Sps. Dionisio Estrada and Jovita R. Estrada v. Philippine Rabbit Bus Lines and Eduardo R.

Saylan
G.R. 203902 | July 19, 2017
Nature of Action: Petition for review on certiorari | Topic: Damages

First Division | Del Castillo, J:

An accident occurred between a Philippine Rabbit bus driven by Saylan and a truck drivEn
by Willy Urez, registered under Rogelio Cuytons name. The truck, properly on his lane, collided
with the bus when the latter overtook a jeepney when the jeepney stopped. Dionisio was passenger
of the bus. His right arm was amputated. Dionisio sued for breach of contract of carriage, for the
negligence of Philippine Rabbits driver, resulting in his arms amputation. He demanded moral
damages, actual damages, and attorneys fees. Philippine Rabbit says it carried him safely as far as
human care and foresight can provide with the utmost diligence of a very cautious person and with
due regard to the prevailing circumstances. They said that the cause of the accident was an
extraordinary circumstance independent of the drivers action. They also invoked that the truck had
the last clear chance to avoid the mishap.

ISSUE: W/N the CA erred in declaring that there was no evidence of fraud or bad faith on Philippine
Rabbits part Yes

RULING OF THE COURT:

Moral damages include physical suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury.
Though incapable of pecuniary computation, moral damages may be recovered if they are the
proximate result of the defendant's wrongful act or omission.

Under Article 2219 of the Civil Code, moral damages are recoverable in the following and
analogous cases x x x

Since breach of contract is not one of the items enumerated under Article 2219, moral
damages, as a general rule, are not recoverable in actions for damages predicated on breach of
contract.

As an exception, such damages are recoverable [in an action for breach of contract:]
(1) in cases in which the mishap results in the death of a passenger, as provided in
Article 1764, in relation to Article 2206(3) of the Civil Code; and (2) in x x x cases in
which the carrier is guilty of fraud or bad faith, as provided in Article 2220

It is obvious that this case does not come under the first of the abovementioned exceptions
since Dionisio did not die in the mishap but merely suffered an injury. Nevertheless, petitioners
contend that it falls under the second category since they aver that Philippine Rabbit is guilty of
fraud or bad faith.

It has been held, however, that "allegations of bad faith and fraud must be proved by clear
and convincing evidence." They are never presumed considering that they are serious accusations
that can be so conveniently and casually invoked. And unless convincingly substantiated by
whoever is alleging them, they amount to mere slogans or mudslinging.

In this case, the fraud or bad faith that must be convincingly proved by petitioners should
be one which was committed by Philippine Rabbit in breaching its contract of carriage with
Dionisio. Unfortunately for petitioners, the Court finds no persuasive proof of such fraud or bad
faith.

Fraud has been defined to include an inducement through insidious machination.

Insidious machination refers to a deceitful scheme or plot with an evil or devious
purpose. Deceit exists where the party, with intent to deceive, conceals or omits to
state material facts and, by reason of such omission or concealment, the other party
was induced to give consent that would not otherwise have been given.

Bad faith, on the other hand, "does not simply connote bad judgment or negligence; it
imports a dishonest purpose or some moral obliquity and conscious doing of a wrong, a breach of a
known duty through some motive or interest or ill will that partakes of the nature of fraud."

There is no showing here that Philippine Rabbit induced Dionisio to enter into a contract of
carriage with the former through insidious machination. Neither is there any indication or even an
allegation of deceit or concealment or omission of material facts by reason of which Dionisio
boarded the bus owned by Philippine Rabbit. Likewise, it was not shown that Philippine Rabbit's
breach of its known duty, which was to transport Dionisio from Urdaneta to La Union, was attended
by some motive, interest, or ill will. From these, no fraud or bad faith can be attributed to Philippine
Rabbit.

Still, petitioners insist that since the defenses it pleaded in its Answer were designed to
evade liability, Philippine Rabbit is guilty of fraud or bad faith. Suffice it to state, however, that the
allegations which made up Philippine Rabbit's defenses are hardly the kind of fraud or bad faith
contemplated by law. Again, it bears to mention that the fraud or bad faith must be one which
attended the contractual breach or one which induced Dionisio to enter into contract in the first
place.

Clearly, moral damages are not recoverable in this case. The CA, therefore, did not err in
deleting the award for moral damages.

XXX

In an attempt to recover the P500,000.00 awarded by the RTC as moral damages but
deleted by the CA, petitioners would instead want this Court to grant them the same amount as just
and proper compensation for the loss of Dionisio's right arm.

It thus appears that while petitioners denominated their claim for P500,000.00 as moral
damages, their computation was actually based on the supposed loss/impairment of Dionisio's
earning capacity.

Xxx

It is, however, settled that damages for loss [or impairment] of earning capacity is in the
nature of actual damages x x x.

Unfortunately, no documentary evidence supporting Dionisio's actual income is extant on

the records. What it bears is the mere testimony of Dionisio on the matter, x x x

It must be emphasized, though, that documentary proof of Dionisio's actual income cannot
be dispensed with since based on the above testimony, Dionisio does not fall under any of the two
exceptions aforementioned. Thus, as it stands, there is no competent proof substantiating his actual
income and because of this, an award for actual damages for loss/ impairment of earning capacity
cannot be made.

Nonetheless, since it was established that Dionisio lost his right arm, temperate damages in
lieu of actual damages for loss/impairment of earning capacity may be awarded in his favor. Under
Article 2224, "[t]emperate or moderate damages, which are more than nominal but less than
compensatory damages, may be recovered when the court finds that some pecuniary loss has been
suffered but its amount cannot, from the nature of the case, be proved with certainty.
Rosalie Ayson v. Fil-Estate Properties
GR No. 223254 | December 1, 2016
Nature of the action: petition for review on certiorari | Topic: Damages

First Division | Perlas-Bernabe, J:

A Complaint for recovery of possession and damages was filed by Ayson against Fil-Estate and
Fairways, alleging that she is the registered owner of a 1,000 sqm. parcel of land. She discovered
that Fil-Estate and Fairways illegally entered into the subject land and included it in the
construction of its golf course, without her consent and authorization.

Fil-Estate said that the land was formerly owned by Divina Villanueva, with whom they entered a
joint venture agreement (JVA) to develop Fairways and Bluewater Resort Golf and Country Club.
Villanueva sold portions of the property to various buyers with the caveat that these may be used in
a development project. Talks with Ayson stalled, but Fil-Estate commenced with construction
relying on Villanuevas assurance that Ayson would eventually agree.

ISSUE: W/N there is basis to award moral damages, exemplary damages, and attorneys fees

RULING OF THE COURT:

The petition is partly meritorious.

I.
XXX

Verily, the finding of Fil-Estate and Fairways' bad faith[31] as well as their liability for moral
damages,[32] exemplary damages,[33] and attorney's fees,[34] are all factual matters which are not
within the ambit of the instant petition for review on certiorari under Rule 45 of the Rules of Court.
In this regard, it has long been settled that factual findings of the trial court, affirmed by the CA, are
final and conclusive and may not be reviewed on appeal,[35] save for certain exceptions,[36] which
Fil-Estate and Fairways failed to show in this case - at least regarding this issue.

Relatedly, the CA correctly reduced the awards for moral damages, exemplary damages, and
attorney's fees to P500,000.00, P300,000.00, and P200,000.00, respectively, in light of the evidence
adduced as well as the prevailing circumstances of the instant case. It must be stressed that
"[m]oral damages are not meant to be punitive 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."[37]
Similarly, exemplary damages are imposed "by way of example or correction for the public good, in
addition to the moral, temperate, liquidated or compensatory damages" and are awarded "only if
the guilty party acted in a wanton, fraudulent, reckless, oppressive or malevolent manner."[38]
Lastly, attorney's fees should be reasonable in all cases where an award thereof is warranted under
the circumstances.[39]

In sum, Fil-Estate and Fairways' liability for moral damages, exemplary damages, and attorney's
fees, as well as the amounts thereof, must be upheld in light of the surrounding circumstances of
this case. In addition, a legal interest at the rate of six percent (6%) per annum should be imposed
on all monetary awards to Ayson from the time of the finality of this Decision until fully paid.
Pryce Properties Corporation v. Sps. Sotero Octobre and Henrissa Octobre
GR No. 186976 | December 7, 2016
Nature of the action: petition for review on certiorari | Topic: Damages

Second Division | Jardeleza, J:

Respondents signed a Reservation Agreement with Pryce for the purchaseof two lots in Puerto
Heights Village in Cagayan de Oro City. They executed a Contract to Sell for P2.8M on January 7,
1998. Pryce issued a certification of full payment of purchase price and amortization interests,
transfer fees and other charges in relation to the property amounting to P4.2M. But Pryce had yet to
deliver the certificates of title. Pryce did not do so despite repeated demands. Complaint was filed in
the HLURB. Pryce apparently previously transferred custody of the titles to China Bank as part of
the deed of assignment executed June 27, 1996, as security for a P200Mcredit facility extended by
China Bank.

CA: contractual breach justified award of compensatory damages.

Pryce argues that compensatory damages should not have been upheld because there was no
competent proof of actual amount of loss. The Spouses maintain validity of compensatory damages
because of the breach of contract by Pryce.

ISSUE: W/N breach of contract automatically triggers award of actual or compensatory damages

RULING OF THE COURT:

Article 2199 of the Civil Code defines actual or compensatory damages:

Art. 2199. Except as provided by law or by stipulation, one is entitled to an adequate

compensation only for such pecuniary loss suffered by him as he has duly proved.
Such compensation is referred to as actual or compensatory damages. (Emphasis
supplied.)

To be entitled to compensatory damages, the amount of loss must therefore be capable of proof and
must be actually proven with a reasonable degree of certainty, premised upon competent proof or
the best evidence obtainable. The burden of proof of the damage suffered is imposed on the party
claiming the same, who should adduce the best evidence available in support thereof. Its award
must be based on the evidence presented, not on the personal knowledge of the court; and certainly
not on flimsy, remote, speculative and non-substantial proof.

It is clear that the amount paid by Spouses Octobre to Pryce as purchase price for the lots has been
adequately proved. There is no dispute that Spouses Octobre are entitled to such amount with legal
interest. The issue being raised by Pryce is only with respect to the P30,000.00 awarded as
compensatory damages.

The records of this case are bereft of any evidentiary basis for the award of P30,000.00 as
compensatory damages. When the HLURB Arbiter initially awarded the amount, it merely
mentioned that "[Spouses Octobre] are entitled to compensatory damages, which is just and
equitable in the circumstances, even against an obligor in good faith since said damages are the
natural and probable consequences of the contractual breach committed." On the other hand, the
Court of Appeals justified the award of compensatory damages by stating that "it is undisputed that
petitioner Pryce committed breach of contract in failing to deliver the titles to respondents
[Spouses] Octobre which necessitated the award of compensatory damages." In their comment,
Spouses Octobre emphasized that they were "forced to litigate and seek the intervention of the
courts because of Pryce's failure to comply with its contractual and legal obligation" without so
much as mentioning any proof that would tend to prove any pecuniary loss they suffered.

In the absence of adequate proof, compensatory damages should not have been awarded.
Nonetheless, we find that nominal damages, in lieu of compensatory damages, are proper in this
case. Under Article 2221, nominal damages may be awarded in order that the plaintiffs right, which
has been violated or invaded by the defendant, may be vindicated or recognized, and not for the
purpose of indemnifying the plaintiff for any loss suffered. Nominal damages are "recoverable
where a legal right is technically violated and must be vindicated against an invasion that has
produced no actual present loss of any kind or where there has been a breach of contract and no
substantial injury or actual damages whatsoever have been or can be shown." So long as there is a
violation of the right of the plaintiffwhether based on law, contract, or other sources of
obligationsan award of nominal damages is proper. Proof of bad faith is not required. The HLURB
Arbiter and the Court of Appeals appear to have confused nominal damages with compensatory
damages, since their justifications more closely fit the former.

It is undisputed that Pryce failed to deliver the titles to the lots subject of the Contract to Sell even
as Spouses Octobre had already fully settled the purchase price. Its inability to deliver the titles
despite repeated demands undoubtedly constitutes a violation of Spouses Octobre's right under
their contract. That Pryce had transferred custody of the titles to China Bank pursuant to a Deed of
Assignment is irrelevant, considering that Spouses Octobre were not privy to such agreement.

In fine, contractual breach is sufficient to justify an award for nominal damages but not
compensatory damages.