
attending to a flat tire on the shoulder of the
Expressway. Unfortunately for the D.M. Transit
road; the next thing they knew, they were
Bus, defendant Pablo Bondad's jeepney was at a
already being blamed for an accident. Worse,
stop at the shoulder along the path to be taken
they were forced to commute all the way from
by the erring bus[;] it was not parked, but was at
Laguna to Makati in order to attend the hearings.
an emergency stop, the emergency being a flat
Under the circumstances of this case, the award
tire. The consequence of this rash action was the
of moral damages is justified.
accident to the Bondad jeepney and
subsequently to the Lancer car owned and Likewise, we affirm the award of exemplary
operated by one Grace Morales Ladaw which damages because petitioner's conduct
vehicle was pinned by the D.M. Transit to the needlessly dragged innocent bystanders into an
concrete island dividing the road. There can be unfounded litigation. Indeed, exemplary
no question that the driver of the D.M. Transit damages are imposed by way of example or
Bus was at fault for the accident. correction for the public good, in addition to
moral, temperate, liquidated or compensatory 163.59 square meters with the privilege to use
damages. 20 two (2) parking slots covered by Condominium
Certificate of Title (CCT) No. 15802. This
In sum, the Court affirms the award of moral Contract to Sell3 was not registered with the
damages, exemplary damages, attorney's fees Register of Deeds of Manila. Thus, the subject
and litigation expenses. The facts of this case unit remained in the name of Bayfront with a
clearly show that petitioner was motivated by clean title.
bad faith in impleading respondents. Indeed, a
person's right to litigate, as a rule, should not be On July 7, 1990, petitioner spouses Carlos and
penalized. This right, however, must be Rosario Suntay (Spouses Suntay) also purchased
exercised in good faith. 21 several condominium units on the 4 th floor of
One final note. Respondents pray that the Bayfront Tower Condominium through another
amount of actual, moral and exemplary damagescontract to sell. Despite payment of the full
purchase price, however, Bayfront failed to
awarded by the trial court be reinstated. 22 We
deliver the condominium units. When Bayfront
cannot do so in this case because they did not
failed to reimburse the full purchase price,
appeal the CA Decision. Jurisprudentially, they
are deemed to be satisfied with it and thus Spouses Suntay filed an action against it before
the Housing and Land Use Regulatory Board
cannot be allowed to attack it belatedly in their
Memorandum.1wphi1.nt (HLURB) for violation of Presidential Decree (P.D.)
No. 957 and P.D. No. 1344, rescission of contract,
WHEREFORE, the Petition is hereby DENIED and sum of money, and damages.
the assailed Decision AFFIRMED. Double costs
against petitioner. In its decision, dated April 23 1994, the HLURB
rescinded the Contract to Sell between Bayfront
SO ORDERED.
and Spouses Suntay and ordered Bayfront to pay
Spouses Suntay the total amount of ?
2,752,068.60 as purchase price with interest.
Consequently, on November 16, 1994, the
HLURB issued a writ of execution.4

Upon the application of Spouses Suntay, the

SECOND DIVISION
G.R. No. 208462, December 10, 2014
SPOUSES CARLOS J. SUNTAY AND ROSARIO 1995, and Spouses Suntay were the highest
R. SUNTAY, Petitioners, v. KEYSER bidder. Consequently, on March 1, 1995, the
MERCANTILE, INC., Respondent.
DECISION
MENDOZA, J.:
This is a petition for review on certiorari seeking
to reverse and set aside the September 7, 2012
Decision1 and the August 8, 2013 Resolution2 of
the Court of Appeals (CA) in CA-G.R. CV No.
94677, entitled Keyser Mercantile, Inc., v.
Spouses Carlos and Rosario Suntay involving
the ownership of Unit G and two (2) parking slots
in Bayfronts Tower Condominium.
The Facts
On October 20, 1989, Eugenia Gocolay,
chairperson and president of respondent Keyser
Mercantile, Inc. (Keyser), entered into a contract
to sell with Bayfront Development Corporation
(Bayfront) for the purchase on installment basis
of a condominium unit in Bayfront Tower
Condominium located at A. Mabini Street,
Malate, Manila. The subject of the sale was Unit
G of the said condominium project consisting of
Sheriffs of the Regional Trial Court (RTC) of
Manila levied Bayfronts titled properties,
including the subject condominium Unit G and
the two parking slots. Considering that CCT No.
15802 was still registered under Bayfront with a
clean title, the sheriffs deemed it proper to be
levied. The levy on execution5 in favor of
Spouses Suntay was duly recorded in the
Register of Deeds of Manila on January 18, 1995.
The auction sale was conducted on February 23,
Certificate of Sale6 in favor of Spouses Suntay
was issued. This was duly annotated at the back
of CCT No. 15802 on April 7, 1995.
Meanwhile, the Deed of Absolute Sale 7 between
Bayfront and Keyser involving the subject
property was finally executed on November 9,
1995. The latter allegedly paid the full purchase
price sometime in 1991. When Keyser was about
to register the said deed of absolute sale in
February 1996, it discovered the Notice of Levy
and the Certificate of Sale annotated at the back
of CCT No. 15802 in favor of Spouses Suntay.
Nevertheless, on March 12, 1996, the Register of
Deeds cancelled the title of Bayfront and issued
CCT No. 264748 in the name of Keyser but
carried over the annotation of the Suntays.9
Subsequently, the sheriffs Final Deed of
Sale10 was executed on April 16, 1996 in favor of
the Suntays upon the expiration of the one (1)
year period of redemption from the earlier
auction sale. CCT No. 26474 of Keyser was
cancelled and, thereafter, CCT No. 34250-A11 was
issued in the name of Spouses Suntay.
Keyser then filed a complaint for annulment of SO ORDERED.14
auction sale and cancellation of notice of levy
before the HLURB, docketed as HLURB Case No. Spouses Suntay filed a motion for
REM 032196-9152. In its decision, dated reconsideration, but it was denied in the August
November 18, 1996, the HLURB ruled in favor of 8, 2013 Resolution of the CA.
Keyser. Spouses Suntay appealed the decision to
the Office of the President and later to the CA Hence, this petition, anchored on the following
but both affirmed the HLURB judgment. STATEMENT OF ISSUES

On appeal before this Court, however, the HLURB I

decision was set aside. In its September 23,
2005 Decision, the Court ruled that the HLURB WHETHER OR NOT THE COURT OF APPEALS
had no jurisdiction over controversies between COMMITTED A REVERSIBLE ERROR IN
condominium unit owners and the issue of SUSTAINING THE TRIAL COURTS DECISION BY
ownership, possession or interest in the disputed NOT DISMISSING THE COMPLAINT CASE OF
condominium units could not be adjudicated by HEREIN RESPONDENT ON GROUND OF
the HLURB due to its limited jurisdiction under PRESCRIPTION OF ACTIONS UNDER ARTICLE
P.D. No. 957 and P.D. No. 1344. 1146 OF THE CIVIL CODE OF THE PHILIPPINES,
AS WELL AS, DUE TO ESTOPPEL BY LACHES;
II
RTC Ruling
WHETHER OR NOT THE COURT OF APPEALS IN
Undaunted, on March 24, 2006, Keyser filed SUSTAINING THE DECISION OF THE COURT A
before the RTC of Manila a new complaint for QUO COMMITTED A SERIOUS REVERSIBLE ERROR
annulment of auction sale, writ of execution, IN NOT APPLYING SECTION 52 OF P.D. 1529 AND
declaration of nullity of title, and reconveyance ARTICLE 1544 OF THE CIVIL CODE OF THE
of property with damages against Spouses PHILIPPINES BY FINDING THAT HEREIN
Suntay, docketed as Civil Case No. 06-114716. In PETITIONERS HAVE BETTER RIGHTS OF
their answer, Spouses Suntay denied the OWNERSHIP OVER THE SUBJECT CONDOMINIUM
material allegations of the complaint and PROPERTY IN LITIGATION;
interposed special and affirmative defenses III
of res judicata, forum shopping, prescription, and
lack of cause of action. WHETHER OR NOT THE COURT OF APPEALS
COMMITTED A REVERSIBLE ERROR IN
SUSTAINING THE TRIAL COURTS DECISION BY
On October 19, 2009, the RTC rendered a
NOT DISMISSING THE COMPLAINT FOR LACK OF
Decision12 in favor of Keyser. It explained that
VALID AND LEGITIMATE CAUSE OF ACTION OF
when Spouses Suntay registered the Certificate HEREIN RESPONDENT AGAINST HEREIN
of Sale, the condominium unit was already PETITIONERS;
registered in the name of Keyser. It also held that IV
the auction sale was irregular due to lack of
posting and publication of notices. The RTC thus WHETHER OR NOT THE COURT OF APPEALS
disposed:chanroblesvirtuallawlibrary COMMITTED A REVERSIBLE ERROR IN
SUSTAINING THE TRIAL COURTS DECISION BY
WHEREFORE, premises considered, the Court NOT DISMISSING THE COMPLAINT ON GROUND
hereby declares the auction sale as null and OF FORUM SHOPPING;
void, orders the Registry of Deeds to reinstate V
the title of Keyser Mercantile Inc. and to pay the
costs. WHETHER OR NOT THE COURT OF APPEALS
COMMITTED A REVERSIBLE ERROR IN
SO ORDERED.13 SUSTAINING THE TRIAL COURTS DECISION BY
NOT DISMISSING THE COMPLAINT [ON] GROUND
CA Ruling OF RES JUDICATA;
VI
Spouses Suntay elevated the decision to the CA.
In its September 7, 2012 Decision, the CA denied WHETHER OR NOT THE COURT OF APPEALS
the appeal as it found that Spouses Suntay did COMMITTED A REVERSIBLE ERROR IN
not acquire the subject property because at the SUSTAINING THE TRIAL COURTS DECISION BY
time it was levied, Bayfront had already sold the NOT AWARDING DAMAGES AND ATTORNEYS
condominium unit to Keyser. Considering that FEES IN FAVOR OF HEREIN PETITIONERS.
15

Spouses Suntay contend that res

the judgment debtor had no interest in the
judicata existed. They assert that HLURB Case
property, Spouses Suntay, as purchasers at the
No. REM-032196-9152 involved the same cause
auction sale, also acquired no interest. The of action, parties and subject matter with Civil
decretal portion of the CA decision Case No. 06-114716 before the RTC. Considering
reads:chanroblesvirtuallawlibrary that the former case had been decided on
appeal by this Court, then there was already res
WHEREFORE, in view of the foregoing
judicata in the RTC case. They likewise claim the
considerations, the Decision dated October 19,
existence of forum shopping in the refiling of the
2009 of the Regional Trial Court (RTC) of Manila, case with the RTC for the second time on March
Branch 21, in Civil Case No. 06-114716, is 24, 2006.
AFFIRMED.
Spouses Suntay also raise the issue of pendentia must be present, or the final judgment
prescription because Article 1146 of the New in one case amounts to res judicata in
Civil Code16provides that actions resulting in another.19 Since there is no res judicata in this
injury prescribe after four (4) years. The resulting case, then there is no forum shopping either.
injury started on January 18, 1995. They argue
that the correct reckoning period was March 24, The defense of prescription is likewise
2006 when Civil Case No. 06-114716 was filed in unavailing. In Fulton Insurance Company v.
the RTC; and that a period of more or less twelve Manila Railroad Company,20 this Court ruled that
(12) years had lapsed and the action had already the filing of the first action interrupted the
prescribed. HLURB Case No. REM-032196-9152 running of the period, and then declared that, at
filed on March 21, 1996 should not have been any rate, the second action was filed within the
considered to have tolled the prescriptive period balance of the remaining period. Applying Article
because it had a null and void judgment due to 1155 of the New Civil Code in that case, 21 the
lack of jurisdiction. interruption took place when the first action was
filed in the Court of First Instance of Manila. The
Spouses Suntay argue that the CA erred in not interruption lasted during the pendency of the
applying Section 52 of P.D. No. 1529 and Article action until the order of dismissal for alleged lack
1544 of the New Civil Code. Their right as of jurisdiction became final.
purchasers in a public action should have been
preferred because their right acquired In the present case, the prescriptive period was
thereunder retroacts to the date of registration interrupted when HLURB Case No. REM-032196-
of the Notice of Levy on January 18, 1995 and 9152 was filed on March 21, 1996. The
the subsequent auction sale on February 23, interruption lasted during the pendency of the
1995. They claim that their right over the subject action and until the judgment of dismissal due to
property is superior over that of Keyser because lack of jurisdiction was rendered on the
they purchased the subject property in a September 23, 2005. Thus, the filing of Civil
legitimate auction sale prior to Keysers Case No. 06-114716 on March 24, 2006 was
registration of the deed of absolute sale. squarely within the prescriptive period of four (4)
years.
Spouses Suntay also pray for moral, exemplary
damages and attorneys fees. They allegedly Spouses Suntay properly relied on the Certificate
experienced mental anguish, besmirched of Title of Bayfront
reputation, sleepless nights, and wounded
feelings warranting moral damages. They Now, the Court proceeds to the substantial
contend that exemplary damages should also be issues. This Court finds that the petition is
awarded in view of the reckless and wanton meritorious applying the Torrens System of Land
attitude of Keyser in instituting a groundless Registration. The main purpose of the Torrens
action against them. Furthermore, Spouses system is to avoid possible conflicts of title to
Suntay were constrained to hire the services of real estate and to facilitate transactions relative
counsel to defend their right against a baseless thereto by giving the public the right to rely
action. upon the face of a Torrens certificate of title and
The Courts Ruling to dispense with the need of inquiring further,
except when the party concerned has actual
The petition is meritorious. knowledge of facts and circumstances that
should impel a reasonably cautious man to make
No res judicata, forum shopping and prescription such further inquiry. Every person dealing with a
in this case registered land may safely rely on the
correctness of the certificate of title issued
As to the procedural matters, the Court finds therefor and the law will in no way oblige him to
that the grounds invoked by Spouses Suntay are go beyond the certificate to determine the
inapplicable. First, the defense of res condition of the property.22
judicata must fail. The doctrine of res judicata is
a fundamental principle of law which precludes Again to stress, any buyer or mortgagee of realty
parties from re-litigating issues actually litigated covered by a Torrens certificate of title, in the
and determined by a prior and final absence of any suspicion, is not obligated to look
judgment.17Res judicata constituting bar by prior beyond the certificate to investigate the title of
judgment occurs when the following requisites the seller appearing on the face of the
concur: (1) the former judgment is final; (2) it is certificate. And, he is charged with notice only of
rendered by a court having jurisdiction over the such burdens and claims as are annotated on
subject matter and the parties; (3) it is a the title.23
judgment or an order on the merits; and (4)
there is identity of parties, of subject matter, and In the case at bench, the subject property was
of causes of action.18 registered land under the Torrens System
covered by CCT No. 15802 with Bayfront as the
The previous case instituted by Keyser in the registered owner. At the time that the Notice of
HLURB was denied on appeal by this Court based Levy was annotated on January 18, 1995, the
on lack of jurisdiction. Thus, the third requisite title had no previous encumbrances and liens.
of res judicata is not present because the Evidently, it was a clean title. The Certificate of
previous case was not adjudicated on the merits Sale, pursuant to an auction sale, was also
as it was denied on jurisdictional grounds. annotated on April 7, 1995, with Bayfront still as
the registered owner.
There is no forum shopping either in this case. To
determine whether a party violated the rule It was only on March 12, 1996, almost a year
against forum shopping, the elements of litis later, that Keyser was able to register its Deed of
Absolute Sale with Bayfront. Prior to such date,
Spouses Suntay appropriately relied on the In this case, the contract to sell between Keyser
Torrens title of Bayfront to enforce the latters and Bayfront was executed on October 20, 1989,
judgment debt. but the deed of absolute sale was only made on
November 9, 1995 and registered on March 12,
Because "the act of registration is the operative 1996. The Notice of Levy in favor of Spouses
act to convey or affect the land insofar as third Suntay was registered on January 18, 1995,
persons are concerned,"24 it follows that where while the Certificate of Sale on April 7, 1995,
there is nothing in the certificate of title to both dates clearly ahead of Keysers registration
indicate any cloud or vice in the ownership of the of its Deed of Absolute Sale. Evidently, applying
property, or any encumbrance thereon, the the doctrine of primus tempore, potior jure (first
purchaser is not required to explore farther than in time, stronger in right), Spouses Suntay have
what the Torrens title upon its face indicates in a better right than Keyser.
quest for any hidden defect or inchoate right
that may subsequently defeat his right thereto. If In the case of Uy v. Spouses Medina32 which
the rule were otherwise, the efficacy and dealt with essentially the same issues, the Court
conclusiveness of the certificate of title which wrote:chanroblesvirtuallawlibrary
the Torrens system seeks to insure would entirely Considering that the sale was not registered
be futile and nugatory. The public shall then be earlier, the right of petitioner over the land
denied of its foremost motivation for respecting became subordinate and subject to the
and observing the Torrens system of preference created over the earlier annotated
registration.25 levy in favor of Swift. The levy of execution
registered and annotated on September 1, 1998
When the notice of levy and certificate of sale takes precedence over the sale of the land to
were annotated on the title, the subject property
petitioner on February 16, 1997, despite the
was unoccupied and no circumstance existed
subsequent registration on September 14, 1998
that might suggest to Spouses Suntay that it was
owned by another individual.26 Records reveal of the prior sale. Such preference in favor of the
that it was only later, on January 6, 1999, that levy on execution retroacts to the date of levy
the subject property was discovered by the for to hold otherwise will render the preference
sheriffs to be padlocked.27 The administrator of nugatory and meaningless.
the condominium did not even know the
whereabouts of the alleged owner. 28 To reiterate, x x x
absent any peculiar circumstance, Spouses
Suntay could not be required to disregard the The settled rule is that levy on attachment,
clean title of Bayfront and invest their time,
duly registered, takes preference over a
effort and resources to scrutinize every square
prior unregistered sale. This result is a
feet of the subject property. This Court is
convinced that Spouses Suntay properly relied necessary consequence of the fact that the
on the genuineness and legitimacy of Bayfronts property involved was duly covered by the
Torrens certificate of title when they had their Torrens system which works under the
liens annotated thereon. fundamental principle that registration is the
operative act which gives validity to the transfer
Levy on execution is superior to the subsequent or creates a lien upon the land.
registration of the deed of absolute sale.
The preference created by the levy on
The CA stated in its decision that when the attachment is not diminished even by the
subject property was levied and subjected to an subsequent registration of the prior
execution sale, Bayfront had already sold it to sale. This is so because an attachment is a
Keyser. As such, Spouses Suntay no longer proceeding in rem. It is against the particular
acquired the right over the subject property from
property, enforceable against the whole world.
Bayfront because the latter, as judgment debtor,
The attaching creditor acquires a specific lien on
29
had nothing more to pass. Earlier, the RTC held
that at the time Spouses Suntay were to register the attached property which nothing can
the auction sale, the subject property was subsequently destroy except the very dissolution
already registered in Keysers name and, thus, of the attachment or levy itself. Such a
they were fully aware of the earlier sale. It was proceeding, in effect, means that the property
too late for Spouses Suntay to deny their attached is an indebted thing and a virtual
knowledge of Keysers title. The RTC also found condemnation of it to pay the owners debt. The
the auction sale questionable due to the lack of lien continues until the debt is paid, or sale is
posting and publication of notice. 30 had under execution issued on the judgment, or
until the judgment is satisfied, or the attachment
The Court disagrees with the lower courts. They discharged or vacated in some manner provided
had completely overlooked the significance of a by law.
levy on execution. The doctrine is well-settled
that a levy on execution duly registered takes [Emphases supplied]
preference over a prior unregistered sale. Even if
the prior sale was subsequently registered The Court does not agree with the RTC either
before the sale in execution but after the levy that the auction sale had glaring irregularities.
was duly made, the validity of the execution sale Assisting Sheriff Rufo Bernardo Jr., testifying as
should be maintained because it retroacts to the Keysers witness, categorically stated that they
date of the levy. Otherwise, the preference had posted notices of the auction sale and had
created by the levy would be meaningless and conducted the bidding.33 The documentary
illusory.31
evidence of Spouses Suntay also shows that
publication of the auction sale was indeed
complied with.34

No award of actual, moral and exemplary

damages

Finally, the Court cannot grant the claim for

damages by Spouses Suntay. The filing alone of
a civil action should not be a ground for an
award of moral damages in the same way that a
clearly unfounded civil action is not among the
grounds for moral damages.35 Spouses Suntay
failed to show a compelling reason to warrant
the award of moral damages aside from their
bare allegations.

As to the award of exemplary damages, Article

2229 of the New Civil Code provides that
exemplary damages may be imposed by way of
example or correction for the public good, in
addition to the moral, temperate, liquidated or
compensatory damages.36 The claimant,
however, must first establish his right to moral,
temperate, liquidated or compensatory
damages. In this case, because Spouses Suntay
failed to prove their entitlement to moral or
compensatory damages, there could be no
award of exemplary damages.

Spouses Suntay are not entitled to attorneys

fees either. The settled rule is that no premium
should be placed on the right to litigate and that
not every winning party is entitled to an
automatic grant of attorneys fees.37

WHEREFORE, the petition is GRANTED. The

September 7, 2012 Decision and the August 8,
2013 Resolution of the Court of Appeals (CA) in
CA-G.R. CV No. 94677 are REVERSED and SET
ASIDE. Accordingly, the Court hereby declares
the auction sale as valid and binding on Keyser
Mercantile, Inc. and all other subsequent
registrants.
Republic of the Philippines
SO ORDERED. SUPREME COURT
Manila
Carpio, (Chairperson), Del Castillo, Villarama,
Jr.,* and Leonen, JJ., concur. THIRD DIVISION

G.R. No. 129584 December 3, 1998

TRIPLE EIGHT INTEGRATED SERVICES,

INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION,
HON. LABOR ARBITER POTENCIANO S.
CANIZARES, JR. and ERLINDA
OSDANA, respondents.

ROMERO, J.:

In this petition for certiorari now before us,

petitioner Triple Eight Integrated Services Inc.
seeks to annul the decision 1 of public
respondent National Labor Relations Commission
(First Division, Quezon City) dated March 11,
1997 affirming the August 20, 1996 decision 2 of no apparent reason. During this period, she was
Labor Arbiter Potenciano Canizares. Petitioner still not paid her salary.
was ordered to pay private respondent Erlinda
Osdana her salaries for the unexpired portion of On October 24, 1993, she was re-assigned to the
her employment contract, unpaid salaries, salary Oleysha University to wash dishes and do other
differential, moral and exemplary damages, as menial tasks. As with her previous assignment at
well as attorney's fees. On April 28, 1997, the the said University, Osdana worked long hours
NLRC denied petitioner's motion for and under harsh conditions. Because of this, she
reconsideration. 3 was diagnosed as having Bilateral Carpal Tunnel
Syndrome, a condition precipitated by activities
The antecedent facts follow. requiring "repeated flexion, pronation, and
supination of the wrist and characterized by
Sometime in August 1992, private respondent excruciating pain and numbness in the arms." 5
Osdana was recruited by petitioner for
employment with the latter's principal, Gulf As the pain became unbearable, Osdana had to
Catering Company (GCC), a firm based in the be hospitalized. She underwent two surgical
Kingdom of Saudi Arabia. Under the original operations, one in January 1994, another on April
employment contract, Osdana was engaged to 23, 1994. Between these operations, she was
work as "Food Server" for a period of thirty-six not given any work assignments even if she was
(36) months with a salary of five hundred fifty willing and able to do light work in accordance
Saudi rials (SR550). with her doctor's advice. Again, Osdana was not
paid any compensation for the period between
Osdana claims she was required by petitioner to February to April 22, 1994.
pay a total of eleven thousand nine hundred fifty
pesos (P11,950.00) in placement fees and other After her second operation, Osdana was
charges, for which no receipt was issued. She discharged From the hospital on April 25, 1994.
was likewise asked to undergo a medical The medical report stated that "she had very
examination conducted by the Philippine Medical good improvement of the symptoms and she
Tests System, a duly accredited clinic for was discharged on the second day of the
overseas workers, which found her to be "Fit of operation. 6
Employment."
Four days later, however, she was dismissed
Subsequently, petitioner asked Osdana to sign from work, allegedly or, the ground of illness.
another "Contractor She was not given any separation pay nor was
Employee Agreement" 4 which provided that she she paid her salaries for the periods when she
would be employed as a waitress for twelve (12) was not allowed to work.
months with a salary of two hundred eighty US
dollars ($280). It was this employment Upon her return to the Philippines, Osdana
agreement which was approved by the Philippine sought the help of petitioner, but to no avail. She
Overseas Employment Administration (POEA). was thus constrained to file a complaint before
the POEA against petitioner, praying for unpaid
On September 16, 1992, Osdana left for Riyadh, and underpaid salaries, salaries for the
Saudi Arabia, and commenced working for GCC. unexpired portion of the employment contract,
She was assigned to the College of Public moral and exemplary damages and attorney's
Administration of the Oleysha University and, fees, as well as the revocation, cancellation,
contrary to the terms and conditions of the suspension and/or imposition of administrative
employment contract, was made to wash dishes, sanctions against petitioner.
cooking pots, and utensils, perform janitorial
work and other tasks which were unrelated to Pursuant to Republic Act No. 8042, otherwise
her job designation as waitress. Making matters known as the Migrant Workers and Overseas
worse was the fact that she was made to work a Filipinos Act of 1995, the case was transferred to
gruelling twelve-hour shift, from six o'clock in the the arbitration branch of the NLRC and assigned
morning to six o'clock in the evening, without to Labor Arbiter Canizares.
overtime pay. In a decision dated August 20, 1996, the labor
Because of the long hours and the strenuous arbiter ruled in favor of Osdana. The dispositive
nature of her work, Osdana suffered from portion of the decision follows:
numbness and pain in her arms. The pain was Wherefore, the respondent is hereby ordered to
such that she had to be confined at the Ladies pay the complainant US$2,499.00 as salaries for
Villa, a housing facility of GCC, from June 18 to the unexpired portion of the contract, and
August 22, 1993, during which period, she was US$1,076.00 as unpaid salary and salary
not paid her salaries. differential, or its equivalent in Philippine Peso.
After said confinement, Osdana was allowed to The respondent is likewise ordered to pay the
resume work, this time as Food Server and Cook complainant P50,000 moral damages, and
at the Hota Bani Tameem Hospital, where she P20,000 exemplary damages.
worked seven days a week from August 22 to
October 5, 1993. Again, she was not The respondent is further ordered to pay the
compensated. complainant 10% of the monetary award as
attorney's fee.
Then, from October 6 to October 23, 1993,
Osdana was again confined at the Ladies Villa for
Other claims are hereby dismissed for lack of the termination was validly made. In termination
sufficient evidence. cases, the burden of proof rests on the employer
to show that the dismissal is for a just
SO ORDERED. cause. 11 Having failed to file its position paper
Aggrieved by the labor arbiter's decision, and to support its denials and affirmative
petitioner appealed to the NLRC, which affirmed defenses in its answer, petitioner cannot now
the decision in question on March 11, 1997. fault the labor arbiter and the NLRC for relying
Petitioner's motion for reconsideration was on the facts as laid down by Osdana in her
likewise denied by the NLRC in its order dated position paper and supported by other
April 28, 1997. documents. The essence of due process is that a
party be afforded reasonable opportunity to be
Hence, this petition for certiorari. heard and to submit any evidence he may have
in support of his defense, 12 and this is exactly
Petitioner alleges grave abuse of discretion on
what petitioner was accorded, although it chose
the part of the public respondents for the
not to fully avail thereof.
following reasons: (a) ruling in favor of Osdana
even if there was no factual or legal basis for the This Court, therefore, upholds the finding of
award and, (b) holding petitioner solely liable for herein public respondents that the facts and the
her claims despite the fact that its liability is joint evidence on record adduced by Osdana and
and several with its principal, GCC. taken in relation to the answer of petitioner show
that indeed there was breach of the employment
At the outset, petitioner argues that "public
contract and illegal dismissal committed by
respondent Labor Arbiter gravely abused his
petitioner's principal.
discretion when he rendered the questioned
decision dated August 20, 1996 without stating Petitioner claims that public respondents
the facts and the law where he derived his committed grave abuse of discretion when they
conclusions." 7 In support of this argument, ruled that Osdana had been illegally dismissed
petitioner cites the first paragraph of Article VIII, by GCC. It maintains that the award for salaries
Section 14 of the Constitution: "No decision shall for the unexpired portion of the contract was
be rendered by any court without expressing improper because Osdana was validly dismissed
therein clearly and distinctly the facts and the on the ground of illness.
law on which it is based."
The argument must fail.
On this point, it is enough to note that the
decisions of both the labor arbiter and the NLRC In its Answer, 14 Memorandum of Appeal, 13 Petition
were based mainly on the facts and allegations for Certiorari, and Consolidated
in Osdana's position paper and supporting Reply, 15
petitioner consistently asserted that
documents. We find these sufficient to constitute Osdana was validly repatriated for medical
substantial evidence to support the questioned reasons, but it failed to substantiate its claim
decisions. Generally, findings of facts of quasi- that such repatriation was justified and done in
judicial agencies like the NLRC are accorded accordance with law.
great respect and, at times, even finality if Art. 284 of the Labor Code is clear on the matter
supported by substantial evidence. "Substantial of termination by reason of disease or
evidence" is such amount of relevant evidence illness, viz:
which a reasonable mind might accept as
adequate to justify a conclusions. 8 Art. 284. Disease as a ground for termination
An employer may terminate the services of an
Moreover, well-settled is the rule that if doubts employee who has been found to be suffering
exist between the evidence presented by the from any disease and whose continued
employer and the employee, the scales of justice employment is prohibited by law or prejudicial to
must be tilted in favor of the latter. Thus, in his health as well as the health of his co-
controversies between a worker and her employees: . . . .
employer, doubts reasonably arising from the
evidence or in the interpretation of agreements Specifically, Section 8, Rule 1, Book VI of the
should be resolved in favor of the former. Omnibus Rules Implementing the Labor Code
provides:
Petitioner, for its part, was given the same
opportunity to file its own position paper but Sec. 8. Disease as a ground for dismissal
instead, it opted to file a two-page Answer With Where the employee suffers from a disease and
Special And Affirmative Defenses, denying his continued employment is prohibited by law
generally the allegations of the complaint. 9 or prejudicial to his health or to the health of his
co-employees, the employer shall not terminate
As observed by the labor arbiter, "The record his employment unless there is a certification by
shows the complainant fled complaint (sic), competent public authority that the disease is of
position paper, and supporting documents, and such nature or at such a stage that it cannot be
prosecuted her case diligently; while the cured within a period of six 6 months with
respondent merely tried to settle the case proper medical treatment. If the disease or
amicably, failing even to file its position ailment can be cured within the period, the
paper." 10 The present case being one for illegal employer shall not terminate the employee but
dismissal, it was incumbent upon petitioner shall ask the employee to take a leave. The
employer to show by substantial evidence that employer shall reinstate such employee to his
former position immediately upon the other forms of debasement, are only a few of the
restoration of his normal health. (Emphasis inhumane acts to which they are subjected by
supplied). their foreign employers, who probably feel they
can do as they please in their country. While
Viewed in the light of the foregoing provisions, these workers may indeed have relatively little
the manner by which Osdana was terminated defense against exploitation while they are
was clearly in violation of the Labor Code and its abroad, that disadvantage must not continue to
implementing rules and regulations. burden them when they return to their own
territory to voice their muted complaint. There is
In the first place, Osdana's continued no reason why, in their own land, the protection
employment despite her illness was not of our own laws cannot be extended to them in
prohibited by law nor was it prejudicial to her full measure for the redress of their grievances."
health, as well as that of her co-employees. In Petitioner likewise attempts to sidestep the
fact, the medical report issued after her second medical certificate requirement by contending
operation stated that "she had very good that since Osdana was working in Saudi Arabia,
improvement of the symptoms." Besides, "Carpal her employment was subject to the laws of the
Tunnel Syndrome" is not a contagious disease. host country. Apparently, petitioner hopes to
make it appear that the labor laws of Saudi
Petitioner attributes good faith on the part of its Arabia do not require any certification by a
principal, claiming that "It was the concern for competent public health authority in the
the welfare and physical well being (sic) of dismissal of employees due to illness.
private respondent that drove her employer to Again, petitioner's argument is without merit.
take the painful decision of terminating her from First, established is the rule that lex loci
the service and having her repatriated to the contactus (the law of the place where the
contract is made) governs in this jurisdiction.
Philippines at its expense. The employer did not
There is no question that the contract of
want to risk the aggravation of the illness of employment in this case was perfected here in
private respondent which could have been the the Philippines. Therefore, the Labor Code, its
logical consequence were private respondent implementing rules and regulations, and other
allowed to continue with her job." 16 laws affecting labor apply in this case.
Furthermore, settled is the rule that the courts of
The Court notes, however, that aside from these
the forum will not enforce any foreign claim
bare allegations, petitioner has not presented obnoxious to the forum's public policy. 20 Here in
any medical certificate or similar document from the Philippines, employment agreements are
a competent public health authority in support of more than contractual in nature. The
its claims. Constitution itself, in Article XIII Section 3,
guarantees the special protection of workers, to
On the medical certificate requirement,
wit:
petitioner erroneously argues that "private The State shall afford fill protection to labor, local
respondent was employed in Saudi Arabia and and overseas, organized and unorganized, and
not here in the Philippines. Hence, there was a promote full employment and equality of
physical impossibility to secure from a Philippine employment opportunities for all.
public health authority the alluded medical It shall guarantee the rights of all workers to self-
certificate that public respondent's illness will organization, collective bargaining and
not be cured within a period of six months." 17 negotiations, and peaceful concerted activities,
including the right to strike in accordance with
Petitioner entirely misses the point, as counsel law. They shall be entitled to security of tenure,
for private respondent states in the humane conditions of work, and a living wage.
Comment. 18 The rule simply prescribes a They shall also participate in policy and decision-
"certification by a competent public health making processes affecting their rights and
authority" and not a "Philippine public health benefits as may be provided by law.
authority." xxx xxx xxx
This public policy should be borne in mind in this
If, indeed, Osdana was physically unfit to case because to allow foreign employers to
continue her employment, her employer could determine for and by themselves whether an
have easily obtained a certification to that effect overseas contract worker may be dismissed on
from a competent public health authority in the ground of illness would encourage illegal or
Saudi Arabia, thereby heading off any complaint arbitrary pre-termination of employment
for illegal dismissal. contracts.
As regards the monetary award of salaries for
The requirement for a medical certificate under the unexpired portion of the employment
Article 284 of the Labor Code cannot be contract, unpaid salaries and salary differential
dispensed with; otherwise, it would sanction the granted by public respondents to Osdana,
unilateral and arbitrary determination by the petitioner assails the same for being contrary to
employer of the gravity or extent of the law, evidence and existing jurisprudence, all of
employee's illness and thus defeat the public which therefore constitutes grave abuse of
policy on the protection of labor. As the Court discretion.
observed in Prieto v. NLRC, 19 "The Court is not Although this contention is without merit, the
unaware of the many abuses suffered by our award for salaries for the unexpired portion of
overseas workers in the foreign land where they the contract must, however, be reduced.
have ventured, usually with heavy hearts, in Paragraph 5, Section 10 of R.A. No. 8042, applies
pursuit of a more fulfilling future. Breach of in this case, thus:
contract, maltreatment, rape, insufficient In case of termination of overseas employment
nourishment, sub-human lodgings, insults and without just, valid or authorized cause as defined
by law or contract, the worker shall be entitled to Petitioner was the only one held liable for
the full reimbursement of his placement fee with Osdana's monetary claims because it was the
interest at twelve percent (12%) per annum, plus only respondent named in the complaint and it
his salaries for the unexpired portion of his does not appear that petitioner took steps to
employment contract or for three (3) months for have its principal included as co-respondent.
every year of the unexpired term, whichever is Thus, the POEA, and later the labor arbiter, did
less. not acquire jurisdiction over the foreign principal.
In the case at bar, while it would appear that the This is not to say, however, that GCC may not be
employment contract approved by the POEA was field liable at all. Petitioner can still claim
only for a period of twelve months, Osdana's reimbursement or contribution from it for the
actual stint with the foreign principal lasted for amounts awarded to the illegally-dismissed
one year and seven-and-a-half months. It may employee.
be inferred, therefore, that the employer WHEREFORE, in view of the foregoing, the
renewed her employment contract for another instant petition is DISMISSED. Accordingly, the
year. Thus, the award for the unexpired portion decisions of the labor arbiter dated August 20,
of the contract should have been US$1,260 1996, and of the NLRC dated March 11, 1997,
(US$280 x 4 1/2 months) or its equivalent in are AFFIRMED with the MODIFICATION that the
Philippine pesos, not US$2,499 as adjudged by award to private respondent Osdana should be
the labor arbiter and affirmed by the NLRC. one thousand two hundred sixty US dollars
As for the award for unpaid salaries and (US$1,260), or its equivalent in Philippine pesos,
differential amounting to US$ 1,076 representing as salaries for the unexpired portion of the
seven months' unpaid salaries and one month employment contract, and one thousand seventy
underpaid salary, the same is proper because, as six US dollars (US$1,076), or its equivalent in
correctly pointed out by Osdana, the "no work, Philippine pesos, representing unpaid salaries for
no pay" rule relied upon by petitioner does not seven (7) months and underpaid salary for one
apply in this case. In the first place, the fact that (1) month, plus interest.
she had not worked from June 18 to August 22, Petitioner is likewise ordered to pay private
1993 and then from January 24 to April 29, 1994, respondent P30,000.00 in moral damages,
was due to her illness which was clearly work- P10,000.00 in exemplary damages and 10%
related. Second, from August 23 to October 5, attorney's fees.
1993, Osdana actually worked as food server This decision is without prejudice to any remedy
and cook for seven days a week at the Hota Bani or claim for reimbursement or contribution
Tameem Hospital, but was not paid any salary petitioner may institute against its foreign
for the said period. Finally, from October 6 to principal, Gulf Catering Company. No
October 23, 1993, she was confined to quarters pronouncement as to costs.
and was not given any work for no reason at all. SO ORDERED.
Now, with respect to the award of moral and
exemplary damages, the same is likewise proper
but should be reduced. Worth reiterating is the
rule that moral damages are recoverable where
the dismissal of the employee was attended by
bad faith or fraud or constituted an act
oppressive to labor, or was done in a manner
contrary to morals, good customs, or public
policy. 21 Likewise, exemplary damages may be
awarded if the dismissal was effected in a
wanton, oppressive or malevolent manner. 22
According to the facts of the case as stated by
public respondent, Osdana was made to perform
such menial chores, as dishwashing and
janitorial work, among others, contrary to her job
designation as waitress. She was also made to
work long hours without overtime pay. Because
of such arduous working conditions, she
developed Carpal Tunnel Syndrome. Her illness
was such that she had to undergo surgery twice.
Since her employer determined for itself that she
was no longer fit to continue working, they sent
her home posthaste without as much as
separation pay or compensation for the months
when she was unable to work because of her
illness. Since the employer is deemed to have
acted in bad faith, the award for attorney's fees
is likewise upheld.
Finally, petitioner alleges save abuse of
discretion on the part of public respondents for
holding it solely liable for the claims of Osdana
despite the fact that its liability with the principal
is joint and several.
Petitioner misunderstands the decision in
question. It should be noted that contrary to
petitioner's interpretation, the decision of the
labor arbiter which was affirmed by the NLRC did
not really absolve the foreign principal.

Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 120706 January 31, 2000
RODRIGO CONCEPCION, petitioner,
vs.
COURT OF APPEALS and SPS. NESTOR
NICOLAS and ALLEM NICOLAS, respondents.
BELLOSILLO, J.:
Petitioner Rodrigo Concepcion assails in this
petition for review on certiorari the Decision of
the Court of Appeals dated 12 December 1994
which affirmed the decision of the Regional Trial
Court of Pasig City ordering him to pay
respondent spouses Nestor Nicolas and Allem
Nicolas the sums of P50,000.00 for moral
damages, P25,000.00 for exemplary damages
and P10,000.00 for attorney's fees, plus the
costs of suit.* Petitioner claims absence of factual
and legal basis for the award of damages.
The courts a quo found that sometime in 1985
the spouses Nestor Nicolas and Allem Nicolas
resided at No. 51 M. Concepcion St., San Joaquin,
Pasig City, in an apartment leased to them by
the owner thereof, Florence "Bing" Concepcion,
who also resided in the same compound where
the apartment was located. Nestor Nicolas was
then engaged in the business of supplying
government agencies and private entities with
office equipment, appliances and other fixtures
on a cash purchase or credit basis. Florence
Concepcion joined this venture by contributing
capital on condition that after her capital
investment was returned to her, any profit
earned would be divided equally between her
and Nestor.
Sometime in the second week of July 1985
Rodrigo Concepcion, brother of the deceased
husband of Florence, angrily accosted Nestor at
the latter's apartment and accused him of
conducting an adulterous relationship with
Florence. He shouted, "Hoy Nestor, kabit ka ni
Bing! . . . Binigyan ka pa pala ni Bing Concepcion
ng P100,000.00 para umakyat ng Baguio.
Pagkaakyat mo at ng asawa mo doon ay bababa
ka uli para magkasarilinan kayo ni Bing."1
To clarify matters, Nestor went with Rodrigo,
upon the latter's dare, to see some relatives of
the Concepcion family who allegedly knew about
the relationship. However, those whom they
were able to see denied knowledge of the
alleged affair. The same accusation was hurled
by Rodrigo against Nestor when the two (2)
confronted Florence at the terrace of her
residence. Florence denied the imputations and
Rodrigo backtracked saying that he just heard
the rumor from a relative. Thereafter, however,
Rodrigo called Florence over the telephone
reiterating his accusation and threatening her
that should something happen to his sick
mother, in case the latter learned about the
affair, he would kill Florence.1wphi1.nt
As a result of this incident, Nestor Nicolas felt
extreme embarrassment and shame to the
extent that he could no longer face his
neighbors. Florence Concepcion also ceased to
do business with him by not contributing capital
anymore so much so that the business venture
of the Nicolas spouses declined as they could no
longer cope with their commitments to their
clients and customers. To make matters worse,
Allem Nicolas started to doubt Nestor's fidelity
resulting in frequent bickerings and quarrels
during which Allem even expressed her desire to
leave her husband. Consequently, Nestor was
forced to write Rodrigo demanding public
apology and payment of damages. Rodrigo
pointedly ignored the demand, for which reason
the Nicolas spouses filed a civil suit against him
for damages.
In his defense, Rodrigo denied that he maligned
Nestor by accusing him publicly of being
Florence's lover. He reasoned out that he only
desired to protect the name and reputation of
the Concepcion family which was why he sought
an appointment with Nestor through Florence's
son Roncali to ventilate his feelings about the
matter. Initially, he discussed with Nestor certain
aspects of the joint venture in a friendly and
amiable manner, and then only casually asked
the latter about his rumored affair with his sister-
in-law.
In contesting the decision of the appellate court,
petitioner Rodrigo Concepcion raises the
following issues: (a) whether there is basis in law
for the award of damages to private
respondents, the Nicolas spouses; and, (b)
whether there is basis to review the facts which
are of weight and influence but which were
overlooked and misapplied by the respondent
appellate court.
Petitioner argues that in awarding damages to
private respondents, the Court of Appeals was
without legal basis to justify its verdict. The
alleged act imputed to him by respondent
spouses does not fall under Arts. 26 2 and
22193 of the Civil Code since it does not
constitute libel, slander, or any other form of
defamation. Neither does it involve prying into
the privacy of another's residence or meddling
with or disturbing the private life or family
relation of another. Petitioner also insists that
certain facts and circumstances of the case were
manifestly overlooked, misunderstood or glossed
over by respondent court which, if considered,
would change the verdict. Impugning the
credibility of the witnesses for private
respondents and the manner by which the
testimonial evidence was analyzed and
evaluated by the trial court, petitioner criticized
the appellate court for not taking into account
the fact that the trial judge who penned the
decision was in no position to observe first-hand
the demeanor of the witnesses of respondent
spouses as he was not the original judge who
heard the case. Thus, his decision rendered was
flawed.
The Court has ruled often enough that its
jurisdiction in a petition for review
on certiorari under Rule 45 of the Revised Rules
of Court is limited to reviewing only errors of law,
not of fact, unless the factual findings
complained of are devoid of support by the
evidence on record or the assailed judgment is
based on misapprehension of facts. 4 The reason
behind this is that the Supreme Court respects
the findings of the trial court on the issue of
credibility of witnesses, considering that it is in a
better position to decide the question, having
heard the witnesses themselves and observed
their deportment and manner of testifying during
the trial.5 Thus it accords the highest respect,
even finality, to the evaluation made by the
lower court of the testimonies of the witnesses
presented before it.
The Court is also aware of the long settled rule
that when the issue is on the credibility of
witnesses, appellate courts will not generally
disturb the findings of the trial court; however,
its factual findings may nonetheless be reversed
if by the evidence on record or lack of it, it
appears that the trial court erred.6 In this
respect, the Court is not generally inclined to
review the findings of fact of the Court of
Appeals unless its findings are erroneous,
absurd, speculative, conjectural, conflicting,
tainted with grave abuse of discretion, or
contrary to the findings culled by the trial court
of origin.7 This rule of course cannot be
unqualifiedly applied to a case where the judge
who penned the decision was not the one who
heard the case, because not having heard the
testimonies himself, the judge would not be in a
better position than the appellate courts to make
such determination.8
However, it is also axiomatic that the fact alone
that the judge who heard the evidence was not
the one who rendered the judgment but merely
relied on the record of the case does not render
his judgment erroneous or irregular. This is so
even if the judge did not have the fullest
opportunity to weigh the testimonies not having
heard all the witnesses speak nor observed their
deportment and manner of testifying. Thus the
Court generally will not find any
misapprehension of facts as it can be fairly
assumed under the principle of regularity of
performance of duties of public officers that the
transcripts of stenographic notes were
thoroughly scrutinized and evaluated by the
judge himself.
Has sufficient reason then been laid before us by
petitioner to engender doubt as to the factual
findings of the court a quo? We find none. A
painstaking review of the evidence on record
convinces us not to disturb the judgment
appealed from. The fact that the case was
handled by different judges brooks no
consideration at all, for preponderant evidence
consistent with their claim for damages has been
adduced by private respondents as to foreclose a
reversal. Otherwise, everytime a Judge who
heard a case, wholly or partially, dies or lives the
service, the case cannot be decided and a new
trial will have to be conducted. That would be
absurb; inconceivable.
According to petitioner, private respondents'
evidence is inconsistent as to time, place and
persons who heard the alleged defamatory
statement. We find this to be a gratuitous
observation, for the testimonies of all the
witnesses for the respondents are unanimous
that the defamatory incident happened in the
afternoon at the front door of the apartment of
the Nicolas spouses in the presence of some
friends and neighbors, and later on, with the
accusation being repeated in the presence of
Florence, at the terrace of her house. That this
finding appears to be in conflict with the
allegation in the complaint as to the time of the
incident bears no momentous significance since
an allegation in a pleading is not evidence; it is a
declaration that has to be proved by evidence. If
evidence contrary to the allegation is presented,
such evidence controls, not the allegation in the
pleading itself, although admittedly it may dent
the credibility of the witnesses. But not in the
instant case.
It is also argued by petitioner that private
respondents failed to present as witnesses the
persons they named as eyewitnesses to the
incident and that they presented instead one
Romeo Villaruel who was not named as a
possible witness during the pre-trial proceedings.
Charging that Villaruel's testimony is not credible
and should never have been accorded any
weight at all, petitioner capitalizes on the fact
that a great distance separates Villaruel's
residence and that of private respondents as
reflected in their house numbers, the former's
number being No. 223 M. Concepcion St., while
that of the Nicolas spouses, No. 51 along the
same street. This being so, petitioner concludes,
Villaruel could not have witnessed the ugly
confrontation between Rodrigo and Nestor. It
appears however from Villaruel's testimony that
at the time of the incident complained of, he was
staying in an apartment inside the compound
adjacent to that of the Nicolas spouses. Whether
his apartment was then numbered 223 is not
stated. What is definite and clear is his
statement that he and Nestor Nicolas were
neighbors on 14 July 1985.
There are other inconsistencies pointed out by
petitioner in the testimonial evidence of private
respondents but these are not of such
significance as to alter the finding of facts of the
lower court. Minor inconsistencies even
guarantee truthfulness and candor, for they
erase any suspicion of a rehearsed
testimony.9 Inconsistencies in the testimonies of
witnesses with on minor details and collateral
matters do not affect the substance of their
testimonies.10
All told, these factual findings provide enough
basis in law for the award of damages by the
Court of Appeals in favor of respondents. We
reject petitioner's posture that no legal provision
supports such award, the incident complained of
neither falling under Art. 2219 nor Art. 26 of the
Civil Code. It does not need further elucidation
that the incident charged of petitioner was no
less than an invasion on the right of respondent
Nestor as a person. The philosophy behind Art.
26 underscores the necessity for its inclusion in
our civil law. The Code Commission stressed in
no uncertain terms that the human personality
must be exalted. The sacredness of human
personality is a concomitant consideration of
every plan for human amelioration. The
touchstone of every system of law, of the culture
and civilization of every country, is how far it
dignifies man. If the statutes insufficiently
protect a person from being unjustly humiliated,
in short, if human personality is not exalted
then the laws are indeed defective. 11 Thus, under
this article, the rights of persons are amply
protected, and damages are provided for
violations of a person's dignity, personality,
privacy and peace of mind.
It is petitioner's position that the act imputed to
him does not constitute any of those
enumerated in Arts 26 and 2219. In this respect,
the law is clear. The violations mentioned in the
codal provisions are not exclusive but are merely
examples and do not preclude other similar or
analogous acts. Damages therefore are
allowable for actions against a person's dignity,
such as profane, insulting, humiliating,
scandalous or abusive language.12Under Art.
2217 of the Civil Code, moral damages which
include physical suffering, mental anguish,
fright, serious anxiety, besmirched reputation,
wounded feelings, moral shock, social
humiliation, and similar injury, although
incapable of pecuniary computation, may be
recovered if they are the proximate result of the
defendant's wrongful act or omission.
There is no question that private respondent
Nestor Nicolas suffered mental anguish,
besmirched reputation, wounded feelings and
social humiliation as a proximate result of
petitioner's abusive, scandalous and insulting
language. Petitioner attempted to exculpate
himself by claiming that he made an
appointment to see Nestor through a nephew,
Roncali, the son of Florence, so he could talk
with Nestor to find out the truth about his
rumored illicit relationship with Florence. He said
that he wanted to protect his nephews and
nieces and the name of his late brother
(Florence's husband).13 How he could be
convinced by some way other than a denial by
Nestor, and how he would protect his nephews
and nieces and his family's name if the rumor
were true, he did not say. Petitioner admitted
that he had already talked with Florence herself
over the telephone about the issue, with the
latter vehemently denying the alleged immoral
relationship. Yet, he could not let the matter rest
on the strength of the denial of his sister-in-law.
He had to go and confront Nestor, even in public,
to the latter's humiliation.
Testifying that until that very afternoon of his
meeting with Nestor he never knew respondent,
had never seen him before, and was unaware of
his business partnership with Florence, his
subsequent declarations on the witness stand
however belie this lack of knowledge about the
business venture for in that alleged encounter he
asked Nestor how the business was going, what
were the collection problems, and how was the
money being spent. He even knew that the
name of the business, Floral Enterprises, was
coined by combining the first syllables of the
name Florence and Allem, the name of Nestor's
wife. He said that he casually asked Nestor about
the rumor between him and Florence which
Nestor denied. Not content with such denial, he
dared Nestor to go with him to speak to his
relatives who were the source of his information.
Nestor went with him and those they were able
to talk to denied the rumor.
We cannot help noting this inordinate interest of
petitioner to know the truth about the rumor and
why he was not satisfied with the separate
denials made by Florence and Nestor. He had to
confront Nestor face to face, invade the latter's
privacy and hurl defamatory words at him in the
presence of his wife and children, neighbors and
friends, accusing him a married man of
having an adulterous relationship with Florence.
This definitely caused private respondent much
shame and embarrassment that he could no
longer show himself in his neighborhood without
feeling distraught and debased. This brought
dissension and distrust in his family where
before there was none. This is why a few days
after the incident, he communicated with
petitioner demanding public apology and
payment of damages, which petitioner ignored.
If indeed the confrontation as described by
private respondents did not actually happen,
then there would have been no cause or motive
at all for them to consult with their lawyer,
immediately demand an apology, and not
obtaining a response from petitioner, file an
action for damages against the latter. That they
decided to go to court to seek redress bespeaks
of the validity of their claim. On the other hand,
it is interesting to note that while explaining at
great length why Florence Concepcion testified
against him, petitioner never advanced any
reason why the Nicolas spouses, persons he
never knew and with whom he had no dealings
in the past, would sue him for damages. It also
has not escaped our attention that, faced with a
lawsuit by private respondents, petitioner sent
his lawyer, a certain Atty. Causapin, to talk not to
the Nicolas spouses but to Florence, asking her
not to be involved in the case, otherwise her
name would be messily dragged into it. Quite
succinctly, Florence told the lawyer that it was
not for her to decide and that she could not do
anything about it as she was not a party to the
court case.1wphi1.nt
WHEREFORE, in light of the foregoing premises,
the assailed Decision of the Court of Appeals
affirming the judgment of the Regional Trial
Court of Pasig City, Br. 167, holding Rodrigo
Concepcion liable to the spouses Nestor Nicolas
and Allem Nicolas for F50,000.00 as moral
damages, P25,000.00 for exemplary damages,
P10,000.00 for attorney's fees, plus costs of suit,
is AFFIRMED.
SO ORDERED.
Mendoza, Quisumbing, Buena and De Leon, Jr.,
JJ., concur.

Republic of the Philippines

Supreme Court
Manila

THIRD DIVISION

MANILA ELECTRIC G.R. NO. 160422

COMPANY
(MERALCO), Present:
Petitioner,
CARPIO MORALES, J.,
Chairperson,
BRION,
- versus - BERSAMIN,
ABAD,* and
VILLARAMA, JR., JJ.

Promulgated:
SPS. EDITO and
FELICIDAD CHUA, July 5, 2010
and JOSEFINA
PAQUEO,
Respondents.

x-----------------------------------------------------------
------ x

DECISION

BRION, J.:

Manila Electric Company

(MERALCO or petitioner) assails in this petition
for review on certiorari[1] the decision of the service inspectors and meter laboratory
Court of Appeals (CA or appellate court), dated technicians after your metering installation at
October 20, 2003,[2] in CA-G.R. SP No. 77034, the above address was inspected on OCTOBER
affirming with modification the March 26, 2003 31, 1996:
decision of the Regional Trial Court (RTC) of
Quezon City, Branch 82, in Civil Case No. Q-97- 1. THE TERMINAL SEAL WAS MISSING.
30503.[3] 2. THE SEALING WIRE OF THE ERB AND
MERALCO LEAD COVER SEALS WAS CUT.
The affirmed RTC decision ordered the petitioner 3. THE 1000TH, 100TH AND 10TH DIAL POINTERS
to restore the electric power connection of OF THE REGISTER WERE OUT OF ALIGNMENT.
spouses Edito and Felicidad Chua (Chuas) at
their residence, and awarded P300,000.00 as Given the above condition(s) and in
moral damages. The CA affirmed the restoration accordance with the rules implementing
of electric power connection but reduced the Republic Act 7832, you are billed the
awarded moral damages to P100,000.00. amount of P183,983.66 (rate charge
of P179,353.26 and energy tax
BACKGROUND FACTS of P4,630.40). Furthermore, the company is
now allowed to collect Surcharges as a penalty
The facts, as found by the RTC and affirmed by for all Violation of Contract cases apprehended
the CA, are summarized below. effective January 17, 1995, which would be
collected later.
MERALCO is a utility company engaged in the
business of sale and distribution of electricity This is a formal demand upon you to pay the
within its franchise area. The Chuas are the above stated amount at this office within ten
beneficial users at their residence of electric days from your receipt of this letter; if no
service provided by MERALCO, registered under settlement is made within the given grace
the name of respondent Josefina Paqueo with period, your service shall be disconnected and
Account Number 05091-4038-14. MERALCO the necessary criminal or civil action initiated
installed an electric meter with number Co. No. against you for violation of Republic Act 7832.[10]
33 SPN 46170 in front of the Chuas home to
record the Chuas electric consumption. The The Chuas refused to pay as
meter was in a concrete post outside the Chuas demanded. On January 24, 1997, MERALCO
perimeter fence.[4] returned to their residence and removed Meter
No. 33RZN80082, thereby disconnecting their
From June 11, 1996 to September 11, 1996, the electric supply.
Chuas consumed between 231 to 269 kilowatt
hours of electricity per month, with their On February 5, 1997, MERALCO sent the Chuas
corresponding monthly electric bills ranging another demand letter stating that it had re-
from P747.84 to P887.27. In October 1996, the evaluated the Chuas case based on field findings
Chuas were surprised to receive an electricity bill and the documents they furnished, and reduced
for the amount of P4,906.87 for the period of the amount they had to pay from P183,983.66
September 11 to October 11, 1996 (September to P71,737.49.[11]
1996 bill). According to this bill, they consumed
1,297 kilowatt hours for this one month period, On March 11, 1997, the Chuas filed a complaint
or approximately 553% higher than their for mandamus and damages,[12] praying that
previous monthly bill.[5] Alarmed by the they be granted a preliminary mandatory
significant increase, Florence Chua (the Chuas injunction to compel MERALCO to restore the
daughter) went to the MERALCO office to electrical connection to their residence. The
question the bill. Florence paid the bill under Chuas also asked the court to award them moral
protest to avoid disconnection. and exemplary damages, attorneys fees, and
litigation expenses.
On October 31, 1996, MERALCO responded to
the Chuas complaint by sending a After trial, the RTC rendered its decision, whose
representative, Francisco Jose Albano, to their dispositive portion states:
residence to inspect the electric
meter. Albano filed a Meter/Socket Inspection WHEREFORE, premises considered, judgment is
Report stating that he replaced the old hereby rendered in favor of the plaintiffs and
meter[6]and installed a new one[7] because the against the defendant ordering the latter as
old meters terminal seal was missing, the cover follows:
seal was broken, and the meter had a broken
sealing wire.[8] 1) To restore to plaintiffs at their residence
at #9 Hukvet St., Area
The Chuas were billed based on the new I, Veterans Village, Quezon City their electric
meter and its readings from October 11, power connection and/or services;
1996 to January 24, 1997, with an average 2) To pay the plaintiffs the sum
usage ranging from 227 to 254 kilowatt hours, of P300,000.00 as and by way of moral
with corresponding monthly electric bills ranging damages;
from P700.00 to P800.00.[9] 3) To pay the plaintiffs the sum of P30,000.00
as and by way of attorneys fees;
On January 3, 1997, the Chuas received a letter 4) To pay the cost of suit.
from MERALCO, stating that:
SO ORDERED.[13]
Our Inspection Office has referred to us for
appropriate action the following finding(s) of our
MERALCO appealed the trial courts decision to MERALCO further posits that the deliberate
the CA. manipulation of the dial pointers prevented the
full and correct billing of the electric energy
The CA affirmed the RTC decision. [14] The actually delivered to and consumed by the
appellate court confirmed that the meter had Chuas. The differential billing represents the
been tampered, but found that the tampering monetary equivalent of the electricity used by
was mitigated by the Chuas voluntary act of the Chuas but not registered by the meter.
going to MERALCO to report the possible defect
in their meter. The voluntary act, according to Lastly, MERALCO maintains that even if it had no
the court, constituted good faith as MERALCO right to disconnect the Chuas electric service,
would not have discovered the defects in the the Chuas nevertheless are not entitled to moral
meter if the Chuas had not reported the matter. damages. The Chuas did not sustain damages
after the disconnection since they sourced their
The appellate court also noted that while Section electric supply from another electric meter
6 of Republic Act No. 7832 (RA 7832), or within the premises.
the Anti-Electricity and Electric Transmission THE COURTS RULING
Lines/Materials Pilferage Act of 1994, allows
MERALCO to immediately disconnect electric We deny the petition for lack of merit.
service, it may only do so when the owner of the
house has either been caught in flagrante Prima facie evidence of
delicto in any of the acts constituting prima illegal use of electricity
facie evidence of illegal use, or has been MERALCO claims that the meter tampering in
discovered a second time in any of the this case stands undisputed in the evidence on
enumerated circumstances. In the Chuas case, record. Under RA 7832, the law presumes that
they were not caught in flagrante delicto as they the person benefited by the unlawful use of
in fact reported the defect in their meter. This electricity is the perpetrator of the meter
was the first instance, too, that MERALCO had tampering. Thus, no need arose for MERALCO to
discovered any tampering in the Chuas meter. prove that the Chuas actually tampered with
Under these circumstances, the appellate court their meter; pursuant to Section 4 of RA 7832,
concluded that MERALCO had no legal right to Meralco had the right to immediately disconnect
disconnect the Chuas electrical service. the Chuas electric service.

While upholding the RTCs factual findings, the CA We find MERALCOs position legally
modified the RTC decision by reducing the incorrect. Essential to the resolution of this
awarded moral damages from P300,000.00 issue is Section 4 of RA 7832, which reads:
to P100,000.00.
SEC. 4. Prima Facie Evidence.
THE PETITION (a) The presence of any of the following
circumstances shall constitute prima
MERALCO filed the present petition, raising the facie evidence of illegal use of electricity,
following arguments:[15] as defined in this Act, by the person benefited
thereby, and shall be the basis for: (1)
I. The CA erred in ruling that the immediate disconnection by the electric
MERALCO had no right to disconnect the electric utility to such person after due notice, x x x
service of the Chuas. (iv) The presence of a tampered, broken, or fake
II. MERALCO is entitled to collect the seal on the meter, or mutilated, altered, or
differential billing of P183,983.66. tampered meter recording chart or graph or
III. Even assuming that MERALCO had no computerized chart, graph, or log.
right to disconnect the Chuas electric service, x x x
they are nevertheless not entitled to moral (viii) x x x Provided, however, That the discovery
damages in the absence of evidence of damages of any of the foregoing circumstances, in order
they sustained. to constitute prima facie evidence, must be
personally witnessed and attested to by an
MERALCO points out that it did not immediately officer of the law or a duly authorized
disconnect electric service to the Chuas. It first representative of the Energy Regulatory
sent several demand letters explaining the Board (ERB).
meter tampering and demanding payment for
the billed differential in the sum of P183,983.66. To reiterate, the discovery of a tampered,
It was only after the Chuas refused to pay the broken, or fake seal on the meter shall only
differential billing that MERALCO disconnected constitute prima facie evidence of illegal use of
their electric service. electricity by the person who benefits from the
illegal use if such discovery is personally
Additionally, MERALCO contends that based on witnessed and attested to by an officer of
Section 9 of RA 7832, no writs of injunction shall the law or a duly authorized representative
be issued by any court against any private of the Energy Regulatory Board (ERB). With
electric utility exercising its right and authority to such prima facie evidence, MERALCO is within its
disconnect electric service unless there is prima rights to immediately disconnect the electric
facieevidence that the disconnection was made service of the consumer after due notice.
with evident bad faith or grave abuse of
authority. Since the Chuas failed to prove Section 1, Rule III of the Rules and Regulations
MERALCOs evident bad faith in disconnecting Implementing RA 7832 (IRR) defines an officer of
their electric service, they are not entitled to an the law as one who, by direct supervision of law
injunctive writ. or by election or by appointment by competent
authority, is charged with the maintenance of
public order and the protection and security of laboratory testing, was also not signed by either
life and property, such as barangay captain, an ERB representative or by any officer of the
barangay chairman, barangay councilman, law.
barangay leader, officer or member of Barangay
Community Brigades, barangay policeman, PNP For lack of any evidence showing that a
policeman, municipal councilor, municipal mayor government representative personally witnessed
and provincial fiscal. and attested to the discovery of the Chuas
tampered electric meter, no supporting prima
The importance of having an authorized facie evidence can be invoked for the immediate
government representative present during an disconnection of the Chuas electric service
inspection was highlighted during the Senate pursuant to Section 4 of RA 7832.
deliberations on RA 7832 when Senator John H.
Osmea, the laws author, explained: Consumer not the proper witness to
inspection
Mr. President, if a utility like MERALCO finds
certain circumstances or situations which are Rule III, Section 1 of the IRR provides: In order to
listed in Section 2 of this bill to be prima constitute prima facie evidence, the discovery of
facie evidence, I think they should be any of the circumstances enumerated in Section
prudent enough to bring in competent 1 hereof, must be personally witnessed and
authority, either the police or the NBI, to attested to by the consumer concerned or a
verify or substantiate their finding. If they duly authorized ERB representative or any officer
were to summarily proceed to disconnect on the of the law, as the case may be.
basis of their findings and later on there would
be a court case and the customer or the user We hold the view, however, that the
would deny the existence of what is listed in inclusion of the phrase by the consumer
Section 2, then they could be in a lot of trouble. concerned in the IRR is invalid because it is
[16]
in excess of what the law being
implemented provides. As RA 7832 stands,
only the presence of an authorized government
We emphasized the significance of this agent, either an officer of the law or an
requirement in Sps. Quisumbing v. MERALCO, authorized representative of the ERB, during the
[17]
when we said: MERALCO inspection would allow any of the
circumstances enumerated in Section 4 of RA
The presence of government agents who 7832 to be considered prima facie evidence of
may authorize immediate disconnections illegal use of electricity by the benefited party.
go into the essence of due process. Indeed, The law does not include the consumer or the
we cannot allow respondent to act virtually as consumers representative in this enumeration.
prosecutor and judge in imposing the penalty of
disconnection due to alleged meter tampering. In legal contemplation, the ERBs inclusion of the
That would not sit well in a democratic country. phrase by the consumer concerned in Rule III,
After all, Meralco is a monopoly that derives its Section 1 of the IRR expanded the clear
power from the government. Clothing it with wording of the law and violated the
unilateral authority to disconnect would be recognized principle that an administrative
equivalent to giving it a license to tyrannize its agencys rule-making power is confined to filling
hapless customers.[18] in the gaps and the necessary details in carrying
into effect the law as enacted; rule-making
cannot extend, amend, or expand statutory
After thoroughly examining the records of this requirements or embrace matters not covered
case, we find no proof that MERALCO ever by the law being implemented. Administrative
complied with the required presence of an officer regulations must always be in harmony with the
of the law. In his testimony, Albano never provisions of the law because any resulting
mentioned that he was accompanied by an discrepancy between the two will always be
authorized government representative during resolved in favor of the basic law. [21] In the
the inspection. As evident from the Meter/Socket present case, the consumer cannot in any way
Inspection Report, only Albano inspected the be considered to be in the same classification as
Chuas electric meter; no evidence shows that he the named government representatives so that
was accompanied by anyone else. Most telling of his or her presence can be a substitute for the
all, MERALCO does not even allege in its presence of these representatives.
submissions with this Court that an ERB
representative or an officer of the law ever For this reason, even if Florence Chua, the Chuas
accompanied its representative during the daughter, acknowledged that she
inspection of the Chuas electric meter. witnessed Albanos examination of the electric
meter outside their house so that she signed the
We note, too, that while MERALCO claimed in its Meter/Socket Inspection Report, her presence did
Answer that an ERB representative was present not characterize the discovered broken meter
and witnessed the testingof the Chuas electric seal as prima facie evidence of illegal use of
meter at the MERALCO laboratory, [19] it never electricity justifying immediate disconnection.
once identified this ERB
representative. MERALCO did not allege in either Legal requirements for authority
the present petition or in the Memorandum it to disconnect electricity
filed with this Court that an ERB representative
witnessed the laboratory testing of the Chuas Section 6 of RA 7832 provides another
electric meter. The Meter Verification Report, mandatory requirement before MERALCO can
[20]
the document that contains the results of the
immediately disconnect a consumers electric not have been caught in flagrante
service. The provision reads: delicto committing the tampering since in the
first place, they were the ones who reported the
SEC. 6. Disconnection of Electric Service. - defect in their meter. Moreover, the presence of
The private electric utility or rural electric a broken cover seal, broken sealing wire, and a
cooperative concerned shall have the right and missing terminal seal, is not enough to declare
authority to disconnect immediately the electric the Chuas in flagrante delicto tampering with the
service after serving the written notice or electric meter. As the basic complaint for
warning to the effect, without the need of a court mandamus alleged, without any serious
or administrative order, and deny restoration of refutation from the petitioner, the electric meter
the same, when the owner of the house or is in a concrete post outside of the Chuas
establishment concerned or someone perimeter fence; hence, in a location accessible
acting in his behalf shall have been to the public. We note, too, that MERALCO did
caught en flagrante delicto doing any of not present any evidence that it caught the
the acts enumerated in section 4 (a) hereof, Chuas committing any of the acts
or when any of the circumstances so constituting prima facie evidence of illegal use of
enumerated shall have been discovered for electricity for the second time.
the second time: Provided, That in the second
case, a written notice or warning shall have been In view of MERALCOs failure to comply with both
issued upon the first discovery: Provided, further, Section 4 and Section 6 of RA 7832, MERALCO
That the electric service shall not be obviously had no authority to immediately
immediately disconnected or shall be disconnect the Chuas electric service.
immediately restored upon the deposit of the
amount representing the differential billing by
the person denied the service, with the private Writ of Mandatory Injunction
electric utility or the rural cooperative concerned
or with the competent court as the case may be: On the validity of the injunctive writ the lower
Provided, furthermore, That if the court finds court issued in the Chuas favor, MERALCO
that illegal use of electricity has not been submits that the Chuas were not entitled to an
committed by the same person, the amount injunctive writ since it had a right, under the law,
deposited shall be credited against future to automatically disconnect the latters electric
billings, with legal interest thereon chargeable service. Furthermore, Section 9 of RA 7832
against the private utility or rural electric prohibits courts from issuing injunctions or
cooperative, and the utility or cooperative shall restraining orders against electric utilities from
be made to immediately pay such person double disconnecting service unless the consumer
the value of the payment or deposit with legal proves that the electric utility acted with evident
interest, which amount shall likewise be bad faith in disconnecting the electric
creditable against immediate future billings, service. This cited provision states:
without prejudice to any criminal, civil or
administrative action that such person may be Section 9. Restriction on the Issuance of
entitled to file under existing laws, rules and Restraining Orders or Writs of Injunction. No writ
regulations: Provided, finally, That if the court of injunction or restraining order shall be issued
finds the same person guilty of such illegal use by any court against any private electric utility
of electricity, he shall, upon final judgment, be or rural electric cooperative exercising the right
made to pay the electric utility or the rural and authority to disconnect electric service as
electric cooperative concerned double the value provided in this Act, unless there is prima
of the estimated electricity illegally used which is facie evidence that the disconnection was made
referred to in this section as differential billing. with evident bad faith or grave abuse of
authority.
In other words, MERALCO is authorized to
immediately disconnect the electric service of its
consumers without the need of a court or We have fully discussed above why MERALCO
administrative order when: (a) the consumer, or was not in the position under RA 7832 to
someone acting in his behalf, is caught in immediately disconnect the Chuas electric
flagrante delicto in any of the acts enumerated service. We add that while electricity is
in Section 4 of RA 7832; or (b) when any of the property[24] whose enjoyment, as a
circumstances constituting prima facie evidence general rule, the owner may extend or deny to
of illegal use of electricity is discovered for the others,[25] electricity is not an ordinary kind of
second time. property that a service provider may grant or
withhold to consumers at will. Electricity is a
In flagrante delicto means [i]n the very act of basic necessity whose generation and
committing the crime.[22] To be caught in distribution is imbued with public interest, and
flagrante delicto, therefore, necessarily implies its provider is a public utility subject to strict
positive identification by an eyewitness or regulation by the State in the exercise of police
eyewitnesses to the act of tampering so that power.[26] In view of the serious consequences
there is direct evidence of culpability, or that resulting from immediate disconnection of
which proves the fact in dispute without the aid electric service, the law provides strict requisites
of any inference or presumption.[23] that MERALCO must follow before it can be
granted authority to undertake instant
In the present case, however, MERALCO disconnection of electric service due to its
presented no proof that it ever caught the consumers. In view of MERALCOs dominance
Chuas, or anyone acting in the Chuas behalf, in over its market and its customers and the latters
the act of tampering with their electric meter. As relatively weak bargaining position as against
correctly observed by the CA, the Chuas could MERALCO, and in view too of the serious
consequences and hardships a customer stands
to suffer upon service disconnection, MERALCOs
failure to strictly observe these legal
requirements can be equated to the bad faith or
abuse of right[27] that the law speaks of.
Under the circumstances, we cannot but
conclude that MERALCO abused its superior and
dominant position as well as the authority
granted to it by law as a service provider when it
persisted in disconnecting the Chuas electric
service. Hence, the general prohibition against
the issuance of a restraining order or an
injunction under Section 9 of RA 7832 cannot
apply. Rather, what must prevail is the
exception: an injunction can issue when a
disconnection has been attended by bad faith or
grave abuse of authority.
As to whether the Chuas are entitled to a writ of
mandatory injunction, we rule in the affirmative.
An injunctive writ issues only upon a showing
that: a) the applicant possesses a clear and
unmistakable right; b) there is a material and
substantial invasion of such right; and c) there is
urgent and permanent necessity for
an injunctive writ to prevent serious damage.[28]
In the present case, the Chuas have established
that they are paying MERALCO customers. In the
absence of the prima facieevidence required by
Section 4 and by the requirements of Section 6
of RA 7832 that the Chuas tampered with their
electric meter, and in light as well of the merits
of the Chuas case as discussed below, the Chuas
have an unmistakable right to be provided with
continuous power supply a right MERALCO
obviously invaded when it cut off the Chuas
electric service. Electricity being what it is and
has been in modern day living, an urgent and
permanent need exists to
prevent MERALCO from cutting off the Chuas
electric service under the circumstances that
gave rise to the present dispute. Accordingly, we
uphold the RTC and CA decisions ordering
MERALCO to immediately restore the Chuas
electric service.
Differential billing
MERALCO further asserts that the Chuas should
be made to pay the differential billing for the
electricity that they actually consumed but
which was not reflected on their electric bills due
to the tampered electric meter. Since the prima
facie presumption afforded by Section 4 of RA
7832 does not apply, it falls upon MERALCO to
first prove that the Chuas actually manipulated
the dial pointers on their meter before it can
hold them accountable for the differential billing.
The circumstances discussed below, however,
cast serious doubt on the allegation and
assumption that the Chuas ever tampered with
their electric meter.
First, we stress once again that the Chuas
themselves requested MERALCO to inspect their
meter for possible defects after they received
their unusually high September 1996 bill; the
Chuas themselves were instrumental in
discovering the tampered condition of their
electric meter. Had the Chuas been guilty of
tampering as MERALCO assumed, they would not
have drawn attention to themselves by reporting
the problem with their meter; as the beneficial
users of the electric service, they would have
been MERALCOs main suspects once the
tampering came to light. We thus find it highly
illogical for the Chuas to be guilty of actual
tampering given their actions on record on the
discovery of the tampered condition of their
meter.
Second, we observe that based on the Chuas
billing record, no discernable difference
exists between the Chuas electric bills
before and after MERALCO had replaced
their tampered meter. The Chuas consumed
between 231 to 269 kilowatt hours of electricity
per month from June 11, 1996 to September 11,
1996, with their corresponding monthly electric
bills ranging from P747.84 to P887.27. (Their
long-term usage record is further reflected in the
appropriate footnoted table below.) The following
usage record is undisputed after MERALCO
installed a new meter to replace the tampered
one.
Date Kilowatt hours
October 1996 1,297
November 227
December 228
January 1997 254
January 24, 1997 96
Tampering with the electric meter is committed
by the consumer to prevent the meter from
registering the correct amount of electric
consumed; thus, while using the same regular
power supply, they are billed for less than what
they actually consumed. Tampering affects only
the registered usage as reflected in the electric
meter, not the amount of electricity actually
used,
assuming a more or less uniform monthly usage
of electricity.[29] Stated otherwise, when an
electric meter is tampered, the recorded
consumption is less than the electricity actually
used. Consequently, when a tampered
electric meter is replaced, assuming the
same amount of monthly rate of usage, the
new electric meter will register the
increased use of electricity that had
previously been concealed by the tampered
meter.[30]
If the Chuas had truly tampered with their
electric meter, it stands to reason that after
MERALCO replaced the tampered electric meter
with a new one, the Chuas electric bills would
have gone up to reflect the electricity they were
actually consuming. That the Chuas monthly
electric consumption remained virtually
unchanged even after the defective electric
meter had been replaced strongly
disproves the contentions that the Chuas
tampered with their electric meter and that
the Chuas electric meter registered less
than the electricity they had actually
consumed. Given the surrounding
circumstance, the sequence of events, and the
electric meter readings, i.e., the exposed
location of the Chuas electric meter, the long-
term consumption record shown below, the
unusual upward spike of the meter reading in
September 1996, the inspection and the
replacement by a new electric meter, and the
continued readings consistent with the readings
prior to the September 1996 spike, it would not
be surprising if the tampering of the seals came
immediately before September 1996 and were
made by parties other than the Chuas for their anything suspicious in the Chuas billing history
own reasons. To be sure, the Chuas would not that would lead him to conclude that the
have tampered with their own meter to increase tampering began on August 17, 1992. All we
their meter reading. have to rely on is Katipunans assurance that the
Chuas electric meter existed in a tampered state
Aside from the doubtful veracity of the allegation for this whole four-year period. This testimony,
and assumption that the Chuas tampered with however, is uncorroborated by evidence.
their meter, we also consider that MERALCO did
not provide any factual or legal basis for its We are not unaware that MERALCO used the
differential billing. Section 6 of RA 7832 supplies Chuas September 1996 bill to compute the
the manner by which a public utility can differential billing the same bill that the Chuas
compute the differential billing. protested with Meralco for being extraordinarily
high. While Section 6 of RA 7832 does
SEC. 6. Disconnection of Electric Service. x x allow MERALCO to use the consumers highest
x recorded monthly consumption as the basis to
compute the differential billing, still, Meralco
For purposes of this Act, differential after examining the Chuas records for the past
billing shall refer to the amount to be charged four years[34] should have noticed that the
to the person concerned for the unbilled September 1996 bill was truly unusual. As seen
electricity illegally consumed by him as from their billing history, while the Chuas
determined through the use of methodologies consistently consumed no more than 300
which utilize, among other, as basis for kilowatt hours of electricity every month for the
determining the amount of monthly electric past four years, in their September bill, their
consumption in kilowatt-hours to be billed either: usage dramatically spiked to 1,297 kilowatt
(a) the highest recorded monthly hours, or a difference of more than 400%. Even
consumption within the five-year billing more telling is that after MERALCO replaced
period preceding the time of the discovery, the alleged tampered electric meter, the
(b) the estimated monthly consumption as per Chuas continued to consume the same
the report of load inspection conducted during amount of electricity they had consumed
the time of the discovery, (c) the higher prior to the September 1996 bill.
consumption between the average consumption
before or after the highest drastic drop in Given the strange circumstances surrounding the
consumption within the five year billing period September 1996 bill, MERALCO should have
preceding the discovery, (d) the highest exercised prudence and employed another
recorded monthly consumption within four (4) method to compute the Chuas differential billing,
months after the time of discovery, or (e) the such as using the estimated monthly
result of the ERB test during the time of consumption based on a load inspection report.
discovery and, as basis for determining the At the very least, MERALCO should have exerted
period to be recovered by the differential efforts to investigate the Chuas complaint
billing, either: (1) the time when the electric regarding the sudden increase in their electric
service of the person concerned recorded bill, especially considering the Chuas claim that
an abrupt or abnormal drop in they had not done anything new or used any
consumption, or (2) when there was change in additional appliances during the period covered
his service connection such as a change in his by the September 1996 bill.[35] We find it
service connection such as a change of meter, significant that nothing in the record suggests
change of seal or reconnection, or in the that MERALCO even attempted to study, or even
absence thereof, a maximum of sixty (60) billing tried to explain, the sudden surge in the Chuas
months, up to the time of discovery: Provided, September 1996 bill.
however, That such period shall, in no case, be
less than one (1) year preceding the date of We highlight another important point to consider
discovery of the illegal use of electricity. - that MERALCO sent the Chuas another letter
dated February 5, 1997, where it reduced the
Chuas differential billing from P183,983.66
According to MERALCOs witness, Enrique to P71,737.49.[36] While MERALCO admitted the
Katipunan, the period affected by the Chuas existence of this letter in the proceedings before
tampered electric meter was from August 17, the lower courts, it chose to ignore the
1992 to October 11, 1996 (affected period).[31] In existence of this February 5, 1997 letter in
line with the fundamental rule that the burden of its submissions with this Court; instead, in
evidence lies with the person who asserts the the Petition and Memorandum it filed with this
affirmative allegation,[32] MERALCO thus carried Court, MERALCO reverted to its demand that the
the burden to prove that the Chuas electric Chuas pay the original differential billing
meter had been tampered with as early of P183,983.66. This unexplained and
as August 17, 1992. inconsistent MERALCO posture further
strengthens our doubts on to the legitimacy and
Significantly, while Katipunan stated that he correctness of the Chuas differential billing.
studied the Chuas billing history to establish the MERALCO is duty bound to explain to its
affected period from August 17, 1992 to October customers the basis for arriving at any given
11, 1996,[33] we find conspicuously absent billing, particularly in cases of unregistered
from his testimony any statement consumptions. Otherwise, consumers will stand
explaining how he established this four- piteously at the public utilitys mercy. [37] Courts
year period as the period affected by the cannot and will not in any way blindly grant a
tampered electric meter. Katipunan did not public utilitys claim for differential billing if there
mention any abrupt or abnormal drop in the is no sufficient evidence to prove entitlement.
Chuas electric consumption, nor did he identify [38] AsMERALCO has failed to substantiate its
claim for the differential billing, we rule that the Mills, Corp.[41] and Davao Light & Power Co., Inc.
Chuas cannot be held to account for the billed v. Opena,[42] we faulted the electric companies
amount. involved for not immediately inspecting the
electric meters after they noted a sudden drop in
the consumers registered electric consumption.
Since, in both cases, the public utility companies
MERALCO guilty of inexcusable negligence allowed several years to lapse before deciding to
conduct an inspection of the electric meters, we
Apart from lacking factual or legal basis, another ruled that they were both negligent and
reason for us not to hold the Chuas accountable consequently barred them from collecting their
for MERALCOs differential billing is our previous claims of differential billing against the
ruling in Ridjo Tape & Chemical Corp. v. CA, consumers.
[39]
where we said:
With these rulings in mind, we held in MERALCO
It has been held that notice of a defect need not v. Wilcon Builders Supply, Inc. [43] that the use of
be direct and express; it is enough that the the words defect and defective in Ridjo does not
same had existed for such a length of time restrict the inexcusable negligence doctrine to
that it is reasonable to presume that it had cases of mechanical defects in installed electric
been detected, and the presence of a meters. We said:
conspicuous defect which has existed for a
considerable length of time will create a The Ridjo doctrine simply states that the public
presumption of constructive notice utility has the imperative duty to make a
thereof. Hence, MERALCOs failure to reasonable and proper inspection of its
discover the defect, if any, considering the apparatus and equipment to ensure that they do
length of time, amounts to inexcusable not malfunction. Its failure to discover the
negligence. Furthermore, we need not belabor defect, if any, considering the length of time,
the point that as a public utility, MERALCO has amounts to inexcusable negligence; its failure to
the obligation to discharge its functions with make the necessary repairs and replace the
utmost care and diligence. defective electric meter installed within the
consumers premises limits the latters liability.
Accordingly, we are left with no recourse but to The use of the words defect and defective in the
conclude that this is a case of negligence on the above-cited case does not restrict the
part of MERALCO for which it must bear the application of the doctrine to cases of
consequences. Its failure to make the necessary mechanical defects in the installed electric
repairs and replacement of the defective electric meters. A more plausible interpretation is to
meter installed within the premises of petitioners apply the rule on negligence whether the
was obviously the proximate cause of the instant defect is inherent, intentional or
dispute between the parties. unintentional, which therefore covers
tampering, mechanical defects and
Indeed, if an unusual electric consumption was mistakes in the computation of the
not reflected in the statements of account of consumers billing.[44]
petitioners, MERALCO, considering its technical
knowledge and vast experience in providing The production and distribution of electricity is a
electric service, could have easily verified any highly technical business undertaking. In
possible error in the meter reading. In the conducting its operation, it is only logical for a
absence of such a mistake, the electric meters public utility, such as MERALCO, to employ
themselves should be inspected for possible mechanical devices and equipment for the
defects or breakdowns and forthwith repaired orderly pursuit of its business.[45] MERALCO has
and, if necessary, replaced. x x x the imperative duty to make a reasonable and
proper inspection of its apparatus and
The rationale behind this ruling is that public equipment to ensure that they do not
utilities should be put on notice, as a malfunction, and the due diligence to discover
deterrent, that if they completely disregard and repair defects therein. Failure to perform
their duty of keeping their electric meters such duties constitutes negligence.[46]
in serviceable condition, they run the risk
of forfeiting, by reason of their negligence, True, consumers who tamper with their electric
amounts originally due from their meter do so surreptitiously to avoid being
customers. Certainly, we cannot sanction a detected by the public utility providing the
situation wherein the defects in the electric service; hence, at first glance, it may seem
meter are allowed to continue indefinitely until unreasonable for us to chastise MERALCO for not
suddenly the public utilities concerned demand detecting the alleged tampering sooner.
payment for the unrecorded electricity utilized However, what stands out in this case is
when, in the first place, they should have the sheer length of time that the Chuas
remedied the situation immediately. If we turn a electric meter allegedly existed in a tampered
blind eye on MERALCOs omission, it may state without being discovered by MERALCO if
encourage negligence on the part of public indeed the electric meter had been defective
utilities, to the detriment of the consuming since 1992. If we presume MERALCOs findings to
public.[40] be correct, MERALCO discovered the broken
seals in the Chuas meter after more than four
years (from August 1992 to October 1996), and
While Ridjo involved a defective meter, we have, only because the Chuas reported a possible
on occasion, applied this same doctrine to cases defect with their electric meter to the public
that involved allegations of meter tampering. In utility company.
both Manila Electric Company v. Macro Textile
Aside from the long period of time involved, we disconnected electric service, we uphold the CA
also underscore the fact that the alleged ruling, reducing the moral damages awarded
tampering in this case did not require special from P300,000.00 to P100,000.00.
training or knowledge to be detected. Certainly,
the missing terminal seal, the broken cover seal, WHEREFORE, the petition is
and the broken sealing wire of the meter [47] are hereby DENIED. The assailed decision of the
visible to the naked eye and would have caught Court of Appeals dated October 20, 2003 in CA-
the attention of MERALCOs personnel in the G.R. SP No. 77034 is AFFIRMED in toto.
course of their meter readings.
SO ORDERED.
As in Ridjo, we take judicial notice that during
this long period of time, MERALCOs personnel
had the opportunity to inspect and examine the
Chuas electric meter for the purpose of
determining the monthly dues payable. Even
if MERALCO did not conduct these regular
monthly inspections, we find it reasonable to
expect that within this four-year
period, MERALCO would, at the very least,
annually examine the electric meter to verify its
condition and to determine the accuracy of its
readings if ordinary examination shows defects
as in the case of the Chuas meter. That it failed
to do so constitutes negligence on its part, and
bars it from collecting its claim for differential
billing.

On the issue of moral damages

Article 32 of the Civil Code provides that moral
damages are proper when the rights of
individuals, including the right against
deprivation of property without due process of
law, are violated. Jurisprudence has established
the following requisites for the award of moral
damages: (1) there is an injury whether physical,
mental, or psychological clearly sustained by the
claimant; (2) there is a culpable act or omission
factually established; (3) the wrongful act or
omission of the defendant is the proximate
cause of the injury sustained by the claimant;
and (4) the award of damages is predicated on
any of the cases stated in Article 2219 of the
Civil Code.[48]

Considering the manner MERALCO disconnected

the Chuas electric service, we find the award of
moral damages proper. Apart from the havoc
wreaked on the Chuas daily lives when MERALCO
abruptly and without legal basis cut off their
electricity, the removal of the electric meter also
caused the Chuas extreme social humiliation and
embarrassment as they were subjected to
speculations in their neighborhood of being
power thieves. As Mrs. Felicidad Chua testified,
she suffered sleepless nights and felt serious
anxiety after the removal of their electric meter
came to the attention of the barangay. In fact,
she even had to consult a doctor for this anxiety.
[49]
Thus, even if the Chuas did subsequently
obtain their electricity from another source,
[50]
the damage to the Chuas reputation and
social standing had already been done.

However, moral damages, which are left largely Republic of the Philippines
to the sound discretion of the courts, should be SUPREME COURT
granted in reasonable amounts, considering the Manila
attendant facts and circumstances.[51] Moral THIRD DIVISION
damages, though incapable of pecuniary
estimation, are designed to compensate the G.R. No. 119398 July 2, 1999
claimant for actual injury suffered and not to EDUARDO M. COJUANGCO JR., petitioner,
impose a penalty.[52] As prevailing vs.
[53]
jurisprudence deems the award of moral COURT OF APPEALS, THE PHILIPPINE
damages in the amount of P100,000.00 CHARITY SWEEPSTAKES OFFICE and
appropriate in cases where MERALCO wrongfully
FERNANDO O. CARRASCOSO Plaintiff [herein petitioner] is a known
JR., respondents. businessman-sportsman owning several
racehorses which he entered in the sweepstakes
PANGANIBAN, J.: races between the periods covering March 6,
To hold public officers personally liable for moral 1986 to September 18, 1989. Several of his
and exemplary damages and for attorney's fees horses won the races on various dates, landing
for acts done in the performance of official first, second or third places, respectively, and
functions, the plaintiff must prove that these winning prizes together with the 30% due for
officers exhibited acts characterized by evident trainer/grooms which are itemized as follows:
bad faith, malice, or gross negligence. But even
if their acts had not been so tainted, public
officers may still be held liable for nominal
damages if they had violated the plaintiff's
constitutional rights.
The Case
Before us is a Petition for Review under Rule 45
of the Rules of Court seeking to set aside the
Decision 1 of the Court of Appeals 2 in CA-GR CV
No. 39252 promulgated on September 9, 1994.
The assailed Decision reversed the Regional Trial
Court (RTC) of Manila, Branch 2, in Civil Case No.
[Herein petitioner] sent letters of demand
91-55873, which disposed of the controversy in
(Exhibits "A," dated July 3, 1986; "B" dated
favor of herein petitioner in the following
manner: 3 August 18, 1986; and "C," dated September 11,
WHEREFORE, judgment is hereby rendered in 1990) to the defendants [herein private
favor of the plaintiff and against the defendants, respondents] for the collection of the prizes due
ordering them, jointly and severally the him. And [herein private respondents]
following: consistently replied. (Exhibits 2 and 3) that the
ON THE FIRST CAUSE OF ACTION demanded prizes are being withheld on advice of
1. To pay P143,000.00 plus interest thereon from Commissioner Ramon A. Diaz of the Presidential
March 26, 1986 until complete payment thereof; Commission on Good Government. Finally on
2. To pay P28,000.00 plus interest thereon [from] January 30, 1991; this case was filed before the
June 8, 1986 until complete payment thereof; Regional Trial Court of Manila. But before receipt
3. To pay P142,700.00 plus interest thereon from of the summons on February 7, Presidential
July 10, 1987 until complete payment thereof; Commission on Good Government advi[s]ed
4. To pay P70,000.00 plus interest thereon from
defendants that "if poses no more objection to
February 1, 1987 until complete payment
the remittance of the prize winnings" (Exh. 6) to
thereof;
5. To pay P140,000.00 plus interest thereon from [herein petitioner]. Immediately, this was
March 22, 1987 until complete payment thereof; communicated to Atty. Estelito Mendoza by
6. To pay P28,000.00 plus interest thereon from [Private Respondent Fernando] Carrascoso [Jr.].
5

April 26, 1987 until complete payment thereof;

As culled from the pleadings of the parties, Atty.
7. To pay P14,000.00 plus interest thereon from
Estelito P. Mendoza, petitioner's counsel, refused
May 17, 1987 until complete payment thereof;
8. To pay P140,000.00 plus interest thereon from to accept the prizes at this point, reasoning that
August 9, 1987 until complete payment thereof; the matter had already been brought to court.
9. To pay P174,000.00 plus interest thereon from
Ruling of the Trial Court
December 13, 1987 until complete payment
thereof; The trial court ruled that Respondent Philippine
10. To pay P140,000.00 plus interest thereon Charity Sweepstakes Office (PCSO) and its then
from September 18, 1988 until complete chairman, Respondent Fernando O. Carrascoso
payment thereof; Jr., had no authority to withhold the subject
11. All income derived from the foregoing
racehorse winnings of petitioner, since no writ of
amounts.
sequestration therefor had been issued by the
ON THE SECOND CAUSE OF ACTION
Ordering defendant Fernando O. Carrascoso the Presidential Commission on Good Government
following: (PCGG). It held that it was Carrascoso's
1. To pay moral damages in the amount of One unwarranted personal initiative not to release
Hundred Thousand Pesos (P100,000.00); the prizes. Having been a previous longtime
2. To pay exemplary damages in the amount of associate of petitioner in his horse racing and
Twenty Thousand Pesos (P20,000.00); breeding activities, he had supposedly been
3. To pay attorney's fees in the amount of Thirty aware that petitioner's winning horses were not
Thousand Pesos (P30,000.00); ill-gotten. The trial court held that, by not paying
4. To pay the costs of suit. the winnings, Carrascoso had acted in bad faith
The counterclaim is ordered dismissed, for lack amounting to the persecution and harassment of
of merit. petitioner and his family. 6 It thus ordered the
SO ORDERED. PCSO and Carrascoso to pay in
In a Resolution 4 dated March 7, 1995, solidum petitioner's claimed winnings plus
Respondent Court denied petitioner's Motion for
interests. It further ordered Carrascoso to pay
Reconsideration.
moral and exemplary damages, attorney's fees
The Facts
The following is the Court of Appeals' undisputed and costs of suit.1wphi1.nt
narration of the facts:
While the case was pending with the Court of
Appeals, petitioner moved for the partial
execution pending appeal of the RTC judgment,
praying for the payment of the principal amount
of his prize winnings. Private respondents posed
no objection thereto and manifested their
readiness to release the amount prayed for.
Hence, the trial court issued on February 14,
1992, an Order 7 for the issuance of a writ of
execution in the amount of P1,020,700.
Accordingly, on May 20, 1992, Respondent PCSO
delivered the amount to petitioner.
IN VIEW OF ALL THE FOREGOING, the judgment
appealed from is REVERSED and SET ASIDE and
a new one entered DISMISSING this case. No
pronouncement as to costs.
On September 29, 1994, petitioner filed a Motion
for Reconsideration, which was denied on March
7, 1995. Hence, this petition. 11
Issues
Petitioner asks this Court to resolve the following
issues:

Ruling of the Court of Appeals a. Whether the Court of Appeals had jurisdiction
over the appeal of respondent Philippine Charity
Before the appellate court, herein private Sweepstakes Office (PCSO);
respondents assigned the following errors: 8
b. Whether the appeal of respondent Carrascoso,
I Jr. should have been dismissed for his failure to
THE COURT A QUO ERRED IN HOLDING THAT file an appeal brief;
DEFENDANTS-APPELLANTS ACTED IN BAD FAITH c. Whether the Court of Appeals had jurisdiction
IN WITHHOLDING PLAINTIFF-APPELLEE['S] to review and reverse the judgment on a cause
PRIZE[S]; of action which was not appealed from by the
II respondents;

THE COURT A QUO ERRED [IN] AWARDING d. Whether the award for damages against
MORAL DAMAGES, EXEMPLARY DAMAGES AND respondent Carrascoso, Jr. is warranted by
ATTORNEY'S FEES IN FAVOR OF PLAINTIFF- evidence and the law. 12
APPELLEE. Being related, the first two issues will be
In reversing the trial court's finding of bad faith discussed jointly.
on the part of Carrascoso, the Court of Appeals The Court's Ruling
held that the former PCSO chairman was merely
carrying out the instruction of the PCGG in The petition is partly meritorious.
regard to the prize winnings of petitioner. It
First and Second Issues:
noted that, at the time, the scope of the
sequestration of the properties of former Effect of PCSO's Appeal Brief
President Ferdinand E. Marcos and his cronies
was not well-defined. Respondent Court Petitioner contends that the appeal filed by the
explained: 9 PCSO before Respondent Court of Appeals should
have been dismissed outright. The appealed RTC
. . . Under those equivocalities, defendant decision ruled on two causes of action: (1) a
Carrascoso could not be faulted in asking further judgment against both PCSO and Carrascoso to
instructions from the PCGG, the official jointly and severally pay petitioner his winnings
government agency on the matter, on what to plus interest and income; and (2) a judgment
do with the prize winnings of the [petitioner], against Carrascoso alone for moral and
and more so, to obey the instructions exemplary damages, as well as attorney's fees
subsequently given. The actions taken may be a and costs. The PCSO, through the Office of the
hard blow on [petitioner] but defendant Government Corporate Counsel (OGCC),
Carrascoso had no alternative. It was the safest appealed only the second item: "the impropriety
he could do in order to protect public interest, of the award of damages . . . ." This appealed
act within the powers of his position and serve portion, however, condemned only Carrascoso,
the public demands then prevailing. More not the PCSO. Technically, petitioner claims,
importantly, it was the surest way to avoid a PCSO could not have appealed the second
possible complaint for neglect of duty or portion of the RTC Decision which ruled against
misfeasance of office or an anti-graft case Carrascoso only, and not against the
against him. government corporation.
The Court of Appeals also noted that the Petitioner further avers that Carrascoso failed to
following actuations of Carrascoso negated bad file his own appeal brief; accordingly, his appeal
faith: (1) he promptly replied to petitioner's should have, been dismissed. The PCSO brief, he
demand for the release of his prizes, citing submits, could not have inured to the benefit of
PCGG's instruction to withhold payment thereof; Carrascoso, because the latter was no longer
(2) upon PCGG's subsequent advice to release chairman of that office at the time the brief was
petitioner's winnings, he immediately informed filed and, hence, could no longer be represented
petitioner thereof; and (3) he interposed no by the OGCC.
objection to the partial execution, pending
appeal, of the RTC decision. Respondent Court On the other hand, respondents aver that the
finally disposed as follows: 10 withholding of petitioner's racehorse winnings by
Respondent Carrascoso occurred during the
latter's incumbency as PCSO chairman.
According to him, he had honestly believed that
it was within the scope of his authority not to
release said winnings, in view of then President
Corazon C. Aquino's Executive Order No. 2 (EO
2), in which she decreed the following:
(1) Freeze all assets and properties in the
Philippines in which former President Marcos
and/or his wife, Mrs. Imelda Romualdez Marcos,
their close friends, subordinates, business
associates, dummies, agents, or nominees have
any interest or participation;
(2) Prohibit any person from transferring,
conveying, encumbering or otherwise depleting
or concealing such assets and properties or from
assisting or taking part in their transfer,
encumbrance, concealment, or dissipation,
under pain of such penalties as are prescribed by
law.
Moreover, he argues that he sought the advice
of the PCGG as to the nature of the subject
racehorse winnings, and he was told that they
were part of petitioner's sequestered properties.
Under these circumstances and in his belief that
said winnings were fruits of petitioner's ill-gotten
properties, he deemed it his duty to withhold
them. The chairman of the PCSO, he adds, is
empowered by law to order the withholding of
prize winnings.
The representation of the OGCC on behalf of the
PCSO and Mr. Carrascoso is pursuant to its basic
function to "act as the principal law office of all
government-owned or controlled corporations,
their subsidiaries, other corporate offsprings and
government acquired asset corporations and . . .
[to] exercise control and supervision over all
legal departments or divisions maintained
separately and such powers and functions as are
now or may hereafter be provided by law." 13 The
OGCC was therefore duty-bound to defend the
PCSO because the latter, under its charter, 14 is a
government-owned corporation. The government
counsel's representation extends to the
concerned government functionary's officers
when the issue involves the latter's official acts
or duties. 15
Granting that upon his separation from the
government, Carrascoso ceased to be entitled to
the legal services of the government corporate
counsel, this development does not
automatically revoke or render ineffective his
notice of appeal of the trial court's Decision. The
filing of an appellant's brief is not an absolute
requirement for the perfection of an
appeal. 16 Besides, when noncompliance with the
Rules of Court is not intended for delay or does
not prejudice the adverse party, the dismissal of
an appeal on a mere technicality may be stayed
and the court may, at its sound discretion,
exercise its equity
17
jurisdiction. The emerging trend in our
jurisprudence is to afford every party-litigant the
amplest opportunity for the proper and just
determination of his cause, free from the
constraints of technicalities. 18
What is important is that Respondent Carrascoso
filed his notice of appeal on time and that his
counsel before the lower court, who was
presumed to have continued representing him
on appeal, 19 had filed an appeal brief on his
behalf. The Manifestation of Carrascoso before
the Court of Appeals that he intended to hire the
services of another counsel and to file his own
brief did not ipso facto effect a change of
counsel under the existing rules of procedure.
The former counsel must first file a formal
petition withdrawing his appearance with the
client's consent, and the newly appointed
attorney should formally enter his appearance
before the appellate court with notice to the
adverse party. 20 But other than Carrascoso's
manifestation of his intention to hire a counsel of
his own, the requisites for a change of counsel
were not fully complied with. Nevertheless, as
stated earlier, even an effective change of
attorney will not abrogate the pleadings filed
before the court by the former counsel.
All in all, we hold that the appellate court
committed no reversible error in not dismissing
the appeal, since this matter was addressed to
its sound discretion, and since such discretion
exercised reasonably in accordance with the
doctrine that cases should, as much as possible,
be decided on their merits.
Third Issue:
Scope of the Appeal
Before Respondent Court
Petitioner is correct in asserting that
the entire RTC judgment was not appealed to
Respondent Court of Appeals. The errors
assigned in the appellants' Brief, as quoted
earlier, attacked only the trial court's (1)
conclusion that "defendants-appellants acted in
bad faith" and (2) award of damages in favor of
herein petitioner. In short, only those parts
relating to the second cause of action could be
reviewed by the CA.
Respondent Court could not therefore reverse
and set aside the RTC Decision in its entirety and
dismiss the original Complaint without trampling
upon the rights that had accrued to the
petitioner from the unappealed portion of the
Decision. It is well-settled that only the errors
assigned and properly argued in the brief, and
those necessarily related thereto, may be
considered by the appellate court in resolving an
appeal in a civil case. 21 The appellate court has
no power to resolve unassigned errors, except
those that affect the court's jurisdiction over the
subject matter and those that are plain or
clerical errors. 22
Having said that, we note, however, that
Respondent Court in its Decision effectively
recognized the confines of the appeal, as it
stated at the outset that "this appeal shall be
limited to the damages awarded in the [RTC]
decision other than the claims for race winning
prizes." 23 The dispositive portion of the Decision
must be understood together with the
aforequoted statement that categorically defined
the scope of Respondent Court's review.
Consequently, what the assailed Decision
"reversed and set aside" was only that part of
the appealed judgment finding bad faith on the
part of herein Private Respondent Carrascoso
and awarding damages to herein petitioner. It
did not annul the trial court's order for
Respondent PCSO to pay Petitioner Cojuangco
his racehorse winnings, because this Order had
never been assigned as an error sought to be
corrected.
On the contrary, Respondent PCSO had probably
never intended to further object to the payment,
as it so manifested before the trial court 24 in
answer to Petitioner Cojuangco's Motion 25 for
the partial execution of the judgment. In fact, on
May 20, 1992, PCSO willingly and readily paid
the petitioner the principal amount of
P1,020,700 in accordance with the writ of
execution issued by the trial court on February
14, 1992. 26 Obviously and plainly, the RTC
judgment, insofar as it related to the first cause
of action, had become final and no longer
subject to appeal.
In any event, the Court of Appeals' discussion
regarding the indispensability of the PCGG as a
party-litigant to the instant case was not pivotal
to its reversal of the appealed trial court
Decision. It merely mentioned that the non-
joinder of the PCGG made the
Complaint vulnerable or susceptible to dismissal.
It did not rule that it was the very ground, or at
least one of the legal grounds, it relied upon in
setting aside the appealed judgment. It could not
have legally done so anyway, because the
PCGG's role in the controversy, if any, had never
been an issue before the trial court. Well-settled
is the doctrine that no question, issue or
argument will be entertained on appeal unless it
has been raised in the court a quo. 27
The aforementioned discussion should therefore
be construed only in light of the previous
paragraphs relating to Respondent Carrascoso's
good faith which, the appellate court surmised,
was indicated by his reliance on PCGG's
statements that the subject prize winnings of
Petitioner Cojuangco were part of the
sequestered properties. In other words,
Respondent Court's view that the non-inclusion
of PCGG as a party made the Complaint
dismissible was a mere aside that did not
prejudice petitioner.
Fourth Issue:
Damages
Petitioner insists that the Court of Appeals erred
in reversing the trial court's finding that
Respondent Carrascoso acted in bad faith in
withholding his winnings. We do not think so.
Bad faith does not simply connote bad judgment
or simple negligence. It imports a dishonest
purpose or some moral obliquity and conscious
doing of a wrong, a breach of a known duty due
to some motive or interest or ill will that partakes
of the nature of fraud. 28
We do not believe that the above judicially
settled nature of bad faith characterized the
questioned acts of Respondent Carrascoso. On
the contrary, we believe that there is sufficient
evidence on record to support Respondent
Court's conclusion that he did not act in bad
faith. It reasoned, and we quote with approval: 29
A close examination of the June 10, 1986 letter
of defendant Carrascoso to Jovito Salonga, then
Chairman of the Presidential Commission on
Good Government, readily display uncertainties
in the mind of Chairman Carrascoso as to the
extent of the sequestration against the
properties of the plaintiff. In the said letter
(Exhibit "1") the first prize for the March 16,
1986 draw and the second prize for the June 8,
1986 draw, were, in the meantime, being
withheld to "avoid any possible violation of your
sequestration order on the matter" because
while he is aware of the sequestration order
issued against the properties of defendant
Eduardo Cojuangco, he is not aware of the
extent and coverage thereof. It was for that
reason that, in the same letter, defendant
Carrascoso requested for a clarification whether
the prizes are covered by the order and if it is in
the affirmative, for instructions on the proper
disposal of the two (2) prizes taking into account
the shares of the trainer and the groom.
Correspondingly, in a letter dated June 13, 1986
(Exhibit 2) PCGG Commissioner Ramon A. Diaz
authorized the payment to the trainer and the
groom but instructed the withholding of the
amounts due plaintiff Eduardo Cojuangco. This
piece of evidence should be understood and
appreciated in the light of the circumstances
prevailing at the time. PCGG was just a newly
born legal creation and "sequestration" was a
novel remedy which even legal luminaries were
not sure as to the actual procedure, the correct
approach and the manner how the powers of the
said newly created office should be exercised
and the remedy of sequestration properly
implemented without violating due process of
law. To the mind of their newly installed power,
the immediate concern is to take over and freeze
all properties of former President Ferdinand E.
Marcos, his immediate families, close associates
and cronies. There is no denying that plaintiff is
a very close political and business associate of
the former President. Under those equivocalities,
defendant Carrascoso could not be faulted in
asking further instructions from the PCGG, the
official government agency on the matter, on
what to do with the prize winnings of the
plaintiff, and more so, to obey the instructions
subsequently given. The actions taken may be a
hard blow on plaintiff but defendant Carrascoso
had no alternative. It was the safest he could do
in order to protect public interest, act within the
powers of his position and serve the public
demands then prevailing. More importantly, it
was the surest way to avoid a possible complaint
for neglect of duty or misfeasance of office or an
anti-graft case against him.
xxx xxx xxx In Aberca v. Ver, 34 this Court explained the
nature and the purpose of this article as follows:
Moreover, the finding of bad faith against
defendant Carrascoso is overshadowed by the It is obvious that the purpose of the above codal
evidences showing his good faith. He was just provision is to provide a sanction to the deeply
recently appointed chairman of the PCGG when cherished rights and freedoms enshrined in the
he received the first demand for the collection of Constitution. Its message is clear; no man may
the prize for the March 16, 1986 race which he seek to violate those sacred rights with impunity.
promptly answered saying he was under In times of great upheaval or of social and
instructions by the PCGG to withhold such political stress, when the temptation is strongest
payment. But the moment he received the go to yield borrowing the words of Chief Justice
signal from the PCGG that the prize winnings of Claudio Teehankee to the law of force rather
plaintiff Cojuangco could already be released, he than the force of law, it is necessary to remind
immediately informed the latter thereof, ourselves that certain basic rights and liberties
interposed no objection to the execution pending are immutable and cannot be sacrificed to the
appeal relative thereto, in fact, actually paid off transient needs or imperious demands of the
all the winnings due the plaintiff. . . . ruling power. The rule of law must prevail, or else
liberty will perish. Our commitment to
Carrascoso's decision to withhold petitioner's democratic principles and to the rule of law
winnings could not be characterized as arbitrary compels us to reject the view which reduces law
or whimsical, or even the product of ill will or to nothing but the expression of the will of the
malice. He had particularly sought from PCGG a predominant power in the community.
clarification of the extent and coverage of the "Democracy cannot be a reign of progress, of
sequestration order issued against the properties liberty, of justice, unless the law is respected by
of petitioner. 30 He had acted upon the PCGG's him who makes it and by him for whom it is
statement that the subject prizes were part of made. Now this respect implies a maximum of
those covered by the sequestration order and its faith, a minimum of idealism. On going to the
instruction "to hold in a proper bank deposits bottom of the matter, we discover that life
[sic] earning interest the amount due Mr. demands of us a certain residuum of sentiment
Cojuangco." 31 Besides, EO 2 had just been which is not derived from reason, but which
issued by then President Aquino," freez[ing] all reason nevertheless controls." 35
assets and properties in the Philippines [of]
former President Marcos and/or his wife, . . . their Under the aforecited article, it is not necessary
close friends, subordinates, business associates . that the public officer acted with malice or bad
. ."; and enjoining the "transfer, encumbrance, faith. 36 To be liable, it is enough that there was a
concealment, or dissipation [thereof], under pain violation of the constitutional rights of petitioner,
of such penalties as prescribed by law." It even on the pretext of justifiable motives or
cannot, therefore, be said that Respondent good faith in the performance of one's duties. 37
Carrascoso, who relied upon these issuances,
acted with malice or bad faith. We hold that petitioner's right to the use of his
property was unduly impeded. While Respondent
The extant rule is that a public officer shall not Carrascoso may have relied upon the PCGG's
be liable by way of moral and exemplary instructions, he could have further sought the
damages for acts done in the performance of specific legal basis therefor. A little exercise of
official duties, unless there is a clear showing of prudence would have disclosed that there was
bad faith, malice or gross no writ issued specifically for the sequestration
negligence. 32Attorney's fees and expenses of of the racehorse winnings of petitioner. There
litigation cannot be imposed either, in the was apparently no record of any such writ
absence of a clear showing of any of the grounds covering his racehorses either. The issuance of a
provided therefor under the Civil Code. 33 The sequestration order requires the showing of
trial court's award of these kinds of damages a prima facie case and due regard for the
must perforce be deleted, as ruled by the Court requirements of due process. 38 The withholding
of Appeals. of the prize winnings of petitioner without a
properly issued sequestration order clearly spoke
Nevertheless, this Court agrees with the of a violation of his property rights without due
petitioner and the trial that Respondent process of law.
Carrascoso may still be held liable under Article
32 of the Civil Code, which provides: Art. 2221 of the Civil Code authorizes the award
of nominal damages to a plaintiff whose right
Art. 32. Any public officer or employee, or any has been violated or invaded by the defendant,
private individual, who directly or indirectly for the purpose of vindicating or recognizing that
obstruct, defeats, violates or in any manner right, not for indemnifying the plaintiff for any
impedes or impairs any of the following rights loss suffered. 39 The court may also award
and liberties of another person shall be liable to nominal damages in every case where a
the latter for damages: property right has been invaded. 40 The amount
xxx xxx xxx of such damages is addressed to the sound
discretion of the court, with the relevant
(6) The rights against deprivation of property circumstances taken into account. 41
without due process of law;
WHEREFORE, the petition is hereby partially
xxx xxx xxx GRANTED. The assailed Decision, as herein
clarified, is AFFIRMED with the MODIFICATION
that Private Respondent Fernando O. Carrascoso
Jr. is ORDERED TO PAY petitioner nominal
damages in the amount of fifty thousand pesos
(P50,000). No pronouncement as to costs.

SO ORDERED.

Republic of the Philippines

Supreme Court
Baguio City

THIRD DIVISION

RODOLFO N. G.R. No. 188715

REGALA, Present:
Petitioner,
CARPIO MORALES, J.,
Chairperson,
BRION,
- versus - BERSAMIN,
VILLARAMA, JR., and
SERENO, JJ.

FEDERICO P. CARIN, Promulgated:

Respondent. April 6, 2011

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

CARPIO MORALES, J.:

Assailed via this petition for review of petitioner

Rodolfo N. Regala is the May 26, 2009
Decision[1] of the Court of Appeals which affirmed
with modification the May 29, 2006 Decision [2] of
the Regional Trial Court (RTC) of Las Pias City, Br.
255 in Civil Case No. LP-99-0058, ordering
petitioner to pay respondent Federico P. Carin
moral and exemplary damages and attorneys
fees.

Petitioner and respondent are adjacent

neighbors at Spirig Street, BF Resort Village, Las
Pias City. When petitioner decided to renovate
his one storey residence by constructing a
second floor, he under the guise of merely
building an extension to his residence,
approached respondent sometime in May 1998
for permission to bore a hole through a
perimeter wall shared by both their respective
properties, to which respondent verbally
consented on condition that petitioner would
clean the area affected by the work.

As earlier indicated, petitioners real intention

was to build a second floor, in fact with a terrace
atop the dividing wall. In the course of the
construction of the second floor, respondent and
his wife Marietta suffered from the dust and dirt
which fell on their property. As petitioner failed
to address the problem to respondents
satisfaction, respondent filed a letter- complaint was instituted by respondent as
complaint[3] with the Office of the City Engineer leverage to force him to withdraw the criminal
and Building Official of Las Pias City on June 9, case for slander and light threats [9] which he had
1998. earlier filed against respondent for uttering
threats and obscenities against him in
In his letter-complaint, respondent related that, connection with the construction work.
despite the lack of a building permit for the
construction of a second floor, petitioner had At the trial, after respondent and his wife
demolished the dividing wall, failed to clean the confirmed the material allegations of the
debris falling therefrom, allowed his laborers to complaint, petitioner took the witness stand and
come in and out of his (respondents) property presented his witnesses.
without permission by simply jumping over the
wall, and trampled on his vegetable garden; and Architect Antonio Punzalan III[10] testified that he
that despite his protestations, petitioner installed GI sheets to prevent debris from falling
persisted in proceeding with the construction, he onto respondents property and had instructed
claiming to be the owner of the perimeter wall. his workers to clean the affected area after every
work day at 5:00 p.m., but they were later
Several sumbongs[4] (complaints) were soon barred by respondent from entering his property.
lodged by respondent before the Office of
Barangay Talon Dos against petitioner for Engineer Crisostomo Chan[11] from the Office of
encroachment, rampant invasion of privacy and the Building Official of Las Pias City testified,
damages arising from the construction, and for among other things, on the circumstances
illegal construction of scaffoldings inside his surrounding the complaint for illegal construction
(respondents) property. filed by respondent and that a building permit
As no satisfactory agreement was reached at the was eventually issued to petitioner on March 15,
last barangay conciliation proceedings in 1999.
December 1998, and petitioner having continued
the construction work despite issuance of Engineer Sonia Haduca[12] declared that upon a
several stop-work notices from the City joint survey conducted on the properties of both
Engineers Office for lack of building permit, petitioner and respondent in December 1998 to
respondent filed on March 1999 a complaint [5] for determine their exact boundaries, she found an
damages against petitioner before the RTC of Las encroachment by petitioner of six centimeters at
Pias City. the lower portion of the existing wall negligible,
since the Land Survey Law permits an
In his complaint, respondent alleged in the main encroachment of up to ten centimeters.
that, instead of boring just one hole as agreed By Decision of May 29, 2006, Branch 255 of
upon, petitioner demolished the whole length of the Las Pias City RTC rendered judgment in favor
the wall from top to bottom into five parts for the of respondent whom it awarded moral damages
purpose of constructing a second floor with in the sum of P100,000, exemplary damages
terrace; and that debris and dust piled up on of P100,000 and attorneys fees of P50,000 plus
respondents property ruining his garden and costs of suit.[13]
forcing him to, among other things, shut some of
the windows of his house. Respondent thus In finding for respondent, the trial court declared
prayed for the award of moral and exemplary that, apart from the fact that petitioner
damages. knowingly commenced the renovation of his
house without the requisite building permit from
Petitioner, denying respondents allegations, the City Engineers Office, he misrepresented to
claimed in his Answer[6] that he was the sole and respondent his true intent of introducing
exclusive owner of the wall referred to as a renovations. For, it found that instead of just
perimeter wall, the same having been built boring a hole in the perimeter wall as originally
within the confines of his property and being proposed, petitioner divided the wall into several
part and parcel of the house and lot package he sections to serve as a foundation for his firewall
purchased from the developer, BF Homes, Inc., (which ended up higher than the perimeter wall)
in 1981; that the issue of its ownership has and the second storey of his house.
never been raised by respondent or his
predecessor; and that securing the consent of The trial court further declared that respondent
respondent and his neighbors was a mere and his family had thus to contend with the
formality in compliance with the requirements of noise, dust and debris occasioned by the
the Building Official to facilitate the issuance of a construction, which petitioner and his work crew
building permit, hence, it should not be taken to failed to address despite respondents
mean that he (petitioner) acknowledges protestations, by refusing to clean the mess or
respondent to be a co-owner of the wall. He install the necessary safety devices.
added that he eventually secured the requisite
building permit[7] in March 1999 and had duly Applying Article 2176 of the Civil Code on quasi-
paid the administrative fine.[8] delicts, the trial court ruled that petitioner was at
fault and negligent for failing to undertake
Further, petitioner, denying that a demolition of sufficient safety measures to prevent
the whole length of the wall took place, claimed inconvenience and damage to respondent to
that he and his contractors laborers had been thus entitle respondent to moral and exemplary
diligently cleaning respondents area after every damages.
days work until respondent arrogantly demanded On appeal by petitioner, the Court of Appeals
the dismantling of the scaffoldings, and barred affirmed the trial courts decision with
the workforce from, and threatening to shoot modification by reducing the award of moral and
anyone entering the premises; and that the exemplary damages to P50,000 and P25,000,
respectively. The appellate court anchored its by the plaintiff regarding the dirt or debris, as
affirmance on Article 19 of the New Civil Code well as the absence of devices or safety
which directs every person to, in the exercise of measures to prevent the same from falling inside
his rights and in the performance of his duties, plaintiffs property, were duly established. It did
act with justice, and observe honesty and good not help the cause of the defendant that he
faith. made a lot of misrepresentations regarding the
By Resolution[14] of July 10, 2009, the appellate renovations on his house and he did not initially
court denied petitioners motion for have a building permit for the same. In fact, it
reconsideration as well as respondents prayer in was only after the construction works were
his Comment that the original awards made by completed that the said permit was issued and
the trial court be restored. upon payment of an administrative fine by the
defendant.[18]
Hence, petitioners present petition faulting the
appellate court in In prayers for moral damages, however, recovery
is more an exception rather than the rule. Moral
Affirming with modification the decision of the damages are not meant to be punitive but are
trial court.considering the absence of any designed to compensate and alleviate the
competent proof to warrant the grant of moral physical suffering, mental anguish, fright, serious
and exemplary damages as well as attorneys anxiety, besmirched reputation, wounded
fees.[15] (underscoring supplied) feelings, moral shock, social humiliation, and
similar harm unjustly caused to a person. To be
entitled to such an award, the claimant must
Petitioner maintains that since moral and satisfactorily prove that he has suffered
exemplary damages are compensatory in nature, damages and that the injury causing it has
being meant neither to punish nor enrich, the sprung from any of the cases listed in
claimant must establish that not only did he Articles 2219[19] and 2220[20] of the Civil Code.
sustain injury but also that the other party had Moreover, the damages must be shown to be the
acted in bad faith or was motivated by ill will. To proximate result of a wrongful act or
petitioner, respondents failed to discharge this omission. The claimant must thus establish the
burden. He adds that the trial court did not delve factual basis of the damages and its causal tie
into whether petitioners renovations were the with the acts of the defendant.
primary cause of respondents claimed
injuries, viz violation of privacy, sleepless nights In fine, an award of moral damages calls for the
and mental anguish, among other things, as it presentation of 1) evidence of besmirched
instead focused on the lack of a building permit reputation or physical, mental or psychological
as basis for the awards. suffering sustained by the claimant; 2) a
culpable act or omission factually established; 3)
Rebutting the testimony of respondents wife as proof that the wrongful act or omission of the
to the alleged unauthorized intrusion of defendant is the proximate cause of the
petitioners workers into respondents property in damages sustained by the claimant; and 4) the
order to erect scaffoldings, petitioner points out proof that the act is predicated on any of the
that such an undertaking would take a instances expressed or envisioned by Article
considerable length of time and could not have 2219 and Article 2220 of the Civil Code.[21]
gone unnoticed had consent not been given by
respondent. In the present case, respondent failed to
establish by clear and convincing evidence that
Moreover, petitioner posits, if consent had truly the injuries he sustained were the proximate
been withheld, there was nothing to prevent effect of petitioners act or omission. It thus
respondent from dismantling or immediately becomes necessary to instead look into the
removing the offending structures a course of manner by which petitioner carried out his
action he did not even attempt. renovations to determine whether this was
In his Comment[16] to the petition, respondent directly responsible for any distress respondent
quotes heavily from the appellate and trial may have suffered since the law requires that
courts findings that fault and negligence a wrongful or illegal act or omission must have
attended petitioners renovation, thus justifying preceded the damages sustained by the
the award of damages. He goes on to reiterate claimant.
his plea that the awards given by the trial court
in its decision of May 29, 2006 should be It bears noting that petitioner was engaged in
reinstated. the lawful exercise of his property rights to
introduce renovations to his abode. While he
The petition is partly impressed with merit. initially did not have a building permit and may
have misrepresented his real intent when he
The trial courts award of moral and exemplary initially sought respondents consent, the lack of
damages, as affirmed by the appellate court, the permit was inconsequential since it only
was premised on the damage and suffering rendered petitioner liable to administrative
sustained by respondent arising from quasi- sanctions or penalties.
delict under Article 2176[17] of the Civil
Code. Thus the trial court explained: The testimony of petitioner and his witnesses,
specifically Architect Punzalan, demonstrates
Indeed, there was fault or negligence on the part that they had actually taken measures to
of the defendant when he did not provide prevent, or at the very least, minimize the
sufficient safety measures to prevent causing a damage to respondents property occasioned by
lot of inconvenience and disturbance to the the construction work. Architect Punzalan details
plaintiff and his family. The evidence presented how upon reaching an agreement with petitioner
for the construction of the second floor, he
(Punzalan) surveyed petitioners property based
on the Transfer Certificate of Title (TCT) and Tax
Declarations[22] and found that the perimeter wall
was within the confines of petitioners property;
that he, together with petitioner, secured the
consent of the neighbors (including respondent)
prior to the start of the renovation as reflected in
a Neighbors Consent[23] dated June 12, 1998;
before the construction began, he undertook
measures to prevent debris from falling into
respondents property such as the installation of
GI sheet strainers, the construction of
scaffoldings[24] on respondents property, the
instructions to his workers to clean the area
before leaving at 5:00 p.m; [25] and that the
workers conducted daily clean-up of respondents
property with his consent, until animosity
developed between the parties.[26]

Malice or bad faith implies a conscious and

intentional design to do a wrongful act for a
dishonest purpose or moral obliquity; it is
different from the negative idea of negligence in
that malice or bad faith contemplates a state of
mind affirmatively operating with furtive design
or ill will.[27] While the Court harbors no doubt
that the incidents which gave rise to this dispute
have brought anxiety and anguish to
respondent, it is unconvinced that the damage
inflicted upon respondents property was
malicious or willful, an element crucial to merit
an award of moral damages under Article 2220
of the Civil Code.

Necessarily, the Court is not inclined to award

exemplary damages.[28]

Petitioner, however, cannot steer clear from any

liability whatsoever. Respondent and his familys
rights to the peaceful enjoyment of their
property have, at the very least, been
inconvenienced from the incident borne of
petitioners construction work. Any pecuniary loss
or damage suffered by respondent cannot be
established as the records are bereft of any
factual evidence to establish the same. Nominal
damages may thus be adjudicated in order that
a right of the plaintiff, respondent herein, which
has been violated or invaded by the defendant,
petitioner herein, may be vindicated or
recognized, and not for the purpose of
indemnifying the plaintiff for any loss suffered by
him.[29]

WHEREFORE, the petition is GRANTED.

The May 26, 2009 Decision of the Court of
Appeals is VACATED. The Court orders petitioner
to pay respondent the sum of P25,000 as
nominal damages.

No costs.

SO ORDERED

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 142029 February 28, 2001
ERLINDA FRANCISCO, doing business in the "Two weeks after the wedding, defendant Erlinda
name and style of Cebu Fountainhead Bakeshop Francisco called Mrs. Rebecca Lo and apologized.
and JULIANA PAMAONG, petitioners,
vs. "Ricardo Ferrer, son-in-law of Rebecca Lo
RICARDO FERRER, JR., ANNETTE FERRER, corroborated the latter's testimony, stating that
ERNESTO LO AND REBECCA LO, respondents. two weeks after the wedding, as a result of the
PARDO, J.: non-delivery of the wedding cake, Ramon
Montinola, the son-in-law of Erlinda Francisco,
Appeal via certiorari1 taken by petitioners from went to Rebecca Lo's residence and offered the
the decision of the Court of Appeals 2 increasing sum of P5,000.00 to indemnify for the damage
the trial court's award of moral damages to done, but it was rejected."4
Ricardo Ferrer, Jr., Annette Ferrer, Ernesto Lo and
Rebecca Lo to two hundred fifty thousand pesos On March 12, 1993, respondents filed with the
(P250,000.00) and awarding exemplary damages Regional Trial Court, Cebu City an action for
in the amount of one hundred thousand pesos breach of contract with damages against
(P100,000.00), in addition to the following: petitioners.5

"1. The cost of the wedding cake in the amount After due trial, on May 19, 1995, the trial court
of P3,175.00; rendered a decision in favor of plaintiffs [herein
defendants], the dispositive portion of which
"2. Attorney's fees in the amount of P10,000.00; reads as follows:
and
"THE FOREGOING CONSIDERED, judgment is
"3. Cost of litigation." hereby rendered in favor of the plaintiffs and
against Erlinda Francisco.
The facts, as found by the Court of Appeals, 3 are
as follows: "Directing the latter to pay the former the
following:
"On November 19, 1992 Mrs. Rebecca Lo and her
daughter Annette Ferrer ordered a three-layered "1. The cost of the wedding cake in the amount
cake from Fountainhead Bakeshop, Mango of P3,175.00;
Avenue Branch. It was then agreed that the
wedding cake shall be delivered at 5:00 o'clock "2. Moral damages in the amount of P30,000.00;
in the afternoon at the Cebu Country Club, Cebu
City, stating clearly that the wedding is "3. Attorney's fees in the amount of P10,000.00;
scheduled on December 14, 1992. and

"Plaintiffs made their first deposit in the amount "4. Cost of litigation.
of P1,000.00 on November 19, 1992 and two
weeks thereafter made a full payment on the "SO ORDERED."6
remaining balance.
On May 25, 1995, petitioners appealed to the
"On the day of the wedding, December 14, 1992, Court of Appeals.7
plaintiffs arrived at the Cebu Country Club
around 6:00 o'clock in the evening. They After due proceedings, on July 05, 1999, the
immediately notice the absence of the wedding Court of Appeals promulgated its decision
cake. modifying the appealed decision as set out in the
opening paragraph of this opinion.8
"At 7:00 o'clock in the evening they made a
follow-up call to Fountainhead Bakeshop and was Hence, this appeal.9
informed that it was probably late because of the
traffic. The issues raised are (1) whether the Court of
Appeals erred in affirming the trial court's award
"At 8:00 o'clock they were informed that no of moral damages and increasing the amount
wedding cake will be delivered because the from thirty thousand (30,000.00) to two hundred
order slip got lost. Plaintiffs were then compelled fifty thousand pesos (P250,000.00); and (2)
to buy the only available cake at the Cebu whether the Court of Appeals was justified in
Country Club which was a sans rival. Even awarding in addition to moral damages,
though they felt that it was a poor substitute to a exemplary damages of one hundred thousand
wedding cake, the cutting of the cake is always a pesos (P100,000.00).1wphi1.nt
part of the ceremony.
Petitioners submit that the Court of Appeals and
"At 10:00 o'clock in the evening, the wedding the trial court erred in awarding moral damages
cake arrived but plaintiffs declined to accept it, in favor of respondents because moral damages
besides their order was a three-layered cake and are recoverable in breach of contract cases only
what was actually delivered was a two-layered where the breach was palpably wanton, reckless,
one. malicious, in bad faith, oppressive or abusive.10

"Subsequently, defendant Erlinda Francisco sent
a letter of apology accompanied with a
P5,000.00 check, however, the same was
declined by plaintiffs because they felt it was
inadequate.
We agree. "To recover moral damages in an
action for breach of contract, the breach must be
palpably wanton, reckless, malicious, in bad
faith, oppressive or abusive."11
"Under the provisions of this law,12 in culpa "The requirements of an award of exemplary
contractual or breach of contract, moral damages are: (1) they may be imposed by way
damages may be recovered when the defendant of example in addition to compensatory
acted in bad faith or was guilty of gross damages, and only after the claimant's right to
negligence (amounting to bad faith) or in wanton them has been established; (2) that they can not
disregard of his contractual obligation and, be recovered as a matter of right, their
exceptionally, when the act of breach of contract determination depending upon the amount of
itself is constitutive of tort resulting in physicalcompensatory damages that may be awarded to
injuries."13 the claimant; (3) the act must be accompanied
by bad faith or done in a wanton, fraudulent,
"Moral damages may be awarded in breaches of oppressive or malevolent manner."26
contracts where the defendant acted
fraudulently or in bad faith."14 Nevertheless, the facts show that when
confronted with their failure to deliver on the
"Bad faith does not simply connote bad wedding day the wedding cake ordered and paid
judgment or negligence, it imports a dishonest for, petitioners gave the lame excuse that
purpose or some moral obliquity and conscious delivery was probably delayed because of the
doing of a wrong, a breach of known duty traffic, when in truth, no cake could be delivered
through some motive or interest or ill will that because the order slip got lost. For such
partakes of the nature of fraud."15 prevarication, petitioners must be held liable for
nominal damages for insensitivity, inadvertence
In this case, "[w]e find no such fraud or bad or inattention to their customer's anxiety and
faith."16 need of the hour. "Nominal damages are
'recoverable where a legal right is technically
"Moral damages are in the category of an award violated and must be vindicated against an
designed to compensate the claimant for actual invasion that has produced no actual present
injury suffered and not to impose a penalty on loss of any kind or where there has been a
the wrongdoer."17 breach of contract and no substantial injury or
actual damages whatsoever have been or can be
"The person claiming moral damages must prove shown.'" Nominal damages may be awarded
27

the existence of bad faith by clear and "to a plaintiff whose right has been violated or
convincing evidence for the law always invaded by the defendant, for the purpose of
presumes good faith. It is not enough that one vindicating or recognizing that right, not for
merely suffered sleepless nights, mental indemnifying the plaintiff for any loss suffered."
28

anguish, serious anxiety as the result of the

actuations of the other party. Invariably such WHEREFORE, the Court GRANTS the petition.
action must be shown to have been willfully The Court REVERSES the decision of the Court
done in bad faith or will ill motive."18 "Mere of Appeals in CA-G. R. CV No. 50894, and in lieu
allegations of besmirched reputation, thereof, sentences petitioners to pay
embarrassment and sleepless nights are respondents, as follows:
insufficient to warrant an award for moral
damages. It must be shown that the proximate 1. The cost of the wedding cake in the amount of
cause thereof was the unlawful act or omission P3,175.00;
of the [private respondent] petitioners."19
2. Nominal damages in the amount of
"An award of moral damages would require P10,000.00;
certain conditions to be met, to wit: (1) first,
there must be an injury, whether physical, 3. Attorney's fees in the amount of P10,000.00;
mental or psychological, clearly sustained by the and
claimant; (2) second, there must be culpable act
or omission factually established; (3) third, the 4. Costs of litigation.
wrongful act or omission of the defendant is the
proximate cause of the injury sustained by the No costs in this instance.
claimant; and (4) fourth, the award of damages
is predicated on any of the cases stated in Article SO ORDERED.
2219" of the Civil Code.21

"It must again be stressed that moral damages

are emphatically not intended to enrich a
plaintiff at the expense of the
defendant."22 "When awarded, moral damages
must not be palpably and scandalously
excessive as to indicate that it was the result of
passion, prejudice or corruption on the part of
the trial court judge"23 or appellate court
justices.24

In the same fashion, to warrant the award of

exemplary damages, "[t]he wrongful act must be
accompanied by bad faith, and an award of
damages would be allowed only if the guilty
party acted in a wanton, fraudulent, reckless or
malevolent manner."25

Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 141761 July 28, 2006
BANKARD, INC., petitioner,
vs.
DR. ANTONIO NOVAK
FELICIANO, respondent.
DECISION
PUNO, J.:
Before us is a petition for review under Rule 45
of the May 31, 1999 Decision1 and January 28,
2000 Resolution2of the Court of Appeals in CA-
G.R. CV No. 56734 which modified the July 22,
1997 Decision3 of the Regional Trial Court (RTC)
of Makati City, Branch 148, in Civil Case No. 95-
1492.
The facts are as follows:
Respondent Dr. Antonio Novak Feliciano is the
holder of PCIBank Mastercard No. 5407-2610-
0000-5864, issued and managed by petitioner
Bankard, Inc. An extension of the card, PCIBank
Mastercard No. 5407-2611-0000-5863, was
issued to his wife, Mrs. Marietta N. Feliciano.
On June 19, 1995, respondent used his PCIBank
Mastercard No. 5407-2610-0000-5864 to pay a
breakfast bill in Toronto, Canada. The card was,
however, dishonored for payment. Respondent's
guests, Dr. Bellaflor Bumanlag and three other
Filipino doctors based in Canada, had to pay the
bill. Respondent immediately called the US toll-
free number of petitioner to inquire on the cause
of dishonor. He was informed that the reason
was the nonpayment of his last billing
statement. Respondent denied that he failed to
pay, and requested the person on the line to
verify the correct status of his credit card again.
Respondent likewise called his secretary in the
Philippines to confirm the fact of payment, and
requested her to advise petitioner's office in
Manila.
The following day, respondent met with Dr.
Bumanlag to reimburse her for the cost of the
breakfast the previous day. Thereafter, Dr.
Bumanlag accompanied the respondent to the
Eddie Bauer Fairview Mall, a prestigious mall in
Toronto, where the latter bought several dressing
items. Respondent presented his PCIBank
Mastercard No. 5407-2610-0000-5864 for
payment. Again, the card was dishonored to the
embarrassment of the respondent. Worse, the
manager of the department store confiscated
the card in front of Dr. Bumanlag and other
shoppers. Respondent protested but the
manager called security and forcibly retained the
card. To end the commotion that ensued,
respondent just asked for a receipt for the
confiscated card.
On October 5, 1995, respondent filed a
complaint against petitioner Bankard, Inc. and
Mastercard International for breach of
contractual rights and damages before the RTC-
Makati City, docketed as Civil Case No. 95-1492.
Respondent alleged that he is a holder in good
standing for more than ten (10) years of PCIBank
Mastercard No. 5407-2610-0000-5864, and that
petitioner and Mastercard International reneged
on their agreement by suspending the services
of the card without notice to him. As a result of
the suspension and confiscation of his card in
Toronto, Canada, respondent suffered social
humiliation, embarrassment and besmirched
reputation. The Canadian-based doctors, who
were his guests during the breakfast meeting in
Toronto and whom he expected to donate at
least fifty thousand Canadian dollars to his
charitable clinic in Makati, withdrew their
contributions because of the incidents.
Respondent prayed for P1,000,000.00 in actual
damages representing the peso equivalent of the
aborted contributions, P1,000,000.00 for moral
damages, P200,000.00 for exemplary damages,
and P100,000.00 for attorney's fees and costs of
suit.
In defense, petitioner claimed due diligence
before suspending the privileges of respondent's
credit card. Petitioner alleged that on June 13,
1995, it received a fraud alert or warning
bulletin4 from Bank International Indonesia. A
fraud alert or warning bulletin is a notice by
telex5 or telephone addressed to the issuer of a
card when a fraudulent or counterfeit use of the
card has been detected or suspected by an
acquirer. In the June 13, 1995 fraud alert,
PCIBank Mastercard No. 5407-2611-0000-5863
was listed as having had a suspected counterfeit
transaction in Indonesia on June 11, 1995.
Petitioner's fraud analyst, Mr. Ferdinand Lopez,
then accessed petitioner's directory of
cardholders to identify the holder of PCIBank
Mastercard No. 5407-2611-0000-5863. The
directory showed that the principal cardholder
for PCIBank Mastercard No. 5407-2611-0000-
5863 was respondent Dr. Antonio Novak
Feliciano, and that the credit card was the
extension card issued to his wife, Marietta
Feliciano. Mr. Lopez immediately called
respondent at his clinic but the latter was not
there. Neither he nor his wife was at home.
Consequently, Mr. Lopez left his name, telephone
number, and a message for respondent to return
his call, to the woman who answered the phone.
He likewise inquired from the woman whether
respondent and his wife were in the country or
whether they had just arrived from abroad. The
woman answered "no." With that information
and considering that Indonesia has a high
incidence of counterfeit credit card transactions,
Mr. Lopez concluded that the transaction
involving PCIBank Mastercard No. 5407-2611-
0000-5863 was counterfeit. He sent a notice of
card account blocking to the Authorization
Department. He likewise sent a written notice to
the Felicianos that PCIBank Mastercard No. 5407-
2611-0000-5863 had a counterfeit movement in
another country and that petitioner is
temporarily suspending the services of the card
including the principal card, PCIBank Mastercard
No. 5407-2610-0000-5864, pending investigation
on the matter. The Felicianos were required to
submit an affidavit of disclaim and photocopies
of their passports. The Felicianos did not respond
to the notification.
On July 22, 1997, the trial court decided the case
in favor of respondent.6It found that petitioner's
negligence was the immediate and proximate
cause of respondent's injury. Although the claim
for actual damages was disallowed for lack of
proof, petitioner was ordered to pay:
(1) P1,000,000.00 as moral damages,
(2) P200,000.00 as exemplary damages, and
(3) P100,000.00 for attorney's fees and costs of
suit. Petitioner was likewise ordered to restore
respondent's good name with the merchant
establishment in Canada which confiscated his
Mastercard, and to return the card with
apologies to respondent.
Petitioner assailed the decision in a petition for
review with the Court of Appeals. In its Decision
dated May 31, 1999,7the Court of Appeals
affirmed the trial court's finding of negligence on
the part of the petitioner. However, the appellate
court modified the trial court's decision by
deleting the award for exemplary damages, and
by reducing moral damages to P800,000.00, and
attorney's fees and costs of suit to P50,000.00.
Actual damages was still disallowed for lack of
proof. Petitioner's motion for partial
reconsideration was denied. Hence, this petition.
Petitioner assigns the following errors:
I.
THE COURT OF APPEALS ERRED IN AWARDING
RESPONDENT MORAL DAMAGES IN THE
EXCESSIVE AND UNPRECEDENTED AMOUNT
OF P800,000.00, WITHOUT ANY LEGAL OR
FACTUAL BASIS, CONSIDERING THAT:
A. NO EVIDENCE WAS PRESENTED TO SHOW
THAT PETITIONER ACTED FRAUDULENTLY OR IN
BAD FAITH OR IN A WANTON, RECKLESS AND
OPPRESSIVE MANNER IN SUSPENDING
RESPONDENT'S CREDIT CARD.
B. EVEN AS IT WAS RESPONDENT'S DUTY TO
AFFIRMATIVELY PROVE HIS CLAIM FOR MORAL
DAMAGES, PETITIONER HAS DULY ESTABLISHED
THAT IT WAS PROMPTED TO SUSPEND THE
CREDIT CARD OF RESPONDENT SOLELY TO
PROTECT ITSELF AND THE RESPONDENT FROM
ANYONE WRONGFULLY USING HIS CREDIT CARD
AND NOT OUT OF MALICE, OR ANY DELIBERATE
INTENT TO CAUSE HARM TO RESPONDENT.
C. CONTRARY TO THE FINDINGS OF THE TRIAL
COURT WHICH THE COURT OF APPEALS
AFFIRMED, PETITIONER WAS NOT GUILTY OF
NEGLIGENCE IN SUSPENDING RESPONDENT'S
CREDIT CARD. ASSUMING ARGUENDO THAT
PETITIONER WAS NEGLIGENT IN DOING SO, THE
SAME DOES NOT WARRANT A FINDING OF
MALICE OR BAD FAITH AS TO JUSTIFY GRANTING
AN AWARD OF MORAL DAMAGES IN THE
STAGGERING AMOUNT OF P800,000.00.
D. IN THE ABSENCE OF AN AWARD OF ACTUAL
DAMAGES, RESPONDENT IS NOT ENTITLED TO
MORAL DAMAGES.
E. THE HONORABLE COURT HAS REPEATEDLY
ADMONISHED AGAINST GRANTING EXCESSIVE
MORAL DAMAGES WHICH ARE NOT INTENDED TO
ENRICH A COMPLAINANT AT THE EXPENSE OF A
DEFENDANT.
II.
THE COURT OF APPEALS ERRED IN AWARDING
ATTORNEY'S FEES TO RESPONDENT
CONSIDERING THAT PETITIONER ACTED IN GOOD
FAITH AND WITH DUE DILIGENCE IN SUSPENDING
RESPONDENT'S CREDIT CARD.
III.
THE COURT OF APPEALS ERRED IN TOTALLY
DISREGARDING THE CONTRACT BETWEEN THE
PARTIES WHICH, AMONG OTHERS, EXPRESSLY
STIPULATES THAT RESPONDENT WOULD HOLD
PETITIONER "FREE AND HARMLESS FROM ANY
CLAIM OF DAMAGES ARISING FROM THE FAILURE
OF ANY ACCREDITED ESTABLISHMENT TO
HONOR" HIS CREDIT CARD.
IV.
THE COURT OF APPEALS ERRED IN NOT FINDING
THAT RESPONDENT WAS CONTRIBUTORILY
NEGLIGENT IN CONTINUING TO USE HIS CREDIT
CARD ON 20 JUNE 1995 DESPITE THE FACT THAT
IT HAD ALREADY BEEN PREVIOUSLY
DISHONORED THE DAY BEFORE WHEN HE FIRST
ATTEMPTED TO USE IT AFTER HIS PURPORTED
BREAKFAST MEETING WITH SOME DOCTORS.
We shall now resolve the issue of whether
petitioner is liable to respondent for moral
damages and attorney's fees.
The award of moral damages is governed by
Section 1, Chapter 3, Title XVIII, Book IV of
the Civil Code. Article 2220 provides:
Willful injury to property may be a legal ground
for awarding moral damages if the court should
find that, under the circumstances, such
damages are justly due. The same rule applies to
breaches of contract where the defendant acted
fraudulently or in bad faith. (emphasis added)
Under the foregoing, moral damages may be
recovered in culpa contractual where the
defendant acted in bad faith or with malice in
the breach of the contract. 8Malice or bad faith
implies moral obliquity or a conscious and
intentional design to do a wrongful act for a
dishonest
purpose.9However,a conscious or intentional
design need not always be present since
negligence may occasionally be so gross as to
amount to malice or bad faith.10 Bad faith, in the
context of Art. 2220 of the Civil Code,
includes gross negligence.11 Thus, we have held
in a number of cases that moral damages may
be awarded in culpa contractual or breach of
contract when the defendant acted fraudulently
or in bad faith, or is guilty of gross negligence
amounting to bad faith, or in wanton disregard of
his contractual obligations.12
Petitioner alleged that it suspended the
privileges of respondent's credit card only after it
received the fraud alert from Indonesia, and
after its fraud analyst, Mr. Lopez, tried to contact
both the respondent and his wife at his clinic and
at home. At first blush, bad faith or malice
appears not to be attributable to petitioner.
However, we find that its efforts at personally
contacting respondent regarding the suspension
of his credit card fall short of the degree of
diligence required by the circumstances.
Petitioner received the fraud alert on June 13,
1995. The following day, petitioner's fraud
analyst tried to call up respondent at his clinic
and at home, to no avail. Apart from this
attempt, however, no further effort was exerted
to personally inform respondent about the
cancellation of his card. Petitioner had more than
enough time within which to do so considering
that it was not until four (4) days later or June
18, 1995 that respondent left for Canada. But,
petitioner's Mr. Lopez contented himself with just
leaving a message with an unidentified woman
in respondent's house for the latter to return his
call. Before receiving the return call,
respondent's PCIBank Mastercard No. 5407-
2610-0000-5864 and that of his wife, PCIBank
Mastercard No. 5407-2611-0000-5863, had been
blocked on June 15, 1995. To be sure, a notice of
card account blocking was sent to respondent.
However, by the ordinary course of mail, the
notice was not expected to reach respondent for
several days yet. Despite the possibility that
respondent or his wife may have occasion to use
their credit cards, petitioner's fraud analyst
made no further attempt to contact and warn
them. Thus, respondent left for Canada on June
18, 1995 armed with his PCIBank Mastercard No.
5407-2610-0000-5864 but totally unaware that
the card had been blocked three (3) days
previously, and that he was not to use the same.
Petitioner claims that it suspended respondent's
card to protect him from fraudulent transactions.
However, while petitioner's motive has to be
lauded, we find it lamentable that petitioner was
not equally zealous in protecting respondent
from potentially embarrassing and humiliating
situations that may arise from the unsuspecting
use of his suspended PCIBank Mastercard No.
5407-2610-0000-5864. Considering the
widespread use of access devices in commercial
and other transactions,13 petitioner and other
issuers of credit cards should not only guard
against fraudulent uses of credit cards but
should also be protective of genuine uses thereof
by the true cardholders. In the case at bar, the
duty is much more demanding for the evidence
shows that respondent is a credit cardholder for
more than ten (10) years in good standing, and
has not been shown to have violated any of the
provisions of his credit card agreement with
petitioner. Considering the attendant
circumstances, we find petitioner to have been
grossly negligent in suspending respondent's
credit card. To reiterate, moral damages may be
awarded in a breach of contract when the
defendant acted fraudulently or in bad faith, or is
guilty of gross negligence amounting to bad
faith.14
With respect to the amount of moral damages to
be awarded, the well-entrenched principle is that
the grant thereof depends upon the discretion of
the court considering the circumstances of each
case.15 In the case at bar, it is undisputed that
respondent's PCIBank Mastercard No. 5407-
2610-0000-5864 was dishonored in a foreign
country where the respondent was not expected
to have family members or close friends nearby
to lend him a helping hand. It was twice
dishonored in public places. Worse, the card was
first dishonored during a breakfast-cum-business
meeting with respected medical colleagues
based in that country. Respondent had
absolutely no inkling then that there was a
problem with his card. Moreover, he had no
reason to think that something was amiss since
he is a member in good standing for more than
ten (10) years and had no previous bad
experience with the card. However, since moral
damages are patently not meant to enrich the
complainant at the expense of the defendant
and should only be commensurate with the
actual loss or injury suffered,16 we reduce the
amount awarded by the Court of Appeals
from P800,000.00 to P500,000.00.
We likewise affirm the award for attorney's fees.
Plaintiff was compelled to litigate to protect his
interest, and the lower courts deemed it just and
equitable to award him attorney's fees.17 The
respondent had to vindicate his rights up to the
highest court of the land.
IN VIEW WHEREOF, the petition is DENIED. The
assailed Decision of the Court of Appeals, dated
May 31, 1999, granting moral damages and
attorney's fees to respondent, as well as its
Resolution dated January 28, 2000 in CA-G.R. CV
No. 56734, is AFFIRMED with the sole
modification that the amount of moral damages
is REDUCED to P500,000.00.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 163654 October 8, 2014

BPI EXPRESS CARD

CORPORATION,* Petitioner,
vs.
MA. ANTONIA R. ARMOVIT, Respondent.

DECISION

BERSAMIN, J.:

This case involves a credit card holder's claim for

damages arising from the suspension of her
credit privileges due to her supposed failure to
reapply for their reactivation. She has insisted
that she was not informed of the condition for
reactivation.

The Case

Petitioner BPI Express Credit Card Corporation

(BPI Express Credit) seeks the reversal of and
assails the adverse decision promulgated on
February 26, 2004,1 whereby the Court of
Appeals (CA) affirmed the judgment rendered on
April 22, 1996 by the Regional Trial Court, Branch
216, in Quezon City, (RTC) adjudging it liable to
pay moral and exemplary damages, attorneys
fees and costs of suit to its credit card holder Ma.
Antonia R. Armovit, the respondent herein.2

Antecedents

Armovit, then a depositor of the Bank of the

Philippine Islands at its Cubao Branch, was
issued by BPI Express Credit a pre-approved BPI
Express Credit Card (credit card) in 1989with a
credit limit of 20,000.00 that was to expire
atthe end of March 1993.3 On November 21,
1992, she treated her British friends from Hong
Kongto lunch at Marios Restaurant in the Ortigas
Center in Pasig. As the host, she handed to the
waiter her credit card to settle the bill, but the
waiter soon returned to inform her that her credit
card had been cancelled upon verification with
BPI Express Credit and would not be honored.
Inasmuch asshe was relying on her credit card
because she did not then carry enough cash that
day, her guests were made to share the bill to
her extreme embarrassment.

Outraged, Armovit called BPI Express Credit to

verify the status of her credit card. She learned
that her credit card had been summarily
cancelled for failure to pay her outstanding
obligations. She vehemently denied having
defaulted onher payments. Thus, by letter dated
February 3, 1993,4 she demanded compensation
for the shame, embarrassment and humiliation
she had suffered in the amount of Finding BPI Express Credit guilty ofnegligence
2,000,000.00. and bad faith, the RTC ordered it to pay Armovit
moral damages of 100,000.00; exemplary
In its reply letter dated February 5, 1993, 5 BPI damages and attorneys fees each in the amount
Express Credit claimed that it had sent Armovit a of 10,000.00; and the costs of suit.
telegraphic message on March 19, 1992
requesting her to pay her arrears for three Decision of the CA
consecutive months, and that she did not comply
with the request, causing it totemporarily Both parties appealed to the CA.
suspend her credit card effective March 31,
1992.6 It further claimed that she had been On February 26, 2004, the CA promulgated its
notified of the suspension and cautioned to assailed decision,14 concurring with the RTC, and
refrain from using the credit card to avoid declaredthat because Armovit had not signed
inconvenience or embarrassment;7 and that any application form in the issuance and
while the obligation was settled by April, 1992, renewals of her credit card from 1989 up to
she failed to submit the required application 1992, she could not have known the terms and
form in order to reactivate her credit card conditions embodied in the application form
privileges. Thus, BPI Express Credit countered even ifthe credit card had specified that its use
that her demand for monetary compensation bound the holder to its terms and conditions. It
had no basis in fact and in law. did not see merit in BPI Express Credits
contention that the submission of a new
On March 12, 1993, Armovit received a application form was a pre-requisite for the
telegraphic message from BPI Express Credit lifting ofthe suspension of her credit card,
apologizing for its error of inadvertently inasmuch as such condition was not stated in a
including her credit card in Caution List No. 225 clear and unequivocal manner in its letter dated
dated March 11, 1993 sent to its affiliated April 8, 1992. It noted that the letter of apology
merchants.8 mentioning another inadvertence committed,
even if it claimed the letter of apology as
As a result, Armovit sued BPI Express Credit for intended for another card holder, still highlighted
damages in the RTC, insisting that she had been BPI Express Credits negligence in its dealings
a credit card holder in good standing, and that with her account. Anent Armovits appeal, the CA
she did not have any unpaid bills at the time of did not increase the amounts of damages for
the incident. lack of basis, observing that moral and
exemplary damages were awarded not to enrich
In its answer with counterclaim, 9 BPI Express her at the expense of BPI Express Credit but to
Credit raised the defense of lack of cause of alleviate the anxiety and embarrassment
action,and maintained that Armovit had suffered.
defaulted in her obligations for three consecutive
months, thereby causing the temporary BPI Express Credits motion for reconsideration
suspension of her credit card in accordance with was denied through the resolution promulgated
the terms and conditions of the credit card. 10 It on May 14, 2004.15
pointed out that Armovit had been duly notified
of the suspension; that for her failure to comply Hence, this appeal by petition for review on
with the requirement for the submission of the certiorari.
application form and other documents as
directed in its letter dated April 8, 1992, 11 her Issue
credit card had not been reactivated and had
remained in the list of suspended cards at the The sole issue is whether or not the CA erred in
time she used it on November 21, 1992; and sustaining the award of moral and exemplary
thatthe telegraphic message of March 11, 1993, damages in favor of Armovit.
which was intended for another client whose
credit card had been erroneously included in the Ruling of the Court
caution list, was mistakenly sent to her.12
The petition for review lacks merit.
Judgment of the RTC
The relationship between the credit card issuer
In the judgment rendered April 22, 1996, 13 the and the credit card holder is a contractual one
RTC, ruling in favor of Armovit, observed that the that is governed by the terms and conditions
terms and conditions governing the issuance and found in the card membership agreement. 16 Such
use of the credit card embodied in the terms and conditions constitute the law between
application formhad been furnished to her for the parties. In case of their breach, moral
the first time only on April 8, 1992, or after her damages may be recovered where the defendant
credit card privileges had already been is shown to have acted fraudulently or in bad
suspended; that, accordingly, she could not be faith.17 Malice or bad faith implies a conscious
blamed for not complying with the same; that and intentional design to do a wrongful actfor a
even if she had been notified of the temporary dishonest purpose or moral obliquity.18 However,
suspension of her credit card, her payment on a conscious or intentional design need not
April 1, 1992 had rendered the continued always be present because negligence may
suspension of her credit card unjustified; and occasionally be so gross as to amount to malice
that there was no clear showing that the or bad faith.19Hence, bad faith in the context of
submission of the application form had been a Article 2220 of the Civil Code includes gross
condition precedent to the lifting of its negligence.20
suspension.
BPI Express Credit contends thatit was not of adhesion because its terms and conditions are
grossly negligent in refusing to lift the solely prepared by the credit card issuer.
suspension of Armovits credit card privileges Consequently, the terms and conditions have to
inasmuch as she had not complied with the be construed against BPI Express Credit as the
requisite submission of a new application form; party who drafted the contract.27
and that under the circumstances its negligence,
if any, was not so gross as to amount to malice Bereft of the clear basis to continuewith the
or bad faith following the ruling in Far East Bank suspension of the credit card privileges of
and Trust Company v. Court of Appeals.21 Armovit, BPI Express Credit acted in wanton
disregard of its contractual obligations with her.
The Court disagrees with the contentions of BPI We concur with the apt observation by the CA
Express Credit.1wphi1 The Terms and that BPI Express Credits negligence was even
Conditions Governing the Issuance and Use of confirmed by the telegraphic message it had
the BPI Express Credit Card22 printed on the addressed and sent to Armovit apologizing for
credit card application form spelled out the the inconvenience caused in inadvertently
terms and conditions of the contract between including her credit card in the caution list. It was
BPI Express Credit and its card holders, including of no consequence that the telegraphic message
Armovit. Such terms and conditions determined could have been intended for another client, as
the rights and obligations of the parties. 23 Yet, a BPI Express Credit apparently sought to convey
review of such terms and conditions did not subsequently, because the tenor ofthe apology
reveal that Armovit needed to submit her new included its admission of negligence in dealing
application as the antecedent condition for her with its clients, Armovit included. Indeed, BPI
credit card to be taken out of the list of Express Credit did not observe the prudence
suspended cards. expected of banks whose business was imbued
with public interest.
Considering that the terms and conditions
nowhere stated that the card holder must submit We hold that the CA rightly sustained the award
the new application form in order to reactivate of 100,000.00 as moral damages. To us, too,
her credit card, to allow BPI Express Credit that amount was fair and reasonable under the
toimpose the duty to submit the new application circumstances. Similarly, the grant of exemplary
form in order to enableArmovit to reactivate the damages was warranted under Article 2232 of
credit card would contravene the Parol Evidence the New Civil Code because BPI Express Credit
Rule.24 Indeed, there was no agreement between acted in a reckless and oppressive manner.
the parties to add the submission of the new Finally, with Armovit having been forced to
application form as the means to reactivate the litigate in order to protect her rights and
credit card. When she did not promptly settle her interests, she was entitled to recover attorney's
outstanding balance, BPI Express Credit sent a fees and expenses oflitigation.28
message on March 19, 1992 demanding
payment with the warning that her failure to pay WHEREFORE, the Court AFFIRMS the decision
would force it to temporarily suspend her credit promulgated on February 26, 2004; and ORDERS
card effective March 31, 1992. It then sent the petitioner to pay the costs of suit.
another demand letter dated March 31, 1992
requesting her to settle her obligation in order to SO ORDERED.
lift the suspension of her credit card and prevent
its cancellation. In April 1992, she paid her
obligation. In the context of the
contemporaneous and subsequent acts of the
parties, the only condition for the reinstatement
of her credit card was the payment of her
outstanding obligation.25 Had it intended
otherwise, BPI Express Credit would have surelyu
informed her of the additional requirement in its
letters of March 19, 1992 and March 31, 1992.
That it did not do so confirmed that they did not
agree on having her submit the new application
form as the condition to reactivate her credit
card. Republic of the Philippines
SUPREME COURT
The letter of BPI Express Credit dated April 8, Manila
1992 did not clearly and categorically inform
Armovit that the submission of the new SECOND DIVISION
application form was the pre-condition for the
reactivation of her credit card. The statement in G.R. No. 156654 November 20, 2008
the letter (i.e., " accomplish the enclosed
application form and provide us with PHILIPPINE AIRLINES, INC., petitioner
informations/documents that can help our Credit vs.
Committee in reevaluating your existingfacility VICENTE LOPEZ, JR., respondent.
with us.") merely raised doubt as to whether the
requirement had really been a pre-condition or R E S O L U T I O N
not. With BPI Express Credit being the party
causing the confusion, the interpretation of the QUISUMBING, J.:
contract could not be donein its
favor.26 Moreover, it cannot be denied that a
credit card contract is considered as a contract
This petition for review assails the
Decision1 dated June 20, 2002 and the
Resolution2 dated December 10, 2002 of the
Court of Appeals in CA-G.R. CV No. 53360 which
affirmed in toto the Decision3 dated April 19,
1995 of the Regional Trial Court (RTC) of Manila,
Branch 24 in Civil Case No. 92-60199. The RTC
had ordered petitioner Philippine Airlines, Inc.
(PAL) to pay respondent Vicente Lopez,
Jr. P100,000 moral damages, P20,000 exemplary
damages and P30,000 attorney's fees plus costs
of suit.
The antecedent facts are as follows:
reservation was for an economy class
seat without examining or checking the latter's
ticket during his booking validation; and (2) the
admission of PAL's check-in clerk8 at the Bangkok
Airport that when Lopez checked-in 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
latter's ticket. The trial court said that had PAL's
employees examined his ticket in those
instances, the error or oversight which might
have resulted from the phoned-in booking could
have been easily rectified.9

In a Complaint4 dated February 11, 1992, filed Thus, citing Articles 173310 and 222011 of the
with the RTC of Manila, Branch 24, Lopez claimed Civil Code and the case of Ortigas, Jr. v.
that PAL had unjustifiably downgraded his seat Lufthansa German Airlines,12 the trial court held
from business to economy class in his return that the inattention and lack of care on the part
flight from Bangkok to Manila last November 30, of the common carrier, in this case PAL, resulting
1991, and that, in view thereof, PAL should be in the failure of the passenger to be
directed to pay him moral damages of at accommodated in the class contracted for
least P100,000, exemplary damages of at amounts to bad faith or fraud, making it liable
least P20,000, attorney's fees in the sum for damages.13 The trial court likewise awarded
of P30,000, as well as the costs of suit. attorney's fees in favor of Lopez after noting that
Lopez was forced to litigate in order to assert his
To support his claim, Lopez averred that he rights.14
purchased a Manila-Hongkong-Bangkok-Manila
PAL business class ticket and that his return The dispositive portion of the trial court's
flight to Manila was confirmed by PAL's booking decision reads:
personnel in Bangkok on November 26, 1991. He
also mentioned that he was surprised to learn Based on all the foregoing therefore, the Court
during his check-in for the said return flight that finds in favor of the plaintiff and against the
his status as business class passenger was defendant and orders defendant to pay plaintiff,
changed to economy class, and that PAL was not as prayed for in the complaint, the following
able to offer any valid explanation for the sudden amounts: P100,000.00 for moral
change when he protested the change. Lopez damages; P20,000.00 for exemplary damages
added that although aggrieved, he nevertheless and P30,000.00 for attorney's fees and also to
took the said flight as an economy class pay for the cost of suit. All amounts awarded to
passenger because he had important bear legal interest from date of this decision.
appointments in Manila.
SO ORDERED.15
For its part, PAL denied any liability and claimed
that whatever damage Lopez had suffered was On appeal, the Court of Appeals affirmed in
due to his own fault. PAL explained that the toto the trial court's decision after having been
terms and conditions of the contract of carriage fully convinced of the negligence of PAL's
required Lopez to reconfirm his booking for the employees and after finding PAL's defenses to be
Bangkok-to-Manila leg of his trip, and that he did unworthy of belief and contrary to common
not protest the economy seat given to him when observation and experience.
the change in his accommodations was read to
him by the person who received his phone PAL moved for reconsideration but it was denied.
reconfirmation. PAL also asserted that Lopez did Hence, this petition.
not complain against his economy seat during
the check-in and that he raised the issue only In our Resolution16 dated September 26, 2007,
after the flight was over.5 Thus, PAL prayed that we suspended the proceedings of this case and
the case be dismissed for lack of merit.6 directed PAL to submit a status report on its then
ongoing corporate rehabilitation. Pursuant to our
In its Decision dated April 19, 1995, the trial directive, PAL submitted a
court held PAL liable for damages. It said that Manifestation/Compliance17 dated October 22,
PAL's contention that Lopez might have thought 2007, informing us of the Securities and
that he was holding an economy class ticket or Exchange Commission Order18 dated September
that he waived his right to have a business class 28, 2007, which granted its request to exit from
seat is untenable, considering that Lopez is an corporate rehabilitation. Thus, we now resolve
experienced businessman and a Bachelor of the instant petition.
Science degree holder.
Petitioner contends that:
It also noted that the following showed that PAL's
employees had been negligent in booking and I.
confirming Lopez's travel accommodations from
Bangkok to Manila: (1) the admission of PAL's THE COURT OF APPEALS ERRED IN NOT RULING
booking personnel7 that she affixed the THAT IN AN OPEN-DATED CONTRACT OF
validation sticker on Lopez's ticket on the basis CARRIAGE, THE PARTIES ARE FREE TO AGREE ON
of the passenger's name list showing that his THE TERMS THEREOF ON THE DATE LEFT OPEN.
II. Moreover, we cannot agree with PAL that the
amount of moral damages awarded by the trial
THE COURT OF APPEALS ERRED IN NOT RULING court, as affirmed by the Court of Appeals, was
THAT RESPONDENT'S CONTRIBUTORY excessive. In Mercury Drug Corporation v.
NEGLIGENCE PREVENTS HIM FROM RECOVERING Baking,26 we had stated that "there is no hard-
DAMAGES FROM PETITIONER. and-fast rule in determining what would be a fair
and reasonable amount of moral damages, since
III. each case must be governed by its own peculiar
facts. However, it must be commensurate to the
THE COURT OF APPEALS ERRED IN NOT RULING loss or injury suffered."27 Taking into account the
THAT IN MORAL DAMAGES RECOVERABLE IN attending circumstances here, we believe that
BREACHES OF CONTRACTS, THE TERMS "FRAUD" the amount of P100,000 awarded as moral
AND "BAD FAITH" HAVE REFERENCE TO damages is appropriate.
WANTON, RECKLESS, OPPRESSIVE, OR
MALEVOLENT CONDUCT. WHEREFORE, the assailed Decision dated June
20, 2002 and Resolution dated December 10,
IV. 2002 of the Court of Appeals in CA-G.R. CV No.
53360 are AFFIRMED. Costs against the
THE COURT OF APPEALS ERRED IN NOT RULING petitioner.
THAT EXEMPLARY DAMAGES ARE NOT
RECOVERABLE IN THE ABSENCE OF FRAUD OR SO ORDERED.
BAD FAITH.

V.

THE COURT OF APPEALS ERRED IN NOT RULING

THAT AWARD OF ATTORNEY'S FEES IS NOT
PROPER IN THE ABSENCE OF GROSS AND
EVIDENT BAD FAITH ON THE PART OF
PETITIONER.19

Simply put, the issues are: (1) Did the Court of

Appeals err in not ruling that Lopez agreed or
allowed his business class seat to be
downgraded to economy class? (2) Did the Court
of Appeals err in not ruling that Lopez's alleged
contributory negligence was the proximate
cause of the downgrading of his seat? and (3)
Did the Court of Appeals err in awarding moral
damages, exemplary damages and attorney's
fees in favor of Lopez in view of the alleged
absence of fraud or bad faith of PAL?

A perusal of the aforesaid issues readily shows

that the same are questions of facts since its
resolution would entail a re-evaluation of the
evidence presented before the trial court. 20 Thus,
we could not take cognizance of such issues
considering the settled rule that our review
under Rule 45 is confined to questions of law. It
is true that there are several exceptions 21 to the
said rule; however, none finds application in this
case.

Moreover, we had already specifically held that

issues on the existence of negligence, fraud and
bad faith are questions of fact.22

We had also observed that PAL is also guilty of

raising prohibited new matters23 and in changing
its theory of defense24 since it is only in the
present petition that it alleged the contributory
negligence of Lopez.

PAL's procedural lapses notwithstanding, we had

nevertheless carefully reviewed the records of
this case and found no compelling reason to
depart from the uniform factual findings of the
trial court and the Court of Appeals that: (1) it
was the negligence of PAL which caused the
downgrading of the seat of Lopez; and (2) the
aforesaid negligence of PAL amounted to fraud
or bad faith, considering our ruling in Ortigas.25
 Area: 938 square meters

Andres died on October 10, 1959, and the

possession of said property was transferred to
Federico. On August 5, 1980, a document
denominated as Pagmamana sa Labas ng
Republic of the Philippines Hukuman at Pagpaparaya o Pagkakaloob7 was
SUPREME COURT executed by the heirs of Andres who waived all
Manila their rights to the property in favor of Federico.

FIRST DIVISION Meanwhile, on February 7, 1991, a Deed of

Conditional Sale8 was executed between
Feliciano Geronimo (Feliciano) and herein
G.R. No. 172611 July 9, 2010
respondent Jose Mano, Jr. (Jose), wherein the
former agreed to sell to the latter a 2,056-square
SPS. FEDERICO VALENZUELA and LUZ
meter parcel of land located at Dampol 1st,
BUENA-VALENZUELA Petitioners,
Pulilan, Bulacan. The corresponding Deed of
vs.
Sale9 was subsequently executed in March 1991.
SPS. JOSE MANO, JR. and ROSANNA REYES-
MANO Respondents.
On March 4, 1992,10 Jose applied for a Free
Patent and on April 10, 1992, Original Certificate
DECISION
of Title (OCT) No. P-35111 was issued in his name.
This time, the property was indicated as covering
DEL CASTILLO, J.:
an area of 2,739 square meters.
The rule that a Torrens Certificate of Title is
Sometime in 1997, Federico declared in his
conclusive evidence of ownership of the land
name under Tax Declaration No. 97-19005-
described therein1 does not apply when such
0110512 the property covered by Declaration of
land, or a portion thereof, was illegally or
Real Property No. 7187 in the name of Andres.
erroneously included in said title.
Subsequently, Jose sold a portion of the land
This Petition for Review on Certiorari 2 assails the
covered by OCT No. P-351 to Roberto S.
Decision3 dated January 16, 2006 of the Court of
Balingcongan (Balingcongan). On January 8,
Appeals (CA) in CA-G.R. CV No. 83577, which
1998, Transfer Certificate of Title (TCT) No. T-
reversed and set aside the Decision 4 dated
11286513 was issued in the name of
March 10, 2004 issued by the Regional Trial
Balingcongan covering 2,292 square meters. On
Court (RTC) of Bulacan, Branch 14, in Civil Case
the same date, TCT No. T-11286414 was also
No. 1065-M-99. Also assailed is the
issued in the name of Jose covering 447 square
Resolution5dated May 3, 2006 denying the
meters.
motion for reconsideration.
Federico transferred his residence to Malabon
Factual Antecedents
and so he left the care of the property to his
nephew, Vicente Joson (Vicente). Sometime in
Petitioner Federico Valenzuela (Federico) is the
1999, Federico instructed Vicente to construct a
son of Andres Valenzuela (Andres) who was the
perimeter fence on his property but he was
owner and possessor of a parcel of land with an
prevented by Jose, claiming that the 447 square
area of 938 square meters, more or less, located
meters was his property as reflected in his TCT
at Dampol 1st, Pulilan, Bulacan. The property
No. T-112864. On the other hand, Federico is
was declared in the name of Andres under
claiming it as part of the property he inherited
Declaration of Real Property No. 71876 which
from his father, Andres.
described the property as follows:
When the matter could not be settled amicably,
Dampol 1st, Pulilan, the petitioners lodged a Complaint 15 for
Location:
Bulacan Annulment of Title and/or Reconveyance,
Damages with the RTC of Malolos, Bulacan. The
case was set for pre-trial conference16 on March
Boundaries
27, 2000. Thereafter, trial ensued.
:
Ruling of the Regional Trial Court
North: Camino Provincial
The RTC found that even before Jose purchased
the 2,056 square meters lot from Feliciano on
East: Felisa Calderon February 7, 1991, he had already caused the
survey of a 2,739-square meter lot on January
30, 1991. The document of sale expressly stated
South: Aurea Caleon
that the area sold was 2,056 square meters and
that the same is located in Dampol 1st, Pulilan,
West: Benita Bailon Bulacan. However, in March, 1991, Jose filed his
application for free patent using the survey on
the 2,739 square meters. He also indicated
Kind of therein that the property is located in Dampol II,
Residential Lot
Land: Pulilan, Bulacan and that the land described and
applied for is not claimed or occupied by any prove ownership of the disputed portion
person. He further claimed that the property was notwithstanding evidence introduced and
public land which was first occupied and admitted.
cultivated by Feliciano.
II.
Thus, the trial court found that the
preponderance of evidence showed that the Whether the CA gravely abused its discretion,
disputed area of 447 square meters rightfully amounting to lack of jurisdiction, when it
belongs to Federico. This was a part of Lot No. reversed the decision of the lower court finding
1306 originally owned and possessed by Andres fraud committed by the respondent in obtaining
as identified and described in the Declaration of title to the property in question.
Real Property No. 7187.
Simply put, the issues raised are: (1) Did the CA
On March 10, 2004, the trial court rendered a err in holding that the respondents are the
Decision, the decretal portion of which reads: owners of the disputed 447 square meter
property? and (2) Did the CA err in finding that
WHEREFORE, judgment is hereby rendered in no fraud was committed by the respondents in
favor of the plaintiffs and against the obtaining title to the disputed property?
defendants, as follows:
Petitioners Arguments
1. Ordering the defendants to return to the
plaintiffs the disputed portion consisting of 447 Petitioners argue that the CA erred in not holding
square meters and now covered by TCT No. T- that they are the rightful owners as Federico
112864 of the Registry of Deeds of Bulacan, in inherited the property from his father Andres,
the name of Jose Mano, Jr. married to Rosanna who died on October 10, 1959. Jose purchased a
Reyes; parcel of land from Feliciano measuring only
2,056 square meters but his application for free
2. Ordering defendants to immediately demolish patent indicated a lot with a total area of 2,739
and/or remove the concrete fence erected on the square meters. Moreover, he indicated the same
premises; to be located at Dampol II, Pulilan, Bulacan;
however, it is actually located at Dampol 1st. He
3. Ordering the defendants to pay plaintiffs the also declared that the said property is not
amounts of P50,000.00 for moral claimed or occupied by any person but the truth
damages; P30,000.00 for exemplary damages is that the 447 square meters is owned and
and P50,000.00 for attorneys fees; possessed by Federico.

4. Ordering the Register of Deeds of Bulacan to Respondents Arguments

cancel said TCT No. T-112864 of the Registry of
Deeds of Bulacan; Respondents, on the other hand, contend that
they have a better title to the property. The
5. Defendants to pay costs of this suit. certificate of title issued in their name is an
absolute and indefeasible evidence of ownership
SO ORDERED.17 of the property. It is binding and conclusive upon
the whole world. There was also no proof or
Ruling of the Court of Appeals evidence presented to support the alleged fraud
on the part of Jose, nor was there any allegation
Respondents went to the CA on appeal. In a of specific acts committed by him which
Decision18 dated January 16, 2006, the CA constitute fraud.
reversed and set aside the ruling of the RTC and
dismissed the complaint. According to the CA, Our Ruling
respondents satisfactorily proved their
ownership over the disputed property. The Free After serious consideration, we find petitioners
Patent No. 031418-92-463 and the TCT No. T- arguments to be meritorious.
112864, as well as the tax declaration offered in
evidence by respondents are more convincing There is preponderance of evidence that
than the evidence presented by the petitioners. Federico is the owner of the disputed property.
Also, petitioners failed to prove by clear and
convincing evidence the fact of fraud allegedly We rule that Federico is the owner of the
committed by Jose in obtaining title to the disputed 447 square meter lot. The Deed of
disputed property. Conditional Sale described the property
purchased by Jose as follows:
The Motion for Reconsideration filed by
petitioners was denied by the CA through its A part of parcel of land (T.D. No. 14312) situated
Resolution19 dated May 3, 2006. at Dampol 1st, Pulilan, Bulacan. Bounded on the
North- Lot 6225; East- Lot 1306 & 1311; South-
Issues Lot 1307 and 1308 and West- Lot 1304 &
1299. Containing an area of Two Thousand Fifty
Hence, this petition raising the following issues: Six (2,056) square meters, more or less.
(Bulacan)."
I.
Feliciano sold a portion of Lot 1305 to Jose. After
Whether the CA gravely abused its discretion the sale was made, a Sketch/Special Plan20 was
when it declared that petitioners were unable to prepared by Geodetic Engineer Fortunato E.
Chavez. It is clear from such document that Lot
1305-A representing the upper portion with an
area of 1,112 square meters was retained by
Feliciano and what was sold was the lower
portion thereof which became Lot No. 1305-B
with a total area of 2,292 square meters. This
exceeds the area of 2,056 square meters
indicated in the above sale transaction.
In another Sketch/Special Plan21 prepared by
Geodetic Engineer Norberto C. Chavez, it is
shown that Lot No. 10176-B with an area of
2,292 square meters with a right of way going to
Camino Provincial Highway was the one sold to
Jose and which was also sold by him to the
Balingcongan spouses. This is also known as Lot
No. 1305-B. TCT No. T-112865 was issued in the
name of the spouses Balingcongan. Lot No.
10175 which represents the upper portion of Lot
No. 1305 was retained by Feliciano. This is also
known as Lot No. 1305-A. However, what is
surprising is that the said plan showed that Lot
No. 10176-A with an area of 447 square meters
had been made to appear as part of the lot sold
by Feliciano to Jose. TCT No. T-112864 was
issued in the name of Jose. If indeed this
disputed area is part of Lot No. 1305 then it
should have been part of Lot No. 1305-A which
was retained by Feliciano as it is at the East side
of the said property.
Moreover, during the ocular inspection, 22 it was
observed that all the neighboring lots are either
square or rectangle. There is an old fence,
measuring about 40 meters long (abutting the
newly constructed fence), which bounds the true
and actual area purchased by Jose. Thus, if the
old fence is followed, the land purchased would
either be square or rectangular like the adjoining
lots. However, if the disputed 447 square meters
would be included in the land purchased by Jose,
the same would slant remarkably to the right, to
the extent of covering the entire area fronting
the provincial road, which as per tax declaration
of Federico, is the boundary of his land on the
north.
Furthermore, Feliciano, the owner of Lot No.
1305 from whom Jose acquired the property
through sale, testified that his lot is only about
2,000 square meters and that Andres owns the
adjoining lot which is enclosed by a fence. Part of
his testimony is copied verbatim to wit:
ATTY. NATIVIDAD:
Q. But before they caused the measuring of the
lot in question, do you have any idea how much
is the area of the lot?
A. About 2,000 plus, sir.
Q. This property measuring about 2,000 plus, as
you mentioned a while ago before it was
surveyed by them, who is the present owner of
this property?
A. Jose Mano, sir.
Q. How did Jose Mano become the owner of the
property?
A. I sold it to him in 1991, sir.
xxxx
Q. Mr. Geronimo, I withdraw the manifestation.
May we further request that the description of
the land indicated in the first page thereof
particularly the boundary and the area be
bracketed and be marked as Exhibit D-3, your
Honor.
Do you know your boundary owners of this lot
located at Dampol 1st, Pulilan, Bulacan?
A. Teresa and Andres Valenzuela, sir.
Q. Who else if you know?
A. It is all that I could remember of, sir.
Q. At the time that the property was acquired
from you by Jose Mano or by the defendants, do
you have any fence erected on your property?
A. None, sir. The adjacent lot has, sir.
COURT:
On all sides?
A. On Teresa and Andres Valenzuelas side, sir.
Q. They were fenced?
A. Yes, there is, sir. 23
The testimony of Feliciano from whom Jose
purchased the property coincides with the
observation made during the ocular inspection
conducted by the RTC that there is an old fence,
measuring about 40 meters which encloses the
true and actual area purchased by Jose. Feliciano
retained the upper portion of Lot No. 1305 which
eventually became Lot No. 1305-A because it is
along the national highway. The disputed 447
square meters property is located at the eastern
side of Lot No. 1305-A. He gave Jose a right of
way at the western side24 of the lot he retained
for himself. This supports the theory that
Feliciano was fully aware that the property at the
eastern part of his property belonged to Andres
from whom Federico inherited the said lot. This is
the reason why a right of way going to the
national highway was given to Jose between Lot
No. 1305-A and Lot No. 1304. If the disputed
property is part of the sale as claimed by Jose
then Feliciano would not have given the said
right of way but would rather keep it to himself.
"Settled is the rule that a person, whose
certificate of title included by mistake or
oversight the land owned by another, does not
become the owner of such land by virtue of the
certificate alone. The Torrens System is intended
to guarantee the integrity and conclusiveness of
the certificate of registration but is not intended
to perpetrate fraud against the real owner of the
land. The certificate of title cannot be used to
protect a usurper from the true owner."25
Jose committed fraud in obtaining the title to the
disputed property.
Anent the second issue, we rule that Jose
committed fraud in obtaining title to the
disputed property. The chain of events leading to
the issuance of title in his name shows beyond
cavil the bad faith or a fraudulent pattern on his
part. The evidence on record disclosed that even
before Jose purchased the 2,056 square meters
from Feliciano, he had already caused on January
30, 1991 the survey of a 2,739 square meters
lot. Although the document of sale expressly
stated that the area sold was 2,056 square
meters and is located at Dampol 1st, Pulilan,
Bulacan, however, when he filed his application
for free patent in March 1991, he used the
survey on the 2,739 square meters and indicated
the same to be located at Dampol II, Pulilan,
Bulacan. Also, in his application, he stated that
the land described and applied for is not claimed
or occupied by any person when in reality the
same is owned and possessed by Federico.
Petitioners are entitled to an award of moral and
exemplary damages.
Article 221726 of the Civil Code defines what are
included in moral damages while Article 2219
enumerates the cases where they may be
recovered. Moral damages are in the category of
an award designed to compensate the claimant
for actual injury suffered and not to impose a
penalty on the wrongdoer.27 "The person
claiming moral damages must prove the
existence of bad faith by clear and convincing
evidence for the law always presumes good
faith. It is not enough that one merely suffered
sleepless nights, mental anguish, serious anxiety
as the result of the actuations of the other party.
Invariably such action must be shown to have
been willfully done in bad faith or with ill
motive."28 In the same fashion, to warrant the
award of exemplary damages, the wrongful act
must be accompanied by bad faith, and an
award of damages would be allowed only if the
guilty party acted in wanton, fraudulent, reckless
or malevolent manner.29 As regards attorneys
fees, the law is clear that in the absence of
stipulation, attorneys fees may be recovered as
actual or compensatory damages under any of
the circumstances provided for in Article
220830 of the Civil Code.
Having ruled that Jose committed fraud in
obtaining title to the disputed property then he
should be liable for both moral and exemplary
damages. Likewise, since petitioners were
compelled to litigate to protect their rights and
having proved that Jose acted in bad faith,
attorneys fees should likewise be awarded.
WHEREFORE, the instant petition for review
on certiorari is GRANTED. The assailed Decision
of the Court of Appeals in CA-G.R. CV No. 83577
dated January 16, 2006 and its May 3, 2006
Resolution are REVERSED and SET ASIDE. The
Decision of the Regional Trial Court of Bulacan,
Branch 14 in Civil Case No. 1065-M-99 dated
March 10, 2004 is reinstated and AFFIRMED.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 157009 March 17, 2010
SULPICIO LINES, INC., Petitioner,
vs.
DOMINGO E. CURSO, LUCIA E. CURSO,
MELECIO E. CURSO, SEGUNDO E. CURSO,
VIRGILIO E. CURSO, DIOSDADA E. CURSO,
and CECILIA E. CURSO, Respondents.
DECISION
BERSAMIN, J.:
Are the surviving brothers and sisters of a
passenger of a vessel that sinks during a voyage
entitled to recover moral damages from the
vessel owner as common carrier?
This is the question presented in the appeal
taken by the common carrier from the reversal
by the Court of Appeals (CA) of the decision of
the Regional Trial Court (RTC) dismissing the
complaint for various damages filed by the
surviving brothers and sisters of the late Dr.
Cenon E. Curso upon a finding that force majeure
had caused the sinking. The CA awarded moral
and other damages to the surviving brothers and
sisters.
Antecedents
On October 23, 1988, Dr. Curso boarded at the
port of Manila the MV Doa Marilyn, an inter-
island vessel owned and operated by petitioner
Sulpicio Lines, Inc., bound for Tacloban City.
Unfortunately, the MV Doa Marilyn sank in the
afternoon of October 24, 1988 while at sea due
to the inclement sea and weather conditions
brought about by Typhoon Unsang. The body of
Dr. Curso was not recovered, along with
hundreds of other passengers of the ill-fated
vessel. At the time of his death, Dr. Curso was 48
years old, and employed as a resident physician
at the Naval District Hospital in Naval, Biliran. He
had a basic monthly salary of P3,940.00, and
would have retired from government service by
December 20, 2004 at the age of 65.
On January 21, 1993, the respondents, allegedly
the surviving brothers and sisters of Dr. Curso,
sued the petitioner in the RTC in Naval, Biliran to
claim damages based on breach of contract of
carriage by sea, averring that the petitioner had
acted negligently in transporting Dr. Curso and
the other passengers. They stated, among
others, that their parents had predeceased Dr.
Curso, who died single and without issue; and
that, as such, they were Dr. Cursos surviving
heirs and successors in interest entitled to
recover moral and other damages.1 They prayed
for judgment, as follows: (a) compensatory
damages of P1,924,809.00; (b) moral damages
of P100,000.00; (c) exemplary or corrective
damages in the amount deemed proper and just;
(d) expenses of litigation of at least P50,000.00;
(e) attorneys fees of P50,000.00; and (f) costs of
suit.
The petitioner denied liability, insisting that the
sinking of the vessel was due to force
majeure (i.e., Typhoon Unsang), which exempted
a common carrier from liability. It averred that
the MV Doa Marilyn was seaworthy in all
respects, and was in fact cleared by the
Philippine Coast Guard for the voyage; and that
after the accident it conducted intensive search
and rescue operations and extended assistance Furthermore, the Court doubts the fitness of the
and aid to the victims and their families. ship for the voyage, since at the first sign of bad
weather, the ships hydraulic system failed and
Ruling of the RTC had to be repaired mid-voyage, making the
On July 28, 1995, the RTC dismissed the vessel a virtual derelict amidst a raging storm at
complaint upon its finding that the sinking of the sea. It is part of the appellees extraordinary
vessel was due to force majeure. The RTC diligence as a common carrier to make sure that
concluded that the officers of the MV Doa its ships can withstand the forces that bear upon
Marilyn had acted with the diligence required of them during a voyage, whether they be the
a common carrier; that the sinking of the vessel ordinary stress of the sea during a calm voyage
and the death of its passengers, including Dr. or the rage of a storm. The fact that the stud
Curso, could not have been avoided; that there bolts in the ships hydraulic system gave way
was no basis to consider the MV Doa while the ship was at sea discredits the theory
Marilyn not seaworthy at the time of the voyage; that the appellee exercised due diligence in
that the findings of the Special Board of Marine maintaining the seaworthy condition of the M.V.
Inquiry (SBMI) constituted to investigate the Doa Marilyn. xxx.
4

disaster absolved the petitioner, its officers, and xxx

crew of any negligence and administrative
liability; and that the respondents failed to prove Aside from these, the defendant must
their claim for damages. compensate the plaintiffs for moral damages
that they suffered as a result of the negligence
Ruling of the CA attending the loss of the M.V. Doa Marilyn.
The respondents appealed to the CA, contending Plaintiffs, have established that they took great
that the RTC erred: (a) in considering itself pains to recover, in vain, the body of their
barred from entertaining the case by the findings brother, at their own cost, while suffering great
of fact of the SBMI in SBMI-ADM Case No. 08-88; grief due to the loss of a loved one. Furthermore,
(b) in not holding that the petitioner was Plaintiffs were unable to recover the body of
negligent and did not exercise the required their brother. Moral damages worth P100,000.00
diligence and care in conducting Dr. Curso to his is proper.
destination; (c) in not finding that the MV Doa WHEREFORE, premises considered, the appealed
Marilyn was unseaworthy at the time of its decision of the RTC of Naval, Biliran, Branch 16,
sinking; and (d) in not awarding damages to rendered in Civil Case No. B-0851, is hereby SET
them.2 ASIDE. In lieu thereof, judgment is hereby
In its decision dated September 16, 2002,3 the rendered, finding the defendant-appellee
CA held and disposed: Sulpicio Lines, Inc, to have been negligent in
transporting the deceased Cenon E. Curso who
Based on the events described by the appellees was on board the ill-fated M.V. Doa Marilyn,
witness, the Court found inadequate proof to resulting in his untimely death. Defendant-
show that Sulpicio Lines, Inc., or its officers and appellee is hereby ordered to pay the plaintiffs
crew, had exercised the required degree of heirs of Cenon E. Curso the following:
diligence to acquit the appellee of liability.
(1) Death indemnity in the amount
In the first place, the court finds inadequate of P50,000.00;
explanation why the officers of the M.V. Doa
Marilyn had not apprised themselves of the (2) Loss of Earning Capacity in the amount
weather reports on the approach of typhoon of P504,241.20;
"Unsang" which had the power of a signal no. 3 (3) Moral Damages in the amount
cyclone, bearing upon the general direction of of P100,000.00.
the path of the M.V. Doa Marilyn. If the officers
and crew of the Doa Marilyn had indeed been (4) Costs of the suit.5
adequately monitoring the strength and direction
of the typhoon, and had acted promptly and Hence, this appeal, in which the petitioner insists
competently to avoid the same, then such a that the CA committed grievous errors in holding
mishap would not have occurred. that the respondents were entitled to moral
damages as the brothers and sisters of the late
Furthermore, there was no account of the acts Dr. Curso; that the CA thereby disregarded
and decision of the crew of the ill-fated ship from Article 1764 and Article 2206 of the Civil Code,
8:00 PM on October 23, 1988 when the Chief and the ruling in Receiver for North Negros
Mate left his post until 4:00 AM the next day Sugar Co., Inc. v. Ybaez,6 whereby the Supreme
when he resumed duty. It does not appear what Court disallowed the award of moral damages in
occurred during that time, or what weather favor of the brothers and sisters of a deceased
reports were received and acted upon by the passenger in an action upon breach of a contract
ship captain. What happened during such time is of carriage.7
important in determining what information about
the typhoon was gathered and how the ship Issues
officers reached their decision to just change The petitioner raises the following issues:
course, and not take shelter while a strong
typhoon was approaching. ARE THE BROTHERS AND SISTERS OF A
DECEASED PASSENGER IN A CASE OF BREACH
OF CONTRACT OF CARRIAGE ENTITLED TO AN therein.11 Thus, the CA erred in awarding moral
AWARD OF MORAL DAMAGES AGAINST THE damages to the respondents.
CARRIER?
The petitioner has correctly relied on the holding
ASSUMING (THAT) THEY ARE ENTITLED TO CLAIM in Receiver for North Negros Sugar Company,
MORAL DAMAGES, SHOULD THE AWARD BE Inc. v. Ybaez,12to the effect that in case of death
GRANTED OR GIVEN TO THE BROTHER OR caused by quasi-delict, the brother of the
SISTER NOTWITHSTANDING (THE) LACK OF deceased was not entitled to the award of moral
EVIDENCE AS REGARDS HIS OR HER PERSONAL damages based on Article 2206 of the Civil Code.
SUFFERING?
Essentially, the purpose of moral damages is
Ruling indemnity or reparation, that is, to enable the
injured party to obtain the means, diversions, or
The petition is meritorious. amusements that will serve to alleviate the
As a general rule, moral damages are not moral suffering he has undergone by reason of
recoverable in actions for damages predicated the tragic event. According to Villanueva v.
on a breach of contract, unless there is fraud or Salvador, 13
the conditions for awarding moral
bad faith. As an exception, moral damages may damages are: (a) there must be an injury,
8

be awarded in case of breach of contract of whether physical, mental, or psychological,

carriage that results in the death of a clearly substantiated by the claimant; (b) there
passenger,9 in accordance with Article 1764, in must be a culpable act or omission factually
relation to Article 2206 (3), of the Civil Code, established; (c) the wrongful act or omission of
which provide: the defendant must be the proximate cause of
the injury sustained by the claimant; and (d) the
Article 1764. Damages in cases comprised in this award of damages is predicated on any of the
Section shall be awarded in accordance with Title cases stated in Article 2219 of the Civil Code.
XVIII of this Book, concerning Damages. Article
2206 shall also apply to the death of a passenger To be entitled to moral damages, the
caused by the breach of contract by a common respondents must have a right based upon law.
carrier. It is true that under Article 1003 14
of the Civil
Code they succeeded to the entire estate of the
Article 2206. The amount of damages for death late Dr. Curso in the absence of the latters
caused by a crime or quasi-delict shall be at descendants, ascendants, illegitimate children,
least three thousand pesos, even though there and surviving spouse. However, they were not
may have been mitigating circumstances. In included among the persons entitled to recover
addition: moral damages, as enumerated in Article 2219
of the Civil Code, viz:
(1) The defendant shall be liable for the loss of
the earning capacity of the deceased, and the Article 2219. Moral damages may be recovered
indemnity shall be paid to the heirs of the latter; in the following and analogous cases:
such indemnity shall in every case be assessed (1) A criminal offense resulting in physical
and awarded by the court, unless the deceased injuries;
on account of permanent physical disability not (2) Quasi-delicts causing physical injuries;
caused by the defendant, had no earning (3) Seduction, abduction, rape or other lascivious
capacity at the time of his death; acts;
(4) Adultery or concubinage;
(2) If the deceased was obliged to give support
(5) Illegal or arbitrary detention or arrest;
according to the provisions of article 291, the
(6) Illegal search;
recipient who is not an heir called to the
(7) Libel, slander or any other form of
decedent's inheritance by the law of testate or
defamation;
intestate succession, may demand support from
(8) Malicious prosecution;
the person causing the death, for a period not
(9) Acts mentioned in article 309;
exceeding five years, the exact duration to be
(10) Acts and actions referred to in articles 21,
fixed by the court;
26, 27, 28, 29, 30, 32, 34 and 35.
(3) The spouse, legitimate and illegitimate The parents of the female seduced, abducted,
descendants and ascendants of the deceased raped or abused referred to in No. 3 of this
may demand moral damages for mental anguish article, may also recover moral damages.
by reason of the death of the deceased. The spouse, descendants, ascendants and
brothers and sisters may bring the action
The foregoing legal provisions set forth the mentioned in No. 9 of this article, in the order
persons entitled to moral damages. The omission named.1avvphi1
from Article 2206 (3) of the brothers and sisters Article 2219 circumscribes the instances in which
of the deceased passenger reveals the moral damages may be awarded. The provision
legislative intent to exclude them from the does not include succession in the collateral line
recovery of moral damages for mental anguish as a source of the right to recover moral
by reason of the death of the deceased. Inclusio damages. The usage of the phrase analogous
unius est exclusio alterius.10 The solemn power cases in the provision means simply that the
and duty of the courts to interpret and apply the situation must be held similar to those expressly
law do not include the power to correct the law enumerated in the law in question 15 following
by reading into it what is not written the ejusdem generis rule. Hence, Article 1003 of
the Civil Code is not concerned with recovery of
moral damages.
In fine, moral damages may be recovered in an
action upon breach of contract of carriage only
when: (a) where death of a passenger results, or
(b) it is proved that the carrier was guilty of
fraud and bad faith, even if death does not
result.16 Article 2206 of the Civil Code entitles
the descendants, ascendants, illegitimate
children, and surviving spouse of the deceased
passenger to demand moral damages for mental
anguish by reason of the death of the
deceased.17
WHEREFORE, the petition for review on certiorari
is granted, and the award made to the
respondents in the decision dated September 16,
2002 of the Court of Appeals of moral damages
amounting to P100,000.00 is deleted and set
aside. SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 128690 January 21, 1999

ABS-CBN BROADCASTING
CORPORATION, petitioner,
vs.
HONORABLE COURT OF APPEALS, REPUBLIC
BROADCASTING CORP, VIVA PRODUCTION,
INC., and VICENTE DEL
ROSARIO, respondents.

DAVIDE, JR., CJ.:

In this petition for review on certiorari, petitioner

ABS-CBN Broadcasting Corp. (hereafter ABS-
CBN) seeks to reverse and set aside the
decision 1 of 31 October 1996 and the
resolution 2 of 10 March 1997 of the Court of
Appeals in CA-G.R. CV No. 44125. The former
affirmed with modification the decision 3 of 28
April 1993 of the Regional Trial Court (RTC) of
Quezon City, Branch 80, in Civil Case No. Q-92- 3. Underground guerillas
12309. The latter denied the motion to
reconsider the decision of 31 October 1996. 4. Tiger Command

The antecedents, as found by the RTC and 5. Boy de Sabog

adopted by the Court of Appeals, are as follows: 6. Lady Commando

In 1990, ABS-CBN and Viva executed a Film 7. Batang Matadero

Exhibition Agreement (Exh. "A") whereby Viva
gave ABS-CBN an exclusive right to exhibit some 8. Rebelyon
Viva films. Sometime in December 1991, in
I hope you will consider this request of mine.
accordance with paragraph 2.4 [sic] of said
agreement stating that . The other dramatic films have been offered to us
before and have been rejected because of the
1.4 ABS-CBN shall have the right of first refusal
ruling of MTRCB to have them aired at 9:00 p.m.
to the next twenty-four (24) Viva films for TV
due to their very adult themes.
telecast under such terms as may be agreed
upon by the parties hereto, provided, however, As for the 10 titles I have choosen [sic] from the
that such right shall be exercised by ABS-CBN 3 packages please consider including all the
from the actual offer in writing. other Viva movies produced last year. I have
quite an attractive offer to make.
Viva, through defendant Del Rosario, offered
ABS-CBN, through its vice-president Charo Thanking you and with my warmest regards.
Santos-Concio, a list of three(3) film packages
(36 title) from which ABS-CBN may exercise its (Signed)
right of first refusal under the afore-said
Charo Santos-Concio
agreement (Exhs. "1" par, 2, "2," "2-A'' and "2-
B"-Viva). ABS-CBN, however through Mrs. Concio, On February 27, 1992, defendant Del Rosario
"can tick off only ten (10) titles" (from the list) approached ABS-CBN's Ms. Concio, with a list
"we can purchase" (Exh. "3" - Viva) and therefore consisting of 52 original movie titles (i.e. not yet
did not accept said list (TSN, June 8, 1992, pp. 9- aired on television) including the 14 titles subject
10). The titles ticked off by Mrs. Concio are not of the present case, as well as 104 re-runs
the subject of the case at bar except the film (previously aired on television) from which ABS-
''Maging Sino Ka Man." CBN may choose another 52 titles, as a total of
156 titles, proposing to sell to ABS-CBN airing
For further enlightenment, this rejection letter
rights over this package of 52 originals and 52
dated January 06, 1992 (Exh "3" - Viva) is hereby
re-runs for P60,000,000.00 of which
quoted:
P30,000,000.00 will be in cash and
6 January 1992 P30,000,000.00 worth of television spots (Exh.
"4" to "4-C" Viva; "9" -Viva).
Dear Vic,
On April 2, 1992, defendant Del Rosario and ABS-
This is not a very formal business letter I am CBN general manager, Eugenio Lopez III, met at
writing to you as I would like to express my the Tamarind Grill Restaurant in Quezon City to
difficulty in recommending the purchase of the discuss the package proposal of Viva. What
three film packages you are offering ABS-CBN. transpired in that lunch meeting is the subject of
conflicting versions. Mr. Lopez testified that he
From among the three packages I can only tick
and Mr. Del Rosario allegedly agreed that ABS-
off 10 titles we can purchase. Please see
CRN was granted exclusive film rights to
attached. I hope you will understand my
fourteen (14) films for a total consideration of
position. Most of the action pictures in the list do
P36 million; that he allegedly put this agreement
not have big action stars in the cast. They are
as to the price and number of films in a "napkin''
not for primetime. In line with this I wish to
and signed it and gave it to Mr. Del Rosario (Exh.
mention that I have not scheduled for telecast
D; TSN, pp. 24-26, 77-78, June 8, 1992). On the
several action pictures in out very first contract
other hand, Del Rosario denied having made any
because of the cheap production value of these
agreement with Lopez regarding the 14 Viva
movies as well as the lack of big action stars. As
films; denied the existence of a napkin in which
a film producer, I am sure you understand what I
Lopez wrote something; and insisted that what
am trying to say as Viva produces only big action
he and Lopez discussed at the lunch meeting
pictures.
was Viva's film package offer of 104 films (52
In fact, I would like to request two (2) additional originals and 52 re-runs) for a total price of P60
runs for these movies as I can only schedule million. Mr. Lopez promising [sic]to make a
them in our non-primetime slots. We have to counter proposal which came in the form of a
cover the amount that was paid for these movies proposal contract Annex "C" of the complaint
because as you very well know that non- (Exh. "1"- Viva; Exh. "C" - ABS-CBN).
primetime advertising rates are very low. These
On April 06, 1992, Del Rosario and Mr. Graciano
are the unaired titles in the first contract.
Gozon of RBS Senior vice-president for Finance
1. Kontra Persa [sic]. discussed the terms and conditions of Viva's
offer to sell the 104 films, after the rejection of
2. Raider Platoon. the same package by ABS-CBN.
On April 07, 1992, defendant Del Rosario preliminary injunction should private
received through his secretary, a handwritten respondents be unable to post a counterbond.
note from Ms. Concio, (Exh. "5" - Viva), which
reads: "Here's the draft of the contract. I hope At the pre-trial 12 on 6 August 1992, the parties,
you find everything in order," to which was upon suggestion of the court, agreed to explore
attached a draft exhibition agreement (Exh. "C''- the possibility of an amicable settlement. In the
ABS-CBN; Exh. "9" - Viva, p. 3) a counter- meantime, RBS prayed for and was granted
proposal covering 53 films, 52 of which came reasonable time within which to put up a P30
from the list sent by defendant Del Rosario and million counterbond in the event that no
one film was added by Ms. Concio, for a settlement would be reached.
consideration of P35 million. Exhibit "C" provides As the parties failed to enter into an amicable
that ABS-CBN is granted films right to 53 films settlement RBS posted on 1 October 1992 a
and contains a right of first refusal to "1992 Viva counterbond, which the RTC approved in its
Films." The said counter proposal was however Order of 15 October 1992. 13
rejected by Viva's Board of Directors [in the]
evening of the same day, April 7, 1992, as Viva On 19 October 1992, ABS-CBN filed a motion for
would not sell anything less than the package of reconsideration 14 of the 3 August and 15
104 films for P60 million pesos (Exh. "9" - Viva), October 1992 Orders, which RBS opposed. 15
and such rejection was relayed to Ms. Concio.
On 29 October 1992, the RTC conducted a pre-
On April 29, 1992, after the rejection of ABS-CBN trial. 16
and following several negotiations and meetings
Pending resolution of its motion for
defendant Del Rosario and Viva's President
reconsideration, ABS-CBN filed with the Court of
Teresita Cruz, in consideration of P60 million,
Appeals a petition 17challenging the RTC's Orders
signed a letter of agreement dated April 24,
of 3 August and 15 October 1992 and praying for
1992. granting RBS the exclusive right to air 104
the issuance of a writ of preliminary injunction to
Viva-produced and/or acquired films (Exh. "7-A" -
enjoin the RTC from enforcing said orders. The
RBS; Exh. "4" - RBS) including the fourteen (14)
case was docketed as CA-G.R. SP No. 29300.
films subject of the present case. 4
On 3 November 1992, the Court of Appeals
On 27 May 1992, ABS-CBN filed before the RTC a
issued a temporary restraining order 18 to enjoin
complaint for specific performance with a prayer
the airing, broadcasting, and televising of any or
for a writ of preliminary injunction and/or
all of the films involved in the controversy.
temporary restraining order against private
respondents Republic Broadcasting On 18 December 1992, the Court of Appeals
5
Corporation (hereafter RBS ), Viva Production promulgated a decision 19 dismissing the petition
(hereafter VIVA), and Vicente Del Rosario. The in CA -G.R. No. 29300 for being premature. ABS-
complaint was docketed as Civil Case No. Q-92- CBN challenged the dismissal in a petition for
12309. review filed with this Court on 19 January 1993,
which was docketed as G.R. No. 108363.
On 27 May 1992, RTC issued a temporary
restraining order 6 enjoining private respondents In the meantime the RTC received the evidence
from proceeding with the airing, broadcasting, for the parties in Civil Case No. Q-192-1209.
and televising of the fourteen VIVA films subject Thereafter, on 28 April 1993, it rendered a
of the controversy, starting with the film Maging decision 20 in favor of RBS and VIVA and against
Sino Ka Man, which was scheduled to be shown ABS-CBN disposing as follows:
on private respondents RBS' channel 7 at seven
o'clock in the evening of said date. WHEREFORE, under cool reflection and
prescinding from the foregoing, judgments is
On 17 June 1992, after appropriate proceedings, rendered in favor of defendants and against the
the RTC issued an plaintiff.
order 7 directing the issuance of a writ of
preliminary injunction upon ABS-CBN's posting of (1) The complaint is hereby dismissed;
P35 million bond. ABS-CBN moved for the
(2) Plaintiff ABS-CBN is ordered to pay defendant
reduction of the bond, 8 while private
RBS the following:
respondents moved for reconsideration of the
order and offered to put up a counterbound. 9 a) P107,727.00, the amount of premium paid by
RBS to the surety which issued defendant RBS's
In the meantime, private respondents filed
bond to lift the injunction;
separate answers with counterclaim. 10 RBS also
set up a cross-claim against VIVA.. b) P191,843.00 for the amount of print
advertisement for "Maging Sino Ka Man" in
On 3 August 1992, the RTC issued an
various newspapers;
11
order dissolving the writ of preliminary
injunction upon the posting by RBS of a P30 c) Attorney's fees in the amount of P1 million;
million counterbond to answer for whatever
damages ABS-CBN might suffer by virtue of such d) P5 million as and by way of moral damages;
dissolution. However, it reduced petitioner's
e) P5 million as and by way of exemplary
injunction bond to P15 million as a condition
damages;
precedent for the reinstatement of the writ of
(3) For defendant VIVA, plaintiff ABS-CBN is parties thereto, and that the said right shall be
ordered to pay P212,000.00 by way of exercised by ABS-CBN within fifteen (15) days
reasonable attorney's fees. from the actual offer in writing.

(4) The cross-claim of defendant RBS against Said parag. 1.4 of the agreement Exhibit "A" on
defendant VIVA is dismissed. the right of first refusal did not fix the price of
the film right to the twenty-four (24) films, nor
(5) Plaintiff to pay the costs. did it specify the terms thereof. The same are
According to the RTC, there was no meeting of still left to be agreed upon by the parties.
minds on the price and terms of the offer. The In the instant case, ABS-CBN's letter of rejection
alleged agreement between Lopez III and Del Exhibit 3 (Records, p. 89) stated that it can only
Rosario was subject to the approval of the VIVA tick off ten (10) films, and the draft contract
Board of Directors, and said agreement was Exhibit "C" accepted only fourteen (14) films,
disapproved during the meeting of the Board on while parag. 1.4 of Exhibit "A'' speaks of the next
7 April 1992. Hence, there was no basis for ABS- twenty-four (24) films.
CBN's demand that VIVA signed the 1992 Film
Exhibition Agreement. Furthermore, the right of The offer of V1VA was sometime in December
first refusal under the 1990 Film Exhibition 1991 (Exhibits 2, 2-A. 2-B; Records, pp. 86-88;
Agreement had previously been exercised per Decision, p. 11, Records, p. 1150), when the first
Ms. Concio's letter to Del Rosario ticking off ten list of VIVA films was sent by Mr. Del Rosario to
titles acceptable to them, which would have ABS-CBN. The Vice President of ABS-CBN, Ms.
made the 1992 agreement an entirely new Charo Santos-Concio, sent a letter dated January
contract. 6, 1992 (Exhibit 3, Records, p. 89) where ABS-
CBN exercised its right of refusal by rejecting the
On 21 June 1993, this Court denied 21 ABS-CBN's offer of VIVA.. As aptly observed by the trial
petition for review in G.R. No. 108363, as no court, with the said letter of Mrs. Concio of
reversible error was committed by the Court of January 6, 1992, ABS-CBN had lost its right of
Appeals in its challenged decision and the case first refusal. And even if We reckon the fifteen
had "become moot and academic in view of the (15) day period from February 27, 1992 (Exhibit
dismissal of the main action by the court a 4 to 4-C) when another list was sent to ABS-CBN
quo in its decision" of 28 April 1993. after the letter of Mrs. Concio, still the fifteen
Aggrieved by the RTC's decision, ABS-CBN (15) day period within which ABS-CBN shall
appealed to the Court of Appeals claiming that exercise its right of first refusal has already
there was a perfected contract between ABS- expired. 22
CBN and VIVA granting ABS-CBN the exclusive Accordingly, respondent court sustained the
right to exhibit the subject films. Private award of actual damages consisting in the cost
respondents VIVA and Del Rosario also appealed of print advertisements and the premium
seeking moral and exemplary damages and payments for the counterbond, there being
additional attorney's fees. adequate proof of the pecuniary loss which RBS
In its decision of 31 October 1996, the Court of had suffered as a result of the filing of the
Appeals agreed with the RTC that the contract complaint by ABS-CBN. As to the award of moral
between ABS-CBN and VIVA had not been damages, the Court of Appeals found reasonable
perfected, absent the approval by the VIVA basis therefor, holding that RBS's reputation was
Board of Directors of whatever Del Rosario, it's debased by the filing of the complaint in Civil
agent, might have agreed with Lopez III. The Case No. Q-92-12309 and by the non-showing of
appellate court did not even believe ABS-CBN's the film "Maging Sino Ka Man." Respondent court
evidence that Lopez III actually wrote down such also held that exemplary damages were correctly
an agreement on a "napkin," as the same was imposed by way of example or correction for the
never produced in court. It likewise rejected ABS- public good in view of the filing of the complaint
CBN's insistence on its right of first refusal and despite petitioner's knowledge that the contract
ratiocinated as follows: with VIVA had not been perfected, It also upheld
the award of attorney's fees, reasoning that with
As regards the matter of right of first refusal, it ABS-CBN's act of instituting Civil Case No, Q-92-
may be true that a Film Exhibition Agreement 1209, RBS was "unnecessarily forced to litigate."
was entered into between Appellant ABS-CBN The appellate court, however, reduced the
and appellant VIVA under Exhibit "A" in 1990, awards of moral damages to P2 million,
and that parag. 1.4 thereof provides: exemplary damages to P2 million, and attorney's
fees to P500, 000.00.
1.4 ABS-CBN shall have the right of first refusal
to the next twenty-four (24) VIVA films for TV On the other hand, respondent Court of Appeals
telecast under such terms as may be agreed denied VIVA and Del Rosario's appeal because it
upon by the parties hereto, provided, however, was "RBS and not VIVA which was actually
that such right shall be exercised by ABS-CBN prejudiced when the complaint was filed by ABS-
within a period of fifteen (15) days from the CBN."
actual offer in writing (Records, p. 14).
Its motion for reconsideration having been
[H]owever, it is very clear that said right of first denied, ABS-CBN filed the petition in this case,
refusal in favor of ABS-CBN shall still be subject contending that the Court of Appeals gravely
to such terms as may be agreed upon by the erred in
I ABS-CBN further contends that there was no
clear basis for the awards of moral and
. . . RULING THAT THERE WAS NO PERFECTED exemplary damages. The controversy involving
CONTRACT BETWEEN PETITIONER AND PRIVATE ABS-CBN and RBS did not in any way originate
RESPONDENT VIVA NOTWITHSTANDING from business transaction between them. The
PREPONDERANCE OF EVIDENCE ADDUCED BY claims for such damages did not arise from any
PETITIONER TO THE CONTRARY. contractual dealings or from specific acts
II committed by ABS-CBN against RBS that may be
characterized as wanton, fraudulent, or reckless;
. . . IN AWARDING ACTUAL AND COMPENSATORY they arose by virtue only of the filing of the
DAMAGES IN FAVOR OF PRIVATE RESPONDENT complaint, An award of moral and exemplary
RBS. damages is not warranted where the record is
bereft of any proof that a party acted maliciously
III
or in bad faith in filing an action. 27 In any case,
. . . IN AWARDING MORAL AND EXEMPLARY free resort to courts for redress of wrongs is a
DAMAGES IN FAVOR OF PRIVATE RESPONDENT matter of public policy. The law recognizes the
RBS. right of every one to sue for that which he
honestly believes to be his right without fear of
IV standing trial for damages where by lack of
sufficient evidence, legal technicalities, or a
. . . IN AWARDING ATTORNEY'S FEES IN FAVOR OF
different interpretation of the laws on the matter,
RBS.
the case would lose ground. 28 One who makes
ABS-CBN claims that it had yet to fully exercise use of his own legal right does no injury. 29 If
its right of first refusal over twenty-four titles damage results front the filing of the complaint,
under the 1990 Film Exhibition Agreement, as it it is damnum absque injuria. 30 Besides, moral
had chosen only ten titles from the first list. It damages are generally not awarded in favor of a
insists that we give credence to Lopez's juridical person, unless it enjoys a good
testimony that he and Del Rosario met at the reputation that was debased by the offending
Tamarind Grill Restaurant, discussed the terms party resulting in social humiliation. 31
and conditions of the second list (the 1992 Film
As regards the award of attorney's fees, ABS-
Exhibition Agreement) and upon agreement
CBN maintains that the same had no factual,
thereon, wrote the same on a paper napkin. It
legal, or equitable justification. In sustaining the
also asserts that the contract has already been
trial court's award, the Court of Appeals acted in
effective, as the elements thereof, namely,
clear disregard of the doctrines laid down
consent, object, and consideration were
in Buan v. Camaganacan 32 that the text of the
established. It then concludes that the Court of
decision should state the reason why attorney's
Appeals' pronouncements were not supported by
fees are being awarded; otherwise, the award
law and jurisprudence, as per our decision of 1
should be disallowed. Besides, no bad faith has
December 1995 in Limketkai Sons Milling, Inc. v.
been imputed on, much less proved as having
Court of Appeals, 23 which cited Toyota Shaw,
been committed by, ABS-CBN. It has been held
Inc. v. Court of Appeals, 24 Ang Yu Asuncion v.
that "where no sufficient showing of bad faith
Court of Appeals, 25 and Villonco Realty
would be reflected in a party' s persistence in a
Company v. Bormaheco. Inc. 26
case other than an erroneous conviction of the
Anent the actual damages awarded to RBS, ABS- righteousness of his cause, attorney's fees shall
CBN disavows liability therefor. RBS spent for the not be recovered as cost."
33

premium on the counterbond of its own volition

On the other hand, RBS asserts that there was
in order to negate the injunction issued by the
no perfected contract between ABS-CBN and
trial court after the parties had ventilated their
VIVA absent any meeting of minds between
respective positions during the hearings for the
them regarding the object and consideration of
purpose. The filing of the counterbond was an
the alleged contract. It affirms that the ABS-
option available to RBS, but it can hardly be
CBN's claim of a right of first refusal was
argued that ABS-CBN compelled RBS to incur
correctly rejected by the trial court. RBS insist
such expense. Besides, RBS had another
the premium it had paid for the counterbond
available option, i.e., move for the dissolution or
constituted a pecuniary loss upon which it may
the injunction; or if it was determined to put up a
recover. It was obliged to put up the
counterbond, it could have presented a cash
counterbound due to the injunction procured by
bond. Furthermore under Article 2203 of the Civil
ABS-CBN. Since the trial court found that ABS-
Code, the party suffering loss or injury is also
CBN had no cause of action or valid claim
required to exercise the diligence of a good
against RBS and, therefore not entitled to the
father of a family to minimize the damages
writ of injunction, RBS could recover from ABS-
resulting from the act or omission. As regards
CBN the premium paid on the counterbond.
the cost of print advertisements, RBS had not
Contrary to the claim of ABS-CBN, the cash bond
convincingly established that this was a loss
would prove to be more expensive, as the loss
attributable to the non showing "Maging Sino Ka
would be equivalent to the cost of money RBS
Man"; on the contrary, it was brought out during
would forego in case the P30 million came from
trial that with or without the case or the
its funds or was borrowed from banks.
injunction, RBS would have spent such an
amount to generate interest in the film.
RBS likewise asserts that it was entitled to the The second is that it is a competitor that caused
cost of advertisements for the cancelled showing RBS to suffer the humiliation. The humiliation
of the film "Maging Sino Ka Man" because the and injury are far greater in degree when caused
print advertisements were put out to announce by an entity whose ultimate business objective is
the showing on a particular day and hour on to lure customers (viewers in this case) away
Channel 7, i.e., in its entirety at one time, not a from the competition. 36
series to be shown on a periodic basis. Hence,
the print advertisement were good and relevant For their part, VIVA and Vicente del Rosario
for the particular date showing, and since the contend that the findings of fact of the trial court
film could not be shown on that particular date and the Court of Appeals do not support ABS-
and hour because of the injunction, the expenses CBN's claim that there was a perfected contract.
for the advertisements had gone to waste. Such factual findings can no longer be disturbed
in this petition for review under Rule 45, as only
As regards moral and exemplary damages, RBS questions of law can be raised, not questions of
asserts that ABS-CBN filed the case and secured fact. On the issue of damages and attorneys
injunctions purely for the purpose of harassing fees, they adopted the arguments of RBS.
and prejudicing RBS. Pursuant then to Article 19
and 21 of the Civil Code, ABS-CBN must be held The key issues for our consideration are (1)
liable for such whether there was a perfected contract between
damages. Citing Tolentino, damages may be VIVA and ABS-CBN, and (2) whether RBS is
34

awarded in cases of abuse of rights even if the entitled to damages and attorney's fees. It may
act done is not illicit and there is abuse of rights be noted that the award of attorney's fees of
were plaintiff institutes and action purely for the P212,000 in favor of VIVA is not assigned as
purpose of harassing or prejudicing the another error.
defendant. I.
In support of its stand that a juridical entity can The first issue should be resolved against ABS-
recover moral and exemplary damages, private CBN. A contract is a meeting of minds between
respondents RBS cited People two persons whereby one binds himself to give
v. Manero, 35 where it was stated that such entity something or to render some service to
may recover moral and exemplary damages if it another 37 for a consideration. there is no
has a good reputation that is debased resulting contract unless the following requisites concur:
in social humiliation. it then ratiocinates; thus: (1) consent of the contracting parties; (2) object
There can be no doubt that RBS' reputation has certain which is the subject of the contract; and
been debased by ABS-CBN's acts in this case. (3) cause of the obligation, which is
When RBS was not able to fulfill its commitment established. 38 A contract undergoes three
to the viewing public to show the film "Maging stages:
Sino Ka Man" on the scheduled dates and times (a) preparation, conception, or generation, which
(and on two occasions that RBS advertised), it is the period of negotiation and bargaining,
suffered serious embarrassment and social ending at the moment of agreement of the
humiliation. When the showing was canceled, parties;
late viewers called up RBS' offices and subjected
RBS to verbal abuse ("Announce kayo nang (b) perfection or birth of the contract, which is
announce, hindi ninyo naman ilalabas," the moment when the parties come to agree on
"nanloloko yata kayo") (Exh. 3-RBS, par. 3). This the terms of the contract; and
alone was not something RBS brought upon
(c) consummation or death, which is the
itself. it was exactly what ABS-CBN had planned
fulfillment or performance of the terms agreed
to happen.
upon in the contract. 39
The amount of moral and exemplary damages
Contracts that are consensual in nature are
cannot be said to be excessive. Two reasons
perfected upon mere meeting of the minds,
justify the amount of the award.
Once there is concurrence between the offer and
The first is that the humiliation suffered by RBS the acceptance upon the subject matter,
is national extent. RBS operations as a consideration, and terms of payment a contract
broadcasting company is [sic] nationwide. Its is produced. The offer must be certain. To
clientele, like that of ABS-CBN, consists of those convert the offer into a contract, the acceptance
who own and watch television. It is not an must be absolute and must not qualify the terms
exaggeration to state, and it is a matter of of the offer; it must be plain, unequivocal,
judicial notice that almost every other person in unconditional, and without variance of any sort
the country watches television. The humiliation from the proposal. A qualified acceptance, or one
suffered by RBS is multiplied by the number of that involves a new proposal, constitutes a
televiewers who had anticipated the showing of counter-offer and is a rejection of the original
the film "Maging Sino Ka Man" on May 28 and offer. Consequently, when something is desired
November 3, 1992 but did not see it owing to the which is not exactly what is proposed in the
cancellation. Added to this are the advertisers offer, such acceptance is not sufficient to
who had placed commercial spots for the generate consent because any modification or
telecast and to whom RBS had a commitment in variation from the terms of the offer annuls the
consideration of the placement to show the film offer. 40
in the dates and times specified.
When Mr. Del Rosario of VIVA met with Mr. Lopez of their acts would
of ABS-CBN at the Tamarind Grill on 2 April 1992 apply. 48 For such officers to be deemed fully
to discuss the package of films, said package of clothed by the corporation to exercise a power of
104 VIVA films was VIVA's offer to ABS-CBN to the Board, the latter must specially authorize
enter into a new Film Exhibition Agreement. But them to do so. That Del Rosario did not have the
ABS-CBN, sent, through Ms. Concio, a counter- authority to accept ABS-CBN's counter-offer was
proposal in the form of a draft contract proposing best evidenced by his submission of the draft
exhibition of 53 films for a consideration of P35 contract to VIVA's Board of Directors for the
million. This counter-proposal could be nothing latter's approval. In any event, there was
less than the counter-offer of Mr. Lopez during between Del Rosario and Lopez III no meeting of
his conference with Del Rosario at Tamarind Grill minds. The following findings of the trial court
Restaurant. Clearly, there was no acceptance of are instructive:
VIVA's offer, for it was met by a counter-offer
which substantially varied the terms of the offer. A number of considerations militate against ABS-
CBN's claim that a contract was perfected at that
ABS-CBN's reliance in Limketkai Sons Milling, Inc. lunch meeting on April 02, 1992 at the Tamarind
v. Court of Grill.
Appeals 41 and Villonco Realty Company
v. Bormaheco, Inc., 42 is misplaced. In these FIRST, Mr. Lopez claimed that what was agreed
cases, it was held that an acceptance may upon at the Tamarind Grill referred to the price
contain a request for certain changes in the and the number of films, which he wrote on a
terms of the offer and yet be a binding napkin. However, Exhibit "C" contains numerous
acceptance as long as "it is clear that the provisions which, were not discussed at the
meaning of the acceptance is positively and Tamarind Grill, if Lopez testimony was to be
unequivocally to accept the offer, whether such believed nor could they have been physically
request is granted or not." This ruling was, written on a napkin. There was even doubt as to
however, reversed in the resolution of 29 March whether it was a paper napkin or a cloth napkin.
1996, 43 which ruled that the acceptance of all In short what were written in Exhibit "C'' were
offer must be unqualified and absolute, i.e., it not discussed, and therefore could not have
"must be identical in all respects with that of the been agreed upon, by the parties. How then
offer so as to produce consent or meeting of the could this court compel the parties to sign
minds." Exhibit "C" when the provisions thereof were not
previously agreed upon?
On the other hand, in Villonco, cited in Limketkai,
the alleged changes in the revised counter-offer SECOND, Mr. Lopez claimed that what was
were not material but merely clarificatory of agreed upon as the subject matter of the
what had previously been agreed upon. contract was 14 films. The complaint in fact
It cited the statement in Stuart v. Franklin Life prays for delivery of 14 films. But Exhibit "C"
Insurance Co. 44 that "a vendor's change in a mentions 53 films as its subject matter. Which is
phrase of the offer to purchase, which change which If Exhibits "C" reflected the true intent of
does not essentially change the terms of the the parties, then ABS-CBN's claim for 14 films in
offer, does not amount to a rejection of the offer its complaint is false or if what it alleged in the
and the tender of a counter-offer." 45However, complaint is true, then Exhibit "C" did not reflect
when any of the elements of the contract is what was agreed upon by the parties. This
modified upon acceptance, such alteration underscores the fact that there was no meeting
amounts to a counter-offer. of the minds as to the subject matter of the
contracts, so as to preclude perfection thereof.
In the case at bar, ABS-CBN made no unqualified For settled is the rule that there can be no
acceptance of VIVA's offer. Hence, they contract where there is no object which is its
underwent a period of bargaining. ABS-CBN then subject matter (Art. 1318, NCC).
formalized its counter-proposals or counter-offer
in a draft contract, VIVA through its Board of THIRD, Mr. Lopez [sic] answer to question 29 of
Directors, rejected such counter-offer, Even if it his affidavit testimony (Exh. "D") states:
be conceded arguendo that Del Rosario had We were able to reach an agreement. VIVA gave
accepted the counter-offer, the acceptance did us the exclusive license to show these fourteen
not bind VIVA, as there was no proof whatsoever (14) films, and we agreed to pay Viva the
that Del Rosario had the specific authority to do amount of P16,050,000.00 as well as grant Viva
so. commercial slots worth P19,950,000.00. We had
Under Corporation Code, 46 unless otherwise already earmarked this P16, 050,000.00.
provided by said Code, corporate powers, such which gives a total consideration of P36 million
as the power; to enter into contracts; are (P19,950,000.00 plus P16,050,000.00. equals
exercised by the Board of Directors. However, P36,000,000.00).
the Board may delegate such powers to either
an executive committee or officials or contracted On cross-examination Mr. Lopez testified:
managers. The delegation, except for the
Q. What was written in this napkin?
executive committee, must be for specific
purposes, 47 Delegation to officers makes the A. The total price, the breakdown the known Viva
latter agents of the corporation; accordingly, the movies, the 7 blockbuster movies and the other
general rules of agency as to the bindings effects 7 Viva movies because the price was broken
down accordingly. The none [sic] Viva and the it. The complaint, in fact, alleges that Mr. Del
seven other Viva movies and the sharing Rosario "is the Executive Producer of defendant
between the cash portion and the concerned Viva" which "is a corporation." (par. 2,
spot portion in the total amount of P35 million complaint). As a mere agent of Viva, Del Rosario
pesos. could not bind Viva unless what he did is ratified
by its Board of Directors. (Vicente vs. Geraldez,
Now, which is which? P36 million or P35 million? 52 SCRA 210; Arnold vs. Willets and Paterson, 44
This weakens ABS-CBN's claim. Phil. 634). As a mere agent, recognized as such
FOURTH. Mrs. Concio, testifying for ABS-CBN by plaintiff, Del Rosario could not be held liable
stated that she transmitted Exhibit "C" to Mr. Del jointly and severally with Viva and his inclusion
Rosario with a handwritten note, describing said as party defendant has no legal basis. (Salonga
Exhibit "C" as a "draft." (Exh. "5" - Viva; tsn pp. vs. Warner Barner [sic] , COLTA , 88 Phil. 125;
23-24 June 08, 1992). The said draft has a well Salmon vs. Tan, 36 Phil. 556).
defined meaning. The testimony of Mr. Lopez and the allegations in
Since Exhibit "C" is only a draft, or a tentative, the complaint are clear admissions that what
provisional or preparatory writing prepared for was supposed to have been agreed upon at the
discussion, the terms and conditions thereof Tamarind Grill between Mr. Lopez and Del
could not have been previously agreed upon by Rosario was not a binding agreement. It is as it
ABS-CBN and Viva Exhibit "C'' could not should be because corporate power to enter into
therefore legally bind Viva, not having agreed a contract is lodged in the Board of Directors.
thereto. In fact, Ms. Concio admitted that the (Sec. 23, Corporation Code). Without such board
terms and conditions embodied in Exhibit "C" approval by the Viva board, whatever agreement
were prepared by ABS-CBN's lawyers and there Lopez and Del Rosario arrived at could not ripen
was no discussion on said terms and conditions. . into a valid contract binding upon Viva (Yao Ka
.. Sin Trading vs. Court of Appeals, 209 SCRA 763).
The evidence adduced shows that the Board of
As the parties had not yet discussed the Directors of Viva rejected Exhibit "C" and insisted
proposed terms and conditions in Exhibit "C," that the film package for 140 films be
and there was no evidence whatsoever that Viva maintained (Exh. "7-1" - Viva ). 49
agreed to the terms and conditions thereof, said
document cannot be a binding contract. The fact The contention that ABS-CBN had yet to fully
that Viva refused to sign Exhibit "C" reveals only exercise its right of first refusal over twenty-four
two [sic] well that it did not agree on its terms films under the 1990 Film Exhibition Agreement
and conditions, and this court has no authority to and that the meeting between Lopez and Del
compel Viva to agree thereto. Rosario was a continuation of said previous
contract is untenable. As observed by the trial
FIFTH. Mr. Lopez understand [sic] that what he court, ABS-CBN right of first refusal had already
and Mr. Del Rosario agreed upon at the Tamarind been exercised when Ms. Concio wrote to VIVA
Grill was only provisional, in the sense that it was ticking off ten films, Thus:
subject to approval by the Board of Directors of
Viva. He testified: [T]he subsequent negotiation with ABS-CBN two
(2) months after this letter was sent, was for an
Q. Now, Mr. Witness, and after that Tamarind entirely different package. Ms. Concio herself
meeting ... the second meeting wherein you admitted on cross-examination to having used or
claimed that you have the meeting of the minds exercised the right of first refusal. She stated
between you and Mr. Vic del Rosario, what that the list was not acceptable and was indeed
happened? not accepted by ABS-CBN, (TSN, June 8, 1992,
pp. 8-10). Even Mr. Lopez himself admitted that
A. Vic Del Rosario was supposed to call us up and
the right of the first refusal may have been
tell us specifically the result of the discussion
already exercised by Ms. Concio (as she had).
with the Board of Directors.
(TSN, June 8, 1992, pp. 71-75). Del Rosario
Q. And you are referring to the so-called himself knew and understand [sic] that ABS-CBN
agreement which you wrote in [sic] a piece of has lost its rights of the first refusal when his list
paper? of 36 titles were rejected (Tsn, June 9, 1992, pp.
10-11) 50
A. Yes, sir.
II
Q. So, he was going to forward that to the board
of Directors for approval? However, we find for ABS-CBN on the issue of
damages. We shall first take up actual damages.
A. Yes, sir. (Tsn, pp. 42-43, June 8, 1992) Chapter 2, Title XVIII, Book IV of the Civil Code is
the specific law on actual or compensatory
Q. Did Mr. Del Rosario tell you that he will submit
damages. Except as provided by law or by
it to his Board for approval?
stipulation, one is entitled to compensation for
A. Yes, sir. (Tsn, p. 69, June 8, 1992). actual damages only for such pecuniary loss
suffered by him as he has duly proved. 51 The
The above testimony of Mr. Lopez shows beyond indemnification shall comprehend not only the
doubt that he knew Mr. Del Rosario had no value of the loss suffered, but also that of the
authority to bind Viva to a contract with ABS-CBN profits that the obligee failed to obtain. 52 In
until and unless its Board of Directors approved contracts and quasi-contracts the damages
which may be awarded are dependent on Neither could ABS-CBN be liable for the print
whether the obligor acted with good faith or advertisements for "Maging Sino Ka Man" for
otherwise, It case of good faith, the damages lack of sufficient legal basis. The RTC issued a
recoverable are those which are the natural and temporary restraining order and later, a writ of
probable consequences of the breach of the preliminary injunction on the basis of its
obligation and which the parties have foreseen determination that there existed sufficient
or could have reasonably foreseen at the time of ground for the issuance thereof. Notably, the RTC
the constitution of the obligation. If the obligor did not dissolve the injunction on the ground of
acted with fraud, bad faith, malice, or wanton lack of legal and factual basis, but because of
attitude, he shall be responsible for all damages the plea of RBS that it be allowed to put up a
which may be reasonably attributed to the non- counterbond.
performance of the obligation. 53 In crimes and
quasi-delicts, the defendant shall be liable for all As regards attorney's fees, the law is clear that
damages which are the natural and probable in the absence of stipulation, attorney's fees
consequences of the act or omission complained may be recovered as actual or compensatory
of, whether or not such damages has been damages under any of the circumstances
foreseen or could have reasonably been foreseen provided for in Article 2208 of the Civil Code. 58
by the defendant. 54 The general rule is that attorney's fees cannot be
Actual damages may likewise be recovered for recovered as part of damages because of the
loss or impairment of earning capacity in cases policy that no premium should be placed on the
of temporary or permanent personal injury, or right to litigate. 59 They are not to be awarded
for injury to the plaintiff's business standing or every time a party wins a suit. The power of the
commercial credit. 55 court to award attorney's fees under Article 2208
demands factual, legal, and equitable
The claim of RBS for actual damages did not justification. 60 Even when claimant is compelled
arise from contract, quasi-contract, delict, or to litigate with third persons or to incur expenses
quasi-delict. It arose from the fact of filing of the to protect his rights, still attorney's fees may not
complaint despite ABS-CBN's alleged knowledge be awarded where no sufficient showing of bad
of lack of cause of action. Thus paragraph 12 of faith could be reflected in a party's persistence
RBS's Answer with Counterclaim and Cross-claim in a case other than erroneous conviction of the
under the heading COUNTERCLAIM specifically righteousness of his cause. 61
alleges:
As to moral damages the law is Section 1,
12. ABS-CBN filed the complaint knowing fully Chapter 3, Title XVIII, Book IV of the Civil Code.
well that it has no cause of action RBS. As a Article 2217 thereof defines what are included in
result thereof, RBS suffered actual damages in moral damages, while Article 2219 enumerates
the amount of P6,621,195.32. 56 the cases where they may be recovered, Article
2220 provides that moral damages may be
Needless to state the award of actual damages recovered in breaches of contract where the
cannot be comprehended under the above law defendant acted fraudulently or in bad faith.
on actual damages. RBS could only probably RBS's claim for moral damages could possibly
take refuge under Articles 19, 20, and 21 of the fall only under item (10) of Article 2219, thereof
Civil Code, which read as follows: which reads:
Art. 19. Every person must, in the exercise of his (10) Acts and actions referred to in Articles 21,
rights and in the performance of his duties, act 26, 27, 28, 29, 30, 32, 34, and 35.
with justice, give everyone his due, and observe
honesty and good faith. Moral damages are in the category of an award
designed to compensate the claimant for actual
Art. 20. Every person who, contrary to law, injury suffered. and not to impose a penalty on
wilfully or negligently causes damage to another, the wrongdoer. 62 The award is not meant to
shall indemnify the latter for tile same. enrich the complainant at the expense of the
Art. 21. Any person who wilfully causes loss or defendant, but to enable the injured party to
injury to another in a manner that is contrary to obtain means, diversion, or amusements that
morals, good customs or public policy shall will serve to obviate then moral suffering he has
compensate the latter for the damage. undergone. It is aimed at the restoration, within
the limits of the possible, of the spiritual status
It may further be observed that in cases where a quo ante, and should be proportionate to the
writ of preliminary injunction is issued, the suffering inflicted. 63 Trial courts must then guard
damages which the defendant may suffer by against the award of exorbitant damages; they
reason of the writ are recoverable from the should exercise balanced restrained and
injunctive bond. 57 In this case, ABS-CBN had not measured objectivity to avoid suspicion that it
yet filed the required bond; as a matter of fact, it was due to passion, prejudice, or corruption on
asked for reduction of the bond and even went the part of the trial court. 64
to the Court of Appeals to challenge the order on
the matter, Clearly then, it was not necessary for The award of moral damages cannot be granted
RBS to file a counterbond. Hence, ABS-CBN in favor of a corporation because, being an
cannot be held responsible for the premium RBS artificial person and having existence only in
paid for the counterbond. legal contemplation, it has no feelings, no
emotions, no senses, It cannot, therefore,
experience physical suffering and mental No pronouncement as to costs
anguish, which call be experienced only by one SO ORDERED.
having a nervous system. 65 The statement
in People v. Manero 66 and Mambulao Lumber
Co. v. PNB 67 that a corporation may recover
moral damages if it "has a good reputation that
is debased, resulting in social humiliation" is
an obiter dictum. On this score alone the award
for damages must be set aside, since RBS is a
corporation.

The basic law on exemplary damages is Section

5, Chapter 3, Title XVIII, Book IV of the Civil
Code. These are imposed by way of example or
correction for the public good, in addition to
moral, temperate, liquidated or compensatory
damages. 68 They are recoverable in criminal
cases as part of the civil liability when the crime
was committed with one or more aggravating
circumstances; 69 in quasi-contracts, if the
defendant acted with gross negligence; 70 and in
contracts and quasi-contracts, if the defendant
acted in a wanton, fraudulent, reckless,
oppressive, or malevolent manner. 71

It may be reiterated that the claim of RBS

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

The elements of abuse of right under Article 19

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

Verily then, malice or bad faith is at the core of

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

There is no adequate proof that ABS-CBN was

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

WHEREFORE, the instant petition is GRANTED.

The challenged decision of the Court of Appeals
in CA-G.R. CV No, 44125 is hereby REVERSED
except as to unappealed award of attorney's fees
in favor of VIVA Productions, Inc.1wphi1.nt
FIRST DIVISION Third: Students are required to take and pay
for the subject even if the subject does not
G.R. No. 141994 January 17, 2005 have an instructor - such greed for money
FILIPINAS BROADCASTING NETWORK, on the part of AMECs administration. Take
INC., petitioner, the subject Anatomy: students would pay for the
vs. subject upon enrolment because it is offered by
AGO MEDICAL AND EDUCATIONAL CENTER- the school. However there would be no instructor
BICOL CHRISTIAN COLLEGE OF MEDICINE, for such subject. Students would be informed
(AMEC-BCCM) and ANGELITA F. that course would be moved to a later date
AGO, respondents. because the school is still searching for the
appropriate instructor.
DECISION
xxx
CARPIO, J.:
It is a public knowledge that the Ago Medical and
The Case Educational Center has survived and has been
surviving for the past few years since its
This petition for review1 assails the 4 January
inception because of funds support from foreign
1999 Decision2 and 26 January 2000 Resolution
foundations. If you will take a look at the AMEC
of the Court of Appeals in CA-G.R. CV No. 40151.
premises youll find out that the names of the
The Court of Appeals affirmed with modification
buildings there are foreign soundings. There is a
the 14 December 1992 Decision3 of the Regional
McDonald Hall. Why not Jose Rizal or Bonifacio
Trial Court of Legazpi City, Branch 10, in Civil
Hall? That is a very concrete and undeniable
Case No. 8236. The Court of Appeals held
evidence that the support of foreign foundations
Filipinas Broadcasting Network, Inc. and its
for AMEC is substantial, isnt it? With the report
broadcasters Hermogenes Alegre and Carmelo
which is the basis of the expose in DZRC today, it
Rima liable for libel and ordered them to
would be very easy for detractors and enemies
solidarily pay Ago Medical and Educational
of the Ago family to stop the flow of support of
Center-Bicol Christian College of Medicine moral
foreign foundations who assist the medical
damages, attorneys fees and costs of suit.
school on the basis of the latters purpose. But if
The Antecedents the purpose of the institution (AMEC) is to
deceive students at cross purpose with its
"Expos" is a radio documentary4 program reason for being it is possible for these foreign
hosted by Carmelo Mel Rima ("Rima") and foundations to lift or suspend their donations
Hermogenes Jun Alegre ("Alegre").5 Expos is temporarily.8
aired every morning over DZRC-AM which is
owned by Filipinas Broadcasting Network, Inc. xxx
("FBNI"). "Expos" is heard over Legazpi City, the
On the other hand, the administrators of
Albay municipalities and other Bicol areas.6
AMEC-BCCM, AMEC Science High School
In the morning of 14 and 15 December 1989, and the AMEC-Institute of Mass
Rima and Alegre exposed various alleged Communication in their effort to minimize
complaints from students, teachers and parents expenses in terms of salary are absorbing
against Ago Medical and Educational Center- or continues to accept "rejects". For example
Bicol Christian College of Medicine ("AMEC") and how many teachers in AMEC are former teachers
its administrators. Claiming that the broadcasts of Aquinas University but were removed because
were defamatory, AMEC and Angelita Ago of immorality? Does it mean that the present
("Ago"), as Dean of AMECs College of Medicine, administration of AMEC have the total definite
filed a complaint for damages7 against FBNI, moral foundation from catholic administrator of
Rima and Alegre on 27 February 1990. Quoted Aquinas University. I will prove to you my friends,
are portions of the allegedly libelous broadcasts: that AMEC is a dumping ground, garbage,
not merely of moral and physical misfits.
JUN ALEGRE: Probably they only qualify in terms of intellect.
The Dean of Student Affairs of AMEC is Justita
Let us begin with the less burdensome: if you
Lola, as the family name implies. She is too old
have children taking medical course at
to work, being an old woman. Is the AMEC
AMEC-BCCM, advise them to pass all
administration exploiting the very [e]nterprising
subjects because if they fail in any subject
or compromising and undemanding Lola? Could
they will repeat their year level, taking up
it be that AMEC is just patiently making use of
all subjects including those they have
Dean Justita Lola were if she is very old. As in
passed already. Several students had
atmospheric situation zero visibility the plane
approached me stating that they had consulted
cannot land, meaning she is very old, low pay
with the DECS which told them that there is no
follows. By the way, Dean Justita Lola is also the
such regulation. If [there] is no such regulation
chairman of the committee on scholarship in
why is AMEC doing the same?
AMEC. She had retired from Bicol University a
xxx long time ago but AMEC has patiently made use
of her.
Second: Earlier AMEC students in Physical
Therapy had complained that the course is xxx
not recognized by DECS. xxx
MEL RIMA:
xxx My friends based on the expose, AMEC is a Brodkaster sa Pilipinas ("KBP") accreditation test
dumping ground for moral and physically misfit and to secure a KBP permit.
people. What does this mean? Immoral and
physically misfits as teachers. On 14 December 1992, the trial court rendered a
Decision12 finding FBNI and Alegre liable for libel
May I say Im sorry to Dean Justita Lola. But this except Rima. The trial court held that the
is the truth. The truth is this, that your are no broadcasts are libelous per se. The trial court
longer fit to teach. You are too old. As an rejected the broadcasters claim that their
aviation, your case is zero visibility. Dont insist. utterances were the result of straight reporting
because it had no factual basis. The
xxx Why did AMEC still absorb her as a teacher, broadcasters did not even verify their reports
a dean, and chairman of the scholarship before airing them to show good faith. In holding
committee at that. The reason is practical cost FBNI liable for libel, the trial court found that
saving in salaries, because an old person is not FBNI failed to exercise diligence in the selection
fastidious, so long as she has money to buy the and supervision of its employees.
ingredient of beetle juice. The elderly can get by
thats why she (Lola) was taken in as Dean. In absolving Rima from the charge, the trial court
ruled that Rimas only participation was when he
xxx agreed with Alegres expos. The trial court
xxx On our end our task is to attend to the found Rimas statement within the "bounds of
interests of students. It is likely that the students freedom of speech, expression, and of the
would be influenced by evil. When they press." The dispositive portion of the decision
become members of society outside of reads:
campus will be liabilities rather than WHEREFORE, premises considered, this court
assets. What do you expect from a doctor who finds for the plaintiff. Considering the degree
while studying at AMEC is so much burdened of damages caused by the controversial
with unreasonable imposition? What do you utterances, which are not found by this
expect from a student who aside from peculiar court to be really very serious and
problems because not all students are rich in damaging, and there being no showing that
their struggle to improve their social status are indeed the enrollment of plaintiff school
even more burdened with false regulations. dropped, defendants Hermogenes "Jun" Alegre,
xxx9(Emphasis supplied) Jr. and Filipinas Broadcasting Network (owner of
The complaint further alleged that AMEC is a the radio station DZRC), are hereby jointly and
reputable learning institution. With the supposed severally ordered to pay plaintiff Ago Medical
exposs, FBNI, Rima and Alegre "transmitted and Educational Center-Bicol Christian College of
malicious imputations, and as such, destroyed Medicine (AMEC-BCCM) the amount
plaintiffs (AMEC and Ago) reputation." AMEC and of P300,000.00 moral damages, plus P30,000.00
Ago included FBNI as defendant for allegedly reimbursement of attorneys fees, and to pay the
failing to exercise due diligence in the selection costs of suit.
and supervision of its employees, particularly SO ORDERED. 13 (Emphasis supplied)
Rima and Alegre.
Both parties, namely, FBNI, Rima and Alegre, on
On 18 June 1990, FBNI, Rima and Alegre, through one hand, and AMEC and Ago, on the other,
Atty. Rozil Lozares, filed an Answer 10 alleging that appealed the decision to the Court of Appeals.
the broadcasts against AMEC were fair and true. The Court of Appeals affirmed the trial courts
FBNI, Rima and Alegre claimed that they were judgment with modification. The appellate court
plainly impelled by a sense of public duty to made Rima solidarily liable with FBNI and Alegre.
report the "goings-on in AMEC, [which is] an The appellate court denied Agos claim for
institution imbued with public interest." damages and attorneys fees because the
Thereafter, trial ensued. During the presentation broadcasts were directed against AMEC, and not
of the evidence for the defense, Atty. Edmundo against her. The dispositive portion of the Court
Cea, collaborating counsel of Atty. Lozares, filed of Appeals decision reads:
a Motion to Dismiss11 on FBNIs behalf. The trial WHEREFORE, the decision appealed from is
court denied the motion to dismiss. hereby AFFIRMED, subject to the modification
Consequently, FBNI filed a separate Answer that broadcaster Mel Rima is SOLIDARILY
claiming that it exercised due diligence in the ADJUDGED liable with FBN[I] and Hermo[g]enes
selection and supervision of Rima and Alegre. Alegre.
FBNI claimed that before hiring a broadcaster,
the broadcaster should (1) file an application; (2) SO ORDERED.14
be interviewed; and (3) undergo an
apprenticeship and training program after FBNI, Rima and Alegre filed a motion for
passing the interview. FBNI likewise claimed that reconsideration which the Court of Appeals
it always reminds its broadcasters to "observe denied in its 26 January 2000 Resolution.
truth, fairness and objectivity in their broadcasts Hence, FBNI filed this petition.15
and to refrain from using libelous and indecent
language." Moreover, FBNI requires all The Ruling of the Court of Appeals
broadcasters to pass the Kapisanan ng mga
The Court of Appeals upheld the trial courts
ruling that the questioned broadcasts are
libelous per se and that FBNI, Rima and Alegre civil action to recover civil liability arising from a
failed to overcome the legal presumption of criminal offense. On the other hand, Article
malice. The Court of Appeals found Rima and 3319 particularly provides that the injured party
Alegres claim that they were actuated by their may bring a separate civil action for damages in
moral and social duty to inform the public of thecases of defamation, fraud, and physical injuries.
students gripes as insufficient to justify the AMEC also invokes Article 1920 of the Civil Code
utterance of the defamatory remarks. to justify its claim for damages. AMEC cites
Articles 217621 and 218022 of the Civil Code to
Finding no factual basis for the imputations hold FBNI solidarily liable with Rima and Alegre.
against AMECs administrators, the Court of
Appeals ruled that the broadcasts were made I.
"with reckless disregard as to whether they were
true or false." The appellate court pointed out Whether the broadcasts are libelous
that FBNI, Rima and Alegre failed to present in A libel23 is a public and malicious imputation of a
court any of the students who allegedly crime, or of a vice or defect, real or imaginary, or
complained against AMEC. Rima and Alegre any act or omission, condition, status, or
merely gave a single name when asked to circumstance tending to cause the dishonor,
identify the students. According to the Court of discredit, or contempt of a natural or juridical
Appeals, these circumstances cast doubt on the person, or to blacken the memory of one who is
veracity of the broadcasters claim that they dead.24
were "impelled by their moral and social duty to
inform the public about the students gripes." There is no question that the broadcasts were
made public and imputed to AMEC defects or
The Court of Appeals found Rima also liable for circumstances tending to cause it dishonor,
libel since he remarked that "(1) AMEC-BCCM is a discredit and contempt. Rima and Alegres
dumping ground for morally and physically misfit remarks such as "greed for money on the part of
teachers; (2) AMEC obtained the services of AMECs administrators"; "AMEC is a dumping
Dean Justita Lola to minimize expenses on its ground, garbage of xxx moral and physical
employees salaries; and (3) AMEC burdened the misfits"; and AMEC students who graduate "will
students with unreasonable imposition and false be liabilities rather than assets" of the society
regulations."16 are libelous per se. Taken as a whole, the
The Court of Appeals held that FBNI failed to broadcasts suggest that AMEC is a money-
exercise due diligence in the selection and making institution where physically and morally
supervision of its employees for allowing Rima unfit teachers abound.
and Alegre to make the radio broadcasts without However, FBNI contends that the broadcasts are
the proper KBP accreditation. The Court of not malicious. FBNI claims that Rima and Alegre
Appeals denied Agos claim for damages and were plainly impelled by their civic duty to air
attorneys fees because the libelous remarks the students gripes. FBNI alleges that there is
were directed against AMEC, and not against her. no evidence that ill will or spite motivated Rima
The Court of Appeals adjudged FBNI, Rima and and Alegre in making the broadcasts. FBNI
Alegre solidarily liable to pay AMEC moral further points out that Rima and Alegre exerted
damages, attorneys fees and costs of efforts to obtain AMECs side and gave Ago the
suit.1awphi1.nt opportunity to defend AMEC and its
Issues administrators. FBNI concludes that since there
is no malice, there is no libel.
FBNI raises the following issues for resolution:
FBNIs contentions are untenable.
I. WHETHER THE BROADCASTS ARE LIBELOUS;
Every defamatory imputation is presumed
II. WHETHER AMEC IS ENTITLED TO MORAL malicious.25 Rima and Alegre failed to show
DAMAGES; adequately their good intention and justifiable
motive in airing the supposed gripes of the
III. WHETHER THE AWARD OF ATTORNEYS FEES students. As hosts of a documentary or public
IS PROPER; and affairs program, Rima and Alegre should have
IV. WHETHER FBNI IS SOLIDARILY LIABLE WITH presented the public issues "free
RIMA AND ALEGRE FOR PAYMENT OF MORAL from inaccurate and misleading
DAMAGES, ATTORNEYS FEES AND COSTS OF information." Hearing the students alleged
26

SUIT. complaints a month before the expos, 27 they

had sufficient time to verify their sources and
The Courts Ruling information. However, Rima and Alegre hardly
made a thorough investigation of the students
We deny the petition.
alleged gripes. Neither did they inquire about nor
This is a civil action for damages as a result of confirm the purported irregularities in AMEC from
the allegedly defamatory remarks of Rima and the Department of Education, Culture and
Alegre against AMEC.17 While AMEC did not point Sports. Alegre testified that he merely went to
out clearly the legal basis for its complaint, a AMEC to verify his report from an alleged AMEC
reading of the complaint reveals that AMECs official who refused to disclose any information.
cause of action is based on Articles 30 and 33 of Alegre simply relied on the words of the students
the Civil Code. Article 3018 authorizes a separate "because they were many and not because there
is proof that what they are saying is true." 28 This are not based on established facts. The record
plainly shows Rima and Alegres reckless supports the following findings of the trial court:
disregard of whether their report was true or not.
xxx Although defendants claim that they were
Contrary to FBNIs claim, the broadcasts were motivated by consistent reports of students and
not "the result of straight reporting." parents against plaintiff, yet, defendants have
Significantly, some courts in the United States not presented in court, nor even gave name of a
apply the privilege of "neutral reportage" in libel single student who made the complaint to them,
cases involving matters of public interest or much less present written complaint or petition
public figures. Under this privilege, a republisher to that effect. To accept this defense of
who accurately and disinterestedly reports defendants is too dangerous because it could
certain defamatory statements made against easily give license to the media to malign people
public figures is shielded from liability, and establishments based on flimsy excuses that
regardless of the republishers subjective there were reports to them although they could
awareness of the truth or falsity of the not satisfactorily establish it. Such laxity would
accusation.29 Rima and Alegre cannot invoke the encourage careless and irresponsible
privilege of neutral reportage because broadcasting which is inimical to public interests.
unfounded comments abound in the broadcasts.
Moreover, there is no existing controversy Secondly, there is reason to believe that
involving AMEC when the broadcasts were made. defendant radio broadcasters, contrary to the
The privilege of neutral reportage applies where mandates of their duties, did not verify and
the defamed person is a public figure who is analyze the truth of the reports before they aired
involved in an existing controversy, and a party it, in order to prove that they are in good faith.
to that controversy makes the defamatory Alegre contended that plaintiff school had no
statement.30 permit and is not accredited to offer Physical
However, FBNI argues vigorously that malice in Therapy courses. Yet, plaintiff produced a
law does not apply to this case. Citing Borjal v. certificate coming from DECS that as of Sept. 22,
Court of Appeals,31 FBNI contends that the 1987 or more than 2 years before the
broadcasts "fall within the coverage of controversial broadcast, accreditation to offer
qualifiedly privileged communications" for being Physical Therapy course had already been given
commentaries on matters of public interest. the plaintiff, which certificate is signed by no less
Such being the case, AMEC should prove malice than the Secretary of Education and Culture
in fact or actual malice. Since AMEC allegedly herself, Lourdes R. Quisumbing (Exh. C-rebuttal).
failed to prove actual malice, there is no libel. Defendants could have easily known this were
they careful enough to verify. And yet,
FBNIs reliance on Borjal is misplaced. In Borjal, defendants were very categorical and sounded
the Court elucidated on the "doctrine of fair too positive when they made the erroneous
comment," thus: report that plaintiff had no permit to offer
Physical Therapy courses which they were
[F]air commentaries on matters of public interest offering.
are privileged and constitute a valid defense in
an action for libel or slander. The doctrine of fair The allegation that plaintiff was getting
comment means that while in general every tremendous aids from foreign foundations like
discreditable imputation publicly made is Mcdonald Foundation prove not to be true also.
deemed false, because every man is presumed The truth is there is no Mcdonald Foundation
innocent until his guilt is judicially proved, and existing. Although a big building of plaintiff
every false imputation is deemed malicious, school was given the name Mcdonald building,
nevertheless, when the discreditable imputation that was only in order to honor the first
is directed against a public person in his public missionary in Bicol of plaintiffs religion, as
capacity, it is not necessarily actionable. In explained by Dr. Lita Ago. Contrary to the claim
order that such discreditable imputation to of defendants over the air, not a single centavo
a public official may be actionable, it must appears to be received by plaintiff school from
either be a false allegation of fact or a the aforementioned McDonald Foundation which
comment based on a false supposition. If does not exist.
the comment is an expression of opinion,
based on established facts, then it is Defendants did not even also bother to prove
immaterial that the opinion happens to be their claim, though denied by Dra. Ago, that
mistaken, as long as it might reasonably be when medical students fail in one subject, they
inferred from the facts.32(Emphasis supplied) are made to repeat all the other subject[s], even
those they have already passed, nor their claim
True, AMEC is a private learning institution whose that the school charges laboratory fees even if
business of educating students is "genuinely there are no laboratories in the school. No
imbued with public interest." The welfare of the evidence was presented to prove the bases for
youth in general and AMECs students in these claims, at least in order to give semblance
particular is a matter which the public has the of good faith.
right to know. Thus, similar to the newspaper
articles in Borjal, the subject broadcasts dealt As for the allegation that plaintiff is the dumping
with matters of public interest. However, unlike ground for misfits, and immoral teachers,
in Borjal, the questioned broadcasts defendant[s] singled out Dean Justita Lola who is
said to be so old, with zero visibility already.
Dean Lola testified in court last Jan. 21, 1991, The public has a right to expect and demand
and was found to be 75 years old. xxx Even older that radio broadcast practitioners live up to the
people prove to be effective teachers like code of conduct of their profession, just like
Supreme Court Justices who are still very much other professionals. A professional code of
in demand as law professors in their late years. conduct provides the standards for determining
Counsel for defendants is past 75 but is found by whether a person has acted justly, honestly and
this court to be still very sharp and with good faith in the exercise of his rights and
effective.l^vvphi1.net So is plaintiffs counsel. performance of his duties as required by Article
1937 of the Civil Code. A professional code of
Dr. Lola was observed by this court not to be conduct also provides the standards for
physically decrepit yet, nor mentally infirmed, determining whether a person who willfully
but is still alert and docile. causes loss or injury to another has acted in a
The contention that plaintiffs graduates become manner contrary to morals or good customs
liabilities rather than assets of our society is a under Article 2138 of the Civil Code.
mere conclusion. Being from the place himself, II.
this court is aware that majority of the medical
graduates of plaintiffs pass the board Whether AMEC is entitled to moral damages
examination easily and become prosperous and
responsible professionals.33 FBNI contends that AMEC is not entitled to moral
damages because it is a corporation.39
Had the comments been an expression of
opinion based on established facts, it is A juridical person is generally not entitled to
immaterial that the opinion happens to be moral damages because, unlike a natural person,
mistaken, as long as it might reasonably be it cannot experience physical suffering or such
inferred from the facts.34 However, the sentiments as wounded feelings, serious anxiety,
comments of Rima and Alegre were not backed mental anguish or moral shock. 40
The Court of
up by facts. Therefore, the broadcasts are not Appeals cites Mambulao Lumber Co. v. PNB,
privileged and remain libelous per se. et al.41 to justify the award of moral damages.
However, the Courts statement
The broadcasts also violate the Radio Code 35 of in Mambulao that "a corporation may have a
the Kapisanan ng mga Brodkaster sa Pilipinas, good reputation which, if besmirched, may also
Ink. ("Radio Code"). Item I(B) of the Radio Code be a ground for the award of moral damages" is
provides: an obiter dictum.42

B. PUBLIC AFFAIRS, PUBLIC ISSUES AND Nevertheless, AMECs claim for moral damages
COMMENTARIES falls under item 7 of Article 2219 43 of the Civil
Code. This provision expressly authorizes the
1. x x x recovery of moral damages in cases of libel,
4. Public affairs program shall present slander or any other form of defamation. Article
public issues free from personal bias, 2219(7) does not qualify whether the plaintiff is
prejudice and inaccurate and misleading a natural or juridical person. Therefore, a
information. x x x Furthermore, the station juridical person such as a corporation can validly
shall strive to present balanced discussion of complain for libel or any other form of
issues. x x x. defamation and claim for moral damages. 44

xxx Moreover, where the broadcast is libelous per se,

the law implies damages.45 In such a case,
7. The station shall be responsible at all times in evidence of an honest mistake or the want of
the supervision of public affairs, public issues character or reputation of the party libeled goes
and commentary programs so that they conform only in mitigation of damages.46Neither in such a
to the provisions and standards of this code. case is the plaintiff required to introduce
evidence of actual damages as a condition
8. It shall be the responsibility of the newscaster,
precedent to the recovery of some damages.47 In
commentator, host and announcer to protect
this case, the broadcasts are libelous per se.
public interest, general welfare and good order
Thus, AMEC is entitled to moral damages.
in the presentation of public affairs and public
issues.36 (Emphasis supplied) However, we find the award of P300,000 moral
damages unreasonable. The record shows that
The broadcasts fail to meet the standards
even though the broadcasts were libelous per se,
prescribed in the Radio Code, which lays down
AMEC has not suffered any substantial or
the code of ethical conduct governing
material damage to its reputation. Therefore, we
practitioners in the radio broadcast industry. The
reduce the award of moral damages
Radio Code is a voluntary code of conduct
from P300,000 to P150,000.
imposed by the radio broadcast industry on its
own members. The Radio Code is a public III.
warranty by the radio broadcast industry that
radio broadcast practitioners are subject to a Whether the award of attorneys fees is proper
code by which their conduct are measured for FBNI contends that since AMEC is not entitled to
lapses, liability and sanctions. moral damages, there is no basis for the award
of attorneys fees. FBNI adds that the instant
case does not fall under the enumeration in The basis of the present action is a tort. Joint tort
Article 220848 of the Civil Code. feasors are jointly and severally liable for the tort
which they commit.52 Joint tort feasors are all the
The award of attorneys fees is not proper persons who command, instigate, promote,
because AMEC failed to justify satisfactorily its encourage, advise, countenance, cooperate in,
claim for attorneys fees. AMEC did not adduce aid or abet the commission of a tort, or who
evidence to warrant the award of attorneys fees. approve of it after it is done, if done for their
Moreover, both the trial and appellate courts benefit.53 Thus, AMEC correctly anchored its
failed to explicitly state in their respective cause of action against FBNI on Articles 2176
decisions the rationale for the award of and 2180 of the Civil Code.1a\^/phi1.net
attorneys fees.49 In Inter-Asia Investment
Industries, Inc. v. Court of Appeals ,50 we As operator of DZRC-AM and employer of Rima
held that: and Alegre, FBNI is solidarily liable to pay for
damages arising from the libelous broadcasts. As
[I]t is an accepted doctrine that the award stated by the Court of Appeals, "recovery for
thereof as an item of damages is the exception defamatory statements published by radio or
rather than the rule, and counsels fees are not television may be had from the owner of the
to be awarded every time a party wins a station, a licensee, the operator of the
suit. The power of the court to award station, or a person who procures, or
attorneys fees under Article 2208 of the participates in, the making of the defamatory
Civil Code demands factual, legal and statements."54 An employer and employee are
equitable justification, without which the solidarily liable for a defamatory statement by
award is a conclusion without a premise, the employee within the course and scope of his
its basis being improperly left to or her employment, at least when the employer
speculation and conjecture. In all events, the authorizes or ratifies the defamation.55 In this
court must explicitly state in the text of the case, Rima and Alegre were clearly performing
decision, and not only in the decretal portion their official duties as hosts of FBNIs radio
thereof, the legal reason for the award of program Expos when they aired the broadcasts.
attorneys fees.51 (Emphasis supplied) FBNI neither alleged nor proved that Rima and
While it mentioned about the award of attorneys Alegre went beyond the scope of their work at
fees by stating that it "lies within the discretion that time. There was likewise no showing that
of the court and depends upon the FBNI did not authorize and ratify the defamatory
circumstances of each case," the Court of broadcasts.
Appeals failed to point out any circumstance to Moreover, there is insufficient evidence on
justify the award. record that FBNI exercised due diligence in
IV. the selection and supervision of its
employees, particularly Rima and Alegre. FBNI
Whether FBNI is solidarily liable with Rima and merely showed that it exercised diligence in
Alegre for moral damages, attorneys fees and the selection of its broadcasters without
costs of suit introducing any evidence to prove that it
observed the same diligence in
FBNI contends that it is not solidarily liable with
the supervision of Rima and Alegre. FBNI did
Rima and Alegre for the payment of damages
not show how it exercised diligence in
and attorneys fees because it exercised due
supervising its broadcasters. FBNIs alleged
diligence in the selection and supervision of its
constant reminder to its broadcasters to
employees, particularly Rima and Alegre. FBNI
"observe truth, fairness and objectivity and to
maintains that its broadcasters, including Rima
refrain from using libelous and indecent
and Alegre, undergo a "very regimented
language" is not enough to prove due diligence
process" before they are allowed to go on air.
in the supervision of its broadcasters. Adequate
"Those who apply for broadcaster are subjected
training of the broadcasters on the industrys
to interviews, examinations and an
code of conduct, sufficient information on libel
apprenticeship program."
laws, and continuous evaluation of the
FBNI further argues that Alegres age and lack of broadcasters performance are but a few of the
training are irrelevant to his competence as a many ways of showing diligence in the
broadcaster. FBNI points out that the "minor supervision of broadcasters.
deficiencies in the KBP accreditation of Rima and
FBNI claims that it "has taken all the precaution
Alegre do not in any way prove that FBNI did not
in the selection of Rima and Alegre as
exercise the diligence of a good father of a
broadcasters, bearing in mind their
family in selecting and supervising them."
qualifications." However, no clear and convincing
Rimas accreditation lapsed due to his non-
evidence shows that Rima and Alegre underwent
payment of the KBP annual fees while Alegres
FBNIs "regimented process" of application.
accreditation card was delayed allegedly for
Furthermore, FBNI admits that Rima and Alegre
reasons attributable to the KBP Manila Office.
had deficiencies in their KBP
FBNI claims that membership in the KBP is
accreditation,56 which is one of FBNIs
merely voluntary and not required by any law or
requirements before it hires a broadcaster.
government regulation.
Significantly, membership in the KBP, while
FBNIs arguments do not persuade us. voluntary, indicates the broadcasters strong
commitment to observe the broadcast industrys
rules and regulations. Clearly, these
circumstances show FBNIs lack of diligence in
selecting and supervising Rima and Alegre.
Hence, FBNI is solidarily liable to pay damages
together with Rima and Alegre.

WHEREFORE, we DENY the instant petition. We

AFFIRM the Decision of 4 January 1999 and
Resolution of 26 January 2000 of the Court of
Appeals in CA-G.R. CV No. 40151 with the
MODIFICATION that the award of moral damages
is reduced from P300,000 to P150,000 and the
award of attorneys fees is deleted. Costs against
petitioner.

SO ORDERED.

Davide, Jr., C.J., (Chairman), Quisumbing, Ynares-

Santiago, and Azcuna, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 148246 February 16, 2007

REPUBLIC OF THE PHILIPPINES, Petitioner,

vs.
JUAN C. TUVERA, VICTOR P. TUVERA and
TWIN PEAKS DEVELOPMENT stock of Twin Peaks on the ground that all the
CORPORATION, Respondents. assets of the corporation are ill-gotten wealth for
having been acquired directly or indirectly
DECISION through fraudulent and illegal means. 4 This was
TINGA, J.: followed

The long-term campaign for the recovery of ill- two days later by Mission Order No. MER-88
gotten wealth of former President Ferdinand E. (Mission Order), also issued by the PCGG,
Marcos, his wife Imelda, and their associates, implementing the aforementioned Writ of
has been met with many impediments, some of Sequestration.5
which are featured in this case, that have led to On 9 December 1988, the PCGG, in behalf of the
doubts whether there is still promise in that Republic, filed the Complaint now subject of this
enterprise. Yet even as the prosecution of those Petition.6Impleaded as defendants in the
cases have drudged on and on, the era of their Complaint7 were Juan and Victor Tuvera, as well
final reckoning is just beginning before this as the then-exiled President Marcos. Through the
Court. The heavy hammer of the law is just Complaint, the Republic sought to recover funds
starting to fall. allegedly acquired by said parties in flagrant
The instant action originated from a civil breach of trust and fiduciary obligations with
complaint for restitution and damages filed by grave abuse of right and power in violation of
the Republic of the Philippines against Marcos the Constitution and the laws of the Republic of
and his longtime aide Juan Tuvera, as well as the Philippines.8
Tuvera's son Victor and a corporation the In particular, the Complaint alleged that Juan
younger Tuvera had controlled. Trial on the case Tuvera, as Presidential Executive Assistant of
against the Tuveras proceeded separately before President Marcos, took advantage of his
the Sandiganbayan. After the Republic had relationship to influence upon and connection
presented its evidence, the Tuveras successfully with the President by engaging in a scheme to
moved for the dismissal of the case on demurrer unjustly enrich himself at the expense of the
to evidence. The demurrer was sustained, and it Republic and of the Filipino people. This was
falls upon this Court to ascertain the absence or allegedly accomplished on his part by securing
existence of sufficient proof to support the relief TLA No. 356 on behalf of Twin Peaks despite
sought by the Republic against the Tuveras. existing laws expressly prohibiting the
I. exportation of mahogany of the narra
We begin with the facts. species9 and Twin Peaks lack of qualification to
be a grantee thereof for lack of sufficient logging
Twin Peaks Development Corporation (Twin equipment to engage in the logging
Peaks) was organized on 5 March 1984 as a business.10 The Complaint further alleged that
corporation with a principal purpose of engaging Twin Peaks exploited the countrys natural
in the real estate business. There were five resources by engaging in large-scale logging and
incorporating stockholders, including respondent the export of its produce through its Chinese
Victor Tuvera (Victor)1 who owned 48% of the operators whereby respondents obtained a
shares of the fledgling corporation. Victor was revenue of approximately P45 million.
the son of respondent Juan Tuvera, who was then
Presidential Executive Assistant of President The Complaint prayed that (1) TLA No. 356 be
Marcos. reverted to the State or cancelled; (2)
respondents be jointly and severally ordered to
Acting on a letter dated 31 May 1984 of Twin pay P48 million11 as actual damages; and (3)
Peaks Vice-President and Treasurer Evelyn respondents pay moral, temperate and
Fontanilla in behalf of the corporation, President exemplary damages, litigation expenses, and
Marcos granted the award of a Timber License treble judicial costs.12 It cited as grounds for
Agreement (TLA), more specifically TLA No. 356, relief, gross abuse of official position and
in favor of Twin Peaks to operate on 26,000 authority, breach of public trust and fiduciary
hectares of forest land with an annual allowable obligations, brazen abuse of right and power,
cut of 60,000 cubic meters of timber and to unjust enrichment, and violation of the
export 10,000 cubic meters of mahogany of the Constitution.13
narra species.2 As a result, Twin Peaks was able
to engage in logging operations. In their Answer,14 respondents Victor Tuvera and
Twin Peaks claimed that Twin Peaks was awarded
On 25 February 1986, President Marcos was TLA No. 356 only after its articles of
ousted, and Corazon C. Aquino assumed the incorporation had been amended enabling it to
presidency. Among her first acts as President engage in logging operations,15 that the
was to establish the Philippine Commission on Republics reference to Chinese operations and
Good Government (PCGG), tasked with tracking revenue of approximately P45 million were
down the ill-gotten wealth procured by Marcos, merely
his family, and associates during his 20-year
rule. Among the powers granted to the PCGG imagined, and that the PCGG has17no statutory
16

was the power to issue writs of authority to institute the action. By way of
sequestration. On 13 June 1988, the PCGG counterclaim, respondents asked that the
3

issued a Writ of Sequestration on all assets, Republic be ordered to pay Victor Tuvera moral
properties, records, documents, and shares of damages and to pay both Victor Tuvera and Twin
Peaks exemplary damages, and to reimburse November 1993, which presented the issues for
their attorneys fees.18 litigation as follows:

Anent the allegation that Twin Peaks sold
about P3 million worth of lumber despite the Writ
of Sequestration issued by the PCGG,
respondents stressed that the Director of Forest
Development acted within the scope of his
authority and the courts have no supervising
power over the actions of the Director of Forest
Development and the Secretary of the
Department of Environment and Natural
Resources (DENR) in the performance of their
official duties.19
As an affirmative and special defense,
respondents Victor Tuvera and Twin Peaks
alleged that after Twin Peaks was granted TLA
No. 356 in 24 August 1984, Felipe Ysmael, Jr. and
Co., Inc. had filed a motion for the cancellation of
the same with the DENR
Whether or not defendant Juan C. Tuvera who
was a Presidential Executive Assistant at the
time material to this case, by himself and in
concert with his co-defendants Ferdinand E.
Marcos and Victor Tuvera, took advantage of his
relation and connection with the late Marcos,
secure (sic) a timber concession for Twin Peaks
Development Corporation and, engage (sic) in a
scheme to unjustly enrich himself at the expense
of the Republic and the Filipino People.29
The Pre-Trial Order also indicated that the
Republic admitted the exhibits by respondents,
subject to the presentation of certified true
copies thereof. Respondents exhibits were as
follows:30

Secretary. When respondents submitted their

Answer, the denial by the DENR of the Ysmael
motion was under review before the Court.20

Juan Tuvera, who was abroad when the case was

filed on 9 December 1988, later submitted his
own Answer on 6 December 1989.21 He also
denied the allegations of the Republic and
alleged that as Presidential Executive Assistant
of then President Marcos, he acted within the
confines of his duties and had perpetrated no
unlawful acts. He merely transmitted
communications of approval in the course of his
duties and had nothing to do with the decisions
of then President Marcos.22 He denied having
anything to do with Twin Peaks.

Juan Tuvera filed a compulsory counterclaim on

the ground that the instant action had
besmirched his reputation and caused serious
anxiety and mental anguish thus entitling him to
moral and exemplary damages and litigation
expenses.23 The Republic presented three (3) witnesses
during the trial. The first witness was Joveniana
On 3 May 1989, respondents filed an Omnibus M. Galicia, Chief of the National Forest
Motion to Nullify Writ of Sequestration and/or the Management Division of the Forest Management
Mission Order.24The Sandiganbayan issued a Bureau. She identified TLA No. 356 of Twin Peaks
Temporary Restraining Order against the PCGG dated 20 August 1984 and a Memorandum dated
requiring it to cease, refrain and desist from 18 July 1984. She testified that TLA No. 356
further implementing the Writ of Sequestration covers 26,000 hectares of forest land located in
and the Mission Order.25 Subsequently, on the Municipality of Isabela, Province of
motion of respondents, the Sandiganbayan Quirino.31 The Memorandum dated 18 July 1984
granted a Writ of Preliminary Injunction covering addressed to Director Edmundo Cortez recited
the Mission Order. The Sandiganbayan deferred then President Marcos grant of the timber
its resolution on the Motion to Lift the Writ of concession to Twin Peaks. Identified and marked
Sequestration.26 in the same memorandum were the name and
signature of Juan Tuvera.32 Upon cross-
From 1988 to 1993, the proceedings before the
examination, Galicia stated that she was not yet
Sandiganbayan were delayed owing to the
the chief of the Division when the documents
difficulty of acquiring jurisdiction over the person
she identified were submitted to the Bureau. She
of President Marcos, who was by then already in
further stated it was her first time to see the
exile. Thus, upon motion by respondents, the
aforementioned documents when she was asked
Sandiganbayan granted them a separate pre-
to bring the same before the trial court.33
trial/trial from President Marcos. 27

The next witness was Fortunato S. Arcangel,

Respondents submitted their documentary
Regional Technical Director III of the DENR. He
evidence in the Pre-Trial Conference while the
testified that he is a Technical Director under the
Republic reserved to present the same during
Forest Management Services of the DENR. 34 He
trial. After the pre-trial conference, the
identified Forestry Administration Order (FAO)
Sandiganbayan issued a Pre-Trial Order28 dated 3
No. 11 dated 1 September 1970. He said he was With leave of court, respondents filed a
aware of TLA No. 356 of Twin Peaks 35 because at Demurrer to Evidence. Respondents argued that
the time it was issued, he was the chief of the the Republic failed to present sufficient legal
Forestry Second Division and his duties included affirmative evidence to prove its claim. In
the evaluation and processing of applications for particular, respondents demurrer contends that
licenses and permits for the disposition and the memorandum (Exh. B) and TLA No. 356 are
distribution of timber and other forest not "legal evidence" because "legal evidence" is
products.36 Consequently, not meant to raise a mere suspicion or doubt.
Respondents also claim that income tax returns
he was aware of the process by which TLA No. are not sufficient to show ones holding in a
356 was issued to Twin Peaks.37 According to corporation. Respondents also cited the factual
him, they processed the application insofar as antecedents culminating with the Courts
they evaluated the location of the area decision in Felipe Ysmael, Jr. & Corp., Inc. v. Sec.
concerned and its present vegetative state, of Environment and Natural Resources.49
examined the records, and determined the
annual allowable land. After the examination, the The Republic filed a Manifestation, contending
license agreement was prepared and submitted that the demurrer is not based on the
for approval.38 He continued that under FAO No. insufficiency of its evidence but on the strength
11, a public bidding is required before any of the evidence of respondents as shown by their
license agreement or permit for the utilization of own exhibits. The Republic claimed that the
timber within the forestry land is issued39 but no Revised Forestry Code of the Philippines does not
public bidding was conducted for TLA No. dispense with the requirement of public bidding.
356.40 He explained that no such bidding was The Republic added that Sec. 5 of said law
conducted because of a Presidential Instruction clearly provides that all applications for a timber
not to accept any application for timber licensing license agreement must be filed before the
as a consequence of which bidding procedures Bureau of Forest Development and that
were stopped.41 Upon cross-examination, respondents still have to prove compliance with
Arcangel said that at the time TLA No. 356 was the requirements for service contracts.50
issued, the Revised Forestry Code of the
Philippines42 was already in effect but there were Respondents opposed the Manifestation,
still provisions in FAO No. 11 that remained maintaining that since the Republic admitted the
applicable such as the terms and conditions of exhibits of respondents during the pre-trial, it is
granting a license. He also stated that the bound by its own admission. Further, these same
issuance of the license to Twin Peaks emanated exhibits contain uncontroverted facts and laws
from the President of the Philippines.43 that only magnify the conclusion that the
Republic has no right to relief.51
The Republics third and last witness was Teresita
M. Zuiga, employee of the Bureau of Internal In its Resolution dated 23 May 2001,52 the
Revenue. She identified the 1986 Income Tax Sandiganbayan sustained the demurrer to
Returns of Victor P. Tuvera, Evelyn Fontanilla andevidence and referred to the decision of this
Feliciano O. Salvana, stockholders of Twin Court in Ysmael in holding that res judicata
Peaks.44 applies. The Anti-Graft Court also did not give
credence to the Republics allegations
On 24 June 1994, the Republic rested its case concerning respondents abuse of power and/or
after its formal offer of evidence, as follows:45 public trust and consequent liability for damages
in view of its failure to establish any violation of
Arts. 19, 20 and 21 of the Civil Code.

In essence, the Sandiganbayan held that the

validity of TLA No. 356 was already fully
adjudicated in a Resolution/Order issued by the
Office of the President on 14 August 1987, which
had become final and executory with the failure
of the aggrieved party to seek a review thereof.
The Sandiganbayan continued that the above
pronouncement is supported by this Court in
Ysmael. Consequently, the Sandiganbayan
concluded, the Republic is barred from
questioning the validity of TLA No. 356 in
consonance with the principle of res judicata.

The Republic now questions the correctness of

the Sandiganbayans decision to grant the
demurrer to evidence because it was not based
solely on the insufficiency of its evidence but
also on the evidence of respondent mentioned
during the pre-trial conference. The Republic also
challenges the applicability of res judicata.
Respondents subsequently submitted certified II.
true copies of the exhibits they had presented
during the pre-trial conference.48
Preliminarily, we observe that respondents had trial, a motion to dismiss under Rule 33 is in the
filed before the Sandiganbayan a pleading nature of a demurrer to evidence on the ground
captioned Motion to Dismiss or Demurrer to of insufficiency of evidence and is presented only
Evidence, thus evincing that they were seeking after the plaintiff has rested his
the alternative reliefs of either a motion to case.56 [Emphasis supplied]
dismiss or a demurrer to evidence. However, the III.
Sandiganbayan, in resolving this motion, referred
to it as Motion to Dismiss on Demurrer to We shall first discuss the question of whether or
Evidence, a pleading of markedly different not a demurrer to evidence may be granted
character from a Motion to Dismiss or Demurrer based on the evidence presented by the
to Evidence. Still, a close reading of the opposing parties.
Sandiganbayan Resolution reveals clearly that An examination of the Sandiganbayans
the Sandiganbayan was treating the motion as a Resolution shows that dismissal of the case on
demurrer, following Rule 33, Section 1 of the demurrer to evidence was principally anchored
Rules of Court, rather than a motion to dismiss on the Republics failure to show its right to relief
under Rule 16, Section 1. because of the existence of a prior judgment
This notwithstanding, the Sandiganbayan which consequently barred the relitigation of the
justified the grant of demurrer with res judicata same issue. In other words, the Sandiganbayan
as rationale. Res judicata is an inappropriate did
ground for sustaining a demurrer to evidence, not dismiss the case on the insufficiency of the
even as it stands as a proper ground for a Republics evidence nor on the strength of
motion to dismiss. A demurrer may be granted if, respondents evidence. Rather, it based its
after the presentation of plaintiffs evidence, it dismissal on the existence of the Ysmael case
appears upon the facts and the law that the which, according to it, would render the case
plaintiff has shown no right to relief. In contrast, barred by res judicata.
the grounds for res judicata present themselves
even before the presentation of evidence, and it Prescinding from this procedural miscue, was the
should be at that stage that the defense of res Sandiganbayan correct in applying res judicata
judicata should be invoked as a ground for to the case at bar? To determine whether or not
dismissal. Properly speaking, the movants for res judicata indeed applies in the instant case, a
demurral who wish to rely on a controlling value review of Ysmael is proper.
of a settled case as a ground for demurrer
In brief, Felipe Ysmael, Jr. & Co., Inc. was a
should invoke the ground of stare decisis in lieu
grantee of a timber license agreement, TLA No.
of res judicata.
87. Sometime in August 1983, the Bureau of
In Domondon v. Lopez, we distinguished a Forest Development cancelled TLA No. 87
53

motion to dismiss for failure of the complainant despite the companys letter for the
to state a cause of action from a motion to reconsideration of the revocation. Barely one
dismiss based on lack of cause of action. The year thereafter, one-half (or 26,000 hectares) of
first is governed by Rule 16, Section 1(g),54while the area formerly covered by TLA No. 87 was re-
the second by Rule 3355 of the Rules of Court, to awarded to Twin Peaks under TLA No. 356.
wit:
In 1986, Felipe Ysmael, Jr. & Co., Inc. sent
x x x The first [situation where the complaint separate letters to the Office of the President
does not alleged cause of action] is raised in a and the Ministry of Natural Resources primarily
motion to dismiss under Rule 16 before a seeking the reinstatement of TLA No. 87 and the
responsive pleading is filed and can be revocation of TLA No. 356. Both offices denied
determined only from the allegations in the the relief prayed for. Consequently, Felipe
initiatory pleading and not from evidentiary or Ysmael, Jr. & Co., Inc. filed a petition for review
other matter aliunde. The second [situation before this Court.
where the evidence does not sustain the cause
The Court, through the late Justice Irene Cortes,
of
held that Ysmaels letters to the Office of the
action alleged] is raised in a demurrer to President and to the Ministry of Natural
evidence under Rule 33 after the plaintiff has Resources in 1986 sought the reconsideration of
rested his case and can be resolved only on the a memorandum order by the Bureau of Forest
basis of the evidence he has presented in Development canceling their timber license
support of his claim. The first does not concern agreement in 1983 and the revocation of TLA No.
itself with the truth and falsity of the allegations 356 subsequently issued by the Bureau in 1984.
while the second arises precisely because the Ysmael did not attack the administrative actions
judge has determined the truth and falsity of the until after 1986. Since the decision of the Bureau
allegations and has found the evidence wanting. has become final, it has the force and effect of a
final judgment within the purview of the doctrine
Hence, a motion to dismiss based on lack of of res judicata. These decisions and orders,
cause of action is filed by the defendant after the therefore, are conclusive upon the rights of the
plaintiff has presented his evidence on the affected parties as though the same had been
ground that the latter has shown no right to the rendered by a court of general jurisdiction. The
relief sought. While a motion to dismiss under Court also denied the petition of Ysmael because
Rule 16 is based on preliminary objections which it failed to file the special civil action for
can be ventilated before the beginning of the
certiorari under Rule 65 within a reasonable Republics cause of action lies in the alleged
time, as well as in due regard for public policy abuse of
considerations and the principle of non-
interference by the courts in matters which are power on respondents part in violation of R.A.
addressed to the sound discretion of government No. 301963 and breach of public trust, which in
agencies entrusted with the regulation of turn warrants its claim for restitution and
activities coming under the special technical damages. Ysmael, on the other hand, sought the
knowledge and training of such agencies. revocation of TLA No. 356 and the reinstatement
of its own timber license agreement. Indeed,
In Sarabia and Leido v. Secretary of Agriculture there is no identity of parties and no identity of
and Natural Resources, et al.,57 the Court causes of action between the two cases.
discussed the underlying principle for res IV.
judicata, to wit:
What now is the course of action to take since
The fundamental principle upon which the we cannot affirm the Sandiganbayans grant of
doctrine of res judicata rests is that parties the demurrer to evidence? Rule 33, Sec. 1 reads:
ought not to be permitted to litigate the same
issue more than once; that, when a right or fact Sec. 1. Effect of judgment on demurrer to
has been judicially tried and determined by a evidence. After the plaintiff has completed the
court of competent jurisdiction, or an opportunity presentation of his evidence, the defendant may
for such trial has been given, the judgment of move for dismissal on the ground that upon the
the court, so long as it remains unreversed, facts and the law the plaintiff has shown no right
should be conclusive upon the parties and those to relief. If his motion is denied, he shall have the
in privity with them in law or estate. right to present evidence. If the motion is
granted but on appeal the order of dismissal is
For res judicata to serve as an absolute bar to a reversed he shall have be deemed to have
subsequent action, the following requisites must waived the right to present evidence.
concur: (1) the former judgment or order must
be final; (2) the judgment or order must be on The general rule is that upon the dismissal of the
the merits; (3) it must have been rendered by a demurrer in the appellate court, the defendant
court having jurisdiction over the subject matter loses the right to present his evidence and the
and parties; and (4) there must be between the appellate court shall then proceed to render
first and second actions, identity of parties, of judgment on the
subject matter, and of causes of action. 58 When merits on the basis of plaintiffs evidence. As the
there is only identity of issues with no identity of Court explained in Generoso Villanueva Transit
causes of action, there exists res judicata in the Co., Inc. v. Javellana:64
concept of conclusiveness of judgment.59
The rationale behind the rule and doctrine is
In Ysmael, the case was between Felipe Ysmael simple and logical. The defendant is permitted,
Jr. & Co., Inc. and the Deputy Executive without waiving his right to offer evidence in the
Secretary, the Secretary of Environment and event that his motion is not granted, to move for
Natural Resources, the Director of the Bureau of a dismissal (i.e., demur to the plaintiffs
Forest Development and Twin Peaks evidence) on the ground that upon the facts as
Development and Realty Corporation. The thus established and the applicable law, the
present case, on the other hand, was initiated by plaintiff has shown no right to relief. If the trial
the Republic of court denies the dismissal motion, i.e., finds that
the Philippines represented by the Office of the plaintiffs evidence is sufficient for an award of
Solicitor General. No amount of imagination judgment in the absence of contrary evidence,
could let us believe that there was an identity of the case still remains before the trial court which
parties between this case and the one formerly should then proceed to hear and receive the
filed by Felipe Ysmael Jr. & Co., Inc. defendants evidence so that all the facts and
evidence of the contending parties may be
The Sandiganbayan held that despite the properly placed before it for adjudication as well
difference of parties, res judicata nevertheless as before the appellate courts, in case of appeal.
applies on the basis of the supposed sufficiency Nothing is lost. The doctrine is but in line with
of the "substantial identity" between the the established procedural precepts in the
Republic of the Philippines and Felipe Ysmael, Jr. conduct of trials that the trial court liberally
Co., Inc. We disagree. The Court in a number of receive all proffered evidence at the trial to
cases considered the substantial identity of enable it to render its decision with all possibly
parties in the application of res judicata in relevant proofs in the record, thus assuring that
instances where there is privity between the two the appellate courts upon appeal have all the
parties, as between their successors in interest material before them necessary to make a
by title60 or where an additional party was simply correct judgment, and avoiding the need of
included in the subsequent case 61 or where one remanding the case for retrial or reception of
of the parties to a previous case was not improperly excluded evidence, with the
impleaded in the succeeding case. 62
possibility thereafter of still another appeal, with
all the concomitant delays. The rule, however,
The Court finds no basis to declare the Republic imposes the condition by the same token that if
as having substantial interest as that of Felipe his demurrer is granted by the trial court, and
Ysmael, Jr. & Co., Inc. In the first place, the the order of dismissal is reversed on appeal, the
movant loses his right to present evidence in his agreements in 1984. In that regard, the Republic
behalf and he shall have been deemed to have argues that the absence of a bidding process is
elected to stand on the insufficiency of plaintiffs patent proof of the irregularity of the issuance of
case and evidence. In such event, the appellate the TLA in favor of Twin Peaks.
court which reverses the order of dismissal shall
proceed to render judgment on the merits on the A timber license agreement authorizes a person
basis of plaintiffs evidence.65 to utilize forest resources within any forest land
with the right of possession and exclusion of
It thus becomes the Court's duty to rule on the others.68 The Forestry Reform Code prohibits any
merits of the complaint, duly taking into account person from utilizing, exploiting, occupying,
the evidence presented by the Republic, and possessing or conducting any activity within any
without need to consider whatever evidence the forest land unless he had been authorized to do
Tuveras have, they having waived their right to so under a license agreement, lease, license or
present evidence in their behalf. permit.69 The Code also mandates that no timber
V. license agreement shall be issued unless the
applicant satisfactorily proves that he has the
Executive Order No. 14-A66 establishes that the financial resources and technical capability not
degree of proof required in cases such as this only to minimize utilization, but also to practice
instant case is preponderance of evidence. forest protection, conservation and development
Section 3 thereof reads: measures to insure the perpetuation of said
SEC. 3. The civil suits to recover unlawfully forest in productive condition.70 However, the
acquired property under Republic Act No. 1379 Code is silent as to the procedure in the
or for restitution, reparation of damages, or acquisition of such timber license agreement.
indemnification for consequential and other Such procedure is more particularly defined
damages or any other civil actions under the under FAO No. 11, dated 1 September 1970,
Civil Code or other existing laws filed with the which provides for the "revised forestry license
Sandiganbayan against Ferdinand E. Marcos, regulations."
Imelda R. Marcos, members of their immediate FAO No. 11 establishes that it is the Director of
family, close relatives, subordinates, close and/or Forestry who has the power "to grant timber
business associates, dummies, agents and licenses and permits."71 It also provides as a
nominees, may proceed independently of any general policy that timber license agreements
criminal proceedings and may be proved by a shall be
preponderance of evidence. [Emphasis
supplied.] granted through no other mode than public
bidding.72 However, Section 24 of FAO No. 11
Thus, the Court recently held in Yuchengco v. does admit that a timber license agreement may
Sandiganbayan,67 that in establishing the be granted through "negotiation," as well as
quantum of evidence required for civil cases through "public bidding."
involving the Marcos wealth held by their
immediate family, close relatives, subordinates, 26. When license may be issued.A license under
close and/or business associates, dummies, this Regulations may be issued or granted only
after an application and an award either
agents and nominees filed before the through bidding or by negotiation has been
Sandiganbayan, that "the Sandiganbayan, x x x made and the Director of Forestry is satisfied
was not to look for proof beyond reasonable that the issuance of such license shall not be
doubt, but to determine, based on the evidence inconsistent with existing laws and regulations or
presented, in light of common human prejudicial to public interest, and that the
experience, which of the theories proffered by necessary license fee, bond deposit and other
the parties is more worthy of credence." requirements of the Bureau of Forestry have
In order that restitution may be proper in this been paid and complied with. [Emphasis
73

case, it must be first established that the grant supplied.]

of the TLA to Twin Peaks was illegal. With the However, even a person who is granted a TLA
illegality of the grant established as fact, finding through "negotiation" is still required to submit
Victor Tuvera, the major stockholder of Twin the same requirements and supporting papers as
Peaks, liable in this case should be the required for public bidding. The pertinent
ineluctable course. In order that Juan Tuvera may provisions of FAO No. 11 state:
be held answerable as well, his own participation
in the illegal grant should also be substantiated. 18. Requirements and supporting papers to be
submitted.The following requirements with
Regarding the first line of inquiry, the Complaint accompanying supporting papers or documents
adverted to several provisions of law which shall be submitted in addition to the
ostensibly were violated by the grant of the TLA requirements of Section 12:
in favor of Twin Peaks. These include R.A. No.
3019, otherwise known as the Anti-Graft and a. With bid application:
Corrupt Practices Act, and Articles 19, 20 and 21
of the Civil Code. The applicant shall support his bid application
with the required application fee duly paid and
Still, the most organic laws that determine the proofs of the following:
validity or invalidity of the TLA are those that
governed the issuance of timber license
(1) Capitalization.Cash deposits and plant should be capable of processing at least
established credit line by applicant in domestic 60% of the allowable annual cut.
bank certified to by the bank President or any of
its authorized officials, duly attested by (6) Forestry Department.The applicant shall
depositor as his own to be used exclusively in submit assurance under oath that he shall put a
logging and wood processing operations if forestry department composed of trained or
awarded the area. The bank certificate shall be experienced foresters to carry out forest
accompanied by a written consent by the management activities such as selective logging,
applicant-depositor for the Director of Forestry or planting of denuded or logged-over areas within
his authorized representative to verify such cash the concessions as specified by the Director of
deposit with bank authorities. Forestry and establish a forest nursery for the
purpose.
Capitalization and financial statements. A
minimum capitalization of P20.00 per cubit (7) Statement on sustained yield operations,
meter in cash and an established credit line reforestation, and protection under management
of P150.00 per cubic meter based on the plans. The bidder or applicant shall submit a
allowable annual cut are required. Financial sworn statement of his agreement and
statements certified by the independent and willingness to operate the area under sustained
reputable certified public accountants must yield to reforest cleared areas and protect the
accompany the application as proof of the concession or licensed area and under the
necessary capitalization. approved management plan, and to abide with
all existing forestry laws, rules and regulations
Additional capitalization, Real Estate. In the and those that may hereafter be promulgated;
event that the capitalization of the applicant is and of his agreement that any violation of these
less than the minimum or less than that set by conditions shall be sufficient cause for the
the Director of Forestry for the area, the cancellation of the licenses.
applicant bidder may be asked to submit an
affidavit signifying his readiness, should the area (8) Organization plan.Other important
be awarded to him, to convert within a specified statement connected with sound management
time any specified unencumbered and titled real and operation of the area, such as the
estate into cash for use in operating and submission among others, of the organizational
developing the area. Presentation of real estate plan and employment of concession guards,
should show location by municipality and shall be submitted. In this connection, the
province, hectarage, title number, latest land tax applicant shall submit a sworn statement to the
declaration, assessed value of land and effect no alien shall be employed without prior
improvements (stating kind of improvements), approval of proper authorities.
and encumbrances if any. (9) Unauthorized use of heave equipment.The
(2) Logging machinery and equipment. applicant shall give his assurance that he shall
Evidence of ownership or capacity to acquire the not introduce into his area additional heave
requisite machinery or equipment shall equipment and machinery without approval of
accompany the bid application. The capacity or the Director of Forestry.
ability to acquire machineries and equipments (10) Such other inducements or considerations
shall be determined by the committee on award. to the award as will serve public interest may
Leased equipment or machineries may be also be required from time to time.
considered in the determination by the
Committee if expressly authorized in writing by xxxx
the Director of Forestry.
d) With applications for areas to be negotiated.
(3) Technical know-how.To assure efficient All the foregoing requirements and supporting
operation of the area or concession, the papers required for bidding under Section 18(a)
applicant shall submit proof of technical hereinabove and of Section 20(b) hereinbelow
competence and know-how and/or his ability to shall also apply to all areas that may be granted
provide hired services of competent personnel. through negotiation. In no case shall an area
exceeding 100,000 hectares be granted thru
(4) Operation or development plan. An negotiation.74
appropriate plan of operation and development
of the forest area applied for shall be submitted, The rationale underlying the very elaborate
including phasing plans and the fund procedure that entails prior to the grant of a
requirements therefor, consistent with selective timber license agreement is to avert the
logging methods and the sustained yield policy haphazard exploitation of the State's forest
of the Bureau of Forestry. This plan must be in resources as it provides that only the most
general agreement with the working unit plan for qualified applicants will be allowed to engage in
the area as contained in Chapter III, Section 6(a) timber activities within the strict limitations of
hereinabove. the grant and that cleared forest areas will have
to be renewed through reforestation. Since
(5) Processing plant.The bidder or applicant timber is not a readily renewable natural
shall show evidence of ownership of, or resource, it is essential and appropriate that the
negotiation to acquire, a wood processing plant. State serve and act as a jealous and zealous
The kind and type of plant, such as plywood, guardian of our forest lands, with the layers of
veneer, bandmill, etc. shall be specified. The bureaucracy that encumber the grant of timber
license agreements effectively serving as a examination of Twin Peaks Articles of
defensive wall against the thoughtless ravage of Incorporation shows that its paid-up capital was
our forest resources. only P312,500.00.78Clearly, Twin Peaks paid-up
capital is way below the minimum capitalization
There is no doubt that no public bidding occurred requirement.
in this case. Certainly, respondents did not raise
the defense in their respective answers. The Moreover, Sec. 18(5) provides that the bidder or
absence of such bidding was testified on by applicant shall show evidence of ownership of, or
prosecution witness Arcangel. Yet even if we negotiation to acquire, a wood processing plant.
consider that Twin Peaks could have acquired the However, although TLA No. 356 was issued to
TLA through "negotiation," the prescribed Twin Peaks in 1984, it continued to engage the
requirements for "negotiation" under the law services of at least two sawmills79 as late as
were still not complied with. 1988. Four (4) years from the issuance of the
license, Twin Peaks remained incapable of
It is evident that Twin Peaks was of the frame of processing logs.
mind that it could simply walk up to President
Marcos and ask for a timber license agreement What could have made Twin Peaks feel
without having to comply with the elaborate emboldened to directly request President Marcos
application procedure under the law. This is for the grant of Timber License Agreement
indicated by the letter dated 31 May despite the obvious problems relating to its
198475 signed by Twin Peaks Vice President and capacity to engage in timber activities? The
Treasurer Evelyn Fontanilla, addressed directly to reasonable assumption is that the official and
then President Marcos, wherein Twin Peaks personal proximity of Juan Tuvera to President
expressed that "we would like to request a Marcos was a key factor, considering that he was
permit to export 20,000 cubic meters of logs and the father of Twin Peaks' most substantial
to cut and process 10,000 cubic meters of the stockholder.
narra species in the same area."76 A marginal
note therein signed by Marcos indicates an The causes of action against respondents
approval thereof. Neither the Forestry Reform allegedly arose from Juan Tuveras abuse of his
Code nor FAO No. 11 provide for the submission relationship, influence and connection as
of Presidential Executive Assistant of then President
Marcos. Through Juan Tuveras position, the
an application directly to the Office of the Republic claims that Twin Peaks was able to
President as a proper mode for the issuance of a secure a Timber License Agreement despite its
TLA. Without discounting the breadth and scope lack of qualification and the absence of a public
of the Presidents powers as Chief Executive, the bidding. On account of the unlawful issuance of a
authority of the President with respect to timber timber license agreement, the natural resources
licenses is, by the express terms of the Revised of the country were unlawfully exploited at the
Forestry Code, limited to the amendment, expense of the Filipino people. Victor Tuvera, as
modification, replacement or rescission of any son of Juan Tuvera and a major stockholder of
contract, concession, permit, license or any Twin Peaks, was included as respondent for
other form of privilege granted by said Code.77 having substantially benefited from this breach
of trust. The circumstance of kinship alone may
There are several factors that taint this backdoor not be enough to disqualify Victor Tuvera from
application for a timber license agreement by seeking a timber license agreement. Yet the
Twin Peaks. The forest area covered by the TLA basic ethical principle of delicadeza should have
was already the subject of a pre-existing TLA in dissuaded Juan Tuvera from any official or
favor of Ysmael. The Articles of Incorporation of unofficial participation or intervention in behalf
Twin Peaks does not even stipulate that logging of the "request" of Twin Peaks for a timber
was either a principal or secondary purpose of license.
the corporation. Respondents do allege that the
Articles was amended prior to the grant in order Did Juan Tuvera do the honorable thing and keep
to accommodate logging as a corporate purpose, his distance from Twin Peaks' "request"?
yet since respondents have waived their right to Apparently not. Instead, he penned a
present evidence by reason of their resort to Memorandum dated 18 July 1984 in his capacity
demurrer, we cannot consider such allegation as as Presidential Executive Assistant, directed at
proven. the Director of Forestry, the official who, under
the law, possessed the legal authority to decide
Sec. 18(a)(1) of FAO No. 11 requires that an whether to grant the timber license agreements
applicant must have a minimum capitalization after deliberating on the application and its
of P20.00 per cubic meter in cash and an supporting documents. The Memorandum reads
established credit line of P150.00 per cubic in full:
meter based on the allowable annual cut. TLA
No. 356 allowed Twin Peaks to operate on 26,000 Office of the President of the Philippines
hectares of forest land with an annual allowable Malacanang
cut of 60,000 cubic meters of timber. With such
annual allowable cut, Twin 18 July 1984

Peaks, therefore, must have at 74-84

least P1,200,000.00 in cash as its minimum MEMORANDUM to
capitalization, following FAO No. 11. An
Director Edmundo Cortes intervenes or takes part in his official capacity, or
Bureau of Forest Development in which he is prohibited by the Constitution or
by any law from having any interest.
I wish to inform you that the President has
granted the award to the Twin Peaks Realty The Memorandum signed by Juan Tuvera can be
Development Corporation, of the concession to taken as proof that he "persuaded, induced or
manage, operate and develop in accordance influenced" the Director of Forestry to
with existing policies and regulations half of the accommodate a timber license agreement in
timber area in the Province of Quirino covered by favor of Twin Peaks, despite the failure to
TLA No. 87, formerly belonging to the Felipe undergo public bidding, or to comply with the
Ysmael, Jr. & Company and comprising 54,920 requisites for the grant of such agreement by
hectares, and to export half of the requested negotiation, and in favor of a corporation that
20,000 cubic meters of logs to be gathered from did not appear legally capacitated to be granted
the area. such agreement. The fact that the principal
stockholder of Twin Peaks was his own son
Herewith is a copy of the letter concering (sic) establishes his indirect pecuniary interest in the
this matter of Ms. Evelyn F. Fontanilla, Vice- transaction he appears to have intervened in. It
President and Treasurer of the Twin Peaks Realty may have been possible on the part of Juan
Development Corporation, on which the Tuvera to prove that he did not persuade, induce
President indicated such approval in his own or influence the Director of Forestry or any other
hand, which I am furnishing you for your official in behalf of the timber license agreement
information and appropriate action. of Twin Peaks, but then again, he waived his right
(signed) to present evidence to acquit himself of such
JUAN C. TUVERA suspicion. Certainly, the circumstances
Presidential Executive Assistant80 presented by the evidence of the prosecution are
sufficient to shift the burden of evidence to
The Memorandum establishes at the very least Tuvera in establishing that he did not violate the
that Tuvera knew about the Twin Peaks provisions of the Anti-Graft and Corrupt Practices
"request," and of President Marcos's favorable Act in relation to the Twin Peaks "request."
action on such "request." The Memorandum also Unfortunately, having waived his right to present
indicates that Tuvera was willing to convey those evidence, Juan Tuvera failed to disprove that he
facts to the Director of Forestry, the ostensible failed to act in consonance with his obligations
authority in deciding whether the Twin Peaks under the Anti-Graft and Corrupt Practices Act.
"request" should have been granted. If Juan
Tuvera were truly interested in preventing any In sum, the backdoor recourse for a hugely
misconception that his own position had nothing priced favor from the government by itself, and
to do with the favorable action on the "request" more in tandem with other brazen relevant
lodged by the company controlled by his son, he damning circumstances, indicates the impudent
would not have prepared or signed the abuse of power and the detestable misuse of
Memorandum at all. Certainly, there were other influence that homologously made the
officials in Malacaang who could have acquisition of ill-gotten wealth a reality. Upon the
performed that role had the intent of the facts borne out by the evidence for the Republic
Memorandum been merely to inform the Director and guideposts supplied by the governing laws,
of Forestry of such Presidential action. the Republic has a clear right to the reliefs it
seeks.
Delicadeza is not merely a stentorian term VI.
evincing a bygone ethic. It is a legal principle as
embodied by certain provisions of the Anti-Graft If only the Court's outrage were quantifiable in
and Corrupt Practices Act. Section 3 of R.A. No. sums of money, respondents are due for
3019 states in part: significant pecuniary hurt. Instead, the Court is
forced to explain in the next few paragraphs why
Sec. 3. Corrupt practices of public officers.In respondents could not be forced to
addition to acts or omissions of public officers recompensate the Filipino people in appropriate
already penalized by existing law, the following financial terms. The fault lies with those engaged
shall constitute corrupt practices of any public by the government to litigate this case in behalf
officer and are hereby declared to be unlawful: of the State.
(a) Persuading, inducing or influencing another It bears to the most primitive of reasons that an
public officer to perform an act constituting a action for recovery of sum of money must prove
violation of rules and regulations duly the amount sought to be recovered. In the case
promulgated by competent authority or an at bar, the Republic rested its case without
offense in connection with the official duties of
presenting any evidence, documentary or
the latter, or allowing himself to be persuaded,testimonial, to establish the amount that should
induced or influenced to commit such violation be restituted to the State by reason of the illegal
or offense. acts committed by the respondents. There is the
bare allegation in the complaint that the State is
xxxx
entitled to P48 million by way of actual damages,
(h) Directly or indirectly having financial or but no single proof presented as to why the
pecuniary interest in any business, contract or State is entitled to such amount.
transaction in connection with which he
Actual damages must be proven, not
presumed.81 The Republic failed to prove
damages. It is not enough for 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.
We fail to comprehend 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? 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 ill-gotten wealth cases, it is
guaranteed to ensure that those who stole from
the people will be laughing on their way to the
bank.
The claim for moral damages deserves short
shrift. The claimant in this case is the Republic of
the Philippines, a juridical person. We explained
in Filipinas Broadcasting v. Ago Medical &
Educational Center-Bicol Christian College of
Medicine (AMEC-BCCM):82
A juridical person is generally not entitled to
moral damages because, unlike a natural person,
it cannot experience physical suffering or such
sentiments as wounded feelings, serious anxiety,
mental anguish or moral shock. The Court of
Appeals cites Mambulao Lumber Co. v. PNB, et
al. to justify the award of moral damages.
However, the Court's statement in Mambulao
that "a corporation may have a good reputation
which, if besmirched, may also be a ground for
the award of moral damages" is an obiter
dictum.
Nevertheless, AMEC's claim for moral damages
falls under item 7 of Article 2219 of the Civil
Code. This provision expressly authorizes the
recovery of moral damages in cases of libel,
slander or any other form of defamation. Article
2219(7) does not qualify whether the plaintiff is
a natural or juridical person. Therefore, a
juridical person such as a corporation can validly
complain for libel or any other form of
defamation and claim for moral damages.83
As explained, a juridical person is not entitled to
moral damages under Article 2217 of the Civil
Code. It may avail of moral damages under the
analogous cases listed in Article 2219, such as
for libel, slander or any other form of
defamation. Suffice it to say that the action at
bar does not involve any of the analogous cases
under Article 2219, and indeed upon an
intelligent reading of Article 2219, it is difficult to
see how the Republic could sustain any of the
injuries contemplated therein. Any lawyer for the
Republic who poses a claim for moral damages
in behalf of the State stands in risk of serious
ridicule.
However, there is sufficient basis for an award of
temperate damages, also sought by the Republic
notwithstanding the fact that a claim for both
actual and temperate damages is internally
inconsistent. 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."84 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.85 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.1awphi1.net
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.
These cases include People v. Oliano,86 People v.
Suplito,87 People v. De la Tongga,[88] People v.
Briones,89 and People v. Plazo.90 In Viron
Transportation Co., Inc. v. Delos Santos,91 a civil
action for damages involving a vehicular
collision, temperate damages were awarded for
the resulting damage sustained by a cargo truck,
after the plaintiff had failed to submit competent
proof of actual damages.
We cannot discount the heavy influence of
common law, and its reliance on judicial
precedents, in our law on tort and 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, 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.
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. Ill-gotten 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."92 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 Sometime in August 1979, CCCC renewed a
to fill in that deficiency. For if there is a lesson previous loan, this time from BPI, Cebu City
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.
WHEREFORE, the petition is GRANTED. The
Resolution of the Sandiganbayan dated 23 May
2001 is REVERSED. Respondents Juan C. Tuvera,
Victor P. Tuvera and Twin Peaks Development
Corporation are hereby ordered to jointly and
severally pay to the Republic of the Philippines
One Million (P1,000,000.00) Pesos, as and for
temperate damages, and One Million
(P1,000,000.00) Pesos, as and for exemplary
damages, plus costs of suit.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 172428 November 28, 2008
HERMAN C. CRYSTAL, LAMBERTO C.
CRYSTAL, ANN GEORGIA C. SOLANTE, and
DORIS C. MAGLASANG, as Heirs of
Deceased SPOUSES RAYMUNDO I. CRYSTAL
and DESAMPARADOS C.
CRYSTAL, petitioners,
vs.
BANK OF THE PHILIPPINE
ISLANDS, respondent.
DECISION
TINGA, J.:
Before us is a Petition for Review 1 of the
Decision2 and Resolution3 of the Court of Appeals
dated 24 October 2005 and 31 March 2006,
respectively, in CA G.R. CV No. 72886, which
affirmed the 8 June 2001 decision of the Regional
Trial Court, Branch 5, of Cebu City.4
The facts, as culled from the records, follow.
On 28 March 1978, spouses Raymundo and
Desamparados Crystal obtained a P300,000.00
loan in behalf of the Cebu Contractors
Consortium Co. (CCCC) from the Bank of the
Philippine Islands-Butuan branch (BPI-Butuan).
The loan was secured by a chattel mortgage on
heavy equipment and machinery of CCCC. On
the same date, the spouses executed in favor of
BPI-Butuan a Continuing Suretyship5 where they
bound themselves as surety of CCCC in the
aggregate principal sum of not
exceeding P300,000.00. Thereafter, or on 29
March 1979, Raymundo Crystal executed a
promissory note6 for the amount of P300,000.00,
also in favor of BPI-Butuan.
branch (BPI-Cebu City). The renewal was
evidenced by a promissory note7 dated 13
August 1979, signed by the spouses in their
personal capacities and as managing partners of
CCCC. The promissory note states that the
spouses are jointly and severally liable with
CCCC. It appears that before the original loan
could be granted, BPI-Cebu City required CCCC
to put up a security.
However, CCCC had no real property to offer as
security for the loan; hence, the spouses
executed a real estate mortgage8 over their own
real property on 22 September 1977.9 On 3
October 1977, they executed another real estate
mortgage over the same lot in favor of BPI-Cebu
City, to secure an additional loan of P20,000.00
of CCCC.10
CCCC failed to pay its loans to both BPI-Butuan
and BPI-Cebu City when they became due.
CCCC, as well as the spouses, failed to pay their
obligations despite demands. Thus, BPI resorted
to the foreclosure of the chattel mortgage and
the real estate mortgage. The foreclosure sale on
the chattel mortgage was initially stalled with
the issuance of a restraining order against
BPI.11 However, following BPIs compliance with
the necessary requisites of extrajudicial
foreclosure, the foreclosure sale on the chattel
mortgage was consummated on 28 February
1988, with the proceeds amounting
to P240,000.00 applied to the loan from BPI-
Butuan which had then
reached P707,393.90.12Meanwhile, on 7 July
1981, Insular Bank of Asia and America (IBAA),
through its Vice-President for Legal and
Corporate Affairs, offered to buy the lot subject
of the two (2) real
estate mortgages and to pay directly the
spouses indebtedness in exchange for the
release of the mortgages. BPI rejected IBAAs
offer to pay.13
BPI filed a complaint for sum of money against
CCCC and the spouses before the Regional Trial
Court of Butuan City (RTC Butuan), seeking to
recover the deficiency of the loan of CCCC and
the spouses with BPI-Butuan. The trial court
ruled in favor of BPI. Pursuant to the decision,
BPI instituted extrajudicial foreclosure of the
spouses mortgaged property.14
On 10 April 1985, the spouses filed an action
for Injunction With Damages, With A Prayer For A
Restraining Order and/ or Writ of Preliminary
Injunction.15 The spouses claimed that the
foreclosure of the real estate mortgages is illegal
because BPI should have exhausted CCCCs
properties first, stressing that they are mere
guarantors of the renewed loans. They also
prayed that they be awarded moral and
exemplary damages, attorneys fees, litigation
expenses and cost of suit. Subsequently, the
spouses filed an amended
complaint,16 additionally alleging that CCCC had
opened and maintained a foreign currency
savings account (FCSA-197) with bpi, Makati
branch (BPI-Makati), and that said FCSA was
used as security for a P450,000.00 loan also
extended by BPI-Makati. The P450,000.00 loan
was allegedly paid, and thereafter the spouses
demanded the return of the FCSA passbook. BPI
rejected the demand; thus, the spouses were
unable to withdraw from the said account to pay
for their other obligations to BPI.
The trial court dismissed the spouses complaint
and ordered them to pay moral and exemplary
damages and attorneys fees to BPI.17 It ruled
that since the spouses agreed to bind
themselves jointly and severally, they are
solidarily liable for the loans; hence, BPI can
validly foreclose the two real estate mortgages.
Moreover, being guarantors-mortgagors, the
spouses are not entitled to the benefit of
exhaustion. Anent the FCSA, the trial court found
that CCCC originally had FCDU SA No. 197 with
BPI, Dewey Boulevard branch, which was
transferred to BPI-Makati as FCDU SA 76/0035, at
the request of Desamparados Crystal. FCDU SA
76/0035 was thus closed, but Desamparados
Crystal failed to surrender the passbook because
it was lost. The transferred FCSA in BPI-Makati
was the one used as security for
CCCCs P450,000.00 loan from BPI-Makati. CCCC
was no longer allowed to withdraw from FCDU SA
No. 197 because it was already closed.
The spouses appealed the decision of the trial
court to the Court of Appeals, but their appeal
was dismissed.18 The spouses moved for the
reconsideration of the decision, but the Court of
Appeals also denied their motion for
reconsideration.19 Hence, the present petition.
Before the Court, petitioners who are the heirs of
the spouses argue that the failure of the spouses
to pay the BPI-Cebu City loan of P120,000.00
was due to BPIs illegal refusal to accept
payment for the loan unless the P300,000.00
loan from BPI-Butuan would also be paid.
Consequently, in view of BPIs unjust refusal to
accept payment of the BPI-Cebu City loan, the
loan obligation of the spouses was extinguished,
petitioners contend.
The contention has no merit. Petitioners rely on
IBAAs offer to purchase the mortgaged lot from
them and to directly pay BPI out of the proceeds
thereof to settle the loan.20 BPIs refusal to agree
to such payment scheme cannot extinguish the
spouses loan obligation. In the first place, IBAA
is not privy to the loan agreement or the
promissory note between the spouses and BPI.
Contracts, after all, take effect only between the
parties, their successors in interest, heirs
and assigns.21 Besides, under Art. 1236 of the
Civil Code, the creditor is not bound to accept
payment or performance by a third person who
has no interest in the fulfillment of the
obligation, unless there is a stipulation to the
contrary. We see no stipulation in the promissory
note which states that a third person may fulfill
the spouses obligation. Thus, it is clear that the
spouses alone bear responsibility for the same.
In any event, the promissory note is the
controlling repository of the obligation of the
spouses. Under the promissory note, the spouses
defined the parameters of their obligation as
follows:
On or before June 29, 1980 on demand, for value
received, I/we promise to pay, jointly and
severally, to the BANK OF THE PHILIPPINE
ISLANDS, at its office in the city of Cebu
Philippines, the sum of ONE HUNDRED TWENTY
THOUSAND PESOS (P120,0000.00), Philippine
Currency, subject to periodic installments on the
principal as follows: P30,000.00 quarterly
amortization starting September 28, 1979. x x
x 22
A solidary obligation is one in which each of the
debtors is liable for the entire obligation, and
each of the creditors is entitled to demand the
satisfaction of the whole obligation from any or
all of the debtors. 23 A liability is solidary "only
when the obligation expressly so states, when
the law so provides or when the nature of the
obligation so requires."24 Thus, when the obligor
undertakes to be "jointly and severally" liable, it
means that the obligation is solidary,25 such as in
this case. By stating "I/we promise to pay, jointly
and severally, to the BANK OF THE PHILIPPINE
ISLANDS," the spouses agreed to be sought out
and be demanded payment from, by BPI. BPI did
demand payment from them, but they failed to
comply with their obligation, prompting BPIs
valid resort to the foreclosure of the chattel
mortgage and the real estate mortgages.
More importantly, the promissory note, wherein
the spouses undertook to be solidarily liable for
the principal loan, partakes the nature of a
suretyship and therefore is an additional security
for the loan. Thus we held in one case that if
solidary liability was instituted to "guarantee" a
principal obligation, the law deems the contract
to be one of suretyship.26 And while a contract of
a surety is in essence secondary only to a valid
principal obligation, the suretys liability to the
creditor or promisee of the principal is said to be
direct, primary, and absolute; in other words, the
surety is directly and equally bound with the
principal. The surety therefore becomes liable for
the debt or duty of another even if he possesses
no direct or personal interest over the
obligations nor does he receive any benefit
therefrom.27
Petitioners contend that the Court of Appeals
erred in not granting their counterclaims,
considering that they suffered moral damages in
view of the unjust refusal of BPI to accept the
payment scheme proposed by IBAA and the
allegedly unjust and illegal foreclosure of the real
estate mortgages on their property. 28 Conversely,
they argue that the Court of Appeals erred in
awarding moral damages to BPI, which is a
corporation, as well as exemplary damages,
attorneys fees and expenses of litigation.29
We do not agree. Moral damages are meant to
compensate the claimant for any physical
suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral
shock, social humiliation and similar injuries
unjustly caused.30 Such damages, to be
recoverable, must be the proximate result of a
wrongful act or omission the factual basis for
which is satisfactorily established by the
aggrieved party.31 There being no wrongful or
unjust act on the part of BPI in demanding
payment from them and in seeking the
foreclosure of the chattel and real estate
mortgages, there is no lawful basis for award of
damages in favor of the spouses.
Neither is BPI entitled to moral damages. A
juridical person is generally not entitled to moral
damages because, unlike a natural person, it
cannot experience physical suffering or such
sentiments as wounded feelings, serious anxiety,
mental anguish or moral shock.32 The Court of
Appeals found BPI as "being famous and having
gained its familiarity and respect not only in the
Philippines but also in the whole world because
of its good will and good reputation must protect
and defend the same against any unwarranted
suit such as the case at bench." 33 In holding that
BPI is entitled to moral damages, the Court of
Appeals relied on the case of People v.
Manero,34 wherein the Court ruled that "[i]t is
only when a juridical person has a good
reputation that is debased, resulting in social
humiliation, that moral damages may be
awarded."35
We do not agree with the Court of Appeals. A
statement similar to that made by the Court
in Manero can be found in the case of Mambulao
Lumber Co. v. PNB, et al.,36 thus:
x x x Obviously, an artificial person like herein
appellant corporation cannot experience physical
sufferings, mental anguish, fright, serious
anxiety, wounded feelings, moral shock or social
humiliation which are basis of moral damages. A
corporation may have good reputation
which, if besmirched may also be a ground
for the award of moral damages. x x x
(Emphasis supplied)
Nevertheless, in the more recent cases of ABS-
CBN Corp. v. Court of Appeals, et
37
al., and Filipinas Broadcasting Network, Inc. v.
Ago Medical and Educational Center-Bicol
Christian College of Medicine (AMEC-
BCCM),38 the Court held that the statements in
Manero and Mambulao were mere obiter dicta,
implying that the award of moral damages to
corporations is not a hard and fast rule. Indeed,
while the Court may allow the grant of moral
damages to corporations, it is not automatically
granted; there must still be proof of the
existence of the factual basis of the damage and
its causal relation to the defendants acts. This is
so because moral damages, though incapable of
pecuniary estimation, are in the category of an
award designed to compensate the claimant
for actual injury suffered and not to impose a
penalty on the wrongdoer.39
The spouses complaint against BPI proved to be
unfounded, but it does not automatically entitle
BPI to moral damages. Although the institution of
a clearly unfounded civil suit can at times be a
legal
justification for an award of attorney's fees, such
filing, however, has almost invariably been held
not to be a ground for an award of moral
damages. The rationale for the rule is that the
law could not have meant to impose a penalty
on the right to litigate. Otherwise, moral
damages must every time be awarded in favor of
the prevailing defendant against an unsuccessful
plaintiff.40 BPI may have been inconvenienced by
the suit, but we do not see how it could have
possibly suffered besmirched reputation on
account of the single suit alone. Hence, the
award of moral damages should be deleted.
The awards of exemplary damages and
attorneys fees, however, are proper. Exemplary
damages, on the other hand, are imposed by
way of example or correction for the public good,
when the party to a contract acts in a wanton,
fraudulent, oppressive or malevolent manner,
while attorneys fees are allowed when
exemplary damages are awarded and when the
party to a suit is compelled to incur expenses to
protect his interest.41 The spouses instituted
their complaint against BPI notwithstanding the
fact that they were the ones who failed to pay
their obligations. Consequently, BPI was forced
to litigate and defend its interest. For these
reasons, BPI is entitled to the awards of
exemplary damages and attorneys fees.
WHEREFORE, the petition is DENIED. The
Decision and Resolution of the Court of Appeals
dated 24 October 2005 and 31 March 2006,
respectively, are hereby AFFIRMED, with the
MODIFICATION that the award of moral damages
to Bank of the Philippine Islands is DELETED.

Costs against the petitioners.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 178008 October 9, 2013

SAN FERNANDO REGALA TRADING,

INC., Petitioner,
vs.
CARGILL PHILIPPINES, INC., Respondent.

x-----------------------x

G.R. No. 178042

CARGILL PHILIPPINES, INC., Petitioner,

vs.
SAN FERNANDO REGALA TRADING,
INC., Respondent.

DECISION
ABAD, J.: Cargill also asked for a return of the demurrage
it paid, attorneys fees, and cost of litigation.
These cases pertain to the reciprocal obligations
of the parties in a contract of sale to deliver the
To substantiate its claim, Cargill presented David
goods, receive them, and pay the price as Mozo of Dolman Transport Corp. who testified
stipulated and the consequent effects of breach that Cargill chartered its Dolman V barge to carry
of such obligations. molasses from Pasacao to the Ajinomoto wharf in
Pasig. But the barge was unable to unload its
The facts and the Case cargo and was placed on stand-by for around
Cargill Philippines, Inc. (Cargill) and San 70days, awaiting orders to unload its molasses.
Fernando Regala Trading, Inc. (San Fernando) Consequently, Dolman Transport charged Cargill
were cane molasses traders that did business for demurrage.
with each other for sometime. The present Cargill also presented Arthur Gunlao, an
controversy arose when San Fernando claimed employee, who testified that his company was
that Cargill reneged on its contractual unable to unload the molasses covered by
obligations to deliver certain quantities of Contracts 5026and 5047 because San
molasses. Cargill denied this, insisting that San Fernandos President, Quirino Kehyeng, advised
Fernando actually refused to accept the delivery them to wait because Ajinomotos storage tanks
of the goods. This enmity resulted in Cargills were still full and could not receive the molasses.
filing on March 2, 1998 a complaint for sum of Because of the prolonged delay in the unloading
money and damages against San Fernando of the goods, Cargill had no choice but to sell the
before the Regional Trial Court (RTC) of Makati molasses to another buyer. At the prodding of
City in Civil Case 98-493. Kehyeng, Cargill wrote San Fernando on May 14,
Cargill alleged that on July 15, 1996 it entered 1997 proposing changes in the delivery periods
into Contract 50261 covering its sale to San of Contract 5026 and 5047,respectively from
Fernando of 4,000 metric tons (mt) of molasses "April to May 1997" to "May to June 1997" and
at the price of P3,950.00 per mt. Cargill agreed from" October-November-December 1996" to
to deliver the molasses within the months of "May-June-July 1997."3 The amendments were
"April to May 1997" at the wharf of Union needed to keep the contracts valid and maintain
Ajinomoto, Inc.(Ajinomoto) along the Pasig River, the good business relations between the two
Metro Manila. This was a risk-taking forward sale companies.
in that its execution was to take place about 10 In its Answer with counterclaim, San Fernando
months later when the parties did not yet know pointed out that, except for the 951 mt of
what the trading price of molasses would be. molasses that Cargill delivered in March 1997,
Shortly after, Cargill also entered into Contract the latter made no further deliveries for Contract
50472 covering another sale to San Fernando of 5026. Indeed, Cargill sent San Fernando a letter
5,000 mt of molasses at P2,750.00 per mt. The dated May 14, 1997 proposing a change in the
delivery period under this contract was within delivery period for that contract from "April to
"October-November-December 1996," sooner May 1997" to "May to June 1997."But San
than the delivery period under Contract 5026. Fernando rejected the change since it had a
Apparently, San Fernando had a deal with contract to sell the molasses to Ajinomoto
Ajinomoto for the supply of these molasses. for P5,300.00 per mt.4 San Fernando expected to
earn a P5,400,000.00 profit out of Contract 5026.
Cargill further alleged that it offered to deliver
the 4,000 mt of molasses as required by As for Contract 5047, San Fernando maintained
Contract 5026 within the months of April and that Cargill delivered no amount of molasses in
May1997 but San Fernando accepted only 951 connection with the same. Cargill admitted its
mt, refusing to accept the rest. On April 2, 1997 inability to deliver the goods when it wrote San
Dolman V, the barge carrying Cargills 1,174 mt Fernando a letter on May 14,1997, proposing to
of molasses, arrived at the Ajinomoto wharf but move the delivery period from "October-
San Fernando refused to accept the same. The November-December 1996" to "May-June-July
barge stayed at the wharf for 71 days, waiting 1997." But San Fernando also rejected the
for San Fernandos unloading order. Because of change since it had already contracted to sell
the delay, the owner of the barges lapped Cargill the subject molasses to Ajinomoto for P4,950.00
with demurrage amounting to P920,000.00. per mt.5 San Fernando expected a profit
Cargill also suffered P3,480,000.00 in damages of P11,000,000.00 under this contract.
by way of unrealized profits because it had to To prove its claims, San Fernando presented its
sell the cargo to another buyer at a loss. President, Kehyeng, who testified that apart from
Cargill further alleged that it earlier sought to the March 1997 delivery of 951 mt of molasses
deliver the molasses covered by Contract 5047 under Contract 5026, Cargill made no further
at the Ajinomoto wharf in the months of October, deliveries. He called Dennis Seah of Cargill
November, and December 1996, but San several times demanding delivery but nothing
Fernando failed or refused for unjustified reasons came of it. Subsequently, Cargill wrote San
to accept the delivery. Consequently, Cargill Fernando, proposing the extension of the
suffered damages by way of unrealized profits delivery periods provided in their two contracts.
of P360,000.00 from this contract. Apart from But Kehyeng rejected the proposal and refused
asking the RTC for awards of unrealized profits, to sign his conformity at the appropriate spaces
on Cargills letter.
Kehyeng denied that San Fernando had refused would have made if it had sold them to
to receive deliveries because it bought molasses Ajinomoto. The CA deleted the award of moral
from Cargill at prices higher than what Ajinomoto and exemplary damages in favor of San
was willing to pay. Kehyeng insisted that San Fernando for its failure to sufficiently establish
Fernando had always received Cargills deliveries Cargills bad faith in complying with its
even on occasions when the prices fluctuated obligations. The CA also deleted the awards of
resulting in losses to his company. He claimed attorneys fees and cost of litigation.
that, as a result of Cargills violation of Contracts
5026 and 5047, San Fernando was entitled to The CA thus ordered: 1) San Fernando to
rescission and awards for unrealized profits reimburse Cargill the demurrage of P892,732.50
of P4,115,329.20 and P11,000,000.00, that it paid, subject to 6% interest per annum
respectively, moral and exemplary damages computed from the date of the filing of the
each in the amount of P500,000.00, attorneys complaint until the finality of the decision; and 2)
fees of P1,000,000.00, and litigation expenses. Cargill to pay San Fernando P11,000,000.00 in
unrealized profits under Contract 5047. The CA
On December 23, 2003 the RTC dismissed deleted the award of moral and exemplary
Cargills complaint for lack of merit and granted damages, attorneys fees, and cost of litigation.
San Fernandos counterclaims. The RTC did not This prompted both Cargill and San Fernando to
give credence to Cargills claim that San appeal to this Court.
Fernando refused to accept the deliveries of
molasses because Ajinomotos tanks were full. Issues for Resolution
San Fernando sufficiently proved that Ajinomoto These cases present the following issues:
continued receiving molasses from other
suppliers during the entire time that Cargills 1. Whether or not the CA erred in ruling that
chartered barge was put on stand-by at the Cargill was not guilty of breach of obligation to
wharf, supposedly waiting for San Fernandos deliver the 4,000 mt of molasses covered by
unloading orders. Contract 5026 during the period April and May
1997;
It was incomprehensible, said the RTC, for San
Fernando to refuse Cargills deliveries, 2. Whether or not the CA erred in ruling that
considering that Ajinomoto had already agreed Cargill was guilty of breach of obligation to
to buy the molasses from it. Cargills failure to deliver the 5,000 mt of molasses covered by
make the required deliveries resulted in San Contract5047 during the period October,
Fernandos default on its obligations to November, and December 1996; and
Ajinomoto, prompting the latter to cancel its
3. Whether or not the CA erred in deleting the
orders. As a result, San Fernando lost expected
award of moral and exemplary damages,
profits of P4,115,329.20 representing the
attorneys fees, and cost of suit in favor of San
remaining undelivered molasses under Contract
Fernando.
5026 and P11,000,000.00 under Contract
5047.The RTC awarded San Fernando its claims The Rulings of the Court
for unrealized profits,P500,000.00 in moral
damages, another P500,000.00 in exemplary One. The CA held that Cargill committed no
damages, attorneys fees of P1,000,000.00, breach of Contract 5026 because it had earlier
and P500,000.00 as cost of litigation. delivered 951 mt of molasses in March
19976 and sent a barge containing 1,174 mt of
The Court of Appeals (CA) ruled on appeal, the goods on April 2, 1997 at the Ajinomotos
however, that Cargill was not entirely in breach wharf. It was actually San Fernando that refused
of Contract 5026. Cargill made an advance to accept this delivery on April 2.
delivery of 951 mt in March 1997. It then
actually sent a barge containing 1,174 mt of But Contract 5026 required Cargill to deliver
molasses on April 2, 1997 for delivery at 4,000 mt of molasses during the period "April to
Ajinomotos wharf but San Fernando refused to May 1997." Thus, anything less than that
have the cargo unloaded. Consequently, the trial quantity constitutes breach of the agreement.
court erred in awarding San Fernando unrealized And since Cargill only delivered a total of 2,125
profits of P4,115,329.20 under Contract 5026. mt of molasses during the agreed period, Cargill
The CA also ruled that since San Fernando should be regarded as having violated Contract
unjustifiably refused to accept the April 2, 1997 5026 with respect to the undelivered balance of
delivery, it should reimburse Cargill 1,875 mt of molasses.
theP892,732.50 demurrage that it paid the
Notably, Chargills chartered barge showed up
owner of the barge.
with 1,174 mt of molasses at the Ajinomoto
The CA, however, found Cargill guilty of breach wharf on April 27, 1997. The barge stayed
of Contract 5047which called for delivery of the therefor around 70 days, awaiting orders to
molasses in "October-November-December unload the cargo. David Mozo of Dolman
1996." Since San Fernando did not accede to Transport Corp. attested to this. Dolman V was
Cargills request to move the delivery period put on stand-by at the wharf while other barges
back, Cargill violated the contract when it did not queued to unload their molasses into
deliver the goods during the previously agreed Ajinomotos storage tanks. 7

period. Cargill was liable to San Fernando for

unrealized profits of P11,000,000.00 that it
In failing to accept delivery of Cargills P4,950 per mt selling price to Ajinomoto
1,174molasses, San Fernando should reimburse P2,750acquisition cost = P2,200 profit per mt
Cargill the P892,732.50 demurrage that it paid.
P2,200 per mt x 5,000 mt = P11,000,000.00
Ultimately, what are the liabilities of the parties
under Contract 5026?Had San Fernando In failing to make any delivery under Contract
accepted the delivery of 1,174 mt of molasses 5047, Cargill should pay San Fernando the profit
on April27, 1997 Cargill would have been that it lost because of such breach. Cargill of
entitled to payment of their price course points out that San Fernando never wrote
of P4,637,300.00 at P3,950.00 per mt. But, since a demand letter respecting its failure to make
Cargill succeeded in selling that 1,174 mt of any delivery under that contract. But demand
molasses to Schuurmans & Van Ginneken was not necessary since Cargills obligation
for P1,861.92 per mt.8 Cargills unrealized profit under the contract specified the date and place
then amounted to only P2,451,405.59. Thus: of delivery, i.e., "October-November-December
1996," at the Ajinomoto wharf in Pasig.12
P3,950 per mt P1,861.92 per mt = P2,088.09 x
1,174 Three. The Court concurs with the CAs deletion
of the RTCs award of moral damages to San
mt = P2,451,405.59 Fernando.1wphi1 As a rule, moral damages are
not awarded to a corporation unless it enjoyed
Since Cargill failed, however, to deliver the good reputation that the offender debased and
balance of 1,875 mt of molasses under Contract besmirched by his actuations.13 San Fernando
5026, it must pay San Fernando failed to prove by sufficient evidence that it fell
the P2,531,250.00, representing the latters within this exception. Besides, moral damages
unrealized profits had it been able to sell that are, as a rule, also not recoverable in culpa
1,875mt of molasses to Ajinomoto. Thus: contractual except when bad faith had been
P5,300 per mt selling price at Ajinomoto proved.
14

P3,950acquisition cost = P1,350 profit per San Fernando failed to show that Cargill was
mt P1,350.00 profit margin per mt x 1,875 mt motivated by bad faith or ill will when it failed to
= P2,531,250.00 deliver the molasses as agreed.
Cargill, of course, claimed that it had sufficient
inventories of molasses to complete its
deliveries, implying that had San Fernando
accepted its initial delivery of 1,174 mt it would
have continued delivering the rest. But it is not
enough for a seller to show that he is capable of
delivering the goods on the date he agreed to
make the delivery. He has to bring his goods and
deliver them at the place their agreement called
for, i.e., at the Ajinomoto Pasig River wharf.
A stipulation designating the place and manner
of delivery is controlling on the contracting
parties.9 The thing sold can only be understood
as delivered to the buyer when it is placed in the
buyers control and possession at the agreed
place of delivery.10 Cargill presented no evidence
that it attempted to make other deliveries to
complete the balance of Contract 5026.
Two. The CA correctly ruled that Cargill was in
breach of Contract 5047 which provided for
delivery of the molasses within the months of
October, November, and December 1996. Thus,
when Cargill wrote San Fernando on May 14,
1997 proposing to move the delivery dates of
this contract to May, June, and July, 1997, it was
already in default. San Fernandos refusal to
signify its conformity at the proper space on
Cargills letter-proposal regarding Contract 5047
signifies that it was not amenable to the change.
San Fernando had good reason for this: it had
already agreed to supply Ajinomoto the molasses
covered by Contract 5047 at the rate
of P4,950.00 per mt.11 Consequently, Cargills
failure to deliver the 5,000 mt of molasses on
"October-November-December 1996" makes it
liable to San Fernando for P11,000,000.00 in
unrealized profits. Thus:
The Court rules that the CA correctly deleted the
award of exemplary damages to San Fernando.
In breach of contract, the court may only award
exemplary damages if the defendant acted in a
wanton, fraudulent, reckless, oppressive, or
malevolent manner.15 The evidence has not
sufficiently established that Cargills failure to
deliver the molasses on time was attended by
such wickedness.
Lastly, the CA correctly deleted the award of
attorneys fees and cost of litigation to San
Fernando. Attorneys fees and expenses of
litigation under Article 2208 of the Civil Code are
proper only when exemplary damages are
awarded. Here, the Court has ruled that San
Fernando is not entitled to an award of
exemplary damages. Both parties actually
committed shortcomings in complying with their
contractual obligations. San Fernando failed in
Contract 5026 to accept Cargills delivery of
1,174 mt of molasses; Cargill only complied
partially with its undertakings under Contract
5026and altogether breached its obligations
under Contract 5047. For these, they must bear
their own expenses of litigation.
WHEREFORE, the Court PARTIALLY GRANTS the
petitions and MODIFIES the Court of Appeals
Decision on January 19, 2007 in CA-G.R.CV
81993 as follows:
1. San Fernando Regala Trading, Inc. is ORDERED
to pay Cargill Philippines, Inc. (a) P892,732.50
representing the demurrage that the latter
incurred and (b) P2,451,405.59 representing its
unrealized profit on the rejected delivery of
1,174 mt of molasses, both under Contract 5026,
for a total of P3,344,138.09, with interest at 6%
per annum computed from the date of the filing PAN-AM on March 29, 1960, by "Your Travel
of the complaint until the same is fully paid; and Guide" agency, specifically, by Delfin Faustino,
for then Senator Fernando Lopez, his wife Maria
2. Cargill Philippines, Inc. is ORDERED to pay San J. Lopez, his son-in-law Alfredo Montelibano, Jr.,
Fernando Regala Trading, Inc. the latters and his daughter, Mrs. Alfredo Montelibano, Jr.,
unrealized profits of P2,531,250.00 for the (Milagros Lopez Montelibano). PAN-AM's San
breach of Contract 5026 and P11,000,000.00 for Francisco head office confirmed the reservations
the breach of Contract 5047, for a total of P on March 31, 1960.
13,531,250.00, with interest at 6% per annum First class tickets for the abovementioned flight
computed from the date of the tiling of the were subsequently issued by
answer with counterclaim until the same is fully PAN-AM on May 21 and 23, 1960, in favor of
paid. Senator Lopez and his party. The total fare of
The Court of Appeals' deletion of the awards of P9,444 for all of them was fully paid before the
moral and exemplary damages, attorney's fees, tickets were issued.
and costs of litigation stands. As scheduled Senator Lopez and party left Manila
by Northwest Airlines on May 24, 1960, arriving
SO ORDERED. in Tokyo at 5:30 P.M. of that day. As soon as they
arrived Senator Lopez requested Minister
Busuego of the Philippine Embassy to contact
PAN-AM's Tokyo office regarding their first class
accommodations for that evening's flight. For the
given reason that the first class seats therein
were all booked up, however, PAN-AM's Tokyo
office informed Minister Busuego that PAN-AM
could not accommodate Senator Lopez and party
in that trip as first class passengers. Senator
Lopez thereupon gave their first class tickets to
Minister Busuego for him to show the same to
PAN-AM's Tokyo office, but the latter firmly
reiterated that there was no accommodation for
them in the first class, stating that they could
not go in that flight unless they took the tourist
class therein.
Due to pressing engagements awaiting Senator
Lopez and his wife, in the United States he
had to attend a business conference in San
Francisco the next day and she had to undergo a
medical check-up in Mayo Clinic, Rochester,
Minnesota, on May 28, 1960 and needed three
Republic of the Philippines days rest before that in San Francisco Senator
SUPREME COURT Lopez and party were constrained to take PAN-
Manila AM's flight from Tokyo to San Francisco as tourist
passengers. Senator Lopez however made it
EN BANC
clear, as indicated in his letter to PAN-AM's Tokyo
G.R. No. L-22415 March 30, 1966 office on that date (Exh. A), that they did so
"under protest" and without prejudice to further
FERNANDO LOPEZ, ET AL., plaintiffs- action against the airline.1wph1.t
appellants, Suit for damages was thereafter filed by Senator
vs. Lopez and party against PAN-AM on June 2, 1960
PAN AMERICAN WORLD AIRWAYS, defendant- in the Court of First Instance of Rizal. Alleging
appellant. breach of contracts in bad faith by defendant,
plaintiffs asked for P500,000 actual and moral
Ross, Selph and Carrascoso for the defendant-
damages, P100,000 exemplary damages,
appellant.
P25,000 attorney's fees plus costs. PAN-AM filed
Vicente J. Francisco for the plaintiffs-appellants.
its answer on June 22, 1960, asserting that its
BENGZON, J.P., J.: failure to provide first class accommodations to
plaintiffs was due to honest error of its
Plaintiffs and defendant appeal from a decision employees. It also interposed a counterclaim for
of the Court of First Instance of Rizal. Since the attorney's fees of P25,000.
value in controversy exceeds P200,000 the Subsequently, further pleadings were filed, thus:
appeals were taken directly to this Court upon all plaintiffs' answer to the counterclaim, on July 25,
questions involved (Sec. 17, par. 3[5], Judiciary 1960; plaintiffs' reply attached to motion for its
Act). admittance, on December 2, 1961; defendant's
Stated briefly the facts not in dispute are as supplemental answer, on March 8, 1962;
follows: Reservations for first class plaintiffs' reply to supplemental answer, on
accommodations in Flight No. 2 of Pan American March 10, 1962; and defendant's amended
World Airways hereinafter otherwise called supplemental answer, on July 10, 1962.
PAN-AM from Tokyo to San Francisco on May After trial which took twenty-two (22) days
24, 1960 were made with ranging from November 25, 1960 to January 5,
1963 the Court of First Instance rendered its
decision on November 13, 1963, the dispositive
portion stating:
In view of the foregoing considerations,
judgment is hereby rendered in favor of the
plaintiffs and against the defendant, which is
accordingly ordered to pay the plaintiffs the
following: (a) P100,000.00 as moral damages;
(b) P20,000.00 as exemplary damages; (c)
P25,000.00 as attorney's fees, and the costs of
this action.
So ordered.
Plaintiffs, however, on November 21, 1963,
moved for reconsideration of said judgment,
asking that moral damages be increased to
P400,000 and that six per cent (6%) interest per
annum on the amount of the award be granted.
And defendant opposed the same. Acting
thereon the trial court issued an order on
December 14, 1963, reconsidering the
dispositive part of its decision to read as follows:
In view of the foregoing considerations,
judgment is hereby rendered in favor of the
plaintiffs and against the defendant, which is
accordingly ordered to pay the plaintiffs the
following: (a) P150,000.00 as moral damages;
(b) P25,000.00 as exemplary damages; with
legal interest on both from the date of the filing
of the complaint until paid; and (c) P25,000.00
as attorney's fees; and the costs of this action.
So ordered.
It is from said judgment, as thus reconsidered,
that both parties have appealed.
Defendant, as stated, has from the start
admitted that it breached its contracts with
plaintiffs to provide them with first class
accommodations in its Tokyo-San Francisco flight
of May 24, 1960. In its appeal, however, it takes
issue with the finding of the court a quo that it
acted in bad faith in the branch of said contracts.
Plaintiffs, on the other hand, raise questions on
the amount of damages awarded in their favor,
seeking that the same be increased to a total of
P650,000.
Anent the issue of bad faith the records show the
respective contentions of the parties as follows.
According to plaintiffs, defendant acted in bad
faith because it deliberately refused to comply
with its contract to provide first class
accommodations to plaintiffs, out of racial
prejudice against Orientals. And in support of its
contention that what was done to plaintiffs is an
oftrepeated practice of defendant, evidence was
adduced relating to two previous instances of
alleged racial discrimination by defendant
against Filipinos in favor of "white" passengers.
Said previous occasions are what allegedly
happened to (1) Benito Jalbuena and (2) Cenon
S. Cervantes and his wife.
And from plaintiffs' evidence this is what
allegedly happened; Jalbuena bought a first class
ticket from PAN-AM on April 13, 1960; he
confirmed it on April 15, 1960 as to the Tokyo-
Hongkong flight of April 20, 1960; PAN-AM
similarly confirmed it on April 20, 1960. At the
airport he and another Oriental Mr. Tung
were asked to step aside while other passengers
- including "white" passengers boarded PAN-
AM's plane. Then PAN-AM officials told them that
one of them had to stay behind. Since Mr. Tung
was going all the way to London, Jalbuena was
chosen to be left behind. PAN-AM's officials could
only explain by saying there was "some
mistake". Jalbuena thereafter wrote PAN-AM to
protest the incident (Exh. B).
As to Cenon S. Cervantes it would appear that in
Flight No. 6 of PAN-AM on September 29, 1958
from Bangkok to Hongkong, he and his wife had
to take tourist class, although they had first class
tickets, which they had previously confirmed,
because their seats in first class were given to
"passengers from London."
Against the foregoing, however, defendant's
evidence would seek to establish its theory of
honest mistake, thus:
The first class reservations of Senator Lopez and
party were made on March 29, 1960 together
with those of four members of the Rufino family,
for a total of eight (8) seats, as shown in their
joint reservation card (Exh. 1). Subsequently on
March 30, 1960, two other Rufinos secured
reservations and were given a separate
reservation card (Exh. 2). A new reservation card
consisting of two pages (Exhs. 3 and 4) was then
made for the original of eight passengers,
namely, Senator Lopez and party and four
members of the Rufino family, the first page
(Exh. 3) referring to 2 Lopezes, 2 Montelibanos
and 1 Rufino and the second page (Exh. 4)
referring to 3 Rufinos. On April 18, 1960 "Your
Travel Guide" agency cancelled the reservations
of the Rufinos. A telex message was thereupon
sent on that date to PAN-AM's head office at San
Francisco by Mariano Herranz, PAN-AM's
reservations employee at its office in Escolta,
Manila. (Annex A-Acker's to Exh. 6.) In said
message, however, Herranz mistakenly
cancelled all the seats that had been reserved,
that is, including those of Senator Lopez and
party.
The next day April 1960 Herranz discovered
his mistake, upon seeing the reservation card
newly prepared by his co-employee Pedro Asensi
for Sen. Lopez and party to the exclusion of the
Rufinos (Exh. 5). It was then that Herranz sent
another telex wire to the San Francisco head
office, stating his error and asking for the
reinstatement of the four (4) first class seats
reserved for Senator Lopez and party (Annex A-
Velasco's to Exh. 6). San Francisco head office
replied on April 22, 1960 that Senator Lopez and
party are waitlisted and that said office is unable
to reinstate them (Annex B-Velasco's to Exh. 6).
Since the flight involved was still more than a
month away and confident that reinstatement
would be made, Herranz forgot the matter and
told no one about it except his co-employee,
either Armando Davila or Pedro Asensi or both of
them (Tsn., 123-124, 127, Nov. 17, 1961).
Subsequently, on April 27, 1960, Armando
Davila, PAN-AM's reservations employee working
in the same Escolta office as Herranz, phoned
PAN-AM's ticket sellers at its other office in the
Manila Hotel, and confirmed the reservations of
Senator Lopez and party.
PAN-AM's reservations supervisor Alberto Jose,
discovered Herranz's mistake after "Your Travel
Guide" phone on May 18, 1960 to state that
Senator Lopez and party were going to depart as
scheduled. Accordingly, Jose sent a telex wire on
that date to PAN-AM's head office at San
Francisco to report the error and asked said
office to continue holding the reservations of
Senator Lopez and party (Annex B-Acker's to
Exh. 6). Said message was reiterated by Jose in
his telex wire of May 19, 1960 (Annex C-Acker's
to Exh. 6). San Francisco head office replied on
May 19, 1960 that it regrets being unable to
confirm Senator Lopez and party for the reason
that the flight was solidly booked (Exh. 7). Jose
sent a third telex wire on May 20, 1960
addressed to PAN-AM's offices at San Francisco,
New York (Idlewild Airport), Tokyo and Hongkong,
asking all-out assistance towards restoring the
cancelled spaces and for report of cancellations
at their end (Annex D-Acker's to Exh. 6). San
Francisco head office reiterated on May 20, 1960
that it could not reinstate the spaces and
referred Jose to the Tokyo and Hongkong offices
(Exh. 8). Also on May 20, the Tokyo office of PAN-
AM wired Jose stating it will do everything
possible (Exh. 9).
Expecting that some cancellations of bookings
would be made before the flight time, Jose
decided to withhold from Senator Lopez and
party, or their agent, the information that their
reservations had been cancelled.
Armando Davila having previously confirmed
Senator Lopez and party's first class reservations
to PAN-AM's ticket sellers at its Manila Hotel
office, the latter sold and issued in their favor
the corresponding first class tickets on the 21st
and 23rd of May, 1960.
From the foregoing evidence of defendant it is in
effect admitted that defendant through its
agents first cancelled plaintiffs, reservations
by mistake and thereafter deliberately and
intentionally withheld from plaintiffs or their
travel agent the fact of said cancellation, letting
them go on believing that their first class
reservations stood valid and confirmed. In so
misleading plaintiffs into purchasing first class
tickets in the conviction that they had confirmed
reservations for the same, when in fact they had
none, defendant wilfully and knowingly placed
itself into the position of having to breach its a
foresaid contracts with plaintiffs should there be
no last-minute cancellation by other passengers
before flight time, as it turned out in this case.
Such actuation of defendant may indeed have
been prompted by nothing more than the
promotion of its self-interest in holding on to
Senator Lopez and party as passengers in its
flight and foreclosing on their chances to seek
the services of other airlines that may have been
able to afford them first class accommodations.
All the time, in legal contemplation such conduct
already amounts to action in bad faith. For bad
faith means a breach of a known duty through
some motive of interest or ill-will (Spiegel vs.
Beacon Participations, 8 NE 2d 895, 907). As
stated in Kamm v. Flink, 113 N.J.L. 582, 175 A.
62, 99 A.L.R. 1, 7: "Self-enrichment or fraternal
interest, and not personal ill-will, may well have
been the motive; but it is malice nevertheless."
As of May 18, 1960 defendant's reservations
supervisor, Alberto Jose knew that plaintiffs'
reservations had been cancelled. As of May 20
he knew that the San Francisco head office
stated with finality that it could not reinstate
plaintiffs' cancelled reservations. And yet said
reservations supervisor made the "decision"
to use his own, word to withhold the
information from the plaintiffs. Said Alberto Jose
in his testimony:
Q Why did you not notify them?
A Well, you see, sir, in my fifteen (15) years of
service with the air lines business my experience
is that even if the flights are solidly booked
months in advance, usually the flight departs
with plenty of empty seats both on the first class
and tourist class. This is due to late cancellation
of passengers, or because passengers do not
show up in the airport, and it was our hope
others come in from another flight and,
therefore, are delayed and, therefore, missed
their connections. This experience of mine,
coupled with that wire from Tokyo that they
would do everything possible prompted me to
withhold the information, but unfortunately,
instead of the first class seat that I was hoping
for and which I anticipated only the tourists class
was open on which Senator and Mrs. Lopez, Mr.
and Mrs. Montelibano were accommodated. Well,
I fully realize now the gravity of my decision in
not advising Senator and Mrs. Lopez, Mr. and
Mrs. Montelibano nor their agents about the
erroneous cancellation and for which I would like
them to know that I am very sorry.
xxx xxx xxx
Q So it was not your duty to notify Sen. Lopez
and parties that their reservations had been
cancelled since May 18, 1960?
A As I said before it was my duty. It was my duty
but as I said again with respect to that duty I
have the power to make a decision or use my
discretion and judgment whether I should go
ahead and tell the passenger about the
cancellation. (Tsn., pp. 17-19, 28-29, March 15,
1962.)
At the time plaintiffs bought their tickets,
defendant, therefore, in breach of its known
duty, made plaintiffs believe that their
reservation had not been cancelled. An
additional indication of this is the fact that upon
the face of the two tickets of record, namely, the
ticket issued to Alfredo Montelibano, Jr. on May
21, 1960 (Exh. 22) and that issued to Mrs.
Alfredo Montelibano, Jr., on May 23, 1960 (Exh.
23), the reservation status is stated as "OK".
Such willful-non-disclosure of the cancellation or
pretense that the reservations for plaintiffs stood
and not simply the erroneous cancellation
itself is the factor to which is attributable the
breach of the resulting contracts. And, as above-
stated, in this respect defendant clearly acted in
bad faith.
As if to further emphasize its bad faith on the
matter, defendant subsequently promoted the
employee who cancelled plaintiffs' reservations
and told them nothing about it. The record shows
that said employee Mariano Herranz was
not subjected to investigation and suspension by
defendant but instead was given a reward in the
form of an increase of salary in June of the
following year (Tsn., 86-88, Nov. 20, 1961).
At any rate, granting all the mistakes advanced
by the defendant, there would at least be
negligence so gross and reckless as to amount to
malice or bad faith (Fores vs. Miranda, L-12163,
March 4, 1959; Necesito v. Paras, L-10605-06,
June 30, 1958). Firstly, notwithstanding the
entries in the reservation cards (Exhs. 1 & 3)
that the reservations cancelled are those of the
Rufinos only, Herranz made the mistake, after
reading said entries, of sending a wire cancelling
all the reservations, including those of Senator
Lopez and party (Tsn., pp. 108-109, Nov. 17,
1961). Secondly, after sending a wire to San
Francisco head office on April 19, 1960 stating
his error and asking for reinstatement, Herranz
simply forgot about the matter. Notwithstanding
the reply of San Francisco head Office on April
22, 1960 that it cannot reinstate Senator Lopez
and party (Annex B-Velasco's to Exh. 6), it was
assumed and taken for granted that
reinstatement would be made. Thirdly, Armando
Davila confirmed plaintiff's reservations in a
phone call on April 27, 1960 to defendant's ticket
sellers, when at the time it appeared in plaintiffs'
reservation card (Exh. 5) that they were only
waitlisted passengers. Fourthly, defendant's
ticket sellers issued plaintiffs' tickets on May 21
and 23, 1960, without first checking their
reservations just before issuing said tickets. And,
finally, no one among defendant's agents
notified Senator Lopez and party that their
reservations had been cancelled, a precaution
that could have averted their entering with
defendant into contracts that the latter had
already placed beyond its power to perform.
Accordingly, there being a clear admission in
defendant's evidence of facts amounting to a
bad faith on its part in regard to the breach of its
contracts with plaintiffs, it becomes unnecessary
to further discuss the evidence adduced by
plaintiffs to establish defendant's bad faith. For
what is admitted in the course of the trial does
not need to be proved (Sec. 2, Rule 129, Rules of
Court).
Addressing ourselves now to the question of
damages, it is well to state at the outset those
rules and principles. First, moral damages are
recoverable in breach of contracts where the
defendant acted fraudulently or in bad faith (Art.
2220, New Civil Code). Second, in addition to
moral damages, exemplary or corrective
damages may be imposed by way of example or
correction for the public good, in breach of
contract where the defendant acted in a wanton,
fraudulent, reckless, oppressive or malevolent
manner (Articles 2229, 2232, New Civil Code).
And, third, a written contract for an attorney's
services shall control the amount to be paid
therefor unless found by the court to be
unconscionable or unreasonable (Sec. 24, Rule
138, Rules of Court).
First, then, as to moral damages. As a proximate
result of defendant's breach in bad faith of its
contracts with plaintiffs, the latter suffered social
humiliation, wounded feelings, serious anxiety
and mental anguish. For plaintiffs were travelling
with first class tickets issued by defendant and
yet they were given only the tourist class. At
stop-overs, they were expected to be among the
first-class passengers by those awaiting to
welcome them, only to be found among the
tourist passengers. It may not be humiliating to
travel as tourist passengers; it is humiliating to
be compelled to travel as such, contrary to what
is rightfully to be expected from the contractual
undertaking.
Senator Lopez was then Senate President Pro
Tempore. International carriers like defendant
know the prestige of such an office. For the
Senate is not only the Upper Chamber of the
Philippine Congress, but the nation's treaty-
ratifying body. It may also be mentioned that in
his aforesaid office Senator Lopez was in a
position to preside in impeachment cases should
the Senate sit as Impeachment Tribunal. And he
was former Vice-President of the Philippines.
Senator Lopez was going to the United States to
attend a private business conference of the
Binalbagan-Isabela Sugar Company; but his
aforesaid rank and position were by no means
left behind, and in fact he had a second
engagement awaiting him in the United States: a
banquet tendered by Filipino friends in his honor
as Senate President Pro Tempore (Tsn., pp. 14-
15, Nov. 25, 1960). For the moral damages
sustained by him, therefore, an award of
P100,000.00 is appropriate.
Mrs. Maria J. Lopez, as wife of Senator Lopez,
shared his prestige and therefore his humiliation.
In addition she suffered physical discomfort
during the 13-hour trip,(5 hours from Tokyo to
Honolulu and 8 hours from Honolulu to San
Francisco). Although Senator Lopez stated that
"she was quite well" (Tsn., p. 22, Nov. 25, 1960)
he obviously meant relatively well, since the
rest of his statement is that two months before,
she was attackedby severe flu and lost 10
pounds of weight and that she was advised by
Dr. Sison to go to the United States as soon as
possible for medical check-up and relaxation,
(Ibid). In fact, Senator Lopez stated, as shown a
few pages after in the transcript of his
testimony, that Mrs. Lopez was sick when she
left the Philippines:
A. Well, my wife really felt very bad during the
entire trip from Tokyo to San Francisco. In the
first place, she was sick when we left the
Philippines, and then with that discomfort which
she [experienced] or suffered during that
evening, it was her worst experience. I myself,
who was not sick, could not sleep because of the
discomfort. (Tsn., pp. 27-28, Nov. 25, 1960).
It is not hard to see that in her condition then a
physical discomfort sustained for thirteen hours
may well be considered a physical suffering. And
even without regard to the noise and trepidation
inside the plane which defendant contends,
upon the strengh of expert testimony, to be
practically the same in first class and tourist
class the fact that the seating spaces in the
tourist class are quite narrower than in first
class, there beingsix seats to a row in the former
as against four to a row in the latter, and that in
tourist class there is very little space for reclining
in view of the closer distance between rows
(Tsn., p. 24, Nov. 25, 1960), will suffice to show
that the aforesaid passenger indeed experienced
physical suffering during the trip. Added to this,
of course, was the painfull thought that she was
deprived by defendant after having paid for
and expected the same of the most suitable,
place for her, the first class, where evidently the
best of everything would have been given her,
the best seat, service, food and treatment. Such
difference in comfort between first class and
tourist class is too obvious to be recounted, is in
fact the reason for the former's existence, and is
recognized by the airline in charging a higher
fare for it and by the passengers in paying said
higher rate Accordingly, considering the totality
of her suffering and humiliation, an award to
Mrs. Maria J. Lopez of P50,000.00 for moral
damages will be reasonable.
Mr. and Mrs. Alfredo Montelibano, Jr., were
travelling as immediate members of the family
of Senator Lopez. They formed part of the
Senator's party as shown also by the reservation
cards of PAN-AM. As such they likewise shared
his prestige and humiliation. Although defendant
contends that a few weeks before the flight they
had asked their reservations to be charged from
first class to tourist class which did not
materialize due to alleged full booking in the
tourist class the same does not mean they
suffered no shared in having to take tourist class
during the flight. For by that time they had
already been made to pay for first class seats
and therefore to expect first class
accommodations. As stated, it is one thing to
take the tourist class by free choice; a far
different thing to be compelled to take it
notwithstanding having paid for first class seats.
Plaintiffs-appellants now ask P37,500.00 each for
the two but we note that in their motion for
reconsideration filed in the court a quo, they
were satisfied with P25,000.00 each for said
persons. (Record on Appeal, p. 102). For their
social humiliation, therefore, the award to them
of P25,000.00 each is reasonable.
The rationale behind exemplary or corrective
damages is, as the name implies, to provide an
example or correction for public good. Defendant
having breached its contracts in bad faith, the
court, as stated earlier, may award exemplary
damages in addition to moral damages (Articles
2229, 2232, New Civil Code).
In view of its nature, it should be imposed in
such an amount as to sufficiently and effectively
deter similar breach of contracts in the future by
defendant or other airlines. In this light, we find
it just to award P75,000.00 as exemplary or
corrective damages.
Now, as to attorney's fees, the record shows a
written contract of services executed on June 1,
1960 (Exh. F) whereunder plaintiffs-appellants
engaged the services of their counsel Atty.
Vicente J. Francisco and agreedto pay the sum
of P25,000.00 as attorney's fees upon the
termination of the case in the Court of First
Instance, and an additional sum of P25,000.00 in
the event the case is appealed to the Supreme
Court. As said earlier, a written contract for
attorney's services shall control the amount to
be paid therefor unless found by the court to be
unconscionable or unreasonable. A consideration
of the subject matter of the present controversy,
of the professional standing of the attorney for
plaintiffs-appellants, and of the extent of the
service rendered by him, shows that said amount
provided for in the written agreement is
reasonable. Said lawyer whose prominence in
the legal profession is well known studied the
case, prepared and filed the complaint, conferred
with witnesses, analyzed documentary evidence,
personally appeared at the trial of the case in
twenty-two days, during a period of three years,
prepared four sets of cross-interrogatories for
deposition taking, prepared several memoranda
and the motion for reconsideration, filed a joint
record on appeal with defendant, filed a brief for
plaintiffs as appellants consisting of 45 printed
pages and a brief for plaintiffs as appellees
consisting of 265 printed pages. And we are
further convinced of its reasonableness because
defendant's counsel likewise valued at
P50,000.00 the proper compensation for his
services rendered to defendant in the trial court
and on appeal.
In concluding, let it be stressed that the amount
of damages awarded in this appeal has been
determined by adequately considering the
official, political, social, and financial standing of
the offended parties on one hand, and the
business and financial position of the offender on
the other (Domingding v. Ng, 55 O.G. 10). And
further considering the present rate of exchange
and the terms at which the amount of damages
awarded would approximately be in U.S. dollars,
this Court is all the more of the view that said
award is proper and reasonable.
Wherefore, the judgment appealed from is
hereby modified so as to award in favor of
plaintiffs and against defendant, the following:
(1) P200,000.00 as moral damages, divided
among plaintiffs, thus: P100,000.00 for Senate
President Pro Tempore Fernando Lopez;
P50,000.00 for his wife Maria J. Lopez;
P25,000.00 for his son-in-law Alfredo
Montelibano, Jr.; and P25,000.00 for his daughter
Mrs. Alfredo Montelibano, Jr.; (2) P75,000.00 as
exemplary or corrective damages; (3) interest at
the legal rate of 6% per annum on the moral and
exemplary damages aforestated, from December
14, 1963, the date of the amended decision of
the court a quo, until said damages are fully
paid; (4) P50,000.00 as attorney's fees; and (5)
the costs. Counterclaim dismissed.So ordered.
Bengzon, C.J., Bautista Angelo, Concepcion,
Reyes, J.B.L., Barrera, Regala, Makalintal,
Zaldivar and Sanchez, JJ., concur.
Dizon, J., is on leave.