GENERAL PROVISIONS ON DAMAGES Held: NAWP. We ca nnot s us tain the awa rd.
: NAWP. We ca nnot s us tain the awa rd. "P ala y" is not a lega l tender
Article 2195. The provisions of this Title shall be respectively applicable to all
obligations mentioned in article 1157.
Article 2196. The rules under this Title are without prejudice to special provisions on
damages formulated elsewhere in this Code. Compensation for workmen and other
employees in case of death, injury or illness is regulated by special laws. Rules
governing damages laid down in other laws shall be observed insofar as they are not
in conflict with this Code.
HEIRS OF SIMEON BORLADO, namely, ADELAIDA BORLADO,
LORETO BORLADO, REYNALDO BORLADO, RICARDO BORLADO,
FRANCISCO BORLADO and ALADINO DORADO,petitioners, vs.
COURT OF APPEALS, and SALVACION VDA. DE BULAN,
BIENVENIDO BULAN, JR., NORMA B. CLARITO and THE
PROVINCIAL SHERIFF OF CAPIZ, respondents.
-joy-
TOPIC: AWARD OF DAMAGES ALWAYS MONETARY
Facts:
The orig inal owner of the la nd in ques tion is Serap io Bolardo, the gr and father
of pe titioners. Bola rdo s old the land to Bace ro which la nd was la ter s old to Sps
Bulan thr oug h a Dee d of Abs olute Sale in 1947. Salvacion Bula n is in p ossess ion
of the la nd e ven prior to the date of the de ed of sa le in view of a loan obta ined
by Fra ncisc o Bac er o. Exe rcis ing her rig ht of owners hip , Bulan d ecla red the la nd
unde r he r na me in 1900 for tax p urp oses a nd pa id the c orresp ond ing ta xes
the reon. Bulan and her co -d efe ndant app ellees possess ion of the lot was
continuous, p eace ful, uninte rrup ted , adverse and exclusive until N ovember 4,
1972, when petitioners forc ibly e ntere d and wr ested physical p ossess ion
the reof from them.
On 23 Nove mber 1972, resp onde nts filed w ith the Muni c ipal Court of Maayon,
Capiz a c omp laint for ej ectment against pe titione rs.
RTC: - ord ered pe titione rs to vac ate prop and d eliver possession to r espondents
- pay 100 cava ns of pa la y fr om 1972 to pres ent or a total of 1100 cavans - pay
lega l fees
CA- a ffirmed in toto
Issue: W/N pa yme nt of 100 cavans of palay a nnually fr om 1972 to pres ent as a
form of damag es is va lid
currency in the Ph. Therefor e, the lia bility to p ay 100 cavans is deleted for lac k
of lega l bas is.
CUSTODIO V. CA
-cyril-
TOPIC: DAMNUM ABSQUE INJURIA
PLAINTIFF-APPELANT: Pacifico Mabasa who died during the pendency of this case and was
substituted by Ofelia Mabasa, his surviving spouse and children.
DEFENDANTS: Santoses
FACTS:
 Pacifico Mabasa owns a property behind the properties of spouses Cristino and Brigida
Custodio and spouses Lito and Ma. Cristina Santos. The passageway leading to
Mabasa’s house passes through the properties of the Custodios and the Santoses.
 When said property was purchased by Mabasa, there were tenants occupying the
premises and who were acknowledged by plaintiff Mabasa as tenants.
 Sometime in February, 1982, one of said tenants vacated the apartment and when
plaintiff Mabasa went to see the premises, he saw that there had been built an adobe
fence in the first passageway making it narrower in width. Said adobe fence was first
constructed by defendants Santoses along their property which is also along the first
passageway. Defendant Morato constructed her adobe fence and even extended said
fence in such a way that the entire passageway was enclosed and it was then that the
remaining tenants of said apartment vacated the area. This effectively deprived
Mabasa passage to his house. Mabasa then sued the Custodios and the Santoses to
compel them to grant his right of way with damages. Mabasa claims that he lost
tenants because of the blockade done by the families in front.
CONTENTION OF MA. CRISTINA SANTOS (Defendant):
1. She constructed said fence because there was an incident when her daughter
was dragged by a bicycle pedalled by a son of one of the tenants in said
apartment along the first passageway.
2. She also mentioned some other inconveniences of having (at) the front of her
house a pathway such as when some of the tenants were drunk and would bang
their doors and windows.
3. Some of their footwear were even lost.
 TRIAL COURT: Ruled in favor of Mabasa. ordered the Custodios and the Santoses to
give Mabasa a permanent easement and right of way and for Mabasa to pay just
compensation.
 COURT OF APPEALS: Affirmed the decision of the trial court. However, the CA
modified the ruling by awarding damages in favor of Mabasa
(Actual damages: P65k, Moral damages: P30k, Exemplary damages: P10k).
ISSUE: Whether or not the grant of damages by the CA is proper.
Page 1 of 20
 FACTS:
RULING:
NO!!
The award of damages has no substantial legal basis. A reading of the decision of the Court of
Appeals will show that the award of damages was based solely on the fact that the original
plaintiff, Pacifico Mabasa, incurred losses in the form of unrealized rentals when the tenants
vacated the leased premises by reason of the closure of the passageway. However, the mere
fact that the plaintiff suffered losses does not give rise to a right to recover damages. To
warrant the recovery of damages, there must be both a right of action for a legal wrong inflicted
by the defendant, and damage resulting to the plaintiff therefrom. Wrong without damage, or
damage without wrong, does not constitute a cause of action, since damages are merely part of
the remedy allowed for the injury caused by a breach or wrong.
There is a material distinction between damages and injury. Injury is the illegal invasion of a
legal right; damage is the loss, hurt, or harm which results from the injury; and damages are
the recompense or compensation awarded for the damage suffered. Thus, there can be damage
without injury in those instances in which the loss or harm was not the result of a violation of a
legal duty.
In the case at bar, although there was damage, there was no legal injury. Contrary to the claim
of private respondents, petitioners could not be said to have violated the principle of abuse of
right. In order that the principle of abuse of right provided in Article 21 of the Civil Code can be
applied, it is essential that the following requisites concur:
1. The defendant should have acted in a manner that is contrary to morals, good
customs or public policy;
ISSUES:
2. The acts should be willful; and
3. There was damage or injury to the plaintiff.
HELD:
** Damnum absque injuria literally means damage without wrongful act. It means that a loss or
harm incurred from something other than a wrongful act does not warrant a legal remedy.
In this case, it is true that Mabasa may have incurred losses (damage) when his tenants left
because of the fence made by the Santoses. However, when Santos built the fence, he was well
within his right. He built the fence inside his property. There was no existing easement
agreement, either by contract or by operation of law, on his property. Hence, Santos has all the
right to build the fence. It was only after the judgment in the trial court that the easement was
created which was even conditioned on the payment of Mabasa of the just compensation.
Santos did not commit a legal injury against Mabasa when he built the fence, therefore, there is
no actionable wrong as basis for the award of damages. In this case, the damage has to be
borne by Mabasa.
Cebu Country Club vs. Elizagaque
-Belhur-
TOPIC: DAMNUM ABSQUE INJURIA
 Cebu Country Club, Inc. (CCCI), petitioner, is a domestic corporation operating as a
non-profit and non-stock private membership club, having its principal place of business
in Banilad, Cebu City. Petitioners herein are members of its Board of Directors.
 In 1996, respondent filed with CCCI an application for proprietary
membership. The application was indorsed by CCCIs two (2) proprietary members,
namely: Edmundo T. Misa and Silvano Ludo.
 As the price of a proprietary share was around the P5 million range, Benito Unchuan,
then president of CCCI, offered to sell respondent a share for only P3.5
million. Respondent, however, purchased the share of a certain Dr. Butalid for
only P3 million. Consequently, on September 6, 1996, CCCI issued Proprietary
Ownership Certificate No. 1446 to respondent.
 During the meetings dated April 4, 1997 and May 30, 1997 of the CCCI Board of
Directors, action on respondents application for proprietary membership was
deferred. In another Board meeting held on July 30, 1997, respondents application
was voted upon. Subsequently, or on August 1, 1997, respondent received a letter from
Julius Z. Neri, CCCIs corporate secretary, informing him that the Board disapproved
his application for proprietary membership.
 On August 6, 1997, Edmundo T. Misa, on behalf of respondent, wrote CCCI a letter of
reconsideration. As CCCI did not answer, respondent, on October 7, 1997, wrote
another letter of reconsideration. Still, CCCI kept silent. On November 5, 1997,
respondent again sent CCCI a letter inquiring whether any member of the Board
objected to his application. Again, CCCI did not reply.
 Complaint for damages was filed. RTC awarded damages in favor of Respondent.
CA affirmed.
1. Whether in disapproving respondent’s application for proprietary membership with
CCCI, petitioners are liable to respondent for damages. (YES)
2. Whether Damnum Absque Injuria as a defense applicable in the instant case. (NO)
 Section 3, Article 1 of CCCIs Amended By-Laws provides:
SECTION 3. HOW MEMBERS ARE ELECTED The procedure for the
admission of new members of the Club shall be as follows:
a. Any proprietary member, seconded by another voting proprietary
member, shall submit to the Secretary a written proposal for the
admission of a candidate to the Eligible-for-Membership List;
b. Such proposal shall be posted by the Secretary for a period of thirty
(30) days on the Club bulletin board during which time any member
may interpose objections to the admission of the applicant by
communicating the same to the Board of Directors;
c. After the expiration of the aforesaid thirty (30) days, if no
objections have been filed or if there are, the Board
considers the objections unmeritorious, the candidate shall
be qualified for inclusion in the Eligible-for-Membership List;
Page 2 of 20
 d. Once included in the Eligible-for-Membership List and after the
candidate shall have acquired in his name a valid POC duly recorded
in the books of the corporation as his own, he shall become a
Proprietary Member, upon a non-refundable admission fee
of P1,000.00, provided that admission fees will only be collected once
from any person.
 On March 1, 1978, Section 3(c) was amended to read as follows:
(c) After the expiration of the aforesaid thirty (30) days, the Board may,
by unanimous vote of all directors present at a regular or special
meeting, approve the inclusion of the candidate in the Eligible-for-
Membership List.
 As shown by the records, the Board adopted a secret balloting known as the black ball
system of voting wherein each member will drop a ball in the ballot box. A
white ball represents conformity to the admission of an applicant, while a black ball
means disapproval. Pursuant to Section 3(c), as amended, cited above, a unanimous
vote of the directors is required. When respondent’s application for proprietary
membership was voted upon during the Board meeting on July 30, 1997, the ballot box
contained one (1) black ball. Thus, for lack of unanimity, his application was
disapproved.
 Obviously, the CCCI Board of Directors, under its Articles of Incorporation, has the right
to approve or disapprove an application for proprietary membership. But such right
should not be exercised arbitrarily. Articles 19 and 21 of the Civil Code on the Chapter
on Human Relations provide restrictions, thus:
Article 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.
Article 21. Any person who willfully 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.
 In rejecting respondent’s application for proprietary membership, we find
that petitioners violated the rules governing human relations, the basic
principles to be observed for the rightful relationship between human beings and for
the stability of social order. The trial court and the Court of Appeals aptly held
that petitioners committed fraud and evident bad faith
in disapproving respondent’s applications. This is contrary to morals, good
custom or public policy. Hence, petitioners are liable for damages pursuant to Article 19
in relation to Article 21 of the same Code.
 It bears stressing that the amendment to Section 3(c) of CCCIs Amended By-Laws
requiring the unanimous vote of the directors present at a special or regular meeting
was not printed on the application form respondent filled and submitted to
CCCI. What was printed thereon was the original provision of Section 3(c) which was
silent on the required number of votes needed for admission of an applicant as a
proprietary member. It is thus clear that respondent was left groping in the dark
wondering why his application was disapproved. He was not even informed that a
unanimous vote of the Board members was required. When he sent a letter for
reconsideration and an inquiry whether there was an objection to his application,
petitioners apparently ignored him.
 As to petitioners reliance on the principle of damnum absque injuria or damage
without injury, suffice it to state that the same is misplaced. In Amonoy v. Gutierrez,
we held that this principle does not apply when there is an abuse of a person’s
right, as in this case.
 As to the appellate courts award to respondent of moral damages, we find the same in
order. Under Article 2219 of the New Civil Code, moral damages may be recovered,
among others, in acts and actions referred to in Article 21. We believe
respondents testimony that he suffered mental anguish, social humiliation and wounded
feelings as a result of the arbitrary denial of his application. However, the amount
of P2,000,000.00 is excessive. While there is no hard-and-fast rule in determining what
would be a fair and reasonable amount of moral damages, the same should not be
palpably and scandalously excessive. Moral damages are not intended to impose a
penalty to the wrongdoer, neither to enrich the claimant at the expense of the
defendant. Taking into consideration the attending circumstances here, we hold that an
award to respondent of P50,000.00, instead of P2,000,000.00, as moral damages is
reasonable.
 Anent the award of exemplary damages, Article 2229 allows it by way of
example or correction for the public good. Nonetheless, since 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, we reduce the
amount from P1,000,000.00 to P25,000.00 only.
 On the matter of attorneys fees and litigation expenses, Article 2208 of the same
Code provides, among others, that attorneys fees and expenses of litigation may be
recovered in cases when exemplary damages are awarded and where the court deems
it just and equitable that attorneys fees and expenses of litigation should be recovered,
as in this case. In any event, however, such award must be reasonable, just and
equitable. Thus, we reduce the amount of attorneys fees (P500,000.00) and litigation
expenses (P50,000.00) to P50,000.00 and P25,000.00, respectively.
WHEREFORE, we DENY the petition.
The challenged Decision and Resolution of the Court of Appeals in CA-G.R. CV No.
71506 are AFFIRMED with modification in the sense that (a) the award of moral
damages is reduced from P2,000,000.00 to P50,000.00; (b) the award of exemplary
damages is reduced from P1,000,000.00 to P25,000.00; and (c) the award of
attorneys fees and litigation expenses is reduced from P500,000.00 and P50,000.00
to P50,000.00 and P25,000.00, respectively.
Heirs of PURISIMA NALA, represented by their attorney-in-fact EFEGENIA
DIGNA DUYAN, petitioners,
vs.
ARTEMIO CABANSAG, respondent.
-em-
Page 3 of 20
TOPIC: DAMNUM ABSQUE INJURIA
Facts:
Artemio Cabansag (respondent) filed Civil Case for damages in October 1991. According to
respondent, he bought a 50-square meter property from spouses Eugenio Gomez, Jr. and Felisa
Duyan Gomez on July 23, 1990. Said property is part of a 400-square meter lot registered in the
name of the Gomez spouses. In October 1991, he received a demand letter from Atty. Alexander
del Prado (Atty. Del Prado), in behalf of Purisima Nala (Nala), asking for the payment of rentals
from 1987 to 1991 until he leaves the premises, as said property is owned by Nala, failing which
criminal and civil actions will be filed against him. Another demand letter was sent on May 14,
1991. Because of such demands, respondent suffered damages and was constrained to file the
case against Nala and Atty. Del Prado.
Atty. Del Prado claimed that he sent the demand letters in good faith and that he was merely
acting in behalf of his client, Nala, who disputed respondent's claim of ownership. Nala alleged
that said property is part of an 800-square meter property owned by her late husband, Eulogio
Duyan, which was subsequently divided into two parts. The 400-square meter property was
conveyed to spouses Gomez in a fictitious deed of sale, with the agreement that it will be merely
held by them in trust for the Duyan's children. Said property is covered by Transfer Certificate of
Title (TCT) No. 281115 in the name of spouses Gomez. Nala also claimed that respondent is only
renting the property which he occupies.
After trial, the RTC its Decision in favor of respondent. Nala and Atty. Del Prado appealed to the
CA. The herein assailed CA Decision affirmed the RTC Decision with modification.
Petitioners argue that respondent did not substantiate his claim for damages. Preliminarily, the
Court notes that both the RTC and the CA failed to indicate the particular provision of law under
which it held petitioners liable for damages. Nevertheless, based on the allegations in respondent's
complaint, it may be gathered that the basis for his claim for damages is Article 19 of the Civil
Code.
Issue:
WN Article 19 of the Civil Code is applicable, thus, respondent can claim for damages.
Held:
No. In order to be liable for damages under the abuse of rights principle, the following requisites
must concur: (a) the existence of a legal right or duty; (b) which is exercised in bad faith; and (c)
for the sole intent of prejudicing or injuring another.
It should be stressed that malice or bad faith is at the core of Article 19 of the Civil Code. Good
faith is presumed, and he who alleges bad faith has the duty to prove the same. Bad faith, on the
other hand, does not simply connote bad judgment to simple negligence, dishonest purpose or
some moral obloquy and conscious doing of a wrong, or a breach of known duty due to some
motives or interest or ill will that partakes of the nature of fraud. Malice connotes ill will or spite
and speaks not in response to duty. It implies an intention to do ulterior and unjustifiable harm.
In the present case, there is nothing on record which will prove that Nala and her counsel, Atty.
Del Prado, acted in bad faith or malice in sending the demand letters to respondent. In the first
place, there was ground for Nala's actions since she believed that the property was owned by her
husband Eulogio Duyan and that respondent was illegally occupying the same. She had no
knowledge that spouses Gomez violated the trust imposed on them by Eulogio and surreptitiously
sold a portion of the property to respondent. It was only after respondent filed the case for
damages against Nala that she learned of such sale. The bare fact that respondent claims
ownership over the property does not give rise to the conclusion that the sending of the demand
letters by Nala was done in bad faith. Absent any evidence presented by respondent, bad faith or
malice could not be attributed to petitioner since Nala was only trying to protect their interests
over the property.
Moreover, respondent failed to show that Nala and Atty. Del Prado's acts were done with the sole
intention of prejudicing and injuring him. It may be true that respondent suffered mental anguish,
serious anxiety and sleepless nights when he received the demand letters; however, there is a
material distinction between damages and injury. Injury is the legal invasion of a legal right while
damage is the hurt, loss or harm which results from the injury.Thus, there can be damage without
injury in those instances in which the loss or harm was not the result of a violation of a legal duty.
In such cases, the consequences must be borne by the injured person alone; the law affords no
remedy for damages resulting from an act which does not amount to a legal injury or wrong.
These situations are often called damnum absque injuria.
Nala was acting well within her rights when she instructed Atty. Del Prado to send the demand
letters. She had to take all the necessary legal steps to enforce her legal/equitable rights over the
property occupied by respondent. One who makes use of his own legal right does no injury. Thus,
whatever damages are suffered by respondent should be borne solely by him.
Petition Granted.
LUCIO ALGARRA vs, SIXTO SANDEJAS
-ron-
TOPIC: ACTUAL DAMAGES
Facts:
 Civil action for personal injuries received from a collision with the defendant's
automobile due to the negligence of the defendant Sandejas, who was driving the car.
 Negligence of the defendant is not questioned and this case involves only the amount
of damages which should be allowed.
 Because of the injuries received, plaintiff Algarra spent 10 days in the hospital. During
the first 4 or 5 days, he could not leave his bed.
 He received medical attention from a private practitioner for several days after being
discharged.
 Plaintiff testified that he had done no work since the accident, which occurred on July
9, 1912, and that he was not yet entirely recovered.
Page 4 of 20
  Plaintiff testified that his earning capacity was P50 per month. He sold the products of
a distillery on a 10% commission. Since the accident his wife had done tried to keep
up this business but the total orders taken by her would not net them over P15.
 Plaintiff further testified that he paid the doctor P8 and expended P2 for medicines.
This expenses, amounting in all to P110 should also be allowed.
 The lower court, while recognizing the justness of he claim, refused to allow him
anything for injury to his business due to his enforced absence therefrom.
Issue:
WON plaintiff Algarra is entitled to indemnity for the damage to his business due to his enforced
absence therefrom. (Yes)
Ruling:
Actions for damages such as the case at bar are based upon article 1902 of the (Old) Civil
Code, which reads as follows: "A person who, by act or omission, causes damage to another
where there is fault or negligence shall be obliged to repair the damage so done."
Article 1902 of the (Old) Civil Code requires that the defendant repair the damage done. There
is, however, a world of difficulty in carrying out the legislative will in this particular. The measure
of damages is an ultimate fact, to be determined from the evidence submitted to the court.
The case at bar involves actual incapacity of the plaintiff for two months, and loss of the greater
portion of his business. As to the damages resulting from the actual incapacity of the plaintiff to
attend to his business there is no question. They are, of course, to be allowed on the basis of
his earning capacity, which in this case, is P50 per month. the difficult question in the present
case is to determine the damage which has results to his business through his enforced
absence.
Elements to be considered in estimating the damage done to plaintiff's business by reason of his
accident: the business the plaintiff is engaged in, the nature and extent of such business, the
importance of his personal oversight and superintendence in conducting it, and the consequent
loss arising from his inability to prosecute it.
The business of the present plaintiff required his immediate supervision. All the profits derived
therefrom were wholly due to his own exertions. Nor are his damages confined to the actual
time during which he was physically incapacitated for work, as is the case of a person working
for a stipulated daily or monthly or yearly salary.
As to persons whose labor is thus compensated and who completely recover from their injuries,
the rule may be said to be that their damages are confined to the duration of their enforced
absence from their occupation. But the present plaintiff could not resume his work at the same
profit he was making when the accident occurred. He had built up an establishing business
which included some twenty regular customers.
As a result of the accident, he lost all but four of his regular customers and his receipts dwindled
down to practically nothing. Other agents had invaded his territory, and upon becoming
physically able to attend to his business, he found that would be necessary to start with
practically no regular trade, and either win back his old customers from his competitors or else
secure others.
When it is shown that a plaintiff's business is a going concern with a fairly steady average profit
on the investment, it may be assumed that had the interruption to the business through
defendant's wrongful act not occurred, it would have continued producing this average income
"so long as is usual with things of that nature". The mere fact that the loss cannot be
ascertained with absolute accuracy, is no reason for denying plaintiff's claim altogether.
Plaintiff having had four years' experience in selling goods on commission, it must be presumed
that he should be able to rebuild this business to its former proportions in much less time than it
took to establish it as it stood just prior to the accident. One year should be sufficient time in
which to do this.
The injury to plaintiff's business begins where these profits leave off, and, as a corollary, there is
where defendant's liability begins. Upon this basis, we fix the damages to plaintiff's business at
P250.
The judgment of the lower court is set aside, and the plaintiff is awarded the following
damages; P10 for medical expenses; P100 for the two months of his enforced absence from his
business; and P250 for the damage done to his business in the way of loss of profits, or a total
of three hundred and sixty pesos.
M.D TRANSIT & TAXI CO. VS. COURT OF APPEALS and DAVID EPSTEIN
-jeanelle-
TOPIC: ACTUAL DAMAGES
FACTS:
 While crossing Taft Avenue extension, passing by the pedestrian lane and as he was
about to reach the island in the middle of the road, DAVID ESPTEIN, was hit by a
Pasay bound bus of the MD Transit & Taxi Co. Inc., driven by Dominador Sembrano.
In consequence, David Epstein’s (plaintiff) suffered injuries.
 Prosecuted for serious physical injuries through reckless imprudence, the CFI of
Manila found Sembrano guilty thereof and sentenced him to suffer penalty of
imprisonment, but refrained from making any pronouncement on his civil liability,
plaintiff reserved the right to file a separate civil action for damages.
 January 23, 1959 – Plaintiff had commenced the present action for damages against
Sembrano and appellant MD Transit. Sembrano was declared in default, whereas
appellant filed its answer alleging that it had exercised due diligence in the selection
of its employees and in supervising them in the performance of their duties, and that
the accident was due to plaintiff’s recklessness and negligence.
 CFI rendered its decision as follows:
That Defendant Sembrano is primarily liable to plaintiff for the damages sustained by
the latter and orders to pay the following:
1. Actual damages in the amount of P3,161.10;
2. Compensatory damages in the amount of P12,000.00;
3. Moral damages in the amount of P5,000.00; and
Page 5 of 20
 4. Counsel fees in the amount of P1,000.00
That defendant MD Transit is subsidiarily liable to plaintiff in the amounts above-
indicated, in the event that defendant Sembrano, fails to pay the same or is insolvent.
 Court of Appeals affirmed CFI’s decision.
ISSUE: Whether the sum of P3, 161.10 awarded as actual damages is unreasonable and ought
to be reduced.
HELD. NO
Actual damages is a question of fact, and the findings thereon of the Court of Appeals, adopting
those of the trial court are conclusive upon the Honorable Court.
Bearing in mind that in crimes, the defendant is liable for all damages which are the natural and
probable consequences of the act or omission complained of, including loss or impairment of
earning capacity of the offended party and injury to his business standing or commercial credit
as well as compensation for physical pain and suffering and mental anguish.
Actual damages are the expenses incurred by the plaintiff for his medical treatment and
“compensatory damages” are the earnings he failed to make due to his consequent inability to
pursue his normal work or occupation. In the language of Article 2200 of the Civil Code,
“indemnification for damages shall comprehend not only the value of the loss suffered”
(damnum emergens/actual damages) but also that of the profits which the oblige failed to
obtain (lucrum cessans/compensatory damages).
DECISION AFFIRMED!
PNOC SHIPPING AND TRANSPORT CORPORATION
VS.
CA & AND MARIA EFIGENIA FISHING CORPORATION
-gaddi-
TOPIC: ACTUAL DAMAGES
FACTS:
M/V Maria Efigenia XV, owned by Maria Efigenia Fishing Corporation, was
navigating the waters near Fortune Island in Nasugbu, Batangas on its way to Navotas, Metro
Manila when it collided with the vessel Petroparcel which at the time was owned by the Luzon
Stevedoring Corporation (LSC). The Board of Marine Inquiry rendered a decision finding
the Petroparcel at fault. The Board and private respondent sued the LSC and the Petroparcel
captain, Edgardo Doruelo, before the then Court of First Instance. During the pendency of the
case, PNOC Shipping and Transport Corporation substituted LSC as it had already acquired
ownership of the Petroparcel.
The RTC rendered its decision in favor of private respondent and against PNOC Shipping
& Transport Corporation ordering the latter to pay the sum of P6,438,048.00 representing the
value of the fishing boat. The lower court cited the evidence presented by private respondent
consisting of the testimony of its general manager and sole witness, Edilberto del Rosario.
According to him, at the time the vessel sank, it was then carrying 1,060 tubs (bañeras) of assorted
fish the value of which was never recovered. Also lost with the vessel were two cummins engines
(250 horsepower), radar, pathometer and compass.
As to the award of P6,438,048.00 in actual damages, the lower court took into account
the following pieces of documentary evidence that private respondent proffered during trial:
(b) Exhibit B - a document stating that as a result of the collision, the M/V Maria
Efigenia XV sustained a hole at its left side that caused it to sink with its cargo of 1,050 bañeras
valued at P170,000.00; (1977)
(c) Exhibit C - a quotation for the construction of a 95-footer trawler showing that
construction of such trawler would cost P2,250,000.00; (1987)
(d) Exhibit D - pro forma invoice showing that two (2) units of CUMMINS Marine
Engine model N855-M, 195 bhp. at 1800 rpm. would cost P1,160,000.00; (1987)
(e) Exhibit E - quotation of prices showing that a unit of Furuno Compact Daylight
Radar and a unit of Furuno Color Video Sounder would cost in total of P145,000.00; (1987)
(f) Exhibit F - quotation of prices showing that rolls of nylon rope, (1) binocular (1)
compass, and 50 pcs. of floats amounted to a total of P197, 150.00; (1987)
(h) Exhibit H - price quotation issued by Seafgear Sales, Inc. dated April 10, 1987 to
Del Rosario showing the cost of poly nettings and banera (tub) having a total of P414,065.00.
(1987)
The Court of Appeals affirmed the RTC’s decision in toto. The amount of P6,438,048.00
was duly established at the trial on the basis of appellee’s documentary exhibits.
ISSUE: W/N the actual damages were proven through the sole testimony of
private respondent’s general manager and certain pieces of documentary
evidence.
Under Article 2199 of the Civil Code, actual or compensatory damages are those
awarded in satisfaction of, or in recompense for, loss or injury sustained. They proceed from a
sense of natural justice and are designed to repair the wrong that has been done, to compensate
for the injury inflicted and not to impose a penalty. In actions based on torts or quasi-delicts,
actual damages include all the natural and probable consequences of the act or omission
complained of. There are two kinds of actual or compensatory damages: one is the loss of
what a person already possesses (daño emergente), and the other is the failure to receive as a
benefit that which would have pertained to him (lucro cesante).
To enable an injured party to recover actual or compensatory damages, he is required
to prove the actual amount of loss with reasonable degree of certainty premised upon competent
proof and on the best evidence available. The burden of proof is on the party who would be
defeated if no evidence would be presented on either side. He must establish his case by a
preponderance of evidence. Damages cannot be presumed and courts, in making an award must
point out specific facts that could afford a basis for measuring whatever compensatory or actual
damages are borne.
Page 6 of 20
 We hold that the price quotations are ordinary private writings which under the Revised
Rules of Court should have been proffered along with the testimony of the authors thereof. Section
36, Rule 130 of the Revised Rules of Court provides that a witness can testify only to those facts
that he knows of his personal knowledge. Del Rosario could not have testified on the veracity of
the contents of the writings even though he was the seasoned owner of a fishing fleet because
he was not the one who issued the price quotations.
The price quotations presented as exhibits partake of the nature of hearsay evidence
considering that the persons who issued them were not presented as witnesses. Any evidence,
whether oral or documentary, is hearsay if its probative value is not based on the personal
knowledge of the witness but on the knowledge of another person who is not on the witness
stand. Hearsay evidence, whether objected to or not, has no probative value. Accordingly, as
stated at the outset, damages may not be awarded on the basis of hearsay evidence.
Nonetheless, the non-admissibility of said exhibits does not mean that it totally deprives
private respondent of any redress for the loss of its vessel. In the absence of competent proof on
the actual damage suffered, private respondent is entitled to nominal damages.
WHEREFORE, the challenged decision of the Court of Appeals is hereby MODIFIED
insofar as it awarded actual damages to private respondent Maria Efigenia Fishing Corporation in
the amount of P6,438,048.00 for lack of evidentiary bases therefor.
MERCURY DRUG CORPORATION and ROLANDO J. DEL ROSARIO,
petitioners, vs. SPOUSES RICHARD HUANG and CARMEN HUANG, and
STEPHEN HUANG, Respondents.
-zyka-
TOPIC: ACTUAL DAMAGES
FACTS:
Petitioner Mercury Drug Corporation (Mercury Drug) is the registered owner of a six-wheeler 1990
Mitsubishi Truck. Its employee petitioner Rolando J. del Rosario as driver.
Respondent spouses Richard and Carmen Huang are the parents of respondent Stephen Huang
and own the red 1991 Toyota Corolla GLI Sedan.
These two vehicles figured in a road accident on December 20, 1996 at around 10:30 p.m. within
the municipality of Taguig.
Respondent Stephen Huang was driving the car, while petitioner Del Rosario was driving the truck.
Both were traversing the C-5 Highway, north bound, coming from the general direction of Alabang
going to Pasig City.
The car was on the left innermost lane while the truck was on the next lane to its right, when the
truck suddenly swerved to its left and slammed into the front right side of the car. The collision
hurled the car over the island where it hit a lamppost, spun around and landed on the opposite
lane. The truck also hit a lamppost, ran over the car and zigzagged towards, and finally stopped
in front of Buellah Land Church.
At the time of the accident, petitioner Del Rosario only had a Traffic Violation Receipt (TVR). His
drivers license had been confiscated because he had been previously apprehended for reckless
driving.
The car, valued at P300,000.00, was a total wreck. Respondent Stephen Huang sustained massive
injuries to his spinal cord, head, face, and lung. Despite a series of operations, respondent Stephen
Huang is paralyzed for life from his chest down and requires continuous medical and rehabilitation
treatment.
Respondents fault petitioner Del Rosario for committing gross negligence and reckless imprudence
while driving, and petitioner Mercury Drug for failing to exercise the diligence of a good father of
a family in the selection and supervision of its driver.
In contrast, petitioners allege that the immediate and proximate cause of the accident was
respondent Stephen Huangs recklessness.
TC: found petitioners Mercury Drug and Del Rosario jointly and severally liable to pay respondents
actual, compensatory, moral and exemplary damages, attorneys fees, and litigation expenses.
CA: affirmed the decision of the trial court but reduced the award of moral damages to
P1,000,000.00. The appellate court also denied the motion for reconsideration filed by petitioners.
Hence, this appeal.
ISSUE:
(1) WON the actual damages claimed are property (IMPORTANT)
HELD: YES
Actual damages:
Art. 2199 of the Civil Code provides that [E]xcept as provided by law or by stipulation one is
entitled to an adequate compensation only for such pecuniary loss suffered by him as he has duly
proved x x x.
In the instant case, the actual damages claimed by respondents were supported by receipts. The
amount of P2,973,000.00 represented cost of hospital expenses, medicines, medical services and
supplies, and nursing care services provided respondent Stephen from December 20, 1996, the
day of the accident, until December 1998.
Moreover, if the victim did not die but he or she will require medical attendance for the rest of his
or her life, it is proper to award life care cost because the tortfeasor is liable for all damages which
are the natural and probable consequences of the act or omission complained of.
Villa Rey Transit, Inc. vs Court of Appeals
-carol-
TOPIC: LOSS OF EARNING CAPACITY
Page 7 of 20
FACTS: An Izuzu First Class passenger bus owned and operated by the defendant, and driven by
Laureano Casim, left Lingayen, Pangasinan, for Manila. Among its paying passengers was the
deceased, Policronio Quintos, Jr. When the vehicle was nearing the northern approach of the
Sadsaran Bridge on the national highway in barrio Sto. Domingo, Pampanga, it frontally hit the
rear side of a bullcart filled with hay. As a result the end of a bamboo pole placed on top of the
hayload and tied to the cart to hold it in place, hit the right side of the windshield of the bus.
The protruding end of the bamboo pole, about 8 feet long from the rear of the bullcart, penetrated
through the glass windshield and landed on the face of Policronio Quintos, Jr. who, because of
the impact, fell from his seat and was sprawled on the floor. The pole landed on his left eye and
the bone of the left side of his face was fractured. He suffered other multiple wounds and was
rendered unconscious due, among other causes to severe cerebral concussion.
A La Mallorca passenger bus going in the opposite direction towards San Fernando, Pampanga,
reached the scene of the mishap and it was stopped by Patrolman Felino Bacani of the municipal
police force of Minalin who, in the meantime, had gone to the scene to investigate. Patrolman
Bacani placed Policronio Quintos, Jr. and three other injured men who rode on the bullcart aboard
the La Mallorca bus and brought them to the provincial hospital of Pampanga at San Fernando for
medical assistance. Notwithstanding such assistance, Policronio Quintos, Jr. died a on the same
day.
The private respondents, Trinidad, Prima and Julita, all surnamed Quintos, are the sisters and only
surviving heirs of Policronio Quintos, Jr., who died single, leaving no descendants nor ascendants.
Said respondents herein brought this action against herein petitioner, Villa Rey Transit, Inc., as
owner and operator of said passenger bus, for breach of the contract of carriage between said
petitioner and the deceased Policronio Quintos, Jr.
RTC & CA: The accident and the death of Policronio had been due to the negligence of the bus
driver, for whom petitioner was liable under its contract of carriage with the deceased. The mishap
was not the result of any unforeseeable fortuitous event or emergency but was the direct result
of the negligence of the driver of the defendant.
ISSUE: The only issue raised in this appeal is the amount of damages recoverable by private
respondents herein.
HELD: The determination of the amount of damages resulting from a death of a passenger due
to breach of contract of carriage recoverable by private respondents, heirs of the deceased,
depends, mainly upon two (2) factors, namely:
(1) the number of years on the basis of which the damages shall be computed and
(2) the rate at which the losses sustained by said respondents should be fixed.
The determination of the indemnity to be awarded to the heirs of a deceased person has therefore
no fixed basis. Much is left to the discretion of the court considering the moral and material
damages involved, and so it has been said that "(t)here can be no exact or uniform rule for
measuring the value of a human life and the measure of damages cannot be arrived at by precise
mathematical calculation, but the amount recoverable depends on the particular facts and
circumstances of each case. The life expectancy of the deceased or of the beneficiary, whichever
is shorter, is an important factor.
Life expectancy is, not only relevant, but, also, an important element in fixing the amount
recoverable by private respondents herein. Although it is not the sole element determinative of
said amount, no cogent reason has been given to warrant its disregard and the adoption, in the
case at bar, of a purely arbitrary standard. such as a four-year rule. Other factors that are usually
considered are:
(1) pecuniary loss to plaintiff or beneficiary;
(2) loss of support;
(3) loss of service;
(4) loss of society;
(5) mental suffering of beneficiaries; and
(6) medical and funeral expenses.
With respect to the rate at which the damages shall be computed, petitioner impugns the decision
appealed from upon the ground that the damages awarded therein will have to be paid now,
whereas most of those sought to be indemnified will be suffered years later. This argument is
basically true, and this is, perhaps, one of the reasons why the Alcantara case points out the
absence of a "fixed basis" for the ascertainment of the damages recoverable in litigations like the
one at bar. Just the same, the force of the said argument of petitioner herein is offset by the fact
that, although payment of the award in the case at bar will have to take place upon the finality of
the decision therein, the liability of petitioner herein had been fixed at the rate only of P2,184.00
a year, which is the annual salary of Policronio Quintos, Jr. at the time of his death, as a young
"training assistant" in the Bacnotan Cement Industries, Inc.
Unlike the Alcantara case, on which petitioner relies, the lower courts did not consider, in the
present case, the victim's potentiality and capacity to increase his future income. Indeed, upon
the conclusion of his training period, he was supposed to have a better job and be promoted from
time to time, and, hence, to earn more, if not — considering the growing importance of trade,
Page 8 of 20
commerce and industry and the concomitant rise in the income level of officers and employees
therein — much more.
In the determination of the losses or damages sustained by the private respondents, as
dependents and intestate heirs of the deceased, said damages consist, not of the full amount of
his earnings, but of the support they received or would have received from him had he not died
in the consequence of the negligence of petitioner's agent. In fixing the amount of that support,
the "necessary expenses of his own living" must be deducted from his earnings. Thus, earning
capacity, as an element of damages to one's estate for his death by wrongful act is necessarily
his net earning capacity, or his capacity to acquire money, "less the necessary expense for his
own living."
FORMULA:
*Net Earning Capacity = Life Expectancy x (Gross Annual Income - Necessary Living Expenses)
*Life Expectancy = 2/3 x (80 - age at death)
SMITH BELL DODWELL SHIPPING AGENCY CORPORATION, petitioner,
vs.
CATALINO BORJA and INTERNATIONAL TO WAGE AND TRANSPORT
CORPORATION, respondents.
-joy-
TOPIC: LOSS OF EARNING CAPACITY
The owner or the person in possession and control of a vessel is liable for all natural and proximate
damages caused to persons and property by reason of negligence in its management or
navigation. The liability for the loss of the earning capacity of the deceased is fixed by taking into
account the net income of the victim at the time of death -- of the incident in this case -- and that
person's probable life expectancy.
FACTS:
On September 23, 1987, Smith Bell [herein petitioner] filed a written request with the Bureau of
Customs for the attendance of the latter's inspection team on vessel M/T King Family which was
due to arrive at the port of Manila on September 24, 1987.
"Said vessel contained 750 metric tons of alkyl benzene and methyl methacrylate monomer.
"On the same day, respondent Borja was instructed to board said vessel and perform his duties
as inspector upon the vessel's arrival until its departure. At that time, Borja was a customs
inspector of the Bureau of Customs receiving a salary of P31,188.25 per annum.
"At about 11 o'clock in the morning on September 24, 1987, while M/T King Family was unloading
chemicals unto two (2) barges [--] ITTC 101 and CLC-1002 [--] owned by [Respondent] ITTC, a
sudden explosion occurred setting the vessels afire. Upon hearing the explosion, Borja, who was
at that time inside the cabin preparing reports, ran outside to check what happened. Again,
another explosion was heard.
"Seeing the fire and fearing for his life, Borja hurriedly jumped over board to save himself.
However, the water was likewise on fire due mainly to the spilled chemicals. Despite the
tremendous heat, Borja swam his way for one (1) hour until he was rescued by the people living
in the squatters' area and sent to San Juan De Dios Hospital.
"After weeks of intensive care at the hospital, his attending physician diagnosed Borja to be
permanently disabled due to the incident. Borja made demands against Smith Bell and ITTC
for the damages caused by the explosion. However, both denied liabilities and attributed to each
other negligence."
RTC ruled in favor of Respondent Borja and held petitioner liable for damages and loss of income.
WHEREFORE, premises considered, judgment is hereby rendered ordering [Petitioner] Smith Bell
Dodwell [S]hipping Agency Corporation to pay [Borja]:
1. The amount of P495,360.00 as actual damages for loss of earning capacity:
2. The amount of P100,000.00 for moral damages; and
3. The amount of P50,000.00 for and as reasonable attorney's fees.
CA affirmed
Petitioner insists that Borja is not entitled to the full amount of damages awarded by the lower
courts. It disputes the use of his gross earning as basis for the computation of the award for loss
of earning capacity. Both courts, in computing the value of such loss, used the remaining years
of the victim as a government employee and the amount he had been receiving per annum at the
time of the incident.
Counsel for Respondent Borja, on the other hand, claims that petitioner had no cause to complain,
because the miscomputation had ironically been in its favor. The multiplier used in the
computation was erroneously based on the remaining years in government service, instead of the
life expectancy, of the victim. Borja's counsel also points out that the award was based on the
former's meager salary in 1987, or about 23 years ago when the foreign exchange was still P14
to $1. Hence, the questioned award is consistent with the primary purpose of giving what is just,
moral and legally due the victim as the aggrieved party.
Issue: w/n life expectancy (as multiplier) is based on the retirement age of the emplooyee (or
remaining years in service)
Page 9 of 20
Held: nawp. It’s 80 y/o. The presumption is that the victim could have earned income even if
beyond his retirement age.
In determining the reasonableness of the damages awarded under Article 1764 in conjunction
with Article 2206 of the Civil Code, the factors to be considered are: (1) life expectancy
(considering the health of the victim and the mortality table which is deemed conclusive) and loss
of earning capacity; (b) pecuniary loss, loss of support and service; and (c) moral and mental
sufferings.The loss of earning capacity is based mainly on the number of years remaining in the
person's expected life span. In turn, this number is the basis of the damages that shall be
computed and the rate at which the loss sustained by the heirs shall be fixed.
The formula for the computation of loss of earning capacity is as follows:
Net earning capacity = Life expectancy x [Gross Annual Income - Living Expenses (50%
of gross annual income)]
where life expectancy = 2/3 (80 - the age of the deceased).
Petitioner is correct in arguing that it is net income (or gross income less living expenses) which
is to be used in the computation of the award for loss of income. Villa Rey Transit v. Court of
Appeals23 explained that "the amount recoverable is not the loss of the entire earning, but rather
the loss of that portion of the earnings which the beneficiary would have received." Hence, in
fixing the amount of the said damages, the necessary expenses of the deceased should
be deducted from his earnings.
In other words, only net earnings, not gross earnings, are to be considered; that is, the
total of the earnings less expenses necessary in the creation of such earnings or income, less
living and other incidental expenses. When there is no showing that the living expenses constituted
a smaller percentage of the gross income, we fix the living expenses at half of the gross income.
To hold that one would have used only a small part of the income, with the larger part going to
the support of one's children, would be conjectural and unreasonable.24
Counsel for Respondent Borja is also correct in saying that life expectancy should not be
based on the retirement age of government employees, which is pegged at 65.
In Negros Navigation Co, Inc. v. CA,25 the Court resolved that in calculating the life expectancy of
an individual for the purpose of determining loss of earning capacity under Article 2206(1) of the
Civil Code, it is assumed that the deceased would have earned income even after
retirement from a particular job.
Respondent Borja should not be situated differently just because he was a government employee.
Private employees, given the retirement packages provided by their companies, usually retire
earlier than government employees; yet, the life expectancy of the former is not pegged at 65
years.
Petitioner avers that Respondent Borja died nine years after the incident and, hence, his life
expectancy of 80 years should yield to the reality that he was only 59 when he actually died.
We disagree. The Court uses the American Experience/Expectancy Table of Mortality or
the Actuarial or Combined Experience Table of Mortality, which consistently pegs the life
span of the average Filipino at 80 years, from which it extrapolates the estimated income to be
earned by the deceased had he or she not been killed.
Respondent Borja's demise earlier than the estimated life span is of no moment. For purposes
of determining loss of earning capacity, life expectancy remains at 80. Otherwise, the
computation of loss of earning capacity will never become final, being always subject to the
eventuality of the victim's death. The computation should not change even if Borja lived beyond
80 years. Fair is fair.
Based on the foregoing discussion, the award for loss of earning capacity should be computed as
follows:
Loss of earning capacity = [2 (80-50)] x [(P2,752x12)-16,512]
3
= P330,240
Moral damages and atty’s fees justified.
METRO MANILA TRANSIT VS. CA
-cyril-
TOPIC: LOSS OF EARNING CAPACITY
FACTS:
 MMTC is the operator of a fleet of passenger buses within the Metro Manila area and
Musa was its driver . The spouses Rosales were parents of Liza Rosalie, a third-year
high school student at the University of the Philippines Integrated School.
 At around a quarter past one in the afternoon of August 9, 1986, MMTC Bus No. 27,
which was driven by Musa, hit Liza Rosalie who was then crossing Katipunan Avenue
in Quezon City. An eye witness said the girl was already near the center of the street
when the bus, then bound for the south, hit her. She fell to the ground upon impact,
rolled between the two front wheels of the bus, and was run over by the left rear tires
thereof. Her body was dragged several meters away from the point of impact. Liza
Rosalie was taken to the Philippine Heart Center, but efforts to revive her proved
futile.
 Pedro Musa was found guilty of reckless imprudence resulting in homicide. However,
for the civil liability, Souses Rosales filed an independent civil action for damages
against MMTC, Musa, MMTC Acting General Manager Conrado Tolentino, and the
Government Service Insurance System (GSIS). They subsequently amended their
complaint to include Feliciana Celebrado, a dispatcher of the MMTC, as a defendant
therein.
 To free themselves from liability, petitioners attempted to prove that it exercise
diligentissimi patris familias in the selcetion and supervision of employees through oral
evidence.
Page 10 of 20
  The RTC ruled in favor of Spouses Rosales, but made MMTC primarily liable and Musa
secondarily liable for the following:
1. Actual damages in the amount of P150,000.00;
2. Moral damages in the amount of P500,000.00;
3. Exemplary damages in the amount of P100,000.00;
4. Attorney's fees in the amount of P50,000.00; and
5. Costs of suit.
 Both parties appealed to the Court of Appeals. CA affirmed the decision of the trial
court with modification deleting the award of P150,000.00 as actual damages and
awarding in lieu thereof the amount of P30,000.00 as death indemnity
YUNG RELATED SA TOPIC:
Compensation for Loss of Earning Capacity.
Art. 2206 of the Civil Code provides that in addition to the indemnity for death caused by a
crime or quasi delict, 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 .
Compensation of this nature is awarded not for loss of earnings but for loss of capacity to earn
money. Evidence must be presented that the victim, if not yet employed at the time of death,
was reasonably certain to complete training for a specific profession.
SC CITED 2 CASES PARA MACOMPARE:
1. People v. Teehankee
- No award of compensation for loss of earning capacity was granted to the heirs of a
college freshman because there was no sufficient evidence on record to show that the
victim would eventually become a professional pilot. But compensation should be
allowed for loss of earning capacity resulting from the death of a minor who has not
yet commenced employment or training for a specific profession if sufficient evidence
is presented to establish the amount thereof.
In the United States it has been observed:
This raises the broader question of the proper measure of damages in death cases
involving children, housewives, the old, and others who do not have market income so
that there is no pecuniary loss to survivors or to the estate of the decedent. The
traditional approach was to award no or merely nominal damages in such cases. . . .
Increasingly, however, courts allow expert testimony to be used to project those lost
earnings.
2. Haumersen v. Ford Motor Co.
- The court allowed the heirs of a seven-year-old boy who was killed in a car accident
to recover compensation for loss of earning capacity. Considerable evidence was
presented by plaintiffs in an effort to give the jury a foundation on which to make an
award. Briefly stated, this evidence showed Charles Haumersen was a seven-year-old
of above average characteristics. He was described as "very intelligent" and "all-
American." He received high marks in school. He was active in church affairs and
participated in recreational and athletic events, often with, children older than himself.
In addition, he had an unusual talent for creating numerous cartoons and other
drawings, some of which plaintiffs introduced at trial.
*MAY ISA PA PERO WAG NA ISALI HAHABA PA E GANON DEN NAMAN*
*SO ETO NA YUNG APPLICATION SA EARNING CAPACITY EMERUT:
In sharp contrast with the situation obtaining in People v. Teehankee, where the
prosecution merely presented evidence to show the fact of the victim's graduation from high
school and the fact of his enrollment in a flying school, spouses Rosales did not content
themselves with simply establishing Liza Rosalie's enrollment at UP Integrated School. They
presented evidence to show that Liza Rosalie was a good student, promising artist, and obedient
child.
1. She consistently performed well in her studies since grade school. A survey
taken in 1984 when Liza Rosalie was twelve years old showed that she had good
study habits and attitudes.
2. Cleofe Chi, guidance counselor of the University of the Philippines Integrated
School, described Liza Rosalie as personable, well-liked, and with a balanced
personality.
3. Professor Alfredo Rebillon, a faculty member of the University of the Philippines
College of Fine Arts, who organized workshops which Liza Rosalie attended in
1982 and 1983, testified that Liza Rosalie had the potential of eventually
becoming an artist.
4. Professor Rebillon's testimony is more than sufficiently established by the 51
samples of Liza Rosalie's watercolor, charcoal, and pencil drawings submitted as
exhibits by the spouses Rosales.
Neither MMTC nor Pedro Musa controverted this evidence.
Considering her good academic record, extra-curricular activities, and varied interests, it is
reasonable to assume that Liza Rosalie would have enjoyed a successful professional career had
it not been for her untimely death. Hence, it is proper that compensation for loss of earning
Page 11 of 20
 capacity should be awarded to her heirs in accordance with the formula established in decided
cases 47 for computing net earning capacity, to wit:
 Lastly, although respondents did not appeal the CA Decision, they now pray in their
Net Earning = Life [Gross Necessary
Capacity Expectancy x [Annual — Living
 On this point, Metro Manila Transit Corporation v. Court of Appeals is instructive, to wit:
[Income Expenses
Life expectancy is equivalent to two thirds (2/3) multiplied by the difference of eighty (80) and
the age of the deceased. Since Liza Rosalie was 16 at the time of her death, her life expectancy
was 44 more years. Her projected gross annual income, computed based on the minimum wage
for workers in the non-agricultural sector in effect at the time of her death, then fixed at
P37.00, is P14,630.46. Allowing for necessary living expenses of fifty percent (50%) of her
projected gross annual income, her total net earning capacity amounts to P321,870.12.
OMC CARRIERS, INC. vs. SPOUSES NABUA
 In the case at bar, respondents only testified to the fact that the victim, Reggie Nabua,
-Belhur-
TOPIC: LOSS OF EARNING CAPACITY
Facts:
 An Isuzu private tanker, owned by and registered in the name of petitioner OMC Carriers, Inc.
and then being driven by its employee Jerry P. Aalucas (Aalucas), was cruising along Quirino
Highway towards the general direction of Lagro, Quezon City.
 The aforesaid private tanker hit a private vehicle, an Isuzu Gemini, which was making a
left turn towards a nearby Caltex gasoline station.
 The impact heavily damaged the right side portion of the latter motor and mortally injured its 18-
year-old driver, Reggie T. Nabua, who was later pronounced dead on arrival at
the Fairview Polymedic Hospital.
 Respondent spouses Nabua, the parents of the victim, filed a Complaint for damages
against petitioners and the General Manager of OMC Carriers, Chito Calauag before the RTC of
Quezon City.
 RTC ruled in favor of plaintiffs. CA affirmed with modifications. Absolving appellant
Chito Calauag from liability for the death of Regie Nabua; and deleting, for want of basis, the
following damages awarded by the court a quo, viz: a. P2,000,000.00 as lost earnings of the
deceased; and b. P100,000.00 as exemplary damages.
ISSUE: Whether the deletion of the award of damages by CA for loss of earning
capacity proper.
HELD: YES.
 While petitioners did not put in error the award of actual damages, this Court feels that the same
should nevertheless be reviewed as an appellate court is clothed with ample authority to review
rulings even if they are not assigned as errors.
 Actual damages are such compensation or damages for an injury that will put the injured party
in the position in which he had been before he was injured. They pertain to such injuries or losses
that are actually sustained and susceptible of measurement. To justify an award of actual
damages, there must be competent proof of the actual amount of loss. Credence can be given
only to claims which are duly supported by receipts.
 Based on the foregoing (Submitted evidence by respondents), the RTC erred when it awarded
the amount of P110,000.00 as actual damages, as the said amount was not duly substantiated
with receipts. Hence, the amount of actual damages that can only be recovered is P59,173.50.
Memorandum that this Court reinstate the RTC award of P2,000,000.00 as compensatory
damages which was deleted by the CA. Respondents point out that the victim, Reggie Nabua,
was 18 years old and at the time of his death, a freshman taking up Industrial Engineering.
x x x Art. 2206 of the Civil Code provides that in addition to the indemnity for death caused by a
crime or quasi delict, 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; . . ." Compensation of this
nature is awarded not for loss of earnings but for loss of capacity to earn money. Evidence must
be presented that the victim, if not yet employed at the time of death, was reasonably certain to
complete training for a specific profession. In People v. Teehankee, no award of compensation for
loss of earning capacity was granted to the heirs of a college freshman because there was no
sufficient evidence on record to show that the victim would eventually become a professional
pilot. But compensation should be allowed for loss of earning capacity resulting from the death of
a minor who has not yet commenced employment or training for a specific profession if sufficient
evidence is presented to establish the amount thereof x x x.
was a freshman taking up Industrial Engineering at the Technological Institute of the
Philippines in Cubao. Unlike in Metro Transit where evidence of good academic record, extra-
curricular activities, and varied interests were presented in court, herein respondents offered no
such evidence. Hence, the CA was correct when it deleted the award of compensatory damages
amounting to P2,000,000.00, as the same is without any basis.
WHEREFORE, the instant petition is PARTIALLY GRANTED.
SPOUSES EDUARDO and ANN AGUSTIN, petitioners,
vs.
HON. COURT OF APPEALS and LABRADOR DEVELOPMENT
CORPORATION, respondents.
-em-
TOPIC: ATTORNEY’S FEES
Facts:
Labrador Development Corp (Labrador Corp), being a subdivision developer, owned Lot 14, Block
1 of the San Pedro Compound IV at Tandang Sora, Quezon City. On November 7, 1981, Labrador
Corp agreed to sell said parcel of land to spouses Edgardo and Ann Agustin on a package deal
together with a residential house per House Plan Model B-203 to be constructed thereon for the
sum of P202,980.00. As therein stipulated, the spouses were to pay P42,980.00 as equity-
P30,133.00 as down payment and the balance of P12,847.00 upon completion and delivery of the
property, the other P160,000.00 to have been funded through a Pag-Ibig Fund loan to be applied
for by the spouses. Central to the above was a stipulation that in the event the housing loan be
insufficient to pay the full contract price owing, they shall pay the same in cash on or before
occupancy and acceptance of the housing unit. The agreement further provided —
Page 12 of 20
(f) Failure of the Vendee to comply with any or all of the above stipulations shall ipso facto cancel
this contract to sell; and thereupon, this contract to sell or any other contract executed in
connection thereof, shall be of no further force and effect; and the title to the property, if already
transferred in the name of the Vendee, shall automatically revert to the Vendor.
The foregoing stipulation encompassed the necessity of transferring title to the lot to the spouses
as an accommodation to enable their application for a housing loan in their names.
Hence, Labrador Corp executed a deed of sale over the lot in favor of defendants-appellants,
without additional consideration beyond the P30,133.00 down payment adverted to, and the
issuance to said spouses of transfer certificate of title. Thusly accommodated, the spouses applied
for a P160,000.00 housing loan with the First Summa Savings and Mortgage Bank as an accredited
financing institution.
After initial approval in the amount applied for, the Pag-ibig housing loan was downgraded to
P128,000.00 after reassessment. Labrador Corp apprised the spouses of said development
enclosing the formal bank letter requiring a co-borrower related within the fourth degree of
consanguinity should the spouses desire approval of an increased loan amount.
The spouses appear to have disdained a reply to plaintiff-appellee's said letter. Thus, under date
of December 28, 1982, Labrador Corp again wrote a follow- up letter to defendants-appellants
affording the latter time to decide on their options, on pain of enforcement of the terms of the
contract to sell.
Instead of reconveyance of title to the lot, the spouses however sought time to buy the property;
Labrador Corp agreed provided that payment be effected in cash. Defendants-appellants failed to
make such payment in cash, despite the lapse of a second 30-day period afforded therefor.
Thereupon, Labrador demanded anew for reconveyance.
Thereafter, Labrador Corp filed a case for reconveyance and damage. In answer, the spouses
maintained inter alia that approval of a P160,000.00 housing loan had been assured upon
completion of the house with proof of its delivery and acceptance, but that acceptance could not
be reasonably given by them in that certain specifications for the housing unit had not been
complied with.
After trial on the merits, the lower court rendered judgment in favor of private respondent, the
dispositive part whereof reads:
WHEREFORE, judgment is hereby rendered ordering defendants, jointly and
severally:
a) to reconvey to plaintiff the parcel of land covered by Transfer Certificate
of Title No. 284735
b) to pay plaintiff the sum of P20,000.00 as exemplary damages;
c) to pay plaintiff the sum of P5,000.00 as attorney's fees, plus costs of the
suit.
which judgment, as earlier stated, was affirmed by respondent court but with the deletion of the
award of exemplary damages.
Issue:
WN private respondent Labrador Corp is not entitled to attorney's fees of P5,000.00 under the
facts and circumstances of the case.
Held:
No. The award to private respondent of attorney's fees, however, must be disallowed considering
that the award of exemplary damages was eliminated by respondent court and the text of the
decision of the trial court, which was aimed by the Court of Appeals, is bereft of any findings of
fact and law to justify such award. The accepted rule is that the reason for the award of attorney's
fees must be stated in the text of the court's decision; otherwise, if it is stated only in the
dispositive portion of the decision, the same must be disallowed on appeal. The award of
attorney's fees being an exception rather than the general rule, it is necessary for the court to
make findings of facts and law that would bring the case within the exception and justify the grant
of such award. 11
WHEREFORE, except for the award of attorney's fees which is hereby deleted, the decision of
respondent Court of Appeals is hereby AFFIRMED.
SPS. MOISES and CLEMENCIA ANDRADA vs. PILHINO SALES
CORPORATION
-ron-
TOPIC: ATTORNEY’S FEES
Facts:
 Respondent Pilhino Sales Corporation (Pilhino) sued Jose Andrada, Jr. and his wife,
Maxima (not the petitioners) in RTC to recover the principal sum of ₱240,863.00,
plus interest and incidental charges.
 Upon Pilhino’s application, the RTC issued a writ of preliminary attachment against a
Hino truck and a Fuso truck both owned by Jose Andrada, Jr. However, the levies on
attachment were lifted after Jose filed a counter-attachment bond.
 RTC rendered a decision against Jose Andrada, Jr. and his wife. Pilhino opted to
enforce the writ of execution against the properties of the Andradas instead of
claiming against the counter-attachment bond considering that the premium on the
bond had not been paid.
 The sheriff seized the Hino truck and sold it at the ensuing public auction, with Pilhino
as the highest bidder. However, the Hino truck could not be transferred to Pilhino’s
name due to its having been already registered in the name of petitioner Moises
Andrada.
Page 13 of 20
  It appears that the Hino truck had been meanwhile sold by Jose Andrada, Jr. to The petitioners are not entitled to attorney’s fees.
Moises Andrada, which sale was unknown to Pilhino, and that Moises had mortgaged
the truck to BA Finance Corporation (BA Finance) to secure his own obligation. It is well accepted in this jurisdiction that no premium should be placed on the right to litigate
 BA Finance sued Moises Andrada for his failure to pay the loan. After a decision was and that not every winning party is entitled to an automatic grant of attorney’s fees.
rendered in the action in favor of BA Finance, a writ of execution issued, by which the
It was only with the advent of the new Civil Code that the right to collect attorney’s fees in the
sheriff levied upon and seized the Hino truck while it was in the possession of Pilhino
instances mentioned in Article 2208 was recognized, and such fees are now included in the
and sold it at public auction, with BA Finance as the highest bidder.
concept of actual damages. One such instance is where the defendant is guilty of gross and
 Consequently, Pilhino instituted this action in the RTC (which included the petitioner
evident bad faith in refusing to satisfy the plaintiff’s plainly valid, just and demandable claim.
spouses as defendants) to annul the deed of sale between Jose Andrada, Jr. and
Moises Andrada and the chattel mortgage involving the Hino truck between Moises This is a corollary of the general principle expressed in Article 19 of the Civil Code that everyone
Andrada and BA Finance. must, in the performance of his duties, observe honesty and good faith and the rule embodied
 RTC, citing the compromise agreement between Pilhino and Jose Andrada, Jr., and in Article 1170 that anyone guilty of fraud (bad faith) in the performance of his obligation shall
the good faith of Pilhino and BA Finance in filing their respective actions, dismissed be liable for damages.
Pilhino’s complaint against petitioner spouses Andrada, Jose Andrada, Sr. and BA
Finance Corporation, including the counterclaims. But the award of attorney’s fees is the exception rather than the rule. The power of a court to
award attorney’s fees under Article 2208 of the Civil Code demands factual, legal, and equitable
Issue: justification; its basis cannot be left to speculation and conjecture. The general rule is that
attorney’s fees cannot be recovered as part of damages because of the policy that no premium
1. WON Pilhino should be held liable for the damages the petitioners sustained from
should be placed on the right to litigate.
Pilhino’s levy on execution upon the Hino truck. (No)
2. WON plaintiff spouses Andrada are entitled to attorney’s fees. (No) Herein, the element of bad faith on the part of Pilhino in commencing the civil case which was
necessary to predicate the lawful grant of attorney’s fees based on Article 2208 (4) of the Civil
Ruling:
Code, was not established. Accordingly, the petitioners’ demand for attorney’s fees must fail.
The petitioners assail the decision promulgated by the CA to the extent that it denied their claim
Petition Denied.
for the damages they had sought by way of counterclaim. They anchored their claim on Article
21 of the Civil Code, which provides that "any person who willfully causes loss or injury to
another in a manner that is contrary to morals, good customs or public policy shall compensate
the latter for damage."

Article 21 of the Civil Code, in conjunction with Article 19 of the Civil Code, is part of the cause
of action known in this jurisdiction as "abuse of rights." The elements of abuse of rights are:

(a) there is a legal right or duty;

(b) exercised in bad faith; and EASTERN SHIPPING LINES, INC. vs. COURT OF APPEALS
(c) for the sole intent of prejudicing or injuring another. -jeanelle-

The CA found that Pilhino had acted in good faith in bringing an action to annul the deed of sale
involving the Hino truck executed by Jose Andrada, Jr. in favor of Moises Andrada, considering
that Pilhino had "believed that the sale in favor of defendants-appellants [had been] resorted to
so that Jose Andrada [might] evade his obligations."
However, the circumstances of this case do not warrant reversing or modifying the findings of
the CA, which are consistent with the established facts. Verily, the petitioners did not prove the
concurrence of the elements of abuse of rights.
The petitioners further seek attorney’s fees based on Article 2208 (4) of the Civil Code, which
provides that "in the absence of stipulation, attorney’s fees and expenses of litigation, other
than judicial costs, cannot be recovered, except xxx (4) in cases of clearly unfounded civil action
or proceeding against the plaintiff xxx."
TOPIC: INTEREST
FACTS:
 Two fiber drums of riboflavin were shipped from Yokohama, Japan for delivery vessel
“SS EASTERN COMET” owned by Eastern Shipping Lines under Bill of Lading. The
shipment was insured under plaintiff’s Marine Insurance Policy.
 Upon arrival of the shipment in Manila, it was discharged unto the custody of
defendant Metro Port Service, Inc. The latter excepted to one drum, said to be in bad
order, which damage was unknown to the plaintiff.

Page 14 of 20
  Defendant Allied Brokerage Corporation received the shipment from defendant Metro
Port Service, one drum opened and without seal.
 Defendant Allied Brokerage Corporation made deliveries of the shipment to the
consignee’s warehouse. The latter excepted one drum which contained spillages,
while the rest of the contents was adulterated/fake.
 Plaintiff contended that due to the loss/damage sustained by the said drum, the
consignee suffered losses totaling P19, 032.95 due to the fault and negligence of
defendants. Claims were presented against defendants who failed and refused to pay
the same.
 As a consequence of the losses, plaintiff was compelled to pay the consignee under
the marine insurance policy, so that it became subrogated to all the rights of action of
said consignee against defendants.
 Trial court ordered defendants to pay plaintiff, jointly and severally;
The amount of P19,032.95 with the present legal interest of 12% per annum from
October 1, 1982, the date of filing of the complaints, until fully paid.
 The Court of Appeals affirmed the trial court’s ruling.
 Petitioner Eastern Shipping Lines assailed the decision of respondent Court and
alleged that there was error and grave abuse of discretion on the part of the appellate
court when it held that the grant of interest on the claim of private respondent should
commence from the date of the filing of the complaint at the rate of 12% per annum
instead of from the date of the decision of the trial court and only at a rate of 6% per
annum, wherein private respondent’s claim being indisputably unliquidated.
ISSUE: Whether the payment of legal interest on an award of loss or damage is to be
computed from the time the complaint is filed or from the date the decision appealed is
rendered.
HELD:
(YUNG DECISION NG COURT SA CASE IS PARTLY GRANTED YUNG PETITION. PARTLY KASI
INAFFIRM YUNG LIABILITY NI EASTERN SHIPPING WHICH IS DIKO NA NILAGAY KASI DI
NAMAN YUN YUNG TOPIC. ANG GRINANT NG COURT NA PETITION IS TONG REGARDING SA
LEGAL INTEREST)
I. When an obligation, regardless of its source, i.e., law, contracts, quasi-contracts,
delicts or quasi-delicts, is breached, the contravenor can be held liable for
damages. The provisions under Title XVIII on “Damages” of the Civil Code
govern in determining the measure of recoverable damages.
II. With regard particularly to an award of interest in the concept of actual and
compensatory damages, the rate of interest, as well as the accrual thereof, is
imposed, as follows:
1. When the obligation is breached, and it consists in the payment of a sum of
money, i.e., a loan or forbearance of money, the interest due should be that
which may have been stipulated in writing. Furthermore, the interest due shall
itself earn legal interest from the time it is judicially demanded. In the absence of
stipulation, the rate of interest shall be 12% per annum to be computed from
default, i.e., from judicial or extrajudicial demand under and subject to the
provisions of Article 1169 of the Civil Code.
2. When an obligation, not constituting a loan or forbearance of money, is
breached, an interest on the amount of damages awarded may be imposed at
the discretion of the court at the rate of 6% per annum. No interest, however,
shall be adjudged on unliquidated damages except when or until the demand can
be established with reasonable certainty. Accordingly, where the demand is
established with reasonable certainty, the interest shall begin to run from the
time the claim is made judicially or extrajudicially, but when such certainty
cannot be so reasonably established at the time the demand is made, the
interest shall begin to run only from the date the judgment of the court is made.
The actual base for the computation of legal interest shall, in any case, be on the
amount finally adjudged.
3. When the judgment of the court awarding a sum of money becomes final and
executory, the rate of legal interest, whether the case falls under paragraph 1 or
2 above, shall be 12% per annum from such finality until its satisfaction, the
interim period being deemed to be by then an equivalent to a forbearance of
credit.
In this case, the court ruled that the legal interest to be paid is SIX PERCENT (6%) on the
amount due from the decision of the court a quo.
A TWELVE PERCENT (12%) interest shall be imposed on such amount upon finality of the
decision until payment thereof.
NOTES: The Central Bank Circular imposing 12% interest per annum applies only to loans or
forbearance of money, goods or credits, as well as to judgments involving such loan or
forbearance of money, goods or credits, and that the 6% interest under the Civil Code governs
when transaction involves the payment of indemnities in the concept of damage arising from the
breach or a delay in the performance of obligations in general. In these cases, a common time
frame in the computation of the 6% interest per annum has been applied, i.e, from the time the
complaint is filed until the adjudged amount is fully paid.
DARIO NACAR
VS.
GALLERY FRAMES & FELIPE BORDEY, JR.,
-gaddi-
TOPIC: INTEREST
Page 15 of 20
FACTS:
Dario Nacar filed a complaint for constructive dismissal before the Arbitration Branch
of the NLRC against respondents. The Labor Arbiter rendered a Decision in favor of Nacar and
found that he was dismissed from employment without a valid or just cause. Thus, petitioner was
awarded backwages and separation pay in lieu of reinstatement in the amount of P158,919.92.
The NLRC sustained the decision of the Labor Arbiter. The CA issued a Resolution dismissing the
petition of respondents. The Supreme Court denied the petition in a Resolution dated April 17,
2002. An Entry of Judgment was later issued certifying that the resolution became final and
executory on May 27, 2002.
Nacar filed a Motion for Correct Computation, praying that his backwages be computed
from the date of his dismissal on January 24, 1997 up to the finality of the Resolution of the
Supreme Court on May 27, 2002. Upon re-computation, the Computation and Examination Unit
of the NLRC arrived at an updated amount in the sum of P471,320.31. On January 14, 2003, it
was reassessed to be in the total amount of only P147,560.19.
Petitioner then filed a Manifestation and Motion praying for the re-computation of the
monetary award to include the appropriate interests.
ISSUE: W/N petitioner is entitled to the payment of interest from May 27, 2002
until full payment by the respondents.
The guidelines laid down in the case of Eastern Shipping Lines v. Court of
Appeals, regarding the manner of computing legal interest, are modified by BSP-MB Circular
No. 799 (effective July 1, 2013) to wit:
I. When an obligation, regardless of its source, i.e., law, contracts, quasi-contracts,
delicts or quasi-delicts is breached, the contravenor can be held liable for damages. The provisions
under Title XVIII on “Damages” of the Civil Code govern in determining the measure of
recoverable damages.
II. With regard particularly to an award of interest in the concept of actual and
compensatory damages, the rate of interest, as well as the accrual thereof, is imposed, as follows:
1. When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan
or forbearance of money, the interest due should be that which may have been stipulated in
writing. Furthermore, the interest due shall itself earn legal interest from the time it is judicially
demanded. In the absence of stipulation, the rate of interest shall be 6% per annum to be
computed from default, i.e., from judicial or extrajudicial demand under and subject to the
provisions of Article 1169 of the Civil Code.
2. When an obligation, not constituting a loan or forbearance of money, is breached, an interest
on the amount of damages awarded may be imposed at the discretion of the court at the rate of
6% per annum. No interest, however, shall be adjudged on unliquidated claims or damages,
except when or until the demand can be established with reasonable certainty. Accordingly, where
the demand is established with reasonable certainty, the interest shall begin to run from the time
the claim is made judicially or extrajudicially (Art. 1169, Civil Code), but when such certainty
cannot be so reasonably established at the time the demand is made, the interest shall begin to
run only from the date the judgment of the court is made (at which time the quantification of
damages may be deemed to have been reasonably ascertained). The actual base for the
computation of legal interest shall, in any case, be on the amount finally adjudged.
3. When the judgment of the court awarding a sum of money becomes final and executory, the
rate of legal interest, whether the case falls under paragraph 1 or paragraph 2, above, shall be
6% per annum from such finality until its satisfaction, this interim period being deemed to be by
then an equivalent to a forbearance of credit.
Thus, from the foregoing, in the absence of an express stipulation as to the rate of
interest that would govern the parties, the rate of legal interest for loans or forbearance of any
money, goods or credits and the rate allowed in judgments shall no longer be (12%) per annum
- as reflected in the case of Eastern Shipping Lines- but will now be (6%) per annum effective
July 1, 2013. It should be noted, nonetheless, that the new rate could only be applied prospectively
and not retroactively. Consequently, the (12%) per annum legal interest shall apply only until
June 30, 2013. Come July 1, 2013 the new rate of (6%) per annum shall be the prevailing rate of
interest when applicable.
WHEREFORE, premises considered, Respondents are Ordered to Pay petitioner interest
of (12%) per annum of the total monetary awards, computed from May 27, 2002 to June 30,
2013 and (6%) per annum from July 1, 2013 until their full satisfaction.
MITSUBISHI MOTORS PHILIPPINES SALARIED EMPLOYEES UNION
(MMPSEU), Petitioner, vs. MITSUBISHI MOTORS PHILIPPINES
CORPORATION, Respondent.
-zyka-
TOPIC: MITIGATION OF LIABILITY
FACTS:
The parties’ CBA, covering the period August 1, 1996 to July 31, 1999 provides for the
hospitalization insurance benefits for the covered dependents.
When the CBA expired on July 31, 1999, the parties executed another CBA, effective August 1,
1999 to July 31, 2002 incorporating the same provisions on dependents’ hospitalization insurance
benefits but in the increased amount.
On separate occasions, three members of MMPSEU, namely, Ernesto Calida (Calida), Hermie Juan
Oabel (Oabel) and Jocelyn Martin (Martin), filed claims for reimbursement of hospitalization
expenses of their dependents.
MMPC paid only a portion of their hospitalization insurance claims, not the full amount. The
amount not covered is paid by MEDICard Philippines, Inc. (MEDICard) – dependents own health
insurance.
Claiming that under the CBA, they are entitled to hospital benefits amounting to ₱27,427.10,
₱6,769.35 and ₱8,123.80, respectively, which should not be reduced by the amounts paid by
MEDICard and by Prosper, Calida, Oabel and Martin asked for reimbursement from MMPC.
However, MMPC denied the claims contending that double insurance would result if the said
employees would receive from the company the full amount of hospitalization expenses despite
having already received payment of portions thereof from other health insurance providers.
This prompted the MMPSEU President to write the MMPC President demanding full payment of
the hospitalization benefits. MMPC, through its Vice-President for Industrial Relations Division,
Page 16 of 20
clarified that the claims of the said MMPSEU members have already been paid on the basis of
official receipts submitted.
On October 3, 2000, the case was referred to Voluntary Arbitrator for resolution of the issue
involving the interpretation of the subject CBA provision. MMPSEU alleged that there is nothing in
the CBA which prohibits an employee from obtaining other insurance or declares that medical
expenses can be reimbursed only upon presentation of original official receipts.
On December 3, 2002, the Voluntary Arbitrator rendered a Decision finding MMPC liable to pay or
reimburse the amount of hospitalization expenses already paid by other health insurance
companies.
VA: held that the employees may demand simultaneous payment from both the CBA and their
dependents’ separate health insurance without resulting to double insurance, since separate
premiums were paid for each contract. He also noted that the CBA does not prohibit
reimbursement in case there are other health insurers.
CA: reversed and set aside decision It ruled otherwise because both had the same subject matter,
interest insured, and risk or peril insured against. Hence, employees will benefit twice for the same
loss resulting in double insurance
ISSUE: WON MMPSEU is liable to pay the whole amount of its employee’s hospitalization expense
despite the amounts paid
HELD: NO
The collateral source rule was originally applied to tort cases wherein the defendant is prevented
from benefiting from the plaintiff’s receipt of money from other sources. Under this rule, if an
injured person receives compensation for his injuries from a source wholly independent of the
tortfeasor, the payment should not be deducted from the damages which he would otherwise
collect from the tortfeasor. The Court went on to explain that although the rule appears to allow
a double recovery, the collateral source will have a lien or subrogation right to prevent such a
double recovery.
MMPSEU insists that MMPC is also liable for the amounts covered under other insurance policies;
otherwise, MMPC will unjustly profit from the premiums the employees contribute through monthly
salary deductions.
This contention is unmeritorious.
To constitute unjust enrichment, it must be shown that a party was unjustly enriched in the sense
that the term unjustly could mean illegally or unlawfully. A claim for unjust enrichment fails when
the person who will benefit has a valid claim to such benefit.
The CBA has provided for MMPC’s limited liability which extends only up to the amount to be paid
to the hospital and doctor by the employees’ dependents, excluding those paid by other insurers.
Consequently, the covered employees will not receive more than what is due them; neither is
MMPC under any obligation to give more than what is due under the CBA.
Moreover, since the subject CBA provision is an insurance contract, the rights and obligations of
the parties must be determined in accordance with the general principles of insurance law. Being
in the nature of a non-life insurance contract and essentially a contract of indemnity, the CBA
provision obligates MMPC to indemnify the covered employees’ medical expenses incurred by their
dependents but only up to the extent of the expenses actually incurred. This is consistent with
the principle of indemnity which proscribes the insured from recovering greater than the loss.
Indeed, to profit from a loss will lead to unjust enrichment and therefore should not be
countenanced. As aptly ruled by the CA, to grant the claims of MMPSEU will permit possible abuse
by employees.
D.M. Consunji, Inc. v. Court of Appeals
-carol-
TOPIC: MITIGATION OF LIABILITY
FACTS: Jose Juego, a construction worker of D.M. Consunji, Inc., fell 14 floors from the
Renaissance Tower, Pasig City to his death. PO3 Rogelio Villanueva of the Eastern Police District
investigated the tragedy and filed a report, stating that the victim was rushed to the Rizal Medical
Center in Pasig, where he was pronounced dead on arrival by the attending physician.
Investigation disclosed that while victim Jose A. Juego together with Jessie Jaluag and Delso
Destajo were performing their work as carpenters at the elevator core of the 14th floor of the
Tower D, Renaissance Tower Building on board a platform made of channel beam (steel)
measuring 4.8 meters by 2 meters wide with pinulid plywood flooring and cable wires attached to
its four corners and hooked at the 5 ton chain block, when suddenly, the bolt or pin which was
merely inserted to connect the chain block with the platform, got loose causing the whole platform
assembly and the victim to fall down to the basement of the elevator core, Tower D of the building
under construction thereby crushing the victim to death, save his two (2) companions who luckily
jumped out for safety.
It is thus manifest that Jose A. Juego was crushed to death when the platform he was then on
board and performing work, fell. And the falling of the platform was due to the removal or getting
loose of the pin which was merely inserted to the connecting points of the chain block and platform
but without a safety lock. Jose Juego's widow, Maria, filed in the RTC of Pasig a complaint for
damages against the deceased's employer, D.M. Consunji, Inc. The employer raised, among other
defenses, the widow's prior availment of the benefits from the State Insurance Fund.
RTC & CA: Rendered a decision in favor of the widow Maria Juego.
ISSUE: Whether or not the heirs of Jugo have a right of selection or choice of action between
availing themselves of the worker's right under the Workmen's Compensation Act and suing in the
regular courts under the Civil Code for higher damages (actual, moral and exemplary) from the
employers by virtue of the negligence or fault of the employers or whether they may avail
themselves cumulatively of both actions
Page 17 of 20
HELD: The rule is settled in Floresca case that a claimant cannot simultaneously pursue recovery
under the Labor Code and prosecute an ordinary course of action under the Civil Code. The
claimant, by his choice of one remedy, is deemed to have waived the other. Waiver is the
intentional relinquishment of a known right. It is an act of understanding that presupposes that a
party has knowledge of its rights, but chooses not to assert them. It must be generally shown by
the party claiming a waiver that the person against whom the waiver is asserted had at the time
knowledge, actual or constructive, of the existence of the party's rights or of all material facts
upon which they depended. Where one lacks knowledge of a right, there is no basis upon which
waiver of it can rest. Ignorance of a material fact negates waiver, and waiver cannot be established
by a consent given under a mistake or misapprehension of fact.
However, the CA held that private respondent's case came under the exception because private
respondent was unaware of petitioner's negligence when she filed her claim for death benefits
from the State Insurance Fund. Private respondent filed the civil complaint for damages after she
received a copy of the police investigation report and the Prosecutor's Memorandum dismissing
the criminal complaint against petitioner's personnel. While stating that there was no negligence
attributable to the respondents in the complaint, the prosecutor nevertheless noted in the
Memorandum that, "if at all," the "case is civil in nature."
The CA further held that not only was private respondent ignorant of the facts, but of her rights
as well. Maria Juego testified that she has reached only elementary school for her educational
attainment; that she did not know what damages could be recovered from the death of her
husband; and that she did not know that she may also recover more from the Civil Code than
from the ECC.
In any event, there is no proof that private respondent knew that her husband died in the elevator
crash when on November 15, 1990 she accomplished her application for benefits from the ECC.
The police investigation report is dated November 25, 1990, 10 days after the accomplishment of
the form. Petitioner filed the application in her behalf on November 27, 1990. The case is
remanded to the RTC of Pasig to determine whether the award decreed in its decision is more
than that of the ECC. Should the award decreed by the trial court be greater than that awarded
by the ECC, payments already made to private respondent pursuant to the Labor Code shall be
deducted therefrom
RELEVANT PROVISIONS:
II. KINDS OF DAMAGES
Article 2197. Damages may be:
(1) Actual or compensatory;
(2) Moral;
(3) Nominal;
(4) Temperate or moderate;
(5) Liquidated; or
(6) Exemplary or corrective.
Article 2198. The principles of the general law on damages are hereby adopted insofar as they
are not inconsistent with this Code.
ACTUAL DAMAGES
Article 2199. Except as provided by law or by stipulation, one is entitled to an adequate
compensation only for such pecuniary loss suffered by him as he has duly proved. Such
compensation is referred to as actual or compensatory damages.
Article 2200. Indemnification for damages shall comprehend not only the value of the loss
suffered, but also that of the profits which the obligee failed to obtain. (1106)
Article 2201. In contracts and quasi-contracts, the damages for which the obligor who acted in
good faith is liable shall be those that 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 the obligation was constituted.
In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible for all
damages which may be reasonably attributed to the non-performance of the obligation. (1107a)
Article 2202. In crimes and quasi-delicts, the defendant shall be liable for all damages which
are the natural and probable consequences of the act or omission complained of. It is not
necessary that such damages have been foreseen or could have reasonably been foreseen by
the defendant.
Article 2203. The party suffering loss or injury must exercise the diligence of a good father of
a family to minimize the damages resulting from the act or omission in question.
Article 2204. In crimes, the damages to be adjudicated may be respectively increased or
lessened according to the aggravating or mitigating circumstances.
Article 2205. Damages may be recovered:
(1) For loss or impairment of earning capacity in cases of temporary or permanent
personal injury;
(2) For injury to the plaintiff's business standing or commercial credit.
Page 18 of 20
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.
Article 2207. If the plaintiff's property has been insured, and he has received indemnity from
the insurance company for the injury or loss arising out of the wrong or breach of contract
complained of, the insurance company shall be subrogated to the rights of the insured against
the wrongdoer or the person who has violated the contract. If the amount paid by the insurance
company does not fully cover the injury or loss, the aggrieved party shall be entitled to recover
the deficiency from the person causing the loss or injury.
Article 2208. In the absence of stipulation, attorney's fees and expenses of litigation, other
than judicial costs, cannot be recovered, except:
(1) When exemplary damages are awarded;
(2) When the defendant's act or omission has compelled the plaintiff to litigate with
third persons or to incur expenses to protect his interest;
(3) In criminal cases of malicious prosecution against the plaintiff;
(4) In case of a clearly unfounded civil action or proceeding against the plaintiff;
(5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the
plaintiff's plainly valid, just and demandable claim;
(6) In actions for legal support;
(7) In actions for the recovery of wages of household helpers, laborers and skilled
workers;
(8) In actions for indemnity under workmen's compensation and employer's liability
laws;
(9) In a separate civil action to recover civil liability arising from a crime;
(10) When at least double judicial costs are awarded;
(11) In any other case where the court deems it just and equitable that attorney's
fees and expenses of litigation should be recovered.
In all cases, the attorney's fees and expenses of litigation must be reasonable.
Article 2209. If the obligation consists in the payment of a sum of money, and the debtor
incurs in delay, the indemnity for damages, there being no stipulation to the contrary, shall be
the payment of the interest agreed upon, and in the absence of stipulation, the legal interest,
which is six per cent per annum. (1108)
Article 2210. Interest may, in the discretion of the court, be allowed upon damages awarded
for breach of contract.
Article 2211. In crimes and quasi-delicts, interest as a part of the damages may, in a proper
case, be adjudicated in the discretion of the court.
Article 2212. Interest due shall earn legal interest from the time it is judicially demanded,
although the obligation may be silent upon this point. (1109a)
Article 2213. Interest cannot be recovered upon unliquidated claims or damages, except when
the demand can be established with reasonable certainty.
Article 2214. In quasi-delicts, the contributory negligence of the plaintiff shall reduce the
damages that he may recover.
Article 2215. In contracts, quasi-contracts, and quasi-delicts, the court may equitably mitigate
the damages under circumstances other than the case referred to in the preceding article, as in
the following instances:
(1) That the plaintiff himself has contravened the terms of the contract;
(2) That the plaintiff has derived some benefit as a result of the contract;
(3) In cases where exemplary damages are to be awarded, that the defendant acted
upon the advice of counsel;
(4) That the loss would have resulted in any event;
Page 19 of 20
 (5) That since the filing of the action, the defendant has done his best to lessen the
plaintiff's loss or injury.

BSP CIRCULAR NO. 799 (June 21, 2013)

In the absence of a contract expressly providing for a different rate, the rate of interest for the
loan or forbearance of any money, goods or credits and the rate allowed in judgments has been
reduced from twelve percent (12%) to six percent (6%) per annum.

Page 20 of 20