Kierulf vs.

Court of Appeals
G.R. No. 99301. March 13, 1997.*
VICTOR KIERULF, LUCILA H. KIERULF and PORFIRIO LEGASPI, petitioners, vs. THE COURT OF APPEALS and PANTRANCO
NORTH EXPRESS, INCORPORATED, respondents.
G.R. No. 99343. March 13, 1997.
PANTRANCO NORTH EXPRESS, INCORPORATED, petitioner, vs. VICTOR KIERULF, LUCILA H. KIERULF and PORFIRIO
LEGASPI, respondents.

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

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

Same; Same; For lack of factual basis, the claim for deprivation of the right to consortium cannot be ruled upon by the
Court at this time.—Victor’s claim for deprivation of his right to consortium, although argued before Respondent Court,
is not supported by the evidence on record. His wife might have been badly disfigured, but he had not testified that, in
consequence thereof, his right to marital consortium was affected. Clearly, Victor (and for that matter, Lucila) had failed
to make out a case for loss of consortium, unlike the Rodriguez spouse. Again, we emphasize that this claim is factual in
origin and must find basis not only in the evidence presented but also in the findings of the Respondent Court. For lack
of factual basis, such claim cannot be ruled upon by this Court at this time.

Civil Law; Damages; The social and financial standing of a claimant of moral damages may be considered in awarding
moral damages only if he or she was subjected to contemptuous conduct despite the offender’s knowledge of his or her
social and financial standing.—The social and financial standing of Lucila cannot be considered in awarding moral
damages. The factual circumstances prior to the accident show that no “rude and rough” reception, no “menacing
attitude,” no “supercilious manner,” no “abusive language and highly scornful reference” was given her. The social and
financial standing of a claimant of moral damages may be considered in awarding moral damages only if he or she was
subjected to contemptuous conduct despite the offender’s knowledge of his or her social and financial standing.

Same; Same; Exemplary damages cannot be recovered as a matter of right; Certain requirements before exemplary
damages may be awarded.—Exemplary damages are designed to permit the courts to mould behavior that has socially
deleterious consequences, and its imposition is required by public policy to suppress the wanton acts of an offender.
However, it cannot be recovered as a matter of right. It is based entirely on the discretion of the court. Jurisprudence sets
certain requirements before exemplary damages may be awarded, to wit: “(1)(T)hey may be imposed by way of example
or correction only in addition, among others, to compensatory damages, and cannot be recovered as a matter of right,
their determination depending upon the amount of compensatory damages that may be awarded to the claimant; (2)
the claimant must first establish his right to moral, temperate, liquidated or compensatory damages; and (3) the
wrongful act must be accompanied by bad faith, and the award would be allowed only if the guilty party acted in a
wanton, fraudulent, reckless, oppressive or malevolent manner.”
Same; Same; Moral damages though incapable of pecuniary estimation are in the category of an award designed to
compensate the claimants for actual injury and are not meant to enrich complainant at the expense of defendant.—Lost
income in the amount of P16,500.00 is also claimed by Legaspi stating that his “whole future has been jeopardized.” This,
in turn, is not rebutted by Pantranco. It should be noted that Respondent Court already considered this when it stated
that the award of P25,000.00 included compensation for “mental anguish and emotional strain of not earning anything
with a family to support.” Moral damages, though incapable of pecuniary estimation, are in the category of an award
designed to compensate the claimant for actual injury and are not meant to enrich complainant at the expense of
defendant.

Same; Same; A party is entitled to adequate compensation for such pecuniary loss actually suffered and duly proved.—
We agree with the findings of Respondent Court that Lucila’s claim of loss of earning capacity has not been duly proven.
The alleged loss must be established by factual evidence for it partakes of actual damages. A party is entitled to
adequate compensation for such pecuniary loss actually suffered and duly proved. Such damages, to be recoverable,
must not only be capable of proof, but must actually be shown with a reasonable degree of certainty. We have
emphasized that these damages cannot be presumed, and courts in making an award must point out specific facts which
can serve as basis for measuring whatever compensatory or actual damages are borne.

PETITION for review on certiorari of a decision of the Court of Appeals.

The facts are stated in the opinion of the Court.

Amado R. Fojas for petitioners in G.R. No. 99301.

Antonio P. Pekas for Pantranco North Express, Inc.

Gupit, Navarrete and Diaz collaborating counsel for petitioners in G.R. No. 99301.

PANGANIBAN, J.:

How much moral, exemplary and actual damages are victims of vehicular accidents entitled to?

In G.R. No. 99301, the victims of the vehicular mishap pray for an increase in the award of damages, over and above
those granted by the appellate court. In this case, the husband of the victim of the vehicular accident claims
compensation/damages for the loss of his right to marital consortium which, according to him, has been diminished due
to the disfigurement suffered by his wife. In G.R. No. 99343, the transport company, which owned the bus that collided
with the victim’s pickup truck, asks for exoneration by invoking an alleged fortuitous event as the cause of the mishap.

Petitioners in both cases assail the Decision,1 dated March 13, 1991, in CA-GR CV No. 23361 of the Court of Appeals,
Sixth Division2 ordering the following:3

“For reasons indicated and in the light of the law and jurisprudence applicable to the case at bar, the judgment of the
trial court is hereby modified as follows:

Under the first cause of action, the defendant is hereby ordered to pay Lucila H. Kierulf the following:

(1) For actual damages incurred for hospitalization, medical case (sic) and doctor’s fees, the sum of P241,861.81;

(2) For moral damages the sum of P200,000.00;

(3) For exemplary damages the amount of P100,000.00.

Under the second cause of action, to pay Victor Kierulf, by way of indemnification damage to the Isuzu Carry All with
plate No. UV PGS 798, the amount of P96,825.15.

Under the third cause of action, to pay Porfirio Legaspi the following:

(1) For moral damages in the amount of P25,000.00;

(2) To reimburse the plaintiff the amount of P6,328.19 for actual damages incurred in the treatment and hospitalization
of the driver Porfirio Legaspi.

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

And to pay the costs of suit.”

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

“WHEREFORE, in view of the foregoing, judgment is hereby rendered against the defendant, ordering Pantranco to pay:

Under the First Cause of Action

1. In favor of plaintiff Lucila H. Kierulf actual damages in the amount on ONE HUNDRED SEVENTY FOUR THOUSAND ONE
HUNDRED and 77/100 (P174,100.77) PESOS;

2. To pay said plaintiff moral damages in the amount of ONE HUNDRED THOUSAND and 00/100 (P100,000.00) PESOS;

3. To pay exemplary damages in the amount of TEN THOUSAND and 00/100 (P10,000.00) PESOS.

Under the Second Cause of Action

1. To pay plaintiff Victor Kierulf the amount of NINETY SIX THOUSAND EIGHT HUNDRED TWENTY FIVE and 15/100
(P96,825.15) PESOS by way of indemnification for the damages to the Isuzu Carry All with plate No. UV PGS 796
registered in his name.

Under the Third Cause of Action

1. To pay the plaintiff spouses by way of reimbursement for actual damages incurred for the treatment of injuries
sustained by their driver Porfirio Legaspi in the amount of SIX THOUSAND THREE HUNDRED TWENTY EIGHT and 19/100
(P6,328.19) PESOS; and

2. To pay plaintiff Porfirio Legaspi moral damages in the amount of TEN THOUSAND and 00/100 (P10,000.00) PESOS.’

4 Presided by Judge Pacita Canizares-Nye, now Associate Justice of the Court of Appeals.

5 Rollo, G.R. No. 99301, pp. 44-45.

Defendant is further ordered to pay the amount of P25,000.00 for and as attorney’s fees, and to pay costs.

All other claims and counterclaims are dismissed.”

The Facts

The following may be culled from the undisputed factual findings of the trial court and Respondent Court of Appeals:
The initial investigation conducted by Pfc. D.O. Cornelio disclosed that at about 7:45 p.m. of 28 February 1987, the
Pantranco bus, bearing plate number AVE-845 (TB PIL 86), was travelling along Epifanio de los Santos Avenue (EDSA)
from Congressional Avenue towards Clover Leaf, Balintawak. Before it reached the corner of Oliveros Drive, the driver
lost control of the bus, causing it to swerve to the left, and then to fly over the center island occupying the east-bound
lane of EDSA. The front of the bus bumped the front portion of an Isuzu pickup driven by Legaspi, which was moving
along Congressional Avenue heading towards Roosevelt Avenue. As a result, the points of contact of both vehicles were
damaged and physical injuries were inflicted on Legaspi and his passenger Lucila Kierulf, both of whom were treated at
the Quezon City General Hospital. The bus also hit and injured a pedestrian who was then crossing EDSA.

Despite the impact, said bus continued to move forward and its front portion rammed against a Caltex gasoline station,
damaging its building and gasoline dispensing equipment.

As a consequence of the incident, Lucila suffered injuries, as stated in the medical report6 of the examining physician,

Wound, lacerated, 10.0 cm., running forwards and upwards, located at the temporal region, scalp, right side; 10.0 cm.,
from the median line; C-shaped 13.0 cm., located at the parietal region, scalp, right side; 4.0 cm., from the median line;
2.0 cm., located at the angle of themmouth (sic), left and right side.

Dr. Pedro P. Solis of the Quezon City General Hospital. The injuries sustained by Lucila required major surgeries like

Abrasion, extensive, involving the anterolateral aspect of the neck and supraclavicular region, left side; extensive
involving the medial aspect, distal third of the forearm; extensive involving the anterior aspect of the kneesand (sic)
lateral aspect of the upper half, left side, 0.5 cm., numbering in two, anterior aspect, knee, right side; 1.0 cm., numbering
in two, located at the medial aspect, knee right side; multilinear ranging from 1.0 to 4.0 cm., running horizontally located
at the lateral aspect, proximal third, leg, right side; 5.0 cm., located at the mid clavicular line at the level of the second
rib, left side.

Contusion, involving the posterior aspect, hand, left side; s.0 (sic) cm., in diameter, located at the antero-medial aspect,
proximal third leg, right side.

SKULL #227609 (3-1-87)

CHEST No demonstrable skull fracture.

FOR

RIBS

CERVICAL There is a complete transverse fracture of the left third posterior rib with mild subpleural hematoma.
Incidental note of normal cardiopulmonary findings.

BOTH Limited view of the cervical vertebrae with C6 and

CLAVICLES C7 not visualized in the lateral view, show no evident fracture nor dislocation.

WRIST No demonstrable fracture in both clavicles and writs. There is a double fracture of the mandible with some
separable and displacement. Suggest panorex view.

CONCLUSIONS:

1. The above described physical injuries are found in the body of the subject, the age of which is compatible to the
alleged date of infliction.
2. Under normal conditions, without subsequent complication and/ordeeper involvement present, but not clinically
apparent at the time of the examination, the above-described physical injuries will require medical attendance or will
incapacitate the victim for a period not less than 31 (thirty one) days.” (Annex “B”).”

“tracheotomy, open reduction, mandibular fracture, intermaxillary repair of multiple laceration” and prolonged
treatment by specialists. Per medical report of Dr. Alex L. Castillo, Legaspi also suffered injuries.7

The front portion of the pickup truck, owned by Spouses Kierulf, bearing plate number UV PGS 798, was smashed to
pieces. The cost of repair was estimated at P107,583.50.

Pantranco, in its petition,8 adds that on said day, the above-mentioned bus was driven by Jose Malanum. While cruising
along EDSA, a used engine differential accidentally and suddenly dropped from a junk truck in front of the bus. Said
differential hit the underchassis of the bus, throwing Malanum off his seat and making him lose control of said bus. The
bus swerved to the left, hit the center island, and bumped the pickup of the spouses.

The Issues

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

“A

The respondent court of appeals erred in awarding only P200,000.00 and P25,000.00 as and for moral damages for the
petitioners Kierulf and Legaspi respectively when it should at least have been P1,000,000.00 and P100,000.00
respectively.

“DIAGNOSIS:

- Fracture open, comminuted inferior pole, patalla (R)

- Wound lacerated, sutured 2.5 cm. pariental (sic) (L)

- Wound lacerated, sutured 1.5 cm. parietal (R)

OPERATION PERFORMED: Partial pallectomy

PROBABLE DISABILITY/PERIOD OF HEARING:

Not less than 30 days. (Annex “D”).”

The respondent court of appeals erred in awarding only P100,000.00 to the petitioners Kierulf and nothing to petitioner
Legaspi as and for exemplary damages when it should have at least been P500,000.00 and P50,000.00 respectively.

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

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

The respondent court of appeals erred in not awarding any legal interest on the sums awarded.”

On the other hand, Pantranco raises the following assignment of errors:10

“4.1 The Honorable Court of Appeals erred in holding that the driver of Pantranco was negligent.

4.2 The Honorable Court of Appeals erred in holding that the proximate cause of the accident was the negligence of
Pantranco and not a fortuitous event; and

4.2 (sic) The Honorable Court of Appeals erred in awarding excessive damages.”

In sum, Spouses Kierulf and Legaspi argue that the damages awarded were inadequate while Pantranco counters that
they were astronomical, bloated and not duly proved.11

The Court’s Ruling

First Issue: Negligence and Proximate Cause Are Factual Issues

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

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

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

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

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

Second Issue: Moral Damages

Complainants aver that the moral damages awarded by Respondent Court are “clearly and woefully not enough.” The
established guideline in awarding moral damages takes into consideration several factors, some of which are the social
and financial standing of the injured parties and17 their wounded moral feelings and personal pride.18 The Kierulf
spouses add that the Respondent Court should have considered another factor: the loss of their conjugal fellowship and
the impairment or destruction of their sexual life.19

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

Pantranco rebuts that Victor’s claim of moral damages on alleged loss of consortium is without legal basis. Article 2219
of the Civil Code provides that only the person suffering the injury may claim moral damages. Additionally, no evidence
was adduced to show that the consortium had indeed been impaired and the Court cannot presume that marital
relations disappeared with the accident.22 The Court notes that the Rodriguez case clearly reversed the original common
law view first enunciated in the case of Deshotel vs. Atchison,23 that a wife could not recover for the loss of her
husband’s services by the act of a third party. Rodriguez ruled that when a person is injured to the extent that he/she is
no longer capable of giving love, affection, comfort and sexual relations to his or her spouse, that spouse has suffered a
direct and real personal loss. The loss is immediate and consequential rather than remote and unforeseeable; it is
personal to the spouse and separate and distinct from that of the injured person.

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

Whether Rodriguez may be cited as authority to support the award of moral damages to Victor and/or Lucila Kierulf for
“loss of consortium,” however, cannot be properly considered in this case.

Victor’s claim for deprivation of his right to consortium, although argued before Respondent Court, is not supported by
the evidence on record. His wife might have been badly disfigured, but he had not testified that, in consequence thereof,
his right to marital consortium was affected. Clearly, Victor (and for that matter, Lucila) had failed to make out a case for
loss of consortium, unlike the Rodriguez spouse. Again, we emphasize that this claim is factual in origin and must find
basis not only in the evidence presented but also in the findings of the Respondent Court. For lack of factual basis, such
claim cannot be ruled upon by this Court at this time.

Third Issue: No Consideration of Social and Financial Standing in this Case

The social and financial standing of Lucila cannot be considered in awarding moral damages. The factual circumstances
prior to the accident show that no “rude and rough” reception, no “menacing attitude,” no “supercilious manner,” no
“abusive language and highly scornful reference” was given her. The social and financial standing of a claimant of moral
damages may be considered in awarding moral damages only if he or she was subjected to contemptuous conduct
despite the offender’s knowledge of his or her social and financial standing.24

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

Fourth Issue: Exemplary Damages

Complainants also pray for an increase of exemplary damages to P500,000.00 and P50,000 for Spouses Kierulf and
Legaspi, respectively. This prayer is based on the pronouncement of this Court in Batangas Transportation Company vs.
Caguimbal26 that “it is high time to impress effectively upon public utility operators the nature and extent of their
responsibility in respect of the safety of their passengers and their duty to exercise greater care in the selection of drivers
and conductors x x x.”

Pantranco opposes this, for under Article 2231 of the Civil Code, “exemplary damages may be granted if the defendant
acted with gross negligence.” And allegedly, gross negligence is sorely lacking in the instant case.

Exemplary damages are designed to permit the courts to mould behavior that has socially deleterious consequences,
and its imposition is required by public policy to suppress the wanton acts of an offender.27 However, it cannot be
recovered as a matter of right. It is based entirely on the discretion of the court.28 Jurisprudence sets certain
requirements before exemplary damages may be awarded, to wit:29

“(1) (T)hey may be imposed by way of example or correction only in addition, among others, to compensatory damages,
and cannot be recovered as a matter of right, their determination depending upon the amount of compensatory
damages that may be awarded to the claimant;

(2) the claimant must first establish his right to moral, temperate, liquidated or compensatory damages; and

(3) the wrongful act must be accompanied by bad faith, and the award would be allowed only if the guilty party acted in
a wanton, fraudulent, reckless, oppressive or malevolent manner.”

The claim of Lucila has been favorably considered in view of the finding of gross negligence by Respondent Court on the
part of Pantranco. This is made clear by Respondent Court in granting Lucila’s claim of exemplary damages:30

“(P)ublic utility operators like the defendant, have made a mockery of our laws, rules and regulations governing
operations of motor vehicles and have ignored either deliberately or through negligent disregard of their duties to
exercise extraordinary degree of diligence for the safety of the travelling public and their passengers. x x x.”

To give teeth to this warning, the exemplary damages awarded to Petitioner Lucila is increased to P200,000.00. The fact
of gross negligence duly proven, we believe that Legaspi, being also a victim of gross negligence, should also receive
exemplary damages. Under the facts proven, the Court awards him P25,000 as exemplary damages.
Fifth Issue: Loss of Earnings as a Component of Damages

Lost income in the amount of P16,500.00 is also claimed by Legaspi stating that his “whole future has been
jeopardized.”31 This, in turn, is not rebutted by Pantranco.

It should be noted that Respondent Court already considered this when it stated that the award of P25,000.00 included
compensation for “mental anguish and emotional strain of not earning anything with a family to support.” Moral
damages, though incapable of pecuniary estimation, are in the category of an award designed to compensate the
claimant for actual injury and are not meant to enrich complainant at the expense of defendant.32

We find, however, the claim of Legaspi to be duly substantiated. Pantranco failed to rebut the claim of Porfirio that he
had been incapacitated for ten (10) months and that during said period he did not have any income. Considering that,
prior to the accident, he was employed as a driver and was earning P1,650.00 a month, his claim for P16,500.00 as
compensation for loss of earning capacity for said period is amply supported by the records33 and is demandable under
Article 2205 of the Civil Code.34

Complainants contend that Lucila is also entitled to damages for “loss or impairment of earning capacity in cases of
temporary or permanent personal injury” under Article 2205 of the Civil Code. Notably, both the trial court and public
respondent denied this prayer because of her failure to produce her income tax returns for the years 1985 and 1986,
notwithstanding the production of her 1983 and 1984 income tax returns.

Pantranco opposes the above claim for loss of earning capacity on the ground that there is no proof “that for the two
years immediately preceding the accident Lucila was indeed deriving income from some source which was cut off by the
accident.”35

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

Sixth Issue: Reduction of Actual Damages on the Pickup Based on an Estimate

Complainants contend that the reduction of 10% from the written estimate of the cost of repairs by the trial court is pure
speculation.37 Pantranco opposes this by pointing out that judicial notice is made by respondent Court of the propensity
of motor repair shops to exaggerate their estimates.38

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

Epilogue
This Court cannot remind the bench and the bar often enough that in order that moral damages may be awarded, there
must be pleading and proof of moral suffering, mental anguish, fright and the like. While no proof of pecuniary loss is
necessary in order that moral damages may be awarded, the amount of indemnity being left to the discretion of the
court,39 it is nevertheless essential that the claimant should satisfactorily show the existence of the factual basis of
damages40 and its causal connection to defendant’s acts. This is so because moral damages, though incapable of
pecuniary estimation, are in the category of an award designed to compensate the claimant for actual injury suffered and
not to impose a penalty on the wrongdoer.41 In Francisco vs. GSIS,42 the Court held that there must be clear testimony
on the anguish and other forms of mental suffering. Thus, if the plaintiff fails to take the witness stand and testify as to
his/her social humiliation, wounded feelings and anxiety, moral damages cannot be awarded. In Cocoland Development
Corporation vs. National Labor Relations Commission,43 the Court held that “additional facts must be pleaded and
proven to warrant the grant of moral damages under the Civil Code, these being, x x x social humiliation, wounded
feelings, grave anxiety, etc. that resulted therefrom.”

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

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

SO ORDERED.
Zenith Insurance Corporation vs. Court of Appeals

G.R. No. 85296. May 14, 1990.*

ZENITH INSURANCE CORPORATION, petitioner, vs. COURT OF APPEALS and LAWRENCE FERNANDEZ, respondents.

Damages; Basis for award of moral damages.—“The purpose of moral damages is essentially indemnity or reparation,
not punishment or correction. Moral damages are emphatically not intended to enrich a complainant at the expense of a
defendant, they are awarded only to enable the injured party to obtain means, diversions or amusements that will serve
to alleviate the moral suffering he has undergone by reason of the defendant’s culpable action.” (J. Cezar S. Sangco,
Philippine Law on Torts and Damages, Revised Edition, p. 539) (See also R and B Surety & Insurance Co., Inc. v. IAC, G.R.
No. 64515, June 22, 1984; 129 SCRA 745). While it is true that no proof of pecuniary loss is necessary in order that moral
damages may be adjudicated, the assessment of which is left to the discretion of the court according to the
circumstances of each case (Art. 2216, New Civil Code), it is equally true that in awarding moral damages in case of
breach of contract, there must be a showing that the breach was wanton and deliberately injurious or the one
responsible acted fraudulently or in bad faith (Perez v. Court of Appeals, G.R. No. L-20238, January 30, 1965; 13 SCRA
137; Solis v. Salvador, G.R. No. L-17022, August 14, 1965; 14 SCRA 887). In the instant case, there was a finding that
private respondent was given a “run-around” for two months, which is the basis for the award of the damages granted
under the Insurance Code for unreasonable delay in the payment of the claim. However, the act of petitioner of delaying
payment for two months cannot be considered as so wanton or malevolent to justify an award of P20,000.00 as moral
damages, taking into consideration also the fact that the actual damage on the car was only P3,460. In the pre-trial of the
case, it was shown that there was no total disclaimer by respondent. The reason for petitioner’s failure to indemnify
private respondent within the two-month period was that the parties could not come to an agreement as regards the
amount of the actual damage on the car. The amount of P10,000.00 prayed for by private respondent as moral damages
is equitable.

Same; Basis for award of exemplary damages.—On the other hand, exemplary or corrective damages are imposed by
way of example or correction for the public good (Art. 2229, New Civil Code of the Philippines). In the case of Noda v.
Cruz-Arnaldo, G.R. No. 57322, June 22, 1987; 151 SCRA 227, exemplary damages were not awarded as the insurance
company had not acted in wanton, oppressive or malevolent manner. The same is true in the case at bar.

Same; Insurance Law; Deduction of deductible franchise and 20% depreciation on parts are not allowed in motor vehicle
insurance claims.—As regards the actual damages incurred by private respondent, the amount of P3,640.00 had been
established before the trial court and affirmed by the appellate court. Respondent appellate court correctly ruled that
the deductions of P250.00 and P274.00 as deductible franchise and 20% depreciation on parts, respectively claimed by
petitioners as agreed upon in the contract, had no basis.

PETITION to review the decision of the Court of Appeals.

The facts are stated in the opinion of the Court.

Vicente R. Layawen for petitioner.

Lawrence L. Fernandez & Associates for private respondent.

MEDIALDEA, J.:
Assailed in this petition is the decision of the Court of Appeals in CA-G.R. C.V. No. 13498 entitled, “Lawrence L.
Fernandez, plaintiff-appellee v. Zenith Insurance Corp., defendant-appellant” which affirmed in toto the decision of the
Regional Trial Court of Cebu, Branch XX in Civil Case No. CEB-1215 and the denial of petitioner’s Motion for
Reconsideration.

The antecedent facts are as follows:

On January 25, 1983, private respondent Lawrence Fernandez insured his car for “own damage” under private car Policy
No. 50459 with petitioner Zenith Insurance Corporation. On July 6, 1983, the car figured in an accident and suffered
actual damages in the amount of P3,640.00. After allegedly being given a run around by Zenith for two (2) months,
Fernandez filed a complaint with the Regional Trial Court of Cebu for sum of money and damages resulting from the
refusal of Zenith to pay the amount claimed. The complaint was docketed as Civil Case No. CEB-1215. Aside from actual
damages and interests, Fernandez also prayed for moral damages in the amount of P10,000.00, exemplary damages of
P5,000.00, attorney’s fees of P3,000.00 and litigation expenses of P3,000.00.

On September 28, 1983, Zenith filed an answer alleging that it offered to pay the claim of Fernandez pursuant to the
terms and conditions of the contract which, the private respondent rejected. After the issues had been joined, the pre-
trial was scheduled on October 17, 1983 but the same was moved to November 4, 1983 upon petitioner’s motion,
allegedly to explore ways to settle the case although at an amount lower than private respondent’s claim. On November
14, 1983, the trial court terminated the pre-trial. Subsequently, Fernandez presented his evidence. Petitioner Zenith,
however, failed to present its evidence in view of its failure to appear in court, without justifiable reason, on the day
scheduled for the purpose. The trial court issued an order on August 23, 1984 submitting the case for decision without
Zenith’s evidence (pp. 10-11, Rollo). Petitioner filed a petition for certiorari with the Court of Appeals assailing the order
of the trial court submitting the case for decision without petitioner’s evidence. The petition was docketed as C.A.-G.R.
No. 04644. However, the petition was denied due course on April 29, 1986 (p. 56, Rollo).

On June 4, 1986, a decision was rendered by the trial court in favor of private respondent Fernandez. The dispositive
portion of the trial court’s decision provides:

“WHEREFORE, defendant is hereby ordered to pay to the plaintiff:

1. The amount of P3,640.00 representing the damage incurred plus interest at the rate of twice the prevailing interest
rates;

2. The amount of P20,000.00 by way of moral damages;

3. The amount of P20,000.00 by way of exemplary damages;

4. The amount of P5,000.00 as attorney’s fees;

5. The amount of P3,000.00 as litigation expenses; and

6. Costs.” (p. 9, Rollo)

Upon motion of Fernandez and before the expiration of the period to appeal, the trial court, on June 20, 1986, ordered
the execution of the decision pending appeal. The order was assailed by petitioner in a petition for certiorari with the
Court of Appeals on October 23, 1986 in C.A. G.R. No. 10420 but which petition was also dismissed on December 24,
1986 (p. 69, Rollo).
On June 10, 1986, petitioner filed a notice of appeal before the trial court. The notice of appeal was granted in the same
order granting private respondent’s motion for execution pending appeal. The appeal to respondent court assigned the
following errors:

“I. The lower court erred in denying defendant appellant to adduce evidence in its behalf.

II. The lower court erred in ordering Zenith Insurance Corporation to pay the amount of P3,640.00 in its decision.

III. The lower court erred in awarding moral damages, attorney’s fees and exemplary damages, the worst is that, the
court awarded damages more than what are prayed for in the complaint.” (p. 12, Rollo)

On August 17, 1988, the Court of Appeals rendered its decision affirming in toto the decision of the trial court. It also
ruled that the matter of the trial court’s denial of Fernandez’s right to adduce evidence is a closed matter in view of its
(CA) ruling in AC-G.R. 04644 wherein Zenith’s petition questioning the trial court’s order submitting the case for decision
without Zenith’s evidence, was dismissed.

The Motion for Reconsideration of the decision of the Court of Appeals dated August 17, 1988 was denied on September
29, 1988, for lack of merit. Hence, the instant petition was filed by Zenith on October 18, 1988 on the allegation that
respondent Court of Appeals’ decision and resolution ran counter to applicable decisions of this Court and that they
were rendered without or in excess of jurisdiction. The issues raised by petitioners in this petition are:

a) The legal basis of respondent Court of Appeals in awarding moral damages, exemplary damages and attorney’s fees in
an amount more than that prayed for in the complaint.

b) The award of actual damages of P3,460.00 instead of only P1,927.50 which was arrived at after deducting P250.00 and
P274.00 as deductible franchise and 20% depreciation on parts as agreed upon in the contract of insurance.

Petitioner contends that while the complaint of private respondent prayed for P10,000.00 moral damages, the lower
court awarded twice the amount, or P20,000.00 without factual or legal basis; while private respondent prayed for
P5,000.00 exemplary damages, the trial court awarded P20,000.00; and while private respondent prayed for P3,000.00
attorney’s fees, the trial court awarded P5,000.00.

The propriety of the award of moral damages, exemplary damages and attorney’s fees is the main issue raised herein by
petitioner.

The award of damages in case of unreasonable delay in the payment of insurance claims is governed by the Philippine
Insurance Code, which provides:

“SEC. 244. In case of any litigation for the enforcement of any policy or contract of insurance, it shall be the duty of the
Commissioner or the Court, as the case may be, to make a finding as to whether the payment of the claim of the insured
has been unreasonably denied or withheld; and in the affirmative case, the insurance company shall be adjudged to pay
damages which shall consist of attorney’s fees and other expenses incurred by the insured person by reason of such
unreasonable denial or withholding of payment plus interest of twice the ceiling prescribed by the Monetary Board of
the amount of the claim due the insured, from the date following the time prescribed in section two hundred forty-two
or in section two hundred forty-three, as the case may be, until the claim is fully satisfied; Provided, That the failure to
pay any such claim within the time prescribed in said sections shall be considered prima facie evidence of unreasonable
delay in payment.”

It is clear that under the Insurance Code, in case of unreasonable delay in the payment of the proceeds of an insurance
policy, the damages that may be awarded are: 1) attorney’s fees; 2) other expenses incurred by the insured person by
reason of such unreasonable denial or withholding of payment; 3) interest at twice the ceiling prescribed by the
Monetary Board of the amount of the claim due the injured; and 4) the amount of the claim.

As regards the award of moral and exemplary damages, the rules under the Civil Code of the Philippines shall govern.

“The purpose of moral damages is essentially indemnity or reparation, not punishment or correction. Moral damages are
emphatically not intended to enrich a complainant at the expense of a defendant, they are awarded only to enable the
injured party to obtain means, diversions or amusements that will serve to alleviate the moral suffering he has
undergone by reason of the defendant’s culpable action.” (J. Cezar S. Sangco, Philippine Law on Torts and Damages,
Revised Edition, p. 539) (See also R and B Surety & Insurance Co., Inc. v. IAC, G.R. No. 64515, June 22, 1984; 129 SCRA
745). While it is true that no proof of pecuniary loss is necessary in order that moral damages may be adjudicated, the
assessment of which is left to the discretion of the court according to the circumstances of each case (Art. 2216, New
Civil Code), it is equally true that in awarding moral damages in case of breach of contract, there must be a showing that
the breach was wanton and deliberately injurious or the one responsible acted fraudently or in bad faith (Perez v. Court
of Appeals, G.R. No. L-20238, January 30, 1965; 13 SCRA 137; Solis v. Salvador, G.R. No. L-17022, August 14, 1965; 14
SCRA 887). In the instant case, there was a finding that private respondent was given a “run-around” for two months,
which is the basis for the award of the damages granted under the Insurance Code for unreasonable delay in the
payment of the claim. However, the act of petitioner of delaying payment for two months cannot be considered as so
wanton or malevolent to justify an award of P20,000.00 as moral damages, taking into consideration also the fact that
the actual damage on the car was only P3,460. In the pre-trial of the case, it was shown that there was no total
disclaimer by respondent. The reason for petitioner’s failure to indemnify private respondent within the two-month
period was that the parties could not come to an agreement as regards the amount of the actual damage on the car. The
amount of P10,000.00 prayed for by private respondent as moral damages is equitable.

On the other hand, exemplary or corrective damages are imposed by way of example or correction for the public good
(Art. 2229, New Civil Code of the Philippines). In the case of Noda v. Cruz-Arnaldo, G.R. No. 57322, June 22, 1987; 151
SCRA 227, exemplary damages were not awarded as the insurance company had not acted in wanton, oppressive or
malevolent manner. The same is true in the case at bar.

The amout of P5,000.00 awarded as attorney’s fees is justified under the circumstances of this case considering that
there were other petitions filed and defended by private respondent in connection with this case.

As regards the actual damages incurred by private respondent, the amount of P3,640.00 had been established before the
trial court and affirmed by the appellate court. Respondent appellate court correctly ruled that the deductions of
P250.00 and P274.00 as deductible franchise and 20% depreciation on parts, respectively claimed by petitioners as
agreed upon in the contract, had no basis. Respondent court ruled:

“Under its second assigned error, defendant-appellant puts forward two arguments, both of which are entirely without
merit. It is contented that the amount recoverable under the insurance policy defendant-appellant issued over the car of
plaintiff-appellee is subject to deductible franchise, and x x x.

“The policy (Exhibit G, pp. 4-9, Record), does not mention any deductible franchise, x x x.” (p. 13, Rollo)

Therefore, the award of moral damages is reduced to P10,000.00 and the award of exemplary damages is hereby
deleted. The awards due to private respondent Fernandez are as follows:

1) P3,640.00 as actual claim plus interest of twice the ceiling prescribed by the Monetary Board computed from the time
of submission of proof of loss;

2) P10,000.00 as moral damages;

3) P5,000.00 as attorney’s fees;

4) P3,000.00 as litigation expenses; and

5) Costs.

ACCORDINGLY, the appealed decision is MODIFIED as above stated.

SO ORDERED.
G.R. No. 173575. February 2, 2011.*

IMMACULATE CONCEPTION ACADEMY and the late DR. PAULO C. CAMPOS substituted by his heirs, DR. JOSE PAULO E.
CAMPOS, ATTY. PAULO E. CAMPOS, JR. and DR. ENRIQUE E. CAMPOS,1 petitioners, vs. AMA COMPUTER COLLEGE,
INCORPORATED, respondent.

Contracts; Lease; Rescission; Article 1660 of the Civil Code is evidently intended to protect human lives.—Article 1660 is
evidently intended to protect human lives. If ICA’s building was structurally defective and in danger of crashing down
during an earthquake or after it is made to bear the load of a crowd of students, AMA had no right to waive those
defects. It can rescind the lease contract under Article 1660. But this assumes that the defects were irremediable and
that the parties had no agreement for rectifying them.

Civil Law; Damages; Due to his untimely demise before the finality of this case, his claim for moral damages does not
survive and is not transmissible to his substitutes, for being extremely personal to him.—As for Dr. Campos, he has amply
proved that he suffered mental anguish, serious anxiety, and social humiliation following AMA’s unfounded accusation
that he fraudulently misled AMA regarding the structural condition of ICA’s building. However, due to his untimely
demise before the finality of this case, his claim for moral damages does not survive and is not transmissible to his
substitutes, for being extremely personal to him.

PETITION for review on certiorari of a decision of the Court of Appeals.

The facts are stated in the opinion of the Court.

ABAD, J.:

This case is about the rescission of a lease contract on the ground that the building turned out to be structurally unsafe
even as the lessee had previously inspected the same.

The Facts and the Case

Immaculate Conception Academy (ICA) owned a three-storey building in Dasmariñas, Cavite. The property caught the
eye of AMA Computer College, Inc. (AMA) and it sought to buy the same but did not succeed. Subsequently, after
inspecting the building, AMA settled on leasing it.2 The parties signed a contract of lease for 10 years from September
22, 1997 to September 21, 2007. The agreed rent was P561,000.00 plus VAT per month. In accordance with the contract,
AMA paid ICA P500,000.00 in earnest money, three months advance rentals, and security deposit.

After the signing of the contract, officials of AMA re-inspected the building and began renovating it for the upcoming
school year. But during an inspection, AMA’s Chief Operating Officer for its Cavite Campus noted several cracks on the
floor and walls of the building’s second storey. This prompted more inspections. Eventually, AMA applied with the
municipal engineer’s office for an occupancy permit.3 After inspection, Municipal Engineer Gregorio C. Bermejo wrote
AMA a letter dated September 29, 1997, detailing his findings and conclusion, thus:

“x x x x

[The] inspection reveals the following defects in the building, such as:

1. Multiple cracks in the second floor slabs showing signs of insufficient or improper reinforcements.

2. Deflections in the second floor slabs and bears ranging from 20 mm to 50 mm which are beyond normal and
allowable.

3. Unusual vibrations in the second floor level which are apparent when subjected to live loadings.
Based from the above observations we are in doubt as to the structural soundness and stability of that three-storey
building. Whether it can withstand against any natural calamity is presently under question. We are convinced that the
building is structurally unsafe for human occupancy.”4

On the same date, September 29, 1997, AMA wrote ICA demanding the return of all that it paid within 24 hours from
notice. AMA cited the building’s structural deficiency, which it regarded as a violation of ICA’s implied warranty against
hidden defects. AMA did not pursue the lease contract and instead leased another property from a different party.

When its request for reimbursement remained unheeded, AMA filed an action5 for breach of contract and damages with
prayer for the issuance of a writ of preliminary attachment against ICA before the Regional Trial Court (RTC) of
Dasmariñas, Cavite. In its complaint, AMA alleged that ICA (represented by the late Dr. Paulo C. Campos) fraudulently
entered into the lease agreement, fraudulently breached the same, and violated its implied warranty against hidden
defects; that despite knowledge of the instability of the building, ICA insisted on offering it to AMA; and that ICA had
been unable to produce the building’s certificate of occupancy. AMA prayed for restitution of the amounts it paid to ICA
with interest and award of exemplary damages and attorney’s fees.

In its Answer, ICA denied that AMA asked for the building’s certificate of occupancy. ICA alleged that it was AMA’s
responsibility to secure the certificate from the municipal government as stipulated in the contract. Further, ICA claims
that it never misrepresented the condition of the building and that AMA inspected it before entering into the contract of
lease.

In its Decision dated April 8, 2003, the RTC took AMA’s side and ruled that the latter entered into the lease contract
without knowing the actual condition of the building. The RTC held that ICA failed to disclose the building’s condition,
thus justifying AMA’s rescission of the contract. The RTC ordered ICA to return the P4,072,150.00 it got from AMA,
representing five months security deposit and three months advance rentals plus interest of 6% per annum, from
January 19, 1998 until full payment and, further, to pay AMA P300,000.00 and P200,000.00 as exemplary damages and
attorney’s fees, respectively.6

5 Docketed as Civil Case 1662-98.

6 Thereafter, AMA moved for execution of the Decision dated April 8, 2003 pending appeal which the RTC granted. ICA
questioned the Order of the RTC allowing execution of the decision pending appeal on certiorari with the CA. The CA
reversed the Order of

On appeal,7 the Court of Appeals (CA) rendered a Decision dated February 27, 2006, holding that ICA did not violate its
implied warranty against hidden defects, misrepresent the building’s condition, or act in bad faith since AMA inspected
the building before it entered into the lease agreement. It should have noticed the patent cracks on the second floor.
Still, the CA ruled that AMA was justified in rescinding the lease contract considering ICA’s default in repairing the defects
in the building’s structure. The CA held that AMA’s demand for the certificate of occupancy amounted to a demand for
repairs. Thus, the CA affirmed the decision of the RTC but deleted the grant of exemplary damages and attorney’s fees.
ICA now turns to this Court for succor.

The Issues Presented

The issues presented in this case are:

1. Whether or not AMA was justified in rescinding the contract of lease either on account of ICA’s fraudulent
representation regarding the condition of its building or on account of its failure to make repairs on the same upon
demand; and
2. Whether or not ICA and Dr. Campos are entitled to their claims for damages against AMA.

The Court’s Rulings

One. The Court is not convinced that AMA was justified in rescinding the contract of lease on account of ICA’s alleged
fraudulent representation regarding the true condition of its building. The fact is that AMA’s representatives inspected
the building to determine if it was suitable for their school’s needs. The cracks on the floor and on the walls were too
obvious to suggest to them that something was amiss. It was their fault that they did not check the significance of such
signs. ICA for its part was candid about the condition of the building and did not in fact deny AMA access to it.

Apparently, AMA did not, at the beginning, believe that the cracks on the floor and on the walls were of a serious nature.
It realized that such cracks were manifestations of structural defects only when it sought the issuance of a municipal
occupancy permit. The local building official inspected the cracks and concluded that they compromised the building’s
structural safety.

The CA ruled that, upon the discovery of the building’s structural defects, AMA had the right to seek their repair by ICA
on the strength of the following stipulations in their contract:8

“x x x x

LESSEE shall comply with any and all laws, ordinances, regulations or orders of national or local governments concerned
arising from the occupation and/or sanitation of the leased PROPERTY.

xxxx

8. REPAIRS—LESSEE hereby agrees that all minor repairs or those caused by the use of the leased PROPERTY or use due
to any ordinary wear and tear shall be for the account of the LESSEE while the major repairs or those affecting the
structural condition of the building and those due to fortuitous events shall be for the account of the LESSOR.”
(Underscoring supplied)

The CA ruled that AMA’s demand for ICA to produce a certificate of occupancy covering the building from the local
building official amounted to a demand for ICA to undertake a repair of its structural defects.

But this ruling reads from AMA’s letter a demand for repair that was not there. AMA simply asked ICA to produce a
certificate of occupancy for the building even when the contract placed on AMA the responsibility for complying with the
government’s occupancy requirement. Indeed, it was AMA that applied for the certificate of occupancy.9 A demand to
repair the defects in the building’s structure, a clearly difficult and costly proposition, cannot be so easily implied from
AMA’s demand that ICA produce such certificate.

True, the quoted provision of the lease contract requires ICA to undertake major repairs “affecting the structural
condition of the building and those due to fortuitous events.” But AMA’s outright rescission of the lease contract and
demand that ICA return the deposit and advance rentals it got within 24 hours from such demand precluded ICA, first,
from contesting the findings of the local building official or getting some structural specialists to verify such findings or,
second, from making the required repair. Clearly, AMA’s hasty rescission of the contract gave ICA no chance to exercise
its options.

AMA belatedly invokes Article 1660 of the Civil Code which reads:

“Art. 1660. If a dwelling place or any other building intended for human habitation is in such a condition that its use
brings imminent and serious danger to life or health, the lessee may terminate the lease at once by notifying the lessor,
even if at the time the contract was perfected the former knew of the dangerous condition or waived the right to rescind
the lease on account of this condition.”

AMA is actually changing its theory of the case. It claimed in its complaint that it was entitled to rescind the contract of
lease because ICA fraudulently hid from it the structural defects of its building. The CA did not agree with this theory but
held that AMA was nonetheless entitled to rescind the contract for failure of ICA to make the repairs mentioned in the
contract. Now, AMA claims that it has a statutory right to rescind the lease contract on the ground mentioned in Article
1660, even if it may be deemed to have initially waived such right.

Article 1660 is evidently intended to protect human lives. If ICA’s building was structurally defective and in danger of
crashing down during an earthquake or after it is made to bear the load of a crowd of students, AMA had no right to
waive those defects. It can rescind the lease contract under Article 1660. But this assumes that the defects were
irremediable and that the parties had no agreement for rectifying them. As pointed out above, the lease contract
implicitly gave ICA the option to repair structural defects at its expense. If that had been done as the contract provides,
the risk to human lives would have been removed and the right to rescind, rendered irrelevant.

In any event, the fact is that the local building official found ICA’s building structurally defective and unsafe. Such finding
is presumably true.10 For this reason, ICA has no justification for keeping AMA’s deposit and advance rentals. Still, the
Court holds that AMA is not entitled to recover more than the return of its deposit and advance rental considering that,
contrary to AMA’s claim, ICA acted in good faith and did not mislead it about the condition of the building.

Two. Aside from seeking the dismissal of the complaint, ICA and Dr. Campos separately seek moral and exemplary
damages in the amount of P90 million and P10 million plus attorney’s fees and cost of suit.

To be entitled to moral damages, ICA needed to prove that it had a good reputation and that AMA’s action besmirched
the same.11 Such proof is wanting in this case. As for Dr. Campos, he has amply proved that he suffered mental anguish,
serious anxiety, and social humiliation following AMA’s unfounded accusation that he fraudulently misled AMA regarding
the structural condition of ICA’s building. However, due to his untimely demise before the finality of this case, his claim
for moral damages does not survive and is not transmissible to his substitutes, for being extremely personal to him.12

Since AMA acted in a reckless, wanton, oppressive, and malevolent manner in imputing fraud and deceit on ICA and Dr.
Campos, the Court finds ground for awarding them exemplary damages. Further, the Court holds that, having been
compelled to litigate in order to protect their interests, ICA and Dr. Campos are also entitled to attorney’s fees.

WHEREFORE, the Court GRANTS the petition and REVERSES and SETS ASIDE the Decision of the Court of Appeals in CA-
G.R. CV 82266 dated February 27, 2006. Further, the Court:

1. DIRECTS petitioner Immaculate Conception Academy to return to respondent AMA Computer College, Inc. its
security deposit and advance rentals for the lease of the subject building totaling P4,072,150.00 plus interest of 6% per
annum from the date of the finality of this decision until it is fully paid; and

2. DIRECTS respondent AMA Computer College, Inc. to pay the heirs of Dr. Paulo C. Campos, namely, Jose Paulo, Paulo,
Jr., and Enrique, all surnamed Campos and the Immaculate Conception Academy P100,000.00 as exemplary damages and
P50,000.00 as attorney’s fees.

SO ORDERED.

Carpio, Nachura, Peralta and Mendoza, JJ., concur. Petition granted, judgment reversed and set aside. Note.—In culpa contractual or breach of contract, moral
damages are recoverable only if the defendant has acted fraudulently or in bad faith, or is found guilty of gross negligence amounting to bad faith, or in wanton
disregard of his contractual obligations. (Cagungun vs. Planters Development Bank, 473 SCRA 259 [2005]
Expertravel & Tours, Inc. vs. Court of Appeals

G.R. No. 130030. June 25, 1999.*

EXPERTRAVEL & TOURS, INC., petitioner, vs. THE HON. COURT OF APPEALS and RICARDO LO, respondents.

Actions; Damages; Requisites for Award of Moral Damages.—Moral damages are not punitive in nature but are designed
to compensate and alleviate in some way the physical suffering, mental anguish, fright, serious anxiety, besmirched
reputation, wounded feelings, moral shock, social humiliation, and similar injury unjustly caused to a person. Although
incapable of pecuniary computation, moral damages, nevertheless, must somehow be proportional to and in
approximation of the suffering inflicted. Such damages, to be recoverable, must be the proximate result of a wrongful act
or omission the factual basis for which is satisfactorily established by the aggrieved party. An award of moral damages
would require certain conditions to be met; to wit: (1) first, there must be an injury, whether physical, mental or
psychological, clearly sustained by the claimant; (2) second, there must be a culpable act or omission factually
established; (3) third, the wrongful act or omission of the defendant is the proximate cause of the injury sustained by the
claimant; and (4) fourth, the award of damages is predicated on any of the cases stated in Article 2219.

Same; Same; Same; Contracts; Statutory Construction; Ejusdem Generis; In culpa contractual or breach of contract,
moral damages may be recovered when the defendant acted in bad faith or was guilty of gross negligence (amounting to
bad faith) or in wanton disregard of his contractual obligation and, exceptionally, when the act of breach of contract itself
is constitutive of tort resulting in physical injuries; The term “analogous cases,” referred to in Article 2219 of the Civil
Code, following the ejusdem generis rule, must be held similar to those expressly enumerated by the law.—Under the
provisions of this law, in culpa contractual or breach of contract, moral damages may be recovered when the defendant
acted in bad faith or was guilty of gross negligence (amounting to bad faith) or in wanton disregard of his contractual
obligation and, exceptionally, when the act of breach of contract itself is constitutive of tort resulting in physical injuries.
By special rule in Article 1764, in relation to Article 2206, of the Civil Code, moral damages may also be awarded in case
the death of a passenger results from a breach of carriage. In culpa aquiliana, or quasi-delict, (a) when an act or omission
causes physical injuries, or (b) where the defendant is guilty of intentional tort, moral damages may aptly be recovered.
This rule also applies, as aforestated, to contracts when breached by tort. In culpa criminal, moral damages could be
lawfully due when the accused is found guilty of physical injuries, lascivious acts, adultery or concubinage, illegal or
arbitrary detention, illegal arrest, illegal search, or defamation. Malicious prosecution can also give rise to a claim for
moral damages. The term “analogous cases,” referred to in Article 2219, following the ejusdem generis rule, must be
held similar to those expressly enumerated by the law.

Same; Same; Attorney’s Fees; Although the institution of a clearly unfounded civil suit can at times be a legal justification
for an award of attorney’s fees, such filing, however, has almost invariably been held not to be a ground for an award of
moral damages.—Although the institution of a clearly unfounded civil suit can at times be a legal justification for an
award of attorney’s fees, such filing, however, has almost invariably been held not to be a ground for an award of moral
damages. The rationale for the rule is that the law could not have meant to impose a penalty on the right to litigate. The
anguish suffered by a person for having been made a defendant in a civil suit would be no different from the usual worry
and anxiety suffered by anyone who is haled to court, a situation that cannot by itself be a cogent reason for the award
of moral damages. If the rule were otherwise, then moral damages must every time be awarded in favor of the prevailing
defendant against an unsuccessful plaintiff.

PETITION for review on certiorari of a decision of the Court of Appeals.

The facts are stated in the opinion of the Court.

Petitioner, Expertravel and Tours, Inc., seeks in the instant petition for review on certiorari a modification of the decision,
dated 20 March 1997, of the Court of Appeals affirming in toto the 07th November 1994 judgment of the Regional Trial
Court (Branch 5) of Manila, the dispositive portion of which reads:

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

“No pronouncement as to other damages for lack of evidence to warrant the same.”1

The factual and case settings of the controversy are culled from the pleadings on record and the assailed decision of the
appellate court and that of the court a quo.

On 07 October 1987, Expertravel & Tours, Inc., (“Ex-pertravel”), a domestic corporation engaged in the travel agency
business, issued to private respondent Ricardo Lo four round-trip plane tickets for Hongkong, together with hotel
accommodations and transfers, for a total cost of P39,677.20. Alleging that Lo had failed to pay the amount due,
Expertravel caused several demands to be made. Since the demands were ignored by Lo, Expertravel filed a court
complaint for recovery of the amount claimed plus damages.

Respondent Lo explained, in his answer, that his account with Expertravel had already been fully paid. The outstanding
account was remitted to Expertravel through its then Chairperson, Ms. Ma. Rocio de Vega, who was theretofore
authorized to deal with the clients of Expertravel. The payment was evidenced by a Monte de Piedad Check No. 291559,
dated 06 October 1987, for P42,175.20 for which Ms. de Vega, in turn, issued City Trust Check No. 417920 in favor of
Expertravel for the amount of P50,000.00, with the notation “placement advance for Ricardo Lo, etc.” Per its own
invoice, Expertravel received the sum on 10 October 1987.

The trial court, affirmed by the appellate court, held that the payment made by Lo was valid and binding on petitioner
Expertravel. Even on the assumption that Ms. de Vega had not been specifically authorized by Expertravel, both courts
said, the fact that the amount “delivered to the latter remain(ed) in its possession up to the present, mean(t) that the
amount redounded to the benefit of petitioner Expertravel, in view of the second paragraph of Article 1241 of the Civil
Code to the effect that payment made to a third person shall also be valid in so far as it has redounded to the benefit of
the creditor.”

In this recourse, petitioner confines itself to the following related legal issues; viz.:

“I. Can moral damages be recovered in a clearly unfounded suit?

“II. Can moral damages be awarded for negligence or quasidelict that did not result to physical injury to the offended
party?”2

There is merit in the petition.

Moral damages are not punitive in nature but are designed to compensate3 and alleviate in some way the physical
suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social
humiliation, and similar injury unjustly caused to a person. Although incapable of pecuniary computation, moral
damages, nevertheless, must somehow be proportional to and in approximation of the suffering inflicted.4 Such
damages, to be recoverable, must be the proximate result of a wrongful act or omission the factual basis for which is
satisfactorily established by the aggrieved party.5 An award of moral damages would require certain conditions to be
met; to wit: (1) first, there must be an injury, whether physical, mental or psychological, clearly sustained by the
claimant; (2) second, there must be a culpable act or omission factually established; (3) third, the wrongful act or
omission of the defendant is the proximate cause of the injury sustained by the claimant; and (4) fourth, the award of
damages is predicated on any of the cases stated in Article 2219.6 Under the provisions of this law, in culpa contractual
or breach of contract, moral damages may be recovered when the defendant acted in bad faith or was guilty of gross
negligence (amounting to bad faith) or in wanton disregard of his contractual obligation and, exceptionally, when the act
of breach of contract itself is constitutive of tort resulting in physical injuries.7 By special rule in Article 1764, in relation
to Article 2206, of the Civil Code, moral damages may also be awarded in case the death of a passenger results from a
breach of carriage. In culpa aquiliana, or quasi-delict, (a) when an act or omission causes physical injuries, or (b) where
the defendant is guilty of intentional tort,8 moral damages may aptly be recovered. This rule also applies, as aforestated,
to contracts when breached by tort. In culpa criminal, moral damages could be lawfully due when the accused is found
guilty of physical injuries, lascivious acts, adultery or concubinage, illegal or arbitrary detention, illegal arrest, illegal
search, or defamation. Malicious prosecution can also give rise to a claim for moral damages. The term “analogous
cases,” referred to in Article 2219, following the ejusdem generis rule, must be held similar to those expressly
enumerated by the law.9

Although the institution of a clearly unfounded civil suit can at times be a legal justification for an award of attorney’s
fees,10 such filing, however, has almost invariably been held not to be a ground for an award of moral damages.11 The
rationale for the rule is that the law could not have meant to impose a penalty on the right to litigate. The anguish
suffered by a person for having been made a defendant in a civil suit would be no different from the usual worry and
anxiety suffered by anyone who is haled to court, a situation that cannot by itself be a cogent reason for the award of
moral damages.12 If the rule were otherwise, then moral damages must every time be awarded in favor of the prevailing
defendant against an unsuccessful plaintiff.13

The Court confirms, once again, the foregoing rules.

WHEREFORE, the petition is GRANTED and the award of moral damages to respondent Ricardo Lo under the assailed
decision is DELETED. In its other aspects, the appealed decision shall remain undisturbed. No costs.

SO ORDERED.

Panganiban, Purisima and Gonzaga-Reyes, JJ., concur.

Romero, J., Abroad, on official business leave.

Petition granted.

Notes.—The enumeration contained in the second portion of Rule 130, Section 40, in light of the rule of ejusdem
generis, is limited to objects which are commonly known as “family possessions,” or those articles which represent, in
effect, a family’s joint statement of its belief as to the pedigree of a person. (Jison vs. Court of Appeals, 286 SCRA 495
[1998])

Under the principle of ejusdem generis, “(w)here general words follow an enumeration of persons or things, by words of
a particular and specific meaning, such general words are not to be construed in their widest extent, but are to be held
as applying only to persons or things of the same kind or class as those specifically mentioned.” (PNOC Shipping and
Transport Corporation vs. Court of Appeals, 297 SCRA 402 [1998])
Compañia Maritima vs. Allied Free Workers Union

No. L-28999. May 24, 1977.*

COMPAÑIA MARITIMA, plaintiff-appellee, vs. ALLIED FREE WORKERS UNION, SALVADOR T. LLUCH, MARIANO LL.
BADELLES, individually and in their capacities as President and Vice-President, respectively of the Allied Free Workers
Union, NICANOR HALIBAS and LAURENTINO LL. BADELLES, individually and officers of Allied Free Workers Union,
defendants-appellants.

Evidence; Admissibility of; Documentary evidence; Original uniting must he produced except when original consists of
numerous accounts or documents which cannot be examined in court without great loss of time and the fact sought to
be established from them is only the general result of the whole; Voluminous character of the accounts or documents
should be established; Accounts or documents should be made accessible to adverse party; Reason.—The rule that
“when the original consists of numerous accounts or other documents which cannot be examined in court without great
loss of time and the fact sought to be established from them is only the general result of the whole,” the original writings
need not be produced cannot be applied because the voluminous character of the records, on which the accountants’
reports were based, was not duly established. It is also a requisite for the application of the rule that the records on
accounts should be made accessible to the adverse party so that the correctness of the summary may be tested on
cross-examination.

Same; Same; Inadmissibility of audit made by auditor as proof of accounts or documents.—An audit made by, or the
testimony of, a private auditor, is inadmissible in evidence as proof of the original records, books of accounts, reports or
the like.

Same; Same; Inadmissibility of the conclusions, inferences or opinions of auditor.—It would not be proper to allow the
accountants’ estimates as recoverable damages. They are not supported by reliable evidence. They can hardly be
sanctioned by the “general accepted auditing standards” alluded to in his report. The pertinent records of the company
should have been produced in court. The rule is that the auditor’s summary should not include his inclusions or
inferences (29 Am Jur 2d 519). His opinion is not evidence.

Same; Hearsay; Inadmissibility of statement where person who made the statement not produced and where the
accounts or records on which statement based not presented in evidence.—The chief clerk’s statement, Exhibit B, is
hearsay. He should have been presented as a witness. The accountant was no competent to take his place since the
statement was prepared by the chief clerk not by the accountant, More appropriate still, the documents and records on
which the statement was based should have been presented as evidence or at least brought to the court for examination
by the union’s counsel and its accountant. The trial court required the production of the manifests supporting the chief
clerk’s statement. Only one, such manifest, was produced. The nonproduction of the other records was not explained.

Obligations and contracts; Enforceability of stipulation agreed upon by the parties.—The printed stipulation in the bill of
lading was superseded by the contractual stipulation. The contract was prepared by the union officials. It was stipulated
in the contract that the stevedoring and arrastre charges should be paid by the shippers and consignees in consonance
with the practice in Iligan City. That stipulation was binding and enforceable.

Same; Arrastre service differentiated from stevedoring service.—Arrastre, a Spanish word which refers to hauling of
cargo, comprehends the handling of cargo on the wharf or between the establishment of the consignee or shipper and
the ship’s tackle. The service is usually performed by longshoremen. On the other hand, stevedoring refers to the
handling of the cargo in the holds of the vessel or between the ship’s tackle and the holds of the vessel.
Damages; Investment or expenses which reduced to benefit of claimant cannot be considered as damages.—The use of
the forklifts, tarpaulins, pallet boards and wire rope slings immeasurably benefitted the company. It is not proper nor just
that the company’s investment in those pieces of equipment should be considered damages just because it was able to
bind the union to a one-sided contract which exempted it from the payment of arrastre and stevedoring fees and which
impliedly obligated the union to purchase the said equipment. If the service rendered by the union members was
unsatisfactory, it must be because the poor stevedores were underfed and underpaid. They were underfed and
underpaid because the company was astute enough to insure that it would obtain stevedoring service without paying for
it. If to improve the arrastre and stevedoring service, the company had to incur expenses for the purchase of forklifts,
pallet boards, tarpaulins and wire rope slings and for the operation of the forklifts, the union should not be required to
reimburse the company for those expenses. The company should bear those expenses because the same redounded to
its benefit.

Same; Moral damages; necessity of proof of moral damages.—The company did not plead and prove moral damages. It
merely claimed moral damages in the prayer of its complaint. This is not sufficient.

APPEAL from a judgment of the Court of First Instance of Iligan City. Estipona, J.

The facts are stated in the opinion of the Court.

Halibas, Badelles, Padilla & Sepulveda and Vicente A. Rafael & Associates for defendants-appellants.

Rufino J, Abadies, Francisco Obach & Jesus Quijano for appellee.

AQUINO, J.:

Antecedents.—Since the onset in 1954 of litigation between the parties herein, this is the fifth case between them that
has been elevated to this Court. The incidents preceding the instant appeal are as follows:

On August 11, 1952 the Compañia Maritima and the Allied Free Workers Union entered into a written contract whereby
the union agreed to perform arrastre and stevedoring work for the company’s vessels at Iligan City, The contract was to
be effective for one month counted from August 12, 1952.

It was stipulated that the company could revoke the contract before the expiration of the term if the union failed to
render proper service. The contract could be renewed by agreement of the parties (Exh. J).

At the time the contract was entered into, the union had just been organized. Its primordial desire was to find work for
its members. The union agreed to the stipulation that the company would not be liable for the payment of the services
of the union “for the loading, unloading and deliveries of cargoes” and that the compensation for such services would be
paid “by the owners and consigness of the cargoes” as “has been the practice in the port of Iligan City” (Par. 2 of Exh. J).

The union found out later that that stipulation was oppressive and that the company was unduly favored by that
arrangement.

Under the contract, the work of the union consisted of arrastre and stevedoring services. Arrastre, a Spanish word which
refers to hauling of cargo, comprehends the handling of consignee or shipper and the ship’s tackle. The service is usually
performed by longshoremen.

On the other hand, stevedoring refers to the handling of the cargo in the holds of the vessel or between the ship’s tackle
and the holds of the vessel.
The shippers and consignees paid the union only for the arrastre work. They refused to pay for the stevedoring service.
They claimed that the shipowner was the one obligated to pay for the stevedoring service because the bill of lading
provided that the unloading of the cargo was at the shipowner’s expense (Exh. 1).

On the other hand, the company refused to pay for the stevedoring service because the contract (Exh. J) explicitly
provided that the compensation for both arrastre and stevedoring work should be paid by the shippers and consignees,
as was the alleged practice in Iligan City, and that the shipowner would not be liable for the payment of such services.

Thus, the issue of whether the company should pay for the stevedoring service became a sore point of contention
between the parties. The union members labored under the impression that they were not being compensated for their
stevedoring service as distinguished from arrastre service.

Although the arrastre and stevedoring contract (Exh. J) was disadvantageous to the union, it did not terminate the
contract because its members were in dire need of work and work, which was not adequately compensated, was
preferable to having no work at all (204, 214-5, 226-7 tsn May 20, 1960).

Upon the expiration of the one-month period, the said contract was verbally renewed. The company allowed the union
to continue performing arrastre and stevedoring work.

On July 23, 1954 the union sent a letter to the company requesting that it be recognized as the exclusive bargaining unit
to load and unload the cargo of its vessels at Iligan City. The company ignored that demand. So, the union filed on August
6, 1954 in the Court of Industrial Relations (CIR) a petition praying that it be certified as the sole collective bargaining
unit.

Despite that certification case, the company on August 24, 1954 served a written notice on the union that, in accordance
with paragraph 4 of the 1952 contract, the same would be terminated on August 31, 1954. Because of that notice, the
union on August 26, 1954 filed in the CIR charges of unfair labor practice against the company.

On August 31, 1954 the company entered into a new stevedoring and arrastre contract with the Iligan Stevedoring
Association. On the following day, September 1, the union members picketed the wharf and prevented the Iligan
Stevedoring Association from performing arrastre and stevedoring work. The picket lasted for nine days.

On September 8, 1954 the company sued the union and its officers in the Court of First Instance of Lanao for the
rescission of the aforementioned 1952 contract, to enjoin the union from interfering with the loading and unloading of
the cargo, and for the recovery of damages.

On the following; day, September 9, the lower court issued ex prate a writ of preliminary injunction after the company
had posted a bond In the sum of P20,000. A few hours later on that same day the union was allowed to file a
counterbond. The injunction was lifted. The union members resumed their arrastre and stevedoring work.

Later, the union assailed in prohibition action in this Court the jurisdiction of the trial court to entertain the action for
damages and injunction.

A majority of this Court held that the lower court had jurisdiction to issue the injunction and to take cognizance of the
damage suit filed by the company but that the injunction was void because it was issued ex parte and the procedure laid
down in section 9(d) of Republic Act No. 875 was not followed by the trial court (Allied Free Workers Union vs. Judge
Apostil, 102 Phil. 292, 298).

After trial, the lower court rendered a decision dated December 5, 1960, amended on January 11, 1961, (1) declaring the
arrastre and stevedoring contract terminated on August 31, 1954; (2) dismissing the union’s counterclaim; (3) ordering
the union and its officers to pay solidarily to the company P520,000 as damages with six percent interest per annum
from September 9, 1954, when the complaint was filed; (4) permanently enjoining the union from performing any
arrastre and stevedoring work for the company at Iligan City, and (6) requiring the union to post a supersedes bond in the
sum of P520,000 to stay execution.

The union filed a motion for reconsideration. On the other hand, the company filed a motion for the execution pending
appeal of the money judgment. It filed another motion for the immediate issuance of a writ of injunction. That second
motion was filed in the municipal court of Iligan City in view of the absence of the District Judge.

The municipal court issued the writ of injunction. However, this Court set it aside because it was not an interlocutory
order and no special reasons were adduced to justify its issuance (Allied Free Workers Union vs. Judge Estipona, 118 Phil.
748).

The union on January 6, 1961 had perfected an appeal from the lower court’s original decision. It did not appeal from the
amended decision. On March 24, 1982 the lower court issued an order declaring its amended decision final and
executory in view of the onion’s failure to appeal therefrom. The court directed the clerk of court to issue a writ of
execution. That order was assailed by the union in a certiorari action filed in this Court. A preliminary injunction was
issued by this Court to restrain the execution of the judgment.

On May 18, 1962 this Court dissolved the injunction at the instance of the company which had filed a counterbond-
Thereupon, the 225 members of the union yielded their ten-year old jobs to the new set of workers contracted by the
company.

The certiorari incident was decided on June 80, 1966. This Court noted that the lower court amended its decision for the
purpose of correcting certain errors and omissions which were not substantial in character and that its amended decision
was served upon the parties after the union had perfected its appeal from the original decision.

Under those circumstances, this Court held that the union’s appeal should be given due course, subject to the
amendment of its record on appeal This Court reserved to the members of the union the right to secure restitution
under sections 2 and 5, Rule 39 of the Rules of Court (Allied Free Workers Union vs. Estipona, L-19651, June 30, 1966, 17
SCRA 513, 64 O.G. 2701).

Pursuant to that reservation, the union on December 16, 1966 filed a motion for restitution, praying that its 225
members be restored to their jobs and that the company be ordered to pay P1,620,000 as damages consisting of the lost
earnings during the four-years period from May 8, 1962 to May 8, 1966.

On the other hand, the company in its motion of January 18, 1967 reiterated its 1960 motion for the execution of the
lower court’s judgment as to the damages of P520,000 and the permanent injunction.

Later, the company called the lower court’s attention to this Court’s decision dated January 31, 1967. In that decision,
this Court affirmed the CIR’s decision holding that the company did not commit any unfair labor practice and reversed
the CIR’s directive that a certification election be held to determine whether the union should be the exclusive
bargaining unit. This Court held that the union could not act as a collective bargaining unit because the union was an
independent contractor and its members were not employees of the company (Allied Free Workers Union vs. Compañia
Maritima, L-22951-2 and L-22971, 19 SCRA 258).

The lower court in its order of April 25, 1967 (1) denied the union’s motion for restitution and to stay execution of its
amended decision on January 11, 1961 and (2) required the union to file a supersedeas bond in the sum of P100,000
within thirty days from notice. The bond was reduced to P50,000 in the lower court’s order of August 16, 1967. The
union posted the bond on August 24, 1967.
The lower court approved the union’s amended record on appeal in its order of October 6, 1967.

The union appealed directly to this Court because the amount involved exceeds P200,000. The appeal was perfected
before Republic Act No. 5440 took effect on September 9, 1968.

Other proceedings.—The company in its original complaint prayed that the union and its officials be ordered to pay
actual damages amounting to P15,000 for the union’s failure to load and unload cargo in and from the company’s vessels
from September 1 to 8, 1954; P50,000 as damages due to the union’s inefficiency in performing arrastre and stevedoring
work “during the latter part of the existence” of the contract; P50,000 as moral and exemplary damages (not supported
by any allegation in the body of the complaint) and P5,000 as attorney’s fees (10-12, Record on Appeal).

On September 15, 1954 the company added a fourth cause of action to its complaint. It alleged that by reason of the acts
of harassment and obstruction perpetrated by the union in the loading and unloading of cargo the company suffered
additional damage in the form of lost and unrealized freight and passenger charges in the amount of P10,000 for
September 9 2nd 10, 1954 (66, Record on Appeal).

On November 2, 1954 the company attached to its motion for the revival of the injunction against the union an auditor’s
report dated September 15, 1954 wherein it was indicated that the company lost freight revenues amounting to
P178,579.20 during the period from January 1 to September 7, 1954 (121-143, Record on Appeal).

On November 27, 1954 the company filed another motion for the restoration of the injunction. In support of that motion
the company attached a trip operation report showing the unloaded cargoes on the company’s vessels, when they
docked at Iligan City on September 14, 19, 22 and 26 and October 3 and 5, 1954, as well as the delays in their departure
(157-162, Record on Appeal).

On March 5, 1955 the company added a fifth cause of action to its complaint. It alleged that during the period from
September 12 to December 28, 1954 it lost freight charges on unloaded cargoes in the sum of P62,680.12, as shown in a
detailed statement, and that it incurred an estimated amount of P20,000 for overhead expenses for the delay in the
departure of its vessels attributable to the union’s unsatisfactory stevedoring and arrastre work (225-220, 237-8, Record
on Appeal).

Also on March 5, 1955 the union answered the original and supplemental complaints. It denied that its members had
rendered inefficient service. It averred that the termination of the contract was prompted by the company’s desire to
give the work to the Iligan Stevedoring Association which the company had allegedly organized and subsidized. The
union filed a counterclaim for P200,000 as compensation for its services to the company and P500,000 as other damages
(239-252, Record on Appeal).

On March 9, 1960 the company filed a third supplemental complaint. It alleged that the continuation of the stevedoring
and arrastre work by the union for the company from 1955 to date had caused losses to the company at the rate of
P25,000 annually in the form of lost freight on shutout cargoes and the expenses for the equipment used to assist the
union members in performing their work (820-3, Record on Appeal).

Plaintiff company’s evidence.—Jose C. Teves, the company’s branch manager at Iligan City, testified that on August 24,
1954 he terminated the arrastre and stevedoring contract with the union (Exh. J) upon instruction of the head office. The
contract was terminated in order to avoid further losses to the company caused by the union’s inefficient service (85-86
ten March 11, 1960).

After the termination of the contract, the members of the union allegedly harassed the company with the help of goons.
The cargoes could not be unloaded in spite of the fact that the company had sought the protection of the law-enforcing
authorities (88). The company’s last recourse was to go to court, (89).

The company supposedly suffered losses as a result of the union’s inefficient service since September 1, 1954 (91). Teves
hired auditors to ascertain the losses suffered by the company during the period from January 1 to September 11, 1954.
The trial court awarded actual damages amounting to P450,000 on the basis of the auditor’s reports, Exhibits A to I. It
did not carefully examine the said exhibits, Contrary to the trial court’s impression, Exhibits B, C and D are not auditors’
reports.

The trial court did not bother to make a breakdown of the alleged damages totalling P450,000. The reports of the two
hired accountants, Demetrio S. Jayme and M. J. Siojo, show the following alleged damages in the aggregate amount of
P349,245.37 (not P412,663.17, as erroneously added by the company’s counsel, 161, 163-4 tan March 11, 1960):

TABULATION OF ALLEGED DAMAGES CLAIMED BY COMPAÑIA MARITIMA

(1) Freight for 74,751 bags of fertilizer allegedly booked for shipment in the company’s vessels but loaded in other
vessels during the period from Jan. 1 to August 31, 1954, Statement A inExh. A, CPA Jayme’s
report ............................................................................ P 29,900.40

(2) Lost freight on other shutout cargoes for January 1 to August 31, 1954, Statement A inExh. A, report of CPA
Jayme .................................. 4,339.64

(3) Lost freight on shutout cargoes for September 2 to 7, 1954 booked for shipment in M, V. Mindoro, Panay and
Masthead Knot,Statement B in Exh. A, CPA Jayme’s report ............... 6,167.16

(4) Losses sustained in voyages of M.V. Panay and Mindoro in four voyages from September 4 to 11, 1954, with
estimates, Statement B, Exh. A..................................................... 3,764.50

(5) Other estimated losses for the said voyages of M.V. Panay and Mindoro for the same period, based on interviews
of parties at the wharf, Statement B, Exh. A ................................... 10,000.00

(6) Additional subsistence expenses for the M.V. Mindoro and Panay due to the delays in their departure from January
1 to August 31, 1954 as certified by the pursers of the two vessels, Statement C, Exh. A ...................................... 4,407.50

(7) Estimated loss in freight and passenger revenue for the period from January 1 to August 31, 1954, based on 1958
freight revenue for the same period Statement D, Exh. A ....................100,000.00

(8) Estimated loss in passenger fares for the period from September to December 31, 1954, Statement D, Exh.
A .......................................... 20,000.00

(9) Lost freight charges from September 12 to December 28, 1954, as certified by the chief clerk of the company’s
Iligan office. Exh. B...................................................................................62,680.12

(10) Estimated overhead expenses for delay of vessels in port, Exh. B ....................................20,000.00

(11) Forklift operating expenses for 1955, consisting of salaries and maintenance expenses, Exh. E-
l .......................................................5,677.54

(12) Lost freight revenue for 1955, Exh. E- 2 ...................................................................................17,838.78

(13) Forklift operating expenses for 1956, Exh. F-1 .......................................................................3,520.90

 (14) Lost freight revenue for 1956, Exh. F-2 .......3,849.56

(15) Forklift operating expenses for 1957, Exh. G-1. ......................................................................8,259.08

(16) Lost freight revenue for 1957, Exh. G-2 ...................................................................................14,538.10

(17) Forklift operating expenses for 1958, Exh. H-1 .......................................................................7,503.45

(18) Lost freight revenue for 1958, Exh. H- 2 ...................................................................................10,193.46

(19) Forklift operating expenses for 1959, Exh. I-1 ........................................................................8,745.35

(20) Lost freight revenue for 1959, Exh. I-2 ........7,859.83

—————

T O T A L—

P349,245.37

We tabulated the alleged damages to show that the trial court’s award to the company of P450,000 as damages is not
supported by the evidence. On the other hand, the statement of the company’s counsel that the damages totaled
P412,663.17 (162-164 tsn March 11, 1960) is wrong.

Teves, the company’s branch manager, submitted a statement (Exh. K) showing the alleged cost of three forklifts, 200
pieces of pallet boards, 530 pieces of wire rope slings and two pieces of tarpaulins in the total sum of P27,215. In that
statement, he claims that the damages to the company by reason of the depreciation of the said items of equipment
amounted to P38,835 or more than the cost thereof.

The company’s counsel, in his summary of the damages, ignored the alleged damages of P38,835 indicated by Teves in
Exhibit K. The company’s counsel relied only on the auditors’ reports, Exhibits A and E to I and on Exhibit B, the chief
clerk’s statement. As already noted, those documents show that the total damages claimed by the company amounted
to P349,245.37.

The best evidence on the cost of the said equipment would have been the sales invoices instead of the oral testimony of
Teves. He did not produce the sales invoices.

Teves further testified that Salvador T. Lluch was the president of the union; Nicanor Halibas, the treasurer; Mariano
Badelles, the general manager, and Luarentino Badelles, a vice-president.

Appellants’ statement of facts.—To sustain their appeal, the appellants made the following exceedingly short and
deficient recital of the facts:

“Sometime in the month of August, 1954, defendant, Allied Free Workers Union filed an unfair labor practice case
against defendant (should be plaintiff) and its branch manager, Mr. Jose Teves, with the Court of Industrial Relations,
Manila, and docketed as Case No. 426-UPL: defendant union also filed a petition for certification election docketed as
Case No. 175-MC against plaintiff; defendant union also filed a notice of strike dated August 27, 1954; the Secretary of
Labor wired the public defender, Iligan City, on August 27, 1954 (see annexes 1 to 4, motion to dismiss, Record on
Appeal, pp. 54-65).
“To counteract these legitimate moves of labor, plaintiff filed the complaint docketed as Civil Case No. 577 in the Court of
First Instance of Lanao (now Lanao del Norte) for damages and/or resolution of contract with writ of preliminary
injunction. On a decision adverse to their interests, defendants take this appeal.

“On the question of jurisdiction taken before this Honorable Tribunal in G.R. No. L-8876, it was held:

“ ‘x x x for the instant case merely refers to the recovery of damages occasioned by the picketing: undertaken by the
members of the union and the rescission of the arrastre and stevedoring contract previously entered into between the
parties.’”

The appellants did not discuss their oral and documentary evidence.*

First assignment of error.—The appellants contend that the trial court erred in awarding to the company actual damages
amounting to P450,000, moral damages of P50,000 and attorney’s fees of P20,000, and in holding that the four officers
of the union are solidarity liable for the said damages. Appellants’ counsel assailed the award of actual damages on the
ground that the auditors’ reports, on which they were based, were hearsay

* This case was submitted for decision on July 9, 1970. One reason for the delay in its disposition is the fact that the
briefs are exceedingly brief and do not give much enlightenment to the Court.

The decision under appeal consists of 70 printed pages; the record on appeal, 883 printed pages; the folder of exhibits,
140 pages, and the transcripts of the testimonies, 1,101 pages.

The briefs do not conform with the requirements of sections 16 and 17, Rule 46 of the Rules of Court, Their subject
indexes do not contain a digest of the argument (Secs. 16[a] and 17[a], Rule 46).

Appellants’ inadequate statement of the case does not contain “a clear and concise statement of the nature of the
action, a summary of the proceedings, the appealed rulings and orders of the court, the nature of the judgment and any
other matters necessary to an understanding of the nature of the controversy, with page references to the record.” (Sec.
16[c], Rule 46).

Their statement of facts does not contain “a clear and concise statement in a narrative form of the facts admitted by both
parties and of those in controversy, together with the substance of the proof relating thereto in sufficient detail to make
it clearly intelligible, with page reference to the record” (Sec. 16[d], Rule 46).

Under section 1(g), Rule 50 of the Rules of Court, this Court may dismiss motu proprio the union’s appeal for want of
page references to the record in its skimpy statement of facts (Genobiagon vs. Court of Appeals, L-44323, March 2,
1977).

After analyzing the nature of the damages awarded, how the same were computed, and the trustworthiness of the
company’s evidence, we find the first assignment of error meritorious. We have already stressed that, on the basis of the
reports of the two accountants, the damages claimed by the company, as a matter of simple addition, does not reach the
sum of P450,000 fixed by the trial court. The damages shown in the accountants’ reports and in the statement made by
the company’s chief clerk (who did not testify) amount to P349,245.37, or much less than P450,000.

The company argues that the accountants’ reports are admissible in evidence because of the rule that “when the original
consists of numerous accounts or other documents which cannot be examined in court without great loss of time and
the fact sought to be established from them is only the general result of the whole”, the original writings need not be
produced (Sec. 2[e] Rule 130, Rules of Court).
That rule cannot be applied in this case because the voluminous character of the records, on which the accountants’
reports were based, was not duly established (U. S. vs. Razon and Tayag, 37 Phil. 856, 861; 29 Am Jur 2nd 529).

It is also a requisite for the application of the rule that the records and accounts should be made accessible to the
adverse party so that the correctness of the summary may be tested on cross-examination (29 Am Jur 2nd 517-8; 32A
C.J.S. 111).

What applies to this case is the general rule “that an audit made by, or the testimony of, a private auditor, is inadmissible
in evidence as proof of the original records, books of accounts, reports or the like” (Anno: 52 ALR 1266).

That general rule cannot be relaxed in this case because the company failed to make a preliminary showing as to the
difficulty or impossibility attending the production of the records in court and their examination and analysis as evidence
by the court (29 Am Jur 2nd 529).

A close scrutiny of the accountants’ reports reveals their lack of probative value. The propriety of allowing the different
items of damages is discussed below.

Unrealized freight and passenger revenue for 1954, ascertained by Accountant Demetrio S. Jayme.—In his report (Exh. A,
pp. 134 to 147, Record on Appeal), Jayme used the pronouns “we” and “our” and made reference to the examination
made by the “auditors” and his accounting office.

He did not disclose the names of other “auditors” who assisted him in making the examination of the company’s records.

He gave the impression that he was an independent accountant hired by the company to make a “special investigation”
of the company’s losses for the period from January 1 to September 7, 1954.

The truth is that Jayme was a “personal friend” of Teves, the company’s branch manager at Iligan City, Teves was the
company’s principal witness in this case. He verified the complaint herein. He signed for the company the stevedoring
and arrastre contract which he later rescinded. In fact, Teves intervened in the drafting of the contract. It was his idea
that the company should not pay the arrastre and stevedoring fees and that those charges should be borne by the
shippers and consignees.

Jayme was not only the friend of Teves but was also his co-employee. Jayme was the company’s branch manager at
Ozamis City and later at Cagayan de Oro City (217-8 tan May 20, 1960; Exh. 12). He suppressed that fact in his report of
examination, Apparently, the practice of accounting was his sideline or he practised accounting and, as the saying goes,
he moonlighted as the company’s branch manager. Obviously, Jayme would be biased for the company. He violated a rule
of the accountants’ code of ethics by not disclosing in his report of examination that he was an employee of the company
(84 tsn June 2, 1960).

Accountant Jayme allegedly found from the company’s records at Iligan City that its freight and passenger revenue for
the eight-month period from January 1 to August 31, 1953 amounted to P373,333.14 and that for the same period in
1954, that revenue amounted to P470,716.29, or an increase of P97,383.12 (Statement D of Exh. A, 145, Record on
Appeal).

Jayme interpreted those figures as signifying that the company would have realized more revenue if the union had
rendered better service. He reasoned out that there was a big volume of business in Iligan City due to the Maria Cristina
Fertilizer Plant, Iligan Steel Mill and NPC Hydroelectric Plant. He imagined that the company’s freight revenue during the
first eight months of 1954 could have amounted to at least P600,000 and that since it actually realized only P470,716.29,
its loss of freight revenue for that period could be “conservatively” estimated at least P100,000 (item 7 of the tabulation
of damages).
He stated that he attached to his report on the comparative statement of gross revenue a certificate of the captain of the
vessel Panay showing the delays in its departure in Iligan City as indicated in its logbook. No such document was attached
to Jayme’s report.

And from the fact that the total fares received by the company during the eight-month period were reduced in the sum
of P3,951.58 (Jayme fixed the reduction at the round figure of P4,000) he calculated that the company suffered a loss of
at least P20,000 in passenger revenue up to December 31, 1954 (Item 8 of the tabulation of damages).

Jayme also included in his report (a) damages amounting to P10,000 as his estimate of losses supposedly “based on
interviews with disinterested parties at the wharf and city proper customers”; (b) damages amounting to P3,764.50
allegedly suffered in the operation of the vessels Mindoro and Panay from September 4 to 11, 1954, consisting of extra
meals, expenses for unloading cargo, estimated loss in passage revenue for four voyages, and estimated loss from “re-
routed freights to competing vessels” (consisting of rice, corn and bananas), and (c) the sum of P4,407.50 as alleged
additional subsistence incurred for the crew of the Panay and Mindoro from January 1 to August 31, 1954 (items 4, 5 and
6 of the tabulation of damages). The records of the purser and chief steward were allegedly examined in ascertaining
those damages.

It would not be proper to allow Jayme’s estimates as recoverable damages. They are not supported by reliable evidence.
They can hardly be sanctioned by the “generally accepted auditing standards” alluded to in Jayme’s report. The pertinent
records of the company should have been produced in court. The purser and steward did not testify.

The rule is that the auditor’s summary should not include his conclusions or inferences (29 Am Jur 2d 519), His opinion is
not evidence.

The trial court unreservedly gave credence to the conjectures of Jayme. Obviously, his inflated guesses are inherently
speculative and devoid of probative value. Furthermore, his estimate of the unrealized freight revenue for January 1 to
August 31, 1954 overlapped with his computation of the lost freight for the unloaded 74,751 bags of fertilizer and other
cargoes covering the same period (Statement A of Exh. A).

The foregoing discussion shows Jayme’s unreliable modus operandi in ascertaining the 1954 losses which the company
claimed to have suffered in consequence of the union’s alleged inefficiency or poor service. It is noteworthy that those
losses were not averred with particularity and certitude in the company’s complaint.

The same observations apply with equal cogency to the damages amounting to P40,407.20 as lost freight revenue also
for the year 1954 (items 1 to 3 of the tabulation of damages) which were computed by Accountant Jayme.

Those items refer to (1) the sum of P29,000.40 as lost freight revenue on 74,751 bags of fertilizer, already mentioned,
which were booked for shipment in the company’s vessels from January 1 to August 31, 1954 but which were allegedly
loaded in other vessels; (2) P4,339.84 as unrealized freight revenue for other cargoes booked in the company’s vessels
but not loaded therein during the same eight-month period, and (3) P6,167.16 as unrealized freight revenue on shutout
cargoes not loaded in the company’s vessels during the six-day period from September 2 to 7, 1954.

Jayme allegedly based his computations on the records of the company which were not produced in court. The union
objected to Jayme’s report as inadmissible under the hearsay rule or as not being the best evidence.

Even if the presentation of the records themselves as exhibits should have been dispensed with, yet the company, to
show good faith and fair dealing, could have brought the records in court (manifests, bills of lading, receipts for the
freights, if any, etc.) and enabled the court and the union’s counsel and its expert accountant to verify the accuracy of
Jayme’s summaries.
Photostatic copies of some manifests and bills of lading proving that the company was not able to collect the stipulated
freight on the alleged shutout cargoes should have been presented in evidence as supporting papers for Jayme’s report.
No such exhibits were presented.

The flaw or error in relying merely on Jayme’s summaries is that, as pointed out by witness Mariano LL. Badelies, cargoes
might be shutout due to causes other than the supposed inefficiency of the union. He testified that cargoes were shutout
deliverately by the company because they could not be loaded in one vessel (for example, 50,000 bags of fertilizer), or a
shipper had no allotment, or because the company did not want to load cargoes like bananas (189-194 tsn May 20,
1960). Jayme’s summaries did not take into account the probability that a part of the cargo booked in the company’s
vessel for a certain date might not have been loaded on that date but was loaded in another vessel of the company
which docked at the port a few days later. In that case, there would be no loss of freight revenue. The mere shutting out
of cargo in a particular voyage did not ipso facto produce loss of freight revenue.

Our conclusion is that an injustice would be perpetrated if the damages aggregating P178,579 computed and estimated
in the report of Jayme, a biased witness, should be accepted at their face value.

Damages computed by Salvador M. Magante.—The company also claims as damages for the period from September 12
to December 28, 1954 lost freight charges on shutout cargoes in the sum of P62,680.12, and the sum of P20,000 as
“overhead expenses for delay of vessels in port”, as set forth by Salvador M. Magante, the company’s chief clerk at Iligan
City, in his statement, Exhibit B (items 9 and 10 of the tabulation of damages).

Magante did not testify on his statement. Instead, accountant Jayme, substituting for Magante, testified on that
statement. Jayme said that he verified the company’s records on which Magante based his statement. Jayme assured the
court that the figures in Magante’s statement were supported by the company’s records.

But as to the damages of P20,000, Jayme said that he could not certify as to their correctness because he had not
finished his investigation (33 tsn March 9, 1955). In spite of that admission, the trial court allowed that item of damages.

The trial court erred in allowing the damages totalling P82,680.12 because Magante’s statement, Exhibit B, is hearsay.
Magante should have been presented as a witness. Jayme was not competent to take his place since the statement was
prepared by Magante, not by Jayme. More appropriate still, the documents and records on which the statement was
based should have been presented as evidence or at least brought to the court for examination by the union’s counsel
and its accountant, The trial court required the production of the manifests supporting Magante’s statement (85-86 tsn
march 9, 1955). Only one such manifest, Exhibit C, was produced. The nonproduction of the other records was not
explained.

Lost freight revenue and operating expenses for the forklifts.—The company claimed as damages the sum of P87,986.05
(P151,403.85 as erroneously computed by the company’s counsel, 163 tsn March 11, 1950) consisting of supposed
unrealized freight charges for shutout or unloaded cargoes for the year 1955 to 1959 (Exh. E to I, Items 11 to 20 of the
tabulation of damages).

The claim is covered by the company’s third supplemental complaint dated March 9, 1960 wherein it was alleged that
due to the acts of the union and its officers the company had suffered damages of not less than P25,000 annually since
1955 (820-8, Record on Appeal), That supplemental complaint was hurriedly filed during the trial as directed by the trial
court.

The said damages were computed in the reports of Miguel J. Siojo, an accountant who, for two days and nights, March 8
to 10, 1960, or shortly before and during the trial, allegedly examined the company’s record at Iligan City, such as its cash
book, cash vouchers, reports to the head office, shipping manifests, and liquidation reports. Those records were not
produced in court. Their nonproduction was not explained. If the accountant was able to summarize the contents of
those records in two days, they could not have been very voluminous-They should have been offered in evidence.

The alleged expenses in the operation of the forklifts consisted of (a) the wates of the operators hired by the company
and (b) the cost of gasoline and oil and expenses for repair. The company’s theory is that under the 1952 contract (Exh. J)
the union was obligated to provide for forklifts in the loading and unloading of cargo. Inasmuch as the union allegedly did
not have forklifts, the company, to expedite the arrastre and stevedoring work, purchase forklifts, hired laborers to
operate the same, and paid for the maintenance expeneses. The company treated those expeneses as losses or
damages.

Those alleged damages amounting to P87,986.05 are in the same category as the depreciation allowances amounting to
P38,835 which the company claimed for the forklifts, pallet boards, tarpaulins, and wire rope slings that it purchased for
only P27,215. We have stated that the company’s counsel ignored that depreciation in his recapitulation of the damages
claimed by the plaintiff.

The union contends that Siojo’s reports (Exh. E to I) were inadmissible evidence because they were hearsay, meaning
that the original documents, on which the reports were based, were not presented in evidence and, therefore,
appellants’ counsel and the court itself were not able to gauge the correctness of the figures or data contained in the
said reports, The person who had personal knowledge of the operating expenses was not examined in court.

We are of the opinion that, to avoid fraud or fabrication, the documents evidencing the alleged expenses should have
been presented in evidence. Siojo’s reports were not the best evidence on the said operating expenses. The explanation
of Badelles with respect to shutout cargoes and our observations on Jayme’s summaries are applicable to accountant
Siojo’s reports.

A more substantial ground for rejecting Siojo’s reports la that the said expenses, if really incurred, cannot be properly
treated as damages to the company.

The union’s witness, Mariano LI. Badelles, testified that the company’s forklifts were not used exclusively on the wharf.
They were used in the fertilizer and carbide plants. Sometimes, the union supplied the driver and the gasoline for the
operation of the forklifts (174-177 tsn May 20, 1960).

Moreover, as stated earlier, the company was not paying the union a single centavo for arrastre and stevedoring work.
The shippers and consignees paid for the arrastre service rendered by the union. The union did not receive any
compensation for stevedoring work.

The company complained that the union had been rendering unsatisfactory arrastre and stevedoring services. That
grievance was controverted by the union.

The use of the forklifts, tarpaulins, pallet boards and wire rope slings immeasurably benefitted the company. It is not
proper nor just that the company’s investment in those pieces of equipment should be considered damages just because
it was able to bind the union to a one-sided contract which exempted it from the payment of arrastre and stevedoring
fees and which impliedly obligated the union to purchase the said equipment.

If the service rendered by the union members was unsatisfactory, it must be because the poor stevedores were underfed
and underpaid. They were underfed and underpaid because the company was astute enough to insure that it would
obtain stevedoring service without paying for it.

If to improve the arrastre and stevedoring service, the company had to incur expenses for the purchase of forklifts, pallet
boards, tarpaulins and wire rope slings and for the operation of the forklifts, the union should not be required to
reimburse the company for those expenses. The company should bear those expenses because the same redounded to
its benefit.

The trial court erred in ordering the union and its officials to pay the amount of the said expenses as damages to the
company.

Moral damages mid attorney’s fees.—Considering that the company’s claim for moral damages was based on the same
facts on which it predicated its claim for actual damages, which we have found to be groundless, it follows that the
company, a juridical person, is not entitled to moral damages. Anyway, the company did not plead and prove moral
damages. It merely claimed moral damages in the prayer of its complaint. That is not sufficient (Darang vs. Ty Belizar, L-
19487, January 31, 1967, 19 SCRA 214, 222).

Under the facts of this case, we do not find any justification for awarding attorney’s fees to the company. Hence, the trial
court/s award of P20,000 as attorney’s fees is set aside.

Appellants’ first assignment of error, although not properly argued by their counsel, should be sustained.

Other assignments of error.—The union and its officers contend that the lower court erred in dismissing their
counterclaims. Their counsel did not even bother to state in their brief the amount of the counterclaims.

The union filed counterclaims for P200,000 as compensation for stevedoring services from August, 1952 to March 4,
1955; P500,000 as damages, P10,000 as attorney’s fees and P5,000 as premium on the counterbond (251-2, Record on
Appeal). In their supplemental counterclaim, they demanded P500,000 as stevedoring charges for the period from March
4, 1955 to March 4, 1960 and additional damages of P10,000 (308-10, Record on Appeal). The trial court dismissed the
said counterclaims.

The appellants in their three-sentence argument in support of their counterclaims alleged that the company’s bill of
lading provided that the unloading of the cargoes was at the company’s expense (Exh. 1); that the company had not paid
the sum of P500,000 as compensation for the stevedoring services rendered by the laborers up to 1960, and that the
stipulation in the arrastre contract, “that the Compañia Maritima shall not be liable for the payment of the services
rendered by the Allied Free Workers Union for the loading and deliveries of cargoes as same is payable by the owners
and consignees of cargoes, as it has been the practice in the port of Iligan City” (Exh. J, pp. 14, 334, 359, 500 Record on
Appeal), was ‘non-operative” and void, “being contrary to morals and public policy”.

That superficial argument is not well-taken. The printed stipulation in the bill of lading was superseded by the contractual
stipulation. The contract was prepared by the union officials. As already noted, it was stipulated in the contract that the
stevedoring and arrastre charges should be paid by the shippers and consignees in consonance with the practice in Iligan
City, That stipulation was binding and enforceable.

The supposed illegality of that stipulation was not squarely raised by the union and its officials in their answer. They
merely averred that the contract did not express the true agreement of the parties. They did not sue for reformation of
the instrument evidencing the contract. The lower court did not err in dismissing defendants’ counterclaims. The other
two errors assigned by the appellants, namely, that the lower court erred in issuing a permanent injunction against them,
and in executing its decision pending appeal, are devoid of merit.

The appellants invoke section 9(d) of the Magna Carta of Labor regarding the issuance of injunctions. That section has no
application to this case because it was definitively ruled by this Court in the certification and unfair labor practice cases
that there is no employer-employee relationship between the company and the stevedores. (They work under the cabo
system).
The lower court did not execute the money aspect of its judgment. It merely required the defendants to file a
supersedeas bond of P50,000.

As to the injunction, it should be recalled that it was this Court which, in its resolution of May 16, 1962 in the execution
and appeal incident (L-19651, 17 SCRA 513), allowed the company to terminate the stevedoring and arrastre work of the
union and to use another union to perform that work.

The company had the contractual right to terminate the 1952 contract (Taylor vs. Uy Teng Piao, 43 Phil 873). The lower
court did not err in sustaining the company’s rescission of the contract and in enjoining the union from performing
arrastre and stevedoring work.

WHEREFORE, that portion of the trial court’s judgment declaring the arrastre and stevedoring contract terminated,
permanently enjoining the union and its officials from performing arrastre and stevedoring work for the vessels of the

Compañia Maritima, and dismissing defendants’ counterclaim is affirmed.

The lower court’s award of damages is reversed and set aside. No costs.

SO ORDERED.
No. L-49390. January 28, 1980.*

NICETA MIRANDA-RIBAYA and LUIS CARBONELL RIBAYA, petitioners, vs. MARINO BAUTISTA, ENCARNACION BAUTISTA
and the COURT OF APPEALS, respondents.

Civil Law; Damages; Moral damages; Failure of claimant to use in her testimony the precise legal terms “mental anguish,
fright, serious anxiety, wounded feelings or moral shock” is not fatal to a claim for damages as long as the said exact
terms have been pleaded in the complaint and evidence adduced in support thereof.—We do not share respondent
court’s narrow view that petitioner Niceta’s failure to use in her testimony the precise legal terms or “sacramental
phrases” of “mental anguish, fright, serious anxiety, wounded feelings or moral shock and the like justifies the denial of
the claim for damages. It is sufficient that these exact terms have been pleaded in the complaint and evidence has been
adduced, as cited above, amply supporting the averments of the complaint. Indeed, petitioner Niceta vividly portrayed in
simple terms the moral shock and suffering she underwent as a result of respondent’s wanton abuse of her good faith
and confidence. Thus, petitioner’s testimonial evidence to the effect that petitioner Niceta suffered “extremely” and that
for three months she could not sleep was a clear demonstration of her physical suffering, mental anguish and serious
anxiety and similar injury, resulting from respondent’s malevolent acts that show her to be clearly entitled to moral
damages.

Same; Same; Exemplary damages; Award of exemplary damages proper due to respondents’ wanton refusal to pay their
just contractual debt and their malicious defraudation of petitioners’ good faith.—The wantonness and malevolence
through which respondents defrauded petitioner deceitful incurring and then evading settlement of their just liability
certainly justifies the award of exemplary damages by way of example and correction for the public good and also to
serve as a deterrent to the commission of similar misdeeds by others, even if the transaction were viewed as a breach of
civil contract.

APPEAL from the decision of the Court of Appeals.

The facts are stated in the opinion of the Court.

Quisumbing, Caparas, Tabios, Ilagan, Alcantara & Mosqueda for petitioners.

Bienvenido Tan for respondents.

TEEHANKEE, J.:

The Court modifies the decisions of the trial court and of the Court of Appeals insofar as they denied petitioner’s claim
for damages and awards to petitioners moral and exemplary damages in the amount of 25% of the principal sum
adjudged in their favor for the mental anguish and suffering undergone by them as a result of the defraudation wantonly,
oppressively and malevolently committed by private respondents and by way of example and correction for the public
good.

In the decision of the Court of Appeals,1 the facts of the case as lifted from the decision of the Court of First Instance are
stated, as follows:

“Mrs. Niceta Miranda-Ribaya was engaged sometime in 1968 in the pawnshop business and in the buying and selling of
jewelry.

Sometime prior to April 23, 1968 one of her agents, Mrs. Josefina Roco-Robles, informed her that a millionaire logger by
the name of Marino Bautista was interested to buy big diamond stones. Acting upon this information, Mrs. Ribaya
accompanied by her agent, Mrs. Robles, decided to drop by the house of Mr. and Mrs. Marino Bautista on April 23, 1968
at La Salle Street, Greenhills, Mandaluyong, Rizal. Mrs. Ribaya was impressed by the residence of the Bautista and
included within herself that the Bautistas were indeed millionaires as represented by her agent, Josefina. On that
occasion both Mr. and Mrs. Bautista were present together with Gloria Duque, the secretary of Mr. Bautista, and the
couple’s daughter, Teresita. Mrs. Ribaya then offered to sell to the Bautistas ten (10) pieces of jewelry described in
paragraph 2 of the complaint for the total amount of P224,000.00. After some haggling, the Bautistas were able to
convince Mrs. Ribaya to sell to them the aforesaid pieces of jewelry for the price of P222,000.00. Mr. Bautista
acknowledged the receipt of the jewelry as well as the agreed purchase price thereof by signing the receipt marked as
Annex A and A-1 of the complaint. Mrs. Ribaya in turn was paid in the form of the two (2) Equitable Banking Corporation
checks Nos. 10767485-A for P112,000.00 (Annex B of the complaint) and No. 10755100-A for P110,000.00, both checks
postdated June 23, 1968. Mrs. Ribaya then executed a voucher evidencing said payment (Annex C of the complaint). The
next day, plaintiff, accompanied by Miss Narcisa Gosioco, went back to see defendant Marino Bautista for the purpose of
requesting the latter to break up the Equitable Banking Corporation Check No. 10755100-A for P110,000.00 into separate
checks inasmuch as part of the jewelry sold to Bautista the previous day belonged to Mis Gosioco, Bautista readily
accommodated the request of Mrs. Ribaya by exchanging said check with four (4) Bank of America checks Nos. DD-8112
for P14,000.00, DD-8113 for P34,000.00, DD-8114 for P12,000.00 and DD-9115 for P50,000.00 totalling P110,000.00, all
postdated June 23, 1968. On the four (4) checks Mrs. Ribaya delivered checks Nos. 8113 for P34,000.00 and 8114 for
P12,000.00 to Miss. Gosioco. Mrs. Ribaya kept for herself checks Nos. 8115 and 8112 for the sum of P64,000.00. The four
(4) checks were acknowledged by Mrs. Ribaya in the debit-credit memo form of the Bautista Logging Company, Inc.
(Annex F of the complaint).

“On the same day, April 24, 1968, Mrs. Ribaya again sold to the defendants four (4) pieces of jewelry worth P94,000.00.
The pieces of jewelry sold are described in paragraph 3 of the complaint and the delivery of said pieces of jewelry was
acknowledged by defendant Bautista under receipt marked Annex G of the complaint. While defendant Bautista issued
Bank of America Checks Nos. DD-8106 for P12,000.00, DD-8111 for P12,000.00, DD-8110 for P35,000.00, and DD-8107
for P35,000.00, all postdated June 23, 1968, plaintiff Ribaya in turn was made to sign another voucher dated April 24,
1968 covering the said payment amounting to P94,000.00 (Annex F of the complaint). This transaction took place at the
office of defendant Bautista at the Bank of Philippine Islands Building in Manila. During the transaction, Gloria Duque,
secretary of Mr. Bautista, and Mr. Bautista himself were present aside from the plaintiff Mrs. Ribaya, Mrs. Bautista was
not present on this occasion.

“As some of the owners of the jewelry sold to the defendants by Mrs. Ribaya on April 23, 1968 and April 24, 1968 wanted
to get back their jewelry, Mrs. Ribaya on May 15, 1968 went back to the house of the Bautistas accompanied by Gloria
Duque bringing with her three (3) pieces of jewelry more particularly described in Annex L of the complaint which she
showed to Mr. Bautista for the purpose of giving said three (3) pieces of jewelry in exchange for some pieces previously
sold to defendant Bautista. As Mrs. Bautista and her daughter, however, were not at home, she was requested by Mr.
Bautista to leave said jewelry so that he can show them to his wife and daughter. Instead of returning the jewelry with
which she offered to exchange for others previously sold, defendant Bautista sent Mrs. Ribaya two (2) days later another
Bank of America check No. DD-8130 for P45,000.00 postdated July 17, 1968 issued by defendant Bautista. She was
informed by Josefina Robles that the said check was in payment of the three (3) pieces of jewelry which plaintiff had left
in the possession of the defendant Marino Bautista. She was further informed that the three (3) pieces of jewelry had
been given away by Bautista as presents to some bank officials.

“When the maturity dates of the various postdated checks given to Mrs. Ribaya in payment of the different pieces of
jewelry arrived, Mrs. Ribaya tried several times to contact defendant Marino Bautista pursuant to their agreement but all
her efforts were in vain as she was informed that the Bautistas were in the mountains attending to their logging
concession.
“Unable to contact the defendants, Mrs. Ribaya then deposited to her account at the Continental Bank the checks in her
possession. All the checks paid by the defendant Bautista were dishonored by the bank for the reason that the accounts
of the defendant were closed.

“As a former pawnshop operator, she know that pawnshop owners were required to report their daily transactions with
the Manila Police Department. Suspecting that the Bautistas might have pawned the pieces of jewelry purchased from
her, she went to the pawnshop section of the Manila Police Department to verify her suspicion and to her chagrin she
discovered that most of the jewelry she had sold to the defendants were pledged to various pawnshops in Manila.

“Armed with this discovery she was finally able to comfort the defendant Marino Bautista with her findings. Defendant
Bautista assured Mrs. Ribaya that he would pay her their obligation in connection with the jewelry transactions. After
failing to keep these promises from week to week, Mrs. Ribaya demanded from the defendant Marino Bautista the
surrender of the pawnshop tickets covering the pledge of the different pieces of jewelry he had obtained from her. Mrs.
Ribaya was able to secure these tickets from the defendant Bautista one by one. The pawnshop tickets were issued in the
names of the driver of the Bautista family, their secretary Gloria Duque, Mrs. Bautista, and a certain Balagot. With these
pawnshop tickets in her possession, Mrs. Ribaya was able to redeem part of the jewelry she had delivered to the
Bautistas after spending P52,900.00 for the redemption price of said jewelry plus interest in the amount of P760.79.

“There were, however, three (3) pawnshop tickets covering jewelry which did not belong to Mrs. Ribaya included among
the tickets delivered to Mrs. Ribaya and (for) which defendant Bautista wanted to value at P11,000.00 (Exhibits P-4 and
P-5). These were pawnshop tickets Nos. 95716, 95719 and 95851, all issued in the name of his driver Narciso Amaya and
pertaining to the Aguirre Pawnshop. Mrs. Ribaya assessed the jewelry covered by these three (3) tickets at P25,000.00
and after paying P17,000.00 for the redemption of said pieces of jewelry she credited the Bautistas with P8,000.00.

“x x x

“After computing the value of the pieces of jewelry recovered by Mrs. Ribaya and the disbursements made by her for the
redemption of said jewelry and the unrecovered pieces, Mrs. Ribaya concluded that the balance of the account of the
Bautistas for the purchase price of the various pieces of jewelry amounts to P125,460.79. She added that this amount
does not include the amount of the checks delivered by her to Miss Gosioco. She also testified that she has agreed to pay
her lawyers an amount equivalent to 25% of the obligation unpaid by the Bautistas.”

In the light of the above factual findings, the trial court rendered judgment sentencing respondents-defendants to pay
petitioners-plaintiffs the sum of P125,460.79 with interest and 25% thereof for attorney’s fees and expenses of litigation.
On petitioners’ claim for moral and exemplary damages, respondents had pleaded that respondent Marino Bautista had
acted “in utmost good faith” and that damages in any concept could not be assessed against them, and the trial court
upheld them ruling that “the evidence adduced by the plaintiffs [was] insufficient to warrant its grant.”

Herein petitioners interposed an appeal to the Court of Appeals insofar as the trial court failed to grant their claim for
moral and exemplary damages, but respondent appellate court rejected their appeal and affirmed the appealed decision,
finding that (1) as to moral damages, petitioner (therein appellant) Niceta Ribaya had not mentioned in her testimony in
the trial court that she has suffered “mental anguish, serious anxiety, wounded feelings and moral shock”; and (2) as to
exemplary damages, these damages cannot be recovered as a matter of right and it was not prepared to disturb the
lower court’s exercise of discretion in this regard.

Hence this petition for review, which we find to be meritorious.

Parenthetically, the petition has been submitted without a comment or answer from respondents-spouses despite the
fact that on December 8, 1978, they were given through counsel ten (10) days from notice thereof to comment. On
March 27, 1979, Zosimo T. Fama, a brother of Atty. Bienvenido T. Fama who was the counsel of record for herein
respondents-spouses, explained in a letter that his brother, the counsel, could not file the required comment since he
had immigrated to the United states in 1972 and that he could not despite diligent efforts ascertain the whereabouts of
his brother’s clients and that their house had long been foreclosed by their creditors and the family had been long
ejected therefrom. Per resolution of May 9, 1979, this Court, at petitioner’s instance, ordered that copy of its resolution
of December 8, 1978 requiring comment be sent directly to respondents at their last known address of record at 599 La
Salle St., Greenhills Subdivision, Mandaluyong, Metro Manila, but the papers were returned unserved. Petitioners were
further required to ascertain the correct address of respondents to no avail. It is noted further that in the trial court, the
case was submitted for decision on the basis of petitioners-plaintiffs’ evidence, since respondentsdefendants failed to
appear on the date set for the continuation of the hearing and reception of their evidence. It thus clearly appears that
respondents have either absconded or have entirely given up their defense. Their failure to answer or to comment or to
be reached by court processes are declared a waiver on their part and cannot deter the Court from rendering judgment
on the issue properly raised by petitioners, since they had been duly summoned at the commencement of the case and
placed under the jurisdiction of our courts in this case.

Respondent court quoted in its appealed decision petitioner Niceta’s testimony, as follows:

“Q : Now, because of Mr. Bautista’s default and your looking around in the pawnshops for those pieces of jewelries, what
was the effect on you and your business?

“A : I had to close my pawnshop and I had to sell some of my personal jewelries and to borrow money.

“Q : Why do you have to do that?

“A : Because I have also to pay the persons from whom I got the jewelries Mr. Bautista got from me.

“Q : And you have all paid them now?

“A : Yes, sir.

“Q : And how about you, yourself, what happened?

“A : We are in debt now, up to our head.

“Q : And what is the effect of your indebtedness to yourself?

“A : Extreme. For three months I could not sleep.(t.s.n., pp. 26-28, hearing on Nov. 25, 1969).” and then erroneously
“noted that it was her indebtedness that caused her to have sleepless nights for three months. She did not mention in
her testimony that she suffered mental anguish, serious anxiety or wounded feelings.”

Respondent court, from its wrong premise, then as erroneously concluded that “(I)n order that moral damages may be
awarded, there must be pleading and proof of moral suffering, mental anguish, fright and the like (San Miguel Brewery,
Inc. vs. Magno, 21 SCRA 292). While in the complaint of plaintiffs-appellants there is an allegation of mental anguish,
serious anxiety, wounded feelings and moral shock, there is no proof of the alleged mental anguish, serious anxiety,
wounded feelings and moral shock. There must be clear testimony on the mental anguish, serious anxiety, wounded
feelings and similar injuries. Plaintiff must testify to his said injury (Francisco vs. Government Service Insurance System, 7
SCRA 577). It would seem that ‘physical suffering, mental anguish, fright, serious anxiety, wounded feelings, moral shock,
and similar injury’ must be testified to by the plaintiff, and not merely inferred from certain proven facts, like having
sleepless nights. Having sleepless nights is not necessarily due to mental anguish, serious anxiety and the like.”
In denying petitioner’s claim for damages because of petitioner Niceta’s failure to “mention in her testimony that she
suffered mental anguish, serious anxiety or wounded feelings” respondent court misread the case of Francisco vs.
Government Service Insurance System cited by it. There, this Court had sustained the trial court’s appealed decision
denying the therein prevailing plaintiff’s claim for moral and exemplary damages “not only on account of the plaintiff’s
failure to take the witness stand and testify to her social humiliation, wounded feelings, anxiety, etc., but primarily
because a breach of contract like that of defendant, not being malicious or fraudulent, does not warrant the award of
moral damages.”2

Here, the facts and circumstances are totally different. In that case, therein plaintiff failed to take the witness stand and
defendant’s breach of contract was held to be not malicious and fraudulent. In the present case, petitioner Niceta took
the witness stand and established by uncontradicted testimony that due to respondents’ deceitful and malevolent acts of
defraudation, she had suffered “extreme” anguish (without using the word anguish) and “could not sleep for three
months,” since she was forced to close her pawnshop, sell some of her personal jewelries and borrow money in order to
pay off the owners of the jewelries wrongfully gotten by respondents from her. The evidence of record shows the
magnitude of respondents’ wanton, fraudulent and malevolent acts of defraudation.

Thus, we find from the appealed decision that petitioner Niceta was misled into believing that respondent Marino
Bautista was a millionaire when she saw their residence and was told that he was in the logging business and that he
could easily pay for the jewelry because he had log shipments every two months; that all the checks issued by him is in
payment of the jewelries bounced with a note “Account Closed” or were dishonored; that some of the pieces of jewelry
were pawned on the very same day that he got them from petitioners; that after discovering that the jewelries had been
pawned with different pawnshops, petitioner Niceta “pleaded” with respondents to give her the pawnshop tickets so
that she could redeem them and after weeks of anguished waiting and pleading, Bautista gave her the pawnshop tickets
“one by one”, which were issued in the names of the driver of the Bautista family, their secretary Gloria Duque, Mrs.
Bautista and a certain Balagot; that petitioners, besides not having been paid, had to raise P82,800.00 plus interest in
redeeming the jewelries covered by the pawnshop tickets, and were now in debt up to their heads; as a result of which
petitioner Niceta suffered “extremely” and she “could not sleep for three months.”

All this was preceded by a long period of serious anxiety: before respondent Bautista returned to her the pawnshop
tickets one by one, petitioner Niceta had tried to see respondents in vain; they were always out and did not answer or
return her calls; she was given the run-around; at the maturity dates of the various postdated checks given her in
payment of the different pieces of jewelry, she tried several times to contact them pursuant to their agreement, but all
her efforts ended in frustration, as she was informed that respondents were in the mountains attending to their logging
concession.

We do not share respondent court’s narrow view that petitioner Niceta’s failure to use in her testimony the precise legal
terms or “sacramental phrases” of “mental anguish, fright, serious anxiety, wounded feelings or moral shock” and the
like justifies the denial of the claim for damages. It is sufficient that these exact terms have been pleaded in the
complaint3 and evidence has been adduced, as cited above, amply supporting the averments of the complaint. Indeed,
petitioner Niceta vividly portrayed in simple terms the moral shock and suffering she underwent as a result of
respondents’ wanton abuse of her good faith and confidence.

Thus, petitioners’ testimonial evidence to the effect that petitioner Niceta suffered “extremely” and that for three
months she could not sleep was a clear demonstration of her physical suffering, mental anguish and serious anxiety and
similar injury, resulting from respondents’ malevolent acts that show her to be clearly entitled to moral damages.4

Petitioners having established the moral damages, are entitled in addition thereto, to exemplary damages. The
wantonness and malevolence through which respondents defrauded petitioners, deceitfully incurring and then evading
settlement of their just liability certainly justifies the award of exemplary damages by way of example and correction for
the public good and also to serve as a deterrent to the commission of similar misdeeds by others,5 even if the
transaction were viewed as a breach of civil contract.

In Pan Pacific Company (Phil.) vs. Phil. Advertising Corporation,6 this Court awarded moral and exemplary damages, in
addition to other kinds of damages, to the plaintiff upon ample demonstration that the defendant therein, in utter
disregard of the contractual rights of therein plaintiff, had refused deliberately and wantonly to pay the latter what was
justly due under their contract for installation of bowling alleys and for taking advantage of the plaintiff’s good faith,
“notwithstanding that the defendant had promised to pay the balance of the price of the bowling alleys. Defendant,
taking advantage of the plaintiff’s good faith, requested a deferment of the payment until the installation shall have been
completed; but the installation having been completed, defendants under one pretext or another, refused without just
cause to pay what is due the plaintiff.” Here, of course, there was more than wanton refusal to pay a plainly valid and just
contractual debt, but a malicious defraudation and gross abuse of petitioners’ good faith, whereby petitioners were
wantonly “paid” with bouncing postdated checks and besides not being paid what was due them, had to undergo trauma
and travail to redeem with their own and borrowed funds from the pawnshops some of the jewelries in order to return
them to their owners.

ACCORDINGLY, the decision of respondent court insofar as it denies petitioners’ claim for damages is hereby set aside. In
addition to the amounts awarded in the affirmed judgment of the lower court, petitioners are further awarded moral
and exemplary damages equivalent to twenty-five per cent (25%) of the principal sum of P125,460.79 adjudged in their
favor by the lower court. With costs. SO ORDERED.

Makasiar, Fernandez, Guerrero, De Castro and Melencio Herrera, JJ. concur.

Petition granted.

Notes.—Where the trial court’s decision failed to mention the party liable for damages, on award therefor cannot be
rendered as the spring cannot rise higher than its source. (Republic vs. De los Angeles, 41 SCRA 422).

A security and investigation agency is liable to the employer for damages incurred by the latter’s customer as a result of
the guard’s intentional act. (People’s Car, Inc. vs. Commando Security Service Agency, 51 SCRA 40).
G.R. No. 118325. January 29, 1997.*

VIRGILIO M. DEL ROSARIO and CORAZON PAREDESDEL ROSARIO, petitioners, vs. COURT OF APPEALS and METAL
FORMING CORPORATION, respondents.

Sales; Advertisements; Warranties; Where the seller, in bad faith and with gross negligence, infringed the express
warranty made by it to the general public in connection with a product brought to and set up in the house of a customer
who had relied on the warranty, and thereby caused him considerable injury, the identity of the individual who actually
dealt with the manufacturer and asked the latter to make such delivery is of little moment.—All the quibbling about
whether Engineer Puno acted as agent of MFC or of the spouses, is pointless. The matter is not a factor in determining
MFC’s liability for its workers’ use of inferior materials and their defective installation of the “Banawe” metal tiles in the
roof of the latter’s residence. Prescinding from the persuasive proof on record that at all times material and with regard
to the acquisition and installation of the metal tiles or shingles, Puno was in truth acting as contractor of the Del Rosarios
and on their instructions, ascertainment of the definite identity of the person who actually ordered the shingles from
MFC is utterly inconsequential—it might just as well have been a construction foreman, a trusted domestic, or any friend
or acquaintance of the Del Rosarios—in view of the indisputable fact not only (1) that the tiles were delivered to the Del
Rosarios and used in fabricating the roof of their home, but also (2) that it was the employees and workers of MFC who
(a) delivered the shingles or metal tiles to the construction site of the Del Rosarios’ home, and (b) undertook and
completed the installation thereof. These they did in bad faith, using inferior materials and assembling them in a manner
contrary to MFC’s express representations in its brochures and advertisements circulated and broadcast to the general
public—which representations had, in the first place, induced the Del Rosarios to choose the metal tiles in question for
their roofing. In fine, since MFC, in bad faith and with gross negligence, infringed the express warranty made by it to the
general public in connection with the “Banawe” tiles brought to and set up in the house of the Del Rosarios who had
relied on the warranty, and thereby caused them considerable injury, the identity of the individual who actually dealt
with MFC and asked the latter to make such delivery and installation is of little moment.

Same; Damages; Evidence; Actual or compensatory damages cannot be presumed but must be duly proved and proved
with reasonable degree of certainty—a court cannot rely on speculations, conjectures or guesswork as to the fact and
amount of damages.—Turning now to the matter of damages, it is the Del Rosarios’ contention that the pecuniary
detriment to their home amounted to P1,008,003.00, covering not only the destruction of the roof, but also substantial
harm to the electrical wiring, ceiling, fixtures, walls, wallpaper, wood parquet flooring and furniture. They rely on the
Report of the Esteban Adjusters and Valuers, Inc., to which the Regional Trial Court accorded full credit. But that report
contains no statement whatever of the amount of the damage. Indeed, the testimony of Engineer Abril, the
representative of the Esteban Adjusters and Valuers, Inc., is that his firm had been retained only to determine the cause
of the damage, not to estimate and assess it. A similar aridity as to the amount of the damage, unfortunately
characterizes the testimony of Atty. Virgilio Del Rosario and the rest of the spouses’ proofs. There is therefore no
evidentiary foundation upon which to lay an award of actual damages. The Trial Court’s grant thereof must be struck
down. Lufthansa German Airlines vs. CA, et al., promulgated on April 21, 1995, inter alia ruled that: “Actual or
compensatory damages cannot be presumed, but must be duly proved and proved with reasonable degree of certainty.
A court cannot rely on speculations, conjectures or guesswork as to the fact and amount of damages, but must depend
upon competent proof that they have (been) suffered and on evidence of the actual amount thereof.”

Same; Same; Same; Where there is satisfactory evidence of the psychological and mental trauma actually suffered by a
party, the grant to him of moral damages is warranted.—That MFC did in truth act with bad faith, in flagrant breach of its
express warranties made to the general public and in wanton disregard of the rights of the Del Rosarios who relied on
those warranties, is adequately demonstrated by the recorded proofs. The law explicitly authorizes the award of moral
damages “in breaches of contract where the defendant acted fraudulently or in bad faith.” There being, moreover,
satisfactory evidence of the psychological and mental trauma actually suffered by the Del Rosarios, the grant to them of
moral damages is warranted. Over a period of about a month, they experienced “feelings of shock, helplessness, fear,
embarrassment and anger.”

Same; Same; Exemplary damages are imposed not to enrich one party or impoverish another but to serve as a deterrent
against or as a negative incentive to curb socially deleterious actions.—This Court also agrees with the Trial Court that
exemplary damages are properly exigible of MFC, “Article 2229 of the Civil Code provides that such damages may be
imposed by way of example or correction for the public good. While exemplary damages cannot be recovered as a
matter of right, they need not be proved, although 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.” “Exemplary damages are imposed not to enrich one party or impoverish another but to serve as a deterrent
against or as a negative incentive to curb socially deleterious actions.”

Same; Same; Generally, the amount of moral damages should be commensurate with the actual loss or injury suffered.—
However, the same statutory and jurisprudential standards just mentioned dictate reduction of the amounts of moral
and exemplary damages fixed by the Trial Court. There is, to be sure, no hard and fast rule for determining what would
be a fair amount of moral (or exemplary) damages, each case having to be governed by its attendant particulars.
Generally, the amount of moral damages should be commensurate with the actual loss or injury suffered.

Same; Same; In the instant case where no actual damages are adjudicated, the Supreme Court reduces the moral
damages from P500,000.00 to P100,000.00, and the exemplary damages from P300,000.00 to P50,000.00.—In another
case involving strikingly analogous facts decided in 1994, Geraldez vs. C.A, where no actual damages were adjudicated
but moral and exemplary damages in similar amounts (P500,000.00 and P300,000.00, respectively) were awarded by the
Trial Court, as in this case, this Court reduced the amount of moral damages to P100,000.00 and of exemplary damages
to P50,000.00. The Court sees no reason to adopt a different treatment in the case at bar, and accordingly reduces the
moral damages from P500,000.00 to P100,000.00, and the exemplary damages from P300,000.00 to P50,000.00.

Attorney’s Fees; Where granted, the court must explicitly state in the body of the decision, and not only in the dispositive
portion thereof, the legal reason for the award of attorney’s fees.—Like the adjudication of actual or compensatory
damages, the award of attorney’s fees must be deleted. The matter was dealt with only in the dispositive portion of the
Trial Court’s decision. Since the judgment does not say why attorney’s fees are awarded, there is no basis for such award,
which should consequently be removed. So did this Court rule, for instance, in Scott Consultants and Resource
Development Corp., Inc. vs. CA, et al.: “It is settled that the award of attorney’s fees is the exception rather than the rule
and counsel’s fees are not to be awarded every time a party wins. The power of the court to award attorney’s fees under
Article 2208 of the Civil Code demands factual, legal, and equitable justification; its basis cannot be left to speculation or
conjecture. Where granted, the court must explicitly state in the body of the decision, and not only in the dispositive
portion thereof, the legal reason for the award of attorney’s fees.”

PETITION for review on certiorari of a decision of the Court of Appeals.

The facts are stated in the opinion of the Court.

Daisy G. Zambrano for petitioners.

Villamor, Legarda & Associates for private respondents.

On August 28, 1995, the Court En Banc promulgated judgment in the case of Metal Forming Corporation v. Office of the
President, etc., et al.,1 dismissing the petitioner’s appeal and affirming the decision of the Office of the President dated
April 30, 1993. The latter decision in turn affirmed that of the Department of Trade and Industry rendered on May 29,
1991 in an administrative case initiated against Metal Forming Corporation (hereafter, MFC) by complaint of the “spouses
Virgilio M. del Rosario and Corazon Paredes-del Rosario.”

The Del Rosario’s complaint, filed on November 21, 1990, charged MFC with a violation of Section 3 of Act No. 3740, “An
Act to Penalize Fraudulent Advertising, Mislabeling or Misbranding of Any Product, Stocks, Bonds, etc” It alleged that:2

1) “in selling to the public roofing materials known as ‘Banawe’ shingles, ** (MFC) made representations on the
durability of the product and the sturdiness of its installation” through massive advertisements in print media and
television ** (and) brochures”;

2) these representations—particularly those characterizing the shingles as “STRUCTURALLY SAFE AND STRONG" and that
the “BANAWE METAL TILE structure acts as a single unit against wind and storm pressure due to the strong hook action
on its overlaps”—"prompted ** (the Del Rosarios) to buy the ‘Banawe’ shingles and ** (have) them installed at their
residence”; but

3) "(b)arely two (2) months after completion of the installation, portions of the roof of ** (the Del Rosarios) were blown
away by strong wind brought about by typhoon “Ruping.'"

After due proceedings, the DTI rendered judgment declaring that MFC had indeed misrepresented its product because
“as the records showed,” strong winds actually blew off part of the structure/roof of the Del Rosario Spouses and the
same acted in parts (instead of as a single unit) when strong winds blew, a part remaining while another part was blown
off. MFC was accordingly sentenced to pay an “administrative fine of P10,000.00" (within ten [10] days from finality of
the decision), otherwise its “business name and registration ** would be deemed suspended and its establishment
closed until the fine was fully paid.”

As already stated, the decision of the DTI (of May 29, 1991) was, on appeal, affirmed in toto by the Office of the
President on April 30, 1993; and the latter judgment was in turn affirmed by this Court on August 28, 1995 with a
modification solely as to the fine, which was reduced to P5,000.00. In said judgment of August 28, 1995, this Court,
stressing that the factual findings of such administrative bodies as the Office of the President are generally to be
accorded respect, if not indeed invested with finality, pronounced as correct that Office’s ruling, among others, that:

"**(A)lthough the occurrence of a typhoon is a fortuitous event which by itself might have exempted petitioner from
liability to private respondents—

"** it cannot efface the fundamental fact that (petitioner) acted in bad faith and/or with gross negligence in failing to
deliver the necessary accessories for the proper installation of the structure ** and actually installed inferior roofing
materials at (private respondents’) residence, in violation of the proper installation procedure expressly specified in the
former’s brochures and advertisements for installation, i.e., the metal tile attached to the roof panels should be by two
(2) selfdrilling screws for one (1) metal cleat. However, instead of conforming with this procedure, (petitioner) attached
some of the metal cleats with only one (1)-inch ordinary nail each and others were fastened with only one (1) wood
screw each. **"

It appears that MFC replaced and repaired the roof free of charge, evidently acknowledging that the damage was
covered by its one-year warranty on the materials and the installation. The repair work was observed and analyzed by
the Esteban Adjusters and Valuers, Inc., which was engaged by the Del Rosarios to determine the cause of the
destruction.3 The repair work was begun on October 23, 1989, with the delivery of replacement tiles, and completed on
November 7, 1989. Thereafter the Esteban Adjusters and Valuers, Inc. submitted its report to the Del Rosarios, dated
November 8, 1989,4 in which it made the following conclusion:
“The ‘Banawe’ metal tiles which were detached from the roof trusses were not fastened with two (2) wood screws on
each metal cleat as required but only with a single wood screw or a combination of a single wood screw and a 1-inch nail
which is contrary to the design and specification. We have observed during the course of repai(r) works that some
‘Banawe’ metal tiles installed were no longer than the roof span, hence there is overlapping on the ridge roll/hip. It is
very evident that the original subcontractor (which we were not able to identify) were in haste to complete the
project.**'"

MFC however declined to concede liability for the other damages claimed by the Del Rosario Spouses to have been
caused to the interior of their home. This prompted the latter to commence a civil action against MFC on April 16, 1990
in the Regional Trial Court of Manila.5 In this suit, docketed as Civil Case No. 90–52734, the spouses sought to recover
from MFC, damages resulting from the events just narrated, contending that aside from the destruction of the roof of
their house, injury was also caused to its electrical wiring, ceiling, fixtures, walls, wall paper, wood parquet flooring and
furniture.6 The plaintiff spouses reckoned their actual damages at P1,008,003.00—“representing the estimated cost of
the repair, restoration and/or replacement of the damaged areas and items in plaintiffs’ house and the cost of the
inspection conducted by the independent adjuster (engaged by them), with legal interests thereon from 21 February
1990 when defendant (MFL) received the formal demand from plaintiffs until fully paid."7 They also prayed for an award
to them of moral damages in the sum of P3,000,000.00, exemplary damages in the amount of P1,000,000.00, and
attorney’s fees in the sum of P1,000,000.00.

MFC moved to dismiss the complaint for lack of cause of action. It stated that it had no contractual relationship with the
Del Rosarios since the contract for the purchase and installation of the roofing, upon which the latter’s claims were
based, was actually entered into between it and another person, Jesus M. Puno (an engineer identified as the Del
Rosarios’ contractor). The Trial Court denied the motion. MFC assailed that denial in the Court of Appeals, but was
rebuffed; and its recourse to this Court (G.R. No. 95514) was also unsuccessful.8

Trial then ensued after which judgment was rendered on November 18, 1991 by the Regional trial Court in favor of the
Del Rosarios,9 the dispositive portion of which reads as follows:10

“WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendant, to pay:—

“a) Actual Damages in the amount of ONE MILLION EIGHT THOUSAND THREE (P1,008,003.00) PESOS, with legal interest
thereon, from June 31, 1990 until fully paid;

(‘b) Moral Damages in the amount of FIVE HUNDRED THOUSAND (P500,000.00) PESOS;

“c) Exemplary Damages in the amount of THREE HUNDRED THOUSAND (P300,000.00) PESOS; and

“d) Attorney’s fees and expenses of litigation in the amount of ONE HUNDRED FIFTY THOUSAND (P150,000.00) PESOS.

Counter claims filed by the defendant are dismissed.

SO ORDERED."

The Trial Court held the corporation liable for breach of its contract for the supply and installation of the roofing
materials in the Del Rosarios’ residence. According to the Court:11

“The following facts were duly established from the evidence supporting plaintiffs’ claim for damages:

“1. There was actually serious damages caused on plaintiffs’ house on account of faulty or inferior installation;
“2. Defendant himself admitted its liability by making partial repairs of the roofing of ‘Banawe’ shingles, free of charge,
after the typhoon ** (Ruping);

“3. There was an expressed warranty specified in the brochure that there should be two (2) metal screws for one (1)
cleat but the same was violated by the defendant who only used one (1) 1inch nail or a combination of one (1) metal
screw to one (1) cleat;

4. There is ample evidence including the testimony of Engr. Puno that it was defendant Metal Forming Corporation who
** (had) a contract with the plaintiffs for the supply and installation of roofing materials in plaintiffs’ residential house
located at No. 17 Tabuena Street, Corinthian Gardens, Quezon City; and

“5. There was a declared warranty by the defendants relied upon by the plaintiffs and that the defendant was guilty of
fraud and/or breach of warranty”

Parenthetically, these conclusions are substantially the same as those made by the Department of Trade and Industry in
its own judgment rendered on May 29, 1991—affirmed by the Office of the President in a decision dated April 30, 1993,
and ultimately by this Court En Banc in its decision promulgated on August 28, 1995.12 The Trial Court ruled that there
was privity of contract between the Del Rosarios and MFC; Engineer Puno acted as MFC’s agent in the signing of the
contracts for the supply and installation of the “Banawe” shingles; hence, the contract was really between the Del
Rosarios and that company.13

MFC appealed to the Court of Appeals. In its Decision promulgated on June 29, 1994,14 said Court reversed the Trial
Court’s judgment. It ruled that there was no privity of contract between the Del Rosarios and MFC, for the following
reasons:15

a. The contracts for the supply of materials and installation of the roof were signed by Engr. Puno. On the face of the
contracts, it does not appear that the Del Rosarios were parties to it or that it was entered into for their benefit. It does
not also appear that Engr. Puno acted as agent of the Del Rosarios nor of the corporation.

b. The holding of the trial court that Engr. Puno was an agent of the corporation is not borne out by the records. There is
no evidence, apart from Engr. Puno’s testimony, to show that any agency exists.

c. The nature of the relationship between the Del Rosarios and Engr. Puno is also not clear from the records of the case.

d. While it may be implicit in the complaint of the Del Rosarios that there was a contract between them and the
corporation, this is not supported by the evidence presented.

There being no such privity, according to the Court of Appeals, the Del Rosarios had no cause of action against MFC for
breach of warranties, there being no law allowing them to proceed directly against those whom their contractor had
subcontracted to furnish materials and do part of the work that the latter was engaged to perform.16

The Del Rosarios appealed, and in this Court expectedly present for resolution,17 the issue of “WHETHER OR NOT THERE
IS A PRIVITY OF CONTRACT BETWEEN THE PARTIES:"

There is merit in the petition. The essential issue is whether or not upon the facts established by the evidence, MFC is
answerable to the Del Rosarios for the damage caused to the latter’s residence when its roof, made of shingles
purchased from and installed by the former, was blown away by a typhoon. The Court rules that it is.

The facts on record—including those set forth in the final judgment of the Court En Banc involving the same parties,
adverted to in the opening paragraph of this opinion, supra,18 of which judgment official cognizance may properly be, as
it is hereby, taken—constitute adequate basis for a verdict against MFC. These are the following:
1. MFC was engaged in the business of selling to the public roofing materials known as ‘Banawe’ shingles or metal tiles,
and through extensive advertisements in media and in its brochures, made representations respecting the durability of
its tiles and the sturdiness of roofing installed in accordance with its particularly described method. These
representations included statements that the shingles are “STRUCTURALLY SAFE AND STRONG" and that the “BANAWE
METAL TILE structure acts as a single unit against wind and storm pressure due to the strong hook action on its overlaps.”

2. After reading MFC’s brochures and advertisements, the Del Rosario Spouses instructed their contractor, Engineer
Puno, to use the “Banawe” shingles or metal tiles in the roofing of their house then under construction.19

3. In other words, paraphrasing Article 1546 of the Civil Code, MFC, as seller to the general public, had made affirmations
of fact and promises relating to its advertised product, the “Banawe” tiles, the natural tendency of which was to induce
the buyers, as in fact it did induce the Del Rosarios, to purchase the same, relying thereon.

4. Pursuant to the Del Rosarios’ instructions, Puno placed orders with MFC and signed the pertinent contracts for the
purchase of the shingles, accepted deliveries thereof and signed corresponding invoices, and made payments thereon
with the spouses’ funds.20

5. Deliveries of the “Banawe” metal tiles or shingles were made by MFC’s employees to the construction site of the Del
Rosarios’ residence; and installation of the metal tiles in the roof of the Del Rosario’s house was made by MFC’s workers.

6. MFC “acted in bad faith and/or with gross negligence in failing to deliver the necessary accessories for the proper
installation of the structure ** and actually installed inferior roofing materials at (private respondents’) residence, in
violation of the proper installation procedure expressly specified in the former’s brochures and advertisements for
installation, i.e., the metal tile attached to the roof panels should be by two (2) self-drilling screws for one (1) metal cleat
** (but) instead of conforming with this procedure, (petitioner) attached some of the metal cleats with only one (1)-inch
ordinary nail each and others were fastened with only one (1) wood screw each ** “21

7. As a result, barely two (2) months after completion of the installation of the roof by MFC’s workers, portions thereof
were blown away by the winds of typhoon “Ruping”

8. MFC replaced the roof free of charge, in acknowledgment of its one-year warranty on the materials and their
installation.

All the quibbling about whether Engineer Puno acted as agent of MFC or of the spouses, is pointless. The matter is not a
factor in determining MFC’s liability for its workers’ use of inferior materials and their defective installation of the
“Banawe” metal tiles in the roof of the latter’s residence. Prescinding from the persuasive proof on record that at all
times material and with regard to the acquisition and installation of the metal tiles or shingles, Puno was in truth acting
as contractor of the Del Rosarios and on their instructions,22 ascertainment of the definite identity of the person who
actually ordered the shingles from MFC is utterly inconsequential—it might just as well have been a construction
foreman, a trusted domestic, or any friend or acquaintance of the Del Rosarios—in view of the indisputable fact not only
(1) that the tiles were delivered to the Del Rosarios and used in fabricating the roof of their home, but also (2) that it was
the employees and workers of MFC who (a) delivered the shingles or metal tiles to the construction site of the Del
Rosarios’ home, and (b) undertook and completed the installation thereof. These they did in bad faith, using inferior
materials and assembling them in a manner contrary to MFC’s express representations in its brochures and
advertisements circulated and broadcast to the general public—which representations had, in the first place, induced the
Del Rosarios to choose the metal tiles in question for their roofing. In fine, since MFC, in bad faith and with gross
negligence, infringed the express warranty made by it to the general public in connection with the “Banawe” tiles
brought to and set up in the house of the Del Rosarios who had relied on the warranty, and thereby caused them
considerable injury, the identity of the individual who actually dealt with MFC and asked the latter to make such delivery
and installation is of little moment.

Turning now to the matter of damages, it is the Del Rosarios’ contention that the pecuniary detriment to their home
amounted to P1,008,003.00, covering not only the destruction of the roof, but also substantial harm to the electrical
wiring, ceiling, fixtures, walls, wallpaper, wood parquet flooring and furniture.23 They rely on the Report of the Esteban
Adjusters and Valuers, Inc.,24 to which the Regional Trial Court accorded full credit. But that report contains no
statement whatever of the amount of the damage. Indeed, the testimony of Engineer Abril, the representative of the
Esteban Adjusters and Valuers, Inc., is that his firm had been retained only to determine the cause of the damage, not to
estimate and assess it.25 A similar aridity as to the amount of the damage, unfortunately characterizes the testimony of
Atty. Virgilio Del Rosario and the rest of the spouses’ proofs. There is therefore no evidentiary foundation upon which to
lay an award of actual damages. The Trial Court’s grant thereof must be struck down. Lufthansa German Airlines vs. CA,
et al., promulgated on April 21, 1995,26 inter alia ruled that:

“Actual or compensatory damages cannot be presumed, but must be duly proved and proved with reasonable degree of
certainty. A court cannot rely on speculations, conjectures or guesswork as to the fact and amount of damages, but must
depend upon competent proof that they have (been) suffered and on evidence of the actual amount thereof.”

Its grant of moral and exemplary damages was justified by the Trial Court as follows:27

“From the evidence presented, plaintiffs’ sufferings have been duly and substantially proven by the defendant’s
fraudulent actuation and breach of warranty, and thereby entitled for the claim of damages and litigation costs as
enunciated by the testimony of the "“** that the damages to his house caused sufferings and feelings of shock,
helplessness, fears, embarrassment and anger, thereby entitling him to Moral Damages which should be assessed at
P500,000.00."

“The moral damages ** (are awarded) for indemnity or repara- eparation not punishment or correction, that is, an award
to entitle the injured party to obtain means (of) diversions and amusement that will serve to alleviate the moral
sufferings he has undergone by reason of defendant’s culpable action. (RNB Surety and Ins. Co. v. IAC, G.R. No. 64515,
June 22,1984,129 SCRA 745)."

That MFC did in truth act with bad faith, in flagrant breach of its express warranties made to the general public and in
wanton disregard of the rights of the Del Rosarios who relied on those warranties, is adequately demonstrated by the
recorded proofs, The law explicitly authorizes the award of moral damages “in breaches of contract where the defendant
acted fraudulently or in bad faith."28 There being, moreover, satisfactory evidence of the psychological and mental
trauma actually suffered by the Del Rosarios, the grant to them of moral damages is warranted. Over a period of about a
month, they experienced “feelings of shock, helplessness, fear, embarrassment and anger."29 As declared by this Court
in Makabili v. Court of Appeals, 30 among other precedents:

It is essential ** in the award of damages that the claimant must have satisfactorily proven during the trial the existence
of the factual basis of the damages and its causal connection to defendant’s acts. This is so because moral damages
though incapable of pecuniary estimation, are in the category of an award designed to compensate the claimant for
actual injury suffered and not to impose a penalty an the wrangdoer (Enervida v. De la Torre, 55 SCRA 340 [1974]) and
are allowable only when specifically prayed for in the complaint. (San Miguel Brewery, Inc. v. Magno, 21 SCRA 292
[1968])

As reflected in the records of the case, the Court of Appeals was in agreement with the findings of the trial court that
petitioners suffered anguish, embarrassment and mental sufferings due to the failure of private respondent to perform
its obligation to petitioners, According to the Court of Appeals, private respondent acted in wanton disregard of the
rights of petitioners. Those pronouncements lay the basis and justification for this Court to award petitioners moral and
exemplary damages.”

This Court also agrees with the Trial Court that exemplary damages are properly exigible of MFC, “Article 2229 of the Civil
Code provides that such damages may be imposed by way of example or correction for the public good. While exemplary
damages cannot be recovered as a matter of right, they need not be proved, although 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."31 “Exemplary damages are imposed not to enrich one party or impoverish
another but to serve as a deterrent against or as a negative incentive to curb socially deleterious actions."32

However, the same statutory and jurisprudential standards just mentioned dictate reduction of the amounts of moral
and exemplary damages fixed by the Trial Court. There is, to be sure, no hard and fast rule for determining what would
be a fair amount of moral (or exemplary) damages, each case having to be governed by its attendant particulars.
Generally, the amount of moral damages should be commensurate with the actual loss or injury suffered. In the case of
PNB v. C.A, just cited,33 this Court quoted with approval the following observanon from RCPI v. Rodriguez,34 viz.:

“'** ** Nevertheless, we find the award of P100,000.00 as moral damages in favor of respondent Rodriguez excessive
and unconscionable. In the case of Prudenciado v. Alliance Transport System, Inc. (148 SCRA 440 [1987]) we said: “x x x
[I]t is undisputed that the trial courts are given discretion to determine the amount of moral damages (Alcantara v. Surro,
93 Phil. 472) and that the Court of Appeals can only modify or change the amount awarded when they are palpably and
scandalously excessive ‘so as to indicate that it was the result of passion, prejudice or corruption on the part of the trial
court’ (Gellada v. Warner Barnes & Co., Inc., 57 O.G. [4] 7347, 7358; Sadie v. Bacharach Motors Co., Inc., 57 O.G. [4] 636
and Adone v. Bacharach Motor Co., Inc., 57 O.G. 656). But in more recent cases where the awards of moral and
exemplary damages are far too excessive compared to the actual loses sustained by the aggrieved party, this Court ruled
that they should be reduced to more reasonable amounts. x x x. (Italics ours.)' "

“In other words, the moral damages awarded must be commensurate with the loss or injury suffered.”

In the same case (PNB v. CA), this Court35 found the amount of exemplary damages required to be paid (P1,000,000.00)
“too excessive” and reduced it to an “equitable level” (P25,000.00).

"**, (T)he award of P1,000,000.00 exemplary damages is also far too excessive and should likewise be reduced to an
equitable level. Exemplary damages are imposed not to enrich one party or impoverish another but to serve as a
deterrent against or as a negative incentive to curb socially deleterious actions.”

In another case involving strikingly analogous facts decided in 1994, Geraldez vs. C.A.,36 where no actual damages were
adjudicated but moral and exemplary damages in similar amounts (P500,000.00 and P300,000.00, respectively) were
awarded by the Trial Court, as in this case, this Court reduced the amount of moral damages to P100,000.00 and of
exemplary damages to P50,000.00. The Court sees no reason to adopt a different treatment in the case at bar, and
accordingly reduces the moral damages from P500,000.00 to P100,000.00, and the exemplary damages from
P300,000.00 to P50,000.00.

Finally, like the adjudication of actual or compensatory damages, the award of attorney’s fees must be deleted. The
matter was dealt with only in the dispositive portion of the Trial Court’s decision. Since the judgment does not say why
attorney’s fees are awarded, there is no basis for such award, which should consequently be removed. So did this Court
rule, for instance, in Scott Consultants and Resource Development Corp., Inc. vs. CA, et al.:37

“It is settled that the award of attorney’s fees is the exception rather than the rule and counsel’s fees are not to be
awarded every time a party wins. The power of the court to award attorney’s fees under Article 2208 of the Civil Code
demands factual, legal, and equitable justification; its basis cannot be left to speculation or conjecture. Where granted,
the court must explicitly state in the body of the decision, and not only in the dispositive portion thereof, the legal reason
for the award of attorney’s fees.”

WHEREFORE, the challenged Decision of the Court of Appeals of June 29, 1994 is REVERSED and SET ASIDE; and the
Decision of the Regional Trial Court of November 18, 1991 is REINSTATED AND AFFIRMED, with the modification that the
award of actual damages and attorney’s fees is deleted, and the moral and exemplary damages awarded are reduced
from P500,000.00 to P100,000.00, and from P300,000.00 to P50,000.00 respectively.

IT IS SO ORDERED.
G.R. No. 171735. April 16, 2009.*

PEOPLE OF THE PHILIPPINES, appellee, vs. ALEJO OBLIGADO y MAGDARAOG, appellant.

Criminal Law; Murder; Voluntary Surrender; Elements for the Mitigating Circumstance of Voluntary Surrender to be
Appreciated.—For the mitigating circumstance of voluntary surrender to be appreciated, the defense must prove that:
(a) the offender had not been actually arrested; (b) the offender surrendered himself to a person in authority; (c) the
surrender was spontaneous and voluntary.

Same; Same; Same; The surrender of appellant is neither voluntary nor spontaneous.—In this case, SPO4 Sarto testified
that appellant’s residence could be accessed only through a footpath where they met appellant. Inasmuch as he was
intercepted by the arresting officers there, appellant had no means of evading arrest. His surrender therefore was
neither voluntary nor spontaneous. On the contrary, the aforementioned circumstances revealed that he had no option
but to yield to the authorities.

Same; Same; Damages; Loss of Earning Capacity; Indemnity for loss of earning capacity is not awarded in the absence of
documentary evidence except where the victim was either self-employed or was a daily wage worker earning less than
the minimum wage under current labor laws.—Both the RTC and CA did not award indemnity for loss of earning capacity
despite the testimony of the victim’s widow that he earned P5,000 per month as a driver. Such indemnity is not awarded
in the absence of documentary evidence except where the victim was either self-employed or was a daily wage worker
earning less than the minimum wage under current labor laws. Since it was neither alleged nor proved that the victim
was either self-employed or was a daily wage worker, indemnity for loss of earning cannot be awarded to the heirs of the
victim.

Same; Same; Same; Actual Damages; Settled is the rule that only receipted expenses can be the basis of actual damages
arising from funeral expenditures.—Settled is the rule that only receipted expenses can be the basis of actual damages
arising from funeral expenditures. All the prosecution presented was a receipt from the funeral parlor amounting to
P15,000. Since the receipted expenses of the victim’s family was less than P25,000, temperate damages in the said
amount can be awarded in lieu of actual damages. Accordingly, the heirs of the victim are not entitled to actual damages
but to temperate damages in the amount of P25,000.

Same; Same; Same; Moral Damages; Moral damages are mandatory in cases of murder without need to allege and prove
such damages.—Inasmuch as moral damages are mandatory in cases of murder (without need to allege and prove such
damages), appellant is likewise ordered to indemnify the heirs of the victim P50,000.

APPEAL from a decision of the Court of Appeals.

The facts are stated in the opinion of the Court.

The Solicitor General for appellee.

Public Attorney’s Office for appellant.

CORONA, J.:

Appellant Alejo Obligado y Magdaraog was charged with murder in the Regional Trial Court (RTC) of Iriga, Branch 351
under the following Information:

“That on or about 7:45 [p.m.] of March 12, 2000, in Barangay de la Fe, Buhi, Camarines Sur, Philippines, and within the
jurisdiction of the Honorable Court, [appellant] did then and there, willfully, unlawfully and feloniously, with intent to kill
and with treachery, to [e]nsure execution, attack, assault and use personal violence upon one FELIX OLIVEROS y RAñADA,
that is—while armed with a bolo and coming from behind the victim, who was then unaware and defenseless of the
impending attack, [appellant] first held tightly the victim’s hair and immediately thereafter, suddenly, unexpectedly
slashed the victim’s neck with his bolo, causing [his] death, to the damage and prejudice of [his] heirs.

CONTRARY TO LAW.”2

Appellant pleaded not guilty upon arraignment.

During trial, the victim’s cousin and prosecution eye-witness Roberto Bagaporo testified that he and the victim along
with several others3 were having a drinking spree in front of his residence in the evening of March 12, 2000. They were
later joined by appellant.

As Bagaporo prepared the videoke machine, he heard the victim call out, “Pinsan!” (Cousin!) He then turned around and
saw appellant standing behind the victim. Appellant grabbed the victim’s hair with his left hand and, with his right, pulled
out a bolo from underneath his shirt and slashed the victim’s neck. He then pushed the victim (who fell face down on the
pavement) and walked away.

1 Docketed as Crim. Case No. IR-5302.

2 Information dated June 22, 2000. CA Rollo, p. 6.

3 They were Juan Narra, Jr., Henry Narra, Joevelyn Narra, Felix Narte, Nestor Bagaporo and Antonio Zaballa.

Senior Police Officer (SPO)4 Jimmy Jose of the Philippine National Police (PNP) Buhi station testified that, around 8:20
p.m. on March 12, 2000, an unidentified barangay kagawad reported a hacking incident in Barangay de la Fe. He, along
with several other police officers, immediately went to the area and found the victim lying face-down in front of
Bagaporo’s house.

Dr. Breandovin Saez, municipal health officer of Buhi, testified that he conducted a post-mortem examination of the
victim. The victim suffered two incised wounds, one on his right cheek and another on his neck area (extending from the
left anterior neck to the right posterior neck). Dr. Saez said that the second wound was fatal because it was deep enough
to cut the carotid artery and cause massive hemorrhage. Furthermore, based on the size and position of the wound, he
opined that the assailant intentionally slashed the victim’s neck from behind using a small bolo with a length of not more
than one foot.

Lastly, the victim’s widow, Gloria Oliveros testified that her husband earned at least P5,000 per month as a driver. She
also presented a receipt from the funeral parlor amounting to P15,000 and an itemized list of expenses incurred during
the wake amounting to P12,000.

For his defense, appellant asserted that he accidentally killed the victim. While they were drinking, the victim
approached and confided to him that he had a problem but did not say what his problem was. Appellant gave the victim
a drink. To his surprise, the victim allegedly pulled out his bolo from its scabbard. Afraid of what could happen, appellant
tried to wrest the bolo but the victim resisted. It was while grappling for possession of the bolo that the victim was fatally
slashed in the neck.

Apolinario Manaog corroborated appellant’s testimony. He basically stated that it was the victim who wielded the bolo
and that he (the victim) and appellant wrestled for its possession.

The defense also presented SPO4 David Sarto, police community officer of the PNP Buhi station. According to SPO4 Sarto,
he and his fellow police officers were ordered to arrest appellant on March 13, 2000. They met appellant while traversing
the lone footpath leading to his residence. Appellant surrendered his person and the bolo.
Based on the size and nature of the victim’s wounds, the RTC concluded that the killing was intentional. Moreover,
because appellant slashed the victim’s neck from behind, the latter had no opportunity to defend himself. Hence, the
trial court appreciated the qualifying circumstance of treachery. In a decision dated February 28, 2001, the RTC found
appellant guilty beyond reasonable doubt of the crime of murder: 4

“WHEREFORE, finding [appellant] ALEJO OBLIGADO y MAGDARAOG guilty of murder beyond reasonable doubt as
defined and penalized in Article 248 of the Revised Penal Code, he is sentenced to suffer the penalty of reclusion
perpetua and to pay indemnity in the amount of P50,000; actual damages of P27,000; moral and exemplary damages of
P50,000 and to pay the cost of suit.”

On intermediate appellate review,5 the Court of Appeals (CA) affirmed the guilt of the appellant but modified the civil
liabilities imposed by the RTC. Because SPO4 Sarto testified that appellant intimated a desire to surrender, the appellate
court appreciated the mitigating circumstance of voluntary surrender. Thus, it deleted the award of exemplary damages
and instead ordered appellant to pay moral damages in the amount of P50,000.6

We affirm appellant’s guilt.

The evidence of the prosecution established beyond reasonable doubt that the appellant intended to kill (and in fact
killed) the victim and that he consciously adopted a design which deprived the victim of any opportunity to defend
himself, or to retaliate. However, the mitigating circumstance of voluntary surrender should not have been considered.

For the mitigating circumstance of voluntary surrender to be appreciated, the defense must prove that:

(a) the offender had not been actually arrested;

(b) the offender surrendered himself to a person in authority;

(c) the surrender was spontaneous and voluntary.7

In this case, SPO4 Sarto testified that appellant’s residence could be accessed only through a footpath where they met
appellant. Inasmuch as he was intercepted by the arresting officers there, appellant had no means of evading arrest. His
surrender therefore was neither voluntary nor spontaneous. On the contrary, the aforementioned circumstances
revealed that he had no option but to yield to the authorities.

With respect to the award of damages, to conform with recent jurisprudence, the appellant is ordered to pay P75,000 as
civil indemnity ex delicto.8

Both the RTC and CA did not award indemnity for loss of earning capacity despite the testimony of the victim’s widow
that he earned P5,000 per month as a driver. Such indemnity is not awarded in the absence of documentary evidence
except where the victim was either self-employed or was a daily wage worker earning less than the minimum wage
under current labor laws.9 Since it was neither alleged nor proved that the victim was either self-employed or was a daily
wage worker, indemnity for loss of earning cannot be awarded to the heirs of the victim.

Settled is the rule that only receipted expenses can be the basis of actual damages arising from funeral expenditures.10
All the prosecution presented was a receipt from the funeral parlor amounting to P15,000. Since the receipted expenses
of the victim’s family was less than P25,000, temperate damages in the said amount can be awarded in lieu of actual
damages.11 Accordingly, the heirs of the victim are not entitled to actual damages but to temperate damages in the
amount of P25,000.

Moreover, inasmuch as moral damages are mandatory in cases of murder (without need to allege and prove such
damages), appellant is likewise ordered to indemnify the heirs of the victim P50,000.12
Lastly, since the killing of the victim was attended by treachery, his heirs are entitled to exemplary damages in the
amount of P25,000.13

WHEREFORE, the December 20, 2005 decision of the Court of Appeals in CA-G.R. CR-H.C. No. 01608 is hereby AFFIRMED
with MODIFICATION. Appellant Alejo Obligado y Magdaraog is found guilty of murder as defined in Article 248 of the
Revised Penal Code and is sentenced to suffer the penalty of reclusion perpetua. He is further ordered to indemnify the
heirs of the victim Felix Oliveros y Rañada P75,000
G.R. No. 134784. December 9, 2002.*

CARLOS ARCONA y MOBAN, petitioner, vs. THE COURT OF APPEALS and PEOPLE OF THE PHILIPPINES, respondents.

Criminal Law; Homicide; Justifying Circumstances; Self-Defense; It is settled jurisprudence that when the accused invokes
self-defense, the onus probandi to show that the killing was justified shifts to him.—It is settled jurisprudence that when
an accused invokes self-defense, the onus probandi to show that the killing was justified shifts to him. Even if the
prosecution evidence was weak, it could not be readily dismissed considering that the accused had openly admitted his
responsibility for the killing.

Same; Same; Same; Same; Requisites.—To prove self-defense, the accused must show with clear and convincing
evidence that: (1) he is not the unlawful aggressor; (2) there was lack of sufficient provocation on his part; and (3) he
employed reasonable means to prevent or repel the aggression. Self-defense, like alibi, is a defense easy to concoct. It is
axiomatic that once an accused had admitted that he inflicted fatal injuries on the deceased, it is incumbent upon him, in
order to avoid criminal liability, to prove the justifying circumstance claimed by him with clear, satisfactory and
convincing evidence.

Same; Same; Appeals; Findings of Fact; The trial judge is the best person to evaluate the veracity of a witness’s testimony
as he is in the most ideal position to see the demeanor, actuation and countenance of a witness.—We have consistently
ruled that the trial judge is the best person to evaluate the veracity of a witness’s testimony as he is in the most ideal
position to see the demeanor, actuation and countenance of a witness. Hence, we do not generally disturb the findings
of the trial court except in cases where the judge acted arbitrarily. In the case at bar, petitioner failed to point out any
arbitrariness on the part of the trial court.

Same; Same; Damages; Moral damages must be awarded even in the absence of any allegation and proof of the heirs’
emotional suffering.—On the other hand, the award of moral damages in the sum of P10,000.00 must be increased to
P50,000.00. As borne out by human nature and experience, a violent death invariably and necessarily brings about
emotional pain and anguish on the part of the victim’s family. It is inherently human to suffer sorrow, torment, pain and
anger when a loved one becomes the victim of a violent or brutal killing. Such violent death or brutal killing not only
steals from the family of the deceased his precious life, deprives them forever of his love, affection and support, but
often leaves them with the gnawing feeling that an injustice has been done to them. For this reason, moral damages
must be awarded even in the absence of any allegation and proof of the heirs’ emotional suffering.

PETITION for review on certiorari of a decision of the Court of Appeals.

The facts are stated in the opinion of the Court.

Fortunato F.L. Viray, Jr. for petitioner.

The Solicitor General for the People.

YNARES-SANTIAGO, J.:

Petitioner Carlos Arcona y Moban1 and his brother Benito Arcona y Moban were charged with Murder and Frustrated
Murder2 in separate informations which read:

Criminal Case No. 6408 (Murder)

“That on or about the 27th day of June, 1986 at Barangay Labog, Municipality of Brooke’s Point, Province of Palawan,
Philippines, and within the jurisdiction of this Honorable Court the above-named accused conspiring, confederating
together and mutually helping one another, with intent to kill and with evident premeditation and treachery, did then
and there wilfully, unlawfully and feloniously attack, assault and stab one NAPOLEON ONG with a bladed weapon to wit;
a knife hitting him in vital part of his body and inflicting upon him injury which was the direct and immediate cause of his
death shortly thereafter.”

Criminal Case No. 6409 (Frustrated Murder)

“That on or about the 27th day of June 1986 at Barangay Labog, Municipality of Brooke’s Point, Province of Palawan,
Philippines, and within the jurisdiction of this Honorable Court the above-named accused conspiring, confederating
together and mutually helping one another, with evident premeditation and treachery and with intent to kill did then
and there wilfully, unlawfully and feloniously attack assault, strike and beat with a bamboo pole one EDGARDO
TALANQUINES hitting him on different parts of his body and inflicting upon him injuries which would have caused his
death thru performing all the acts of execution which would have produced the crime of murder as a consequence but
nevertheless did not produce it by reason of causes independent of the will of the accused that is EDGARDO
TALANQUINES have parried the blows, escaped away from his assailant and by the timely and able medical assistance
rendered to said Edgardo Talanquines which prevented his death.”

On arraignment both accused pleaded “not guilty.” Thereafter, the cases were jointly tried.

It appears that at around 7:30 in the evening of June 27, 1986, Napoleon Ong and Edgardo Talanquines were walking
along the national highway at Barangay Labog, Brooke’s Point, Palawan, on their way home after coming from a birthday
party. When they were near the house of Jerry Boston, Edgardo heard a loud thud. He turned around saw Napoleon
slump to the ground. Suddenly, someone hit Edgardo from behind with a piece of bamboo, causing him to fall. He saw no
one in the immediate premises except petitioner. Edgardo then stood up and ran towards the house of Cesar Umapas to
ask for help.

Prosecution witness Leo Zaragoza testified that he was standing in front of Jerry Boston’ house, about seven (7) meters
away, when he saw petitioner stab Napoleon.

Napoleon expired on the way to the hospital. Dr. Joaquin Fabellon, who conducted the autopsy on Napoleon’s body,
certified that the cause of death was the stab wound sustained at the stomach area just above the waistline.

Petitioner voluntarily surrendered to T/Sgt. Romeo Laging at the PC Detachment Command in Barangay Lugod.

In his defense, petitioner alleged that in the evening of June 27, 1986, he was walking alone when he met Napoleon Ong
and Edgardo Talanquines. Without any provocation, Napoleon suddenly drew his bolo and shouted, “Caloy, I will kill
you!”3 Napoleon swung the bolo at him twice but missed him. Petitioner then drew out his knife and stabbed Napoleon.
When he saw Edgardo Talanquines rushing towards him, he grabbed a piece of bamboo from the newly constructed
culvert and hit the former on the left arm. Talanquines ran away. Petitioner also left the premises and went home. On the
way, he met his brother, Benito, and together they proceeded to their house.4

After trial, the court a quo rendered judgment in Criminal Case No. 6408 convicting petitioner of Homicide and acquitting
Benito Arcona. In Criminal Case No. 6409, the trial court convicted Benito Arcona of Slight Physical Injuries and acquitted
petitioner. The dispositive portion of the decision5 reads:

“WHEREFORE, premises considered, the Court renders judgment in Criminal Case No. 6408 finding Carlos Arcona y
Moban GUILTY beyond reasonable doubt of the crime of Homicide under Art. 249 of the Revised Penal Code, with the
mitigating circumstance of voluntary surrender to authorities and no aggravating circumstances. He is hereby sentenced
to suffer the indeterminate penalty of SIX (6) YEARS and ONE (1) DAY of PRISION MAYOR as MINIMUM to FOURTEEN (14)
YEARS and ONE (1) DAY OF RECLUSION TEMPORAL as MAXIMUM, and to indemnify the heirs of Napoleon Ong the sum
of THIRTY THOUSAND PESOS (P30,000.00) for his death, TEN THOUSAND PESOS (P10,000.00) as actual damages and TEN
THOUSAND PESOS (P10,000.00) as moral damages. Benito Arcona is acquitted of the crime charged, for failure of
Prosecution to prove his guilt beyond reasonable doubt.

In Criminal Case No. 6409, Benito Arcona is found GUILTY beyond reasonable doubt of the crime of Slight Physical
injuries and is sentenced to suffer imprisonment of TWENTY (20) DAYS of ARRESTO MENOR and to indemnify Edgardo
Talanquines the sum of TEN THOUSAND PESOS (P10,000.00) as actual damages. Carlos Arcona is ACQUITTED of the crime
charged for failure of Prosecution to prove his guilt beyond reasonable doubt.”

Only petitioner appealed to the Court of Appeals, assailing his conviction for Homicide in Criminal Case No. 6408. On
January 28, 1997, the Court of Appeals affirmed the findings of the trial court but increased the civil indemnity to
P50,000.00, thus:

WHEREFORE, for all the foregoing, the decision of the trial court finding appellant Carlos Arcona guilty of Homicide
mitigated by his voluntary surrender to the authorities is hereby AFFIRMED, with the sole modification that the civil
indemnity Carlos Arcona shall pay to the heirs of Napoleon Ong is hereby increased to Fifty Thousand Pesos
(P50,000.00).6

Petitioner filed the instant petition for review. He maintains that he acted in self-defense when he stabbed Napoleon and
hit Edgardo with a bamboo stick. He contends that Napoleon committed unlawful aggression when drew an unsheathed
bolo and attempted to hack him with it twice. Moreover, petitioner invokes the testimony of Jerry Boston, to the effect
that before the stabbing incident he heard somebody shout, “Caloy, patayon kita.” (Caloy, I will kill you!)7

We are not persuaded. It is settled jurisprudence that when an accused invokes self-defense, the onus probandi to show
that the killing was justified shifts to him. Even if the prosecution evidence was weak, it could not be readily dismissed
considering that the accused had openly admitted his responsibility for the killing.8

To prove self-defense, the accused must show with clear and convincing evidence that: (1) he is not the unlawful
aggressor; (2) there was lack of sufficient provocation on his part; and (3) he employed reasonable means to prevent or
repel the aggression. Self-defense, like alibi, is a defense easy to concoct. It is axiomatic that once an accused had
admitted that he inflicted fatal injuries on the deceased, it is incumbent upon him, in order to avoid criminal liability, to
prove the justifying circumstance claimed by him with clear, satisfactory and convincing evidence.9

The question whether accused-appellant acted in self-defense is essentially a question of fact. In self-defense, unlawful
aggression is a primordial element.10

In the case at bar, the trial court was evidently not satisfied and convinced with petitioner’s claim that Napoleon was the
unlawful aggressor, thus:

It has been established that a bolo identified as belonging to Napoleon Ong was found at the scene of the crime. The
Court is also convinced that the stabbing incident was preceded by the sounds of a scuffle or fight because it was these
unusual noises which led Leo Zaragosa and Benito Arcona to go out of the house of Jerry Boston in order to investigate
what had happened. However, the presence of the bolo of Napoleon Ong, and the shout of “Caloy, I will kill you”
allegedly uttered by the deceased are circumstantial evidence and not sufficient to conclude that the deceased had
committed acts of unlawful aggression which justified the stabbing by accused Carlos Arcona.11

We agree with the findings of the trial court. The presence of Napoleon’s unsheathed bolo at the crime scene and the
scattered bamboo sticks suggest a number of scenarios. While the physical evidence may suggest that Napoleon drew
the bolo from its scabbard, such fact alone would not in any way satisfactorily support the conclusion that, indeed,
Napoleon was the unlawful aggressor.

Likewise, the trial court was correct in refusing to give any weight to the shout, “Caloy, I will kill you!” which Jerry Boston
allegedly heard immediately prior to the actual stabbing incident. Indeed, Jerry Boston testified that “somebody”
shouted those words. He did not categorically say that it was Napoleon. Even granting that Napoleon uttered those
words, it was still possible that he said it while being assaulted by petitioner. Significantly, Jerry only heard the shouted
words but never saw the sequence of events preceding the stabbing incident, thereby rendering doubtful the contention
that Napoleon was the unlawful aggressor. Simply, these circumstances are insufficient to conclusively establish that
Napoleon was the unlawful aggressor.

Parenthetically, the Court of Appeals concurred with the findings of the trial court and even concluded that the physical
evidence only made petitioner’s claim improbable, thus:

Accused-appellant miserably failed to convince the trial court that the stabbing was indeed in self-defense. Accused-
appellant’s version that he was waylaid by Edgardo Talanquines and the deceased Napoleon Ong is highly improbable
because he escaped the alleged ambush without a single scratch considering that there were allegedly two (2) attackers
and one was even armed with a bolo (TSN, March 27, 1990, pp. 3, 7 and 9). Moreover, accused-appellant’s claim that
Edgardo Talanquines rushed him is also questionable because appellant who was then already armed with a knife was
purportedly attacked by Mr. Talanquines who was not at all armed (Ibid., p. 10).12

In fine, the plea of self-defense cannot be justifiably entertained where it is not only uncorroborated by any separate
competent evidence but also extremely doubtful in itself. Accused-appellant having failed to discharge the burden
proving his defense, his conviction shall of necessity follow, on the basis of his admission to the killing.13

We have consistently ruled that the trial judge is the best person to evaluate the veracity of a witness’s testimony as he is
in the most ideal position to see the demeanor, actuation and countenance of a witness. Hence, we do not generally
disturb the findings of the trial court except in cases where the judge acted arbitrarily.14 In the case at bar, petitioner
failed to point out any arbitrariness on the part of the trial court.

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

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

On the other hand, the award of moral damages in the sum of P10,000.00 must be increased to P50,000.00. As borne
out by human nature and experience, a violent death invariably and necessarily brings about emotional pain and anguish
on the part of the victim’s family. It is inherently human to suffer sorrow, torment, pain and anger when a loved one
becomes the victim of a violent or brutal killing. Such violent death or brutal killing not only steals from the family of the
deceased his precious life, deprives them forever of his love, affection and support, but often leaves them with the
gnawing feeling that an injustice has been done to them. For this reason, moral damages must be awarded even in the
absence of any allegation and proof of the heirs’ emotional suffering.17

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

WHEREFORE, in view of the foregoing, the petition for review is DENIED. The decision of the Court of Appeals, finding
petitioner Carlos Arcona y Moban guilty beyond reasonable doubt of Homicide, attended by the mitigating circumstance
of voluntary surrender, and sentencing him to suffer the indeterminate penalty of six (6) years and one (1) day of prision
mayor, as minimum, to fourteen (14) years and one (1) day of reclusion temporal, as maximum, and to pay the heirs of
the deceased Napoleon Ong the sum of P50,000.00 as civil indemnity, is AFFIRMED with MODIFICATION. As modified,
petitioner is further ordered to pay the heirs of the deceased moral damages in the increased amount of P50,000.00. The
award of actual damages is deleted for lack of factual and legal basis.

SO ORDERED.

Davide, Jr. (C.J., Chairman), Vitug, Carpio and Azcuna, JJ., concur.

Judgment affirmed with modification.

Note.—Moral damages, which include physical suffering and mental anguish, may be recovered in criminal offenses
resulting in physical injuries or the victim’s death. (People vs. Salcedo, 273 SCRA 473 [1997])
G.R. No. 175833. January 29, 2008.*

PEOPLE OF THE PHILIPPINES, appellee, vs. EDWIN MALICSI, appellant.

Criminal Law; Rape; Evidence; Denial; Denial is a negative, self-serving evidence which cannot be given greater weight
than the testimony of credible witnesses who testified on affirmative matters.—AAA’s testimony is entitled to great
weight in contrast to appellant’s bare denials. “Denial is a negative, self-serving evidence which cannot be given greater
weight than the testimony of credible witnesses who testified on affirmative matters. Between the positive declarations
of the prosecution witnesses and the negative statements of the accused, the former deserve more credence.” Besides,
neither AAA nor her family had any ill-motive to falsely testify and impute a serious crime against the appellant who is a
close relative.

Same; Same; Same; Witnesses; The intimidation must be viewed in the light of the victim’s perception and judgment at
the time of rape and not by any hard-and-fast rule.—This Court is not persuaded by appellant’s contention that the lack
of outcry, lack of tenacious resistance, and delay in reporting the incidents signify that the sexual encounters were
consensual. First, appellant exercised moral ascendancy over AAA, being AAA’s uncle. Second, appel-lant had instilled
fear upon AAA’s young mind during the sexual assaults by using a knife and threatening to kill her. These circumstances
have led AAA to keep her ordeals in secret until her mother learned of the incidents from AAA’s cousin. This Court
declared in People v. Garcia, 281 SCRA 463 (1997): [R]ape is committed when intimidation is used on the victim and this
includes the moral kind of intimidation or coercion. Intimidation is a relative term, depending on the age, size and
strength of the parties, and their relationship with each other. It can be addressed to the mind as well. Moreover, the
intimidation must be viewed in the light of the victim’s perception and judgment at the time of rape and not by any hard-
and-fast rule. It is therefore enough that it produces fear—fear that if the victim does not yield to the lustful demands of
the accused, something would happen to her at the moment or thereafter.

Same; Same; Qualifying Circumstances; Relationship; The special circumstance of relationship, that is, appellant is the
victim’s uncle and they are related within the third civil degree of affinity, must be alleged in the Information.—The
appellate court was correct in finding appellant guilty of four counts of simple rape. We have ruled that the special
circumstance of relationship, that is, appellant is the victim’s uncle and they are related within the third civil degree of
affinity, must be alleged in the Information. The fact that such relationship was proved will not justify the imposition of
the death penalty and appellant cannot be convicted of qualified rape.

Same; Same; Damages; Moral damages are automatically granted to the rape victim without presentation of further
proof other than the commission of the crime.—We find that the Court of Appeals correctly imposed the penalty of
reclusion perpetua on appel-lant. The appellate court also correctly affirmed the award by the trial court of P200,000 in
moral damages. Moral damages are automatically granted to the rape victim without presentation of further proof other
than the commission of the crime.

Civil Indemnity; Civil indemnity in the amount of P50,000 for each count of simple rape is automatically granted once the
fact of rape is established.—We reduce the award of civil indemnity from P300,000 to P200,000 in accordance with
prevailing jurisprudence. Civil indemnity in the amount of P50,000 for each count of simple rape is automatically granted
once the fact of rape is established.

APPEAL from a decision of the Court of Appeals.

The facts are stated in the resolution of the Court.

The Solicitor General for appellee.

Public Attorney’s Office for appellant.

RESOLUTION

CARPIO, J.:

This is an appeal from the 18 August 2006 Decision1 of the Court of Appeals in CA-G.R. CR-HC No. 01368. The Court of
Appeals affirmed with modification the decision of the Regional Trial Court, Branch 42, Pinamalayan, Oriental Mindoro,
finding appellant Edwin Malicsi guilty beyond reasonable doubt of four counts of rape.

In four separate Informations dated 28 May 1998, the prosecution charged appellant with raping AAA, who was then
alleged to be 13 years old when she was raped for the first time and 15 years old during the succeeding rape incidents.

Appellant pleaded not guilty upon arraignment.

During the trial, the prosecution presented three witnesses namely, AAA, AAA’s mother, and Dr. Marlon dela Rosa (Dr.
dela Rosa), the examining physician.

AAA testified that sometime in December 1996 at 7 o’clock in the evening, her father asked her to buy wine from a store
10 meters away from their house. AAA was only 13 years old then. The house of AAA’s family is some 20 meters away
from appellant’s house. On her way home, AAA chanced upon appellant who is her uncle, her father being the brother of
appellant’s wife. Appellant placed AAA on his lap. Appellant switched off AAA’s flashlight and embraced her. Appellant
ordered AAA to bend over. AAA acceded because appellant threatened to kill her. Appellant removed AAA’s shorts and
underwear. Appellant, while poking a knife at AAA’s breast, succeeded in inserting his penis inside her vagina. AAA felt
pain. Appellant warned AAA not to say anything to her parents.

AAA further testified that sometime in March 1998, her mother asked her to gather coconuts that have fallen off from
the tree at the bamboo grove. Appellant followed her and grabbed one of the coconuts she was holding. AAA tried to
retrieve the coconut but appellant forced her to lie on her back. Appellant removed her underwear and inserted his
penis inside her vagina. AAA struggled to no avail. Appellant again threatened to kill her if she informed her parents
about the incident.

AAA added that on 1 April 1998, appellant ordered AAA to meet him at a banana grove. Out of fear, AAA went there
because she knew appellant always carried a knife. Again, appellant forced her to lie on the ground and inserted his
penis inside her vagina.

AAA alleged that three days later, appellant caught up with her while she was gathering firewood. AAA was again forced
to lie on the ground and appellant inserted his penis inside her vagina. AAA’s cousin witnessed the incident and informed
AAA’s mother. When AAA confirmed to her mother that appellant raped her, they went to the police headquarters to file
a complaint against appellant. AAA testified that she was thereafter brought to the doctor for physical examination.

AAA’s mother testified that appellant is her brother-in-law. Sometime in April 1998, her nephew informed her that he
saw appellant rape AAA. Thereafter, AAA confirmed to her mother that appellant raped her on different occasions. AAA’s
mother discussed the matter with her husband and they decided to report the rape incidents to the police authorities.
AAA’s mother alleged that appellant’s wife offered to settle the case for P10,000 but she refused the offer because of the
dishonor to her daughter.

Dr. dela Rosa testified that he examined AAA and executed a Medical Certificate with the following findings:

Vagina: nulliparous introitus with old hymenal lacerations at 1º, 7º and 5º positions.”2

Dr. dela Rosa added that based on his findings, AAA had lost her virginity. On cross-examination, Dr. dela Rosa stated that
the hymenal lacerations were inflicted possibly by the insertion of a hard object.3
The defense presented appellant as its only witness. Appellant denied the accusations of rape and alleged that he and
AAA were sweethearts and they mutually agreed to engage in sexual intercourse. Appellant claimed that AAA visits their
house about thrice a week when his wife is not at home. Appellant then recounted the incidents of his sexual intercourse
with AAA.

Appellant claimed that sometime in December 1996, he arrived home from Manila and he told his wife to go to the
market. After she left, he slept. Then, he sensed someone entering his house. Upon seeing that it was AAA, appellant
asked her if she needed something but she replied negatively. Appellant then stood up, held her hands and kissed her.
AAA told him that they might be seen by her mother as the door was not closed. Appellant and AAA then entered the
room and he embraced and kissed her. AAA also embraced and kissed him. Then, he told her, “maghubo ka ng panty
(take off your un-derwear).” While taking off her underwear, appellant also removed his briefs. While AAA was lying in
bed face upward, she had no violent reaction but merely closed her eyes when he inserted his penis inside her vagina.
After the sexual intercourse, AAA went home.4

Appellant contended that the second time they had sexual intercourse was in 1998 before AAA’s graduation. It happened
at the banana grove. He was urinating at the creek when he called her by a whistle. AAA approached him. He held her
hands and they embraced each other. Then, they removed their undergarments. AAA lay on the banana leaves while he
placed himself on top of her. He inserted his penis inside her vagina and while doing so, AAA was embracing him.
Afterwards, she went home.5

Appellant alleged that the third sexual intercourse happened on 4 April 1998 at the banana plantation where they
agreed to meet. AAA arrived while appellant was gathering “puso ng saging.” When she approached him, they embraced
each other and removed their undergarments. AAA lay on the banana leaves while he placed himself on top of her and
inserted his penis inside her vagina. AAA was merely looking at him while he was doing it. After the sexual act, she went
home.6

Appellant also alleged that in these three occasions, AAA gave her consent since they were sweethearts. Appellant
attested that after he learned about the rape charges, he did not have the opportunity to talk to AAA anymore.

The trial court gave credence to the testimonies of the prosecution witnesses. The trial court took note of the fact that
AAA was barely 13 years old when the first rape took place while appellant was in his early 30’s.7 The trial court also
noted that appellant was AAA’s uncle, thus he exercised some sort of moral ascendancy over AAA.8 The trial court was
not persuaded by appellant’s defense that AAA was his girlfriend and that the sexual encounters were done with her
consent due to the lack of outcry, lack of tenacious resistance, and delay in reporting the rape charges to the authorities.
The trial court disbelieved appellant’s testimony that they were sweethearts because there was no sufficient proof to
substantiate the alleged love relationship. Appellant merely relied on his own uncorroborated testimony. The trial court
added that a love affair is not a license for sexual intercourse.9

The trial court ruled that the lack of outcry and tenacious resistance did not make the sexual congress voluntary because
being of tender age, AAA did not possess discernment and was incapable of giving an intelligent consent to the sexual
act. Moreover, there is no standard form of human behavioral response to a startling or frightful experience such as rape
being perpetrated by the victim’s uncle. Furthermore, the resistance on the part of the victim need not be carried out to
the point of inviting death or physical injuries, it being sufficient that the coitus takes place against her will or that she
yields to a genuine apprehension of great harm.10

The trial court acknowledged that there was delay in reporting the rape incidents. However, the trial court believed that
the delay was due to the death threats made by appel-lant coupled with the victim’s immaturity. The fact that ap-pellant
was holding a knife is suggestive of the force or intimidation that would cause the victim to conceal for sometime the
violation on her honor.11
On 8 October 2001, the trial court rendered its decision, finding appellant guilty of four counts of qualified rape. The trial
court sentenced appellant to suffer the penalty of death for each count of rape, and to pay AAA P300,000 as civil
indemnity (P75,000 for each count), and P200,000 as moral damages (P50,000 for each count).12

On appeal, appellant contended that the trial court erred in giving weight and credence to the incredulous testimonies of
the prosecution witnesses especially AAA’s testimony. Appellant alleged that the prosecution failed to prove his guilt
beyond reasonable doubt. Appellant also questioned the imposition of death penalty considering the attendant
circumstances of the case.

In its 18 August 2006 Decision, the Court of Appeals affirmed the trial court’s decision with modification, finding
appellant guilty of four counts of simple rape instead of qualified rape and reducing the penalty imposed to reclusion
per-petua. The Court of Appeals stated that AAA was a minor at the time of the commission of the crime and appellant
was a family relative by affinity. The Court of Appeals believed that the family relationship made AAA subject to
appellant’s moral ascendancy. Moreover, it was clearly established during the trial that AAA exerted efforts to free
herself from appellant. AAA acceded to appellant’s sexual urges because appellant threatened to kill her and appellant
actually poked a knife on her breast during the incidents. The appellate court added that these circumstances belie
appellant’s claim that AAA did not offer tenacious resistance. AAA’s fear for her life and safety made her conceal the fact
that she was being molested by appellant.13

The Court of Appeals did not believe appellant’s “sweet-heart” defense because it was not supported by some
documentary or other evidence of the relationship other than his bare assertions. Such claim obviously deserves scant
consideration. Assuming arguendo that appellant and AAA were sweethearts, this relationship still does not, by itself,
make their sexual intercourse voluntary because even a lover can be forced to engage in a sexual act against her will and
consent.14

The Court of Appeals noted that from the time of the first rape incident, there was a lapse of almost two years before
AAA reported the rape incidents to the police authorities. The appellate court explained that this delay is not an
indication of a false accusation. The fact of AAA’s failure to disclose for two years that appellant molested her was not
unexplained. AAA had repeatedly testified during the trial that appellant warned her not to say anything to her parents
and appellant threatened to kill her if she would tell them. The appellate court stated that it is even common for young
girls to conceal for some time the assault against their virtue because of threats on their lives. The Court of Appeals
upheld the finding of the trial court on AAA’s credibility on the face of appel-lant’s bare denials, more especially that
appellant had not adduced any evidence that AAA or her family had any ill-motive to testify against him.15

However, the Court of Appeals agreed with appellant that the trial court erred in sentencing him to suffer the death
penalty on four counts of qualified rape and that he should only be convicted of simple rape. The minority of the victim
and the offender’s relationship to the victim, which constitute only one special qualifying circumstance, must be alleged
in the Information and proved with certainty. In this case, the Informations filed against appellant merely stated that he
is the “uncle” of AAA. This is not the sufficient allegation required by law because the Information must allege that he is a
relative by consanguinity or affinity within the third civil degree and the same should be proven during the trial. The
Court of Appeals further held that since Republic Act No. 934616 now prohibits the imposition of the death penalty, the
penalty of reclusion perpetua should be imposed. This new law must be given retroactive application because it is
favorable to the accused.

Hence, this appeal.

We find the appeal without merit. The Court of Appeals was correct in affirming with modification the ruling of the trial
court that four counts of rape were clearly established by the prosecution witnesses. The findings and observations of
the trial court on the credibility of the prosecution witnesses are binding and conclusive on the appellate court unless
some facts or circumstances of weight and substance have been overlooked, misapprehended or misinterpreted,17
which is not true in the present case. Moreover, AAA’s testimony is worthy of belief because she categorically pointed to
appellant as the person who sexually abused her.

AAA’s testimony is entitled to great weight in contrast to appellant’s bare denials. “Denial is a negative, self-serving
evidence which cannot be given greater weight than the testimony of credible witnesses who testified on affirmative
matters. Between the positive declarations of the prosecution witnesses and the negative statements of the accused, the
former deserve more credence.”18 Besides, neither AAA nor her family had any ill-motive to falsely testify and impute a
serious crime against the appellant who is a close relative.

Appellant’s allegation that they were sweethearts is barren of factual support because he failed to substantiate his claim
by some documentary or other evidence of the relationship. The “sweetheart defense” appears to be a fabrication to
exculpate himself from the rape he committed. Although appellant admitted having carnal knowledge with AAA in three
separate occasions,19 he failed to discharge the burden of proving the affirmative defense by clear and convincing
evidence.

This Court is not persuaded by appellant’s contention that the lack of outcry, lack of tenacious resistance, and delay in
reporting the incidents signify that the sexual encounters were consensual.20 First, appellant exercised moral
ascendancy over AAA, being AAA’s uncle. Second, appellant had instilled fear upon AAA’s young mind during the sexual
assaults by using a knife and threatening to kill her. These circumstances have led AAA to keep her ordeals in secret until
her mother learned of the incidents from AAA’s cousin. This Court declared in People v. Garcia:21

“[R]ape is committed when intimidation is used on the victim and this includes the moral kind of intimidation or
coercion. Intimidation is a relative term, depending on the age, size and strength of the parties, and their relationship
with each other. It can be addressed to the mind as well. Moreover, the intimidation must be viewed in the light of the
victim’s perception and judgment at the time of rape and not by any hard-and-fast rule. It is therefore enough that it
produces fear—fear that if the victim does not yield to the lustful demands of the accused, something would happen to
her at the moment or thereafter.”

AAA’s tender age and appellant’s moral ascendancy made AAA subservient to appellant’s sexual desires. This
psychological predicament explains why AAA did not give any outcry or offer any resistance when appellant was raping
her. Moreover, the physical differences between appellant, who was a man in his early 30’s then, and AAA, a 13 and 15-
year-old girl during the rape incidents, afforded appellant the greater advantage such that no amount of resistance from
AAA could have overcome the coercive physical force of appellant.

The appellate court was correct in finding appellant guilty of four counts of simple rape. We have ruled that the special
circumstance of relationship, that is, appellant is the victim’s uncle and they are related within the third civil degree of
affinity, must be alleged in the Information.22 The fact that such relationship was proved will not justify the imposition of
the death penalty and appellant cannot be convicted of qualified rape.23

We find that the Court of Appeals correctly imposed the penalty of reclusion perpetua on appellant. The appellate court
also correctly affirmed the award by the trial court of P200,000 in moral damages. Moral damages are automatically
granted to the rape victim without presentation of further proof other than the commission of the crime.24

However, we reduce the award of civil indemnity from P300,000 to P200,000 in accordance with prevailing
jurisprudence.25 Civil indemnity in the amount of P50,000 for each count of simple rape is automatically granted once
the fact of rape is established.26
WHEREFORE, we AFFIRM the 18 August 2006 Decision of the Court of Appeals in CA-G.R. CR-HC No. 01368 finding
appellant Edwin Malicsi guilty beyond reasonable doubt of four counts of simple rape with the MODIFICATION that the
award of civil indemnity is reduced to P200,000.

SO ORDERED.

Quisumbing (Chairperson), Carpio-Morales, Tinga and Velasco, Jr., JJ., concur.

Judgment affirmed with modification.

Note.—The sweetheart defense does not necessarily preclude rape. (People vs. Flores, 372 SCRA 421 [2001])
G.R. No. 187077. February 23, 2011.*

PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. ALEX CONDES Y GUANZON, accused-appellant.

Criminal Law; Rape; Appeals; Rape; Guiding principles in the disposition and review of rape cases; The credibility of the
victim is always the single most important issue on the prosecution of a rape case.—In the disposition and review of rape
cases, the Court is guided by three settled principles: First, an accusation for rape can be made with facility and it is
difficult to prove but more difficult for the accused, though innocent, to disprove; Second, in view of the intrinsic nature
of the crime of rape where only two persons are usually involved, the testimony of the complainant must be scrutinized
with extreme caution; and Third, the evidence for the prosecution must stand or fall on its own merits, and cannot be
allowed to draw strength from the weakness of the evidence for the defense. Corollary to the above principles is the rule
that the credibility of the victim is always the single most important issue in the prosecution of a rape case. Conviction or
acquittal in a rape case more often than not depends almost entirely on the credibility of the complainant’s testimony
because, by the very nature of this crime, it is usually the victim alone who can testify as to its occurrence.

Same; Same; Evidence; Witnesses; When the decision hinges on the credibility of witnesses and their respective
testimonies, the trial court’s observations and conclusions deserve great respect and are often accorded finality.—Time
and again, the Court has held that when the decision hinges on the credibility of witnesses and their respective
testimonies, the trial court’s observations and conclusions deserve great respect and are often accorded finality. The trial
judge has the advantage of observing the witness’ deportment and manner of testifying. Her “furtive glance, blush of
conscious shame, hesitation, flippant or sneering tone, calmness, sigh, or the scant or full realization of an oath” are all
useful aids for an accurate determination of a witness’ honesty and sincerity. The trial judge, therefore, can better
determine if witnesses are telling the truth, being in the ideal position to weigh conflicting testimonies. Unless certain
facts of substance and value were overlooked which, if considered, might affect the result of the case, its assessment
must be respected for it had the opportunity to observe the conduct and demeanor of the witnesses while testifying and
detect if they were lying. The rule finds an even more stringent application where said findings are sustained by the CA.

Same; Same; Same; Same; Youth and immaturity are generally badges of truth and sincerity.—When offended parties are
young and immature girls from 12 to 16 years of age, courts are inclined to lend credence to their version of what
transpired, considering not only their relative vulnerability, but also the public humiliation to which they would be
exposed by a court trial, if their accusation were not true. Youth and immaturity are generally badges of truth and
sincerity. It bears stressing that not an iota of evidence was presented by the defense showing that AAA’s account of her
defilement was not true.

Same; Same; Same; Same; When a victim is threatened with bodily injury as when the rapist is armed with a deadly
weapon, such as a knife or bolo, such constitutes intimidation sufficient to bring the victim to submission to the lustful
desires of the rapist.—The Court is convinced that the accused did employ threat and intimidation to subjugate AAA’s
will and break her resistance. She categorically stated that he poked a bolo at her neck and threatened to kill her if she
would make a noise and resist his advances. Undoubtedly, fear and helplessness gripped her. To an innocent girl who was
only 14 years old, his menacing acts engendered in her a well-grounded fear that if she would resist or not yield to his
bestial demands, he would make good his threats. She was obviously cowed into submission by the real and present
threat of physical harm on her person. Obviously, she was silenced to do his bidding. Her submission was re-enforced by
the fact that the accused was her stepfather who exercised moral ascendancy and influence over her. When a victim is
threatened with bodily injury, as when the rapist is armed with a deadly weapon, such as a knife or bolo, such constitutes
intimidation sufficient to bring the victim to submission to the lustful desires of the rapist.

Same; Same; Same; Same; Delay in reporting an incident of rape is not an indication of a fabricated charge; Neither does
it necessarily cast doubt on credibility of the complainant.—AAA’s failure to immediately report to anyone what she had
suffered in the hands of her stepfather does not vitiate the integrity of her claim. Apparently, the accused succeeded in
instilling fear upon her young mind when he threatened to kill her and her siblings should she say a word about the
incident. Thus, paralyzed by the fear that he would make good his threats, she remained silent and only broke it when he
tried to repeat the sexual assault. The subsequent attack brought her silence to the breaking point and forced her to
come out in the open to prevent and avoid further assaults. Delay in reporting an incident of rape is not an indication of
a fabricated charge. Neither does it necessarily cast doubt on the credibility of the complainant.

Same; Same; Same; Same; Motives; Motives such as those arising from family feuds, resentment or revenge have not
prevented the court from giving, if proper, full evidence to the testimony of minor complainants.—Granting AAA indeed
resented his stepfather, the Court does not necessarily cast doubt on AAA’s credibility as witness. Motives, such as those
arising from family feuds, resentment, or revenge, have not prevented the Court from giving, if proper, full credence to
the testimony of minor complainants who remained steadfast throughout their direct and cross-examination. After all, ill
motive is never an essential element of a crime.

Same; Same; Same; Rape; Rape can be committed in even the unlikeliest places and circumstances and by the most
unlikely persons.—According to AAA, her siblings were all outside the house while her grandmother was doing an errand
in the market when the accused molested her. Granting arguendo that there were other people in the house when the
rape was committed, rapists are not deterred from committing their odious act by the presence of people nearby or the
members of the family. Lust, being a very powerful human urge, is, to borrow from People v. Virgilio Bernabe, 370 SCRA
142, 147 (2001), “no respecter of time and place.” Rape can be committed in even the unlikeliest places and
circumstances and by the most unlikely persons.

Same; Same; Same; Denial and Alibi; Denial and alibi are the common defenses in rape cases; The barefaced denial of
the charge by the accused cannot prevail over the posture and forthright identification of him as the perpetrator of the
dastardly act; Alibi on the other hand is the weakest of all defenses for it can be easily contrived.—Judicial experience
has taught this Court that denial and alibi are the common defenses in rape cases. Denial is an intrinsically weak defense
which must be buttressed with strong evidence of non-culpability to merit credibility. It is a negative self-serving
assertion that deserves no weight in law if unsubstantiated by clear and convincing evidence. The barefaced denial of the
charge by the accused cannot prevail over the positive and forthright identification of him as the perpetrator of the
dastardly act. Alibi, on the other hand, is the weakest of all defenses for it can be easily contrived. For alibi to prosper, it
is not enough for the accused to prove that he was somewhere else when the crime was committed; he must likewise
demonstrate that it was physically impossible for him to have been at the scene of the crime at the time of its
commission. In this case, not a shred of evidence was adduced by the accused to substantiate his alibi.

Criminal Procedure; Qualifying Circumstances; Aggravating Circumstances; The Revised Rules on Criminal Procedure
which took effect on December 1, 2000 explicitly mandates that the information must state in ordinary and concise
language the qualifying and aggravating circumstances attending an offense.—The courts below correctly noted that the
qualifying circumstance of her relationship with the accused as his stepdaughter was not alleged in the Information,
although proven during the trial and not even contested by the accused. This omission prevents the transformation of
the crime in its qualified form. The twin requisites of minority of the victim and her relationship with the offender being
special qualifying circumstances, which increase the penalty as opposed to a generic aggravating circumstance which
only affects the period of the penalty, should be alleged in the information because of the right of the accused to be
informed of the nature and cause of the accusation against him. The Revised Rules on Criminal Procedure which took
effect on December 1, 2000, explicitly mandates that the information must state in ordinary and concise language the
qualifying and aggravating circumstances attending an offense. Although the crime of rape in this case was committed
before the effectivity of the new rules, it should be applied retroactively, as the same is favorable to an accused.

APPEAL from a decision of the Court of Appeals.

 The facts are stated in the opinion of the Court.

Office of the Solicitor General for plaintiff-appellee.

Public Attorney’s Office for accused-appellant.

MENDOZA, J.:

This is an appeal from the July 31, 2008 Decision1 of the Court of Appeals (CA), in CA-G.R. CR-H.C. No. 00926, which
affirmed the July 21, 2003 Decision2 of the Regional Trial Court, Branch 34, Calamba City (RTC), in Criminal Case No.
7383-2000-C, finding the accused guilty beyond reasonable doubt of the crime of rape committed against AAA.3

Accused Alex Condes y Guanzon (accused) was charged with the crime of rape in an information4 dated February 23,
2000, the accusatory portion of which reads:

“That on or about February 14, 1999 at Brgy. Bitin, Municipality of Bay, Province of Laguna and within the jurisdiction of
this Honorable Court, the above-named accused while conveniently armed with a bolo through force, violence and
intimidation and with lewd design, did then and there willfully, unlawfully and feloniously have carnal relation with one
AAA, a fourteen (14) year old minor, against her will and consent, to her damage and prejudice.

CONTRARY TO LAW.”

Version of the Prosecution

The thrust of the prosecution’s evidence has been summarized by the Office of the Solicitor General (OSG) in its Brief5 as
follows:

“On the eve[ning] of February 14, 1999, the 14-year old victim, AAA, was left alone with her stepfather, appellant Alex
Condes, at their house in Brgy. Bitin, Laguna. She was cleaning the upstairs area of the house, when appellant entered
the room, pointed a bolo at her neck, and warned her not to shout. He pulled her down to the floor, removed her
clothes, and when she tried to push him away—subdued her with a threat of a cut from his bolo. Appellant removed his
own garments, positioned himself on top of his stepdaughter, and succeeded in inserting his penis into the victim. He
made push and pull movement for about ten minutes. The pain the victim felt in her sex organ was excruciating.

After satisfying himself, appellant wiped his sex organ. Threatening to kill her brothers and sister, he made AAA promise
not to tell anyone about the incident. She kept the unpalatable promise until December 30, 1999, when appellant tried
to rape her again. Determined to obtain justice, the victim called her aunt in San Pablo City and disclosed the revolting
incident. On January 4, 2000, accompanied by her aunt, AAA was taken to the PNP Regional Crime Laboratory Office,
Camp Vicente Lim, Canlubang Calamba, Laguna, where she was examined by Dr. Joselito Rodrigo whose findings revealed
the following:

“…scanty growth of pubic hair. Labia majora are full, convex and coapted with pinkish brown labia minora presenting in
between. On separating the same is disclosed an elastic fleshy type hymen with deep-healed laceration at 6 o’clock
position. External vaginal orifice offers strong resistance to the introduction of the examining index finger. Vaginal canal is
narrow with prominent rugosities. Cervix is soft…. Findings are compatible with 9 to 10 weeks pregnant already…”

Version of the Defense

In his Brief,6 the accused denied the charges against him and presented his own version of the circumstances before and
during the alleged incident. Thus:
“Rose Catalan is a lady guard of the Guzent Incorporated in Tiwi, Albay, where the accused used to work since 1991. She
is in-charge of the time records of all the employees in the said establishment.

On February 13, 1999, the accused reported for work, which was indicated in their logbook. The accused left the
company at 11:10 in the morning but proceeded to Tiwi Hot Spring.

Alex Condes vehemently denied the accusation hurled against him. He recalled that in the morning of February 14, 1999,
he returned the service vehicle to his office at No. 1237 EDSA, Quezon City. He went home soon thereafter to take a
short nap in his house in Quezon City. At 5:00 o’clock in the morning, he decided to go to his house in Brgy. Bitin, Bay,
Laguna. Upon reaching home, he went to sleep again until his brother-in-law and a companion arrived. They had a
drinking spree. The complainant asked permission to attend a fiesta at her friend’s house.

At 7:00 o’clock in the evening, he asked his mother-in-law and the complainant to prepare his things as he would return
to Manila the following day. He left his house on February 15, 1999 at 3:30 in the morning.

Alberto Navarette, barangay captain of Bitin, in Bay, Laguna, averred that he saw the accused inside the latter’s house in
the morning of February 14, 1999. He also saw the complainant washing dishes in their kitchen. Then, in the afternoon,
he passed by the house of the accused and saw him carrying a child while the complainant was in front of their house.
He did not notice anything unusual.”

On July 21, 2003, the RTC rendered its judgment convicting the accused guilty beyond reasonable doubt of simple rape.
It rejected the defenses of denial and alibi proffered by the accused stating that said defenses fell flat in the face of the
testimony of AAA on her harrowing ordeal in the hands of the accused. It found her testimony to be credible, natural,
convincing, consistent with human nature, and in the normal course of events.7 The lower court, however, ruled that the
accused can only be convicted of simple rape and not in its qualified form. It reasoned out that while the prosecution
was able to establish the aggravating/qualifying circumstances of minority and relationship which would warrant the
imposition of death penalty under Article 266-B of the Revised Penal Code, the circumstance of stepfather-daughter
relationship was not alleged in the information. Thus, the dispositive portion of the RTC Decision reads:

“WHEREFORE, for the foregoing reasons, the herein accused ALEX CONDES Y GUANZON is found GUILTY beyond
reasonable doubt as principal by direct participation of the crime of rape. There being no modifying circumstances
properly alleged in the Information to be appreciated, the accused is hereby sentenced to suffer the indivisible penalty of
RECLUSION PERPETUA. The accused is hereby ordered to indemnify the victim AAA P50,000.00 as civil indemnity,
P50,000.00 as moral damages and P25,000.00 as exemplary damages.

SO ORDERED.”8

The records of the case were originally transmitted to this Court on appeal. Pursuant to People v. Efren Mateo,9 the
Court issued a resolution10 dated January 19, 2005 transferring this case to the CA for appropriate action and
disposition.

The CA eventually affirmed11 the guilty verdict on the basis of AAA’s testimony which it found credible and sufficient to
sustain a conviction. It debunked the defense of alibi of the accused holding that it was not satisfactorily established and
not at all persuasive when pitted against the positive and convincing identification by the victim.

On August 29, 2008, the accused filed the Notice of Appeal,12 which was given due course by the CA in its Minute
Resolution13 dated September 8, 2008.

On June 1, 2009, the Court issued the Resolution14 requiring the parties to submit their respective supplemental briefs.
On July 7, 2009, the OSG manifested15 that it would forego the filing of a supplemental brief if appellant should opt not
to file one. On October 12, 2009, the Court dispensed16 with the filing by the Public Attorney’s Office of a supplemental
brief for appellant when it did not file one during the prescribed period.

From the Appellant’s Brief of the accused filed with the CA, he prayed for the reversal and setting aside of the guilty
verdict anchored on the following:

ASSIGNMENT OF ERRORS

THE TRIAL COURT GRAVELY ERRED IN FAILING TO CONSIDER THE MOTIVE BEHIND THE FILING OF THE INSTANT CASE
AGAINST THE ACCUSED-APPELLANT.

II

THE COURT A QUO GRAVELY ERRED IN CONVICTING THE ACCUSED-APPELLANT OF THE CRIME CHARGED ALTHOUGH HIS
ACTUAL PARTICIPATION IN THE ALLEGED ACT WAS NOT PROVEN WITH CERTAINTY.

In essence, the accused claims that AAA merely concocted the accusation of rape out of hatred because she resented the
hard discipline imposed by him and she feared that he would punish her once he would learn that she had a boyfriend
and pregnant at that. He tags AAA’s story of defloration as both preposterous and ridiculous conjured by an overly
imaginative individual anchored on ill motives.

Professing innocence, he insists that he could not have possibly committed the offense charged as he was pre-occupied
and even left the house on the day of the alleged commission of the sexual assault. He discredits AAA’s testimony
stressing that it would be difficult for him to commit the crime considering that her siblings and grandmother were
staying in the same house. Thus, he concludes that the evidence for the prosecution failed to meet that quantum of
proof necessary to warrant his conviction.

The OSG, on the other hand, counters that AAA’s testimony was credible and sufficient to convict and that the culpability
of the accused for the crime of rape was proven beyond reasonable doubt.

The Court’s Ruling

The appeal must fail.

In the disposition and review of rape cases, the Court is guided by three settled principles: First, an accusation for rape
can be made with facility and it is difficult to prove but more difficult for the accused, though innocent, to disprove;
Second, in view of the intrinsic nature of the crime of rape where only two persons are usually involved, the testimony of
the complainant must be scrutinized with extreme caution; and Third, the evidence for the prosecution must stand or fall
on its own merits, and cannot be allowed to draw strength from the weakness of the evidence for the defense.17
Corollary to the above principles is the rule that the credibility of the victim is always the single most important issue in
the prosecution of a rape case.18 Conviction or acquittal in a rape case more often than not depends almost entirely on
the credibility of the complainant’s testimony because, by the very nature of this crime, it is usually the victim alone who
can testify as to its occurrence.

In his Brief, the accused put in issue the credibility of AAA’s testimony contending that she merely fabricated the
accusation to place him behind bars and rid him out of her life forever. This contention deserves scant consideration.

Time and again, the Court has held that when the decision hinges on the credibility of witnesses and their respective
testimonies, the trial court’s observations and conclusions deserve great respect and are often accorded finality. The trial
judge has the advantage of observing the witness’ deportment and manner of testifying. Her “furtive glance, blush of
conscious shame, hesitation, flippant or sneering tone, calmness, sigh, or the scant or full realization of an oath”19 are all
useful aids for an accurate determination of a witness’ honesty and sincerity. The trial judge, therefore, can better
determine if witnesses are telling the truth, being in the ideal position to weigh conflicting testimonies. Unless certain
facts of substance and value were overlooked which, if considered, might affect the result of the case, its assessment
must be respected for it had the opportunity to observe the conduct and demeanor of the witnesses while testifying and
detect if they were lying.20 The rule finds an even more stringent application where said findings are sustained by the
CA.21

In the case at bench, the Court finds no cogent reason to depart from the trial court’s findings and its calibration of
private complainant’s credibility.

A meticulous review of the transcript of stenographic notes would show that AAA narrated in the painstaking and
degrading public trial her unfortunate and painful ordeal in the hands of the accused in a logical, straightforward,
spontaneous, and frank manner. There were no perceptible artificialities or pretensions that tarnished the veracity of her
testimony. She recounted the tragic experience, unflawed by inconsistencies or contradictions in its material points and
unshaken by the tedious and grueling cross-examination. Her declaration revealed each and every detail of the incident
and gave no impression whatsoever that her testimony was a mere fabrication. Had her story been contrived, she would
not have been so consistent throughout her testimony in the face of intense and lengthy interrogation.

When offended parties are young and immature girls from 12 to 16 years of age, courts are inclined to lend credence to
their version of what transpired, considering not only their relative vulnerability, but also the public humiliation to which
they would be exposed by a court trial, if their accusation were not true.22 Youth and immaturity are generally badges of
truth and sincerity.23 It bears stressing that not an iota of evidence was presented by the defense showing that AAA’s
account of her defilement was not true.

Without hesitation, AAA pointed an accusing finger against the accused, her stepfather no less, as the person who
sexually assaulted her on that fateful night of February 14, 1999. She vividly recalled that he poked a bolo at her neck
and told her not to shout or else he would kill her. Bent on satisfying his lust, he embraced and pulled her down on the
floor. He took off her pajamas, undressed himself and placed himself on top of her. She resisted by pushing him away but
he again pointed the bolo and ordered her not to move or shout. He then succeeded in penetrating her organ with his
own causing her excruciating pain. Thereafter, he warned her that he would kill her and her siblings if she would tell
anyone about what happened. The following excerpts from the Transcript of Stenographic Notes are revealing:

Fiscal Loreto M. Masa

(On Direct Examination)

Q: On February 14, 1999, tell us where you were?

A: In the house, sir.

Q: When you said “in the house,” are you referring to the house in Bitin?

A: Yes, sir.

Q: Do you recall of any unusual incident that happened to you on February 14, 1999?

A: Yes, sir.

Q: Tell us what was that unusual incident you said you experienced?
A: Alex Condes raped me, sir.

Q: Where were you raped by Alex Condes?

A: In our house in the evening in Bitin.

Q: And how did he rape you?

A: Because at that time, my grandmother and my brothers and sisters, except my youngest sister, were not in the
house and I was alone upstairs and was cleaning the house when he pointed a bolo at me.

Q: In what portion of your body this bolo was pointed at you?

A: In my neck, sir.

Q: Where were you? What portion of the house were you at that time he pointed a bolo in your neck?

A: Upstairs sir, he was also there.

Q: What did the accused tell you when he pointed a bolo at your neck?

A: He told me not to shout or else he will kill me.

Q: What did you do when he told you not to shout or else he would kill you?

A: I just asked him “Papa, bakit po?” and because he was pointing a bolo at me I was frightened.

Q: And when you ask her [sic] “Papa, bakit po?” what did he do?

A: Nothing, sir, he continued.

Q: When you said he continued, what do you mean? What did he do to you?

A: Because I was then at the door and was then about to go to the other room when he pulled me and embraced me.

Q: When you said he pulled you where were you pulled by the accused?

A: To the bed, sir.

Q: At the time you were being pulled and being embraced, what did you do?

A: I was resisting, sir.

Q: What happened after you said the accused was pulling you and embracing you and you were resisting? What
happened next?

A: Nothing, sir. I was not able to do anything because he embraced me.

Q: You said you were not able to evade him when he was embracing you, what did he do next to you?

A: He removed my clothes.

Q: What did you do when the accused removed your clothes?

A: I was pushing him.

Q: What happened when you were pushing him?

A: He again pointed the bolo and told me not to move or to shout.

Q: What did he do after he again threatened you?

A: Because I was very frightened, he forced me to do what he wanted me to do.

Q: Was the accused able to remove your clothes?

A: Yes, sir.

Q: What clothes?

A: Pajamas, sir.

Q: How about the accused?

A: His sando and shorts, sir

Q: What was your position at the time you said the accused was able to do it from you?

A: I was lying down, sir.

Q: Where were you lying down, on the bed or on the floor?

A: On the floor, sir.

Q: How did the accused rape you after removing your clothes?

A: He was forcing “yung ano nya sa ari ko.”

Q: Was he able to insert his penis to your private organ?

A: Yes, sir.

Q: What did you feel when your stepfather was able to insert his private organ to yours?

A: It was painful, sir.

Q: For how long was he on top of you?

A: Five to ten minutes, sir.

Q: What were you doing at the time your stepfather was doing it to you when he was inserting his private organ against
your will?

A: I was pushing him.

Q: What happened after you said you were pushing him?

A: Nothing, sir.

Q: And you said he was able to rape you and inserted his private organ to you, what did he do next after he was able to
insert your private organ to your vagina?
A: He was pumping me.

Q: When you said “pump”, will you explain?

A: He was “kinakadyot ako.”

Q: That was while he was on top of you?

A: Yes, sir.

Q: After pumping you, what did he do next?

A: He was kissing me, sir.

Q: When he was kissing you, what were you doing?

A: I was pushing his face, sir.

Q: What happened next?

A: Because I cannot do anything he was able to finish.

Q: Why were you able to say that he was able to finish?

A: Because when he removed his private organ from my private part, he wiped it.

Q: After he removed his private organ from your organ what did he do next?

A: He told me not to complain or else he would kill us.

Q: What did you feel by his threatening against you and your brothers and sisters that you would be killed?

A: I was frightened, sir.

Q: After threatening you that you and your brothers and sisters would be killed, what did he do next?

A: So he told me to go down.

Q: How about the accused, where was he?

A: He stayed inside.

Q: Where was your mother at that time?

A: She was in Dubai, sir.

Q: How about your grandmother, where was she?

A: She was in the market, sir.

Q: You said your brothers and sisters were not in your house, where were they?

A: They were outside the house. I do not know what were they doing outside the house.

Q: You said you went down, what did you do when you went down?
A: Because “diring-diri ako” I went inside the bathroom, sir.

Q: What did you do there?

A: I took a bath, sir.24

The Court is convinced that the accused did employ threat and intimidation to subjugate AAA’s will and break her
resistance. She categorically stated that he poked a bolo at her neck and threatened to kill her if she would make a noise
and resist his advances. Undoubtedly, fear and helplessness gripped her. To an innocent girl who was only 14 years old,
his menacing acts engendered in her a well-grounded fear that if she would resist or not yield to his bestial demands, he
would make good his threats. She was obviously cowed into submission by the real and present threat of physical harm
on her person. Obviously, she was silenced to do his bidding. Her submission was re-enforced by the fact that the
accused was her stepfather who exercised moral ascendancy and influence over her. When a victim is threatened with
bodily injury, as when the rapist is armed with a deadly weapon, such as a knife or bolo, such constitutes intimidation
sufficient to bring the victim to submission to the lustful desires of the rapist.25

In the present case, it appears that AAA chose to suffer the February 14, 1999 rape in silence had it not been for the
second attempt to defile her on December 30, 1999. After he mauled her when she resisted, she was compelled to seek
her aunt’s assistance. This was apparent from her testimony when she declared:

Fiscal Masa to Witness:

(Redirect Examination)

Q: You said that you were not able to report to anybody that you were raped by your stepfather because of that
threat[s] that your brothers and sister will be killed, why did you report or give statement to the police on January 1,
2000?

The Fiscal: May I manifest for the record, your Honor that the witness is crying.

A:  Because on December 30, he was again about to rape me but I resisted so he mauled me and poked a bolo at me
and told me that he will kill my aunt so the following day I went to San Pablo to my aunt, who is near to me, and told her
what happened and what he has done to me that he mauled me and will kill my aunt.

Q: And what did your aunt in San Pablo do after you confided to her what the accused did to you?

A: She immediately reported the incident to Sgt. Manaog.

Q: Do you know what Sgt. Manaog did after your aunt confided to him what happened to you?

A: He was arrested, sir.

xxx

Atty. Ingente:

Recross, your Honor.

Q: When you told the incident to your aunt you were also thinking of your brothers and sisters?

A: Yes, sir.
Q: And in fact perhaps at that time you were afraid that your aunt will report the incident to the police?

A: No, sir because at that time I was also prepared to report the incident.

Q: But you know that the accused made threats that he will kill your brothers and sister?

A: Yes, sir but I was then ready because I was thinking then that may be he was threatening me because he want to
rape me so I decided to file a complaint. And I was also thinking that how would he kill his own children?26

AAA’s failure to immediately report to anyone what she had suffered in the hands of her stepfather does not vitiate the
integrity of her claim. Apparently, the accused succeeded in instilling fear upon her young mind when he threatened to
kill her and her siblings should she say a word about the incident. Thus, paralyzed by the fear that he would make good
his threats, she remained silent and only broke it when he tried to repeat the sexual assault. The subsequent attack
brought her silence to the breaking point and forced her to come out in the open to prevent and avoid further assaults.
Delay in reporting an incident of rape is not an indication of a fabricated charge. Neither does it necessarily cast doubt on
the credibility of the complainant.27

Any insinuation of ill motive on the part of AAA in the filing of the rape case against her stepfather does not merit any
consideration. It is highly improbable that she would concoct a sordid tale of sexual abuse against the accused, whom
she called “Papa,” simply because she was reproved or censured for her irresponsible ways and was afraid that he would
punish her for getting pregnant by her boyfriend. Parental punishment is not enough reason for a young girl to falsely
accuse her stepfather of a crime so grave as rape. Reverence and respect for the elders are two values deeply ingrained
in Filipino children.28

Granting AAA indeed resented his stepfather, the Court does not necessarily cast doubt on AAA’s credibility as witness.
Motives, such as those arising from family feuds, resentment, or revenge, have not prevented the Court from giving, if
proper, full credence to the testimony of minor complainants29 who remained steadfast throughout their direct and
cross-examination.30 After all, ill motive is never an essential element of a crime. It becomes irrelevant and of no
significance where there are affirmative, nay, categorical declarations towards the culpability of the accused for the
felony. Well-entrenched is the doctrine which is founded on reason and experience that when the victim testifies that
she has been raped, and her testimony is credible, such testimony may be the sole basis of conviction.31 In this case,
there could not have been a more powerful testament to the truth than her public outpouring of her unspoken grief.

In an attempt at exculpation, the accused claims that it is difficult to commit the crime of rape inasmuch as AAA’s siblings
and grandmother were staying in the same house at Barangay Bitin, Municipality of Bay, Laguna.

The argument fails.

According to AAA, her siblings were all outside the house while her grandmother was doing an errand in the market
when the accused molested her. Granting arguendo that there were other people in the house when the rape was
committed, rapists are not deterred from committing their odious act by the presence of people nearby or the members
of the family.32 Lust, being a very powerful human urge, is, to borrow from People v. Virgilio Bernabe,33 “no respecter of
time and place.” Rape can be committed in even the unlikeliest places and circumstances and by the most unlikely
persons.34 The beast in a man bears no respect for time and place, driving him to commit rape anywhere - even in
places where people congregate, in parks, along the roadsides, in school premises, in a house where there are other
occupants, in the same room where other members of the family are also sleeping, and even in places which to many
would appear unlikely and high risk venues for its commission. Besides, there is no rule that rape can be committed only
in seclusion.35
In stark contrast to AAA’s firm declaration, the defenses of denial and alibi invoked by the accused rest on shaky grounds.
The accused insists that “the accusation is a lie”36 and claims that “I did not do that.”37 He avers that he could not have
committed the offense because he was preoccupied and was not in their house at Barangay Bitin, Bay, Laguna on the
date and time the alleged rape was perpetrated.

Judicial experience has taught this Court that denial and alibi are the common defenses in rape cases. Denial is an

intrinsically weak defense which must be buttressed with strong evidence of non-culpability to merit credibility.38 It is a
negative self-serving assertion that deserves no weight in law if unsubstantiated by clear and convincing evidence. The
barefaced denial of the charge by the accused cannot prevail over the positive and forthright identification of him as the
perpetrator of the dastardly act.

Alibi, on the other hand, is the weakest of all defenses for it can be easily contrived. For alibi to prosper, it is not enough
for the accused to prove that he was somewhere else when the crime was committed; he must likewise demonstrate
that it was physically impossible for him to have been at the scene of the crime at the time of its commission.39 In this
case, not a shred of evidence was adduced by the accused to substantiate his alibi.

A perusal of his own testimony discloses that he arrived at their house at Barangay Bitin, Bay, Laguna at past 9:00 o’clock
in the morning; that he had visitors who came to attend their town fiesta and they had a drinking spree; that after his
visitors and AAA left at past 12:00 o’clock noon, he took a slumber; that he woke up at around 7:00 o’clock in the evening
and asked AAA and her grandmother to prepare his things as he would return to Manila; and that he left for Manila at
3:30 o’clock in the morning of February 15, 1999.40 From the foregoing, it is clear that he was at home in the evening of
February 14, 1999. Alibi necessarily fails when there is positive evidence of the physical presence of the accused at the
crime scene.41 Taken in this light, the plausible and emphatic testimony of AAA must prevail.

Finally, the Court sustains the two courts below in imposing the penalty of reclusion perpetua on the accused. The
applicable provisions of the Revised Penal Code, as amended by Republic Act No. 8353 (effective October 22, 1997),
covering the crime of Rape are Articles 266-A and 266-B which provide:

“Article 266-A. Rape; When and How Committed.—Rape is committed:

1. By a man who shall have carnal knowledge of a woman under any of the following circumstances:

a. Through force, threat or intimidation;

xxx

Article 266-B. Penalties.—Rape under paragraph 1 of the next preceding article shall be punished by reclusion
perpetua.

Whenever the rape is committed with the use of a deadly weapon or by two or more persons, the penalty shall be
reclusion perpetua to death.

xxx

The death penalty shall also be imposed if the crime of rape is committed with any of the following
aggravating/qualifying 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 Information in Criminal Case No. 7383-2000-C specifically alleged that AAA was 14 years old at the time of the
commission of the rape. In proving her minority, the prosecution presented a birth certificate42 issued by the Office of
City Civil Registrar of San Pablo City showing that she was born on January 2, 1985. Hence, she was 14 years old when
she was raped by the accused on February 14, 1999. However, the courts below correctly noted that the qualifying
circumstance of her relationship with the accused as his stepdaughter was not alleged in the Information, although
proven during the trial and not even contested by the accused.43 This omission prevents the transformation of the crime
in its qualified form.

The twin requisites of minority of the victim and her relationship with the offender being special qualifying
circumstances, which increase the penalty as opposed to a generic aggravating circumstance which only affects the
period of the penalty, should be alleged in the information because of the right of the accused to be informed of the
nature and cause of the accusation against him.44 The Revised Rules on Criminal Procedure which took effect on
December 1, 2000, explicitly mandates that the information must state in ordinary and concise language the qualifying
and aggravating circumstances attending an offense. Although the crime of rape in this case was committed before the
effectivity of the new rules, it should be applied retroactively, as the same is favorable to an accused.45

The Court notes, however, that the Information also alleged that the accused committed the rape “while conveniently
armed with a bolo through force, violence and intimidation.” The prosecution was able to prove during trial his use of a
deadly weapon and threatening words which caused the victim to submit to his will for fear for her life and personal
safety.

When the accused commits rape with the use of a deadly weapon, the penalty is the range of two indivisible penalties of
reclusion perpetua to death. In this connection, Article 63 of the Revised Penal Code provides that when the law
prescribes a penalty composed of two indivisible penalties and there are neither mitigating nor aggravating
circumstances in the commission of the deed, the lesser penalty shall be applied.

The Court also sustains the monetary awards granted by the RTC and the CA in favor of AAA, except for the exemplary
damages which is increased from P25,000.00 to P30,000.00 in line with our ruling in People v. Gilbert Castro46 and
earlier cases.

Civil indemnity, which is actually in the nature of actual or compensatory damages, is mandatory upon the finding of the
fact of rape.47 Moral damages in rape cases should be awarded without need of showing that the victim suffered
trauma, with mental, physical, and psychological sufferings constituting the basis thereof. These are too obvious to still
require their recital by the victim at the trial.48

The award of exemplary damages is likewise called for because the rape was committed with the use of a deadly
weapon. In People v. Silverio Montemayor,49 the Court has stated that “exemplary damages are justified under Article
2230 of the Civil Code if there is an aggravating circumstance, whether ordinary or qualifying. Since the qualifying
circumstance of the use of a deadly weapon was present in the commission of the rapes subject of these cases,
exemplary damages x x x may be awarded to the offended party in each case.”

WHEREFORE, the July 31, 2008 Decision of the Court of Appeals in CA-G.R. CR-H.C. No. 00926 is hereby AFFIRMED except
as to the exemplary damages which is hereby increased from P25,000.00 to P30,000.00.
G.R. No. 175528. September 30, 2009.*

PO3 BENITO SOMBILON, JR., petitioner, vs. PEOPLE OF THE PHILIPPINES, respondent.

Criminal Law; Acts of Lasciviousness; Elements.—For an accused to be convicted of acts of lasciviousness under the
foregoing provision, the prosecution is burdened to prove the confluence of the following essential elements: (1) that the
offender commits any act of lasciviousness or lewdness; and (2) that it is done under any of the following circumstances:
(a) by using force or intimidation; (b) when the offended woman is deprived of reason or otherwise unconscious; or (c)
when the offended party is under twelve (12) years of age.

Same; Same; Words and Phrases; The term “lewd” is commonly defined as something indecent or obscene,
characterized by or intended to excite crude sexual desire.—In the case of Amployo v. People, 457 SCRA 282 (2005), the
Court expounded on the definition of the term lewd, thus: The term “lewd” is commonly defined as something indecent
or obscene; it is characterized by or intended to excite crude sexual desire. That an accused is entertaining a lewd or
unchaste design is necessarily a mental process the existence of which can be inferred by overt acts carrying out such
intention, i.e., by conduct that can only be interpreted as lewd or lascivious. The presence or absence of lewd designs is
inferred from the nature of the acts themselves and the environmental circumstances. What is or what is not lewd
conduct, by its very nature, cannot be pigeonholed into a precise definition. As early as U.S. v. Gomez we had already
lamented that—It would be somewhat difficult to lay down any rule specifically establishing just what conduct makes
one amenable to the provisions of article 439 of the Penal Code. What constitutes lewd or lascivious conduct must be
determined from the circumstances of each case. It may be quite easy to determine in a particular case that certain acts
are lewd and lascivious, and it may be extremely difficult in another case to say just where the line of demarcation lies
between such conduct and the amorous advances of an ardent lover.

Same; Same; Force and Intimidation; In cases of acts of lasciviousness, it is not necessary that intimidation be irresistible.
—In People v. Victor, 393 SCRA 472 (2002), the Court held that in cases of acts of lasciviousness, it is not necessary that
intimidation be irresistible. It being sufficient that some compulsion equivalent to intimidation annuls or subdues the
free exercise of the will of the offended party. Here, the victim was locked inside a windowless room together with her
aggressor who poked a gun at her forehead. Even a grown man would be paralyzed with fear if threatened at gunpoint,
what more the hapless victim who was only 15 years old when she was subjected to such atrocity.

Same; Same; Criminal Procedure; Pleadings and Practice; Qualifying Circumstances; Aggravating Circumstances; Right to
be Informed; It is now a requirement that the aggravating as well as the qualifying circumstances be expressly and
specifically alleged in the complaint or information, otherwise, they cannot be considered by the trial court in its
judgment, even, if they are subsequently proved during trial.—It is now a requirement that the aggravating as well as the
qualifying circumstances be expressly and specifically alleged in the complaint or information. Otherwise, they cannot be
considered by the trial court in its judgment, even, if they are subsequently proved during trial. A reading of the
Information shows that there was no allegation of any aggravating circumstance.

Same; Same; Same; Same; The 2000 Rules of Criminal Procedure is given retroactive application if it benefits the
accused.—In People v. Buayaban, 400 SCRA 48 (2003), the crime was committed and the Information was filed in 1990.
Still, the Court gave the 2000 Rules of Criminal Procedure retroactive application since it benefited the accused and
disregarded the generic aggravating circumstance of band because it was not alleged in the Information. The Court
explained, viz.: Section 8 simply provides that the information or complaint must state the designation of the offense
given by the statute and specify its qualifying and generic aggravating circumstances. With regard to Section 9, we held in
People vs. Nerio Suela that the use of the word “must” in said Section 9 indicates that the requirement is mandatory and
therefore, the failure to comply with sec. 9, Rule 110, means that generic aggravating circumstances, although proven at
the trial, cannot be appreciated against the accused if such circumstances are not stated in the information. In this case,
we cannot properly appreciate the ordinary aggravating circumstance of band in the commission of the crime since there
was no allegation in the information that “more than three armed malefactors acted together in the commission of the
crime.

Same; Same; Same; Same; Procedural Rules and Technicalities; 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.—As to the damages awarded, Article 2230 of the Civil Code provides that in criminal offenses,
exemplary damages as part of the civil liability may be imposed when the crime was committed with one or more
aggravating circumstances. Since the generic aggravating circumstance of taking advantage of public position was not
alleged in the Information against petitioner it cannot be appreciated in the imposition of the penalty. But as regards the
award of exemplary damages, in the case of People v. Catubig, 363 SCRA 621 (2001), the Court declined retroactive
application of the 2000 Rules of Criminal Procedure, to wit: 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. Thus, in accordance with the foregoing pronouncement, the Court affirms the CA’s award of
exemplary damages to the victim in the amount of P10,000.00.

Same; Same; Evidence; Damages; Moral Damages; Upon a finding of guilt of the accused for acts of lasciviousness, the
amount of 30,000.00 as moral damages may be further awarded to the victim in the same way that moral damages are
awarded to victims of rape even without need of proof because it is assumed that they suffered moral injury.—With
regard to the awarded moral damages in the amount of P10,000.00, the same should be increased to P30,000.00. In
People v. Solmoro, 393 SCRA 100 (2002), we declared that upon a finding of guilt of the accused for acts of
lasciviousness, the amount of P30,000.00 as moral damages may be further awarded to the victim in the same way that
moral damages are awarded to victims of rape even without need of proof because it is assumed that they suffered
moral injury. Considering the immeasurable pain and anguish that the victim had to suffer in the hands of the petitioner;
the trauma that she had to endure even after the incident; and the sexual perversity of petitioner, who is a police officer,
the award of moral damages in the amount of P30,000.00 is proper.

PETITION for review on certiorari of the decision and resolution of the Court of Appeals.

The facts are stated in the opinion of the Court.

Leopoldo L. Cagatin for petitioner.

The Solicitor General for respondent.

LEONARDO-DE CASTRO, J.:

This resolves the petition for review which seeks to annul and set aside the following rulings of the Court of Appeals (CA)
in C.A. C.R. No. 27729: a) the Decision1 dated July 28, 2005 which affirmed with modification the decision2 dated May
13, 2003 of the Regional Trial Court of Davao City (RTC), convicting petitioner of acts of lasciviousness; and b) the
Resolution3 dated September 22, 2006 denying petitioner’s Motion for Reconsideration of the aforesaid Decision.

The facts found during trial, as succinctly stated by the CA, are as follows:

“The facts found during the trial reveal that on or about August 15, 1998, AAA, a fifteen (15)-year old minor, was
investigated by Appellant at the Calinan Police Station, Davao City in connection with a complaint for Theft filed by a
certain Aileen Dagoc.
AAA alleged that Appellant, in conducting the investigation, took her inside a room and locked it. She testified that the
room had no window but had a cot, a table, and a clothesline where some clothes were hanged. She claimed that
Appellant pointed a gun at her, with the end of the barrel touching her forehead and pushed her with it, causing her
head to violently bang against the wall, and asked her: “Did you steal the necklace?” She answered that she did not.
Appellant then took an electric wire from a drawer and inserted its male plug to a socket. She was ordered to place her
two hands on top of the table where her fingers were electrocuted with the end of the wire. She was again asked the
same question, which she kept answering in the negative. Subsequently, she was asked: “Dalaga ka na ba?’ (Are you a
woman now?), and was told: “I am single too.” Simultaneously, she was touched all over her body including her breasts,
her belly, and her private parts. She was also kissed on her cheek. She struggled to resist the sexual advances but
Appellant prevailed. She claimed that they were inside the room for more than one (1) hour.

Thereafter, they went out of the room where Appellant announced to P03 Danilo Mendez and Aileen Dagoc that she had
already admitted having stolen the necklace. Pale, AAA was trembling and crying; her hair disheveled, her dress wet. She
also had bruises on her forehead.”

The police officers allowed AAA and her mother to go home on the condition that they would pay the value of the
necklace. Because of AAA’s condition, AAA’s mother brought her daughter to the Medical Clinic of St. Luke where AAA
was examined by Dr. Manuel Garcia, Sr.4 Dr. Garcia gave AAA a tranquilizer to calm down the latter who was trembling
and incoherent.5 At first, AAA could not answer the doctor when she was asked what happened to her. Later, upon
regaining her composure, she revealed that she was electrocuted and sexually molested by petitioner.6 The Medical
Certificate7 issued by Dr. Garcia disclosed the following injuries:

“1. Slight contusion over occiput region.

2. Slight contusion over center area of forehead.

3. Multiple slight contusions of fingers of bilateral hands.

4. Multiple slight contusions of bilateral breast areas.

5. Slight body tremors.

Diagnosis: Slight Physical Injuries

In an Information8 dated August 23, 1999, petitioner was charged with the crime of Acts of Lasciviousness com mitted as
follows:

“The undersigned accuses the above-named accused of the crime of Acts of Lasciviousness, under Art. 336, in relation to
Art. 344 of the Revised Penal Code, upon the instance of the complainant AAA, who is 15 years old, whose affidavit is
hereto attached to form part of this Information. The crime is committed as follows:

That on or about August 14, 1998, in the City of Davao, Philippines, and within the jurisdiction of this Honorable Court,
the above-mentioned accused, motivated by lewd design, willfully, unlawfully, and feloniously upon the person of AAA,
by then and there embracing, mashing the breast, and touching the private part, against her will.

CONTRARY TO LAW.”

Upon arraignment, petitioner pleaded “not guilty.” Trial ensued thereafter.

On May 13, 2003, after trial on the merits, the RTC rendered a decision finding petitioner guilty of acts of lasciviousness
with the aggravating circumstance of petitioner’s taking advantage of his public position and sentenced him to six (6)
months of arresto mayor, as minimum, to five (5) years, four (4) months and twenty-one (21) days of prision correccional,
as maximum. The dispositive portion of the Decision reads:

“For the foregoing judgment is hereby rendered, finding accused PO3 Benito Sombilon, GUILTY beyond reasonable doubt
of the crime of Acts of Lasciviousness, under Article 366 of the Revised Penal Code, and is hereby sentenced to suffer
imprisonment under the Indeterminate Sentence Law from Six (6) months of Arresto Mayor, as minimum to Five (5)
years, Four (4) months and Twenty-one (21) days of Prision Correccional, as maximum and directed to pay private
complainant AAA the following:

a.) by way of moral Damages, the amount of Ten Thousand Pesos (PhP10,000.00); and

b.) by way of Exemplary Damages, the amount of ten Thousand Pesos (PhP10,000.00).”9

From the above decision, petitioner interposed an appeal to the CA, which was docketed as CA-G.R. CV No. 40419.

On July 28, 2005, the CA rendered the herein challenged Decision affirming with modification the RTC’s judgment of
conviction. Appreciating the aggravating circumstance of taking advantage of public position which was adequately
established during the trial, the CA increased the maximum penalty imposed against petitioner to its maximum period of
six years of prision correccional. The dispositive portion of the Decision reads:

“WHEREFORE, the Decision of the Regional Trial Court, Br. 8, Davao City in Criminal Case No. 43, 810-99 is hereby
AFFIRMED with MODIFICATION. Appellant PO3 Benito Sombilon, as found guilty beyond reasonable doubt of the crime
of acts of lasciviousness, defined and penalized under article 336 of the Revised Penal Code, is hereby sentenced to
suffer the indeterminate penalty of 6 months of arresto mayor as minimum, to 6 years of prision correccional, as
maximum. Appellant is likewise ordered to pay the victim, AAA, the amount of Php10,000.00 as moral damages and
another Php10,000.00 as exemplary damages.

With costs.

Thus, petitioner filed the instant petition, with the following allegations:

THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING THE TRIAL COURT THAT THE ACCUSED IS GUILTY OF THE
CRIME CHARGED BEYOND REASONABLE DOUBT;

II

ASSUMING BUT NOT ADMITTING, THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING THE APPRECIATION OF
THE AGGRAVATING CIRCUMSTANCE OF TAKING ADVANTAGE OF HIS PUBLIC POSITION FOR FAILURE TO ALLEGE IN THE
INFORMATION;

III

THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING THE AWARD OF DAMAGES.11

Petitioner contends that the CA erred in affirming his conviction for acts of lasciviousness. Even as he admits having
merely touched the victim, petitioner argues that the act of touching did not constitute lewdness. At most, he could only
be convicted of unjust vexation. Petitioner likewise asserts that while the victim was being touched, the latter tried to
cover her body with her arms. Lastly petitioner posits that the police station does not favor the perpetration of the crime
of acts of lasciviousness.
Petitioner’s contention deserves scant consideration.

The crime of acts of lasciviousness as punished under Article 336 of the Revised Penal Code provides:

“ART. 336. Acts of lasciviousness.—Any person who shall commit any act of lasciviousness upon other persons of
either sex, under any of the circumstances mentioned in the preceding article, shall be punished by prision correccional.”

For an accused to be convicted of acts of lasciviousness under the foregoing provision, the prosecution is burdened to
prove the confluence of the following essential elements: (1) that the offender commits any act of lasciviousness or
lewdness; and (2) that it is done under any of the following circumstances: (a) by using force or intimidation; (b) when
the offended woman is deprived of reason or otherwise unconscious; or (c) when the offended party is under twelve (12)
years of age.12

In the case of Amployo v. People,13 the Court expounded on the definition of the term lewd, thus:

“The term “lewd” is commonly defined as something indecent or obscene; it is characterized by or intended to excite
crude sexual desire. That an accused is entertaining a lewd or unchaste design is necessarily a mental process the
existence of which can be inferred by overt acts carrying out such intention, i.e., by conduct that can only be interpreted
as lewd or lascivious. The presence or absence of lewd designs is inferred from the nature of the acts themselves and the
environmental circumstances. What is or what is not lewd conduct, by its very nature, cannot be pigeonholed into a
precise definition. As early as U.S. v. Gomez we had already lamented that—

It would be somewhat difficult to lay down any rule specifically establishing just what conduct makes one amenable
to the provisions of article 439 of the Penal Code. What constitutes lewd or lascivious conduct must be determined from
the circumstances of each case. It may be quite easy to determine in a particular case that certain acts are lewd and
lascivious, and it may be extremely difficult in another case to say just where the line of demarcation lies between such
conduct and the amorous advances of an ardent lover.”

Undoubtedly, petitioner committed acts which fall within the above described lascivious conduct. It cannot be viewed as
mere unjust vexation as petitioner would have the Court do. The intention of petitioner was intended neither to merely
annoy or irritate the victim nor to force her to confess the theft. He could have easily achieved that when he
electrocuted the latter. Petitioner intended to gratify his sexual desires.

As found by the RTC and affirmed by the CA, petitioner’s acts of kissing the victim, fondling her breasts and touching her
private parts constitute lascivious conduct intended to quench his salacious desire. Petitioner’s lewd intent was betrayed
when he asked AAA, “Dalaga ka na ba?” as a prelude to his lustful advances on the victim, and thereafter conveyed to
her that “I am single too.” We quote with approval the CA’s ratiocination:

“Undeniably, appellant committed lewd acts against AAA. “Lewd” is defined as obscene, lustful, indecent, and lecherous.
It signifies that form of immorality which has relation to moral impurity; or that which is carried on a wanton manner.
The evidence shows that appellant committed lewd acts against AAA when he touched her “all over her body” which
includes mashing her breasts, touching her private parts, and kissing her on the cheek. These acts were clearly done with
lewd designs as appellant even previously asked AAA, as if it was a prelude for things to come, “Dalaga ka na ba?” and
thereafter conveyed to her that “he is single too.”14

The fact that the victim tried to cover her body with her arms does not negate petitioner’s lascivious conduct. Petitioner
succeeded in fondling the victim’s breasts intense enough to cause multiple slight contusions of bilateral breast areas.

As aptly observed by the CA, petitioner employed force and intimidation against AAA:
“Moreover, appellant employed force and intimidation when he committed these acts on AAA. In fact, as found by the
trial court, appellant pointed a gun at the forehead of AAA as evidenced by the bruises on her forehead. Further, the
medical Certificate shows that AAA suffered slight physical injuries which include “multiple slight contusion of bilateral
breast areas” which supports AAA’s claim.”15

In People v. Victor,16 the Court held that in cases of acts of lasciviousness, it is not necessary that intimidation be
irresistible. It being sufficient that some compulsion equivalent to intimidation annuls or subdues the free exercise of the
will of the offended party. Here, the victim was locked inside a windowless room together with her aggressor who poked
a gun at her forehead. Even a grown man would be paralyzed with fear if threatened at gunpoint, what more the hapless
victim who was only 15 years old when she was subjected to such atrocity.

Petitioner’s assertion that the locus criminis i.e., the police station makes it unlikely for him to commit the crime of acts
of lasciviousness is specious. The presence of other policemen on duty and of the victim’s mother outside the room
where the incident took place does not render commission of the offense impossible. It has been shown that there was a
room in the precinct which, except for two doors which could be locked, was totally enclosed.17 During the commission
of the acts of lasciviousness, petitioner and AAA were the only persons inside the room. Lust, as we have often held, is
no respecter of either place or time.18

As to the appreciation of the aggravating circumstance of taking advantage of public position, petitioner points out that
said circumstance was not alleged in the information. The Solicitor General shares the same view.

Sections 8 and 9 of Rule 110 of the Revised Rules of Criminal Procedure, which took effect on December 1, 2000,
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.”

Clearly, it is now a requirement that the aggravating as well as the qualifying circumstances be expressly and
specifically alleged in the complaint or information. Otherwise, they cannot be considered by the trial court in its
judgment, even, if they are subsequently proved during trial.19 A reading of the Information shows that there was no
allegation of any aggravating circumstance.

In People v. Buayaban,20 the crime was committed and the Information was filed in 1990. Still, the Court gave the 2000
Rules of Criminal Procedure retroactive application since it benefited the accused and disregarded the generic
aggravating circumstance of band because it was not alleged in the Information. The Court explained, viz.:

“Section 8 simply provides that the information or complaint must state the designation of the offense given by the
statute and specify its qualifying and generic aggravating circumstances. With regard to Section 9, we held in People vs.
Nerio Suela that the use of the word “must” in said Section 9 indicates that the requirement is mandatory and therefore,
the failure to comply with sec. 9, Rule 110, means that generic aggravating circumstances, although proven at the trial,
cannot be appreciated against the accused if such circumstances are not stated in the information.
In this case, we cannot properly appreciate the ordinary aggravating circumstance of band in the commission of the
crime since there was no allegation in the information that “more than three armed malefactors acted together in the
commission of the crime.”

Here, the crime was committed in 1998, the generic aggravating circumstance of taking advantage of public position was
not alleged in the information. As such, it cannot be appreciated as an aggravating circumstance. Consequently, the
penalty imposed must be modified.

Section 1 of the Indeterminate Sentence Law21 (ISL) states that (i)n imposing a prison sentence for an offense punished
by the Revised Penal Code, or its amendments, the court shall sentence the accused to an indeterminate sentence the
maximum term of which shall be that which, in view of the attending circumstances, could be properly imposed under
the rules of the said Code, and the minimum which shall be within the range of the penalty next lower to that prescribed
by the Code for the offense. Under Article 366 of the Revised Penal Code, the penalty for acts of lasciviousness is prision
correccional. Since no aggravating or mitigating circumstance attended the commission of the offense in this case, the
penalty should be applied in its medium period, the duration of which is two (2) years, four (4) months and one (1) day
to four (4) years and two months, as maximum. The minimum shall be within the range of the penalty next lower in
degree which is arresto mayor, with the duration of one (1) month and one (1) day to six (6) months.

Applying the ISL, the proper penalty would be imprisonment of six (6) months of arresto mayor as minimum to four (4)
years and two (2) months of prision correccional as maximum.22

As to the damages awarded, Article 2230 of the Civil Code provides that in criminal offenses, exemplary damages as part
of the civil liability may be imposed when the crime was committed with one or more aggravating circumstances. Since
the generic aggravating circumstance of taking advantage of public position was not alleged in the Information against
petitioner it cannot be appreciated in the imposition of the penalty. But as regards the award of exemplary damages, in
the case of People v. Catubig,23 the Court declined retroactive application of the 2000 Rules of Criminal Procedure, to
wit:

“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.”

Thus, in accordance with the foregoing pronouncement, the Court affirms the CA’s award of exemplary damages to the
victim in the amount of P10,000.00.

With regard to the awarded moral damages in the amount of P10,000.00, the same should be increased to P30,000.00.
In People v. Solmoro24 we declared that upon a finding of guilt of the accused for acts of lasciviousness, the amount of
P30,000.00 as moral damages may be further awarded to the victim in the same way that moral damages are awarded to
victims of rape even without need of proof because it is assumed that they suffered moral injury. Considering the
immeasurable pain and anguish that the victim had to suffer in the hands of the petitioner; the trauma that she had to
endure even after the incident; and the sexual perversity of petitioner, who is a police officer, the award of moral
damages in the amount of P30,000.00 is proper.

WHEREFORE, the petition is hereby denied and the Decision dated July 28, 2005 of the Court of Appeals finding
petitioner PO3 Benito Sombilon GUILTY of the crime of acts of lasciviousness under Article 336 of the Revised Penal Code
is AFFIRMED with Modification that he is sentenced to suffer an indeterminate penalty of imprisonment of six (6) months
of arresto mayor as minimum to four (4) years and two (2) months of prision correccional as maximum, and to pay the
victim the amount of P30,000 as moral damages and P10,000.00 as exemplary damages.
SO ORDERED.

Puno (C.J., Chairperson), Carpio, Corona and

Bersamin, JJ., concur.

Judgment affirmed with modification.

Notes.—If rape can be committed in places where people congregate, even in the same room where other members of
the family are sleeping, there is less reason to believe that other people sleeping in the same room can serve as a
deterrent for the commission of lascivious acts. (People vs. Jimenez, 356 SCRA 508 [2001])

There are material differences between a criminal action and a civil complaint for quasi-delict arising from the same act
of lasciviousness—a judgment of conviction or acquittal in the criminal case cannot at all be invoked as being one of res
judicata in the independent suit for damages. (London vs. Baguio Country Club Corporation, 390 SCRA 618 [2002]).
G.R. No. 136722. April 12, 2000.*

INDUSTRIAL INSURANCE COMPANY, INC., petitioner, vs. PABLO BONDAD and LIGORIO BONDAD, respondents.

Remedial Law; Appeals; It is jurisprudentially settled that, as a rule, the jurisdiction of the Court is limited to a review of
errors of law allegedly committed by the appellate court.—Questions regarding the cause of the accident and the
persons responsible for it are factual issues which we cannot pass upon. It is jurisprudentially settled that, as a rule, the
jurisdiction of this Court is limited to a review of errors of law allegedly committed by the appellate court. It is not bound
to analyze and weigh all over again the evidence already considered in the proceedings below.

Civil Law; Attorney’s Fees; Attorney’s fees may be awarded by a court if one who claims it is compelled to litigate with
third persons or to incur expenses to protect one’s interests by reason of an unjustified act or omission on the part of the
party from whom it is sought.—Attorney’s fees may be awarded by a court if one who claims it is compelled to litigate
with third persons or to incur expenses to protect one’s interests by reason of an unjustified act or omission on the part
of the party from whom it is sought, x x x In impleading respondents, petitioner clearly acted in wanton disregard of facts
that were as obvious then as they are now. To repeat, even a cursory examination of the police investigation report and
other pertinent data at the time would show that there was no reason to implead respondents. The carelessness and
lack of diligence of petitioner destroy its claim of good faith. Accordingly, the award of attorney’s fees should be
sustained.

Same; Damages; Requisites in order that the award of moral damages may be sustained.—In the same vein, we affirm
the award of moral damages. To sustain this award, it must be shown that (1) the claimant suffered injury, and (2) such
injury sprung from any of the cases listed in Articles 2219 and 2220 of the Civil Code. It is not enough that the claimant
alleges mental anguish, serious anxiety, wounded feelings, social humiliation, and the like as a result of the acts of the
other party. It is necessary that such acts be shown to have been tainted with bad faith or ill motive.

Same; Same; A person’s right to litigate, as a rule, should not be penalized; Right must be exercised in good faith.—The
Court affirms the award of moral damages, exemplary damages, attorney’s fees and litigation expenses. The facts of this
case clearly show that petitioner was motivated by bad faith in impleading respondents. Indeed, a person’s right to
litigate, as a rule, should not be penalized. This right, however, must be exercised in good faith.

PETITION for review on certiorari of a decision of the Court of Appeals.

The facts are stated in the opinion of the Court.

Conrado R. Mangahas & Associates for petitioner.

Nelson Cordero Belarmino for private respondents.

PANGANIBAN, J.:

No person should be penalized for the exercise of the right to litigate. This right, however, must be exercised in good
faith. Absence of good faith in the present case is shown by the fact that petitioner clearly has no cause of action against
respondents but it recklessly filed suit anyway and wantonly pursued pointless appeals, thereby causing the latter to
spend valuable time, money and effort in unnecessarily defending themselves, incurring damages in the process.

The Case

Before us is a Petition for Review under Rule 45 assailing the July 29, 1998 Decision1 of the Court of Appeals2 (CA), as
well as its December 4, 1998 Resolution in CA-GR CR CV No. 50573. In its Decision, the CA ruled:3
“WHEREFORE, the Decision appealed from is AFFIRMED with the MODIFICATION that the award for attending hearings in
the amount of P10,500.00 is deleted; and the award for moral and exemplary damages is reduced to P50,000.00 and
P10,000.00, respectively.”

The trial court ruling4 modified by the CA reads as follows:

“WHEREFORE, from all the foregoing findings, the Court hereby renders judgment as follows:

1. Ordering the defendants D.M. Transit Corporation, D.M. Consortium, Inc. and Eduardo Diaz y Mendoza jointly and
severally, to pay plaintiff Industrial Insurance Co., Inc.:

(a) The sum of P29,800.00 representing the amount it had to pay to Grace Ladaw Morales under its Insurance Policy No.
00857, with interest thereon at the legal rate from April 12, 1985 until fully paid;

(b) The sum of P2,000 as litigation and adjustment expenses; and

(c) The sum of P15,000.00 as and for attorney’s fees;

2. Ordering the plaintiff Industrial Insurance Co., Inc., to pay to the defendants-counterclaimants Pablo Bondad and
Ligorio Bondad jointly and severally:

(a) The sum of P15,000.00 representing their attorney’s fees, and P6,300.00 as appearance fees;

(b) The sum of P10,500.00 representing their expenses for the twenty-one hearings consisting of jeepney hire and meals;

(c) The sum of P75,000.00 in the concept of moral damages for their having been recklessly and without basis being
impleaded by the plaintiff inspite of the clear language in the Traffic Investigation Report (Exhibit “1-A”) submitted by Pfc.
Agapito Domingo; and

(d) The sum of P25,000.00 by way of exemplary damages.

3. Ordering the cross-defendants jointly and severally to pay the cross-claimants Bondads the sum of P8,000.00
representing the cost of repairs of the jeepney, with interest at the legal rate from April 2, 1985 until fully paid.

4. Dismissed for lack of merit are:

(a) the cross-claim against the Bondads;

(b) the third party complaint against the GSIS;

(c) the cross-claims against the GSIS; and

(d) the counterclaim interposed by the defendants except that of the Bondads.

5. The claim made by plaintiff Grace Ladaw Morales is likewise dismissed for lack of evidence in support thereof. She is
not held liable in favor of Pablo Bondad and Ligorio Bondad for lack of proof that she authorized the filing of this suit.”5

The December 4, 1998 CA Resolution denied petitioner’s Motion for Reconsideration.

The Facts

The present Petition finds its roots in an incident which involved three vehicles: a Galant Sigma car driven by Grace
Ladaw Morales, a packed passenger jeepney originally driven by Ligorio Bondad, and a DM Transit Bus driven by Eduardo
Mendoza.
Pfc. Agapito L. Domingo of the Southern Police District investigated the accident and filed the following report:

“Investigation disclosed that shortly before the accident took place, V-3 (D.M. Transit Bus) was traveling along South
Expressway coming from Alabang towards the general direction of Makati. When upon reaching a place at KM Post 14 [in
front] of Merville Subd., said V-3 hit and bumped the rear left side portion of V-l [Bondads’ jeepney] which was then at
[stop] position due to flat tire[;] due to the severe impact cause by V-3 it swerved to the left and collided with the right
side portion of V-2 [Morales’ car] which was travelling [in] the same direction taking the innermost lane[;] V-2 was
dragged to its left side and hit the concrete wall. All vehicles incurred damages and sustaining injuries to the occupant of
V-1 and the passengers of V-3. Victims were brought to the hospital for treatment.”6

Before the Regional Trial Court of Makati on April 12, 1985, Petitioner Industrial Insurance Company, Inc. and Grace
Ladaw Morales filed a Complaint for damages7 against DM Transit Corporation, Eduardo Diaz, Pablo Bondad and Ligorio
Bondad. Petitioner contended that it had paid Morales P29,800 for the damages to her insured car. It also asserted that
the December 17, 1984 accident had been caused “solely and proximately” by the “joint gross and wanton negligence,
carelessness and imprudence of both defendant drivers Eduardo Diaz y Mendoza and Ligorio Bondad y Hernandez, who
failed to exercise and observe the diligence required by law in the management and operation of their respective
vehicles and by their defendant employers; D.M. Transit Corporation and Pablo Bondad, respectively, for their failure to
exercise the diligence required of them by law in the selection and supervision of their employees including their
aforementioned involved drivers.”8

On June 6, 1985, Respondents Pablo and Ligorio Bondad filed their Answer9 denying any responsibility or liability to
petitioner and Morales. They asserted that their vehicle was on full stop because of a flat tire. Thus, it was the bus which
hit Morales’ car.10 In their Counterclaim, they contended that petitioner had acted in bad faith in impleading them and
that, contrary to its allegation, no prior demand had been made upon them.11

In its October 14, 1991 Decision, the trial court exculpated the Bondads and ordered petitioner to pay them actual, moral
and exemplary damages, as well as attorney’s fees.

Petitioner appealed to the Court of Appeals, which affirmed the ruling of the trial court with modification.

Hence, this Petition for Review.12

The CA Ruling

The appellate court debunked petitioner’s assertion that it had a cause of action against the Bondads, whose negligence
was allegedly the proximate cause of the damage to the insured vehicle.

“The records are clear, however, that soon after the D.M. Transit Bus hit the jeepney of the defendant Bondad, the bus
swerved to the left hitting the car of plaintiff Morales. This fact was supported by the investigation report made by Pfc.
Agapito L. Domingo of the Southern Police District (Exh. “A”) as well as the testimony of defendant Ligorio Bondad which
was supported by photographs of defendant Bondad’s jeepney which were taken immediately after the incident. (Exh.
“3”) It was shown that the jeepney remained at the right shoulder of the expressway (northbound) even after it had
been hit forward from its position as a result of the impact. According to Ligorio Bondad, when he noticed that his tire
was flat, he slowed down and drove towards the rightmost lane of the expressway with great difficulty until he was able
to stop at the right shoulder of the road. (TSN, pp. 55-62, March 21, 1989) This was consistent with the affidavit he had
made at the Traffic Bureau Station in Fort Bonifacio on the same day of the accident, December 17, 1984. (Exh. “2-A”)

“Proximate cause is that which, in natural and continuous sequence, unbroken by an efficient intervening cause,
produces injury without which the result would not have occurred. (Sabena Belgian World Airline, 255 SCRA 38; Pilipinas
Bank vs. Court of Appeals, 234 SCRA 435) As borne out by the evidence in this case, the proximate cause of the damage
to the car of plaintiff Morales was the negligence of the driver of the DM Transit bus. Plaintiff-appellant had no valid
cause of action against defendants Bondad.”

The CA, however, reduced the lower court’s award of damages to the Bondads, ratiocinating as follows:

“We agree with the trial court when it granted the counter-claim of defendants Bondad. The plaintiff-appellant insurance
company did not verify the facts before impleading the Bondads in this action for damages. The trial court noted that
plaintiff-appellant failed to even make a formal demand from the defendants Bondad before it filed the present case. As
stated by the trial court in the aforequoted decision, had a formal demand been made by the plaintiffs on the Bondads,
matters could have been clarified. As it were, the Bondads had to come to Makati from Alaminos every time this case
was set for hearing and not only suffered inconvenience but incurred expenses, particularly for attorney’s fees.

“We, however, believe that the expenses for attending the hearings should be deleted, the same not having been
sufficiently proven. Likewise, moral and exemplary damages should be reduced to the more reasonable amounts of
P50,000.00 and P10,000.00, respectively.”

Issues

In its Memorandum,13 petitioner presents the following issues for resolution:

“A) Whether or not the assailed decision and resolution of the Honorable Court of Appeals were scrutinized closely with
the legal aspect of law, Articles 2202, 2203, 2219 and 2220 of the Civil Code, in light of the evidence presented in making
its decision and its resolution.

“B) Whether or not the Honorable Court of Appeals with due respect, went out of the “path of law” and disregarded past
precedents applicable to the case at bar.”

In the main, the core issue is the propriety of the award of moral and exemplary damages, as well as attorney’s fees, to
the respondents. We shall also discuss a preliminary matter: the cause of the accident.

The Court’s Ruling

The Petition is not meritorious.

Preliminary Issue:

Cause of Accident

Petitioner insists that the negligence of Ligorio and Pablo Bondad was the proximate cause of the accident that damaged
the insured vehicle of Grace Ladaw Morales.

This argument deserves scant consideration. Questions regarding the cause of the accident and the persons responsible
for it are factual issues which we cannot pass upon. It is jurisprudentially settled that, as a rule, the jurisdiction of this
Court is limited to a review of errors of law allegedly committed by the appellate court. It is not bound to analyze and
weigh all over again the evidence already considered in the proceedings below.14

True, there are instances when this Court may review factual issues,15 but petitioner has failed to demonstrate why his
case falls under any of them. There is no contrariety between the findings of the trial court and those of the CA as to
what and who had caused the December 17, 1984 accident. We find no reason to modify or reverse both courts’ finding
that the mishap was caused by the negligence of Eduardo Diaz, the bus driver.

Main Issue:
Award of Damages and Attorney’s Fees

In justifying the award of attorney’s fees and other litigation expenses, the appellate court held that respondents were
compelled to litigate an unfounded suit because of petitioner’s negligence and lack of prudence in not verifying the facts
before filing this action. In affirming the award of moral damages, it accepted the trial court’s justification that
respondents had “been recklessly and without basis x x x impleaded by the plaintiff in spite of the clear language in the
Traffic Investigation Report x x x submitted by Pfc. Agapito Domingo.”16

We agree.

Attorney’s fees may be awarded by a court if one who claims it is compelled to litigate with third persons or to incur
expenses to protect one’s interests by reason of an unjustified act or omission on the part of the party from whom it is
sought.17

In this case, the records show that petitioner’s suit against respondents was manifestly unjustified. In the first place, the
contact between the vehicles of respondents and of Morales was completely due to the impact of the onrushing bus.
This fact is manifest in the police investigation report and, significantly, in the findings of facts of both lower courts.

Moreover, even a cursory examination of the events would show that respondents were not even remotely the cause of
the accident. Their vehicle was on the shoulder of the road because of a flat tire. In view of their emergency situation,
they could not have done anything to avoid getting hit by the bus. Verily, an ordinary person has no reason to think that
respondents could have caused the accident. It is difficult to imagine how petitioner could have thought so.

More significantly, petitioner knew that respondents were not the cause of the accident. This is evident from its failure to
even make a prior formal demand on them before initiating the suit. Indeed, the cause of the accident was the
negligence of the DM Transit bus driver. In this light, we agree with the following findings of the trial court:

“It is the Court’s findings that the D.M. Transit Bus in question was recklessly engaged in a race with a Baliuag Transit Bus
and tried to outrun the former by using the shoulder of the road, a tactic that is very common along the South
Expressway. Unfortunately for the D.M. Transit Bus, defendant Pablo Bondad’s jeepney was at a stop at the shoulder
along the path to be taken by the erring bus[;] it was not parked, but was at an emergency stop, the emergency being a
flat tire. The consequence of this rash action was the accident to the Bondad jeepney and subsequently to the Lancer car
owned and operated by one Grace Morales Ladaw which vehicle was pinned by the D.M. Transit to the concrete island
dividing the road. There can be no question that the driver of the D.M. Transit Bus was at fault for the accident.

“It is further the Court’s finding that the plaintiffs have absolutely no cause of action against the Bondads. The latter’s
jeepney never got into contact with Ms. Morales’ car. While it is true that before the D.M. Transit Bus hit Ms. Morales car,
it had gotten involved in an accident with the Bondad jeepney[;] it is equally true that at the time of the accident the
Bondad jeepney was at an emergency stop. This fact was obvious not only from the scene of the accident but also from
the police investigation report. There was no need to implead the Bondads as defendants, and if the jeepney had in any
way caused, or contributed to, the accident, it could very well be impleaded by the D.M. Transit Bus operator. Worse, no
demand for payment was ever made by the plaintiffs on the Bondads. Had a formal demand been made by the plaintiffs
on the Bondads, the latter’s role could have been clarified. As it is, they had to face a lawsuit and were constrained to
come all the way to Makati from Alaminos for not to do so could place them in a situation where judgment may be
rendered against them.”18

In impleading respondents, petitioner clearly acted in wanton disregard of facts that were as obvious then as they are
now. To repeat, even a cursory examination of the police investigation report and other pertinent data at the time would
show that there was no reason to implead respondents. The carelessness and lack of diligence of petitioner destroy its
claim of good faith. Accordingly, the award of attorney’s fees should be sustained.

In the same vein, we affirm the award of moral damages. To sustain this award, it must be shown that (1) the claimant
suffered injury, and (2) such injury sprung from any of the cases listed in Articles 2219 and 2220 of the Civil Code. It is not
enough that the claimant alleges mental anguish, serious anxiety, wounded feelings, social humiliation, and the like as a
result of the acts of the other party. It is necessary that such acts be shown to have been tainted with bad faith or ill
motive.19

In the case at bar, it has been shown that the petitioner acted in bad faith in compelling respondents to litigate an
unfounded claim. As a result, Respondent Ligorio Bondad “could no longer concentrate on his job.” Moreover, Pablo
Bondad became sick and even suffered a mild stroke. Indeed, respondents’ anxiety is not difficult to understand. They
were innocently attending to a flat tire on the shoulder of the road; the next thing they knew, they were already being
blamed for an accident. Worse, they were forced to commute all the way from Laguna to Makati in order to attend the
hearings. Under the circumstances of this case, the award of moral damages is justified.

Likewise, we affirm the award of exemplary damages because petitioner’s conduct needlessly dragged innocent
bystanders into an unfounded litigation. Indeed, exemplary damages are imposed by way of example or correction for
the public good, in addition to moral, temperate, liquidated or compensatory damages.20

In sum, the Court affirms the award of moral damages, exemplary damages, attorney’s fees and litigation expenses. The
facts of this case clearly show that petitioner was motivated by bad faith in impleading respondents. Indeed, a person’s
right to litigate, as a rule, should not be penalized. This right, however, must be exercised in good faith.21

One final note. Respondents pray that the amount of actual, moral and exemplary damages awarded by the trial court be
reinstated.22 We cannot do so in this case because they did not appeal the CA Decision. Jurisprudentially, they are
deemed to be satisfied with it and thus cannot be allowed to attack it belatedly in their Memorandum.

WHEREFORE, the Petition is hereby DENIED and the assailed Decision AFFIRMED. Double costs against petitioner.

SO ORDERED.
G.R. No. 158996. November 14, 2008.*

SPOUSES FREDELICTO FLORES (deceased) and FELICISIMA FLORES, petitioners, vs. SPOUSES DOMINADOR PINEDA and
VIRGINIA SACLOLO, and FLORENCIO, CANDIDA, MARTA, GODOFREDO, BALTAZAR and LUCENA, all surnamed PINEDA,
as heirs of the deceased TERESITA S. PINEDA, and UNITED DOCTORS MEDICAL CENTER, INC., respondents.

Civil Law; Negligence; Medical Negligence; A medical negligence is a type of claim to redress a wrong committed by a
medical professional, that has caused bodily harm to or the death of a patient; Elements Involved in a Medical
Negligence Case; A physician is expected to use at least the same level of care that any other reasonably competent
doctor would use under the same circumstances; Breach of duty occurs when the physician fails to comply with these
professional standards.—A medical negligence case is a type of claim to redress a wrong committed by a medical
professional, that has caused bodily harm to or the death of a patient. There are four elements involved in a medical
negligence case, namely: duty, breach, injury, and proximate causation. Duty refers to the standard of behavior which
imposes restrictions on one’s conduct. The standard in turn refers to the amount of competence associated with the
proper discharge of the profession. A physician is expected to use at least the same level of care that any other
reasonably competent doctor would use under the same circumstances. Breach of duty occurs when the physician fails
to comply with these professional standards. If injury results to the patient as a result of this breach, the physician is
answerable for negligence.

Same; Same; Same; To successfully pursue a claim, the plaintiff must prove by preponderance of evidence that, one, the
physician either failed to do something which a reasonable prudent health care provider would have done, or that he did
something that a reasonably prudent provider would not have done and two, the failure or action caused injury to the
patient; Expert testimony is therefore essential.—As in any civil action, the burden to prove the existence of the
necessary elements rests with the plaintiff. To successfully pursue a claim, the plaintiff must prove by preponderance of
evidence that, one, the physician either failed to do something which a reasonably prudent health care provider would
have done, or that he did something that a reasonably prudent provider would not have done; and two, the failure or
action caused injury to the patient. Expert testimony is therefore essential since the factual issue of whether a physician
or surgeon has exercised the requisite degree of skill and care in the treatment of his patient is generally a matter of
expert opinion.

Same; Same; Same; If a patient suffers from some disability that increases the magnitude of risk to him, that disability
must be taken into account so long as it is or should have been known to the physician.—Taken together, we find that
reasonable prudence would have shown that diabetes and its complications were foreseeable harm that should have
been taken into consideration by the petitioner spouses. If a patient suffers from some disability that increases the
magnitude of risk to him, that disability must be taken into account so long as it is or should have been known to the
physician. And when the patient is exposed to an increased risk, it is incumbent upon the physician to take
commensurate and adequate precautions.

Same; Same; Same; The critical and clinching factor in a medical negligence case is proof of the causal connection
between the negligence which the evidence established and the plaintiff’s injuries; Causation must be proven within a
reasonable medical probability based upon competent expert testimony.—The critical and clinching factor in a medical
negligence case is proof of the causal connection between the negligence which the evidence established and the
plaintiff’s injuries; the plaintiff must plead and prove not only that he had been injured and defendant has been at fault,
but also that the defendant’s fault caused the injury. A verdict in a malpractice action cannot be based on speculation or
conjecture. Causation must be proven within a reasonable medical probability based upon competent expert testimony.

Same; Same; Damages; The settled rule is that a plaintiff is entitled to be compensated for proven pecuniary loss.—Both
the trial and the appellate court awarded actual damages as compensation for the pecuniary loss the respondents
suffered. The loss was presented in terms of the hospital bills and expenses the respondents incurred on account of
Teresita’s confinement and death. The settled rule is that a plaintiff is entitled to be compensated for proven pecuniary
loss. This proof the respondents successfully presented. Thus, we affirm the award of actual damages of P36,000.00
representing the hospital expenses the patient incurred.

Same; Same; Same; Article 2206 of the Civil Code allows the recovery of moral damages in case of death caused by a
quasi-delict and enumerates the spouse, legitimate or illegitimate ascendants or descendants as the persons entitled
thereto.—The same article allows the recovery of moral damages in case of death caused by a quasi-delict and
enumerates the spouse, legitimate or illegitimate ascendants or descendants as the persons entitled thereto. Moral
damages are designed to compensate the claimant for the injury suffered, that is, for the mental anguish, serious anxiety,
wounded feelings which the respondents herein must have surely felt with the unexpected loss of their daughter. We
affirm the appellate court’s award of P400,000.00 by way of moral damages to the respondents.

Same; Same; Same; Damages; Exemplary Damages.—The Supreme Court similarly affirms the grant of exemplary
damages. Exemplary damages are imposed by way of example or correction for the public good. Because of the
petitioner spouses’ negligence in subjecting Teresita to an operation without first recognizing and addressing her diabetic
condition, the appellate court awarded exemplary damages to the respondents in the amount of P100,000.00. Public
policy requires such imposition to suppress the wanton acts of an offender. We therefore affirm the CA’s award as an
example to the medical profession and to stress that the public good requires stricter measures to avoid the repetition of
the type of medical malpractice that happened in this case.

PETITION for review on certiorari of a decision of the Court of Appeals.

The facts are stated in the opinion of the Court.

Felipe M. Alpajora for petitioners.

Reynaldo P. Melendres for respondents.

This petition involves a medical negligence case that was elevated to this Court through an appeal by certiorari under
Rule 45 of the Rules of Court. The petition assails the Decision1 of the Court of Appeals (CA) in CA G.R. CV No. 63234,
which affirmed with modification the Decision2 of the Regional Trial Court (RTC) of Nueva Ecija, Branch 37 in Civil Case
No. SD-1233. The dispositive portion of the assailed CA decision states:

“WHEREFORE, premises considered, the assailed Decision of the Regional Trial Court of Baloc, Sto. Domingo, Nueva Ecija,
Branch 37 is hereby AFFIRMED but with modifications as follows:

1) Ordering defendant-appellants Dr. and Dra. Fredelicto A. Flores and the United Doctors Medical Center, Inc. to jointly
and severally pay the plaintiff-appellees—heirs of Teresita Pineda, namely, Spouses Dominador Pineda and Virginia
Saclolo and Florencio, Candida, Marta, Godofredo, Baltazar and Lucena, all surnamed Pineda, the sum of P400,000.00 by
way of moral damages;

2) Ordering the above-named defendant-appellants to jointly and severally pay the above-named plaintiff-appellees
the sum of P100,000.00 by way of exemplary damages;

3) Ordering the above-named defendant-appellants to jointly and severally pay the above-named plaintiff-appellees
the sum of P36,000.00 by way of actual and compensatory damages; and

4) Deleting the award of attorney’s fees and costs of suit.

SO ORDERED.”
While this case essentially involves questions of facts, we opted for the requested review in light of questions we have on
the findings of negligence below, on the awarded damages and costs, and on the importance of this type of ruling on
medical practice.3

Background Facts

Teresita Pineda (Teresita) was a 51-year old unmarried woman living in Sto. Domingo, Nueva Ecija. She consulted on April
17, 1987 her townmate, Dr. Fredelicto Flores, regarding her medical condition. She complained of general body
weakness, loss of appetite, frequent urination and thirst, and on-and-off vaginal bleeding. Dr. Fredelicto initially
interviewed the patient and asked for the history of her monthly period to analyze the probable cause of the vaginal
bleeding. He advised her to return the following week or to go to the United Doctors Medical Center (UDMC) in Quezon
City for a general check-up. As for her other symptoms, he suspected that Teresita might be suffering from diabetes and
told her to continue her medications.4

Teresita did not return the next week as advised. However, when her condition persisted, she went to further consult Dr.
Flores at his UDMC clinic on April 28, 1987, travelling for at least two hours from Nueva Ecija to Quezon City with her
sister, Lucena Pineda. They arrived at UDMC at around 11:15 a.m. Lucena later testified that her sister was then so weak
that she had to lie down on the couch of the clinic while they waited for the doctor. When Dr. Fredelicto arrived, he did a
routine check-up and ordered Teresita’s admission to the hospital. In the admission slip, he directed the hospital staff to
prepare the patient for an “on call” D&C5 operation to be performed by his wife, Dr. Felicisima Flores (Dr. Felicisima).
Teresita was brought to her hospital room at around 12 noon; the hospital staff forthwith took her blood and urine
samples for the laboratory tests6 which Dr. Fredelicto ordered.

At 2:40 p.m. of that same day, Teresita was taken to the operating room. It was only then that she met Dr. Felicisima, an
obstetrician and gynecologist. The two doctors—Dr. Felicisima and Dr. Fredelicto, conferred on the patient’s medical
condition, while the resident physician and the medical intern gave Dr. Felicisima their own briefings. She also
interviewed and conducted an internal vaginal examination of the patient which lasted for about 15 minutes. Dr.
Felicisima thereafter called up the laboratory for the results of the tests. At that time, only the results for the blood sugar
(BS), uric acid determination, cholesterol determination, and complete blood count (CBC) were available. Teresita’s BS
count was 10.67mmol/l7 and her CBC was 109g/l.8

Based on these preparations, Dr. Felicisima proceeded with the D&C operation with Dr. Fredelicto administering the
general anesthesia. The D&C operation lasted for about 10 to 15 minutes. By 3:40 p.m., Teresita was wheeled back to her
room.

A day after the operation (or on April 29, 1987), Teresita was subjected to an ultrasound examination as a confirmatory
procedure. The results showed that she had an enlarged uterus and myoma uteri.9 Dr. Felicisima, however, advised
Teresita that she could spend her recovery period at home. Still feeling weak, Teresita opted for hospital confinement.

Teresita’s complete laboratory examination results came only on that day (April 29, 1987). Teresita’s urinalysis showed a
three plus sign (+++) indicating that the sugar in her urine was very high. She was then placed under the care of Dr.
Amado Jorge, an internist.

By April 30, 1987, Teresita’s condition had worsened. She experienced difficulty in breathing and was rushed to the
intensive care unit. Further tests confirmed that she was suffering from Diabetes Mellitus Type II.10 Insulin was
administered on the patient, but the medication might have arrived too late. Due to complications induced by diabetes,
Teresita died in the morning of May 6, 1987.11
Believing that Teresita’s death resulted from the negligent handling of her medical needs, her family (respondents)
instituted an action for damages against Dr. Fredelicto Flores and Dr. Felicisima Flores (collectively referred to as the
petitioner spouses) before the RTC of Nueva Ecija.

The RTC ruled in favor of Teresita’s family and awarded actual, moral, and exemplary damages, plus attorney’s fees and
costs.12 The CA affirmed the judgment, but modified the amount of damages awarded and deleted the award for
attorney’s fees and costs of suit.13

Through this petition for review on certiorari, the petitioner spouses—Dr. Fredelicto (now deceased) and Dr. Felicisima
Flores—allege that the RTC and CA committed a reversible error in finding them liable through negligence for the death
of Teresita Pineda.

Assignment of Errors

The petitioner spouses contend that they exercised due care and prudence in the performance of their duties as medical
professionals. They had attended to the patient to the best of their abilities and undertook the management of her case
based on her complaint of an on-and-off vaginal bleeding. In addition, they claim that nothing on record shows that the
death of Teresita could have been averted had they employed means other than what they had adopted in the
ministration of the patient.

The Court’s Ruling

We do not find the petition meritorious.

The respondents’ claim for damages is predicated on their allegation that the decision of the petitioner spouses to
proceed with the D&C operation, notwithstanding Teresita’s condition and the laboratory test results, amounted to
negligence. On the other hand, the petitioner spouses contend that a D&C operation is the proper and accepted
procedure to address vaginal bleeding—the medical problem presented to them. Given that the patient died after the
D&C, the core issue is whether the decision to proceed with the D&C operation was an honest mistake of judgment or
one amounting to negligence.

Elements of a Medical Negligence Case

A medical negligence case is a type of claim to redress a wrong committed by a medical professional, that has caused
bodily harm to or the death of a patient. There are four elements involved in a medical negligence case, namely: duty,
breach, injury, and proximate causation.14

Duty refers to the standard of behavior which imposes restrictions on one’s conduct.15 The standard in turn refers to the
amount of competence associated with the proper discharge of the profession. A physician is expected to use at least the
same level of care that any other reasonably competent doctor would use under the same circumstances. Breach of duty
occurs when the physician fails to comply with these professional standards. If injury results to the patient as a result of
this breach, the physician is answerable for negligence.16

As in any civil action, the burden to prove the existence of the necessary elements rests with the plaintiff.17 To
successfully pursue a claim, the plaintiff must prove by preponderance of evidence that, one, the physician either failed
to do something which a reasonably prudent health care provider would have done, or that he did something that a
reasonably prudent provider would not have done; and two, the failure or action caused injury to the patient.18 Expert
testimony is therefore essential since the factual issue of whether a physician or surgeon has exercised the requisite
degree of skill and care in the treatment of his patient is generally a matter of expert opinion.19
Standard of Care and Breach of Duty

D&C is the classic gynecologic procedure for the evaluation and possible therapeutic treatment for abnormal vaginal
bleeding.20 That this is the recognized procedure is confirmed by Drs. Salvador Nieto (Dr. Nieto) and Joselito Mercado
(Dr. Mercado), the expert witnesses presented by the respondents:

DR. NIETO: [W]hat I know among obstetricians, if there is bleeding, they perform what we call D&C for diagnostic
purposes.

x x x   x x x x x x

Q: So are you trying to tell the Court that D&C can be a diagnostic treatment?

A: Yes, sir. Any doctor knows this.21

Dr. Mercado, however, objected with respect to the time the D&C operation should have been conducted in Teresita’s
case. He opined that given the blood sugar level of Teresita, her diabetic condition should have been addressed first:

Q: Why do you consider the time of performance of the D&C not appropriate?

A: Because I have read the record and I have seen the urinalysis, [there is] spillage in the urine, and blood sugar was
10.67

Q: What is the significance of the spillage in the urine?

A: It is a sign that the blood sugar is very high.

Q: Does it indicate sickness?

A: 80 to 95% it means diabetes mellitus. The blood sugar was 10.67.

x x x   x x x  x x x

COURT: In other words, the operation conducted on the patient, your opinion, that it is inappropriate?

A: The timing of [when] the D&C [was] done, based on the record, in my personal opinion, that D&C should be
postponed a day or two.22

The petitioner spouses countered that, at the time of the operation, there was nothing to indicate that Teresita was
afflicted with diabetes: a blood sugar level of 10.67mmol/l did not necessarily mean that she was a diabetic considering
that this was random blood sugar;23 there were other factors that might have caused Teresita’s blood sugar to rise such
as the taking of blood samples during lunchtime and while patient was being given intra-venous dextrose.24
Furthermore, they claim that their principal concern was to determine the cause of and to stop the vaginal bleeding.

The petitioner spouses’ contentions, in our view, miss several points. First, as early as April 17, 1987, Teresita was already
suspected to be suffering from diabetes.25 This suspicion again arose right before the D&C operation on April 28, 1987
when the laboratory result revealed Teresita’s increased blood sugar level.26 Unfortunately, the petitioner spouses did
not wait for the full medical laboratory results before proceeding with the D&C, a fact that was never considered in the
courts below. Second, the petitioner spouses were duly advised that the patient was experiencing general body
weakness, loss of appetite, frequent urination, and thirst—all of which are classic symptoms of diabetes.27 When a
patient exhibits symptoms typical of a particular disease, these symptoms should, at the very least, alert the physician of
the possibility that the patient may be afflicted with the suspected disease:
[Expert testimony for the plaintiff showed that] tests should have been ordered immediately on admission to the
hospital in view of the symptoms presented, and that failure to recognize the existence of diabetes constitutes
negligence.28

Third, the petitioner spouses cannot claim that their principal concern was the vaginal bleeding and should not therefore
be held accountable for complications coming from other sources. This is a very narrow and self-serving view that even
reflects on their competence.

Taken together, we find that reasonable prudence would have shown that diabetes and its complications were
foreseeable harm that should have been taken into consideration by the petitioner spouses. If a patient suffers from
some disability that increases the magnitude of risk to him, that disability must be taken into account so long as it is or
should have been known to the physician.29 And when the patient is exposed to an increased risk, it is incumbent upon
the physician to take commensurate and adequate precautions.

Taking into account Teresita’s high blood sugar,30 Dr. Mendoza opined that the attending physician should have
postponed the D&C operation in order to conduct a confirmatory test to make a conclusive diagnosis of diabetes and to
refer the case to an internist or diabetologist. This was corroborated by Dr. Delfin Tan (Dr. Tan), an obstetrician and
gynecologist, who stated that the patient’s diabetes should have been managed by an internist prior to, during, and after
the operation.31

Apart from bleeding as a complication of pregnancy, vaginal bleeding is only rarely so heavy and life-threatening that
urgent first-aid measures are required.32 Indeed, the expert witnesses declared that a D&C operation on a
hyperglycemic patient may be justified only when it is an emergency case—when there is profuse vaginal bleeding. In
this case, we choose not to rely on the assertions of the petitioner spouses that there was profuse bleeding, not only
because the statements were self-serving, but also because the petitioner spouses were inconsistent in their
testimonies. Dr. Fredelicto testified earlier that on April 28, he personally saw the bleeding,33 but later on said that he
did not see it and relied only on Teresita’s statement that she was bleeding.34 He went on to state that he scheduled the
D&C operation without conducting any physical examination on the patient.

The likely story is that although Teresita experienced vaginal bleeding on April 28, it was not sufficiently profuse to
necessitate an immediate emergency D&C operation. Dr. Tan35 and Dr. Mendoza36 both testified that the medical
records of Teresita failed to indicate that there was profuse vaginal bleeding. The claim that there was profuse vaginal
bleeding although this was not reflected in the medical records strikes us as odd since the main complaint is vaginal
bleeding. A medical record is the only document that maintains a long-term transcription of patient care and as such, its
maintenance is considered a priority in hospital practice. Optimal record-keeping includes all patient inter-actions. The
records should always be clear, objective, and up-to-date.37 Thus, a medical record that does not indicate profuse
medical bleeding speaks loudly and clearly of what it does not contain.

That the D&C operation was conducted principally to diagnose the cause of the vaginal bleeding further leads us to
conclude that it was merely an elective procedure, not an emergency case. In an elective procedure, the physician must
conduct a thorough pre-operative evaluation of the patient in order to adequately prepare her for the operation and
minimize possible risks and complications. The internist is responsible for generating a comprehensive evaluation of all
medical problems during the pre-operative evaluation.38 “The aim of pre-operative evaluation is not to screen broadly
for undiagnosed disease, but rather to identify and quantify comorbidity that may impact on the operative outcome. This
evaluation is driven by findings on history and physical examination suggestive of organ system dysfunction . . . The goal
is to uncover problem areas that may require further investigation or be amenable to preoperative optimization.

If the preoperative evaluation uncovers significant comorbidity or evidence of poor control of an underlying disease
process, consultation with an internist or medical specialist may be required to facilitate the work-up and direct
management. In this process, communication between the surgeons and the consultants is essential to define realistic
goals for this optimization process and to expedite surgical management.”39 [Emphasis supplied.]

Significantly, the evidence strongly suggests that the pre-operative evaluation was less than complete as the laboratory
results were fully reported only on the day following the D&C operation. Dr. Felicisima only secured a telephone report
of the preliminary laboratory result prior to the D&C. This preliminary report did not include the 3+ status of sugar in the
patient’s urine40—a result highly confirmatory of diabetes.

Because the D&C was merely an elective procedure, the patient’s uncontrolled hyperglycemia presented a far greater
risk than her on-and-off vaginal bleeding. The presence of hyperglycemia in a surgical patient is associated with poor
clinical outcomes, and aggressive glycemic control positively impacts on morbidity and mortality.41 Elective surgery in
people with uncontrolled diabetes should preferably be scheduled after acceptable glycemic control has been
achieved.42 According to Dr. Mercado, this is done by administering insulin on the patient.43 “The management
approach in this kind of patients always includes insulin therapy in combination with dextrose and potassium infusion.
Insulin xxx promotes glucose uptake by the muscle and fat cells while decreasing glucose production by the liver x x x.
The net effect is to lower blood glucose levels.”44

The prudent move is to address the patient’s hyperglycemic state immediately and promptly before any other procedure
is undertaken. In this case, there was no evidence that insulin was administered on Teresita prior to or during the D&C
operation. Insulin was only administered two days after the operation.

As Dr. Tan testified, the patient’s hyperglycemic condition should have been managed not only before and during the
operation, but also immediately after. Despite the possibility that Teresita was afflicted with diabetes, the possibility was
casually ignored even in the post-operative evaluation of the patient; the concern, as the petitioner spouses expressly
admitted, was limited to the complaint of vaginal bleeding. Interestingly, while the ultrasound test confirmed that
Teresita had a myoma in her uterus, she was advised that she could be discharged a day after the operation and that her
recovery could take place at home. This advice implied that a day after the operation and even after the complete
laboratory results were submitted, the petitioner spouses still did not recognize any post-operative concern that would
require the monitoring of Teresita’s condition in the hospital.

The above facts, point only to one conclusion—that the petitioner spouses failed, as medical professionals, to comply
with their duty to observe the standard of care to be given to hyperglycemic/diabetic patients undergoing surgery.
Whether this breach of duty was the proximate cause of Teresita’s death is a matter we shall next determine.

Injury and Causation

As previously mentioned, the critical and clinching factor in a medical negligence case is proof of the causal connection
between the negligence which the evidence established and the plaintiff’s injuries;45 the plaintiff must plead and prove
not only that he had been injured and defendant has been at fault, but also that the defendant’s fault caused the injury.
A verdict in a malpractice action cannot be based on speculation or conjecture. Causation must be proven within a
reasonable medical probability based upon competent expert testimony.46

The respondents contend that unnecessarily subjecting Teresita to a D&C operation without adequately preparing her,
aggravated her hyperglycemic state and caused her untimely demise. The death certificate of Teresita lists down the
following causes of death:

Immediate cause: Cardiorespiratory arrest

Antecedent cause: Septicemic shock, ketoacidocis

Underlying cause: Diabetes Mellitus II

Other significant conditions

contributing to death: Renal Failure—Acute47

Stress, whether physical or emotional, is a factor that can aggravate diabetes; a D&C operation is a form of physical
stress. Dr. Mendoza explained how surgical stress can aggravate the patient’s hyperglycemia: when stress occurs, the
diabetic’s body, especially the autonomic system, reacts by secreting hormones which are counter-regulatory; she can
have prolonged hyperglycemia which, if unchecked, could lead to death.48 Medical literature further explains that if the
blood sugar has become very high, the patient becomes comatose (diabetic coma). When this happens over several days,
the body uses its own fat to produce energy, and the result is high levels of waste products (called ketones) in the blood
and urine (called diabetic ketoacidiosis, a medical emergency with a significant mortality).49 This was apparently what
happened in Teresita’s case; in fact, after she had been referred to the internist Dr. Jorge, laboratory test showed that her
blood sugar level shot up to 14.0mmol/l, way above the normal blood sugar range. Thus, between the D&C and death
was the diabetic complication that could have been prevented with the observance of standard medical precautions. The
D&C operation and Teresita’s death due to aggravated diabetic condition is therefore sufficiently established.

The trial court and the appellate court pinned the liability for Teresita’s death on both the petitioner spouses and this
Court finds no reason to rule otherwise. However, we clarify that Dr. Fredelicto’s negligence is not solely the act of
ordering an “on call” D&C operation when he was mainly an anaesthesiologist who had made a very cursory examination
of the patient’s vaginal bleeding complaint. Rather, it was his failure from the very start to identify and confirm, despite
the patient’s complaints and his own suspicions, that diabetes was a risk factor that should be guarded against, and his
participation in the imprudent decision to proceed with the D&C operation despite his early suspicion and the
confirmatory early laboratory results. The latter point comes out clearly from the following exchange during the trial:

Q: On what aspect did you and your wife consult [with] each other?

A: We discussed on the finding of the laboratory [results] because the hemoglobin was below normal, the blood sugar
was elevated, so that we have to evaluate these laboratory results—what it means.

Q: So it was you and your wife who made the evaluation when it was phoned in?

A: Yes, sir.

Q: Did your wife, before performing D&C ask your opinion whether or not she can proceed?

A: Yes, anyway, she asked me whether we can do D&C based on my experience.

Q: And your answer was in the positive notwithstanding the elevation of blood sugar?

A: Yes, sir, it was both our disposition to do the D&C. [Emphasis supplied.]50

If Dr. Fredelicto believed himself to be incompetent to treat the diabetes, not being an internist or a diabetologist (for
which reason he referred Teresita to Dr. Jorge),51 he should have likewise refrained from making a decision to proceed
with the D&C operation since he was niether an obstetrician nor a gynecologist.

These findings lead us to the conclusion that the decision to proceed with the D&C operation, notwithstanding Teresita’s
hyperglycemia and without adequately preparing her for the procedure, was contrary to the standards observed by the
medical profession. Deviation from this standard amounted to a breach of duty which resulted in the patient’s death.
Due to this negligent conduct, liability must attach to the petitioner spouses.
Liability of the Hospital

In the proceedings below, UDMC was the spouses Flores’ co-defendant. The RTC found the hospital jointly and severally
liable with the petitioner spouses, which decision the CA affirmed. In a Resolution dated August 28, 2006, this Court
however denied UDMC’s petition for review on certiorari. Since UDMC’s appeal has been denied and they are not parties
to this case, we find it unnecessary to delve on the matter. Consequently, the RTC’s decision, as affirmed by the CA,
stands.

Award of Damages

Both the trial and the appellate court awarded actual damages as compensation for the pecuniary loss the respondents
suffered. The loss was presented in terms of the hospital bills and expenses the respondents incurred on account of
Teresita’s confinement and death. The settled rule is that a plaintiff is entitled to be compensated for proven pecuniary
loss.52 This proof the respondents successfully presented. Thus, we affirm the award of actual damages of P36,000.00
representing the hospital expenses the patient incurred.

In addition to the award for actual damages, the respondent heirs of Teresita are likewise entitled to P50,000.00 as death
indemnity pursuant to Article 2206 of the Civil Code, which states that “the amount of damages for death caused by a x x
x quasi-delict shall be at least three thousand pesos,53 even though there may have been mitigating circumstances x x
x.” This is a question of law that the CA missed in its decision and which we now decide in the respondents’ favor.

The same article allows the recovery of moral damages in case of death caused by a quasi-delict and enumerates the
spouse, legitimate or illegitimate ascendants or descendants as the persons entitled thereto. Moral damages are
designed to compensate the claimant for the injury suffered, that is, for the mental anguish, serious anxiety, wounded
feelings which the respondents herein must have surely felt with the unexpected loss of their daughter. We affirm the
appellate court’s award of P400,000.00 by way of moral damages to the respondents.

We similarly affirm the grant of exemplary damages. Exemplary damages are imposed by way of example or correction
for the public good.54 Because of the petitioner spouses’ negligence in subjecting Teresita to an operation without first
recognizing and addressing her diabetic condition, the appellate court awarded exemplary damages to the respondents
in the amount of P100,000.00. Public policy requires such imposition to suppress the wanton acts of an offender.55 We
therefore affirm the CA’s award as an example to the medical profession and to stress that the public good requires
stricter measures to avoid the repetition of the type of medical malpractice that happened in this case.

With the award of exemplary damages, the grant of attorney’s fees is legally in order.56 We therefore reverse the CA
decision deleting these awards, and grant the respondents the amount of P100,000.00 as attorney’s fees taking into
consideration the legal route this case has taken.

WHEREFORE, we AFFIRM the Decision of the CA dated June 20, 2003 in CA-G.R. CV No. 63234 finding petitioner spouses
liable for negligent medical practice. We likewise AFFIRM the awards of actual and compensatory damages of
P36,000.00; moral damages of P400,000.00; and exemplary damages of P100,000.00.

We MODIFY the CA Decision by additionally granting an award of P50,000.00 as death indemnity and by reversing the
deletion of the award of attorney’s fees and costs and restoring the award of P100,000.00 as attorney’s fees. Costs of
litigation are adjudged against petitioner spouses.

To summarize, the following awards shall be paid to the family of the late Teresita Pineda:

1. The sum of P36,000.00 by way of actual and compensatory damages;

2. The sum of P50,000.00 by way of death indemnity;

3. The sum of P400,000.00 by way of moral damages;

4. The sum of P100,000.00 by way of exemplary damages;

5. The sum of P100,000.00 by way of attorney’s fees; and

6. Costs.

SO ORDERED.

Quisumbing (Acting C.J., Chairperson), Carpio-Morales, Tinga and Velasco, Jr., JJ., concur.

Judgment affirmed with modification.

Note.—Negligence is not presumed but proven by whoever alleges it. (Bank of the Philippine Islands vs. Casa Montessori
Internationale, 430 SCRA 261 [2004])
G.R. No. 146635. December 14, 2005.*

MARCELO MACALINAO, Substituted by ESPERANZA MACALINAO and ANTONIO MACALINAO, petitioners, vs. EDDIE
MEDECIELO ONG and GENOVEVO SEBASTIAN, respondents.

Torts; Quasi-Delicts; Negligence; Appeals; The issue of negligence is factual and, in quasi-delicts, crucial in the award of
damages; As a rule factual findings of the Court of Appeals are deemed to be conclusive in cases brought before the
Supreme Court on appeal; Exceptions.—The issue of negligence is factual and, in quasi-delicts, crucial in the award of
damages. In the case at bar, the crux of the controversy is the sufficiency of the evidence presented to support a finding
of negligence against Ong. Given the contradictory conclusions of the trial court and the appellate court on this issue,
this Court is impelled to ascertain for itself which court made the correct determination. While as a rule factual findings
of the Court of Appeals are deemed conclusive in cases brought to us on appeal, we have also consistently pronounced
that we may review its findings of fact in the following instances, among others: (i) when the judgment of the Court of
Appeals was based on a misapprehension of facts; (ii) when the factual findings are conflicting; (iii) when the Court of
Appeals manifestly overlooked certain relevant facts not disputed by the parties and which, if properly considered,
would justify a different conclusion; and (iv) where the findings of fact of the Court of Appeals are contrary to those of
the trial court, or are mere conclusions without citation of specific evidence, or where the facts set forth by the
petitioner are not disputed by the respondent, or where the findings of fact of the Court of Appeals are premised on the
absence of evidence and are contradicted by the evidence on record.

Same; Same; Same; Evidence; Photographs; Physical evidence is a mute but an eloquent manifestation of truth which
ranks high in the hierarchy of trustworthy evidence; According to American courts, photographs are admissible in
evidence in motor vehicle accident cases when they appear to have been accurately taken and are proved to be faithful
and clear representation of the subject.—Physical evidence is a mute but an eloquent manifestation of truth which ranks
high in our hierarchy of trustworthy evidence. In this case, while there is a dearth of testimonial evidence to enlighten us
about what actually happened, photographs depicting the relative positions of the vehicles immediately after the
accident took place do exist. It is well established that photographs, when duly verified and shown by extrinsic evidence
to be faithful representations of the subject as of the time in question, are, in the discretion of the trial court, admissible
in evidence as aids in arriving at an understanding of the evidence, the situation or condition of objects or premises or
the circumstances of an accident. According to American courts, photographs are admissible in evidence in motor vehicle
accident cases when they appear to have been accurately taken and are proved to be a faithful and clear representation
of the subject, which cannot itself be produced, and are of such nature as to throw light upon a disputed point. Before a
photograph may be admitted in evidence, however, its accuracy or correctness must be proved, and it must be
authenticated or verified first. In the case at bar, the photographer testified in open court and properly identified the
pictures as the ones he took at the scene of the accident.

Same; Same; Same; Police Blotters; Although police blotters are of little probative value, they are nevertheless admitted
and considered in the absence of competent evidence to refute the facts stated therein.—Another piece of evidence
which supports a finding of negligence against Ong is the police report of the incident denoted as Entry No. 04-229 of the
Sta. Maria Police Station. The report states that the Isuzu truck was the one which hit the left front portion of the private
jeepney. This piece of evidence was disregarded by the Court of Appeals on the ground that entries in police blotters
should not be given significance or probative value as they do not constitute conclusive proof of the truth thereof. While
true in most instances, it must still be remembered that although police blotters are of little probative value, they are
nevertheless admitted and considered in the absence of competent evidence to refute the facts stated therein. Entries in
police records made by a police officer in the performance of the duty especially enjoined by law are prima facie
evidence of the fact therein stated, and their probative value may be either substantiated or nullified by other
competent evidence.
Same; Same; Same; Same; The prima facie nature of police report ensures that if it remains unexplained or
uncontradicted, it will be sufficient to establish the facts posited therein.—In this case, the police blotter was identified
and formally offered as evidence and the person who made the entries thereon was likewise presented in court. On the
other hand, aside from a blanket allegation that the driver of the other vehicle was the one at fault, respondents did not
present any evidence to back up their charge and show that the conclusion of the police investigator was false. Given the
paucity of details in the report, the investigator’s observation could fs have been easily refuted and overturned by
respondents through the simple expedient of supplying the missing facts and showing to the satisfaction of the court
that the Isuzu truck was blameless in the incident. Ong was driving the truck while the two other truck helpers also
survived the accident. Any or all of them could have given their testimony to shed light on what actually transpired, yet
not one of them was presented to substantiate the claim that Ong was not negligent. Since respondents failed to refute
the contents of the police blotter, the statement therein that the Isuzu truck hit the private jeepney and not the other
way around is deemed established. The prima facie nature of the police report ensures that if it remains unexplained or
uncontradicted, it will be sufficient to establish the facts posited therein.

Same; Same; Same; Res Ipsa Loquitor; Words and Phrases; Res Ipsa Loquitor is a Latin phrase which literally means “the
thing or the transaction speaks for itself”—it recognizes that parties may establish prima facie negligence without direct
proof allowing the principle to substitute for specific proof of negligence; The doctrine can be invoked only when under
the circumstances, direct evidence is absent and not readily available.—While not constituting direct proof of Ong’s
negligence, the foregoing pieces of evidence justify the application of res ipsa loquitur, a Latin phrase which literally
means “the thing or the transaction speaks for itself.” Res ipsa loquitur recognizes that parties may establish prima facie
negligence without direct proof, thus, it allows the principle to substitute for specific proof of negligence. It permits the
plaintiff to present along with proof of the accident, enough of the attending circumstances to invoke the doctrine,
create an inference or presumption of negligence and thereby place on the defendant the burden of proving that there
was no negligence on his part. The doctrine can be invoked only when under the circumstances, direct evidence is absent
and not readily available. This is based in part upon the theory that the defendant in charge of the instrumentality which
causes the injury either knows the cause of the accident or has the best opportunity of ascertaining it while the plaintiff
has no such knowledge, and is therefore compelled to allege negligence in general terms and rely upon the proof of the
happening of the accident in order to establish negligence. The inference which the doctrine permits is grounded upon
the fact that the chief evidence of the true cause, whether culpable or innocent, is practically accessible to the defendant
but inaccessible to the injured person.

Same; Same; Same; Same; Requisites.—Under local jurisprudence, the following are the requisites for the application of
res ipsa loquitur: (1)

The accident is of a kind which ordinarily does not occur in the absence of someone’s negligence; (2) It is caused by an
instrumentality within the exclusive control of the defendant or defendants; and (3) The possibility of contributing
conduct which would make the plaintiff responsible is eliminated.

Same; Same; Same; Same; No two motor vehicles traversing opposite lanes will collide as a matter of course unless
someone is negligent.—No two motor vehicles traversing opposite lanes will collide as a matter of course unless
someone is negligent, thus, the first requisite for the application of the doctrine is present. Ong was driving the Isuzu
truck which, from the evidence adduced, appears to have precipitated the collision with the private jeepney. Driving the
Isuzu truck gave Ong exclusive management and control over it, a fact which shows that the second requisite is also
present. No contributory negligence could be attributed to Macalinao relative to the happening of the accident since he
was merely a passenger in the Isuzu truck. Respondents’ allegation that Macalinao was guilty of contributory negligence
for failing to take the necessary precautions to ensure his safety while onboard the truck is too specious for belief
particularly as respondents did not even present any evidence to prove such allegation. The last requisite is, therefore,
likewise present. There exists a fourth requisite under American jurisprudence, that is, that the defendant fails to offer
any explanation tending to show that the injury was caused by his or her want of due care. In this case, while
respondents claimed that Ong drove cautiously and prudently during the time in question, no evidence was proffered to
substantiate the same. In fact, Ong did not bother to testify to explain his actuations and to show that he exercised due
care when the accident happened, so even this requisite is fulfilled.

Same; Same; Same; Presumptions; Whenever an employee’s negligence causes damage or injury to another, there
instantly arises a presumption juris tantum that the employer failed to exercise diligentissimi patris families in the
selection (culpa in eligiendo) or supervision (culpa in vigilando) of its employees.—Whenever an employee’s negligence
causes damage or injury to another, there instantly arises a presumption juris tantum that the employer failed to exercise
diligentissimi patris families in the selection (culpa in eligiendo) or supervision (culpa in vigilando) of its employees. To
avoid liability for a quasi-delict committed by his employee, an employer must overcome the presumption by presenting
convincing proof that he exercised the care and diligence of a good father of a family in the selection and supervision of
his employee.

Same; Same; Same; Due Diligence; Words and Phrases; Due diligence in supervision requires the formulation of rules and
regulations for the guidance of employees and the issuance of proper instructions as well as actual implementation and
monitoring of consistent compliance with the rules.—Due diligence in supervision requires the formulation of rules and
regulations for the guidance of employees and the issuance of proper instructions as well as actual implementation and
monitoring of consistent compliance with the rules. Admonitions to drive carefully without the corresponding guidelines
and monitoring of the employee do not satisfy the due diligence required by law either.

Same; Same; Same; Article 2180 of the Civil Code makes no distinction whatsoever whether the claimant is an employee
or a third person relative to the employer.—Article 2180 makes no distinction whatsoever whether the claimant is an
employee or a third person relative to the employer. Ubi lex non distinguit nec nos distinguere debemos.Where the law
does not distinguish, neither should we.

Same; Same; Same; Damages; The relatives of the victim who incurred physical injuries in a quasi-delict are not
proscribed from recovering moral damages in meritorious cases; The award of moral damages is aimed at a restoration
within the limits possible, of spiritual status quo ante, and therefore, must be proportionate to the suffering inflicted.—
Additionally, respondents postulated that since it was Macalinao who sustained physical injuries and died, he was the
one who suffered pain, not petitioners so moral damages are not recoverable in this case. The relatives of the victim who
incurred physical injuries in a quasi-delict are not proscribed from recovering moral damages in meritorious cases. To
hold otherwise would give rise to the ridiculous scenario where a defendant may be compelled to pay moral damages in
a quasi-delict causing physical injuries but will be relieved from doing so should those same injuries cause the victim’s
death. In the case of Lambert v. Heirs of Ray Castillon, we held that in quasi-delicts: . . . . the award of moral damages is
aimed at a restoration, within the limits possible, of the spiritual status quo ante; and therefore, it must be proportionate
to the suffering inflicted. The intensity of the pain experienced by the relatives of the victim is proportionate to the
intensity of affection for him and bears no relation whatsoever with the wealth or means of the offender.

Same; Same; Same; Same; Gross Negligence; Words and Phrases; Gross negligence is a negligence characterized by the
want of even slight care, acting or omitting to act in a situation where there is duty to act, not inadvertently but willfully
and intentionally, with a conscious indifference to consequences insofar as other persons may be affected.—
Respondents claim that exemplary damages is not warranted in this case. Under the law, exemplary damages may be
granted in quasi-delicts if the defendant acted with gross negligence. Gross negligence has been defined as negligence
characterized by the want of even slight care, acting or omitting to act in a situation where there is duty to act, not
inadvertently but willfully and intentionally, with a conscious indifference to consequences insofar as other persons may
be affected. Ong’s gross negligence in driving the Isuzu truck precipitated the accident. This is lucidly portrayed in the
photographs on record and it justifies the award of exemplary damages in petitioners’ favor. However, the trial court’s
award of P10,000.00 is insufficient, thus the Court deems it proper to increase the award to P25,000.00 under the
circumstances.

PETITION for review on certiorari of the decision and resolution of the Court of Appeals.

The facts are stated in the opinion of the Court.

Public Attorney’s Office for petitioner.

Acsay, Pascual & Associates Law Office for respondents.

TINGA, J.:

Before this Court is a Petition for Review on Certiorari assailing the Decision1 and Resolution2 of the Court of Appeals
dated 31 May 2000 and 7 September 2000, respectively, in CA-G.R. CV No. 52963. The Court of Appeals reversed the
judgment of the trial court and dismissed the complaint for damages filed by Marcelo Macalinao (Macalinao) against
Eddie Medecielo Ong (Ong) and Genovevo Sebastian (Sebastian) for insufficiency of evidence. The antecedent facts
follow.

Macalinao and Ong were employed as utility man and driver, respectively, at the Genetron International Marketing
(Genetron), a single proprietorship owned and operated by Sebastian. On 25 April 1992, Sebastian instructed Macalinao,
Ong and two truck helpers to deliver a heavy piece of machinery—a reactor/motor for mixing chemicals, to Sebastian’s
manufacturing plant in Angat, Bulacan. While in the process of complying with the order, the vehicle driven by Ong,
Genetron’s Isuzu Elf truck with plate no. PMP-106 hit and bumped the front portion of a private jeepney with plate no.
DAF-922 along Caypombo, Sta. Maria, Bulacan at around 11:20 in the morning.3

Both vehicles incurred severe damages while the passengers sustained physical injuries as a consequence of the
collision.4 Macalinao incurred the most serious injuries among the passengers of the truck. He was initially brought to
the Sta. Maria District Hospital for first aid treatment but in view of the severity of his condition, he was transferred to
the Philippine Orthopedic Center at the instance of Sebastian. He was again moved to the Capitol Medical Center by his
parents, petitioners herein, for medical reasons and later to the Philippine General Hospital for financial considerations.5

Macalinao’s body was paralyzed and immobilized from the neck down as a result of the accident and per doctor’s advice,
his foot was amputated. He also suffered from bed sores and infection. His immedicable condition, coupled with the
doctor’s recommendation, led his family to bring him home where he died on 7 November 1992.6

Before he died, Macalinao was able to file an action for damages against both Ong and Sebastian before the Regional
Trial Court (RTC) of Quezon City, Branch 81.7 After his death, Macalinao was substituted by his parents in the action.8 A
criminal case for reckless imprudence resulting to serious physical injuries9 had also been instituted earlier against Ong
but for reasons which do not appear in the records of this case, trial thereon did not ensue.10

After trial in the civil action, the RTC held that based on the evidence, Ong drove the Isuzu truck in a reckless and
imprudent manner thereby causing the same to hit the private jeepney. It observed that while respondents claimed that
Ong was driving cautiously and prudently at the time of the mishap, no evidence was presented to substantiate the
claim.11 It declared Ong negligent and at the same time, it held that Sebastian failed to exercise the diligence of a good
father of a family in the selection and supervision of Ong. Consequently, the trial court pronounced the two of them
jointly liable to pay actual, moral, and exemplary damages as well as civil indemnity for Macalinao’s death. The trial court
subsequently increased the monetary award12 upon petitioners’ motion for reconsideration thereof.
On appeal, the appellate court reversed the findings of the trial court. It held that the evidence presented by petitioners
was woe fully scant to support a verdict of negligence against Ong. And since respondents’ liability hinged squarely on
proof of Ong’s negligence, neither of them could be held liable for damages to petitioners.13

Aggrieved at the ruling, petitioners elevated the case to this Court. They herein contend that contrary to the conclusion
reached by the Court of Appeals, the evidence conclusively establish fault or negligence on the part of Ong and justify
the award of damages in their favor.

The petition is meritorious.

The issue of negligence is factual and, in quasi-delicts, crucial in the award of damages.14 In the case at bar, the crux of
the controversy is the sufficiency of the evidence presented to support a finding of negligence against Ong. Given the
contradictory conclusions of the trial court and the appellate court on this issue, this Court is impelled to ascertain for
itself which court made the correct determination.

While as a rule factual findings of the Court of Appeals are deemed conclusive in cases brought to us on appeal, we have
also consistently pronounced that we may review its findings of fact in the following instances, among others:

“(i) when the judgment of the Court of Appeals was based on a misapprehension of facts; (ii) when the factual findings
are conflicting; (iii) when the Court of Appeals manifestly overlooked certain relevant facts not disputed by the parties
and which, if properly considered, would justify a different conclusion; and (iv) where the findings of fact of the Court of
Appeals are contrary to those of the trial court, or are mere conclusions without citation of specific evidence, or where
the facts set forth by the petitioner are not disputed by the respondent, or where the findings of fact of the Court of
Appeals are premised on the absence of evidence and are contradicted by the evidence on record.”15

Said exceptions obtain in this case thus, a departure from the application of the general rule is warranted.

In reversing the trial court and absolving respondents from liability, the appellate court made the following
pronouncement:

“The evidence presented is woefully scant. The pictures of the collision afford no basis for concluding that it was the fault
of the defendant driver, or that he was driving recklessly. The police report contains no findings as to the road conditions,
estimates of the relative speed of the vehicles, or their exact position at the time of the accident. And even so, entries in
the police blotter should not be given significance or probative value as they do not constitute conclusive proof of the
truth thereof. Nor were eyewitnesses presented, not even affidavits or statements to give any indication as to what
actually happened. The police investigator’s findings are sketchy at best, with only the phrase “Isuzu lost control” as his
opinion, with no explanation how he reached it. Civil cases require evidence of a lesser degree than criminal cases, but
one sentence by one who did not even witness an event, is not conclusive proof.

...

There was only the fact of the collision before the trial court. The attendant circumstances were not established, and no
fault could be determined using the evidence, both testimonial and documentary presented.”16

Contrary to the above conclusion of the appellate court, the evidence on record coupled with the doctrine of res ipsa
loquitur sufficiently establishes Ong’s negligence.

We focus first on the evidence presented before the trial court.

The photographs of the accident which the appellate court cavalierly brushed aside as insignificant deserve substantial
cogitation. In Jose v. Court of Appeals,17 we upheld the trial court’s reliance on photographs of the accident as opposed
to a party’s obviously biased testimony. In so doing, we stated:

“In criminal cases such as murder or rape where the accused stands to lose his liberty if found guilty, this Court has, in
many occasions, relied principally upon physical evidence in ascertaining the truth. In People v. Vasquez,18 where the
physical evidence on record ran counter to the testimonial evidence of the prosecution witnesses, we ruled that the
physical evidence should prevail.”19

Physical evidence is a mute but an eloquent manifestation of truth which ranks high in our hierarchy of trustworthy
evidence.20

In this case, while there is a dearth of testimonial evidence to enlighten us about what actually happened,
photographs21 depicting the relative positions of the vehicles immediately after the accident took place do exist. It is
well established that photographs, when duly verified and shown by extrinsic evidence to be faithful representations of
the subject as of the time in question, are, in the discretion of the trial court, admissible in evidence as aids in arriving at
an understanding of the evidence, the situation or condition of objects or premises or the circumstances of an
accident.22

According to American courts, photographs are admissible in evidence in motor vehicle accident cases when they appear
to have been accurately taken and are proved to be a faithful and clear representation of the subject, which cannot itself
be produced, and are of such nature as to throw light upon a disputed point.23 Before a photograph may be admitted in
evidence, however, its accuracy or correctness must be proved, and it must be authenticated or verified24 first. In the
case at bar, the photographer testified in open court and properly identified the pictures as the ones he took at the
scene of the accident.25

An examination of said photographs clearly shows that the road where the mishap occurred is marked by a line at the
center separating the right from the left lane. Based on the motorist’s right of way rule, the Isuzu truck which was
headed towards Norzagaray, Bulacan26 should have been occupying the left lane while the private jeepney which was
traversing the road to the town proper of Sta. Maria, Bulacan27 should have been in the right lane. Exhibits “L” and “L-4”
among the photographs, however, reveal that in the aftermath of the collision, the Isuzu truck usurped the opposite lane
to such an extent that only its right rear wheel remained in the left lane, a few inches from the demarcation line. Its two
front wheels and left rear wheel were planted squarely on the private jeepney’s lane and the Isuzu truck had rotated
such that its front no longer pointed towards Norzagaray but partially faced the town proper of Sta. Maria instead.

While ending up at the opposite lane is not conclusive proof of fault in automobile collisions, the position of the two
vehicles gives rise to the conclusion that it was the Isuzu truck which hit the private jeepney rather than the other way
around. The smashed front of the Isuzu truck is pressed against the private jeepney’s left front portion near the driver’s
side. The private jeepney is positioned diagonally in the right lane; its front at the rightmost corner of the road while its
rear remained a few feet from the demarcation line. Based on the angle at which it stopped, the private jeepney
obviously swerved to the right in an unsuccessful effort to avoid the Isuzu truck. This would support the statement of the
police investigator that the Isuzu truck lost control28 and hit the left front portion of the private jeepney.29 It would also
explain why the driver of the private jeepney died immediately after being brought to the hospital,30 since in such a
scenario, the brunt of the collision logically bore down on him.

Moreover, the unequal size and weight of the two vehicles would make it improbable for the relatively lighter private
jeepney to have stricken the heavier truck with such force as to push the latter to the former’s side of the road. Had that
been the case, the two vehicles would have ended up crushed together at the center of the road or at the Isuzu truck’s
lane instead of rolling to a stop at the private jeepney’s lane.
Another piece of evidence which supports a finding of negligence against Ong is the police report of the incident
denoted as Entry No. 04-229 of the Sta. Maria Police Station. The report states that the Isuzu truck was the one which hit
the left front portion of the private jeepney.31 This piece of evidence was disregarded by the Court of Appeals on the
ground that entries in police blotters should not be given significance or probative value as they do not constitute
conclusive proof of the truth thereof.

While true in most instances, it must still be remembered that although police blotters are of little probative value, they
are nevertheless admitted and considered in the absence of competent evidence to refute the facts stated therein.32
Entries in police records made by a police officer in the performance of the duty especially enjoined by law are prima
facie evidence of the fact therein stated,33 and their probative value may be either substantiated or nullified by other
competent evidence.34

In this case, the police blotter was identified and formally offered as evidence and the person who made the entries
thereon was likewise presented in court. On the other hand, aside from a blanket allegation that the driver of the other
vehicle was the one at fault, respondents did not present any evidence to back up their charge and show that the
conclusion of the police investigator was false. Given the paucity of details in the report, the investigator’s observation
could have been easily refuted and overturned by respondents through the simple expedient of supplying the missing
facts and showing to the satisfaction of the court that the Isuzu truck was blameless in the incident. Ong was driving the
truck while the two other truck helpers also survived the accident. Any or all of them could have given their testimony to
shed light on what actually transpired, yet not one of them was presented to substantiate the claim that Ong was not
negligent.

Since respondents failed to refute the contents of the police blotter, the statement therein that the Isuzu truck hit the
private jeepney and not the other way around is deemed established. The prima facie nature of the police report ensures
that if it remains unexplained or uncontradicted, it will be sufficient to establish the facts posited therein.35

While not constituting direct proof of Ong’s negligence, the foregoing pieces of evidence justify the application of res
ipsa loquitur, a Latin phrase which literally means “the thing or the transaction speaks for itself.”36

Res ipsa loquitur recognizes that parties may establish prima facie negligence without direct proof, thus, it allows the
principle to substitute for specific proof of negligence.37 It permits the plaintiff to present along with proof of the
accident, enough of the attending circumstances to invoke the doctrine, create an inference or presumption of
negligence and thereby place on the defendant the burden of proving that there was no negligence on his part.38

The doctrine can be invoked only when under the circumstances, direct evidence is absent and not readily available.39
This is based in part upon the theory that the defendant in charge of the instrumentality which causes the injury either
knows the cause of the accident or has the best opportunity of ascertaining it while the plaintiff has no such knowledge,
and is therefore compelled to allege negligence in general terms and rely upon the proof of the happening of the
accident in order to establish negligence.40 The inference which the doctrine permits is grounded upon the fact that the
chief evidence of the true cause, whether culpable or innocent, is practically accessible to the defendant but inaccessible
to the injured person.41

In this case, Macalinao could no longer testify as to the cause of the accident since he is dead. Petitioners, while
substituting their son as plaintiff, have no actual knowledge about the event since they were not present at the crucial
moment. The driver of the private jeepney who could have shed light on the circumstances is likewise dead. The only
ones left with knowledge about the cause of the mishap are the two truck helpers who survived, both employees of
Sebastian, and Ong, who is not only Sebastian’s previous employee but his co-respondent in this case as well. In the
circumstances, evidence as to the true cause of the accident is, for all intents and purposes, accessible to respondents
but not to petitioners. The witnesses left are unlikely to divulge to petitioners what they knew about the cause of the
accident if the same militates against the interest of their employer. This justifies the invocation of the doctrine.

Under local jurisprudence, the following are the requisites for the application of res ipsa loquitur:

(1) The accident is of a kind which ordinarily does not occur in the absence of someone’s negligence;

(2) It is caused by an instrumentality within the exclusive control of the defendant or defendants; and

(3) The possibility of contributing conduct which would make the plaintiff responsible is eliminated.42

We are convinced that all the above requisites are present in the case at bar.

No two motor vehicles traversing opposite lanes will collide as a matter of course unless someone is negligent, thus, the
first requisite for the application of the doctrine is present. Ong was driving the Isuzu truck which, from the evidence
adduced, appears to have precipitated the collision with the private jeepney. Driving the Isuzu truck gave Ong exclusive
management and control over it, a fact which shows that the second requisite is also present. No contributory
negligence could be attributed to Macalinao relative to the happening of the accident since he was merely a passenger in
the Isuzu truck. Respondents’ allegation that Macalinao was guilty of contributory negligence for failing to take the
necessary precautions to ensure his safety while onboard the truck43 is too specious for belief particularly as
respondents did not even present any evidence to prove such allegation. The last requisite is, therefore, likewise present.
There exists a fourth requisite under American jurisprudence, that is, that the defendant fails to offer any explanation
tending to show that the injury was caused by his or her want of due care.44 In this case, while respondents claimed that
Ong drove cautiously and prudently during the time in question, no evidence was proffered to substantiate the same. In
fact, Ong did not bother to testify to explain his actuations and to show that he exercised due care when the accident
happened, so even this requisite is fulfilled.

All the requisites for the application of the rule of res ipsa loquitur are present, thus a reasonable presumption or
inference of Ong’s negligence arises. In consonance with the effect of the doctrine, the burden of proving due care at the
time in question shifts to respondents. Unfortunately, as previously discussed, aside from blanket allegations that Ong
exercised prudence and due care while driving on the day of the accident, respondents proffered no other proof. As a
consequence, the prima facie finding of negligence against Ong, remaining unexplained and/or uncontradicted, is
deemed established. This in turn warrants a finding that Ong is liable for damages to petitioners.

Such liability of Ong is solidary with Sebastian pursuant to Art. 2176 in relation to Art. 2180 of the Civil Code which
provide:

Art. 2176. Whoever by act or omission causes damage to another, there being fault or negligence is obliged to pay for
the damage done . . . .

Art. 2180. The obligation imposed by Art. 2176 is demandable not only for one’s own acts or omissions but also for those
of persons for whom one is responsible.

...

Employers shall be liable for the damage caused by their employees and household helpers acting within the scope of
their assigned tasks even though the former are not engaged in any business or industry.

...
The responsibility treated of in this article shall cease when the persons herein mentioned prove that they observed all
the diligence of a good father of a family to prevent damage. Whenever an employee’s negligence causes damage or
injury to another, there instantly arises a presumption juris tantum that the employer failed to exercise diligentissimi
patris families in the selection (culpa in eligiendo) or supervision (culpa in vigilando) of its employees.45 To avoid liability
for a quasi-delict committed by his employee, an employer must overcome the presumption by presenting convincing
proof that he exercised the care and diligence of a good father of a family in the selection and supervision of his
employee.46

In an attempt to exculpate himself from liability, Sebastian claimed that he exercised due care in selecting Ong as a driver.
Before he hired Ong, he allegedly required him to produce police and NBI clearances and he took into account the
recommendations of Ong’s previous employer and friends.47 Sebastian also stressed that he instructed Ong to drive
slowly and carefully and to take necessary precautions.48 He likewise admonished Ong to be careful after the latter had
some minor accidents in the parking area.49

However, Sebastian’s statements are not sufficient to prove that he exercised the diligence of a good father of a family in
the selection of Ong. His testimony is self-serving and devoid of corroboration as he did not bother to support the same
with document evidence. Moreover, Sebastian could not even remember whether the recommendation from Ong’s
previous employer was made verbally or in writing.50

On the other hand, due diligence in supervision requires the formulation of rules and regulations for the guidance of
employees and the issuance of proper instructions as well as actual implementation and monitoring of consistent
compliance with the rules.51 Admonitions to drive carefully without the corresponding guidelines and monitoring of the
employee do not satisfy the due diligence required by law either.

In short, Sebastian’s claims fall short of what is required by law to overcome the presumption of negligence in the
selection and supervision of his employee. The trial court therefore correctly held him solidarily liable with Ong to
petitioners.

In an obvious ploy to relieve himself from liability should the appellate court’s decision be reversed, Sebastian averred
that Macalinao is not entitled to damages. He anchored his claim on the novel argument that the provisions of Art. 2180
apply only when the injured party is a third person but it has no application to an employee like Macalinao.52 He
likewise postulated that recovery from the Social Security System, State Insurance Fund, Employee’s Compensation
Commission, and the Philippine Medical Care Act, the government agencies with which petitioners filed a claim in view
of Macalinao’s injury and subsequent death, preclude pursuing alternate recourse or recovering from other sources until
the former claims have been rejected.53

Sebastian is grasping at straws. Art. 2180 makes no distinction whatsoever whether the claimant is an employee or a
third person relative to the employer. Ubi lex non distinguit nec nos distinguere debemos. Where the law does not
distinguish, neither should we.54

Moreover, petitioner’s claim against Sebastian is not based upon the fact of Macalinao’s previous employment with him
but on the solidary liability of the latter for the negligent act of one of his employees. Such is not precluded by prior
claims with the government agencies enumerated. One is based on compulsory coverage of government benefits while
the other is based on a cause of action provided by law.

Additionally, respondents postulated that since it was Macalinao who sustained physical injuries and died, he was the
one who suffered pain, not petitioners so moral damages are not recoverable in this case.55
The relatives of the victim who incurred physical injuries in a quasi-delict are not proscribed from recovering moral
damages in meritorious cases. To hold otherwise would give rise to the ridiculous scenario where a defendant may be
compelled to pay moral damages in a quasi-delict causing physical injuries but will be relieved from doing so should
those same injuries cause the victim’s death.

In the case of Lambert v. Heirs of Ray Castillon,56 we held that in quasi-delicts:

“. . . . the award of moral damages is aimed at a restoration, within the limits possible, of the spiritual status quo ante;
and therefore, it must be proportionate to the suffering inflicted. The intensity of the pain experienced by the relatives of
the victim is proportionate to the intensity of affection for him and bears no relation whatsoever with the wealth or
means of the offender.”57 (Emphasis Supplied.)

The trial court awarded moral damages in the amount of P30,000.00 but since prevailing jurisprudence has fixed the
same at P50,000.00,58 there is a need to increase the award to reflect the recent rulings.

Lastly, respondents claim that exemplary damages is not warranted in this case. Under the law, exemplary damages may
be granted in quasi-delicts if the defendant acted with gross negligence.59 Gross negligence has been defined as
negligence characterized by the want of even slight care, acting or omitting to act in a situation where there is duty to
act, not inadvertently but willfully and intentionally, with a conscious indifference to consequences insofar as other
persons may be affected.60

Ong’s gross negligence in driving the Isuzu truck precipitated the accident. This is lucidly portrayed in the photographs on
record and it justifies the award of exemplary damages in petitioners’ favor. However, the trial court’s award of
P10,000.00 is insufficient, thus the Court deems it proper to increase the award to P25,000.00 under the circumstances.

WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals dated 31 May 2000, as well as its Resolution
dated 7 September 2000, are hereby SET ASIDE. The Decision of the Regional Trial Court of Quezon City, Branch 81 dated
12 April 1996 as amended by the Order dated 23 May 1996 is hereby REINSTATED with the modifications that the award
for moral damages is increased to P50,000.00 to conform with prevailing jurisprudence and the award for exemplary
damages is increased to P25,000.00. Costs against respondents.

SO ORDERED.
G.R. No. 157009. March 17, 2010.*

SULPICIO LINES, INC., petitioner, vs. DOMINGO E. CURSO, LUCIA E. CURSO, MELECIO E. CURSO, SEGUNDO E. CURSO,
VIRGILIO E. CURSO, DIOSDADA E. CURSO, and CECILIA E. CURSO, respondents.

Common Carriers; Damages; Statutory Construction; The omission from Article 2206(3) of the brothers and sisters of the
deceased passenger reveals the legislative intent to exclude them from the recovery of moral damages for mental
anguish by reason of the death of the deceased—the solemn power and duty of the courts to interpret and apply the
law do not include the power to correct the law by reading into it was is not written therein.—As a general rule, moral
damages are not recoverable in actions for damages predicated on a breach of contract, unless there is fraud or bad
faith. As an exception, moral damages may be awarded in case of breach of contract of carriage that results in the death
of a passenger, in accordance with Article 1764, in relation to Article 2206 (3), of the Civil Code, which provide: x x x The
foregoing legal provisions set forth the persons entitled to moral damages. The omission from Article 2206 (3) of the
brothers and sisters of the deceased passenger reveals the legislative intent to exclude them from the recovery of moral
damages for mental anguish by reason of the death of the deceased. Inclusio unius est exclusio alterius. The solemn
power and duty of the courts to interpret and apply the law do not include the power to correct the law by reading into
it what is not written therein. Thus, the CA erred in awarding moral damages to the respondents.

Same; Same; Moral Damages; To be entitled to moral damages, a party must have a right based upon law.—The purpose
of moral damages is indemnity or reparation, that is, to enable the injured party to obtain the means, diversions, or
amusements that will serve to alleviate the moral suffering he has undergone by reason of the tragic event. According to
Villanueva v. Salvador, 480 SCRA 39 (2006), the conditions for awarding moral damages are: (a) there must be an injury,
whether physical, mental, or psychological, clearly substantiated by the claimant; (b) there must be a culpable act or
omission factually established; (c) the wrongful act or omission of the defendant must be the proximate cause of the
injury sustained by the claimant; and (d) the award of damages is predicated on any of the cases stated in Article 2219 of
the Civil Code. To be entitled to moral damages, the respondents must have a right based upon law. It is true that under
Article 1003 of the Civil Code they succeeded to the entire estate of the late Dr. Curso in the absence of the latter’s
descendants, ascendants, illegitimate children, and surviving spouse. However, they were not included among the
persons entitled to recover moral damages, as enumerated in Article 2219 of the Civil Code.

Same; Same; Same; Ejusdem Generis; The usage of the phrase analogous cases in Article 2219 of the Civil Code means
simply that the situation must be held similar to those expressly enumerated in the law in question following the
ejusdem generis rule.—Article 2219 circumscribes the instances in which moral damages may be awarded. The provision
does not include succession in the collateral line as a source of the right to recover moral damages. The usage of the
phrase analogous cases in the provision means simply that the situation must be held similar to those expressly
enumerated in the law in question following the ejusdem generis rule. Hence, Article 1003 of the Civil Code is not
concerned with recovery of moral damages.

PETITION for review on certiorari of a decision of the Court of Appeals.

The facts are stated in the opinion of the Court.

Arthur D. Lim Law Office for petitioner.

Clemencio C. Sabitsana for respondents.

BERSAMIN, J.:

Are the surviving brothers and sisters of a passenger of a vessel that sinks during a voyage entitled to recover moral
damages from the vessel owner as common carrier?
This is the question presented in the appeal taken by the common carrier from the reversal by the Court of Appeals (CA)
of the decision of the Regional Trial Court (RTC) dismissing the complaint for various damages filed by the surviving
brothers and sisters of the late Dr. Cenon E. Curso upon a finding that force majeure had caused the sinking. The CA
awarded moral and other damages to the surviving brothers and sisters.

Antecedents

On October 23, 1988, Dr. Curso boarded at the port of Manila the MV Doña Marilyn, an inter-island vessel owned and
operated by petitioner Sulpicio Lines, Inc., bound for Tacloban City. Unfortunately, the MV Doña Marilyn sank in the
afternoon of October 24, 1988 while at sea due to the inclement sea and weather conditions brought about by Typhoon
Unsang. The body of Dr. Curso was not recovered, along with hundreds of other passengers of the ill-fated vessel. At the
time of his death, Dr. Curso was 48 years old, and employed as a resident physician at the Naval District Hospital in Naval,
Biliran. He had a basic monthly salary of P3,940.00, and would have retired from government service by December 20,
2004 at the age of 65.

On January 21, 1993, the respondents, allegedly the surviving brothers and sisters of Dr. Curso, sued the petitioner in the
RTC in Naval, Biliran to claim damages based on breach of contract of carriage by sea, averring that the petitioner had
acted negligently in transporting Dr. Curso and the other passengers. They stated, among others, that their parents had
predeceased Dr. Curso, who died single and without issue; and that, as such, they were Dr. Curso’s surviving heirs and
successors in interest entitled to recover moral and other damages.1 They prayed for judgment, as follows: (a)
compensatory damages of P1,924,809.00; (b) moral damages of P100,000.00; (c) exemplary or corrective damages in the
amount deemed proper and just; (d) expenses of litigation of at least P50,000.00; (e) attorney’s fees of P50,000.00; and
(f) costs of suit.

The petitioner denied liability, insisting that the sinking of the vessel was due to force majeure (i.e., Typhoon Unsang),
which exempted a common carrier from liability. It averred that the MV Doña Marilyn was seaworthy in all respects, and
was in fact cleared by the Philippine Coast Guard for the voyage; and that after the accident it conducted intensive
search and rescue operations and extended assistance and aid to the victims and their families.

Ruling of the RTC

On July 28, 1995, the RTC dismissed the complaint upon its finding that the sinking of the vessel was due to force
majeure. The RTC concluded that the officers of the MV Doña Marilyn had acted with the diligence required of a
common carrier; that the sinking of the vessel and the death of its passengers, including Dr. Curso, could not have been
avoided; that there was no basis to consider the MV Doña Marilyn not seaworthy at the time of the voyage; that the
findings of the Special Board of Marine Inquiry (SBMI) constituted to investigate the disaster absolved the petitioner, its
officers, and crew of any negligence and administrative liability; and that the respondents failed to prove their claim for
damages.

Ruling of the CA

The respondents appealed to the CA, contending that the RTC erred: (a) in considering itself barred from entertaining the
case by the findings of fact of the SBMI in SBMI-ADM Case No. 08-88; (b) in not holding that the petitioner was negligent
and did not exercise the required diligence and care in conducting Dr. Curso to his destination; (c) in not finding that the
MV Doña Marilyn was unseaworthy at the time of its sinking; and (d) in not awarding damages to them.2

In its decision dated September 16, 2002,3 the CA held and disposed:

“Based on the events described by the appellee’s witness, the Court found inadequate proof to show that Sulpicio Lines,
Inc., or its officers and crew, had exercised the required degree of diligence to acquit the appellee of liability.
In the first place, the court finds inadequate explanation why the officers of the M.V. Doña Marilyn had not apprised
themselves of the weather reports on the approach of typhoon “Unsang” which had the power of a signal no. 3 cyclone,
bearing upon the general direction of the path of the M.V. Doña Marilyn. If the officers and crew of the Doña Marilyn had
indeed been adequately monitoring the strength and direction of the typhoon, and had acted promptly and competently
to avoid the same, then such a mishap would not have occurred.

Furthermore, there was no account of the acts and decision of the crew of the ill-fated ship from 8:00 PM on October 23,
1988 when the Chief Mate left his post until 4:00 AM the next day when he resumed duty. It does not appear what
occurred during that time, or what weather reports were received and acted upon by the ship captain. What happened
during such time is important in determining what information about the typhoon was gathered and how the ship
officers reached their decision to just change course, and not take shelter while a strong typhoon was approaching.

Furthermore, the Court doubts the fitness of the ship for the voyage, since at the first sign of bad weather, the ship’s
hydraulic system failed and had to be repaired mid-voyage, making the vessel a virtual derelict amidst a raging storm at
sea. It is part of the appellee’s extraordinary diligence as a common carrier to make sure that its ships can withstand the
forces that bear upon them during a voyage, whether they be the ordinary stress of the sea during a calm voyage or the
rage of a storm. The fact that the stud bolts in the ships hydraulic system gave way while the ship was at sea discredits
the theory that the appellee exercised due diligence in maintaining the seaworthy condition of the M.V. Doña Marilyn.
xxx.4

xxx

Aside from these, the defendant must compensate the plaintiffs for moral damages that they suffered as a result of the
negligence attending the loss of the M.V. Doña Marilyn. Plaintiffs, have established that they took great pains to recover,
in vain, the body of their brother, at their own cost, while suffering great grief due to the loss of a loved one.
Furthermore, Plaintiffs were unable to recover the body of their brother. Moral damages worth P100,000.00 is proper.

WHEREFORE, premises considered, the appealed decision of the RTC of Naval, Biliran, Branch 16, rendered in Civil Case
No. B-0851, is hereby SET ASIDE. In lieu thereof, judgment is hereby rendered, finding the defendant-appellee Sulpicio
Lines, Inc, to have been negligent in transporting the deceased Cenon E. Curso who was on board the ill-fated M.V. Doña
Marilyn, resulting in his untimely death. Defendant-appellee is hereby ordered to pay the plaintiffs heirs of Cenon E.
Curso the following:

(1) Death indemnity in the amount of P50,000.00;

(2) Loss of Earning Capacity in the amount of P504,241.20;

(3) Moral Damages in the amount of P100,000.00.

(4) Costs of the suit.”5

Hence, this appeal, in which the petitioner insists that the CA committed grievous errors in holding that the
respondents were entitled to moral damages as the brothers and sisters of the late Dr. Curso; that the CA thereby
disregarded Article 1764 and Article 2206 of the Civil Code, and the ruling in Receiver for North Negros Sugar Co., Inc. v.
Ybañez,6 whereby the Supreme Court disallowed the award of moral damages in favor of the brothers and sisters of a
deceased passenger in an action upon breach of a contract of carriage.7

Issues

The petitioner raises the following issues:

ARE THE BROTHERS AND SISTERS OF A DECEASED PASSENGER IN A CASE OF BREACH OF CONTRACT OF CARRIAGE
ENTITLED TO AN AWARD OF MORAL DAMAGES AGAINST THE CARRIER?

ASSUMING (THAT) THEY ARE ENTITLED TO CLAIM MORAL DAMAGES, SHOULD THE AWARD BE GRANTED OR GIVEN TO
THE BROTHER OR SISTER NOTWITHSTANDING (THE) LACK OF EVIDENCE AS REGARDS HIS OR HER PERSONAL SUFFERING?

Ruling

The petition is meritorious.

As a general rule, moral damages are not recoverable in actions for damages predicated on a breach of contract, unless
there is fraud or bad faith.8 As an exception, moral damages may be awarded in case of breach of contract of carriage
that results in the death of a passenger,9 in accordance with Article 1764, in relation to Article 2206 (3), of the Civil Code,
which provide:

“Article 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
common carrier.

Article 2206. 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 the 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 foregoing legal provisions set forth the persons entitled to moral damages. The omission from Article 2206 (3) of the
brothers and sisters of the deceased passenger reveals the legislative intent to exclude them from the recovery of moral
damages for mental anguish by reason of the death of the deceased. Inclusio unius est exclusio alterius.10 The solemn
power and duty of the courts to interpret and apply the law do not include the power to correct the law by reading into
it what is not written therein.11 Thus, the CA erred in awarding moral damages to the respondents.

The petitioner has correctly relied on the holding in Receiver for North Negros Sugar Company, Inc. v. Ybañez,12 to the
effect that in case of death caused by quasi-delict, the brother of the deceased was not entitled to the award of moral
damages based on Article 2206 of the Civil Code.

Essentially, the purpose of moral damages is indemnity or reparation, that is, to enable the injured party to obtain the
means, diversions, or amusements that will serve to alleviate the moral suffering he has undergone by reason of the
tragic event. According to Villanueva v. Salvador,13 the conditions for awarding moral damages are: (a) there must be an
injury, whether physical, mental, or psychological, clearly substantiated by the claimant; (b) there must be a culpable act
or omission factually established; (c) the wrongful act or omission of the defendant must be the proximate cause of the
injury sustained by the claimant; and (d) the award of damages is predicated on any of the cases stated in Article 2219 of
the Civil Code.
To be entitled to moral damages, the respondents must have a right based upon law. It is true that under Article 100314
of the Civil Code they succeeded to the entire estate of the late Dr. Curso in the absence of the latter’s descendants,
ascendants, illegitimate children, and surviving spouse. However, they were not included among the persons entitled to
recover moral damages, as enumerated in Article 2219 of the Civil Code, viz.:

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

(1) A criminal offense resulting in physical injuries;

(2) Quasi-delicts causing physical injuries;

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

(4) Adultery or concubinage;

(5) Illegal or arbitrary detention or arrest;

(6) Illegal search;

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

(8) Malicious prosecution;

(9) Acts mentioned in article 309;

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

The parents of the female seduced, abducted, raped or abused referred to in No. 3 of this article, may also recover moral
damages.

The spouse, descendants, ascendants and brothers and sisters may bring the action mentioned in No. 9 of this article, in
the order named.”

Article 2219 circumscribes the instances in which moral damages may be awarded. The provision does not include
succession in the collateral line as a source of the right to recover moral damages. The usage of the phrase analogous
cases in the provision means simply that the situation must be held similar to those expressly enumerated in the law in
question15 following the ejusdem generis rule. Hence, Article 1003 of the Civil Code is not concerned with recovery of
moral damages.

In fine, moral damages may be recovered in an action upon breach of contract of carriage only when: (a) where death
of a passenger results, or (b) it is proved that the carrier was guilty of fraud and bad faith, even if death does not
result.16 Article 2206 of the Civil Code entitles the descendants, ascendants, illegitimate children, and surviving spouse
of the deceased passenger to demand moral damages for mental anguish by reason of the death of the deceased.17

WHEREFORE, the petition for review on certiorari is granted, and the award made to the respondents in the decision
dated September 16, 2002 of the Court of Appeals of moral damages amounting to P100,000.00 is deleted and set aside.

SO ORDERED.

Puno (C.J., Chairperson), Carpio-Morales, Leonardo-De Castro and Villarama, Jr., JJ., concur.

Petition granted.
Note.—Much of the distinction between a “common or public carrier” and a “private or special carrier” lies in the
character of the business, such that if the undertaking is an isolated transaction, not a part of the business or occupation,
and the carrier does not hold itself out to carry the goods for the general public or to a limited clientele, although
involving the carriage of goods for a fee, the person or corporation providing such service could very well be just a
private carrier. (Philippine American General Insurance Company vs. PKS Shipping Company, 401 SCRA 222 [2003])
G.R. No. 128690. January 21, 1999.*

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

Civil Law; Contracts; A contract is a meeting of minds between two persons whereby one binds himself to give something
or to render some service to another for a consideration.—The first issue should be resolved against ABS-CBN. A contract
is a meeting of minds between two persons whereby one binds himself to give something or to render some service to
another for a consideration. There is no contract unless the following requisites concur: (1) consent of the contracting
parties; (2) object certain which is the subject of the contract; and (3) cause of the obligation, which is established. A
contract undergoes three stages: (a) preparation, conception, or generation, which is the period of negotiation and
bargaining, ending at the moment of agreement of the parties; (b) perfection or birth of the contract, which is the
moment when the parties come to agree on the terms of the contract; and (c) consummation or death, which is the
fulfillment or performance of the terms agreed upon in the contract.

Same; Same; Contracts that are consensual in nature are perfected upon mere meeting of the minds. Once there is
concurrence between the offer and the acceptance upon the subject matter, consideration, and terms of payment a
contract is produced.—Contracts that are consensual in nature are perfected upon mere meeting of the minds. Once
there is concurrence between the offer and the acceptance upon the subject matter, consideration, and terms of
payment a contract is produced. The offer must be certain. To convert the offer into a contract, the acceptance must be
absolute and must not qualify the terms of the offer; it must be plain, unequivocal, unconditional, and without variance
of any sort from the proposal. A qualified acceptance, or one that involves a new proposal, constitutes a counter-offer
and is a rejection of the original offer. Consequently, when something is desired which is not exactly what is proposed in
the offer, such acceptance is not sufficient to generate consent because any modification or variation from the terms of
the offer annuls the offer.

Same; Same; Acceptance of an Offer; Words and Phrases; The acceptance of an offer must be unqualified and absolute,
i.e., it “must be identical in all respects with that of the offer so as to produce consent or meeting of the minds.”—ABS-
CBN’s reliance in Limketkai Sons Milling, Inc. v. Court of Appeals and Villonco Realty Company v. Bormaheco, Inc., is
misplaced. In these cases, it was held that an acceptance may contain a request for certain changes in the terms of the
offer and yet be a binding acceptance as long as “it is clear that the meaning of the acceptance is positively and
unequivocally to accept the offer, whether such request is granted or not.” This ruling was, however, reversed in the
resolution of 29 March 1996, which ruled that the acceptance of an offer must be unqualified and absolute, i.e., it “must
be identical in all respects with that of the offer so as to produce consent or meeting of the minds.”

Commercial Law; Corporation Code; Board of Directors; Under the Corporation Code, unless otherwise provided by said
Code, corporate powers, such as the power to enter into contracts, are exercised by the Board of Directors. However, the
Board may delegate such powers to either an executive committee or officials or contracted managers.— Under the
Corporation Code, unless otherwise provided by said Code, corporate powers, such as the power to enter into contracts,
are exercised by the Board of Directors. However, the Board may delegate such powers to either an executive committee
or officials or contracted managers. The delegation, except for the executive committee, must be for specific purposes.
Delegation to officers makes the latter agents of the corporation; accordingly, the general rules of agency as to the
binding effects of their acts would apply. For such officers to be deemed fully clothed by the corporation to exercise a
power of the Board, the latter must specially authorize them to do so. That Del Rosario did not have the authority to
accept ABS-CBN’s counter-offer was best evidenced by his submission of the draft contract to VIVA’s Board of Directors
for the latter’s approval. In any event, there was between Del Rosario and Lopez III no meeting of minds.
Civil Law; Contracts; Damages; Except as provided by law or by stipulation, one is entitled to compensation for actual
damages only for such pecuniary loss suffered by him as he has duly proved.— We find for ABS-CBN on the issue of
damages. We shall first take up actual damages. Chapter 2, Title XVIII, Book IV of the Civil Code is the specific law on
actual or compensatory damages. Except as provided by law or by stipulation, one is entitled to compensation for actual
damages only for such pecuniary loss suffered by him as he has duly proved. The indemnification shall comprehend not
only the value of the loss suffered, but also that of the profits that the obligee failed to obtain. In contracts and quasi-
contracts the damages which may be awarded are dependent on whether the obligor acted with good faith or
otherwise. In case of good faith, the damages recoverable are those which are the natural and probable consequences of
the breach of the obligation and which the parties have foreseen or could have reasonably foreseen at the time of the
constitution of the obligation. If the obligor acted with fraud, bad faith, malice, or wanton attitude, he shall be
responsible for all damages which may be reasonably attributed to the non-performance of the obligation. 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, whether or not such damages have been foreseen or could have reasonably been foreseen
by the defendant.

Same; Same; Same; Actual damages may likewise be recovered for loss or impairment of earning capacity in cases of
temporary or permanent personal injury, or for injury to the plaintiff’s business standing or commercial credit.—Actual
damages may likewise be recovered for loss or impairment of earning capacity in cases of temporary or permanent
personal injury, or for injury to the plaintiff’s business standing or commercial credit. The claim of RBS for actual damages
did not arise from contract, quasi-contract, delict, or quasidelict. It arose from the fact of filing of the complaint despite
ABS-CBN’s alleged knowledge of lack of cause of action.

Same; Same; Same; In cases where a writ of preliminary injunction is issued, the damages which the defendant may
suffer by reason of the writ are recoverable from the injunctive bond.—It may further be observed that in cases where a
writ of preliminary injunction is issued, the damages which the defendant may suffer by reason of the writ are
recoverable from the injunctive bond. In this case, ABS-CBN had not yet filed the required bond; as a matter of fact, it
asked for reduction of the bond and even went to the Court of Appeals to challenge the order on the matter. Clearly
then, it was not necessary for RBS to file a counterbond. Hence, ABS-CBN cannot be held responsible for the premium
RBS paid for the counterbond.

Same; Same; Same; The general rule is that attorney’s fees cannot be recovered as part of damages because of the policy
that no premium should be placed on the right to litigate.—As regards attorney’s fees, the law is clear that in the
absence of stipulation, attorney’s fees may be recovered as actual or compensatory damages under any of the
circumstances provided for in Article 2208 of the Civil Code. The general rule is that attorney’s 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 attorney’s fees under Article 2208 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 attorney’s fees may not be awarded where no sufficient showing of bad faith could be
reflected in a party’s persistence in a case other than an erroneous conviction of the righteousness of his cause.

Same; Same; Same; Moral damages are in the category of an award designed to compensate the claimant for actual
injury suffered and not to impose a penalty on the wrongdoer.—Moral damages are in the category of an award
designed to compensate the claimant for actual injury suffered and not to impose a penalty on the wrongdoer. The
award is not meant to enrich the complainant at the expense of the defendant, but to enable the injured party to obtain
means, diversion, or amusements that will serve to obviate the moral suffering he has undergone. It is aimed at the
restoration, within the limits of the possible, of the spiritual status quo ante, and should be proportionate to the
suffering inflicted. Trial courts must then guard against the award of exorbitant damages; they should exercise balanced
restrained and measured objectivity to avoid suspicion that it was due to passion, prejudice, or corruption on the part of
the trial court.

Same; Same; Same; The award of moral damages cannot be granted in favor of a corporation because, being an artificial
person and having existence only in legal contemplation, it has no feelings, no emotions, no senses. It cannot, therefore,
experience physical suffering and mental anguish, which can be experienced only by one having a nervous system.—The
award of moral damages cannot be granted in favor of a corporation because, being an artificial person and having
existence only in legal contemplation, it has no feelings, no emotions, no senses. It cannot, therefore, experience physical
suffering and mental anguish, which can be experienced only by one having a nervous system. The statement in People v.
Manero and Mambulao Lumber Co. v. PNB that a corporation may recover moral damages if it “has a good reputation
that is debased, resulting in social humiliation” is an obiter dictum. On this score alone the award for damages must be
set aside, since RBS is a corporation.

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

Same; Same; Same; Bad Faith; Malice or bad faith is at the core of Articles 19, 20, and 21. Malice or bad faith implies a
conscious and intentional design to do a wrongful act for a dishonest purpose or moral obliquity. Such must be
substantiated by evidence.—It may be reiterated that the claim of RBS against ABS-CBN is not based on contract, quasi-
contract, delict, or quasi-delict. Hence, the claims for moral and exemplary damages can only be based on Articles 19, 20,
and 21 of the Civil Code. The elements of abuse of right under Article 19 are the following: (1) the existence of a legal
right or duty, (2) which is exercised in bad faith, and (3) for the sole intent of preju-dicing or injuring another. Article 20
speaks of the general sanction for all other provisions of law which do not especially provide for their own sanction;
while Article 21 deals with acts contra bonus mores, and has the following elements: (1) there is an act which is legal, (2)
but which is contrary to morals, good custom, public order, or public policy, and (3) and it is done with intent to injure.
Verily then, malice or bad faith is at the core of Articles 19, 20, and 21. Malice or bad faith implies a conscious and
intentional design to do a wrongful act for a dishonest purpose or moral obliquity. Such must be substantiated by
evidence.

Same; Same; Same; The adverse result of an action does not per se make the action wrongful and subject the actor to
damages, for the law could not have meant to impose a penalty on the right to litigate. If damages result from a person’s
exercise of a right, it is damnum absque injuria.—There is no adequate proof that ABS-CBN was inspired by malice or bad
faith. It was honestly convinced of the merits of its cause after it had undergone serious negotiations culminating in its
formal submission of a draft contract. Settled is the rule that the adverse result of an action does not per se make the
action wrongful and subject the actor to damages, for the law could not have meant to impose a penalty on the right to
litigate. If damages result from a person’s exercise of a right, it is damnum absque injuria.

PETITION for review or certiorari of a decision of the Court of Appeals.

The facts are stated in the opinion of the Court.

Gancayco Law Offices for petitioners.

Peñaflor & Perez Law Offices and Belo, Gozon, Elma, Parel, Asuncion & Lucila for Republic Broadcasting System, Inc.
 Bengzon, Narciso, Cadula, Jimenez, Gonzales & Liwanag for VIVA Productions and V. del Rosario

DAVIDE, JR., C.J.:

In this petition for review on certiorari, petitioner ABS-CBN Broadcasting Corp. (hereafter ABS-CBN) seeks to reverse and
set aside the decision1 of 31 October 1996 and the resolution2 of 10 March 1997 of the Court of Appeals in CA-

G.R. CV No. 44125. The former affirmed with modification the decision3 of 28 April 1993 of the Regional Trial Court (RTC)
of Quezon City, Branch 80, in Civil Case No. Q-92-12309. The latter denied the motion to reconsider the decision of 31
October 1996.

The antecedents, as found by the RTC and adopted by the Court of Appeals, are as follows:

In 1990, ABS-CBN and Viva executed a Film Exhibition Agreement (Exh. “A”) whereby Viva gave ABS-CBN an exclusive
right to exhibit some Viva films. Sometime in December 1991, in accordance with paragraph 2.4 [sic] of said agreement
stating that—

1.4 ABS-CBN shall have the right of first refusal to the next twenty-four (24) Viva films for TV telecast under such terms as
may be agreed upon by the parties hereto, provided, however, that such right shall be exercised by ABS-CBN from the
actual offer in writing.

Viva, through defendant Del Rosario, offered ABS-CBN, through its vice-president Charo Santos-Concio, a list of three (3)
film packages (36 title) from which ABS-CBN may exercise its right of first refusal under the aforesaid agreement (Exhs.
“1” par. 2, “2,” “2-A” and “2-B”-Viva). ABS-CBN, however through Mrs. Concio, “can tick off only ten (10) titles” (from the
list) “we can purchase” (Exh. “3”-Viva) and therefore did not accept said list (TSN, June 8, 1992, pp. 9-10). The titles
ticked off by Mrs. Concio are not the subject of the case at bar except the film “Maging Sino Ka Man.”

For further enlightenment, this rejection letter dated January 06, 1992 (Exh. “3”-Viva) is hereby quoted:

6 January 1992

Dear Vic,

This is not a very formal business letter I am writing to you as I would like to express my difficulty in recommending the
purchase of the three film packages you are offering ABS-CBN.

From among the three packages I can only tick off 10 titles we can purchase. Please see attached. I hope you will
understand my position. Most of the action pictures in the list do not have big action stars in the cast. They are not for
prime-time. In line with this I wish to mention that I have not scheduled for telecast several action pictures in our very
first contract because of the cheap production value of these movies as well as the lack of big action stars. As a film
producer, I am sure you understand what I am trying to say as Viva produces only big action pictures.

In fact, I would like to request two (2) additional runs for these movies as I can only schedule them in our non-primetime
slots. We have to cover the amount that was paid for these movies because as you very well know that non-primetime
advertising rates are very low. These are the unaired titles in the first contract.

1. Kontra Persa [sic]

2. Raider Platoon

3. Underground guerillas
4. Tiger Command

5. Boy de Sabog

6. Lady Commando

7. Batang Matadero

8. Rebelyon

I hope you will consider this request of mine.

The other dramatic films have been offered to us before and have been rejected because of the ruling of MTRCB to have
them aired at 9:00 p.m. due to their very adult themes.

As for the 10 titles I have choosen [sic] from the 3 packages please consider including all the other Viva movies produced
last year. I have quite an attractive offer to make.

Thanking you and with my warmest regards.

(Signed)

Charo Santos-Concio

On February 27, 1992, defendant Del Rosario approached ABS-CBN’s Ms. Concio, with a list consisting of 52 original
movie titles (i.e. not yet aired on television) including the 14 titles subject of the present case, as well as 104 re-runs
(previously aired on television) from which ABS-CBN may choose another 52 titles, as a total of 156 titles, proposing to
sell to ABS-CBN airing rights over this package of 52 originals and 52 re-runs for P60,000,000.00 of which P30,000,000.00
will be in cash and P30,000,000.00 worth of television spots (Exhs. “4” to “4-C”-Viva; “9”-Viva).

On April 2, 1992, defendant Del Rosario and ABS-CBN’s general manager, Eugenio Lopez III, met at the Tamarind Grill
Restaurant in Quezon City to discuss the package proposal of Viva. What transpired in that lunch meeting is the subject
of conflicting versions. Mr. Lopez testified that he and Mr. Del Rosario allegedly agreed that ABS-CBN was granted
exclusive film rights to fourteen (14) films for a total consideration of P36 million; that he allegedly put this agreement as
to the price and number of films in a “napkin” and signed it and gave it to Mr. Del Rosario (Exh. D; TSN, pp. 24-26, 77-78,
June 8, 1992). On the other hand, Del Rosario denied having made any agreement with Lopez regarding the 14 Viva
films; denied the existence of a napkin in which Lopez wrote something; and insisted that what he and Lopez discussed
at the lunch meeting was Viva’s film package offer of 104 films (52 originals and 52 re-runs) for a total price of P60
million. Mr. Lopez promising [sic] to make a counter proposal which came in the form of a proposal contract Annex “C” of
the complaint (Exh. “1”-Viva; Exh. “C”-ABS-CBN).

On April 06, 1992, Del Rosario and Mr. Graciano Gozon of RBS Senior vice-president for Finance discussed the terms and
conditions of Viva’s offer to sell the 104 films, after the rejection of the same package by ABS-CBN.

On April 07, 1992, defendant Del Rosario received through his secretary, a handwritten note from Ms. Concio, (Exh. “5”-
Viva), which reads: “Here’s the draft of the contract. I hope you find everything in order,” to which was attached a draft
exhibition agreement (Exh. “C”-ABS-CBN; Exh. “9”-Viva, p. 3) a counter-proposal covering 53 films, 52 of which came
from the list sent by defendant Del Rosario and one film was added by Ms. Concio, for a consideration of P35 million.
Exhibit “C” provides that ABS-CBN is granted film rights to 53 films and contains a right of first refusal to “1992 Viva
Films.” The said counter proposal was however rejected by Viva’s Board of Directors [in the] evening of the same day,
April 7, 1992, as Viva would not sell anything less than the package of 104 films for P60 million pesos (Exh. “9”-Viva), and
such rejection was relayed to Ms. Concio.

On April 29, 1992, after the rejection of ABS-CBN and following several negotiations and meetings defendant Del Rosario
and Viva’s President Teresita Cruz, in consideration of P60 million, signed a letter of agreement dated April 24, 1992,
granting RBS the exclusive right to air 104 Viva-produced and/or acquired films (Exh. “7-A” -RBS; Exh. “4”-RBS) including
the fourteen (14) films subject of the present case.4

On 27 May 1992, ABS-CBN filed before the RTC a complaint for specific performance with a prayer for a writ of
preliminary injunction and/or temporary restraining order against private respondents Republic Broadcasting
Corporation5 (hereafter RBS), Viva Productions (hereafter VIVA), and Vicente del Rosario. The complaint was docketed as
Civil Case No. Q-92-12309.

On 28 May 1992, the RTC issued a temporary restraining order6 enjoining private respondents from proceeding with the
airing, broadcasting, and televising of the fourteen VIVA films subject of the controversy, starting with the film Maging
Sino Ka Man, which was scheduled to be shown on private respondent RBS’ channel 7 at seven o’clock in the evening of
said date.

On 17 June 1992, after appropriate proceedings, the RTC issued an order7 directing the issuance of a writ of preliminary
injunction upon ABS-CBN’s posting of a P35 million bond. ABS-CBN moved for the reduction of the bond,8 while private
respondents moved for reconsideration of the order and offered to put up a counterbond.9

In the meantime, private respondents filed separate answers with counterclaim.10 RBS also set up a cross-claim against
VIVA.

On 3 August 1992, the RTC issued an order11 dissolving the writ of preliminary injunction upon the posting by RBS of a
P30 million counterbond to answer for whatever damages ABS-CBN might suffer by virtue of such dissolution. However,
it reduced petitioner’s injunction bond to P15 million as a condition precedent for the reinstatement of the writ of
preliminary injunction should private respondents be unable to post a counterbond.

At the pre-trial12 on 6 August 1992, the parties, upon suggestion of the court, agreed to explore the possibility of an
amicable settlement. In the meantime, RBS prayed for and was granted reasonable time within which to put up a P30
million counterbond in the event that no settlement would be reached.

As the parties failed to enter into an amicable settlement, RBS posted on 1 October 1992 a counterbond, which the RTC
approved in its Order of 15 October 1992.13

On 19 October 1992, ABS-CBN filed a motion for reconsideration14 of the 3 August and 15 October 1992 Orders, which
RBS opposed.15

On 29 October 1992, the RTC conducted a pre-trial.16

Pending resolution of its motion for reconsideration, ABS-CBN filed with the Court of Appeals a petition17 challenging
the RTC’s Orders of 3 August and 15 October 1992 and praying for the issuance of a writ of preliminary injunction to
enjoin the RTC from enforcing said orders. The case was docketed as CA-G.R. SP No. 29300.

On 3 November 1992, the Court of Appeals issued a temporary restraining order18 to enjoin the airing, broadcasting,
and televising of any or all of the films involved in the controversy.
On 18 December 1992, the Court of Appeals promulgated a decision19 dismissing the petition in CA-G.R. SP No. 29300
for being premature. ABS-CBN challenged the dismissal in a petition for review filed with this Court on 19 January 1993,
which was docketed as G.R. No. 108363.

In the meantime the RTC received the evidence for the parties in Civil Case No. Q-92-12309. Thereafter, on 28 April 1993,
it rendered a decision20 in favor of RBS and VIVA and against ABS-CBN disposing as follows:

WHEREFORE, under cool reflection and prescinding from the foregoing, judgment is rendered in favor of defendants and
against the plaintiff.

(1) The complaint is hereby dismissed.

(2) Plaintiff ABS-CBN is ordered to pay defendant RBS the following:

a) P107,727.00, the amount of premium paid by RBS to the surety which issued defendant RBS’s bond to lift the
injunction;

b) P191,843.00 for the amount of print advertisement for “Maging Sino Ka Man” in various newspapers;

c) Attorney’s fees in the amount of P1 million;

d) P5 million as and by way of moral damages;

e) P5 million as and by way of exemplary damages;

(3) For defendant VIVA, plaintiff ABS-CBN is ordered to pay P212,000.00 by way of reasonable attorney’s fees.

(4) The cross-claim of defendant RBS against defendant VIVA is dismissed.

(5) Plaintiff to pay the costs.

According to the RTC, there was no meeting of minds on the price and terms of the offer. The alleged agreement
between Lopez III and Del Rosario was subject to the approval of the VIVA Board of Directors, and said agreement was
disapproved during the meeting of the Board on 7 April 1992. Hence, there was no basis for ABS-CBN’s demand that
VIVA signed the 1992 Film Exhibition Agreement. Furthermore, the right of first refusal under the 1990 Film Exhibition
Agreement had previously been exercised per Ms. Concio’s letter to Del Rosario ticking off ten titles acceptable to them,
which would have made the 1992 agreement an entirely new contract.

On 21 June 1993, this Court denied21 ABS-CBN’s petition for review in G.R. No. 108363, as no reversible error was
committed by the Court of Appeals in its challenged decision and the case had “become moot and academic in view of
the dismissal of the main action by the court a quo in its decision” of 28 April 1993.

Aggrieved by the RTC’s decision, ABS-CBN appealed to the Court of Appeals claiming that there was a perfected contract
between ABS-CBN and VIVA granting ABS-CBN the exclusive right to exhibit the subject films. Private respondents VIVA
and Del Rosario also appealed seeking moral and exemplary damages and additional attorney’s fees.

In its decision of 31 October 1996, the Court of Appeals agreed with the RTC that the contract between ABS-CBN and
VIVA had not been perfected, absent the approval by the VIVA Board of Directors of whatever Del Rosario, it’s agent,
might have agreed with Lopez III. The appellate court did not even believe ABS-CBN’s evidence that Lopez III actually
wrote down such an agreement on a “napkin,” as the same was never produced in court. It likewise rejected ABS-CBN’s
insistence on its right of first refusal and ratiocinated as follows:
As regards the matter of right of first refusal, it may be true that a Film Exhibition Agreement was entered into between
Appellant ABS-CBN and appellant VIVA under Exhibit “A” in 1990, and that parag. 1.4 thereof provides:

1.4 ABS-CBN shall have the right of first refusal to the next twenty-four (24) VIVA films for TV telecast under such terms
as may be agreed upon by the parties hereto, provided, however, that such right shall be exercised by ABS-CBN within a
period of fifteen (15) days from the actual offer in writing (Records, p. 14).

[H]owever, it is very clear that said right of first refusal in favor of ABS-CBN shall still be subject to such terms as may be
agreed upon by the parties thereto, and that the said right shall be exercised by ABS-CBN within fifteen (15) days from
the actual offer in writing. Said parag. 1.4 of the agreement Exhibit “A” on the right of first refusal did not fix the price of
the film right to the twenty-four (24) films, nor did it specify the terms thereof. The same are still left to be agreed upon
by the parties.

In the instant case, ABS-CBN’s letter of rejection Exhibit 3 (Records, p. 89) stated that it can only tick off ten (10) films,
and the draft contract Exhibit “C” accepted only fourteen (14) films, while parag. 1.4 of Exhibit “A” speaks of the next
twenty-four (24) films. The offer of VIVA was sometime in December 1991 (Exhibits 2, 2-A, 2-B; Records, pp. 86-88;
Decision, p. 11, Records, p. 1150), when the first list of VIVA films was sent by Mr. Del Rosario to ABS-CBN.

The Vice President of ABS-CBN, Mrs. Charo Santos-Concio, sent a letter dated January 6, 1992 (Exhibit 3, Records, p. 89)
where ABS-CBN exercised its right of refusal by rejecting the offer of VIVA. As aptly observed by the trial court, with the
said letter of Mrs. Concio of January 6, 1992, ABS-CBN had lost its right of first refusal. And even if We reckon the fifteen
(15) day period from February 27, 1992 (Exhibits 4 to 4-C) when another list was sent to ABS-CBN after the letter of Mrs.
Concio, still the fifteen (15) day period within which ABS-CBN shall exercise its right of first refusal has already expired.22

Accordingly, respondent court sustained the award of actual damages consisting in the cost of print advertisements and
the premium payments for the counterbond, there being adequate proof of the pecuniary loss which RBS’s had suffered
as a result of the filing of the complaint by ABS-CBN. As to the award of moral damages, the Court of Appeals found
reasonable basis therefor, holding that RBS’ reputation was debased by the filing of the complaint in Civil Case No. Q-92-
12309 and by the non-showing of the film “Maging Sino Ka Man.” Respondent court also held that exemplary damages
were correctly imposed by way of example or correction for the public good in view of the filing of the complaint despite
petitioner’s knowledge that the contract with VIVA had not been perfected. It also upheld the award of attorney’s fees,
reasoning that with ABS-CBN’s act of instituting Civil Case No. Q-92-12309, RBS was “unnecessarily forced to litigate.”
The appellate court, however, reduced the awards of moral damages to P2 million, exemplary damages to P2 million, and
attorney’s fees to P500,000.00.

On the other hand, respondent Court of Appeals denied VIVA and Del Rosario’s appeal because it was “RBS and not VIVA
which was actually prejudiced when the complaint was filed by ABS-CBN.”

Its motion for reconsideration having been denied, ABS-CBN filed the petition in this case, contending that the Court of
Appeals gravely erred in

. . . RULING THAT THERE WAS NO PERFECTED CONTRACT BETWEEN PETITIONER AND PRIVATE RESPONDENT VIVA
NOTWITHSTANDING PREPONDERANCE OF EVIDENCE ADDUCED BY PETITIONER TO THE CONTRARY.

II

. . . IN AWARDING ACTUAL AND COMPENSATORY DAMAGES IN FAVOR OF PRIVATE RESPONDENT RBS.

III

. . . IN AWARDING MORAL AND EXEMPLARY DAMAGES IN FAVOR OF PRIVATE RESPONDENT RBS.

IV

. . . IN AWARDING ATTORNEY’S FEES IN FAVOR OF RBS.

ABS-CBN claims that it had yet to fully exercise its right of first refusal over twenty-four titles under the 1990 Film
Exhibition Agreement, as it had chosen only ten titles from the first list. It insists that we give credence to Lopez’s
testimony that he and Del Rosario met at the Tamarind Grill Restaurant, discussed the terms and conditions of the
second list (the 1992 Film Exhibition Agreement) and upon agreement thereon, wrote the same on a paper napkin. It
also asserts that the contract has already been effective, as the elements thereof, namely, consent, object, and
consideration were established. It then concludes that the Court of Appeals’ pronouncements were not supported by
law and jurisprudence, as per our decision of 1 December 1995 in Limketkai Sons Milling, Inc. v. Court of Appeals,23
which cited Toyota Shaw, Inc. v. Court of Appeals;24 Ang Yu Asuncion v. Court of Appeals;25 and Villonco Realty Company
v. Bormaheco, Inc.26

Anent the actual damages awarded to RBS, ABS-CBN disavows liability therefor. RBS spent for the premium on the
counterbond of its own volition in order to negate the injunction issued by the trial court after the parties had ventilated
their respective positions during the hearings for the purpose. The filing of the counterbond was an option available to
RBS, but it can hardly be argued that ABS-CBN compelled RBS to incur such expense. Besides, RBS had another available
option, i.e., move for the dissolution of the injunction; or if it was determined to put up a counterbond, it could have
presented a cash bond. Furthermore under Article 2203 of the Civil Code, the party suffering loss or injury is also
required to exercise the diligence of a good father of a family to minimize the damages resulting from the act or
omission. As regards the cost of print advertisements, RBS had not convincingly established that this was a loss
attributable to the non-showing of “Maging Sino Ka Man”; on the contrary, it was brought out during trial that with or
without the case or the injunction, RBS would have spent such an amount to generate interest in the film.

ABS-CBN further contends that there was no clear basis for the awards of moral and exemplary damages. The
controversy involving ABS-CBN and RBS did not in any way originate from business transaction between them. The claims
for such damages did not arise from any contractual dealings or from specific acts committed by ABS-CBN against RBS
that may be characterized as wanton, fraudulent, or reckless; they arose by virtue only of the filing of the complaint. An
award of moral and exemplary damages is not warranted where the record is bereft of any proof that a party acted
maliciously or in bad faith in filing an action.27 In any case, free resort to courts for redress of wrongs is a matter of
public policy. The law recognizes the right of every one to sue for that which he honestly believes to be his right without
fear of standing trial for damages where by lack of sufficient evidence, legal technicalities, or a different interpretation of
the laws on the matter, the case would lose ground.28 One who makes use of his own legal right does no injury.29 If
damage results from the filing of the complaint, it is damnum absque injuria.30 Besides, moral damages are generally
not awarded in favor of a juridical person, unless it enjoys a good reputation that was debased by the offending party
resulting in social humiliation.31

As regards the award of attorney’s fees, ABS-CBN maintains that the same had no factual, legal, or equitable justification.
In sustaining the trial court’s award, the Court of Appeals acted in clear disregard of the doctrine laid down in Buan v.
Camaganacan32 that the text of the decision should state the reason why attorney’s fees are being awarded; otherwise,
the award should be disallowed. Besides, no bad faith has been imputed on, much less proved as having been committed
by, ABS-CBN. It has been held that “where no sufficient showing of bad faith would be reflected in a party’s persistence
in a case other than an erroneous conviction of the righteousness of his cause, attorney’s fees shall not be recovered as
cost.”33
On the other hand, RBS asserts that there was no perfected contract between ABS-CBN and VIVA absent any meeting of
minds between them regarding the object and consideration of the alleged contract. It affirms that ABS-CBN’s claim of a
right of first refusal was correctly rejected by the trial court. RBS insists the premium it had paid for the counterbond
constituted a pecuniary loss upon which it may recover. It was obliged to put up the counterbond due to the injunction
procured by ABS-CBN. Since the trial court found that ABS-CBN had no cause of action or valid claim against RBS and,
therefore not entitled to the writ of injunction, RBS could recover from ABS-CBN the premium paid on the counterbond.
Contrary to the claim of ABS-CBN, the cash bond would prove to be more expensive, as the loss would be equivalent to
the cost of money RBS would forego in case the P30 million came from its funds or was borrowed from banks.

RBS likewise asserts that it was entitled to the cost of advertisements for the cancelled showing of the film “Maging Sino
Ka Man” because the print advertisements were put out to announce the showing on a particular day and hour on
Channel 7, i.e., in its entirety at one time, not as series to be shown on a periodic basis. Hence, the print advertisements
were good and relevant for the particular date of showing, and since the film could not be shown on that particular date
and hour because of the injunction, the expenses for the advertisements had gone to waste.

As regards moral and exemplary damages, RBS asserts that ABS-CBN filed the case and secured injunctions purely for the
purpose of harassing and prejudicing RBS. Pursuant then to Articles 19 and 21 of the Civil Code, ABS-CBN must be held
liable for such damages. Citing Tolentino,34 damages may be awarded in cases of abuse of rights even if the act done is
not illicit, and there is abuse of rights where a plaintiff institutes an action purely for the purpose of harassing or
prejudicing the defendant.

In support of its stand that a juridical entity can recover moral and exemplary damages, private respondent RBS cited
People v. Manero,35 where it was stated that such entity may recover moral and exemplary damages if it has a good
reputation that is debased resulting in social humiliation. It then ratiocinates; thus:

There can be no doubt that RBS’ reputation has been debased by ABS-CBN’s acts in this case. When RBS was not able to
fulfill its commitment to the viewing public to show the film “Maging Sino Ka Man” on the scheduled dates and times
(and on two occasions that RBS advertised), it suffered serious embarrassment and social humiliation. When the showing
was canceled, irate viewers called up RBS’ offices and subjected RBS to verbal abuse (“Announce kayo ng announce, hindi
ninyo naman ilalabas,” “nanloloko yata kayo”) (Exh. 3-RBS, par. 3). This alone was not something RBS brought upon itself.
It was exactly what ABS-CBN had planned to happen.

The amount of moral and exemplary damages cannot be said to be excessive. Two reasons justify the amount of the
award.

The first is that the humiliation suffered by RBS is national in extent. RBS’ operations as a broadcasting company is [sic]
nationwide. Its clientele, like that of ABS-CBN, consists of those who own and watch television. It is not an exaggeration
to state, and it is a matter of judicial notice that almost every other person in the country watches television. The
humiliation suffered by RBS is multiplied by the number of televiewers who had anticipated the showing of the film
“Maging Sino Ka Man” on May 28 and November 3, 1992 but did not see it owing to the cancellation. Added to this are
the advertisers who had placed commercial spots for the telecast and to whom RBS had a commitment in consideration
of the placement to show the film in the dates and times specified.

The second is that it is a competitor that caused RBS to suffer the humiliation. The humiliation and injury are far greater
in degree when caused by an entity whose ultimate business objective is to lure customers (viewers in this case) away
from the competition.36

For their part, VIVA and Vicente del Rosario contend that the findings of fact of the trial court and the Court of Appeals
do not support ABS-CBN’s claim that there was a perfected contract. Such factual findings can no longer be disturbed in
this petition for review under Rule 45, as only questions of law can be raised, not questions of fact. On the issue of
damages and attorney’s fees, they adopted the arguments of RBS.

The key issues for our consideration are (1) whether there was a perfected contract between VIVA and ABS-CBN, and (2)
whether RBS is entitled to damages and attorney’s fees. It may be noted that the award of attorney’s fees of P212,000 in
favor of VIVA is not assigned as another error.

The first issue should be resolved against ABS-CBN. A contract is a meeting of minds between two persons whereby one
binds himself to give something or to render some service to another37 for a consideration. There is no contract unless
the following requisites concur: (1) consent of the contracting parties; (2) object certain which is the subject of the
contract; and (3) cause of the obligation, which is established.38 A contract undergoes three stages:

(a) preparation, conception, or generation, which is the period of negotiation and bargaining, ending at the moment of
agreement of the parties;

(b) perfection or birth of the contract, which is the moment when the parties come to agree on the terms of the
contract; and

(c) consummation or death, which is the fulfillment or performance of the terms agreed upon in the contract.39

Contracts that are consensual in nature are perfected upon mere meeting of the minds. Once there is concurrence
between the offer and the acceptance upon the subject matter, consideration, and terms of payment a contract is
produced. The offer must be certain. To convert the offer into a contract, the acceptance must be absolute and must not
qualify the terms of the offer; it must be plain, unequivocal, unconditional, and without variance of any sort from the
proposal. A qualified acceptance, or one that involves a new proposal, constitutes a counter-offer and is a rejection of
the original offer. Consequently, when something is desired which is not exactly what is proposed in the offer, such
acceptance is not sufficient to generate consent because any modification or variation from the terms of the offer annuls
the offer.40

When Mr. Del Rosario of VIVA met with Mr. Lopez of ABS-CBN at the Tamarind Grill on 2 April 1992 to discuss the
package of films, said package of 104 VIVA films was VIVA’s offer to ABS-CBN to enter into a new Film Exhibition
Agreement. But ABS-CBN, sent, through Ms. Concio, a counter-proposal in the form of a draft contract proposing
exhibition of 53 films for a consideration of P35 million. This counter-proposal could be nothing less than the counter-
offer of Mr. Lopez during his conference with Del Rosario at Tamarind Grill Restaurant. Clearly, there was no acceptance
of VIVA’s offer, for it was met by a counter-offer which substantially varied the terms of the offer.

ABS-CBN’s reliance in Limketkai Sons Milling, Inc. v. Court of Appeals 41 and Villonco Realty Company v. Bormaheco,
Inc.,42 is misplaced. In these cases, it was held that an acceptance may contain a request for certain changes in the
terms of the offer and yet be a binding acceptance as long as “it is clear that the meaning of the acceptance is positively
and unequivocally to accept the offer, whether such request is granted or not.” This ruling was, however, reversed in the
resolution of 29 March 1996,43 which ruled that the acceptance of an offer must be unqualified and absolute, i.e., it
“must be identical in all respects with that of the offer so as to produce consent or meeting of the minds.”

On the other hand, in Villonco, cited in Limketkai, the alleged changes in the revised counter-offer were not material but
merely clarificatory of what had previously been agreed upon. It cited the statement in Stuart v. Franklin Life Insurance
Co.44 that “a vendor’s change in a phrase of the offer to purchase, which change does not essentially change the terms
of the offer, does not amount to a rejection of the offer and the tender of a counter-offer.”45 However, when any of the
elements of the contract is modified upon acceptance, such alteration amounts to a counter-offer.
In the case at bar, ABS-CBN made no unqualified acceptance of VIVA’s offer. Hence, they underwent a period of
bargaining. ABS-CBN then formalized its counter-proposals or counter-offer in a draft contract. VIVA through its Board of
Directors, rejected such counter-offer. Even if it be conceded arguendo that Del Rosario had accepted the counter-offer,
the acceptance did not bind VIVA, as there was no proof whatsoever that Del Rosario had the specific authority to do so.

Under the Corporation Code,46 unless otherwise provided by said Code, corporate powers, such as the power to enter
into contracts, are exercised by the Board of Directors. However, the Board may delegate such powers to either an execu-
tive committee or officials or contracted managers. The delegation, except for the executive committee, must be for
specific purposes.47 Delegation to officers makes the latter agents of the corporation; accordingly, the general rules of
agency as to the binding effects of their acts would apply.48 For such officers to be deemed fully clothed by the
corporation to exercise a power of the Board, the latter must specially authorize them to do so. That Del Rosario did not
have the authority to accept ABS-CBN’s counter-offer was best evidenced by his submission of the draft contract to
VIVA’s Board of Directors for the latter’s approval. In any event, there was between Del Rosario and Lopez III no meeting
of minds. The following findings of the trial court are instructive:

A number of considerations militate against ABS-CBN’s claim that a contract was perfected at that lunch meeting on April
02, 1992 at the Tamarind Grill.

FIRST, Mr. Lopez claimed that what was agreed upon at the Tamarind Grill referred to the price and the number of films,
which he wrote on a napkin. However, Exhibit “C” contains numerous provisions which were not discussed at the
Tamarind Grill, if Lopez’ testimony was to be believed nor could they have been physically written on a napkin. There was
even doubt as to whether it was a paper napkin or a cloth napkin. In short what were written in Exhibit “C” were not
discussed, and therefore could not have been agreed upon, by the parties. How then could this court compel the parties
to sign Exhibit “C” when the provisions thereof were not previously agreed upon?

SECOND, Mr. Lopez claimed that what was agreed upon as the subject matter of the contract was 14 films. The complaint
in fact prays for delivery of 14 films. But Exhibit “C” mentions 53 films as its subject matter. Which is which? If Exhibit “C”
reflected the true intent of the parties, then ABS-CBN’s claim for 14 films in its complaint is false or if what it alleged in
the complaint is true, then Exhibit “C” did not reflect what was agreed upon by the parties. This underscores the fact
that there was no meeting of the minds as to the subject matter of the contract, so as to preclude perfection thereof. For
settled is the rule that there can be no contract where there is no object certain which is its subject matter (Art. 1318,
NCC).

THIRD, Mr. Lopez [sic] answer to question 29 of his affidavit testimony (Exh. “D”) states:

“We were able to reach an agreement. VIVA gave us the exclusive license to show these fourteen (14) films, and we
agreed to pay Viva the amount of P16,050,000.00 as well as grant Viva commercial slots worth P19,950,000.00. We had
already earmarked this P16,050,000.00.”

which gives a total consideration of P36 million (P19,950,000.00 plus P16,050,000.00 equals P36,000,000.00).

On cross-examination Mr. Lopez testified:

Q: What was written in this napkin?

A: The total price, the breakdown the known Viva movies, the 7 blockbuster movies and the other 7 Viva movies because
the price was broken down accordingly. The none [sic] Viva and the seven other Viva movies and the sharing between
the cash portion and the concerned spot portion in the total amount of P35 million pesos.

Now, which is which? P36 million or P35 million? This weakens ABS-CBN’s claim.
FOURTH. Mrs. Concio, testifying for ABS-CBN stated that she transmitted Exhibit “C” to Mr. Del Rosario with a
handwritten note, describing said Exhibit “C” as a “draft.” (Exh. “5”-Viva; tsn, pp. 23-24, June 08, 1992). The said draft has
a well defined meaning.

...

Since Exhibit “C” is only a draft, or a tentative, provisional or preparatory writing prepared for discussion, the terms and
conditions thereof could not have been previously agreed upon by ABS-CBN and Viva. Exhibit “C” could not therefore
legally bind Viva, not having agreed thereto. In fact, Ms. Concio admitted that the terms and conditions embodied in
Exhibit “C” were prepared by ABS-CBN’s lawyers and there was no discussion on said terms and conditions . . . .

As the parties had not yet discussed the proposed terms and conditions in Exhibit “C,” and there was no evidence
whatsoever that Viva agreed to the terms and conditions thereof, said document cannot be a binding contract. The fact
that Viva refused to sign Exhibit “C” reveals only two [sic] well that it did not agree on its terms and conditions, and this
court has no authority to compel Viva to agree thereto.

FIFTH. Mr. Lopez understand [sic] that what he and Mr. Del Rosario agreed upon at the Tamarind Grill was only
provisional, in the sense that it was subject to approval by the Board of Directors of Viva. He testified:

Q: Now, Mr. Witness, and after that Tamarind meeting . . . the second meeting wherein you claimed that you have the
meeting of the minds between you and Mr. Vic del Rosario, what happened?

A: Vic Del Rosario was supposed to call us up and tell us specifically the result of the discussion with the Board of fs
Directors.

Q: And you are referring to the so-called agreement which you wrote in [sic] a piece of paper?

A: Yes, sir.

Q: So, he was going to forward that to the board of Directors for approval?

A: Yes, sir. (Tsn, pp. 42-43, June 8, 1992)

...

Q: Did Mr. Del Rosario tell you that he will submit it to his Board for approval?

A: Yes, sir. (Tsn, p. 69, June 8, 1992).

The above testimony of Mr. Lopez shows beyond doubt that he knew Mr. Del Rosario had no authority to bind Viva to a
contract with ABS-CBN until and unless its Board of Directors approved it. The complaint, in fact, alleges that Mr. Del
Rosario “is the Executive Producer of defendant Viva” which “is a corporation.” (par. 2, complaint). As a mere agent of
Viva, Del Rosario could not bind Viva unless what he did is ratified by its Board of Directors. (Vicente vs. Geraldez, 52
SCRA 210; Arnold vs. Willets and Paterson, 44 Phil. 634). As a mere agent, recognized as such by plaintiff, Del Rosario
could not be held liable jointly and severally with Viva and his inclusion as party defendant has no legal basis. (Salonga vs.
Warner Barner [sic], COLTA, 88 Phil. 125; Salmon vs. Tan, 36 Phil. 556).

The testimony of Mr. Lopez and the allegations in the complaint are clear admissions that what was supposed to have
been agreed upon at the Tamarind Grill between Mr. Lopez and Del Rosario was not a binding agreement. It is as it
should be because corporate power to enter into a contract is lodged in the Board of Directors. (Sec. 23, Corporation
Code). Without such board approval by the Viva board, whatever agreement Lopez and Del Rosario arrived at could not
ripen into a valid contract binding upon Viva (Yao Ka Sin Trading vs. Court of Appeals, 209 SCRA 763). The evidence
adduced shows that the Board of Directors of Viva rejected Exhibit “C” and insisted that the film package for 104 films be
maintained (Exh. “7-1”-Viva).49

The contention that ABS-CBN had yet to fully exercise its right of first refusal over twenty-four films under the 1990

Film Exhibition Agreement and that the meeting between Lopez and Del Rosario was a continuation of said previous
contract is untenable. As observed by the trial court, ABS-CBN’s right of first refusal had already been exercised when Ms.
Concio wrote to VIVA ticking off ten films. Thus:

[T]he subsequent negotiation with ABS-CBN two (2) months after this letter was sent, was for an entirely different
package. Ms. Concio herself admitted on cross-examination to having used or exercised the right of first refusal. She
stated that the list was not acceptable and was indeed not accepted by ABS-CBN, (TSN, June 8, 1992, pp. 8-10). Even Mr.
Lopez himself admitted that the right of first refusal may have been already exercised by Ms. Concio (as she had). (TSN,
June 8, 1992, pp. 71-75). Del Rosario himself knew and understand [sic] that ABS-CBN has lost its right of first refusal
when his list of 36 titles were rejected (Tsn, June 9, 1992, pp. 10-11).50

II

However, we find for ABS-CBN on the issue of damages. We shall first take up actual damages. Chapter 2, Title XVIII, Book
IV of the Civil Code is the specific law on actual or compensatory damages. Except as provided by law or by stipulation,
one is entitled to compensation for actual damages only for such pecuniary loss suffered by him as he has duly proved.51
The indemnification shall comprehend not only the value of the loss suffered, but also that of the profits that the obligee
failed to obtain.52 In contracts and quasi-contracts the damages which may be awarded are dependent on whether the
obligor acted with good faith or otherwise. In case of good faith, the damages recoverable are those which are the
natural and probable consequences of the breach of the obligation and which the parties have foreseen or could have
reasonably foreseen at the time of the constitution of the obligation. If the obligor acted with fraud, bad faith, malice, or
wanton attitude, he shall be responsible for all damages which may be reasonably attributed to the non-performance of
the obligation.53 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, whether or not such damages have been foreseen or could
have reasonably been foreseen by the defendant.54

Actual damages may likewise be recovered for loss or impairment of earning capacity in cases of temporary or
permanent personal injury, or for injury to the plaintiff’s business standing or commercial credit.55

The claim of RBS for actual damages did not arise from contract, quasi-contract, delict, or quasi-delict. It arose from the
fact of filing of the complaint despite ABS-CBN’s alleged knowledge of lack of cause of action. Thus paragraph 12 of RBS’s
Answer with Counterclaim and Cross-claim under the heading COUNTERCLAIM specifically alleges:

12. ABS-CBN filed the complaint knowing fully well that it has no cause of action against RBS. As a result thereof, RBS
suffered actual damages in the amount of P6,621,195.32.56

Needless to state the award of actual damages cannot be comprehended under the above law on actual damages. RBS
could only probably take refuge under Articles 19, 20, and 21 of the Civil Code, which read as follows:

ART. 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give
everyone his due, and observe honesty and good faith.

ART. 20. Every person who, contrary to law, wilfully or negligently causes damage to another, shall indemnify the latter
for the same.
ART. 21. Any person who wilfully causes loss or injury to another in a manner that is contrary to morals, good customs or
public policy shall compensate the latter for the damage.

It may further be observed that in cases where a writ of preliminary injunction is issued, the damages which the
defendant may suffer by reason of the writ are recoverable from the injunctive bond.57 In this case, ABS-CBN had not yet
filed the required bond; as a matter of fact, it asked for reduction of the bond and even went to the Court of Appeals to
challenge the order on the matter. Clearly then, it was not necessary for RBS to file a counterbond. Hence, ABS-CBN
cannot be held responsible for the premium RBS paid for the counterbond.

Neither could ABS-CBN be liable for the print advertisements for “Maging Sino Ka Man” for lack of sufficient legal basis.
The RTC issued a temporary restraining order and later, a writ of preliminary injunction on the basis of its determination
that there existed sufficient ground for the issuance thereof. Notably, the RTC did not dissolve the injunction on the
ground of lack of legal and factual basis, but because of the plea of RBS that it be allowed to put up a counterbond.

As regards attorney’s fees, the law is clear that in the absence of stipulation, attorney’s fees may be recovered as actual
or compensatory damages under any of the circumstances provided for in Article 2208 of the Civil Code.58

The general rule is that attorney’s fees cannot be recovered as part of damages because of the policy that no premium
should be placed on the right to litigate.59 They are not to be awarded every time a party wins a suit. The power of the
court to award attorney’s fees under Article 2208 demands factual, legal, and equitable justification.60 Even when a
claimant is compelled to litigate with third persons or to incur expenses to protect his rights, still attorney’s fees may not
be awarded where no sufficient showing of bad faith could be reflected in a party’s persistence in a case other than an
erroneous conviction of the righteousness of his cause.61

As to moral damages the law is Section 1, Chapter 3, Title XVIII, Book IV of the Civil Code. Article 2217 thereof defines
what are included in moral damages, while Article 2219 enumerates the cases where they may be recovered. Article
2220 provides that moral damages may be recovered in breaches of contract where the defendant acted fraudulently or
in bad faith. RBS’s claim for moral damages could possibly fall only under item (10) of Article 2219, thereof which reads:

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

Moral damages are in the category of an award designed to compensate the claimant for actual injury suffered and not
to impose a penalty on the wrongdoer.62 The award is not meant to enrich the complainant at the expense of the
defendant, but to enable the injured party to obtain means, diversion, or amusements that will serve to obviate the
moral suffering he has undergone. It is aimed at the restoration, within the limits of the possible, of the spiritual status
quo ante, and should be proportionate to the suffering inflicted.63 Trial courts must then guard against the award of
exorbitant damages; they should exercise balanced restrained and measured objectivity to avoid suspicion that it was
due to passion, prejudice, or corruption on the part of the trial court.64

The award of moral damages cannot be granted in favor of a corporation because, being an artificial person and having
existence only in legal contemplation, it has no feelings, no emotions, no senses. It cannot, therefore, experience physical
suffering and mental anguish, which can be experienced only by one having a nervous system.65 The statement in
People v. Manero 66 and Mambulao Lumber Co. v. PNB 67 that a corporation may recover moral damages if it “has a
good reputation that is debased, resulting in social humiliation” is an obiter dictum. On this score alone the award for
damages must be set aside, since RBS is a corporation.

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

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

The elements of abuse of right under Article 19 are the following: (1) the existence of a legal right or duty, (2) which is
exercised in bad faith, and (3) for the sole intent of prejudicing or injuring another. Article 20 speaks of the general
sanction for all other provisions of law which do not especially provide for their own sanction; while Article 21 deals with
acts contra bonus mores, and has the following elements: (1) there is an act which is legal, (2) but which is contrary to
morals, good custom, public order, or public policy, and (3) and it is done with intent to injure.72

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

There is no adequate proof that ABS-CBN was inspired by malice or bad faith. It was honestly convinced of the merits of
its cause after it had undergone serious negotiations culminating in its formal submission of a draft contract. Settled is
the rule that the adverse result of an action does not per se make the action wrongful and subject the actor to damages,
for the law could not have meant to impose a penalty on the right to litigate. If damages result from a person’s exercise
of a right, it is damnum absque injuria.75

WHEREFORE, the instant petition is GRANTED. The challenged decision of the Court of Appeals in CA-G.R. CV No. 44125
is hereby REVERSED except as to unappealed award of attorney’s fees in favor of VIVA Productions, Inc.

No pronouncement as to costs.

SO ORDERED.
G.R. No. 141994. January 17, 2005.*

FILIPINAS BROADCASTING NETWORK, INC., petitioner, vs. AGO MEDICAL AND EDUCATIONAL CENTER-BICOL
CHRISTIAN COLLEGE OF MEDICINE, (AMEC-BCCM) and ANGELITA F. AGO, respondents.

Constitutional Law; Freedom of Expression; Libel; Broadcast Industry; Radio host’s remarks such as “greed for money on
the part of AMEC’s administrators”; “AMEC is a dumping ground, garbage of x x x moral and physical misfits”; and AMEC
students who graduate “will be liabilities rather than assets” of the society are libelous per se.—A libel is a public and
malicious imputation of a crime, or of a vice or defect, real or imaginary, or any act or omission, condition, status, or
circumstance tending to cause the dishonor, discredit, or contempt of a natural or juridical person, or to blacken the
memory of one who is dead. There is no question that the broadcasts were made public and imputed to AMEC defects or
circumstances tending to cause it dishonor, discredit and contempt. Rima and Alegre’s remarks such as “greed for money
on the part of AMEC’s administrators”; “AMEC is a dumping ground, garbage of x x x moral and physical misfits”; and
AMEC students who graduate “will be liabilities rather than assets” of the society are libelous per se. Taken as a whole,
the broadcasts suggest that AMEC is a money-making institution where physically and morally unfit teachers abound.

Same; Same; Same; Same; Hosts of documentary or public affairs programs should present the public issues “free from
inaccurate and misleading information.”—Every defamatory imputation is presumed malicious. Rima and Alegre failed to
show adequately their good intention and justifiable motive in airing the supposed gripes of the students. As hosts of a
documentary or public affairs program, Rima and Alegre should have presented the public issues “free from inaccurate
and misleading information.” Hearing the students’ alleged complaints a month before the exposé, they had sufficient
time to verify their sources and information. However, Rima and Alegre hardly made a thorough investigation of the
students’ alleged gripes. Neither did they inquire about nor confirm the purported irregularities in AMEC from the
Department of Education, Culture and Sports. Alegre testified that he merely went to AMEC to verify his report from an
alleged AMEC official who refused to disclose any information. Alegre simply relied on the words of the students
“because they were many and not because there is proof that what they are saying is true.” This plainly shows Rima and
Alegre’s reckless disregard of whether their report was true or not.

Same; Same; Same; Same; Privilege of Neutral Reportage; Words and Phrases; Under the principle of neutral reportage,
a republisher who accurately and disinterestedly reports certain defamatory statements against public figures is shielded
from liability, regardless of the republisher’s subjective awareness of the truth or falsity of the accusation; The privilege
of neutral reportage applies where the defamed person is a public figure who is involved in an existing controversy, and a
party to that controversy makes the defamatory statement.—Contrary to FBNI’s claim, the broadcasts were not “the
result of straight reporting.” Significantly, some courts in the United States apply the privilege of “neutral reportage” in
libel cases involving matters of public interest or public figures. Under this privilege, a republisher who accurately and
disinterestedly reports certain defamatory statements made against public figures is shielded from liability, regardless of
the republisher’s subjective awareness of the truth or falsity of the accusation. Rima and Alegre cannot invoke the
privilege of neutral reportage because unfounded comments abound in the broadcasts. Moreover, there is no existing
controversy involving AMEC when the broadcasts were made. The privilege of neutral reportage applies where the
defamed person is a public figure who is involved in an existing controversy, and a party to that controversy makes the
defamatory statement.

Same; Same; Same; Same; Doctrine of Fair Comment; Under the doctrine of fair comment, fair commentaries on matters
of public interest are privileged and constitute a valid defense in an action for libel or slander.—FBNI’s reliance on Borjal
is misplaced. In Borjal, the Court elucidated on the “doctrine of fair comment,” thus: [F]air commentaries on matters of
public interest are privileged and constitute a valid defense in an action for libel or slander. The doctrine of fair comment
means that while in general every discreditable imputation publicly made is deemed false, because every man is
presumed innocent until his guilt is judicially proved, and every false imputation is deemed malicious, nevertheless,
when the discreditable imputation is directed against a public person in his public capacity, it is not necessarily
actionable. In order that such discreditable imputation to a public official may be actionable, it must either be a false
allegation of fact or a comment based on a false supposition. If the comment is an expression of opinion, based on
established facts, then it is immaterial that the opinion happens to be mistaken, as long as it might reasonably be
inferred from the facts. (Emphasis supplied)

Same; Same; Same; Same; If the comments made by media practitioners are an expression of opinion based on
established facts, it is immaterial that the opinion happens to be mistaken, as long as it might reasonably be inferred
from the facts.—True, AMEC is a private learning institution whose business of educating students is “genuinely imbued
with public interest.” The welfare of the youth in general and AMEC’s students in particular is a matter which the public
has the right to know. Thus, similar to the newspaper articles in Borjal, the subject broadcasts dealt with matters of
public interest. However, unlike in Borjal, the questioned broadcasts are not based on established facts. The record
supports the following findings of the trial court: x x x Had the comments been an expression of opinion based on
established facts, it is immaterial that the opinion happens to be mistaken, as long as it might reasonably be inferred
from the facts. However, the comments of Rima and Alegre were not backed up by facts. Therefore, the broadcasts are
not privileged and remain libelous per se.

Same; Same; Same; Same; Radio Code of the Kapisanan ng mga Broadkaster sa Pilipinas, Ink.; The Radio Code lays down
the code of ethical conduct governing practitioners in the radio broadcast industry; The public has a right to expect and
demand that radio broadcast practitioners live up to the code of conduct of their profession, just like other professionals,
and a professional code of conduct provides the standards for determining whether a person has acted justly, honestly
and with good faith in the exercise of his rights and performance of his duties as required by Article 19 of the Civil Code.
—The broadcasts fail to meet the standards prescribed in the Radio Code, which lays down the code of ethical conduct
governing practitioners in the radio broadcast industry. The Radio Code is a voluntary code of conduct imposed by the
radio broadcast industry on its own members. The Radio Code is a public warranty by the radio broadcast industry that
radio broadcast practitioners are subject to a code by which their conduct are measured for lapses, liability and
sanctions. The public has a right to expect and demand that radio broadcast practitioners live up to the code of conduct
of their profession, just like other professionals. A professional code of conduct provides the standards for determining
whether a person has acted justly, honestly and with good faith in the exercise of his rights and performance of his duties
as required by Article 19 of the Civil Code. A professional code of conduct also provides the standards for determining
whether a person who willfully causes loss or injury to another has acted in a manner contrary to morals or good
customs under Article 21 of the Civil Code.

Libel; Damages; Corporations; Obiter Dictum; The Court’s statement in Mambulao Lumber Co. v. PNB, 22 SCRA 359
(1968), that “a corporation may have a good reputation which, if besmirched, may also be a ground for the award of
moral damages” is an obiter dictum.—A juridical person is generally not entitled to moral damages because, unlike a
natural person, it cannot experience physical suffering or such sentiments as wounded feelings, serious anxiety, mental
anguish or moral shock. The Court of Appeals cites Mambulao Lumber Co. v. PNB, et al. to justify the award of moral
damages. However, the Court’s statement in Mambulao that “a corporation may have a good reputation which, if
besmirched, may also be a ground for the award of moral damages” is an obiter dictum.

Same; Same; Same; Since Article 2219(7) of the Civil Code does not qualify whether the plaintiff is a natural or juridical
person, a juridical person such as a corporation may validly complain for libel or any other form of defamation and claim
for moral damages.— AMEC’s claim for moral damages falls under item 7 of Article 2219 of the Civil Code. This provision
expressly authorizes the recovery of moral damages in cases of libel, slander or any other form of defamation. Article
2219(7) does not qualify whether the plaintiff is a natural or juridical person. Therefore, a juridical person such as a
corporation can validly complain for libel or any other form of defamation and claim for moral damages.
Same; Same; Where the broadcast is libelous per se, the law implies damages, in which case, evidence of an honest
mistake or the want of character or reputation of the party libeled goes only in mitigation of damages.—Where the
broadcast is libelous per se, the law implies damages. In such a case, evidence of an honest mistake or the want of
character or reputation of the party libeled goes only in mitigation of damages. Neither in such a case is the plaintiff
required to introduce evidence of actual damages as a condition precedent to the recovery of some damages. In this
case, the broadcasts are libelous per se. Thus, AMEC is entitled to moral damages. However, we find the award of
P300,000 moral damages unreasonable. The record shows that even though the broadcasts were libelous per se, AMEC
has not suffered any substantial or material damage to its reputation. Therefore, we reduce the award of moral damages
from P300,000 to P150,000.

Attorney’s Fees; The power of the court to award attorney’s fees under Article 2208 of the Civil Code demands factual,
legal and equitable justification, without which the award is a conclusion without a premise, its basis being improperly
left to speculation and conjecture.—The award of attorney’s fees is not proper because AMEC failed to justify
satisfactorily its claim for attorney’s fees. AMEC did not adduce evidence to warrant the award of attorney’s fees.
Moreover, both the trial and appellate courts failed to explicitly state in their respective decisions the rationale for the
award of attorney’s fees. In Inter-Asia Investment Industries, Inc. v. Court of Appeals, we held that: [I]t is an accepted
doctrine that the award thereof as an item of damages is the exception rather than the rule, and counsel’s fees are not to
be awarded every time a party wins a suit. The power of the court to award attorney’s fees under Article 2208 of the Civil
Code demands factual, legal and equitable justification, without which the award is a conclusion without a premise, its
basis being improperly left to speculation and conjecture. In all events, the court must explicitly state in the text of the
decision, and not only in the decretal portion thereof, the legal reason for the award of attorney’s fees. (Emphasis
supplied)

Torts; Damages; Broadcast Industry; Joint tort feasors are all the persons who command, instigate, promote, encourage,
advise, countenance, cooperate in, aid or abet the commission of a tort, or who approve of it after it is done, if done for
their benefit; The corporation which operates the radio station, and who is the employer of the radio hosts, is solidarily
liable to pay for damages arising from libelous broadcasts.—The basis of the present action is a tort. Joint tort feasors are
jointly and severally liable for the tort which they commit. Joint tort feasors are all the persons who command, instigate,
promote, encourage, advise, countenance, cooperate in, aid or abet the commission of a tort, or who approve of it after
it is done, if done for their benefit. Thus, AMEC correctly anchored its cause of action against FBNI on Articles 2176 and
2180 of the Civil Code. As operator of DZRC-AM and employer of Rima and Alegre, FBNI is solidarily liable to pay for
damages arising from the libelous broadcasts. As stated by the Court of Appeals, “recovery for defamatory statements
published by radio or television may be had from the owner of the station, a licensee, the operator of the station, or a
person who procures, or participates in, the making of the defamatory statements.” An employer and employee are
solidarily liable for a defamatory statement by the employee within the course and scope of his or her employment, at
least when the employer authorizes or ratifies the defamation. In this case, Rima and Alegre were clearly performing
their official duties as hosts of FBNI’s radio program Exposé when they aired the broadcasts. FBNI neither alleged nor
proved that Rima and Alegre went beyond the scope of their work at that time. There was likewise no showing that FBNI
did not authorize and ratify the defamatory broadcasts.

Same; Same; The radio operator’s alleged constant reminder to its broadcasters to “observe truth, fairness and
objectivity and to refrain from using libelous and indecent language” is not enough to prove due diligence in the
supervision of its broadcasters.—There is insufficient evidence on record that FBNI exercised due diligence in the
selection and supervision of its employees, particularly Rima and Alegre. FBNI merely showed that it exercised diligence
in the selection of its broadcasters without introducing any evidence to prove that it observed the same diligence in the
supervision of Rima and Alegre. FBNI did not show how it exercised diligence in supervising its broadcasters. FBNI’s
alleged constant reminder to its broadcasters to “observe truth, fairness and objectivity and to refrain from using libelous
and indecent language” is not enough to prove due diligence in the supervision of its broadcasters. Adequate training of
the broadcasters on the industry’s code of conduct, sufficient information on libel laws, and continuous evaluation of the
broadcasters’ performance are but a few of the many ways of showing diligence in the supervision of broadcasters.

Same; Same; Membership in the Kapisanan ng mga Broadkaster sa Pilipinas, while voluntary, indicates the broadcaster’s
strong commitment to observe the broadcast industry’s rules and regulations.—FBNI claims that it “has taken all the
precaution in the selection of Rima and Alegre as broadcasters, bearing in mind their qualifications.” However, no clear
and convincing evidence shows that Rima and Alegre underwent FBNI’s “regimented process” of application.
Furthermore, FBNI admits that Rima and Alegre had deficiencies in their KBP accreditation, which is one of FBNI’s
requirements before it hires a broadcaster. Significantly, membership in the KBP, while voluntary, indicates the
broadcaster’s strong commitment to observe the broadcast industry’s rules and regulations. Clearly, these circumstances
show FBNI’s lack of diligence in selecting and supervising Rima and Alegre. Hence, FBNI is solidarily liable to pay damages
together with Rima and Alegre.

PETITION for review on certiorari of the decision and resolution of the Court of Appeals.

The facts are stated in the opinion of the Court.

Ocampo & Ocampo for petitioner.

Z.P. Reyes Law Office for respondents.

CARPIO, J.:

The Case

This petition for review1 assails the 4 January 1999 Decision2 and 26 January 2000 Resolution of the Court of Appeals in
CA-G.R. CV No. 40151. The Court of Appeals affirmed with modification the 14 December 1992 Decision3 of the Regional
Trial Court of Legazpi City, Branch 10, in Civil Case No. 8236. The Court of Appeals held Filipinas Broadcasting Network,
Inc. and its broadcasters Hermogenes Alegre and Carmelo Rima liable for libel and ordered them to solidarily pay Ago
Medical and Educational Center-Bicol Christian College of Medicine moral damages, attorney’s fees and costs of suit.

The Antecedents

“Exposé” is a radio documentary4 program hosted by Carmelo ‘Mel’ Rima (“Rima”) and Hermogenes ‘Jun’ Alegre
(“Alegre”).5 Exposé is aired every morning over DZRC-AM which is owned by Filipinas Broadcasting Network, Inc.
(“FBNI”). “Exposé” is heard over Legazpi City, the Albay municipalities and other Bicol areas.6

In the morning of 14 and 15 December 1989, Rima and Alegre exposed various alleged complaints from students,
teachers and parents against Ago Medical and Educational Center-Bicol Christian College of Medicine (“AMEC”) and its
administrators. Claiming that the broadcasts were defamatory, AMEC and Angelita Ago (“Ago”), as Dean of AMEC’s
College of Medicine, filed a complaint for damages7 against FBNI, Rima and Alegre on 27 February 1990. Quoted are
portions of the allegedly libelous broadcasts:

JUN ALEGRE:

Let us begin with the less burdensome: if you have children taking medical course at AMEC-BCCM, advise them to pass
all subjects because if they fail in any subject they will repeat their year level, taking up all subjects including those they
have passed already. Several students had approached me stating that they had consulted with the DECS which told
them that there is no such regulation. If [there] is no such regulation why is AMEC doing the same?
xxx

Second: Earlier AMEC students in Physical Therapy had complained that the course is not recognized by DECS. x x x

Third: Students are required to take and pay for the subject even if the subject does not have an instructor—such greed
for money on the part of AMEC’s administration. Take the subject Anatomy: students would pay for the subject upon
enrolment because it is offered by the school. However there would be no instructor for such subject. Students would be
informed that course would be moved to a later date because the school is still searching for the appropriate instructor.

xxx

It is a public knowledge that the Ago Medical and Educational Center has survived and has been surviving for the past
few years since its inception because of funds support from foreign foundations. If you will take a look at the AMEC
premises you’ll find out that the names of the buildings there are foreign soundings. There is a McDonald Hall. Why not
Jose Rizal or Bonifacio Hall? That is a very concrete and undeniable evidence that the support of foreign foundations for
AMEC is substantial, isn’t it? With the report which is the basis of the expose in DZRC today, it would be very easy for
detractors and enemies of the Ago family to stop the flow of support of foreign foundations who assist the medical
school on the basis of the latter’s purpose. But if the purpose of the institution (AMEC) is to deceive students at cross
purpose with its reason for being it is possible for these foreign foundations to lift or suspend their donations
temporarily.8

xxx

On the other hand, the administrators of AMEC-BCCM, AMEC Science High School and the AMEC-Institute of Mass
Communication in their effort to minimize expenses in terms of salary are absorbing or continues to accept “rejects”. For
example how many teachers in AMEC are former teachers of Aquinas University but were removed because of
immorality? Does it mean that the present administration of AMEC have the total definite moral foundation from
catholic administrator of Aquinas University. I will prove to you my friends, that AMEC is a dumping ground, garbage, not
merely of moral and physical misfits. Probably they only qualify in terms of intellect. The Dean of Student Affairs of AMEC
is Justita Lola, as the family name implies. She is too old to work, being an old woman. Is the AMEC administration
exploiting the very [e]nterprising or compromising and undemanding Lola? Could it be that AMEC is just patiently making
use of Dean Justita Lola were if she is very old. As in atmospheric situation—zero visibility—the plane cannot land,
meaning she is very old, low pay follows. By the way, Dean Justita Lola is also the chairman of the committee on
scholarship in AMEC. She had retired from Bicol University a long time ago but AMEC has patiently made use of her.

xxx

MEL RIMA:

x x x My friends based on the expose, AMEC is a dumping ground for moral and physically misfit people. What does this
mean? Immoral and physically misfits as teachers.

May I say I’m sorry to Dean Justita Lola. But this is the truth. The truth is this, that your are no longer fit to teach. You are
too old. As an aviation, your case is zero visibility. Don’t insist.

x x x Why did AMEC still absorb her as a teacher, a dean, and chairman of the scholarship committee at that. The reason
is practical cost saving in salaries, because an old person is not fastidious, so long as she has money to buy the ingredient
of beetle juice. The elderly can get by—that’s why she (Lola) was taken in as Dean.

xxx
x x x On our end our task is to attend to the interests of students. It is likely that the students would be influenced by evil.
When they become members of society outside of campus will be liabilities rather than assets. What do you expect from
a doctor who while studying at AMEC is so much burdened with unreasonable imposition? What do you expect from a
student who aside from peculiar problems—because not all students are rich—in their struggle to improve their social
status are even more burdened with false regulations. x x x9 (Emphasis supplied)

The complaint further alleged that AMEC is a reputable learning institution. With the supposed exposés, FBNI, Rima and
Alegre “transmitted malicious imputations, and as such, destroyed plaintiffs’ (AMEC and Ago) reputation.” AMEC and Ago
included FBNI as defendant for allegedly failing to exercise due diligence in the selection and supervision of its
employees, particularly Rima and Alegre.

On 18 June 1990, FBNI, Rima and Alegre, through Atty. Rozil Lozares, filed an Answer10 alleging that the broadcasts
against AMEC were fair and true. FBNI, Rima and Alegre claimed that they were plainly impelled by a sense of public duty
to report the “goings-on in AMEC, [which is] an institution imbued with public interest.”

Thereafter, trial ensued. During the presentation of the evidence for the defense, Atty. Edmundo Cea, collaborating
counsel of Atty. Lozares, filed a Motion to Dismiss11 on FBNI’s behalf. The trial court denied the motion to dismiss.
Consequently, FBNI filed a separate Answer claiming that it exercised due diligence in the selection and supervision of
Rima Filipinas Broadcasting Network, Inc. vs. Ago Medical and Eduacational Central-Bicol Christian college of Medicine
(AMEC-BCCM) and Alegre. FBNI claimed that before hiring a broadcaster, the broadcaster should (1) file an application;
(2) be interviewed; and (3) undergo an apprenticeship and training program after passing the interview. FBNI likewise
claimed that it always reminds its broadcasters to “observe truth, fairness and objectivity in their broadcasts and to
refrain from using libelous and indecent language.” Moreover, FBNI requires all broadcasters to pass the Kapisanan ng
mga Brodkaster sa Pilipinas (“KBP”) accreditation test and to secure a KBP permit.

On 14 December 1992, the trial court rendered a Decision12 finding FBNI and Alegre liable for libel except Rima. The trial
court held that the broadcasts are libelous per se. The trial court rejected the broadcasters’ claim that their utterances
were the result of straight reporting because it had no factual basis. The broadcasters did not even verify their reports
before airing them to show good faith. In holding FBNI liable for libel, the trial court found that FBNI failed to exercise
diligence in the selection and supervision of its employees.

In absolving Rima from the charge, the trial court ruled that Rima’s only participation was when he agreed with Alegre’s
exposé. The trial court found Rima’s statement within the “bounds of freedom of speech, expression, and of the press.”
The dispositive portion of the decision reads:

“WHEREFORE, premises considered, this court finds for the plaintiff. Considering the degree of damages caused by the
controversial utterances, which are not found by this court to be really very serious and damaging, and there being no
showing that indeed the enrollment of plaintiff school dropped, defendants Hermogenes “Jun” Alegre, Jr. and Filipinas
Broadcasting Network (owner of the radio station DZRC), are hereby jointly and severally ordered to pay plaintiff Ago
Medical and Educational Center-Bicol Christian College of Medicine (AMEC-BCCM) the

Both parties, namely, FBNI, Rima and Alegre, on one hand, and AMEC and Ago, on the other, appealed the decision to
the Court of Appeals. The Court of Appeals affirmed the trial court’s judgment with modification. The appellate court
made Rima solidarily liable with FBNI and Alegre. The appellate court denied Ago’s claim for damages and attorney’s fees
because the broadcasts were directed against AMEC, and not against her. The dispositive portion of the Court of Appeals’
decision reads:

“WHEREFORE, the decision appealed from is hereby AFFIRMED, subject to the modification that broadcaster Mel Rima is
SOLIDARILY ADJUDGED liable with FBN[I] and Hermo[g]enes Alegre.
SO ORDERED.”14

FBNI, Rima and Alegre filed a motion for reconsideration which the Court of Appeals denied in its 26 January 2000
Resolution.

Hence, FBNI filed this petition.15

The Ruling of the Court of Appeals

The Court of Appeals upheld the trial court’s ruling that the questioned broadcasts are libelous per se and that FBNI,
Rima and Alegre failed to overcome the legal presumption of malice. The Court of Appeals found Rima and Alegre’s claim
that they were actuated by their moral and social duty to inform the public of the students’ gripes as insufficient to
justify the utterance of the defamatory remarks.

Filipinas Broadcasting Network, Inc. vs. Ago Medical and Eduacational Central-Bicol Christian college of Medicine (AMEC-
BCCM)

Finding no factual basis for the imputations against AMEC’s administrators, the Court of Appeals ruled that the
broadcasts were made “with reckless disregard as to whether they were true or false.” The appellate court pointed out
that FBNI, Rima and Alegre failed to present in court any of the students who allegedly complained against AMEC. Rima
and Alegre merely gave a single name when asked to identify the students. According to the Court of Appeals, these
circumstances cast doubt on the veracity of the broadcasters’ claim that they were “impelled by their moral and social
duty to inform the public about the students’ gripes.”

The Court of Appeals found Rima also liable for libel since he remarked that “(1) AMEC-BCCM is a dumping ground for
morally and physically misfit teachers; (2) AMEC obtained the services of Dean Justita Lola to minimize expenses on its
employees’ salaries; and (3) AMEC burdened the students with unreasonable imposition and false regulations.”16

The Court of Appeals held that FBNI failed to exercise due diligence in the selection and supervision of its employees for
allowing Rima and Alegre to make the radio broadcasts without the proper KBP accreditation. The Court of Appeals
denied Ago’s claim for damages and attorney’s fees because the libelous remarks were directed against AMEC, and not
against her. The Court of Appeals adjudged FBNI, Rima and Alegre solidarily liable to pay AMEC moral damages,
attorney’s fees and costs of suit.

Issues

FBNI raises the following issues for resolution:

I. WHETHER THE BROADCASTS ARE LIBELOUS;

II. WHETHER AMEC IS ENTITLED TO MORAL DAMAGES;

III. WHETHER THE AWARD OF ATTORNEY’S FEES IS PROPER; and

IV. WHETHER FBNI IS SOLIDARILY LIABLE WITH RIMA AND ALEGRE FOR PAYMENT OF MORAL DAMAGES, ATTORNEY’S
FEES AND COSTS OF SUIT.

The Court’s Ruling

We deny the petition.

This is a civil action for damages as a result of the allegedly defamatory remarks of Rima and Alegre against AMEC.17
While AMEC did not point out clearly the legal basis for its complaint, a reading of the complaint reveals that AMEC’s
cause of action is based on Articles 30 and 33 of the Civil Code. Article 3018 authorizes a separate civil action to recover
civil liability arising from a criminal offense. On the other hand, Article 3319 particularly provides that the injured party
may bring a separate civil action for damages in cases of defamation, fraud, and physical injuries. AMEC also invokes
Article 1920 of the Civil Code to justify its claim for damages. AMEC cites Articles 217621 and 218022 of the Civil Code to
hold FBNI solidarily liable with Rima and Alegre.

19 Art. 33. In cases of defamation, fraud, and physical injuries, a civil action for damages, entirely separate and distinct
from the criminal action, may be brought by the injured party. Such civil action shall proceed independently of the
criminal prosecution, and shall require only a preponderance of evidence.

20 Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give
everyone his due, and observe honesty and good faith.

21 Art. 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay
for the damage done. Such fault or negligence, if there is no pre-existing contractual relation between the parties, is
called a quasi-delict and is governed by the provisions of this Chapter.

22 Art. 2180. The obligation imposed by article 2176 is demandable not only for one’s own acts or omissions, but also
for those of persons for whom one is responsible.

xxx

The owners and managers of an establishment or enterprise are likewise 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.

Employers shall be liable for the damages caused by their employees and household helpers acting within the scope of
their assigned tasks, even though the former are not engaged in any business or industry.

xxx

I.

Whether the broadcasts are libelous

A libel23 is a public and malicious imputation of a crime, or of a vice or defect, real or imaginary, or any act or omission,
condition, status, or circumstance tending to cause the dishonor, discredit, or contempt of a natural or juridical person,
or to blacken the memory of one who is dead.24

There is no question that the broadcasts were made public and imputed to AMEC defects or circumstances tending to
cause it dishonor, discredit and contempt. Rima and Alegre’s remarks such as “greed for money on the part of AMEC’s
administrators”; “AMEC is a dumping ground, garbage of x x x moral and physical misfits”; and AMEC students who
graduate “will be liabilities rather than assets” of the society are libelous per se. Taken as a whole, the broadcasts
suggest that AMEC is a money-making institution where physically and morally unfit teachers abound.

However, FBNI contends that the broadcasts are not malicious. FBNI claims that Rima and Alegre were plainly impelled
by their civic duty to air the students’ gripes. FBNI alleges that there is no evidence that ill will or spite motivated Rima
and Alegre in making the broadcasts. FBNI further points out that Rima and Alegre exerted efforts to obtain AMEC’s side
and gave Ago the opportunity to defend AMEC and its administrators. FBNI concludes that since there is no malice, there
is no libel.
FBNI’s contentions are untenable.

Filipinas Broadcasting Network, Inc. vs. Ago Medical and Eduacational Central-Bicol Christian college of Medicine (AMEC-
BCCM)

Every defamatory imputation is presumed malicious.25 Rima and Alegre failed to show adequately their good intention
and justifiable motive in airing the supposed gripes of the students. As hosts of a documentary or public affairs program,
Rima and Alegre should have presented the public issues “free from inaccurate and misleading information.”26 Hearing
the students’ alleged complaints a month before the exposé,27 they had sufficient time to verify their sources and
information. However, Rima and Alegre hardly made a thorough investigation of the students’ alleged gripes. Neither did
they inquire about nor confirm the purported irregularities in AMEC from the Department of Education, Culture and
Sports. Alegre testified that he merely went to AMEC to verify his report from an alleged AMEC official who refused to
disclose any information. Alegre simply relied on the words of the students “because they were many and not because
there is proof that what they are saying is true.”28 This plainly shows Rima and Alegre’s reckless disregard of whether
their report was true or not.

Contrary to FBNI’s claim, the broadcasts were not “the result of straight reporting.” Significantly, some courts in the
United States apply the privilege of “neutral reportage” in libel cases involving matters of public interest or public figures.
Under this privilege, a republisher who accurately and disinterestedly reports certain defamatory statements made
against public figures is shielded from liability, regardless of the republisher’s subjective awareness of the truth or falsity
of the accusation.29 Rima and Alegre cannot invoke the privilege of neutral reportage because unfounded comments
abound in the broadcasts. Moreover, there is no existing controversy involving AMEC when the broadcasts were made.
The privilege of neutral reportage applies where the defamed person is a public figure who is involved in an existing
controversy, and a party to that controversy makes the defamatory statement.30

However, FBNI argues vigorously that malice in law does not apply to this case. Citing Borjal v. Court of Appeals,31 FBNI
contends that the broadcasts “fall within the coverage of qualifiedly privileged communications” for being commentaries
on matters of public interest. Such being the case, AMEC should prove malice in fact or actual malice. Since AMEC
allegedly failed to prove actual malice, there is no libel.

FBNI’s reliance on Borjal is misplaced. In Borjal, the Court elucidated on the “doctrine of fair comment,” thus:

[F]air commentaries on matters of public interest are privileged and constitute a valid defense in an action for libel or
slander. The doctrine of fair comment means that while in general every discreditable imputation publicly made is
deemed false, because every man is presumed innocent until his guilt is judicially proved, and every false imputation is
deemed malicious, nevertheless, when the discreditable imputation is directed against a public person in his public
capacity, it is not necessarily actionable. In order that such discreditable imputation to a public official may be actionable,
it must either be a false allegation of fact or a comment based on a false supposition. If the comment is an expression of
opinion, based on established facts, then it is immaterial that the opinion happens to be mistaken, as long as it might
reasonably be inferred from the facts.32 (Emphasis supplied)

True, AMEC is a private learning institution whose business of educating students is “genuinely imbued with public
interest.” The welfare of the youth in general and AMEC’s students in particular is a matter which the public has the right
to know. Thus, similar to the newspaper articles in Borjal, the subject broadcasts dealt with matters of public interest.
However, unlike in Borjal, the questioned broadcasts are not based on established facts. The record supports the
following findings of the trial court:

x x x Although defendants claim that they were motivated by consistent reports of students and parents against plaintiff,
yet, defendants have not presented in court, nor even gave name of a single student who made the complaint to them,
much less present written complaint or petition to that effect. To accept this defense of defendants is too dangerous
because it could easily give license to the media to malign people and establishments based on flimsy excuses that there
were reports to them although they could not satisfactorily establish it. Such laxity would encourage careless and
irresponsible broadcasting which is inimical to public interests.

Secondly, there is reason to believe that defendant radio broadcasters, contrary to the mandates of their duties, did not
verify and analyze the truth of the reports before they aired it, in order to prove that they are in good faith.

Alegre contended that plaintiff school had no permit and is not accredited to offer Physical Therapy courses. Yet, plaintiff
produced a certificate coming from DECS that as of Sept. 22, 1987 or more than 2 years before the controversial
broadcast, accreditation to offer Physical Therapy course had already been given the plaintiff, which certificate is signed
by no less than the Secretary of Education and Culture herself, Lourdes R. Quisumbing (Exh. “C”-rebuttal). Defendants
could have easily known this were they careful enough to verify. And yet, defendants were very categorical and sounded
too positive when they made the erroneous report that plaintiff had no permit to offer Physical Therapy courses which
they were offering.

The allegation that plaintiff was getting tremendous aids from foreign foundations like McDonald Foundation prove not
to be true also. The truth is there is no McDonald Foundation existing. Although a big building of plaintiff school was
given the name McDonald building, that was only in order to honor the first missionary in Bicol of plaintiffs’ religion, as
explained by Dr. Lita Ago. Contrary to the claim of defendants over the air, not a single centavo appears to be received by
plaintiff school from the aforementioned McDonald Foundation which does not exist.

Defendants did not even also bother to prove their claim, though denied by Dra. Ago, that when medical students fail in
one subject, they are made to repeat all the other subject[s], even those they have already passed, nor their claim that
the school charges laboratory fees even if there are no laboratories in the school. No evidence was presented to prove
the bases for these claims, at least in order to give semblance of good faith.

As for the allegation that plaintiff is the dumping ground for misfits, and immoral teachers, defendant[s] singled out Dean
Justita Lola who is said to be so old, with zero visibility already. Dean Lola testified in court last Jan. 21, 1991, and was
found to be 75 years old. x x x Even older people prove to be effective teachers like Supreme Court Justices who are still
very much in demand as law professors in their late years. Counsel for defendants is past 75 but is found by this court to
be still very sharp and effective. So is plaintiffs’ counsel.

Dr. Lola was observed by this court not to be physically decrepit yet, nor mentally infirmed, but is still alert and docile.

The contention that plaintiffs’ graduates become liabilities rather than assets of our society is a mere conclusion. Being
from the place himself, this court is aware that majority of the medical graduates of plaintiffs pass the board examination
easily and become prosperous and responsible professionals.33

Had the comments been an expression of opinion based on established facts, it is immaterial that the opinion happens
to be mistaken, as long as it might reasonably be inferred from the facts.34 However, the comments of Rima and Alegre
were not backed up by facts. Therefore, the broadcasts are not privileged and remain libelous per se.

The broadcasts also violate the Radio Code35 of the Kapisanan ng mga Brodkaster sa Pilipinas, Ink. (“Radio Code”). Item
I(B) of the Radio Code provides:

B. PUBLIC AFFAIRS, PUBLIC ISSUES AND COMMENTARIES

1. x x x
4. Public affairs program shall present public issues free from personal bias, prejudice and inaccurate and misleading
information. x x x Furthermore, the station shall strive to present balanced discussion of issues. x x x.

xxx

7. The station shall be responsible at all times in the supervision of public affairs, public issues and commentary
programs so that they conform to the provisions and standards of this code.

8. It shall be the responsibility of the newscaster, commentator, host and announcer to protect public interest, general
welfare and good order in the presentation of public affairs and public issues.36 (Emphasis supplied)

The broadcasts fail to meet the standards prescribed in the Radio Code, which lays down the code of ethical conduct
governing practitioners in the radio broadcast industry. The Radio Code is a voluntary code of conduct imposed by the
radio broadcast industry on its own members. The Radio Code is a public warranty by the radio broadcast industry that
radio broadcast practitioners are subject to a code by which their conduct are measured for lapses, liability and
sanctions.

The public has a right to expect and demand that radio broadcast practitioners live up to the code of conduct of their
profession, just like other professionals. A professional code of conduct provides the standards for determining whether
a person has acted justly, honestly and with good faith in the exercise of his rights and performance of his duties as
required by Article 1937 of the Civil Code. A professional code of conduct also provides the standards for determining
whether a person who willfully causes loss or injury to another has acted in a manner contrary to morals or good
customs under Article 2138 of the Civil Code.

II.

Whether AMEC is entitled to moral damages

FBNI contends that AMEC is not entitled to moral damages because it is a corporation.39

A juridical person is generally not entitled to moral damages because, unlike a natural person, it cannot experience
physical suffering or such sentiments as wounded feelings, serious anxiety, mental anguish or moral shock.40 The Court
of Appeals cites Mambulao Lumber Co. v. PNB, et al.41 to

Filipinas Broadcasting Network, Inc. vs. Ago Medical and Eduacational Central-Bicol Christian college of Medicine (AMEC-
BCCM)

justify the award of moral damages. However, the Court’s statement in Mambulao that “a corporation may have a good
reputation which, if besmirched, may also be a ground for the award of moral damages” is an obiter dictum.42

Nevertheless, AMEC’s claim for moral damages falls under item 7 of Article 221943 of the Civil Code. This provision
expressly authorizes the recovery of moral damages in cases of libel, slander or any other form of defamation. Article
2219(7) does not qualify whether the plaintiff is a natural or juridical person. Therefore, a juridical person such as a
corporation can validly complain for libel or any other form of defamation and claim for moral damages.44

Moreover, where the broadcast is libelous per se, the law implies damages.45 In such a case, evidence of an honest
mistake or the want of character or reputation of the party libeled goes only in mitigation of damages.46 Neither in such
a case is the plaintiff required to introduce evidence of actual damages as a condition precedent to the recovery of some
damages.47 In this case, the broadcasts are libelous per se. Thus, AMEC is entitled to moral damages.
However, we find the award of P300,000 moral damages unreasonable. The record shows that even though the
broadcasts were libelous per se, AMEC has not suffered any substantial or material damage to its reputation. Therefore,
we reduce the award of moral damages from P300,000 to P150,000.

III.

Whether the award of attorney’s fees is proper

FBNI contends that since AMEC is not entitled to moral damages, there is no basis for the award of attorney’s fees. FBNI
adds that the instant case does not fall under the enumeration in Article 220848 of the Civil Code.

The award of attorney’s fees is not proper because AMEC failed to justify satisfactorily its claim for attorney’s fees. AMEC
did not adduce evidence to warrant the award of attorney’s fees. Moreover, both the trial and appellate courts failed to
explicitly state in their respective decisions the rationale for the award of attorney’s fees.49 In Inter-Asia Investment
Industries, Inc. v. Court of Appeals,50 we held that:

[I]t is an accepted doctrine that the award thereof as an item of damages is the exception rather than the rule, and
counsel’s fees are not to be awarded every time a party wins a suit. The power of the court to award attorney’s fees
under Article 2208 of the Civil Code demands factual, legal and equitable justification, without which the award is a
conclusion without a premise, its basis being improperly left to speculation and conjecture. In all events, the court must
explicitly state in the text of the decision, and not only in the decretal portion thereof, the legal reason for the award of
attorney’s fees.51 (Emphasis supplied)

While it mentioned about the award of attorney’s fees by stating that it “lies within the discretion of the court and
depends upon the circumstances of each case,” the Court of Appeals failed to point out any circumstance to justify the
award.

IV.

Whether FBNI is solidarily liable with Rima and Alegre for moral damages, attorney’s fees and costs of suit

FBNI contends that it is not solidarily liable with Rima and Alegre for the payment of damages and attorney’s fees
because it exercised due diligence in the selection and supervision of its employees, particularly Rima and Alegre. FBNI
maintains that its broadcasters, including Rima and Alegre, undergo a “very regimented process” before they are allowed
to go on air. “Those who apply for broadcaster are subjected to interviews, examinations and an apprenticeship
program.”

FBNI further argues that Alegre’s age and lack of training are irrelevant to his competence as a broadcaster. FBNI points
out that the “minor deficiencies in the KBP accreditation of Rima and Alegre do not in any way prove that FBNI did not
exercise the diligence of a good father of a family in selecting and supervising them.” Rima’s accreditation lapsed due to
his non-payment of the KBP annual fees while Alegre’s accreditation card was delayed allegedly for reasons attributable
to the KBP Manila Office. FBNI claims that membership in the KBP is merely voluntary and not required by any law or
government regulation.

FBNI’s arguments do not persuade us.

The basis of the present action is a tort. Joint tort feasors are jointly and severally liable for the tort which they
commit.52 Joint tort feasors are all the persons who command, instigate, promote, encourage, advise, countenance,
cooperate in, aid or abet the commission of a tort, or who approve of it after it is done, if done for their benefit.53 Thus,
AMEC correctly anchored its cause of action against FBNI on Articles 2176 and 2180 of the Civil Code.
As operator of DZRC-AM and employer of Rima and Alegre, FBNI is solidarily liable to pay for damages arising from the
libelous broadcasts. As stated by the Court of Appeals, “recovery for defamatory statements published by radio or
television may be had from the owner of the station, a licensee, the operator of the station, or a person who procures, or
participates in, the making of the defamatory statements.”54 An employer and employee are solidarily liable for a
defamatory statement by the employee within the course and scope of his or her employment, at least when the
employer authorizes or ratifies the defamation.55 In this case, Rima and Alegre were clearly performing their official
duties as hosts of FBNI’s radio program Exposé when they aired the broadcasts. FBNI neither alleged nor proved that
Rima and Alegre went beyond the scope of their work at that time. There was likewise no showing that FBNI did not
authorize and ratify the defamatory broadcasts.

Moreover, there is insufficient evidence on record that FBNI exercised due diligence in the selection and supervision of
its employees, particularly Rima and Alegre. FBNI merely showed that it exercised diligence in the selection of its
broadcasters without introducing any evidence to prove that it observed the same diligence in the supervision of Rima
and Alegre. FBNI did not show how it exercised diligence in supervising its broadcasters. FBNI’s alleged constant
reminder to its broadcasters to “observe truth, fairness and objectivity and to refrain from using libelous and indecent
language” is not enough to prove due diligence in the supervision of its broadcasters. Adequate training of the
broadcasters on the industry’s code of conduct, sufficient information on libel laws, and continuous evaluation of the
broadcasters’ performance are but a few of the many ways of showing diligence in the supervision of broadcasters.

Filipinas Broadcasting Network, Inc. vs. Ago Medical and Eduacational Central-Bicol Christian college of Medicine (AMEC-
BCCM)

FBNI claims that it “has taken all the precaution in the selection of Rima and Alegre as broadcasters, bearing in mind
their qualifications.” However, no clear and convincing evidence shows that Rima and Alegre underwent FBNI’s
“regimented process” of application. Furthermore, FBNI admits that Rima and Alegre had deficiencies in their KBP
accreditation,56 which is one of FBNI’s requirements before it hires a broadcaster. Significantly, membership in the KBP,
while voluntary, indicates the broadcaster’s strong commitment to observe the broadcast industry’s rules and
regulations. Clearly, these circumstances show FBNI’s lack of diligence in selecting and supervising Rima and Alegre.
Hence, FBNI is solidarily liable to pay damages together with Rima and Alegre.

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

SO ORDERED.