FIRST DIVISION

[G.R. No. 111692. February 9, 1996]

ALEJANDRO FUENTES, JR., petitioner, vs. COURT OF APPEALS and PEOPLE OF THE
PHILIPPINES, respondents.

D E C I S I O N
Still professing innocence and insisting that he is a victim of mistaken identity,
petitioner Alejandro Fuentes, Jr., seeks reversal of the decision of the Court of Appeals
affirming his conviction for murder.[1]
At four o clock in the morning of 24 June 1989 Julieto Malaspina together with Godofredo
Llames, Honorio Osok and Alberto Toling, was at a benefit dance at Dump Site, Tudela, Trento,
Agusan del Sur. Petitioner called Malaspina and placed his right arm on the shoulder of the
latter saying, Before, I saw you with a long hair but now you have a short hair. [2]Suddenly
petitioner stabbed Malaspina in the abdomen with a hunting knife. Malaspina fell to the ground
and his companions rushed to his side. Petitioner fled. Before the victim succumbed to the
gaping wound on his abdomen he muttered that Alejandro Fuentes, Jr., stabbed him.[3]
Dr. Porfirio L. Salubre, the Rural Health Physician who autopsied the cadaver of Julieto
Malaspina on 24 July 1989, reported that death was due to stab wound at left lumbar region
I V2 in. in length with extracavitation of the small and large intestines.[4]
Petitioner claims on the other hand that it was his cousin Zoilo Fuentes, Jr., alias Jonie
who knifed Malaspina; that when the victim was killed he was conversing with him; that he was
compelled to run away when he heard that somebody with a bolo and spear would kill all those
from San Isidro because Jonie, the killer, was from that place; that since he was also from
San Isidro he sought refuge in his brothers house where he met Jonie; that Jonie admitted
spontaneously that he stabbed Malaspina because after a boxing match before the latter untied
his gloves and punched him; that as there were many persons milling around the house Jonie
jumped out and escaped through the window; that he was arrested at eight oclock in the morning
of 24 June 1989 while he was in a store in the barangay.[5]
The Regional Trial Court of Prosperidad, Agusan del Sur, found petitioner guilty of murder
qualified by treachery and imposed on him an indeterminate prison term of ten (10) years and
one (1) day of prision mayor as minimum to seventeen (17) years and four (4) months
of reclusion temporal as maximum, to indemnify the heirs of the victim Julieto Malaspina the
amount of P50,000.00 and to pay P8,300.00 as actual damages plus costs.[6]
The Court of Appeals affirmed the judgment of the trial court; hence, this petition for
review.
Petitioner contends that the appellate court erred when it held that petitioner was
positively and categorically identified as the killer of Malaspina, in affirming the judgment
of conviction and in holding petitioner liable for damages to the heirs of the victim.
Petitioner points to an alleged inconsistency between the testimonies of prosecution
witnesses Alberto Toling and Honorio Osok to the effect that they saw petitioner stab Malaspina
on the right lumbar region, and the testimony of the attending physician that the victim was
stabbed on the left lumbar region.
This discrepancy is inconsequential. What is material is that Malaspina was stabbed to
death and that three (3) prosecution witnesses positively identified petitioner as the knife
wielder. It must be stressed that these witnesses had known petitioner for quite some time
and never had any personal misunderstanding nor altercation with the latter as to create any
suspicion that they were impelled by ill motives to falsely implicate him.
That it was another person who committed the offense is too incredible. No less than
petitioners own witness, Nerio Biscocho who claimed he also saw the killing, testified that
Alejandro Fuentes, Jr., the petitioner, and Jonie Fuentes are one and the same person. Thus
-
COURT:
Q. Who is this Joni Fuentes and Alejandro Fuentes?
A. That Joni Fuentes is the same of that or the accused Alejandro Fuentes. I do not
know his real name but he is called as Joni, sir, x x x[7]
On cross-examination witness Biscocho further admitted that he himself would call
petitioner Alejandro Fuentes, Jr., as Joni or Jonie Fuentes, as some of his friends did, but
victim Malaspina occasionally called petitioner Junior.[8]
 Petitioner would make much of the alleged confession of Zoilo Fuentes, Jr., since it is a
declaration against penal interest and therefore an exception to the hearsay rule. The so-
called confession of Zoilo was allegedly given to Felicisimo Fuentes, the uncle of petitioner
and Zoilo, who in turn relayed the matter to P/Sgt. Benjamin Conde, Jr. Felicisimo testified
that on 24 June 1989 while he was at Barangay San Isidro, Zoilo Fuentes, Jr., confessed that
he killed Malaspina in retaliation; that he even showed him the knife he used and asked his
help in finding a lawyer, in securing bail and, if possible, in working out a settlement with
the relatives of the deceased. The following day however he learned that the self-confessed
killer was gone and that petitioner had been arrested for a crime he did not commit.[9]
For his part, Station Commander P/Sgt. Conde, Jr., testified that after the criminal
information for murder was filed on 26 July 1989, petitioner met Felicisimo who informed him
of the disclosure by Zoilo. Conde then advised Felicisimo that if it was true that it was
Zoilo who fatally stabbed Malaspina Felicisimo must persuade Zoilo to surrender. Conde then
personally went to Barangay San Isidro to investigate. There he was told by the townsfolk
that Zoilo had already fled).[10]
One of the recognized exceptions to the hearsay rule is that pertaining to declarations
made against interest. Sec. 38 of Rule 130 of the Rules of Court provides that (t)he
declaration made by a person deceased, or unable to testify, against the interest of the
declarant, if the fact asserted in the declaration was at the time it was made so far contrary
to declarants own interest, that a reasonable man in his position would not have made the
declaration unless he believed it to be true, may be received in evidence against himself or
his successors in interest and against third persons. The admissibility in evidence of such
declaration is grounded on necessity and trustworthiness.[11]
There are three (3) essential requisites for the admissibility of a declaration against
interest: (a) the declarant must not be available to testify; (b) the declaration must concern
a fact cognizable by the declarant; and (c) the circumstances must render it improbable that
a motive to falsify existed.
In the instant case, we find that the declaration particularly against penal interest
attributed to Zoilo Fuentes Jr. is not admissible in evidence as an exception to the hearsay
rule. We are not unaware of People Toledo,[12] a 1928 case, where Justice Malcolm writing for
the Court endeavored to reexamine the declaration of third parties made contrary to their
penal interest. In that case, the protagonists Holgado and Morales engaged in a bob duel.
Morales was killed almost instantly. Holgado who was seriously wounded gave a sworn statement
(Exh. 1) before the municipal president declaring that when he and Morales fought there was
nobody else present. One (1) month later Holgado died from his wounds. While the Court was
agreed that Toledo, who reportedly intervened in the fight and dealt the mortal blow, should
be exonerated on reasonable doubt, the members did not reach an accord on the admissibility
of Exh. 1. One group would totally disregard Exh. 1 since there was ample testimonial evidence
to support an acquittal. The second group considered Exh. 1 as part of the res gestae as it
was made on the same morning when the fight occurred. A third group, to which Justice Malcolm
belonged, opined that the court below erred in not admitting Exh. 1 as the statement of a
fact against penal interest.
For all its attempt to demonstrate the arbitrariness behind the rejection in certain cases
of declarations against penal interest, the Toledo case cannot be applied in the instant case
which is remarkably different. Consider this factual scenario: the alleged declarant Zoilo
Fuentes Jr., a cousin of accused-appellant, verbally admitted to the latter, and later to
their common uncle Felicisimo Fuentes, that he (Zoilo) killed the victim because of a grudge,
after which he disappeared. One striking feature that militates against the acceptance of
such a statement is its patent untrustworthiness. Zoilo who is related to accused-appellant
had every motive to prevaricate. The same can be said of accused-appellant and his uncle
Felicisimo. Secondly, we need not resort to legal rhetorics to find that the admission of
such a statement may likewise be, according to Wigmore, shocking to the sense of
justice.[13] Let us assume that the trial court did admit the statement of Zoilo and on that
basis acquitted accused-appellant. Let us assume further that Zoilo was subsequently captured
and upon being confronted with his admission of guilt readily repudiated the same. There is
nothing, absolutely nothing, that can bind Zoilo legally to that statement.
But more importantly, the far weightier reason why the admission against penal interest
cannot be accepted in the instant case is that the declarant is not unable to testify. There
is no showing that Zoilo is either dead, mentally incapacitated or physically incompetent
which Sec. 38 obviously contemplates. His mere absence from the jurisdiction does not make
him ipso facto unavailable under this rule.[14] For it is incumbent upon the defense to produce
each and every piece of evidence that can break the prosecution and assure the acquittal of
the accused. Other than the gratuitous statements of accused-appellant and his uncle to the
effect that Zoilo admitted having killed Malaspina, the records show that the defense did not
exert any serious effort to produce Zoilo as a witness. Lest we be misunderstood, the Court
is always for the admission of evidence that would let an innocent declaration of guilt by
the real culprit. But this can be open to abuse, as when the extrajudicial statement is not
even authenticated thus increasing the probability of its fabrication; it is made to persons
who have every reason to lie and falsify; and it is not altogether clear that the declarant
himself is unable to testify. Thus, for this case at least, exclusion is the prudent recourse
as explained in Toledo -The purpose of all evidence is to get at the truth. The reason for
the hearsay rule is that the extrajudicial and unsworn statement of another is not the best
method of serving this purpose. In other words, the great possibility of the fabrication of
falsehoods, and the inability to prove their untruth, requires that the doors be closed to
such evidence.[15]
The Court of Appeals as well as the trial court correctly determined the crime to be
murder qualified by treachery. The suddenness of the attack, without any provocation from the
unsuspecting victim, made the stabbing of Malaspina treacherous.[16] However, the court a
quo erred in imposing an indeterminate prison term of ten (10) years and one (1) day of prision
mayor as minimum to seventeen (17) years and four (4) months of reclusion temporal as maximum.
Murder under Art. 248 of The Revised Penal Code is punishable by reclusion temporal in its
maximum period to death. Since aside from treachery qualifying the crime to murder there is
no other modifying circumstance proved, the medium period of the penalty, i.e. reclusion
perpetua, should have been imposed on petitioner.[17]
Petitioner maintains that assuming that he committed the crime it is error to hold him
answerable for P8,300.00 as actual damages on the basis of the mere testimony of the victims
sister, Angelina Serrano, without any tangible document to support such claim. This is a
valid point. In crimes and quasi-delicts, the defendant is liable for all damages which are
the natural and probable consequences of the act or omission complained of.[18] To seek recovery
for actual damages it is essential that the injured party proves the actual amount of loss
with reasonable degree of certainty premised upon competent proof and on the best evidence
available.[19] Courts cannot simply rely on speculation, conjecture or guesswork in determining
the fact and amount of damages.[20]
The award by the court a quo of P8,300.00 as actual damages is not supported by the
evidence on record. We have only the testimony of the victims elder sister stating that she
incurred expenses of P8,300.00 in connection with the death of Malaspina.[21] However, no proof
of the actual damages was ever presented in court. Of the expenses alleged to have been
incurred, the Court can only give credence to those supported by receipts and which appear
to have been genuinely expended in connection with the death of the victim. Since the actual
amount was not substantiated, the same cannot be granted.[22]
WHEREFORE, the judgment appealed from finding petitioner ALEJANDRO FUENTES JR. guilty of
MURDER and directing him to indemnify the heirs of Julieto Malaspina in the amount of
P50,000.00 plus costs is AFFIRMED with the modification that the penalty imposed should be
as it is corrected to reclusion perpetua, and the award of actual damages is deleted.
SO ORDERED.

[1] [15]
Decision penned by Justice Quirino D. Abad Santos, Jr., with Id., p. 838.
[16]
Justices Oscar M. Herrera and Alfredo J. Lagamon concurring, People v. Ronquillo, G.R. No. 96125, 31 August 1995;
prom. 28 July 1993; Rollo, pp. 34-39. People v. Loto, G.R. Nos. 114523-24, 5 September 1995.
[2] [17]
TSN, 11 July 1991, pp. 9-10. People v. Laspona, G.R. No. 108084,14 August 1995; People v.
[3]
TSN, 18 June 1991, pp. 2-6; 11 July 1991, pp. 8-11; 8 August 1991, Mirabite, G.R. Nos. 111294-95,7 September 1995.
[18]
pp. 3-5 Art. 2202, New Civil Code.
[4] [19]
Exhs. A and B, Records, pp. 69-71; see TSN, 11 July I 991, pp. 2-4. Art. 2199, id.
[5] [20]
TSN, 3 September 1991, pp. 3-7. People v. Degoma, G.R. Nos. 89404-05,22 May 1992, 209
[6]
Judge Evangeline S. Yuipco, presiding; Records, pp. 107-108. SCRA 266; People v. Arguelles, G.R. No. 102539, 17 May 1993, 222
[7]
TSN 29 August 1991, pp. 7-8. SCRA 166; Dichoso v. Court of Appeals, OR. No. 55613, 10
[8]
Id., pp. 13-14. December 1990, 192 SCRA 169.
[9] [21]
TSN, 29 August 1991, pp. 3-5. TSN, 19 June 1991, p. 4.
[10] [22]
Id., 4 September 1991, pp. 2-3. In People v. Wenceslao, G.R. No. 95583, 12 August 1992,212
[11]
Jones on Evidence, 2nd Ed., Sec. 1164, cited in Francisco, The SCRA 560, the Court disallowed claim for actual damages, the same
Revised Rules of Court in the Philippines, Vol. III, 1990 Ed., p. 554. being merely based on a typewritten list of expenses submitted by
[12]
51 Phil. 825(1928). the father of the deceased without any competent proof presented
[13]
Id., p. 836. in court.
[14]
See Weber v. Chicago, R. I. & P. RY. Co., 151 N.W. 852, 862, cited
in 20 Am. Jur. 468; People v. Catalino, No. L-25403, 15 March 1968,
22 SCRA 1091, 1107.
 THIRD DIVISION
[G.R. No. 143819. January 29, 2002]

PEOPLE OF THE PHILIPPINES, appellee, vs. GERRY CUENCA y MEDRANO, JACKSON CUENCA (at large),
CRISANTO AGON y MAGPANTAY, and BERNIE AGON (at large), accused,
GERRY CUENCA y MEDRANO and CRISANTO AGON y MAGPANTAY, appellants.

D E C I S I O N
The testimony of a single eyewitness, if credible and positive, is sufficient to support
a conviction for murder. Truth is established by the quality, not necessarily by the quantity,
of the evidence.

The Case

Gerry Cuenca and Crisanto Agon[1] appeal the February 7, 2000 Decision[2] of the Regional
Trial Court (RTC) of Lipa City (Branch 12) in Criminal Case No. 0132-98, which found them
guilty of murder beyond reasonable doubt.
The RTC disposed of the case as follows:

WHEREFORE, the Court finds the accused GERRY CUENCA and CRISANTO AGON, guilty beyond
reasonable doubt, both as principals by direct participation for having conspired and
confederated with one another in the commission of the crime of [m]urder, as alleged in the
Information dated March 27, 1998, and defined and penalized under Article 248 of the Revised
Penal Code, as amended by Republic Act 7659 and sentences each of them to suffer the penalty
of RECLUSION PERPETUA, to pay the heirs of Wilfredo Castillo the sum of P50,000.00 as
indemnity for his death, the sum of P38,800.00, as actual damages, the sum of P4,800,000.00
for loss of earning capacity, the sum of P20,000.00, as moral damages and to pay their
proportionate share of the costs.

The period during which both accused are under preventive imprisonment shall be deducted from
their sentence.

Finally, let also warrants of arrest be issued against the accused Jackson Cuenca and Bernardo
Bernie Agon for their immediate apprehension.[3]

On March 17, 1998, Lipa City Assistant City Prosecutor Mario G. Mayuga filed the
Information charging appellants and their co-accused as follows:

That on or about the 14th day of February, 1998 at about 9:30 oclock in the evening,
at Barangay Tambo, Lipa City, Philippines and within the jurisdiction of this Honorable
Court, the above-named accused, then armed with bladed/pointed and hard instruments,
conspiring and confederating together, acting in common accord and mutually aiding one
another, with intent to kill, with treachery and grave abuse of superior strength and taking
advantage of nighttime, did then and there wilfully, unlawfully and feloniously attack,
assault, beat and stab with the use of said bladed/pointed and hard instruments, suddenly and
without warning, one Wilfredo Castillo, thereby inflicting upon the latter stab wounds, which
directly caused his death.[4]

When arraigned on April 27, 1998, appellants -- with the assistance of their lawyers --
entered a plea of not guilty.[5]Because their co-accused were at large, trial on the merits
proceeded only as against them.
The Facts

Version of the Prosecution

In its Brief,[6] the Office of the Solicitor General summarized the prosecutions version
of the facts as follows:

On February 14, 1998, around 9:30 in the evening, while lying down with his wife and family
in his house at Module
Subdivision, BarangayTambo, Lipa City, Batangas, Marcial Morillo[7] heard a commotion taking
place outside his house. Dogs were barking loudly, so he decided to go out of the house to
see what was happening outside. He then saw a man being mauled and beaten by four (4) persons.
Upon seeing the incident, he hid himself behind a PLDT telephone post. From a distance of
about ten (10) meters, he recognized the four (4) assailants as Gerry Cuenca,
Jackson Cuenca, Crisanto Agon and Bernie Agon, while the person being mauled
was Wilfredo Edok Castillo. Marcial knew the four assailants and the victim for eight (8)
years since they were all neighbors, Gerry and Jackson being brothers and Crisanto and Bernie
being father and son. He witnessed Crisanto hold Edoks left hand while Bernie held his right
hand. Gerry was at Edoks front and to the right while Jackson was at Edoks front and to the
left and both were beating Edok continuously. Gerry and Jackson each used a piece of wood in
hitting Edok several times on the face, head, chest and other parts of his body. Edok tried
to struggle but his efforts proved futile. Edok then gave in, stooped down and eventually
lost consciousness (Lumug[m]ok na po siya). The four (4) assailants then carried Edoks body
with one holding on to his right arm, the other one x x x his left arm and the other two each
held the right and left leg[s] of Edok towards the direction of Calabarzon Highway.

Thereafter, Marcial returned to his house but did not tell his wife about the incident because
she was nerbiyosa. He did not want the members of his family to get involved in the incident
because he feared for their safety. The mauling incident lasted approximately twenty (20)
minutes. The place where the incident happened was illuminated by the light coming from the
moon and the electric bulb at the electric post which was at the top of the roof of a house
near the place of the incident.

The following morning, February 15, 1998, Marcial met Feliciano Castillo, Edoks brother, who
told him that they were looking for Edok.Marcial did not mention to Feliciano that he had
witnessed the mauling of Edok because he was afraid that he might be implicated and involved
in the incident.

On February 15, 1998, around 2:30 in the afternoon, a neighbor named Silo passed
by Marcials house and told him that they were looking for Edoks body. Marcial joined in the
search in the forest for about one hour and then he went home.

About 4 oclock in the afternoon of February 15, 1998, Feliciano dropped by the house
of Marcial and said that Edoks body had been found and borrowed Marcials flashlight in order
to help in the recovery of Edoks body which was found inside a well in the forest. The body
was retrieved from the well which was about fifteen (15) meters deep. There were blood stains
around the well. Coconut trees surrounded the area. The body was recovered
between Masagana Subdivision and Adelina Subdivision, which was a forested area and about
one-half (1/2) kilometer from where the mauling incident took place.

Around 4:30 in the afternoon of February 15, 1998, Feliciano reported to the Desk Officer,
SPO2 Alberto Libao of the Lipa Police Satation, that the body of his
brother, Wilfredo Castillo, had been found in the forested area
in Barangay Tambo. Thereafter, Police Inspector Romeo Mitra, PO2 Enrico Tapalla, SPO4
Renaldo Saludo and SPO3 Pablo de Luna were dispatched to the crime scene to investigate the
incident. Feliciano went with them. When Edoks body was retrieved, SPO4 Saludo noticed the
presence of stab wounds, blows and hematomas on his body. The cadaver was then taken
to Funeraria San Sebastian at Balagbag, Lipa City.

About 7:30 in the evening of February 15, 1998, Dr. Corazon Sabile, Health Officer
of Lipa City, conducted an autopsy on Edoks body. The physical examniation yielded the
following results: there were nine (9) injuries on the head, two (2) of which were stab
wounds, one stab wound on the right frontal area of the right ear which reached the skull and
the second stab wound also at his right ear; one (1) lacerated gaping wound on the head;
there were several contusions and hematoma on both eyes which could have been caused by
mauling, and hematomas on the middle mandibular area and the lateral mandibular area (chin)
which could have been caused by mauling or the dumping of the cadaver in to the well; there
are also linear abrasions on the right lateral neck area that could have been caused by
forcible contact; there were nine (9) wounds on the body, that is, four (4) stab wounds and
five (5) abrasions; the first stab wound was on the third intercostalspace midelavicular area,
the second on the fifth intercostal space, right midelavicular area, the third on the
8th intercostal space midelavicular area, and the fourth [was] on the right lumbar area; the
said wounds were almost of the same depth, that is 5 cms; all of the said wounds could have
been caused by a sharp pointed instrument; she also found five (5) abrasion on the body,
i.e., in the left midscapulararea, left infrascapular area, on the vertebral line, on the
right midscapular area and on the vertebral line; that the abrasions are called gasgasand
could have been caused by forcible contact; she also found in the extrem[i]ties of the cadaver
two (2) stab wounds on the right anterior thigh 4 to 5 cms. deep; she also found three (3)
abrasions on the right forearm, left posterior arm and left posterior hand which could have
been caused by forcible contact. The internal examination on the victims body revealed that
200 ml. of blood were found in the fleuralcavity which could have come from the perforations
of the right ventricle of the heart; the liver and upper lobe of the right lung were
perforated; there were complete fractures on the 2nd, 3rd, 4th, 5th, 6th, 7th of both ribs which
alone were sufficient to cause death. The mauling was aggravated by the dumping of
the Edoks body in the well. Considering the nature and number of injuries Edok sustained, no
medical attention and assistance could have saved his life. The cause of Edoks death
was Hypovolemia secondary to multiple stab wounds.

On February 16, 1998, Marcial Morillo told Ruben Castillo about the mauling incident which
(Morillo) had witnessed on the night of February 14, 1998.

Bothered by his conscience, on February 17, 1998, Morillo went to the Lipa Police Station to
report the incident.[8] (Citations omitted)

Version of the Defense

Appellants gave the following narration of the facts:[9]

The defense maintained that in the evening of February 14, 1998 accused Jackson Cuenca and
Bernie Agon together with three [V]isayan[C]alabarzon workers identified
as Obet, Nognog and Ruel were in the house of Yolanda Cuenca in the evening of February 14,
1998 at Brgy. Tambo, Lipa City about one kilometer away from the place of Marcial Morillo,
the alleged eyewitness, in whose place according to Marcial Morillo the crime was
committed. While these persons were in said house of Yolanda Cuenca, they heard a voice
calling for Jackson who was identified as Wilfredo Castillo. Jackson Cuenca came out [of] the
house and asked Wilfredo Castillo what was the problem[;] however, Wilfredo Castillo
immediately hacked him who was wounded at the right side of his back. Witness
Yolanda Cuenca brought him inside her house and attended to his wound. While bringing him
inside the house, Jackson was struggling to be free, [and] the
three Visayan[C]alabarzon workers visitors went outside and thereafter a commotion took
place. During the commotion, Yolanda Cuenca heard somebody [utter] the words sobra-
sobra na ang ginagawa mo sa mga tao dito. The following day, February 15, 1998, two of the
three VisayanCalabarzon Workers namely Obet and Nognog arrived at the house of
Yolanda Cuenca and told her that she [would] say that she saw and heard nothing about the
commotion.

Accused Gerry Cuenca and Crisanto Agon were not in the house of Yolanda Cuenca where the
commotion took place [o]n the evening of February 14, 1998 and they were not also near the
house of Marcial Morillo where the crime took place allegedly [o]n the evening of February
14, 1998. On that time and date, they were at the house of
Roger Dimaculangan at Normanz Village, Tambo, Lipa City helping in the preparation of food
for the baptismal party on February 15, 1998. Other than accused-appellants Andy Obille,
Benjamin Anterola and Romy Anterola and other people were there. Accused-appellants
vehemently denied that they were the ones who killed Wilfredo Castillo alias Edok in the
evening of February 14, 1998.[10]

The Trial Courts Ruling

The RTC convicted appellants because the lone prosecution witness, Marcial Morcillo, was
credible. It said: the Court believes and gives weight to the candid, vivid and detailed
account of the incident and positive identification of all the accused by Marcial Morcillo,
not only because it is clear, straight-forward and devoid of any signs of artificiality, but
also because it vibrates with truth and sincerity.[11]
The court a quo held that conspiracy attended the killing:

In this case, Crisanto and Bernie Agon were each holding the hands of Wilfredo Castillo,
while the brothers Gerry and Jackson Cuencahelped each other in beating him with a piece of
[wood] about one (1) meter long x x x. After Castillo slumped and lost consciousness, the
four (4) accused helped each other in carrying Wilfredo Castillo towards
the Calabarzon Highway going to the direction of Batangas City. Verily, at the precise moment
of the execution of the crime, the accused acted in concert to accomplish a common objective
to take the life of Wilfredo Castillo. The fact that Marcial Morillo did not witness the
actual stabbing and killing of Wilfredo Castillo is of no moment.[12]

It disbelieved the defenses of denial and alibi.

 Hence, this appeal.[13]

Issues
In their Brief, appellants fault the trial court with the following alleged errors:
1. The honorable trial court erred in giving weight to the testimony of the alleged
lone eyewitness, Marcial Mor[c]illo.
2. The honorable trial court erred in not considering that the victim died of multiple
stab wounds and not due to injuries caused by a piece of wood.
3. The honorable trial court erred in not considering the defense of alibi of accused-
appellants in the appreciation of the whole evidence presented by the prosecution
and defense.[14]

This Courts Ruling

After reviewing the records of this case, we find no cogent basis to reverse appellants
conviction. We however modify the award of civil liabilities.

First Issue: Credibility of Lone Prosecution Witness

Appellants assail the credibility of Marcial Morcillo, the lone prosecution witness. They
contend that the trial court erred in giving full credence to Morcillos testimony, because
it was not in accordance with common experience and observation of mankind.[15] We disagree.
We carefully reviewed the testimonies of both the prosecution and the defense witnesses,
as well as the other pieces of evidence on record. We are convinced that the trial court did
not err in giving full faith and credence to Morcillos testimony, which we reproduce in part
as follows:
Q On February 14, 1998, around 9:30 oclock in the evening, do you remember where you
were?
A I was inside my house sir.
Q Where was your house on that date, February 14, 1998, 9:30 oclock in the evening?
A At Module Subdivision, Tambo, Lipa City sir.
Q What were you doing around that time, 9:30 oclock in the evening of February 14,
1998 inside your house in Module Subdivision, Tambo, Lipa City?
A We were already lying down sir.
Q You said we, who were with you in your house?
A My wife and my family sir.
Q While you were then already lying down on that date, February 14, 1998 around 9:30
oclock in the evening, do you remember x x x any unusual incident that transpired?
A Yes sir.
Q What was that unusual incident that transpired?
A There was a commotion of people sir.
Q How did you come to know that there was a commotion of people?
A My dog and the dogs of my neighbors were barking sir.
Q What did you do when you heard this commotion of people and barking of the dog and
the dogs of your neighbors?
A I went out of the house and looked for [what] the commotion was all about[,] sir.
Q What did you see when you looked [for] where this commotion [was] coming [from] or
what was causing this commotion?
A I saw a person being beaten by four (4) persons sir.
Q Were these four (4) persons or in what place in relation to your house where these
four (4) persons beating one person?
A In the street sir.
Q How far is that place from your own house?
A About ten (10) meters sir.
Q Where were you when you saw four (4) persons beating one (1) person?
A I was hiding behind [a] PLDT Telephone post sir.
Q From the place where you were hiding behind a PLDT Telephone Post, how far [away
from you] were these four (4) persons who were beating another person x x x?
A 10 meters sir.
Q Were you able to recognize these four (4) persons who were beating another person?
A Yes, sir.
Q Who were these four (4) persons whom you saw were beating another person.
A Crisanto Agon, Bernie Agon, Jackson Cuenca and Gerry Cuenca sir.
Q Of these (4) persons whom you named Gerry Cuenca and Crisanto Agon were the persons
whom you pointed [to] a while ago [among them]?
A Yes sir.
Q Were you able to recognize the person whom these four (4) accused were beating?
A Yes, sir. I recognized him.
Q Who was that person who was being beaten by these four (4) accused, Gerry Cuenca,
Jackson Cuenca, Crisanto Agon and Bernie Agon?
A Edok Castillo sir.
Q Do you know the complete name of this Edok Castillo?
A I quite remember, it is Alfredo Castillo, sir.
Q And how were Gerry Cuenca, Jackson Cuenca, Crisanto Agon and Bernie Agon beating
this Edok Castillo?
A The father and son were holding Edok Castillo and the brothers were beating him sir.
Q When you said that the father and son were holding Edok Castillo while the brothers
were beating him, who are you referring to when you said the father and son?
A Crisanto Agon and Bernie Agon sir.
Q How was Crisanto Agon holding Edok Castillo while the brothers were
beating Edok Castillo?
A The father and son were holding [both hands of] Edok Castillo.
Q What hand was Crisanto Agon holding?
A Left hand sir.
Q How about Bernie Agon, what hand of Edok Castillo was he holding?
A The right hand sir.
Q How about Gerry Cuenca? Where was he positioned in relation to Edok Castillo when
he was beating Edok?
A Right front portion of Edok Castillo sir.
Q How about Jackson Cuenca, where was he positioned in relation to Edok Castillo while
he was beating Edok Castillo?
A He was standing towards the left front of Edok Castillo sir.
x x x x x x x x x
Q Aside from stooping down, what else was Edok Castillo doing while he was being beaten
by Gerry Cuenca and Jackson Cuenaand while Bernie Agon and Crisanto Agon were
holding his two hands?
A He lost consciousness sir.
Q Why do say that he lost consciousness?
A Lumugmok na po siya.
 Q But before Edok Castillo actually fe[l]l or lumugmok what was he doing while he was
being beaten up?
A He could not do anything anymore sir.
Q After Wilfredo Castillo [fell] or lumugmok, what did Gerry Cuenca,
Jackson Cuenca, Crisanto Agon and Bernie Agon do to him if they did anything more?
A [T]hey carried him towards Calabarzon, sir.
Q By the way, how many times did Gerry Cuenca and Jackson Cuenca hit Edok Castillo?
A I could not remember, but he was hit several times, sir.
Q In what part or parts of the body of Edok Castillo was he hit by th[o]se beating
[him up], if he was ever hit?
x x x x x x x x x
Witness pointing his face, to his head, to his chest and to his right face below
the eye.
Q You said that after Gerry Cuenca and Jackson Cuenca [beat] up Edok Castillo while
he was being held [by] his two (2) hands by Crisanto and Bernie Agon, he fell down
or lumugmok [and] he was carried to Calabarzon[;] what do you mean by
this Calabarzon?
A The highway going to Batangas sir.
Q How did the four (4) carry Edok Castillo towards the Calabarzo[n] which is the road
according to you going to Batangas City?
A They help[ed] each other in carrying him sir.
Q How did they carry actually this Edok Castillo?
A The two (2) were carrying him by [both his] hands[,] one [holding] on each hand and
the other two (2) were holding on [both his] feet sir.[16]
On cross-examination Morcillo consistently maintained, despite intense grilling and
repeated attempts of the defense counsel to discredit him, that appellants were the ones who
had mauled the victim. True, the defense counsel tried to impeach his credibility during the
cross-examination by leading him through an intricate and annoying maze of questions that
resulted in minor inconsistencies in his testimonial
declarations. Nevertheless, Morcillo remained steadfast in his narration of what he had
witnessed on the night of February 14, 1998.
So long as the witnesses testimonies agree on substantial matters, inconsequential
inconsistencies and contradictions dilute neither their credibility nor the verity of their
testimonies.[17] In the instant case, the inconsistencies cited by appellants are insignificant
and immaterial to the essential fact testified to -- the killing of the victim.[18]
As a rule, this Court will not disturb the factual findings of the trial court, because
it had a better opportunity to observe the demeanor and conduct of the witnesses while they
were testifying. Indeed, its assessment of the witnesses and their credibility is entitled
to great weight and is even conclusive and binding, if not tainted with arbitrariness or
oversight of some fact or circumstance of significance and value.[19]
This Court has ruled in a number of cases[20] that the testimony of a single witness, if
credible and positive, is sufficient for conviction because truth is established not by the
quantity, but by the quality of the evidence.

Second Issue: Cause of the Victims Death

Appellants also contend that Morcillo did not see how the victim was stabbed. All he said
was that he saw them beat up the victim with a piece of wood. Thus, they said that the trial
court erred in concluding that the deceased had succumbed, not to multiple stab wounds, but
to injuries caused by a piece of wood.[21]
In the absence of direct evidence, appellants may be convicted on the basis of
circumstantial evidence. The latter is defined as that which indirectly proves a fact in
issue through an inference which the factfinder draws from the evidence established. Resort
thereto is essential when the lack of direct testimony would result in setting a felon free.[22]
Circumstantial evidence suffices to convict if the following requisites concur: (1) more
than one circumstance is present, (2) the facts from which the inferences are derived are
proven, and (3) the combination of all the circumstances produces a conviction beyond
reasonable doubt. The totality of the evidence must constitute an unbroken chain showing
beyond reasonable doubt the guilt of the accused, to the exclusion of all others. [23]
To require direct eyewitness testimony when circumstantial evidence is sufficiently
established would, in many cases, expose society to felons who would be unreasonably set
free.[24]
In the present case, the postmortem examination shows that the victim sustained multiple
lacerations and abrasions plus eight stab wounds.[25] The following pieces of circumstantial
evidence show beyond reasonable doubt that appellants are responsible for the killing:
First, Morcillo positively identified appellants as members of the group that had ganged
up on the victim and mauled him near his residence around 9:30 in the evening on February 14,
1998.
Second, the witness saw appellants acting in unison -- beating up then carrying towards
the Calabarzon Highway -- the unconscious body of the victim.
Third, the victims corpse was recovered the next day inside a well, which was less than a
kilometer away from the place of the mauling.
Fourth, the victim suffered from multiple stab wounds, abrasions, contusions and
lacerations, all of which indicated that he had been heavily beaten up. This was consistent
with the narration of Morcillo on how he saw appellants maul the victim less than 24 hours
before the dead body was discovered.
Fifth, appellants were the last persons seen with the victim before he died.
Sixth, the other accused, Jackson Cuenca (brother of Appellant Gerry Cuenca) and
Bernie Agon (son of Appellant CrisantoAgon) fled from their residence in Lipa City, and they
have continuously evaded arrest up to the present.
Finally, Morcillo had no ill motive to testify against appellants.
From the foregoing circumstances, it is undisputed that appellants were physically present
at the locus criminis and its immediate vicinity, and that an eyewitness positively identified
them to be members of the group that had mauled and removed the victim from the crime scene
prior to the discovery of his corpse.

Third Issue: Defense of Alibi

Well-settled is the rule that alibi is the weakest of all defenses, because it is easy to
concoct and difficult to disprove. For alibi to prosper, it is not enough for the accused to
prove that they were somewhere else when the crime was committed; they must likewise
demonstrate that it was physically impossible for them to have been at the scene of the crime
at the time.[26]
In the case before us, appellants claim that at the time the crime happened, they were at
the residence of Roger Dimaculangan, which was located also
at Barangay Tambo, Lipa City. Dismissing this claim, the RTC said:

Alibi and denial are inherently weak and easily contrived. This is why the accused must prove
with clear and convincing evidence that it was physically impossible for him to have been
present at the place and time the felony was committed. This the accused failed to do. The
distance between the house of Roger Dimaculangan, where both accused claimed to be at the
time the f[e]lony was committed and the locus criminis is just a few kilometers away. It can
be travelled in a few minutes by bicycle. Thus, it was not impossible for
Gerry Cuenca and Crisanto Agon to leave and, after killing Wilfredo Castillo, return to the
house of Dimaculangan without anybody noticing their absence. In any event, alibi and denial
cannot overcome the categorical and credible testimony of Marcial Morcillo identifying both
accused as among those whom he saw helping each other in holding and beating Wilfredo Castillo
and thereafter carrying him towards [C]alabarzon Highway going to the direction
of Batangas City. Basic is the rule that positive identification prevails over denial and
alibi.[27]

Thus, it was not physically impossible for appellants to have been at the scene of the
crime on the evening of February 14, 1998, notwithstanding their friends testimonies that
they were also at the Dimaculangan residence.

Conspiracy and Treachery

 The trial court did not err in finding appellants guilty of murder because treachery,
which was alleged in the Information, had attended the killing.
On this point, the trial court aptly explained:

Article 14 (16) of the Revised Penal Code provides that there is treachery when the offender
commits any of the crimes against persons, employing means, methods o[r] forms in the execution
thereof which tend directly and specifically to insure its execution without risk to himself
arising from the defense which the offended party might make. In the instant
case, Crisanto and Bernie Agon were holding both hands of Wilfredo Castillo, while Gerry and
Jackson Cuenca were beating him with a piece of wood on the different parts of his
body.Wilfredo Castillo was unarmed and defenseless. Hence, treachery was present.[28]

Treachery is present when the following conditions are present: (1) the means of execution
employed gives the victims no opportunity to defend themselves or to retaliate, and (2) the
means of execution are deliberately or consciously adopted. In this case, the prosecution
succeeded in showing that appellants, together with their co-accused (who are still at large),
helped each other in ensuring the execution of their nefarious intention to beat up and kill
the victim who was unarmed and with no opportunity to defend himself.
The prosecution was likewise able to show that there was conspiracy. Conspiracy exists
when two or more persons come to an agreement and decide on the commission of a felony.[29] It
is not necessary that there be direct proof that the co-conspirators had any prior agreement
to commit the crime; it is sufficient that they acted in concert pursuant to the same
objective.[30]
Despite affirming appellants conviction, we nonetheless modify the monetary awards.
The award of P50,000 as indemnity ex delicto for the loss of the victims life is in accord
with prevailing jurisprudence.[31]Likewise, the award of P20,000 as moral damages is
reasonable. However, the actual damages granted is improper and should be reduced from P38,800
to P7,300 considering that only the latter amount, representing burial expenses, was duly
supported by receipts. The unsubstantiated balance of P31,500 should be deleted.[32]
We also find the court a quos award of P4,800,000 for loss of earning capacity to be
improper. True, in People v. Verde,[33]we granted an award for the loss of earning capacity to
the heirs of the deceased despite the absence of documentary evidence to substantiate such
claim. We deemed the testimony of the victims wife sufficient to establish the basis for the
grant. However, the new ruling in People v. Panabang[34] modifies this principle and now
precludes an award for loss of earning capacity without adequate proof. The bare testimony
of the brother of the deceased Felicisimo Castillo that, at the time of his
death, Wilfredo Castillo was earning P250.00 daily as carpenter[35] is not sufficient proof.
In Panabang, we held that the indemnification for loss of earning capacity must be duly
proven. Justice Jose C. Vitug, expressing the current view of the Court, wrote:

Indemnification for loss of earning capacity partakes of the nature of actual damages which
must be duly proven. A self-serving statement, being unreliable, is not enough. The father
of the victim has testified on the latters monthly income of P12,000.00. But for lost income
to be recovered, there must likewise be an unbiased proof of the deceaseds average, not just
gross, income. An award for lost of earning capacity refers to the net income of the deceased,
i.e., his total income net of expenses. x x x.[36] (Emphasis in the original, citations omitted)

WHEREFORE, the assailed Decision is AFFIRMED but the actual damages awarded by the RTC
is REDUCED from P35,850 to P7,300 while the grant of P4,800,000 for loss of earning capacity
is DELETED.
SO ORDERED.

[1] [8]
Co-accused Jackson Cuenca and Bernie Agon remain at large. Appellees Brief, pp. 4-10; rollo, pp. 169-175.
[2] [9]
Written by Judge Vicente F. Landicho; rollo, pp. 112-137; records, Appellants Brief was signed by Atty. Dominador M. Mauhay.
[10]
pp. 182-207. Ibid., pp. 2-3; rollo, pp. 91-92.
[3] [11]
Assailed Decision, pp. 25-26; rollo, pp. 136-137; records, pp. 206- RTC Decision, p. 22; rollo, p. 133.
[12]
207. Ibid., p. 22-23; id., pp. 133-134.
[4] [13]
Ibid., p. 1. This case was deemed submitted for resolution on September
[5]
Order dated April 27, 1998; records, p. 19. 11, 2001, upon receipt by this Court of Appellees Brief. Appellants
[6]
Appellees Brief was signed by Asst. Sol. Gen. Carlos N. Ortega, Brief was received by the Court on April 3, 2001. The filing of a Reply
Asst. Sol. Gen. Mariano M. Martinez and Asso. Brief was deemed waived, as none had been submitted within
Sol. Flordeliz A. Elizaga. the reglementary period.
[7] [14]
Also spelled Morcillo in the assailed Decision. Appellants Brief, p. 3; rollo, p. 92.
[15]
Ibid., p. 5; id., p. 94. dead with several stab wounds and abrasions. All told the
[16]
TSN, June 23, 1998, pp. 9-22. circumstantial evidence for the prosecution surmounted the
[17]
People v. Agomo-o, 334 SCRA 279, June 23, 2000. constitutional presumption of innocence.
[18] [22]
People v. Monieva, 333 SCRA 244, June 8, 2000, citing People v. Rendaje, 344 SCRA 738, 746-747, November 15, 2000,
People v. Pandiano, 232 SCRA 619, May 30, 1994; see also People v. per Panganiban, J.
[23]
Antonio, 333 SCRA 201, June 8, 2000. Ibid., p. 747; People v. Espina, 326 SCRA 753, February 29, 2000.
[19] [24]
People v. Sabado, 345 SCRA 269, November 20, 2000. See People v. Roa, 167 SCRA 116, November 8, 1988.
[20] [25]
Ibid.; People v. Toyco, GR No. 138609, January 17, Records, pp. 135-136.
[26]
2001; People v. Pascual, 331 SCRA 252, April 28, People v. Patalin Jr., 311 SCRA 188, July 27,
2000; People v. Pirame, 327 SCRA 552, March 9, 2000. 1999; People v. Gallarde, 325 SCRA 835, February 17, 2000.
[21] [27]
The trial court resorted to circumstantial evidence, as follows: Rollo, pp. 135-136.
[28]
Gerry Cuenca and Crisanto Agon were positively identified as RTC Decision, p. 24; rollo, p. 135.
[29]
present at the place of the incident at the time of its commission; People v. Tan, GR Nos. 116200-02, June 21, 2001.
[30]
that Crisanto was positively identified as one of the two (2) persons Ibid.
[31]
holding one of the hand[s] of Wilfredo Castillo; that People v. Silvestre, 307 SCRA 68, May 12, 1999; People v.
Gerry Cuenca was also positively identified as the person at the Verde, 302 SCRA 690, February 10, 1999.
[32]
right front of Wilfredo Castillo and one of the two (2) persons who People v. Goling, GR No. 135936, September 19, 2001.
[33]
beat Wilfredo Castillo with a piece of wood; that Supra, pp. 706-707; People v. Pantranco North Express,
Gerry Cuenca and Crisanto Agon were also identified as two (2) of Inc. v. Baesa, 179 SCRA 384, 394-395, November 14, 1989.
[34]
the four (4) persons who carried the unconscious Wilfredo Castillo GR Nos. 137514-15, January 16, 2002.
[35]
towards the Calabarzon Highway going to the direction TSN, January 28, 1999, p. 11.
[36]
of Batangas City; and [that], the next day, the victim was found People v. Panabang, pp. 20-21.

-------------------------------------------------------------------------------------------
FIRST DIVISION

[G.R. No. L-11037. December 29, 1960.]

EDGARDO CARIAGA, ET AL., plaintiffs and appellants, v. LAGUNA TAYABAS BUS COMPANY,
defendant and appellant. MANILA RAILROAD COMPANY, defendant and appellee.

SYLLABUS

1. DAMAGES; MORAL DAMAGES; RECOVERABLE ONLY IN INSTANCES ENUMERATED IN ART. 2219 OF THE
CIVIL CODE. — Article 2219 of the Civil Code enumerated the instances when moral damages
may be recovered. Plaintiff’s claim for moral damages not falling under any one of them,
the same cannot be granted.

2. ID.; ID.; WHEN RECOVERABLE FOR BREACH OF CONTRACT UNDER ART. 2220 OF THE CIVIL CODE. —
Neither could defendant LTB be held liable to pay moral damages to plaintiffs under Art.
2220 of the Civil Code on account of breach of its contract of carriage because said
defendant did not act fraudulently or in bad faith in connection therewith.

3. ID.; ACTUAL AND COMPENSATORY DAMAGES; ONLY PARTIES TO CONTRACTS BREACHED ARE ENTITLED TO
COMPENSATORY DAMAGES RESULTING THEREFROM. — Since the present action is based upon a breach
of contract of carriage and plaintiff’s parents were not a party thereto and were not
themselves injured as a result of the collision, their claim for actual and compensatory
damages is without merit.

4. ATTORNEYS-AT-LAW; ATTORNEY’S FEES; CASE NOT FALLING UNDER ANY OF THE INSTANCES
ENUMERATED IN ART. 2208 OF THE CIVIL CODE. — The present case not falling under any of the
instances enumerated in Article 2208 of the Civil Code, plaintiff’s are not entitled to
recover attorney’s fees.

D E C I S I O N

At about 1:00 p.m. on June 18, 1952, Bus No. 133 of the Laguna Tayabas Bus Company —
hereinafter referred to as the LTB — driven by Alfredo Moncada, left its station at Azcarraga
St., Manila for Lilio, Laguna, with Edgardo Cariaga, a fourth-year medical student of the
University of Santo Tomas, as one of it passengers. At about 3:00 p.m., as the bus reached
that part of the población of Bay, Laguna, where the national highway crossed a railroad
track, it bumped against the engine of a train then passing by with such terrific force that
the first six wheels of the latter were derailed, the engine and front part of the body of
the bus were wrecked, the driver of the bus died instantly, while many of its passengers,
Edgardo among them, were severely injured. Edgardo was first confined at the San Pablo City
Hospital from 5:00 p.m., June 18, 1952, to 8:25 a.m., June 20 of the same year when he was
taken to the De los Santos Clinic, Quezon City. He left that clinic on October 14 to be
transferred to the University of Santo Tomas Hospital where he stayed up to November 15. On
this last date he was taken back to the De los Santos Clinic where he stayed until January
15, 1953. He was unconscious during the first 35 days after the accident: at the De los Santos
Clinic Dr. Gustilo removed the fractured bones which lacerated the right frontal lobe of his
brain and at the University of Santo Tomas Hospital Dr. Gustilo performed another operation
to cover a big hole on the right frontal part of the head with a tantalum plate.

The LTB paid the sum of P16,964.45 for all the hospital, medical and miscellaneous expenses
incurred from June 18, 1952 to April 1953. From January 15, 1953 up to April of the same year
Edgardo stayed in a private house in Quezon City, the LTB having agreed to give him a
subsistence allowance of P10.00 daily during his convalescence, having spent in this
connection the total sum of P775.30 in addition to the amount already referred to.

On April 24, 1953 the present action was filed to recover for Edgardo Cariaga, from the LTB
and the MRR Co., the total sum of P312,000.00 as actual, compensatory, moral and exemplary
damages, and for his parents, the sum of P18,000.00 in the same concepts. The LTB disclaimed
liability claiming that the accident was due to the negligence of it s co-defendant, the
Manila Railroad Company, for not providing a crossing bar at the point where the national
highway crossed the railway track, and for this reason filed the corresponding cross-claim
against the latter company to recover the total sum of P18,194.75 representing the expenses
paid to Edgardo Cariaga. The Manila Railroad Company, in turn, denied liability upon the
complaint and cross-claim, alleging that it was the reckless negligence of the bus driver
that caused the accident.

The lower court held that it was the negligence of the bus driver that caused the accident
and, as a result, rendered judgment sentencing the LTB to pay Edgardo Cariaga the sum of
P10,490.00 as compensatory damages, with interest at the legal rate from the filing of the
complaint, and dismissing the cross-claim against the Manila Railroad Company. From this
decision the Cariagas and the LTB appealed.

The Cariagas claim that the trial court erred: in awarding only P10,490. as compensatory
damages to Edgardo; in not awarding them actual and moral damages, and in not sentencing
appellant LTB to pay attorney’s fees.

On the other hand, the LTB’s principal contention in this appeal is that the trial court
should have held that the collision was due to the fault of both the locomotive driver and
the bus driver and erred, as a consequence, in not holding the Manila Railroad Company liable
upon the cross-claim filed against it.

We shall first dispose of the appeal of the bus company. Its first contention is that the
driver of the train locomotive, like the bus driver, violated the law, first, in sounding the
whistle only when the collision was about to take place instead of at a distance at least 300
meters from the crossing, and second, in not ringing that locomotive bell at all. Both
contentions are without merits.

After considering the evidence presented by both parties the lower court expressly
found:jgc:chanrobles.com.ph

". . . While the train was approximately 300 meters from the crossing, the engineer sounded
two long and two short whistles and upon reaching a point about 100 meters from the highway,
he sounded a long whistle which lasted up to the time the train was about to cross it. The
bus proceeded on its way without slackening its speed and it bumped against the train engine,
causing the first six wheels of the latter to be derailed."cralaw virtua1aw library

x x x

". . . that the train whistle had been sounded several times before it reached the crossing.
All witnesses for the plaintiffs and the defendants are uniform in stating that they heard
the train whistle sometime before the impact and considering that some of them were in the
bus at the time, the driver thereof must have heard it because he was seated on the left
front part of the bus and its was his duty and concern to observe such fact in connection
with the safe operation of the vehicle. The other L.T.B. bus which arrived ahead at the
crossing, heeded the warning by stopping and allowing the train to pass and so nothing
happened to said vehicle. On the other hand, the driver of the bus No. 133 totally ignored
the whistle and noise produced by the approaching train and instead he tried to make the bus
pass the crossing before the train by not stopping a few meters from the railway track and
in proceeding ahead."cralaw virtua1aw library

The above findings of the lower court are predicated mainly upon the testimony of Gregorio
Ilusondo, a witness for the Manila Railroad Company. Notwithstanding the efforts exerted by
the LTB to assail his credibility, we do no find in the record any fact or circumstance
sufficient to discredit his testimony. We have, therefore, no other alternative but to accept
the findings of the trial court to the effect, firstly, that the whistle of the locomotive
was sounded four times — two long and two short — "as the train was approximately 300 meters
from the crossing" ; secondly, that another LTB bus which arrived at the crossing ahead of
the one where Edgardo Cariaga was a passenger, paid heed to the warning and stopped before
the "crossing", while — as the LTB itself now admits (Brief p. 5) — the driver of the bus in
question totally disregarded the warning.

But to charge the MRR Co. with contributory negligence, the LTB claims that the engineer of
the locomotive failed to ring the bell altogether, in violation of section 91 of Article
1459, incorporated in the charter of the said MRR Co. This contention — as is obvious — is
the very foundation of the cross-claim interposed by the LTB against its co-defendant. The
former, therefore, had the burden to proving it affirmatively because a violation of law is
never presumed. The record discloses that this burden has not been satisfactorily discharged.

The Cariagas, as appellants, claim that the award of P10,000.00 compensatory damages to
Edgardo is inadequate considering the nature and the after effects of the physical injuries
suffered by him. After a careful consideration of the evidence on this point we find their
contention to be well founded.

From the deposition of Dr. Romeo Gustilo, a neurosurgeon, it appears that, as a result of the
injuries suffered by Edgardo, his right forehead was fractured necessitating the removal of
practically all of the right frontal lobe of his brain. From the testimony of Dr. Jose A.
Fernandez, a psychiatrist, it may be gathered that, because of the physical injuries suffered
by Edgardo, his mentality has been so reduced that he can no longer finish his studies as a
medical student; that he has become completely misfit for any kind of work; that he can hardly
walk around without someone helping him, and has to use a brace on his left leg and feet.

Upon the whole evidence on the matter, the lower court found that the removal of the right
frontal lobe of the brain of Edgardo reduced his intelligence by about 50%; that due to the
replacement of the right frontal bone of his head with a tantalum plate Edgardo has to lead
a quite and retired life because "if the tantalum plate is pressed in or dented it would
cause his death."cralaw virtua1aw library

The impression one gathers from this evidence is that, as a result of the physical injuries
suffered by Edgardo Cariaga, he is now in a helpless condition, virtually an invalid, both
physically and mentally.

Appellant LTB admits that under Art. 2201 of the Civil Code the damages for which the obligor,
guilty of a breach of contract but who acted in good faith, is liable shall be those that are
the natural and probable consequences of the breach and which the parties had foreseen or
could have reasonably foreseen at the time the obligation was constituted, provided such
damages, according to Art. 2199 of the same Code, have been duly proved. Upon this premise
it claims that only the actual damages suffered by Edgardo Cariaga consisting of medical,
hospital and other expenses in the total sum of P17,719.75 are within this category. We are
of the opinion, however, that the income which Edgardo Cariaga could earn if he should finish
the medical course and pass the corresponding board examinations must be deemed to be within
the same category because they could have reasonably been foreseen by the parties at the time
he boarded the bus No. 133 owned and operated by the LTB. At that time he was already a
fourth-year student in medicine in a reputable university. While his scholastic record may
not be first rate (Exhibits 4, 4-A to 4-C), it is, nevertheless, sufficient to justify the
assumption that he could have finished the course and would have passed the board test in due
time. As regards the income that he could possibly earn as a medical practitioner, it appears
that, according to Dr. Amado Doria, a witness for the LTB, the amount of P300.00 could easily
be expected as the minimum monthly income of Edgardo had he finished his studies.

Upon consideration of all the facts mentioned heretofore, this Court is of the opinion, and
so holds, that the compensatory damages awarded to Edgardo Cariaga should be increased to
P25,000.00.

Edgardo Cariaga’s claim for moral damages and attorney’s fees was denied by the trial court,
the pertinent portion of its decision reading as follows:jgc:chanrobles.com.ph
"Plaintiffs’ claim for moral damages cannot also be granted. Article 2219 of the Civil Code
enumerated the instances when moral damages may be covered and the case under consideration
does not fall under any one of them. The present action cannot come under paragraph 2 of said
article because it is not one of the quasi-delict and cannot be considered as such because
of the pre-existing contractual relations between the Laguna Tayabas Bus Company and Edgardo
Cariaga. Neither could defendant Laguna Tayabas Bus Company be held liable to pay moral
damages to Edgardo Cariaga under Article 2220 of the Civil Code on account of breach of its
contract of carriage because said defendant did not act fraudulently or in bad faith in
connection therewith. Defendant Laguna Tayabas Bus Company had exercised due diligence in the
selection and supervision of its employees like the drivers of its buses in connection with
the discharge of their duties and so it must be considered an obligor in good faith.

"The plaintiff Edgardo Cariaga is also not entitled to recover for attorney’s fees, because
this case does not fall under any of the instances enumerated in Article 2208 of the Civil
Code."cralaw virtua1aw library

We agree with the trial court and, to the reasons given above, we add those given by this
Court in Cachero v. Manila Yellow Taxicab Co., Inc. (101 Phil., 523, 530,
533):jgc:chanrobles.com.ph

"A mere perusal of plaintiff’s complaint will show that his action against the defendant is
predicated on an alleged breach of contract of carriage, i.e., the failure of the defendant
to bring him ‘safely and without mishaps’ to his destination, and it is to be noted that the
chauffeur of defendant’s taxicab that plaintiff used when be received the injuries involved
herein, Gregorio Mira, had not even been made a party defendant to this case.

"Considering, therefore, the nature of plaintiff’s action in this case, is he entitled to

compensation for moral damages? Article 2219 of the Civil Code says the following:chanrob1es
virtual 1aw library

‘Art. 2219. Moral damages may be recovered in the following and analogous cases:chanrob1es
virtual 1aw library

(1) A criminal offense resulting in physical injuries;

(2) Quasi-delicts causing physical injuries;

(3) Seduction, abduction, rape, or other lascivious acts;

(4) Adultery or concubinage;

(5) Illegal or arbitrary detention or arrest;

(6) Illegal search;

(7) Libel, slander or any other form of defamation;

(8) Malicious prosecution;

(9) Acts mentioned in Article 309;

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

x x x

"Of the cases enumerated in the just quoted Article 2219 only the first two may have any
bearing on the case at bar. We find, however, with regard to the first that the defendant
herein has not committed in connection with this case any ‘criminal offense resulting in
physical injuries’. The one that committed the offense against the plaintiff is Gregorio
Mira, and that is why he has been already prosecuted and punished therefor. Altho (a) owners
and managers of an establishment or enterprise are responsible for damages caused by their
employees in the service of the branches in which the latter are employed or on the occasion
of their functions; (b) employers are likewise liable for damages caused by their employees
and household helpers acting within the scope of their assigned task (Article 218 of the
Civil Code); and (c) employers and corporations engaged in any kind of industry are subsidiary
civilly liable for felonies committed by their employees in the discharge of their duties
(Art. 103, Revised Penal Code), plaintiff herein does not maintain this action under the
provisions of any of the articles of the codes just mentioned and against all the persons who
might be liable for the damages caused, but as a result of an admitted breach of contract of
carriage and against the defendant employer alone. We, therefore, hold that the case at bar
does not come within the exception of paragraph 1, Article 2219 of the Civil Code.

"The present complaint is not based either on a ‘quasi-delict causing physical injuries’
(Art. 2219, par. 2, of the Civil Code). From the report of the Code Commission on the new
Civil Code. We copy the following:chanrob1es virtual 1aw library

‘A question of nomenclature confronted the Commission. After a careful deliberation, it was

agreed to use the term ‘quasi-delict’ for those obligations which do not arise from law,
contracts, quasi- contracts, or criminal offenses. They are known in Spanish legal treatises
as ‘culpa aquiliana’, culpa-extra-contractual’ or ‘quasi- delitos’. The phrase ‘culpa-extra
contractual’ or its translation ‘extra-contractual-fault’ was eliminated because it did not
exclude quasi-contractual or penal obligations.’Aquilian fault’ might have been selected, but
it was thought inadvisable to refer to so ancient a law as the ‘Lex Aquilia’. So ‘quasi-
delict’ was chosen, which more nearly corresponds to the Roman Law classification of
obligations, and is in harmony with the nature of this kind of liability.’

‘The Commission also thought of the possibility of adopting the word "tort" from Anglo-
American law. But "tort" under that system is much broader than the Spanish-Philippine concept
of obligations arising from non-contractual negligence.’Tort’ in Anglo-American jurisprudence
includes not only negligence, but also intentional criminal act, such as assault and battery,
false imprisonment and deceit. In the general plan of the Philippine legal system, intentional
and malicious acts are governed by the Penal Code, although certain exceptions are made in
the Project.’ (Report of the Code Commission, pp. 161-162).

"In the case of Cangco, v. Manila Railroad, 38 Phil. 768, We established the distinction
between obligation derived from negligence and obligation as a result of a breach of contract.
Thus, we said:chanrob1es virtual 1aw library

‘It is important to note that the foundation of the legal liability of the defendant is the
contract of carriage, and that the obligation to respond for the damage which plaintiff has
suffered arises, if at all, from the breach of that contract by reason of the failure of
defendant to exercise due case in its performance. That is to say, its liability is direct
and immediate, differing essentially in the legal viewpoint from that presumptive
responsibility for the negligence of its servants, imposed by Article 1903 of the Civil Code
(Art. 2180 of the new), which can be rebutted by proof of the exercise of due care in their
selection of supervision. Article 1903 is not applicable to obligations arising EX CONTRACTU,
but only to extra- contractual obligations — or to use the technical form of expression, that
article relates only to CULPA AQUILIANA.’ and not to CULPA CONTRACTURAL.’

"The decisions in the cases of Castro v. Acro Taxicab Co., (82 Phil., 359; 46 Off. Gaz., No.
5, p. 2023); Lilius Et. Al. v. Manila Railroad, 59 Phil., 758) and others, wherein moral
damages were awarded to the plaintiffs, are not applicable to the case at bar because said
decisions were rendered before the effectivity of the new Civil Code (August 30, 1950) and
for the further reason that the complaints filed therein were based on different causes of
action.

"In view of the foregoing the sum of P2,000 awarded as moral damages by the trial court has
to be eliminated, for under the law it is not a compensation awardable in a case like the one
at bar."cralaw virtua1aw library

What has been said heretofore relative to the moral damages claimed by Edgardo Cariaga
obviously applies with greater force to a similar claim (4th assignment of error) made by his
parents.

The claim made by said spouses for actual and compensatory damages is likewise without merits.
As held by the trial court, in so far as the LTB is concerned, the present action is based
upon a breach of contract of carriage to which said spouses were not a party, and neither can
they premise their claim upon the negligence or quasi- delict of the LTB for the simple reason
that they were not themselves injured as a result of the collision between the LTB bus and
the train owned by the Manila Railroad Company.

Wherefore, modified as above indicated, the appealed judgment is hereby affirmed in all other
respects, with costs against appellant LTB.
 SECOND DIVISION

G.R. No. 89684 September 18, 1990

PEOPLE OF THE PHILIPPINES, plaintiff-appellee,

vs.
GERARDO SAZON, alias "INSIK," accused-appellant.

For the death of Wilfredo Longno, alias, "Inday," on September 17, 1983 at Barangay Progreso,
Lapuz, La Paz, Iloilo City, herein accused-appellant Gerardo Sazon, alias "Insik," and
Cornelio Altejos, alias "Toto," were charged with murder before the Regional Trial Court of
Iloilo, 1 in an amended information dated October 18, 1983.2 However, only herein accused was
arraigned, and pleaded not guilty, since Cornelio Altejos was not apprehended and has since
remained at large.

After trial, appellant was found guilty and sentenced to serve the penalty of reclusion
perpetua. He was further ordered to pay the heirs of the deceased the amount of P16,628.40
representing hospital bills, expenses for the coffin, tomb, wake and attorney's fees, and
P30,000.00 as indemnity for the death of the victim.

The antecedental facts which led to the filing of the criminal action below are herein under
set forth as synthesized by the court a quo from the testimonies of the witnesses, 3 and as
clarified and amplified by us from the transcripts of the notes of the hearings.

On September 15, 1983, in the barangay aforementioned, a certain Ernesto Romualdez was
accosted by appellant near the barangay hall for allegedly circulating the rumor that
appellant and his companions were engaged in stealing. Upon confrontation, appellant boxed
Romualdez which caused the latter to fall. Wilfredo Longo, who was then present at the scene,
approached and helped the fallen Romualdez and pushed appellant away. This apparently angered
appellant who, in his native dialect said "Andam ka lang Inday kay patyon ta guid," ("Watch
out Inday for I will kill you") to which Longno retorted, "Just do it."

Two days later, or on September 17, 1983, at about 8:00 o'clock P.M., appellant and his
cousin, Cornelio Altejos, were drinking softdrinks at the shire of Gloria Aposaga when Longno
passed by. Thereupon, appellant and Altejos left their softdrinks half-assumed and followed
Longno.

Longno eventually reached the bench near the public faucet where the group of Massulini
Dullete, Samuel Canoso and Nathaniel Ramos were sitting. He joined the group in their
conversation by saying, "Upon ako dira." ("I'll go with what you say."). Shortly thereafter,
appellant and Altejos arrived and appellant accosted and pointed a gun at Longno, saying,
"Maano ka?" ("What are you going to do?"). Longno then faced appellant and said, "Brod, tiruha
lang." ("Brod, just shoot.")

Apparently irked by the response, appellant fired the gun, hitting Longno in the left forearm.
Dullete, Canoso and Ramos then scampered for safety as appellant and the wounded Longno
grappled for the gun. It was while the two were thus struggling that Altejos stabbed Longno
in the chest, after which both appellant and Altejos ran away.

Longno then came out of the footwalk shouting, "Tay tiniro ako ni Insik, binuno ako ni Toto."
("Father, I was shot by Insik and stabbed by Toto."). He was able to run about thirty (30)
meters before he fell. His father, Julio Longno, ran to his son who was then lying sprawled
on the ground. Rushed to the St. Paul's Hospital, Wilfredo Longno died. Later, it was
established that the cause of death was hemorrhage, secondary to stab wound.

Appellant's version of the incident, however, differs. He admits having shot Longno but pleads
self-defense. He claims that on September 17, 1983, he left the house of his father-in-law
at about 8:00 o'clock P.M. with his cousin, Altejos. The latter had asked for help to have a
.22 caliber revolver repaired and appellant was taking the revolver to a policeman friend of
his. On their way, appellant saw Longno from a distance. Upon his approach, Longno allegedly
said, "Insik, I heard that you are not afraid of me. Maybe you want to be taught a lesson." 4

Appellant claims that the deceased had a revolver tucked in his waist and was about to draw
the same. He, therefore, parried the gun but it fired hitting one of appellant's left fingers
which was later amputated. It was then that appellant pulled out his gun and shot Longno in
the forearm. Appellant and Longno afterwards grappled for the gun. Altejos allegedly tried
to separate appellant and Longno but he was brushed aside by the latter. In the course of
their struggle, Altejos then shouted to appellant, "I stabbed Inday, run," and so he and
Altejos ran away. 5

Appellant, in his brief, makes the following assignment of errors:

1. The trial court erred in not acquitting the accused-appellant for having acted
in complete self-defense.

2. The trial court erred in convicting the accused-appellant of the crime of

murder and in imposing the penalty of reclusion perpetua when the prosecution has
not established by competent evidence the existence of conspiracy and the presence
of the aggravating circumstances of evident premeditation and abuse of superior
strength. 6

Appellant's version does not inspire credence. Well-entrenched is the rule that where the
accused invokes self-defense, it is incumbent upon him to prove by clear and convincing
evidence that he indeed acted in defense of himself. He must rely on the strength of his own
evidence and not on the weakness of the prosecution. For, even if the prosecution evidence
is weak, it could not be disbelieved after the accused himself had admitted the killing. 7

It is a statutory and doctrinal requirement that for the justifying circumstance of self-
defense, the presence of unlawful aggression is a condition sine qua non. There can be no
self-defense, complete or incomplete, unless the victim has committed an unlawful aggression
against the person defending himself.8

In the present case, the burden of evidence having been shifted, we hold that the defense
failed to establish the primary element of unlawful aggression on the part of the victim and,
therefore, the plea of self-defense must fail. The narrations of the sequence of events by
the accused, and by the lone alleged eyewitness for the defense, Jose Randera, are unconvincing
primarily on account of their inherent inconsistency and conflict with each other.

Appellant on cross-examination testified as follows:

Q How far were you from Inday Longno when he allegedly fired a shot
at you?

A One (1) meter.

Q At one (1) meter distance did (sic) you not able to recognize what
kind of a gun was that allegedly used by Inday Longno?

A No, sir, at first I only saw the handle of the gun and I did not see
the body of the gun.

Q But you can recognize between a pistol and a revolver?

A Yes, sir.

Q What was that allegedly used by Inday Longno, was that a pistol or
a revolver?

A Because immediately after he said those words 'Maybe you want to

learn a lesson he immediately drew his gun and I was able to parry.

xxx xxx xxx

Q When you fired at Inday Longno hitting him on his left arm near the
elbow, was he still holding that gun he used in shooting you hitting
you at the left palm?

A No, sir, because of too much force the gun fell.

Q Did you not pick up the gun?

A No, sir.9
On the other hand, defense eyewitness Jose Randera stated in his testimony:

ATTY. SORONGON: (To the witness)

Q While Wilfredo Longno alias Inday was pointing a gun at Gerardo Sazon
alias Insik, what was Gerardo Sazon doing?

WITNESS JOSE RANDERA:

A When Inday said something, Insik Sazon brushed aside the gun and the
gun fired.

xxx xxx xxx

Q You said, that Wilfredo Longno alias Inday pointed a gun at Gerardo
Sazon alias Insik, with what hand was he holding that gun when he was
pointing that gun to Gerardo Sazon?

WITNESS JOSE RANDERA:

A His right hand.

ATTY. SORONGON (To the witness)

Q You said that Gerardo Sazon brushed aside the gun which was being
pointed to him, what hand did Gerardo Sazon used (sic) in brushing
that gun?

A His left hand.

Q When Gerardo Sazon brushed aside the gun pointed to him, what else
if any did he do?

A Insik also drew a gun and shot Inday,

COURT: (To the witness)

Q What hand?

A Right hand. He drew a gun with his right hand and shot Inday.

xxx xxx xxx

ATTY. SORONGON (To the witness)

Q You said that there was a brushing, who was brushing aside and who
was brushed aside?

WITNESS JOSE RANDERA:

Q Inday parried Cornelio Artejos (sic).

COURT: (To the witness)

Q And, what happened next?

Cornelio Artejos (sic) pulled out a knife and stabbed Inday.

Q This happened when Inday was already hit by Sazon?

A Yes, sir.

ATTY. SORONGON (To the witness)

 Q When Cornelio Artejos (sic) stabbed Wilfredo Longno alias Inday,
what was Gerardo Sazon and Wilfredo Longno doing if they were doing
anything.?

A They were graffling of (sic) the weapon.

Q You are referring to whose weapon they were graffling (sic) at that
time?

A Inday's weapon.10

The testimonies aforequoted reveal an inconsistency on the matter of the gun for which
appellant and the victim supposedly grappled. While appellant claimed that the victim's weapon
fell to the ground, witness Randera stated that appellant and the victim still grappled for
the latter's gun. The latter statement is itself difficult to imagine since appellant at that
precise moment was also allegedly holding with his right hand the gun which he used in
shooting Longno.

It is necessary to stress that such inconsistency cannot be considered a minor detail since
the homogeneity of the answers to the inquiry could very well have established the existence
of not only a single gun. Had this prevarication not been exposed, said testimonies could
have bolstered the defense theory that the victim himself carried a gun which he used to
assault the appellant and thus establish the element of unlawful aggression contrived by the
defense.

Furthermore, the credibility of witness Randera is shattered by this finding of the trial
court which is sustained by the evidence:

The testimony of security guard Jose Randera deserves scant consideration not only
because he admitted that he was one of those threatened by the deceased Wilfredo
Longno but also because he wilfully falsified the truth when he testified that
the deceased was shot and hit by the accused on the body and that he saw blood
come out just below the right breast of the deceased. The physical evidence in
this case showed that there was no wound on the right breast of the deceased nor
on any part of his body. The gunshot wound sustained by the deceased was only on
his left forearm. Considering that he testified that there were no other persons
there during the incident except the accused, the deceased and Cornelio Altejos
when the overwhelming weight of evidence is that there were a lot of other people
during the incident (this) showed that this witness had small regard for the
truth. 11

Coming back to appellant's representations in court, his vacillation as to what he allegedly

did after Altejos stabbed the victim is another instance which renders his version highly
suspect. While stating on direct examination that he ran to the main road, 12 he claimed on
cross-examination that he only walked a short distance and then went to the hospital upon
seeing that his hand was wounded. 13 The latter statement is itself inconsistent with his
earlier declaration during the same proceeding that he was brought by a policeman to the
hospital. 14 This irresolution on the part of the appellant was obviously to avoid any
imputation of guilt against him arising from his flight. 15

At any rate, unlawful aggression on the part of the victim is further negated by the physical
evidence in the case. Again, we quote the trial court with approval:

The testimony of the accused Gerardo Sazon that the deceased was armed with a gun
and fired at him is not borne out by the physical evidence in this case. The
paraffin test conducted on the cadaver of the deceased showed that the hands of
the deceased were negative for gunpowder residues indicating that he did not fire
a gun during the incident. The other parts of his body like his forearm and his
abdomen bore strong traces of gunpowder residues because of the burst of the gun
of the accused. The court is convinced beyond reasonable doubt that there was only
one gun during the incident and that the gun belonged to and/or was used by the
accused Gerardo Sazon. That a part of one of his fingers was blown off at very
close range, according to Dr. Ely Canja strongly indicated that the accused
accidentally hit his finger when he and the deceased grappled for the possession
of the gun. 16
In contrast, appellant was found positive for the presence of gunpowder residues (nitrates).
While the presence or absence of nitrates cannot indeed be considered conclusive proof that
one has or has not fired a gun, the following testimony on direct examination by prosecution
witness Zenaida Sinfuego a forensic chemist whose expertise on the matter was sufficiently
established, yields this verification:

Atty. E. Original:

Q Now, have you conducted also a paraffin examination on the person

of Wilfredo Longno?

COURT:

Q On the cadaver?

Atty. E. Original:

Q On the cadaver?

A Yes, Sir.

Q Have you brought with you the result of that examination?

A Yes, Sir.

Q Now I have here a carbon original of Chemistry Report No. C-200-83,

result of the paraffin test on the cadaver of Wilfredo Longno, please
compare this carbon original to the original copy in your possession
whether it is the same?

A The same.

xxx xxx xxx

Q This report says specimen submitted, one pair of paraffin casts taken
from the left and right hands of the cadaver of one Wilfredo Longno,
one piece of paraffin cast taken from left forearm of same subject and
one piece paraffin last taken from the left side of the abdomen.
Purpose of laboratory examination: to determine the presence of
gunpowder residues (nitrates) on the above-mentioned specimens.
Findings, cast from hands-negative for the presence of gunpowder
residues (nitrates). Cast from forearm-positive for the presence of
gunpowder residues (nitrates) in the 1 1/2 in, 2 1/2 in, 3 in, and 4
in radius. Cast from the left side of the abdomen-positive for the
presence of gunpowder residues (nitrates) in the center and in the 1
and 2 in radius. In the layman's language Mrs. Sinfuego, will you
please explain to the Honorable Court these findings 1, 2 and 3?

A Casts from the hands, negative for the presence of gunpowder residues
that means that, no blue specks were found in the hands of the cadaver.

COURT:

Q Before we go on, what is the implication when the finding is negative?

A Probably, the subject never fired a gun.

Q Within what time-span?

A The gunpowder will stay only within three days.

Q When was this examination conducted?

A Last September 18,1983.

 Q Now before we go on, on that Chemistry Report which has been marked
as Exhibit 'D' regarding the paraffin test conducted on the right hand
of the accused Gerardo Sazon, your finding there states, positive for
gunpowder residues, what is the implication?

A The implication states positive, that Sazon have (sic) fired a gun.

Q Within what time-span?

A Within three days.

Q Within three days?

A Within three days.

Q From the examination?

A Three days from the subject firing of a gun.

Q And when was the examination conducted?

A Last September 19,1983, Your Honor.

Q September?

A Nineteen.

Q So he could have fired a gun on September 17,1983?

A I think that depends, Your Honor on the requesting party.

Q I am asking you if it was possible that he fired a gun which left

the powder burns, was it possible that he fired a gun on September 17?

A Yes, Your Honor. 17

On cross-examination, Sinfuego further testified as follows:

Q Is it possible for a person who has not fired a firearm and could
be (sic) positive for nitrates?

A Yes, Sir.

Q In what instance?

A For example, if he is near to the person firing a gun it is possible

that it was carried by the wind.

Q So that is the only case wherein you find nitrates on the person who
has not fired a gun?

A Also from the fertilizer.

Q You mean, a person handling fertilizers could also be positive for

nitrates?

A Yes, Sir but we have to consider also the time of reaction, from
contaminance (sic) for the nitrates will take effect between two to
three minutes.

COURT:
 Q Can you determine on your examination whether the nitrates found was
(sic) the nitrates left by gunpowder residues or by fertilizer can you
distinguish that?

A Yes, Sir.

Q And this (sic) nitrates found on the hands of the accused, could you
determine where did it (sic) come from?

A Gunpowder residues. 18

Parenthetically, it is true that the bad moral character of the offended party may be proven
in evidence to establish in any reasonable degree the probability of the offense
charged, 19 e.g., the quarrelsome nature of the victim may tend to establish that he started
the unlawful aggression. Nonetheless, such evidence, seeking to establish as it does only a
probability, cannot prevail over facts sufficiently proven by the prosecution during the
trial belying such aggression. These observations find application in the instant case where
the defense presented and now argue on character evidence consisting of criminal charges
involving minor offenses which had been filed against the deceased, but not one of which
resulted in conviction and were in fact dismissed except for one case which was sent to the
archives. 20

Obviously, whether or not appellant acted in self-defense is essentially a question of fact.

Being so and in the absence of any showing that the Court a quo failed to appreciate facts
or circumstances of weight and substance that would have altered its conclusion, the court
below, having seen and heard the witnesses during the trial, is in a better position to
evaluate their testimonies. No compelling reason, therefore, lies for this Court to disturb
the trial court's finding that appellant did not act in self-defense. 21

The Court, however, holds that appellant, albeit guilty, can only be convicted of homicide
and not murder. The trial court correctly held that the killing was not accompanied by
treachery. It, however, ruled that there was evident premeditation on the part of appellant.
We find the records sorely wanting in evidence to support the latter conclusion.

The fact that appellant told the deceased that he would kill him and that two days later,
after the deceased passed by the store where appellant and Altejos were drinking softdrinks
the latter followed the former and inflicted the fatal blows, cannot adequately sustain a
conclusion of premeditated killing.

To justify its attendance, the prosecution must prove (1) the time when the offender determined
to commit the crime, (2) an act manifestly indicating that the culprit has clung to his
determination, and (3) a sufficient lapse of time between the determination and the execution
to allow him to reflect upon the consequences of his act. 22

In the case at bar, the first and second elements are lacking. The angry outburst of appellant
in that incident of September 15, 1983, warning the victim that the former would kill him,
does not convince us that, under the circumstances therein, appellant as of that time had
already decided to kill the victim. A homicidal premeditation is studiedly conceived and not
impulsively adopted just like that and, worse, publicly announced. It was more of a spontaneous
expression of resentment or bravado on the part of appellant.

Again, the circumstance that appellant and Altejos were by chance at the store when the victim
passed by cannot be taken as manifestly indicating that appellant had clung to his
determination to kill the victim. No evidence was presented to show that appellant purposely
waited there for the deceased. Nor was there any showing that the deceased frequently passed
by the same route as to warrant and explain appellant's waiting for the former at that place.
Indeed, that the meeting may have been purely accidental is not a remote possibility. We are
more inclined to believe that it was the belligerent and defiant demeanor of the victim when
confronted by appellant near the public faucet that precipitated assault.

Under such considerations and there being no other evidence to prove that the death of the
victim was the result of meditation, calculation or reflection, evident premeditation cannot
be appreciated to qualify the killing to murder. 23The circumstances qualifying or aggravating
the act must be proved in an evident and incontestable manner. They must be proved as
conclusively as the acts constituting the offense.24 Thus, for the same reason, the aggravating
circumstance of abuse of superior strength cannot be appreciated in this case. Superior
strength may aggravate or qualify a crime, only if it is clearly shown that there was
deliberate intent to take advantage of it.25 In the absence of any evidence to show that the
accused purposely sought to use their superior strength to their advantage in the present
case, a finding to that effect by the trial court cannot be sustained.

Finally, the fact that appellant did not inflict the mortal wound upon the deceased is of no
moment, since the existence of conspiracy was satisfactorily shown by the evidence. The
coordinated acts of appellant and Altejos of immediately following the victim and jointly
confronting him thereafter reveal a concordance and unity of thought which resulted in the
encounter. The circumstances that after the accused shot the victim in the forearm and, while
he and the victim were grappling for appellant's gun, Altejos stabbed the victim to death,
indicate closeness and coordination of their action geared towards a common purpose, that is,
to kill the victim. 26 Proof of a previous agreement to commit the crime is not absolutely
essential to establish a conspiracy. It is sufficient that the accused be shown to have acted
in concert pursuant to the same objective, 27 as such circumstance is invariably indicative
of a conspiratorial agreement.

It bears mention, at this point, that while we have ruled out evident premeditation in the
case, this does not negate the existence of a conspiracy. True, conspiracy generally involves
evident premeditation, but this circumstance requires for its raison d' etre a sufficient
time in a juridical sense for the accused to meditate and reflect on the consequences of his
intended action. Such time element is not an indispensable requirement for a conspiracy to
exist. 28 Consequently, we find that there was a conspiracy between appellant and Altejos
although, for lack of conclusive showing, we cannot consider evident premeditation against
appellant.

The rule is that where a conspiracy is proven, a showing as to who inflicted the fatal wound
is not required to sustain a conviction. 29 The act of one in killing the victim becomes the
act of all the accused. Insofar as Cornelio Altejos is concerned, however, the trial court
never acquired jurisdiction over him and he can neither be convicted nor exculpated herein.
References in this judgment to him are, therefore, obiter and with no binding effect on
him. 30

WHEREFORE, the judgment of the trial court is MODIFIED. Accused-appellant Gerardo Sazon is
declared GUILTY beyond reasonable doubt of the crime of homicide and is hereby sentenced to
suffer the indeterminate penalty of eight (8) years and one (1) day of prision mayor to
fourteen (14) years, eight (8) months and one (1) day of reclusion temporal.

The award by the lower court of the items of civil liability to be paid by accused-appellant
to the heirs of the deceased is hereby MODIFIED by disallowing the grant of attorney's fees
for lack of basis, and increasing the death indemnity to P50,000.00 in accordance with the
policy adopted by the Court en banc on August 30,1990.

SO ORDERED.

Footnotes 17 TSN, February 8, 1984, 30-32.

1 Judge Sixto R. Guanzon, presiding. 18 Ibid., 34-35.
2 Original record, 15. 19 Section 51, Rule 130, Rules of Court.
3 Rollo, 32-35. 20 TSN, February 26, 1988, 231-233.
4 Ibid., 38-39. 21 People vs. Alvarez, etc., 163 SCRA 745 (1988).
5 Ibid., 39. 22 People vs. Talla, et al., G.R. No. L-44414, January 18, 1990.
6 Ibid., 56. 23 U.S. Vs. Balagtas, et al., 19 Phil. 164 (1911).
7 People vs. Bayocot, G.R. No. 55285, June 28, 1989. 24 People vs. Tiongson, 130 SCRA 614 (1984); People vs. Atienza,
8 People vs. Batas, et al., G.R. Nos. 84277-78, August 2, 1989. 148 SCRA 147 (1987).
9 TSN, March 1, 1988,16-17. 25 People vs. Salcedo, et al., 172 SCRA 78 (1989).
10 TSN, September 17,1985,10-14. 26 People vs. Kindo, et al., 95 SCRA 553 (1980).
11 Rollo, 40. 27 People vs. Abueg, 145 SCRA 622 (1986); People vs. Cantre, et al.,
12 TSN, October 12, 1987, 244. G.R. No. 70743, June 4,1990.
13 TSN, March 1, 1988, 270. 28 People vs. Custodia, et al., 97 Phil. 698 (1955); People vs.
14 Ibid., 264. Arcamo, etc., et al., 105 SCRA 707 (1981).
15 See U.S. vs. Alegado, 25 Phil. 510 (1913). 29 People vs. Tala, et al., 141 SCRA 240 (1986).
16 Rollo, 41-42. 30 People vs. Eswan, et al., G.R. No. 84713, June 4, 1990.
 EN BANC

G.R. No. L-25913 February 29, 1969

HEIRS OF RAYMUNDO CASTRO, petitioners,

vs.
APOLONIO BUSTOS, respondent.

Appeal from the Court of Appeals.

Respondent Apolonio Bustos was charged in the Court of First Instance of Pampanga on October
26, 1962 with the crime of murder for the killing of Raymundo Castro whose heirs are now the
petitioners. The trial court found Bustos guilty only of homicide and, crediting him with two
mitigating circumstances, namely, passion or obfuscation and voluntary surrender, sentenced
him to an indeterminate prison term of 2 years, 4 months and 1 day of prision correccional,
as minimum, to 8 years and 1 day of prision mayor, as maximum, and to indemnify the
petitioners, who were represented in the case by a private prosecutor, in the sum of six
thousand pesos (P6,000) "without prejudice to whatever the accused (respondent) is entitled
from the Government Service Insurance System (GSIS) for his services of around twenty-six
(26) years as a public school teacher, prior to October 20, 1962." Both respondent and
petitioners appealed to the Court of Appeals, respondent asking that appellate, court acquit
him and petitioners praying, on the other hand, that respondent be convicted of murder, that
the portion regarding what said respondent will receive from the GSIS be deleted and that he
be ordered to pay petitioners "the aggregate sum of P50,764.00 as indemnity and actual, moral,
temperate and exemplary damages." For the purposes of their appeal, petitioners even filed
unnecessarily a printed record on appeal. On October 18, 1965, the Court of Appeals rendered
judgment modifying that of the trial court insofar as it concerned (1) the amount of damages
to be awarded petitioners thus:

... Aside from the P6,000 indemnity awarded by the trial court, which we uphold, we
feel justified, in the exercise of our discretion, to award to the heirs of the deceased
moral damages in the amount of P6,000 plus P13,380.00 to compensate for the loss of
earning of the decedent at the annual salary of P2,676.00 ....

and (2) the mitigating circumstance of "obfuscation", appreciated as such by the trial court,
which was changed to "vindication of a grave offense", but affirming it in all other respects.
Upon motion, however, of respondent for the reconsideration of said decision, reiterating his
plea for acquittal, or, in the alternative, praying for the elimination of the award of moral
and compensatory damages, the Court of Appeals promulgated on November 13, 1965, an amended
decision, the pertinent portions of which are:

The arguments interposed by the appellant in his Motion for consideration to support
the complete reversal of the judgment appealed from, have been considered and passed
upon in our decision, and we see no reason to alter the same in so far as the appellant's
guilt of the crime is concerned. On the other hand, we agree with the appellant that in
the interest of justice and equity and in view of the presence of two mitigating
circumstances, without any aggravating one to offset them, the award of moral and
compensatory damages should be eliminated.

WHEREFORE, the decision promulgated October 18, 1965, is hereby amended by eliminating
therefrom the award of P6,000.00 representing moral damages, and of P13,380.00
representing the decedent's loss of earnings.

From this amended decision, only petitioners have appealed to Us. The prayer in their petition
for certiorari asks for nothing more than that the amended decision of the Court of Appeals
be revoked and reversed, and its original decision be affirmed in toto insofar as the award
of indemnity and damages is concerned. Since We find the grounds of the appeal meritorious,
We grant fully the prayer in the petition.

This case affords this Court as appropriate an opportunity, as any other, to restate, in a
more comprehensive way, the law regarding the items of damages that are recoverable in cases
of death caused by a crime, whether the claim therefor is made in the criminal proceedings
itself or in a separate civil action. In the instant case, recovery of such damages is being
sought in the criminal proceedings but even if it were claimed otherwise, the indemnity and
damages would be the same, for generally, the items of damages are identical in both
procedures, except with respect to attorney's fees and expenses of litigation which can be
awarded only when a separate civil action is instituted. (Art. 2208, Civil Code) With the
clarifications We are making herein, at least the writer of this opinion expects that
litigations regarding the aspects of the law herein passed upon may be minimized.

As a start, it is to be noted that in the matter of damages, the original decision of the
Court of Appeals, while correct in making a particularization in the award of indemnity and
damages, nonetheless, still failed to comply strictly with the constitutional requirement
that all decisions of courts of record must state both the facts and the law on which they
are based. (Sec. 12, Art. VIII, Constitution) In said original decision, the Court of Appeals
held:

Coming now to the damages asked by the heirs of the deceased: Aside from the P6,000.00
indemnity awarded by the trial court which we uphold, we feel justified, in the exercise
of our discretion, to award to the heirs of the deceased moral damages in the amount of
P6,000 plus P13,380.00 to compensate for the loss of earning of the decedent at the
annual salary of P2,676.00 (Exh. V; p. 42 t.s.n. Vergara).

WHEREFORE, the appealed judgment is modified as above indicated in so far as it concerns

the amount of indemnity and damages to be awarded to the heirs of the deceased, and the
mitigating circumstance of vindication of a grave offense which takes the place of the
circumstance of obfuscation appreciated by the trial court; and affirmed in all other
respects. Costs against the appellant.

As can be seen, no legal or factual basis is stated therein for the award of indemnity and
damages to petitioners; worse, the impression is given that the said award is purely a matter
of discretion on the part of the court. Clearly, this is not in accordance with the law.
Indeed, it must have been this failure to refer to the pertinent legal provisions which
induced the appellate court, at the mere invocation by respondent of Art. 2204 of the Civil
Code, to commit the error of readily eliminating in the amended decision the items on moral
damages and compensation for loss of earning of the decedent which its original decision had
correctly contained. Having held that it had discretion in the premises, the court easily
yielded to the argument that simply because it had credited the respondent with two mitigating
circumstances, it was already justified in eliminating the items of damages already adverted
to, presumably having in mind said Art. 2204 which provides that:

In crimes, the damages to be adjudicated may be respectively increased or lessened

according to the aggravating or mitigating circumstances.

Of course, this was clear error, inasmuch as construed literally or otherwise, the quoted
provision does not warrant a complete deletion of said items of damages. In any event the
court evidently failed to take into account that several other provisions can come into play
considering the circumstances in this case.

When the commission of a crime results in death, the civil obligations arising therefrom are
governed by the penal laws, "... subject to the provisions of Art. 2177, and of the pertinent
provisions of Chapter 2, Preliminary Title on Human Relations, and of Title XVIII of this
Book (Book IV) regulating damages." (Art. 1161, Civil Code)

Thus, "every person criminally liable for a felony is also civily liable." (Art. 100, Revised
Penal Code). This civil liability, in case the felony involves death, includes indemnification
for consequential damages (Art. 104, id.) and said consequential damages in turn include "...
those suffered by his family or by a third person by reason of the crime." (Art. 107, id.)
Since these provisions are subject, however, as above indicated, to certain provisions of the
Civil Code, We will now turn to said provisions.

The general rule in the Civil Code is that:

In crimes and quasi-delicts, the defendant shall be liable for all damages which are
the natural and probable consequences of the act or omission complained of. It is not
necessary that such damages have been foreseen or could have reasonably been foreseen
by the defendant. (Art. 2202)

When, however, the crime committed involves death, there is Art. 2206 which provides thus:
 The amount of damages for death caused by a crime or quasi-delict shall be at least
three thousand pesos, even though there may have been mitigating circumstances. In
addition:

(1) The defendant shall be liable for the loss of the earning capacity of the deceased,
and the indemnity shall be paid to the heirs of the latter; such indemnity shall in
every case be assessed and awarded by the court, unless the deceased on account of
permanent physical disability not caused by the defendant, had no earning capacity at
the time of his death;

(2) If the deceased was obliged to give support according to the provisions of article
291, the recipient who is not an heir called to the decedent's inheritance by law of
testate or intestate succession may demand support from the person causing the death,
for a period not exceeding five years, the exact duration to be fixed by the court;

(3) The spouse, legitimate and illegitimate descendants and ascendants of the deceased
may demand moral damages for mental anguish by reason of the death of the deceased.

The amount of P3,000 referred to in the above article has already been increased by this
Court first, to P6,000.00 in People v. Amansec, 80 Phil. 426, and lately to P12,000.00 in the
case of People v. Pantoja, G. R. No. L-18793, promulgated October 11, 1968, and it must be
stressed that this amount, as well as the amount of moral damages, may be adjudicated even
without proof of pecuniary loss, the assessment of the moral damages being "left to the
discretion of the court, according to the circumstances of each case." (Art. 2216)

Exemplary damages may also be imposed as a part of this civil liability when the crime has
been committed with one or more aggravating circumstances, such damages being "separate and
distinct from fines and shall be paid to the offended party," (Art. 2230). Exemplary damages
cannot however be recovered as a matter of right; the court will decide whether or not they
should be given. (Art. 2233)

In any event, save as expressly provided in connection with the indemnity for the sole fact
of death (1st par., Art. 2206) and in cases wherein exemplary damages are awarded precisely
because of the attendance of aggravating circumstances, (Art. 2230) "... damages to be
adjudicated may be respectively increased or lessened according to the aggravating or
mitigating circumstances," (Art. 2204) but "the party suffering the loss or injury must
exercise the diligence of a good father of a family to minimize the damages resulting from
the act or omisson in question." (Art. 2203) "Interest as a part of the damages, may, in a
proper case, be adjudicated in the discretion of the Court." (Art. 2211) As to attorneys'
fees and expenses of litigation, the same may be recovered only when exemplary damages have
been granted (Art. 2208, par. 1) or, as We have already stated, when there is a separate
civil action.

Stated differently, when death occurs as a result of a crime, the heirs of the deceased are
entitled to the following items of damages:

1. As indemnity for the death of the victim of the offense — P12,000.00, without the
need of any evidence or proof of damages, and even though there may have been mitigating
circumstances attending the commission of the offense.

2. As indemnity for loss of earning capacity of the deceased — an amount to be fixed by

the Court according to the circumstances of the deceased related to his actual income
at the time of death and his probable life expectancy, the said indemnity to be assessed
and awarded by the court as a matter of duty, unless the deceased had no earning capacity
at said time on account of permanent disability not caused by the accused. If the
deceased was obliged to give support, under Art. 291, Civil Code, the recipient who is
not an heir, may demand support from the accused for not more than five years, the exact
duration to be fixed by the court.

3. As moral damages for mental anguish, — an amount to be fixed by the court. This may
be recovered even by the illegitimate descendants and ascendants of the deceased.

4. As exemplary damages, when the crime is attended by one or more aggravating

circumstances, — an amount to be fixed in the discretion of the court, the same to be
considered separate from fines.
 5. As attorney's fees and expresses of litigation, — the actual amount thereof, (but
only when a separate civil action to recover civil liability has been filed or when
exemplary damages are awarded).

6. Interests in the proper cases.

7. It must be emphasized that the indemnities for loss of earning capacity of the
deceased and for moral damages are recoverable separately from and in addition to the
fixed sum of P12,000.00 corresponding to the indemnity for the sole fact of death, and
that these damages may, however, be respectively increased or lessened according to the
mitigating or aggravating circumstances, except items 1 and 4 above, for obvious reasons.

In the light of the foregoing discussion, it is clear that the Court of Appeals erred in
eliminating in its amended decision, the items of moral damages and compensation for loss of
earning capacity of the deceased. Indeed, as to the award of moral damages in case of death,
this Court has already held in Mercado v. Lira, etc., G. R. Nos. L-13328-29, September 29,
1961, that once the heirs of the deceased claim moral damages and are able to prove they are
entitled thereto, it becomes the duty of the court to make the award. We held:

Art. 2206 states further that "In addition" to the amount of at least P3,000.00 to be
awarded for the death of a passenger, the spouse, legitimate and illegitimate descendants
and ascendants of the deceased may demand moral damages as a consequence of the death
of their deceased kin, which simply means that once the above-mentioned heirs of the
deceased claim compensation for moral damages and are able to prove that they are
entitled to such award, it becomes the duty of the court to award moral damages to the
claimant in an amount commensurate with the mental anguish suffered by them.

This doctrine was reiterated in Maranan v. Perez, G. R. No. L-22272, June 26, 1967:

In connection with the award of damages, the court a quo granted only P3,000 to
plaintiff-appellant. This is the minimum compensatory damages amount recoverable under
Art. 1764 in connection with Art. 2206 of the Civil Code when a breach of contract
results in the passenger's death. As has been the policy followed by this Court, this
minimal award should be increased to P6,000 .... Still, Art. 2206 and 1764 award moral
damages in addition to compensatory damages, to the parents of the passenger killed to
compensate for the mental anguish they suffered. A claim therefor, having been properly
made, it becomes the court's duty to award moral damages. Plaintiff demands P5,000 as
moral damages; however, in the circumstances, We consider P3,000 moral damages, in
addition to the P6,000 damages aforestated, as sufficient. Interest upon such damages
are also due to plaintiff-appellant.

Likewise, in the matter of the compensatory damages for the loss of earning capacity of the
deceased, We also held in the case of Daniel Bulante v. Chu Liante, G.R. Nos. L- 21583 and
L-21591-92, May 20, 1968 that:

The next item objected to refers to the damages awarded to the heirs of the deceased
passengers for loss of earning capacity, separately from the indemnities by reason of
death. The ground for the objection is that loss of earning capacity was not specifically
pleaded or claimed in the complaint. This item, however, may be considered included in
the prayer for "actual damages" and for other "just and equitable reliefs", especially
if taken in the light of Art. 2206, in connection with Art. 1764, of the Civil Code,
which allows, in addition to an indemnity of at least P3,000 by reason of death, recovery
for loss of earning capacity on the part of the deceased, the same to be paid to his
heirs "in every case ... unless the deceased on account of permanent physical disability
not caused by the defendant, had no earning capacity at the time of his death."

To be sure, these cases of Mercado v. Lira, Maranan v. Perez and Bulante v. Chu Liante from
which We have quoted, were actions based on contracts of common carriers. But the above-
mentioned doctrines are equally applicable to civil liability ex delicto because, after all,
Art. 2206 of the Civil Code which was applied in said cases is precisely the provision
pertinent to liability arising from crimes (and quasi-delicts). No doubt, said Article must
have been relied upon by the court in the above cases only because Art. 1764 of the Civil
Code provides that said "Art. 2206 shall also apply to the death of a passenger caused by the
breach of contract of a common carrier." Accordingly, the interpretation given to said article
in those cases are applicable to the case at bar. In other words, this must be so because
under the Civil Code, the same rules on damages are generally to be observed, whether death
results from a crime or a quasi-delict or a breach of the contract of common carriage.
As to the amount of the indemnity for moral damages and loss of earning capacity of the
deceased in the present case, the original decision of the Court of Appeals awarding them,
does not afford sufficient basis for Us to increase the amounts fixed by said court, as prayed
for by appellants. As has already been stated, the said decision failed to follow the
Constitution, not only in not stating the law on which it is based but also in not making the
necessary findings of fact on which it based its discretion in fixing the respective amounts
it awarded for moral and compensatory damages. Legally, therefore, We can, if We wish to,
return this case to that court for it to supply these constitutional omissions. We opt
however, to save time and further difficulties for and damages to, the petitioners. Extant
in the records before Us is the fact that the respondent has never disputed that petitioners
are the widow and seven children of the deceased, three of whom were still minors at the time
of his death, nor that the said deceased was a public school teacher, 56 years old, and
earning P2,276.00 a year. These facts appear to have been repeatedly asserted in the briefs
of petitioners in the Court of Appeals and in this Court. No denial was ever made by the
respondent. When respondent moved for the reconsideration of the original decision of the
Court of Appeals, (Annex E of Petition for Certiorari) he only argued that in view of the
mitigating circumstances credited to him by said court, petitioners were not entitled to
moral damages and to indemnity for loss of earning capacity of the deceased; the amounts
fixed therefor by said court — he never questioned. When petitioners filed their motion for
reconsideration of the amended decision of the Court of Appeals, these facts (relationship,
earnings, etc.) were reiterated. (Annex G, id.) Respondent did not file any answer to said
motion despite the resolution requiring him to do so. (Par. 12, Petition for Certiorari)
Neither has respondent filed any brief in the present instance, notwithstanding repeated
requests on his part for extension to file the same, which, incidentally, were all granted.
Under these circumstances, We feel justified in brushing aside strict technicalities of
procedure in order to accomplish substantial justice more expeditiously. Anyway, as We said
at the outset, petitioners are asking Us, in the prayer of their petition for certiorari, for
nothing more than to affirm "in toto" the original decision of the Court of Appeals, and in
their lone assignment of error in the present instance, their only claim is that "the Court
of Appeals erred when it issued the amended decision eliminating the award of P6,000 moral
damages and the award of P13,380.00 loss of earnings of the deceased Raymundo Castro." In
these circumstances, even if We should award the amounts of damages just mentioned, inspite
of the absence of the pertinent findings of fact by the Court of Appeals, We would not have
to reach beyond amounts that are undisputed by the respondent.

We, therefore, overrule the prayer for additional damages in petitioners' brief and We hold
that, on the basis of the facts not questioned by respondent, they are entitled only to the
P6,000.00 as moral damages and the P13,380.00 as compensatory damages for the loss of earning
capacity of the deceased awarded in the original decision of the Court of Appeals in addition,
of course, to the indemnity for death fixed also by said court at P6,000.00. This amount of
P6,000.00 We cannot increase to P12,000.00, as allowed in People v. Pantoja, supra, and the
subsequent cases, (People v. Mongaya G. R. No. L-23708, October 31, 1968, and People v. Ramos,
G. R. No. L-19143, November 29, 1968) because in the instant suit, neither party has appealed
in relation thereto. This case is now before Us on appeal by the offended party only as
to specific portions of the civil indemnity to be paid by the respondent. It would have been
different if the whole criminal case were up for our review because then, even without any
appeal on the part of the offended party, We could have still increased the said liability
of the accused, here-in respondent. (See Mercado v. Lira, supra.)

At this juncture, for the guidance of parties similarly situated as petitioners herein, and
so that there may be no useless expenses in appeals by offended parties in regard to the
civil aspect of a criminal case when no separate civil action has been filed by them, it
should be made clear that when there is no such separate civil action and the claim for civil
indemnity is joined with the criminal case, no record on appeal, whether printed, typewritten
or mimeographed, is necessary, except perhaps when formal pleading raising complicated
questions are filed in connection therewith, and still, this would be purely optional on the
appellant because anyway the whole original record of the case is elevated in appeals in
criminal cases. It is already settled that appeals relating to the civil aspects of a criminal
case should follow the procedure for appeal required by rules of criminal procedure. (People
vs. Lorredo, 50 Phil. 209, 220-221; People v. ViIlanueva, G.R. No. L-18769, May 27,
1966)lawphi1.nêt

WHEREFORE, the amended decision of the Court of Appeals is modified as hereinabove indicated,
in so far as the civil liability of respondent is concerned, with costs against him in this
instance.

Separate Opinions
CAPISTRANO, J., concurring:

I concur, and take this opportunity to express my views on certain points not covered by the
majority opinion.

1. In the criminal action for death by crime, as murder, homicide, and homicide through
reckless imprudence it is the duty of the Fiscal, unless the heirs reserve their right
to file a separate civil action, to demand payment, for the benefit of the heirs of the
deceased, of the damages ordained in Article 2206 and 2230 of the Civil Code. This duty
is apparent from the following considerations: (a) A crime is an offense against both
the State and the offended party. This is so because before the State intervened in its
punishment, a crime was an offense purely against the injured party calling for private
vengeance. It was only after "the period of private vengeance" in the history of criminal
law that the State decided to intervene in the punishment of crime for reasons of social
defense. (b) The civil liability in crime is generally determined in the criminal action
pursuant to the basic principle that "every person criminally liable is civilly liable."
Since the Fiscal has full control of the criminal action, he is the only one who may
demand payment therein of the civil indemnity for the benefit of the heirs of the
deceased. (c) In case the Fiscal does not demand payment of the civil indemnity in the
criminal action and the judgment does not order its payment, said judgment will
constitute a bar to a future civil action to recover the civil indemnity. (d) Most of
the injured parties in crime are poor or ignorant. For this reason, the intervention of
a private prosecutor, hired by the heirs of the deceased, in the criminal action, is
rare. (e) The trial court usually awards only the amount of P12,000 as damages for the
death unless the other items of damages specified in Articles 2206 and 2230 of the Civil
Code are demanded by the Fiscal. The failure of the Fiscals throughout the country to
make such demand in the criminal actions has resulted in the law (Art. 2206, except
par. 1, and Art. 2230) having fallen into disuse for a period of more than 18 years
(from 1950 when the New Civil Code took effect, until now), contrary to the great
expectations of the Code Commission and the Legislature. Said failure has also resulted
in great injustice to the countless heirs of the victims of murder, homicide and homicide
through reckless imprudence during said period of 18 years.

2. Accordingly, unless the heirs reserve their right to file a separate civil action,
the Fiscal should also allege in the information all the items of damages recoverable
for the benefit of the heirs of the deceased as follows: (a) P12,000 for the death of
the victim; (b) the amount constituting loss of the earning capacity of the deceased;
(e) the amount of monthly support to be given by the accused for the period not exceeding
five years in case the deceased was obligated to give support under Article 291 of the
Civil Code to a recipient who is not an intestate heir of the deceased; (d) that moral
damages are demanded by and on behalf of the surviving spouse, legitimate and
illegitimate descendants, and ascendants of the deceased for mental anguish by reason
of the death of the deceased, the amount of award to each of them individually to be
determined in the discretion of the court on proof of mental anguish and the depth or
intensity of the same; and (e) exemplary damages in the amount to be determined by the
court to be paid to the heirs of the deceased in case of the presence of one or more
aggravating circumstance in the commission of the crime.

3. Where a private prosecutor, hired by the heirs of the deceased, intervenes in the
criminal action, as in the case at bar, the heirs may also demand and recover reasonable
attorney's fees and expenses of litigation. This is just. From the provision of Article
2208(9) of the Civil Code which allows recovery of attorney's fees and expenses of
litigation in case of a separate civil action to recover civil liability arising from
a crime, it does not follow that the converse is true. Whether the heirs recover the
civil liability through a private prosecutor in criminal action or through counsel in
a separate civil action, they are entitled to attorney's fees and expenses of litigation.
What is important is not in what action the civil liability is recovered, but the fact
that in either action the heirs have paid attorney's fees and expenses of litigation.

4. Those heirs entitled to the civil indemnity are the intestate heirs of the deceased
in the order of intestate succession. The Fiscal should therefore give in the information
the names and personal circumstances of the heirs entitled to the civil indemnity in
accordance with the law of intestate succession so that the trial court may make the
award in their names. This will avoid further or subsequent litigation on who, among
several claimants, are really the heirs entitled to the civil indemnity. The practice
of the trial courts in awarding the civil indemnity to "the heirs of the deceased,"
does not satisfy the law and should be abandoned.
 Does the term "heirs" include testamentary heirs? An affirmative answer is proper.
According to Manresa "Donde la ley no distingue, no debemos distinguir." The heirs,
whether testate or intestate, are a continuation of the juridical personality of the
decedent. The law has a tender regard for the will of the testator expressed in his
last will and testament on the ground that any disposition made by the testator is
better than that which the law can make. For this reason, intestate succession is
nothing more than a disposition based upon the presumed will of the decedent.

5. The award of moral damages to the surviving spouse, legitimate and illegitimate
descendants, and ascendants of the deceased, should be made to each of them individually
and in varying amounts depending upon proof of mental anguish and the depth or intensity
of the same. Where it is shown that one or some did not suffer mental anguish or could
not have suffered the same, no award of moral damages should be made to him or to them.
For example: The evidence shows that the surviving widow, who had a paramour, when
informed of the death of her husband, said: "Mabuti nga. Ngayon maaari na akong pakasal
kay Pepe." Another example: The evidence shows that the legitimate children (or
grandchildren) were aged one, two and four at the time their father was killed. In the
very nature of things these children (or descendants) could not have suffered mental
anguish. In these examples there should be no award of moral damages to the widow and
the infant children.

-------------------------------------------------------------------------------------------

EN BANC

G.R. No. L-22183 August 30, 1968

THE RECEIVER FOR NORTH NEGROS SUGAR COMPANY, INC., petitioner,

vs.
PEDRO V. YBAÑEZ ET AL., respondents.

A petition for review of the decision of the Court of Appeal, rendered on October 14, 1963,
in CA-G.R. No. 28608-R, entitled "Pedro V. Ybañez, and Rosario V. Ybañez, represented by her
legal guardian, Pedro V. Ybañez, plaintiffs-appellants, versus North Negros Sugar Company,
Inc., Primitivo Gustilo, and Loreto Perez, defendants-appellees."

Plaintiffs-appellants Pedro V. Ybañez and Rosario V. Ybañez, named respondents in the instant
petition,1 are the brother and sister, respectively, and immediate heirs of Cesar V. Ybañez
who was one of two persons who died as a result of the collision between the car, where said
Cesar V. Ybañez was riding and being driven by Gil Dominguez, and train No. 5, owned by the
North Negros Sugar Company, Inc., in the evening of August 31, 1937 in the railroad
intersection at Hacienda Santa Teresa, Manapla, Occidental Negros, while the car was on its
way from Bacolod City to Cadiz. Criminal prosecution for double homicide and serious physical
injuries through reckless imprudence was instituted against Gil Dominguez, driver of the car,
and Primitivo Gustilo and Loreto Perez, operator and brakeman, respectively, of the
locomotive. The offended parties reserved their right to institute separate civil actions for
damages. Primitivo Gustilo and Loreto Perez were tried together and acquitted of the crime
charged. Gil Dominguez was also acquitted in a separate trial.

Thereafter, a civil action based on culpa aquiliana was instituted, on May 15, 1940, in the
Court of First Instance of Negros Occidental by Pedro V. Ybañez and Rosario V. Ybañez against
Primitivo Gustilo, Loreto Perez, and their employer, North Negros Sugar Company, Inc.,
docketed as Civil Case No. 8367, seeking to recover damages for the death of the deceased.
In their answer, defendants interposed as special defense the previous acquittal of defendants
Primitivo Gustilo and Loreto Perez in the criminal case, and prayed for the dismissal of the
complaint.

At the pre-trial, on August 5, 1940, the parties agreed to reproduce in the civil case all
the evidence submitted in the criminal case, as well as the decision in and the transcript
of the stenographic notes taken during the trial of, the criminal case. Defendants filed a
motion for summary judgment, praying for the dismissal of the civil case. The trial court,
without any further hearing, considered the case submitted, and rendered a decision dismissing
the case. Appeal was taken by the plaintiffs to the Court of Appeals, but the appeal was
certified to this Court on the ground that the appeal merely involved questions of law. This
Court, in G.R. No. L-6790, on March 28, 1955, reversed the decision of the lower court and
remanded the case for further proceedings.
During the pendency of the case in the lower court, plaintiff Rosario V. Ybañez died, leaving
as her only heir, co-plaintiff Pedro V. Ybañez, to continue the case. On the other hand, the
North Negros Sugar Company, Inc. was dissolved and was accordingly substituted by its receiver
Dr. Claudio R. Luzurriaga. One of the defendants, Loreto Perez, also died in the interim and
the case against him was dismissed.

After having received additional evidence, the Court of First Instance of Negros Occidental
rendered judgment, on July 23, 1958, dismissing the case anew. Appeal was taken by plaintiff
Pedro V. Ybañez to this Court, docketed as G.R. No. L-14849, but because questions of fact
were involved, and the amount involved was less than P200,000, the case was certified, on
August 25, 1960, to the Court of Appeals and docketed in the latter court as Case No. 28608-
R.

The Court of Appeals, on October 14, 1963, reversed the judgment of the lower court and held
the North Negros Sugar Company, Inc. liable for the death of Cesar V. Ybañez, ordering it to
pay plaintiff-appellant Pedro V. Ybañez damages consisting of P9,600.00 as compensatory
damages for lost earnings of the deceased; P6,000.00 for death indemnity; P1,000.00 for
funeral expenses; P5,000.00 "as moral damages for the mental anguish suffered by the heir";
P5,000.00 "for attorney's fees, considering the years and extensive work — the protracted
litigation had taken;"2 and costs. A motion for reconsideration filed by defendant North
Negros Sugar Company, Inc., upon the grounds, among others, that the awards of moral damages
and attorney's fees were not warranted under the law and the circumstances attending the
litigation, was denied. Hence this petition for review.

In this appeal, or petition for review petitioner limits itself to questioning the correctness
of the decision of the Court of Appeals in so far as it awards moral damages and attorney's
fees. In its brief, petitioner contents that the Court of Appeals erred:

1. "in ordering petitioner to pay P5,000 "as moral damages for mental anguish suffered" by
plaintiffs who were brother and sister of the deceased"; and

2. "in awarding attorney's fees in the sum of P5,000 to the heirs of the deceased."3

1. In support of the first assignment of error, petitioner cites paragraph 3 of Article 2206
of the new Civil Code, which provides that in case of death caused by a crime or quasi-delict,
only the spouse, legitimate and illegitimate descendants and ascendants of the deceased may
demand moral damages for mental anguish by reason of the death of the deceased. Petitioner
urges that in the instant case the heirs of the deceased Cesar V. Ybañez, being his brother,
Pedro V. Ybañez, and his sister, Rosario V. Ybañez (now deceased), are not among those
entitled to moral damages; consequently, the award to them of moral damages was not authorized
by law.

Respondent Pedro V. Ybañez, on the contrary, contends that the law applicable is in the old
Civil Code, and not Article 2206 of the new Civil Code, because the accident that caused the
death happened in 1937, and the case was filed in 1940. Said respondent maintains that the
award of moral damages is authorized particularly under Articles 1902, 1903, 1103, 1104, 1106
and 1107 of the old Civil Code, and as ruled by this Court in the decisions in Lilius vs.
Manila Railroad;4 Gutierrez vs. Gutierrez;5 and Castro vs. Acro Taxicab Inc.6 Moral damages,
respondent urges, should be paid to the injured person; but if the injured person died as a
consequence of the culpable act and the victim left no descendants or ascendants, the damages
must be paid — taking into consideration the principles of the general law on damages, of the
law on succession, and the fact that under the old Civil Code no specific persons are indicated
to be the only ones entitled to recover moral damages — to the heirs or next of kin of the
victim. Respondent further cites the rulings of this Court in the cases of Bernal vs. House,
et al.7; Astudillo vs. Manila Electric Co.8; and Manzanares vs. Moreta9, wherein the fact of
heirship, as viewed from the general principle of succession of the deceased victim, was
taken into consideration in determining who would be paid the indemnity for damages.

In reply, petitioner points out that although the cases cited by respondent show that moral
damages were awarded even before the new Civil Code took effect, in none of the cases cited,
however, were moral damages awarded to a brother or sister of the deceased, but only to either
the victim himself, the surviving spouses, the children or the parents.

To resolve the issue, we have to determine, what law is a applicable — whether the provisions
of the old Civil Code or of the new Civil Code. We believe that the old Civil Code is the law
applicable to the case at bar, subject to such modifications as are suggested, or are
warranted, under the transitional provisions of the new Civil Code, as we may show at the
later part of this opinion. This is so, because the acts and events that gave rise to the
instant action took place in 1937, and the action was commenced in 1940. Article 2253 of the
new Civil Code, provides:

The Civil Code of 1889 and other previous laws shall govern rights originating, under
said laws, from acts done or events which took place under their regime; even though
this Code may regulate them in a different manner, or may not recognize them . . . .

The pertinent provisions of the old Civil Code are Articles 1902 and 1903. The first article
provides:

Art. 1902. Any person who by act or omission causes damage to another by his fault or
negligence shall be liable for the damage so done.

and the second article in part, provides:

Art. 1903. The obligation imposed by the next preceding article is enforcible not only
for personal acts and omissions, but also for those of persons for whom another is
responsible.

x x x x x x x x x

Owners or directors of an establishment or business are equally liable for any damages
caused by their employees while engaged in the branch of the service in which employed,
or on the occasion of the performance of their duties.

This Court said: "Article 1902 of the Civil Code declares that any person who by an act or
omission, characterized by fault or negligence, causes damage to another shall be liable for
the damage done . . . a person is liable for damage done to another by any culpable act; and
by culpable act is meant any act which is blameworthy when judged by accepted legal standards.
The idea thus expressed is undoubtedly broad enough to include any rational conception of
liability for the tortious acts likely to be developed in any society." 10 The word "damage"
in said article, comprehending as it does all that are embraced in its meaning, includes any
and all damages that a human being may suffer in any and all the manifestations of his life:
physical or material, moral or psychological, mental or spiritual, financial, economic,
social, political, and religious. 11

It is particularly noticeable that Article 1902 stresses the passive subject of the obligation
to pay damages caused by his fault or negligence. The article does not limit or specify the
active subjects, much less the relation that must exist between the victim of the culpa
aquiliana and the person who may recover damages, thus warranting the inference that, in
principle, anybody who suffers any damage from culpa aquiliana whether a relative or not of
the victim, may recover damages from the person responsible therefor. This Court had granted
moral damages not only to the person who himself was injured, 12 but also to the legitimate
children and heirs of the deceased. 13 Parents, even natural, have also been awarded damages
for the death of their children. 14

We have not come across, and herein respondent has not cited, any case in this jurisdiction
where a brother and/or sister of the victim of culpa aquiliana was awarded moral damages. In
our search for persuasive authority, however, we came across decisions by the courts of France
whose Civil Code, in its article 1383, provides substantially the same as article 1902 of the
Civil Code of Spain, as follows:

Cada uno es responsable del daño que ha causado no solamente por su hecho, sino tambien
por su negligencia o por su imprudencia. (Ripert and Boulanger, Tratado de Derecho
Civil, Vol. V, 2nd part, p. 50).

On the basis of the above-quoted article, in France, moral damages for mental anguish
(sentimientos afectivos) have been awarded not only to parents, children and spouse, of the
victim of culpa aquiliana but also to brothers and sisters, natural grandparents, and
godchildren. 15

We thus see that a provision in the Civil Code of France which is substantially similar to
the provision of the Civil Code of Spain, relating to culpa aquiliana is so applied by the
courts of France as to hold a person guilty of culpa aquiliana liable for moral damages to
the person injured, or to his spouse, children, parents, brothers and sisters, and even to
godchildren. If the provision of our old Civil Code — which was itself the Civil Code of
Spain of 1889 — relating to culpa aquiliana were to be applied as it had been applied in
France, then the person guilty of culpa aquiliana under our old Civil Code would be liable
for moral damages to the person injured, or to his spouse, children, parents, brothers and
sisters and even to his godchildren. This would mean that under our old Civil Code the
liability for moral damages for mental anguish due to culpa aquiliana was to more persons
than what our new Civil Code now provides in its Article 2206 which limits the liability for
moral damages to the spouse and legitimate and illegitimate descendants and ascendants of the
deceased. And so, under the new Civil Code, a less severe sanction — at least as regards the
persons entitled to moral damages — is provided for, than under the old Civil Code.

Article 2257 of the new Civil Code — one of the transitional provisions — provides as follows:

Art. 2257. Provisions of this Code which attach a civil sanction or penalty or a
deprivation of rights to acts or omissions which were not penalized by the former laws,
are not applicable to those who, when said laws were in force, may have executed the
act or incurred in the omission forbidden or condemned by this Code.

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

x x x x x x x x x

(Emphasis supplied.)

It may well be said that culpa aquiliana, or quasi-delict, is punished both by the old Civil
Code — the previous legislation — and by the new Civil Code. But, as we have pointed out, a
less severe sanction, or penalty, for culpa aquiliana is provided for in the new Civil Code.
It follows, therefore, that Article 2206 of the new Civil Code — which provides that only the
spouse, legitimate and illegitimate descendants and ascendants may demand moral damages for
mental anguish by reason of the death of the deceased caused by quasi-delict — should be
applied in the instant case. Hence, petitioner herein, who claims moral damages for the death
of his brother Cesar V. Ybañez caused by quasi-delict, is not entitled to, and should not
have been awarded, moral damages, by the Court of Appeals. 16

2. Regarding the second error assigned, petitioner argues that the Court of Appeals had no
special reason for awarding attorney's fees because the petitioner had not acted in gross and
evident bad faith in resisting respondent's claims for damages, and the claims of respondent
herein could not be characterized as "plainly valid, just and demandable" claims as
contemplated under paragraph (5) of Article 2208 of the new Civil Code, considering that the
two employees, for whose alleged negligent acts herein petitioner is made to answer, were
acquitted in the criminal case, and the civil case for damages was dismissed by the trial
court.

Respondent, on the other hand, argues that the Court of Appeals gave as reason for the award
of attorney's fees: "considering the years and extensive work — the protracted litigation had
taken." Respondent also maintains that the award must have been based by the Court of Appeals
on Article 2208 (11) and Article 2253 of the new Civil Code.

But petitioner urges that the issue is whether or not attorney's fees might be recovered, and
not the amount of attorney's fees in the determination of which the long years of litigation
given as reason by the Court of Appeals would be pertinent.

Respondent's argument that the award of attorney's fees was justified under Article 2208 (11)
of the new Civil Code is untenable, because the instant case was filed on May 15, 1940, or
before the effectivity of the new Civil Code. This Court, in the case of Bureau of Lands vs.
Samia, et al., 17 held:

That portion of the decision which awards P10,000 to respondents as attorney's fees is
untenable. Although courts have, under paragraph (11) of Article 2208 of the Civil Code,
authority to award attorney's fees whenever it may be "just and equitable," said
provision is inapplicable to the present case, the same having been instituted before
the effectivity of the said Code.

The refusal of herein petitioner to pay the damages asked, although the case was finally
decided against it, cannot be said to have been caused by bad faith. In the case of George
Edward Koster Inc. vs. Zulueta, 18 this Court said:
 At common law, the successful party usually has no right to have the fees of his
attorney, as such, taxed against his opponent (14 L. ed. 181). The Court will not
ordinarily allow counsel fees to the successful party. Each party to the action must
pay his own lawyer . . . . Counsel fees paid in prior action have been allowed . . .
(where) the conduct of the party against whom they were allowed, so directly and
certainly caused the expenditure for this purpose, that the loss of the amount so paid
was easily within such causal relations to the defendant's wrong as to warrant the
assessment of the damages in compensation for it (Sears vs. Inhabitants of Nahant, 102
N. E. 491.). Our rulings before the New Civil Code took effect (the present case having
arisen before) have been as follows:

"It is not sound public policy to place a penalty on the right to litigate. To
compel the defeated party to pay the fees of counsel for his successful opponent
would throw wide the door of temptation to the opposing party and his counsel to
swell the fees to undue proportions, and to apportion them arbitrarily between
those pertaining properly to one branch of the case from the other.

"This Court has already placed itself on record as favoring the view taken by
those courts which hold that attorney's fees are not a proper element of damages."
(Tan Ti vs. Alvear, 26 Phil. 566; The Borden Co. vs. Doctors Pharmaceuticals,
Inc., 90 Phil. 500).

". . . Counsel fees, other than those fixed in the rules as costs, are not an
element of recoverable damages." (Jesswani vs. Masaram Dialdas, G.R. No. L-4651,
May 12, 1952)."

WHEREFORE, the decision of the Court of Appeals sought to be reviewed should be, as it is
hereby, modified by eliminating therefrom the award of P5,000.00 for moral damages for mental
anguish suffered by the heir, and the award of P5,000.00 for attorney's fees. No pronouncement
as to costs. It is so ordered.

11
Footnotes Castro vs. Acro Taxicab Co., 82 Phil. 359, 381.
1 12
Properly the only respondent is Pedro V. Ybañez because Rosario Lilius vs. Manila Railroad Co., 59 Phil. 768 (1934).
13
V. Ybañez died leaving as her only heir her brother Pedro V. Ybañez. Alcantara vs. Surro and Manila Electric Co., 93 Phil. 473, wherein
2
Words in quotation marks are as quoted from the decision of the the death occurred on Nov. 24, 1945.
14
Court of Appeals.1äwphï1.ñët Manzanares v. Moreta, 38 Phil. 821; Astudillo v. Manila Electric
3
As quoted from the assignment of errors. Co., 55 Phil. 427.
4 15
50 Phil. 768. See Ripert and Boulanger, "Tratado de Derecho Civil", op. cit., p.
5
56 Phil. 177. 97 for dates of decision.
6 16
82 Phil. 359. Heirs of Gervacio D. Gonzales vs. Arcadio Alegarbes, G.R. No. L-
7
54 Jur. 349, 352. 7821, May 25, 1956.
8 17
55 Jur. 457, 461, 462. G. R. No. L-8068, August 25, 1956; 99 Phil. 1060.
9 18
38 Jur. 874, 893, 894. 99 Phil. 945.
10
Daywalt vs. Corporacion de PP Agustinos Recoletos, et al., 39 Phil.
587.
-------------------------------------------------------------------------------------------

THIRD DIVISION

G.R. No. 163212 March 13, 2007

CANDANO SHIPPING LINES, INC., Petitioner,

vs.
FLORENTINA J. SUGATA-ON, Respondent.

D E C I S I O N

This is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court,
seeking to reverse and set aside the Court of Appeals Decision1 dated 23 May 2003 and its
Resolution dated 1 April 2004, affirming with modification the Decision of the Regional Trial
Court (RTC) of Manila, Branch 20, finding Candano Shipping Lines, Inc. (Candano Shipping)
liable for the death of Melquiades Sugata-on. The dispositive portion of the assailed decision
of the appellate court reads:

IN VIEW OF ALL THE FOREGOING, the appealed decision is AFFIRMED, with the MODIFICATION that:
(1) the awarded compensation for the death of Melquiades Sugata-on is reduced to ₱608,400.00;
and, (2) the award of moral and exemplary damages as well as attorney’s fees is deleted. No
pronouncement as to costs.2

The factual and procedural antecedents of this instant petition are as follows:

Candano Shipping is a domestic corporation engaged in the business of coastwise trading within
the Philippines.3On 7 March 1994, Melquiades Sugata-on was employed by Candano Shipping as
Third Marine Engineer on board its cargo vessel, M/V David, Jr., with the monthly salary of
₱7,800.00.4

On 25 March 1996, M/V David, Jr. left the port of Davao City with its cargo and 20 crew
members. The voyage was initially uneventful until around seven o’clock in the evening of 27
March 1996 when the vessel encountered rough seas and strong winds while traversing the waters
of Lianga Bay, Surigao del Sur, causing her to tilt at three degrees on its starboard side.
Due to the violent waves which continuously hammered the tilting vessel, the seawaters slowly
swallowed up the main deck causing the tilting to worsen up to 30 degrees. In an effort to
salvage the vessel, the ship captain changed its course from the north to the south but the
tilting continued to grow to a dangerously high level, rendering the vessel beyond control.
It was at this point when the ship captain ordered the crew members to abandon the vessel.
Despite the efforts exerted by the crew members to save the vessel, M/V David, Jr. sank
together with her cargo at around eleven o’clock in the evening at Bakulin Point, Lianga Bay,
Surigao del Sur. Among the 20 crew members, twelve survived, one died and seven were missing.
One of those who were missing was Melquiades Sugata-on (Melquiades), the husband of herein
respondent, Florentina Sugata-on, (Florentina) as shown in the List of Surviving Crew of the
Ill-Fated David, Jr., prepared by Candano Shipping.5

Upon learning of Melquiades’ fate, Florentina immediately went to the office of Candano
Shipping in Manila to claim the death benefits of her husband but it refused to pay.6

Such refusal prompted Florentina to institute on 31 January 1997, an action seeking indemnity
for the death of her husband against Candano Shipping before the RTC of Manila, Branch 20.
She grounded her case on the provision of Article 17117 of the New Civil Code, which imposes
upon the employer liability for the death of his employee in the course of employment, even
if the death is caused by a fortuitous event. Accordingly, Florentina prayed that actual,
moral and exemplary damages including attorney’s fees, be awarded in her favor.8

In its Answer,9 Candano Shipping countered that Florentina had no cause of action against it
because the death of Melquiades was not yet an established fact since he was merely reported
missing upon the sinking of M/V David, Jr. The filing of the case before the RTC therefore
was premature for she should have waited until the body of Melquiades could be recovered or
until the lapse of time which would render the provision of Article 391 of the New Civil
Code10 on presumptive death operative.

The RTC resolved the controversy in favor of Florentina and ratiocinated that the provision
of Article 391 of the New Civil Code on presumptive death had become operative since the
period of four years had already elapsed since Melquiades was reported missing upon the
sinking incident which occurred on 27 March 1996. In a Decision11promulgated on 15 February
2001, the RTC ordered Candano Shipping to indemnify Florentina for the death of her husband,
in the following amounts:

WHEREFORE, premises considered, judgment is hereby rendered ordering defendant Candano

Shipping Lines, Inc. to indemnify plaintiff Forentina J. Sugata-on the amount of ₱988,400.00
as actual damages, ₱100,000.00 as moral damages ₱50,000.00 as exemplary damages and 10% of
the amount due as and for attorney’s fees plus the cost of suit.

The award for actual damages amounting to ₱988,400.00 was computed by the lower court by
adopting the formula in the computation of loss of earning capacity enunciated in the case
of Villa Rey Transit, Inc. v. Court of Appeals,12wherein the annual expenses of the deceased
are deducted from his gross annual income and multiplied by life expectancy (gross annual
income – annual expense x life expectancy).13

The Motion for Reconsideration interposed by Candano Shipping was denied by the RTC for lack
of cogent reason to disturb or reconsider its decision.14

Aggrieved, Candano Shipping elevated the adverse RTC decision to the Court of Appeals, which
in turn, affirmed with modification the judgment of the lower court. The award for actual
damages was reduced from ₱998,400.00 to ₱608,400.00, while the awards for moral and exemplary
damages including attorney’s fees were deleted for lack of sufficient basis for their
allowance.15

In arriving at the sum of ₱608,400.00, the appellate court applied the standard prescribed
by Article 194 of the Labor Code of the Philippines, as amended, to wit:

ART. 194. DEATH. – (a) Under such regulations as the Commission may approve, the System shall
pay to the primary beneficiaries upon the death of the covered employee under this Title an
amount equivalent to his monthly income benefit, plus ten percent thereof for each dependent
child, but not exceeding five, beginning with the youngest and without substitution, except
as provided for in paragraph (j) of Article 167 hereof; Provided, however, That the monthly
income benefit shall be guaranteed for five years: Provided, further, That if he has no
primary beneficiary, the System shall pay to his secondary beneficiaries the monthly income
benefit not to exceed sixty months; Provided, finally, That the minimum monthly death benefit
shall not be less that fifteen thousand pesos.

In a Resolution16 issued on 1 April 2004, the Court of Appeals denied the Motion for
Reconsideration filed by Candano Shipping for failure to offer any justifiable ground to
modify, reverse or reconsider the questioned decision.

Hence, this instant Petition for Review on Certiorari filed by Candano Shipping raising the
following issues:

WHETHER OR NOT THE FORMULA FOR FIXING THE AMOUNT OF DEATH COMPENSATION IN ARTICLE 194
OF THE LABOR CODE APPLIES IN DETERMINING THE COMPENSATION CLAIMED BY THE HEIR OF THE
DECEASED EMPLOYEE AGAINST THE EMPLOYER UNDER ARTICLE 1711?

WHETHER OR NOT IT IS PERMITTED FOR THE COURT OF APPEALS, ON ORDINARY APPEAL, TO APPLY
ART. 194 OF THE LABOR CODE ON A CLAIM FOR DEATH COMPENSATION OF AN EMPLOYEE AGAINST THE
EMPLOYER FILED AND TRIED BEFORE THE REGULAR COURTS ON THE BASIS OF ARTICLE 1711 OF THE
CIVIL CODE AND THE DOCTRINE ENUNCIATED IN THE VILLA REY TRANSIT CASE?

WHETHER OR NOT APPLICATION OF ARTICLE 194 OF THE LABOR CODE ON THE CLAIM FOR DEATH
COMPENSATION OF RESPONDENT OUSTS THE REGULAR COURTS, INCLUDING THE COURT OF APPEALS OF
JURISDICTION OVER THE CASE?

IN THE EVENT THAT THE SUPREME COURT RULES THAT THE COURT OF APPEALS APPLICATION OF
ARTICLE 194 OF THE LABOR CODE IN THIS CASE SHOULD BE SET ASIDE, IS RESPONDENT ENTITLED
TO RECOVER DEATH COMPENSATION FROM PETITIONER IN ACCORDANCE WITH HER THEORY OF THE CASE
AS ALLEGED, ARGUED AND TRIED BEFORE THE TRIAL COURT.17

Since the factual findings of the RTC and the Court of Appeals that the non-recovery of
Melquiades’ body for the period of four (4) years from 27 March 1996 creates a presumption
that he is already dead and that his death was caused by a fortuitous event, were already
settled, and considering that these findings were not controverted by the parties in this
instant petition, we find no compelling reason to disturb the same. Henceforth, we will limit
our discussion to the computation of the amount of indemnification.

In its Petition, Candano Shipping argues that the application of the measure stipulated under
Article 194 of the Labor Code is erroneous since it applies only to death compensation to be
paid by the Social Security System to the beneficiaries of a deceased member, to which
proposition Florentina concedes. We agree. The remedy availed by Sugata-on in filing the
claim under the New Civil Code has been validly recognized by the prevailing jurisprudence
on the matter.

In the case of Floresca v. Philex Mining Company,18 we declared that the employees may invoke
either the Workmen’s Compensation Act or the provisions of the Civil Code, subject to the
consequence that the choice of one remedy will exclude the other and that the acceptance of
the compensation under the remedy chosen will exclude the other remedy. The exception is
where the claimant who had already been paid under the Workmen’s Compensation Act may still
sue for damages under the Civil Code on the basis of supervening facts or developments
occurring after he opted for the first remedy.19

Stated differently, save for the recognized exception, an employee cannot pursue both remedies
simultaneously but has the option to proceed by interposing one remedy and waiving his right
over the other. As we have explained in Floresca, this doctrinal rule is rooted on the theory
that the basis of the compensation under the Workmen’s Compensation Act is separate and
distinct from the award of damages under the Civil Code, thus:

The rationale in awarding compensation under the Workmen’s Compensation Act differs from that
in giving damages under the Civil Code. The compensation acts are based on a theory of
compensation distinct from the existing theories of damages, payments under the acts being
made as compensation and not as damages (99 C.J.S. 53). Compensation is given to mitigate
harshness and insecurity of industrial life for the workman and his family. Hence, an employer
is liable whether negligence exists or not since liability is created by law. Recovery under
the Act is not based on any theory of actionable wrong on the part of the employer (99 D.J.S.
36).

In other words, under compensation acts, the employer is liable to pay compensation benefits
for loss of income, as long as the death, sickness or injury is work-connected or work-
aggravated, even if the death or injury is not due to the fault of the employer (Murillo v.
Mendoza, 66 Phil. 689). On the other hand, damages are awarded to one as a vindication of the
wrongful invasion of his rights. It is the indemnity recoverable by a person who has sustained
injury either in his person, property or relative rights, through the act or default of
another (25 C.J.S. 452).

The principle underscored in the case of Floresca was further affirmed in the later case
of Ysmael Maritime Corporation v. Avelino,20 wherein we emphasized that once the claimant had
already exercised his choice to pursue his right under one remedy, he is barred from proceeding
with an alternative remedy. As eloquently laid down by Chief Justice Marcelo Fernan:

It is therefore clear that respondents had not only opted to recover under the Act but they
had also been duly paid. At the very least, a sense of fair play would demand that if a person
entitled to a choice of remedies made a first election and accepted the benefits thereof, he
should no longer be allowed to exercise the second option. "Having staked his fortunes on a
particular remedy, (he) is precluded from pursuing the alternate course, at least until the
prior claim is rejected by the Compensation Commission."

In the case at bar, Florentina was forced to institute a civil suit for indemnity under the
New Civil Code, after Candano Shipping refused to compensate her husband’s death.

The pertinent provision of the New Civil Code reads:

Article 1711. Owners of enterprises and other employers are obliged to pay compensation for
the death of or injuries to their laborers, workmen, mechanics or other employees, even though
the event may have been purely accidental or entirely due to a fortuitous cause, if the death
or personal injury arose out of and in the course of employment. The employer is also liable
for compensation if the employee contracts any illness or diseases caused by such employment
or as the result of the nature of employment. If the mishap was due to the employee’s own
notorious negligence, or voluntary act, or drunkenness, the employer shall not be liable for
compensation. When the employee’s lack of due care contributed to his death or injury, the
compensation shall be equitably reduced.

In the case of Philippine Air Lines, Inc. v. Court of Appeals,21 this Court validated the
strength of the aforementioned provision and made the employer liable for the injury suffered
by its employee in the course of employment. We thus ruled:

Having affirmed the gross negligence of PAL in allowing Capt. Delfin Bustamante to fly the
plane to Daet on January 8, 1951 whose slow reaction and poor judgment was the cause of the
crash-landing of the plane which resulted in private respondent Samson hitting his head
against the windshield and causing him injuries for which reason PAL terminated his services
and employment as pilot after refusing to provide him with the necessary medical treatment
of respondent’s periodic spells, headache and general debility produced from said injuries, We
must necessarily affirm likewise the award of damages or compensation under the provisions
of Art. 1711 and Art. 1712 of the New Civil Code. x x x.

As early as the case of Valencia v. Manila Yacht Club, Inc.,22 this Court, speaking through
the renowned civilist, Mr. Justice J.B.L. Reyes, made a pronouncement that Article 1711 of
the Civil Code imposes upon the employer the obligation to compensate the employee for injury
or sickness occasioned by his employment, and thus articulated:

>Appellant’s demand for compensation is predicated on employer’s liability for the sickness
of, or injury to, his employee imposed by Article 1711 of the Civil Code, which reads:
Article 1711. Owners of enterprises and other employers are obliged to pay compensation for
the death x x x.

We find the abovequoted provision to be applicable and controlling in this case. The matter
of the amount of compensation and allowable medical expenses should be properly determined
by the Municipal Court after the parties are heard accordingly.

Given that the right of the claimant arose from the contract of employment and the
corresponding obligation imposed by the New Civil Code upon the employer to indemnify the
former for death and injury of the employee circumstanced by his employment, necessarily, the
provisions of the same code on damages shall govern the extent of the employer’s liability.

The pertinent provision on damages under the New Civil Code provides:

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.

Article 2200. Indemnification for damages shall comprehend not only the value of the loss
suffered, but also that of the profits which the obligee failed to obtain.

In order to give breath to the aforestated provisions on damages of the New Civil Code, they
must be transformed into a more tangible and practical mathematical form, so that the purpose
of the law to indemnify the employee or his heirs for his death or injury occasioned by his
employment, as envisioned by the Article 1711 of the same code may be realized. We deem it
best to adopt the formula for loss of earning capacity enunciated in the case of Villa Rey
v. Court of Appeals,23 in computing the amount of actual damages to be awarded to the claimant
under Article 1711 of the New Civil Code.

In Villa Rey, the common carrier was made liable for the death of its passenger on board a
passenger bus owned and operated by Villa Rey Transit, Inc. going to Manila from Lingayen,
Pangasinan. While the bus was nearing Sadsaran Bridge in Barrio Sto. Domingo, Minalin,
Pampanga, it frontally hit the rear side of bull cart filled with hay and bamboo poles. The
protruding end of one bamboo pole, about eight feet long, penetrated through the glass
windshield of the bus and hit the face of Policarpio Quintos, Jr., who was then sitting at
the front row, causing his death.24

The obligation of the common carrier to indemnify its passenger or his heirs for injury or
death arose from the contract of carriage entered into by the common carrier and the
passenger.25 By the very nature of the obligation which is imbued with public interest,26 in
contract of carriage the carrier assumes the express obligation to transport its passenger
to his destination safely and to observe extraordinary diligence with due regard to all the
circumstances, and any injury that might be suffered by the passenger is right away
attributable to the fault or negligence of the carrier and thus gives rise to the right of
the passenger or his heirs for indemnity.27

In the same breadth, the employer shall be liable for the death or personal injury of its
employees in the course of employment as sanctioned by Article 1711 of the New Civil Code.
The liability of the employer for death or personal injury of his employees arose from the
contract of employment entered into between the employer and his employee which is likewise
imbued with public interest.28 Accordingly, when the employee died or was injured in the
occasion of employment, the obligation of the employer for indemnity, automatically attaches.
The indemnity may partake of the form of actual, moral, nominal, temperate, liquidated or
exemplary damages, as the case may be depending on the factual milieu of the case and
considering the criterion for the award of these damages as outlined by our jurisprudence.29 In
the case at bar, only the award of actual damages, specifically the award for unearned income
is warranted by the circumstances since it has been duly proven that the cause of death of
Melquiades is a fortuitous event for which Candano Shipping cannot be faulted.

The formula for the computation of unearned income is:

Net Earning Capacity = life expectancy x (gross annual income - reasonable and necessary
living expenses).

Life expectancy is determined in accordance with the formula:

2 / 3 x [80 – age of deceased at the time of death]

Jurisprudence provides that the first factor, i.e., life expectancy, shall be computed by
applying the formula (2/3 x [80 - age at death]) adopted in the American Expectancy Table of
Mortality or the Actuarial of Combined Experience Table of Mortality.30

In the computation of the second factor, it is computed by multiplying the life expectancy
by the net earnings of the deceased, i.e., the total earnings less expenses necessary in the
creation of such earnings or income and less living and other incidental expenses.31 The loss
is not equivalent to the entire earnings of the deceased, but only such portion that he would
have used to support his dependents or heirs. Hence, we deduct from his gross earnings the
necessary expenses supposed to be used by the deceased for his own needs.32 The Court explained
in Villa Rey:1avvphi1

[(The award of damages for loss of earning capacity is)] concerned with the determination of
losses or damages sustained by the private respondents, as dependents and intestate heirs of
the deceased, and that said damages consist, not of the full amount of his earnings, but of
the support they received or would have received from him had he not died in consequence of
negligence of petitioner’s agent. In fixing the amount of that support, we must reckon with
the ‘necessary expenses of his own living’, which should be deducted from his earnings. Thus,
it has been consistently held that earning capacity, as an element of damages to one’s estate
for his death by wrongful act is necessarily his net earning capacity or his capacity to
acquire money, ‘less necessary expense for his own living.’ Stated otherwise, the amount
recoverable is not the loss of entire earning, but rather the loss of that portion of the
earnings which the beneficiary would have received. In other words, only net earnings, and
not gross earnings are to be considered that is, the total of the earnings less expenses
necessary in the creation of such earnings or income and less living and other incidental
expenses.33

In computing the third factor, the necessary living expense, a survey of more recent
jurisprudence shows that this Court consistently pegged the amount at 50% of the gross annual
income.34 We held in Smith Bell Dodwell Shipping Agency Corp. v. Borja,35 that when there is
no showing that the living expenses constituted the smaller percentage of the gross income,
we fix the living expenses at half of the gross income.

Applying the aforestated jurisprudential guidelines in the computation of the amount of award
for damages set out in Villa Rey, we now proceed to determining Melquiades’ life expectancy,
thus:

Life expectancy = 2 / 3 x [80 – age of deceased at the time of death]

2 /3 x [80 – 56]

2 / 3 x [24]

Life expectancy = 16

With 16 more years of life expectancy and a monthly income of ₱7,800.00, as evidenced by the
pay slips duly presented before the RTC, Melquiades’ earning capacity is computed as follows:

Net Earning Capacity = life expectancy x (gross annual income - reasonable and necessary
living expenses).

= 16 x ( ₱93,600.00 – ₱ 46,800.00)

= 16 x ( ₱ 46,800.00 )

Net Earning Capacity = ₱ 748,800.00

The argument raised by Candano Shipping that the formula for determining the life expectancy
under Villa Reycannot be automatically applied without proof of the basis for the expected
length of life of a Filipino does not merit our consideration. The formula for life expectancy
has been repeatedly adopted in our jurisprudence in fixing the amount of indemnity for the
death of a party. This was adopted from the American Expectancy Table of Mortality or the
Actuarial of Combined Experience Table of Mortality which was used by insurers in determining
the capital sum to be charged for annuity.36
Admittedly, in several cases, this Court reduced the life expectancy multiplier considering
the medical history such as when the deceased previously underwent a major surgery37 or when
it was shown that he was treated for chest pains, backache or occasional feeling of
tiredness38 and the fact that the deceased has been consistently engaged in a dangerous and
risky activity tending to shorten his life.39 Failing to prove, however, that any of these
circumstances is attendant in the case at bar, Candano Shipping cannot validly assert that
the standard life expectancy factor laid down in Villa Rey cannot be applied in this case.

Accordingly, Florentina is entitled to recover the amount of ₱748,800.00 as actual damages

for the death of her husband. The awards of moral and exemplary damages are deleted. However,
the award of costs of litigation and attorney’s fees are proper.40

WHEREFORE, in view of the foregoing, the instant petition is DENIED and the Decision dated
23 May 2003 as well as the Resolution dated 1 April 2004, rendered by the Court of Appeals
in CA-G.R. CV No. 70410, are hereby PARTIALLY AFFIRMED in so far as it finds petitioner liable
to respondent for damages.

Pursuant to the appropriate provisions of the New Civil Code and the prevailing jurisprudence
on the matter, petitioner Candano Shipping Lines, Inc., is ORDERED to pay the amount of
₱748,800.00, as actual damages, plus 10% of the amount awarded as attorney’s fee plus cost
of the suit.

SO ORDERED.

18
Footnotes Floresca v. Philex Mining Corporation, 220 Phil. 533, 547-548
* No part; on leave. (1985).
1 19
Penned by Associate Justice Conrado M. Vasquez, Jr. with Macropper Mining Corporation v. Abeleda, G.R. No. L-33851, 15
Associate Justices Mercedes Gozo-Dadole and Rosmari D. August 1988, 164 SCRA 316, 318.
20
Carandang, concurring; rollo, pp. 29-39. G.R. No. L-43674, 30 June 1987, 151 SCRA 333, 337.
2 21
Id. at 38. 193 Phil. 560, 577 (1981).
3 22
Id. at 29. 138 Phil. 761, 765-766 (1969).
4 23
Records, p. 199. Villa Rey Transit v. Court of Appeals, supra note 12.
5 24
Rollo, pp. 29-39. Id.
6 25
Records, p. 199. La Mallorca v. Court of Appeals, G.R. No. L-20761, 27 July 1966,
7
Article 1711. Owners of enterprises and other employers are 17 SCRA 739, 745.
26
obliged to pay compensation for the death of or injuries to their Bacarro v. Castaño, 203 Phil. 563, 571 (1982).
27
laborers, workmen, mechanics or other employees even though the Article 1764, New Civil Code, Batangas Transportation Co. v.
event may have been purely accidental or entirely due to a Caguimbal, 130 Phil. 166, 171 (1968).
28
fortuitous cause, if the death or personal injury arose out of and in Article 1700, New Civil Code. The relations between capital and
the course of employment. The employer is also liable for labor are not merely contractual. They are so impressed with public
compensation if the employee contracts any illness or diseases interest that labor contacts must yield to the common good.
caused by such employment or as the result of the nature of the Therefore, such contracts are subject to the special laws on labor
employment. If the mishap was due to the employee’s own unions, collective bargaining, strikes and lockouts, closed shops,
notorious negligence, or voluntary act, or drunkenness, the wages, working conditions, hours of labor and similar subjects.
29
employer shall not be liable for compensation. When the Article 2197. Damages may be:
employee’s lack of due care contributed to his death or injury, the (1) Actual or compensatory;
compensation shall be equitably reduced. (2) Moral;
8
Records, pp. 1-10. (3) Nominal;
9
Id. at 17-19. (4) Temperate or moderate;
10
Article 391, New Civil Code. The following shall be presumed (5) Liquidated; or
dead for all purposes , including the division of the estate among (6) Exemplary or corrective.
30
the heirs: Lambert v. Heirs of Ray Castillon, G.R. No. 160709, 23 February
(1) A person on board a vessel lost during a sea voyage, or an 2005, 452 SCRA 285, 294.
31
aeroplane which is missing, who has not be heard for four years Id.
32
since the loss of the vessel or aeroplane; Magbanua v. Tabusares, Jr.,G.R. No. 152134, 4 June 2004, 431
(2) A person in the armed forces who has taken part in war, and has SCRA 99, 104.
33
been missing for four years; Id. at 104-105.
34
(3) A person who has been in danger of death under other Id. at 105.
35
circumstances and his existence has not been known for four years. 432 Phil. 913, 925 (2002).
11 36
Records, pp. 199-203. Winfield and Jolowich, p. 770 a cited in Aquino, Torts and
12
Villa Rey Transit, Inc v. Court of Appeals, G.R. No. L-25499, 18 Damages, 2001 Ed., pp. 843-844.
37
February 1970, 31 SCRA 511. MD Transit, Inc. v. Court of Appeals, G.R. No. L-49496, 31 May
13
Records, pp. 199-203. 1979, 90 SCRA 542, 546.
14 38
Id. at 231. Davila v. Philippine Air Lines, 151 Phil. 549, 556 (1973).
15 39
CA rollo, pp. 86-96. Rodgriguez –Luna v. Intermediate Appellate Court, G.R. No. L-
16
Rollo, p. 40. 62988, 28 February 1985, 135 SCRA 242, 248.
17
Id. at 19-20.
40
Singson v. Court of Appeals, G.R. No. 119995, 18 November 1997,
346 SCRA 831, 847

EN BANC

G.R. No. 189871 August 13, 2013

DARIO NACAR, PETITIONER,

vs.
GALLERY FRAMES AND/OR FELIPE BORDEY, JR., RESPONDENTS.

D E C I S I O N

This is a petition for review on certiorari assailing the Decision1 dated September 23, 2008
of the Court of Appeals (CA) in CA-G.R. SP No. 98591, and the Resolution2 dated October 9,
2009 denying petitioner’s motion for reconsideration.

The factual antecedents are undisputed.

Petitioner Dario Nacar filed a complaint for constructive dismissal before the Arbitration
Branch of the National Labor Relations Commission (NLRC) against respondents Gallery Frames
(GF) and/or Felipe Bordey, Jr., docketed as NLRC NCR Case No. 01-00519-97.

On October 15, 1998, the Labor Arbiter rendered a Decision3 in favor of petitioner and found
that he was dismissed from employment without a valid or just cause. Thus, petitioner was
awarded backwages and separation pay in lieu of reinstatement in the amount of ₱158,919.92.
The dispositive portion of the decision, reads:

With the foregoing, we find and so rule that respondents failed to discharge the burden of
showing that complainant was dismissed from employment for a just or valid cause. All the
more, it is clear from the records that complainant was never afforded due process before he
was terminated. As such, we are perforce constrained to grant complainant’s prayer for the
payments of separation pay in lieu of reinstatement to his former position, considering the
strained relationship between the parties, and his apparent reluctance to be reinstated,
computed only up to promulgation of this decision as follows:

SEPARATION PAY
Date Hired = August 1990
Rate = ₱198/day
Date of Decision = Aug. 18, 1998
Length of Service = 8 yrs. & 1 month
₱198.00 x 26 days x 8 months = ₱41,184.00
BACKWAGES
Date Dismissed = January 24, 1997
Rate per day = ₱196.00
Date of Decisions = Aug. 18, 1998
a) 1/24/97 to 2/5/98 = 12.36 mos.
₱196.00/day x 12.36 mos. = ₱62,986.56
b) 2/6/98 to 8/18/98 = 6.4 months
Prevailing Rate per day = ₱62,986.00
 ₱198.00 x 26 days x 6.4 mos. = ₱32,947.20
T O T A L = ₱95.933.76

x x x x

WHEREFORE, premises considered, judgment is hereby rendered finding respondents guilty of

constructive dismissal and are therefore, ordered:

To pay jointly and severally the complainant the amount of sixty-two thousand nine hundred
eighty-six pesos and 56/100 (₱62,986.56) Pesos representing his separation pay;

To pay jointly and severally the complainant the amount of nine (sic) five thousand nine
hundred thirty-three and 36/100 (₱95,933.36) representing his backwages; and

All other claims are hereby dismissed for lack of merit.

SO ORDERED.4

Respondents appealed to the NLRC, but it was dismissed for lack of merit in the
Resolution5 dated February 29, 2000. Accordingly, the NLRC sustained the decision of the Labor
Arbiter. Respondents filed a motion for reconsideration, but it was denied.6

Dissatisfied, respondents filed a Petition for Review on Certiorari before the CA. On August
24, 2000, the CA issued a Resolution dismissing the petition. Respondents filed a Motion for
Reconsideration, but it was likewise denied in a Resolution dated May 8, 2001.7

Respondents then sought relief before the Supreme Court, docketed as G.R. No. 151332. Finding
no reversible error on the part of the CA, this Court denied the petition in the Resolution
dated April 17, 2002.8

An Entry of Judgment was later issued certifying that the resolution became final and executory
on May 27, 2002.9The case was, thereafter, referred back to the Labor Arbiter. A pre-execution
conference was consequently scheduled, but respondents failed to appear.10

On November 5, 2002, petitioner filed a Motion for Correct Computation, praying that his
backwages be computed from the date of his dismissal on January 24, 1997 up to the finality
of the Resolution of the Supreme Court on May 27, 2002.11 Upon recomputation, the Computation
and Examination Unit of the NLRC arrived at an updated amount in the sum of ₱471,320.31.12

On December 2, 2002, a Writ of Execution13 was issued by the Labor Arbiter ordering the Sheriff
to collect from respondents the total amount of ₱471,320.31. Respondents filed a Motion to
Quash Writ of Execution, arguing, among other things, that since the Labor Arbiter awarded
separation pay of ₱62,986.56 and limited backwages of ₱95,933.36, no more recomputation is
required to be made of the said awards. They claimed that after the decision becomes final
and executory, the same cannot be altered or amended anymore.14 On January 13, 2003, the Labor
Arbiter issued an Order15 denying the motion. Thus, an Alias Writ of Execution16 was issued on
January 14, 2003.

Respondents again appealed before the NLRC, which on June 30, 2003 issued a
Resolution17 granting the appeal in favor of the respondents and ordered the recomputation of
the judgment award.

On August 20, 2003, an Entry of Judgment was issued declaring the Resolution of the NLRC to
be final and executory. Consequently, another pre-execution conference was held, but
respondents failed to appear on time. Meanwhile, petitioner moved that an Alias Writ of
Execution be issued to enforce the earlier recomputed judgment award in the sum of
₱471,320.31.18

The records of the case were again forwarded to the Computation and Examination Unit for
recomputation, where the judgment award of petitioner was reassessed to be in the total amount
of only ₱147,560.19.
Petitioner then moved that a writ of execution be issued ordering respondents to pay him the
original amount as determined by the Labor Arbiter in his Decision dated October 15, 1998,
pending the final computation of his backwages and separation pay.

On January 14, 2003, the Labor Arbiter issued an Alias Writ of Execution to satisfy the
judgment award that was due to petitioner in the amount of ₱147,560.19, which petitioner
eventually received.

Petitioner then filed a Manifestation and Motion praying for the re-computation of the
monetary award to include the appropriate interests.19

On May 10, 2005, the Labor Arbiter issued an Order20 granting the motion, but only up to the
amount of ₱11,459.73. The Labor Arbiter reasoned that it is the October 15, 1998 Decision
that should be enforced considering that it was the one that became final and executory.
However, the Labor Arbiter reasoned that since the decision states that the separation pay
and backwages are computed only up to the promulgation of the said decision, it is the amount
of ₱158,919.92 that should be executed. Thus, since petitioner already received ₱147,560.19,
he is only entitled to the balance of ₱11,459.73.

Petitioner then appealed before the NLRC,21 which appeal was denied by the NLRC in its
Resolution22 dated September 27, 2006. Petitioner filed a Motion for Reconsideration, but it
was likewise denied in the Resolution23dated January 31, 2007.

Aggrieved, petitioner then sought recourse before the CA, docketed as CA-G.R. SP No. 98591.

On September 23, 2008, the CA rendered a Decision24 denying the petition. The CA opined that
since petitioner no longer appealed the October 15, 1998 Decision of the Labor Arbiter, which
already became final and executory, a belated correction thereof is no longer allowed. The
CA stated that there is nothing left to be done except to enforce the said judgment.
Consequently, it can no longer be modified in any respect, except to correct clerical errors
or mistakes.

Petitioner filed a Motion for Reconsideration, but it was denied in the Resolution25 dated
October 9, 2009.

Hence, the petition assigning the lone error:

WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED, COMMITTED GRAVE ABUSE OF
DISCRETION AND DECIDED CONTRARY TO LAW IN UPHOLDING THE QUESTIONED RESOLUTIONS OF THE NLRC
WHICH, IN TURN, SUSTAINED THE MAY 10, 2005 ORDER OF LABOR ARBITER MAGAT MAKING THE DISPOSITIVE
PORTION OF THE OCTOBER 15, 1998 DECISION OF LABOR ARBITER LUSTRIA SUBSERVIENT TO AN OPINION
EXPRESSED IN THE BODY OF THE SAME DECISION.26

Petitioner argues that notwithstanding the fact that there was a computation of backwages in
the Labor Arbiter’s decision, the same is not final until reinstatement is made or until
finality of the decision, in case of an award of separation pay. Petitioner maintains that
considering that the October 15, 1998 decision of the Labor Arbiter did not become final and
executory until the April 17, 2002 Resolution of the Supreme Court in G.R. No. 151332 was
entered in the Book of Entries on May 27, 2002, the reckoning point for the computation of
the backwages and separation pay should be on May 27, 2002 and not when the decision of the
Labor Arbiter was rendered on October 15, 1998. Further, petitioner posits that he is also
entitled to the payment of interest from the finality of the decision until full payment by
the respondents.

On their part, respondents assert that since only separation pay and limited backwages were
awarded to petitioner by the October 15, 1998 decision of the Labor Arbiter, no more
recomputation is required to be made of said awards. Respondents insist that since the
decision clearly stated that the separation pay and backwages are "computed only up to [the]
promulgation of this decision," and considering that petitioner no longer appealed the
decision, petitioner is only entitled to the award as computed by the Labor Arbiter in the
total amount of ₱158,919.92. Respondents added that it was only during the execution
proceedings that the petitioner questioned the award, long after the decision had become
final and executory. Respondents contend that to allow the further recomputation of the
backwages to be awarded to petitioner at this point of the proceedings would substantially
vary the decision of the Labor Arbiter as it violates the rule on immutability of judgments.
The petition is meritorious.

The instant case is similar to the case of Session Delights Ice Cream and Fast Foods v. Court
of Appeals (Sixth Division),27 wherein the issue submitted to the Court for resolution was
the propriety of the computation of the awards made, and whether this violated the principle
of immutability of judgment. Like in the present case, it was a distinct feature of the
judgment of the Labor Arbiter in the above-cited case that the decision already provided for
the computation of the payable separation pay and backwages due and did not further order the
computation of the monetary awards up to the time of the finality of the judgment. Also in
Session Delights, the dismissed employee failed to appeal the decision of the labor arbiter.
The Court clarified, thus:

In concrete terms, the question is whether a re-computation in the course of execution of the
labor arbiter's original computation of the awards made, pegged as of the time the decision
was rendered and confirmed with modification by a final CA decision, is legally proper. The
question is posed, given that the petitioner did not immediately pay the awards stated in the
original labor arbiter's decision; it delayed payment because it continued with the litigation
until final judgment at the CA level.

A source of misunderstanding in implementing the final decision in this case proceeds from
the way the original labor arbiter framed his decision. The decision consists essentially of
two parts.

The first is that part of the decision that cannot now be disputed because it has been
confirmed with finality. This is the finding of the illegality of the dismissal and the awards
of separation pay in lieu of reinstatement, backwages, attorney's fees, and legal interests.

The second part is the computation of the awards made. On its face, the computation the labor
arbiter made shows that it was time-bound as can be seen from the figures used in the
computation. This part, being merely a computation of what the first part of the decision
established and declared, can, by its nature, be re-computed. This is the part, too, that the
petitioner now posits should no longer be re-computed because the computation is already in
the labor arbiter's decision that the CA had affirmed. The public and private respondents,
on the other hand, posit that a re-computation is necessary because the relief in an illegal
dismissal decision goes all the way up to reinstatement if reinstatement is to be made, or
up to the finality of the decision, if separation pay is to be given in lieu reinstatement.

That the labor arbiter's decision, at the same time that it found that an illegal dismissal
had taken place, also made a computation of the award, is understandable in light of Section
3, Rule VIII of the then NLRC Rules of Procedure which requires that a computation be made.
This Section in part states:

[T]he Labor Arbiter of origin, in cases involving monetary awards and at all events, as far
as practicable, shall embody in any such decision or order the detailed and full amount
awarded.

Clearly implied from this original computation is its currency up to the finality of the
labor arbiter's decision. As we noted above, this implication is apparent from the terms of
the computation itself, and no question would have arisen had the parties terminated the case
and implemented the decision at that point.

However, the petitioner disagreed with the labor arbiter's findings on all counts - i.e., on
the finding of illegality as well as on all the consequent awards made. Hence, the petitioner
appealed the case to the NLRC which, in turn, affirmed the labor arbiter's decision. By law,
the NLRC decision is final, reviewable only by the CA on jurisdictional grounds.

The petitioner appropriately sought to nullify the NLRC decision on jurisdictional grounds
through a timely filed Rule 65 petition for certiorari. The CA decision, finding that NLRC
exceeded its authority in affirming the payment of 13th month pay and indemnity, lapsed to
finality and was subsequently returned to the labor arbiter of origin for execution.

It was at this point that the present case arose. Focusing on the core illegal dismissal
portion of the original labor arbiter's decision, the implementing labor arbiter ordered the
award re-computed; he apparently read the figures originally ordered to be paid to be the
computation due had the case been terminated and implemented at the labor arbiter's level.
Thus, the labor arbiter re-computed the award to include the separation pay and the backwages
due up to the finality of the CA decision that fully terminated the case on the merits.
Unfortunately, the labor arbiter's approved computation went beyond the finality of the CA
decision (July 29, 2003) and included as well the payment for awards the final CA decision
had deleted - specifically, the proportionate 13th month pay and the indemnity awards. Hence,
the CA issued the decision now questioned in the present petition.

We see no error in the CA decision confirming that a re-computation is necessary as it

essentially considered the labor arbiter's original decision in accordance with its basic
component parts as we discussed above. To reiterate, the first part contains the finding of
illegality and its monetary consequences; the second part is the computation of the awards
or monetary consequences of the illegal dismissal, computed as of the time of the labor
arbiter's original decision.28

Consequently, from the above disquisitions, under the terms of the decision which is sought
to be executed by the petitioner, no essential change is made by a recomputation as this step
is a necessary consequence that flows from the nature of the illegality of dismissal declared
by the Labor Arbiter in that decision.29 A recomputation (or an original computation, if no
previous computation has been made) is a part of the law – specifically, Article 279 of the
Labor Code and the established jurisprudence on this provision – that is read into the
decision. By the nature of an illegal dismissal case, the reliefs continue to add up until
full satisfaction, as expressed under Article 279 of the Labor Code. The recomputation of the
consequences of illegal dismissal upon execution of the decision does not constitute an
alteration or amendment of the final decision being implemented. The illegal dismissal ruling
stands; only the computation of monetary consequences of this dismissal is affected, and this
is not a violation of the principle of immutability of final judgments.30

That the amount respondents shall now pay has greatly increased is a consequence that it
cannot avoid as it is the risk that it ran when it continued to seek recourses against the
Labor Arbiter's decision. Article 279 provides for the consequences of illegal dismissal in
no uncertain terms, qualified only by jurisprudence in its interpretation of when separation
pay in lieu of reinstatement is allowed. When that happens, the finality of the illegal
dismissal decision becomes the reckoning point instead of the reinstatement that the law
decrees. In allowing separation pay, the final decision effectively declares that the
employment relationship ended so that separation pay and backwages are to be computed up to
that point.31

Finally, anent the payment of legal interest. In the landmark case of Eastern Shipping Lines,
Inc. v. Court of Appeals,32 the Court laid down the guidelines regarding the manner of
computing legal interest, to wit:

II. With regard particularly to an award of interest in the concept of actual and compensatory
damages, the rate of interest, as well as the accrual thereof, is imposed, as follows:

1. When the obligation is breached, and it consists in the payment of a sum of money,
i.e., a loan or forbearance of money, the interest due should be that which may have
been stipulated in writing. Furthermore, the interest due shall itself earn legal
interest from the time it is judicially demanded. In the absence of stipulation, the
rate of interest shall be 12% per annum to be computed from default, i.e., from judicial
or extrajudicial demand under and subject to the provisions of Article 1169 of the Civil
Code.

2. When an obligation, not constituting a loan or forbearance of money, is breached, an

interest on the amount of damages awarded may be imposed at the discretion of the court
at the rate of 6% per annum. No interest, however, shall be adjudged on unliquidated
claims or damages except when or until the demand can be established with reasonable
certainty. Accordingly, where the demand is established with reasonable certainty, the
interest shall begin to run from the time the claim is made judicially or extrajudicially
(Art. 1169, Civil Code) but when such certainty cannot be so reasonably established at
the time the demand is made, the interest shall begin to run only from the date the
judgment of the court is made (at which time the quantification of damages may be deemed
to have been reasonably ascertained). The actual base for the computation of legal
interest shall, in any case, be on the amount finally adjudged.

3. When the judgment of the court awarding a sum of money becomes final and executory,
the rate of legal interest, whether the case falls under paragraph 1 or paragraph 2,
above, shall be 12% per annum from such finality until its satisfaction, this interim
period being deemed to be by then an equivalent to a forbearance of credit.33
Recently, however, the Bangko Sentral ng Pilipinas Monetary Board (BSP-MB), in its Resolution
No. 796 dated May 16, 2013, approved the amendment of Section 234 of Circular No. 905, Series
of 1982 and, accordingly, issued Circular No. 799,35 Series of 2013, effective July 1, 2013,
the pertinent portion of which reads:

The Monetary Board, in its Resolution No. 796 dated 16 May 2013, approved the following
revisions governing the rate of interest in the absence of stipulation in loan contracts,
thereby amending Section 2 of Circular No. 905, Series of 1982:

Section 1. The rate of interest for the loan or forbearance of any money, goods or credits
and the rate allowed in judgments, in the absence of an express contract as to such rate of
interest, shall be six percent (6%) per annum.

Section 2. In view of the above, Subsection X305.136 of the Manual of Regulations for Banks
and Sections 4305Q.1,37 4305S.338 and 4303P.139 of the Manual of Regulations for Non-Bank
Financial Institutions are hereby amended accordingly.

This Circular shall take effect on 1 July 2013.

Thus, from the foregoing, in the absence of an express stipulation as to the rate of interest
that would govern the parties, the rate of legal interest for loans or forbearance of any
money, goods or credits and the rate allowed in judgments shall no longer be twelve percent
(12%) per annum - as reflected in the case of Eastern Shipping Lines40and Subsection X305.1
of the Manual of Regulations for Banks and Sections 4305Q.1, 4305S.3 and 4303P.1 of the Manual
of Regulations for Non-Bank Financial Institutions, before its amendment by BSP-MB Circular
No. 799 - but will now be six percent (6%) per annum effective July 1, 2013. It should be
noted, nonetheless, that the new rate could only be applied prospectively and not
retroactively. Consequently, the twelve percent (12%) per annum legal interest shall apply
only until June 30, 2013. Come July 1, 2013 the new rate of six percent (6%) per annum shall
be the prevailing rate of interest when applicable.

Corollarily, in the recent case of Advocates for Truth in Lending, Inc. and Eduardo B. Olaguer
v. Bangko Sentral Monetary Board,41 this Court affirmed the authority of the BSP-MB to set
interest rates and to issue and enforce Circulars when it ruled that "the BSP-MB may prescribe
the maximum rate or rates of interest for all loans or renewals thereof or the forbearance
of any money, goods or credits, including those for loans of low priority such as consumer
loans, as well as such loans made by pawnshops, finance companies and similar credit
institutions. It even authorizes the BSP-MB to prescribe different maximum rate or rates for
different types of borrowings, including deposits and deposit substitutes, or loans of
financial intermediaries."

Nonetheless, with regard to those judgments that have become final and executory prior to
July 1, 2013, said judgments shall not be disturbed and shall continue to be implemented
applying the rate of interest fixed therein.1awp++i1

To recapitulate and for future guidance, the guidelines laid down in the case of Eastern
Shipping Lines42 are accordingly modified to embody BSP-MB Circular No. 799, as follows:

I. When an obligation, regardless of its source, i.e., law, contracts, quasi-contracts,

delicts or quasi-delicts is breached, the contravenor can be held liable for damages.
The provisions under Title XVIII on "Damages" of the Civil Code govern in determining
the measure of recoverable damages.1âwphi1

II. With regard particularly to an award of interest in the concept of actual and
compensatory damages, the rate of interest, as well as the accrual thereof, is imposed,
as follows:

When the obligation is breached, and it consists in the payment of a sum of money, i.e., a
loan or forbearance of money, the interest due should be that which may have been stipulated
in writing. Furthermore, the interest due shall itself earn legal interest from the time it
is judicially demanded. In the absence of stipulation, the rate of interest shall be 6% per
annum to be computed from default, i.e., from judicial or extrajudicial demand under and
subject to the provisions of Article 1169 of the Civil Code.

When an obligation, not constituting a loan or forbearance of money, is breached, an interest

on the amount of damages awarded may be imposed at the discretion of the court at the rate
of 6% per annum. No interest, however, shall be adjudged on unliquidated claims or damages,
except when or until the demand can be established with reasonable certainty. Accordingly,
where the demand is established with reasonable certainty, the interest shall begin to run
from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code), but
when such certainty cannot be so reasonably established at the time the demand is made, the
interest shall begin to run only from the date the judgment of the court is made (at which
time the quantification of damages may be deemed to have been reasonably ascertained). The
actual base for the computation of legal interest shall, in any case, be on the amount finally
adjudged.

When the judgment of the court awarding a sum of money becomes final and executory, the rate
of legal interest, whether the case falls under paragraph 1 or paragraph 2, above, shall be
6% per annum from such finality until its satisfaction, this interim period being deemed to
be by then an equivalent to a forbearance of credit.

And, in addition to the above, judgments that have become final and executory prior to July
1, 2013, shall not be disturbed and shall continue to be implemented applying the rate of
interest fixed therein.

WHEREFORE, premises considered, the Decision dated September 23, 2008 of the Court of Appeals
in CA-G.R. SP No. 98591, and the Resolution dated October 9, 2009 are REVERSED and SET ASIDE.
Respondents are Ordered to Pay petitioner:

(1) backwages computed from the time petitioner was illegally dismissed on January 24,
1997 up to May 27, 2002, when the Resolution of this Court in G.R. No. 151332 became
final and executory;

(2) separation pay computed from August 1990 up to May 27, 2002 at the rate of one month
pay per year of service; and

(3) interest of twelve percent (12%) per annum of the total monetary awards, computed
from May 27, 2002 to June 30, 2013 and six percent (6%) per annum from July 1, 2013
until their full satisfaction.

The Labor Arbiter is hereby ORDERED to make another recomputation of the total monetary
benefits awarded and due to petitioner in accordance with this Decision.

SO ORDERED.

26
Footnotes Id. at 27.
1 27
Penned by Associate Justice Vicente S. E. Veloso, with Associate G.R. No. 172149, February 8, 2010, 612 SCRA 10.
28
Justices Rebecca De Guia-Salvador and Ricardo R. Rosario, Session Delights Ice Cream and Fast Foods v. Court of Appeals
concurring; rollo, pp. 33-48. (Sixth Division), supra, at 21-23.
2 29
Id. at 32. Id. at 25.
3 30
Id. at 79-84. Id. at 25-26.
4 31
Id. at 82-84. (Emphasis supplied.) Id. at 26.
5 32
Id. at 85-93. G.R. No. 97412, July 12, 1994, 234 SCRA 78.
6 33
Resolution dated July 24, 2000, id. at 94-96. Eastern Shipping Lines, Inc. v. Court of Appeals, supra, at 95-97.
7
Rollo, p. 35. (Citations omitted; italics in the original).
8 34
Id. at 35-36. SECTION 2. The rate of interest for the loan or forbearance of any
9
Id. at 36. money, goods or credits and the rate allowed in judgments, in the
10
Id. at 100. absence of express contract as to such rate of interest, shall
11
Id. continue to be twelve percent (12%) per annum.
12 35
Id. at 101. Rate of interest in the absence of stipulation; Dated June 21,
13
Id. at 97-102. 2013.
14 36
Id. at 37. § X305.1 Rate of interest in the absence of stipulation. The rate
15
Id. at 103-108. of interest for the loan or forbearance of any money, goods or
16
Id. at 109-113. credits and the rate allowed in judgments, in the absence of
17
Id. at 114-117. expressed contract as to such rate of interest, shall be twelve
18
Id. at 101. percent (12%) per annum.
19 37
Id. at 40. The Section is under Q Regulations or Regulations Governing
20
Id. at 65-69. Non-Bank Financial Institutions
21
Id. at 70-74. Performing Quasi-Banking Functions. It reads:
22
Id. at 60-64. § 4305Q.1 (2008 - 4307Q.6) Rate of interest in the absence of
23
Id. at 58-59. stipulation. The rate of interest for the loan or forbearance of any
24
Id. at 33-48. money, goods or credit and the rate allowed in judgments, in the
25
Id. at 32.
 39
absence of express contract as to such rate of interest, shall be The Section is under P Regulations or Regulations Governing
twelve percent (12%) per annum. Pawnshops. It reads:
38
The Section is under S Regulations or Regulations Governing Non- § 4303P.1 Rate of interest in the absence of stipulation. The rate of
Stock Savings and Loan Associations. It reads: interest for a loan or forbearance of money in the absence of an
§ 4305S.3 Interest in the absence of contract. In the absence of expressed contract as to such rate of interest, shall be twelve
express contract, the rate of interest for the loan or forbearance of percent (12%) per annum. (Circular No. 656 dated 02 June 2009)
40
any money, goods or credit and the rate allowed in judgment shall Supra note 32, at 95-97.
41
be twelve percent (12%) per annum. G.R. No. 192986, January 15, 2013, 688 SCRA 530, 547.
42
Supra note 32.

EN BANC

G.R. No. L-22415 March 30, 1966

FERNANDO LOPEZ, ET AL., plaintiffs-appellants,

vs.
PAN AMERICAN WORLD AIRWAYS, defendant-appellant.

Plaintiffs and defendant appeal from a decision of the Court of First Instance of Rizal.
Since the value in controversy exceeds P200,000 the appeals were taken directly to this Court
upon all questions involved (Sec. 17, par. 3[5], Judiciary Act).

Stated briefly the facts not in dispute are as follows: Reservations for first class
accommodations in Flight No. 2 of Pan American World Airways — hereinafter otherwise called
PAN-AM — from Tokyo to San Francisco on May 24, 1960 were made with
PAN-AM on March 29, 1960, by "Your Travel Guide" agency, specifically, by Delfin Faustino,
for then Senator Fernando Lopez, his wife Maria J. Lopez, his son-in-law Alfredo Montelibano,
Jr., and his daughter, Mrs. Alfredo Montelibano, Jr., (Milagros Lopez Montelibano). PAN-AM's
San Francisco head office confirmed the reservations on March 31, 1960.

First class tickets for the abovementioned flight were subsequently issued by
PAN-AM on May 21 and 23, 1960, in favor of Senator Lopez and his party. The total fare of
P9,444 for all of them was fully paid before the tickets were issued.

As scheduled Senator Lopez and party left Manila by Northwest Airlines on May 24, 1960,
arriving 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 days
rest before that in San Francisco — Senator Lopez and party were constrained to take PAN-AM's
flight from Tokyo to San Francisco as tourist passengers. Senator Lopez however made it clear,
as indicated in his letter to PAN-AM's Tokyo office on that date (Exh. A), that they did so
"under protest" and without prejudice to further action against the airline.1äwphï1.ñët

Suit for damages was thereafter filed by Senator Lopez and party against PAN-AM on June 2,
1960 in the Court of First Instance of Rizal. Alleging breach of contracts in bad faith by
defendant, plaintiffs asked for P500,000 actual and moral damages, P100,000 exemplary damages,
P25,000 attorney's fees plus costs. PAN-AM filed its answer on June 22, 1960, asserting that
its failure to provide first class accommodations to plaintiffs was due to honest error of
its employees. It also interposed a counterclaim for attorney's fees of P25,000.

Subsequently, further pleadings were filed, thus: plaintiffs' answer to the counterclaim, on
July 25, 1960; plaintiffs' reply attached to motion for its admittance, on December 2, 1961;
defendant's supplemental answer, on March 8, 1962; plaintiffs' reply to supplemental answer,
on March 10, 1962; and defendant's amended supplemental answer, on July 10, 1962.
After trial — which took twenty-two (22) days 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.

x x x x x x x x x

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.
 THIRD DIVISION
[G.R. No. 152753. January 13, 2004]

IGLECERIO MAHINAY, petitioner, vs. ATTY. GABINO A. VELASQUEZ, JR., respondent.

D E C I S I O N
Before us is a petition for review of the decision[1] dated December 20, 2001 of the Court
of Appeals affirming with modification the order and resolution dated October 31, 1977 of the
Regional Trial Court, Branch 16, Naval, Biliran in Civil Case No. B-0923, for damages.
The instant case arose from the alleged defamatory remarks of petitioner Iglecerio Mahinay
against respondent Gabino A. Velasquez, Jr.
According to Olipio Machete, overseer of respondent, petitioner uttered the following
malicious and insulting statement against respondent: Your master, a candidate for
Congressman, Ben Velasquez, is a land grabber. Machete informed respondent of what petitioner
said about him. This impelled respondent to file a complaint for damages against petitioner,
claiming that his utterances besmirched his and his familys reputation and caused him anxiety,
mental anguish and sleepless nights.
As no amicable settlement could be reached by the parties, trial on the merits ensued. The
trial court eventually ruled in favor of respondent on the basis of the sole testimony of
Machete and awarded to respondent moral damages in the amount of P100,000 and exemplary
damages in the amount of P50,000.[2] No other evidence was adduced by either party.
Petitioner appealed to the Court of Appeals alleging that the trial court order lacked
factual basis. The Court of Appeals, however, modified the award, as follows:

WHEREFORE, with the MODIFICATION that the award for moral and exemplary damages is hereby
reduced to P50,000.00 and P25,000.00, respectively, the decision appealed from is hereby
AFFIRMED and this appeal DISMISSED.

SO ORDERED.[3]

His motion for reconsideration having been denied, petitioner comes to this Court arguing
that the appellate court gravely erred in: (a) affirming the trial court order despite the
lack of sufficient factual basis and (b) awarding moral and exemplary damages to respondent
despite his failure to take the witness stand.[4]
We agree.
In order that moral damages may be awarded, there must be pleading and proof of moral
suffering, mental anguish, fright and the like.[5] While respondent alleged in his complaint
that he suffered mental anguish, serious anxiety, wounded feelings and moral shock, he failed
to prove them during the trial. Indeed, respondent should have taken the witness stand and
should have testified on the mental anguish, serious anxiety, wounded feelings and other
emotional and mental suffering he purportedly suffered to sustain his claim for moral
damages. Mere allegations do not suffice; they must be substantiated by clear and convincing
proof.[6] No other person could have proven such damages except the respondent himself as they
were extremely personal to him.
In Keirulf vs. Court of Appeals,[7] we held:

While no proof of pecuniary loss is necessary in order that moral damages may be awarded, the
amount of indemnity being left to the discretion of the court, it is nevertheless essential
that the claimant should satisfactorily show the existence of the factual basis of damages
and its causal connection to 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. In Francisco
vs. GSIS, the Court held that there must be clear testimony on the anguish and other forms
of mental suffering. Thus, if the plaintiff fails to take the witness stand and testify as
to his/her social humiliation, wounded feelings and anxiety, moral damages cannot be
awarded. In Cocoland Development Corporation vs. National labor Relations Commission, the
Court held that additional facts must be pleaded and proven to warrant the grant of moral
damages under the Civil Code, these being, x x x social humiliation, wounded feelings, grave
anxiety, etc. that resulted therefrom.

The testimony of Machete was not enough evidence of the moral damages that the respondent
supposedly suffered.Machete may have clearly testified on the specific words uttered by
petitioner against respondent but he could not have testified on the wounded feelings
respondent allegedly went through by reason of petitioners slanderous remark. The award of
moral damages must be anchored to a clear showing that respondent actually experienced mental
anguish, besmirched reputation, sleepless nights, wounded feelings or similar injury. There
was no better witness to this experience than respondent himself.Since respondent failed to
testify on the witness stand, the trial court did not have any factual basis to award moral
damages to him.
Neither is respondent entitled to exemplary damages. If the court has no proof or evidence
upon which the claim for moral damages could be based, such indemnity could not be outrightly
awarded. The same holds true with respect to the award of exemplary damages where it must be
shown that the party acted in a wanton, oppressive or malevolent manner.[8] Furthermore, this
specie of damages is allowed only in addition to moral damages such that no exemplary damages
can be awarded unless the claimant first establishes his clear right to moral damages.
The affirmance of the Court of Appeals of the ruling of the trial court is therefore not
in order as it lacked sufficient factual basis.
WHEREFORE, the decision of the Court of Appeals is hereby REVERSED and SET ASIDE. The
complaint for damages in Civil Case No. B-0923 against herein petitioner is
hereby DISMISSED. No costs.
SO ORDERED.
Vitug, (Chairman), Sandoval-Gutierrez, and Carpio-Morales, JJ., concur.

[1] [5]
Penned by Associate Justice (now Presiding Justice) Cancio C. San Miguel Brewery, Inc. vs. Magno, 21 SCRA 292 [1967].
[6]
Garcia and concurred in by Associate Justices Roberto A. Barrios Philippine National Bank vs. Court of Appeals, 266 SCRA 136
and Bienvenido L. Reyes. [1997].
[2] [7]
Rollo, pp. 15-16. 269 SCRA 433 [1997].
[3] [8]
Rollo, p. 20. Philippine Airlines, Inc. vs. National Labor Relations
[4]
Rollo, p. 9. Commission, 259 SCRA 459 [1996].

-------------------------------------------------------------------------------------------
SECOND DIVISION
[G.R. No. 110398. November 7, 1997]

NEGROS NAVIGATION CO., INC., petitioner, vs. THE COURT OF APPEALS, RAMON MIRANDA, SPS. RICARDO
and VIRGINIA DE LA VICTORIA, respondents.

D E C I S I O N
This is a petition for review on certiorari of the decision of the Court of Appeals
affirming with modification the Regional Trial Courts award of damages to private respondents
for the death of relatives as a result of the sinking of petitioners vessel.
In April of 1980, private respondent Ramon Miranda purchased from the Negros Navigation
Co., Inc. four special cabin tickets (#74411, 74412, 74413 and 74414) for his wife, daughter,
son and niece who were going to Bacolod City to attend a family reunion. The tickets were for
Voyage No. 457-A of the M/V Don Juan, leaving Manila at 1:00 p.m. on April 22, 1980.
The ship sailed from the port of Manila on schedule.
At about 10:30 in the evening of April 22, 1980, the Don Juan collided off the Tablas
Strait in Mindoro, with the M/T Tacloban City, an oil tanker owned by the Philippine National
Oil Company (PNOC) and the PNOC Shipping and Transport Corporation (PNOC/STC). As a result,
the M/V Don Juan sank. Several of her passengers perished in the sea tragedy. The bodies of
some of the victims were found and brought to shore, but the four members of private
respondents families were never found.
Private respondents filed a complaint on July 16, 1980 in the Regional Trial Court of
Manila, Branch 34, against the Negros Navigation, the Philippine National Oil Company (PNOC),
and the PNOC Shipping and Transport Corporation (PNOC/STC), seeking damages for the death of
Ardita de la Victoria Miranda, 48, Rosario V. Miranda, 19, Ramon V. Miranda, Jr., 16, and
Elfreda de la Victoria, 26.
In its answer, petitioner admitted that private respondents purchased ticket numbers
74411, 74412, 74413 and 74414; that the ticket numbers were listed in the passenger manifest;
and that the Don Juan left Pier 2, North Harbor, Manila on April 22, 1980 and sank that night
after being rammed by the oil tanker M/T Tacloban City, and that, as a result of the collision,
some of the passengers of the M/V Don Juan died. Petitioner, however, denied that the four
relatives of private respondents actually boarded the vessel as shown by the fact that their
bodies were never recovered. Petitioner further averred that the Don Juan was seaworthy and
manned by a full and competent crew, and that the collision was entirely due to the fault of
the crew of the M/T Tacloban City.
On January 20, 1986, the PNOC and petitioner Negros Navigation Co., Inc. entered into a
compromise agreement whereby petitioner assumed full responsibility for the payment and
satisfaction of all claims arising out of or in connection with the collision and releasing
the PNOC and the PNOC/STC from any liability to it. The agreement was subsequently held by
the trial court to be binding upon petitioner, PNOC and PNOC/STC. Private respondents did not
join in the agreement.
After trial, the court rendered judgment on February 21, 1991, the dispositive portion of
which reads as follows:

WHEREFORE, in view of the foregoing, judgment is hereby rendered in favor of the plaintiffs,
ordering all the defendants to pay jointly and severally to the plaintiffs damages as follows:

To Ramon Miranda:

P42,025.00 for actual damages;

P152,654.55 as compensatory damages for loss of earning capacity of his wife;

P90,000.00 as compensatory damages for wrongful death of three (3) victims;

P300,000.00 as moral damages;

P50,000.00 as exemplary damages, all in the total amount of P634,679.55; and

P40,000.00 as attorneys fees.

To Spouses Ricardo and Virginia de la Victoria:

P12,000.00 for actual damages;

P158,899.00 as compensatory damages for loss of earning capacity;

P30,000.00 as compensatory damages for wrongful death;

P100,000.00 as moral damages;

P20,000.00 as exemplary damages, all in the total amount of P320,899.00; and

P15,000.00 as attorneys fees.

On appeal, the Court of Appeals[1] affirmed the decision of the Regional Trial Court with
modification
1. Ordering and sentencing defendants-appellants, jointly and severally, to pay
plaintiff-appellee Ramon Miranda the amount of P23,075.00 as actual damages instead
of P42,025.00;
 2. Ordering and sentencing defendants-appellants, jointly and severally, to pay
plaintiff-appellee Ramon Miranda the amount of P150,000.00, instead of P90,000.00,
as compensatory damages for the death of his wife and two children;
3. Ordering and sentencing defendants-appellants, jointly and severally, to pay
plaintiffs-appellees Dela Victoria spouses the amount of P50,000.00, instead
of P30,000.00, as compensatory damages for the death of their daughter Elfreda Dela
Victoria;
Hence this petition, raising the following issues:
(1) whether the members of private respondents families were actually passengers of
the Don Juan;
(2) whether the ruling in Mecenas v. Court of Appeals,[2] finding the crew members of
petitioner to be grossly negligent in the performance of their duties, is binding
in this case;
(3) whether the total loss of the M/V Don Juan extinguished petitioners liability; and
(4) whether the damages awarded by the appellate court are excessive, unreasonable and
unwarranted.
First. The trial court held that the fact that the victims were passengers of the M/V Don
Juan was sufficiently proven by private respondent Ramon Miranda, who testified that he
purchased tickets numbered 74411, 74412, 74413, and 74414 at P131.30 each from the Makati
office of petitioner for Voyage No. 47-A of the M/V Don Juan, which was leaving Manila on
April 22, 1980. This was corroborated by the passenger manifest (Exh. E) on which the numbers
of the tickets and the names of Ardita Miranda and her children and Elfreda de la Victoria
appear.
Petitioner contends that the purchase of the tickets does not necessarily mean that the
alleged victims actually took the trip.Petitioner asserts that it is common knowledge that
passengers purchase tickets in advance but do not actually use them.Hence, private respondent
should also prove the presence of the victims on the ship. The witnesses who affirmed that
the victims were on the ship were biased and unreliable.
This contention is without merit. Private respondent Ramon Miranda testified that he
personally took his family and his niece to the vessel on the day of the voyage and stayed
with them on the ship until it was time for it to leave. There is no reason he should claim
members of his family to have perished in the accident just to maintain an action. People do
not normally lie about so grave a matter as the loss of dear ones. It would be more difficult
for private respondents to keep the existence of their relatives if indeed they are alive
than it is for petitioner to show the contrary. Petitioners only proof is that the bodies of
the supposed victims were not among those recovered from the site of the mishap. But so were
the bodies of the other passengers reported missing not recovered, as this Court noted in
the Mecenas[3] case.
Private respondent Mirandas testimony was corroborated by Edgardo Ramirez. Ramirez was a
seminarian and one of the survivors of the collision. He testified that he saw Mrs. Miranda
and Elfreda de la Victoria on the ship and that he talked with them. He knew Mrs. Miranda who
was his teacher in the grade school. He also knew Elfreda who was his childhood friend and
townmate. Ramirez said he was with Mrs. Miranda and her children and niece from 7:00 p.m.
until 10:00 p.m. when the collision happened and that he in fact had dinner with them. Ramirez
said he and Elfreda stayed on the deck after dinner and it was there where they were jolted
by the collision of the two vessels. Recounting the moments after the collision, Ramirez
testified that Elfreda ran to fetch Mrs. Miranda. He escorted her to the room and then tried
to go back to the deck when the lights went out. He tried to return to the cabin but was not
able to do so because it was dark and there was a stampede of passengers from the deck.
Petitioner casts doubt on Ramirez testimony, claiming that Ramirez could not have talked
with the victims for about three hours and not run out of stories to tell, unless Ramirez had
a storehouse of stories. But what is incredible about acquaintances thrown together on a long
journey staying together for hours on end, in idle conversation precisely to while the hours
away?
Petitioner also points out that it took Ramirez three (3) days before he finally contacted
private respondent Ramon Miranda to tell him about the fate of his family. But it is not
improbable that it took Ramirez three days before calling on private respondent Miranda to
tell him about the last hours of Mrs. Miranda and her children and niece, in view of the
confusion in the days following the collision as rescue teams and relatives searched for
survivors.
 Indeed, given the facts of this case, it is improper for petitioner to even suggest that
private respondents relatives did not board the ill-fated vessel and perish in the accident
simply because their bodies were not recovered.
Second. In finding petitioner guilty of negligence and in failing to exercise the
extraordinary diligence required of it in the carriage of passengers, both the trial court
and the appellate court relied on the findings of this Court in Mecenas v. Intermediate
Appellate Court,[4] which case was brought for the death of other passengers. In that case it
was found that although the proximate cause of the mishap was the negligence of the crew of
the M/T Tacloban City, the crew of the Don Juan was equally negligent as it found that the
latters master, Capt. Rogelio Santisteban, was playing mahjong at the time of collision, and
the officer on watch, Senior Third Mate Rogelio De Vera, admitted that he failed to call the
attention of Santisteban to the imminent danger facing them. This Court found that Capt.
Santisteban and the crew of the M/V Don Juanfailed to take steps to prevent the collision or
at least delay the sinking of the ship and supervise the abandoning of the ship.
Petitioner Negros Navigation was found equally negligent in tolerating the playing of
mahjong by the ship captain and other crew members while on board the ship and failing to
keep the M/V Don Juan seaworthy so much so that the ship sank within 10 to 15 minutes of its
impact with the M/T Tacloban City.
In addition, the Court found that the Don Juan was overloaded. The Certificate of
Inspection, dated August 27, 1979, issued by the Philippine Coast Guard Commander at Iloilo
City stated that the total number of persons allowed on the ship was 864, of whom 810 are
passengers, but there were actually 1,004 on board the vessel when it sank, 140 persons more
than the maximum number that could be safely carried by it.
Taking these circumstances together, and the fact that the M/V Don Juan, as the faster
and better-equipped vessel, could have avoided a collision with the PNOC tanker, this Court
held that even if the Tacloban City had been at fault for failing to observe an
internationally-recognized rule of navigation, the Don Juan was guilty of contributory
negligence. Through Justice Feliciano, this Court held:

The grossness of the negligence of the Don Juan is underscored when one considers the foregoing
circumstances in the context of the following facts: Firstly, the Don Juan was more than
twice as fast as the Tacloban City. The Don Juans top speed was 17 knots; while that of the
Tacloban City was 6.3. knots. Secondly, the Don Juan carried the full complement of officers
and crew members specified for a passenger vessel of her class. Thirdly, the Don Juan was
equipped with radar which was functioning that night. Fourthly, the Don Juans officer on-
watch had sighted the Tacloban City on his radar screen while the latter was still four (4)
nautical miles away. Visual confirmation of radar contact was established by the Don Juan
while the Tacloban City was still 2.7 miles away. In the total set of circumstances which
existed in the instant case, the Don Juan, had it taken seriously its duty of extraordinary
diligence, could have easily avoided the collision with the Tacloban City. Indeed, the Don
Juan might well have avoided the collision even if it had exercised ordinary diligence merely.

It is true that the Tacloban City failed to follow Rule 18 of the International Rules of the
Road which requires two (2) power-driven vessels meeting end on or nearly end on each to
alter her course to starboard (right) so that each vessel may pass on the port side (left)
of the other.The Tacloban City, when the two (2) vessels were only three-tenths (0.3) of a
mile apart, turned (for the second time) 15o to port side while the Don Juan veered hard to
starboard. . . . [But] route observance of the International Rules of the Road will not
relieve a vessel from responsibility if the collision could have been avoided by proper care
and skill on her part or even by a departure from the rules.

In the petition at bar, the Don Juan having sighted the Tacloban City when it was still a
long way off was negligent in failing to take early preventive action and in allowing the two
(2) vessels to come to such close quarters as to render the collision inevitable when there
was no necessity for passing so near to the Tacloban City as to create that hazard or
inevitability, for the Don Juan could choose its own distance. It is noteworthy that the
Tacloban City, upon turning hard to port shortly before the moment of collision, signalled
its intention to do so by giving two (2) short blasts with its horn. The Don Juan gave no
answering horn blast to signal its own intention and proceeded to turn hard to starboard.

We conclude that Capt. Santisteban and Negros Navigation are properly held liable for gross
negligence in connection with the collision of the Don Juan and Tacloban City and the sinking
of the Don Juan leading to the death of hundreds of passengers. . . .[5]

Petitioner criticizes the lower courts reliance on the Mecenas case, arguing that,
although this case arose out of the same incident as that involved in Mecenas, the parties
are different and trial was conducted separately. Petitioner contends that the decision in
this case should be based on the allegations and defenses pleaded and evidence adduced in it
or, in short, on the record of this case.
The contention is without merit. What petitioner contends may be true with respect to the
merits of the individual claims against petitioner but not as to the cause of the sinking of
its ship on April 22, 1980 and its liability for such accident, of which there can only be
one truth. Otherwise, one would be subscribing to the sophistry: truth on one side of the
Pyrenees, falsehood on the other!
Adherence to the Mecenas case is dictated by this Courts policy of maintaining stability
in jurisprudence in accordance with the legal maxim stare decisis et non quieta movere (Follow
past precedents and do not disturb what has been settled.) Where, as in this case, the same
questions relating to the same event have been put forward by parties similarly situated as
in a previous case litigated and decided by a competent court, the rule of stare decisis is
a bar to any attempt to relitigate the same issue.[6] In Woulfe v. Associated Realties
Corporation,[7] the Supreme Court of New Jersey held that where substantially similar cases
to the pending case were presented and applicable principles declared in prior decisions, the
court was bound by the principle of stare decisis. Similarly, in State ex rel. Tollinger v.
Gill,[8] it was held that under the doctrine of stare decisis a ruling is final even as to
parties who are strangers to the original proceeding and not bound by the judgment under
the res judicata doctrine. The Philadelphia court expressed itself in this wise: Stare decisis
simply declares that, for the sake of certainty, a conclusion reached in one case should be
applied to those which follow, if the facts are substantially the same, even though the
parties may be different.[9] Thus, in J. M. Tuason v. Mariano, supra, this Court relied on its
rulings in other cases involving different parties in sustaining the validity of a land title
on the principle of stare decisis et non quieta movere.
Indeed, the evidence presented in this case was the same as those presented in
the Mecenas case, to wit:

Document Mecenas case This case

Decision of Commandant Exh. 10[10] Exh. 11-B-NN/X

Phil. Coast Guard in BMI Case
No. 415-80 dated 3/26/81

Decision of the Minister Exh. 11[11] Exh. ZZ

of National Defense dated 3/12/82

Resolution on the motion Exh. 13[12] Exh. AAA

for reconsideration of the (private respondents)
decision of the Minister of
National Defense dated 7/24/84

Certificate of inspection Exh. 1-A[13] Exh. 19-NN

dated 8/27/79

Certificate of Stability Exh. 6-A[14] Exh. 19-D-NN

dated 12/16/76

Nor is it true that the trial court merely based its decision on the Mecenas case. The
trial court made its own independent findings on the basis of the testimonies of witnesses,
such as Senior Third Mate Rogelio de Vera, who incidentally gave substantially the same
testimony on petitioners behalf before the Board of Marine Inquiry. The trial court agreed
with the conclusions of the then Minister of National Defense finding both vessels to be
negligent.
Third. The next issue is whether petitioner is liable to pay damages notwithstanding the
total loss of its ship. The issue is not one of first impression. The rule is well-entrenched
in our jurisprudence that a shipowner may be held liable for injuries to passengers
notwithstanding the exclusively real and hypothecary nature of maritime law if fault can be
attributed to the shipowner.[15]
In Mecenas, this Court found petitioner guilty of negligence in (1) allowing or tolerating
the ship captain and crew members in playing mahjong during the voyage, (2) in failing to
maintain the vessel seaworthy and (3) in allowing the ship to carry more passengers than it
was allowed to carry. Petitioner is, therefore, clearly liable for damages to the full extent.
 Fourth. Petitioner contends that, assuming that the Mecenas case applies, private
respondents should be allowed to claim only P43,857.14 each as moral damages because in
the Mecenas case, the amount of P307,500.00 was awarded to the seven children of the Mecenas
couple. Under petitioners formula, Ramon Miranda should receive P43,857.14, while the De la
Victoria spouses should receive P97,714.28.
Here is where the principle of stare decisis does not apply in view of differences in the
personal circumstances of the victims. For that matter, differentiation would be justified
even if private respondents had joined the private respondents in theMecenas case. The
doctrine of stare decisis works as a bar only against issues litigated in a previous case.
Where the issue involved was not raised nor presented to the court and not passed upon by the
court in the previous case, the decision in the previous case is not stare decisis of the
question presently presented.[16] The decision in the Mecenas case relates to damages for which
petitioner was liable to the claimants in that case.
In the case at bar, the award of P300,000.00 for moral damages is reasonable considering
the grief petitioner Ramon Miranda suffered as a result of the loss of his entire family. As
a matter of fact, three months after the collision, he developed a heart condition undoubtedly
caused by the strain of the loss of his family. The P100,000.00 given to Mr. and Mrs. de la
Victoria is likewise reasonable and should be affirmed.
As for the amount of civil indemnity awarded to private respondents, the appellate courts
award of P50,000.00 per victim should be sustained. The amount of P30,000.00 formerly set
in De Lima v. Laguna Tayabas Co.,[17] Heirs of Amparo delos Santos v. Court of
Appeals,[18] and Philippine Rabbit Bus Lines, Inc. v. Intermediate Appellate Court[19] as
benchmark was subsequently increased to P50,000.00 in the case of Sulpicio Lines, Inc. v.
Court of Appeals,[20] which involved the sinking of another interisland ship on October 24,
1988.
We now turn to the determination of the earning capacity of the victims. With respect to
Ardita Miranda, the trial court awarded damages computed as follows:[21]

In the case of victim Ardita V. Miranda whose age at the time of the accident was 48 years,
her life expectancy was computed to be 21.33 years, and therefore, she could have lived up
to almost 70 years old. Her gross earnings for 21.33 years based on P10,224.00 per annum,
would be P218,077.92. Deducting therefrom 30% as her living expenses, her net earnings would
be P152,654.55, to which plaintiff Ramon Miranda is entitled to compensatory damages for the
loss of earning capacity of his wife. In considering 30% as the living expenses of Ardita
Miranda, the Court takes into account the fact that plaintiff and his wife were supporting
their daughter and son who were both college students taking Medicine and Law respectively.

In accordance with the ruling in Villa-Rey Transit, Inc. v. Court of Appeals,[22] we think the
life expectancy of Ardita Miranda was correctly determined to be 21.33 years, or up to age
69. Petitioner contends, however, that Mrs. Miranda would have retired from her job as a
public school teacher at 65, hence her loss of earning capacity should be reckoned up to
17.33 years only.
The accepted formula for determining life expectancy is 2/3 multiplied by (80 minus the
age of the deceased). It may be that in the Philippines the age of retirement generally is
65 but, in calculating the life expectancy of individuals for the purpose of determining loss
of earning capacity under Art. 2206(1) of the Civil Code, it is assumed that the deceased
would have earned income even after retirement from a particular job. In this case, the trial
court took into account the fact that Mrs. Miranda had a masters degree and a good prospect
of becoming principal of the school in which she was teaching. There was reason to believe
that her income would have increased through the years and she could still earn more after
her retirement, e.g., by becoming a consultant, had she not died. The gross earnings which
Mrs. Miranda could reasonably be expected to earn were it not for her untimely death was,
therefore, correctly computed by the trial court to be P218,077.92 (given a gross annual
income of P10,224.00 and life expectancy of 21.33 years).
Petitioner contends that from the amount of gross earnings, 60% should be deducted as
necessary living expenses, not merely 30% as the trial court allowed. Petitioner contends
that 30% is unrealistic, considering that Mrs. Mirandas earnings would have been subject to
taxes, social security deductions and inflation.
We agree with this contention. In Villa-Rey Transit, Inc. v. Court of Appeals,[23] the
Court allowed a deduction of P1,184.00 for living expenses from the P2,184.00 annual salary
of the victim, which is roughly 54.2% thereof. The deceased was 29 years old and a training
assistant in the Bacnotan Cement Industries. In People v. Quilaton,[24] the deceased was a 26-
year old laborer earning a daily wage. The court allowed a deduction of P120,000.00 which was
51.3% of his annual gross earnings of P234,000.00. In People v. Teehankee,[25] the court
allowed a deduction of P19,800.00, roughly 42.4% thereof from the deceaseds annual salary
of P46,659.21. The deceased, Maureen Hultman, was 17 years old and had just received her
first paycheck as a secretary. In the case at bar, we hold that a deduction of 50% from Mrs.
Mirandas gross earnings (P218,077.92) would be reasonable, so that her net earning capacity
should be P109,038.96. There is no basis for supposing that her living expenses constituted
a smaller percentage of her gross income than the living expenses in the decided cases. To
hold that she would have used only a small part of her income for herself, a larger part
going to the support of her children would be conjectural and unreasonable.
As for Elfreda de la Victoria, the trial court found that, at the time of her death, she
was 26 years old, a teacher in a private school in Malolos, Bulacan, earning P6,192.00 per
annum. Although a probationary employee, she had already been working in the school for two
years at the time of her death and she had a general efficiency rating of 92.85% and it can
be presumed that, if not for her untimely death, she would have become a regular
teacher. Hence, her loss of earning capacity is P111,456.00, computed as follows:

net earning capacity (x) = life expectancy x [ gross annual income less reasonable &
necessary living expenses (50%) ]

x = [ 2 (80-26) ] x [P6,192.00 - P3,096.00]

= 36 x 3,096.00

= P111,456.00

On the other hand, the award of actual damages in the amount of P23,075.00 was determined
by the Court of Appeals on the basis of receipts submitted by private respondents. This amount
is reasonable considering the expenses incurred by private respondent Miranda in organizing
three search teams to look for his family, spending for transportation in going to places
such as Batangas City and Iloilo, where survivors and the bodies of other victims were found,
making long distance calls, erecting a monument in honor of the four victims, spending for
obituaries in the Bulletin Today and for food, masses and novenas.
Petitioners contention that the expenses for the erection of a monument and other expenses
for memorial services for the victims should be considered included in the indemnity for
death awarded to private respondents is without merit. Indemnity for death is given to
compensate for violation of the rights of the deceased, i.e., his right to life and physical
integrity.[26] On the other hand, damages incidental to or arising out of such death are for
pecuniary losses of the beneficiaries of the deceased.
As for the award of attorneys fees, we agree with the Court of Appeals that the amount
of P40,000.00 for private respondent Ramon Miranda and P15,000.00 for the de la Victoria
spouses is justified. The appellate court correctly held:

The Mecenas case cannot be made the basis for determining the award for attorneys fees. The
award would naturally vary or differ in each case. While it is admitted that plaintiff-
appellee Ramon Miranda who is himself a lawyer, represented also plaintiffs-appellees Dela
Victoria spouses, we note that separate testimonial evidence were adduced by plaintiff-
appellee Ramon Miranda (TSN, February 26, 1982, p. 6) and plaintiffs-appellees spouses Dela
Victoria (TSN, August 13, 1981, p. 43). Considering the amount of work and effort put into
the case as indicated by the voluminous transcripts of stenographic notes, we find no reason
to disturb the award of P40,000.00 for plaintiff-appellee Ramon Miranda and P15,000.00 for
plaintiffs-appellees Dela Victoria spouses.[27]

The award of exemplary damages should be increased to P300,000.00 for Ramon Miranda
and P100,000.00 for the de la Victoria spouses in accordance with our ruling in
the Mecenas case:

Exemplary damages are designed by our civil law to permit the courts to reshape behaviour
that is socially deleterious in its consequence by creating negative incentives or deterrents
against such behaviour. In requiring compliance with the standard of extraordinary diligence,
a standard which is in fact that of the highest possible degree of diligence, from common
carriers and in creating a presumption of negligence against them, the law seeks to compel
them to control their employees, to tame their reckless instincts and to force them to take
adequate care of human beings and their property. The Court will take judicial notice of the
dreadful regularity with which grievous maritime disasters occur in our waters with massive
loss of life. The bulk of our population is too poor to afford domestic air transportation. So
it is that notwithstanding the frequent sinking of passenger vessels in our waters, crowds
of people continue to travel by sea. This Court is prepared to use the instruments given to
it by the law for securing the ends of law and public policy. One of those instruments is the
institution of exemplary damages; one of those ends, of special importance in an archipelagic
state like the Philippines, is the safe and reliable carriage of people and goods by sea.[28]

WHEREFORE, the decision of the Court of Appeals is AFFIRMED with modification and
petitioner is ORDERED to pay private respondents damages as follows:

To private respondent Ramon Miranda:

P23,075.00 for actual damages;

P109,038.96 as compensatory damages for loss of earning capacity of his wife;

P150,000.00 as compensatory damages for wrongful death of three (3) victims;

P300,000.00 as moral damages;

P300,000.00 as exemplary damages, all in the total amount of P882,113.96; and

P40,000.00 as attorneys fees.

To private respondents Spouses Ricardo and Virginia de la Victoria:

P12,000.00 for actual damages;

P111,456.00 as compensatory damages for loss of earning capacity;

P50,000.00 as compensatory damages for wrongful death;

P100,000.00 as moral damages;

P100,000.00 as exemplary damages, all in the total amount of P373,456.00; and

P15,000.00 as attorneys fees.

Petitioners are further ordered to pay costs of suit.

In the event the Philippine National Oil Company and/or the PNOC Shipping and Transport
Corporation pay or are required to pay all or a portion of the amounts adjudged, petitioner
Negros Navigation Co., Inc. shall reimburse either of them such amount or amounts as either
may have paid, and in the event of failure of Negros Navigation Co., Inc., to make the
necessary reimbursement, PNOC and/or PNOC/STC shall be entitled to a writ of execution without
need of filing another action.
SO ORDERED.

[1] [14]
Per Justice Eduardo G. Montenegro and concurred in by Justices Id., at note 18.
[15]
Arturo B. Buena and Regina G. Ordoez-Benitez. Manila Steamship Co. v. Insa Abdulhanan, 100 Phil. 32 (1956);
[2]
180 SCRA 83 (1989). Chua Yek Heng v. Intermediate Appellate Court, 166 SCRA 183
[3]
180 SCRA at 87. (1988); Heirs of Amparo delos Santos v. Court of Appeals, 186 SCRA
[4]
Ibid. 649 (1990).
[5] [16]
Id. at 95-98. Eubanks v. State, Tex. Civ. App., 203 S.W. 2d 339, 342 (1947).
[6] [17]
J. M. Tuason & Corp. v. Mariano, 85 SCRA 644 (1978). 160 SCRA 70 (1988).
[7] [18]
130 N.J. Eq. 519, 23 A.2d 399, 401 (1942). Supra, note 15.
[8] [19]
75 Ohio App. ___, 62 N.E.2d 760 (1944). 189 SCRA 158 (1990).
[9] [20]
Heisler v. Thomas Colliery Co., 274 Pa. 448, 452, 118 A. 394, 395 246 SCRA 376 (1995).
[21]
(1922). Accord, Monogahela Street Ry. Co. v. Philadelphia Co., 350 Records, p. 721.
[22]
Pa. 603, 39 A.2d 909, 916 (1944); In re Burtts Estate, 353 Pa. 217, 44 31 SCRA 511 (1970); Accord, People v. Teehankee, Jr., 249 SCRA
A.2d 670, 677 (1945). 54 (1995); Philippine Airlines, Inc. v. Court of Appeals, 185 SCRA 110
[10]
p. 90 at note 7. (1990); Monzon v. Intermediate Appellate Court, 169 SCRA 760
[11]
Id., at note 8. (1989); Davila v. Philippine Airlines, 49 SCRA 497 (1973).
[12] [23]
Id., at note 9. Supra, note 22.
[13] [24]
p. 94 at note 16. 205 SCRA 279 (1992).
[25] [27]
Supra, note 22. Rollo, p. 62.
[26] [28]
Geluz v. Court of Appeals, 2 SCRA 801 (1961). 180 SCRA at 100.

FIRST DIVISION
[G.R. No. 141011. July 19, 2001]

CITYTRUST BANKING CORPORATION (now Bank of the Philippine Islands), petitioner, vs. ISAGANI
C. VILLANUEVA, respondent.

[G.R. No. 141028. July 19, 2001]

ISAGANI C. VILLANUEVA, petitioner, vs. CITYTRUST BANKING CORPORATION, respondent.

D E C I S I O N
In these consolidated cases, the Court is called upon to determine whether the repeated
dishonor of a check drawn against a well-funded account but bearing the account number of
another depositor with the same name and surname as the drawer would entitle the drawer to
compensatory and moral damages and to attorneys fees.
The antecedent facts are as follows:
Sometime in February 1984, Isagani C. Villanueva (hereafter VILLANUEVA) opened a savings
account and a current account with Citytrust Banking Corporation (hereafter the BANK), which
were assigned account numbers 1-033-02337-1 and 33-00977-5, respectively, with an automatic
transfer arrangement.
On 21 May 1986, VILLANUEVA deposited some money in his savings account with the BANKs
Legaspi Village Branch in Makati, Metro Manila. Realizing that he had run out of blank checks,
VILLANUEVA requested a new checkbook from one of the BANKs customer service
representatives. He then filled up a checkbook requisition slip with the obligatory
particulars, except for his current account number which he could not remember. He expressed
his predicament to a lady customer service representative of the BANK, who in turn assured
him that she could supply the information from the BANKs account records. After signing the
requisition slip, he gave it to her.[1]
Pia Rempillo, another customer service representative of the BANK, saw VILLANUEVAs
checkbook requisition slip. She took it and proceeded to check the BANKs checkbook register
which contained all the names and account numbers of the BANKs clients who were issued
checkbooks. Upon seeing the name Isagani Villanueva -- Account No. 33-00446-3 in the checkbook
register, Rempillo copied the aforesaid account number on the space intended for it in
VILLANUEVAs requisition slip.[2]
On 17 June 1986, VILLANUEVA received from the BANK his requested checkbook. On the same
day, he immediately signed Check No. 396701 bearing the amount of P50,000 payable to the
order of Kingly Commodities Traders and Multi Resources, Inc. (hereafter Kingly Commodities).
VILLANUEVA thereafter delivered the check to Helen Chu, his investment consultant at Kingly
Commodities, with his express instruction to use said check in placing a trading order at
Kingly Commodities future trading business as soon as a favorable opportunity presented
itself.[3]
Two days later, or on 19 June 1986, VILLANUEVA received a call from Helen Chu, informing
him that she had already placed a trading order in his behalf and delivered the check to
Kingly Commodities. The check was deposited with the China Banking Corporation.The next day,
he deposited P31,600 in cash to his savings account to cover the full amount of the check he
issued. His deposits in both accounts totalled P51,304.91.[4]
However, on 23 June 1986, VILLANUEVAs Check No. 396701 was dishonored due to insufficiency
of funds and disparity in the signature. VILLANUEVA called Kingly Commodities and explained
that there was a mistake in the dishonor of the check because he had sufficient
funds. Forthwith on the same day, VILLANUEVA called up the BANKs Legaspi Village Branch
Operations Manager, Maritess Gamboa, and inquired about the dishonor of his well-funded
check. Gamboa promised to look into the matter and instructed VILLANUEVA to advise his payee,
Kingly Commodities, to re-deposit the check. Gamboa assured VILLANUEVA that the check would
be honored after the sufficiency of the funds was ascertained.[5]
On 26 June 1986 at about 4:00 p.m., VILLANUEVA learned that his check was again dishonored
due to insufficiency of funds and a stop- payment order he allegedly issued. Dismayed by the
turn of events, VILLANUEVA called up the BANK and inquired from Gamboa the reason for the
dishonor of his well-funded check and the alleged stop-payment order which he never
issued. Gamboa promised to investigate the matter and to call VILLANUEVA in fifteen (15)
minutes.[6] In the meantime, she advised VILLANUEVA to re-deposit the check.
VILLANUEVA then requested Lawrence Chin of Kingly Commodities to give him until 5:30 p.m.
that same day to make good his P50,000 check. He then proceeded to the BANKs Legaspi Village
Branch Office, together with his investment consultant and his trading partner, to personally
inquire into the matter. They were met by Marilou Genuino, the BANKs Branch Manager. There
he complained that his trading order was rejected because of the dishonor of the check and
that Kingly Commodities threatened to close his trading account unless his check payment
would be made good before 5:30 p.m. that day. After making the necessary investigation,
Genuino related to VILLANUEVA that the reason for the dishonor of the check was that the
account number assigned to his new checkbook was the account number of another depositor also
named Isagani Villanueva but with a different middle initial.[7]
To resolve the matter, Genuino promised to send to Kingly Commodities a managers check
for P50,000 before 5:30 p.m., the deadline given to VILLANUEVA. She also personally called
Kingly Commodities and explained the reason for the dishonor of the check.[8]
On 30 June 1986, VILLANUEVA sent a letter[9] to the BANK addressed to the President, Jose
Facundo, demanding indemnification for alleged losses and damages suffered by him as a result
of the dishonor of his well-funded check. He demanded the amount of P70,000 as indemnification
for actual damages in the form of lost profits and P2 Million for moral and other damages.
On 10 July 1986, in answer to VILLANUEVAs letter, Gregorio Anonas III, the BANKs Senior
Vice-President, apologized for the unfortunate oversight, but reminded VILLANUEVA that the
dishonor of his check was due to his failure to state his current account number in his
requisition slip. Anonas further stated that as soon as the mistake was discovered, the BANK
promptly sent a managers check to Kingly Commodities before 5:30 p.m. on 26 June 1986 to
avoid any damage the dishonor of the check might have caused.[10]
Failing to obtain from the BANK a favorable action on his demand for indemnification,
VILLANUEVA filed on 27 August 1986 a complaint for damages based on breach of contract and/or
quasi-delict before the Regional Trial Court of Makati City. The case was docketed as Civil
Case No. 14749 and was raffled to Branch 63 thereof.
VILLANUEVA alleged in his complaint that the BANK breached its contractual obligation to
him as a depositor because of its repeated dishonor of his valid and well-funded check. The
breach arose from the BANKs gross negligence and culpable recklessness in supplying the wrong
account number. As a consequence, he suffered and sustained (1) actual damages consisting of
loss of profits in the amount of at least P240,000, for he was not allowed to trade by Kingly
Commodities; and (2) P2 Million as moral damages because of the intolerable physical
inconvenience, discomfort, extreme humiliation, indignities, etc., that he had borne before
his peers and colleagues in the firm, his trading partners, and the officers of Kingly
Commodities. He prayed for an additional award of P500,000 for exemplary damages, attorneys
fees, litigation expenses and costs of the suit.[11]
In its answer, the BANK alleged that VILLANUEVA suffered no actionable injury, much less
damages, considering his blatant irresponsibility in not remembering his current account
number and in failing to bring his checkbook re-order slip form on which his account number
was inscribed when he requested a new set of checks. His negligence in verifying the account
number of the new set of checks issued to him also contributed to the dishonor of his
check. The BANK claimed that it acted in good faith when it twice dishonored the check. It
further asserted that VILLANUEVAs negligence was the proximate cause of his self-proclaimed
injury; and the alleged losses and damages could not likewise be deemed the natural and
probable consequences of the BANKs breach of obligation, had there been any.Finally, it
claimed that VILLANUEVA acted with malice in filing the case, and interposed counterclaims
of P500,000 as exemplary damages; P250,000 as attorneys fees; and actual damages as may be
determined by the court.[12]
After due proceedings, the trial court rendered on 3 July 1992 a decision[13] dismissing
the complaint and the compulsory counterclaim for lack of merit. To the trial court, the
basic issue was whether it was VILLANUEVAs or the BANKs negligence which was the proximate
cause of the formers alleged injury. After an evaluation of the respective allegations and
evidence of the parties, the trial court found that VILLANUEVAs negligence set the chain of
events which resulted in his alleged losses and damages. His negligence consisted in his
failure to (a) indicate his current account number when he filled up his requisition slip for
a new set of checks; (b) remember his account number; (c) bring the used checkbook to which
was attached the pre-order requisition slip on which the account number was pre-indicated;
(d) give the requisition slip to the care and custody of a BANK officer or employee instead
of leaving the requisition slip on top of one of the tables of the BANK; and (e) verify the
account number of the new set of checks when it was delivered to him. These omissions directly
resulted in the dishonor of his check drawn from an account bearing the account number of
another BANK client whose name and surname were similar to his. VILLANUEVA then must bear the
consequent damages and losses he allegedly suffered.
The trial court conceded, however, that the BANK was negligent when it failed to supply
VILLANUEVAs correct account number despite its promise to do so; but its negligence was merely
contributory, which would have reduced the damages recoverable by VILLANUEVA had the latter
proved his claims for actual, moral and exemplary damages, and attorneys fees.
Likewise, the trial court doubted that VILLANUEVA sustained actual damages in the amount
of P240,000 due to loss of profits as averred in the complaint considering that his initial
claim against the BANK for actual loss was merely P70, 000[14] and the evidence presented in
support thereof was hearsay, unreliable and not the best evidence.
VILLANUEVA appealed to the Court of Appeals. The appeal was docketed as CA-G.R. CV No.
40931.
In his appeal, VILLANUEVA maintained that the BANK was guilty of gross or culpable
negligence amounting to bad faith when its customer service representative furnished an
erroneous account number. He further contended that the same was the proximate cause of the
repeated dishonor of his check. He should, therefore, be entitled to an award of actual,
moral and exemplary damages, including attorneys fees and costs of the suit.
The Court of Appeals, in its decision of 2 February 1999,[15] ruled that when the BANK
voluntarily processed the requisition slip without the requisite account number being supplied
by the applicant, it in effect took upon itself the obligation to supply the correct account
number. Thus, when the new checkbook was released to VILLANUEVA on 17 June 1986, the BANK was
deemed to have waived any defect in the requisition slip and estopped from putting the blame
on VILLANUEVAs failure to indicate his account number. VILLANUEVA had every right to assume
that everything was in order in his application for a new checkbook; for, after all, he was
banking with a world class universal bank. The banking industry is imbued with public interest
and is mandated by law to serve its clients with extraordinary care and diligence.
The Court of Appeals also considered the BANKs voluntary processing of the requisition
slip as the cause which in the natural and continuous sequence, unbroken by any efficient
intervening cause, produced the injury and without which the result would not have
occurred.[16] However, although it conceded that the BANKs negligence was not attended with
malice and bad faith, it nonetheless awarded moral damages in the amount of P100,000. It also
awarded attorneys fees in the amount of P50,000, since VILLANUEVA was compelled to incur
expenses to protect his interests by reason of the unjustified act or omission of the
BANK. However, it rejected VILLANUEVAs claim for compensatory damages and affirmed the trial
courts finding thereon.
Upon the denial[17] of their respective motions for reconsideration, both VILLANUEVA and
the BANK appealed to us by way of petition for review.
In its petition, the BANK ascribes to the Court of Appeals as reversible errors its (1)
reversal of the court a quos decision; (2) declaration that the proximate and efficient cause
of the injury allegedly suffered by VILLANUEVA was the BANKs processing of the checkbook and
assigning an erroneous account number, and not the negligent act of VILLANUEVA in leaving the
checkbook requisition slip on top of one of the desks with the account number entry blank;
and (3) award of moral damages and attorneys fees despite the absence of a finding of bad
faith on the part of the BANK.
In his petition, VILLANUEVA asserts that the Court of Appeals erred in holding that his
actual losses in the amount of P234,059.04 was not sufficiently proved with reasonable
certainty. Had his fully-funded check not been dishonored twice, his four trading orders with
Kingly Commodities consisting of two (2) open sell positions on 17 and 18 of June 1986 and
two (2) settle buy orders on 26 June 1986 would have earned him profits in the amount he
claimed. He emphatically maintains that the loss had been satisfactorily proved by the
testimony of Helen Chu, his investment consultant. Ms. Chus testimony was not controverted;
hence, it should have been considered and admitted as factually true. Considering that his
claim for actual damages has been adequately established and that the BANK committed gross
negligence amounting to bad faith, his concomitant demand for exemplary damages should
likewise be awarded.
The issue of whether VILLANUEVA suffered actual or compensatory damages in the form of
loss of profits is factual. Both the Court of Appeals and the trial court have ascertained
that VILLANUEVA was unable to prove his demand for compensatory damages arising from loss. His
evidence thereon was found inadequate, uncorroborated, speculative, hearsay and not the best
evidence. Basic is the jurisprudential principle that in determining actual damages, the
court cannot rely on mere assertions, speculations, conjectures or guesswork but must depend
on competent proof and on the best obtainable evidence of the actual amount of the
loss.[18] Actual damages cannot be presumed but must be duly proved with reasonable
certainty.[19]
It must also be stressed that the unanimity on the factual ascertainment on this point by
the trial court and the Court of Appeals bars us from supplanting their finding and
substituting it with our own assessment. Well-entrenched in our jurisprudence is the doctrine
that the factual determinations of the lower courts are conclusive and binding upon appellate
courts and hence should not be disturbed. None of the recognized exceptions to said principle
exists in this case to warrant a reexamination of such finding. Besides, our jurisdiction in
cases brought before us from the Court of Appeals is limited to the review of errors of
law.[20]
Nonetheless, is VILLANUEVA entitled to the moral damages and attorneys fees granted by
the Court of Appeals?
Moral damages include physical suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shock, social humiliation, and similar
injury.[21] Although incapable of pecuniary computation, moral damages may be recovered if
they are the proximate result of the defendants wrongful act or omission. [22] Thus, case law
establishes the requisites for the award of moral damages, viz: (1) there must be an injury,
whether physical, mental or psychological, clearly sustained by the claimant; (2) there must
be 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.[23]
It is beyond cavil that VILLANUEVA had sufficient funds for the check. Had his account
number been correct, the check would not have been dishonored. Hence, we can say that
VILLANUEVAs injury arose from the dishonor of his well-funded check. We have already ruled
that the dishonor of the check does not entitle him to compensatory damages. But, could the
dishonor result in his alleged intolerable physical inconvenience and discomfort, extreme
humiliation, indignities, etc, which he had borne before his peers, trading partners and
officers of Kingly Commodities? True, we find that under the circumstances of this case,
VILLANUEVA might have suffered some form of inconvenience and discomfort as a result of the
dishonor of his check. However, the same could not have been so grave or intolerable as he
attempts to portray or impress upon us.
Further, it is clear from the records that the BANK was able to remedy the caveat of
Kingly Commodities to VILLANUEVA that his trading account would be closed at 5:30 p.m. on 26
June 1986. The BANK was able to issue a managers check in favor of Kingly Commodities before
the deadline. It was able to likewise explain to Kingly Commodities the circumstances
surrounding the unfortunate situation. Verily, the alleged embarrassment or inconvenience
caused to VILLANUEVA as a result of the incident was timely and adequately contained,
corrected, mitigated, if not entirely eradicated. VILLANUEVA, thus, failed to support his
claim for moral damages. In short, none of the circumstances mentioned in Article 2219 of the
Civil Code exists to sanction the award for moral damages.
The award of attorneys fees should likewise be deleted. The general rule is that attorneys
fees cannot be recovered as part of damages because of the policy that no premium should be
placed on the right to litigate. They are not to be awarded every time a party wins a suit.The
power of the court to award attorneys fees under Article 2208 of the Civil Code
demands factual, legal and equitable justification. Even when a claimant is compelled to
litigate with third persons or to incur expenses to protect his rights, still attorneys fees
may not be awarded where there is no sufficient showing of bad faith in the parties persistence
of a case other than an erroneous conviction of the righteousness of his cause.[24]
In view of the foregoing discussion, we need not deliberate on the dispute as to whether
it was the BANKs or VILLANUEVAs negligence which was the proximate cause of the latters injury
because, in the first place, he did not sustain any compensable injury. If any damage had
been suffered at all, it could be equivalent to damnum absque injuria, i.e., damage without
injury or damage or injury inflicted without injustice, or loss or damage without violation
of a legal right, or a wrong done to a man for which the law provides no remedy.[25]
 WHEREFORE, the decision of the Court of Appeals in CA-G.R. CV No. 40931 is hereby REVERSED,
and the judgment of the Regional Trial Court of Makati City, Branch 63, in Civil Case No.
14749 dismissing the complaint and the counterclaim is hereby REINSTATED.
No costs.
SO ORDERED.

[1]
TSN, 8 April 1987, 3, 6; TSN, 26 June 1987, 28-30. Inc. v. Court of Appeals, 302 SCRA 315, 327 [1999]; Asuncion v.
[2]
TSN, 5 June 1991, 16, 19-22. Evangelista, 316 SCRA 848, 877 [1999].
[3] [20]
TSN, 8 April 1987, 7-9. Tiongco v. Deguma, 317 SCRA 527, 540-541 [1999].
[4] [21]
Id., 10-11. Article 2217, Civil Code.
[5] [22]
Id., 12-15. Id., second sentence.
[6] [23]
Id., 15-17, 23-24. Expertravel & Tours v. Court of Appeals, 309 SCRA 141, 145
[7]
TSN, 8 April 1987, 25-27. [1999]. Article 2219 of the Civil Code states that moral damages
[8]
Id., 28; TSN, 26 June 1987, 19-21. may be recovered in the following and analogous cases:
[9]
Exhibit B. (1) A criminal offense resulting in physical injuries;
[10]
Exhibit D. (2) Quasi-delicts causing physical injuries;
[11]
Original Record (OR), Vol. I, 3-5. (3) Seduction, abduction, rape, or other lascivious acts;
[12]
OR, 18-22. (4) Adultery or concubinage;
[13]
Id., 367. Per Judge Julio R. Logarta. (5) Illegal or arbitrary detention or arrest;
[14]
Supra note 9. (6) Illegal search;
[15]
Rollo, 30-45. Per Abesamis, B., J., with Rasul, J., and Carpio- (7) Libel, slander or any other form of defamation;
Morales, C., JJ. concurring. (8) Malicious prosecution;
[16]
Citing Sabena Belgian World Airlines v. Court of Appeals, 255 (9) Acts mention in Article 309;
SCRA 38 [1996]. (10) Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30,
[17]
Rollo, 47. 32, 34 and 35.
[18] [24]
Lucena v. Court of Appeals, 313 SCRA 47, 61-62 [1999]. ABS-CBN Broadcasting Corporation v. Court of Appeals, 301
[19]
Development Bank of the Philippines v. Court of Appeals, 284 SCRA 572, 601 [1999]; See also Scotts Consultants and Resource
SCRA 14, 29-30 [1998]; People v. Oliano, 287 SCRA 158, 179 [1998]; Development Corp., Inc. v. Court of Appeals, 242 SCRA 393, 406
Ong v. Court of Appeals, 301 SCRA 387, 400 [1999]; Luxuria Homes, [1995].
[25]
Escano v. Court of Appeals, 100 SCRA 197, 203 [1980].
-------------------------------------------------------------------------------------------

EN BANC

G.R. No. L-16439 July 20, 1961

ANTONIO GELUZ, petitioner,

vs.
THE HON. COURT OF APPEALS and OSCAR LAZO, respondents.

This petition for certiorari brings up for review question whether the husband of a woman,
who voluntarily procured her abortion, could recover damages from physician who caused the
same.

The litigation was commenced in the Court of First Instance of Manila by respondent Oscar
Lazo, the of Nita Villanueva, against petitioner Antonio Geluz, a physician. Convinced of the
merits of the complaint upon the evidence adduced, the trial court rendered judgment favor
of plaintiff Lazo and against defendant Geluz, ordering the latter to pay P3,000.00 as
damages, P700.00 attorney's fees and the costs of the suit. On appeal, Court of Appeals, in
a special division of five, sustained the award by a majority vote of three justices as
against two, who rendered a separate dissenting opinion.

The facts are set forth in the majority opinion as follows:

Nita Villanueva came to know the defendant (Antonio Geluz) for the first time in 1948
— through her aunt Paula Yambot. In 1950 she became pregnant by her present husband
before they were legally married. Desiring to conceal her pregnancy from her parent,
and acting on the advice of her aunt, she had herself aborted by the defendant. After
her marriage with the plaintiff, she again became pregnant. As she was then employed in
the Commission on Elections and her pregnancy proved to be inconvenient, she had herself
aborted again by the defendant in October 1953. Less than two years later, she again
became pregnant. On February 21, 1955, accompanied by her sister Purificacion and the
latter's daughter Lucida, she again repaired to the defendant's clinic on Carriedo and
P. Gomez streets in Manila, where the three met the defendant and his wife. Nita was
again aborted, of a two-month old foetus, in consideration of the sum of fifty pesos,
 Philippine currency. The plaintiff was at this time in the province of Cagayan,
campaigning for his election to the provincial board; he did not know of, nor gave his
consent, to the abortion.

It is the third and last abortion that constitutes plaintiff's basis in filing this action
and award of damages. Upon application of the defendant Geluz we granted certiorari.

The Court of Appeals and the trial court predicated the award of damages in the sum of
P3,000.06 upon the provisions of the initial paragraph of Article 2206 of the Civil Code of
the Philippines. This we believe to be error, for the said article, in fixing a minimum award
of P3,000.00 for the death of a person, does not cover the case of an unborn foetus that is
not endowed with personality. Under the system of our Civil Code, "la criatura abortiva no
alcanza la categoria de persona natural y en consscuencia es un ser no nacido a la vida del
Derecho" (Casso-Cervera, "Diccionario de Derecho Privado", Vol. 1, p. 49), being incapable
of having rights and obligations.

Since an action for pecuniary damages on account of personal injury or death pertains primarily
to the one injured, it is easy to see that if no action for such damages could be instituted
on behalf of the unborn child on account of the injuries it received, no such right of action
could derivatively accrue to its parents or heirs. In fact, even if a cause of action did
accrue on behalf of the unborn child, the same was extinguished by its pre-natal death, since
no transmission to anyone can take place from on that lacked juridical personality (or
juridical capacity as distinguished from capacity to act). It is no answer to invoke the
provisional personality of a conceived child (conceptus pro nato habetur) under Article 40
of the Civil Code, because that same article expressly limits such provisional personality
by imposing the condition that the child should be subsequently born alive: "provided it be
born later with the condition specified in the following article". In the present case, there
is no dispute that the child was dead when separated from its mother's womb.

The prevailing American jurisprudence is to the same effect; and it is generally held that
recovery can not had for the death of an unborn child (Stafford vs. Roadway Transit Co., 70
F. Supp. 555; Dietrich vs. Northampton, 52 Am. Rep. 242; and numerous cases collated in the
editorial note, 10 ALR, (2d) 639).

This is not to say that the parents are not entitled to collect any damages at all. But such
damages must be those inflicted directly upon them, as distinguished from the injury or
violation of the rights of the deceased, his right to life and physical integrity. Because
the parents can not expect either help, support or services from an unborn child, they would
normally be limited to moral damages for the illegal arrest of the normal development of
the spes hominis that was the foetus, i.e., on account of distress and anguish attendant to
its loss, and the disappointment of their parental expectations (Civ. Code Art. 2217), as
well as to exemplary damages, if the circumstances should warrant them (Art. 2230). But in
the case before us, both the trial court and the Court of Appeals have not found any basis
for an award of moral damages, evidently because the appellee's indifference to the previous
abortions of his wife, also caused by the appellant herein, clearly indicates that he was
unconcerned with the frustration of his parental hopes and affections. The lower court
expressly found, and the majority opinion of the Court of Appeals did not contradict it, that
the appellee was aware of the second abortion; and the probabilities are that he was likewise
aware of the first. Yet despite the suspicious repetition of the event, he appeared to have
taken no steps to investigate or pinpoint the causes thereof, and secure the punishment of
the responsible practitioner. Even after learning of the third abortion, the appellee does
not seem to have taken interest in the administrative and criminal cases against the appellant.
His only concern appears to have been directed at obtaining from the doctor a large money
payment, since he sued for P50,000.00 damages and P3,000.00 attorney's fees, an "indemnity"
claim that, under the circumstances of record, was clearly exaggerated.

The dissenting Justices of the Court of Appeals have aptly remarked that:

It seems to us that the normal reaction of a husband who righteously feels outraged by
the abortion which his wife has deliberately sought at the hands of a physician would
be highminded rather than mercenary; and that his primary concern would be to see to it
that the medical profession was purged of an unworthy member rather than turn his wife's
indiscretion to personal profit, and with that idea in mind to press either the
administrative or the criminal cases he had filed, or both, instead of abandoning them
in favor of a civil action for damages of which not only he, but also his wife, would
be the beneficiaries.
It is unquestionable that the appellant's act in provoking the abortion of appellee's wife,
without medical necessity to warrant it, was a criminal and morally reprehensible act, that
can not be too severely condemned; and the consent of the woman or that of her husband does
not excuse it. But the immorality or illegality of the act does not justify an award of damage
that, under the circumstances on record, have no factual or legal basis.

The decision appealed from is reversed, and the complaint ordered dismissed. Without costs.

Let a copy of this decision be furnished to the Department of Justice and the Board of Medical
Examiners for their information and such investigation and action against the appellee Antonio
Geluz as the facts may warrant.

-------------------------------------------------------------------------------------------

EN BANC

G.R. No. L-8721 May 23, 1957

TRANQUILINO CACHERO, plaintiff-appellant,

vs.
MANILA YELLOW TAXICAB CO., INC., defendant-appellant.

There is no dispute as to the following facts: on December 13, 1952, Atty. Tranquilino F.
Cachero boarded a Yellow Taxicab, with plate No. 2159-52 driven by Gregorio Mira Abinion and
owned by the Manila Yellow Taxicab Co., Inc. On passing Oroquieta between Doroteo Jose and
Lope de Vega streets, Gregorio Mira Abinion bumped said taxicab against a Meralco post, No.
1-4/387, with the result that the cab was badly smashed and the plaintiff fell out of the
vehicle to the ground, suffering thereby physical injuries, slight in nature.

The chauffeur was subsequently prosecuted by the City Fiscal and on February 26, 1963, upon
his plea of guilty the Municipal Court of Manila sentenced him to suffer 1 month and 1 day
of arresto mayor, and to pay the costs. On December 17, 1952, Tranquilino F. Cachero addressed
a letter to the Manila Yellow Taxicab Co., Inc., which was followed by another of January 6,
1953, which reads as follows:

MANILA, January 6, 1953

The MANILA YELLOW TAXICAB CO., INC.

1338 Arlegui, Manila

Dear Sirs:

As you have been already advised by the letter dated December 17, 1952, on December 13,
1952, while I was a passenger of your taxicab bearing plate No. 2159 and driven by your
chauffeur Gregorio Mira and through his negligence and the bad condition of the said
car, he bumped the same against the pavement on the street (Oroquieta — between Doroteo
Jose and Lope de Vega streets, Manila) and hit the Meralco post on said street, resulting
in the smashing of the said taxicab, and as a result thereof I was gravely injured and
suffered and is still suffering physical, mental and moral damages and not being able
to resume my daily calling.

For the said damages, I hereby make a demand for the payment of the sum of P79,245.65,
covering expenses for transportation to the hospital for medical treatment, medicines,
doctors bills, actual monetary loss, moral, compensatory and exemplary damages, etc.,
within 5 days from date of receipt hereof.

I trust to hear from you on the matter within the period of 5 days above specified.

Truly yours,
 (Sgd.) TRANQUILINO F. CACHERO
2256 Int. B, Misericordia St.,
Sta. Cruz, Manila

(Exhibit K)

The Taxicab Co. to avoid expenses and time of litigation offered to settle the case amicably
with plaintiff but the latter only agreed to reduce his demand to the sum of P72,050.20 as
his only basis for settlement which, of course, was not accepted by said company. So plaintiff
instituted this action on February 2, 1953, in the Court of First Instance of Manila, praying
in the complaint that the defendant be condemned to pay him:

(a) The sum of P72,050.20, the total sum of the itemized losses and/or damages under
paragraph 7 of the complaint, with legal interest thereon from the date of the filing
of the complaint;

(b) The sum of P5,000 as attorney's fee; and the costs of the suit; and

Plaintiff further respectfully prays for such other and further reliefs as the facts
and the law pertaining to the case may warrant.

The defendant answered the complaint setting forth affirmative defenses and a counterclaim
for P930 as damages and praying for the dismissal of plaintiff's action. After hearing the
Court rendered decision only July 20, 1954, the dispositive part of which is as follows:

IN VIEW OF THE FOREGOING, the Court hereby renders judgment in favor of the plaintiff
and against the defendant, sentencing the latter to pay the former the following: (1)
For medicine, doctor's fees for services rendered and transportation, P700; (2)
professional fee as attorney for the defendant in Criminal Case No. 364, "People vs.
Manolo Maddela et al." of the Court of First Instance of Nueva Vizcaya, P3,000; (3)
professional fees as attorney for the defendant in Civil Case No. 23891 of the Municipal
Court of Manila, "Virginia Tangulan vs. Leonel da Silva," and for the taking of the
deposition of Gabina Angrepan in a case against the Philippine National Bank, P200;
and(4) moral damages in the amount of P2,000.

Defendant's counterclaim is hereby dismissed.

Defendant shall also pay the costs."

From this decision both parties appealed to Us, plaintiff limiting his appeal to the part of
the decision which refers to the moral damages awarded to him which he considered inadequate,
and to the failure of said judgment to grant the attorney's fees asked for in the prayer of
his complaint. Defendant in turn alleges that the trial Court erred in awarding to the
plaintiff the following:

(1) P700 — for medicine, doctor's fees and transportation expenses;

(2) P3,000 — as supposedly unearned full professional fees as attorney for the defendant
in Criminal Case No. 364, "People vs. Manolo Maddela et al.";

(3) P200 — as supposedly unearned professional fees as attorney for the defendant in
Civil Case No. 23891 of the Manila Municipal Court, "Virginia Tangulan vs. Leonel de
Silva", and for failure to take the deposition of a certain Gabina Angrepan in an
unnamed case; and

(4) P2,000 — as moral damages, amounting to the grand total of P5,900, these amounts
being very much greater than what plaintiff deserves.

In connection with his appeal, plaintiff calls attention to the testimonies of Dr. Modesto
S. Purisima and of Dr. Francisco Aguilar, a member of the staff of the National Orthopedic
Hospital, which he considers necessary as a basis for ascertaining not only the physical
sufferings undergone by him, but also for determining the adequate compensation for moral
damages that he should be awarded by reason of said accident.
The exact nature of plaintiff's injuries, their degree of seriousness and the period of his
involuntary disability can be determined by the medical certificate (Exhibit D) issued by the
National Orthopedic Hospital on December 16, 1952, and the testimonies of Dr. Francisco
Aguilar, physician in said hospital, and of Dr. Modesto Purisima, a private practitioner. The
medical certificate (Exhibit D) lists: (a) a subluxation of the right shoulder joint; (b)
a contusion on the right chest; and (c) a "suspicious fracture" of the upper end of the right
humerus. Dr. Aguilar who issued the medical certificate admitted, however, with regard to the
"suspicious fracture", that in his opinion with (the aid of) the x-ray there was no fracture.
According to this doctor plaintiff went to the National 0rthopedic Hospital at least six
times during the period from December 16, 1952, to April 7, 1953; that he strapped plaintiffs
body (see Exhibit E), which strap was not removed until after a period of six weeks had
elapsed Dr. Modesto Purisima, a private practitioner, testified that
he advised and treated plaintiff from, December 14, 1952, to the end of March (1953).
Plaintiff was never hospitalized for treatment of the injuries he received in said accident.

Counsel for the defendant delves quite extensively on these injuries. He says in his brief
the following:

Just what is a subluxation? Luxation is another term for dislocation (Dorland, W.A.N.,
The American Illustrated Medical Dictionary (13th ed.), p. 652), and hence,
a sublaxation is an incomplete or partial dislocation (Ibid., p. 1115). While a
dislocation is the displacement of a bone or bones from its or their normal setting
(and, therefore, applicable and occurs only to joints and not to rigid or non-movable
parts of the skeletal system) (Ibid., p. 358; Christopher, F., A Textbook of Surgery
(5th ed.), p. 342), it should be distinguished from a fracture which is a break or
rupture in a bone or cartilage, usually due to external violence (Christopher, F., A
Textbook of Surgery (5th Ed.) p. 194; Dorland, W.A.N., The American Illustrated Medical
Dictionary (13th ed.), P.459). Because, unlike fracture which may be partial (a crack
in the bone) or total (a complete break in the bone), there can be no half-way situations
with regard to dislocations of the shoulder joint (the head or ball of the humerus —
the humerus is the bone from the elbow to the shoulder) must be either inside the socket
of the scapula or shoulder blade (in which case there is no dislocation) or out of the
latter (in which event there is a dislocation), to denote a condition where due to
external violence, the muscles and ligaments connecting the humerus to the scapula have
subjected to strain intense enough to produce temporary distention or lessening of their
tautness and consequently resulting in the loosening or wrenching of the ball of the
humerus from its snug fit in the socket of the scapula, by using the terms subluxation
or partial dislocation(as used in the medical certificate), is to fall into a misnomer
— a term often used by "chiropractors" and by those who would want to sound impressive,
but generally unfavored by the medical profession. To describe the above condition more
aptly, the medical profession usually employs the expression luxatio imperfecta, or, in
simple language, a sprain (Dorland, W.A.N., The American Illustrated Medical Dictionary
(13th ed.), p. 652). The condition we have described is a paraphrase of the definition
of a sprain. Plaintiff suffered this very injury (a sprained or wrenched shoulder joint)
and a cursory scrutiny of his x-ray plates (Exhibits A and B) by a qualified orthopedic
surgeon or by a layman with a picture or x-ray plate of a normal shoulder joint (found
in any standard textbook on human anatomy; the one we used was Schemer, J.P., Morris'
Human Anatomy (10 ed., p. 194) for comparison will bear out our claim.

Treatment for a sprain is by the use of adhesive or elastic bandage, elevation of the
joint, heat, effleurage and later massage (Christopher, F., A Textbook of Surgery (5th
ed., p. 116). The treatment given to the plaintiff was just exactly that Dr. Aguilar
bandaged (strapped) plaintiff's right shoulder and chest (t.s.n., p. 31) in an elevated
position (with the forearm horizontal to the chest (see photograph, Exhibit E), and
certain vitamins were prescribed for him (t.s.n., p. 131). He also underwent massage
for some time by Drs. Aguilar and Purisima. The medicines and appurtenances to treatment
purchased by plaintiff from the Orthopedic Hospital, Botica Boie and Metro Drug Store
were, by his own admission, adhesive plaster, bandage, gauze, oil and "tintura arnica"
(t.s.n., p. 3 — continuation of transcript ), and Dr. Purisima also prescribed
"Numotizin", a beat generating ointment (t.s.n., p. 23), all of which are indicated for
a sprain, and by their nature, can cure nothing more serious than a sprain anyway.
Fractures and true dislocations cannot be cured by the kind of treatment and medicines
which plaintiff received. A true dislocation, for instance, is treated by means of
reduction through traction of the arm until the humeral head returns to the proper
position in the scapular socket (pulling the arm at a 60 degree angle and guiding the
ball of the humerus into proper position, in its socket) while the patient is under
deep anaesthesia, and then, completely immobilizing the part until the injured capsule
has healed (Christopher, F., A Textbook of Surgery, pp. 343 and 344). No evidence was
 submitted that plaintiff ever received the latter kind of treatment. Dr. Purisima even
declared that after the plaintiff's first visit to the Orthopedic Hospital the latter
informed him that there was no fracture or dislocation (t.s.n., p. 26). Dr. Purisima's
statement is the truth of the matter as we have already explained — joints of the
shoulder being only subject to total dislocation (due to their anatomical design), not
to partial ones, and any injury approximating dislocation but not completely, it being
classified as mere sprains, slight or bad.

The second and last injury plaintiff sustained was a contusion. What is a contusion? It
is just a high flown expression for a bruise or the act of bruising (Dorland, W.A.N.,
The American Illustrated Medical Dictionary (13th ed. p. 290). No further discussion
need be made on this particular injury since the nature of a bruise is of common
knowledge (it's a bit uncomfortable but not disabling unless it occurs on movable parts
like the fingers or elbow which is not the case, herein having occurred in the right
chest) and the kind of medical treatment or help it is also well known. (pp. 10-14,
defendant-appellant's brief).

The trial Judge undoubtedly did not give much value to the testimonies of the doctors when
in the statement of facts made in his decision he referred to the physical injuries received
by the plaintiff as slight in nature and the latter is estopped from discussing the same in
order to make them appear as serious, because in the statement of facts made in his brief
as appellant, he says the following:

The facts of the case as found by the lower court in its decision, with the permission
of this Honorable Court, we respectfully quote them hereunder as our STATEMENT OF
FACTS for the purpose of this appeal.

Before entering into a discussion of the merits of plaintiff's appeal, We will say a few
words as to the nature of the action on which his demand for damages is predicated.

The nature of an action as in contract or in tort is determined from the essential

elements of the complaint, taken as a whole, in the case of doubt a construction to
sustain the action being given to it.

While the prayer for relief or measure of damages sought does not necessarily determine
the character of the action, it may be material in the determination of the question
and therefore entitled to consideration and in case of doubt will open determine
character of the action and indeed there are actions whose character is necessarily
determined thereby. (1 C.J.S. 1100)

A mere perusal of plaintiff complaint will show that his action against the defendant is
predicated on an alleged breach of contract of carriage, i.e., the failure of the defendant
to bring him "safely and without mishaps" to his destination, and it is to be noted that the
chauffeur of defendant's taxicab that plaintiff used when he received the injuries involved
herein, Gregorio Mira, has not even been made a party defendant to this case.

Considering, therefore, the nature of plaintiff's action in this case, is he entitled to

compensation for moral damages? Article 2219 of the Civil Code says the following:

ART. 2219. Moral damages may be recovered in the following and analogous cases:

(1) A criminal offense resulting in physical injuries;

(2) Quasi-delicts causing physical injuries;

(3) Seduction, abduction, rape, or other lascivious acts;

(4) Adultery or concubinage;

(5) Illegal or arbitrary detention or arrest;

(6) Illegal search;

(7) Libel, slander or any other form of defamation;

(8) Malicious prosecution;

 (9) Acts mentioned in Article 309;

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

x x x x x x x x x

Of the cases enumerated in the just quoted Article 2219 only the first two may have any
bearing on the case at bar. We find, however, with regard to the first that the defendant
herein has not committed in connection with this case any "criminal offense resulting in
physical injuries". The one that committed the offense against the plaintiff is Gregorio
Mira, and that is why he has been already prosecuted and punished therefor. Although (a)
owners and managers of an establishment or enterprise are responsible for damages caused by
their employees in the service of the branches in which the latter are employed or on the
occasion of their functions; (b) employers are likewise liable for damages caused by their
employees and household helpers acting within the scope of their assigned task (Article 2180
of the Civil Code); and (c) employers and corporations engaged in any kind of industry are
subsidiarily civilly liable for felonies committed by their employees in the discharge of
their duties (Art. 103, Revised Penal Code), plaintiff herein does not maintain this action
under the provisions of any of the articles of the codes just mentioned and against all the
persons who might be liable for the damages caused, but as a result of an admitted breach of
contract of carriage and against the defendant employer alone. We, therefore, hold that the
case at bar does not come within the exception of paragraph 1, Article 2219 of the Civil
Code.

The present complaint is not based either on a "quasi delict causing physical injuries" (Art.
2219 par. 2, of the Civil Code). From the report of the Code Commission on the new Civil Code
We copy the following:

A question of nomenclature confronted the Commission. After a careful deliberation, it

was agreed to use the term "quasi-delict" for those obligations which do not arise from
law, contracts quasi-contracts or criminal offenses. They are known in Spanish legal
treatises as "culpa aquiliana", "culpa-extra-contractual" or "cuasi-delitos". The
phrase "culpa-extra-contractual" or its translation "extra-contractual fault" was
eliminated because it did not exclude quasi-contractual or penal obligations. "Aquilian
fault" might have been selected, but it was thought inadvisable to refer to so ancient
a law as the "Lex Aquilia". So "quasi-delicts" was chosen, which more nearly corresponds
to the Roman Law classification of obligations, and is in harmony with the nature of
this kind of liability.

The Commission also thought of the possibility of adopting the word "tort" from Anglo-
American Law. But "tort" under that system is much broader than the Spanish-Philippine
concept of obligations arising from non-contractual negligence." "Tort" in Anglo-
American jurisprudence includes not only negligence, but also intentional criminal acts,
such as assault and battery, false imprisonment and deceit. In the general plan of the
Philippine legal system, intentional and malicious are governed by the Penal Code,
although certain exceptions are made in the Project. (Report of the Code Commission,
pp. 161-162).

In the case of Cangco vs. Manila Railroad, 38 Phil. 768, We established the distinction
between obligation derived from negligence and obligation as a result of a breach of a
contract. Thus, We said:

It is important to note that the foundation of the legal liability of the defendant is
the contract of carriage, and that the obligation to respond for the damage which
plaintiff has suffered arises, if at all, from the breach of that contract by reason of
the failure of defendant to exercise due care in its performance. That is to say, its
liability is direct and immediate, differing essentially in the legal view point from
that presumptive responsibility for the negligence of its servants, imposed by Article
1903 of the Civil Code (Art. 2180 of the new), which can be rebutted by proof of the
exercise of due care in their selection or supervision. Article 1903 is not applicable
to obligation arising EX CONTRACTU, but only to extra-contractual obligations or — to
use the technical form of expression, that article, relates only to CULPA AQUILIANA and
not to CULPA CONTRACTUAL.

The decisions in the cases of Castro vs. Acro Taxicab (82 Phil., 359, 46 Off. Gaz., Na. 5,
p. 2023); Lilius et al. vs. Manila Railroad, (59 Phil. 758) and others, wherein moral damages,
are awarded to the plaintiffs, are not applicable to the case at bar because said decisions
were rendered before the effectivity of the new Civil Code (August 30, 1950) and for the
further reason that the complaints filed therein were based on different causes of action.

In view of the foregoing the sum of P2,000 awarded as moral damages by the trial Court has
to be eliminated, for under the law it is not a compensation awardable in a case like the one
at bar.

As to plaintiff's demand for P5,000 as attorney's fees, the Civil Code provides the following:

ART, 2208. In the absence of stipulation, attorney's fees and expenses of litigation,
other than judicial costs, cannot be recovered, except:

(1) When exemplary damages are awarded;

(2) When the defendant's act or omission has compelled the plaintiff to litigate with
third persons or to incur expenses to protect his interest;

(3) In criminal cases of malicious prosecution against the plaintiff;

(4) In case of a clearly unfounded civil action or proceeding against the plaintiff;

(5) Where the defendant acted in gross and evident had faith in refusing to satisfy the
plaintiff's plainly valid, just and demandable claim;

(6) In actions for legal support;

(7) In actions for the recovery of wages of household helpers, laborers and skilled
workers;

(8) in actions for indemnity under workmen's compensation and employers liability laws;

(9) In a separate civil action to recover civil liability arising from a crime;

(10) When at least double judicial costs are awarded;

(11) In any other case where the court deems it just and equitable that attorney's fees
and expenses of litigation should be recovered.

In all cases, the attorney's fees and expenses of litigation must be reasonable.

The present case does not come under any of exceptions enumerated in the preceding article,
specially of paragraph 2 thereof, because defendant's failure to meet its responsibility was
not the plaintiff to litigate or to incur expenses to protect his interests. The present
action was instituted because plaintiff an exorbitant amount for damages (P60,000) and
naturally the defendant did not and could not yield to such demand. This is neither a case
that comes under paragraph 11 of Article 2208 because the Lower Court did not deem it just
and equitable to award any amount for attorney's fees. As We agree with the trial Judge on
this point, We cannot declare that he erred for not awarding to plaintiff any such fees in
this case.

Coming now to the appeal of the defendant, the Court, after due consideration of the evidence
appearing on record:

(1) Approves the award of P700 for medicine, doctors' fees and transportation expenses;

(2) Reduces the award of P3,000 as attorney's fees to the sum of P2,000, as Manolo Maddela,
defendant in Criminal Case No. 364 of the Court of First Instance of Nueva Vizcaya testified
that he has already paid to plaintiff part of the latter's fees of P3,000, the amount of
which was not disclosed, though it was incumbent upon the plaintiff to establish how much he
had been paid of said fees;

(3) Approves the award of P200 as unearned professional fees as attorney for the defendant
in Civil Case No. 238191 of the Municipal Court of Manila whom plaintiff was unable to
represent, and for the latter's failure to take the deposition of one Agripina Angrepan due
to the automobile accident referred to in this case.
Before closing this decision We deem it convenient to quote the following passage of
defendant's brief as appellant:

Realizing its obligation under its contract of carriage with the plaintiff, and because
the facts of the case, as have been shown, mark it as more proper for the Municipal
Court only, the defendant, to avoid the expense and time of litigation, offered to
settle the case amicably with plaintiff, but the latter refused and insisted on his
demand for P72,050.20 (Exhibit K) as the only basis for settlement, thus adding a
clearly petty case to the already overflowing desk of the Honorable Members of this
Court.

We admire and respect at all times a man for standing up and fighting for his rights,
and when said right consists in injuries sustained due to a breach of a contract of
carriage with us, sympathy and understanding are added thereto. But when a person starts
demanding P72,050.20 for a solitary bruise and sprain, injuries for which the trial
court, even at its generous although erroneous best, could only grant P5,900, then
respect and sympathy give way to something else. It is time to fight, for, in our humble
opinion, there is nothing more loathsome nor truly worthy of condemnation than one who
uses his injuries for other purposes than just rectification. If plaintiff's claim is
granted, it would be a blessing, not a misfortune, to be injured. (p. 34-35)

This case was instituted by a lawyer who, as an officer of the courts, should be the first
in helping Us in the administration of justice, and after going over the record of this case,
we do not hesitate to say that the demand of P72,050.20 for a subluxation of the right humerus
bone and an insignificant contusion in the chest, has not even the semblance of reasonableness.
As a matter of fact, Dr. Aguilar himself said that the x-ray plates (Exhibits A, Band C)
" did not show anything significant except that it shows a slight subluxation of the right
shoulder, and that there is a suspicious fracture", which ultimately he admitted not to exist.
The plaintiff himself must have felt embarrassed by his own attitude when after receiving
defendant's brief as appellant, he makes in his brief as appellee the categorical statement
that he DOES NOT NOW INSIST NOR PRETEND IN THE LEAST to Collect from the defendant all the
damages he had claimed in his complaint, but instead he is submitting his case to the sound
discretion of the Honorable Court for the award of a reasonable and equitable damages allowable
by law, to compensate the plaintiff of the suffering and losses he had undergone and incurred
of the accident oftentimes mentioned in this brief in which plaintiff was injured" (p. 17-
18).This acknowledgment comes too late, for plaintiff has already deprived the Court of
Appeals of the occasion to exercise its appellate jurisdiction over this case which he
recklessly dumped to this Court. We certainly cannot look with at favor at his attitude of
plaintiff.

WHEREFORE, the decision appealed from is hereby modified by reducing the amount awarded as
professional fees from P3,000 to P2,000 and by eliminating the moral damages of P2,000 awarded
by the Lower Court to the plaintiff. Said decision is in all other respects affirmed, without
pronouncement as to costs. It is so ordered.

-------------------------------------------------------------------------------------------

EN BANC

G.R. No. L-10605 June 30, 1958

PRECILLANO NECESITO, ETC., plaintiff-appellant,

vs.
NATIVIDAD PARAS, ET AL., defendants-appellees.

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

G.R. No. L-10606 June 30, 1958

GERMAN NECESITO, ET AL., plaintiffs-appellants,

vs.
NATIVIDAD PARAS, ET AL., defendants-appellees.

These cases involve ex contractu against the owners and operators of the common carrier known
as Philippine Rabbit Bus Lines, filed by one passenger, and the heirs of another, who injured
as a result of the fall into a river of the vehicle in which they were riding.
In the morning of January 28, 1964, Severina Garces and her one-year old son, Precillano
Necesito, carrying vegetables, boarded passenger auto truck or bus No. 199 of the Philippine
Rabbit Bus Lines at Agno, Pangasinan. The passenger truck, driven by Francisco Bandonell,
then proceeded on its regular run from Agno to Manila. After passing Mangatarem, Pangasinan
truck No. 199 entered a wooden bridge, but the front wheels swerved to the right; the driver
lost control, and after wrecking the bridge's wooden rails, the truck fell on its right side
into a creek where water was breast deep. The mother, Severina Garces, was drowned; the son,
Precillano Necesito, was injured, suffering abrasions and fracture of the left femur. He was
brought to the Provincial Hospital at Dagupan, where the fracture was set but with fragments
one centimeter out of line. The money, wrist watch and cargo of vegetables were lost.

Two actions for damages and attorney's fees totalling over P85,000 having been filed in the
Court of First Instance of Tarlac (Cases Nos. 908 and 909) against the carrier, the latter
pleaded that the accident was due to "engine or mechanical trouble" independent or beyond the
control of the defendants or of the driver Bandonell.

After joint trial, the Court of First Instance found that the bus was proceeding slowly due
to the bad condition of the road; that the accident was caused by the fracture of the right
steering knuckle, which was defective in that its center or core was not compact but "bubbled
and cellulous", a condition that could not be known or ascertained by the carrier despite the
fact that regular thirty-day inspections were made of the steering knuckle, since the steel
exterior was smooth and shiny to the depth of 3/16 of an inch all around; that the knuckles
are designed and manufactured for heavy duty and may last up to ten years; that the knuckle
of bus No. 199 that broke on January 28, 1954, was last inspected on January 5, 1954, and was
due to be inspected again on February 5th. Hence, the trial court, holding that the accident
was exclusively due to fortuitous event, dismissed both actions. Plaintiffs appealed directly
to this Court in view of the amount in controversy.

We are inclined to agree with the trial court that it is not likely that bus No. 199 of the
Philippine Rabbit Lines was driven over the deeply rutted road leading to the bridge at a
speed of 50 miles per hour, as testified for the plaintiffs. Such conduct on the part of the
driver would have provoked instant and vehement protest on the part of the passengers because
of the attendant discomfort, and there is no trace of any such complaint in the records. We
are thus forced to assume that the proximate cause of the accident was the reduced strength
of the steering knuckle of the vehicle caused by defects in casting it. While appellants hint
that the broken knuckle exhibited in court was not the real fitting attached to the truck at
the time of the accident, the records they registered no objection on that ground at the
trial below. The issue is thus reduced to the question whether or not the carrier is liable
for the manufacturing defect of the steering knuckle, and whether the evidence discloses that
in regard thereto the carrier exercised the diligence required by law (Art. 1755, new Civil
Code).

ART. 1755. A common carrier is bound to carry the passengers safely as far as human
care and foresight can provide, using the utmost diligence of very cautious persons,
with a due regard for the all the circumstances.

It is clear that the carrier is not an insurer of the passengers' safety. His liability rests
upon negligence, his failure to exercise the "utmost" degree of diligence that the law
requires, and by Art. 1756, in case of a passenger's death or injury the carrier bears the
burden of satisfying the court that he has duly discharged the duty of prudence required. In
the American law, where the carrier is held to the same degree of diligence as under the new
Civil Code, the rule on the liability of carriers for defects of equipment is thus expressed:
"The preponderance of authority is in favor of the doctrine that a passenger is entitled to
recover damages from a carrier for an injury resulting from a defect in an appliance purchased
from a manufacturer, whenever it appears that the defect would have been discovered by the
carrier if it had exercised the degree of care which under the circumstances was incumbent
upon it, with regard to inspection and application of the necessary tests. For the purposes
of this doctrine, the manufacturer is considered as being in law the agent or servant of the
carrier, as far as regards the work of constructing the appliance. According to this theory,
the good repute of the manufacturer will not relieve the carrier from liability" (10 Am. Jur.
205, s, 1324; see also Pennsylvania R. Co. vs. Roy, 102 U. S. 451; 20 L. Ed. 141; Southern
R. Co. vs. Hussey, 74 ALR 1172; 42 Fed. 2d 70; and Ed Note, 29 ALR 788; Ann. Cas. 1916E 929).

The rationale of the carrier's liability is the fact that the passenger has neither choice
nor control over the carrier in the selection and use of the equipment and appliances in use
by the carrier. Having no privity whatever with the manufacturer or vendor of the defective
equipment, the passenger has no remedy against him, while the carrier usually has. It is but
logical, therefore, that the carrier, while not in insurer of the safety of his passengers,
should nevertheless be held to answer for the flaws of his equipment if such flaws were at
all discoverable. Thus Hannen, J., in Francis vs. Cockrell, LR 5 Q. B. 184, said:

In the ordinary course of things, the passenger does not know whether the carrier has
himself manufactured the means of carriage, or contracted with someone else for its
manufacture. If the carrier has contracted with someone else the passenger does not
usually know who that person is, and in no case has he any share in the selection. The
liability of the manufacturer must depend on the terms of the contract between him and
the carrier, of which the passenger has no knowledge, and over which he can have no
control, while the carrier can introduce what stipulations and take what securities he
may think proper. For injury resulting to the carrier himself by the manufacturer's
want of care, the carrier has a remedy against the manufacturer; but the passenger has
no remedy against the manufacturer for damage arising from a mere breach of contract
with the carrier . . . . Unless, therefore, the presumed intention of the parties be
that the passenger should, in the event of his being injured by the breach of the
manufacturer's contract, of which he has no knowledge, be without remedy, the only way
in which effect can be given to a different intention is by supposing that the carrier
is to be responsible to the passenger, and to look for his indemnity to the person whom
he selected and whose breach of contract has caused the mischief. (29 ALR 789)

And in the leading case of Morgan vs. Chesapeake & O. R. Co. 15 LRA (NS) 790, 16 Ann. Cas.
608, the Court, in holding the carrier responsible for damages caused by the fracture of a
car axle, due to a "sand hole" in the course of moulding the axle, made the following
observations.

The carrier, in consideration of certain well-known and highly valuable rights granted
to it by the public, undertakes certain duties toward the public, among them being to
provide itself with suitable and safe cars and vehicles in which carry the traveling
public. There is no such duty on the manufacturer of the cars. There is no reciprocal
legal relation between him and the public in this respect. When the carrier elects to
have another build its cars, it ought not to be absolved by that facts from its duty to
the public to furnish safe cars. The carrier cannot lessen its responsibility by shifting
its undertaking to another's shoulders. Its duty to furnish safe cars is side by side
with its duty to furnish safe track, and to operate them in a safe manner. None of its
duties in these respects can be sublet so as to relieve it from the full measure
primarily exacted of it by law. The carrier selects the manufacturer of its cars, if it
does not itself construct them, precisely as it does those who grade its road, and lay
its tracks, and operate its trains. That it does not exercise control over the former
is because it elects to place that matter in the hands of the manufacturer, instead of
retaining the supervising control itself. The manufacturer should be deemed the agent
of the carrier as respects its duty to select the material out of which its cars and
locomotive are built, as well as in inspecting each step of their construction. If there
be tests known to the crafts of car builders, or iron moulders, by which such defects
might be discovered before the part was incorporated into the car, then the failure of
the manufacturer to make the test will be deemed a failure by the carrier to make it.
This is not a vicarious responsibility. It extends, as the necessity of this business
demands, the rule of respondeat superior to a situation which falls clearly within its
scope and spirit. Where an injury is inflicted upon a passenger by the breaking or
wrecking of a part of the train on which he is riding, it is presumably the result of
negligence at some point by the carrier. As stated by Judge Story, in Story on Bailments,
sec. 601a: "When the injury or damage happens to the passenger by the breaking down or
overturning of the coach, or by any other accident occurring on the ground, the
presumption prima facie is that it occurred by the negligence of the coachmen, and onus
probandi is on the proprietors of the coach to establish that there has been no
negligence whatever, and that the damage or injury has been occasioned by inevitable
casualty, or by some cause which human care and foresight could not prevent; for the
law will, in tenderness to human life and limb, hold the proprietors liable for the
slightest negligence, and will compel them to repel by satisfactory proofs every
imputation thereof." When the passenger has proved his injury as the result of a breakage
in the car or the wrecking of the train on which he was being carried, whether the
defect was in the particular car in which he was riding or not, the burden is then cast
upon the carrier to show that it was due to a cause or causes which the exercise of the
utmost human skill and foresight could not prevent. And the carrier in this connection
must show, if the accident was due to a latent defect in the material or construction
of the car, that not only could it not have discovered the defect by the exercise of
such care, but that the builders could not by the exercise of the same care have
discovered the defect or foreseen the result. This rule applies the same whether the
defective car belonged to the carrier or not.
In the case now before us, the record is to the effect that the only test applied to the
steering knuckle in question was a purely visual inspection every thirty days, to see if any
cracks developed. It nowhere appears that either the manufacturer or the carrier at any time
tested the steering knuckle to ascertain whether its strength was up to standard, or that it
had no hidden flaws would impair that strength. And yet the carrier must have been aware of
the critical importance of the knuckle's resistance; that its failure or breakage would result
in loss of balance and steering control of the bus, with disastrous effects upon the
passengers. No argument is required to establish that a visual inspection could not directly
determine whether the resistance of this critically important part was not impaired. Nor has
it been shown that the weakening of the knuckle was impossible to detect by any known test;
on the contrary, there is testimony that it could be detected. We are satisfied that the
periodical visual inspection of the steering knuckle as practiced by the carrier's agents did
not measure up to the required legal standard of "utmost diligence of very cautious persons"
— "as far as human care and foresight can provide", and therefore that the knuckle's failure
can not be considered a fortuitous event that exempts the carrier from responsibility
(Lasam vs. Smith, 45 Phil. 657; Son vs. Cebu Autobus Co., 94 Phil., 892.)

It may be impracticable, as appellee argues, to require of carriers to test the strength of

each and every part of its vehicles before each trip; but we are of the opinion that a due
regard for the carrier's obligations toward the traveling public demands adequate periodical
tests to determine the condition and strength of those vehicle portions the failure of which
may endanger the safe of the passengers.

As to the damages suffered by the plaintiffs, we agree with appellee that no allowance may
be made for moral damages, since under Article 2220 of the new Civil Code, in case of suits
for breach of contract, moral damages are recoverable only where the defendant acted
fraudulently or in bad faith, and there is none in the case before us. As to exemplary
damages, the carrier has not acted in a "wanton, fraudulent, reckless, oppressive or
malevolent manner" to warrant their award. Hence, we believe that for the minor Precillano
Necesito (G. R. No. L-10605), an indemnity of P5,000 would be adequate for the abrasions and
fracture of the femur, including medical and hospitalization expenses, there being no evidence
that there would be any permanent impairment of his faculties or bodily functions, beyond the
lack of anatomical symmetry. As for the death of Severina Garces (G. R. No. L-10606) who was
33 years old, with seven minor children when she died, her heirs are obviously entitled to
indemnity not only for the incidental loses of property (cash, wrist watch and merchandise)
worth P394 that she carried at the time of the accident and for the burial expenses of P490,
but also for the loss of her earnings (shown to average P120 a month) and for the deprivation
of her protection, guidance and company. In our judgment, an award of P15,000 would be
adequate (cf Alcantara vs. Surro, 49 Off. Gaz. 2769; 93 Phil., 472).

The low income of the plaintiffs-appellants makes an award for attorney's fees just and
equitable (Civil Code, Art. 2208, par. 11). Considering that he two cases filed were tried
jointly, a fee of P3,500 would be reasonable.

In view of the foregoing, the decision appealed from is reversed, and the defendants-appellees
are sentenced to indemnify the plaintiffs-appellants in the following amounts: P5,000 to
Precillano Necesito, and P15,000 to the heirs of the deceased Severina Garces, plus P3,500
by way of attorney's fees and litigation expenses. Costs against defendants-appellees. So
ordered.

R E S O L U T I O N

September 11, 1958

REYES, J. B. L., J.:

Defendants-appellees have Submitted a motion asking this Court to reconsider its decision of
June 30, 1958, and that the same be modified with respect to (1) its holding the carrier
liable for the breakage of the steering knuckle that caused the autobus No. 199 to overturn,
whereby the passengers riding in it were injured; (2) the damages awarded, that appellees
argue to be excessive; and (3) the award of attorneys' fees.

(1) The rule prevailing in this jurisdiction as established in previous decisions of this
Court, cited in our main opinion, is that a carrier is liable to its passengers for damages
caused by mechanical defects of the conveyance. As early as 1924, in Lasam vs. Smith, 45
Phil. 659 this Court ruled:

As far as the record shows, the accident was caused either by defects in the
automobile or else through the negligence of its driver. That is not caso fortuito.

And in Son vs. Cebu Autobus Company, 94 Phil., 892, this Court held a common carrier liable
in damages to passenger for injuries cause by an accident due to the breakage of a faulty
drag-link spring.

It can be seen that while the courts of the United States are at variance on the question of
a carrier's liability for latent mechanical defects, the rule in this jurisdiction has been
consistent in holding the carrier responsible. This Court has quoted from American and English
decisions, not because it felt bound to follow the same, but merely in approval of the
rationale of the rule as expressed therein, since the previous Philippine cases did not
enlarge on the ideas underlying the doctrine established thereby.

The new evidence sought to be introduced do not warrant the grant of a new trial, since the
proposed proof available when the original trial was held. Said evidence is not newly
discovered.

(2) With regard to the indemnity awarded to the child Precilliano Necesito, the injuries
suffered by him are incapable of accurate pecuniary estimation, particularly because the full
effect of the injury is not ascertainable immediately. This uncertainty, however, does not
preclude the right to an indemnity, since the injury is patent and not denied (Civil Code,
Art. 2224). The reasons behind this award are expounded by the Code Commission in its report:

There are cases where from the nature of the case, definite proof of pecuniary loss
cannot be offered, although the court is convinced that there has been such loss. For
instance, injury to one's commercial credit or to the goodwill of a business firm is
often hard to show with certainty in terms of money. Should damages be denied for that
reason? The judge should be empowered to calculate moderate damages in such cases,
rather than that the plaintiff should suffer, without redress, from the defendant's
wrongful act." (Report of the Code Commission, p. 75)

In awarding to the heirs of the deceased Severina Garces an indemnity for the loss of her
"guidance, protection and company," although it is but moral damage, the Court took into
account that the case of a passenger who dies in the course of an accident, due to the
carrier's negligence constitutes an exception to the general rule. While, as pointed out in
the main decision, under Article 2220 of the new Civil Code there can be no recovery of moral
damages for a breach of contract in the absence of fraud malice or bad faith, the case of a
violation of the contract of carriage leading to a passenger's death escapes this general
rule, in view of Article 1764 in connection with Article 2206, No. 3 of the new Civil Code.

ART. 1764. Damages in cases comprised in this Section shall be awarded in accordance
with Title XVIII of this Book, concerning Damages. Article 2206 shall also apply to the
death of a passenger caused by the breach of contract by a comman carrier. ART. 2206.
. . .

(3) The spouse, legitimate and eligimate descendants and ascendants of the deceased may
demand moral damages for mental anguish by reason of the death of the deceased.

Being a special rule limited to cases of fatal injuries, these articles prevail over the
general rule of Art. 2220. Special provisions control general ones (Lichauco & Co. vs.
Apostol, 44 Phil. 138; Sancio vs. Lizarraga, 55 Phil. 601).

It thus appears that under the new Civil Code, in case of accident due to a carrier's
negligence, the heirs of a deceased passenger may recover moral damages, even though a
passenger who is injured, but manages to survive, is not entitled to them. There is, therefore,
no conflict between our main decision in the instant case and that of Cachero vs. Manila
Yellow Taxi Cab Co., 101 Phil., 523, where the passenger suffered injuries, but did not lose
his life.

(3) In the Cachero case this Court disallowed attorneys' fees to the injured plaintiff because
the litigation arose out of his exaggerated and unreasonable deeds for an indemnity that was
out of proportion with the compensatory damages to which he was solely entitled. But in the
present case, plaintiffs' original claims can not be deemed a priori wholly unreasonable,
since they had a right to indemnity for moral damages besides compensatory ones, and moral
damages are not determined by set and invariable bounds.

Neither does the fact that the contract between the passengers and their counsel was on a
contingent basis affect the former's right to counsel fees. As pointed out for appellants,
the Court's award is an party and not to counsel. A litigant who improvidently stipulate
higher counsel fees than those to which he is lawfully entitled, does not for that reason
earn the right to a larger indemnity; but, by parity of reasoning, he should not be deprived
of counsel fees if by law he is entitled to recover them.

We find no reason to alter the main decision heretofore rendered. Ultimately, the position
taken by this Court is that a common carrier's contract is not to be regarded as a game of
chance wherein the passenger stakes his limb and life against the carrier's property and
profits.

Wherefore, the motion for reconsideration is hereby denied. So ordered.

SECOND DIVISION

G.R. No. 141761 July 28, 2006

BANKARD, INC., petitioner,

vs.
DR. ANTONIO NOVAK FELICIANO, respondent.

D E C I S I O N

Before us is a petition for review under Rule 45 of the May 31, 1999 Decision1 and January
28, 2000 Resolution2 of 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.

11
Footnotes Far East Bank and Trust Company v. Court of Appeals, supra at
1
Rollo, pp. 53-62. 675.
2 12
Id. at 64. Philippine Telegraph and Telephone Corporation v. Court of
3
Id. at 65-73. Appeals, G.R. No. 139268, September 3, 2002, 388 SCRA
4
Exhibit "2." 270, citing Expertravel & Tours, Inc. v. Court of Appeals, G.R. No.
5
Teletypewriter exchange. 130030, June 25, 1999, 309 SCRA 141, and Integrated Packaging
6
Supra note 3. Corporation v. Court of Appeals, G.R. No. 115117, June 8, 2000, 333
7
Supra note 1. SCRA 170; Bank of the Philippine Islands v. Leobrera, G.R. No.
8
Far East Bank and Trust Company v. Court of Appeals, G.R. No. 137148, January 30, 2002, 375 SCRA 268.
13
108164, February 23, 1995, 241 SCRA 671. Also Philippine National See the "Declaration of Policy," Sec. 2, R.A. No. 8484 entitled "An
Bank v. Pike, G.R. No. 157845, September 20, 2005, 470 SCRA Act Regulating the Issuance and Use of Access Devices, Prohibiting
328 and Paguyo v. Astorga, G.R. No. 130982, September 16, 2005, Fraudulent Acts Committed Relative Thereto, Providing Penalties
470 SCRA 33. and For Other Purposes."
9 14
Id. at 675. See also GF Equity, Inc. v. Valenzona, G.R. No. 156841, See Philippine Telegraph and Telephone Corporation v. Court of
June 30, 2005, 462 SCRA 466. Appeals, G.R. No. 139268, September 3, 2002, 388 SCRA 270; Bank
10
Fores v. Miranda, 105 Phil. 266, 276 (1959). of the Philippine Islands v. Leobrera, G.R. No. 137148, January 30,
 16
2002, 375 SCRA 268, citing Integrated Packaging Corporation v. Del Rosario v. Court of Appeals, G.R. No. 118325, January 29,
Court of Appeals, G.R. No. 115117, June 8, 2000, 333 SCRA 170. 1997, 267 SCRA 158.
15 17
Singson v. Court of Appeals, G.R. No. 119995, November 18, See paragraphs 2 and 11, Art. 2208, Civil Code.
1997, 282 SCRA 149.

THIRD DIVISION

G.R. No. 84281 May 27, 1994

CITYTRUST BANKING CORPORATION, petitioner,

vs.
THE INTERMEDIATE APPELLATE COURT and EMME HERRERO, respondents.

This case emanated from a complaint filed by private respondent Emme Herrero for damages
against petitioner Citytrust Banking Corporation. In her complaint, private respondent averred
that she, a businesswoman, made regular deposits, starting September of 1979, with petitioner
Citytrust Banking Corporation at its Burgos branch in Calamba, Laguna. On 15 May 1980, she
deposited with petitioner the amount of Thirty One Thousand Five Hundred Pesos (P31,500.00),
in cash, in order to amply cover six (6) postdated checks she issued, viz:

Check No. Amount

007383 — P1,507.00
007384 — 1,262.00
007387 — 4,299.00
007387 — 2,204.00
007492 — 6,281.00
007400 — 4,716.00

When presented for encashment upon maturity, all the checks were dishonored due to
"insufficient funds." The last check No. 007400, however, was personally redeemed by
private respondent in cash before it could be redeposited.

Petitioner, in its answer, asserted that it was due to private respondent's fault that her
checks were dishonored. It averred that instead of stating her correct account number, i.e.,
29000823, in her deposit slip, she inaccurately wrote 2900823.

The Regional Trial Court (Branch XXXIV) of Calamba, Laguna, on

27 February 1984, dismissed the complaint for lack of merit; thus:

WHEREFORE, judgment is hereby rendered in favor of the defendant and against the
plaintiff, DISMISSING the complaint for lack of merit, plaintiff is hereby adjudged
to pay the defendant reasonable attorney's fee in the amount of FIVE THOUSAND
PESOS (P5,000.00) plus cost of suit.

Private respondent went to the Court of Appeals, which found the appeal meritorious. Hence,
it rendered judgment, on 15 July 1988, reversing the trial court's decision. The appellate
court ruled:
 WHEREFORE, the judgment appealed from is REVERSED and a new one entered thereby
ordering defendant to pay plaintiff nominal damages of P2,000.00, temperate and
moderate damages of P5,000.00, and attorney's fees of P4,000.00.

The counterclaim of defendant is dismissed for lack of merit, with costs against
him.

Petitioner Citytrust Banking Corporation is now before us in this petition for review
on certiorari.

Petitioner bank concedes that it is its obligation to honor checks issued by private respondent
which are sufficiently funded, but, it contends, private respondent has also the duty to use
her account in accordance with the rules of petitioner bank to which she has contractually
acceded. Among such rules, contained in its "brochures" governing current account deposits,
is the following printed provision:

In making a deposit . . . kindly insure accuracy in filing said deposit slip forms
as we hold ourselves free of any liability for loss due to an incorrect account
number indicated in the deposit slip although the name of the depositor is
correctly written.

Exactly the same issue was addressed by the appellate court, which, after its deliberations,
made the following findings and conclusions:1

We cannot uphold the position of defendant. For, even if it be true that there
was error on the part of the plaintiff in omitting a "zero" in her account number,
yet, it is a fact that her name, "Emme E. Herrero", is clearly written on said
deposit slip (Exh. "B"). This is controlling in determining in whose account the
deposit is made or should be posted. This is so because it is not likely to commit
an error in one's name than merely relying on numbers which are difficult to
remember, especially a number with eight (8) digits as the account numbers of
defendant's depositors. We view the use of numbers as simply for the convenience
of the bank but was never intended to disregard the real name of its depositors.
The bank is engaged in business impressed with public interest, and it is its duty
to protect in return its many clients and depositors who transact business with
it. It should not be a matter of the bank alone receiving deposits, lending out
money and collecting interests. It is also its obligation to see to it that all
funds invested with it are properly accounted for and duly posted in its ledgers.

In the case before Us, We are not persuaded that defendant bank was not free from
blame for the fiasco. In the first place, the teller should not have accepted
plaintiff's deposit without correcting the account number on the deposit slip
which, obviously, was erroneous because, as pointed out by defendant, it contained
only seven (7) digits instead of eight (8). Second, the complete name of plaintiff
depositor appears in bold letters on the deposit slip (Exh. "B"). There could be
no mistaking in her name, and that the deposit was made in her name, "Emma E.
Herrero." In fact, defendant's teller should not have fed her deposit slip to the
computer knowing that her account number written thereon was wrong as it contained
only seven (7) digits. As it happened, according to defendant, plaintiff's deposit
had to be consigned to the suspense accounts pending verification. This, indeed,
could have been avoided at the first instance had the teller of defendant bank
performed her duties efficiently and well. For then she could have readily detected
that the account number in the name of "Emma E. Herrero" was erroneous and would
be rejected by the computer. That is, or should be, part of the training and
standard operating procedure of the bank's employees. On the other hand, the
depositors are not concerned with banking procedure. That is the responsibility
of the bank and its employees. Depositors are only concerned with the facility of
depositing their money, earning interest thereon, if any, and withdrawing
therefrom, particularly businessmen, like plaintiff, who are supposed to be always
"on-the-go". Plaintiff's account is a "current account" which should immediately
be posted. After all, it does not earn interest. At least, the forbearance should
be commensurated with prompt, efficient and satisfactory service.

Bank clients are supposed to rely on the services extended by the bank, including
the assurance that their deposits will be duly credited them as soon as they are
made. For, any delay in crediting their account can be embarrassing to them as in
the case of plaintiff.
 We agree with plaintiff that —

. . . even in computerized systems of accounts, ways and means are

available whereby deposits with erroneous account numbers are properly
credited depositor's correct account numbers. They add that failure
on the part of the defendant to do so is negligence for which they are
liable. As proof thereof plaintiff alludes to five particular incidents
where plaintiff admittedly wrongly indicated her account number in her
deposit slips
(Exhs. "J", "L", "N", "O" and "P"), but were nevertheless properly
credited her deposit (pp. 4-5, Decision).

We have already ruled in Mundin v. Far East Bank & Trust Co., AC-G.R. CV No.
03639, prom. Nov. 2, 1985, quoting the court a quo in an almost identical set of
facts, that —

Having accepted a deposit in the course of its business transactions,

it behooved upon defendant bank to see to it and without recklessness
— that the depositor was accurately credited therefor. To post a
deposit in somebody else's name despite the name of the depositor
clearly written on the deposit slip is indeed sheer negligence which
could have easily been avoided if defendant bank exercised due
diligence and circumspection in the acceptance and posting of
plaintiff's deposit.

We subscribe to the above disquisitions of the appellate court. In Simex International

(Manila), Inc. vs. Court of Appeals, 183 SCRA 360, reiterated in Bank of Philippine Islands
vs. Intermediate Appellate Court, 206 SCRA 408, we similarly said, in cautioning depository
banks on their fiduciary responsibility, that —

In every case, the depositor expects the bank to treat his account with utmost
fidelity, whether such account consists only of a few hundred pesos or of millions.
The bank must record every single transaction accurately, down to the last centavo,
and as promptly as possible. This has to be done if the account is to reflect at
any given time the amount of money the depositor can dispose of as he sees fit,
confident that the bank will deliver it as and to whomever he directs. A blunder
on the part of the bank, such as the dishonor of a check without good reason, can
cause the depositor not a little embarrassment if not also financial loss and
perhaps even civil and criminal litigation.

The point is that as a business affected with public interest and because of the
nature of its functions, the bank is under obligation to treat the accounts of
its depositors with meticulous care, always having in mind the fiduciary nature
of their relationship.

We agree with petitioner, however, that it is wrong to award, along with nominal damages,
temperate or moderate damages. The two awards are incompatible and cannot be granted
concurrently. Nominal damages are given in order that a right of the plaintiff, 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 by him (Art. 2221, New Civil
Code; Manila Banking Corp. vs. Intermediate Appellate Court, 131 SCRA 271). Temperate or
moderate damages, which are more than nominal but less than compensatory damages, on the
other hand, 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 reasonable certainty (Art.
2224, New Civil Code).

In the instant case, we also find need for vindicating the wrong done on private respondent,
and we accordingly agree with the Court of Appeals in granting to her nominal damages but not
in similarly awarding temperate or moderate damages.

WHEREFORE, the appealed decision is MODIFIED by deleting the award of temperate or moderate
damages. In all other respects, the appellate court's decision is AFFIRMED. No costs in this
instance.

SO ORDERED.

#Footnotes
1 Penned by Mr. Justice Josue N. Bellosillo, concurred in by Justices Felipe B. Kalalo and Regina G. Ordoñez-Benitez.

EN BANC
[G.R. No. 137842. August 23, 2001]
PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. DANILO CATUBIG y HORIO, accused-
appellant.

D E C I S I O N
In an information, dated 29 January 1998, the accused, Danilo Catubig y Horio, was charged
with the crime of rape before the Regional Trial Court, Branch 78, of Malolos, Bulacan; viz:

The undersigned Asst. Provincial Prosecutor on complaint of the offended party Dannilyn
Catubig y Lazaro accuses Danilo Catubig y Horio of the crime of rape, penalized under the
provisions of Art. 335 of the Revised Penal Code, committed as follows:

That on or about the 27th day of November, 1997, in the municipality of San Jose del Monte,
province of Bulacan, Philippines, and within the jurisdiction of this Honorable Court, the
above-named accused, did then and there wilfully, unlawfully and feloniously, by means of
force, threats and intimidation and with lewd design have carnal knowledge of the said
offended party against her will.[1]

When arraigned on 16 July 1998, accused Catubig, represented by counsel de oficio, pleaded
not guilty to the offense charged; forthwith, trial ensued.
The case for the prosecution was laid bare in Appellees Brief submitted by the Office of
the Solicitor General.

On November 27, 1997, at around 4:00 oclock in the afternoon, private complainant Dannilyn
Catubig, who was born on August 9, 1985, and her four (4) younger siblings were watching
television in the sala of their house located at Sunlife Subdivision, San Jose del Monte,
Bulacan.

After an hour, Dannilyns father, herein appellant Danilo Catubig, arrived and told Dannilyns
siblings to proceed, as in fact they did proceed, to her aunts house which is just located
nearby. Thereafter, appellant told Dannilyn to go inside a room and to lie down on the
bed. After Dannilyn had complied, appellant removed Dannilyns shorts and panty, while
appellant, after removing his brief and t-shirt, [laid] on top of Dannilyn. Afraid of
appellant who beat and raped her in the past, Dannilyn was not able to resist appellant who
succeeded in inserting his penis into Dannilyns vagina.

However, Dannilyns aunt, who got suspicious of what appellant was doing to Dannilyn, informed
the latters mother, Jocelyn Catubig, about the said suspicion. Thus, when confronted by her
mother, Dannilyn was forced to reveal that she was indeed raped by appellant. The sexual
assault was reported to the San Jose del Monte Police Station where Dannilyns sworn statement
was subsequently taken on December 3, 1997.
Upon the request of the police authorities, Dannilyn was examined on December 1, 1997 by Dr.
Wilfredo E. Tiera, Medico-Legal Officer of the National Bureau of Investigation, who found
out that Dannilyns healed laceration in the hymen was caused by sexual intercourse.[2]

The accused denied the accusation against him. He claimed that the rape charge was brought
about only because of the ill-will between him, on the one hand, and his wife and daughter
Dannilyn, on the other hand, following a quarrel. On 27 November 1997, he asseverated, he had
fought with his wife, hitting her and his daughter. His wife then threatened him that it was
the last time that she would allow him to harm her and that he would regret what he did. True
to her foreboding, the next day, he was arrested and a complaint for rape was filed against
him.
On 11 December 1998, the Regional Trial Court rendered a decision holding the accused
guilty of the crime of rape; it adjudged:

WHEREFORE, in view of the foregoing, the Court hereby finds accused DANILO CATUBIG Y HORIO
GUILTY beyond reasonable doubt of the crime of Rape defined and penalized under Article 335
of the Revised Penal Code, as amended by Republic Act No. 7659, and hereby sentences him to
suffer the penalty of DEATH, and to pay private complainant Dannilyn Catubig the amount of
Fifty Thousand Pesos (P50,000.00) as moral damages.[3]

With the imposition of the death penalty by the trial court, the records were elevated to
this Court for automatic review.
In his brief, appellant submitted thusly:

1. The lower court erred in finding the accused guilty of the crime of rape in violation of
Article 335 of the Revised Penal Code as amended by Republic Act 7659.

2. The lower court erred in not taking into consideration the fact that the information was
defective for failure to state that the accused is the father of the victim and that the
victim was under 18 years [of] age at the time of the commission of the alleged rape.[4]

Private complainant Dannilyn Catubig narrated how she was repeatedly abused by her own
father; she testified:
Q Now, after your sisters and brother [went] to the house of your aunt, what did your
father do?
A He instructed me to go inside the room.
Q How many rooms were there in your house?
A Only one.
Q Did you go to the room per instruction?
A Yes, sir.
Q And what happened inside the room?
A My father entered the room.
Q And when your father entered the room, what did he do next?
A He removed my short [pants] and my panty.
Q What was your position at that time when your father removed your short pants and panty?
A I was lying.
Q When you entered the room, did you lie immediately?
A No, I just sat.
Q How come as you claimed a while ago, you were lying when your father removed your short
pants and panty?
A Once I entered the room, I was sitting then he removed my short [pants] and panty.
Q You said upon entering the room, you sat and while sitting, all of a sudden your father
removed your short pants and panty while already lying at that time, how come you were
lying when according to you, you were sitting inside the room?
A I was sitting first and he instructed me to lie down.
Q While you were sitting inside the room and you were instructed by your father to lie,
what comes to your mind?
A That he will rape me.
Q How did you come to know that?
A He was raping me before, doing that before.
Q In other words, that was not the first time your father raped you on that particular
date?
A No, sir.
Q When was the first time, if you remember?
A When I was still in grade 1.
Q How many times were you raped by your father?
A I can no longer remember how many it was - several.
Q When was the last time your father raped you?
A November 27.
Q Now, when your father removed your short pants and panty, what did he do next?
A He removed his brief and shirt.
Q After removing his brief and shirt, what did he do?
A He [laid] on top me.
Q When your father [laid] on top of you, what did he do?
A He was inserting his penis to my vagina.
Q At this juncture, may we make of record that witness starts to cry.
Q How did you know your father inserted his penis to your vagina?
A I can feel it and it is painful.
Q That was the time when your father was already lying on top of you?
A Yes, sir.
Q And what was the movement of the body of your father while he was lying on top of you?
A Push and pull movement.
Q For how long did your father stay on top of you doing that push and pull movement?
A That must be about 1 hour, but my aunt arrived.
Q Aside from the pain, what else did you feel?
A Mahapdi at parang may pumipitik sa loob ng ari ko.
Q Did you not try to resist?
A No, because I am afraid of him.
Q You are afraid of your father?
A Yes, sir.
Q Afraid of what?
A Because he was beating us, hitting us.
Q Why, what was the reason why your father was hitting you?
A To threaten us.
Q For what purpose?
A Whenever my mother sided with us, my father and mother engaged in a fight.
Q In this case, you were raped and sexually abused by your father, what made you afraid of
him?
A Because we were afraid of my father since childhood.[5]
 Dannilyn has given her testimony in a plain, categorical, spontaneous and frank manner,
remaining consistent throughout, and there is hardly anything on record that can cast doubt
on her sincerity. The revelations of an innocent child whose chastity has been abused, coupled
with her willingness to face police investigation and to undergo the trouble and humiliation
of a public trial, should merit credence unless strong justifications dictate
otherwise. Indeed, it would take a most senseless kind of depravity for a young daughter to
just make up a story which could put her own father to an undeserved indictment and to even
possibly face death in the hands of the law.[6]
When rape is committed against ones own daughter, the moral ascendancy and influence of
the father, that necessarily flows from his parental authority, can sufficiently cow the
child to submission and can rightly be held to substitute for the requisite violence or
intimidation that, normally, would be characterized by physical acts and uttered threats made
on the victim.
The trite defenses of alibi and denial proferred by appellant cannot prevail over the
positive and categorical statements of private complainant. Alibi is often viewed with
suspicion and received with caution not only because it is inherently weak and unreliable but
also because it is easy to fabricate. In order that this defense can prosper, it must be
convincing to preclude any doubt on the physical impossibility of the presence of the accused
at the locus criminis at the time of the incident. These conditions have not been met in the
case at bar.
The contention of appellant that his wife and daughter Dannilyn have accused him merely
because of his violent ways is much too flimsy to be believed. The mere resentment of a wife
and daughter is not so compelling as to have motivated them to wrongly lodge a complaint for
a crime much more serious than might, if at all, be expected.
It is likewise a settled doctrine that the assessment made by the trial court on the
credibility of witnesses deserves great regard and weight on appeal. The rule is not without
reason; the trial judge has a unique position of hearing first hand the witnesses and observing
their deportment, conduct and attitude during the course of the testimony in open court. There
is no valid reason to now ignore this long accepted jurisprudence in this instance.
This Court, however, finds the second assignment of error impressed with merit.
Article 335 of the Revised Penal Code, as amended by Section 11 of Republic Act No. 7659,
at times also referred to as the Death Penalty Law, states in part:

Art. 335. When and how rape is committed. x x x

x x x x x x x x x

The death penalty shall also be imposed if the crime of rape is committed with any of the
following attendant circumstances:

1. When the victim is under eighteen (18) years of age and the offender is a parent, ascendant,
step-parent, guardian, relative by consanguinity or affinity within the third civil degree,
or the common-law spouse of the parent of the victim.

The concurrence of the minority of the victim and her relationship to the offender are special
qualifying circumstances that are needed to be alleged in the complaint or information for
the penalty of death to be decreed.[7] The Constitution guarantees to be inviolable the right
of an accused to be informed of the nature and cause of the accusation against him.[8] It is
a requirement that renders it essential for every element of the offense with which he is
charged to be properly alleged in the complaint or information.
Here, the information failed to state the minority of the victim and her relationship with
the offender, both special qualifying circumstances under Republic Act No. 7659, and for want
of such allegations, the trial court erred in imposing the death penalty on the
accused.[9] Appellant could only thus be convicted under Article 335 of the Revised Penal
Code, as amended, of simple rape punishable by reclusion perpetua.
Anent the award of damages, the trial court has correctly awarded P50,000.00 moral damages,
an award that rests on the jural foundation that the crime of rape necessarily brings with
it shame, mental anguish, besmirched reputation, moral shock and social humiliation to the
offended party.[10] In addition, the offended party deserves to receive the amount of P50,000.00
civil indemnity,[11] the equivalent of compensatory damages, and exemplary damages in the
amount of P25,000.00.
 An apparent discord in the award of exemplary damages in simple and qualified rape cases
perhaps deserves more than just a passing remark.
The Civil Code of the Philippines provides, in respect to exemplary or corrective damages,
thusly:

ART. 2229. Exemplary or corrective damages are imposed, by way of example or correction for
the public good, in addition to the moral, temperate, liquidated or compensatory damages.

ART. 2230. In criminal offenses, exemplary damages as a part of the civil liability may be
imposed when the crime was committed with one or more aggravating circumstances. Such damages
are separate and distinct from fines and shall be paid to the offended party.

ART. 2231. In quasi-delicts, exemplary damages may be granted if the defendant acted with
gross negligence.

ART. 2232. In contracts and quasi-contracts, the court may award exemplary damages if the
defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner.

ART. 2233. Exemplary damages cannot be recovered as a matter of right; the court will decide
whether or not they should be adjudicated.

ART. 2234. 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. In case
liquidated damages have been agreed upon, although no proof of loss is necessary in order
that such liquidated damages may be recovered, nevertheless, before the court may consider
the question of granting exemplary in addition to the liquidated damages, the plaintiff must
show that he would be entitled to moral, temperate or compensatory damages were it not for
the stipulation for liquidated damages.

ART. 2235. A stipulation whereby exemplary damages are renounced in advance shall be null and
void.

The attendance of aggravating circumstances in the perpetration of the crime serves to

increase the penalty (the criminal liability aspect),[12] as well as to justify an award of
exemplary or corrective damages (the civil liability aspect),[13] moored on the greater
perversity of the offender manifested in the commission of the felony such as may be shown
by (1) the motivating power itself, (2) the place of commission, (3) the means and ways
employed, (4) the time, or (5) the personal circumstances of the offender or the offended
party or both.There are various types of aggravating circumstances, among them, the ordinary
and the qualifying. Relationship is an alternative circumstance under Article 15 of the
Revised Penal Code.

Art. 15. Their concept. --Alternative circumstances are those which must be taken into
consideration as aggravating or mitigating according to the nature and effects of the crime
and other conditions attending its commission. They are relationship, intoxication, and degree
of instruction and education of the offender.

The alternative circumstance of relationship shall be taken into consideration when the
offended party is the spouse, ascendant, descendant, legitimate, natural, or adopted brother
or sister, or relative by affinity in the same degree of the offender.

As a rule, relationship is held to be aggravating in crimes against chastity, such as rape

and acts of lasciviousness, whether the offender is a higher or a lower degree relative of
the offended party.[14]
Under Section 11 of Republic Act No. 7659, amending Article 335 of the Revised Penal Code,
the death penalty is to be imposed in rape cases when the victim is under eighteen (18) years
of age and the offender is a parent, ascendant, step-parent, guardian, relative by
consanguinity or affinity within the third civil degree, or the common-law spouse of the
parent of the victim. The Court has since held that the circumstances enumerated by the
amendatory law are to be regarded as special qualifying (aggravating) circumstances. Somehow
doubts linger on whether relationship may then be considered to warrant an award for exemplary
damages where it is used to qualify rape as a heinous crime, thereby becoming an element
thereof, as would subject the offender to the penalty of death. Heretofore, the Court has not
categorically laid down a specific rule, preferring instead to treat the issue on a case to
case basis.
 In People vs. Fundano,[15] People vs. Ramos,[16] People vs. Medina,[17] People vs.
Dimapilis,[18] People vs. Calayca,[19] People vs. Tabion,[20] People vs. Bayona,[21] People vs.
Bayya,[22] and People vs. Nuez,[23] along with still other cases, the Court has almost invariably
appreciated relationship as an ordinary aggravating circumstance in simple rape and thereby
imposed exemplary damages upon the offender whether or not the offense has been committed
prior to or after the effectivity of Republic Act No. 7659. Exceptionally, as in People vs.
Decena,[24] People vs. Perez,[25] People vs. Perez,[26] and People vs. Ambray,[27] the Court has
denied the award of exemplary damages following the effectivity of that law. In qualified
rape cases, such as in People vs. Magdato,[28] People vs. Arizapa,[29] and People vs.
Alicante,[30] the Court decreed the payment of exemplary damages to the offended party but it
did not so do as in People vs. Alba,[31]People vs. Mengote,[32] and People vs. Maglente.[33]
It may be time for the Court to abandon its pro hac vice stance and provide, for the
guidance of the bar and the bench, a kind of standard on the matter.
Also known as punitive or vindictive damages, exemplary or corrective damages are intended
to serve as a deterrent to serious wrong doings, and as a vindication of undue sufferings and
wanton invasion of the rights of an injured or a punishment for those guilty of outrageous
conduct. These terms are generally, but not always, used interchangeably. In common law,
there is preference in the use of exemplary damages when the award is to account for injury
to feelings and for the sense of indignity and humiliation suffered by a person as a result
of an injury that has been maliciously and wantonly inflicted,[34] the theory being that there
should be compensation for the hurt caused by the highly reprehensible conduct of the defendant
- associated with such circumstances as willfulness, wantonness, malice, gross negligence or
recklessness, oppression, insult or fraud or gross fraud[35]- that intensifies the injury. The
terms punitive or vindictive damages are often used to refer to those species of damages that
may be awarded against a person to punish him for his outrageous conduct. In either case,
these damages are intended in good measure to deter the wrongdoer and others like him from
similar conduct in the future.[36]
The term aggravating circumstances used by the Civil Code, the law not having specified
otherwise, is to be understood in its broad or generic sense. The commission of an offense
has a two-pronged effect, one on the public as it breaches the social order and the other
upon the private victim as it causes personal sufferings, each of which is addressed by,
respectively, the prescription of heavier punishment for the accused and by an award of
additional damages to the victim. The increase of the penalty or a shift to a graver felony
underscores the exacerbation of the offense by the attendance of aggravating circumstances,
whether ordinary or qualifying, in its commission. Unlike the criminal liability which is
basically a State concern, the award of damages, however, is likewise, if not primarily,
intended for the offended party who suffers thereby. It would make little sense for an award
of exemplary damages to be due the private offended party when the aggravating circumstance
is ordinary but to be withheld when it is qualifying. Withal, the ordinary or qualifying
nature of an aggravating circumstance is a distinction that should only be of consequence to
the criminal, rather than to the civil, liability of the offender. In fine, relative to the
civil aspect of the case, an aggravating circumstance, whether ordinary or qualifying, should
entitle the offended party to an award of exemplary damages within the unbridled meaning of
Article 2230 of the Civil Code.
Relevantly, the Revised Rules on Criminal Procedure, made effective on 01 December 2000,
requires aggravating circumstances, whether ordinary or qualifying, to be stated in the
complaint or information. Sections 8 and 9 of Rule 110 of the Rules of Court now provide:

Sec. 8. Designation of the offense. - The complaint or information shall state the designation
of the offense given by the statute, aver the acts or omissions constituting the offense,
and specify its qualifying and aggravating circumstances. If there is no designation of the
offense, reference shall be made to the section or subsection of the statute punishing it.

Sec. 9. Cause of the accusations. - The acts or omissions complained of as constituting the
offense and the qualifying and aggravating circumstances must be stated in ordinary and
concise language and not necessarily in the language used in the statute but in
terms sufficient to enable a person of common understanding to know what offense is being
charged as well as its qualifying and aggravating circumstances and for the court to pronounce
judgment.

A court would thus be precluded from considering in its judgment the attendance of qualifying
or aggravating circumstances if the complaint or information is bereft of any allegation of
the presence of such circumstances.
The retroactive application of procedural rules, nevertheless, cannot adversely affect
the rights of the private offended party that have become vested prior to the effectivity of
said rules. Thus, in the case at bar, although relationship has not been alleged in the
information, the offense having been committed, however, prior to the effectivity of the new
rules, the civil liability already incurred by appellant remains unaffected thereby.
WHEREFORE, the decision of the court a quo is AFFIRMED with MODIFICATION in that appellant
Danilo Catubig y Horio is found guilty only of simple rape and not in its qualified form, and
he is hereby sentenced to suffer the penalty of reclusion perpetua and to pay complainant
Dannilyn Catubig P50,000.00 civil indemnity, P50,000.00 moral damages and P25,000.00 exemplary
damages. Costs de oficio.
SO ORDERED.

[1] [18]
Rollo, p. 5. 300 SCRA 279.
[2] [19]
Rollo, pp. 61-62. 301 SCRA 192.
[3] [20]
Rollo, p. 51. 317 SCRA 126.
[4] Rollo, p. 35. [21] 327 SCRA 190.
[5] [22]
TSN, 16 March 1998, pp. 3-5. 327 SCRA 771
[6] [23]
People vs. Rivera, 318 SCRA 317. 310 SCRA 168.
[7] People vs. Narido, 316 SCRA 131. [24] 332 SCRA 618.
[8] [25]
Sec. 1(2), Art. III of the Constitution. 270 SCRA 526.
[9] [26]
People vs. Panique, 316 SCRA 757. 290 SCRA 17.
[10] People vs. Nuez, 310 SCRA 168; People vs. Narido, 316 SCRA [27] 303 SCRA 697.
[28] 324 SCRA 785.
131.
[11] People vs. De la Cuesta, 304 SCRA 83; People vs. [29] 328 SCRA 214.
[30] 332 SCRA 440.
Narido, supra.
[12] Idem, p. 312. [31] 305 SCRA 811.
[13] Art. 2230, Civil Code. [32] 305 SCRA 380.
[14] Reyes, Luis R. The Revised Penal Code, 14th Ed., 1998, p. 464; [33] 306 SCRA 546.
[34] American Cent. Corp. vs. Stevens Van Lines, Inc., 103 Mich
People vs. Porras, 58 Phil. 578; People vs. Lucas, 181 SCRA 316;
People vs. Tan Jr., 264 SCRA 425; People vs. Perez, 270 SCRA App 507, 303 NW2d 234; Morris vs. Duncan, 126 Ga 467, 54 SE
526; People vs. Perez, 296 SCRA 17; People vs. Mosqueda, 313 1045; Faircloth vs. Greiner, 174 Ga app 845, 332 SE 2d 905; 731,
SCRA 694; People vs. Tresballes, 314 SCRA 774; People vs. 22 Am Jur 2d, p. 784 American Surety Co. vs. Gold, 375 F 2d 523,
Docena, 322 SCRA 820; People vs. Sampior, 327 SCRA 31; 20 ALR 3d 335; Erwin vs. Michigan, 188 Ark 658, 67 SW 2d 592.
[35] 762 22 Am Jur 2d pp. 817-818.
People vs. Gajo, 327 SCRA 612; People vs. Alvero, 329 SCRA 737.
[15] [36]
291 SCRA 356. 733, 22 Am Jur 2d, p. 785; Symposium: Punitive Damages, 56
[16] 296 SCRA 559. So Cal LR 1, November 1982.
[17] 300 SCRA 98.

-------------------------------------------------------------------------------------------
SECOND DIVISION

[G.R. No. 138060. September 1, 2004]

WILLIAM TIU, doing business under the name and style of D Rough Riders, and VIRGILIO TE LAS
PIAS petitioners, vs. PEDRO A. ARRIESGADO, BENJAMIN CONDOR, SERGIO PEDRANO and
PHILIPPINE PHOENIX SURETY AND INSURANCE, INC., respondents.

D E C I S I O N
This is a petition for review on certiorari under Rule 45 of the Rules of Court from the
Decision[1] of the Court of Appeals in CA-G.R. CV No. 54354 affirming with modification the
Decision[2] of the Regional Trial Court, 7th Judicial Region, Cebu City, Branch 20, in Civil
Case No. CEB-5963 for breach of contract of carriage, damages and attorneys fees, and the
Resolution dated February 26, 1999 denying the motion for reconsideration thereof.
The following facts are undisputed:
At about 10:00 p.m. of March 15, 1987, the cargo truck marked Condor Hollow Blocks and
General Merchandise bearing plate number GBP-675 was loaded with firewood in Bogo, Cebu and
left for Cebu City. Upon reaching Sitio Aggies, Poblacion, Compostela, Cebu, just as the
truck passed over a bridge, one of its rear tires exploded. The driver, Sergio Pedrano, then
parked along the right side of the national highway and removed the damaged tire to have it
vulcanized at a nearby shop, about 700 meters away.[3] Pedrano left his helper, Jose Mitante,
Jr. to keep watch over the stalled vehicle, and instructed the latter to place a spare tire
six fathoms away[4] behind the stalled truck to serve as a warning for oncoming vehicles. The
trucks tail lights were also left on. It was about 12:00 a.m., March 16, 1987.
 At about 4:45 a.m., D Rough Riders passenger bus with plate number PBP-724 driven by
Virgilio Te Laspias was cruising along the national highway of Sitio Aggies, Poblacion,
Compostela, Cebu. The passenger bus was also bound for Cebu City, and had come from Maya,
Daanbantayan, Cebu. Among its passengers were the Spouses Pedro A. Arriesgado and Felisa
Pepito Arriesgado, who were seated at the right side of the bus, about three (3) or four (4)
places from the front seat.
As the bus was approaching the bridge, Laspias saw the stalled truck, which was then about
25 meters away.[5] He applied the breaks and tried to swerve to the left to avoid hitting the
truck. But it was too late; the bus rammed into the trucks left rear. The impact damaged the
right side of the bus and left several passengers injured. Pedro Arriesgado lost consciousness
and suffered a fracture in his right colles.[6] His wife, Felisa, was brought to
the Danao City Hospital. She was later transferred to the Southern Island Medical Center
where she died shortly thereafter.[7]
Respondent Pedro A. Arriesgado then filed a complaint for breach of contract of carriage,
damages and attorneys fees before the Regional Trial Court of Cebu City, Branch 20, against
the petitioners, D Rough Riders bus operator William Tiu and his driver, Virgilio Te Laspias
on May 27, 1987. The respondent alleged that the passenger bus in question was cruising at a
fast and high speed along the national road, and that petitioner Laspias did not take
precautionary measures to avoid the accident.[8] Thus:

6. That the accident resulted to the death of the plaintiffs wife, Felisa Pepito Arriesgado,
as evidenced by a Certificate of Death, a xerox copy of which is hereto attached as integral
part hereof and marked as ANNEX A, and physical injuries to several of its passengers,
including plaintiff himself who suffered a COLLES FRACTURE RIGHT, per Medical Certificate, a
xerox copy of which is hereto attached as integral part hereof and marked as ANNEX B hereof.

7. That due to the reckless and imprudent driving by defendant Virgilio Te Laspias of the
said Rough Riders passenger bus, plaintiff and his wife, Felisa Pepito Arriesgado, failed to
safely reach their destination which was Cebu City, the proximate cause of which was
defendant-drivers failure to observe utmost diligence required of a very cautious person
under all circumstances.

8. That defendant William Tiu, being the owner and operator of the said Rough Riders passenger
bus which figured in the said accident, wherein plaintiff and his wife were riding at the
time of the accident, is therefore directly liable for the breach of contract of carriage for
his failure to transport plaintiff and his wife safely to their place of destination which
was Cebu City, and which failure in his obligation to transport safely his passengers was due
to and in consequence of his failure to exercise the diligence of a good father of the family
in the selection and supervision of his employees, particularly defendant-driver Virgilio Te
Laspias.[9]

The respondent prayed that judgment be rendered in his favor and that the petitioners be
condemned to pay the following damages:

1). To pay to plaintiff, jointly and severally, the amount of P30,000.00 for the death and
untimely demise of plaintiffs wife, Felisa Pepito Arriesgado;

2). To pay to plaintiff, jointly and severally, the amount of P38,441.50, representing actual
expenses incurred by the plaintiff in connection with the death/burial of plaintiffs wife;

3). To pay to plaintiff, jointly and severally, the amount of P1,113.80, representing
medical/hospitalization expenses incurred by plaintiff for the injuries sustained by him;

4). To pay to plaintiff, jointly and severally, the amount of P50,000.00 for moral damages;

5). To pay to plaintiff, jointly and severally, the amount of P50,000.00 by way of exemplary
damages;

6). To pay to plaintiff, jointly and severally, the amount of P20,000.00 for attorneys fees;

7). To pay to plaintiff, jointly and severally, the amount of P5,000.00 for litigation
expenses.

PLAINTIFF FURTHER PRAYS FOR SUCH OTHER RELIEFS AND REMEDIES IN LAW AND EQUITY.[10]
 The petitioners, for their part, filed a Third-Party Complaint[11] on August 21, 1987
against the following: respondent Philippine Phoenix Surety and Insurance, Inc. (PPSII),
petitioner Tius insurer; respondent Benjamin Condor, the registered owner of the cargo truck;
and respondent Sergio Pedrano, the driver of the truck. They alleged that petitioner Laspias
was negotiating the uphill climb along the national highway of Sitio Aggies, Poblacion,
Compostela, in a moderate and normal speed. It was further alleged that the truck was parked
in a slanted manner, its rear portion almost in the middle of the highway, and that no early
warning device was displayed. Petitioner Laspias promptly applied the brakes and swerved to
the left to avoid hitting the truck head-on, but despite his efforts to avoid damage to
property and physical injuries on the passengers, the right side portion of the bus hit the
cargo trucks left rear. The petitioners further alleged, thus:

5. That the cargo truck mentioned in the aforequoted paragraph is owned and registered in the
name of the third-party defendant Benjamin Condor and was left unattended by its driver Sergio
Pedrano, one of the third-party defendants, at the time of the incident;

6. That third-party defendant Sergio Pedrano, as driver of the cargo truck with marked (sic)
Condor Hollow Blocks & General Merchandise, with Plate No. GBP-675 which was recklessly and
imprudently parked along the national highway of Compostela, Cebu during the vehicular
accident in question, and third-party defendant Benjamin Condor, as the registered owner of
the cargo truck who failed to exercise due diligence in the selection and supervision of
third-party defendant Sergio Pedrano, are jointly and severally liable to the third-party
plaintiffs for whatever liability that may be adjudged against said third-party plaintiffs
or are directly liable of (sic) the alleged death of plaintiffs wife;

7. That in addition to all that are stated above and in the answer which are intended to show
reckless imprudence on the part of the third-party defendants, the third-party plaintiffs
hereby declare that during the vehicular accident in question, third-party defendant was
clearly violating Section 34, par. (g) of the Land Transportation and Traffic Code

10. That the aforesaid passenger bus, owned and operated by third-party plaintiff William
Tiu, is covered by a common carrier liability insurance with Certificate of Cover No. 054940
issued by Philippine Phoenix Surety and Insurance, Inc., Cebu City Branch, in favor of third-
party plaintiff William Tiu which covers the period from July 22, 1986 to July 22, 1987 and
that the said insurance coverage was valid, binding and subsisting during the time of the
aforementioned incident (Annex A as part hereof);

11. That after the aforesaid alleged incident, third-party plaintiff notified third-party
defendant Philippine Phoenix Surety and Insurance, Inc., of the alleged incident hereto
mentioned, but to no avail;

12. That granting, et arguendo et arguendi, if herein third-party plaintiffs will be adversely
adjudged, they stand to pay damages sought by the plaintiff and therefore could also look up
to the Philippine Phoenix Surety and Insurance, Inc., for contribution, indemnification and/or
reimbursement of any liability or obligation that they might [be] adjudged per insurance
coverage duly entered into by and between third-party plaintiff William Tiu and third-party
defendant Philippine Phoenix Surety and Insurance, Inc.;[12]

The respondent PPSII, for its part, admitted that it had an existing contract with
petitioner Tiu, but averred that it had already attended to and settled the claims of those
who were injured during the incident.[13] It could not accede to the claim of respondent
Arriesgado, as such claim was way beyond the scheduled indemnity as contained in the contract
of insurance. [14]
After the parties presented their respective evidence, the trial court ruled in favor of
respondent Arriesgado. The dispositive portion of the decision reads:

WHEREFORE, in view of the foregoing, judgment is hereby rendered in favor of plaintiff as

against defendant William Tiu ordering the latter to pay the plaintiff the following amounts:

1 - The sum of FIFTY THOUSAND PESOS (P50,000.00) as moral damages;

2 - The sum of FIFTY THOUSAND PESOS (P50,000.00) as exemplary damages;

3 - The sum of THIRTY-EIGHT THOUSAND FOUR HUNDRED FORTY-ONE PESOS (P38,441.00) as actual
damages;
4 - The sum of TWENTY THOUSAND PESOS (P20,000.00) as attorneys fees;

5 - The sum of FIVE THOUSAND PESOS (P5,000.00) as costs of suit;

SO ORDERED.[15]

According to the trial court, there was no dispute that petitioner William Tiu was engaged
in business as a common carrier, in view of his admission that D Rough Rider passenger bus
which figured in the accident was owned by him; that he had been engaged in the transportation
business for 25 years with a sole proprietorship; and that he owned 34 buses. The trial court
ruled that if petitioner Laspias had not been driving at a fast pace, he could have easily
swerved to the left to avoid hitting the truck, thus, averting the unfortunate incident. It
then concluded that petitioner Laspias was negligent.
The trial court also ruled that the absence of an early warning device near the place
where the truck was parked was not sufficient to impute negligence on the part of respondent
Pedrano, since the tail lights of the truck were fully on, and the vicinity was well lighted
by street lamps.[16] It also found that the testimony of petitioner Tiu, that he based the
selection of his driver Laspias on efficiency and in-service training, and that the latter
had been so far an efficient and good driver for the past six years of his employment, was
insufficient to prove that he observed the diligence of a good father of a family in the
selection and supervision of his employees.
After the petitioners motion for reconsideration of the said decision was denied, the
petitioners elevated the case to the Court of Appeals on the following issues:
I WHETHER THIRD PARTY DEFENDANT SERGIO PEDRANO WAS RECKLESS AND IMPRUDENT WHEN HE
PARKED THE CARGO TRUCK IN AN OBLIQUE MANNER;
II WHETHER THE THIRD PARTY DEFENDANTS ARE JOINTLY AND SEVERALLY LIABLE DIRECTLY TO
PLAINTIFF-APPELLEE OR TO DEFENDANTS-APPELLANTS FOR WHATEVER LIABILITY THAT MAY BE
ADJUDGED TO THE SAID DEFENDANTS-APPELLANTS;
III WHETHER DEFENDANT-APPELLANT VIRGILIO TE LASPIAS WAS GUILTY OF GROSS NEGLIGENCE;
IV WHETHER DEFENDANT-APPELLANT WILLIAM TIU HAD EXERCISED THE DUE DILIGENCE OF A GOOD
FATHER OF A FAMILY IN THE SELECTION AND SUPERVISION OF HIS DRIVERS;
V GRANTING FOR THE SAKE OF ARGUMENT THAT DEFENDANT-APPELLANT WILLIAM TIU IS LIABLE TO
PLAINTIFF-APPELLEE, WHETHER THERE IS LEGAL AND FACTUAL BASIS IN AWARDING EXCESSIVE
MORAL DAMAGES, EX[E]MPLARY DAMAGES, ATTORNEYS FEES AND LITIGATION EXPENSES TO
PLAINTIFF-APPELLEE;
VI WHETHER THIRD PARTY DEFENDANT PHILIPPINE PHOENIX SURETY AND INSURANCE, INC. IS
LIABLE TO DEFENDANT- APPELLANT WILLIAM TIU.[17]
The appellate court rendered judgment affirming the trial courts decision with the
modification that the awards for moral and exemplary damages were reduced to P25,000. The
dispositive portion reads:

WHEREFORE, the appealed Decision dated November 6, 1995 is hereby MODIFIED such that the
awards for moral and exemplary damages are each reduced to P25,000.00 or a total of P50,000.00
for both. The judgment is AFFIRMED in all other respects.

SO ORDERED.[18]

According to the appellate court, the action of respondent Arriesgado was based not on
quasi-delict but on breach of contract of carriage. As a common carrier, it was incumbent
upon petitioner Tiu to prove that extraordinary diligence was observed in ensuring the safety
of passengers during transportation. Since the latter failed to do so, he should be held
liable for respondent Arriesgados claim. The CA also ruled that no evidence was presented
against the respondent PPSII, and as such, it could not be held liable for respondent
Arriesgados claim, nor for contribution, indemnification and/or reimbursement in case the
petitioners were adjudged liable.
The petitioners now come to this Court and ascribe the following errors committed by the
appellate court:
I. THE HONORABLE COURT OF APPEALS ERRED IN NOT DECLARING RESPONDENTS BENJAMIN CONDOR
AND SERGIO PEDRANO GUILTY OF NEGLIGENCE AND HENCE, LIABLE TO RESPONDENT PEDRO A.
ARRIESGADO OR TO PETITIONERS FOR WHATEVER LIABILITY THAT MAY BE ADJUDGED AGAINST
THEM.
 II. THE HONORABLE COURT OF APPEALS ERRED IN FINDING PETITIONERS GUILTY OF NEGLIGENCE
AND HENCE, LIABLE TO RESPONDENT PEDRO A. ARRIESGADO.
III. THE HONORABLE COURT OF APPEALS ERRED IN FINDING PETITIONER WILLIAM TIU LIABLE FOR
EXEMPLARY DAMAGES, ATTORNEYS FEES AND LITIGATION EXPENSES.
IV.THE HONORABLE COURT OF APPEALS ERRED IN NOT FINDING RESPONDENT
PHILIPPINE PHOENIX SURETY AND INSURANCE, INC. LIABLE TO RESPONDENT PEDRO A.
ARRIESGADO OR TO PETITIONER WILLIAM TIU.[19]
According to the petitioners, the appellate court erred in failing to appreciate the
absence of an early warning device and/or built-in reflectors at the front and back of the
cargo truck, in clear violation of Section 34, par. (g) of the Land Transportation and Traffic
Code. They aver that such violation is only a proof of respondent Pedranos negligence, as
provided under Article 2185 of the New Civil Code. They also question the appellate courts
failure to take into account that the truck was parked in an oblique manner, its rear portion
almost at the center of the road. As such, the proximate cause of the incident was the gross
recklessness and imprudence of respondent Pedrano, creating the presumption of negligence on
the part of respondent Condor in supervising his employees, which presumption was not
rebutted. The petitioners then contend that respondents Condor and Pedrano should be held
jointly and severally liable to respondent Arriesgado for the payment of the latters claim.
The petitioners, likewise, aver that expert evidence should have been presented to prove
that petitioner Laspias was driving at a very fast speed, and that the CA could not reach
such conclusion by merely considering the damages on the cargo truck. It was also pointed out
that petitioner Tiu presented evidence that he had exercised the diligence of a good father
of a family in the selection and supervision of his drivers.
The petitioners further allege that there is no legal and factual basis to require
petitioner Tiu to pay exemplary damages as no evidence was presented to show that the latter
acted in a fraudulent, reckless and oppressive manner, or that he had an active participation
in the negligent act of petitioner Laspias.
Finally, the petitioners contend that respondent PPSII admitted in its answer that while
it had attended to and settled the claims of the other injured passengers, respondent
Arriesgados claim remained unsettled as it was beyond the scheduled indemnity under the
insurance contract. The petitioners argue that said respondent PPSII should have settled the
said claim in accordance with the scheduled indemnity instead of just denying the same.
On the other hand, respondent Arriesgado argues that two of the issues raised by the
petitioners involved questions of fact, not reviewable by the Supreme Court: the finding of
negligence on the part of the petitioners and their liability to him; and the award of
exemplary damages, attorneys fees and litigation expenses in his favor. Invoking the principle
of equity and justice, respondent Arriesgado pointed out that if there was an error to be
reviewed in the CA decision, it should be geared towards the restoration of the moral and
exemplary damages to P50,000 each, or a total of P100,000 which was reduced by the Court of
Appeals to P25,000 each, or a total of only P50,000.
Respondent Arriesgado also alleged that respondents Condor and Pedrano, and respondent
Phoenix Surety, are parties with whom he had no contract of carriage, and had no cause of
action against. It was pointed out that only the petitioners needed to be sued, as driver and
operator of the ill-fated bus, on account of their failure to bring the Arriesgado Spouses
to their place of destination as agreed upon in the contract of carriage, using the utmost
diligence of very cautious persons with due regard for all circumstances.
Respondents Condor and Pedrano point out that, as correctly ruled by the Court of Appeals,
the proximate cause of the unfortunate incident was the fast speed at which petitioner Laspias
was driving the bus owned by petitioner Tiu. According to the respondents, the allegation
that the truck was not equipped with an early warning device could not in any way have
prevented the incident from happening. It was also pointed out that respondent Condor had
always exercised the due diligence required in the selection and supervision of his employees,
and that he was not a party to the contract of carriage between the petitioners and respondent
Arriesgado.
Respondent PPSII, for its part, alleges that contrary to the allegation of petitioner Tiu,
it settled all the claims of those injured in accordance with the insurance contract. It
further avers that it did not deny respondent Arriesgados claim, and emphasizes that its
liability should be within the scheduled limits of indemnity under the said contract. The
respondent concludes that while it is true that insurance contracts are contracts of
indemnity, the measure of the insurers liability is determined by the insureds compliance
with the terms thereof.
 The Courts Ruling
At the outset, it must be stressed that this Court is not a trier of facts. [20] Factual
findings of the Court of Appeals are final and may not be reviewed on appeal by this Court,
except when the lower court and the CA arrived at diverse factual findings.[21]The petitioners
in this case assail the finding of both the trial and the appellate courts that petitioner
Laspias was driving at a very fast speed before the bus owned by petitioner Tiu collided with
respondent Condors stalled truck. This is clearly one of fact, not reviewable by the Court
in a petition for review under Rule 45.[22]
On this ground alone, the petition is destined to fail.
However, considering that novel questions of law are likewise involved, the Court resolves
to examine and rule on the merits of the case.
Petitioner Laspias Was negligent in driving The Ill-fated bus
In his testimony before the trial court, petitioner Laspias claimed that he was traversing
the two-lane road at Compostela, Cebu at a speed of only forty (40) to fifty (50) kilometers
per hour before the incident occurred.[23] He also admitted that he sawthe truck which was
parked in an oblique position at about 25 meters before impact,[24] and tried to avoid hitting
it by swerving to the left. However, even in the absence of expert evidence, the damage
sustained by the truck[25] itself supports the finding of both the trial court and the appellate
court, that the D Rough Rider bus driven by petitioner Laspias was traveling at a fast pace.
Since he saw the stalled truck at a distance of 25 meters, petitioner Laspias had more than
enough time to swerve to his left to avoid hitting it; that is, if the speed of the bus was
only 40 to 50 kilometers per hour as he claimed. As found by the Court of Appeals, it is
easier to believe that petitioner Laspias was driving at a very fast speed, since at 4:45
a.m., the hour of the accident, there were no oncoming vehicles at the opposite direction.
Petitioner Laspias could have swerved to the left lane with proper clearance, and, thus,
could have avoided the truck.[26] Instinct, at the very least, would have prompted him to apply
the breaks to avert the impending disaster which he must have foreseen when he caught sight
of the stalled truck. As we had occasion to reiterate:

A man must use common sense, and exercise due reflection in all his acts; it is his duty to
be cautious, careful and prudent, if not from instinct, then through fear of recurring
punishment. He is responsible for such results as anyone might foresee and for acts which no
one would have performed except through culpable abandon. Otherwise, his own person, rights
and property, and those of his fellow beings, would ever be exposed to all manner of danger
and injury.[27]

We agree with the following findings of the trial court, which were affirmed by the CA on
appeal:

A close study and evaluation of the testimonies and the documentary proofs submitted by the
parties which have direct bearing on the issue of negligence, this Court as shown by
preponderance of evidence that defendant Virgilio Te Laspias failed to observe extraordinary
diligence as a driver of the common carrier in this case. It is quite hard to accept his
version of the incident that he did not see at a reasonable distance ahead the cargo truck
that was parked when the Rough Rider [Bus] just came out of the bridge which is on an (sic)
[more] elevated position than the place where the cargo truck was parked. With its headlights
fully on, defendant driver of the Rough Rider was in a vantage position to see the cargo
truck ahead which was parked and he could just easily have avoided hitting and bumping the
same by maneuvering to the left without hitting the said cargo truck. Besides, it is (sic)
shown that there was still much room or space for the Rough Rider to pass at the left lane
of the said national highway even if the cargo truck had occupied the entire right lane
thereof. It is not true that if the Rough Rider would proceed to pass through the left lane
it would fall into a canal considering that there was much space for it to pass without
hitting and bumping the cargo truck at the left lane of said national highway. The records,
further, showed that there was no incoming vehicle at the opposite lane of the national
highway which would have prevented the Rough Rider from not swerving to its left in order to
avoid hitting and bumping the parked cargo truck. But the evidence showed that the Rough
Rider instead of swerving to the still spacious left lane of the national highway plowed
directly into the parked cargo truck hitting the latter at its rear portion; and thus, the
(sic) causing damages not only to herein plaintiff but to the cargo truck as well.[28]

Indeed, petitioner Laspias negligence in driving the bus is apparent in the records. By
his own admission, he had just passed a bridge and was traversing the highway of
Compostela, Cebu at a speed of 40 to 50 kilometers per hour before the collision occurred.
The maximum speed allowed by law on a bridge is only 30 kilometers per hour. [29] And, as
correctly pointed out by the trial court, petitioner Laspias also violated Section 35 of the
Land Transportation and Traffic Code, Republic Act No. 4136, as amended:

Sec. 35. Restriction as to speed. (a) Any person driving a motor vehicle on a highway shall
drive the same at a careful and prudent speed, not greater nor less than is reasonable and
proper, having due regard for the traffic, the width of the highway, and or any other condition
then and there existing; and no person shall drive any motor vehicle upon a highway at such
speed as to endanger the life, limb and property of any person, nor at a speed greater than
will permit him to bring the vehicle to a stop within the assured clear distance ahead.[30]

Under Article 2185 of the Civil Code, a person driving a vehicle is presumed negligent if
at the time of the mishap, he was violating any traffic regulation.[31]
Petitioner Tiu failed to Overcome the presumption Of negligence against him as One engaged
in the business Of common carriage
The rules which common carriers should observe as to the safety of their passengers are
set forth in the Civil Code, Articles 1733,[32] 1755[33] and 1756.[34] In this case, respondent
Arriesgado and his deceased wife contracted with petitioner Tiu, as owner and operator of D
Rough Riders bus service, for transportation from Maya, Daanbantayan, Cebu, to Cebu City for
the price of P18.00.[35] It is undisputed that the respondent and his wife were not safely
transported to the destination agreed upon. In actions for breach of contract, only the
existence of such contract, and the fact that the obligor, in this case the common carrier,
failed to transport his passenger safely to his destination are the matters that need to be
proved.[36] This is because under the said contract of carriage, the petitioners assumed the
express obligation to transport the respondent and his wife to their destination safely and
to observe extraordinary diligence with due regard for all circumstances.[37] Any injury
suffered by the passengers in the course thereof is immediately attributable to the negligence
of the carrier.[38] Upon the happening of the accident, the presumption of negligence at once
arises, and it becomes the duty of a common carrier to prove that he observed extraordinary
diligence in the care of his passengers.[39] It must be stressed that in requiring the highest
possible degree of diligence from common carriers and in creating a presumption of negligence
against them, the law compels them to curb the recklessness of their drivers.[40]
While evidence may be submitted to overcome such presumption of negligence, it must be
shown that the carrier observed the required extraordinary diligence, which means that the
carrier must show the utmost diligence of very cautious persons as far as human care and
foresight can provide, or that the accident was caused by fortuitous event.[41] As correctly
found by the trial court, petitioner Tiu failed to conclusively rebut such presumption. The
negligence of petitioner Laspias as driver of the passenger bus is, thus, binding against
petitioner Tiu, as the owner of the passenger bus engaged as a common carrier.[42]
The Doctrine of Last Clear Chance Is Inapplicable in the Case at Bar
Contrary to the petitioners contention, the principle of last clear chance is inapplicable
in the instant case, as it only applies in a suit between the owners and drivers of two
colliding vehicles. It does not arise where a passenger demands responsibility from the
carrier to enforce its contractual obligations, for it would be inequitable to exempt the
negligent driver and its owner on the ground that the other driver was likewise guilty of
negligence.[43] The common law notion of last clear chance permitted courts to grant recovery
to a plaintiff who has also been negligent provided that the defendant had the last clear
chance to avoid the casualty and failed to do so. Accordingly, it is difficult to see what
role, if any, the common law of last clear chance doctrine has to play in a jurisdiction
where the common law concept of contributory negligence as an absolute bar to recovery by the
plaintiff, has itself been rejected, as it has been in Article 2179 of the Civil Code.[44]
Thus, petitioner Tiu cannot escape liability for the death of respondent Arriesgados wife
due to the negligence of petitioner Laspias, his employee, on this score.
Respondents Pedrano and Condor were likewise Negligent
In Phoenix Construction, Inc. v. Intermediate Appellate Court,[45] where therein respondent
Dionisio sustained injuries when his vehicle rammed against a dump truck parked askew, the
Court ruled that the improper parking of a dump truck without any warning lights or reflector
devices created an unreasonable risk for anyone driving within the vicinity, and for having
created such risk, the truck driver must be held responsible. In ruling against the petitioner
therein, the Court elucidated, thus:

In our view, Dionisios negligence, although later in point of time than the truck drivers
negligence, and therefore closer to the accident, was not an efficient intervening or
independent cause. What the petitioners describe as an intervening cause was no more than a
foreseeable consequence of the risk created by the negligent manner in which the truck driver
had parked the dump truck. In other words, the petitioner truck driver owed a duty to private
respondent Dionisio and others similarly situated not to impose upon them the very risk the
truck driver had created. Dionisios negligence was not that of an independent and overpowering
nature as to cut, as it were, the chain of causation in fact between the improper parking of
the dump truck and the accident, nor to sever the juris vinculum of liability.

We hold that private respondent Dionisios negligence was only contributory, that the immediate
and proximate cause of the injury remained the truck drivers lack of due care.[46]

In this case, both the trial and the appellate courts failed to consider that respondent
Pedrano was also negligent in leaving the truck parked askew without any warning lights or
reflector devices to alert oncoming vehicles, and that such failure created the presumption
of negligence on the part of his employer, respondent Condor, in supervising his employees
properly and adequately. As we ruled in Poblete v. Fabros:[47]

It is such a firmly established principle, as to have virtually formed part of the law itself,
that the negligence of the employee gives rise to the presumption of negligence on the part
of the employer. This is the presumed negligence in the selection and supervision of employee.
The theory of presumed negligence, in contrast with the American doctrine of respondeat
superior, where the negligence of the employee is conclusively presumed to be the negligence
of the employer, is clearly deducible from the last paragraph of Article 2180 of the Civil
Code which provides that the responsibility therein mentioned shall cease if the employers
prove that they observed all the diligence of a good father of a family to prevent damages. [48]

The petitioners were correct in invoking respondent Pedranos failure to observe Article
IV, Section 34(g) of the Rep. Act No. 4136, which provides:

(g) Lights when parked or disabled. Appropriate parking lights or flares visible one hundred
meters away shall be displayed at a corner of the vehicle whenever such vehicle is parked on
highways or in places that are not well-lighted or is placed in such manner as to endanger
passing traffic.

The manner in which the truck was parked clearly endangered oncoming traffic on both
sides, considering that the tire blowout which stalled the truck in the first place occurred
in the wee hours of the morning. The Court can only now surmise that the unfortunate incident
could have been averted had respondent Condor, the owner of the truck, equipped the said
vehicle with lights, flares, or, at the very least, an early warning device.[49] Hence, we
cannot subscribe to respondents Condor and Pedranos claim that they should be absolved from
liability because, as found by the trial and appellate courts, the proximate cause of the
collision was the fast speed at which petitioner Laspias drove the bus. To accept this
proposition would be to come too close to wiping out the fundamental principle of law that a
man must respond for the foreseeable consequences of his own negligent act or omission.
Indeed, our law on quasi-delicts seeks to reduce the risks and burdens of living in society
and to allocate them among its members. To accept this proposition would be to weaken the
very bonds of society.[50]
The Liability of Respondent PPSII as Insurer
The trial court in this case did not rule on the liability of respondent PPSII, while the
appellate court ruled that, as no evidence was presented against it, the insurance company
is not liable.
A perusal of the records will show that when the petitioners filed the Third-Party
Complaint against respondent PPSII, they failed to attach a copy of the terms of the insurance
contract itself. Only Certificate of Cover No. 054940[51] issued in favor of Mr. William Tiu,
Lahug, Cebu City signed by Cosme H. Boniel was appended to the third-party complaint. The
date of issuance, July 22, 1986, the period of insurance, from July 22, 1986 to July 22,
1987, as well as the following items, were also indicated therein:

SCHEDULED VEHICLE

MODEL MAKE TYPE OF BODY COLOR BLT FILE NO.

Isuzu Forward Bus blue mixed

PLATE NO. SERIAL/CHASSIS MOTOR NO. AUTHORIZED UNLADEN
PBP-724 NO. SER450- 677836 CAPACITY 50 WEIGHT
1584124 6Cyls. Kgs.

SECTION 1/11 *LIMITS OF LIABILITY PREMIUMS

P50,000.00 PAID
A. THIRD PARTY LIABILITY

B. PASSENGER LIABILITY Per Person Per Accident P540.0052

P12,000.00 P50,000

In its Answer53 to the Third-Party Complaint, the respondent PPSII admitted the existence
of the contract of insurance, in view of its failure to specifically deny the same as required
under then Section 8(a), Rule 8 of the Rules of Court,54 which reads:

Sec. 8. How to contest genuineness of such documents. When an action or defense is founded
upon a written instrument copied in or attached to the corresponding pleading as provided in
the preceding section, the genuineness and due execution of the instrument shall be deemed
admitted unless the adverse party, under oath, specifically denies them, and sets forth what
he claims to be the facts; but the requirement of an oath does not apply when the adverse
party does not appear to be a party to the instrument or when compliance with an order for
inspection of the original instrument is refused.

In fact, respondent PPSII did not dispute the existence of such contract, and admitted
that it was liable thereon. It claimed, however, that it had attended to and settled the
claims of those injured during the incident, and set up the following as special affirmative
defenses:

Third party defendant Philippine Phoenix Surety and Insurance, Inc. hereby reiterates and
incorporates by way of reference the preceding paragraphs and further states THAT:-

8. It has attended to the claims of Vincent Canales, Asuncion Batiancila and Neptali Palces
who sustained injuries during the incident in question. In fact, it settled financially their
claims per vouchers duly signed by them and they duly executed Affidavit[s] of Desistance to
that effect, xerox copies of which are hereto attached as Annexes 1, 2, 3, 4, 5, and 6
respectively;

9. With respect to the claim of plaintiff, herein answering third party defendant through its
authorized insurance adjuster attended to said claim. In fact, there were negotiations to
that effect. Only that it cannot accede to the demand of said claimant considering that the
claim was way beyond the scheduled indemnity as per contract entered into with third party
plaintiff William Tiu and third party defendant (Philippine Phoenix Surety and Insurance,
Inc.). Third party Plaintiff William Tiu knew all along the limitation as earlier stated, he
being an old hand in the transportation business; 55

Considering the admissions made by respondent PPSII, the existence of the insurance
contract and the salient terms thereof cannot be dispatched. It must be noted that after
filing its answer, respondent PPSII no longer objected to the presentation of evidence by
respondent Arriesgado and the insured petitioner Tiu. Even in its Memorandum56 before the
Court, respondent PPSII admitted the existence of the contract, but averred as follows:

Petitioner Tiu is insisting that PPSII is liable to him for contribution, indemnification
and/or reimbursement. This has no basis under the contract. Under the contract, PPSII will
pay all sums necessary to discharge liability of the insured subject to the limits of liability
but not to exceed the limits of liability as so stated in the contract. Also, it is stated
in the contract that in the event of accident involving indemnity to more than one person,
the limits of liability shall not exceed the aggregate amount so specified by law to all
persons to be indemnified.57

As can be gleaned from the Certificate of Cover, such insurance contract was issued
pursuant to the Compulsory Motor Vehicle Liability Insurance Law. It was expressly provided
therein that the limit of the insurers liability for each person was P12,000, while the limit
per accident was pegged at P50,000. An insurer in an indemnity contract for third party
liability is directly liable to the injured party up to the extent specified in the agreement
but it cannot be held solidarily liable beyond that amount.58 The respondent PPSII could not
then just deny petitioner Tius claim; it should have paid P12,000 for the death of Felisa
Arriesgado,59 and respondent Arriesgados hospitalization expenses of P1,113.80, which the
trial court found to have been duly supported by receipts. The total amount of the claims,
even when added to that of the other injured passengers which the respondent PPSII claimed
to have settled,60 would not exceed the P50,000 limit under the insurance agreement.
Indeed, the nature of Compulsory Motor Vehicle Liability Insurance is such that it is
primarily intended to provide compensation for the death or bodily injuries suffered by
innocent third parties or passengers as a result of the negligent operation and use of motor
vehicles. The victims and/or their dependents are assured of immediate financial assistance,
regardless of the financial capacity of motor vehicle owners.61 As the Court, speaking through
Associate Justice Leonardo A. Quisumbing, explained in Government Service Insurance System
v. Court of Appeals:62

However, although the victim may proceed directly against the insurer for indemnity, the
third party liability is only up to the extent of the insurance policy and those required by
law. While it is true that where the insurance contract provides for indemnity against
liability to third persons, and such persons can directly sue the insurer, the direct liability
of the insurer under indemnity contracts against third party liability does not mean that the
insurer can be held liable in solidum with the insured and/or the other parties found at
fault. For the liability of the insurer is based on contract; that of the insured carrier or
vehicle owner is based on tort.

Obviously, the insurer could be held liable only up to the extent of what was provided for
by the contract of insurance, in accordance with the CMVLI law. At the time of the incident,
the schedule of indemnities for death and bodily injuries, professional fees and other charges
payable under a CMVLI coverage was provided for under the Insurance Memorandum Circular (IMC)
No. 5-78 which was approved on November 10, 1978. As therein provided, the maximum indemnity
for death was twelve thousand (P12,000.00) pesos per victim. The schedules for medical
expenses were also provided by said IMC, specifically in paragraphs (C) to (G).63

Damages to be Awarded
The trial court correctly awarded moral damages in the amount of P50,000 in favor of
respondent Arriesgado. The award of exemplary damages by way of example or correction of the
public good,64 is likewise in order. As the Court ratiocinated inKapalaran Bus Line v.
Coronado:65

While the immediate beneficiaries of the standard of extraordinary diligence are, of course,
the passengers and owners of cargo carried by a common carrier, they are not the only persons
that the law seeks to benefit. For if common carriers carefully observed the statutory
standard of extraordinary diligence in respect of their own passengers, they cannot help but
simultaneously benefit pedestrians and the passengers of other vehicles who are equally
entitled to the safe and convenient use of our roads and highways. The law seeks to stop and
prevent the slaughter and maiming of people (whether passengers or not) on our highways and
buses, the very size and power of which seem to inflame the minds of their drivers. Article
2231 of the Civil Code explicitly authorizes the imposition of exemplary damages in cases of
quasi-delicts if the defendant acted with gross negligence.66

The respondent Pedro A. Arriesgado, as the surviving spouse and heir of Felisa Arriesgado,
is entitled to indemnity in the amount of P50,000.00.67
The petitioners, as well as the respondents Benjamin Condor and Sergio Pedrano are jointly
and severally liable for said amount, conformably with the following pronouncement of the
Court in Fabre, Jr. vs. Court of Appeals:68

The same rule of liability was applied in situations where the negligence of the driver of
the bus on which plaintiff was riding concurred with the negligence of a third party who was
the driver of another vehicle, thus causing an accident. In Anuran v. Buo, Batangas Laguna
Tayabas Bus Co. v. Intermediate Appellate Court, and Metro Manila Transit Corporation v.
Court of Appeals, the bus company, its driver, the operator of the other vehicle and the
driver of the vehicle were jointly and severally held liable to the injured passenger or the
latters heirs. The basis of this allocation of liability was explained in Viluan v. Court of
Appeals, thus:

Nor should it make difference that the liability of petitioner [bus owner] springs from
contract while that of respondents [owner and driver of other vehicle] arises from quasi-
delict. As early as 1913, we already ruled in Gutierrez vs. Gutierrez, 56 Phil. 177, that in
case of injury to a passenger due to the negligence of the driver of the bus on which he was
riding and of the driver of another vehicle, the drivers as well as the owners of the two
vehicles are jointly and severally liable for damages. Some members of the Court, though, are
of the view that under the circumstances they are liable on quasi-delict.69

IN LIGHT OF ALL THE FOREGOING, the petition is PARTIALLY GRANTED. The Decision of the
Court of Appeals is AFFIRMED with MODIFICATIONS:
(1) Respondent Philippine Phoenix Surety and Insurance, Inc. and petitioner William Tiu
are ORDERED to pay, jointly and severally, respondent Pedro A. Arriesgado the total amount
of P13,113.80;
(2) The petitioners and the respondents Benjamin Condor and Sergio Pedrano are ORDERED to
pay, jointly and severally, respondent Pedro A. Arriesgado P50,000.00 as
indemnity; P26,441.50 as actual damages; P50,000.00 as moral damages; P50,000.00 as exemplary
damages; and P20,000.00 as attorneys fees.
SO ORDERED.

[1] [34]
Penned by Associate Justice Delilah Vidallon-Magtolis, with Article 1756. In case of death of or injuries to passengers,
Associate Justices Artemon D. Luna and Rodrigo V. Cosico common carriers are presumed to have been at fault or to have
concurring. acted negligently, unless they prove that they observed
[2]
Penned by Judge Ferdinand J. Marcos. extraordinary diligence as prescribed in articles 1733 and 1755.
[3] [35]
TSN, 3 September 1990, p. 7 (Pedrano). TSN, 23 January 1989, p. 8 (Arriesgado).
[4] [36]
TSN, 4 September 1990, p. 14 (Mitante, Jr.). Calalas v. Court of Appeals, 332 SCRA 356 (2000).
[5] [37]
TSN, 20 November 1989, p. 6. Light Rail Transit Authority v. Navidad, 397 SCRA 75 (2003).
[6] [38]
Exhibit G, Records, p. 8. Estrada v. Consolacion, 71 SCRA 523 (1976).
[7] [39]
TSN, 23 January 1989, pp. 7-13; Exhibit B. Calalas v. Court of Appeals, supra.
[8] [40]
Records, p. 2 Kapalaran Bus Line v. Coronado, 176 SCRA 792 (1989).
[9] [41]
Id. at 2-3. Estrada v. Consolacion, supra at 530.
[10] [42]
Id. at 5. Mallari, Sr. v. Court of Appeals, supra.
[11] [43]
Id. at 35-39. Phil. Rabbit Bus Lines, Inc. v. Intermediate Appellate Court, 189
[12]
Id. at 37-39. SCRA 158 (1990), citing Anuran v. Buo, 17 SCRA 224 (1966).
[13] [44]
Annexes 1 to 6, Records, pp. 57-62. Phoenix Construction, Inc. v. Intermediate Appellate Court, 148
[14]
Records, p. 55. SCRA 353 (1987).
[15] [45]
Id. at 311. Supra.
[16] [46]
Id. at 308. Id. at 367-368.
[17] [47]
CA Rollo, pp 29-30. 93 SCRA 200 (1979).
[18] [48]
Rollo, p. 29. Id. at 204.
[19] [49]
Id. at 12-13. Letter of Instructions (LOI) No. 229 which was issued by then
[20]
Flores v. Uy, 368 SCRA 347 (2001). President Ferdinand E. Marcos on December 2, 1974 in recognition
[21]
Yobido v. Court of Appeals, 281 SCRA 1 (1997). of the fact that as statistics then showed, one of the major causes
[22]
Cresenciano Duremdes v. Agustin Duremdes, G.R. No. 138256, of fatal or serious accidents in land transportation is the presence
November 12, 2003. of disabled, stalled, or parked motor vehicles or highways without
[23]
TSN, 20 November 1989, p. 6 any appropriate early warning device, requires vehicles to have
[24]
Ibid. such devices at all times. It was later on amended by LOI No. 479,
[25]
Exhibits 1 to 7. issued on November 15, 1976. The pertinent provisions are as
[26]
CA Rollo, p. 79. follows:
[27]
Picart v. Smith, 37 Phil. 809 (1918), cited in People v. De los 1. That all powers, users or drivers of motor vehicles shall have at
Santos, 355 SCRA 415, 430 (2001). all times in their motor vehicles at least one (1) pair of early warning
[28]
Records, p. 307. device consisting of a triangular, collapsible reflectorized plates in
[29]
Section 53, Motor Vehicle Law, cited in McKee v. Intermediate red and yellow colors at least 5 cm. at the base and 40 cms. at the
Appellate Court, 211 SCRA 517, 541 (1992). sides.
[30]
Emphasis supplied. 2. Whenever any motor vehicle is stalled or disabled or is parked
[31]
Mallari, Sr. v. Court of Appeals, 324 SCRA 147 (2000). for thirty (30) minutes or more on any street or highways, including
[32]
Article 1733. Common carriers, from the nature of their business expressways or limited access roads, the owner, user or driver
and for reasons of public policy, are bound to observe extraordinary thereof shall cause the warning device mentioned herein to be
diligence in the vigilance over the goods and for the safety of installed at least four meters away to the front and rear of the
passengers transported by them, according to all the circumstances motor vehicle stalled, disabled or parked.
of each case. 3. The Land Transportation Commissioner shall require every motor
Such extraordinary diligence in the vigilance over the goods is vehicle owner to procure from any source and present at
further expressed in articles 1734, 1735, and 1745, Nos. 5, 6, and 7, registration of his vehicle, one pair of reflectorized triangular early
while the extraordinary diligence for the safety of passengers is warning device, as described herein, of any brand or make chosen
further set forth in articles 1755 and 1756. by said motor vehicle owner. The Land Transportation
[33]
Article 1755. A common carrier is bound to carry passengers Commissioner shall also promulgate such rules and regulations as
safely as far as human care and foresight can provide, using the are appropriate to effectively implement this order.
[50]
utmost diligence of very cautious persons, with a due regard for all Phoenix Construction, Inc. v. Intermediate Appellate
the circumstances. Court, supra at 370.
[51]
Records, p. 41.
52 60
Ibid. Annexes 1 to 6 (Answer to the Third-party Complaint), Records,
53
Id. at 54-62. pp. 57-62.
54 61
Now Section 8, rule 8 of the Revised Rules of Civil Procedure, as Shafer v. Judge, RTC of Olongapo City, Branch 75, 167 SCRA 386
amended, and the epitaph now reads, How to contest such (1988).
62
documents. 308 SCRA 559 (1999).
55 63
Records, p. 55; Answer, p. 2. Id. at 569-570
56 64
Rollo, pp. 161-169. Article 2229, Civil Code.
57 65
Id. at 166. Supra.
58 66
Metro Manila Transit Corporation vs. Court of Appeals, 298 SCRA Id. at 801-802.
67
494 (1998). Metro Manila Transit Corporation, supra.
59 68
See Perla Campania de Seguros, Inc. v. Court of Appeals, 185 259 SCRA 426 (1996).
69
SCRA 741 (1990). Id. at 438.

-------------------------------------------------------------------------------------------

EN BANC

G.R. No. L-21151 June 26, 1968

LOURDES MUNSAYAC, petitioner,

vs.
BENEDICTA DE LARA and THE COURT OF APPEALS, respondents.

As a result of injuries suffered by the plaintiff-appellee while riding as a passenger on a

jeepney owned and operated by the defendant-appellant, this action for recovery of damages
was filed in the Court of First Instance of Rizal (Pasig Branch). The trial Judge found the
driver recklessly negligent: he drove at an excessive speed, unmindful of the fact that the
road was under repair and heedless of the passengers' pleas that he go more slowly. Besides
the award of compensatory damages for actual expenses incurred and loss of income, the
defendant was ordered to pay P1,000.00 as exemplary damages and P500.00 as attorney's fees.
On these last two items the defendant appealed to the Court of Appeals, which rendered a
judgment of affirmance, quoting the trial Court's justification for the award as follows:

The defendant's admission that the accident happened and the plaintiff's extensive
injuries as a result thereof, despite which the defendant failed, or even refused, to
placate the sufferings of plaintiff, necessitating the filing of this action, entitled
plaintiff to exemplary damages — to set an example to others — and attorney's fees.

The case is new before us on review by certiorari.

The Civil Code provides that "exemplary or corrective damages are imposed, by way of example
or correction for the public good" (Act 2229); and that in contracts "the Court may award
exemplary damages if the defendant acted in wanton, fraudulent, reckless, oppressive or
malevolent manner" (Art. 2232).

Appellant points out that the act referred to in Article 2232 must be one which is coetaneous
with and characterizes the breach of the contract on which the suit is based, and not one
which is subsequent to such breach and therefore has no causal relation thereto, such as the
herein defendant's failure to placate the sufferings of the plaintiff.

Appellant relies on the case of Rotea vs. Halili, G.R. No. L-12030, September 30, 1960, where
this Court held:

According to the rule adopted by many courts, a principal or master can be held liable
for exemplary or punitive damages based upon the wrongful act of his agent or servant
 only where he participated in the doing of such wrongful act or has previously authorized
or subsequently ratified it with full knowledge of the facts. Reasons given for this
rule are that since damages are penal in character, the motive authorizing their
infliction will not be imputed by presumption to the principal when the act is committed
by an agent or servant, and that since they are awarded not by way of compensation, but
as a warning to others, they can only be awarded against one who has participated in
the offense, and the principal therefore cannot be held liable for them merely by reason
of wanton, oppressive or malicious intent on the part of the agent (15 Art. Jur. 730).

We believe the point of the appellant is well-taken. It is difficult to conceive how the
defendant in a breach of contract case could be held to have acted in a wanton, fraudulent,
reckless, oppressive or violent manner within the meaning of Article 2232 for something he
did or did not do after the breach, which had no causal connection therewith. The law does
not contemplate a vicarious liability on his part: the breach is his as party to the contract,
and so if he is to be held liable at all for exemplary damages by reason of the wrongful act
of his agent, it must be shown that he had previously authorized or knowingly ratified it
thereafter, in effect making him a co-participant. From the decision under review, however,
there is nothing to show previous authority or subsequent ratification by appellant insofar
as the recklessness of the driver was concerned. The mere statement that the defendant failed,
even refused, to placate the suffering of the plaintiff, necessitating the filing of the
action, is too tenuous a basis to warrant the conclusion that the defendant approved of the
wrongful act of his servant with full knowledge of the facts.

It is not enough to say that an example should be made, or corrective measures employed, for
the public good, especially in accident cases where public carriers are involved. For the
causative negligence in such cases is personal to the employees actually in charge of the
vehicles, and it is they who should be made to pay this kind of damages by way of example or
correction, unless by the demonstrated tolerance or approval of the owners they themselves
can be held at fault and their fault is of the character described in Article 2232 of the
Civil Code. Otherwise there would be practically no difference between their liability for
exemplary damages and their liability for compensatory damages, which needs no proof of their
negligence since the suit is predicated on breach of contract and due diligence on their part
does not constitute a defense.

IN VIEW OF THE FOREGOING, the judgment appealed from is modified by eliminating the award for
exemplary damages, and affirmed with respect to the attorney's fees. No pronouncement as to
costs.

-------------------------------------------------------------------------------------------

FIRST DIVISION

[G.R. No. 139268. September 3, 2002]

PHILIPPINE TELEGRAPH & TELEPHONE CORPORATION and LOUIE CABALIT, petitioners, vs. HON. COURT
OF APPEALS and LOLITA SIPE ESCARA, respondents.

D E C I S I O N
Assailed in the instant petition of the Philippine Telegraph & Telephone Corporation
(PT&T) and Louie Cabalit is the judgment of the Court of Appeals in CA G.R. CV No. 48313,
promulgated on 15 March 1999, which has affirmed with modification the decision of the
Regional Trial Court of Makati awarding damages to respondent Lolita Sipe Escara.
The facts were synthesized by the appellate court in its decision under review.

On July 13, 1990, Felicitas B. Sipe, a resident of Surralah, South Cotabato, remitted to her
sister-in-law, Lolita Sipe Escara, two telegraphic money orders through the facilities of
Philippine Telegraph and Telephone Company (PT&T, for brevity). The money orders, one for
P2,000.00 and the other for P1,000.00, originated from Marbel, South Cotabato, and were
transmitted to the Cubao branch of PT&T.Plaintiff was then studying for a doctoral degree in
Education at the University of the Philippines (U.P., for brevity), Diliman, Quezon City and
was residing in one of its dormitories, the Ipil Residence Hall. According to the plaintiff,
the money was sent for the purpose of paying for her tuition fee for one semester at the
U.P.; paying for her fare to go back to Cotabato to enable her to complete the requirements
for a job promotion; and paying for the cost of the medical consultation of her son who is
sick of diabetes.
On July 22, 1990, plaintiffs husband sent her a telegram advising her to inform him if she
has received a remittance of P3,000.00. She made several phone calls to PT&T to inquire about
the money but was told that no money was transmitted in her favor. On August 10, 1990,
plaintiff sent her husband a telegram to inform him of her non-receipt of the money. On August
18, 1990, plaintiffs husband again sent her a telegram instructing her to claim at the PT&T
Cubao branch the money transmitted on July 13, 1990.

On August 20, 1990, plaintiff went to the PT&T office to inquire about the remittance in her
favor. Since Louie Cabalit, the branch cashier, was not around, plaintiff was constrained to
return the next day. It was only in the afternoon of August 21, 1990, that she was able to
talk to Louie Cabalit about the remittance. Cabalit looked into his records, after which, the
branch security guard informed plaintiff that no money was transmitted to her. Upon plaintiffs
request, Cabalit issued a certification that no telegraphic money order in favor of plaintiff
was received from Surralah by PT&T. Nevertheless, Cabalit told her that he would re-examine
his records to determine whether a remittance was made in her name.

Subsequently, Cabalit informed plaintiff that the money being claimed by her did not come
from Surralah but from Marbel, South Cotabato.On August 22, 1990, an attempt was made by PT&T
to deliver the telegraphic money order at plaintiffs dormitory but she was not around.On
September 10, 1990, plaintiff received from PT&T two checks representing the amount remitted
to her. However, plaintiff was not able to encash the checks at once because the bank did not
have a clearance from PT&T. Finally, on September 14, 1990, plaintiff was able to encash the
checks.

Aggrieved by the delay in the delivery of the remittance, plaintiff filed a complaint for
damages against PT&T and Louie Cabalit. In her complaint, she alleged that the delay was the
cause of her failure to enroll for one semester at the U.P.; to complete her requirements for
a job promotion; and to bring her son to the doctor for medical consultation. On November 29,
1994, the lower court rendered the questioned decision, the dispositive portion of which
reads:

`WHEREFORE, this Court renders judgment in favor of the plaintiff and against the defendants,
ordering the defendants, jointly and severally, to pay the plaintiff:

`1. The sum of P100,000.00 in actual/compensatory damages;

`2. The sum of P50,000 in moral damages;

`3. The sum of P10,000.00 in exemplary damages;

`4. No attorneys fees awarded being a pro bono publica case; and

`5. To pay costs of suits.[1]

Petitioners appealed the decision of the trial court to the Court of Appeals. The appellate
court affirmed the decision with modification. Finding to be inadequate the evidence submitted
by respondent Lolita Sipe Escara to prove pecuniary loss suffered by her, the Court of Appeals
deleted the award of actual damages. The appellate court, however, sustained the award of
moral and exemplary damages in favor of private respondent, ratiocinating thusly:

Article 1170 of the Civil Code provides that `those who in the performance of their obligations
are guilty of fraud, negligence, or delay and those who in any manner contravene the tenor
thereof, are liable for damages. In the case at bar, appellant PT&T, for a fee, undertook to
send plaintiff two telegraphic money orders in the sum of P3,000.00. Appellant, however,
failed to deliver the money to plaintiff immediately after the money order was transmitted
to its Cubao branch. It was only on September 14, 1990, or almost two months from transmittal
that plaintiff was finally able to have her money.

We find PT&T negligent when it did not take steps to ensure the prompt delivery of the money
to plaintiff from the time the checks were issued in her favor. It is quite clear that PT&T
did not act with any sense of urgency but with indifference and nonchalance with respect to
plaintiffs case. First of all, after Louie Cabalit endorsed the two checks to the dispatch
section of PT&T and subsequently took an emergency leave, the personnel at the Cubao branch
did not exert enough effort to effect the delivery of the money. In fact, the Cubao branch
wired its Marbel branch only on August 3, 1990 to request for the complete address of the
recipient from the sender. Apparently, it took them eighteen days to realize that the address
of the recipient was insufficient.
Furthermore, the claim of PT&T that it made several attempts to deliver the money between
July 17, 1990 and August 3, 1990 is open to doubt because there is no proof showing to what
extent PT&T endeavored to locate the plaintiff. Francisco Dumlao, administrative officer of
the Registrars Office of U.P., testified that the addressee of letters or telegrams labeled
only as `U.P. Diliman, is located by referring to the records of currently enrolled students
under the active file or to the records of its alumni under the inactive file. It appears
that PT&T did not attempt to inquire from the Registrars Office regarding plaintiffs
whereabouts since it obviously failed to draw the inference that the University of the
Philippines is a school with facilities that can be of assistance in locating its own
students.[2]

In the instant appeal, petitioners would strongly urge that the appellate court be reversed
in awarding moral and exemplary damages to respondent Lolita Escara with the latters failure
to present evidence that she had suffered wounded feelings, serious anxiety, and mental
anguish or that the act she had ascribed to petitioners was done in bad faith, or in wanton,
fraudulent, oppressive or malevolent manner. Private respondent, however, would insist that
the clearly established culpable conduct of petitioners warranted the award of both moral and
exemplary damages.
There is merit in the petition.
The breach of an obligation because of fraud, negligence or delay or of a contravention
by any means of the tenor of that obligation does open the defaulting obligor to possible
liability for damages. The right to those damages and the extent of their recovery would
depend on the kind and nature of the damages and the manner in which the injury causing it
is brought about.
The Court of Appeals was correct in deleting the award made by the trial court of actual
damages where proof of pecuniary loss, in an action based on culpa contractual, is
essential. Finding the evidence to be wanting in this respect, the appellate court did not
err in its judgment.
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 2219[3] and 2220[4] of the Civil Code.[5]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. In culpa contractual or breach
of contract, particularly, moral damages may be recovered when the defendant has acted in bad
faith or is found to be guilty of gross negligence (amounting to bad faith) or in wanton
disregard of his contractual obligation.[6]
In the case at bar, the appellate court itself did not see any clear indication of bad
faith or gross negligence amounting to bad faith on the part of petitioners. It would be
error to make an award of moral damages to private respondent merely because petitioner
corporation was unable to effect immediate delivery of the money sent through it in two money
orders, one for P2,000.00 and the other for P1,000.00. Indeed, it would appear that the
address given by the sender was merely and vaguely stated to be U.P. Diliman Quezon City. So,
also, when private respondent went to the office of petitioner PT&T to inquire about the
money order she erroneously mentioned it to have been sent from Surralah, South Cotabato. It
was only upon verification made by petitioners that the latter were able to discover that the
money transfers did originate, not, however, from Surralah, but from Marbel, South
Cotabato. Given all the circumstances found by the appellate court, the delay of less than
two months in the remittance to private respondent of the amounts due her could hardly be
said as being constitutive of bad faith or gross negligence amounting to bad faith.
Neither can the award of exemplary damages be sustained. Exemplary damages are not
recoverable as a matter of right.[7]Although such damages need not be proved, plaintiff must
first show that he is entitled to moral, temperate, or compensatory damages before a court
can favorably consider an award of exemplary damages.[8] In contracts and quasi-contracts,
specifically, exemplary damages may be justified if the defendant is shown to have acted in
a wanton, fraudulent, reckless, oppressive, or malevolent manner.[9] Petitioner corporation
might have been remiss in the prompt delivery of the sums sent through it to respondent;
however, the Court would be hardput to say that such delay under the facts obtaining can be
described as being wanton, fraudulent, reckless, or oppressive in character.
Still, of course, petitioner corporation is not totally free from liability. It may have
had good reasons, but it has not been able to overcome thereby its burden to prove a
valid excuse, for the breach of agreement such as by proving, among other possible legal
grounds, fortuitous event to account for its failure. The breach would have justified a
recovery of actual damages but, there being no adequate proof of pecuniary loss found by the
appellate court, such damages cannot be awarded. Neither moral nor exemplary damages have
been justified, as hereinbefore explained, as to warrant any recovery thereof. The Court thus
is left with two alternative possibilities an award of temperate or moderate damages or an
award of nominal damages.
Temperate or moderate damages may only be given if the court finds that some pecuniary loss
has been suffered but that its amount cannot, from the nature of the case, be proved with
certainty.[10] The factual findings of the appellate court that respondent has failed to
establish such pecuniary loss or, if proved, cannot from their nature be precisely quantified
precludes the application of the rule on temperate or moderate damages. The result comes down
to only a possible award of nominal damages. Nominal damages are adjudicated in order that a
right of the plaintiff, 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 by
him.[11]The court may award nominal damages in every obligation arising from any source
enumerated in article 1157 of the Civil Code or, generally, in every case where property
right is invaded.
In the instant case, for the violation of the right of private respondent to receive
timely delivery of the money transmitted through petitioner corporation an award of nominal
damages is appropriate. An amount of P20,000.00 by way of nominal damages, considering all
that private respondent has had to go through, is in the Courts view reasonable and fair.
There is, however, neither enough factual nor adequate legal basis to hold petitioner
Louie Cabalit, PT&Ts branch cashier, solidarily liable with petitioner corporation.
WHEREFORE, the instant petition is GRANTED. The appealed decision is reversed and set
aside and, in its stead, petitioner Philippine Telegraph & Telephone Corporation is ordered
to pay respondent Lolita Sipe Escara the sum of P20,000.00 by way of nominal damages. Costs
against petitioner corporation.
SO ORDERED.

[1]
Rollo, pp. 27-29. 298; Go vs. Court of Appeals, 272 SCRA 752; Del Rosario vs. Court
[2]
Rollo, pp. 31-32. of Appeals, 267 SCRA 158; Octot vs. Ybaez, 111 SCRA 79; Ace
[3]
ART. 2219 Moral damages may be recovered in the following and Haulers Corporation vs. Court of Appeals, 338 SCRA 572; Macalino,
analogous cases: Jr. vs. People, 340 SCRA 11.
[7]
(1) A criminal offense resulting in physical injuries; Art. 2233, Civil Code.
[8]
(2) Quasi-delicts causing physical injuries; See Art. 2234, Civil Code; Philippine National Bank vs. Court of
(3) Seduction, abduction, rape, or other lascivious acts; Appeals, 266 SCRA 136.
[9]
(4) Adultery or concubinage; J Marketing Corporation vs. Sia, Jr., 285 SCRA 580; Xentrex
(5) Illegal or arbitrary detention or arrest; Automotive, Inc. vs. Court of Appeals, 291 SCRA 66; Art. 2234 of the
(6) Illegal search; Civil Code provides:
(7) Libel, slander or any other form of defamation; ART. 2234. While the amount of the exemplary damages need not
(8) Malicious prosecution; be proved, the plaintiff must show that he is entitled to moral,
(9) Acts mentioned in article 309; temperate or compensatory damages before the court may
(10) Acts and actions referred to in articles 21, 26, 27, 28, 29, 30, consider the question of whether or not exemplary damages should
32, 34, and 35. be awarded. In case liquidated damages have been agreed upon,
The parents of the female seduced, abducted, raped, or abused, although no proof of loss is necessary in order that such liquidated
referred to in No. 3 of this article, may also recover moral damages. damages may be recovered, nevertheless, before the court may
The spouse, descendants, ascendants, and brothers and sisters may consider the question of granting exemplary in addition to the
bring the action mentioned in No. 9 of this article, in the order liquidated damages, the plaintiff must show that he would be
named. entitled to moral, temperate or compensatory damages were it not
[4]
ART. 2220. Willful injury to property may be a legal ground for for the stipulation for liquidated damages.
[10]
awarding moral damages if the court should find that, under the ART. 2224. Temperate or moderate damages, which are more
circumstances, such damages are justly due. The same rule applies than nominal but less than compensatory damages, may be
to breaches of contract where the defendant acted fraudulently or recovered when the court finds that some pecuniary loss has been
in bad faith. suffered but its amount can not, from the nature of the case, be
[5]
Industrial Insurance Company, Inc. vs. Bondad, 330 SCRA 706. proved with certainty.
[6] [11]
Expert Travel & Tours, Inc. vs. Court of Appeals, 309 SCRA 141; Article 2221, Civil Code of the Philippines; Sumalpong vs. Court
see also Integrated Packaging Corporation vs. Court of of Appeals, 268 SCRA 764.
Appeals, 333 SCRA 170; Magat, Jr. vs. Court of Appeals 337 SCRA